THE ITO, WARD-4(1), Visakhapatnam V. Bora Rama Naidu(HUF), Visakhapatnam

ITA 590/VIZ/2013

• Counselvise Citation: [2016] 130 COUNSELVISE.COM (IT) 9604 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 11-09-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: T.V.U.B.S. KISHORE BABU
• Keywords: Capital asset; Assessment record; Capital Gains
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 271(1)(c); 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 2(14); 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM SMC BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER ITA NO. 590 / VIZ /201 3 (ASST. YEAR : 20 06 - 07 ) ITO, WARD - 4(1), VISAKHAPATNAM. VS. BORA RAMA NAIDU (HUF) , 58 - 9 - 35, KARASA, B.R. PALEM, VISAKHAPATNAM. PAN NO. AHTPB 4058 R (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI T.V.U.B.S. KISHORE BABU ADV. DEPARTMENT BY : SHRI T. SATYANADHAM - DR DATE OF HEARING : 2 6 / 11 /201 6 . DATE OF PRONOUNCEMENT : 28 / 1 2 /201 6 . O R D E R THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), VISAKHAPATNAM , DATED 1 2/0 7 /2013 FOR THE ASSESSMENT YEAR 2006 - 07 . 2. FACTS OF THE CASE, IN BRIEF, ARE THAT A SURVEY WAS CONDUCTED IN THE BUSINESS PREMISES OF SMT. CHUKKA NOOKA RATNAM , PROPX : M/S. BORA RAM APPA SONS , OLD KARASA, VISAKHAPATNAM ON 23/01/2009 . DURING THE COURSE OF SURVEY , IT CAME TO LIGHT THAT THE ASSESSEE HAD TRANSFERRED CERTAIN SITES, RESULTING IN LONG TERM CAPITAL GAIN DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2006 - 07 , BUT HAD NOT FILED ANY RETURN OF INCOME. THE ASSESSING OFFICER HAD ISSUED NOTICE UNDER SECTION 148 TO THE ASSESSEE CALLING FOR THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2 ITA NO. 590 / VIZ /201 3 2006 - 07 . IN RESPONSE TO THE NOTICE, ASSESSEE FILED RETURN OF INCOME, HOWEVER, HAD NOT ADMITTED ANY INCOME UNDER THE HEAD LONG TERM CAPITAL GAIN AND FILED A SEPARATE TO THE STATEMENT OF TOTAL INCOME WHEREIN IT WAS MENTIONED THAT AGRICULTURAL LAND OF ACRES 3.11 CENTS AT BOYAPALEM SOLD FOR RS. 75,26,600/ - . SINCE IT WAS NOT A CAPITAL ASSET, CAPITAL GAIN DOES NOT ARISE UNDER SECTION 2(14) OF THE ACT. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT UNDER SECTION 144 OF THE ACT DETERMI NI N G THE LONG TERM CAPITAL GAIN AT RS. 71,39,031/ - . ON APPEAL , COMMISSIONER OF INCOME TAX (APPEALS) AS WELL AS ITAT HAS CONFIRMED THE ORDER OF THE ASSESSING OFFICER. SUBSEQUENTLY, THE ASSESSING OFFICER INITIATED THE PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. 3. IT WAS SUBMITTED BEFORE THE ASSESSING OFFICER THAT ALL THE DETAILS HAVE BEEN FILED IN RESPECT OF CAPITAL GAINS BEFORE THE ASSESSING OFFICER IN THE FORM OF NOTE, T HEREFORE, IT CANNOT BE SAID THAT THE ASSESSEE HAS NEITHER CONCEALED NOR FURNISHED INACCURATE PARTICULARS OF INCOME . HOWEVER, THE ASSESSING OFFICER HAD NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE AND OBSERVED THAT ASSESSEE WITH A MALAFIDE INTENTION, DELIBERATE LY A VOIDED ADMITTING THE LONG TERM CAPITAL GAIN ON ACCOUNT OF TRANSFER OF VACANT SITES FALLING WITHIN THE LOCAL LIMITS OF GVMC. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE ASSESSEE IN THE RETURN OF INCOME MADE A MENTI ON THAT AGRICULTURAL LAND OF ACRES 3.11 CENTS WAS NOT A CAPITAL ASSET HENCE, WOULD NOT GIVE RISE TO CAPITAL GAINS, BUT THE FACT REMAINS THAT THE ASSESSEE HA D SOLD 12 VACANT SITES 3 ITA NO. 590 / VIZ /201 3 ADMEASURING 15,051.36 SQ.YDS , WHICH IS CLEARLY FALLING WITHIN THE PRESCRIBED DISTANCE FROM THE LIMITS OF GVMC. THE ASSESSING OFFICER WAS OF THE OPINION THAT THE ASSESSEE NOT ONLY CONCEALED THE INCOME BUT ALSO FURNISHED INACCURATE PARTICULARS , THEREFORE, HE LEVIED PEN ALTY UNDER SECTION 271(1)(C) OF THE ACT. 4 . ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF ACT BY THE ASSESSING OFFICER. 5. ON BEING AGGRIEVED, REVENUE CARRIED THE MATTER IN APPEAL BEFORE THE TRIBUNAL. 6 . I HAVE HEARD BOTH THE PARTIES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW . 7 . I HAVE CONSIDERED THE ASSESSMENT ORDER AS WELL AS PENALTY ORDER AND ALSO ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS). I FIND THAT THE ASSESSEE HAD NOT ADMITTED THE INCOME FROM LONG TERM CAPITAL GAIN, HOWEVER, A NOTE WAS FILED ALONG WITH THE STATEMENT OF TOTAL INCOME BY SUBMITTING THE DETAILS OF THE CAPITAL ASSETS SOLD BY HIM AND ALSO ADMITTED THAT CAPITAL GAIN DOES NOT ARISE UNDER SECTION 2(14) OF THE ACT. HOWEVER, THE ASSESSING OFFICER HAS TAXED THE INCOME ON SALE OF THE LAND , WHICH ATTRACT S THE LONG TERM CAPITAL GAIN UNDER SECTION 2(14), THE SAME WAS CONFIRMED BY THE COMMISSIONER OF INCOME TAX (APPEALS) AS WELL AS ITAT . THE CASE OF THE ASSESSEE IS THAT THE LAND SOLD BY HER IS AN AGRICULTURAL LAND AND ALSO 8 KM. A WAY FROM GVMC, T HEREFORE, TH E ASSESSEE IS NOT UNDER OBLIGATION TO PAY LONG TERM CAPITAL GAIN IN VIEW OF 4 ITA NO. 590 / VIZ /201 3 NON - ATTRACTION OF SECTION 2(14), HOWEVER, THE ASSESSING OFFICER SAYS THAT THE LONG TERM CAPITAL GAIN ATTRACTS FOR THE REASON THAT IT IS WITHIN 8 KM. FROM THE GVMC . ACCORDINGLY, TH E ASSESSING OFFICER HAS TAXED THE INCOME RECEIVED BY THE ASSESSEE UNDER THE HEAD LONG TERM CAPITAL GAIN . IN MY OPINION , THE ASSESSEE HAS MADE A LEGAL CLAIM AND SUBMITTED THAT NO CAPITAL GAIN WILL ATTRACT S TO THE LAND SOLD BY HER AND THE ASSESSING OFFICER TAXED THE INCOME OF THE ASSESSEE UNDER THE HEAD LONG TERM CAPITAL GAIN . IT IS ALSO A FACT THAT THE ASSESSEE HAS DISCLOSED THESE FACTS IN RESPONSE TO THE NOTICE UNDER SECTION 148 BEFORE THE ASSESSING OFFICER . UNDER THESE FACTS AND CIRC UMSTANCES OF THE CASE , I AM OF THE OPINION TH AT THE ASSESSEE NEITHER CONCEAL ED THE INCOME NOR FILED INACCURATE PARTICULARS. THE COMMISSIONER OF INCOME TAX (APPEALS) BY CONSIDERING THE ENTIRE FACTS OF THE CASE AND BY FOLLOWING THE JUDGMENT OF THE HON'BLE S UPREME COURT IN THE CASE OF CIT V. RELIANCE PETROPRODUCTS P VT. LTD . REPORTED IN 322 ITR 15 8 , CANC E LLED THE LEVY OF PENALTY . THE RELEVANT PORTION OF THE ORDER IS EXTRACTED AS UNDER: - 5.3 I HAVE CONSIDERED THE WRITTEN SUBMISSIONS AND THE ORAL REPRESENTATIONS MADE BY THE AR. I HAVE ALSO PERUSED THE ASSESSMENT RECORDS. I AM OF THE VIEW THAT THE APPELLANT APPEARS TO BE UNDER THE BONAFIDE IMPRESSION THAT THE IMPUGNED LAND IS NOT A CAPITAL ASSET AS IT IS NOT WITHIN 8 KM FROM THE VISAKHAPATNAM MUNICI PALITY AND A SEPARATE NOTIFICATION WOULD BE REQUIRED AS STATED IN SECTION 2(14)(III)(B) OF THE I.T.ACT. OTHER - WISE, I FIND THAT THE PARTICULARS RELATING TO THE TRANSACTIONS HAVE BEEN DISCLOSED THOUGH IN THE RETURN FILED IN RESPONSE TO NOTICE U/S.148, BELAT EDLY. THE APPELLANT'S CONTENTION THAT IT DID NOT FILE RETURN OF INCOME VOLUNTARILY AS IT DID NOT HAVE TAXABLE INCOME IS NOT WITHOUT MERITS. I DO NOT CONSIDER THIS TO BE A CASE WHERE PARTICULARS OF INCOME HAVE BEEN CONCEALED OR INACCURATE PARTICULARS FURNIS HED. IN MY VIEW, A LEGAL PLEA HAS BEEN RAISED AS TO THE TAXABILITY AND SUCH PLEA FOUND TO BE NOT SUSTAINABLE WOULD NOT RENDER THE APPELLANT EXIGIBLE TO PENALTY U/S.271(L)(C). 5 ITA NO. 590 / VIZ /201 3 5.4 THE HON'BLE APEX COURT IN THE CASE OF RELIANCE PETRO PRODUCTS OBSERVED THAT A MERE MAKING OF THE CLAIM WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME AND SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT OF INACCURATE PARTICULARS. IN THE LIGHT OF THE ABOVE OBSERVAT IONS, I AM OF THE VIEW THAT THE CONDITIONS SPECIFIED IN SECTION 271(L)(C) HAS NOT BEEN SATISFIED SO AS TO IMPOSE PENALTY ON THE APPELLANT. ACCORDINGLY THE PENALTY LEVIED OF RS.26,91,300/ - IS CANCELLED. 8 . IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE , BY FOLLOWING THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA) , I FIND NO INFIRMITY IN THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) , WHICH IS HEREBY CONFIRMED AND THE GROUND OF APPEAL RAISED BY THE REVENUE IS DISMISSED. 9 . IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 2 8 T H DAY OF DEC , 201 6 . S D / - ( V. DURGA RAO ) JUDICIAL MEMBER DATED : 2 8 T H DECEMBER, 201 6 . VR/ - COPY TO: 1 . THE ASSESSEE - BORA RAMA NAIDU (HUF), 58 - 9 - 35, KARASA, B.R. PALEM, VISAKHAPATNAM. 2 . THE REVENUE - ITO, WARD - 4(1), VISAKHAPATNAM. 3 . THE CIT - 2, VISAKHAPATNAM . 4 . THE CIT(A) , VISAKHAPATNAM. 5 . THE D.R . 6 . GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY, I.T.A.T., VISAKHAPATNAM