ITO, Ward-3(3), Visakhapatnam V. Siripurapu Chinatalli, Visakhapatnam

ITA 375/VIZ/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4957 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 20-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K SONOWAL
• Keywords: Capital asset; Business income; Depreciation; Source of fund; Cost of acquisition; Difference of opinion; Revised return
• Section: 271(1)(c)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , ACCOUNTANT MEMBER . / I . T .A.NO. 375 /VIZ/20 1 7 ( / ASSESSMENT YEAR: 20 0 8 - 09 ) INCOME TAX OFFICER WARD - 3(3) VISAKHAPATNAM VS. SMT. SIRIPURAPU CHINATALLI D.NO.9 - 16 - 37/2 GURAJADA ENCLAVE CBM COMPOUND VISAKHAPATNAM [PAN : AGRPC1150E ] ( / APPELLANT) ( / RESPONDENT) ./ I .T.A.NO. 457 /VIZ/2017 ( / ASSESSMENT YEAR: 2008 - 09) INCOME TAX OFFICER WARD - 3(3) VISAKHAPATNAM VS. SHRI K.V.V.PRASAD PLOT NO.301, VYTLA RESIDENCY BALAJINAGAR SIRIPURAM VISAKHAPATNAM ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : S HRI D.K.SONOWAL, CIT DR / RESPONDENT BY : SHRI G.V.N.HARI, AR / DATE OF HEARING : 24 . 01. 201 9 / DATE OF PRONOUNCEMENT : 13 . 02 .201 9 2 I.T.A. NO S.375/VIZ/2017 AND 457/VIZ/2017 SMT. SIRIPURAPU CHINATALLI AND SHRI K.V.V.PRASAD, VISAKHAPATNAM / O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER: TH E S E APPEAL S ARE FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX ( APPEALS ) [CIT(A)] - 2 , GUNTUR VIDE A PPEAL . NO. 005/2013 - 14 DATED 03 .0 4 .201 7 AND 006/2012 - 13 DATED 23.03.2017 FOR THE ASSESSMENT YEAR (A.Y.) 20 0 8 - 09 . SINCE THE GROUNDS RAISED IN THE APPEALS ARE IDENTICAL, THESE APPEALS ARE CLUBBED, HEARD TOGETHER AND DISPOSED OF IN COMMON ORDER FOR THE SAKE OF CONVENIENCE AS UNDER. 2 . ALL THE GROUNDS OF APPEAL ARE AGAINST THE LEVY OF PENALTY U/S 271(1)(C) OF TH E ACT . BRIEFLY , THE FACTS RELATING TO THE AFORESAID APPEALS ARE EXTRACTED FROM THE APPEAL OF SMT. SIRIPURAPU CHINATALLI WHICH ARE COMMON TO BOTH THE APPEALS. T HE ASSESSEE IS AN INDIVIDUAL AND DERIVES INCOME FROM FAMILY PENSION. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE ORIGINALLY FILED THE RETURN OF INCOME ON 30 . 07 . 20 08 DECLARING TOTAL INCOME OF RS.52,773/ - . IN THE COMPUTATION OF INCOME, THE SOURCES OF INCOME SHOWN A RE FAMILY PENSION OF RS.52,773/ - AND AGRICULTURAL INCOME OF RS.66,000/ - . SUB SEQUENTLY, 3 I.T.A. NO S.375/VIZ/2017 AND 457/VIZ/2017 SMT. SIRIPURAPU CHINATALLI AND SHRI K.V.V.PRASAD, VISAKHAPATNAM DURING THE ASSESSMENT PROCEEDING S, THE ASSESSEE FILED A REVISED RETURN DECLARING NIL' INCOME. IN BOTH THE RETURNS OF SMT .CHINNATALLI AND SHRI K.V.V.PRASAD, THE ASSESSEES HAVE APPENDED THE NOTES RELATING TO THE AMOUNT RECEIVED BY THEM IN PROPERTY TRANSACTION AND STATED THE REASONS WHY IT IS NOT TAXABLE. THE AO ON THE BASIS OF FACTS AND THE INFORMATION AVAILABLE ON RECORD NOTICED THAT ASSESSEE HA D ENTERED INTO AN AGREEMENT OF SALE - CUM - GPA ON 10 . 10 . 20 02 WITH SHRI R.K. MITTAL FOR PURCHASE OF 9507 SQ.YDS. OF LAND AT SOMAJIGUDA, HYDERABAD WHICH WA S UNDER LITIGATION SINCE 1996. AO FURTHER NOTICED THAT THOUGH SHRI R.K. MITTAL HAS DECRETAL RIGHT OVER THE PROPERTY BY VIRTUE OF A COURT ORDER HE WAS NOT IN POSSESSION OF THE PROPERTY. TO ENFORCE HIS DECRETAL RIGHT OVER THE PROPERTY, SHRI R.K. MITTAL HAS ALSO FILED A PETITION IN THE COURT FOR EXECUTION OF DECREE IN HIS FAVO U R. AO OBSERVED THAT SHRI R.K. MITTAL HAS ALSO ENTERED INTO A SIMILAR AND SEPARATE AGREEMENT WITH SHRI K.V.V. PRASAD. AS PER THE T ERMS OF THE SAID AGREEMENT, ASSESSEE AND SHRI K . V . V PRASAD WERE TO BE NOMINATED AS PARTIES TO THE DISPUTE BY SHRI R.K. MITTAL IN THE EXECUTION PETITION PENDING IN CIVIL COURT. THUS, IN A SENSE WHILE 4 I.T.A. NO S.375/VIZ/2017 AND 457/VIZ/2017 SMT. SIRIPURAPU CHINATALLI AND SHRI K.V.V.PRASAD, VISAKHAPATNAM ENTERING INTO AGREEMENT OF SALE DATED 10 . 10 . 20 02 BOTH ASS ESSEE AS WELL AS SHRI K . V . V PRASAD KNEW FULLY WELL - THAT WHAT - THEY INTENDED TO PURCHASE WA S ONLY DECRETAL RIGHTS IN THE PROPERTY WHICH WERE HELD BY SHRI R.K MITTAL. SUBSEQUENTLY, THE ASSESSEE , SHRI K . V . V . PRASAD AND SHRI R.K. MITTAL HAVE ENTERED INTO A TRIPARTITE AGREEMENT ON 12 . 11 . 20 07 , AS PER WHICH THEY RELINQUISHED THEIR DECRETAL RIGHTS IN FAVOUR OF M/S FORTUNA INFRASTRUCTURE INDIA PVT. LTD. UNDER THE TERMS OF THE AGREEMENT DATED 12 . 11 .20 07, S HRI R.K. MITTAL IS TO RECEIVE RS. 53,42,65,300 @ RS. 28,100 PER SQ.YD. WHILE ASSESSEE AND SHRI KVV PRASAD WERE TO RECEIVE RS. 30,23,06,700 / - @ RS. 15,900 PER SQ.YD. AO NOTICED THAT AS PER THE AGREEMENT DATED 12 . 11 . 20 07 , THE ASSESSEE IS ENTITLED TO RECEIVE THE SUM OF RS. 15,11,45,400 / - WHERE AS SHRI K . V . V . PRASAD IS ENTITLED TO A SUM OF RS. 15,11,61,300. IT WAS FURTHER NOTICED BY THE AO THAT OUT OF THE SAID AMOUNT , A SUM OF RS. 11,30,00,000 / - WAS ALREADY PAID TO THE ASSESSEE AND SHRI K . V . V PRASAD AT THE TIME OF AGREEMENT DATED 12 . 11 . 20 07 IN THE PROPORTION OF RS. 5,40,00,000 / - AND RS. 5,90,00,000 / - RESPECTIVELY. AS PER THE SAID AGREEMENT, THE BALANCE AMOUNT WAS TO BE PAID IN TWO MORE INSTALMENTS I.E. FIRST INSTALMENT TO BE PAID AFTER 120 DAYS 5 I.T.A. NO S.375/VIZ/2017 AND 457/VIZ/2017 SMT. SIRIPURAPU CHINATALLI AND SHRI K.V.V.PRASAD, VISAKHAPATNAM OF REGISTRATION OF SALE DEED AND THE SECOND INS TALMENT WILL BE AFTER RECORDING OF DELIVERY POSSESSION BY THE COURT. APART FROM TRANSFERRING THEIR NOMINEE RIGHTS UNDER THE TRIPARTITE AGREEMENT THE ONLY OTHER OBLIGATION OF THE ASSESSEE AND K.V.V.PRASAD IS TO TAKE STEPS FOR NOMINATION OF FORTUNA INFRASTRU CTURE IN DIA (P) LTD. IN THE RECORDS OF EP NO.155/2 IN OS NO.1402/1996 ON THE FILE OF SR.CIVIL JUDGE, CITY CIVIL COURT, HYDERABAD AND FURTHER CAUSE THE EXECUTION OF THE SALE DEED UNDER REGISTRATION BY THE CITY CIVIL COURT. IT WAS OBSERVED BY THE AO THAT ON RECEIPT OF THE AMOUNT OF RS. 11,30,00,000 / - , BOTH ASSESSEE AS WELL AS SHRI K . V . V . PRASAD HAVE PAID ADVANCE TAX OF RS. 36,30,000 / - AND RS. 21,20,000 / - RESPECTIVELY FOR THE A . Y UNDER CONSIDERATION . S UBSEQUENTLY THEY FILED THEIR RE VISED RETURN S OF INCOMES REVISING THE INCOME TO NIL AND CLAIMING THE REFUND OF THE ADVANCE TAX PAID. FROM THE SUBMISSIONS OF ASSESSEE AND ON THE FACTS AND MATERIALS ON RECORD, THE AO OBSERVED THAT THE ASSESSEE HAD ENTERED INTO THE AGREEMENT OF SALE WITH SHRI R.K. MITTAL KNOWING FULLY WELL THAT THE PROPERTY WA S UNDER LITIGATION AND PAID AN AMOUNT OF RS. 50,000 / - TO SHRI R.K. MITTAL. THE ASSESSEE ALSO KNEW THAT SHRI R.K. MITTAL WAS ONLY 6 I.T.A. NO S.375/VIZ/2017 AND 457/VIZ/2017 SMT. SIRIPURAPU CHINATALLI AND SHRI K.V.V.PRASAD, VISAKHAPATNAM HAVING DECRETAL RIGHTS OVER PROPERTY AND NOT HAVING THE PHYSICAL POSSESSION OF THE SAME. THE VALUE OF THE PROPERTY INTENDED TO BE PURCHASED WA S VERY HIGH COMPARED TO THE AVAILABLE MEANS OF THE ASSESSEE AS THE PROPOSED SALE CONSIDERATION TO SHRI R.K. MITTAL IS TO THE TUNE OF RS. 53 .00 CRORES , WHEREAS THE ASSESSEE DID NOT HAVE THE SOURCES TO PAY SUCH HUGE AMOUNT. THE AO RECORDED THE STATEMENT FROM THE ASSESSEE AND FOUND THAT THE ASSESSEE HAS ENTERED INTO SUCH TRANSACTION DUE TO MORE PROFIT. IT WAS ALSO STATED BY THE ASSESSEE THAT SHE TOOK THE RISK IN DEALING WITH D ISPUTED PROPERTY WITH A VIEW TO EARN THE PROFIT . IT WAS FURTHER STATED BY HER THAT LOOKING AT THE HIGH MARGIN OF PROFIT IN SUCH NATURE OF TRANSACTION INVOLVING DISPUTED PROPERTY, SHE HAS ENTERED INTO THE TRANSACTION. FROM AVAILABLE INFORMATION AND THE OBSE RVATIONS MADE FROM THE STATEMENT, THE AO VIEWED THAT ASSESSEE HAS MADE THE TRANSACTION AS BUSINESS TRANSACTION AND ANY PRUDENT PERSON WHO INTENDS TO INVEST IN A PROPERTY FOR INVESTMENT PURPOSE WOULD INVEST ONLY IN PROPERTY FREE FROM THE LITIGATION , U NLIKE THE A SSESSEE WHO ENTERS INTO TRANSACTION S WITH DISPUTED PROPERTIES , SHOWS THE PROFIT MOT IVE . H ENCE, AO CAME TO A CONCLUSION THAT THE TRANSACTION IS AN 7 I.T.A. NO S.375/VIZ/2017 AND 457/VIZ/2017 SMT. SIRIPURAPU CHINATALLI AND SHRI K.V.V.PRASAD, VISAKHAPATNAM ADVENTURE IN THE NATURE OF TRADE. T HE ASSESSEES CONTENTION THAT IT IS ONLY A SOLITARY TRANSACTION WAS REJECTED BY THE AO AND HELD THAT EVEN A SOLITARY TRANSACTION CAN BE CHARACTERIZED AS AN ADVENTURE IN THE NATURE OF TRADE , A S THE INTENTIONS OF ASSESSEE WAS TO PURCHASE PROPERTY WITH AN IDEA TO RESELL WITH A HUGE PROFIT MARGIN . F OR THIS PURPOSE THE AO RELIED ON A NUMBER OF DECISIONS OF HONBLE SUPREME COURT AS WELL AS DIFFERENT HIGH COURTS. SO FAR AS THE YEAR OF TAXABILITY IS CONCERNED, AO CONCLUDED THAT SINCE THE ASSESSEE HAS TRANSFERRED HER RIGHT , FOR A CONSIDERATION DURING PREVIOUS YEAR RELEVANT TO A Y UNDER DISPUTE , THE AMOUNT RECEIVED IS TAXABLE IN THE IMPUGNED ASSESSMENT YEAR. HAVING COME TO SUCH CONCLUSION, THE AO PROCEEDED TO COMPUTE THE AMOUNT RECEIVED AS INCOME UNDER THE HEAD BUSINESS AND PROFESSION'. OUT OF THE TOTAL AMOUNT OF RS.5,40,00,000 / - RECEIVED BY THE ASSESSEE, AO ALLOWE D THE DEDUCTION OF RS. 2,00,00,000 / - PAID TO SHR I R.K. MITTAL AND THE SUM OF RS. 50,00,000 / - RETURNED BACK TO SHRI T.C. ASHOK AND BROUGHT THE BALANCE AMOUNT OF RS.2,90,00,000 / - TO TAX . 3 . AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE WENT ON APPEAL BEFORE 8 I.T.A. NO S.375/VIZ/2017 AND 457/VIZ/2017 SMT. SIRIPURAPU CHINATALLI AND SHRI K.V.V.PRASAD, VISAKHAPATNAM THE CIT(A) AND CHALLENGED THE ASSESSMENT ON TWO ISSUES. FIRSTLY, THE YEAR OF TAXABILITY AND SECONDLY THE HEAD OF INCOME UNDER WHICH THE AMOUNT TAXABLE. THE LD.CIT(A) IN ITS APPEAL IN I.T. A NO.183 & 184 DATED 30.11.2011 UPHELD THE ADDITION MADE BY THE AO HOLDING THAT THE TRANSACTION IS AN ADVENTURE IN THE NATURE OF TRADE AND ACCORDINGLY CONFIRMED T HE ADDITION UNDER THE HEAD BUSINESS INCOME. THE LD.CIT(A) ALSO HELD THAT THE INCOME IS ASSESS ABLE IN THE FINANCIAL YEAR 2007 - 08 AND TO BE TAXABLE IN THE ASSESSMENT YEAR 2008 - 09 IRRESPECTIVE OF THE SUBSEQUENT EVIDENCES. THE ASSESSEE WENT ON APPEAL BEFORE THE ITAT AND THE ITAT ALSO CONFIRMED THE ORDER OF THE CIT(A) AND DISMISSED THE APPEALS OF THE ASSESSEE. IN THE MEANTIME, THE AO COMPLETED THE PENALTY PROCEEDINGS INITIATED U/S 271(1)(C) BY AN ORDER U/S 274 R.W.S. 271(1)(C) DATED 07.03.2013 AND IMPOSED PENALTY OF RS.98,77,719/ - AGAINST S.CHINATALLI AND RS.1,14,72,375/ - AGAINST SHRI K.V.V.PRASAD. THE AO IN THE PENALTY ORDER REITERATED THE OBSERVATIONS OF THE CIT(A) AND THE ASSESSMENT ORDER WHICH READS AS UNDER : 1. THE ASSESSEE WHILE ENTERING INTO AN AGREEMENT FOR PURCHASE OF LAND FROM RK MITTAL IS FULLY AWARE THAT SHRI MITTAL IS ONLY A DECREE HOLDER AND THAT THE LAND IN QUESTION IN LITIGATION. 2. DURING THE COURSE OF SCRUTINY PROCEEDINGS, THE ASSESSEE HIMSELF HAS ADMITTED THAT SUCH LANDS IN LITIGATION WOULD BE AVAILABLE FOR A CHEAPER PRICE AND ONCE THE LITIGATION IS CLEARED, THEY WOULD FETCH A HANDSO ME PRICE. THEREFORE, THE IDEA IS TO TRADE IN SUCH LANDS NOT TO MAKE ANY INVESTMENT, FOR ANY INVESTMENT, SAFETY IS THE FIRST AND FOREMOST FACTOR FOR CONSIDERATION WHICH IS 9 I.T.A. NO S.375/VIZ/2017 AND 457/VIZ/2017 SMT. SIRIPURAPU CHINATALLI AND SHRI K.V.V.PRASAD, VISAKHAPATNAM CONSPICUOUS BY ITS ABSENCE IN THE PRESENT DEAL. 3. THE ASSESSEE ENTERED INTO A LAND DEAL FOR RS.26.71 CRORES. THE ASSESSEE DID NOT POSSESS ADEQUATE MONEY TO FINALIZE THE DEAL. IT IS ONLY WITH THE INTENTION OF FINDING AN IMMEDIATE BUYER, THE ASSESSEE ENTERED INTO THE DEAL. 4. THAT THE AMOUNTS PAID AS ADVANCE DID NOT CONSTITUTE PAYMENT OF P ART CONSIDERATION DOES NOT HOLD WATER. PART CONSIDERATION ALONE IS PAID AS ADVANCE. THEREFORE THE CONTENTION THAT THERE IS NO CONSIDERATION INVOLVED IN THE 'SAID TRANSACTION AND HENCE THE TRANSACTION DOES NOT GIVE RISE TAX LIABILITY IS NOT TENABLE, 5. THE PATTERN OF PAYMENTS TO RK MITTAL GIVES RISE TO SERIOUS DOUBTS AS TO THE TIME OF PAYMENT. THE AMOUNT OF RS,50,000/ - WAS PAID AS ADVANCE BY THE AGREEMENT DATED 10.10.2002 AND THE BALANCE AMOUNTS WERE PAID TO HIM YEARS LATER I.E. IN FEB 2007. 6. THE STAMP PAP ER VERIFICATION OF PAPERS DATED 10.10.2002 REVEALED THAT THE STAMP PAPERS SENT FOR VERIFICATION EITHER NOT SOLD BY THE STAMP VENDOR SHRI M.SATYANARAYANA OR THEY MIGHT HAVE OLD STAMP PAPERS, WHICH ARE TAMPERED WITH DATE OF PURCHASE. 7. THE ASSESSEE HAS ENT ERED INTO SIMILAR DEALS OF LAND PURCHASE WHERE THE LAND IN LITIGATION, WHICH CLEARLY ESTABLISHES THE FACT THAT THE ASSESSEE HAS BEEN CARRYING OUT THE BUSINESS OF PURCHASING OF LANDS IN LITIGATION AND SELLING THEM AT A HIGHER PRICE WHERE RISK AND MARGINS AR E HIGH. THEREFORE, THE PURCHASE OF LAND IN QUESTION CAN NO WAY BE TERMED AS AN INVESTMENT BUT IS ONLY A STOCK IN TRADE. 8. THE CONSIDERATION RECEIVED BY THE ASSESSEE REPRESENTED CONSIDERATION RECEIVED IN RELINQUISHMENT OF RIGHTS ACQUIRED THROUGH AN AGREE MENT ENTERED INTO WITH RK MITTAL. EVEN THE BUYERS M/S FORTUNE INFRA ( P ) LTD. ARE FULLY AWARE THAT THE ASSESSEE CANNOT IMPROVE UPON THE TITLE. WHATEVER RIGHT THAT HE HAD ACQUIRED BY VIRTUE OF THE AGREEMENT DATED 10.10.2002 IS BEING TRANSFERRED FOR A DEFINITIVE CONSIDERATION. 9. AS FAR AS THE ASSESSEE IS CONCERNED, THERE IS NO OBLIGATION ON HER PART TO REFUND THE SALE CONSIDERATION RECEIVED EVEN IF IT WERE PROVED THAT THE TITLE WAS DEFECTIVE. HENCE, IT CAN BE STATED THAT GAINS ACCRUED TO THE ASSESSEE ON THE DATE OF TRIPARTITE AGREEMENT DATED 10.11.2007 BECAME FINAL IN THE PREVIOUS YEAR RELEVANT TO THE A.Y. 2008 - 09. 10. THE SUPPLEMENTARY TRIPARTITE AGREEMENT DID NOT CAST ANY ADDITIONAL BURDEN ON THE PART OF THE ASSESSEE. ON THE OTHER HAND, IT FREED TH E ASSESSEE FROM THE ENCUMBRANCES / LITIGATION THAT COULD HAVE ENSUED SUBSEQUENTLY. THEREFORE, IT 10 I.T.A. NO S.375/VIZ/2017 AND 457/VIZ/2017 SMT. SIRIPURAPU CHINATALLI AND SHRI K.V.V.PRASAD, VISAKHAPATNAM IS TRIPARTITE AGREEMENT DATED 10.11.2007 THAT DECIDES THE ISSUE THAT THE INCOME CHARGEABLE TO TAX IN THE A.Y. 2008 - 09. 4 . THE AO VIEWED THAT THERE IS TOTAL ABSENCE OF B ONAFI DE AND PRESENCE OF MALAFIDE IN THIS TRANSACTION. THUS, THE AO HELD THAT THE ASSESSEE HAS FULLY CONCEALED HER INCOME PARTICULARS AND FURNISHED THEM INACCURATELY, THEREBY IT IS A CLEAR ATTEMPT TO CONCEAL HER INCOME PARTIC ULARS AND OR FURNISH ED INACCURATE PARTICULARS OF INCOME SEEKING TO AVOID TAXES AND ACCORDINGLY HELD THAT THE CASE IS FIT CASE FOR LEVY OF PENALTY U/S 271(1)(C) AND LEVIED THE CONCEALMENT PENALTY IN BOTH THE CASE S OF SMT.CHINATALLI AND SHRI K.V.V.PRASAD . 5 . AGAINST THE ORDER OF THE AO , THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) OBSERVED THAT THE ASSESSEE HAS NEITHER FURNISHED THE INACCURATE PARTICULARS NOR CONCEALED THE INCOME AND ACCORDINGLY, THERE IS NO CASE FOR LEVYING PENALTY U/S 271(1)(C), HENCE DELETED THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. THE LD.CIT(A) RELIED ON THE DECISION S OF RELIANCE PETRO PRODUCTS PRIVATE LIMITED (322 ITR 158) (SC) AND THE DECISION S OF HONBLE BOMBAY HIGH COURT IN THE CASE OF METAL ROLLING WORKS LIMITED VS. CIT , 339 ITR 373 AND CIT - 21 VS. ADVAITA ESTATE DEVELOPMENT PVT. LTD. VIDE I.T.A NO.1498 OF 2014 DATED 17.02.2017. 11 I.T.A. NO S.375/VIZ/2017 AND 457/VIZ/2017 SMT. SIRIPURAPU CHINATALLI AND SHRI K.V.V.PRASAD, VISAKHAPATNAM 6 . DURING THE APPEAL HEARING, THE LD.DR STRONGLY SUPPORTED THE ORDER OF THE AO AND ARGUED THAT THE ASSESSEE HAS CONCEALED THE INCOME AND FURNISHED THE INACCURATE PARTICULARS. THE LD.DR FURTHER SUBMITTED THAT THE ADDITION WAS CONFIRMED BY THE HONBLE ITAT AND THERE IS NO REQUIREMENT OF MENS REA IN INCOME TAX PENALTY PROCEEDINGS AS HELD BY HONBLE SUP REME COURT IN THE CASE OF UNION OF INDIA VS. DHAR A MENDRA TEXTILES PROCESSORS (306 ITR 377) AND ARGUED THAT THE ORDER OF THE LD.CIT(A) IS TO BE SET ASIDE AND REQUESTED TO CONFIRM THE PENALTY. 7 . ON THE OTHER HAND, THE LD.AR SUPPORTED THE ORDER OF THE LD. CIT(A). 8 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. IN THE INSTANT CASE THE ISSUE ON WHICH THE ADDITION WAS MADE IS A DEBATABLE ISSUE AND TWO DIVERGENT VIEWS ARE POSSIBLE ACCORDING TO THE ASSESSEE. W ITH REGARD THE TAXABI LITY OF INCOME AND THE YEAR IN WHICH THE INCOME IS TO BE TAXED ALSO IN DISPUTE . ACCORDING TO THE ASSESSEE, SHE HAD ENTERED INTO AN AGREEMENT FOR PURCHASE OF THE LAND FROM SHRI R.K.MITTAL BY AN AGREEMENT CUM GENERAL POWER OF ATTORNEY DATED 10.10.2002 FOR PURCHASE OF 9507 SQ.YDS OF LAND FOR A CONSIDERATION OF RS.28,100/ - PER 12 I.T.A. NO S.375/VIZ/2017 AND 457/VIZ/2017 SMT. SIRIPURAPU CHINATALLI AND SHRI K.V.V.PRASAD, VISAKHAPATNAM SQ.YARD . THE ASSESSEE HAD PAID THE PART AMOUNT OF RS.50,000/ - AS ADVANCE TO THE VENDOR AND SUBSEQUENTLY ENTERED INTO A TRIPARTITE AGREEMENT ON 12.11.2007 CONFERRING THE RIGHTS ON M /S FORTUNA INFRASTRUCTURE INDIA PRIVATE LTD. , ALONG WITH OTHERS AND RECEIVED THE SUM OF RS.5.90 CRORES AS ADVANCE TILL THE DATE OF REGISTRATION OF THE TRIPARTITE AGREEMENT. ACCORDING TO THE ASSESSEE, THE TITLE OF THE PROPERTY IN QUESTION IS SUB - JUDICE AND HENCE VERY FOUNDATION OF THE CLAIM OF THE OWNERSHIP MADE BY THE ORIGINAL OWNERS, AND CONSEQUENTLY THE RIGHTS OF THE SRI R.K.MITTAL AS DECREE HOLDER AND THE RIGHTS DERIVED BY HER THROUGH THE AGREEMENT WITH R.K.MITTAL WITH REGARD TO THE PROPERTY ARE ALL IN SERIOUS JEOPARDY AND NOTHING WOULD BE DUE IF THE APPEAL IS DECIDED AGAINST R.K.MITTAL. THE ASSESSEE HAD PLACED EVIDENCES REGARDING THE CLAIMS OF OWNERSHIP MADE BY THE RIVAL CLAIMA NTS WHO ARE IN PHYSICAL POSSESSION OF THE PROPERTY FOR VERY LONG TIME. S INCE , THE DISPUTES ARE CONTINUING , THE ASSESSEE ALONG WITH SRI K.V.V.PRASAD HAVE ENTERED IN TO SUPPLEMENTARY AGREEMENT WITH M/S FORTUNA INFRASTRUCTURE INDIA PRIVATE LTD RELINQUISHING THE RIGHT TO RECEIVE THE BALANCE CONSIDERATION ON 10.04.2010. IT IS THE CONT ENTION OF THE ASSESSEE THAT AS THE DISPUTES REGARDING THE PROPERTY AND TAKING OVER THE POSSESSION OF THE PROPERTY WERE NOT SETTLED THE ASSESSEE HAD NO RIGHT ON THE AMOUNTS RECEIVED THUS THE SAME 13 I.T.A. NO S.375/VIZ/2017 AND 457/VIZ/2017 SMT. SIRIPURAPU CHINATALLI AND SHRI K.V.V.PRASAD, VISAKHAPATNAM CANNOT BE TREATED AS INCOME IN THE IMPUGNED ASSESSMENT YEA R TILL THE DATE OF COMPLETE SETTLEMENT OF THE DISPUTES. THE INCOME ACCRUES TO THE ASSESSEE ONLY ON SETTLEMENT OF THE DISPUTES BUT NOT IN THE YEAR OF RECEIPT. THE ASSESSEE HAD GOT THE RIGHT OVER THE MONEY RECEIVED ONLY AFTER THE SUPPLEMENTARY AGREEMENT, THUS VIEWED THAT IF THE SAME IS TO BE TREATED AS INCOME IT SHOULD BE ASSESSED IN THE F.Y.2010 - 1 1 , RELATED TO THE A.Y.2011 - 12 BUT NOT IN THE A.Y.2008 - 09. THE ASSESSEE HAS TAKEN THE SUPPORT FROM THE DECISION OF CIT VS HINDUSTAN HOUSING AND LAND DEVELOPMENT TRUST LTD(1986) 161 ITR 524 AND THE DECISION OF CIT VS JAI PRAKASH OM PRAKASH CO.LTD(1961) 41 ITR718(PUNJ). THE ASSESSEE CONTENDED THAT THE AMOUNT RECEIVED FROM M/S FORTUNA INFRASTRUCTURE INDIA PRIVATE LIMITED HAS TO BE TREATED AS ADVANCE IN THE IMPUGNED ASSESS MENT YEAR AND CANNOT BE TREATED AS INCOME PENDING SETTLEMENT OF DISPUTE. A CCORDING TO THE ASSESSEE, THE SUM RECEIVED BY THE ASSESSEE IS ALSO NOT TAXABLE AS CAPITAL GAINS, SINCE THE COST OF THE ACQUISITION WAS NIL . FURTHER, T HE ASSESSEE IS UNDER THE IMPRESSION THAT SINCE , THE SUPPLEMENTARY AGREEMENT WAS FINALLY REACHED ON 10.04.2010, THE CONSIDERATION RECEIVED BY THE ASSESSEE , IF AT ALL TAXABLE THE SAME REQUIRED TO BE TAXED IN THE A.Y. 2011 - 12 BUT NOT IN THE IMPUGNED A.Y. ACCORDING TO THE ASSESSEE TH E RECEIPT IS NOT TAXABLE AS CAPITAL GAIN . 14 I.T.A. NO S.375/VIZ/2017 AND 457/VIZ/2017 SMT. SIRIPURAPU CHINATALLI AND SHRI K.V.V.PRASAD, VISAKHAPATNAM EVEN IF IT IS TAXABLE THE SAME REQUIRED TO BE TAXED IN THE A.Y. 2011 - 12, BUT NOT IN THE A.Y.2008 - 09, THE YEAR IN WHICH THE ASSESSEE HAD ENTERED INTO SUPPLEMENTARY AGREEMENT. THE ASSESSEE HAS SUBMITTED THE ENTIRE FACTS ALONG WITH THE INCOME TAX RETURNS, THUS, FURNISHED THE COMPLETE PARTICULARS BEFORE THE AO. THIS FACT WAS ACCEPTED BY THE AO IN THE ASSESSMENT ORDER. THE NOTE APPENDED BY THE ASSESSEE IN THE ASSESSMENT ORDER IS MADE AVAILABLE IN PAGE NO.15 OF THE L D.CIT(A) WHICH READS AS UNDER : ' NOTE REGARDING LONG TERM CAPITAL GAINS AN AGREEMENT OF SALE - CU M - GENERAL POWER OF ATTORNEY WAS EXECUTED BY SRI R.K. MITTAL ON 10 / 10/2002 FOR THE SALE OF 9507 SQ. YDS. IN TS. NO.20/IA, 20/2 AND 20/3 AT SOMA JIGUDA , HYDERABAD IN FAVOUR OF THE ASSESSEE @ RS. 28.100/ - PER S Q . YD. INRESPECT OF THE SAID, PROPERTY LITIGATION IS PENDING IN, THE COURT SINCE 1996 THE AMOUNTS PAID BY THE ASSESSEE TO SRI R.K, MITTAL WERE ENDORSED ON THE BACK OF THE AGREEMENT. THE ASSESSEE ALONG WITH OTHERS ENTERED INTO A TRIPARTITE AGREEMENT ON 12 / 11 / 2007 WHEREBY THE RIGHTS CONFERRED ON HIM BY THE ABOVE SAID AGREEMENT ARE TO BE VESTED IN M/S. FORTUNA INFRASTRUCTURE INDIA PVT . LTD , HYDERABAD . IT IS SUBMITTED THAT THE AGREEMENT RIGHTS TRANSFERRED BY THE ASSESSEE DID NOT HAVE ANY COST OF ACQUISITION. THOUGH SOME PAYMENTS WERE MADE UNDER THE AGREEMENT THESE AMOUNTS WERE TOWARDS THE CONSIDERATION PAYABLE UNDER THE AGREEMENT BY THE ASSESSEE AND WOUL D HAVE BEEN ADJUSTED AGAINST THE SAME AT THE TIME OF REGISTRATION OF SALE DEED IN FAVOUR OF THE ASSESSEE IN THE NORMAL COURSE. IN OTHER WORDS, THE AMOUNTS PAID UNDER THE A G REEMENT BY THE ASSESSEE WERE ONLY ADVANCES AND THEY WERE NOT THE COSTS INCURRED FOR OBTAINING THE AGREEMENT RIGHTS. UNDER THESE CIRCUMSTANCES, IT IS SUBMITTED THAT THE AMOUNTS REALIZED BY THE ASSESSEE ON THE TRANSFER OF AGREEMENT RIGHTS IN FAVOR OF M /S. FORTUNA INFRASTRUCTURE (INDIA) PVT. LTD. DO NOT CONSTITUTE TAXABLE CAPITAL GAINS IN VIEW OF THE RATIO OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS B.C. SRINIVAS SETTY (1981) 128 ITR 294 (SC) AND FOLLOWED IN CIT VS. DHANARAJ DUGAR( 1 982) 137 IT R 350 (CAL). ANOTHER ANGLE TO THE ISSUE IS THAT THE RIGHT UNDER AN AGREEMENT OF SALE 15 I.T.A. NO S.375/VIZ/2017 AND 457/VIZ/2017 SMT. SIRIPURAPU CHINATALLI AND SHRI K.V.V.PRASAD, VISAKHAPATNAM IS A MERE RIGHT TO SPECIFIC PERFORMANCE OR A RIGHT TO SUE AND THEREFORE NOT TRANSFERABLE U/S. 6(E) OF THE TRANSFER OF PROPERTY ACT, 1882 AND HENCE SUCH RIGHT D ID NOT CONSTITUTE A CAPITAL ASSET AND HENCE THE TRANSFER OF AGREEMENT RIGHT WOULD NOT GIVE RI S E TO TAXABLE CAPITAL GAINS. REFERENCE IN THIS CONTEXT MAY KINDLY B E MADE TO CIT VS, R .DALMIA (1984) 149 ITR 250 (DEL) AND CIT VS. R. DA LMIA (DECD) (1987) 163 ITR 517 UNDER THESE CIRCUMSTANCES THE ASSESSEE SUBMITS THAT THE TRANSFER OF AGREEMENT RIGHTS UNDER THE TRIPARTITE AGREEMENT DID NOT GIVE RISE TO TAXABLE CAPITAL GAINS. FOR DETAILED APPRECIATION OF ALL THE ASPECTS INVOLVED A COPY OF THE AGREEMENT OF SALE CUM PO WER OF ATTORNEY DT. 10 . 10 . 2002 EXECUTED IN FAVOUR OF THE ASSESSEE AND A COPY OF THE REGISTERED TRIPARTITE AGREEMENT D T. 12 . 11 . 2007, W HICH ARE ENCLOSED, MAY KINDLY BE PERUSED.' - THE DEPARTMENT TOOK A VIEW THAT THE INCOME IS TAXABLE IN THE A.Y. 2008 - 09 UNDER THE HEAD BUSINESS INCOME, SINCE, NATURE OF TRANSACTION IS VENTURE IN THE NATURE OF TRADE AND THE AGREEMENT HAS REACHED FINALITY DURING THE PRE VIOUS YEAR RELEVANT TO THE A.Y. 2008 - 09. THE DEPARTMENT HAS TAKEN THIS VIEW SINCE THE ASSESSEE HAD RECEIV ED THE AMOUNT IN THE PREVIOUS YEAR RELEVANT TO THE A.Y. 2008 - 09. BOTH THE VIEWS OF THE DEPARTMENT HA VE BEEN CONFIRMED BY THE HON BLE ITAT, VISAKHAPATNAM. IT IS SETTLED ISSUE THAT MERE CONFIRMATION OF THE ADDITION CANNOT LEAD TO AUTOMATIC IMPOSITION OF PEN ALTY . FROM THE SUBMISSIONS, IT IS OBSERVED THAT THE TWO VIEWS ARE POSSIBLE IN THIS CASE WITH REGARD TO TAXABILITY OF INCOME AND THE YEAR OF TAXABILITY . THE ASSESSEE WAS UNDER THE IMPRESSION THAT THE TRANSACTION IS TAXAB LE UNDER THE HEAD CAPITAL GAINS. S INCE THERE WAS NO COST OF ACQUISITION, 16 I.T.A. NO S.375/VIZ/2017 AND 457/VIZ/2017 SMT. SIRIPURAPU CHINATALLI AND SHRI K.V.V.PRASAD, VISAKHAPATNAM THE TAXABLE CAPITAL GAINS WORKS OUT TO NIL . THE ASSESSEE WAS ALSO UNDER THE IMPRESSION THAT THE YEAR OF TAXABILITY OF INCOME WOULD BE 2011 - 12, BUT NO T A.Y.2008 - 09 . THE COMPLETE DETAILS WERE FURNISHED BEFORE THE AO AL ONG WITH THE RETURN OF INCOME. T HE AO HAS TAKEN A LL TOGETHER A DIFFERENT VIEW AND HELD THAT THE TRANSACTION WAS COMPLETED IN THE PREVIOUS YEAR 2007 - 08 RELEVANT TO THE A.Y. 2008 - 09, HENCE TAXABLE IN THE A.Y. 2008 - 09. SIMILARLY, THE AO HAS ALSO TAKEN A VI EW THAT THE SUM RECEIVED BY THE ASSESSEE WAS TAXAB LE UNDER THE HEAD BUSINESS AS ADVENTURE IN NATURE OF TRADE BUT NOT CAPITAL GAINS, KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES IN WHICH THE ASSESSEE HAD ENTERED INTO THE TRANSACTION. THOUGH THE VIEW OF T HE AO WAS FINALLY CONFIRMED , PRIMA FACIE IT IS ARGUED THAT TWO VIEWS ARE POSSIBLE WITH REGARD TO THE TAXABILITY OF INCOME. SINCE THE ENTIRE PARTICULARS ARE PLACED BEFORE THE AO, THE ISSUE WAS KEPT OPEN BEFORE THE AO AND IT CANNOT BE SAID THAT THE ASSESSEE HAD FURNISHED THE INACCURATE PARTICULARS. IN THIS CASE, THE ENTIRE MATERIAL WAS PLACED BEFORE THE AO AND THE ASSESSEE HAS GIVEN HER VIEW AND CLAIMED THAT THE AMOUNT RECEIVED BY THE ASSESSEE IS NEITHER TAXABLE IN THE YE AR UNDER CONSIDERATION NOR TAXABLE AS CAPITAL GAINS. THE VIEW TAKEN BY THE ASSESSEE WAS TAXABILITY OF INCOME UNDER THE HEAD CAPITAL GAINS SINCE THE INVESTMENT WAS MADE FOR PURCHASE OF LAND. THE ASSESSEE 17 I.T.A. NO S.375/VIZ/2017 AND 457/VIZ/2017 SMT. SIRIPURAPU CHINATALLI AND SHRI K.V.V.PRASAD, VISAKHAPATNAM HAS GIVEN HER INTERPRETATION AND SUPPORTED H ER VIEW WITH VARIOUS CASE LAWS IN THE NOTE ITSELF. THE DEPARTMENT HAS TAKEN A DIFFERENT VIEW WHICH WAS NOT FORESEEN BY THE ASSESSEE AND TAXED THE ENTIRE AMOUNT AS BUSINESS INCOME. THE SOURCE OF INFORMATION FOR TAXING THE SUBJECT AMOUNT IS THE INFORMATION FURNIS HED BY THE ASSESSEE IN THE RETURN OF INCOME. THUS THE SOURCE OF INFORMATION WAS GIVEN BY THE ASSESSEE VOLUNTARILY AND THE DEPARTMENT HAS NOT COLLECTED ANY OTHER INFORMATION WHICH WAS NOT SUBMITTED BY THE ASSESSEE IN THE RETURN OF INCOME INDEPENDE N TLY . TH OUGH THE LD.DR RELIED ON THE DECISION OF DHARMENDRA TEXTILES PROCESSORS , THE HONBLE SUPREME COURT DID NOT HELD THAT IN ALL THE CASES WHERE THE ADDITION IS CONFIRM ED , THE PENALTY SHALL FOLLOW AUTOMATICALLY . THIS VIEW IS FORTIFIED BY THE DECISION OF COORDINATE BENCH OF MUMBAI TRIBUNAL IN THE CASE OF ASSISTANT COMMISSIONER OF INCOME - TAX, CENTRAL CIRCLE 32, MUMBAI. V. VIP INDUSTRIES LTD., [2009] 30 SOT 254 (MUMBAI) IN THE CASE REFERRED ABOV E THE COORDINATE BENCH OF ITAT HELD AS UNDER: THEREFORE, IT WO ULD BE CLEAR THAT THE PENALTY PROCEEDINGS ARE DISTINCT FROM THE ASSESSMENT PROCEEDINGS AND, HENCE, IT BECOMES AMPLY CLEAR THAT ANY ADDITION MADE DOES NOT AUTOMATICALLY LEAD TO THE IMPOSITION OF PENALTY UNDER SECTION 271(1)( C ). IN THE PENALTY PROCEEDINGS, THE ASSESSEE IS GIVEN A CHANCE TO EXPLAIN HIS CASE. IF HE SUCCESSFULLY EXPLAINS HIS POSITION AND IS NOT TRAPPED WITHIN THE PARAMETERS OF CLAUSE ( C ) OF SECTION 271(1) ALONG WITH THE EXPLANATION DEEMING THE CONCEALMENT OF INCOME, THE PENALTY CANNOT BE IMPOSE D. IN THE INSTANT CASE, THE ASSESSEE HAD BONA FIDELY MADE A CLAIM FOR DEDUCTION UNDER SECTION 35 IN 18 I.T.A. NO S.375/VIZ/2017 AND 457/VIZ/2017 SMT. SIRIPURAPU CHINATALLI AND SHRI K.V.V.PRASAD, VISAKHAPATNAM RESPECT OF COST OF CAR PURCHASED FOR THE PURPOSE OF R&D ACTIVITY BY DISCLOSING ALL THE NECESSARY PARTICULARS IN THE AUDIT REPORT. THE FACTS THAT THE CAR WAS PURCHASED BY THE ASSESSEE AND ALSO USED FOR THE PURPOSE OF THE BUSINESS HAD NOT BEEN CONTROVERTED BY THE ASSESSING OFFICER. FURTHER, THE GRANTING OF DEPRECIATION AT 20 PER CENT INSTEAD OF HUNDRED PER CENT DEDUCTION CLAIMED BY THE ASSESSEE SHOWED THAT THERE WAS A GENUINE DIFFERENCE OF OPINION BETWEEN THE ASSESSEE AND THE ASSESSING OFFICER ON THIS ASPECT OF THE MATTER. IT COULD NOT BE SAID THAT THE ASSESSEE, UNDER SUCH CIRCUMSTANCES, HAD CONCEALED ITS INCOME AND WAS CAUGHT WITHIN THE FOUR CORNERS OF SECTION 2 71(1)( C ). THEREFORE, THE COMMISSIONER (APPEALS) HAD RIGHTLY DELETED THE IMPUGNED PENALTY LEVIED UPON THE ASSESSEE. [PARA 12] THE EXPRESSION CONCEALMENT OF INCOME IMPLIES THAT THE INCOME IS BEING CAMOUFLAGED OR COVERED UP SO AS IT CANNOT BE SEEN, FOUND, OB SERVED OR DISCOVERED. THE EXPRESSION FURNISHING OF PARTICULARS OF INCOME IMPLIES FURNISHING OF DETAILS OR INFORMATION ABOUT INCOME WHICH IS NOT IN CONFORMITY WITH THE FACTS IS TRUE. IT DOES NOT EXTEND SUBJECT TO AREAS SUCH AS TAXABILITY OF INCOME, ADMISS IBILITY, DEDUCTION AND INTERPRETATION OF LAW. THE COORDINATE BENCH OF ITAT IN THE CASE OF CO O PERATIVE TEX TILE MILLS LTD. V. ACIT (2015) 43 CCH 0164 (DEL.TRIB) HELD THAT MAKING AN INCORRECT CLAIM DOES NOT AMOUNT TO MENTIONING OF INACCURATE PARTICULARS. IN THE INSTANT CASE, THE AO IN THE ASSESSMENT ORDER STATED THAT THERE IS TOTAL ABSENCE OF BONAFIDE AND ON THE OTHER HAND, THERE IS PRESENCE OF MALAFIDE. HOWEVER, THE AO HAS NOT DISCUSSED HOW THERE WAS ABSENCE OF BONAFIDE AND THE PRESENCE OF MALAFIDE. SIMILA RLY, THE AO LEVIED THE PENALTY FOR FURNISHING THE INACCURATE PARTICULARS AND F OR CONCEALING THE INCOME. FROM PLAIN READING OF 19 I.T.A. NO S.375/VIZ/2017 AND 457/VIZ/2017 SMT. SIRIPURAPU CHINATALLI AND SHRI K.V.V.PRASAD, VISAKHAPATNAM THE PENALTY ORDER, IT SHOWS THAT THE AO IS NOT SURE OF THE CHARGE ON WHICH THE PENALTY IS LEVIED. THE AO MUST BE CLEAR IN HIS MI ND FOR LEVYING THE PENALTY. IT IS THE DUTY OF THE AO TO MAKE OUT A CASE OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS. AS DISCUSSED EARLIER, CONCEALMENT OF INCOME IS IMPLIED THAT HIDDEN TRANSACTION AND FURNISHING OF INACCURATE PARTICUL ARS IMPLIES THAT FURNISHING OF DETAILS OR INFORMATION ABOUT INCOME WHICH ARE NOT IN CONFORMITY WITH THE FACTS OR TRUTH. IN THE INSTANT CASE, THE ENTIRE PARTICULARS ARE PLACED BEFORE THE AO WHICH WAS NOT DISPUTED BY THE AO. HONBLE HIGH COURT OF ANDHRA PRADESH IN ITA NO.684/VIZAG/2016 IN PRINCIPAL CIT - 1, VISAKHAPATNAM VS. SMT. BAISETTY REVATHI, HELD THAT IT IS NECESSARY TO MAKE THE ASSESSEE TO KNOW FOR WHICH OFFENCE THE NOTICE HAS BEEN ISSUED WHILE QUASHING THE NOTICE U/S 271 (1)(C) . IN THE INSTANT CASE AS OBSERVED FROM THE PENALTY ORDER, THE AO IS NOT SURE OF THE OFFENCE COMMITTED BY THE ASSESSEE FOR LEVYING THE PENALTY. THE AO HIMSELF IS CONFUSED WITH REGARD TO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS. H ONBLE HIGH COURT OF PUNJAB & HARYANA IN THE CASE OF CIT VS. HARYANA WAREHOUSING CORPORATION [2009] [314 ITR 215 (P&H)] DISTINGUISHING DHARMENDRA TEXTILES (SUPRA) HELD THAT WHERE ASSESSEE HAS CLAIMED A DEDUCTION DISCLOSING ALL MATERIAL FACTS, BUT THE DEDUC TION WAS 20 I.T.A. NO S.375/VIZ/2017 AND 457/VIZ/2017 SMT. SIRIPURAPU CHINATALLI AND SHRI K.V.V.PRASAD, VISAKHAPATNAM DISALLOWED THOUGH THE CONFLICTING DECISIONS EXIST ON THE SUBJECT, PENALTY CANNOT BE LEVIED. IN THE CASE OF CIT & ANR. VS. EURO FOOTWEAR LTD. &ANR. (2015) (94 CCH 0153) , HONBLE HIGH COURT OF ALLAHABAD HELD THAT MERE MAKING OF CLAIM THAT IS UN SUSTA INABLE IN LAW BY ITSELF SHALL NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS REGARDING INCOME OF ASSESSEE AND NO PENALTY U/S 271(1)(C) CAN BE IMPOSED IN THE ABSENCE OF ANY FINDING THAT THE RETURN WAS IN FACT INCORRECT, ERRONEOUS OR FALSE. HONBLE DELHI HIGH COURT IN THE CASE OF WOODWARD GOVERNOR INDIA (P) LTD. VS. CIT (2002) 253 ITR 745 (DEL.) HELD THAT LEVY OF PENALTY U/S 271 (1)(C) IS NOT AUTOMATIC. 9. IN THE INSTANT CASE, AT THE OUTSET, THE ASSESSEE H AS TAKEN A DIFFEREN T VIEW AND UNDER THE IMPRESSION THAT THE RECEIPT IS NOT TAXABLE AT ALL AND EVEN IF IT IS TAXABLE IT IS TO BE TAXED IN THE SUBSEQUENT ASSESSMENT YEARS I.E. 2011 - 12 AND THE ENTIRE INFORMATION WAS PLACE D BEFORE THE AO. THE AO DID N O T MAKE OUT A CASE OF FURNIS HING INACCURATE PARTICULARS OR CONCEALMENT OF INCOME AND THE CIT(A) RELIED ON THE DECISION OF RELIANCE PETRO CHEMICALS, WHEREIN, HONBLE SUPREME COURT HELD THAT MERELY BECAUSE, THE ASSESSEE HAD CLAIMED THE EXPENDITURE , THE CLAIM WAS ACCEPTABLE OR NOT ACCE PTABLE TO THE REVENUE THAT BY ITSELF WOULD NOT IN OUR OPINION ATTRACT THE PENALTY U/S 21 I.T.A. NO S.375/VIZ/2017 AND 457/VIZ/2017 SMT. SIRIPURAPU CHINATALLI AND SHRI K.V.V.PRASAD, VISAKHAPATNAM 271(1)(C) OF THE ACT. THE LD.CIT(A) ALSO RELIED ON THE DECISION OF HONBLE HIGH COURT OF BOMBAY IN THE CASE OF METAL ROLLING WORKS LIMITED VS. CIT (SUPRA), WHEREIN HONB LE HIGH COURT OF BOMBAY HELD THAT ONCE THE RECEIPT IS DISCLOSED, THE ASSESSEE CANNOT BE SAID TO HAVE CONCEALED THE PARTICULARS OF INCOME. SIMILARLY, IN THE CASE OF CIT - 21 VS. ADVAITA ESTATE DEVELOPMENT PVT. LTD., THE HONBLE HIGH COURT OF BOMBAY HELD THAT WHEN AN APPEAL HAS BEEN ADMITTED IN QUANTUM OF PROCEEDINGS BY HIGH COURT THEN THAT ITSELF IS AN EVIDENCE OF THE ISSUE BEING DEBATABLE NOT WARRANTING PENALTY. IN THE INSTANT CASE, IT IS UNDISPUTED FACT THAT THE HONBLE HIGH COURT HAS ADMITTED THE APPEAL O F THE ASSESSEE WITH REGARD TO QUANTUM AND THE ENTIRE INFORMATION IS FURNISHED BY THE ASSESSEE IN THE RETURN OF INCOME . IN VIEW OF THE FOREGOING FACTS AND CIRCUMSTANCES OF THE CASE , WE HOLD THAT IN THE INSTANT CASE, THE ASSESSEE HAS NEITHER CONCEALED THE INCOME NOR FURNISHED THE INACCURATE PARTICULARS OF INCOME, HENCE, THERE IS NO CASE FOR PENALTY U/S 271(1)(C). ACCORDINGLY, WE HAVE NO HESITATION TO SUSTAIN THE ORDER OF THE LD.CIT(A) AND THE SAME IS UPHELD. 10. IN THE RESULT, THE APPEALS OF THE REVENU E ARE DISMISSED. 22 I.T.A. NO S.375/VIZ/2017 AND 457/VIZ/2017 SMT. SIRIPURAPU CHINATALLI AND SHRI K.V.V.PRASAD, VISAKHAPATNAM ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH FEBRUARY , 2019. S D/ - S D/ - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /VISAKHAPATNAM /DATED : 13 .0 2 .2019 L.RAMA, SPS / COPY OF THE ORDER FORWARDED TO: - 1. / THE ASSESSEE - (I) SMT. SIRIPURAPU CHINATALLI, D.NO.9 - 16 - 37/2, GURAJADA ENCLAVE, CBM COMPOUND, VISAKHAPATNAM (II) SHRI K.V.V.PRASAD, PLOT NO.301, VYTLA RESIDENCY, BALAJINAGAR, SIRIPURAM, VISAKHAPATNAM 2. / THE REVENUE INCOME TAX OFFICER, WARD - 3(3), VISAKHAPATNAM 3. THE PR. COMMISSIONER OF INCOME TAX , RAJAHMUNDRY 4. COMMISSIONER OF INCOME - TAX (APPEALS) - 2 , GUNTUR 5 . , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM