The ITO, 2(3), Indore V. SHRI DILIP KUMAR GHOLAP, Indore

ITA 497/IND/2014

• Counselvise Citation: 49722714 RSA 2014
• Duration Of Justice: 1 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 09-07-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 16-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: S S SOLANKI
• Keywords: Capital asset; Wrong claim
• Section: 54B; 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, J.M. AND SHRI B.C.MEENA, A.M. I.T.A.NO.497/IND/2014 A.Y. : 2009-10 INCOME-TAX OFFICER, SHRI DILIP KUMAR GHOLAP, 2(3), VS 1-2, SAMPAT FARM, BICHOLI MARDANA, INDORE. INDORE. APPELLANT RESPONDENT PAN NO. ALHPG6321L APPELLANT BY : SHRI R.A. VERMA, SR. DR RESPONDENT BY : SHRI S.S.SOLANKI, C.A. DATE OF HEARING : 09 . 0 7 .201 5 DATE OF PRONOUNCEMENT : 17 . 0 8 .201 5 O R D E R PER GARASIA, J.M. THIS APPEAL IS DIRECTED AGAINST THE ORDER OF CIT(A) -I, INDORE, DATED 25.04.2014 FOR THE ASSESSMENT YEAR 20 09-10. -: 2: - 2 2. THE SHORT FACTS OF THE CASE ARE AS UNDER. 3. IN THIS CASE, THE ASSESSMENT WAS COMPLETED U/S 143( 3) OF INCOME-TAX ACT, 1961. THE AO HAS ASSESSED THE IN COME AT RS. 85,81,350/- AND AGRICULTURAL INCOME AT RS. 1,25 ,000/- AGAINST THE RETURNED INCOME OF RS. 5,43,900/- AND A GRICULTURAL INCOME OF RS. 1.25 LACS. DURING THE COURSE OF ASSES SMENT PROCEEDINGS, IT WAS NOTICED THAT THE ASSESSEE HAS S OLD FOUR PIECES OF LAND ON 1.4.2005 AND SALE CONSIDERATION O F RS 2,30,00,000/- AND ALSO CLAIMED THAT THESE LANDS ARE NOT A CAPITAL ASSET AS PER SECTION 2(14)(III) OF THE INCO ME-TAX ACT, 1961. IN SUPPORT OF THIS, THE ASSESSEE SUBMITTED A CERTIFICATE FROM GRAM PANCHAYAT, BICHOLI HAPSI THAT IT IS OUT O F NAGAR NIGAM AND THIS GRAM COMES TO GRAM PANCHAYAT. FOR VERIFICATION OF CLAIM OF THE ASSESSEE, AN ENQUIRY W AS MADE BY THE ASSESSING OFFICER FROM THE TEHSILDAR THROUGH CO LLECTOR, INDORE AND COMMISSIONER, NAGAR NIGAM, INDORE, AND O N THE BASIS OF THE REPLIES RECEIVED FROM THE ADDL. TEHSIL DAR, INDORE AND NAGAR NIGAM, INDORE, THE AO MADE AN ADDITION OF RS. 80,37,449/- ON ACCOUNT OF LTCG AFTER ALLOWING EXEMP TION U/S -: 3: - 3 54B AND U/S 54F OF THE ACT AND PENALTY U/S 271(1)(C ) WAS LEVIED. 4. THE MATTER CARRIED TO LD. CIT(A). THE LD. CIT(A) HA S DELETED THE PENALTY BY OBSERVING AS UNDER :- 4. I HAVE GONE THROUGH ASSESSMENT ORDER, THE GROUNDS OF APPEAL AND THE SUBMISSIONS OF APPELLANT. 5. IN THIS CASE BARE FACTS ARE THAT APPELLANT SOLD FOU R PIECES OF LAND ON 14.05.2008 FOR A SALE CONSIDERATI ON OF RS. 2,30,00,000/- AND CLAIMED IN THE RETURN OF INCOME THAT THESE LANDS ARE NOT A CAPITAL ASSET AS PER SECTION 2(14)(III) OF THE INCOME TAX ACT AND THUS S HOWN NIL INCOME FROM CAPITAL GAIN ON SALE OF LAND. THIS WAS DONE BY APPELLANT ON THE BASIS OF A CERTIFICATE FRO M GRAM PANCHAYAT, BICHOLI HAPSI THAT SUCH LAND IS OUT OF NAGAR NIGAM AREA. BUT THAT CERTIFICATE DID NOT MENTION HOW FAR THE LAND WAS SITUATED FROM NAGAR NIGAM. THEREFORE APPELLANT WAS UNDER BONA FIDE BELI EF THAT LAND SOLD BEING AGRICULTURAL LAND WAS EXEMPT FROM TAX. -: 4: - 4 6. ON ENQUIRY BEING MADE FROM TEHSILDAR BY AO, IT WAS CERTIFIED BY TEHSILDAR THAT SUCH LAND WAS SITUATED WITHIN 3 KM FROM NAGAR NIGAM LIMITS. 7. APPELLANT IS AN AGRICULTURIST AND DOES NOT KNOW INTRICACIES OF LAW. HE WAS TOLD BY HIS EARLIER CONSULTANT THAT RECEIPTS ON SALE OF HIS AGRICULTURA L LANDS WERE NOT TAXABLE, BUT WHEN HE TOOK SECOND OPINION AND CAME TO KNOW THAT IF LAND IS SITUATED WITHIN 8 KM OF MUNICIPAL LIMIT, THEN SALE CONSIDERA TION OF SUCH LAND BECOMES TAXABLE, HE WITHDREW APPEAL FROM THE OFFICE OF CIT(A) AND OFFERED CAPITAL GAIN ON THE SAME. THEREFORE, NOTHING TO SUGGEST THAT APPELLANT HAS CONCEALED HIS INCOME. THE ONLY DISPUTE WAS WHETHER THE APPELLANT WAS ENTITLED TO EXEMPTION AS CLAIMED OR NOT. THEREFORE THERE WAS NO CONCEALMENT OF INCOME N OR WAS THERE ANY ATTEMPT ON THE PART OF APPELLANT TO H IDE ANY MATERIAL FACTS FROM THE REVENUE. FOR THIS PURPO SE RELIANCE IS PLACED ON THE DECISION IN CASE OF VIDEO N -: 5: - 5 [2008] 301 ITR 260 (DELHI) AND H. A. SODHAN (GREATE R HUF) 17 ITD 479 (ITAT, AHMEDABAD B BENCH). IN CASE OF RELIANCE PETROPRODUCTS P. LTD. 322 ITR 158 (SC), HONBLE APEX COURT HELD THAT MERELY BECAUSE APPELLANT CLAIMED DEDUCTION WHICH HAS NOT BEEN ACCEPTED BY REVENUE, PENALTY U/S 271(L)(C) IS NOT ATTARACTED. IF THE CONTENTION OF REVENUE IS ACCEPTE D THAN APPELLANT WOULD BE LIABLE FOR PENALTY U/S 27L( L)(C) IN EVERY CASE WHERE THE CLAIM MADE BY APPELLANT IS NOT ACCEPTED BY THE AO FOR ANY REASON - THAT IS CLE ARLY NOT THE INTENT OF LEGISLATURE. RESPECTFULLY FOLLOWI NG THE AFORESAID DECISIONS, PENALTY OF RS. 18,21,300/- LEV IED IN THIS CASE U/S 271(L)(C) OF THE INCOME TAX ACT IS HEREBY DELETED. 5. AS A RESULT THE APPEAL IS ALLOWED. 6. THE LD. SENIOR D.R. RELIED UPON THE ORDER OF AO AND SUBMITTED THAT THIS ASSESSEE HAS CLAIMED THAT HIS L AND IS NOT SUBJECTED TO CAPITAL GAINS, AS THE LAND IS SITUATED IN THE GRAM -: 6: - 6 PANCHAYAT. THE AO HAS DISALLOWED THE CLAIM. THE ASS ESSEE WENT TO CIT(A) AND THE ASSESSEE HAS WITHDRAWN THE C LAIM. THEREFORE, THIS IS A FIT CASE WHEREIN THE ASSESSEE HAS MADE A WRONG CLAIM. THEREFORE, IN VIEW OF THE DECISION OF CIT VS. ZOOM COMMUNICATION, 327 ITR 510 (DEL), THE AOS ORDER MA Y BE UPHELD. 7. ON THE OTHER HAND, THE LD. AUTHORIZED REPRESENTATIV E RELIED UPON THE ORDER OF CIT(A) AND FILED THE WRIT TEN SYNOPSIS AND RELIED UPON THE DECISION OF RELIANCE PETRO PROD UCTS (P) LIMITED, 320 ITR 158 ( S.C. ). 8. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE ASSESSEE HAS CLAIMED THAT HIS LAND IS NOT A CAPITAL ASSETS AS PER SECTION 2(14)(III) OF THE ACT . IN SUPPORT OF HIS CLAIM, THE ASSESSEE HAD ATTACHED THE CERTIFICAT E OF GRAM PANCHAYAT AND ON THE BASIS OF CERTIFICATE OF SARPAN CH OF GRAM PANCHAYAT, THE ASSESSEE CLAIMED THAT HIS LAND WAS N OT SUBJECT TO CAPITAL ASSETS. THE AO HAS MADE INQUIRY AND HE H AD CONFIRMED THAT THE ASSESSEES LAND IS SITUATED WITH IN 8 KMS.OF MUNICIPAL AREA. THEREFORE, THE ASSESSEE HAS TO PAY LONG TERM -: 7: - 7 CAPITAL GAIN. WHILE FILING THE RETURN OF INCOME ALO NGWITH STATEMENT OF INCOME, THE ASSESSEE HAS FILED THE DET AILS OF LAND SOLD AND PURCHASED BEFORE THE AO AND THAT FACTS HAV E BEEN STATED ALONGWITH RETURN OF INCOME. THEREFORE, THE A SSESSEE HAD CLAIMED THAT SALE OF LAND IS NOT SUBJECTED TO LONG TERM CAPITAL GAIN AS IT IS AN AGRICULTURAL LAND. THE CLAIM OF TH E ASSESSEE WAS NOT ACCEPTED BY THE DEPARTMENT. IT DOES NOT MEA N THAT THE ASSESSEE HAD MADE ANY WRONG CLAIM. BY SIMPLY CL AIMING BEFORE THE TAX AUTHORITIES CANNOT BE SAID THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME. TH EREFORE, WE ARE OF THE VIEW THAT THE LD. CIT(A) IS JUSTIFIED IN DELETING THE PENALTY RELYING UPON THE DECISION OF HON'BLE SUPREM E COURT IN THE CASE OF RELIANCE PETRO PRODUCTS PRIVATE LIMITED 320 ITR 158 ( S.C. ). 9. THE POSITION OF LAW REGARDING LEVY OF PENALTY U/S 271(1)(C) HAS UNDERGONE A SUBSTANTIAL CHANGE AFTER INSERTION OF EXPLANATION I TO SECTION 271(1)(C) WITH EFFECT F ROM 01.04.1976. EXPLANATION 1 TO SECTION 271(1)(C) RAIS ES A PRESUMPTION THAT AS AND WHEN ANY AMOUNT IS ADDED OR -: 8: - 8 DISALLOWED IN COMPUTING THE TOTAL INCOME, THE SAME SHALL BE DEEMED OR REPRESENT THE INCOME IN RESPECT OF WHICH THE PARTICULARS HAVE BEEN CONCEALED. FURTHER WITH EFFEC T FROM 10.9.1986 AMENDMENT HAS BEEN MADE TO EXPLANATION 1( B) TO SECTION 271(1)(C), AFTER THIS AMENDMENT FURTHER ONUS HAS BEEN PLACED ON THE ASSESSEE TO PROVE THAT EXPLANATI ON FURNISHED BY HIM WAS BONA FIDE. THE POSITION NOW IS THAT UNLESS AND UNTIL THE ASSESSEE SUBSTANTIATES THE EXP LANATION AND PROVES THAT THE EXPLANATION WAS BONA FIDE, THE ADDITION MADE TO HIS INCOME SHALL BE DEEMED TO REPRESENT THE CONCEALED INCOME. ON ANALYSIS OF PROVISIONS OF SECT ION 271(1)(C), IT IS OBSERVED THAT EXPLANATION 1 TO SEC TION 271(1)(C) PROVIDES THE SITUATION, WHERE NO EXPLANAT ION FOR THE FAILURE IS OFFERED BY THE ASSESSEE OR WHERE THE EXPLANATION THAT HAS BEEN OFFERED IS FOUND TO BE FA LSE OR WHERE THE ASSESSEE IS NOT ABOUT TO SUBSTANTIATE THE EXPLANATION OFFERED BY HIM. IN ALL THE CASES, THE A MOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME O F SUCH PERSON SHALL BE DEEMED TO REPRESENT THE INCOME IN R ESPECT OF WHICH THE PARTICULARS HAVE BEEN CONCEALED. AS PE R -: 9: - 9 PROVISO TO THIS EXPLANATION, THE ONUS TO ESTABLISH THAT EXPLANATION OFFERED WAS BONA FIDE AND FACTS RELATIN G TO SAME AND MATERIAL TO THE COMPUTATION OF HIS INCOME EVEN DISCLOSED BY HIM WILL BE ON THE PERSONS CHARGED FOR CONCEALMENT. 10. AS PER THE PROVISIONS 2 TO EXPLANATION 1(B) NO W THE ENTIRE ONUS IS ON THE ASSESSEE TO NOT ONLY OFFE R AN EXPLANATION BUT ALSO TO SUBSTANTIATE IT AND TO PROV E THAT THE PRESUMPTION WAS BONA FIDE. AT THE SAME TIME THE PRESUMPTION SO RAISED BY THE EXPLANATION 1 IS REBUT TABLE. THE EFFECT IS THAT UNLESS AND UNTIL REBUTS THE PRES UMPTION, HE WOULD BE LIABLE TO PENALTY U/S 271(1)(C) OF THE INCOME- TAX ACT, 1961. IT IS NOW ESTABLISHED LAW THAT PRESU MPTION WOULD NOT STAND REBUTTED MERELY BY FURNISHING ANY G ENERAL OR FANTASTIC OR FANCIFUL OR UNREASONABLE EXPLANATIO N BY THE ASSESSEE, THE EXPLANATION SHOULD BE BASED ON COGENT AND RELEVANT MATERIAL AND SHOULD BE ACCEPTED TO THE AUTHORITIES. 11. THE EXPRESSION FURNISHING THE INACCURATE PARTICULA RS OF INCOME HAS BEEN NOT DEFINED IN THE ACT. THE EXP RESSION -: 10: - 10 INACCURATE REFERS TO NOT ONLY IN CONFORMITY WITH THE FACT OR TRUTH AND THAT IS AMENDMENT, WHICH IS RELEVANT I N THE CONTEXT OF FURNISHING INACCURATE PARTICULARS. THE M EANING BY FURNISHING INACCURATE PARTICULARS OF INCOME IMPL IES FURNISHING OF DETAILS OR INFORMATION ABOUT THE INCO ME WHICH ARE NOT IN CONFORMITY WITH THE FACT OR TRUTH. THE D ETAILS OR INFORMATION ABOUT INCOME DEALS WHICH ARE FACTUAL DE TAIL OF INCOME AND THIS CANNOT BE EXTENDED TO THE AREA, WHI CH ARE SUBJECTIVE SUCH AS STATUS OF TAXABILITY OF INCOME, ADMISSIBILITY OF DEDUCTION AND INTERPRETATION OF LA W. FURNISHING OF INACCURATE INFORMATION, THUS, RELATES TO FURNISHING THE FACTUAL INCORRECT DETAILS AND INFORM ATION ABOUT THE INCOME. THE ADMISSION OR REJECTION OF A C LAIM SUBJECT TO EXERCISE AND WHETHER THE CLAIM IS ACCEPT ED OR REJECTED HAS NOTHING TO DO WITH FURNISHING OF INACC URATE PARTICULARS OF INCOME. RAISING A LEGAL CLAIM, EVEN IF IT IS ULTIMATELY FOUND TO BE LEGALLY UNACCEPTABLE CANNOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. WE FIND THAT, IN THIS CASE, THE ASSESSEE HAS MADE A BONA FI DE LEGAL CLAIM, WHICH WAS NOT ACCEPTED BY THE TAX AUTHORITY OR -: 11: - 11 JUDICIAL AUTHORITY. WE FIND THAT THE ASSESSEES CLA IM WAS NOT ACCEPTED BY THE AUTHORITY, IT DOES NOT MEAN THA T THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF IN COME. THE HON'BLE SUPREME COURT IN THE CASE OF UNION OF INDIA VS. RAJASTHAN SPINNING AND WEAVING MILLS REPORTED IN (2009) 13 SCC 448, CONSIDERED THE EARLIER DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F UNION OF INDIA AND ORS VS. DHARMENDRA TEXTILES PROCESSORS & ORS., REPORTED IN (2008) 306 ITR 277 (SC) AND HELD THAT IT GOES WITHOUT SAYING THAT FOR APPLICABILITY OF SECTION 271(L)(C) OF THE ACT, COND ITION STATED THEREIN MUST EXIST. THE ABOVE SAID DECISION CAME UP FOR CONSIDERATION IN THE CASE OF COMMISSIONER OF INCOME TAX VS. RELIANCE PETROPRODUCTS PVT., LTD., REPORTED IN (2010) 322 ITR 158 (SC). ON READING OF SECTION 271(1)(C) , THE HON'BLE SUPREME COURT POINTED OUT THAT IN ORDER TO BRING THE CASE UNDER SECTION 271(1)(C), THERE HAS TO BE CONCEALMENT OF THE PARTI CULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME . IN -: 12: - 12 ORDER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY P ROVISION COULD NOT BE INVOKED. THUS, THE HON'BLE SUPREME COU RT POINTED OUT THAT A MERE MAKING OF CLAIM, WHICH IS N OT SUSTAINABLE IN LAW, BY ITSELF, WOULD NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. THE READING OF THE DECISION OF THE HON'BLE SUPREME COURT REFERRED TO ABOVE, THUS POINTS OUT TH AT FOR SUSTAINING PENALTY, THE BONA FIDE EXPLANATION OF TH E ASSESSEE MUST BE LOOKED AT, SO THAT THE CONTUMACIOU S CONDUCT OF THE ASSESSEE FOR THE PURPOSE OF SUSTAINI NG THE PENALTY WOULD BE TAKEN AS CONDITION THAT IS THE MAI N REQUIREMENT UNDER SECTION 271(L)(C) OF THE ACT. REFERRING TO THE DECISION IN THE CASE OF DHARMENDRA TEXTILE PROCESSORS, (SUPRA), THE HON'BLE SUPREME COURT POINTED OUT THAT IN THE BACKGROUND OF SECTION 271(L )(C) OF THE ACT, THERE IS NO NECESSITY OF MENS REA BEING SHOWN BY THE REVENUE, HOWEVER REFERRING TO THE EXPLANATION T O SECTION 271(L)(C) PENALTY BEING A MULTIPLE LIABILITY, THE BONA FIDE OF THE CONDUCT OF THE ASSESSEE NECESSARIL Y -: 13: - 13 ASSUMES SIGNIFICANT EVEN THOUGH WILLFULNESS OF THE ASSESSEE MAY NOT BE A CRITERIA, THE CONDUCT IS TO B E CONSIDERED. THUS, A MERE FACT THAT THE ADDITION IN THIS CASE HAS BEEN SUSTAINED BY THIS COURT BY ITSELF WOU LD NOT LEAD TO THE AUTOMATIC APPLICATION TO SECTION 271(L) . 12. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 17 TH AUGUST, 2015. SD/- (B. C. MEENA) ACCOUNTANT MEMBER SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 17 TH AUGUST, 2015. CPU* 1617