Minakshi Keshav Shirole, Ahmednagar V. Income tax Officer,

ITA 2746/PUN/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1692 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 11-03-2019
• Assessment Year: 2006-2007
• Appeal Filed On: 05-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJEEV GHEI
• Assessee Lawyers: N O N E
• Keywords: Sale consideration of property below Jantri Value; Cost of acquisition; Initiation of penalty proceedings; Reasonable cause; Valuation report; Set aside
• Section: 271(1)(c); 50C; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO . 27 46 /PUN/201 6 / ASSESSMENT YEAR : 200 6 - 07 SMT. MINAKSHI KESHAV SHIROLE, (L/H KESHAV JEEVANRAO SHIROLE), A/P MANDAVGAON KATRABAD, SHROGONDA, TALUKA - SHRIGONDA, AHMEDNAGAR PAN : DICPS5295C ....... / APPELLANT / V/S. THE INCOME TAX OFFICER, WARD 4, AHMEDNAGAR / RESPONDENT ASSESSEE BY : N O N E REVENUE BY : SHRI SANJEEV GHEI / DATE OF HEARING : 11 - 03 - 2019 / DATE OF PRONOUNCEMENT : 14 - 0 3 - 2019 / ORDER PER VIKAS AWASTHY, JM : TH IS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMI SSIONER OF INCOME TAX (APPEALS) - 2, PUNE DATED 16 - 09 - 2016 FOR THE ASSESSMENT YEAR 20 0 6 - 07 CONFIRMING LEVY OF PENALTY U/S. 271(1)(C) O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ). 2 ITA NO .2746/PUN/2016, A.Y. 2006 - 07 2. THE NOTICE OF APPEAL WAS SENT TO THE ASSESSEE THROUGH RPAD ON THE ADDRESS MENTIONED IN FORM NO. 36 ON 27 - 11 - 2018 FOR 27 - 12 - 2018. ON THE SAID DATE BENCH DID NOT FUNCTION, HENCE, THE APPEAL O F THE ASSESSEE WAS ADJOURNED FOR TODAY I.E. 11 - 03 - 2019. DESPITE SERVICE OF NOTICE NONE APPEARED ON BEHALF OF THE ASSESSEE. 3. THE ASSESSEE IN APPEAL HAS ASSAILED LEVY OF PENALTY U/S. 271(1)(C) ON LEGAL GROUNDS , AS WELL AS ON MERITS. THE NOTICE U/S. 14 8 OF THE ACT WAS ISSUED TO THE ASSESSEE ON 14 - 02 - 2011 ON THE BASIS OF INFORMATION RECEIVED FROM DDIT (INV.), UNIT - 1(2), PUNE THAT THE ASSESSEE HAS MADE PAYMENT OF RS.26,00,000/ - IN CASH IN THE MONTH OF APRIL, 2005 FOR PURCHASE OF FLATS/SHOPS. IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE FILED RETURN OF INCOME ON 28 - 04 - 2011 DECLARING LONG TERM CAPITAL LOSS OF RS.37,62,257/ - AND AGRICULTURE INCOME OF RS.60,000/ - . DURING ASSESSMENT PROCEEDINGS, THE ASSESSEE WHILE EXPLAINING THE SOURCE OF PAYMENT OF RS.26,00, 000/ - FOR PURCHASE OF FLATS/SHOPS REVEAL ED THAT THE ASSESSEE UTILIZED SALE CONSIDERATION RECEIVED FROM SALE OF THREE PARCELS OF LAND COMPRISING IN : A . CITY SURVEY NO. 920, FINAL PLOT NO. 305, BHAMBURDI, SHIVAJINAGAR, PUNE OUT OF 11 ACRES 13 GUNTHE, ASSESS EES SHARE IS 1 ACRE 13 GUNTHE (5300 SQ. MTRS.). B . CITY SURVEY NO. 921, FINAL PLOT NO. 304, BHAMBURDI, SHIVAJINAGAR, PUNE OUT OF 1,64,000 SQ. MTRS. - ASSESSEES SHARE IS 1 HECTAR 11 GUNTHE (11,100 SQ. MTRS.). C . CITY SURVEY NO. 924, FINAL PLOT NO. 308, BHAMBU RDI, SHIVAJINAGAR, PUNE OUT OF 1437 SQ. MTRS. - ASSESSEES SHARE IS 159.67 SQ. MTRS.). 3 ITA NO .2746/PUN/2016, A.Y. 2006 - 07 THE ASSESSEE WAS CO - OWNER OF AFORESAID LANDS, THE OTHER THREE PERSONS WHO JOINTLY OWNED LANDS WITH THE ASSESSEE WERE : JEEVANRAO NANA SHIROLE, SMT. SINDHBAI JEEVANRAO SHIROLE AND SHRI ANIL JEEVANRAO SHIROLE. 3 .1 ON VERIFICATION OF SALE DEED THE ASSESSING OFFICER FOUND THAT SALE CONSIDERATION OF LANDS WAS STATED TO BE RS.59,33,513/ - , WHEREAS MARKET VALUE OF LAND FOR STAMP VALUATION PUR POSE WAS RS.12,38,00,000/ - . THE ASSESSEE WHILE COMPUTING LONG TERM CAPITAL GAIN HAD TAKEN SALE CONSIDERATION OF LAND AT RS.12,38,00,000/ - UNDER THE PROVISIONS OF SECTION 50C AND THE INDEXED COST OF ACQUISITION AS ON 01 - 04 - 1981 AT RS.12,75,62,257/ - . THUS, THE ASSESSEE RETURNED LOSS FROM SALE OF LANDS. THE ASSESSING OFFICER DID NOT AGREE WITH THE COST OF ACQUISITION ADOPTED BY THE ASSESSEE AND HENCE MADE REFERENCE TO THE DVO FOR VALUATION. THE ASSESSING OFFICER THEREAFTER DETERMINED LONG TERM CAPITAL GAIN SANS DVO VALUATION REPORT BY COM PUTING INDEXED COST OF ACQUISITION OF LAND AT RS.11,52,21,488/ - ON THE BASIS OF READY RECKONER RATE RECEIVED FROM JOINT SUB - REGISTRAR. THE LONG TERM CAPITAL GAIN REWORKED BY THE ASSESSING OFFICER ON SALE OF LAND WAS RS.85,78,512/ - (RS.12,38,00,000/ - - RS. 11,52,21,488/ - ). THE ASSESSING OFFICER MADE ADDITION OF AFORESAID LONG TERM CAPITAL GAIN IN THE INCOME RETURNED AND ALSO INITIATED PENALTY PROCEEDINGS U/S. 271(1)(C) QUA THE SAID ADDITION. 3 .2 THAT PENALTY ORDER U/S. 271(1)(C) WAS PASSED BY THE ASSESSING OFFICER ON 13 - 03 - 2015 LEVYING PENALTY OF RS.19,21,586/ - ON THE ADDITION OF RS.85,78,512/ - . 4 ITA NO .2746/PUN/2016, A.Y. 2006 - 07 3 .3 AGGRIEVED AGAINST THE ORDER LEVYING PENALTY, THE ASSESSEE FILED APPEAL BEFORE THE COMMISSIONER OF INC OME TAX (APPEALS) , INTER ALIA CHALLENGING LEVY OF PENALTY ON THE GROUND OF AMBIGUITY IN RECODING OF SATISFACTION AT THE TIME OF INITIATION OF PENALTY PROCEEDINGS AND THE NOTICE ISSUED U/S. 274 OF THE ACT. THE COMMISSIONER OF INCOME TAX (APPEALS) VIDE IMPU GNED ORDER DISMISSED THE CONTENTIONS OF ASSESSEE AND CONFIRMED LEVY OF PENALTY. HENCE, THE PRESENT APPEAL. 4 . SHRI SANJAY GHAI REPRESENTING THE DEPARTMENT SUBMITTED THAT THE ASSESSEE HAD ADOPTED INDEXED COST OF ACQUISITION OF LAND AS ON 01 - 04 - 1981 AT R S.12,75,62,257/ - WITHOUT ANY BASIS AND HAD DECLARED LONG TERM CAPITAL LOSS. THE LD. DR SUBMITTED THAT IT WAS A DELIBERATE ACT ON THE PART OF ASSESSEE TO SUPPRESS THE LONG TERM CAPITAL GAINS AND HAS THEREBY CAUSED LOSSES TO THE REVENUE. THE LD. DR VEHEMEN TLY DEFENDED THE ORDER OF AUTHORITIES BELOW IN LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT. 5 . WE HAVE EXAMINED THE ORDER S OF AUTHORITIES BELOW AND HAVE HEARD THE SUBMISSIONS MADE BY LD. DR. A PERUSAL OF ASSESSMENT ORDER SHOWS THAT THE ASSESSING OFFICER HAS INITIATED PENALTY PROCEEDINGS U/S. 271(1)(C) IN RESPECT OF ADDITION MADE ON ACCOUNT OF LONG TERM CAPITAL GAINS BY MENTI ONING BOTH THE CHARGES. THE SATISFACTION RECORDED BY ASSESSING OFFICER FOR INITIATING PENALTY PROCEEDINGS READS AS UNDER : THEREFORE, INCOME FROM LONG TERM CAPITAL GAIN IS TAKEN AT RS.85,78,512/ - . PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE I.T. ACT, ARE INITIATED FOR CONCEALING THE INCOME BY FILING INACCURATE PARTICULARS OF INCOME. 5 ITA NO .2746/PUN/2016, A.Y. 2006 - 07 6 . AT THE TIME OF PASSING ORDER DATED 13 - 03 - 2015 LEVYING PENALTY U/S. 271(1)(C) THE ASSESSING OFFICER LEVIED PENALTY ON THE CHARGE OF CONCEALMENT OF INCOME. THE RELEVANT E XTRACT OF THE ORDER LEVYING PENALTY DATED 13 - 03 - 2015 IS AS UNDER : 7. IN VIEW OF THE ABOVE, I AM, THEREFORE, SATISFIED THAT THE ASSESSEE WITHOUT ANY REASONABLE CAUSE CONCEALED OF INCOME TO THE EXTENT OF RS.85,78,512/ - AND COMMITTED THE DEFAULT WITHIN THE MEANING OF SEC. 271(1)(C) OF THE I.T. ACT, 1961. I, THEREFORE, LEVY MINIMUM PENALTY OF RS.19,21,586/ - AS AGAINST MAXIMUM LEVIABLE AT RS.57,64,758/ - , U/S. 271(1)(C) OF THE I.T. ACT, 1961 . 7 . THE ASSESSING OFFICER WHILE RECORDING SATISFACTION HAS INVOKED BOTH THE CHARGES OF SECTION 271(1)(C) I.E. CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME FOR LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT. THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF T. ASHOK PAI VS. COMMISSIONER OF INCOME TAX REPORTED AS 292 ITR 11 HAS HELD, CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS CARRY DIFFERENT CONNOTATIONS. CONCEALMENT REFERS TO DELIBERATE ACT ON THE PART OF THE ASSESSEE. A MERE OMISSION OR NEGLIGENCE WOULD NOT CONSTITUTE A DELIBERATE ACT OF SUPPRESSIO VERI OR SUGGESTIO FALSI . EXPRESSION CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME CANNOT BE USED INTERCHANGEABLY. CONCEALMENT OF INCOME CONNOTES WHERE THERE IS ESCAPMENT OF INCOME FROM TAX NET BY VIRTUE OF ASSESSEE CONCEALING INFORMATION/DOCUMENTS ETC. OR NON - FURNISHING OF INFORMATION ABOUT INCOME EARNED IN THE RETURN OF INCOME DURING THE RELEVANT PERIOD. ON THE OTHER HAND EXP RESSION FURNISHING INACCURATE PARTICULARS OF INCOME SIGNIFIES WHERE THE ASSESSEE HAS 6 ITA NO .2746/PUN/2016, A.Y. 2006 - 07 FURNISHED PARTICULARS OF INCOME BUT THE INFORMATION/DOCUMENTS FURNISHED ARE FALSE/WRONG/INCORRECT OR ERRONEOUS. 8 . THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF COM MISSIONER OF INCOME TAX VS. MANJUNATHA COTTON AND GINNING FACTORY REPORTED AS 359 ITR 565 HAS HELD : 61. THE ASSESSING OFFICER IS EMPOWERED UNDER THE ACT TO INITIATE PENALTY PROCEEDINGS ONCE HE IS SATISFIED IN THE COURSE OF ANY PROCEEDINGS THAT THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF TOTAL INCOME UNDER CLAUSE (C). CONCEALMENT, FURNISHING INACCURATE PARTICULARS OF INCOME ARE DIFFERENT. THUS THE ASSESSING OFFICER WHILE ISSUING NOTICE HAS TO COME TO THE CONCLUSION THAT WHETH ER IS IT A CASE OF CONCEALMENT OF INCOME OR IS IT A CASE OF FURNISHING OF INACCURATE PARTICULARS. THE APEX COURT IN THE CASE OF ASHOK PAI REPORTED IN 292 ITR 11 AT PAGE 19 HAS HELD THAT CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME CARRY DIFFERENT CONNOTATIONS. THE GUJRAT HIGH COURT IN THE CASE OF MANU ENGINEERING REPORTED IN 122 ITR 306 AND THE DELHI HIGH COURT IN THE CASE OF VIRGO MARKETING REPORTED IN 171 TAXMN 156, HAS HELD THAT LEVY OF PENALTY HAS TO BE CLEAR AS TO THE LIMB FOR WHICH IT IS LEVIED AND THE POSITION BEING UNCLEAR PENALTY IS NOT SUSTAINABLE. THEREFORE, WHEN THE ASSESSING OFFICER PROPOSES TO INVOKE THE FIRST LIMB BEING CONCEALMENT, THEN THE NOTICE HAS TO BE APPROPRIATELY MARKED. SIMILAR IS THE CASE FOR FURNISHING INAC CURATE PARTICULARS OF INCOME. THE STANDARD PROFORMA WITHOUT STRIKING OF THE RELEVANT CLAUSES WILL LEAD TO AN INFERENCE AS TO NON - APPLICATION OF MIND. 9 . IN THE INSTANT CASE, WE ARE OF CONSIDERED OPINION THAT THERE WAS AMBIGUITY AND VAGUENESS IN THE MIND OF ASSESSING OFFICER WHILE RECORDING SATISFACTION WITH RESPECT TO CHARGE U/S. 271(1)(C) OF THE ACT FOR LEVY OF PENALTY. THOUGH AT THE TIME OF LEVY OF PENALTY, THE ASSESSING OFFICER STICK TO ONLY ONE CHARGE I.E. CONCEALMENT OF INCOME. THE ASSESSING OFFICE R HAS TO BE SPECIFIC AND CATEGORIC IN MENTIONING THE CHARGE U/S. 271(1)(C) AT THE TIME OF RECORDING SATISFACTION AS WELL AS AT THE TIME OF LEVY OF PENALTY. W HERE PENALTY PROVISIONS HAVE BEEN INVOKED IN INDISTINCT MANNER, PENALTY 7 ITA NO .2746/PUN/2016, A.Y. 2006 - 07 PROCEEDINGS WOULD FAIL THE TEST OF LEGAL REQUIREMENTS. ACCORDINGLY, THE IMPUGNED ORDER IS SET ASIDE AND THE APPEAL OF ASSESSEE IS ALLOWED. 1 0 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THURSDAY, THE 14 TH DAY OF MARCH, 2019. SD/ - SD/ - ( . /D. KARUNAKARA RAO ) ( / VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 14 TH MARCH, 2019 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 2, PUNE 4. THE PR. COMMISSIONER OF INCOME TAX - 1, PUNE 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. / / // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE