M/s BSV Enterprises, Delhi V. DCIT, New Delhi

ITA 5189/DEL/2013

• Counselvise Citation: 518920114 RSA 2013
• Duration Of Justice: 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 13-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Assessee Lawyers: ADESH KUMAR JAIN; RAJAT JAIN C AS
• Keywords: Capital asset; Reasonable cause

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH A AA A : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE BEFORE SHRI G.D. AGRAWAL, VICE BEFORE SHRI G.D. AGRAWAL, VICE BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND PRESIDENT AND PRESIDENT AND PRESIDENT AND SHRI SHRI SHRI SHRI H.S. SIDHU H.S. SIDHU H.S. SIDHU H.S. SIDHU, JUDICIAL , JUDICIAL , JUDICIAL , JUDICIAL MEMBER MEMBER MEMBER MEMBER ITA NO ITA NO ITA NO ITA NO. .. .5189/DEL/2013 5189/DEL/2013 5189/DEL/2013 5189/DEL/2013 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2004 2004 2004 2004- -- -05 0505 05 M/S B.S.V. ENTERPRISES, M/S B.S.V. ENTERPRISES, M/S B.S.V. ENTERPRISES, M/S B.S.V. ENTERPRISES, 4842, BARA TOOTI CHOWK, 4842, BARA TOOTI CHOWK, 4842, BARA TOOTI CHOWK, 4842, BARA TOOTI CHOWK, SADAR BAZAR SADAR BAZAR SADAR BAZAR SADAR BAZAR, ,, , DELHI DELHI DELHI DELHI 110 006. 110 006. 110 006. 110 006. PAN : AALFV2791D. PAN : AALFV2791D. PAN : AALFV2791D. PAN : AALFV2791D. VS. VS. VS. VS. DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -39(1), 39(1), 39(1), 39(1), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ADESH KUMAR JAIN AND SHRI RAJAT JAIN, CAS. RESPONDENT BY : MS. Y. KAKKAR, SR.DR. ORDER ORDER ORDER ORDER PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP : : : : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-XXVIII, NEW DELHI DATED 15 TH JULY, 2013 FOR THE AY 2004- 05. 2. THE ONLY GROUND RAISED IN THIS APPEAL BY THE ASSESSEE IS AGAINST THE LEVY OF PENALTY UNDER SECTION 271B OF THE INCOM E-TAX ACT, 1961 AMOUNTING TO ` 50,520/-. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PARTN ERSHIP FIRM. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF ` 63,36,058/- WHICH INCLUDED INCOME FROM CAPITAL GAINS OF ` 60,27,712/- AND INCOME FROM OTHER SOURCES AT ` 3,08,346/-. THE ASSESSING OFFICER TREATED THE INCOME F ROM SALE OF THE LAND AS INCOME FROM BUSINESS. THAT THE ASSESSEE FILED THE APPEAL ITA-5189/DEL/2013 2 AGAINST THE ORDER OF THE ASSESSING OFFICER. HOWEVER, T HE ITAT AS WELL AS HON'BLE JURISDICTIONAL HIGH COURT UPHELD THE VIEW THAT THE INCOME FROM SALE OF LAND IS TO BE ASSESSED AS INCOME FROM BUSINE SS. THE ASSESSING OFFICER LEVIED THE PENALTY UNDER SECTION 271B FOR NOT GETTING THE ACCOUNTS AUDITED AMOUNTING TO ` 50,520/- WHICH IS UPHELD BY THE LEARNED CIT(A). HENCE, THIS APPEAL BY THE ASSESSEE. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND P ERUSED RELEVANT MATERIAL PLACED BEFORE US. AT THE TIME OF HEARING BEFORE US, IT WAS VEHEMENTLY CONTENDED BY THE LEARNED COUNSEL THAT THE ASSESSEE DID NOT MAINTAIN ANY BOOKS OF ACCOUNT. HE ALSO SUBMIT TED THAT THE ONLY TRANSACTION DURING THE YEAR UNDER CONSIDERATION WAS THE SALE OF THE LAND WHICH WAS ACQUIRED SOME YEARS BEFORE AND AFTE R THE SALE OF THE LAND SUBSEQUENTLY, THE PARTNERSHIP FIRM IS DISSOLVED. HE, THEREFORE, SUBMITTED THAT WHEN NO BOOKS OF ACCOUNT ARE MAINTAINE D, THE QUESTION OF THE SAME GETTING AUDITED DOES NOT ARISE. 5. LEARNED DR, ON THE OTHER HAND, RELIED UPON THE O RDERS OF AUTHORITIES BELOW. 6. WE FIND THAT THE ASSESSING OFFICER HAD LEVIED THE P ENALTY UNDER SECTION 271(1)(C) FOR THE SAME ASSESSMENT YEAR. ON APPE AL, THE ITAT, VIDE ITA NO.586/DEL/2011, CANCELLED THE PENALTY. T HE RELEVANT FINDING OF THE ITAT READS AS UNDER:- 5.2 CONSIDERING ALL THESE CASE LAWS IT BECOMES IMPERATIVE TO APPRECIATE THE EXPLANATION OF THE ASSESSE E WHILE MAKING A CLAIM UNDER A PARTICULAR HEAD OF INC OME. IT IS CLEAR THAT THE ASSESSEE FIRM COULD NEVER START ITS BUSINESS IN EFFECTIVE TERMS. THEREFORE, NO BOOKS OF A/C S ARE MAINTAINED. THE QUESTION TO BE CONSIDERED IS WHET HER THE ASSESSEE HELD IT AS STOCK IN TRADE OR AS A CAPITAL ASSET . IN THE ABSENCE OF ANY OTHER BUSINESS TRANSACTION OR ITA-5189/DEL/2013 3 MAINTENANCE OF BOOKS OF A/CS, THE ISSUE BECOMES VEXED ONE TO BE DECIDED ON CIRCUMSTANTIAL EVIDENCE. IT HA S NOT BEEN QUESTIONED THAT THERE WERE DISPUTES AMONG THE PARTNERS AND THE FIRM WAS TO BE DISSOLVED AND THE LIABI LITIES WERE TO BE PAID WHICH IS CORROBORATED BY THE FACT TH AT THE ASSESSEE FIRM SOLD THIS PROPERTY, PAID OUT THE LIABILITIE S AND DISTRIBUTED THE REMAINDER AMONG PARTNERS. THE PROPER TY PURCHASED WAS ALSO DISPUTED PROPERTY ATTACHED BY THE D RT AND THEREAFTER AUCTIONED THROUGH RECOVERY OFFICER. 7. FROM THE ABOVE, IT IS EVIDENT THAT WHILE DEALING WITH THE PENALTY UNDER SECTION 271(1)(C), THE ITAT HAS RECORDED A FIN DING THAT THE ASSESSEE FIRM COULD NEVER START ITS BUSINESS IN EFFECTIVE TE RMS AND NO BOOKS OF ACCOUNT WERE MAINTAINED. WHEN NO BOOKS OF A CCOUNT WERE MAINTAINED, THE QUESTION OF GETTING THE SAME AUDITED COULD NOT ARISE. THEREFORE, IN OUR OPINION, THE NON-MAINTENANCE OF B OOKS OF ACCOUNT IS A REASONABLE CAUSE FOR ASSESSEES FAILURE TO GET THE ACCOUNT S AUDITED. MOREOVER, WHEN THE ASSESSEE HAD A BONA-FIDE BELIEF THAT THE SALE PROCEED FROM THE TRANSFER OF LAND IS A CAPITAL RECEI PT, THERE WAS NO TURNOVER BY THE ASSESSEE WHICH MAY REQUIRE IT TO GET T HE ACCOUNTS AUDITED. IN VIEW OF THE TOTALITY OF ABOVE FACTS, WE ARE OF THE OPINION THAT IT IS NOT A FIT CASE FOR LEVY OF PENALTY UNDER S ECTION 271B OF THE ACT. THE SAME IS CANCELLED AND THE ASSESSEES APPEAL IS ALLOWED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON 8 TH AUGUST, 2014. SD/- SD/- ( (( (H.S. SIDHU H.S. SIDHU H.S. SIDHU H.S. SIDHU) )) ) (G.D. AGRAWAL (G.D. AGRAWAL (G.D. AGRAWAL (G.D. AGRAWAL) )) ) JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 08.08.2014 VK. ITA-5189/DEL/2013 4 COPY FORWARDED TO: - 1. APPELLANT : M/S B.S.V. ENTERPRISES, M/S B.S.V. ENTERPRISES, M/S B.S.V. ENTERPRISES, M/S B.S.V. ENTERPRISES, 4842, BARA TOOTI CHOWK, 4842, BARA TOOTI CHOWK, 4842, BARA TOOTI CHOWK, 4842, BARA TOOTI CHOWK, SADAR BAZAR, DELHI SADAR BAZAR, DELHI SADAR BAZAR, DELHI SADAR BAZAR, DELHI 110 006. 110 006. 110 006. 110 006. 2. RESPONDENT : DEPUTY COMMISSIONER OF INCOME TAX, DEPUTY COMMISSIONER OF INCOME TAX, DEPUTY COMMISSIONER OF INCOME TAX, DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -39(1), NEW DELHI. 39(1), NEW DELHI. 39(1), NEW DELHI. 39(1), NEW DELHI. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR