Shri Jivansinh Somsinh Zala, Ahmedabad V. The ACIT, Circle-6, Ahmedabad

ITA 2779/AHD/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0862 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 11-08-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 28-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K I RAVAL
• Keywords: Capital asset; Rectification of order; Audit objection; Revised return
• Section: 143(3); 54F; 148; 54; 154

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ITA.NO.2779/AHD/2013 / ASSTT. YEAR: 2009-2010 SHRI JIVANSINH SOMSINH ZALA 25, SOMVILLA SOCIETY NR.BHAIKAKA NAGAR THALTEJ, AHMEDABAD 380 054. PAN : AACPZ 3817 E VS ACIT, CIR.6 AHMEDABAD. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : SHRI K.I. RAVAL, AR REVENUE BY : SHRI SATISH SOLANKI, SR.DR / DATE OF HEARING : 11/08/2016 / DATE OF PRONOUNCEMENT: 12/08/2016 $%/ O R D E R ASSESSEE IS IN APPEAL AGAINST ORDER OF THE LD.CIT(A )-XI, AHMEDABAD DATED 13.9.2013 FOR THE ASTT.YEAR 2009-10. 2. SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT LD.CI T(A) HAS ERRED IN CONFIRMING THE PENALTY AMOUNTING TO RS.5,34,647/- W HICH WAS IMPOSED BY THE AO UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1 961. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED HIS RETURN OF INCOME ON 31/3/2010 DECLARING TOTAL INCOME OF RS.54 ,55,400/- AND AGRICULTURAL INCOME OF RS.8,30,000/-. THE CASE WAS SELECTED FOR SCRUTINY ITA NO.2779/AHD/2013 2 ASSESSMENT UNDER CASS. AN ASSESSMENT ORDER WAS PAS SED UNDER SECTION 143(3) OF THE ACT ON 31.3.2011, AND INCOME OF THE A SSESSEE WAS DETERMINED AT RS.58,40,170/-. THE AO, THEREAFTER, REVISED THIS I NCOME BY WAY OF RECTIFICATION OF ORDER PASSED UNDER SECTION 154 OF THE ACT ON 18.10.2011. THE INCOME DETERMINED VIDE THIS ORDER WAS AT RS.60,45,0 15/-. THEREAFTER, IT CAME TO THE NOTICE OF THE DEPARTMENT THAT THE ASSESSEE H AS CLAIMED DEDUCTION UNDER SECTION 54F OF THE INCOME TAX ACT. THIS DEDUCTION WAS NOT ADMISSIBLE TO THE ASSESSEE ON THE GROUND THAT HE HAS ONE RESIDENTIAL PROPERTY AT 25, SOMVILLA SOCIETY, B/H. BHAIKAKANAGAR, THALTEJ, AHMEDABAD. H E HAS A FLAT AT KALGI APARTMENTS, JUDGES BUNGALOW ROAD, BODAKDEV, AHMEDAB AD. THEREFORE, THE REASONS WERE RECORDED AND ASSESSMENT WAS REOPENED. IN RESPONSE TO THE NOTICE UNDER SECTION 148 OF THE ACT, THE ASSESSEE H AS FILED REVISED RETURN AND WITHDREW HIS CLAIM MADE UNDER SECTION 54F. THE ASS ESSEE PLEADED THAT HE DOES NOT WANT TO CONTINUE LITIGATION WITH THE DEPAR TMENT, AND THEREFORE, HE IS READY TO OFFER LONG TERM CAPITAL GAIN ACCRUED TO HI M ON SALE OF CAPITAL ASSETS. THE ASSESSMENT ORDER WAS PASSED AND INCOME WAS DETE RMINED AT RS.84,04,450/- AS AGAINST RS.60,45,015/- DETERMINED IN THE REGULAR ASSESSMENT ORDER PASSED UNDER SECTION 143(3) R.W.S. 154 OF THE INCOME TAX ACT. THE LD.AO HAS INITIATED PENALTY PROCEEDINGS AND ISSUED NOTICE UNDER SECTION 271(1)(C) R.W.S. 274 OF THE INCOME TAX ACT. IN RES PONSE TO THE NOTICE, IT WAS CONTENDED BY THE ASSESSEE THAT IN THE ORIGINAL ASSE SSMENT PROCEEDINGS, THE AO HAS DISCUSSED WITH REGARD TO COMPUTATION OF CAPITAL GAIN ELABORATELY. THESE FACTS WERE ON RECORD. BUT SOMEHOW, ON THE BASIS OF AUDIT OBJECTION OR OTHERWISE, THE ASSESSMENT HAS BEEN REOPENED. THE A SSESSEE DID NOT WANT TO CONTINUE WITH LITIGATION, AND THEREFORE, OFFERED TH E AMOUNT FOR TAXATION. THERE IS NO CONCEALMENT AT THE END OF THE ASSESSEE. THE LD.AO HAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE AND IMPOSED PENALTY OF RS.5,34,647/-. ITA NO.2779/AHD/2013 3 4. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, I HAVE GONE THROUGH THE RECORD CAREFULLY. SECTION 271(1)(C) OF THE INCOME TAX ACT, HAS DIRECT BEARING ON THE CONTROVERSY. THEREFORE, IT IS PERTINENT TO TAKE NOTE OF THIS SECTION. IT READS AS UNDER: '271. FAILURE TO FURNISH RETURNS, COMPLY WITH NOTIC ES, CONCEALMENT OF INCOME, ETC. (1) THE ASSESSING OFFICER OR THE C OMMISSIONER (APPEALS) OR THE CIT IN THE OF COURSE OF ANY PROCEE DINGS UNDER THIS ACT, IS SATISFIED THAT ANY PERSON (A) AND (B) ** ** ** (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. HE MAY DIREC T THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY. (I)AND (INCOME-TAX OFFICER,)** ** ** (III) IN THE CASES REFERRED TO IN CLAUSE (C) OR CLA USE (D), IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM WHICH SHALL N OT BE LESS THAN, BUT WHICH SHALL NOT EXCEED THREE TIMES, THE AMOUNT OF TAX SOUGHT TO BE EVADED BY REASON OF THE CONCEALMENT OF PARTICULA RS OF HIS INCOME OR FRINGE BENEFIT THE FURNISHING OF INAC CURATE PARTICULARS OF SUCH INCOME OR FRINGE BENEFITS: EXPLANATION 1- WHERE IN RESPECT OF ANY FACTS MATERI AL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OF FERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMM ISSIONER (APPEALS) OR THE CIT TO BE FALSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS N OT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATI ON IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MAT ERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOT AL INCOME OR SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE PURP OSES OF CLAUSE (C) OF THIS SUB-SECTION, BE DEEMED TO REPRESENT THE INC OME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED.' 5. A BARE PERUSAL OF THIS SECTION WOULD REVEAL THA T FOR VISITING ANY ASSESSEE WITH THE PENALTY, THE ASSESSING OFFICER OR THE LEARNED CIT(APPEALS) ITA NO.2779/AHD/2013 4 DURING THE COURSE OF ANY PROCEEDINGS BEFORE THEM SH OULD BE SATISFIED, THAT THE ASSESSEE HAS; (I) CONCEALED HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. AS FAR AS THE QUANTIFICATION OF THE PENALTY IS CONCERNED, THE PENALTY IMPOSED UNDER THIS SECTION CAN RANGE IN BETWEEN 100 % TO 300% OF THE TAX SOUGHT TO BE EVADED BY THE ASSESSEE, AS A RESULT OF SUCH CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS. THE OT HER MOST IMPORTANT FEATURES OF THIS SECTION IS DEEMING PROVISIONS REGARDING CON CEALMENT OF INCOME. THE SECTION NOT ONLY COVERED THE SITUATION IN WHICH THE ASSESSEE HAS CONCEALED THE INCOME OR FURNISHED INACCURATE PARTICULARS, IN CERT AIN SITUATION, EVEN WITHOUT THERE BEING ANYTHING TO INDICATE SO, STATUTORY DEEM ING FICTION FOR CONCEALMENT OF INCOME COMES INTO PLAY. THIS DEEMING FICTION, BY WAY OF EXPLANATION-1 TO SECTION 271(1)(C) POSTULATES TWO SITUATIONS; (A) FI RST WHETHER IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF THE TOTAL INCO ME UNDER THE PROVISIONS OF THE ACT, THE ASSESSEE FAILS TO OFFER AN EXPLANATION OR THE EXPLANATION OFFERED BY THE ASSESSEE IS FOUND TO BE FALSE BY THE ASSESSING OFFICER OR LEARNED CIT(APPEAL); AND, (B) WHERE IN RESPECT OF ANY FACT, MATERIAL TO THE COMPUTATION OF TOTAL INCOME UNDER THE PROVISIONS OF THE ACT, THE ASSESSEE IS NOT ABLE TO SUBSTANTIATE THE EXPLANATION AND THE AS SESSEE FAILS, TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT THE ASSESSEE HAD DISCLOSED ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATIO N OF THE TOTAL INCOME. UNDER FIRST SITUATION, THE DEEMING FICTION WOULD CO ME TO PLAY IF THE ASSESSEE FAILED TO GIVE ANY EXPLANATION WITH RESPECT TO ANY FACT MATERIAL TO THE COMPUTATION OF TOTAL INCOME OR BY ACTION OF THE ASS ESSING OFFICER OR THE LEARNED CIT(APPEALS) BY GIVING A CATEGORICAL FINDIN G TO THE EFFECT THAT EXPLANATION GIVEN BY THE ASSESSEE IS FALSE. IN THE SECOND SITUATION, THE DEEMING FICTION WOULD COME TO PLAY BY THE FAILURE O F THE ASSESSEE TO SUBSTANTIATE HIS EXPLANATION IN RESPECT OF ANY FACT MATERIAL TO THE COMPUTATION ITA NO.2779/AHD/2013 5 OF TOTAL INCOME AND IN ADDITION TO THIS THE ASSESSE E IS NOT ABLE TO PROVE THAT SUCH EXPLANATION WAS GIVEN BONA FIDE AND ALL THE FA CTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME HAV E BEEN DISCLOSED BY THE ASSESSEE. THESE TWO SITUATIONS PROVIDED IN EXPLANAT ION 1 APPENDED TO SECTION 271(1)(C) MAKES IT CLEAR THAT THAT WHEN THIS DEEMIN G FICTION COMES INTO PLAY IN THE ABOVE TWO SITUATIONS THEN THE RELATED ADDITION OR DISALLOWANCE IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE FOR THE PURPOSE OF SECTION 271(1)(C) WOULD BE DEEMED TO BE REPRESENTING THE I NCOME IN RESPECT OF WHICH INACCURATE PARTICULARS HAVE BEEN FURNISHED. 6. IN THE LIGHT OF THE ABOVE, IF I EXAMINE THE FACT S OF THE PRESENT CASE, THEN, IT WOULD REVEAL THAT THE AO HAS NOT PIN POINTED AS TO HOW THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME. IN THE FIRST ROUND OF LITIGATION, THE ASSESSMENT WAS MADE UNDER SECTION 143(3) OF THE ACT , AND THE CLAIM OF THE ASSESSEE WAS ACCEPTED. IT IS A DISPUTE WHETHER SEC TION 54F DEDUCTION ADMISSIBLE OR NOT. WHEN THE DEPARTMENT ALLEGED THA T THIS DEDUCTION IS NOT ADMISSIBLE, THEN, WITHOUT ASKING FOR PROVING ITS AD MISSIBILITY CONCLUSIVELY, THE ASSESSEE HAS WITHDRAWN HIS CLAIM FOR DEDUCTION UNDE R SECTION 54F. IF THE AO CAN ACCEPT THE CLAIM IN SCRUTINY ASSESSMENT, AND EV EN AFTER RECTIFYING THE ORDER UNDER SECTION1 54 OF THE ACT, THEN, HOW IT CO ULD BE ALLEGED THAT THE CLAIM OF THE ASSESSEE WAS FACTUALLY INCORRECT ? TH E ADDITION IS BASED ON THE RETURNED INCOME THAT IS OFFERED BY THE ASSESSEE, AN D NOT ON THE BASIS OF EVIDENCE BROUGHT BY REVENUE. THE REVENUE FAILED TO BRING ANY MATERIAL ON RECORD, WHICH CAN FALSIFY THE EXPLANATION OF THE AS SESSEE, THAT THE DEDUCTION WAS ADMISSIBLE TO HIM UNDER SECTION 54F OF THE ACT. HE HAS WITHDRAWN IT TO AVOID LITIGATION WITH THE DEPARTMENT. THE ASSESSE E HAS PUT HIS VERSION IN THE ORIGINAL RETURN BY CLAIMING THE DEDUCTION. IT WAS ACCEPTED. IN THE REOPENED ASSESSMENT HE HAS WITHDRAWN THE CLAIM AGAIN. IT WA S ACCEPTED. IF THAT BE SO, ITA NO.2779/AHD/2013 6 THEN, WHERE IS THE EVIDENCE TO PROVE THAT EXPLANATI ON OF THE ASSESSEE WAS FALSE ? TAKING INTO CONSIDERATION ALL THESE FACTS AND CI RCUMSTANCES, I AM OF THE VIEW THAT THERE IS NO DELIBERATE ATTEMPT AT THE END OF THE ASSESSEE TO FURNISH INACCURATE PARTICULARS OF INCOME OR CONCEALMENT PAR TICULARS OF INCOME. THEREFORE, I ALLOW THE APPEAL OF THE ASSESSEE AND D ELETE PENALTY. 7. IN THE RESULT, APPEAL OF THE APPEAL OF THE ASSES SEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 12 TH AUGUST, 2016 AT AHMEDABAD. SD/- (RAJPAL YADAV) JUDICIAL MEMBER