Smt. Prema Dhatri Rao, CHENNAI V. JCIT, CHENNAI

ITA 2996/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4169 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 12-04-2017
• Assessment Year: 2004-2005
• Appeal Filed On: 24-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Capital asset

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . , . , BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ I.T.A.NO. 2996/MDS/2016 / ASSESSMENT YEAR :20 04 - 05 SMT. PREMA DHATRI RAO, NO. 13, SATHYANARAYANA ROAD, BOAT CLUB ROAD, CHENNAI 60 0 0 2 8 . [PAN:A AA PR8254R ] VS. THE JOINT COMMISSIONER OF INCOME TAX, NON COR PORATE RANGE 1 9 , CHENNAI 600 0 34 . ( / APPELLANT ) ( / RESPONDENT ) W .T.A.NO S . 41, 42, 43, 44, 45 & 46/MDS/2016 / ASSESSMENT YEAR :20 01 - 02 TO 2006 - 07 SMT. PREMA DHATRI RAO, NO. 13, SATHYANARAYANA ROAD, BOAT CLUB ROAD, CHENNAI 600 028. VS. THE JOINT COMMISSIONER OF WEALTH TAX, NON CORPORATE RANGE 19, CHENNAI 600 034. ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI R. VIJAYARAGHAVAN & SHRI ABHISHEK MURALI ADVOCATE / RESPONDENT BY : SHRI A.V. SREEKANTH, JCIT / DATE OF HEARING : 12 . 04 .201 7 / DATE OF P RONOUNCEMENT : 23 .06 .201 7 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : ALL T HE INCOME TAX APPEAL AND WEALTH TAX APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE COMMON ORDER OF THE LD. COMMISSIONER OF INCOME TAX /WEALTH TAX (APPEALS) 12 , CHENNAI DATED 27 . 0 7 .201 6 RELEVANT TO I.T.A. NO . 2996 /M/ 16 & W.T.A. NOS. 41 TO 46/M/16 2 THE ASSESSMENT YEAR S 20 01 - 02, 2002 - 03, 2003 - 04, 2004 - 05, 2005 - 06 AND 20 06 - 07 PASSED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT AS WELL AS UNDER SECTION 18(1)(C) OF THE WEALTH TAX ACT LEVYING PENALTY . 2. D URING THE FINANCIAL YEAR 2003 - 04, THE ASSESSEE SOLD A PIECE OF LAND MEASURING 1 ACRE AND 33.5 CENTS, WHICH HAS BEEN USED FOR AGRI CULTURAL PURPOSES AND THE SAME HAD BEEN DULY MENTIONED IN THE TAX RETURN FILED AND CLAIMED EXEMPTION. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY AND FROM THE DOCUMENTS AND DETAILS PROVIDED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS, THE ASSESS ING OFFICER HAS CONCLUDED THAT THE LAND WAS SITUATED WITHIN THE STIPULATED L IMITS OF MUNICIPAL LIMITS AND T HEREFORE, THE SALE TRANSACTION HAS BEEN TREATED AS SALE OF A CAPITAL ASSET AND THE CAPITAL GAIN TAX HAS BEEN IMPOSED ON THE A SSESSEE . SINCE, THE ASSE SSEE HA S BEEN CARRYING OUT THE AGRICULTURAL OPERATIONS, SHE HA S CONSIDERED THE SAME AS AGRICULTURAL LAND AND HA S BEEN FILING THE INCOME TAX RETURN AND WEALTH TAX RETURN ACCORDINGLY. SINCE, THE APPEALS FILED BY THE ASSESSEE BEFORE THE CIT(A) AND THE TRIBUNA L WERE DECIDED AGAINST HER, THE ASSESSING OFFICER HAS INITIATED PENALTY PROCEEDINGS AND LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT AS WELL AS UNDER SECTION 18(1)(C) OF THE WEALTH TAX ACT FOR ALL THE ASSESSMENT YEARS UNDER CONSIDERATION. 3. THE AS SESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE LD. CIT(A) WAS OF THE I.T.A. NO . 2996 /M/ 16 & W.T.A. NOS. 41 TO 46/M/16 3 OPINION THAT SINCE THE ASSESSEE HAS NOT FILED WEALTH TAX RETURN FOR THE ASSESSMENT YEARS 2001 - 02 ONWARDS VOLUNTARILY AND ONLY AFTER SERVICE OF NOTICE UNDER SECTION 17 OF THE ACT, SHE CAME FORWARD TO FILE HER WEALTH TAX RETURN, THE PENALTY LEVIED BY THE ASSESSING OFFICER WAS CONFIRMED. 4. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL FOR ALL THE ASSESS MENT YEARS. THE MAIN CONTENTION ADVANCED BY THE LD. COUNSEL FOR THE ASSESSEE IS THAT THE ASSESSEE WAS NOT AWARE OF THE PROVISIONS OF STATUTE, SHE COULD NOT FILE THE RETURN. BY FILING COPY OF THE CBDT CIRCULAR NO. 3/2014 DATED 24.01.2014, THE LD. COUNSEL FO R THE ASSESSEE HAS FURTHER SUBMITTED THAT THE ASSESSEE IS NOT LIABLE FOR WEALTH TAX AND THEREFORE, LEVY OF PENALTY UNDER BOTH INCOME TAX ACT AS WELL AS WEALTH TAX ACT DOES NOT ARISE AND PRAYED THAT THE PENALTY LEVIED UNDER BOTH PROVISIONS SHOULD BE DELETED . ON THE OTHER HAND, THE LD. DR FAIRLY CONCEDED THE SUBMISSIONS OF THE AR. 5. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WITH REGARD TO LEVY OF PENALTY UNDER SECTION 18(1)(C) OF WEALTH TAX ACT, A DMITTEDLY, THE ASSESSEE SOLD A PIECE OF LAND MEASURING 1 ACRE AND 33.5 CENTS, WHICH HAS BEEN USED FOR AGRICULTURAL PURPOSES LOCATED IN URBAN AGGLOMERATION. THE WEALTH TAX TO AGRICULTURAL LAND SITUATED IN URBAN AREA IS EXEMPTED AS PER AME NDMENT TO THE PROVISIONS OF THE FINANCE ACT, 2013 AND THE AMENDMENT TAKES EFFECT RETROSPECTIVELY FROM 1 ST APRIL, 1993, WHICH READS AS UNDER: I.T.A. NO . 2996 /M/ 16 & W.T.A. NOS. 41 TO 46/M/16 4 47. EXEMPTION FROM WEALTH TAX TO AGRICULTURAL LAND SITUATED IN URBAN AREA. 47.1 FINANCE ACT, 1992 AMENDED THE P ROVISIONS OF WEALTH - TAX ACT WITH EFFECT FROM 1ST APRIL, 1993 TO PROVIDE THAT WEALTH TAX SHALL BE LEVIED ONLY ON CERTAIN SPECIFIED ASSETS. THE DEFINITION OF ASSETS ON WHICH WEALTH TAX IS LEVIABLE INTER ALIA INCLUDES URBAN LAND. AS PER THIS DEFINITION URBAN LAND MEANS LAND SITUATED IN THE JURISDICTION OF MUNICIPALITY OR CANTONMENT BOARD OR LAND SITUATED IN NOTIFIED AREA. HOWEVER, CERTAIN CATEGORIES OF URBAN LAND SUCH AS LAND ON WHICH CONSTRUCTION OF A BUILDING IS NOT PERMISSIBLE, LAND HELD FOR INDUSTRIAL PURP OSE, LAND HELD AS STOCK IN TRADE, HAVE BEEN EXCLUDED FROM THE DEFINITION OF URBAN LAND. NORMALLY ON AGRICULTURAL LAND, EITHER NO CONSTRUCTION IS ALLOWED OR ALLOWED ONLY FOR A SPECIFIC PURPOSE (MAINLY FOR AGRICULTURAL NEEDS), BUT NO SPECIFIC EXEMPTION HAS B EEN PROVIDED TO THE AGRICULTURAL LAND. RECENTLY IT HAS BEEN HELD BY THE HON'BLE SUPREME COURT THAT AGRICULTURAL LAND SITUATED IN URBAN AREA IS LIABLE FOR WEALTH TAX. AS THE WEALTH TAX IS LEVIED ONLY ON UNPRODUCTIVE ASSETS, THERE WAS NO INTENTION TO LEVY WE ALTH TAX ON THE AGRICULTURAL LAND WHICH CANNOT BE TERMED AS UNPRODUCTIVE ASSETS. 47.2 IN VIEW OF THE ABOVE, THE DEFINITION OF URBAN LAND IN THE WEALTH - TAX ACT, 1957 HAS BEEN AMENDED TO SPECIFICALLY PROVIDE THAT WEALTH TAX IS NOT LEVIABLE ON URBAN LAND W HICH IS, (I) CLASSIFIED AS AGRICULTURAL LAND IN THE RECORDS OF THE GOVERNMENT; AND (II) USED FOR AGRICULTURAL PURPOSES. 47.3 APPLICABILITY: - THIS AMENDMENT TAKES EFFECT RETROSPECTIVELY FROM 1ST APRIL, 1993. 6. IN THIS CASE, THE LAND IN QUESTION WAS CLASSIFIED AS AGRICULTURAL LAND IN THE RECORDS OF THE GOVERNMENT AND MOREOVER THE ASSESSEE USED THE LAND FOR AGRICULTURAL PURPOSES, WHICH ARE NOT DISPUTED BY THE DEPARTMENT. IN VIEW OF THE ABOVE AMENDED PROVISIONS TO WEALTH TAX ACT RETROSPECTIVELY, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE WA S NOT EVEN LIABLE FOR PAYING TAX AND THEREFORE, THE QUESTION OF LEVY OF PENALTY DOES NOT ARISE. A CCORDINGLY, THE PENALTY LEVIED UNDER SECTION 18(1)(C) OF THE WEALTH TAX ACT FOR ALL THE I.T.A. NO . 2996 /M/ 16 & W.T.A. NOS. 41 TO 46/M/16 5 ASSESSMENT YEARS UND ER CONSIDERATION ARE DELETED. ACCORDINGLY, THE GROUND RAISED BY THE ASSESSEE IS ALLOWED. 7. WITH REGARD TO LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT IS CONCERNED, THE ASSESSING OFFICER HAS OBSERVED THAT THE INVESTMENT IN 54EC BOND WA S MADE AGAINST THE SALE OF 1 ACRE 33.5 CENTRES OF LAND WAS ON THE DATE BEYOND SIX MONTHS FROM THE DATE OF TRANSFER. SINCE QUANTUM ADDITION MADE BY THE ASSESSING OFFICER WAS CONFIRMED BY THE LD. CIT(A), THE ASSESSING OFFICER HAS INITIATED PENALTY PROCEEDING S, LEVIED PENALTY, WHICH WAS CONFIRMED BY THE LD. CIT(A). 8. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE HAS VEHEMENTLY ARGUED THAT THE ASSESSEE WAS NOT AWARE OF THE PROVISIONS OF STATUTE THAT IF THE PROPERTY IS SITUATED WITHIN THE MUNICIPAL LIMIT, IT I S NOT TO BE TREATED AS AGRICULTURAL LAND. HE FURTHER ARGUED THAT DURING THE TIME LIMIT PERMITTED TO MAKE INVESTMENT IN 54EC BOND, THE ASSESSEE WAS NOT RESIDING IN INDIA AND FOR THE INVESTMENT PURPOSE, SHE CAME TO INDIA AND DEPOSITED, THEREBY THERE WAS DELA Y. HE FURTHER ARGUED THAT THE ASSESSEE HAS NO MALAFIDE INTENTION, BESIDES NOT AWARE OF THE LEGAL CONSEQUENCES, WHICH IS VERY MUCH EVIDENCE THAT THE ASSESSEE HAS VOLUNTARILY OFFERED FOR WEALTH TAX, EVEN THOUGH SHE WAS NOT LIABLE TO PAY WEALTH TAX. HENCE, TH E LD. COUNSEL FOR THE ASSESSEE HAS PRAYED THAT THE PENALTY LEVIED UNDER SECTION SHOULD BE DELETED. WE FIND FORCE IN THE ARGUMENT OF THE ASSESSEE. THERE IS NO DISPUTE THAT THE ASSESSEE I.T.A. NO . 2996 /M/ 16 & W.T.A. NOS. 41 TO 46/M/16 6 WAS CARRYING ON AGRICULTURAL OPERATION IN THE ABOVE LAND AND MOREOVER, S HE HAS OFFERED WEALTH TAX TO THE ABOVE PROPERTY. IT IS AN ADMITTED FACT THAT EVEN THOUGH THE ASSESSEE WAS NOT LIABLE FOR WEALTH TAX , AS PER THE AMENDED PROVISIONS AS REPRODUCED HEREINABOVE, SHE HAS OFFERED THE WEALTH TAX. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE HAD NO MALAFIDE INTENTION TO CONCEAL THE INCOME/PARTICULARS AND IT IS VERY CLEAR THAT THE ASSESSEE WAS NOT AWARE OF THE PROVISIONS OF THE STATUTE. IN THIS CASE, THE WEALTH TAX ASSESSED AND QUANT UM ADDITION MADE AND PAID BY THE ASSESSEE WAS MUCH MORE THAN THE PENALTY LEVIED BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A), WHICH THE ASSESSEE WAS NOT EVEN LIABLE TO BE PAY. UNDER THE ABOVE FACTS AND CIRCUMSTANCES, WE ARE OF THE CONSIDERED OP INION THAT IT IS NOT A FIT CASE TO LEVY PENALTY UNDER SECTION 271(1)(C) OF THE ACT. HENCE, THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT IS DELETED. 7 . IN THE RESULT, THE ALL APPEAL S FILED BY THE ASSESSEE ARE ALLOWED . ORDER PRONOUNCED ON THE 23 RD JUNE , 201 7 AT CHENNAI. SD/ - SD/ - ( A. MOHAN ALANKAMONY ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 23 . 0 6 .201 7 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.