Smt. Rekha Jindal, New Delhi V. ITO, New Delhi

ITA 3479/DEL/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6513 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 21-12-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 09-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJA
• Keywords: Wrong claim; Onus to prove
• Section: 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-I NEW DELHI BEFORE SHRI J.S. REDDY, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 3479/DEL/2014 AY: 20 09-10 REKHA JINDAL, V S ITO, C/O GARG BROS. & ASSOCIATES, CA, WARD-20(4) , 203/88, NEHRU PLACE, NEW DELHI. NEW DELHI. (PAN: ADJPJ6476B) (APPELLANT) (RESPONDENT ) APPELLANT BY : NONE PRESENT RESPONDENT BY : SHRI P. DAMKANUNJ A, SR. DR DATE OF HEARING: 21.12.2015 DATE OF PRONOUNCEMENT: ORDER PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX( APPEALS)- XXII, NEW DELHI WHEREIN BY THE IMPUGNED ORDER DATED 27/07/2012 THE LEARNED FIRST APPELLATE AUTHORITY HA S CONFIRMED PENALTY OF RS. 1,08,548 LEVIED UNDER SECTION 271(1) (C) OF THE INCOME TAX ACT 1961. 2. FROM THE RECORDS, IT IS SEEN THAT THE ORIGINAL R ETURN OF INCOME WAS FILED DECLARING NET TAXABLE INCOME OF RS . 1,73,710/- WHICH WAS LATER REVISED TO RS. 2,59,560/- AFTER IN CLUDING SALE OF I.T.A. NO. 3479/DEL/2014 ASSESSMENT YEAR 2009-10 2 A SCRAP AT RS. 85,850/- AND CAPITAL GAINS AT NIL CL AIMING DEDUCTIONS OF RS. OF 12,22,667/- UNDER SECTION 54 O F THE INCOME TAX ACT, 1961. ASSESSMENT UNDER SECTION 143 (3) OF THE INCOME TAX ACT, 1961 WAS COMPLETED AT AN INCOME OF RS. 7,0 6,930/- AFTER ADDING RS. 5,33,223/-ON ACCOUNT OF CAPITAL GA INS. DURING THE YEAR, THE ASSESSEE HAD SOLD A RESIDENTIAL HOUSE FOR RS. 34,38,000/- AND HAD INVESTED RS. 18,75,000/- IN THE ACQUISITION OF NEW RESIDENTIAL PROPERTY. DUE TO INDEXATION, THE CAPITAL GAINS AMOUNTED ONLY TO RS. 12,22,667/- AND THE CLAIM UNDE R SECTION 54 WAS LIMITED TO THIS AMOUNT ONLY. IT IS SEEN FROM THE RECORDS THAT ORIGINALLY THE CAPITAL GAINS WERE COMPUTED AT NIL BUT LATER DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE SUR RENDERED AN AMOUNT OF RS. 7,15,000/- TOWARDS COST OF IMPROVEMEN T INCURRED IN FINANCIAL YEAR 1998-1999 IN ABSENCE OF VOUCHERS FOR EXPENSES. IN THE PENALTY PROCEEDINGS, IT WAS THE ASSESSEE'S C ONTENTION THAT THE SURRENDER WAS MADE WITH AN AIM TO BUY PEACE OF MIND AND AVOID PROTRACTED LITIGATION. HOWEVER, THE AO IMPOSE D A PENALTY OF RS. 1,08,548/- UNDER SECTION 271 (1) (C) OF THE AC T. THE PENALTY WAS IMPOSED VIDE ORDER DATED 28/06/2012 WITH THE FO LLOWING OBSERVATIONS:- I.T.A. NO. 3479/DEL/2014 ASSESSMENT YEAR 2009-10 3 ASSESSMENT IN THIS CASE WAS COMPLETED UNDER SECTION 143 (3) WIDE ORDER DATED 24TH OF DECEMBER 2011 AT AN INCOME OF RS. 7,06,930/- AGAINST RETURNED INCOME OF RS. 1,73,710/-. THE BRIEF FACTS OF THE CASE LEADING TO PENALTY UNDE R SECTION 271(1)(C). THE CASE WAS SELECTED FOR A SCRU TINY THROUGH CASS WITH REMARKS OF SALE OF PROPERTY OF RS . 39,31,000/-. ASSESSEE HAS DECLARED NIL LONG TERM CAPITAL GAIN IN HIS RETURNED INCOME. THE ASSESSEE C OULD NOT PRODUCE THE DETAILS OF COST OF CONSTRUCTION CLA IMED DURING THE YEAR 1998-99 FOR RS. 7,15,000/- NEITHER ASSESSEE COULD PRODUCE THE SOURCE OF EXPENDITURE ON PROPERTY IN SPITE OF REPEATED REMINDERS WHEREAS CLA IMED FOR STAMP DUTY HAS BEEN GIVEN TO THE ASSESSEE THOUG H IT WAS NOT CLAIMED IN THE RETURN. HENCE, THE LONG TER M CAPITAL GAIN WAS ARRIVED AT RS. 5,33,223/-, WHIC H WERE ACCEPTED BY THE AR AT THE TIME OF ASSESSMENT PROCEEDINGS. IN CASE, THE CASE WOULD NOT HAVE BEEN SELECTED UNDER SCRUTINY, THE ASSESSEE WOULD HAVE CHEATED THE GOVERNMENT. HENCE, IT WAS DETRIMENTAL T O THE REVENUE AND I IMPOSE THE PENALTY OF RS. 1,08,548/- UNDER SECTION 271(1)(C), WHICH IS EQUAL TO 100% OF TAX OR TO BE EVADED. 3. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE FIRST APPELLATE AUTHORITY WHICH WAS DISMISSED WITH THE FO LLOWING REMARKS:- 8.25 IN THE PRESENT CASE ALSO, IT IS SEEN THAT T HE ASSESSEE HAS MADE THE BOGUS CLAIM OF A SCRAP SALE FOR RS. 85,850/- ONLY AS A TOOL FOR GIVING THE COLOUR O F GENUINENESS TO THE OTHERWISE NON-GENUINE CLAIM OF CONSTRUCTION (REFERRED TO AS THE DISPUTED CONSTRUC TION ABOVE). THE CLAIM MADE BY THE ASSESSEE WAS CLEARLY MALA FIDE, AND IN FACT THE MALA FIDE INTENTION OF T HE ASSESSEE IN CLAIMING FALSE INVESTMENT OF RS. 7,15, 000/- I.T.A. NO. 3479/DEL/2014 ASSESSMENT YEAR 2009-10 4 DURING FY 98 - 99 TO SUPPRESS THE TAXABLE CAPITAL G AINS IS VISIBLE TO THE NAKED EYE AND NO AUTHORITY CAN RE MAIN A MUTE SPECTATOR TO SUCH MALA FIDE CLAIMS. AS HELD B Y THE HON'BLE ITAT, MUMBAI IN THE CASE OF CHAMPALAL K VARDHAN (SUPRA), AS THE CLAIM ITSELF IS MALA FIDE, NO ONE CAN SAVE THE ASSESSEE FROM FACING THE MUSIC. 8.26 IN VIEW OF THE ABOVE DISCUSSION IT IS HELD T HAT PENALTY UNDER SECTION 271 (1) (C) IS IMPOSABLE UPON THE ASSESSEE, AS THE ASSESSEE CONCEALED THE PARTICULARS OF HIS INCOME AND FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. ACCORDINGLY, THE PENALTY OF RS. 1,08,548/- IMPOSED UPON THE ASSESSEE FOR ASSESSMENT YEAR 2009 - 10 VIDE ORDER DATED 28/06/2012 IS HEREBY UPHELD. 4. NONE APPEARED FOR THE ASSESSEE, HOWEVER, WRITTEN SUBMISSIONS HAVE BEEN FILED WHICH ARE AVAILABLE ON RECORD. 5. THE LEARNED AR RELIED ON THE ORDERS OF THE AO A ND THE CIT (A). 6. WE HAVE GONE THROUGH THE CASE RECORDS AND HAVE G IVEN THE FACTS DUE CONSIDERATION. IT IS SEEN THAT THE PENALT Y HAS BEEN LEVIED AND CONFIRMED ON ACCOUNT OF ASSESSEE'S FAILU RE TO SUBSTANTIATE HER CLAIM OF IMPROVEMENT TO THE PROPER TY WHICH WAS CARRIED OUT IN FINANCIAL YEAR 1998-99. IT IS SEEN F ROM RECORDS THAT THE ASSESSEE SURRENDERED THE AMOUNT CLAIMED AS COST OF IMPROVEMENT BECAUSE OF HER INABILITY TO PRODUCE THE RELEVANT BILLS AND VOUCHERS AFTER A LAPSE OF ALMOST 10 YEARS. HOWE VER, IN PENALTY PROCEEDINGS, MALA FIDE WAS ATTRIBUTED TO TH E ASSESSEE'S CLAIM IN THIS REGARD AND THE PENALTY WAS IMPOSED. W E ARE OF THE VIEW THAT PENALTY CANNOT BE LEVIED ON PRESUMPTIONS ONLY. BOTH I.T.A. NO. 3479/DEL/2014 ASSESSMENT YEAR 2009-10 5 THE AO AS WELL AS THE COMMISSIONER HAVE NOT DEMONST RATED AS TO HOW MALA FIDE COULD BE ATTRIBUTED TO A CLAIM WHICH, AFTER A LAPSE OF MORE THAN A DECADE, COULD NOT BE SUBSTANTIATED B Y PROPER DOCUMENTS. WE PLACE RELIANCE ON THE JUDGEMENT OF TH E HON'BLE SUPREME COURT IN THE CASE OF DILIP N SHROFF VERSUS JCIT 291 ITR 519 WHEREIN THE HON'BLE APEX COURT HAS OBSERVED AS FOLLOWS: 48. PRIMARY BURDEN OF PROOF, THEREFORE, IS ON THE REVENUE. THE STATUTE REQUIRES SATISFACTION ON THE P ART OF THE ASSESSING OFFICER. HE IS REQUIRED TO ARRIVE AT A SATISFACTION SO AS TO SHOW THAT THERE IS PRIMARY EV IDENCE TO ESTABLISH THAT THE ASSESSEE HAD CONCEALED THE AM OUNT OR FURNISHED INACCURATE PARTICULARS AND THIS ONUS I S TO BE DISCHARGED BY THE DEPARTMENT. 49. WHILE CONSIDERING AS TO WHETHER THE ASSESSEE HA S BEEN ABLE TO DISCHARGE HIS BURDEN, THE ASSESSING OF FICER SHOULD NOT BEGIN WITH THE PRESUMPTION THAT HE IS GU ILTY. 50. ONCE THE PRIMARY BURDEN OF PROOF IS DISCHARGED, THE SECONDARY BURDEN OF PROOF WOULD SHIFT ON THE ASSESS EE BECAUSE THE PROCEEDING UNDER SECTION 271 (1) (C) IS OF PENAL NATURE IN THE SENSE THAT ITS CONSEQUENCES ARE INTENDED TO BE AN EFFECTIVE DETERRENT WHICH WILL PU T A STOP TO PRACTICES WHICH THE PARLIAMENT CONSIDERS TO BE AGAINST PUBLIC INTEREST AND, THEREFORE, IT WAS FOR THE DEPARTMENT TO ESTABLISH THAT THE ASSESSEE SHALL BE GUILTY OF THE PARTICULARS OF INCOME. 51. THE ORDER IMPOSING PENALTY IS QUASI-CRIMINAL IN NATURE AND, THUS, BURDEN LIES ON THE DEPARTMENT TO ESTABLISH THAT THE ASSESSEE HAD CONCEALED HIS INCOM E. SINCE BURDEN OF PROOF IN PENALTY PROCEEDINGS VARIES FROM THAT IN THE ASSESSMENT PROCEEDING, A FINDING IN AN ASSESSMENT PROCEEDING THAT A PARTICULAR RECEIPT IS INCOME CANNOT AUTOMATICALLY BE ADOPTED, THOUGH A FINDING IN THE ASSESSMENT PROCEEDING CONSTITUTES GO OD I.T.A. NO. 3479/DEL/2014 ASSESSMENT YEAR 2009-10 6 EVIDENCE IN THE PENALTY PROCEEDINGS. IN THE PENALTY PROCEEDINGS, THUS, THE AUTHORITIES MUST CONSIDER TH E MATTER AFRESH AS THE QUESTION HAS TO BE CONSIDERED FROM A DIFFERENT ANGLE. 7. IN THE CASE OF CIT VS RELIANCE PETROPRODUCTS PRI VATE LIMITED 322 ITR 158 (SC), THE HON'BLE APEX COURT HAS LAID D OWN THE LAW AS UNDER:- A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 SUGGESTS THAT IN ORDER TO BE COVERED BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY , THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTION 271(1)(C) WOULD EMBRACE THE DETAILS OF CLAI M MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS F OUND TO BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. I N ORDER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROV ISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THA T EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY TH E ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE T HE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, T HE LIABILITY WOULD ARISE. TO ATTRACT PENALTY, THE DETA ILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE, NOT EX ACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. W HERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY TH E ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT O R ERRONEOUS OR FALSE, THERE IS NO QUESTION OF INVITIN G THE PENALTY UNDER SECTION 271(1)(C). A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDI NG THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN TH E I.T.A. NO. 3479/DEL/2014 ASSESSMENT YEAR 2009-10 7 RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. 8. IN THE CASE UNDER CONSIDERATION ALTHOUGH BOTH TH E LOWER AUTHORITIES HAVE ALLEGED THAT THE ASSESSEE HAD FURN ISHED INACCURATE PARTICULARS WITH A MALA FIDE INTENTION, THE SAME HAS NOT BEEN SUBSTANTIATED CONVINCINGLY BY THE DEPARTME NT SO AS TO ATTRACT PENALTY. THE ONLY FINDING AGAINST THE ASSES SEE IS THAT SHE COULD NOT PRODUCE THE RELEVANT VOUCHERS AFTER A LAP SE OF TEN YEARS. EVEN THE INCOME TAX ACT REQUIRES MAINTENANCE OF RECORDS FOR ONLY EIGHT YEARS. SO IT IS HARSH ON THE ASSESSE E TO EXPECT HER TO PRODUCE RECORDS FOR A PERIOD FALLING BEYOND THE STATUTORY PRESCRIBED LIMIT. MOREOVER, THE ASSESSEE HAS ANY WA Y BEEN TAXED ON THE AMOUNT REMAINING UNSUBSTANTIATED. HOWEVER, D RAWING AN INFERENCE AS TO THE MALAFIDE INTENTION OF THE ASSES SEE IN THIS REGARD IS A MERE PRESUMPTION. HENCE, WE ARE UNABL E TO CONCUR WITH THE OBSERVATIONS OF THE LD. COMMISSIONER OF IN COME TAX (APPEALS) AND SET ASIDE HIS ORDER AND DIRECT THAT T HE PENALTY IMPOSED BE DELETED. 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLO WED. I.T.A. NO. 3479/DEL/2014 ASSESSMENT YEAR 2009-10 8 ORDER PRONOUNCED IN THE OPEN COURT ON 17TH OF MARC H, 2016. SD/- SD/- (J.S. REDDY) (SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: THE 17TH OF MARCH, 2016 GS COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT BY ORDER ASSTT. REGISTRAR