The Sathe Biscuit & Choloate Co. Ltd., Pune V. Dy.CIT,Cir.7, Pune, Pune

ITA 441/PUN/2012

• Counselvise Citation: 44124514 RSA 2012
• Duration Of Justice: 3 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 02-12-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 01-03-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MRS M S VERMA; B G REDDY
• Assessee Lawyers: SUNIL PATHAK
• Keywords: Capital asset; Period of limitation; Additional evidence; Cost of acquisition; Reasonable cause; Fair market value; Difference of opinion; Valuation report; Competent authority; Onus to prove; Time period of passing order
• Section: 143(3); 27; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.441/PN/2012 (ASSESSMENT YEAR : 2007-08) THE SATHE BISCUIT AND CHOCOLATE COMPANY LTD., SATHE MEMORIAL COMPLEX, 820, BHAVANI PETH, PUNE 411 002. PAN : AACCT3593Q . APPELLANT VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE- 7, PUNE. . RESPONDENT ASSESSEE BY : MR. SUNIL PATHAK & MR. SANKET JOSHI DEPARTMENT BY : MRS. M.S. VERMA, CIT & MR. B. G. REDDY, CIT DATE OF HEARING : 13-03-2015 DATE OF PRONOUNCEMENT : 10-04-2015 ORDER PER G. S. PANNU, AM THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AG AINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-III, PUNE DATED 30.12.2011 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 27.05.2011 PASSED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) PERTAINING TO THE ASSESSMENT YEAR 2007-08. 2. IN THIS APPEAL, ASSESSEE HAS RAISED THE FOLLOWIN G GROUNDS OF APPEAL :- 1. THE LEARNED CIT (A) ERRED IN CONFIRMING THE PEN ALTY U/S 271(L)(C). 2. THE LEARNED CIT (A) ERRED IN CONFIRMI NG THE PENALTY OF RS.12,76,62,859/- ON THE GROUND THAT ASSESSEE HAS C ONCEALED THE INCOME BY WAY OF CAPITAL GAIN ON SALE OF LAND AT 44 /A/1, DHANORI, PUNE AND FURNISHED INACCURATE PARTICULARS THEREOF. 3. THE LEARNED CIT (A) WAS NOT JUSTIFIED IN HOLDING THE LEARNED A.O.'S STAND THAT THE ASSESSEE HAD INFLATED THE FAIR MARKE T VALUE OF THE PROPERTY AS ON 01.04.1981 AND THEREBY REDUCED THE C APITAL GAIN ON SALE THEREOF. ITA NO.441/PN/2012 4. THE LEARNED CIT (A) WAS NOT JUSTIFIED IN HOLDING THE LEARNED A.O.'S STAND THAT BY ASSESSING THE CAPITAL GAIN ON SALE OF LAND IN AY 2007-08 AGAINST THE AY 2008-09 AS OFFERED TO TAX BY THE ASS ESSEE, AMOUNTS TO CONCEALMENT OF INCOME/ FURNISHING OF INACCU RATE PARTICULARS OF INCOME. 5. THE LEARNED CIT (A) ERRED IN CONFIRMING THE PENA LTY LEVIED ON THE GROUND OF DISAGREEING WITH THE TRUE PARTICULARS SUB MITTED IN SUPPORT OF THE RETURN OF INCOME BY THE APPELLANT. 6. THE LEARNED CIT (A) ERRED IN CONFIRMING THE PENA LTY LEVIED ON THE GROUND OF DIFFERENCE OF OPINION ON ESTIMATION OF FM V AS ON 01.04.1981. 7. THE LEARNED CIT (A) ERRED IN CONFIRMING THE PENA LTY LEVIED ON THE GROUND OF DIFFERENCE OF OPINION ON YEAR OF TAXABILI TY OF INCOME. 8. THE LEARNED CIT(A) ERRED IN CONFIRMING THE PENAL TY LEVIED, WHEN CAPITAL GAIN IS TAXED IN THE A.Y. 2007-08 INSTEAD O F 2008-09 BECAUSE OF THE HIGH COURT JUDGMENT (NOT THE SUPREME COURT J UDGMENT) IN CASE OF CHATURBHUJ DWARKADAS KAPADIA. 9. THE LEARNED CIT (A) FAILED TO APPRECIATE THAT A. THE APPELLANT HAD VOLUNTARILY OFFERED TO TAX THE CAPITAL GAIN ON SALE OF LAND IN THE AY 2008-09 AND PAID THE TOTAL T AX LIABILITY BY WAY OF ADVANCE TAX. B. THE APPELLANT RELIED AND SUBMITTED FOLLOWING DOC UMENTS ALONG WITH THE RETURN OF INCOME FOR AY 2008-09 IN SUPPORT OF THE SALE TRANSACTION. I COPY OF DEVELOPMENT AGREEMENT II. COPY OF SALE DEED/CONVEYANCE DEED C. THE APPELLANT'S ESTIMATE OF FMV AS ON 01.04.1981 WAS BASED ON THE FMV AS PER THE STAMP DUTY AUTHORITIES CIRCUL AR NO.5 DATED 10 IN -14 M AUGUST 1989. D. THERE WAS NO PRACTICE OF ESTIMATING THE FMV BY S TAMP DUTY AUTHORITIES IN THE RECKONER IN THE YEAR 1981 AND TH EREFORE THE ONLY CORRECT WAY TO FIND OUT THE FMV IN 1981 WAS ON THE BASIS OF CIRCULAR REFERRED ABOVE. E. THE SALE INSTANCES REFERRED BY THE LEARNED AO FO R DETERMINING THE FMV AS ON 01.04.1981 WERE NOT COMPARABLE AT ALL WITH THE APPELLANT'S LAND AND THEREFORE THE FMV AS ON 01.04. 1981 COULD NOT BE DETERMINED ON THE BASIS OF THESE INCOMPARABL E SALE INSTANCES. F. THE APPELLANT HAD DISCLOSED ALL THE FACTS CORREC TLY AND THE FMV AS ON 01.04.1981 WAS SUPPORTED BY THE REGISTERED VA LUER'S REPORT. HENCE, IT IS WRONG TO PRESUME THAT APPELLA NT HAD CONCEALED THE INCOME OR FILED THE INACCURATE PARTIC ULARS OF INCOME. G. AT THE BEST, IT COULD BE STATED THAT THE CLAIM O F THE FMV AS ON 01.04.1981 MADE BY THE ASSESSEE WAS A DISPUTABLE ON E AND IN VIEW OF THE SUPREME COURT'S DECISION IN CASE OF VEG ETABLE PRODUCT (88 ITR 192), PENALTY WAS NOT LEVIABLE. H. MERELY BECAUSE THE LEARNED A.O. DISAGREE WITH TH E TRUE PARTICULARS SUBMITTED IN SUPPORT OF RETURN OF INCOM E, IT CANNOT BE CONSTRUED THAT THE APPELLANT CONCEALED THE PARTI CULARS OF ITA NO.441/PN/2012 INCOME OR FURNISHED INCORRECT OR INACCURATE PARTICU LARS OF INCOME FOR THE PURPOSE OF SEC. 271(1)(C). I. THE LEARNED A.O. FAILED TO REFER THE VALUATION O F LAND AS ON 01.04.1981 TO DEPARTMENTAL VALUATION OFFICER, AND F AILED TO OBTAIN THE DVO'S REPORT. 10. THE APPELLANT PRAYS FOR ADMISSION OF ADDITIONAL EVIDENCES. IF ANY REQUIRED IN SUPPORTING THIS APPEAL. 11. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. 3. IN THIS APPEAL, ALTHOUGH THE APPELLANT HAS RAISE D MULTIPLE GROUND OF APPEAL BUT ESSENTIALLY THE SOLITARY GRIEVANCE IS AR ISING FROM THE ORDER OF THE CIT(A) WHEREBY HE HAS SUSTAINED THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT TO THE EXTENT OF RS.12,76,62,859/-. 4. SUBSTANTIVELY SPEAKING, THE PENALTY U/S 271(1)(C ) OF THE ACT HAS BEEN IMPOSED WITH RESPECT TO ADDITION MADE BY THE ASSESS ING OFFICER ON ACCOUNT OF LONG TERM CAPITAL GAIN EARNED BY THE ASSESSEE ON SA LE OF LAND AT 44/A/1, DHANORI, PUNE. BEFORE WE PROCEED TO ADJUDICATE THE EFFICACY OF THE PENALTY SUSTAINED BY THE INCOME-TAX AUTHORITIES ON THE GROU NDS RAISED IN THE MEMO OF APPEAL, WE MAY TOUCH-UPON AN ADDITIONAL GROUND OF A PPEAL RAISED BY THE ASSESSEE IN THE COURSE OF HEARING, WHICH READS AS U NDER :- 1] THE LEARNED CIT(A) ERRED IN HOLDING THAT THE PE NALTY ORDER U/S 271(1)(C) OF THE ACT IS NOT BARRED BY LIMITATION. 5. IN TERMS OF THE SAID ADDITIONAL GROUND OF APPEAL , IT IS SOUGHT TO BE CANVASSED BY THE ASSESSEE THAT THE PENALTY ORDER PA SSED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE ACT DATED 27.05.2011 I S BARRED BY LIMITATION. SINCE THIS GROUND OF APPEAL INVOLVES A POINT OF LAW AND A RISES FROM THE FACTS WHICH ARE ALREADY ON RECORD, THE SAME WAS ADMITTED FOR AD JUDICATION FOLLOWING THE PARITY OF REASONING LAID DOWN BY THE HONBLE SUPREM E COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. VS. CIT, (1998) 229 ITR 383 (SC). NOTABLY, THE SAID GROUND WAS ALSO RAISED BY THE ASSESSEE BEF ORE THE CIT(A) WHO HAS DEAL WITH THE SAME IN PARA 5.1 TO 5.1.2 OF THE IMPU GNED ORDER AND HAS REJECTED ITA NO.441/PN/2012 THE SAME ON MERITS. AT THE TIME OF HEARING, THE LD . CIT-DR DID NOT OPPOSE THE ADMISSION OF THE SAID GROUND OF APPEAL. IN THIS BA CKGROUND, BOTH THE COUNSELS FURNISHED THEIR SAY ON THE MERITS OF THE A DDITIONAL GROUND OF APPEAL. 6. AS PER THE ASSESSEE, THE PENALTY ORDER PASSED BY THE ASSESSING OFFICER IS BARRED BY LIMITATION AND FOR THAT MATTER HE HAS REFERRED TO A CHRONOLOGICAL CHART OF EVENTS PLACED AT PAGE 1 OF THE PAPER BOOK. THE PLEA RAISED BY THE ASSESSEE IS THAT IN TERMS OF THE FIRST PROVISO TO S ECTION 275(1)(A) OF THE ACT, ONCE AN ORDER IS PASSED BY THE CIT(A) AFTER 1 ST JUNE, 2003 ON THE QUANTUM PROCEEDINGS, THE ASSESSING OFFICER SHOULD LEVY PENA LTY U/S 271(1)(C) OF THE ACT WITHIN ONE YEAR FROM THE END OF THE RELEVANT FINANC IAL YEAR IN WHICH THE ORDER OF THE CIT(A) HAS BEEN RECEIVED BY THE COMMISSIONER OF INCOME TAX OR THE CHIEF COMMISSIONER OF INCOME TAX, AS THE CASE MAY BE. IN THIS CONTEXT, IT IS POINTED OUT THAT THE ASSESSMENT ORDER U/S 143(3) R. W.S. 147 OF THE ACT WAS PASSED ON 23.03.2009 AND THE SHOW-CAUSE NOTICE U/S 274 R.W.S. 271(1)(C) OF THE ACT WAS ISSUED ON 23.03.2009. THE ORDER OF THE CIT(A)-III, PUNE ARISING FROM THE ASSESSMENT ORDER DATED 23.03.2009 IS PASSE D ON 31.08.2009. ON THIS BASIS, ASSESSEE SUBMITTED THAT THE ORDER OF TH E CIT(A) DATED 31.08.2009 WAS RECEIVED BY THE CONCERNED CIT DURING THE FINANC IAL YEAR 2009-10 AND THEREFORE IN VIEW OF THE PROVISO TO SECTION 275(1)( A) OF THE ACT, THE ASSESSING OFFICER OUGHT TO HAVE PASSED THE PENALTY ORDER ON O R BEFORE 31.03.2011 WHEREAS THE IMPUGNED ORDER HAS BEEN PASSED BY THE A SSESSING OFFICER ON 27.05.2011, WHICH IS BELATED. 7. ON THIS ASPECT, THE LD. CIT-DR OPPOSED THE PLEA OF THE ASSESSEE BY POINTING OUT THAT THE ASSESSEE COMPANY HAD APPEALED TO THE TRIBUNAL AGAINST THE ORDER OF THE CIT(A) IN QUANTUM PROCEEDINGS DATE D 31.08.2009 AND THEREFORE THE TIME LIMIT FOR LEVY OF PENALTY WAS TO BE RECKONED IN TERMS OF SECTION 275(1)(A) OF THE ACT I.E. WITHIN SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE ORDER OF THE TRIBUNAL WAS RECEIVED BY THE COMMISSIONER OF INCOME ITA NO.441/PN/2012 TAX OR CHIEF COMMISSIONER OF INCOME TAX, AS THE CAS E MAY BE. IT WAS THEREFORE CONTENDED THAT SEEN FROM THIS ANGLE THE O RDER OF PENALTY PASSED BY THE ASSESSING OFFICER ON 27.05.2011 WAS WITHIN THE PERIOD OF LIMITATION AND IN SUPPORT HE RELIED UPON THE JUDGEMENT OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF RAYALA CORPORATION P. LTD. VS. UOI, 288 ITR 452 (MAD.). 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS ON THIS ASPECT. PERTINENTLY, THE ISSUE RAISED BY THE ASSESSEE IS FU LLY COVERED BY THE JUDGEMENT OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF RAY ALA CORPORATION P. LTD. (SUPRA). AS PER THE HONBLE MADRAS HIGH COURT, IN A CASE WHERE ASSESSEE HAS CHALLENGED THE QUANTUM ADDITION BEFORE THE TRIB UNAL, THE PERIOD OF LIMITATION FOR PASSING OF PENALTY ORDER U/S 271(1)( C) OF THE ACT IS TO BE RECKONED AS PER THE PROVISIONS OF SECTION 275(1)(A) OF THE A CT I.E. WITHIN A PERIOD OF SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE ORDER OF THE TRIBUNAL HAS BEEN RECEIVED BY THE CONCERNED COMMISSIONER OF INCOME TA X OR THE CHIEF COMMISSIONER OF INCOME TAX, AS THE CASE MAY BE. IN THIS CONTEXT, THE FOLLOWING DISCUSSION IN THE JUDGEMENT OF THE HONBL E MADRAS HIGH COURT IN THE CASE OF RAYALA CORPORATION P. LTD. (SUPRA) IS RELEV ANT :- A READING OF THE ABOVESAID PROVISION MAKES IT CLEA R THAT THE INTERPRETATION PLACED BY LEARNED COUNSEL FOR THE PE TITIONER ON THE SAID PROVISION IS ACCEPTABLE. THERE IS NO DISPUTE IN THIS CASE THA T THE PETITIONER HAS FILED AN APPEAL BEFORE THE TRIBUNAL AND THE SAME IS PENDING. IN SUCH A CASE, THE LIMITATION PERIOD FOR THE LEVY OF PENALTY WILL BE A S PROVIDED FOR UNDER SECTION 275(1)(A), I.E, SIX MONTHS FROM THE END OF THE MONT H IN WHICH THE ORDER OF THE APPELLATE TRIBUNAL IS RECEIVED BY THE CHIEF COMMISS IONER. THERE CANNOT BE ANY DOUBT ON THIS ASPECT. ACCORDINGLY, THIS COURT I S OF THE VIEW THAT THE PROVISO TO SECTION 275(1)(A) OF THE ACT, DOES NOT NULLIFY T HE AVAILABILITY TO THE THIRD RESPONDENT OF THE PERIOD OF LIMITATION OF SIX MONTH S FROM THE END OF THE MONTH WHEN THE ORDER OF THE INCOME-TAX APPELLATE TRIBUNAL , CHENNAI, IS RECEIVED BY THE THIRD RESPONDENT HEREIN. 9. IF WE EXAMINE THE FACT-POSITION IN THE PRESENT C ASE, WE FIND THAT THE ASSESSEE HAD CHALLENGED THE ORDER OF THE CIT(A) IN QUANTUM PROCEEDINGS BEFORE THE TRIBUNAL WHO VIDE ITS ORDER DATED 06.09. 2010 IN ITA NO.1329/PN/2009 & OTHERS HAD DISPOSED OF SUCH APPEA L. THEREFORE, THE ITA NO.441/PN/2012 LIMITATION FOR PASSING OF AN ORDER U/S 271(1)(C) OF THE ACT IN THE PRESENT CASE IS TO BE GOVERNED BY SECTION 275(1)(A) OF THE ACT WHIC H PROVIDES THAT THE PENALTY CAN BE LEVIED WITHIN SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE ORDER OF THE TRIBUNAL WAS RECEIVED BY THE COMMISSIONER OF IN COME TAX OR THE CHIEF COMMISSIONER OF INCOME TAX, AS THE CASE MAY BE. FR OM THE SIDE OF THE ASSESSEE, THERE IS NO DISPUTE THAT THE IMPUGNED PEN ALTY ORDER HAS BEEN PASSED BY THE ASSESSING OFFICER WITHIN SIX MONTHS F ROM THE END OF THE MONTH IN WHICH THE TRIBUNAL ORDER WAS RECEIVED BY THE COM MISSIONER OF INCOME TAX OR THE CHIEF COMMISSIONER OF INCOME TAX, AS THE CAS E MAY BE. THUS, IN THIS FACTUAL BACKGROUND AND HAVING REGARD TO THE PARITY OF REASONING LAID DOWN BY THE HONBLE MADRAS HIGH COURT IN THE CASE OF RAYALA CORPORATION P. LTD. (SUPRA), THE ADDITIONAL GROUND OF APPEAL RAISED BY THE ASSESSEE CHALLENGING THE LIMITATION IN PASSING THE IMPUGNED PENALTY ORDE R IS HEREBY DISMISSED. 10. IN ORDER TO APPRECIATE THE FACTUAL BACKGROUND L EADING TO THE IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT, THE FOLLOWING FACTS ARE RELEVANT. THE ASSESSEE COMPANY IN THIS CASE FILED A RETURN OF INC OME ON 27.03.2008 DECLARING NIL INCOME. THE ASSESSMENT WAS RE-OPEN ED BY THE ISSUANCE OF NOTICE U/S 148 OF THE ACT ON 28.05.2008 IN CONSEQUE NCE TO WHICH AN ASSESSMENT U/S 143(3) R.W.S. 147 OF THE ACT WAS COM PLETED ON 23.03.2009 ASSESSING A TOTAL INCOME AT RS.76,10,61,683/-. THE SAID INCOME REPRESENTED AN ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUN T OF LONG TERM CAPITAL GAIN IN RESPECT OF THE LAND SITUATED AT DHANORI, PUNE. THE ASSESSEE COMPANY CHALLENGED THE ADDITION MADE BY THE ASSESSING OFFIC ER IN APPEAL BEFORE THE CIT(A) WHO HAS SINCE AFFIRMED THE SAME. HOWEVER, T HE TRIBUNAL VIDE ITS ORDER DATED 06.09.2010 (SUPRA) ALLOWED PARTIAL RELIEF WHE REBY THE LONG TERMS CAPITAL GAIN ON SALE OF LAND WAS DETERMINED AT RS.56,89,07, 575/-. THE ASSESSING OFFICER IN THE MEANWHILE VIDE HIS ORDER DATED 27.05 .2011 HELD THE ASSESSEE GUILTY OF CONCEALMENT/FURNISHING OF INACCURATE PART ICULARS OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT QUA THE AFO RESAID LONG TERM CAPITAL ITA NO.441/PN/2012 GAINS. THE CIT(A) HAS ALSO UPHELD THE LEVY OF PENA LTY BUT HAS SCALED DOWN IT TO RS.12,76,62,859/- BY RESTRICTING IT TO THE REVIS ED LONG TERM CAPITAL GAIN COMPUTED AFTER THE ORDER OF THE TRIBUNAL AT RS.56,8 9,07,575/- AS AGAINST RS.76,10,61,683/- ASSESSED BY THE ASSESSING OFFICER . 11. THE AREA OF DIFFERENCE BETWEEN ASSESSEE AND THE REVENUE WITH REGARD TO THE TAXABILITY OF THE LONG TERM CAPITAL GAIN IS TWO-FOLD. FIRSTLY, IT IS NOTICED THAT WHILE COMPUTING CAPITAL GAIN ASSESSEE CONSIDER ED THE FAIR MARKET VALUE OF THE SAID LAND AS ON 01.04.1981 AT RS.1230 PER SQ .MTR. FOR THE PURPOSES OF COMPUTING ITS COST OF ACQUISITION. THE ASSESSING O FFICER DID NOT ACCEPT THE AFORESAID FAIR MARKET VALUE AS ON 01.04.1981 AND IN STEAD HE ADOPTED A RATE OF RS.15.23 PER SQ.MTR.. THIS ASPECT OF THE ADDITI ON WAS SUSTAINED BY THE CIT(A) ALSO IN THE QUANTUM PROCEEDINGS. HOWEVER, T HE TRIBUNAL VIDE ITS ORDER DATED 06.09.2010 HELD THAT FAIR MARKET VALUE AS ON 01.04.1981 BE CONSIDERED AT RS.665 PER SQ.MTR.. THUS, AS AGAINST THE FAIR M ARKET VALUE ADOPTED BY THE ASSESSEE AT RS.1230 PER SQ.MTR., THE TRIBUNAL DIREC TED IT TO BE ADOPTED AT RS.665 PER SQ.MTR.. IN THIS CONTEXT, A REVISED WOR KING OF THE LONG TERM CAPITAL GAIN HAS BEEN FURNISHED BY THE ASSESSEE WHICH COMES TO RS.56,10,96,776/- AS AGAINST RS.37,19,49,949/- OFFERED TO TAX BY THE ASSESSEE ALBEIT IN THE NEXT ASSESSMENT YEAR 2008-09. THE COPY OF THE SAID WORK ING IS PLACED AT PAGE 4 OF THE PAPER BOOK. 12. PERTINENTLY, ON THIS POINT IT IS ALSO RELEVANT TO OBSERVE THAT THE ASSESSEE HAD SOLD THE LAND IN TWO TRANCHES. FIRSTLY, IN ASS ESSMENT YEAR 2005-06 AND BALANCE IN ASSESSMENT YEAR 2008-09. THEREFORE, ASS ESSEE OFFERED CAPITAL GAINS IN ASSESSMENT YEAR 2005-06 AND 2008-09 AND NO CAPITAL GAINS WAS OFFERED IN THE INSTANT ASSESSMENT YEAR OF 2007-08 I NITIALLY. THE ASSESSING OFFICER, HOWEVER, HELD THAT THE SECOND TRANCHE OF L AND SOLD BY THE ASSESSEE WAS LIABLE FOR CAPITAL GAINS IN ASSESSMENT YEAR 200 7-08 ITSELF AND NOT IN ASSESSMENT YEAR 2008-09. THIS ASPECT OF THE CONTRO VERSY IS THE SECOND LIMB ITA NO.441/PN/2012 OF THE ADDITION ON WHICH THE PENALTY HAS BEEN LEVIE D. THUS, IT IS NOTABLE THAT THE PENALTY HAS BEEN LEVIED BY THE ASSESSING OFFICE R ON TWO ASPECTS, FIRSTLY ON THE GROUND THAT THE CAPITAL GAIN WAS NOT OFFERED IN ASSESSMENT YEAR 2008-09; AND, SECONDLY, THAT THE ASSESSEE HAD ADOPTED THE FA IR MARKET VALUE OF THE LAND AS ON 01.04.1981 AT RS.1230 PER SQ.MTR. AS AGA INST WHICH THE TRIBUNAL HAS DIRECTED TO ADOPTED THE FAIR MARKET VALUE AS ON 01.04.1981 AT RS.665 PER SQ.MTR.. 13. IN THIS BACKGROUND, AT THE OUTSET, THE LD. REPR ESENTATIVE POINTED OUT THAT EVEN AT THE TIME OF THE ASSESSMENT OF CAPITAL GAIN ON THE FIRST TRANCHE OF THE SALE IN ASSESSMENT YEAR 2005-06 THERE WAS A DIF FERENCE BETWEEN THE FAIR MARKET VALUE AS ON 01.04.1981 ADOPTED BY THE ASSESS EE AND THAT DETERMINED BY THE ASSESSING OFFICER. IN ASSESSMENT YEAR 2005- 06 ALSO, THE ASSESSING OFFICER COMPUTED CAPITAL GAIN BY ADOPTING THE FAIR MARKET VALUE AT RS.15.23 PER SQ.MTR. AS AGAINST RS.1230 PER SQ.MTR. ADOPTED BY THE ASSESSEE. IT WAS POINTED OUT THAT THE FAIR MARKET VALUE WAS ADOPTED BY THE ASSESSEE ON THE BASIS OF A VALUATION REPORT OBTAINED FROM A GOVERNM ENT APPROVED VALUER WHICH WAS VERY MUCH BEFORE THE ASSESSING OFFICER. IN ASSESSMENT YEAR 2005- 06 ALSO, THE SAID ISSUE TRAVELLED BEFORE THE TRIBUN AL AND IN ITS ORDER DATED 06.09.2010 (SUPRA) IN ITA NO.1568/PN/2008 THE FAIR MARKET VALUE OF THE LAND AS ON 01.04.1981 WAS DIRECTED TO BE ADOPTED AT RS.6 65 PER SQ.MTR.. IN ASSESSMENT YEAR 2005-06 ALSO, THE ASSESSING OFFICER LEVIED PENALTY ON THIS ASPECT OF THE DISPUTE. THE LD. REPRESENTATIVE POIN TED OUT THAT PENALTY IMPOSED ON THIS ASPECT OF THE DISPUTE IN ASSESSMENT YEAR 2005-06 TRAVELLED TO THE TRIBUNAL, AND VIDE ITS ORDER IN ITA NO.495/PN/2 010 DATED 20.03.2012 THE TRIBUNAL FOUND IT FIT TO DELETE THE SAME. THEREFOR E, IT WAS CONTENDED BY THE LD. REPRESENTATIVE THAT SO FAR AS THE PENALTY LEVIED WI TH RESPECT TO THE DIFFERENCE IN COMPUTED INCOME ON THE BASIS OF THE DIFFERENCE I N FAIR MARKET VALUE AS ON 01.04.1981 IS CONCERNED, NO PENALTY WAS LEVIABLE HA VING REGARD TO THE DECISION IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2005-06 (SUPRA). ITA NO.441/PN/2012 THIS FACTUAL MATRIX HAS NOT BEEN OPPOSED BY THE LD. CIT-DR APPEARING FOR THE REVENUE. 14. WE HAVE PERUSED THE PRECEDENT DATED 20.03.2012 (SUPRA) IN THE ASSESSEES OWN CASE AND FIND THAT THE FOLLOWING DIS CUSSION IN THE ORDER IS RELEVANT :- 6. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND P ERUSING THE MATERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAS S OLD ITS LAND AT DHANORI, PUNE. THE ASSESSEE WAS ENGAGED IN THE BUS INESS OF MANUFACTURING BISCUITS AND CHOCHOLATES AND STATED T O HAVE CLOSED ITS BUSINESS ACTIVITIES FROM 1996 ONWARDS DU E TO VARIOUS PROBLEMS, MANUFACTURING LOSS, CONTROL OVER ADMINIST RATION AND IT WAS NOT RUNNING THE ADMINISTRATION PROPERLY AND WAS NOT HAVING ALL RECORDS SO AS TO FILE THE RETURNS FOR A.Y. 2005 -06 AT RELEVANT PART OF TIME. HOWEVER VARIOUS QUERIES WERE RAISED BY THE ASSESSING OFFICER WITH REGARDS TO CAPITAL GAIN AND AFTER REJECTING THE CONTENTION RAISED ON BEHALF OF THE ASSESSEE, TH E ASSESSING OFFICER CONSIDERED THE CAPITAL GAIN OF RS.22,93,91 ,745/- WHICH WAS CONFIRMED BY THE CIT(A). IN SECOND APPEAL AND THE TRIBUNAL VIDE ITS ORDER DATED 6 TH SEPTEMBER 2010 IN ITA NO. 1568/PN/2008 DIRECTED THE ASSESSING OFFICER TO COMP UTE THE CAPITAL GAIN BY TAKING FMV OF THE LAND AT RS. 665/- PER SQ. MTR AS ON 1-4-1981. IN CONSEQUENTIAL ORDER, THE LONG TERM CAPITAL GAIN HAS BEEN REVISED BY THE ASSESSING OFFICER AT RS. 8, 39,82,576/-. THUS, THE ASSESSING OFFICER DETERMINED THE FMV OF T HE LAND AT RS. 665/- PER SQ. MTR AS AGAINST RS. 15.23 PER SQ. MTR ALLOWED BY THE ASSESSING OFFICER AS AGAINST RS. 1230/- PER SQ. MTRS AS CLAIMED BY THE ASSESSEE. THE BASIS OF PENALTY IS N ON- ACCEPTANCE OF THE LONG TERM CAPITAL LOSS BY THE ASS ESSING OFFICER WHICH WAS CONFIRMED BY THE CIT(A). ACCORDING TO TH E ASSESSING OFFICER, THE VALUE OF THE LAND ADOPTED BY THE ASSES SEE WAS UNREALISTIC AND WITHOUT ANY BASIS. HE STATED THAT THE ASSESSEE HAS ADOPTED THE HIGHER VALUE OF THE LAND AND THEREB Y REDUCED THE INCOME. ACCORDINGLY, THE ABOVE SAID FMV OF THE PROPERTY WAS ADOPTED AT RS. 15.23 PER SQ. MTRS AS AGAINST TH E CLAIM OF THE ASSESSEE AT RS. 1230/- PER SQ MTRS FOR THE PURP OSE OF COMPUTATION OF CAPITAL GAIN. NOW, THE FMV AS STATE D ABOVE, HAS BEEN HELD TO BE REASONABLE AT RS. 665/- PER SQ. MTR S. IN FACT THE FMV OF THE LAND HAS BEEN THE SUBJECT MATTER OF PENA LTY WHICH WAS, ACCORDING TO THE ASSESSEE, IS DEBATABLE AND RI GHTLY SO, BECAUSE THE TRIBUNAL HAS ALSO TAKEN THE MARKET VALU E WITH REGARDS TO FMV. THE ADOPTION OF FMV IS A MATTER OF ESTIMATE. IT MAY VARY PERSON TO PERSON AND ADOPTING THE PARTICUL AR FMV AT THE ADVICE OF APPROVED VALUER CANNOT BE THE SOUND B ASIS FOR INVOKING THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT. AS EXPLAINED ABOVE, THE ASSESSEE COULD NOT FILE THE RE TURN IN TIME. SAME THING WAS EXPLAINED BEFORE THE ASSESSING OFFIC ER THOUGH NOT ACCEPTED BY THE HIM AT THE RELEVANT POINT OF TI ME. THE ASSESSEE WAS TRYING TO GIVE EXPLANATION WITH REGARD S TO NON- ITA NO.441/PN/2012 FILING OF THE RETURN AND TO JUSTIFY ITS CLAIM OF FM V IN THE COMPUTATION OF CAPITAL GAIN. SO THERE IS NOTHING O N RECORD TO SUGGEST THAT THE ASSESSEE HAD ANY INTENTION TO CONC EAL THE INCOME. THIS VIEW GETS STRENGTH FROM THE FACT THAT THE ASSESSEE HAD PAID ADVANCE TAX ON THE LONG TERM CAPITAL GAIN ARISING FROM THE SALE OF THE BALANCE PORTION OF THE LAND. SO, T HE ASSESSEE WAS PREVENTED BY REASONABLE CAUSE FOR NOT FILING TH E RETURN OF INCOME IN TIME. THE ASSESSEE BONAFIDELY CLAIMED TH E CAPITAL GAIN IN QUESTION. THIS VIEW GETS STRENGTH FROM THE JUDGMENT OF THE HIMACHAL PRADESH HIGH COURT IN THE CASE OF CIT VS. RAGHUNATH SINGH THAKUR (304 ITR 268) WHEREIN IT HAS BEEN STATED THAT IN CASE THE ASSESSING OFFICER DOES NOT REFER THE MATTER TO THE DVO, THE VALUE ADOPTED BY THE ASSESSE E SHOULD BE ACCEPTED THE ASSESSING OFFICER. IN THIS BACKGROUN D, THE ASSESSEE WAS UNDER BONAFIDE IMPRESSION THAT THE FMV ADOPTED BY IT FOR THE PURPOSES OF COMPUTATION OF CAPITAL GA IN IS JUSTIFIED. THE HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LTD. (322 ITR 158) HAS HELD THAT EVEN IF THE ASSESSEE MAKES AN INCORRECT CLAIM IN LAW, SAME CANN OT BE STATED THAT THE ASSESSEE HAS CONCEALED ITS INCOME O R FURNISHED INACCURATE PARTICULARS OF INCOME. CLAUSE (C) OF SEC TION 271(1) CATEGORICALLY STATES THAT THE PENALTY WOULD BE LEVI ABLE IF THE ASSESSEE CONCEALS PARTICULARS OF HIS INCOME OF FURN ISHES INACCURATE PARTICULARS THEREOF. MOREOVER, THE VALU ATION BY APPROVED VALUER OR OTHERWISE IS A MATTER OF ESTIMAT E. UNDER FACTS AND CIRCUMSTANCES, WE HOLD THAT THE PENALTY I S NOT JUSTIFIABLE IN RESPECT OF THE ADDITION MADE ON ACCO UNT OF COMPUTATION OF CAPITAL GAIN ON SALE OF LAND AT DHAN ORI. THE SAME IS DIRECTED TO BE DELETED. 15. CONSIDERING THE DECISION OF THE TRIBUNAL DATED 20.03.2012 (SUPRA) IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2005-06 WE HOLD THAT NO PENALTY IS LEVIABLE ON THE INCOME ASSESSABLE ON ACC OUNT OF ADOPTION OF THE FAIR MARKET VALUE AS ON 01.04.1981 AT RS.665 PER SQ .MTR. AS AGAINST RS.1230 PER SQ.MTR. ADOPTED BY THE APPELLANT COMPANY. THUS , THE ASSESSING OFFICER IS DIRECTED TO DELETE THE SAME. 16. THE SECOND ISSUE ON WHICH THE PENALTY HAS BEEN LEVIED IS NON-OFFERING OF THE CAPITAL GAIN TO TAX BY THE ASSESSEE IN ASSES SMENT YEAR 2007-08. ON THIS ISSUE, ASSESSEE POINTED OUT THAT IT HAD OFFERE D TO TAX THE LONG TERM CAPITAL GAIN IN ASSESSMENT YEAR 2008-09. AT THE TIME OF HE ARING, THE LD. REPRESENTATIVE FOR THE ASSESSEE REFERRED TO PAGES 1 1 AND 12 OF THE PAPER BOOK TO POINT OUT THAT FOR ASSESSMENT YEAR 2008-09 ASSESSEE DULY FURNISHED A ITA NO.441/PN/2012 RETURN OF INCOME ON 29.09.2008 DECLARING SUCH CAPIT AL GAINS. IN THIS CONTEXT, THE CASE SETUP BY THE ASSESSEE IS THAT ONLY DIFFERE NCE IN THE YEAR OF TAXABILITY OF INCOME CANNOT BE A GROUND TO LEVY PENALTY U/S 27 1(1)(C) OF THE ACT. 17. IN THIS CONTEXT, BRIEF FACTS ARE THAT ASSESSEE ENTERED INTO A DEVELOPMENT AGREEMENT WITH ONE M/S RAGHULEELA BUILDERS PVT. LTD . ON 19.03.2007 WHICH WAS REGISTERED ON 04.04.2007. THE LD. REPRESENTATI VE AT THE TIME OF HEARING HAS POINTED OUT THAT ULTIMATELY THE CONVEYANCE DEED WAS EXECUTED ON 27.03.2008, A COPY OF WHICH HAS BEEN PLACED AT PAGE S 177 TO 179 OF THE PAPER BOOK. NOTABLY, ASSESSEE CONSIDERED THAT THE TRANSFER OF LAND GIVING RISE TO THE LEVY OF CAPITAL GAINS TOOK PLACE DURING THE PERIOD 01.04.2007 TO 31.03.2008 AND ACCORDINGLY IT DECLARED CAPITAL GAIN S ON SALE OF SUCH LAND IN THE RETURN FILED FOR ASSESSMENT YEAR 2008-09 ON 29. 09.2008. THE ASSESSING OFFICER, HOWEVER, DEEMED IT FIT TO TAX SUCH CAPITAL GAIN IN ASSESSMENT YEAR 2007-08 ITSELF ON THE BASIS OF THE DEVELOPMENT AGRE EMENT DATED 19.03.2007. THE ASSESSING OFFICER TAXED THE CAPITAL GAIN IN ASS ESSMENT YEAR 2007-08 ON THE BASIS OF THE JUDGEMENT OF THE HONBLE BOMBAY HI GH COURT IN THE CASE OF CHATURBHUJ DWARKADAS KAPADIA VS. CIT, 260 ITR 491 ( BOM.). IN SO FAR AS THE MERITS OF SUCH ACTION IS CONCERNED, THE SAME HAS BE EN AFFIRMED BY THE TRIBUNAL ALSO VIDE ITS ORDER DATED 06.09.2010 (SUPR A). BE THAT AS IT MAY, FOR THE PRESENT, THE MERITS OF THE CONTROVERSY ARE NOT THE ISSUE BEFORE US. 18. ON THIS ASPECT, THE PLEA OF THE LD. REPRESENTAT IVE WAS THAT IN TERMS OF THE DEVELOPMENT AGREEMENT DATED 19.03.2007, ASSESSE E ONLY GAVE A LICENSE TO THE PURCHASER/DEVELOPER TO ENTER UPON THE LAND A ND TO COMMENCE DEVELOPMENT AND CONSTRUCTION. THE CASE OF THE REVE NUE IS THAT THE DEVELOPMENT AGREEMENT DATED 19.09.2007 CLEARLY INDI CATED PASSING OR TRANSFERRING OF COMPLETE CONTROL OVER THE SAID LAND TO THE PURCHASER AND THE EXECUTION OF THE CONVEYANCE WAS ONLY POSTPONED TILL THE DISCHARGE OF FULL CONSIDERATION BY THE PURCHASER. THE LD. REPRESENTA TIVE IN THIS BACKGROUND, ITA NO.441/PN/2012 POINTED OUT THAT THOUGH THE DEVELOPMENT AGREEMENT G RANTED LICENSE TO THE PURCHASER FOR DEVELOPMENT OF THE LAND BUT IN REALIT Y THE PHYSICAL POSSESSION OF THE LAND REMAINED WITH ASSESSEE DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2007-08. IN SUPPORT, HE INVITED OU R ATTENTION TO A COPY OF THE COMPLAINT FILED BY THE ASSESSEE TO VISHRANTWADI POL ICE STATION DATED 22.05.2007, WHICH HAS BEEN PLACED AT PAGES 182 TO 1 85 OF THE PAPER BOOK. IN TERMS OF THE SAID COMPLAINT, IT IS SOUGHT TO BE MADE OUT THAT A MOB OF ABOUT 50 TO 60 PEOPLE ENTERED THE SAID LAND. ANOTHER COM PLAINT FILED WITH THE POLICE DATED 26.05.2007 IS ALSO ENCLOSED AT PAGES 186 TO 1 87 OF THE PAPER BOOK; THE LD. REPRESENTATIVE ALSO REFERRED TO AN INVOICE RAIS ED BY THE SECURITY AGENCY FOR THE PERIOD APRIL TO JUNE, 2007 TO DEMONSTRATE T HAT ASSESSEE WAS HIRING SECURITY AND LABOUR SERVICES TO PROTECT THE LAND. IT WAS THEREFORE CONTENDED THAT THE PHYSICAL POSSESSION OF THE SAID LAND WAS N OT PARTED BY THE ASSESSEE IN THE PREVIOUS YEAR ENDING ON 31.03.2007 SO AS TO DEEM IT TO BE A TRANSFER WITHIN THE MEANING OF SECTION 2(47)(V) OF THE ACT. 19. WE HAVE CONSIDERED THE AFORESAID SUBMISSIONS PU T-FORTH BY THE ASSESSEE BUT THE SAME IMPINGES ON THE MERITS OF THE ADDITION WHICH IS NOT THE SUBJECT-MATTER OF THE CONTROVERSY BEFORE US. THE A SSESSEE HAD ALSO STATED IN THE COURSE OF THE HEARING THAT ONLY PART CONSIDERAT ION WAS RECEIVED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION INASMU CH AS ONLY A SUM OF RS.38,25,92,925/- OUT OF THE TOTAL CONSIDERATION OF RS.76,51,85,850/- WAS RECEIVED DURING THE ASSESSMENT YEAR 2007-08. IT WA S POINTED OUT THAT ONLY AFTER RECEIPT OF THE ENTIRE CONSIDERATION THE CONVE YANCE DEED OF THE SAID LAND WAS EXECUTED BY THE ASSESSEE IN FAVOUR OF THE PURCH ASER ON 27.03.2008 AND THEREFORE ASSESSEE WAS JUSTIFIED IN DECLARING CAPIT AL GAIN ON SALE OF SUCH LAND IN THE PREVIOUS YEAR 2007-08 CORRESPONDING TO THE A SSESSMENT YEAR 2008-09. IT WAS, THEREFORE, CONTENDED THAT THE ISSUE REGARDI NG THE TAXABILITY OF CAPITAL GAIN IN ASSESSMENT YEAR 2007-08 OR ASSESSMENT YEAR 2008-09 IS A DEBATABLE ITA NO.441/PN/2012 ISSUE AND THEREFORE IN SUCH A SITUATION, AT LEAST P ENALTY U/S 271(1)(C) OF THE ACT IS NOT LEVIABLE. 20. ON THE OTHER HAND, THE LD. CIT-DR HAS SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. IT WAS ARGUED BY LD. CIT-DR THA T THE PLEA OF THE ASSESSEE THAT LONG TERM CAPITAL GAIN ON SALE OF LAND WAS TAX ABLE IN ASSESSMENT YEAR 2008-09 WAS NEGATED BY THE TRIBUNAL AND THEREFORE T HE ASSESSING OFFICER WAS JUSTIFIED IN LEVYING THE PENALTY. IT WAS SUBMITTED BY THE LD. CIT-DR THAT THE DEVELOPMENT AGREEMENT DATED 19.03.2007 CLEARLY STAT ED THAT ASSESSEE COMPANY HANDED-OVER POSSESSION OF THE SAID LAND ON THAT DATE AND THEREFORE THE SAID CAPITAL GAIN WAS LIABLE TO BE OFFERED IN A SSESSMENT YEAR 2007-08 ITSELF. BECAUSE THE ASSESSEE DID NOT OFFER IT IN A SSESSMENT YEAR 2007-08, THE ASSESSING OFFICER WAS JUSTIFIED IN LEVYING PENALTY U/S 271(1)(C) OF THE ACT. 21. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. THE MOOT POINT TO BE CONSIDERED IS AS TO WHETHER THE ASSESSMENT OF CA PITAL GAIN ON SALE OF LAND IN ASSESSMENT YEAR 2007-08 AS AGAINST IN ASSESSMENT YEAR 2008-09 AS OFFERED BY THE ASSESSEE TANTAMOUNTS TO CONCEALMENT OF INCOME AND/OR FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT. FACTUALLY SPEAKING, IT IS NOT A CASE WHERE ASSESSEE HAS NOT OFFERED THE CAPITAL GAINS TO TAX R ATHER IT IS A CASE WHERE THE INCOME HAS BEEN OFFERED TO TAX BY THE ASSESSEE, ALB EIT IN THE SUBSEQUENT ASSESSMENT YEAR. THE ASSESSING OFFICER HAS ASSESSE D THE CAPITAL GAIN IN ASSESSMENT YEAR 2007-08 BASED ON THE DECISION OF TH E HONBLE BOMBAY HIGH COURT IN THE CASE OF CHATURBHUJ DWARKADA KAPADIA (S UPRA). THE AFORESAID ACTION HAS ALSO BEEN AFFIRMED BY THE TRIBUNAL VIDE ITS ORDER DATED 06.09.2010 (SUPRA). AS PER THE HONBLE SUPREME COURT IN THE C ASE OF ANANTHARAM VEERASINGAIAH AND CO. VS. CIT, 123 ITR 457 (SC) PEN ALTY PROCEEDINGS ARE INDEPENDENT OF THE ASSESSMENT PROCEEDINGS AND A FIN DING IN ASSESSMENT PROCEEDINGS THAT A PARTICULAR RECEIPT IS INCOME CAN NOT AUTOMATICALLY BE ITA NO.441/PN/2012 ADOPTED AS A FINDING TO THAT EFFECT IN THE PENALTY PROCEEDINGS. THE HONBLE SUPREME COURT EMPHASIZED THAT THE BURDEN OF PROOF I N A PENALTY PROCEEDING VARIES FROM THAT INVOLVED IN AN ASSESSMENT PROCEEDI NG AND THEREFORE IN THE PENALTY PROCEEDINGS THE TAXING AUTHORITY IS BOUND T O CONSIDER THE MATTER AFRESH ON THE BASIS OF MATERIAL BEFORE IT AND IN THE LIGHT OF THE BURDEN CAST TO ASCERTAIN WHETHER THE LEVY OF PENALTY IS JUSTIFIABLE. AS PER THE HONBLE SUPREME COURT, THE FINDING IN THE ASSESSMENT ORDER THAT THE DISPUT ED AMOUNT REPRESENTED INCOME MAY CONSTITUTE GOOD EVIDENCE IN PENALTY PROC EEDINGS BUT SUCH FINDING IN THE ASSESSMENT PROCEEDINGS CANNOT BE REGARDED AS CONCLUSIVE FOR THE PURPOSES OF LEVY OF PENALTY. THE AFORESAID LEGAL P ROPOSITION LAID DOWN BY THE HONBLE SUPREME COURT IS RELEVANT IN THE PRESENT CO NTEXT BECAUSE IT IS CLEARLY EMERGING FROM THE ORDERS OF THE AUTHORITIES BELOW I N THE IMPUGNED PENALTY PROCEEDINGS THAT ASSESSEE HAS BEEN HELD GUILTY FOR CONCEALMENT OF INCOME AND/OR FURNISHING OF INACCURATE PARTICULARS OF INCO ME ONLY FOR THE REASON THAT ADDITION ON ACCOUNT OF CAPITAL GAIN HAS BEEN SUSTAI NED BY THE TRIBUNAL IN THE QUANTUM PROCEEDINGS. IT IS NOTEWORTHY THAT IN SO F AR AS THE PARTICULARS RELATING TO THE IMPUGNED INCOME FURNISHED BY THE ASSESSEE IN THE PROCEEDINGS BEFORE THE ASSESSING OFFICER ARE CONCERNED, THE SAME HAVE NOT BEEN FOUND TO BE ERRONEOUS OR INCORRECT. THE ENTIRE CONSPECTUS OF T HE DISPUTE, WHICH WE HAVE NARRATED IN THE EARLIER PARAS WOULD REVEAL THAT THE CRUX OF THE DIFFERENCE BETWEEN THE ASSESSEE AND THE REVENUE IS THE YEAR IN WHICH THE CAPITAL GAIN IS LIABLE TO BE TAXED, HAVING REGARD TO THE TERMS AND CONDITIONS OF THE DEVELOPMENT AGREEMENT ENTERED BY THE ASSESSEE WITH THE PURCHASER ON 19.03.2007. NO DOUBT, IN THE QUANTUM PROCEEDINGS, IT HAS BEEN HELD THAT A TRANSFER HAS OCCURRED IN TERMS OF SECTION 2(47)(V ) OF THE ACT IN ASSESSMENT YEAR 2007-08 ON ACCOUNT OF GIVING OF POSSESSION FOL LOWING THE JUDGEMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CHATUR BHUJ DWARKADAS KAPADIA (SUPRA). SO HOWEVER, THE QUESTION RELEVANT FOR THE PRESENT SITUATION IS AS TO WHETHER ASSESSEES ACTION OF DECLARING SUCH INCOME IN ASSESSMENT YEAR 2008- 09 IS BONA-FIDE OR NOT ? IT IS QUITE APPARENT FROM THE COPY OF THE DEVELOPMENT ITA NO.441/PN/2012 AGREEMENT WHICH IS PLACED IN THE PAPER BOOK THAT IT WAS REGISTERED ON 04.04.2007. IT IS ALSO CLEAR THAT THE CONVEYANCE D EED WAS ULTIMATELY EXECUTED ON 27.03.2008 AFTER ASSESSEE RECEIVED THE FULL CONSIDERATION FROM THE PURCHASER. IT IS ALSO NOT IN DISPUTE THAT DURI NG THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION ASSESSEE DI D NOT RECEIVE THE FULL CONSIDERATION BUT HAD RECEIVED ONLY PART CONSIDERAT ION FROM THE PURCHASER. UNDER THESE CIRCUMSTANCES, ESPECIALLY IN VIEW OF TH E FACT THAT ASSESSEE HAD SUO-MOTU DECLARED SUCH INCOME IN THE RETURN OF INCOME FILED FOR ASSESSMENT YEAR 2008-09, NO MALA-FIDE ON THE PART OF THE ASSES SEE CAN BE INFERRED FOR HAVING DECLARED SUCH INCOME FOR ASSESSMENT YEAR 200 8-09 AND NOT FOR ASSESSMENT YEAR 2007-08. AT THE TIME OF HEARING, I N SUPPORT OF ASSESSEES BONA-FIDES, THE LD. REPRESENTATIVE MADE A STATEMENT AT BAR THAT THE ADVANCE TAXES ON SUCH INCOME PAYABLE FOR ASSESSMENT YEAR 20 08-09 WERE PAID BY THE ASSESSEE WITHIN PERIOD PRESCRIBED WHICH WAS EVEN BE FORE THE RE-ASSESSMENT PROCEEDINGS WERE STARTED BY THE ASSESSING OFFICER F OR THE INSTANT ASSESSMENT YEAR 2007-08. THE SAID STATEMENT MADE BY THE LD. R EPRESENTATIVE FOR THE ASSESSEE AT BAR HAS NOT CONTROVERTED BY THE REVENUE . 22. IN THE CASE OF METAL ROLLING WORKS LTD. VS. CIT , (2011) 339 ITR 373 (BOM.), WHICH WAS RELIED UPON BY THE ASSESSEE BEFOR E US, THE ISSUE WAS RELATING TO LEVY OF PENALTY ON CAPITAL GAINS. THE CONTROVERSY WAS THE YEAR IN RELATION TO WHICH CAPITAL GAINS TAX WAS LEVIABLE. THE HONBLE HIGH COURT DISAGREED WITH THE REVENUE FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT MERELY ON ACCOUNT OF THE DIFFERENCE IN THE YEAR OF TAXABIL ITY OF CAPITAL GAINS. TO THE SIMILAR EFFECT IS THE JUDGEMENT OF THE HONBLE BOMB AY HIGH COURT IN THE CASE OF JAYANT VEGOILS AND CHEMICALS PVT. LTD. VS. CIT, (2010) 323 ITR 641 (BOM.). IN THE CASE OF JAYANT VEGOILS AND CHEMICALS PVT. LT D. (SUPRA), PENALTY WAS IMPOSED WITH RESPECT TO THE DISALLOWANCE OF A FINE LEVIED IN LIEU OF CONFICATION OF GOODS. THE ASSESSING OFFICER HAD NOTED THAT IN TERMS OF AN ORDER PASSED BY THE COMPETENT AUTHORITY, THE FINE WAS DROPPED AN D THEREFORE THE ITA NO.441/PN/2012 DISALLOWANCE WAS JUSTIFIED. FACTUALLY, IT WAS NOT DISPUTED THAT THE FINE IN LIEU OF CONFISCATION HAD BEEN CANCELLED BY THE COMPETENT AU THORITY, BUT ASSESSEE TOOK THE PLEA THAT THE ORDER PASSED BY THE COMPETEN T AUTHORITY CANCELLING THE FINE WAS RECEIVED AFTER THE CLOSE OF THE FINANCIAL YEAR UNDER CONSIDERATION AND THEREFORE ASSESSEE DID NOT MAKE ENTRIES IN THE BOOK S WITHIN THE RELEVANT YEAR. THE BOOK ENTRIES WERE MADE IN THE SUBSEQUENT YEAR. THE ASSESSEE CONTENDED THAT ON THE BASIS OF THE BOOK ENTRIES MAD E IN THE SUBSEQUENT YEAR THE SAID AMOUNT WAS OFFERED TO TAX IN THE NEXT YEAR . THEREFORE, THE PLEA WAS THAT THERE WAS NO JUSTIFICATION FOR LEVY OF PENALTY FOR DISALLOWANCE OF THE FINE LEVIED IN LIEU OF CONFISCATION OF GOODS. THE HONB LE HIGH COURT ACCEPTED THE PLEA OF THE ASSESSEE THAT SUCH A LAPSE WAS NOT DELI BERATE AND AT THE HIGHEST IT COULD BE SAID TO BE AN INADVERTENT ERROR OF JUDGEME NT, NO PENALTY OUGHT TO HAVE BEEN IMPOSED . 23. IN OUR CONSIDERED OPINION, IN THE PRESENT CASE TOO HAVING REGARD TO THE CONSPECTUS OF FACTS AND CIRCUMSTANCES, NON-DECLARAT ION OF CAPITAL GAIN IN ASSESSMENT YEAR 2007-08 CANNOT BE CONSTRUED AS A DE LIBERATE LAPSE BUT IT COULD ONLY BE CONSTRUED AS AN INADVERTENT ERROR OF JUDGEMENT ON A POINT OF LAW AND THEREFORE NO PENALTY U/S 271(1)(C) OF THE ACT I S IMPOSABLE. 24. MOREOVER, IT IS ALSO APPARENT FROM THE CONTOURS OF THE DISPUTE THAT THE CLAIM OF THE ASSESSEE FOR TAXABILITY OF CAPITAL GAI NS IN ASSESSMENT YEAR 2008- 09 INSTEAD OF 2007-08 HAS BEEN REJECTED NOT ON THE BASIS OF ANY FALSITY OR INACCURACY IN FACTS OR PARTICULARS FURNISHED BY THE ASSESSEE BUT ONLY ON AN APPLICATION OF A LEGAL POSITION. IN THIS CONTEXT, A MERE MAKING OF A CLAIM, WHICH IS NOT FOUND TO BE SUSTAINABLE IN LAW BY THE ASSESS ING OFFICER CANNOT BY ITSELF BE CONSTRUED AS FURNISHING OF INACCURATE PARTICULAR S OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT, AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD., (2010) 322 ITR 158 (SC). ITA NO.441/PN/2012 25. IN VIEW OF THE AFORESAID DISCUSSION, IN CONCLUS ION, WE HOLD THAT LOWER AUTHORITIES HAVE ERRED IN IMPOSING THE PENALTY U/S 271(1)(C) OF THE ACT ON THE IMPUGNED ASPECT OF THE MATTER. WE THEREFORE SET-AS IDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE PENA LTY IMPOSED U/S 271(1)(C) OF THE ACT. 26. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED, AS ABOVE. ORDER PRONOUNCED ON 10 TH APRIL, 2015. SD/- SD /- (SUSHMA CHOWLA) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 10 TH APRIL, 2015. SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-III, PUNE; 4) THE CIT-IV, PUNE; 5) THE DR A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE