Smt. Bijal Darshitbhai Pujara, Rajkot V. The Dy. Commr. of Income Tax, Circle-1 (1), Rajkot

ITA 292/RJT/2018

AI Insights

The case involves Smt. Bijal Darshitbhai Pujara, who appealed against the penalty imposed by the Deputy Commissioner of Income Tax (DCIT), Circle-1(1), Rajkot, for not disclosing long-term capital gains in her original return of income for the assessment year 2014-15. The assessee initially did not declare the capital gains from the sale of immovable properties, believing the land was agricultural and thus exempt from capital gains tax. Upon receiving a notice under section 142(1) of the Income Tax Act, she filed a revised return declaring the capital gains. The DCIT imposed a penalty under section 271(1)(c) for concealment of income, which was upheld by the CIT(A). The Tribunal, however, found that the revised return was filed voluntarily and before any detection by the Department, leading to the deletion of the penalty.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 124024 (ITAT-RAJKOT)
• Duration Of Justice: 4 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 26-03-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 30-07-2018
• Other Referred Cases: ACIT v. Ashok Raj Nath, Bhavin Kumar M. Dagli, Prema Gopal Rao, Sanghavi Savla Commodity Brokers P. Ltd, M/s. Parinee Developers Pvt Ltd, Shri Sachin Arora, M. G. Contractors Pvt Ltd, Jeetmal Choraria vs. ACIT, EPG Wealth Management (P) Ltd. vs. DCIT, Snita Transport (P) Ltd. vs ACIT, Jaysukh M. Parmar, Raj Bricks Field, Bhavinkumar M. Dagli
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revised return; Capital Gains
• Section: 271(1)(c); 142(1); 274; 143(2); 139(4)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [CONDUCTED THROUGH VIRTUAL COURT ] Before: Shri Waseem Ahmed, Accountant Member And Shri Siddhartha Nautiyal, Judicial Member S mt. Bijal Darshitbhai Pujara, 402, Alishan Appart ment, 150 ft Ring Road , Rajkot PAN: AP DP P6538G (Appellant) Vs The DCIT, Circle-1(1), Rajkot (Resp ondent) Asses see by : Shri Sa mir Bhuptani, A.R. Revenue by : Shri B. D. Gupta, Sr. D. R. Date of hearing : 09-05 -2 023 Date of pronouncement : 16-05 -2 023 आदेश/ORDER PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:- This assessee’s appeal for A.Y. 2014-15, arises from order of the CIT(A)-1, Rajkot dated 04-07-2018, in proceedings under section 271(1)(c) of the Income Tax Act, 1961; in short “the Act”. ITA No. 292/Rjt/2018 Assessment Year 2014-15 I.T.A No. 292/Rjt/2018 A.Y. 2014-15 Page No Smt. Bijal Darshitbhai Pujara vs. Dy. CIT 2 2. The assessee has taken the following grounds of appeal: “Ld. CIT(A) erred in law as well as on facts in - 1. Confirming Penalty of Rs. 10,67,798/- u/s. 271(l)(c) of the Income-tax Act, 1961 as the notice u/s. 271(l)(c) r.w.s. 274 of the Income-tax Act,1961 was issued without specifying the limbs for which the penalty was levied. 2. Confirming penalty of Rs. 10,67,798/- u/s. 271(l)(c) of the Income- tax Act, 1961 particularly when there is no case of concealment or furnishing of inaccurate particular and income declare in revised return was accepted. 3. Not following the decision of ACIT v. Ashok Raj Nath (19 ITR (trib) 70) of Delhi Tribunal, Bhavin Kumar M. Dagli (ITA No. 1179/Ahd/2011) dated 30/06/2014 of Ahmedabad Tribunal (Approved by Hon'ble Gujarat High Court), Prema Gopal Rao (ITA no. 8653/Mum/2011) dated 07/01/2015 and Sanghavi Savla Commodity Brokers P. Ltd (ITA no. 1746/Murn/2011), M/s. Parinee Developers Pvt ltd. (ITA no. 6772/M/2013), Shri Sachin Arora (ITA no. 118/Agra/2015), M. G. Contractors Pvt Ltd. (ITA no. 7038 to 7038/Del/2014), Jeetmal Choraria vs. ACIT (ITA no. 956/Kol/2016) and EPG Wealth Management (P) Ltd. vs. DCIT (ITA no. 263/Murn/2016). 4. Applying the decision of Hon'ble Gujarat High Court in the case of Snita Transport (P) Ltd. vs ACIT (2014), particularly when in that case the department 4fitetsd" additional income in survey operation and then after the said assessee revised return of income and hence the facts are completely distinguished. All the grounds stated hereinabove are without prejudice to each other. The appellant craves leave to add, delete, amend, alter or withdraw one or more grounds of appeal.” I.T.A No. 292/Rjt/2018 A.Y. 2014-15 Page No Smt. Bijal Darshitbhai Pujara vs. Dy. CIT 3 3. The brief facts of the case are that during the year under consideration, the assessee sold immovable property for an aggregate consideration of 54,20,000/- on which the assessee has shown long-term capital gains of 51,83,487/-. However, during the course of assessment proceedings, the assessing officer observed that in the original return of income, the assessee had shown income of 14,49,880/- but in the said return of income, the assessee had not declared the aforesaid capital gains. It was only during the course of assessment proceedings that the assessee filed revised return of income declaring long-term capital gains of 51,83,487/- on sale of the aforesaid properties. The assessee’s contention was that assessee had inadvertently omitted to disclose the aforesaid capital gains in the original return of income for the reason that the assessee was under the mistaken impression that the aforesaid land was an agricultural land and hence the capital gains on sale of such land was exempt from taxation. However, the assessing officer rejected the contention of the assessee firstly, on the ground that the revised return had been filed by the assessee beyond the due date prescribed under section 139(4) of the Act and further, it was only once notice under section 142(1) of the Act dated 31-08-2015 was issued that the assessee filed revised return of income, declaring the sale of immovable properties therein. Accordingly, the aforesaid revised return of income cannot be said to have been filed voluntary by the assessee. Accordingly, the assessing officer initiated proceedings under section u/s 271(1)(c) of the Act and proceeded to impose penalty in respect of the aforesaid sale of property, which was not disclosed in the original return of income, u/s 271(1)(c) of the Act. I.T.A No. 292/Rjt/2018 A.Y. 2014-15 Page No Smt. Bijal Darshitbhai Pujara vs. Dy. CIT 4 4. In appeal against the order passed under section u/s 271(1)(c) of the Act, the Ld. CIT(Appeals) upheld the penalty order with the following observations: “The notice u/s 143(2) was issued on 31,08,2016, During the scrutiny assessment proceedings the assessee filed a revised return of income wherein income from long term capita! gain on sale of the said property was declared. The original return of income was furnished after the time prescribed time u/s 139(1} and therefore the revised return of income was held to be invalid return, The income was assessed by making addition of the said capital gain of Rs, 51,83,487/- and penalty u/s 271(l)(c) was initiaed. The impugned penalty has been levied with respect to this addition. During penalty proceedings as well as during appellate proceedings the assessee has contended that she was under the impression that the said land was agricultural land and therefore a non capital asset. It was contended that during scrutiny assessment she had rectified this mistake through a revised return of income before the same was detected the AO, The assessee has cited various decisions in support of her claim that disclosure by assessee during assessment before detection by AO was voluntary disclosure and does not warrant penalty u/s 27l(l)(c). Having considered the facts and rival contentions I find it uncontroverted that in the original return of income the assessee had not declared the impugned capital gain and that the revised return of income was filed after issuance of notice u/s 143(2} and that the revised return was invalid return, Issue is whether in these facts disclosure by assessee can be said to be voluntary so as to save him from penalty u/s 271(l)(c). The noteworthy fact in this case is that sole reason of selection for scrutiny in this case was non-declaration of income from the capital gains. The assessee had not declared this transaction in his return of income while the department was in possession of information through AIR about this transaction. It is in these facts that the return I.T.A No. 292/Rjt/2018 A.Y. 2014-15 Page No Smt. Bijal Darshitbhai Pujara vs. Dy. CIT 5 got selected for scrutiny under the Computer Aided Scrutiny Selection and the notices u/s 143(2) was issued. In these facts and circumstances of the case in my considered opinion contention of assessee that the assessee filed revised return of income voluntarily before detection by the AO is not tenable. In the given facts and circumstances of the case, the case laws cited by the assessee are distinguishable and are therefore not applicable to this case. In my considered opinion the decision of Hon. Gujarat High Court in the case of Snita transport (P) Ltd. vs ACIT (2014) 42 Taxmann.com 54 (Gujarat) is applicable in this case wherein the penalty u/s 271(l}(c) had been held justified on the disclosure by assessee after detection by department. In view of the above discussed facts and 'circumstances of the case and the binding decision of Hon. Gujarat High Court the impugned penalty is confirmed. The grounds of appeal is rejected. 7. For statistical purpose, the appeal of the assessee is to be treated as dismissed.” 5. The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(Appeals) confirming the penalty imposed by the Assessing Officer. The counsel for the assessee drew our attention to notice issued under section 143(2) of the Act dated 31-08-2015 at page 38 of the paper book and submitted that in the aforesaid notice, on the basis of which the assessing officer had levied penalty, there is no mention of sale of any immovable properties by the assessee during the impugned year under consideration. Accordingly, it cannot be inferred by any stretch of imagination that the revised return of income filed by the assessee, in which the assessee declared capital gains tax with respect to the aforesaid immovable properties, was in pursuance to the aforesaid notice under section 143(2) issued by the Department. In fact, perusal of the aforesaid notice also I.T.A No. 292/Rjt/2018 A.Y. 2014-15 Page No Smt. Bijal Darshitbhai Pujara vs. Dy. CIT 6 does not indicate in any manner whatsoever that the proceedings were in respect of enquiry into the aspect of non-declaration of long-term capital gains with respect to the aforesaid properties. Thereafter, the counsel for the assessee drew our attention to the notice dated 30-06-2016 under section 143(2) of the Act in which for the first time, the issue of sale of immovable property for 54.2 lakhs was raised by the Department (Query number 4 of the aforesaid notice) whereas the assessee had filed revised return of income on 31-10-2015. Accordingly, the counsel for the assessee submitted that in the instant facts, it is clear that the revised return including therein the details of the sale of immovable properties, was not filed pursuant to notice under section 143(2) of the Act issued by the Department but revised return of income was filed on a prior date. 6. In response, the Ld. DR submitted that in the instant facts the declaration filed by the assessee disclosing the details of immovable properties cannot be accepted for two reasons: firstly, the revised return of income was filed beyond the due date prescribed under section 139(4) of the Act and hence was non-est in eyes of law, and secondly, the assessment proceedings were initiated under CASS to enquire into the taxability with respect to sale of immovable properties, which was not declared by the assessee in the return of income, but the details thereof were apparent to the Department from the AIR Report. 7. We have heard the rival contentions and perused the material on record. Looking into the facts of the instant case, we are of the considered view that the revised return of income, in which the assessee disclosed I.T.A No. 292/Rjt/2018 A.Y. 2014-15 Page No Smt. Bijal Darshitbhai Pujara vs. Dy. CIT 7 details of sale of immovable properties 54,20,000/- was not in pursuance to notice issued by the Department under section 143(2) of the Act, for the following reasons: firstly, on perusal of notices issued by the Department, it is seen that the query regarding the sale of immovable properties amounting to 54 .20 lakhs was enquired into for the first time by the Department vide notice dated 30-06-2016, whereas the assessee had already filed revised return of income on 31-10-2015. Secondly, in the notice dated 31-08-2015, there is no mention regarding sale of immovable properties by the assessee, and hence, it cannot be inferred that the assessee made a declaration regarding the sale of immovable properties pursuant to the aforesaid notice. Thirdly, the contention of the Department that the assessment proceedings had been initiated to enquire into the aspect of sale of aforesaid immovable properties by the assessee and therefore, the assessee was aware the reason as to why the assessment proceedings had been initiated is also not acceptable for the reason that the Department has not been able to bring forth any communication/information/evidence to show that it was within the knowledge of the assessee, that the assessment proceedings had been initiated to enquire into the aspect of sale of immovable properties by the assessee. Fourthly, regarding the contention that the revised return of income was filed beyond the due prescribed date, it has been brought to our attention that the return of income was filed online and the same was accepted by the Department website and accordingly the same has been validated by the Department. It is a well-settled principle of law that if the assessee has made disclosure in the return of income, without the Department having brought the fact of omission on part of the assessee to the notice of the assessee, then it cannot be inferred that the revised return I.T.A No. 292/Rjt/2018 A.Y. 2014-15 Page No Smt. Bijal Darshitbhai Pujara vs. Dy. CIT 8 was filed pursuant to the omission having been detected by the Department. In the case of Jaysukh M. Parmar 33 Taxmann.com 422 (Ahmedabad - Trib.), the Ahmedabad ITAT held that where notice issued under section 131 did not give any indication about any material with Department regarding concealment of income by assessee, merely because thereafter assessee filed revised return, before recording of statement under section 131, declaring additional income, no penalty was imposable upon assessee under section 271(1)(c) of the Act. In the case of Raj Bricks Field46 taxmann.com 281 (Punjab & Haryana), the High Court held that where return filed by petitioner is voluntary, filed in good faith and before detection of any concealment, neither penalty would be levied under section 271(1)(c) nor any criminal proceedings under section 276C could be allowed. In the case of Bhavinkumar M. Dagli 79 taxmann.com 392 (Gujarat), the jurisdictional Gujarat High Court held that where during assessment proceedings, assessee filed revised return declaring additional income and prior to that Department had no material to show that there was some additional income than income disclosed in original return, there was no justification for imposition of penalty on ground that assessee had furnished inaccurate particulars of income. 7.1 Accordingly, in light of the above observations, we are of the considered view that nothing has been brought forth by the Department to substantiate that the revised return of income was filed in pursuance to information contained in notice under section 143(2) of the Act. Accordingly, looking into the instant facts, we are hereby deleting the penalty imposed under section u/s 271(1)(c) of the Act. I.T.A No. 292/Rjt/2018 A.Y. 2014-15 Page No Smt. Bijal Darshitbhai Pujara vs. Dy. CIT 9 8. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 16-05-2023 Sd/- Sd/- (WASEEM AHMED) (SIDHHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad : Dated 16/05/2023 आदेश क त ल प अ े षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order, Assistant Registrar, Income Tax Appellate Tribunal, Rajkot