Ramesh K.B.Menon, CHENNAI V. ACIT, Madurai

ITA 619/CHNY/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7394 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2017
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 16-01-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 30-03-2015
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTHJCIT
• Assessee Lawyers: S SRIDHAR
• Keywords: Bonafide belief; Reasonable cause
• Section: 143(3); 54F; 142(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . , . , ' # BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A. NO. 619/MDS/2015 / ASSESSMENT YEAR : 2009-10 SHRI RAMESH K.B. MENON, C/O N. VISWANATHAN, 11/16, 9TH STREET, DOAK NAGAR, MADURAI- 625 016. [PAN: ACTPM 1182E] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE III, MADURAI. ( / APPELLANT) ( / RESPONDENT) $% & / APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE )*$% & / RESPONDENT BY : SHRI A.V. SREEKANTH, JCIT & + /DATE OF HEARING : 16.01.2017 & + /DATE OF PRONOUNCEMENT : 22.03.2017 /O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER: THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-3, MADURAI, IN ITA NO. 40/2 012-13 DATED 06.03.2015 PASSED U/S. 271(1)(C) AND 250 OF THE INCOME TAX ACT . :-2-: I.T.A. NO. 619/MDS/2015 2. THE SOLE SUBSTANTIVE GROUND RAISED BY THE ASSESS EE THAT THE LD. CIT(A) ERRED IN CONFIRMING THE LEVY OF PENALTY U/S. 271(1) (C) OF THE ACT BY THE ASSESSING OFFICER ON CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS BECAUSE OF WITHDRAWAL OF EXEMPTION U/S. 54F OF THE ACT OF LONG TERM CAPITAL GAINS. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL AND FILED HIS INCOME TAX RETURN FOR THE ASSESSMENT YEAR 2009- 10 ON 09.06.2009 WITH TOTAL INCOME OF RS. 42,24,270/- AND THE RETURN OF INCOME WAS PROCESSED U/S. 143(1) OF THE ACT. SUBSEQUENTLY, THE CASE WAS SELECTED FO R SCRUTINY UNDER CASS AND NOTICE U/S. 143(2) & 142(1) OF THE ACT WAS ISSUED C ALLING FOR THE INFORMATION. IN COMPLIANCE LD. AR OF THE ASSESSEE APPEARED FROM TIM E TO TIME AND FILED INFORMATION. THE ASSESSING OFFICER ON PERUSAL OF T HE DETAILS FOUND THAT THE ASSESSEE HAS SOLD THE PROPERTY ON 10.09.2008 FOR A CONSIDERATION OF RS. 85 LAKHS AND HAS PURCHASED RESIDENTIAL FLAT FOR RS. 73 LAKHS ON 04.07.2007 AND CLAIMED EXEMPTION U/S. 54F OF THE ACT AND WAS UNDER A BONAF IDE BELIEF THAT PROPERTY CAN BE PURCHASED WITHIN 2 YEARS BEFORE THE DATE OF SALE OF ORIGINAL ASSET, WHEREAS THE ASSESSING OFFICER EXPLAINED THAT THE LONG TERM CAPITAL GAINS IS EXEMPTED ONLY WHEN THE ASSESSEE PURCHASE A RESIDENTIAL PROPERTY W ITHIN ONE YEAR BEFORE THE DATE OF SALE OF ASSET. THE LD. AO FOUND THAT THE A SSESSEE HAS NOT COMPLIED THE CONDITIONS OF PURCHASE WITHIN ONE YEAR BEFORE THE S ALE AND WITHDRAWN THE EXEMPTION CLAIMED EARLIER AND ADDED TO RETURNED INC OME WHICH WAS ACCEPTED BY THE ASSESSEE AND THE ASSESSEE PAID THE LONG TERM CA PITAL GAINS TAX BEFORE :-3-: I.T.A. NO. 619/MDS/2015 PASSING THE ASSESSMENT ORDER U/S. 143(3) OF THE ACT DATED 29.12.2011 WITH ASSESSED INCOME OF RS. 94,55,591/-. SUBSEQUENTLY, THE LD. AO INITIATED PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT AND ISSUED NO TICE U/S. 274 R.W.S. 271(1)(C) DATED 07.05.2012. THE LD. AO CONSIDERED THE FINDIN GS IN THE ASSESSMENT PROCEEDINGS AND THE FACTS BEING THE ASSESSEE HAS PA ID CAPITAL GAINS TAX LIABILITY RS.16,08,610/- ON 21.11.2011 INCLUDING INTEREST BEF ORE THE COMPLETION OF THE ASSESSMENT PROCEEDINGS. THE LD. AO PERUSED THE PRO VISIONS OF SECTION 54F OF THE ACT AND FOUND THAT THE ASSESSEE HAS NOT INVESTE D IN THE RESIDENTIAL PROPERTY WITHIN ONE YEAR BEFORE THE SALE OF ORIGINAL ASSET, AND OBSERVED SUCH ACT AS THE CONCEALMENT OF ASSESSEE AND FILED INACCURATE PARTIC ULARS AND BUT FOR SCRUTINY ASSESSMENT, THE FACTS HAS COME TO THE KNOWLEDGE OF THE REVENUE AND WAS OF THE OPINION THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS AND THE ASSESSEE HAS NOT SUBMITTED SATISFACTORY EXPLANATIONS WITH TH ESE OBSERVATIONS, THE LD. AO LEVIED PENALTY U/S. 271(1)(C) OF THE ACT ON 14.05. 2012. 4. AGGRIEVED BY THE PENALTY ORDER, THE ASSESSEE HAS FILED AN APPEAL WITH THE CIT(A). IN THE APPELLATE PROCEEDINGS, THE LD AR OF THE ASSESSEE ARGUED THE GROUNDS AND MADE SUBMISSIONS IN THE ASSESSMENT AND PENALTY PROCEEDINGS. THE FACT BEING THE ASSESSEE HAS PURCHASED THE PROPERTY AFTER EXPIRY OF ONE YEAR BEFORE DATE OF SALE. THE ASSESSEE FILED THE DETAIL S IN LETTER DATED 22.01.2012 EXPLAINING THE REASONS AS THE ASSESSEE COULD NOT PU RCHASE THE PROPERTY WITHIN THE SAID STIPULATED PERIOD. THE LD. CIT(A) CONSIDE RED THE FINDINGS OF THE ASSESSING OFFICER AND THE SUBMISSIONS OF THE ASSESS EE AND DISCUSSED EXHAUSTIVELY :-4-: I.T.A. NO. 619/MDS/2015 ON THE FINDINGS AND THE PROVISIONS AND JUDICIAL DEC ISIONS AT PAGE 5 TO 13 OF THE ORDER AND CONCURRED WITH THE FINDINGS OF THE ASSESS ING OFFICER AND CONFIRMED THE LEVY OF PENALTY. 5. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE H AS FILED AN APPEAL WITH THE TRIBUNAL. BEFORE US, THE LD. AR ARGUED THE GRO UNDS ON LEVY OF PENALTY AND EXPLAINED THAT THE LD. CIT(A) HAS ERRED IN CONFIRMI NG THE LEVY OF PENALTY WITHOUT CONSIDERING THE FACT THAT THE ASSESSEE HAS PURCHASE D THE PROPERTY AND CLAIMED EXEMPTION U/S. 54F OF THE ACT. SUBSEQUENTLY, IN TH E ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS ACCEPTED THE MISTAKE COMMITTED ON CLAIM OF EXEMPTION U/S. 54F OF THE ACT AND ACCEPTED THE WITHDRAWAL OF THE C LAIM BY THE LD. AO AND PAID THE TAX AND INTEREST BEFORE THE COMPLETION OF THE A SSESSMENT PROCEEDINGS AND THERE IS A REASONABLE CAUSE THAT THE ASSESSEE HAS N OT OBTAINED PROPER ADVICE ON THE PROVISIONS AND TO BUY PEACE WITH THE DEPARTMENT HAS NOT CONTESTED THE ADDITION IN THE QUANTUM APPEAL AND THE ASSESSEE ALS O FILED EXPLANATIONS IN THE PENALTY PROCEEDINGS WHICH THE LD. CIT(A) HAS OVERLO OKED AND PRAYED FOR ALLOWING THE APPEAL. CONTRA, THE LD. DR RELIED ON THE ORDER S OF THE CIT(A) AND OPPOSED THE GROUNDS OF THE ASSESSEE . 6. WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATE RIAL ON RECORD AND JUDICIAL DECISIONS. THE SOLE CRUX OF THE ISSUE BEI NG THE LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT BY THE ASSESSING OFFICER ON TH E GROUND THAT THE ASSESSEE HAS CONCEALED THE INCOME AND FURNISHED INACCURATE PARTI CULARS. THE LD. AR ARGUED :-5-: I.T.A. NO. 619/MDS/2015 THAT THE ASSESSEE WAS NOT HAVING KNOWLEDGE ON THE P ROVISIONS AND WAS ON BONAFIDE BELIEF THAT THE PROPERTY CAN BE PURCHASED WITHIN 2 YEARS BEFORE THE DATE OF SALE OF ORIGINAL ASSET AND PURCHASED THE RESIDEN TIAL PROPERTY ON 04.07.2007. WHEREAS, THE ASSESSEE SOLD THE PROPERTY ON 10.09.20 08 FOR RS. 85 LAKHS. THERE IS NO DISPUTE THAT THE ASSESSEE HAS SOLD THE PROPER TY AND PURCHASED A RESIDENTIAL PROPERTY BUT NOT WITHIN SPECIFIED TIME PERIOD UNDER THE PROVISIONS OF SECTION 54F OF THE ACT. THE EXEMPTION IS GRANTED ON PURCHASE O F RESIDENTIAL PROPERTY ONE YEAR BEFORE THE TRANSFER OF THE ORIGINAL ASSET OR P URCHASE OF THE RESIDENTIAL PROPERTY WITHIN 2 YEARS FROM THE DATE OF TRANSFER O R PURCHASE AND CONSTRUCT THE RESIDENTIAL PROPERTY WITHIN THE PERIOD OF 3 YEARS F ROM THE DATE OF SALE OF ORIGINAL ASSET. IN THE PRESENT CASE, THE PROPERTY WAS SOLD ON 10.09.2008 AND THE TIME LIMIT OF PURCHASE OF RESIDENTIAL PROPERTY ONE YEAR BEFORE IS 10.09.2007 AND FOR VARIOUS REASONS. THE PROPERTY WAS PURCHASED ON 04. 07.2007 AND THE ASSESSEE HAS NOT COMPLIED PRIMARY CONDITIONS OF PROVISIONS O F SECTION 54F OF THE ACT DISCUSSED ABOVE AND ACCEPTED THE LAPSE AND PAID THE TAX, ALONG WITH INTEREST BEFORE THE COMPLETION OF ASSESSMENT PROCEEDINGS. T HE ASSESSING OFFICER HAS INITIATED PENALTY PROCEEDINGS AND OBSERVED THAT BUT FOR THE SCRUTINY OF THE INCOME TAX RETURNS FILED THE FACT OF WITHDRAWAL OF EXEMPTION U/S. 54F OF THE ACT WOULD HAVE ARISEN. WE ARE OF THE OPINION THAT EVER Y ADDITION IN THE ASSESSMENT PROCEEDINGS SHALL NOT BE A GATEWAY FOR LEVYING OF P ENALTY. THE ASSESSING OFFICER HAS DISCRETIONARY POWERS AND SHALL CONSIDER THE REA SONABLE CAUSE EXPLAINED BY THE ASSESSEE IN THE PENALTY PROCEEDINGS. CONSIDERI NG THE APPARENT FACTS, MATERIAL ON RECORD, WE ARE OF THE OPINION THAT THE ASSESSEE HAS COMPLIED THE TAX :-6-: I.T.A. NO. 619/MDS/2015 PAYMENTS AND RELYING ON PRINCIPLES OF M/S. MANUJNAT H SPINNING AND GINNING MILLS VS CIT, 359 ITR 565 (KRN), WHERE IT WAS HELD THE LE VY OF PENALTY IS NOT AUTOMATIC HELD AS UNDER: ' MERELY BECAUSE ASSESSEE AGREED FOR ADDITION AND ACCORDINGLY ASSESSMENT ORDER WAS PASSED ON THE BASIS OF ADDITIO N AND WHEN THE ASSESSEE HAS PAID THE TAX AND INTEREST THEREON IN T HE ABSENCE OF ANY MATERIAL ON RECORD TO SHOW THE CONCEALMENT OF INCOM E, IT CANNOT BE INFERRED THAT THE SAID ADDITION IS ON ACCOUNT OF CO NCEALMENT SO AS TO LEVY PENALTY U/S. 271(1)(C).' WE FIND THERE IS A REASONABLE CAUSE EXPLAINED BY THE ASSESSEE AND ACCORDINGLY WE DIRECT THE ASSESSING OFFICER TO DELETE THE PENAL TY. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED ON WEDNESDAY, THE 22ND DAY OF MARC H, 2017 AT CHENNAI. SD/ - ( . ) ( A. MOHAN ALANKAMONY ) # / ACCOUNTANT MEMBER SD/ - ( . ) (G. PAVAN KUMAR) ) # /JUDICIAL MEMBER /CHENNAI, 0 /DATED: 22ND MARCH, 2017 JPV & )'+23 43-+ /COPY TO: 1. $%/ APPELLANT 2. )*$% /RESPONDENT 3. ! 5+ ( )/CIT(A) 4. ! 5+ /CIT 5. 367 )'+' /DR 6. 789 /GF