A.C.I.T, .CENTRAL CIRCLE 2(1), Nagpur V. SHRI VIKAS KHUSHALCHAND PINCHA, Nagpur

ITA 536/NAG/2016

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3275 (ITAT-NAGPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 07-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A R NINAWE
• Assessee Lawyers: MANOJ SONI; JAIKRISHNA
• Keywords: Business income; Cost of acquisition; Documents seized
• Section: 143(3); 32; 131; 132; 28

Judgement Text

1 ITA NO. 536/NAG/2016. IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. (S.M.C.) I.T.A. NO . 536 /NAG/201 6 ASSESSMENT YEAR : 20 11 - 12. ASSTT. COMMISSIONER OF INCOME - TAX, SHRI VIKAS KHUSHALCHAND PINCHA, CENTRAL CIRCLE - 2(1), NAGPUR. VS. NAGPUR. PAN ACJPP8481F. APPELLANT. RESPONDENT. APPELLANT BY : SHRI A.R. NINAWE. RESPONDENT BY : S/ SHRI JAIKRISHNA & MANOJ SONI. DATE OF HEARING : 0 5 - 12 - 2016 DATE OF PRONOUNCEMENT : 5 TH JANUARY, 2017. O R D E R. T HIS APPEAL BY THE R EVENUE IS DIRECTED AGAINST ORDER OF L EARNED CIT (APPEALS) - 3, NAGPUR DATED 0 5/ 0 8/2016 AND PERTAINS TO ASSESSMENT YEAR 2011 - 12. THE GROUNDS OF APPEAL READ AS UNDER : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DE LETING THE PENALTY OF RS.10,81,500/ - LEVIED U/S 271(1)(C) WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAD DISCLOSED THE ADDITIONAL INCOME OF RS.35,00,000/ - ONLY AFTER SEARCH ACTION WAS CONDUCTED AND AS SUCH CLEARLY CONCEALED INCOME/FURNISHED INACCURATE PARTICULARS OF INCOME, 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, WHETHER THE LD. CIT(A) WAS RIGHT IN ACCEPTING THE ASSESSEES CLAIM THAT THE ASSESSEE SUFFERED LOSSES DUE TO MISUSE OF POWER OF ATTORNEY GIVEN BY HIM, WITHOUT APPRECIATING THE FA CT THAT THE ASSESSEE CANNOT ABSOLVE HIMSELF OF ANY LIABILITY OR CONSEQUENCE ARISING OUT OF AN ACT DONE BY HIS POWER OF ATTORNEY HOLDER. 2. B RIEF FACTS OF THE CASE ARE AS UNDER; 2 ITA NO. 536/NAG/2016. I N THIS CASE THE RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 29 - 09 - 2011 WITH TOTAL INCOME OF RS.13,63,490/ - . SEARCH & SEIZURE ACTION U/S 132 WAS CONDUCTED IN KONDAWAR GROUP OF CASES ON 07 - 03 - 2013. THE DOCUMENTS FOUND AND SEIZED IN THE SEARCH INCLUDED CERTAIN DOCUMENTS WHICH BELONGED TO SHRI VIKAS K. PINCHA. NOTICE U/S 153C WAS ISSU ED TO THE ASSESSEE SHRI VIKAS K. PINCHA BY THE AO DATED 03 - 02 - 2014. THE ASSESSEE FILED THE RETURN ON04 - 03 - 2015 IN RESPONSE TO NOTICE U/S 153C WITH TOTAL INCOME OF RS.48,63,490/ - WHICH INCLUDED RS.35,00,000/ - OFFERED BY THE ASSESSEE AS ADDITIONAL INCOME. T HE ASSESSMENT U/S 153C R.W.S. 143(3) WAS COMPLETED BY THE AO ON 27 - 03 - 2015 AT ASSESSED INCOME OF RS.48,64,740/ - . THE ASSESSED INCOME WAS THE SAME AS THE INCOME SHOWN BY THE ASSESSEE IN RETURN FILED IN RESPONSE TO NOTICE U/S 153C OF THE ACT. PENALTY PROCEED INGS WERE INITIATED BY THE AO U/S 271(1) (C) AND PENALTY WAS LEVIED OF RS.10,81,500/ - . 3. T HE A SSESSING O FFICER WHILE NOTING THE FACTS MADE FOLLOWING OBSERVATIONS : 'KONDA W AR GROUP HAD PURCHASED LAN D S AT M AN G R U L AND OTH ER PLACES OFF WARDHA ROAD, NA G PUR F O R ITS PROJECTS . JRPL CAME UP WITH ' JAGDA M BA PR IDE SCH EM E ', A LAYOUT SCHEME, C O NSISTING O F 863 , P L OT S AT MANGRUL , OFF WARDHA ROAD , NA G PUR IN TH E YEA R 2008 - 09 WHICH IS S P READ O VER IN 85 A C RES O F LA ND . ADJACENT LANDS AT MANGRUL WERE PUR CH ASE D B Y S HRI ANUJ BADJATE, SHRI SHANKAR MURARKA & S H RI KOMAWA R THROUGH KONDAWAR G R O U P A S CO NSENT O R 2 5 % OF LAND AT KH . NO . 106 & 107 AT MAN G RUL WAS P URC H AS ED BY SHR I VIKA S P INCHAFROM SELLER SHRI N . KUMA R ON 22 . 06 . 2007. THESE FI V E P A RTIES MU T U ALL Y DEFINED , FIN A L I ZED AND DECLARED THEIR INDIVI D UAL OW N E RS HIP AS G I VEN I N MOU (PAGE NO. 70 TO 81 OF ITEM N O . 3 OF ANNEXURE B SEIZED FR OM THE O FFI CE O F JR PL) DATED 19 . 12.20 0 8 . THE LAN D WAS D I V ERTED T O NON - AGRICULTU R AL (RESIDENTIAL) USE VI D E COLLECTOR , NAGPUR ' S ITS LETTER DATED 22. 0 9. 2008 AN D LAYOUT PLAN WAS DULY SANCTI O NE D AND A PP R OVED BY ASST . DIRECT O R, T O WN PLAN NI NG, N AG P UR O N 1 8 . 07 . 2008 AS ME N T I ONED I N MOU . THE SAID MO U DECLARED THAT ABOVE P A R T IES DECIDED T O DEVEL O P THE LAND INT O A LAYOUT SCH E ME BY CARVING O UT VARI O US PL O T S . OU T OF 863 PLOTS , 822 PL O TS ARE F O UND T O HA VE B EE N S O L D BY JRPL (ITS OWN PLOTS DIRECTLY A N D O T H ER FOUR PARTIES ' PL O TS I ND IR ECT L Y THR O U GH POA) . JRPL HAS SH O WN TOTAL SALES O F RS . 2 3 , 8 7, 67 , 984/ - FROM THE YEAR 2008 - 09 T O YEAR 20 11 - 1 2 B UT I S DOES NOT INCLUDE SALES MADE I N T H E NA M E O F SHRI PI N C H A 88 PLOTS W ERE F O UND T O H AVE BEEN S O LD IN T H E NA ME O F S HR I V I K A S PINCHA AND HIS WIFE SMT . BARKHA V IKA S PIN C HA . I N TH E S T AT EMEN T U / S . 1 32 ( 4 ) 0 F THE I . T . A C T , 1 961 , S HR I GOPAL L. K O NDAWAR WAS ASKE D A BOUT TH E TR A N S A C T IONS WITH SHRI VIKAS PINCHA . HE STA TED THAT ' I N C A SE OF PIN C HA , THE PAYMENT F O R LA N D HA S NOT BEEN M ADE . HE ASS U RE D H I M THAT WE WI L L GI V E HIM LAND I R I SU K LI F O R A N E QUI V ALEN T AM O UNT WH IC H W E HA V E RE C EI V E D ON SALE OF 3 ITA NO. 536/NAG/2016. PINCHA ' S PL O T ON P OWE R O F ATTOR N E Y . ' FU RTHER , SH RI GOPA L R . K O NDAWAR W A S ASKED U / S . 132(4) O F THE I . T . ACT, 1 96 1 O N 1 6 . 0 4 . 2013 AS WHA T I S HIS ASS OC IATI O N WIT H LAND TRANSA C TI O NS IN CASE OF SHRI VIKAS PINCHA . IN R E PL Y , H E P R ODUCED LEDGER ACC O UNT AND LIST O F PL O TS SO L D IN T HE NAME O F SHRI V IKAS PI N CHA WHI CH WE RE NO T RE COR DED IN BOOKS OF JRPL . PE R USAL O F THE LI ST OF PIN C HA ' S P L O T S IN D IC A T ES T OT AL 88 PLOTS F O UND TO H A V E BEE N S O LD IN HIS NAME . T HE PL O TS ARE SPREA D OV ER I N A R EA ADMEASURING 3 4 2 1 28 . 035 SQ . F T . A T MAN G RU L , A R E T H E PART O F ' JAGDA MB A PR I DE S CHEME ' C O NTAI N I NG TOTAL 129 PLOTS AS PER M O U DAT ED 1 9 . 1 2 . 2008 . BES I DES , LEDGE R AC COU NT I N THE N AM E O F SH R I V I KAS PIN C HA IN THE BOOKS OF JRPL REFLECTS DIFFERE NT OU TST A NDIN G B ALA NCE S IN VARI O US YEARS . LT: THE Y E A R 20 1 0 - 11, CREDI T C L OSING BALANCE O F RS . 1 0 , 4 2 ,1 97 / - WAS REFL EC T ED . SIMILARLY IN THE YEAR 2009 - 1 0 , NUMBER O F PL O T S HAV E BEEN S O L D IN THE NAME O F SHRI VI KAS P INC HA T H R O UGH P OW ER O F . ATT O RNE Y SHRI GOPAL K O NDAWAR T O THE TUNE O F RS . 85 , 03 , 5 8 4 / - AND CLO SI NG D EBI T BALAN CE S H OWN T O RS . 34 , 85 , 8 51 / - AT THE YEAR END . AMOUNT O F RS . 2 , 57 , 19 7 / - WAS S HOWN A S C R ED IT B AL ANCE A G AI NST SHRI V IKAS PINCHA I N T H E BOO K S O F JR PL AS O N 28 . 0 2 . 2 0 13 . THEREF O RE, SHR I VIKASH K . PINCHA WAS S UM M O NE D AND HI S S TAT EMENT UNDER O AT H WAS REC O R D ED . HE S TATED THAT SHRI G O PAL L . K ON DA W AR H A S S O LD 88 P LO TS OUT O F 1 29 PLO T S T H R OUGH HIS POWER O F ATTORNEY B UT W I T HOU T HIS KNO W LEDGE AND CONSENT IRRESPECTIVE O F THE F A C T S INCORPORATED IN THE SAID POWER OF ATT O RNEY . H E W A S CONFRONTED WITH POWER OF ATTORNEY FROM PAGE N O . 1 7 7 TO 186 OF ANNEXURE B - 3 / 2 SEIZED FR O M THE OFFICE O F THE JRPL AND ASKED VIDE STATEMENT U / S. 131 DAT E D 27 . 05 . 2013 TO EXPLAIN IT . HE STATED , WE HAVE GI VE N PO W ER OF ATTORNEY EXCLUSIVELY F O R THE PURP O SE O F CONVERTING THE AGRI C ULTURAL LAND INT O N . A . LA N D . T H E SAID P O WER OF ATT O RNEY IS A N O N R EG ISTER E D D OCUMEN T AND IS A G E NERAL P O WER O F A TT O RNE Y ON LY . T HE SAME WAS N O T MEAN T F O R T HE PURP O SE O F EXECUT I NG SALE / TRANSFER O F PL O TS . ' SHRI V I K A S K . PIN CHA A L SO SUBM I TTED DETAILS O F P LO T A RE 2 , 07 ,45 6 . 08 S Q . F T . CONTA I NING 8 8 PLOTS. THE T O TAL S ALE C O NSI DE RA T I ON OF RS . 2 , 40 , 93 , 618 / - WAS SH O WN FR O M PL O TS SOL D W H I LE TOTA L COST OF LAND WAS CLAIMED O F RS. 1 , 78 ,59 , 1 66 / - PRI M E F A C I E , THE PR O FIT DERIV E D BY SHRI VIKA S K . PINCHA COMES TO RS . 62 , 34 , 552 / - F OR T H E RELE VANT ASSESSMENT YEAR . THE PROFIT ON SALE DERI V E D N EIT HE R FOUND PLACE IN THE BOO K S O F K O NDAWAR G R OUP NOR BOOKS OF ACC O UNT O F SHR I VIKAS K . P IN C HA AND HIS WI FE . DURING THE YEAR UN D ER CO NSIDER A TI ON TH E TO T A L SALE CONSIDERATION WAS O F RS . 6 4 , 90 , 0 66 / - A N D P U R CHA S E COST W AS OF RS . 31,58,185 / - THE PR O FIT DERI V ED FR OM ABOVE SALE IS RS. 33,31 8 81 / - . THE A S SES SEE AGA I NST ABOVE SALE PROFI T O F F E RE D INCOM E O F R S . 3 5, 0 0 , 000 / - FOR TAXATI O N . THE R E F O R E , NO FU RT H ER A DD I TION TOWARDS UNA C C O UNT E D S A L E I S M A D E . T H E REFO R E , PENALTY PR O CEEDINGS U / S . 27 1 (1) ( C ) O F T H E ACT A R E INITIATED SE P ARATE L Y . ' 4 ITA NO. 536/NAG/2016. 4. THE AO WHILE LEVYING THE PENALTY OBSERVED AS UNDER : 3. THE EXPLANATION FILED BY THE ASSESSEE HAS BEEN CAREFULLY PERUSED AND CONSIDERED. HOWEVER THE SAME IS NOT ACCEPTABLE. AT THE OUTSET IT NEEDS TO BE MENTIONED THAT FROM THE DOCUMENTS SEIZED, DURING THE SEARCH IT WAS REVEALED THAT THE ASSESSEE WAS ENGAGED IN BUSINESS OF TRADING IN PLOTS OF LAND AND HAS EARNED INCOME FROM THIS ACTIVITY. THE ASSESSEE DURING THE PREVIOUS YEAR RELEVANT TO THE A.Y. UNDER CONSIDERATION SOL D PLOTS OF LAND AT RS.64,90,066/ - , THE PURCHASE COST OF WHICH WAS RS.31,58,185/ - . THE INCOME ARISEN FROM THE SALE OF PLOTS WAS NEITHER REFLECTED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE NOR OFFERED TO TAX IN THE ORIGINAL RETURN OF INCOME FILED U/S 139. THE ASSESSEE CAME FORWARD TO OFFER THE IMPUGNED INCOME ONLY AFTER ISSUANCE OF NOTICE U/S 153C AND AFTER REALIZING THAT HE WAS CAUGHT ON THE WRONG FOOT. THEREFORE, ASSESSEES SUBMISSIONS OF NOT HAVING FURNISHED INACCURATE PARTICULARS OR CONCEALMENT OF INCOM E DOES NOT HOLD ANY WATER AND ACCORDINGLY DESERVES TO BE REJECTED. FURTHER, ASSESSEES PLEA THAT THERE WAS NO CONSCIOUS EFFORT TO CONCEAL THE INCOME, DOES NOT REQUIRE ANY COGNIZANCE AS MENS REA IS NOT REQUIRED TO BE PROVED AS THE WORD DELIBERATELY HAS BE EN OMITTED FROM THIS SECTION W.E.F. 1.04.1964. THE ACTION U/S 132 IN KONDAWAR GROUP HAS ENTAINED INTO REVEALING ASSESSEES ACT OF CONCEALMENT. TO PUT IT DIFFERENTLY BUT FOR ACTION U/S 132 IN KONDAWAR GROUP OF CASES AND CONSEQUENTIAL PROCEEDINGS U/S 153C IN ASSESSEES CASE, THE ASSESSEE WOULD NOT HAVE DISCLOSED HIS REAL INCOME. 4. IN THE LIGHT OF DISCUSSION IN THE FOREGOING PARAS, I AM FULLY CONVINCED & SATISFIED THAT THE ASSESSEE HAS COMMITTED DEFAULT WITHIN THE MEANING OF SECTION 271(1)(C) READ WITH EXPLAN ATION 5A(A) OF THE I.T. ACT, 1961 AND MADE HIMSELF LIABLE FOR PENALTY U/S 271(1)(C). ACCORDINGLY, I PROCEED TO IMPOSE PENALTY @ 100% TAX SOUGHT TO BE EVADED OF RS.10,81,500/ - AS AGAINST MAXIMUM LEVIABLE PENALTY @ 300% OF TAX SOUGHT TO BE EVADED OF RS.32,44 ,500/ - U/S 271(1)(C) OF THE I.T. ACT 1961. 5 . U PON ASSESSEE'S APPEAL L EARNED CIT (APPEALS) DELETED THE PENALTY BY CONCLUDING AS UNDER : 10. IT IS INTERESTING TO OBSERVE THAT THE ASSESSEE CAME FORWARD TO OFFER TO TAX THE ADDITIONAL INCOME OF RS. RS . 3 5, 0 0, 00 0 / - O N T H E SA L E OF PLOTS EVEN WHILE SUCH PLOTS W ERE SOLD BY SHRI GOPAL KONDAWAR BY MISUSING T HE LI MITED P O WER O F ATT OR N EY GIVEN BY THE ASSES S EE TO HIM . T HE ASSESSEE 5 ITA NO. 536/NAG/2016. HAS O FF E R E D THE I NCOME T O T AX INSPI TE OF TH E FACT THAT THE SA L E CONSIDERATION H A D NOT BEEN PASSED O N BY S H RI G O PAL K OND A WAR TO THE ASSESSEE , SHRI VIKAS PI NCHA. THE AO HAS N O T ADD U CED ANY EV I DENCE WHATSOEVER TO PROVE THAT THE ASSESSEE HAD FURNISHED INACCURATE PAR TI C U L ARS O R H AD CONCEALED ANY IN COME . THE ASSESSEE HAS POINTED O UT THAT TH E ENT IR E INCOME HAS BEEN ASSESSED BY THE AO ON THE BASIS OF CALCULATIONS PROVIDED BY THE ASSESSEE HIMSELF. THE ASSESSEE HAS POINTED OUT THAT HE HAS ALREADY SUFFERED DOUBLE LOSSES ONCE WHEN HIS PROPERTY WAS SOLD WITHOUT HIS KNOWLEDGE AND AUTHORITY AND WI THOUT HIM RECEIVING A SINGLE PENNY OUT OF THE SALE CONSIDERATION AND SECONDLY WHEN HE PAID THE ENTIRE TAX AND INTEREST THEREON. 11. IN MY CONSIDERED OPINION, IT APPEARS TO BE A UNIQUE CASE IN WHICH THE ASSESSEE HAS OFFERED TO TAX THE INCOME FROM THE TRANS ACTIONS WHICH WERE CARRIED OUT BY A THIRD PARTY WITHOUT THE ASSESSEES KNOWLEDGE AND CONSENT AND EVEN WHILE THE PROCEEDS OF SUCH TRANSACTION HAVE NOT BEEN RECEIVED BY THE ASSESSEE. I DO NOT FIND ANY MERIT IN THE ACTION OF THE AO IN LEVYING THE PENALTY U/S 271(1)(C) TREATING THE INCOME OFFERED BY THE ASSESSEE AS CONCEALED INCOME OR INCOME IN RESPECT OF WHICH INACCURATE PARTICULARS HAD BEEN GIVEN. THE AO HAS LEVIED THE PENALTY IN A MECHANICAL MANNER WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS APPARENT LY OFFERED THE INCOME TO TAX IN A TRANSACTION DONE BY THIRD PARTY WITHOUT HIS CONSENT. I FIND MERIT IN ASSESSEES ARGUMENT THAT HE HAS ALREADY SUFFERED DOUBLE LOSSES ONCE WHEN HIS PROPERTY WAS SOLD WITHOUT HIS KNOWLEDGE AND AUTHORITY AND WITHOUT HIM RECEIV ING A SINGLE PENNY OUT OF THE SALE CONSIDERATION AND SECONDLY WHEN HE PAID THE ENTIRE TAX AND INTEREST THEREON. 12. IN THE FACTS OF THE CASE, THE LEVY OF PENALTY BY THE AO U/S 271(1)(C) AMOUNTING TO RS.10,81,500/ - IS HELD UNJUSTIFIED. THEREFORE , PENALTY L EVIED BY THE AO IS ORDERED TO BE DELETED. THE AO IS ACCORDINGLY DIRECTED. 6 . A GAINST ABOVE ORDER R EVENUE IS IN APPEAL BEFORE THE ITAT. 7 . I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. IN THIS CASE SHRI GOPAL L KONDAWAR HAS SOLD THE ASSESSEE S PLOTS BY MISUSING THE POWER OF ATTORNEY GIVEN BY THE ASSESSEE. THIS CLAIM OF THE ASSESSEE HAS NOT BEEN DISPUTED OR PROVED TO BE MALEFIDE. IN THE CIRCUMSTANCES W HEN THE MATTER WAS BROUGHT TO THE NOTICE OF THE ASSESSEE HE HAS AGREED TO PAY THE TAXES ON THE AFORESAID SUMS OF PLOT SALE WHICH WERE MADE BEHIND HIS BACK. THE ASSESSEE HAS ALSO PAID THE TAX THEREON. IN THESE CIRCUMSTANCES I FIND THAT L EARNED CIT (APPEALS) IS CORRECT 6 ITA NO. 536/NAG/2016. IN HOLDING THAT THERE IS NO CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME O R CONCEALMENT OF INCOME 8 . I N THIS REGARD I DRAW SUPPORT FROM THE H ONOURABLE A PEX C OURT DECISION IN THE CASE OF HINDUSTAN STEEL LTD. 83 ITR26 DELIVERED BY A LARGER BENCH OF THREE OF THE LORDSHIPS FOR THE PROPOSITION THAT PENALTY NEED NOT BE LEVIED UNLE SS THE ACT OF THE ASSESSEE CAN BE CONSIDERED TO BE CONTUMACIOUS. IN THIS CASE THE FACTS CLEARLY INDICATE THAT ASSESSEE'S CONDUCT HAS BEEN BONA FIDE AND THERE IS NO CASE OF CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS . IN THE SE CIRCUMSTANCES I DO NOT FIND ANY INFIRMITY IN THE ORDER OF L EARNED CIT (APPEALS) .ACCORDINGLY I UPHOLD THE SAME. 9 . IN THE RESULT THIS APPEAL BY THE R EVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 5 TH DAY OF JANUARY., 2017. SD/ - ( SHAMIM YAHYA) ACCOUNTANT MEMBER. NAGPUR, DATED: 5 TH JANUARY, 2017. 7 ITA NO. 536/NAG/2016. COPY FORWARDED TO : 1. SHRI V 2. IKAS KHUSHALCHAND PINCHA, PLOT NO. 2A, AJNI SQUARE, PRASHANT NAGAR, NAGPUR. 3. A.C.I.T., CENTRAL CIRCLE - 2(1), NAGPUR. 4. C.I.T. - (CENTRAL), NAGPUR. 5. CIT(APPEALS), - 3, NAGPUR. 6. D.R., ITAT, NAGPUR. 7. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGIS TRAR, INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. WAKODE.