Shri Hasmukhbhai Prajapati, Baroda V. The ACIT, Circle-2(1), Baroda

ITA 2708/AHD/2014

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4587 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 23-06-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 09-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LALIT P JAIN
• Assessee Lawyers: M J SHAH
• Keywords: Business income; Bonafide belief
• Section: 143(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE: SHR I RAJPAL YADAV , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER SHRI HASMUKH PRAJAPATI, BARODA PAN: ACPPP2632N (APPELLANT) VS THE ACIT, CIRCLE - 2( 1 ) , BARODA (RESPONDENT) REVENUE BY : S H RI LALIT P. JAIN , SR. D . R. ASSESSEE BY: SHRI M.J. SHAH, A. R. DATE OF HEARING : 27 - 09 - 2 018 DATE OF PRONOUNCEMENT : 11 - 10 - 2 018 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THIS ASSESSEE S APPEAL FOR A.Y. 2008 - 09 , ARI SES FROM ORDER OF TH E CIT(A) - II, BARODA DATED 24 - 06 - 2 014 , IN PROCEEDINGS UNDER SECTION 271B OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED A.O. ERR ED ON LAW AND ON FACTS IN INVOKING THE PROVISION OF SECTION 271B AND THEREBY LEVYING PENALTY UNDER SECTION 271B. THE ACTION OF A.O. BEING UNCALLD FOR UNWARRANTED YOUR APPELLANT THEREFORE IN THE INTEREST OF JUSTICE HEREBY REQUESTS TO DELETE THE PENALTY LE VIED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED A.O. ERRED ON FACTS IN TAKING TURNOVER OF YOUR APPELLANT AT RS.9,58,79,688/ - AS AGAINST THE CORRECT TURNOVER OF RS.97,27,178/ I T A NO . 2708 / A HD/20 14 A SSESSMENT YEAR 200 8 - 09 I.T.A NO. 2708 /AHD/20 14 A.Y. 2008 - 09 PAGE NO SHRI HASMUKH PRAJAPATI VS. ACIT 2 YOUR APPELLANT THEREFORE IN THE INTEREST OF JUSTICE TO TAKE CORRECT TURN OF RS.97,27,178/ - 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEANED A.O. ERRED ON FACTS AS WELL AS ON LAW LEVYING PENALTY OF RS.1,00,000/ - AS AGAINST @ 0.5% OF THE TURNOVER RS.97, 27,178 WORKS OUT TO RS. 48,635/ - AS PER THE PROVISION OF SECTION 271 B. YOUR APPELLANT THEREFORE IN THE INTEREST OF JUSTICE TO WORK OUT CORRECT QUANTUM OF PENALTY THE ACTION OF A.O. BEING UNCALLED FOR UNWARRANTED, YOUR APPELLANT, THEREFORE IN THE INTEREST OF JUSTICE HEREBY REQUESTS TO DELETE TH E PENALTY LEVIED. 3. ALL THE THREE GROUNDS OF APPEAL ARE INTER - CONNECTED, THEREFORE, FOR THE SAKE OF CONVENIENCE THEY ARE ADJUDICATED TOGETHER AS UNDER: - 4 . THE BRIEF FACT OF THE CASE IS THAT ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE ACT ON 31 ST DECEM BER, 2010 AND TOTAL INCOME WAS DETERMINED AT RS. 78 , 18 , 500/ - . THE MAIN ISSUE IN THIS CASE WAS THAT A SURVEY U/S. 133A OF THE ACT WAS CARRIED OUT ON 18 TH OCTOBER, 2010 WHEREIN THE ASSESSEE HAD ADMITTED THAT HIS ACTIVITIES OF INVESTMENT IN LAND WAS OF THE B USINESS NATURE .T HEREFORE, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSE E WAS LIABLE FOR AUDIT U/S. 44AB OF THE ACT AND ISSUED A NOTICE U/S. 271B OF THE ACT ON 27 TH FEB, 2013 FOR NOT FURNISHING OF AUDIT REPORT U/S. 44AB OF THE ACT. THE ASSESSEE EXPLAINE D THAT TRANSACTIONS IN THE LAND PERTAINED TO THE LAND WHICH WAS PURCHASED LONG BACK AND REGULARLY SHOWN AS INVESTMENT IN THE RETURN OF INCOME FILED . HE HAS FURTHER EXPLAINED THAT DURING THE COURSE OF SURVEY HE HAS A GREED TO TREAT THE INCOME ON SALE OF SA ID LAND AS BUSINESS INCOME AS AGAINST CAPITAL GAIN SHOWN BY HIM IN THE RETURN OF INCOME . HE HAS ALSO SUBMITTED THAT MAJORITY OF THE LAND IN QUESTION WAS SHOWN AS INVESTMENT SINCE 1992 TILL 2007 AND HE WAS NOT ENGAGED IN FREQUENT PURCHASE AND SALE O F LAND . THE ASSESSING OFFICER HAS NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE AND STATED THAT ASSESSEE WAS LIABLE FOR AUDIT THEREFORE, IMPOSED THE IMPUGNED PENALTY U/S. 271B OF THE ACT. 5 . AGGRIEVED ASSESSEE HAS FILED APPEAL BEFORE THE LD. CIT(A). TH E LD. CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE . I.T.A NO. 2708 /AHD/20 14 A.Y. 2008 - 09 PAGE NO SHRI HASMUKH PRAJAPATI VS. ACIT 3 6. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, THE LD. AUTHORIZED REPRESENTATIVE HAS CONTENDED THAT SURVEY WAS CARRIED OUT AFTER FILING OF RETURN OF INCOME WHEN THE FINANCIAL YEAR WAS OVER WHICH IS VERY CLEAR FROM THE DATE OF SURVEY ON 18 TH OCTOBER, 2010. HE HAS ALSO FURNISHED COPY OF ORDER PASSED BY THE LD. CIT(A) IN THE CASE OF THE ASSESSEE ON IDENTICAL ISSUE FOR ASSESSMENT YEAR 2007 - 08 VIDE WHICH THE CIT(A) H ELD THAT THE ASSESSEE HE LD A BONAFIDE BELIEF BASED ON PAST RETURN INCOME THAT HE WAS CAR RYING OUT TRANSACTION OF SALE OF LAND WHICH WAS NOT IN THE NATURE OF BUSINESS ACTIVITY, THEREFORE, THERE WAS NO JUSTIFICATION TO GET HIS ACCOUNT AUDITED. ON THE OTHER HAND, LD. DEPARTMENTAL REPRES ENTATIVE HAS SUPPORTED THE ORDER OF LD. CIT(A). 7 . WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD CAREFULLY. I N THE PRECEDING YEAR THE ASSSSSEE HAS SHOWN THE TRANSACTION IN THE LAND AS INVESTMENT AND INCOME FROM SUCH INVESTMENT ACTIV ITIES UNDER THE HEAD CAPITAL GAIN. WE HAVE ALSO PERUSED THE ORDER OF THE LD. CIT(A) ORDER DATED 25/01/2017 FOR ASSESSMENT YEAR 2007 - 08 IN THE CASE OF THE ASSESSEE DELET ING THE PENALTY LEVIED U/S. 44AB OF THE ACT ON IDENTICAL ISSUE ON THE GROUND THAT A SSESSEE USED TO SHOW INCOME FROM LAND TRANSACTIONS REGULARLY UNDER THE HEAD CAPITAL GAIN . IN THE LIGHT OF THE ABOVE FACTS AND CIRCUMSTANCES, WE OBSERVE THAT ASSESSEE HAS REGULARLY BEEN SHOWING THE TRANSACTION IN THE LAND AS INVESTMENT AND CORRESPONDING INCOME UNDER THE HEAD CAPITAL GAIN . THE SURVEY IN THE CASE OF THE ASSESSEE WAS CONDUCTED ON 18/10/2010 AND DURING THE COURSE OF SURVEY TO AVOID FURTHER LITIGATION THE ASSESSEE AGREED TO TREAT THE INCOME FROM THE SALE OF LAND AS BUSINESS AS AGAINST INCO ME SHOWN UNDER THE HEAD CAPITAL GAIN IN THE RETURN OF INCOME FILED BY THE ASSESSEE. AFTER CONSIDERING THE ABOVE AND UNDISPUTED FACTS THAT IN THE PAST THE SIMILAR INCOME WAS SHOWN FROM INVESTMENT ACTIVITIES FACTS W E OBSERVE THAT AT THE TIME OF SURVEY THE TIME L IMIT FOR GETTING AUDITED U/S. 44AB OF THE ACT WAS ALREADY OVER WHICH DEMONSTRATE THAT THERE WAS I.T.A NO. 2708 /AHD/20 14 A.Y. 2008 - 09 PAGE NO SHRI HASMUKH PRAJAPATI VS. ACIT 4 BONA FIDE REASONS FOR THE ASSESSEE TO NOT GET HIS ACCOUNT AUDITED. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, WE CONSIDER THAT THERE IS A NO CASE FOR PENALTY U/S. 271B OF THE ACT, THEREFORE, THE APPEAL OF THE ASSESSEE IS ALLOWED. 8 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 1 1 - 10 - 201 8 SD/ - SD/ - ( RAJPAL YADAV ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 11 /10 /2018 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FI LE. BY ORDER/ , / ,