Shri Vivekbahi S. Balchandani, RAJKOT-GUJARAT V. The Income Tax Officer, Ward-1(3), RAJKOT-GUJARAT

ITA 480/RJT/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2017 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 18-01-2013
• Assessment Year: 2001-2002
• Appeal Filed On: 20-12-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Capital asset; Reasonable cause; Wrong claim; Revised return
• Section: 143(3); 54

Judgement Text

Y : : IN THE INCOME TAX APPELLATE TRIBU N AL : RAJKOT BENCH : RAJKOT I.. [ R .. BEFORE SHRI T. K. SHARM A JM AND SHRI D. K. SRIVASTAVA AM ITA NO . 480 /RJ T/201 1 TO O/ ASSESSMENT YEAR 200 1 - 02 VIVEKBHAI S. BALCHANDANI V. ITO PARIJAT, 39, PARAS SOCIETY WARD 1 ( 3 ) OPP:NIRMALA CONVENT SCHOOL, RAJKOT RAJKOT PAN: A BPPB7574D DATE OF HEARING: 1 8 . 0 1 .2013 DATE OF PRONOUNCEMENT: 08 . 0 2 .2013 FO R THE ASSESSEE: R.D. LALCHANDANI, ADVOCATE FOR THE REVENUE : A VINASH KUMAR , DR / ORDER .. / D. K. SRIVASTAVA : THE A PPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) ON 29 - 11 - 201 1 , ON THE FOLLOWING GROUNDS: - (1) THE COMMISSIONER OF I NCOME T AX [ A PPEALS] ERRED IN CONFIRMING THE LEVY OF PENALTY U/S 271(1)(C) FOR ASSESSMENT YEAR 2001 - 02. (2) WITHOUT PREJUDICE TO GROUND NO.1 THE LEVY OF PENALTY IS BAD IN LAW IN AS MUCH AS THE PENALTY PROCEEDINGS WERE INITIATE D FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME WHEREAS THE PENALTY LEVIED IS FOR CONCEALING THE PARTICULAR OF INCOME. 2. THE ASSESSEE IS A N INDIVIDUAL. HE FILED HI S RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER APPEAL ON 31 - 07 - 200 1 RETURNING HIS TOTAL INCOME AT RS. 10,62,961/ - . THE ASSESSEE FILED A REVISED RETURN ON 31 - 07 - 2002 IN WHICH HE RETURNED HIS TOTAL INCOME AT RS. 11,89,916/ - . ASSESSMENT U/S 143(3) OF THE INCOME - TAX ACT WAS COMPLETED ON 15.3.2004 ASSESSING THE TOTAL INCOME OF THE ASSESSEE AT RS.18,99,284/ - AFTER WITHDRAWAL OF EXEMPTION AMOUNTING TO RS.6,35,000/ - CLAIMED BY THE ASSESSEE U/S 54 OF THE I - T ACT. 3. FACTS GIVING RISE TO THE WITHDRAW A L OF EXEMPTION CLAIMED BY THE ASSESSEE U/S 54 ARE THAT THE ASSESSEE HAD SOLD LAND ON WHICH CAPITAL GAIN OF RS. 70 ,03,741/ - WAS WORKED OUT BY HIM. IN THE COMPUTATION OF INCOME, HE OFFERED RS.10,68,741/ - AS LONG TERM CAPITAL GAIN. THE REMAINING AMOUNT OF CAPITAL GAIN, I.E., RS.6,35,000/ - W AS NOT OFFERED TO THE CHARGE OF CAPITAL GAIN TAX ON THE GROUND THAT HE HAD DEPOSITED THE SAME IN THE MANNER SPECIFIED IN SECTION 54. IN OTHER WORDS, THE ASSESSEE DID NOT INCLUDE THE SAID SUM OF RS.6,35,000/ - IN HIS CAPITAL GAIN FOR TAX PURPOSES ON THE PLEA THAT HE HAD DEPOSITED THE SAME IN THE MANNER SPECIFIED IN SECTION 54. DURING THE 2 ITA 480 /201 1 COURSE OF SCRUTINY, IT WAS FOUND THAT THE ASSESSEE HAD NOT DEPOSITED A SUM OF RS. 3,40,000/ - AT ALL IN THE MANNER SPECIFIED IN SECTION 54 ; THE ASSESSEE HAD, IN FACT, KEPT THE MONEY WITH HIMSELF. RESULTANTLY, THE AO DENIED EXEMPTION IN RESPEC T OF RS.3,40,000/ - AS CLAIMED BY THE ASSESSEE U/S 54. IT IS WITH REFERENCE TO THE AFORESAID AMOUNT THAT THE AO HAS LEVIED THE IMPUGNED PENALTY WITH THE FOLLOWING OBSERVATIONS: 5. I HAVE CONSIDERED THE ABOVE REPLY OF THE ASSESSEE AND THE SAME IS NOT ACCE PTABLE ON THE FOLLOWING: IT IS OBLIGATORY UNDER THE PROVISION OF THE ACT TO DEPOSIT THE UNUTILIZED AMOUNT OF CAPITAL GAIN IN THE SPECIFIED ACCOUNT BEFORE THE STIPU LATED PERIOD. AS OBSERVED IN THE ASSESSMENT AS WELL AS THE APPELLANT ORDER THE ASSESSEE HAS FAILED TO DISCHARGE HIS STATUTORY ONUS. THE ACT OF THE ASSESSEE ITSELF SUGGEST THAT IT WAS A GROSS FAILURE OF NEGLIGENCE ON THE PART OF THE ASSESSEE AND HAD FURNISHED INACCURATE PARTICULAR OF INCOME IN FORM OF CLAIMING DEDUCTION U/S.54 OF THE ACT FOR WHI CH HE WAS NOT ENTITLED TO. FURTHERMORE THE ASSESSEE DID NOT BROUGHT ANY FACT ON THE RECORD TO SUGGEST THAT THERE WAS A REASONABLE CAUSE ON HIS PART FOR SUCH FAILURE. ON THE OTHER HAND IT WAS DETECTED THERE WAS TOTAL INACCURACY IN THE PARTICULARS OF INCOM E FURNISHED IN THE RETURN OF INCOME. THE WORD INACCURATE PARTICULAR WOULD COVER FALSITY IN THE FINAL FIGURE WILL ALSO CONSTITUENT ELEMENT OF ITEMS. THEY SIMPLY WOULD MEAN INACCURATE IN SOME SPECIFIC OR DEFINITE RESPECT WHETHER IN THE CONSTITUENT OR SUB ORDINATE ITEM OF INCOME OF THE END RESULT. THE VERY OBSERVATION WAS MADE BY THE HONBLE HIGH COURT OF GUJARAT IN THE CASE OF A.M.SHAH VS. CIT 108 TAXMAN 137 WHEREIN THE HONBLE COURT JUSTIFIED THE PENALTY U/S.271(1)(C) LEVIED FOR CONCEALING OR FURNISHING THE INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT. 4. ON APPEAL, THE LD. CIT(A) HAS CONFIRMED THE IMPUGNED PENALTY LEVIED BY THE AO, WITH THE FOLLOWING OBSERVATIONS: 5. I HAVE PERUSED THE RIVAL CONTENTIONS OF THE A O AND THOSE OF THE APPELLANT. THE AO IN PARA - 5 & 6 OF THE PENALTY ORDER AS MENTIONED ABOVE HAS CLEARLY MENTIONED THAT NON - DEPOSIT OF UNUTILIZED AMOUNT OF CAPITAL GAIN IN THE SPECIFIED ACCOUNT WITHIN THE STIPULATED PERIOD WAS A GROSS FAILURE OF NEGLIGENCE ON THE PART OF THE APPELLANT WHICH RESULTED IN FURNISHING INACCURATE PARTICULARS OF INCOME IN THE FORM OF CLAIMING DEDUCTION U/S.54 OF THE I.T. ACT FOR WHICH HE WAS NOT ENTITLED TO. NEITHER HAS THE APPELLANT BROUGHT ON ANY EVIDENCE WHICH COULD SUGGEST THA T THERE WAS REASONABLE CAUSE WHICH PREVENTED HIM FROM DISCHARGING HIS LEGAL OBLIGATIONS IN THIS REGARD. THUS, THE CONTENTION OF THE APPELLANT THAT THERE IS AMBIGUITY IN FINDING OF THE AO IN ASSESSMENT PROCEEDINGS AND IN PENALTY PROCEEDINGS IS 3 ITA 480 /201 1 NOT CORRECT. IT IS ALSO TO BE NOTED THAT THE APPELLANT IS ASSISTED BY A QUALIFIED PROFESSIONAL WHO REPRESENTED HIS CASE DURING THE ASSESSMENT PROCEEDINGS AS WELL. THE CASE LAW RELIED UPON BY THE APPELLANT ARE DISTINGUISHABLE ON FACTS OF THE CASE. THUS, CONSIDERING THE FACTS OF THE CASE AND SUBMISSIONS AS AVAILABLE ON RECORD, PENALTY LEVIED BY THE AO IS HELD TO BE JUSTIFIED. 5 . IN SUPPORT OF APPEAL, THE LD. C OUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD FURNISHED ALL THE DETAILS FULLY AND TRULY TO THE ASS ESSING OFFICER. HE SUBMITTED THAT THE ASSESSEE COULD NOT DEPOSIT UNUTILIZED PORTION OF CAPITAL GAIN AMOUNTING TO RS.3, 40,000/ - IN THE MANNER SPECIFIED BY SECTION 54 DUE TO HIS FINANCIAL CONSTRAINTS. HE SUBMITTED THAT THERE WAS NO CONCEALMENT OF PARTICULARS BY THE ASSESSEE AND THEREFORE IT WAS A FIT CASE FOR CANCELLING OF PENALTY. HE HAS RELIED UPON SEVERAL DECISIONS, I.E., CIT V. K M BHATIA, 193 ITR 379; CIT V. MANU ENGINEERING WORKS, 122 ITR 306; CIT V.PADMA RAM BHARALI, 110 ITR 54; CIT V. LAKHDHIR LALJI, 85 ITR 77; CIT V. RAM COMMERCIAL, 246 ITR 568; CIT V. DILIP N SHROFF, 291 ITR 519; ITO V. DHOLU CONSTRUCTION, 121 ITR (TRIB.) 438; ACIT V. RUBBER UDYOG, 10 ITR (TRIB.) 418; DCIT V. VA THARABAI, 14 ITR (TRIB.) 15; AND, DCIT V. PATHANKOT PRIMARY CO - OPERATIVE DEVELOPMENT BANK, 142 TTJ 401. 6 . IN REPLY, THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER PASSED BY THE CIT (A). 7 . WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY CONSIDERED THEIR SUBMISSIONS. SECTION 54 EXEMPTS CAPITAL GAIN ARISING FROM TRANSF ER OF A LONG TERM CAPITAL ASSET BEING BUILDINGS OR LANDS APPURTENANT THERETO AND BEING A RESIDENTIAL HOUSE, FROM TAX IF AN ASSESSEE PURCHASES OR CONSTRUCTS A HOUSE IN ACCORDANCE WITH THE PROVISIONS OF SECTION 54. SECTION 54(2) ENABLES AN ASSESSEE TO C LAIM EXEMPTION U/S 54(2) BY DEPOSITING THE UNUTILIZED OR UN - APPROPRIATED PORTION OF CAPITAL GAIN, IN THE MANNER PROVIDED THEREIN. THE ASSESSEE CLAIMED EXEMPTION U/S 54(2) IN RESPECT OF UNUTILIZED PORTION OF CAPITAL GAIN BY STATING THAT HE HAD DEPOSITED THE SAME IN THE MANNER SPECIFIED IN SECTION 54(2). ON SCRUTINY, IT WAS FOUND BY THE AO THAT THE ASSESSEE HAS NOT DEPOSITED THE UNUTILIZED PORTION OF CAPITAL GAIN IN THE MANNER SPECIFIED IN SECTION 54(2) AND THEREFORE THE EXEMPTION CLAIMED BY HIM U/S 54(2) WAS DENI ED TO HIM. 8 . THE IMPUGNED PENALTY HAS BEEN LEVIED BY THE AO ON THE GROUND THAT THE ASSESSEE HIMSELF KNEW WHILE FURNISHING HIS RETURN OF INCOME THAT HE HAD NOT DEPOSITED THE UNUTILIZED PORTION OF CAPITAL GAIN IN THE MANNER SPECIFIED BY SECTION 54(2) A ND YET FALSELY CLAIMED THE EXEMPTION U/S 54(2) WITH FULL KNOWLEDGE THAT HE WAS NOT ENTITLED TO THE SAID DEDUCTION. ACCORDING TO THE AO/CIT(A), THE ASSESSEE WAS WELL AWARE THAT HE WAS MAKING A FALSE CLAIM AND YET HE PREFERRED TO MAKE IT. IT IS IN THIS BACKGROU ND THAT THE IMPUGNED PENALTY HAS BEEN LEVIED BY THE AO AND CONFIRMED BY THE CIT(A). 4 ITA 480 /201 1 9 . SECTION 54(2) REQUIRES AN ASSESSEE TO DEPOSIT THE UNUTILIZ ED PORTION OF CAPITAL GAIN BEFORE FURNISHING RETURN OF INCOME IN ORDER TO CLAIM EXEMPTION U/S 54. IT IS THE C ASE OF THE ASSESSEE THAT HE HAS NOT DEPOSITED THE SAID AMOUNT IN THE MANNER SPECIFIED IN SECTION 54 WHILE FURNISHING HIS RETURN OF INCOME. YET HE FALSELY CLAIMED EXEMPTION WITH FULL KNOWLEDGE THAT HE WAS NOT ENTITLED TO EXEMPTION U/S 54(2). THERE IS NO EXP LANATION FROM THE ASSESSEE JUSTIFYING HIS CONDUCT IN THE MATTER. THE CASE OF THE ASSESSEE IS FULLY COVERED BY THE PROVISIONS OF SECTION 271(1)(C) READ WITH EXPLANATION 1 THEREOF. IN THIS VIEW OF THE MATTER, THE IMPUGNED PENALTY HAS BEEN RIGHTLY CONFIRMED B Y THE CIT(A). WE DECLINE TO INTERFERE WITH HIS ORDER. NONE OF THE DECISIONS CITED BY THE LD. COUNSEL FOR THE ASSESSEE IS APPLICABLE TO THE FACTS OF THE CASE. 10 . IN VIEW OF THE FOREGOING, A PPEAL FILED BY THE ASSESSEE IS DISMISSED. A 08 . 0 2 .201 3 A ORDER PRONOUNCED ON 08 . 0 2 - 2013 SD/ - SD/ - ( .. O / T. K. SHARMA) ( .. ME / D. K. SRIVASTAVA) T E / JUDICIAL MEMBER / ACCOUNTANT MEMBER /RAJKOT : 08 . 0 2. 2013 NVA/ - RJO' O / COPY OF ORDER FORWARDED TO: - 1.D /APPELLANT - SHRI VIVEKBHAI S. BALCHANDANI, RAJKOT 2 VRD / RESPONDENT - THE INCOME - TAX OFFICER, WARD 1(3), RAJKOT. . Y N / CONCERNED CIT - I, RAJ KOT 4. N - / CIT (A) - I I , RAJKOT. 5. VTTY, Y, / DR, ITAT, RAJKOT 6. O / GUARD FILE / BY ORDER TRUE COPY. SENIOR PRIVATE SECRETARY, ITAT, RAJKOT