Ravindra Anant Bhuskute, Raigad V. Income-tax Officer, Ward - 4, Panvel

ITA 3041/PUN/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 9129 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-08-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 21-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MAHADEVAN A M KRISHNAN
• Keywords: Sale consideration of property below Jantri Value; Salary income; Bonafide belief; Revised return; Capital Gains
• Section: 271(1)(c); 2

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE ( THROUGH VIRTUAL COURT) BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER . / ITA NO.3041/PUN/2017 / ASSESSMENT YEAR : 2011-12 RAVINDRA ANANT BHUSKUTE, FLAT NO.1, SAVLI BANGLOW, DATAR ALI, PEN, RAIGAD 402107. PAN : ABKPB3372K . / APPELLANT V/S THE INCOME TAX OFFICER, WARD 4, PANVEL. . / RESPONDENT ASSESSEE BY : NONE REVENUE BY : SHRI MAHADEVAN A.M. KRISHNAN / ORDER PER SHRI PARTHA SARATHI CHAUDHURY, THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM TH E ORDER OF THE LD. CIT(APPEALS) 2, PUNE DATED 05.10.2017 FOR THE ASSESS MENT YEAR 2011- 12 AS PER THE FOLLOWING GROUNDS OF APPEAL ON RECORD: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) 2 , HAS ERRED IN LAW AND ON FACTS OF THE CASE IN LEVYING THE PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT,1961 . 2. THE LEARNED COMMISSIO N ER OF INCOME TAX (APPEALS) 2, ERRED IN LAW AND ON THE FACTS IN NOT APPRECIATING THE EXPLANATION OF TH E ASSESSEE THAT CHEQUES COULD NOT BE PRESENTED FOR CLEARING DUE TO A BAN PU T ON THE OPERATIONS OF PEN CO-OPERATIVE URBAN CO - OPERATIVE BANK AND HE COULD NOT MAKE THE ALTERNATIV E ARRANGEMENTS FOR PAYMENT TO THE ASSESSEE. THUS THE BUYER FAILED TO HONOUR HIS COMMITMENT OF PAYMENT FOR LAND HENCE THE AGREEME NT BECAME INOPERATIVE OR NULL AND VOID DUE TO NON-PERFORMANCE OF THE BUYE R . SUBSEQUENTLY FRESH CHEQUES WERE ISSUED BY BUYER ONLY IN JULY 2014. / DATE OF HEARING : 04 . 0 8 .2020 / DATE OF PRONOUNCEMENT : 04 .0 8 .2020 2 2. THE BRIEF FACTS IN THIS CASE ARE THAT THE ASSESSEE IS A STENOGRAPHER IN MAHARASHTRA STATE ROAD TRANSPORT CORPORATION AND DER IVES INCOME FROM SALARY. DURING THE YEAR ASSESSEE ALONG WITH THREE OTHER CO-OWNERS SOLD AN INHERITED PIECE OF LAND FOR A TOTAL CONSIDERATION OF RS.28,60 ,000/- AS AGAINST MARKET VALUE OF RS.51,66,000/-. THE ASSESSEE ALONG WITH THREE OTHER CO-OWNERS HAD RECEIVED A CHEQUE OF RS.7,15,000/- E ACH AND THE SALE DEED WAS EXECUTED ON 17.08.2010. THE ASSESSEE, HOWEVER , DID NOT DISCLOSE ANY INCOME FROM THE SALE OF ABOVE PLOT WITH A BELIEF THAT THE SALE WAS NOT COMPLETE SINCE THE PAYMENT WAS NOT REALIZED IN THE YEAR UNDER CONSIDERATION AND THE SAME WAS REALIZED ONLY IN JULY, 20 14. IT WAS CONTENDED THAT THE PLOT WAS SOLD ON 17.08.2010 BUT IT WA S MUTUALLY AGREED BETWEEN THE BUYER AND THE SELLER TO PRESENT THESE CH EQUES IN OCTOBER, 2010 AND IN THE MEANTIME, IN SEPTEMBER, 2010, THE RESERVE BANK OF INDIA (R.B.I.) PUT RESTRICTIONS ON THE ENTIRE FUNCTIONING OF THE PEN CO-OPERATIVE URBAN BANK LTD., W.E.F., 24.09.2010. AS A RESULT OF WHICH, CHE QUES COULD NOT BE DEPOSITED IN THE BANK FOR CLEARANCE. THE ASSESSE E FURTHER SUBMITTED BEFORE THE DEPARTMENT THAT HE HAS NOT RECEIVED ANY CO NSIDERATION FROM THE BUYER TILL DATE OF ASSESSMENT AND THE CHEQUES ISSUED BY THE BUYER HAVE BEEN RETURNED AS UNACCEPTED AS THE BANK WHOSE CHEQU ES WERE GIVEN I.E., PEN CO-OPERATIVE URBAN BANK LTD., WAS IN CRITICAL PROBLEMS AND WAS IN THE VERGE OF WINDING UP. THIS EXPLANATION OF THE ASSESSEE WA S NOT ACCEPTED BY THE ASSESSING OFFICER AND HE THEREFORE, BY INVOKING THE PRO VISIONS OF SEC.50C OF THE ACT, COMPUTED THE AMOUNT OF LONG TERM CAP ITAL GAINS AND MADE THE ADDITION. THE ASSESSING OFFICER FURTHER PROCEEDED TO LEVY THE PENALTY U/S 271(1)(C) OF THE ACT AT RS.1,06,041/- BEING 100% OF THE TAX SOUGHT TO BE EVADED. 3 3. THE CASE OF THE DEPARTMENT IS THAT ON CONCEALMENT OF INCOME BY THE ASSESSEE, BEING AGGRIEVED THE ASSESSEE PREFERRED APPEAL BEFORE LD.CIT(A) AND PLACED ON RECORD DETAILED WRITTEN SUBMISSIONS BEFORE HIM. THE LD.CIT(A) AFTER CONSIDERING THE ASSESSMENT ORDER, FACTS OF THE CASE AS WELL AS THE SUBMISSIONS OF THE ASSESSEE HAS OBSERVED AND HELD THAT THE A SSESSEE WAS IN OBLIGATION TO DISCLOSE THE TRANSACTION IN THE RETURN OF INCOME AND SHOULD HAVE SHOWN THE INCOME FROM CAPITAL GAINS. IN THE OPINION OF THE LD.CIT(A), THE ASSESSEE SUPPRESSED THE TRANSACTION AND O NLY IT CAME TO LIGHT DURING THE ASSESSMENT PROCEEDINGS AND THEREFORE, TH ERE IS A CLEAR INTENTION ON THE PART OF THE ASSESSEE FOR CONCEALING THE INCOME FROM THE CAPITAL GAIN EARNED ON SALE OF LAND. THE LD.CIT(A) UPHELD TH E ORDER OF THE PENALTY U/S 271(1)(C) OF RS.1,06,041/- BEING 100% OF THE TAXA TION SOUGHT TO BE EVADED AS IMPOSED BY THE ASSESSING OFFICER. 4. BEING FURTHER AGGRIEVED, THIS APPEAL HAS BEEN PREFERRE D BY THE ASSESSEE BEFORE US. 5. AT THE TIME OF HEARING, NEITHER THE ASSESSEE NOR HIS LE ARNED AUTHORISED REPRESENTATIVE WAS PRESENT. ON THE DATE OF HEARING, WE PROCEEDED TO ADJUDICATE THE CASE AFTER RECORDING THE SUBMISSIONS OF THE LEARNED DEPARTMENTAL REPRESENTATIVE AND CONSIDERING THE RELEVANT FACTS ON RECORD. 6. WE HAVE PERUSED THE CASE RECORDS AND ANALYZED TH E FACTS AND CIRCUMSTANCES OF THIS CASE AND GIVEN CONSIDERABLE THOUGHT TO THE FINDINGS OF THE SUB-ORDINATE AUTHORITIES. AT THE TIME OF HEARING, WE ENQUIRED WITH THE LEARNED DEPARTMENTAL REPRESENTATIVE SINCE ASSESSEE WAS HAVING ONLY 4 1/4 TH SHARE IN THE PROPERTY AND THE IMPOSITION OF PENALTY WAS DONE AGAINST HIM BY THE DEPARTMENT AND WHAT WAS THE STEPS TAKEN B Y THE DEPARTMENT FOR THE OTHER THREE CO-OWNERS. TO THIS QUESTION, THE LE ARNED DEPARTMENTAL REPRESENTATIVE HAS ANSWERED THAT NO ACTION HAS BEEN T AKEN AGAINST THE OTHER THREE CO-OWNERS OF THE PROPERTY. FURTHER, THE FA CTS ON RECORD COULD NOT BE DISPUTED BY THE LEARNED DEPARTMENTAL REPRESENTA TIVE PLACING ON RECORD ANY EVIDENCES. THE FACTS ARE CLEAR THAT DURING T HE YEAR UNDER CONSIDERATION, NO PAYMENT WAS REALIZED BY THE ASSESSEE A ND IT WAS ONLY REALIZED IN THE YEAR 2014 AND THAT FURTHER THE BUYER AN D THE SELLER HAS ACTUALLY AGREED THAT THEY WOULD PRESENT THE CHEQUES IN OCTOBER, 2010 WHEREAS IN SEPTEMBER 2010, THE R.B.I. PUT RESTRICTIONS ON THE FUNCTIONING OF THE BANK I.E., PEN CO-OPERATIVE URBAN BANK LTD., W.E.F. 24.09 .2010 AND THIS IS THE SAME BANK FROM WHERE THE CHEQUES WERE SUPP OSED TO BE CLEARED AND RECEIVED BY THE ASSESSEE TO THE EXTENT OF 1/4 TH SHARE IN THE SALE TRANSACTION. BUT DUE TO THE BANK BEING IN CRITICAL FINANC IAL CONDITION AND THE SAID RESTRICTIONS IMPOSED ON THE BANK BY THE R.B.I, N O PAYMENT WAS REALIZED IN THE YEAR UNDER CONSIDERATION. THESE FACTS WER E NOT DISPUTED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE NOR HE COULD P LACE ON RECORD ANY EVIDENCES CONTRARY TO THESE FACTS ON RECORD. THE ASSE SSEE WAS UNDER THE BONAFIDE BELIEF THAT SINCE HE HAS NOT RECEIVED ANY CONSIDER ATION DURING THE RELEVANT YEAR, THE SALE IS NOT COMPLETE AND NO PROFITS AC CRUED TO HIM. THE REVENUE ALSO COULD NOT PLACE ON RECORD ANY EVIDENCE OF ACTUAL RECEIPT OF ANY AMOUNT BY THE ASSESSEE DURING THE YEAR UNDER CON SIDERATION. THE PROCEDURE OF IMPOSITION OF PENALTY U/S 271(1)(C) SHALL ARISE AND ONLY ARISE IF THERE IS ANY CONCEALMENT OF INCOME OR FURNISHING OF INACCU RATE PARTICULARS OF INCOME. TO DETERMINE THESE FACTORS, THE FACTS AND CIRCU MSTANCES ARE ESSENTIAL. IN THE PRESENT FACTS, WHEN THE CHARGE IS OF T HE CONCEALMENT OF 5 INCOME, THE FACTS DOES NOT SUGGEST EVEN ON A REMOTE B ASIS THAT ASSESSEE HAS CONCEALED HIS INCOME RATHER THE ASSESSEE HAS ACTED UNDER BONAFIDE BELIEF AND EVEN THE REVENUE COULD NOT PLACE ON RECORD AN Y EVIDENCE OF RECEIPT OF INCOME REGARDING 1/4 TH SHARE OF THE PROPERTY BY THE ASSESSEE IN THE RELEVANT YEAR. NEITHER THERE IS MENS REA NOR ACTUS REUS ON THE PART OF THE ASSESSEE. WE FIND THAT OUR VIEW IS FORTIFIED BY THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF K.C.BUILDERS VS. ACIT IN CRL. APPEAL NO.212-213 DT.28.01.2004. WE FIND IT RELEVANT TO EXTRACT SOME FEW LINES FROM THE PARAGRAPH 87 OF THE ORDER HEREUNDER : 87..WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMI SSIONS AND PERUSED THE MATERIALS BROUGHT ON RECORD. ALTHOUGH THERE IS A DI SCUSSION BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS RECEIVED SOME ON-MONE Y IN RESPECT OF SALE OF FLATS BUT HE HAS NOT MENTIONED WHAT IS THE EXACT QU ANTUM OF SUCH ON-MONEY RECEIPTS. THE MERE FACT THAT THOUGH THE RECEIPT OF ON-MONEY IS A PREVALENT PRACTICE IN THE CASE OF TRANSACTION IN FLATS, IT CA NNOT BE PRESUMED THAT THERE WAS A CONCEALMENT OF INCOME OR EVASION OF TAXES. TH E DEPARTMENT MUST BRING OUT MATERIAL TO INDICATE THE ACTUAL CONCEALMENT OF INCOME. THE WHOLE DISCUSSIONS IN THE ASSESSMENT ORDER CLEARLY SHOWS T HAT THE DEPARTMENT HAS PROCEEDED ONLY ON THE BASIS OF THE COST OF CONSTRUC TION. AT THE STAGE WHEN ENQUIRIES WERE MADE, THE ASSESSEE HAS GOT THE VALUA TION DONE BY AN APPROVED VALUER AND FILED THE REVISED RETURNS AND P AID THE TAXES THEREON. THIS CONDUCT CLEARLY SHOWS THAT THERE WAS SOME SORT OF SETTLEMENT BETWEEN THE ASSESSEE AND THE DEPARTMENT. THE ASSESSMENT OF INCOME IS BASED PURELY ON ESTIMATE BASIS. WITHOUT ADEQUATE MATERIALS, IT I S IMPOSSIBLE TO ACCEPT THE DEPARTMENT'S CONTENTION THAT SOME PART OF THE ESTIM ATED INCOME REPRESENTS CONCEALED INCOME. THE ASSESSEE HAS FILED THE REVISE D RETURNS. BY SO REVISING THE RETURNS, THE ASSESSEE HAS SUBSTITUTED THE INCOM E OF THE ORIGINAL RETURN WITH THAT OF THE REVISED RETURNS VIS-`-VIS THE REVI SED RETURN THERE IS NO CONCEALMENT OF ANY INCOME. THE DEPARTMENT HAS ACCEP TED ALL THESE REVISED INCOME WHICH CLEARLY SHOWS THAT THE ASSESSMENTS ARE BASED ON THE BASIS OF THE VOLUNTARY OFFER MADE BY THE ASSESSEE. THERE IS NO MATERIAL BROUGHT BEFORE US EVEN AT THIS STAGE TO SHOW THAT THERE WAS ANY CO NCEALMENT OF INCOME BY THE ASSESSEE AND THEREFORE FIND FORCE IN THE STAND TAKEN BY THE ASSESSEE THAT THE ENTIRE REVISION OF INCOME WAS AS A RESULT OF VO LUNTARY OFFER MADE BY THE ASSESSEE. KEEPING IN VIEW THE RATIO LAID DOWN BY TH E SUPREME COURT IN THE CASE OF SIR SHADILAL SUGAR AND GENERAL MILLS LTD. AND ANOTH ER VS. CIT (165 ITR 705), WE HOLD THAT IN THE FACTS AND CIRCUMSTANC ES OF THE CASE THERE IS NO CONCEALMENT OF INCOME BY THE ASSESSEE. ACCORDINGLY, THE PENALTIES ARE CANCELLED. 6 7. WE ALSO FIND THAT THE ABOVE RATIO OF THE HONBLE APEX COURT HAS BEEN FOLLOWED BY THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. MOHANLAL SHARMA DT.27.04.2005. 8. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES AND THE AFORESAID JUDICIAL PRONOUNCEMENTS, WE ARE OF THE CONSIDERED VIEW THAT THIS IS NOT A FIT CASE FOR IMPOSITION OF PENALTY U/S 271(1)(C) AND W E DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY FROM THE HANDS OF T HE ASSESSEE AND WE HEREBY ALLOW ASSESSEES APPEAL. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 4 TH DAY OF AUGUST, 2020. SD/- SD/- /- ( R. S. SYAL ) ( PARTHA SARATHI CHAUDHURY ) VICE PRESIDENT JUDICIAL MEMBER PUNE; DATED : 4 TH AUGUST, 2020. YAMINI 0 1234 542 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5. 6. CIT(A)-2, PUNE. PR.CIT-2, THANE, '#$ %%&',)&', / DR, ITAT, B PUNE; $*+,/ GUARD FILE. / BY ORDER , // TRUE COPY // -./%0&1 / SR. PRIVATE SECRETARY )&', / ITAT, PUNE.