Brij Bhushan Aggarwal, Saharanpur V. ITO, Ward-3(1), Saharanpur

ITA 5079/DEL/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 3811 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 23-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L ANURAGI
• Assessee Lawyers: SAMEER JAIN E; SUVIGYA AWASTHY
• Keywords: Opportunity of being heard
• Section: 271(1)(c); 274; 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : SMC : NEW DELHI BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.5079/DEL/2018 ASSESSMENT YEAR: 2014-15 BRIJ BHUSHAN AGGARWAL, 2A/1501, POST OFFICE ROAD, SAHARANPUR (UP). PAN: ABFPA6529A VS. ITO, WARD-3(1), SAHARANPUR (UP). (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SAMEER JAIN, ADVOCATEE & SHRI SUVIGYA AWASTHY, ADVOCATE REVENUE BY : SHRI S.L. ANURAGI, SR.DR DATE OF HEARING : 30.07.2019 DATE OF PRONOUNCEMENT : 14.08.2019 ORDER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 28 TH MAY, 2018 OF THE CIT(A), MUZAFFARNAGAR, RELATING TO ASSESSMENT Y EAR 2014-15. 2. LEVY OF PENALTY OF RS.1,48,130/- BY THE ASSESSIN G OFFICER U/S 271(1)(C) OF THE ACT WHICH HAS BEEN UPHELD BY THE CIT(A) IS THE ONLY ISSUE RAISED BY THE ASSESSEE IN THE GROUNDS OF APPEAL. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS AN INDIVIDUAL AND FILED HIS RETURN OF INCOME ON 13 TH AUGUST, 2014, DECLARING THE TOTAL INCOME OF RS.3,0 0,090/-. ITA NO.5079/DEL/2018 2 THIS CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE A SSESSEE HAS SOLD 20 BIGHAS OF LAND FOR A TOTAL CONSIDERATION OF RS.70,54,000/-. WHILE COMPUTING THE CAPITAL GAIN, THE ASSESSEE HAS CLAIMED INDEXED COST OF FILLING OF SOI L IN BHATTA LAND FOR 20 BIGHAS AT RS.9,78,125/-. SINCE THE ASSESSEE COULD NOT SUBSTA NTIATE THE CLAIM BY PRODUCING DOCUMENTARY EVIDENCE, THE ASSESSING OFFICER REJECTE D THE AFFIDAVIT FILED BY THE ASSESSEE AND MADE ADDITION OF RS.9,78,125/- TO THE TOTAL INCOME OF THE ASSESSEE. THE ASSESSING OFFICER, THEREAFTER, INITIATED PENALTY PR OCEEDINGS U/S 271(1)(C) OF THE IT ACT AND LEVIED PENALTY OF RS.1,48,130/- ON ACCOUNT OF T HE ADDITION SO MADE BY HIM WHICH WAS UPHELD BY THE CIT(A) AS WELL AS THE TRIBUNAL. 4. THE LD. COUNSEL FOR THE ASSESSEE STRONGLY CHALLE NGED THE ORDER OF THE CIT(A) IN CONFIRMING THE PENALTY LEVIED BY THE ASSESSING OFFI CER AND CONFIRMED BY THE CIT(A). HE SUBMITTED THAT THE ASSESSEE, DURING THE COURSE O F ASSESSMENT PROCEEDINGS, HAS FILED AN AFFIDAVIT BEFORE THE ASSESSING OFFICER STATING T HAT IT HAS INCURRED THE EXPENDITURE SINCE THE LAND WAS LOW LYING AS COMPARED TO THE ROA D LEVEL. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE IS NOT MAINTAINING ANY BOOKS OF A CCOUNT AND SINCE THE CASE IS TEN YEARS OLD THE ASSESSEE IS NOT IN A POSITION TO SUBS TANTIATE WITH DOCUMENTARY EVIDENCE. REFERRING TO THE DECISION OF THE HON'BLE SUPREME CO URT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. REPORTED IN (2010) 11 SCC 7 62, HE SUBMITTED THAT SUBMITTING INCORRECT CLAIM IN LAW DOES NOT TANTAMOUNT TO FURNI SHING INACCURATE PARTICULARS OF ITA NO.5079/DEL/2018 3 INCOME OF ASSESSEE OR CONCEALMENT. HE ACCORDINGLY SUBMITTED THAT THE PENALTY LEVIED BY THE ASSESSING OFFICER AND UPHELD BY THE CIT(A) I S NO SUSTAINABLE. 5. THE LD. COUNSEL FOR THE ASSESSEE DREW THE ATTENT ION OF THE BENCH TO THE NOTICE ISSUED BY THE ASSESSING OFFICER U/S 274 READ WITH S ECTION 271(1)(C) OF THE ACT AND SUBMITTED THAT THE INAPPROPRIATE WORDS IN THE SAID NOTICE ARE NOT STRUCK OFF, THEREFORE IT IS NOT CLEAR AS TO UNDER WHICH LIMB THE ASSESSING O FFICER HAS LEVIED PENALTY I.E., FOR CONCEALMENT OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. REFERRING TO THE DECISION OF HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. M/S SSAS EMERALD MEADOWS (2016) 73 TAXMANN.COM, HE SUBMITTED THAT THE HON'BLE HIGH COURT IN THE SAID DECISION HAS ALLOWED THE APPEAL OF THE ASSESSEE AND DISMISSED THE APPEAL FILED BY THE REVENUE HOLDING THAT NOTICE ISSUED U/S 274 READ WITH SECTION 271(1)(C) WAS BAD IN LAW AS IT DID NOT SPECIFY UNDER WHICH LI MB OF THE SECTION 271(1)(C) PENALTY PROCEEDINGS HAD BEEN INITIATED. HE SUBMITTED THAT AGAINST THE ABOVE DECISION OF THE HON'BLE HIGH COURT THE REVENUE HAD PREFERRED APPEAL BEFORE THE HON'BLE SUPREME COURT AND THE HON'BLE APEX COURT HAD DISMISSED THE SLP FILED BY THE REVENUE, VIDE ORDER DATED 5 TH AUGUST, 2016. 6. THE LD. DR, ON THE OTHER HAND, STRONGLY RELIED O N THE ORDER OF THE CIT(A). REFERRING TO THE DECISION OF THE CHENNAI BENCH OF T HE TRIBUNAL IN THE CASE OF ITO VS. SHRI RAJAN KALIMUTHU IN ITA NO.2900/CHNY/2018, ORDE R DATED 22 ND MAY, 2019 , HE SUBMITTED THAT THE TRIBUNAL HAS DISTINGUISHED THE D ECISION IN THE CASE OF MANJUNATHA COTTON & GINNING FACTORY 359 ITR 565 (KAR.) AND SUSTAINED THE PENALTY LEVIED U/S ITA NO.5079/DEL/2018 4 271(1)(C) OF THE ACT WHERE THE INAPPROPRIATE WORDS HAVE NOT BEEN STRUCK OFF IN THE SHOW CAUSE NOTICE. RELYING ON VARIOUS OTHER DECISI ONS, THE LD. DR SUBMITTED THAT MERE NON-STRIKING OFF OF THE INAPPROPRIATE WORDS FROM TH E NOTICE CANNOT INVALIDATE THE PENALTY PROCEEDINGS ESPECIALLY WHEN THE ASSESSEE IT SELF HAS PARTICIPATED IN THE PENALTY PROCEEDINGS AND PROPER OPPORTUNITY OF BEING HEARD W AS GIVEN TO THE ASSESSEE. SO FAR AS THE MERIT OF THE CASE IS CONCERNED, THE LD. DR S UBMITTED THAT THE ASSESSEE COULD NOT SUBSTANTIATE THE CLAIM OF EXPENDITURE RELATING TO F ILLING OF LAND BY PRODUCING DOCUMENTARY EVIDENCE. THUS, THE CLAIM WAS NOT BONA FIDE AND, THEREFORE, THE ASSESSING OFFICER HAD RIGHTLY LEVIED PENALTY U/S 27 1(1)(C) OF THE ACT WHICH HAS BEEN UPHELD BY THE CIT(A). 7. I HAVE CONSIDERED THE RIVAL ARGUMENTS MADE AND P ERUSED THE MATERIAL AVAILABLE ON RECORD. I FIND THE VERY BASIS OF LEVY OF PENALT Y IS THE ADDITION MADE BY THE ASSESSING OFFICER AMOUNTING TO RS.9,78,125/- ON ACC OUNT OF UNSUBSTANTIATED CLAIM OF COST OF FILLING OF SOIL. IT IS AN ADMITTED FACT TH AT THE ADDITION SO MADE BY THE ASSESSING OFFICER WAS UPHELD BY THE CIT(A) AND ON FURTHER APP EAL BY THE ASSESSEE THE TRIBUNAL HAD ALSO SUSTAINED THE ADDITION. NOW, THE QUESTION THAT ARISES IS AS TO WHETHER THE PENALTY IS LEVIABLE ON ACCOUNT OF SUCH UNSUBSTANTIA TED CLAIM. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE ASSESSEE HAD FILED AN AFFIDAVIT ON 09.11.2015, THE CONTENTS OF WHICH HAS BEEN REPRODUCED BY THE ASSESS ING OFFICER AND WHICH READS AS UNDER:- ITA NO.5079/DEL/2018 5 ON 09.11.2015 THE ASSESSEE FILED AN AFFIDAVIT STAT ING THAT AS REGARDS THE LAND FILLING OF 20 BIGHAS LAND LYING LOW AS COMPARED TO ROAD LEVEL AND INVESTED RS. FIVE LACS ON CONTRACT BASIS INCLUDING THE COST OF S OIL, LOADING TRANSPORTATION OF SOIL, UNLOADING AND LEVELING ALSO IN THE YEAR 2004 AND AS THE DEPONENT SAID EARLIER NO BOOKS OF ACCOUNT HAS BEEN MAINTAINED, THERE IS N O OTHER EVIDENCE WITH THE DEPONENT AFTER TEN YEARS FOR THIS INVESTMENT. 8. FROM THE ABOVE, IT IS CLEAR THAT THE ASSESSEE IS NOT MAINTAINING ANY BOOKS OF ACCOUNT AND IS NOT HAVING ANY OTHER DOCUMENTARY EVI DENCE SINCE THE INVESTMENT WAS MADE TEN YEARS BACK. IN MY OPINION, NON-SUBSTANTIA TION OF THE CLAIM OF COST OF FILLING OF SOIL MAY BE SUFFICIENT FOR MAKING ADDITION, BUT, THE SAME, IN MY OPINION, DOES NOT CALL FOR LEVY OF PENALTY IN THE INSTANT CASE. THE HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA) HAS HELD THAT MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPT ED OR WAS NOT ACCEPTABLE TO THE REVENUE BY ITSELF WOULD NOT, IN OUR OPINION, ATTRAC T THE PENALTY U/S 271(1)(C) OF THE ACT. IF WE ACCEPT THE CONTENTION OF THE REVENUE, T HEN, IN CASE OF EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTED BY THE ASSESSING OFF ICER FOR ANY REASON, THE ASSESSEE WILL INVITE PENALTY U/S 271(1)(C). THAT IS CLEARLY NOT THE INTENT OF THE LEGISLATURE. SINCE THE ASSESSEE IN THE INSTANT CASE HAS FILED AN AFFID AVIT BEFORE THE ASSESSING OFFICER AND THE CASE IS VERY OLD AND THE CLAIM OF THE ASSESSEE THAT THE LAND IN QUESTION WAS A LOW LYING LAND WHICH WAS FILLED TO BRING IT TO THE ROAD LEVEL, THEREFORE, IN MY OPINION, IT IS NOT A FIT CASE FOR LEVY OF PENALTY FOR DISALLOWANCE OF THE CLAIM. ACCORDINGLY, THE ORDER OF THE CIT(A) SUSTAINING THE PENALTY IS CANCELLED A ND THE ASSESSING OFFICER IS DIRECTED TO DELETE THE PENALTY. ITA NO.5079/DEL/2018 6 9. IN THE RESULT, THE APPEAL FILED BY THE ASS ESSEE IS ALLOWED. THE DECISION WAS PRONOUNCED IN THE OPEN COURT ON 1 4.08.2019. SD/- ( R.K. PANDA) ACCOUNTANT MEMFBE R DATED: 14 TH AUGUST, 2019 DK COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASSTT. REGISTRAR, ITAT, NEW DELHI