DCIT 17(2), MUMBAI V. DILIP S. COULAGI, MUMBAI

ITA 3264/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7707 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2004-2005
• Appeal Filed On: 15-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DURGESH SUMROTT
• Assessee Lawyers: DEVDATTA MAINKAR
• Keywords: Capital Gains

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI BEFORE SHRI A.L.GEHLOT, AM & SMT. P.MADHAVI DEVI, JM I.T.A.NO.3264/MUM/2009 - A.Y 2004-05 DY. COMMISSIONER OF I.T. 17(2), MUMBAI. DILIP S. COULAGI, 43, SOUTH R.A.KIDWAI ROAD, WADALA MUMBAI 400 031. PAN NO.AAFPC6564J (APPELLANT) (RESPONDENT) REVENUE BY : SHRI DURGESH SUMROTT. SR. DR ASSESSEE BY : SHRI DEVDATTA MAINKAR. O R D E R PER P.MADHAVI DEVI, JM: THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST CIT (A)S ORDER DATED 26-2-2009. 2. THE ONLY GROUND OF APPEAL RAISED BY THE REVENUE IN THIS APPEAL IS THAT THE CIT[A] HAS ERRED IN DELETING THE PENAL TY OF RS.4,18,065/- LEVIED U/S.271[1][C] OF THE INCOME TAX ACT. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S AN INDIVIDUAL WHO FILED HIS RETURN OF INCOME ON 1-11-2004 DECLARI NG TOTAL INCOME OF RS.1,75,49,260/-. DURING THE ASSESSMENT PROCEEDINGS U/S.143[3] OF THE ACT, AO OBSERVED THAT ASSESSEE HAS SOLD A PLOT OF L AND TO SAHARA INDIA COMMERCIAL CORP. LTD. VIDE AGREEMENT DATED 30-7-200 3 FOR A CONSIDERATION OF RS.5 LAKHS AND THE ASSESSEE HAS CL AIMED CAPITAL GAINS ARISING OUT OF THE TRANSFER AS TAX FREE ON THE GROU ND THAT THE LAND SOLD IS AN AGRICULTURAL LAND. AO OBSERVED FROM THE AGREE MENT THAT THE LAND 2 OF THE ASSESSEE IS SITUATED IN TOURISM DEVELOPMENT ZONE AND, THEREFORE, IS A NON AGRICULTURAL LAND AND THE STAMP ING AUTHORITY HAS ALSO VALUED THE LAND AS DEEMED NON-AGRICULTURAL LAN D. THE ASSESSEE ALSO AGREED TO TAX THE SAME AS CAPITAL GAIN BY SUBS TITUTING THE SALE PRICE OF RS.6,50,000/- AS TAKEN BY THE STAMPING AUT HORITY AND RECOMPUTED THE LONG TERM CAPITAL GAINS. THE ASSESSE E DID NOT PREFER ANY APPEAL BEFORE THE CIT[A]. MEANWHILE, AO INITIAT ED PENALTY PROCEEDINGS U/S.271[1][C] OF THE ACT ON THE GROUND THAT THE ASSESSEE CLAIMED THE NON AGRICULTURAL LAND AS AGRICULTURAL L AND AND THAT THE LONG TERM CAPITAL GAINS ARISING THEREFROM AS EXEMPT FROM TAX. THE ASSESSEES EXPLANATION WAS CALLED FOR AND VIDE LETT ER DATED 7-4-2007 ASSESSEE SUBMITTED HIS EXPLANATION STATING THAT THE RE WAS NO GROSS OR WILLFUL NEGLECT AND HENCE NO PENALTY MAY BE IMPOSED . HOWEVER, AO WAS NOT SATISFIED WITH THE SAID EXPLANATION AND HEL D THAT THE ASSESSEE HAS DELIBERATELY DECLARED THE LAND AS AGRICULTURAL LAND IN ITS RETURN OF INCOME WITH A VIEW TO HOODWINK THE EXCHEQUER. HE, T HEREFORE, LEVIED THE MINIMUM PENALTY OF RS.4,18,605/- U/S.271[1][C] OF THE ACT. 4. AGGRIEVED, ASSESSEE FILED AN APPEAL BEFORE THE C IT[A] WHO DELETED THE PENALTY AND THE REVENUE IS IN SECOND AP PEAL BEFORE US. 5. THE LD. DR PLACED RELIANCE UPON THE ORDER OF THE AO, WHILE THE LD. COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDER OF THE CIT[A] AND REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORIT IES BELOW. 6. HAVING HEARD BOTH THE PARTIES, WE FIND THAT THE ASSESSEE HAS PURCHASED THE LAND AS AN AGRICULTURAL LAND AND CONT INUED TO HOLD IT AS 3 AGRICULTURAL LAND AND IT IS AN ANCESTRAL PROPERTY A ND THE MUNICIPAL TAXES ON NON AGRICULTURAL LAND HAS NOT BEEN PAID BY THE A SSESSEE. IT IS ALSO WORTH NOTING THAT THE SAID LAND HAS BEEN DECLARED A S NON AGRICULTURAL DUE TO EFFORTS OF M/S. SAHARA INDIA CORPN. LTD. AND DUE TO CHANGE IN THE GOVERNMENT POLICY AS IT LIES WITHIN THE TOURISM DEVELOPMENT ZONE. THE ASSESSEES CONTENTION WAS THAT HE WAS UNDER THE BONA FIDE BELIEF THAT IT WAS HELD AS AN AGRICULTURAL LAND, AND THERE FORE THE CAPITAL GAIN ON SALE OF SUCH LAND IS EXEMPT FROM TAXATION AND HA S CLAIMED AS SUCH IN THE RETURN OF INCOME. THE FACT THAT THE ASSESSEE HAS SOLD THE LAND AS NON AGRICULTURAL LAND MAY BE A FIT CASE FOR MAKING THE ADDITION, BUT IT CANNOT BE A CASE FOR LEVY OF PENALTY. THE BONA FIDE S OF THE ASSESSEES CLAIM HAS TO BE SEEN AND WE ARE SATISFIED THAT THE ASSESSEE WAS UNDER THE BONA FIDE BELIEF THAT THE SAME IS EXEMPT AS AGR ICULTURAL INCOME. IN VIEW OF THE SAME, WE DO NOT SEE ANY REASON TO INTER FERE WITH THE ORDER OF THE CIT[A] AND, THEREFORE, REVENUES GROUND OF APPEAL IS DISMISSED. 7. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED ON THIS 12 TH DAY OF FEBRUARY, 2010. SD/- SD/- (A.L.GEHLOT) (P.MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI: 12 TH FEBRUARY, 2010. P/-* 4 COPY TO- 1) APPELLANT 2) RESPONDENT 3) CITA MUMBAI. 4) CIT CITY MUMBAI 5) DR BENCH MUMBAI TRUE COPY BY ORDER DY /ASST.REGISTRAR,ITAT MUMBAI. SR.NO. PARTICULARS DATE INITIALS 1 DRAFT DICTATED ON 9-2-10 P 2 DRAFT PLACED BEFORE AUTHOR 10-2-10 P 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 5 APPROVED DRAFT COMES TO SR.PS/PS 6 ORDER KEPT FOR PRONOUNCEMENT 7 FILE SENT TO BENCH CLERK 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER