ITO, Chandigarh V. Sh. Tej Parkash Singh, Chandigarh

ITA 491/CHANDI/2015

• Counselvise Citation: 49121514 RSA 2015
• Duration Of Justice: 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 07-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Difference of opinion
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE VICE PRESIDENT & MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO. 491/CHD/2015 ASSESSMENT YEAR: 2007-08 THE ITO, VS. SH. TEJ PARKASH SINGH WARD 1(3), CHANDIGARH CHANDIGARH PAN NO. ACFPS1314N (APPELLANT) (RESPONDENT) APPELLANT BY : SH. SUNIL KUMAR RESPONDENT BY : SH. TEJ MOHAN SINGH DATE OF HEARING : 02.09.2015 DATE OF PRONOUNCEMENT : 08.09.2015 ORDER PER H.L.KARWA, VP THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF CIT(A)-I, CHANDIGARH DATED 13.02.2015 IN CANCELLING THE PENAL TY OF RS. 37,10,407/- LEVIED U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961 RELATING TO ASSESSMENT YEAR 2007-08. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE FILED HIS RETURN OF INCOME ON 31.10.2010 DECLARING TOTAL INCOME AT RS. 17,59,256/-, EXCLUDING AGRICULTURAL INCOME OF RS. 3 LAKHS. SUBSEQUENTLY, T HE ASSESSMENT WAS REOPENED FOR THE REASONS THAT ASSESSEE HAD NOT DECLARED INCO ME FROM CAPITAL GAINS EARNED FROM TRANSFER OF LAND OWNED BY THE PUNJABI COOPERAT IVE HOUSING BUILDING SOCIETY LTD., MOHALI, OF WHICH THE ASSESSEE IS ONE OF THE MEMBERS. AS A RESULT OF ASSESSMENT U/S 147 OF THE ACT, INCOME OF THE ASSESS EE WAS ASSESSED AT RS. 1,79,53,260/- THE ASSESSEE WAS A MEMBER OF HOUSING SOCIETY OF MLAS NAMED AS 2 PUNJAB COOPERATIVE HOUSE BUILDING SOCIETY LTD., MOH ALL WHICH WAS THE OWNER OF 21.2 ACRES OF LAND IN VILLAGE KANSAL, DISTRICT MOHA LI. THE SAID SOCIETY ENTERED INTO A TRIPARTITE JOINT DEVELOPMENT AGREEMENT ON 25 .2.2007 WITH M/S HASH BUILDER (PVT.) LTD, CHANDIGARH BY VIRTUE OF WHICH T HE SOCIETY WOULD TRANSFER ITS LAND FOR DEVELOPMENT IN LIEU OF MONETARY CONSIDERAT ION AND ALSO CONSIDERATION IN KIND TO MEMBERS OF THE SOCIETY OWNING 500 SQUARE YA RDS LAND. THE TOTAL CONSIDERATION WAS SETTLED AT RS. 82,50,000/- PLUS ALLOTMENT OF ONE FLAT OF 2250 SQ. FEET TO THE ASSESSEE OUT OF WHICH ASSESSEE HAD RECEIVED RS. 33 LAKHS. THE ASSESSING OFFICER NOTICED THAT AS PER THE AGREEMENT DATED 25.2.2007, EACH OF THE MEMBER OF THE SOCIETY INCLUDING THE ASSESSEE , OWNI NG PLOT OF 500 SQ. YARDS WERE TO RECEIVE RS. 82,50,000/- IN CASH AND A FURNISHED FLAT MEASURING 2250 SQ. FEET WITH MARKET VALUE OF RS. 1,01,25,000/- CALCULATED @ RS. 4500/- PER SQUARE FEET. THUS, THE TOTAL CONSIDERATION FOR TRANSFER OF PLOT CAME TO RS. 1,83,75,000/-. THE ASSESSING OFFICER COMPUTED THE INCOME BY WAY OF CAP ITAL GAINS BY ADOPTING THIS AMOUNT AS SALE CONSIDERATION. FINALLY, THE ASSESSM ENT WAS MADE BY TAKING CAPITAL GAINS AT RS. 1,77,74,258/-. THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT AND AFTER AFFORDING AN OPP ORTUNITY OF BEING HEARD TO THE ASSESSEE. THE ASSESSING OFFICER LEVIED A PENALTY O F RS. 37,10,407/-. 3. ON APPEAL, THE CIT(A) CANCELLED THE PENALTY, OBS ERVING AS UNDER:- 5.1 THUS, THE PENALTY FOR CONCEALMENT CAN BE LEVIE D WHEN THE ASSESSE HAS CONCEALED PARTICULARS OF HIS INCOME OR HAS FURN ISHED INACCURATE PARTICULARS OR IS NOT ABLE TO GIVE ANY SATISFACTORY EXPLANATION IN REGARD TO ANY MATTER WHICH IS MATERIAL TO THE COMPUTATION OF INCOME. NOW WE EXAMINE THE FACTS OF THE PRESENT CASE. IT IS NOTEWO RTHY THAT THE VIEW TAKEN BY THE ASSESSING OFFICER THAT THE AMOUNT OF CAPITAL GA INS HAS TO BE COMPUTED BY TAKING THE TOTAL CONSIDERATION, ACTUALLY RECEIVE D OR RECEIVABLE BY THE APPELLANT AS SALE CONSIDERATION AND THAT THE TOTAL AMOUNT OF CAPITAL GAIN IS ASSESSABLE AS THE INCOME OF THE YEAR UNDER APPEAL H AS BEEN UPHELD BY THE TRIBUNAL. THEREFORE, THE LIMITED POINT FOR CONSIDER ATION IS WHETHER THE APPELLANT HAS A REASONABLE EXPLANATION FOR THIS OMI SSION TO DISCLOSE THE 3 INCOME BY WAY OF CAPITAL GAINS IN THE RETURN. IN TH E RETURN FILED ON 30.10.2008 I.E. BEFORE THE ISSUE OF NOTICE U/S 148( ON 31.12.2009), THE APPELLANT HAD DISCLOSED THE AMOUNT OF RS. 15 LACS, RELATING TO THE TRANSFER OF PLOT AND HAD PAID TAX ON CAPITAL GAIN COMPUTED O N THIS SALE CONSIDERATION. IN THIS RETURN, SOME INCOME UNDER TH E HEAD CAPITAL GAINS WAS SHOWN BUT THE SALE CONSIDERATION SHOWN WAS ONLY THE AMOUNT WHICH HE HAD ACTUALLY RECEIVED DURING THE PREVIOUS YEAR. IN FACT , THE APPELLANT HAD DECLARED THE CONSIDERATION RECEIVED IN THE NEXT FIN ANCIAL YEAR ALSO IN THE RETURN OF A.Y. 2008-09. IT IS CLEAR FROM THE ARGUME NTS RAISED BY THE APPELLANT THAT THERE WERE CERTAIN CONTROVERSIES AND DISPUTES IN REGARD TO THE TRANSFER OF PLOT. IN FACT, I UNDERSTAND THAT THE VA RIOUS ISSUES HAVE TILL NOT BEEN RESOLVED AND THE CONSTRUCTION OF THE BUILDING, IN WHICH THE APPELLANT WAS TO GET A FLAT AS A PART OF SALE CONSIDERATION, HAS NOT STARTED TILL DATE. IN THESE PECULIAR CIRCUMSTANCES, THE BELIEF OF THE APP ELLANT THAT THE CAPITAL GAINS, ON WHICH HE HAS TO PAY TAX, HAS TO BE COMPUT ED ONLY ON THE BASIS OF THE AMOUNT WHICH HE HAS ACTUALLY RECEIVED, CANNOT B E CONSIDERED TO BE TOTALLY UNREASONABLE, THOUGH IT IS NOT STRICTLY LEG AL. THE FACT THAT ALL THE MATERIAL FACTS WHICH WERE REQUIRED TO COMPUTE THE C ORRECT CAPITAL GAIN WERE FURNISHED BY THE APPELLANT IN HIS RETURN, ESTABLISH HIS BONAFIDE CREDENTIALS. IN VIEW OF THIS DISCUSSION, IT IS HELD THAT PENALTY FOR CONCEALMENT HAS BEEN WRONGLY LEVIED IN THE INSTANT CASE AND THE SAME IS ACCORDINGLY CANCELLED. GROUNDS OF APPEAL TAKEN BY THE APPELLANT ARE ALLOWE D. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS. SHRI TEJ MO HAL SINGH, ITA. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS DE CLARED CAPITAL GAINS ON THE AMOUNT WHICH WAS RECEIVED BY EXECUTING THE SALE DEE D AND FOR AGREEMENT TO SELL REGARDING WHICH NO TRANSACTIONS WERE COMPLETED, NO CAPITAL GAIN ARISES. HE FURTHER POINTED OUT THAT THE ASSESSEE HAS DISCLOSED ALL THE PARTICULARS IN THE RETURN OF INCOME AS WELL AS BEFORE ASSESSING OFFICER. THE REFORE, ON MERE DIFFERENCE OF OPINION, PENALTY WAS CORRECTLY CANCELLED BY THE LD. CIT(A). SHRI TEJ MOHAN SINGH, LD. COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT THE HON'BLE PUNJAB & HARYANA HIGH COURT IN ITS RECENT DECISION IN THE CA SE OF SHRI C.S. ATWAL VS. CIT, LUDHIANA & OTHERS IN BUNCH OF 85 APPEALS DECIDED TH E QUANTUM ISSUE AGAINST THE 4 REVENUE IN ITA NO. 200 OF 2013 DATED 22.7.2015. THE REFORE, THERE REMAINS NO BASIS AT ALL FOR LEVYING THE PENALTY U/S 271(1)(C) OF THE ACT. NO SUCH PENALTY CAN SURVIVE AND THE SAME IS LIABLE TO BE CANCELLED. SHR I TEJ MOHAN SINGH FURTHER SUBMITTED THAT THE FACTS OF THE PRESENT CASE ARE SI MILAR TO THE CASE OF SHRI C.S. ATWAL REFERRED TO ABOVE. SHRI TEJ MOHAN SINGH ITA. COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF ITAT, CHANDIGARH BENCH IN TH E CASE OF ITO VS. SHRI BALWINDER SINGH DHILLON IN ITA NO. 1140/CHD/2014 (A SSESSEE BELONGING TO SAME GROUP) RELATING TO ASSESSMENT YEAR 2008-09, WHEREIN THE TRIBUNAL VIDE ITS ORDER DATED 3.8.2015, DECIDED A SIMILAR ISSUE IN FAVOUR O F THE ASSESSEE, AND CONFIRMED THE ORDER OF LD. CIT(A) IN CANCELLING THE PENALTY O F RS. 20,25,000/- LEVIED U/S 271(1) (C) OF THE ACT, FOR THE AY- 2008-09, OBSERVI NG AS UNDER:- E5. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS OF THE CASE OF ASSESSEE ARE ADMITTEDLY IDENTICAL AS HA VE BEEN DECIDED BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SHRI C.S. ATWAL VS CIT, LUDHIANA (SUPRA) IN WHICH THE HON'BLE HIGH COURT DECIDED THE ISSUE OF EXIGIBILITY TO CAPITAL GAIN IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVE NUE. IN THE CASE OF THE PRESENT ASSESSEE ALSO, THE ASSESSEE HAS , OF HIS OWN FILED ANOTHER RETURN OF INCOME DISCLOSING ALL THE M ATERIAL FACTS RELATING TO TRANSFER OF PLOT AND HAS DISCLOSED CAPI TAL GAINS ON THE AMOUNT WHICH WAS ACTUALLY RECEIVED DURING THE Y EAR UNDER CONSIDERATION. THE DISPUTE WAS LEFT REGARDING TRAN SFER OF PLOT AND THE AMOUNT WHICH WAS NOT YET RECEIVED THROUGH T HE AGREEMENT TO SELL. THE LD. CIT(APPEALS), THEREFORE , ON PROPER APPRECIATION OF THE FACTS AND MATERIAL ON RECORD, C ORRECTLY HELD THAT IT IS NOT A CASE OF CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. THE E XPLANATION OF THE ASSESSEE WAS BONAFIDE AND AFTER PASSING THE IMPUGNED ORDER, WHEN THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SHRI C.S.ATWAL VS CIT, LUDHIANA (SUPRA) HAS DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE, WOUL D CLEARLY PROVE THAT IT IS NOT A FIT CASE OF LEVY OF THE PENA LTY UNDER SECTION 271(1)(C) OF THE ACT. THEREFORE, WE DO NOT FIND ANY 5 ERROR IN THE ORDER OF LD. CIT(APPEALS) IN DELETING PENALTY. THE DEPARTMENTAL APPEAL FAILS AND IS DISMISSED. 5. THE FACTS OF THE PRESENT CASE ARE SIMILAR TO THE CASE OF SHRI BALWINDER SINGH DHILLON, REFERRED TO ABOVE. EVEN THE RIVAL CO NTENTIONS ARE ALSO SIMILAR. RESPECTFULLY, FOLLOWING THE ORDER OF THE TRIBUNAL, PASSED IN THE CASE OF SHRI BALWINDER SINGH DHILLON (SUPRA), WE HOLD THAT IT IS NOT A FIT CASE FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. ACCORDINGLY, WE DO NOT SEE ANY MERIT IN THE APPEAL PREFERRED BY THE REVENUE. CONSEQUENTLY, WE D ISMISS THE APPEAL. 6. IN THE RESULT, APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 08/09/2015 SD/- SD/- (RANO JAIN) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT DATED :08 TH SEPTEMBER,2015 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR