Shiv Kumar Goyal., Kolkata V. I.T.O Wd - 41(1),kolkata., Kolkata

ITA 294/KOL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99857 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 12-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PINAKI MUKHERJEE JCITSRDR
• Assessee Lawyers: SOUMITRA CHOW DHURY
• Keywords: Capital asset; Salary income
• Section: 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI N.V.VASUDEVAN, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 294 / KOL / 2013 ASSESSMENT YEAR :2005-06 SHIV KUMAR GOYAL 901, AARVIND TOWERS, 242/1B, APC ROAD, KOLKATA 700 004 [ PAN NO.ADSPG 9789 K ] V/S . ITO WARD-41(1), P-7, CHOWRINGHEE SQUARE, KOLKATA 700 069 /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI SOUMITRA CHOWDHURY, ADVOCATE /BY RESPONDENT SHRI PINAKI MUKHERJEE, JCIT, SR-DR /DATE OF HEARING 09-09-2015 /DATE OF PRONOUNCEMENT 07-10-2015 / O R D E R PER WASEEM AHMED, ACCOUNTANTMEMBER:- THIS APPEAL BY THE ASSESSEE IS ARISING OUT OF ORD ER OF COMMISSIONER OF INCOME TAX (APPEALS)-XII, KOLKATA IN APPEAL NO.17/X II/41(1)/10-11 DATED 10.10.2012. ASSESSMENT WAS FRAMED BY ITO WARD -41(1), KOLKATA U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REF ERRED TO AS THE ACT) VIDE HIS ORDER DATED 30.12.2009 FOR ASSESSMENT YEAR 2005 -06. THE PENALTY UNDER DISPUTE WAS LEVIED BY THE ITO WARD-41(1) KOLKATA U/ S 271(1) OF THE ACT VIDE HIS ORDER DATED 22.03.2010. ITA NO.294/KOL/2013 A.Y. 2005-06 SHIV KR. GOYAL V. ITO WD-41(1), KOL. PAGE 2 2. ONLY ISSUE RAISED BY THE ASSESSEE IN THIS APPEAL THAT THE LD.CIT (A) HAS CONFIRMED THE ORDER OF THE AO BY SUSTAINING THE PEN ALTY ORDER PASSED BY THE AO UNDER SECTION 271(1)(C) OF THE ACT. 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND HAS THE INCOME FROM SALARY, OTHER SOURCES AND SHORT TERM CA PITAL GAIN. DURING THE YEAR THE ASSESSEE HAS SOLD A PIECE OF LAND FOR A VALUE O F RS. 10 LACS BY EXECUTING THE POWER OF ATTORNEY IN FAVOUR OF THE BUYER. THE A SSESSEE HAS NOT DECLARED THE CAPITAL GAIN ON THIS TRANSACTION OF TRANSFER IN THE RETURN OF INCOME AND HAS SHOWN THE RECEIPT OF RS. 10 LACS AS ADVANCE IN THE BALANCE SHEET. HOWEVER THE AO TREATED THIS TRANSACTION AS TRANSFER WITHIN THE MEANING OF SECTION 2(47) OF THE ACT AND WORKED OUT THE LONG TERM CAPITAL GAI N AND TAXED THE INCOME ACCORDINGLY. THE AO ALSO INITIATED THE PENALTY PROC EEDINGS UNDER SECTION 271(1) OF THE ACT FOR THE CONCEALMENT OF INCOME. T HE ASSESSEE SUBMITTED THAT HE HAD NEITHER FURNISHED INACCURATE PARTICULAR S NOR CONCEALED ANY PARTICULARS OF INCOME. HOWEVER, THE AO HAS DISREGAR DED THE PLEA OF THE ASSESSEE AND LEVIED PENALTY, STATING THAT THE DISCL OSURE WAS MADE BY THE ASSESSEE ONLY IN PURSUANCE OF NOTICE ISSUED UNDER S ECTION 148 OF THE ACT. FINALLY THE AO HAS LEVIED THE PENALTY ON THE BASIS OF CONCEALED INCOME BY PASSING THE ORDER UNDER SECTION 271(1) OF THE ACT @100% OF THE TAX SOUGHT TO BE EVADED. AGGRIEVED ASSESSEE PREFERRED AN APPEA L TO LD. CIT(A) WHO HAS UPHELD THE DECISION OF THE AO BY OBSERVING THAT ALT HOUGH THIS TRANSFER OF LAND WAS BY WAY OF POWER OF ATTORNEY YET THE ASSESSEE WA S DUTY BOUND TO DISCLOSE THE TRANSACTION AND TO OFFER THE INCOME TO TAX ON S UCH TRANSACTION. 4. AGGRIEVED, ASSESSEE IS IN SECOND APPEAL BEFORE U S ON THE FOLLOWING GROUNDS OF APPEAL. 1) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(APPEALS) ERRED IN SUSTAINING PENALTY UNDER SECT ION 271(1) RS.44,227/- WITHOUT APPRECIATING THAT THE APPELLANT DULY DISCLOSED AN ADVANCE RECEIVED RS.10 LACS AGAINST POWER OF ATTORN EY AS SECURITY DEPOSIT IN THE BALANCE SHEET FILED ALONGWITH ORIGIN AL I.T. RETURN AND AS SUCH THERE SHOULD NOT BE ANY REASON TO HOLD THAT TH E ASSESSEE ITA NO.294/KOL/2013 A.Y. 2005-06 SHIV KR. GOYAL V. ITO WD-41(1), KOL. PAGE 3 CONCEALED THE INCOME OR FURNISHED INACCURATE PARTIC ULARS OF SUCH INCOME. 2) THAT THE FINDINGS GIVEN BY LD. CIT(APPEALS) ARE ERRONEOUS , PERVERSE, UNJUSTIFIED AND UNTENABLE AND AS SUCH NOT SUSTAINAB LE UNDER THE LAW. 3) THAT THE LD. CIT(APPEALS) HAS HELD THAT ONCE TH E ASSESSEE HAD GIVEN A GENERAL POWER OF ATTORNEY IN FAVOUR OF ANY PERSON, HE IS DUTY BOUND TO DISCLOSED ANY ADVANCE OR ANY AMOUNT RECEIV ED AGAINST THE POWER OF ATTORNEY TO THE DEPARTMENT BUT BY NOT DOIN G SO THE ASSESSEE IS LIABLE FOR PENALTY, WITHOUT APPRECIATING THAT TH E ASSESSEE DULY DISCLOSED THE ADVANCE RECEIVED AGAINST PO IN THE OR IGINAL I.T. RETURN. 4) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(APPEALS) OUGHT TO HAVE HELD THAT THE APPELLANT IN THE RETURN FILED IN COMPLIANCE TO NOTICE U/S 148 HAS TREATED THE ADVANC E RECEIVED AGAINST POA AS SALE CONSIDERATION WITH A VIEW TO BUY PEACE AND AS SUCH THE PROVISIONS OF SECTION 271(10 ARE NOT ATTRACTED IN THE INSTANCE CASE. MR.SOUMITRA CHOWDHURY, LD. AR IS APPEARING ON BEHAL F OF ASSESSEE AND MR.PINAKI MUKHERJEE, LD. SENIOR DR IS APPEARING ON BEHALF OF REVENUE. 5. THE LD. AR SUBMITTED THAT THE ASSESSEE HAS DISCL OSED THE FACT IN THE BALANCE SHEET ABOUT THE RECEIPT OF ADVANCE. THE ASS ESSEE DID NOT PREFER THE APPEAL AGAINST THE ASSESSMENT ORDER DOES NOT TANTAM OUNT THE ACCEPTANCE OF THE CONCEALMENT OF INCOME. BUT THE ASSESSEE DID SO TO BUY THE PEACE OF MIND. ON THE CONTRARY, LD. DR SUPPORTED THE ORDERS OF AUT HORITIES BELOW. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF THE PARTI ES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE REQUIREMENT OF S EC.271(1)(C) OF THE ACT IS THAT THE ASSESSEE SHOULD HAVE (A) CONCEALED THE PAR TICULARS OF INCOME; OR (B) FURNISHED INACCURATE PARTICULARS OF INCOME. IN THE PRESENT CASE, THE QUESTION IS AS TO WHETHER THE ASSESSEE CONCEALED PARTICULARS OF INCOME. THE QUESTION OF FURNISHING INACCURATE PARTICULARS OF INCOME DOES NOT ARISE IN THIS CASE BECAUSE THE ASSESSEE DID NOT DECLARE ANY CAPITAL GA IN ON TRANSFER OF CAPITAL ASSET. ADMITTEDLY THE ASSESSEE DID NOT EXECUTE A RE GISTERED INSTRUMENT OF TRANSFER IN FAVOUR OF THE PURCHASER OF THE PROPERTY . THE ASSESSEE RECEIVED FULL ITA NO.294/KOL/2013 A.Y. 2005-06 SHIV KR. GOYAL V. ITO WD-41(1), KOL. PAGE 4 CONSIDERATION AND EXECUTED A POWER OF ATTORNEY EMPO WERING THE AGENT TO SELL OR OTHERWISE ALIENATE HIS PROPERTY. THE DEFINITION OF TRANSFER U/S.2(47) OF THE ACT (47) 'TRANSFER', IN RELATION TO A CAPITAL ASSET, IN CLUDES, (I) THE SALE, EXCHANGE OR RELINQUISHMENT OF THE A SSET ; OR (II) THE EXTINGUISHMENT OF ANY RIGHTS THEREIN ; O R (III) THE COMPULSORY ACQUISITION THEREOF UNDER ANY LAW ; OR (IV) IN A CASE WHERE THE ASSET IS CONVERTED BY THE OWNER THEREOF INTO, OR IS TREATED BY HIM AS, STOCK-IN-TRADE OF A BUSINE SS CARRIED ON BY HIM, SUCH CONVERSION OR TREATMENT ; OR (IVA) THE MATURITY OR REDEMPTION OF A ZERO COUPON B OND; OR (V) ANY TRANSACTION INVOLVING THE ALLOWING OF THE POSSESSION OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882 (4 OF 1882) ; OR (VI) ANY TRANSACTION (WHETHER BY WAY OF BECOMING A MEMBER OF, OR ACQUIRING SHARES IN, A CO-OPERATIVE SOCIETY, COMPAN Y OR OTHER ASSOCIATION OF PERSONS OR BY WAY OF ANY AGREEMENT O R ANY ARRANGEMENT OR IN ANY OTHER MANNER WHATSOEVER) WHIC H HAS THE EFFECT OF TRANSFERRING, OR ENABLING THE ENJOYMENT O F, ANY IMMOVABLE PROPERTY. EXPLANATION 1.FOR THE PURPOSES OF SUB-CLAUSES (V) AND (VI), 'IMMOVABLE PROPERTY' SHALL HAVE THE SAME MEANING AS IN CLAUSE (D) OF SECTION 269UA . EXPLANATION 2.FOR THE REMOVAL OF DOUBTS, IT IS HER EBY CLARIFIED THAT 'TRANSFER' INCLUDES AND SHALL BE DEEMED TO HAVE ALW AYS INCLUDED DISPOSING OF OR PARTING WITH AN ASSET OR ANY INTERE ST THEREIN, OR CREATING ANY INTEREST IN ANY ASSET IN ANY MANNER WHATSOEVER, DIRECTLY OR INDIRECTLY, ABSOLUTELY OR CONDITIONALLY, VOLUNTARIL Y OR INVOLUNTARILY, BY WAY OF AN AGREEMENT (WHETHER ENTERED INTO IN INDIA OR O UTSIDE INDIA) OR OTHERWISE, NOTWITHSTANDING THAT SUCH TRANSFER OF RI GHTS HAS BEEN CHARACTERISED AS BEING EFFECTED OR DEPENDENT UPON O R FLOWING FROM THE TRANSFER OF A SHARE OR SHARES OF A COMPANY REGISTER ED OR INCORPORATED OUTSIDE INDIA; THE CASE OF THE REVENUE, AS WE SEE IT, IS THAT BY R ECEIVING THE ENTIRE SALE CONSIDERATION IN RESPECT OF THE PROPERTY AND EXECUT ING A POWER OF ATTORNEY IN FAVOUR OF THE PURCHASER, THE ASSESSEE HAS EFFECTED A TRANSFER WITHIN THE MEANING OF CLAUSE (VI) OR EXPLN-2 TO SEC.2(47) OF T HE ACT. WE ARE DOUBTFUL AS ITA NO.294/KOL/2013 A.Y. 2005-06 SHIV KR. GOYAL V. ITO WD-41(1), KOL. PAGE 5 TO WHETHER IT CAN BE SAID THAT BY EXECUTING A POWER OF ATTORNEY THE ASSESSEE TRANSFERRED EITHER BY PARTING WITH OR CREATING INTE REST IN IMMOVABLE PROPERTY ENABLED TRANSFER OR ENJOYMENT OF ANY IMMOVABLE PROP ERTY. POWER OF ATTORNEY BY ITS NATURE IS REVOCABLE. THERE ARE SITUATIONS I N WHICH POWER OF ATTORNEY GETS TERMINATED IN LAW VIZ., WHEN THE PRINCIPAL OR THE AGENT DIES. THE PROVISIONS OF CLAUSE-VI TO SEC.2(47) OF THE ACT WOU LD COVER CASES OF TRANSFER OF SHARES OF CO-OPERATIVE SOCIETIES OR COMPANY OR OTHE R ASSOCIATION OF PERSONS AND THOSE PROVISIONS WILL NOT APPLY TO THE PRESENT CASE. THE PROVISIONS OF EXPLN.2 TO SEC.2(47) OF THE ACT WOULD APPLY TO TRAN SFER OF SHARES IN A COMPANY WHICH RESULTS IN TRANSFER OF IMMOVABLE PROPERTY. T HE CASE OF THE REVENUE THEREFORE IS NOT ON A SOUND FOOTING. IT IS A DIFFE RENT MATTER THAT THE ASSESSEE HAS ACCEPTED THE ASSESSMENT. AT THE STAGE OF IMPOS ING PENALTY, ONE HAS TO LOOK AT ALL CIRCUMSTANCES BEFORE COMING TO A CONCLU SION THAT THE ASSESSEE IS GUILTY OF HAVING CONCEALED PARTICULARS OF INCOME. APART FROM THE ABOVE ASPECT, WE ALSO NOTICE THAT TH E AO GOT THE INFORMATION ABOUT RECEIPT OF CONSIDERATION TOWARDS SALE OF PROP ERTY ONLY FROM THE BALANCE SHEET OF THE ASSESSEE. THE ASSESSEE HAS SHOWN THE S UM RECEIVED BY IT TOWARDS PURPORTED SALE OF PROPERTY IN THE BALANCE S HEET AS SECURITY DEPOSIT IN THE BALANCE SHEET. HAD IT BEEN THE INTENTION OF THE ASSESSEE TO CONCEAL PARTICULARS OF INCOME, THE SAME WOULD NOT HAVE BEEN SO REFLECTED IN THE BALANCE SHEET OF THE ASSESSEE. THE ISSUE AS TO WHET HER WHEN SALE CONSIDERATION IS RECEIVED IN FULL AND A POWER OF AT TORNEY IS EXECUTED IN FAVOUR OF THE PURPORTED PURCHASER, THE SAME WOULD AMOUNT T O TRANSFER WITHIN THE MEANING OF SEC.2(47) OF THE ACT, IN OUR VIEW, IS A HIGHLY DEBATABLE ISSUE. THEREFORE NO FAULT CAN BE FOUND IN THE ASSESSEES A SSUMPTION THAT THERE WAS NO TRANSFER OF A CAPITAL ASSET DURING THE PREVIOUS YEAR AND THEREFORE THERE WAS NO REQUIREMENT TO DECLARE CAPITAL GAIN ON SALE OF P ROPERTY. AS WE HAVE ALREADY STATED THE DISCLOSURE AS MADE BY THE ASSESS EE IN THE BALANCE SHEET IS ITSELF SUFFICIENT TO CONCLUDE THAT THE ASSESSEE NEV ER INTENDED TO CONCEAL PARTICULARS OF INCOME. ITA NO.294/KOL/2013 A.Y. 2005-06 SHIV KR. GOYAL V. ITO WD-41(1), KOL. PAGE 6 7. KEEPING THE DISCUSSION AS ABOVE, WE ARE OF THE V IEW THAT THIS IS NOT A FIT CASE FOR LEVY OF PENALTY U/S.271(1)(C) OF THE ACT. CONSEQUENTLY, THE PENALTY IMPOSED ON THE ASSESSEE BY THE AO AND CONFIRMED BY THE CIT(A) IS DIRECTED TO BE DELETED. THE APPEAL OF THE ASSESSEE IS ALLOW ED. 8. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT 07/ 10/2015 SD/- SD/- (N.V.VASUDEVAN) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP !- 07 /10/2015 / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT-SHIV KR. GOYAL, 901, ARIVND TOWERS, 24 2/1B, APC RD, KOL-04 2. / RESPONDENT- ITO WD-41(1) P-7, CHOWRINGHEE SQ. KO L-69 3. * +, - - . / CONCERNED CIT KOLKATA 4.- - .- / CIT (A) KOLKATA 5. 012 33+,,- +, , / DR, ITAT, KOLKATA 6. 267 89 / GUARD FILE. BY ORDER/ - , /TRUE COPY/ / - +, ,