M/s. Jaroda Plantations Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 6094/DEL/2015

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 7780 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2005-2006
• Appeal Filed On: 12-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V K GARG
• Keywords: Gift
• Section: 115JB; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E, NEW DELHI BEFORE SHRI G.D. AGRAWAL, HONBLE PRESIDENT AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER I.T.A. NO. 6094/DEL/2015 A.Y. : 2005-06 JARODA PLANTATIONS PVT. LTD. F-0, GROUND FLOOR, THE MIRA CORPORATE SUITS, ISHWAR NAGAR, MATHURA ROAD, NEW DELHI 110 065 (PAN: AAACJ 5252A) VS. INCOME TAX OFDFICER, WARD-13(1), NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. V.K. GARG, ADV. DEPARTMENT BY : MS. RASHMITA JHA, SR. DR. DATE OF HEARING : 25.09.2018 DATE OF ORDER : 27-09-2018 ORDER PER K. NARASIMHA CHARY, J.M. THIS IS AN APPEAL BY THE ASSESSEE CHALLENGING THE ORDER DATED 24.01.2014 IN APPEAL NO. 0166/2012-13 FOR ASSESSMENT YEAR 2007-08 PASSED BY THE LD. COMMISSIO NER OF INCOME TAX (APPEALS)-VIII, NEW DELHI (IN SHORT LD. CIT(A)) WHEREIN THE LD. CIT(A) HAS UPHELD THE PENALTY OF RS . 2 2,41,56,197/- MADE BY THE AO U/S. 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT ACT). 2. BRIEFLY STATED FACTS ARE THAT THE ORIGINAL ASSES SMENT IN THIS CASE WAS COMPLETED VIDE ORDER DATED 11.6.2017 AT A TOTAL INCOME AT NIL AS AGAINST THE DECLARED LOSS OF RS. (-) 67,824/- FILED BY ASSESSEE ON 29.3.2006. LATER, THE ASSESSM ENT WAS SET ASIDE BY THE LD. CIT-II, NEW DELHI VIDE ORDER U /S. 263 OF THE ACT DATED 5.3.2010 ON THE GROUND THAT CAPITAL G AIN ON ACCOUNT OF SALE OF LAND SHOULD HAVE BEEN CONSIDERED FOR THE PURPOSE OF CALCULATING BOOK PROFIT U/S. 115JB OF TH E ACT. ACCORDINGLY, ASSESSMENT WAS COMPLETED VIDE ORDER U/ S. 143(3)/263 OF THE I.T. ACT, 1961 DATED 27.12.2010 A T A TOTAL INCOME OF RS. 43,33,780/- U/S. 115JB AS AGAINST ORI GINALLY ASSESSED FOR A SUM OF RS. 5,76,655/-. AO OBSERVED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR A.Y . 2005-06 THE ASSESSEE COMPANY HAD PURCHASED ONE AGRICULTURA L LAND IN AUGUST, 1997 MEASURING 2.925 HECT. SITUATED AT V ILLAGE MOAZA BPGARAJPUR, PARGANA KHATAULI TEHSIL JANSTH DI STT. MUZAFFAR NAGAR. FURTHER 2 PIECE OF LAND BEARING KHA SRA NO.1425/2, 1422 & 1409 M AREA 2.130 HECT. SITUATED AT VILLAGE JARODA PARGANA, TEHSIL & DISTT. MUZAFFARNAG AR WAS TAKEN IN GIFT ON 23RD DAY OF APRIL, 1999. 2ND PIECE OF LAND WHICH WAS OWNED IN GIFT WAS SOLD IN EARLIER YEARS B EFORE THIS FINANCIAL YEAR (I.E.2003-04). BUT DURING THE ASSESS MENT YEAR 2005-06 1ST PIECE OF LAND WAS SOLD. COST OF THIS PI ECE OF LAND WAS RS.993365/-, AS SHOWN IN THE SCHEDULE-C OF THE BALANCE SHEET FOR THE FINANCIAL YEAR 2004-05. THE LONG TERM CAPITAL GAIN ON SALE OF ABOVE LAND WAS NOT ROUTED THROUGH T HE PROFIT AND LOSS ACCOUNT AND THEREFORE TAX LIABILITY WAS NO T COMPUTED 3 ON THIS LONG TERM CAPITAL GAIN U/S 115JB. ACCORDIN GLY, THE AO INITIATED THE PENALTY PROCEEDINGS FOR FURNISHING IN ACCURATE PARTICULARS OF INCOME AND NOTICE U/S. 274 READ WITH SECTION 271 WAS ISSUED TO THE ASSESSEE ON 22.12.2010, WHIC H WAS NOT RESPONDED BY THE ASSESSEE AND ACCORDINGLY, THE ASSESSEE LOST ITS APPEAL BEFORE THE LD. CIT(A) AND THEREAFTE R BEFORE THE TRIBUNAL. ACCORDINGLY, TO FINALIZED THE PENALTY PR OCEEDINGS, THE ASSESSEE ISSUED SHOW CAUSE NOTICE ON 31.10.2012 WHICH WAS REPLIED BY THE ASSESSEE. AFTER CONSIDERING THE REPLY, THE AO OBSERVED THAT THE CAPITAL GAIN WAS NOT ROUTED TH ROUGH THE CREDIT SIDE OF PROFIT AND LOSS ACCOUNT AND ALSO THE RE WAS NO MENTION IN THE NOTES OF ACCOUNTS IN RESPECT OF SUCH CAPITAL GAIN. ACCORDINGLY, AO HELD THAT ASSESSEE HAS CONCE ALED THE PARTICULARS OF ITS INCOME AND FURNISHED INACCURATE PARTICULARS OF ITS INCOME AND LEVIED THE PENALTY VIDE HIS ORDE R DATED 21.12.2012 PASSED U/S. 271(1)(C) OF THE ACT. AGGRIE VED BY THE PENALTY ORDER, THE ASSESSEE APPEAL BEFORE THE L D. CIT(A), WHO VIDE HIS IMPUGNED ORDER DATED 05.8.2015 HAS E NHANCED THE PENALTY TO RS. 5,53,824/- AS AGAINST RS. 2,76,9 12/- LEVIED BY THE AO. AGAINST THE ORDER OF THE LD. CIT(A), AS SESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. LD. AR FOR THE ASSESSEE SUBMITTED THAT THE ADD ITION IN BOOK PROFIT OF RS. 35,31,500/- AS CONFIRMED BY THE ITAT IN QUANTUM APPEAL INVOLVES A HIGHLY DEBATABLE LEGAL I SSUE WHERE TWO VIEWS ARE POSSIBLE AS ALSO BORNE OUT FROM THE O RDER OF ITAT. HE FURTHER STATED THAT AO WHILE LEVYING PEN ALTY IN HIS ORDER HAS HIMSELF NOTED THE FINDINGS OF THE TRIBUNA L AS TO THE EXISTENCE OF TWO VIEWS OF TWO DIFFERENT HIGH COURT. HE FURTHER SUBMITTED THAT MERELY BECAUSE THE TRIBUNAL HAS APPL IED ITAT 4 SPECIAL BENCH DECISION IN THE CASE OF RAIN COMMODIT IES LTD. VS. DCIT 131 TTJ 514 (HYD.), IT DOES NOT TAKE AWAY THE FACT OF EXISTENCE OF TWO VIEWS. HE FURTHER STATED THAT IT I S THE SETTLED LAW THAT THERE IS NO CONCEALMENT OF INCOME OR INACC URATE PARTICULARS WHERE THE ADDITION AND/OR DISALLOWANCE IS BASED ON BONA FIDE CLAIMS OR DEBATABLE CLAIMS OR DIFFERE NCE OF VIEW, AS IS HELD INTER ALIA BY THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD., REPORTED IN 322 ITR 158 (SC). LASTLY, HE FURTHER S UBMITTED THAT THE SAID PENALTY U/S. 271(1)(C) HAS BEEN ERRON EOUSLY SUSTAINED AND ENHANCED BY LD. CIT(A) WITHOUT APPREC IATING BONA FIDES OF THE ASSESSEE, FACTS OF THE CASE AND D EBATABLE NATURE OF THE ISSUE INVOLVED. IN VIEW OF ABOVE, HE REQUESTED TO DELETE THE PENALTY IN DISPUTE. 4. PER CONTRA, LD. DR STRONGLY RELIED UPON THE ORDE RS OF THE AUTHORITIES BELOW. 5. WE HAVE CAREFULLY GONE THROUGH THE RECORDS IN TH E APPEAL PREFERRED BY THE ASSESSEE CHALLENGING THE QU ANTUM ADDITION IN ITA NO. 420/DEL/2011 WHEREIN THE TRIBU NAL OBSERVED IN UNAMBIGUOUS TERM VIDE PARA NO. 9 AT PA GE NO. 7 THAT IN THIS MATTER THERE IS ONE HIGH COURT JUDGMEN T IN FAVOUR OF THE ASSESSEE AND ANOTHER HIGH COURT JUDGMENT IN FAVOUR OF THE REVENUE. THIS OBSERVATION OF THE TRIBUNAL MA KES IT CLEAR THAT THE ADDITION GIVING RISE TO THE PENALTY WAS A DEBATABLE ISSUE. HOWEVER, THE TRIBUNAL WHILE FOLLO WING THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN TH E CASE OF RAIN COMMODITIES LTD. VS. DCIT 131 TTJ 514 (HYD.) D ECIDED THE QUANTUM ADDITION ISSUE AGAINST THE ASSESSEE. H OWEVER, 5 IN VIEW OF THE OBSERVATIONS OF THE TRIBUNAL IN QUAN TUM PROCEEDINGS, IT IS CLEAR THAT THE ISSUE RELATING TO WHICH THE PENALTY IS LEVIED IS A DEBATABLE ISSUE IN RESPECT O F WHICH NO PENALTY COULD BE LEVIED. THEREFORE, WE ARE OF THE C ONSIDERED VIEW THAT IT IS NOT A MATTER OF EITHER CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME, BUT IT IS ONLY A QUESTION OF APPLICATION OF LAW WHILE MAKING DISALLO WANCE AND THAT ENDED UP IN ADDITION AND CONSEQUENT PENALTY PR OCEEDINGS SUCH AS PENALTY CANNOT BE SUSTAINED. WITH THIS VIEW OF THE MATTER, WE QUASH THE PENALTY PROCEEDINGS AND DIRECT THE AO TO DELETE THE PENALTY IN DISPUTE. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27/09/2018 . SD/- SD/- [G.D. AGRAWAL] [K.NARASIMHA CHARY] PRESIDENT JUDICIAL MEMBER DATE 27/09/2018 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY ASSISTANT REGISTRAR, ITAT, DELHI BENCHES