The Income Tax Officer, Nakodar V. Sh. Ajit Singh Kohar, Jalandhar

ITA 578/ASR/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7825 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 9 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 29-06-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 04-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: J S BHASIN
• Keywords: Capital asset; Revised return
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. T. S. KAPOOR, ACCOUNTANT MEMBER AND SH. N.K. CHOUDHRY, JUDICIAL MEMBER I.T.A NO. 578/(ASR)/2015 ASSESSMENT YEAR: 2007-08 PAN: ABOPK0167F INCOME TAX OFFICER, NAKODAR. VS. SH. AJIT SINGH KOHAR S/O SH. CHANAN SIGH KOHAR, VILL.-KOHAR KHURD, PO TALWANDI BOOTIAN, TEHSIL- SHAHKOT, DISTT. JALANDHAR. (APPELLANT) (RESPONDENT) APPELLANT BY : SH. RAHUL DHAWAN (D. R.) RESPONDENT BY: SH. J. S. BHASIN (ADV.) DATE OF HEARING: 10.08.2017 DATE OF PRONOUNCEMENT: 31.08.201 7 ORDER PER T. S. KAPOOR (AM): THIS IS AN APPEAL FILED BY REVENUE AGAINST THE ORDE R OF LD. CIT(A), JALANDHAR DATED 19.08.2015 FOR ASST. YEAR: 2007-08. 2. THE GROUNDS OF APPEAL TAKEN BY REVENUE ARE REPRO DUCED BELOW: 1. THAT THE LD. CIT(A) HAS ERRED IN LAW ON FACTS O F THE CASE IN DELETING THE PENALTY U/S 271(1)(C) OF THE INCOME TA X ACT, 1961 ON GROUNDS THAT THE QUANTUM OF CAPITAL GAIN AM OUNTING 99,00,000/- HAS BEEN DELETED BY HON'BLE PUNJAB & HA RYANA HIGH COURT, IGNORING THE FACT THAT THE ORDER OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IS BEING CHALLENGED BY THE DEPTT. BEFORE HON'BLE SUPREME COURT AND THUS IT HAS BEEN ATTAINED FINALITY AND FURTHER SECTION 275(1A) OF TH E INCOME TAX ACT, ITSELF TAKES CARE OF SUCH SITUATIONS. ITA NO. 578(ASR)/2015 ASSESSMENT YEAR: 2007-08 2 2. THAT THE LD. CIT(A) HAS ERRED IN LAW ON THE FACT S OF THE CASE IN DELETING THE PENALTY ON CAPITAL GAIN OF RS.36,00 ,000/- WHICH HAVE BEEN RECEIVED AND SHOWN BY THE ASSESSEE IN A.Y. 2008-09 IGNORING THE FACT THAT WITHIN THE MEAN ING OF SECTION 2(47) OF THE I.T. ACT, 1961, FULL CAPITAL G AIN IS TAXABLE IN A.Y. 2007-08, AS THE AGREEMENT WAS SIGNED DURING F.Y. 2006-07. 3. THAT THE LD. CIT(A) HAS ERRED IN LAW AND FACTS O F THE CASE IN HOLDING BONAFIDE THE ASSESSEES BELIEF THAT LONG TE RM CAPITAL GAIN WHICH WAS YET TO BE RECEIVED WAS NOT PAYABLE I N THE YEAR UNDER CONSIDERATION, EVEN THOUGH THE ASSESSEE HAD NOT SHOWN ANY CAPITAL GAIN IN HIS RETURN OF INCOME. 4. IT IS PRAYED THAT THE ORDER OF THE LD. COMMISSIO NER OF INCOME TAX (APPEALS) BE SET ASIDE AND THAT OF THE ASSESSIN G OFFICER BE RESTOERED. 5. THE APPELLANT REQUESTS FOR LEAVE TO ADD OR AMEND OR ALTER THE GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD AND DI SPOSED OFF. 3. AT THE OUTSET, THE LD. DR SUBMITTED THAT LD. CI T(A) HAS DELETED THE PENALTY U/S 271(1)(C) ON THE GROUNDS THAT QUANT UM OF CAPITAL GAIN HAS BEEN DELETED BY HON'BLE PUNJAB & HARYANA HIGH C OURT WHEREAS THE FACT REMAINS THAT THE SAID ORDER IS BEING CHALLENGE D BY DEPARTMENT BEFORE HON'BLE SUPREME COURT AND THEREFORE IT HAD NOT BEEN ATTAINED FINALITY, THE LD. DR FURTHER SUBMITTED THAT THE LD. CIT(A) HA S ERRED IN LAW IN DELETING THE PENALTY ON CAPITAL GAIN OF RS.36,00,00 0/- WHICH HAVE BEEN RECEIVED AND SHOWN BY THE ASSESSEE IN A. Y. 2008-09 IGNORING THE FACT THAT WITHIN THE MEANING OF SECTION 2(47) OF THE I.T . ACT, THE CAPITAL GAIN WAS TAXABLE IN A. Y. 2007-08. 4. THE LD. AR ON THE OTHER HAND SUBMITTED THAT APPE LLANT WAS ONE OF THE MEMBERS OF THE PUNJABI CO-OPERATIVE HOUSE BUILD ING SOCIETY AND WAS HAVING A PLOT OF LAND MEASURING 1000 SQ. YARDS. IN VIEW OF TRIPARTITE ITA NO. 578(ASR)/2015 ASSESSMENT YEAR: 2007-08 3 AGREEMENT BETWEEN THE SOCIETY, HASH BUILDERS AND TA TA HOUSING DEVELOPMENT THE PLOT WAS AGREED TO BE TRANSFERRED T O TATA HOUSING DEVELOPMENT FOR A CONSIDERATION. IN VIEW OF THE SAI D AGREEMENT THE ASSESSEE RECEIVED RS. 30,00,000/- ON 27.02.2007 AND RS.36,00,000/- ON 27.04.2007. THE LD. AR SUBMITTED THAT SINCE THE AGR EEMENT COULD NOT BE EXECUTED, THE ASSESSEE DID NOT RECEIVE THE BALANCE AMOUNTS AND THEREFORE NO CAPITAL GAIN ON THIS TRANSFER WAS SHOWN IN THE O RIGINAL RETURN FILED ON 31.03.2008. HOWEVER, ON A REVIEW OF THE MATTER, THE RETURN WAS REVISED ON 11.11.2009, DECLARING LONG TERM CAPITAL GAIN OF RS.22,21,208/- ON PROPORTIONATE SALE CONSIDERATION OF RS.24 LACS AND DUE TAX WAS PAID. THE LD. AR SUBMITTED THAT ON BALANCE AMOUNT OF RS.6 LAC S WAS CONSIDERED AS ADVANCE AND THEREFORE THE CAPITAL GAIN WAS NOT OFFE RED AS IT REPRESENTED THE AMOUNT OF ADVANCE ONLY. AS REGARDS THE AMOUNT O F 36,00,000/- RECEIVED ON 27.04.2007, IT WAS OFFERED TO TAX IN TH E RETURN FILED FOR ASSESSMENT YEAR 2008-09. 5. THE LD. AR SUBMITTED THAT ASSESSING OFFICER BROU GHT TO TAX THE ENTIRE CAPITAL GAIN ON NOTIONAL BASIS IN THE YEAR U NDER CONSIDERATION ITSELF AND HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF C.S. ATWAL AND OTHERS HAS HELD THAT CAPITAL GAIN UNDER THESE CIRCU MSTANCES WAS CHARGEABLE ON THE BASIS OF RECEIPTS ONLY. THE LD. A R SUBMITTED THAT IN THE REVISED RETURN OF INCOME, THE ASSESSEE HAD ALRE ADY DECLARED THE RELEVANT CAPITAL GAIN CALCULATED ON THE BASIS OF PR OPORTIONATE RECEIPTS AND THEREFORE THE PENALTY WAS NOT IMPOSABLE AND THEREFO RE THE LD. CIT(A) HAS RIGHTLY DELETED. ITA NO. 578(ASR)/2015 ASSESSMENT YEAR: 2007-08 4 6. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE THOUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT THE LD. CIT(A) HAS D ELETED THE PENALTY IN RESPECT OF RS. 24 LACS AND RS. 36 LACS. HOWEVER HE HAS UPHELD THE PENALTY AT RS. 36 LACS WHICH THE ASSESSEE HAD CLAIM ED TO HAVE BEEN RECEIVED AS ADVANCE ONLY. THE HON'BLE ITAT IN ITA N O. 650/ASR/2015 HAS DELETED THIS PENALTY OF RS. 6 LACS ALSO VIDE ORDER DATED 24.06.2016. WE FIND THAT ASSESSEE HAD DECLARED THE PROPORTIONATE C APITAL GAIN IN THE REVISED RETURN OF INCOME EVEN BEFORE THE NOTICE U/S 148 OF THE ACT WAS ISSUED. IN THIS CASE THE REVISED RETURN WAS FILED O N 11.11.2009 WHEREAS THE NOTICE U/S 148 WAS ISSUED ON 31.08.2010. 7. THE LD. CIT(A) HAS PASSED A SPEAKING AND REASONE D ORDER WHERE IN HE HAS HELD THAT ON RECEIPT BASIS, THE ASSESSEE HAD DECLARED THE CAPITAL GAIN. HE HAS ALSO HELD THAT AMOUNT OF RS. 36 LACS H AD BEEN RECEIVED BY ASSESSEE IN ASSESSMENT YEAR 2008-09 AND THEREFORE O N THIS AMOUNT ALSO RIGHTLY DID NOT IMPOSE PENALTY. 8. FOR THE SAKE OF CONVENIENCE, THE FINDINGS OF LD. CIT(A) ARE REPRODUCED BELOW: 5.4 ON CAREFUL CONSIDERATION OF THE PROVISIONS OF SECTION 271(1 )(C) OF THE ACT AND EXPLANATION 1 TO SECTION 271(1 )(C) OF THE ACT, I AM OF THE OPINION THAT THE PENALTY FOR CONCEALMENT CAN BE LEVIED WHEN THE ASSESSEE HAS EITHER CONCEALED THE PARTICULARS OF HI S INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF HIS INCOME OR I S NOT ABLE TO GIVE ANY SATISFACTORY EXPLANATION IN REGARD TO ANY MATTE R WHICH IS MATERIAL TO THE COMPUTATION OF HIS INCOME. NOW WE E XAMINE THE FACTS OF THE CASE OF THE ASSESSEE IN ABOVE CONTEXT. IT IS NOTEWORTHY THAT THE VIEW TAKEN BY THE ASSESSING OFFICER THAT T HE AMOUNT OF LONG TERM CAPITAL GAINS HAS TO BE COMPUTED BY TAKING INT O CONSIDERATION OF RS. 1,65,00,000/-, ACTUALLY RECEIVED OR RECEIVAB LE BY THE APPELLANT TOWARDS SALE CONSIDERATION (EXCEPT THE VA LUE OF TWO FIATS) AND THAT THE TOTAL AMOUNT OF LONG TERM CAPITAL GAIN S IS ASSESSABLE ITA NO. 578(ASR)/2015 ASSESSMENT YEAR: 2007-08 5 AS THE INCOME OF THE YEAR UNDER APPEAL HAS BEEN UPH ELD EVEN BY THE HONORABLE JURISDICTIONAL TRIBUNAL. THEREFORE, T HE LIMITED POINT FOR CONSIDERATION IS WHETHER THE APPELLANT HAS A REASON ABLE EXPLANATION FOR HIS OMISSION TO DISCLOSE THE INCOME BY WAY OF LONG TERM CAPITAL GAINS IN THE RETURN. IN THE REVISED RE TURN FILED BY THE ASSESSEE ON 11.11.2009 WHICH HAS BEEN FILED BEFORE THE ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT, THE APPELLANT HAD DISCLOSED THE LONG TERM CAPITAL GAINS ON PRORATE BASIS BY TAKING INTO ACCOUNT AN AMOUNT OF RS.24,00.000/- ONLY AS AGAINST ACTUAL AMO UNT RECEIVED DURING THE YEAR UNDER CONSIDERATION AT RS.30.00,000 /-. IT HAS FURTHER BEEN NOTICED THAT LTCG OF RS.33.14,622/- ON AN AMOUNT OF RS.36.00.000/- HAS BEEN DECLARED IN A.Y. 2008-09. T HIS ALSO FIND MENTION IN THE ASSESSMENT ORDER FOR THE A.Y. 2007-0 8. HOWEVER, NO CAPITAL GAIN ON THE BALANCE RECEIPTS OF RS.6,00.000 /- HAS BEEN SHOWN EVEN ON RECEIPT BASIS IN THE REVISED RETURN F ILED BY THE ASSESSEE ON 11.11.2009. IT IS ALSO AN UNDISPUTED FA CT THAT THERE WERE CERTAIN CONTROVERSIES AND DISPUTES WITH REGARD TO TRANSFER OF PLOT. IN TACT, I UNDERSTAND THAT THE VARIOUS ISSUES WERE STILL NOT RESOLVED AND THE CONSTRUCTION OF THE BUILDING, IN W HICH THE APPELLANT WAS TO GET TWO FLATS AS A PART OF SALE CONSIDERATIO N, HAS NOT STARTED TILL DATE. IN THESE PARTICULAR FACTS AND IN THE CIR CUMSTANCES OF THE CASE, THE BELIEF OF THE APPELLANT THAT THE LONG TER M CAPITAL GAINS, ON WHICH HE HAS TO PAY TAX. HAS TO BE COMPUTED ONLY ON THE BASIS OF THE AMOUNT WHICH HAS ACTUALLY BEEN RECEIVED BY HIM IN CASH OR IN THE YEAR WHEN FULL CONSIDERATION WILL BE RECEIVED, CANNOT BE CONSIDERED TO BE TOTALLY UNREASONABLE. THE FACT THA T ALL THE MATERIAL FACTS WHICH WERE REQUIRED TO COMPUTE THE LONG TERM CAPITAL GAINS WERE FURNISHED BY THE APPELLANT IN HIS REVISED RETU RN FILED ON 11.11.2009, ESTABLISH HIS BONA FIDE CREDENTIALS. MO REOVER, THE QUANTUM ADDITION IN RESPECT OF LTCG ON AN AMOUNT OF DEEMED RECEIPT RS.99.00.000/- [RS.1.65.00.000/- (-) RS.66, 00,000/-] WHICH ALSO FORMS THE BASIS FOR LEVY OF (PENALTY UNDER SEC TION 271(1 )(C) IN THIS CASE STANDS DELETED BY THE HONORABLE PUNJAB & HARYANA HIGH COURT VIDE ITS ORDER IN ITA NO. 200 OF 2013 DATED 2 2.07.2015 IN THE CASE OF SH. C. S. ATWAL AND OTHERS INCLUDING THE AS SESSEE HIMSELF. AS THE BASIS FOR LEVY OF PENALTY UNDER SECTION 271( 1)(C) OF THE ACT IN THIS CASE ON AN AMOUNT OF LTCG TO BE WORKED BY TAKI NG INTO ACCOUNT A DEEMED RECEIPT OF RS.99.00,000/- HAS GONE , PENALTY LEVIED BY THE ASSESSING OFFICER ON LTCG TO BE WORKE D OUT ON THE BASIS OF THIS AMOUNT CANNOT BE SUSTAINED. HOWEVER, AS THE ASSESSEE HAS NOT DISCLOSED ANY LTCG EITHER IN HIS O RIGINAL RETURN OR IN THE REVISED RETURN OR RETURN FILED IN RESPONSE T O NOTICE UNDER SECTION 148 OF THE ACT ON AN AMOUNT OF RECEIPT OF R S.6.00,000/- EVEN ON RECEIPT BASIS, THE PENALTY LEVIED BY THE ASSESSI NG OFFICER ON LTCG WHICH IS TO BE WORKED OUT ON THIS AMOUNT IS RE QUIRED TO BE UPHELD AS THE ASSESSEE HAS CERTAINLY FILED INACCURA TE PARTICULARS OF HIS INCOME TO THIS EXTENT. ITA NO. 578(ASR)/2015 ASSESSMENT YEAR: 2007-08 6 9. WE DO NOT FIND ANY INFIRMITY IN THE ABOVE ORDER OF LD. CIT(A). 10. IN VIEW OF THE ABOVE, THE APPEAL FILED BY THE R EVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31.08.2017 SD/- SD/- (N. K. CHOUDHRY) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 31.08.2017. /GP/SR. PS . COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER