Shri Rajesh N.Patel,HUF, Ahmedabad V. The Income tax Officer,Ward-6(5), Ahmedabad

ITA 2813/AHD/2012

• Counselvise Citation: 281320514 RSA 2012
• Duration Of Justice: 1 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2013
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 04-12-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 13-12-2012
• Court: TRIBUNAL
• Department Lawyers: O P BATHEJA
• Assessee Lawyers: S N DIVETIA
• Keywords: Income from undisclosed sources; Principle of natural justice; Bonafide belief; Revised return
• Section: 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI D.K. TYAGI, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO. 2813/AHD/2012 A.Y. 2009-10 RAJESH N. PATEL, AHMEDABAD. PAN: AADHP7778R VS ITO, WD-6(5) AHMEDABAD. (APPELLANT) (RESPONDENT) REVENUE BY : SH. O.P. BATHEJA, SR.D.R. ASSESSEE(S) BY : SH. S.N.DIVETIA, AR / // / DATE OF HEARING : 04/12/2013 / DATE OF PRONOUNCEMENT : 13/12/2013 / O R D E R PER SHRI A. K. GARODIA, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED CIT(A)-XI, AHMEDABAD DATED 29.10.12 FOR AY 2009-10 ARISING OUT OF THE PENALTY PROCEEDINGS INITIATED BY THE A.O . U/S 271(1)(C) OF THE I.T.ACT.. 2. THE GROUNDS OF ASSESSEES APPEAL ARE AS UNDER: 2.1 THE ORDER PASSED U/S 250 ON 29.10.12 FOR AY 200 9-10 BY CIT(A)-XI, ABAD UPHOLDING THE PENALTY OF RS2,52,00 0 LEVIED U/S 271(1)(C) BY A.O. IS WHOLLY ILLEGAL, UNL AWFUL AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 2.2 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN NOT CONSIDERING FULLY AND PROPERLY THE SUBMISSIO NS MADE AND EVIDENCE PRODUCED BY THE APPELLANT WITH REGARD TO THE IMPUGNED PENALTY. ITA NO.2813/AHD/2013 RAJESH N. PATEL VS. ITO, WD-6(5). AHD FOR A.Y. 2009-10 - 2 - 2.3 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND ON FACTS IN CONFIRMING THAT THE APPELLANT HAD INTENTIONALLY CON CEALED THE FACT OF CAPITAL GAIN JUST TO EVADE TAXES AND THE ST CG WAS DECLARED ONLY AFTER MAKING SPECIFIC QUERIES BY AO S O THAT THE DEFAULT U/S 271(1)(C) WAS COMMITTED AND PENALTY OF RS 2,52,000/- WAS JUSTIFIED. 2.4 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD. CIT(A) OUGHT NOT TO HAVE UPHELD THAT T HE APPELLANT HAD CONCEALED INCOME BY WAY OF STCG ON SA LE OF LAND AND IT WAS DECLARED ONLY UPON QUERIES RAISED B Y AO SO THAT THE PENALTY OF RS 2,52,000 WAS JUSTIFIED. 3. BRIEF FACTS TILL THE STAGE OF IMPOSITION OF PENA LTY BY THE A.O. ARE NOTED BY THE LEARNED CIT(A) IN PARA NO. 2 AND 2.1 O F HIS ORDER WHICH ARE REPRODUCED BELOW FOR READY REFERENCE: 2. THE ONLY EFFECTIVE GROUND OF APPEAL IS AGAINST LEVY OF PENALTY U/S 271(1)(C) OF RS 2,52,000/-. THE A.O. LEVIED THIS P ENALTY VIDE PENALTY ORDER DATED 30.01.2012. IT IS MENTIONED BY THE A.O . THAT HE WAS INFORMED THAT LAND SITUATED AT VILLAGE OGNAJ, TAL. DASKROI, DIST. AHMEDABAD WAS SOLD FOR A CONSIDERATION OF RS 49,32, 000/- ON 12.9.2003. IN THE SALE DEED, PAN OF SHRI RAJESH PA TEL I.E. ACTPP0203H IS MENTIONED. IN THE INDIVIDUAL CASE WI TH THE APPELLANT WAS ENQUIRED ABOUT THIS TRANSACTION. DURING THESE PROCEEDINGS, IT WAS SUBMITTED THAT THIS TRANSACTION PERTAINS TO HIS HUF NAMELY RAJESH N. PATEL HUF. IT WAS ALSO INTIMATED THAT HIS TRANSACT ION IS PROPOSED TO BE DECLARED IN THE HUF. ACCORDINGLY, NOTICE U/S 148 W AS ISSUED IN THE CASE OF RAJESH N. PATEL HUF ON 29.7.2011. IN RESPO NSE TO NOTICE U/S. 148 THE ASSESSEE REVISED HIS STATEMENT OF INCOME AN D DECLARED SHORT ITA NO.2813/AHD/2013 RAJESH N. PATEL VS. ITO, WD-6(5). AHD FOR A.Y. 2009-10 - 3 - TERM CAPITAL GAIN OF RS 9,04,792/-. THE ASSESSMENT U/S 143(3) WAS FINALIZED ON 19.8.2011. PENALTY U/S 271(1)(C) INIT IATED IN THE ASSESSMENT ORDER. 2.1 DURING THE PENALTY PROCEEDINGS THE APPELLANT H AS SUBMITTED THAT IT HAS PAID TAX ON CAPITAL GAIN ON 5.6.2011 WHICH I S MUCH BEFORE THE NOTICE U/S. 148 DATED 29.7.2011. ACCORDINGLY, THE REVISED STATEMENT OF INCOME WAS BONAFIDELY SUBMITTED AND CONCEALMENT PEN ALTY IS NOT ATTRACTED IN HIS CASE. ON THE OTHER HAND THE A.O. HAD HELD THAT THE ASSESSEE HAD CONCEALED PARTICULARS OF HIS INCOME AN D LEVIED PENALTY U/S. 271(1)(C) AGAINST CONCEALMENT OF SHORT TERM CAPITAL GAIN OF RS 9,04,792/-. 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER REGARDING IMPOSITION OF PENALTY IN APPEAL BEFORE LD. CIT(A) W ITHOUT SUCCESS AND NOW THE ASSESSEE IS IN FURTHER APPEAL BEFORE US . 5. IT WAS THE MAIN SUBMISSION OF THE LD. AR OF THE ASSESSEE BEFORE US THAT THE ASSESSEE WAS UNDER BONAFIDE BELIEF THAT TH E CAPITAL GAIN ARISING OUT OF THE SALE OF AGRICULTURAL LAND IS NOT TAXABLE AS ANY OTHER AGRICULTURAL INCOME. ONLY DURING THE REPLY B EING GIVEN IN THE CASE OF THE INDIVIDUAL, THE ASSESSEE CAME TO KNOW F ROM HIS TAX CONSULTANT THAT AGRICULTURAL LAND SITUATED WITHIN A DISTANCE OF 8 KILOMETRES OF AUDA/MUNICIPALITY IS A TAXABLE CAPITA L ASSET AND PROFIT ON SALE THEREOF IS LIABLE TO TAX. HE FURTHE R SUBMITTED THAT THIS IS NOT IN DISPUTE THAT THE LAND SOLD BY THE ASSESSE E WAS AN AGRICULTURAL LAND. HE FURTHER SUBMITTED THAT BECAU SE OF THIS BONA FIDE BELIEF OF THE ASSESSEE THAT THIS SHORT TERM CA PITAL GAIN IS NOT TAXABLE, PENALTY IS NOT JUSTIFIED. HE PLACED RELIA NCE ON THE ITA NO.2813/AHD/2013 RAJESH N. PATEL VS. ITO, WD-6(5). AHD FOR A.Y. 2009-10 - 4 - JUDGEMENT OF HONBLE APEX COURT RENDERED IN THE CAS E OF CIT V. RELIANCE PETROPRODUCTS (P.) LTD. [2010] 322 ITR 158 (SC). 6. THE LD. DR OF THE REVENUE SUPPORTED THE ORDER OF LD. CIT(A). HE ALSO SUBMITTED THAT THE REVISED RETURN FILED BY THE ASSESSEE IN COURSE OF PROCEEDINGS U/S 148 IS NOT VOLUNTARY. HE PLACED RELIANCE ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS: (A) KAILASHBHAI AMBALAL SHAH VS. ITO, 129 ITD 135 AHD (B) 22 TAXMANN.COM 62 (ALD.) 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW AND THE JUDGMENTS CITED BY BOTH THE PARTIES. WE FIND T HAT THE MAIN CONTENTION OF THE ASSESSEE IS THAT HE WAS UNDER BON AFIDE BELIEF THAT THIS SHORT TERM CAPITAL GAIN BEING IN RESPECT OF AG RICULTURAL LAND IS NOT TAXABLE. THIS CONTENTION WAS RAISED BY THE ASS ESSEE BEFORE THE LD. CIT(A) ALSO AS HAS BEEN NOTED BY HIM ON PAGE NO . 6 OF HIS ORDER. THEREAFTER, ON PAGE NO. 7 PARA 2.3 OF HIS O RDER, THE LD. CIT(A) HAS REJECTED THIS CONTENTION WITHOUT GIVING ANY REASONING. HE HAS SIMPLY STATED THAT AFTER CAREFUL CONSIDERATI ON, HE IS NOT INCLINED TO AGREE WITH THE CONTENTIONS OF THE LD. A R. WE ARE OF THE CONSIDERED OPINION THAT REJECTING THIS CONTENTION B Y SUCH SWEEPING REMARK IS NOT JUSTIFIED. WE HAVE TO EXAMINE AND TO DECIDE AS TO WHETHER THIS CLAIM OF THE ASSESSEE THAT HE WAS UNDE R BONAFIDE BELIEF REGARDING NON-TAXABILITY OF STCG ON SALE OF AGRICULTURAL LAND IS REASONABLE OR NOT. IN OUR CONSIDERED OPINI ON, THIS IS NOT VERY MUCH ABNORMAL FOR A LAYMAN TO HAVE SUCH A BELI EF. ONCE THE ASSESSEE BECAME AWARE OF THIS LEGAL POSITION THAT T HIS STCG IS ITA NO.2813/AHD/2013 RAJESH N. PATEL VS. ITO, WD-6(5). AHD FOR A.Y. 2009-10 - 5 - TAXABLE, THE ASSESSEE HAS PAID THE TAX ON THIS INCO ME ON 5.6.2011 ALTHOUGH THE NOTICE U/S 148 WAS ISSUED ON 29.07.201 1. THESE FACTS ALTHOUGH DONT SUGGEST THAT THE TAX WAS PAID BY THE ASSESSEE VOLUNTARILY BECAUSE OBVIOUSLY, THE ASSESSEE WAS AWA RE THAT THE DEPARTMENT HAS COME TO KNOW ABOUT THIS ESCAPEMENT O F INCOME BUT THIS DEFINITELY SHOWS THAT ONCE THE ASSESSEE BECAME AWARE OF THE LEGAL POSITION REGARDING HIS LIABILITY TO TAX, HE H AS PAID THE TAX WITHOUT ENTERING INTO ANY LITIGATION OR DELAYING TA CTICS. SO, CONSIDERING THE FACTS IN ITS TOTALITY, WE ARE SATIS FIED THAT THE ASSESSEE WAS UNDER BONAFIDE BELIEF REGARDING NON-TA XABILITY OF SHORT TERM CAPITAL GAIN ARISING OUT OF SALE OF AGRI CULTURAL LAND AND HENCE ALTHOUGH THE INCOME IS TAXABLE BUT PENALTY IS NOT JUSTIFIED IN THE FACTS OF THE PRESENT CASE. 8. NOW, WE EXAMINE THE APPLICABILITY OF THE JUDGMEN TS CITED BY THE LD. DR OF THE REVENUE. 8.1 THE FIRST JUDGEMENT IS THE TRIBUNALS DECISION RENDERED IN THE CASE OF KAILASHBHAI AMBALAL SHAH VS. ITO (SUPRA). IN THAT CASE, THE A.O. RECEIVED INFORMATION FROM ANNUAL INFORMATION RETURN (AIR) FILED BY THE BANK WHEREIN IT WAS FOUND THAT THE ASSESSEE HAS RECEIVED INTEREST INCOM E OF RS 4,46,379/- DURING RELEVANT YEAR. THEREAFTER, TH E A.O. MADE FURTHER INQUIRY FROM THE CONCERNED BANK AND FO UND OUT INFORMATION REGARDING FIXED DEPOSITS MADE BY THE AS SESSEE TO THE EXTENT OF RS 22.78 LAKHS WHEREIN INTEREST INCOM E OF RS 4.46 LAKHS WAS EARNED BY THE ASSESSEE. IN REPLY TO THE SHOW CAUSE NOTICE ISSUED BY THE A.O. TO THE ASSESSEE, TH E ASSESSEE ITA NO.2813/AHD/2013 RAJESH N. PATEL VS. ITO, WD-6(5). AHD FOR A.Y. 2009-10 - 6 - HAS SUBMITTED A RETURN DECLARING THAT INCOME ALONGW ITH CHALLAN FOR PAYMENT OF TAX IN RESPECT OF INCOME OF RS 22.78 LAKHS BEING INVESTMENT IN FDRS AND THEREAFTER, THE A.O. MADE ADDITION OF UNACCOUNTED INTEREST INCOME ALSO O F RS 4.73 LAKHS. UNDER THESE FACTS, PENALTY IN THAT CAS E WAS CONFIRMED BY THE TRIBUNAL. IN OUR CONSIDERED OPINI ON, THIS TRIBUNAL ORDER IS NOT APPLICABLE IN THE FACTS OF TH E PRESENT CASE AS FACTS ARE DIFFERENT IN THE PRESENT CASE. I N THAT CASE, IT WAS NOT THE CLAIM OF THE ASSESSEE THAT HE WAS UNDER BONFAFIDE BELIEF THAT SUCH UNACCOUNTED INCOME IN RE SPECT OF INVESTMENT IN FD AND INTEREST THEREON WAS NOT TAXAB LE, WHEREAS IN THE PRESENT CASE, THE CLAIM OF THE ASSES SEE IS THAT HE WAS UNDER BONAFIDE BELIEF THAT THE STCG IN RESPE CT OF SALE OF AGRICULTURAL LAND IS NOT TAXABLE. SUCH STC G IS IN FACT NOT TAXABLE IF SUCH AGRICULTURAL LAND IS SITUATED O UTSIDE PRESCRIBED LIMIT OF THE MUNICIPALITY ETC AND HENCE, IT IS VERY MUCH POSSIBLE THAT THE ASSESSEE WAS UNDER BONAFIDE BELIEF REGARDING NON-TAXABILITY OF THIS STCG INCOME AND AL THOUGH SUCH BELIEF WAS NOT TRUE IN THE FACTS OF THE PRESEN T CASE BECAUSE OF THE LOCATION OF THE LAND IN QUESTION WIT HIN THE PRESCRIBED LIMIT OF THE MUNICIPALITY BUT STILL IN O UR CONSIDERED OPINION, PENALTY IS NOT JUSTIFIED IN THE FACTS OF THE PRESENT CASE. IN VIEW OF THIS, THIS TRIBUNAL DECIS ION IS NOT RENDERING ANY HELP TO THE REVENUE IN THE PRESENT CA SE. 8.2 THE SECOND JUDGMENT CITED BY THE LD. DR OF REVE NUE IS HAVING THE CITATION OF 22 TAXMANN.COM 62 (ALD.). W E WANT TO OBSERVE THAT THE LD. DR WAS ASKED TO SUBMIT A CO PY OF THE JUDGMENT BUT THE SAME WAS NOT SUBMITTED AND IN SPIT E OF OUR ITA NO.2813/AHD/2013 RAJESH N. PATEL VS. ITO, WD-6(5). AHD FOR A.Y. 2009-10 - 7 - BEST EFFORTS, WE COULD NOT LOCATE THIS JUDGMENT AND THEREFORE, THE SAME CANNOT BE CONSIDERED BY US. 9. IN VIEW OF THE ABOVE DISCUSSION, WE FIND THAT NO NE OF THE JUDGMENTS CITED BY THE REVENUE IS RENDERING ANY HEL P TO THE REVENUE AND IN THE FACTS OF THE PRESENT CASE, WE HA VE SEEN THAT IN THE PRESENT CASE, THE ASSESSEE WAS UNDER BONAFIDE B ELIEF THAT STCG IS NOT TAXABLE IN RESPECT OF SALE OF AGRICULTURAL L AND AND HENCE, IN THE FACTS OF THE PRESENT CASE, THE PENALTY IS NOT J USTIFIED. WE THEREFORE DELETE THE SAME. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE COURT ON THE DATE MENTIONED ON CAPTION PAGE. SD/- SD/- (D.K. TYAGI) JUDICIAL MEMBER ( A.K. GARODIA) ACCOUNTANT MEMBER AHMEDABAD; DATED 13/12/2013 GHANSHYAM MAURYA, SR. P.S. TRUE COPY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT. 3. #$#% ' '& / CONCERNED CIT 4. ' '&() / THE CIT(A)-III, AHMEDABAD 5. )*' %, ' ' % , ,-$ / DR, ITAT, AHMEDABAD 6. *./ 0 / GUARD FILE. / BY ORDER, 1 11 1/ // /,' #2 ,' #2 ,' #2 ,' #2 ( DY./ASSTT.REGISTRAR) ' ' % ' ' % ' ' % ' ' % , , , , ,-$ ,-$ ,-$ ,-$ / ITAT, AHMEDABAD