Shri Rameshbhai Dahyabhai Patel, V. The Income tax Officer,Ward-9(1), Ahmedabad

ITA 4261/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 0134 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 05-08-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 03-12-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUDHASHU S JHA
• Assessee Lawyers: S N DIVATIA
• Keywords: Business income; Initiation of penalty proceedings; Revised return
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI A.N. PAHUJA, ACCOUNTANT MEMBER DATE OF HEARING : 05/08/2010 DRAFTED ON: 16/08/2 010 ITA NO.4261/AHD/2007 ASSESSMENT YEAR : 2002-03 RAMESHBHAI DAHYABHAI PATEL 292, BRAHMAN VAS OGNAJ DIST: AHMEDABAD VS. THE INCOME TAX OFFICER WARD-9(1) AHMEDABAD PAN/GIR NO. :ALZPP 8365 P (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI S.N.DIVATIA, A.R. RESPONDENT BY: SHRI SUDHASHU S.JHA, D.R. O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE ASSESSEE WHICH HAS EMANATED FROM THE ORDER OF LEARNED CIT(APPEALS)-XV, AHMEDABAD DATED 31/10/2007 PASSED FOR ASSESSMENT YEAR 2002-03 . 2. THE APPELLANT HAS CHALLENGED THE CONFIRMATION OF LEVY OF PENALTY IMPOSED U/S.271(1)(C) OF THE I.T. ACT, 1961 OF RS.2 ,91,943/-. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ORDERS PASS ED U/S.271(1)(C) DATED 20/03/2007 AND THE ASSESSMENT ORDER MADE U/S. 143(3) R.W.S.147 OF THE I.T. ACT, 1961 DATED 29/09/2006 WERE THAT IN CO MPLIANCE U/S.148 OF THE I.T. ACT, 1961, THE APPELLANT HAS DISCLOSED THE INCOME WHICH HE HAS EARNED ON SALE OF LAND. FACTS HAVE REVEALED THAT THE APPELLANT ALONG WITH TWO OTHERS HAVE SOLD SIX PLOTS OF LAND AND EARNED P ROFIT OF RS.59,09,676/-. ITA NO. 4261/AHD/2007 RAMESHBHAI DAHYABHAI PATEL VS. ITO ASST.YEAR - 2002-03 - 2 - FACTS HAVE ALSO REVEALED THAT THE SHARES OF THE PER SONS INVOLVED WAS AS UNDER:- SL.NO(S) NAME OF PARTY PERCENTAGE 1. GOKULDAS FAMILY TRUST1 50% 2. SHRI BABULAL JAMNADAS PATEL 25% 3. SHRI RAMESHBHAI DAHYABHAI PATEL (THE APPELLANT) 25% 2.1. ACCORDINGLY, THE ASSESSEES SHARE AMOUNTING TO RS.13,67,527/- WAS DISCLOSED AS PER THE RETURN AND THE SAME WAS ASSESS ED AS PER THE ORDER MENTIONED ABOVE. SINCE THE RETURN HAS NOT BEEN FI LED WITHIN THE TIME PRESCRIBED, BUT IT WAS FILED CONSEQUENCE UPON A NOT ICE U/S.148 OF THE I.T. ACT, 1961, THEREFORE, IT WAS HELD THAT THE ASSESSEE WAS LIABLE FOR PENALTY OF CONCEALMENT U/S.271(1)(C) OF THE I.T. ACT, 1961. DURING THE PENALTY PROCEEDINGS, THE APPELLANT VEHEMENTLY CONTESTED THA T THE NECESSARY INFORMATION ABOUT THE PROFIT EARNED ON SALE OF LAND WAS DULY INFORMED TO AN ADVOCATE WITH THE IMPRESSION THAT THE DUE LEGAL RECOURSE SHALL BE FOLLOWED BY HIM BUT HE HAD FAILED TO COMPLY WITH TH E PROVISIONS OF THE I.T. ACT, 1961. FOR THE DELAY ON THE PART OF THE ADVOCATE, THE ASSESSEE MUST NOT BE PENALIZED. THE ASSESSING OFFICER WAS NOT CONVINCED AND OPINED THAT THE APPELLANT COULD NOT SHRINK FROM HIS RESPONSIBILITY BY ADVANCING THE REASON THAT THE ADVOCATE WAS ENTRUSTE D WITH THE WORK OF FILING OF THE RETURN WHO HAD NOT COMPLIED WITH IN T IME. ACCORDING TO ASSESSING OFFICER, THE ASSESSEE WAS REQUIRED TO FIL E THE RETURN U/S.139(1) OF THE I.T. ACT, 1961 ON OR BEFORE 31/07/2002, HOW EVER, THE RETURN WAS FILED AFTER A NOTICE U/S.148 OF THE I.T. ACT, 1961 WAS ISSUED ON 29/09/2006, THEREFORE, IT WAS CLEAR THAT THE ASSESS EE HAD NEVER INTENDED TO ITA NO. 4261/AHD/2007 RAMESHBHAI DAHYABHAI PATEL VS. ITO ASST.YEAR - 2002-03 - 3 - FILE THE RETURN UNLESS AND UNTIL SERVED WITH A NOTI CE U/S.148 OF THE I.T. ACT, 1961. ACCORDINGLY, THE PENALTY WAS LEVIED. 3. BEFORE THE FIRST APPELLATE AUTHORITY, THE APPELL ANT HAS TRIED TO ESTABLISH THAT THERE WAS NO DEFAULT ON HIS PART BEC AUSE THE COMPLIANCE IN RESPECT OF REST OF THE CO-OWNERS HAVE BEEN MADE AND IN A GOOD FAITH HE HAS ALSO GIVEN ALL THE INFORMATION TO AN ADVOCATE, THEREFORE, THERE WAS NO CONCEALMENT OF HIS PART. CASE LAW CITED ARE:- SL.NO(S) DECISION IN THE CASE OF REPORTED IN 1. PANDIT GOVIND PRASAD MISHRA VS. CIT 238 ITR 338 (ALL.) 2. CIT VS. M.V. KENLUCKY 57 TTJ 736 3. - 58 TTJ (AHD.)715 4. MOTILAL PADAMPAT SUGAR MILLS CO.LTD. VS. STATE OF U.P. (SC) 118 ITD 5. T.ASHOK PAI VS. CIT 292 ITR 11(SC) 3.1. HOWEVER, LEARNED CIT(APPEALS) WAS NOT CONVINCE D AND IN HIS OPINION EVEN IN A CASE IF A REVISED RETURN IS FILED , AFTER THE DETECTION BY THE REVENUE DEPARTMENT, THE ASSESSEE IS LIABLE FOR CONCEALMENT PENALTY AND FOLLOWING THE DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF DEEPAK CONSTRUCTION CO. VS. CIT REPORTED AS (2007) 293 ITR 285 (GUJ.) AFFIRMED THE ACTION OF THE ASSESSING OFFICER. 4. WITH THIS LEGAL AND FACTUAL BRIEF BACKGROUND, WE HAVE HEARD BOTH THE SIDES. THE UNDISPUTED FACT IS THAT A LAND WAS SOLD AND THE APPELLANTS 25% SHARE WAS RS.13,67,527/-. THE FOREMOST ARGUME NT IS THAT THE ASSESSEE HAD NO INTENTION FOR NOT DISCLOSING THE PR OFIT ON SALE OF LAND. ITA NO. 4261/AHD/2007 RAMESHBHAI DAHYABHAI PATEL VS. ITO ASST.YEAR - 2002-03 - 4 - THE DUE DISCLOSURE HAD ALREADY BEEN DONE BY THE OTH ER CO-OWNERS. BEFORE US, A JUDGMENT OF ONE OF THE CO-OWNERS, NAME LY, SHRI BABULAL JAMNADAS PATEL PASSED U/S.143(3) OF THE I.T. ACT, 1 961 DATED 28/03/2005 IS PLACED ON RECORD. IN THAT ORDER VIDE PARAGRAPH NO.4, THE ASSESSING OFFICER HAS RECORDED THE FACTS. AS STATED ABOVE, T HAT THE SAID ASSESSEE ALONG WITH TWO OTHERS HAD SOLD SIX PLOTS OF LAND AN D EARNED PROFIT OF RS.55,09,676/-. IN THAT CASE, 1/4 TH SHARE OF THE PROFIT OF RS.13,77,407/- WAS TREATED AS BUSINESS INCOME FROM PURCHASE AND SA LE OF LAND. HOWEVER, THE PERTINENT POINT AS STRESSED UPON BEFOR E US IS THAT NO PENALTY FOR CONCEALMENT WAS INITIATED IN THAT CASE. WE HA VE PERUSED THE MATERIAL FACTS AND THEREAFTER CAN MAKE AN OBSERVATION THAT N ON-INITIATION OF PENALTY PROCEEDINGS COULD BE BECAUSE OF SEVERAL OTH ER REASONS AND ON THAT GROUND ONLY THE ASSESSEE MUST NOT GET RELIEF AUTOMA TICALLY IN THE PRESENT CASE. NEVERTHELESS, THE QUESTION IS THAT WHETHER T HE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME WHEN THE DETAI LS OF THAT VERY INCOME WERE VERY MUCH IN THE KNOWLEDGE OF THE REVENUE DEPA RTMENT. FROM THE SEVERAL FACTS MENTIONED IN THE SAID ASSESSMENT ORDE R PASSED U/S.143(3) DATED 28/03/2005 IN THE CASE OF SHRI BABULAL JAMNAD AS PATEL, ONE THING IS APPARENT THAT, THE DETAILS OF THE SALE OF LAND AND PROFIT EARNED THEREON AS WELL AS THE AMOUNT OF ASSESSEES SHARE OF PROFIT W AS IN THE KNOWLEDGE OF THE REVENUE DEPARTMENT MUCH BEFORE THE PROCEEDING S INITIATED AGAINST THE ASSESSEE. THIS IS ALSO NOT IN DISPUTE THAT THE RETURNED INCOME, THOUGH FILED INCOMPLIANCE OF NOTICE U/S.148 OF THE I.T. AC T, 1961, WAS ACCEPTED AS IT WAS, MEANING THEREBY THE PROFIT ON SALE OF LA ND OF RS.3,67,527/- WAS ACCEPTED BY THE ASSESSING OFFICER. AT THIS STAGE, WE CAN HOLD THAT THE APPELLANT HAD OFFERED AN EXPLANATION ABOUT THE PROF IT EARNED ON SALE AND THAT EXPLANATION WAS NOT FOUND TO BE FALSE. RATHER IT IS ALSO CLEAR THAT THE ITA NO. 4261/AHD/2007 RAMESHBHAI DAHYABHAI PATEL VS. ITO ASST.YEAR - 2002-03 - 5 - ASSESSEE IS IN A POSITION TO SUBSTANTIATE THE EXPLA NATION OFFERED BY FILING THE PROOF OF DISCLOSURE IN THE HANDS OF AN ANOTHER CO-OWNER. ONCE IT WAS SO, THEN IT CAN BE SAFELY HELD THAT IN THE LIGHT OF EXPLANATION-1 TO SECTION 271(1)(C) OF THE I.T.ACT, 1961.)9C), THE ASSESSEE I S ENTITLED FOR THE RELIEF BEING COVERED UNDER THE EXCEPTIONS PRESCRIBED THERE IN. 5. THE APPELLANT HAS ALSO TRIED TO ESTABLISH HIS BO NA FIDE BY STATING THAT THE TRUE AND CORRECT INFORMATION WAS HANDED OV ER TO AN ADVOCATE, THEREFORE, THERE WAS NO CONSCIOUS CONCEALMENT OR AN ATTEMPT TO EVADE THE TAX WAS ON HIS PART. TAKING SHELTER FROM THE WORDI NGS OF SUB-CLAUSE-B OF EXPLANATION-1 TO SECTION 271(1)(C) OF THE I.T.ACT, IT HAS BEEN ARGUED THAT THE ASSESSEE HAS OFFERED A BONA FIDE EXPLANATION AN D THE SAID EXPLANATION WAS A TRUE EXPLANATION BECAUSE ALL THE MATERIAL FA CTS IN RESPECT OF COMPUTATION OF A TOTAL INCOME WAS NOT ONLY DISCLOSE D BY HIM BUT ALSO ONE OF THE OTHER CO-OWNER. 5.1. LASTLY, IT HAS ALSO BEEN TRIED TO ARGUE THAT I N THE LIGHT OF THE PRE- AMENDED PROVISIONS OF EXPLANATION-3 TO SECTION 271 OF THE I.T. ACT, 1961 SINCE THE RETURN FOR ASSESSMENT YEARS 2003-04, 200 4-05 AND 2005-06 HAVE BEEN FILED PRIOR TO THE DATE OF FILING OF THE RETURN FOR THE YEAR UNDER CONSIDERATION, THEREFORE, MERELY NON-FILING OF RETU RN MUST NOT BE HELD AS A DEEMED CONCEALMENT SPECIALLY WHEN THE RETURNED INCO ME WAS FOUND TRUE AND CORRECT. AFTER HEARING BOTH THE SIDES, WE ARE OF THE VIEW THAT INSTEAD OF GOING INTO THESE TECHNICALITIES, SPECIALLY WHEN THE SAID ARGUMENT IT NEVER BEEN RAISED BEFORE THE AUTHORITIES BELOW, THE MERITS OF THE CASE GOES IN FAVOUR OF THE ASSESSEE AS DISCUSSED HEREINABOVE. THOUGH THE ADDITION IN ITSELF CAN BE SAID TO BE JUSTIFIED BUT FOR THE P ENALTY PROCEEDINGS, THE ITA NO. 4261/AHD/2007 RAMESHBHAI DAHYABHAI PATEL VS. ITO ASST.YEAR - 2002-03 - 6 - CRITERIA OF ADJUDICATION IS ALTOGETHER DIFFERENT AN D FOR THAT EXPLANATION-1 IS ONE OF THE GUIDING FACTOR TO DECIDE WHETHER OR N OT A CASE IS FIT FOR IMPOSITION OF CONCEALMENT PENALTY. IN THE PRESENT CASE, AN EXPLANATION WAS FURNISHED WHICH WAS NOT FOUND TO BE FALSE, BUT ALL THE SAME IT WAS FOUND THAT THE ASSESSEE WAS ABLE TO SUBSTANTIATE TH E DETAILS OF THE DISCLOSURE. THUS, THE TOTALITY OF THE CIRCUMSTANCE S HEREBY DEMANDS TO REVERSE THE ACTION OF THE REVENUE AUTHORITIES. WI TH THE RESULT, WE HEREBY DIRECT TO DELETE THE PENALTY. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 19/ 08 /2010. SD/- SD/- ( A.N. PAHUJA ) ( MU KUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBE R AHMEDABAD; DATED 19/ 08 /2010 T.C. NAIR, SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 2. THE DEPARTMENT. 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-XV, AHMEDABAD 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD