The Assistant Commissioner of Income Tax,Circle-3(1) , Hyderabad V. Arun Kumar Agarwal , Hyderabad

ITA 356/Hyd/2021

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 6616 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2021
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB-B
• Assessment Year: 2011-2012
• Appeal Filed On: 02-09-2021
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 271(1)(c); 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES “B”: HYDERABAD (THROUGH VIRTUAL CONFERENCE) B EFORE SH RI SA TBEER SING H GODA RA, JU DI CIA L MEM BER AND SHR I L AXMI PR AS A D SAHU , AC COUNT ANT MEMBE R ITA No. 356/H/2021 Assessment Year: 2011-12 Asst. Commissioner of Income-tax, Circle – 3(1), Hyderabad. Vs. Arun Kumar Agarwal, Secunderabad. PAN – ACCPA 8722H (Appellant) (Respondent) Assessee by: Shri M.V. Anil Kumar Revenue by: Smt. Matta Padma Date of hearing: 07/12/2021 Date of pronouncement: 10/12/2021 O R D E R PER L.P. SAHU, A.M.: This appeal filed by the Revenue is directed against CIT(A) - 3, Hyderabad’s order dated 03/07/2020 for AY 2011-12 involving proceedings u/s 271(1)(c) of the Income Tax Act, 1961 ; in short “the Act on the following grounds of appeal: “1. In the facts and circumstances of the case and in law, the CIT(A) has erred in not confirming the action of the Assessing Officer in imposing penalty u/s.271(1)(c) of the IT Act amounting to Rs.60,00,000/- ITA No.. 356/Hyd/2021 S h r i A r u n K u m a r A g a r w a l H y d . :- 2 -: The action of the CIT(A) is unjustified, arbitrary and against the facts to the case. 2. In the facts and circumstances of the case and in law, the CIT(A) erred in holding that the disallowance of 54F can't be made for the year under consideration and deleting the penalty ignoring the fact that the said order had been confirmed by the CIT(A), the CIT(A) has to appreciate the penalty levied by the Assessing Officer and confirmed the same. 3. Any other grounds that may be urged during course of appeal hearing before the Hon'ble ITAT.” 2. Briefly stated the facts of the case are that the assessee, being an 'Individual', is the Director of a company viz., M/s. Surya Jyothi Spinning Mills Limited, apart from others. The assessee filed his return of income for the impugned AY 2011-12 on 02.09.2011, admitting a total income of Rs.27,81,730/-. The return of income was processed u/s.143(1) of the Act, accepting the returned income, and the case was not selected for regular scrutiny u/s.143(3) of the Act. 2.1 Subsequently, during the course of scrutiny assessment proceedings of the assessee's own case for the AY 2012-13, the AO came to know that the assessee had sold an immovable property for a sale consideration of Rs.2,86,44,700/-, resulting in taxable income under the head 'Long term capital gains' ("LTCG" for short) to the extent of Rs.2,74,53,961/-. Further, the assessee disclosed the said LTCG of Rs. 2,74,53,961/- in the return of income ITA No.. 356/Hyd/2021 S h r i A r u n K u m a r A g a r w a l H y d . :- 3 -: filed for the A Y 2012 -13 and claimed exemption u/s.54F of the Act. 2.3 However, after verifying the documentary evidence relating to sale of the property, the AO opined that the actual transfer of the said property had taken place in the FY 2010-11 relevant to the impugned AY 2011-12, rather than during the FY 2011-12 relevant to the AY 2012-13. Accordingly, the AO had reason to believe that income chargeable to tax under the head 'Long term capital gains' has escaped assessment for the impugned AY 2011-12, within the meaning of sec.147 of the Act. 2.4 The AO, therefore, reopened the assessment for the impugned AY 2011-12, by way of issuing a notice u/s.148 of the Act, dated 19.12.2014, and completed the assessment u/s.143(3) r.w.s. 147 of the Act, dated 26.02.2015. While doing so, the AO determined the total income of the assessee at Rs.3,03,47,939/-, by assessing the entire amount of the LTCG arising from transfer of the impugned property of Rs.2,75,66,209/- denying the assessee's claim of exemption u/s.54F of the Act. 2.5 Also, in regard to the AY 2012-13, the AO assessed the same amount of income under the head 'Long term capital gains' arising from the sale of the impugned property and denied exemption u/s. 54F of the Act. As such, the AO ITA No.. 356/Hyd/2021 S h r i A r u n K u m a r A g a r w a l H y d . :- 4 -: assessed the same income in two AYs implying that the income was brought tax both on substantive basis as well as protective basis. Simultaneously, the AO initiated penalty proceedings u/s.271(1)(c) of the Act, by way of issuing a show cause notice u/s.274 r.w.s 271(1)(c) of the Act. 3. Aggrieved by the orders passed by the AO, the assessee preferred appeals against both the assessment orders i.e., for the AY 2011-12 and AY 2012-13, before the First Appellate Authority i.e., CIT(A)-3, Hyderabad. Accordingly, the CIT(A) disposed of the appeals wherein both the appeals were dismissed. 4. Aggrieved by the order of CIT(A), the assessee preferred appeals before the ITAT, Hyderabad and the ITAT remitted the issue back to the file of the CIT(A) vide its order dated 06/08/2021 in ITA Nos. 1657 & 1658/Hyd/2016 ( a copy is available on record) by observing as under: “5. We have heard the rival submissions and carefully perused the materials on record. On examining the facts of the case, We find merit in the submissions of the Ld. DR. The Ld. CIT (A) had posted the case on four occasions. However, none appeared on behalf of the assessee before the CIT(A) on the dates of hearing. Therefore, the Ld. CIT (A) was left with no other option except to adjudicate the appeals ex-parte. In this situation, We do not find much strength in the arguments advanced by the ld. AR. However, considering the prayer of the Ld. AR, in the interest of justice, We hereby remit the matter back to the file of ITA No.. 356/Hyd/2021 S h r i A r u n K u m a r A g a r w a l H y d . :- 5 -: Ld. CIT (A) in order to consider the appeals afresh on merits by providing one more opportunity to the assessee of being heard. At the same breath, We also hereby caution the assessee to promptly co-operate before the Ld. CIT (A) in the proceedings failing which the Ld. CIT (A) shall be at liberty to pass appropriate order in accordance with law and merits based on the materials on the record. It is ordered accordingly.” 5. In the meanwhile, the AO initiated penalty proceedings u/s 271(1)(c) for AY 2011-12 on the ground that the assessee has concealed the particulars of income under the head long term capital gains of Rs. 2,75,66,209/- and levied a penalty of Rs. 60,00,000/- u/s 271(1)(c). 6. Against the penalty order, the assessee preferred an appeal before the CIT(A) and the CIT(A) directed the AO to cancel the penalty levied u/s 271(1)(c) by observing as under: “6.15 In view of the aforementioned facts and legal position, I am of the considered opinion that the addition made by the AD by disallowing the exemption u/s.54F of the Act itself is questionable and, also, subject matter of appeal before the Hon'ble ITAT, Hyderabad. Under the circumstances, at this juncture, it is not possible to construe that there is any concealment of particulars of income or furnishing inaccurate particulars of income, as the case may be, so as to invoke the provisions of sec.271(1)(c) of the Act. Accordingly, the AO is directed to cancel the penalty levied u/s. 271(1)(c) of the Act, to the extent of Rs.60,OO,OOO/-. Thus, the grounds of appeal raised by the assessee are allowed.” ITA No.. 356/Hyd/2021 S h r i A r u n K u m a r A g a r w a l H y d . :- 6 -: 7. Aggrieved by the order of CIT(A), the revenue is in appeal before the ITAT. 8. We have considered the rival submissions and perused the material on record. It is noticed that the assessee challenged the addition in quantum proceedings before the Tribunal. The Tribunal in ITA Nos. 1657 & 1658/Hyd/2016 vide its order dated 06/08/2021 set aside the issue to the file of CIT(A) for decision afresh after verification of relevant records. When the addition has been restored to the file of CIT(A), in our considered opinion, the penalty on this aspect should also be restored to the file of CIT(A) for taking a fresh decision in accordance with the view finally taken by him in respect of addition in quantum proceedings. Our view in restoring the matter to the file of the CIT(A) is fortified by the judgment of the Hon'ble Supreme Court in the case of Mohammed Mohatram Farooqui Vs. CIT (SC) 2010-TIOL-23-SC-IT. We, therefore, overturn the impugned order on this issue and restore the matter to the file of CIT(A). for taking a fresh decision after deciding the matter in quantum proceedings. Accordingly, the grounds raised by the revenue on this issue are allowed for statistical purposes. ITA No.. 356/Hyd/2021 S h r i A r u n K u m a r A g a r w a l H y d . :- 7 -: 9. In the result, appeal of the revenue is allowed for statistical purposes in above terms. Pronounced in the open court on 10 th December, 2021. Sd/- Sd/- (S.S. GODARA) (L. P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER Hyderabad, Dated: 10 th December, 2021. kv Copy to : 1 ACIT, Circle – 3(1), 7 th floor, Signature Towers, Kondapur, Hyderabad – 500 084 2 Shri Arun Kumar Agarwal, 7 th floor, 105, Surya Towers, S.P. Road, Secunderabad – 500 003. 3 CIT(A) - 3, Hyderabad. 4 Pr. CIT – 3, Hyderabad 5 ITAT, DR, Hyderabad. 6 Guard File.