SHAKIL HAMID SHEIKH, NAVI MUMBAI V. ACIT 22(3), MUMBAI

ITA 6775/MUM/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1738 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-11-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2008-2009
• Appeal Filed On: 22-11-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: POOJA SWAROOP
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Depreciation; Bonafide belief; Earning of tax free income; Reasonable cause; Revised return; Bonafide mistake
• Section: 273B; 143(3); 54B; 50C

Judgement Text

E IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO. 6775 /MUM/2013 ( / ASSESSMENT YEAR : 2008-09) SHRI SHAKIL HAMID SHEIKH, SURVEY NO. 183, KUKSHET, OPP. HPCL, MIDC, NAVI MUMBAI 400 703. / V. ASSTT. COMMISSIONER OF INCOME TAX 22(3), MUMBAI. ./ PAN : ABQPS2677G ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY SHRI RAHUL HAKANI REVENUE BY : MS. POOJA SWAROOP, D.R. / DATE OF HEARING : 24-08-2016 / DATE OF PRONOUNCEMENT : 17-11-2016 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER THIS APPEAL, FILED BY THE ASSESSEE, BEING ITA NO. 6775/MUM/2013, IS DIRECTED AGAINST THE APPELLATE ORDER DATED 2 ND SEPTEMBER, 2013 PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- 33, M UMBAI (HEREINAFTER CALLED THE CIT(A)), FOR THE ASSESSMENT YEAR 2008- 09, THE APPELLATE PROCEEDINGS BEFORE THE LEARNED CIT(A) ARISING FROM THE PENALTY ORDER DATED 22.06.2011 PASSED BY THE LEARNED ASSESSING OFFICER (HEREINAFTER CALLED THE AO) U/S 271(1)(C) OF THE INCOME TAX ACT,1961 (HERE INAFTER CALLED THE ACT). ITA 6775/MUM/2013 2 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN THE MEMO OF APPEAL FILED WITH THE INCOME TAX APPELLATE TRIBUNAL, MUMBA I (HEREINAFTER CALLED THE TRIBUNAL) READ AS UNDER:- PENALTY U/S. 271(1)(C) OF THE ACT. 1. THE LEARNED CIT(A) ERRED IN UPHOLDING THE ORDER OF A.O. LEVYING PENALTY U/S.271(1)(C) OF THE ACT OF RS4,50,368/- ON ADDITION U/S. 50C OF RS.13,25,000/- BEING DIFFERENCE BETWEEN STAMP DUTY V ALUE AND AGREEMENT VALUE WITHOUT APPRECIATING THAT ASSESSEE HAS NEITHER CONCEALED ANY INCOME NOR FURNISHED INACCURATE PARTI CULARS OF INCOME AS ASSESSEE HAD MADE ALL BONA FIDE DISCLOSURES DURI NG ASSESSMENT PROCEEDINGS, ASSESSEE WAS UNDER THE BONAFIDE IMPRES SION THAT LAND CONSIDERED AS SOLD WAS AGRICULTURAL LAND AND CAPITAL GAINS FROM SALE OF AGRICULTURAL LAND WAS EXEMPT AND ASSESSEE IS REGULAR LY PAYING INCOME TAX AND THEREFORE PENALTY U/S. 271(1)(C) OF RS. 4,50 ,368/- MAY BE DELETED. 2. THE LEARNED CIT(A) ERRED IN UPHOLDING THE ORDER OF A.O. LEVYING PENALTY U/S. 271(1)(C) OF THE ACT OF RS. 4,50,368/- O N ADDITION U/S. 50C OF RS.13,25,000/- BEING DIFFERENCE BETWEEN STAMP DUT Y VALUE AND AGREEMENT VALUE WITHOUT APPRECIATING THAT SEC. 50C IS A DEEMING PROVISION AND ADDITION U/S. 50C DOES NOT AMOUNT TO CON CEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCO ME AND HENCE PENALTY U/S. 271(1)(C) OF RS. 4,50,368/- MAY BE DEL ETED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED RETURN OF INCOME ON 29 TH SEPTEMBER, 2008 DECLARING TOTAL INCOME OF RS. 67,1 7,110/-. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF STONE CRUSHI NG AND TRANSPORT. THE A.O. NOTED DURING THE ASSESSMENT PROCEEDINGS U/S 14 3(3) OF THE ACT READ WITH SECTION 143(2) OF THE ACT THAT THE ASSESSEE HAD PUR CHASED A LAND AT BARAMATI FOR A CONSIDERATION OF RS. 39 LACS. THE ASSESSEE W AS ASKED TO EXPLAIN THE SOURCE OF THIS INVESTMENT DURING QUANTUM ASSESSMENT PROCEEDINGS U/S 143(3) R.W.S 143(2) OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 143(3) R.W.S. 143(2) OF THE ACT, THE ASSESSEE S UBMITTED THAT THE ASSESSEE HAD PURCHASED A PIECE OF LAND FOR A CONSIDERATION O F RS. 22.50 LACS IN THE PRECEDING YEAR AND THE SAME WAS SOLD FOR A TOTAL CO NSIDERATION OF RS. 31.20 ITA 6775/MUM/2013 3 LACS DURING THE IMPUGNED ASSESSMENT YEAR WHICH WAS UTILIZED BY THE ASSESSEE FOR PURCHASE OF LAND AT BARAMATI. THE ASSESSEE HAD NOT DISCLOSED SHORT TERM CAPITAL GAIN EARNED ON THE SALE OF THE LAND IN THE RETURN OF INCOME FILED WITH THE REVENUE AND WHEN ASKED THE ASSESSEE SUBMITTED T HAT THE CAPITAL GAIN EARNED WAS NOT DISCLOSED IN THE RETURN OF INCOME UN DER THE BELIEF THAT THE SAME WAS NOT LEVIABLE ON AGRICULTURAL LAND AND HE W OULD GET BENEFIT OF SECTION 54B OF THE ACT. THE SALE CONSIDERATION OF THE SAID LAND SOLD DURING THE YEAR WAS RS. 31.20 LACS WHILE THE STAMP DUTY VALUATION AS ADOPTED BY R EGISTERING AUTHORITY WAS RS. 1.398 CRORES AND MATTER WAS ALSO REFERRED TO TH E DVO BY THE AO U/S 50C(2) OF THE ACT , AND THE DVO VALUED THE FAIR MAR KET VALUE OF LAND AT RS. 35.75 LACS U/S 50C(2) OF THE ACT. THUS, THE VALUE AS DETERMINED BY DVO WAS LOWER THAN THE VALUE ADOPTED BY STAMP DULY VALUATIO N AUTHORITIES FOR THE SAID LAND, THE VALUE AS DETERMINED BY THE DVO OF RS. 35. 75 LACS WAS ADOPTED BY THE AO AS FULL VALUE OF CONSIDERATION FOR COMPUTING CAPITAL GAIN CHARGEABLE TO TAX UNDER THE ACT WHILE FRAMING QUANTUM ASSESSMENT U/S 143(3) OF THE ACT. THE PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT W ERE INITIATED BY THE AO AGAINST THE ASSESSEE. DURING THE COURSE OF PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT, THE ASSESSEE SUBMITTED THAT HE SOLD THE LAND FOR RS. 31.20 LACS FOR WHICH THE FAIR MARKET VALUATION WAS COMPUTED BY THE DVO AT RS. 35.75 LACS WHICH WAS ADOPTED AS FULL VALUE OF CONSIDERATION BY THE AO FOR COMPUTING CAPITAL GAINS CHARGEABLE TO TAX, WHICH WAS NOT REC EIVED BY THE ASSESSEE AND THE DIFFERENCE OF RS. 4.55 LACS WAS AN UNREALIZED C ONSIDERATION. THE ASSESSEE SUBMITTED THAT THE DIFFERENCE OF RS. 4.55 LACS WAS ADDED TO THE INCOME OF THE ASSESSEE BY THE AO IN QUANTUM ASSESSMENT PROCEEDING S U/S 143(3) OF THE ACT WHICH WAS NOT ACCEPTED BY THE ASSESSEE. THE ASSESS EE SUBMITTED THERE WERE NO CONCEALMENT OF INCOME OR INACCURATE PARTICULARS FURNISHED BY THE ASSESSEE. IT WAS SUBMITTED BY THE ASSESSEE THAT ALL THE DETAILS WERE SUBMITTED ITA 6775/MUM/2013 4 BY THE ASSESSEE BEFORE THE REVENUE EXPLAINING THE R EASONS FOR SELLING THE LAND FOR RS. 31.20 LACS. THE A.O. REJECTED THE CONTENTION OF THE ASSESSEE WH EREBY IT WAS OBSERVED THAT THE ASSESSEE HAS NOT CONTESTED THE BASIC FACT WITH RESPECT TO THE NON- DISCLOSURE OF CAPITAL GAINS EARNED ON SALE OF LAND. IT WAS OBSERVED BY THE AO THAT IF THE CASE OF THE ASSESSEE WOULD NOT HAVE BEE N SELECTED FOR SCRUTINY THEN THE CAPITAL GAINS WHICH WERE NOT DISCLOSED BY THE A SSESSEE IN THE RETURN OF INCOME FILED WITH REVENUE WOULD NOT HAVE BEEN DETEC TED. THE CONTENTION OF THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS THAT HE WAS UNDER THE BELIEF THAT TAX IS NOT LEVIABLE ON AGRICULTURAL LAND AND H ENCE HE DID NOT DISCLOSE THE SAID CAPITAL GAINS IN THE RETURN OF INCOME FILED WI TH THE REVENUE CAN ALSO BE NOT ACCEPTED AS THERE IS A COLUMN IN THE RETURN OF INCOME UNDER WHICH EXEMPT INCOME IS REQUIRED TO BE DISCLOSED. THE ASSE SSEE FAILED TO DISCLOSE SUCH EXEMPT INCOME IN THE ORIGINAL RETURN OF INCOME FILED ON 29/09/2008 NOR THE SAME WAS DISCLOSED IN THE REVISED RETURN OF INC OME FILED ON 06/12/2010. THE A.O. OBSERVED THAT THE ASSESSEE NOT ONLY CONCEA LED THE PARTICULARS OF INCOME IN RESPECT TO THE CAPITAL GAINS EARNED BUT H AS ALSO FAILED TO OFFER AN EXPLANATION SHOWING REASONABLE CAUSE IN TERMS OF SE CTION 273B OF THE ACT , HENCE, PENALTY U/S 271(1)(C) OF THE ACT IS LEVIABLE IN THE CASE OF THE ASSESSEE AND ACCORDINGLY PENALTY OF RS. 4,50,363/- WAS LEVIE D BY THE AO U/S 271(1)(C) OF THE ACT , BEING 100% OF THE TAX SOUGHT TO BE EVA DED BY THE ASSESSEE, VIDE PENALTY ORDER DATED 22-06-2011 PASSED BY THE AO U/S 271(1)(C) OF THE ACT 4. AGGRIEVED BY THE PENALTY ORDER DATED 22-06-2011 PASSED BY THE A.O. U/S. 271(1)(C) OF THE ACT, THE ASSESSEE FILED FIRST APP EAL BEFORE THE LD. CIT(A). 5. BEFORE THE LD. CIT(A) , THE ASSESSEE SUBMITTED T HAT THE LAND WHICH WAS PURCHASED BY THE ASSESSEE WAS PURELY AGRICULTURAL L AND AND THE SALE OF THE AGRICULTURAL LAND WAS NOT DISPUTED BY THE ASSESSING AUTHORITIES. THE ASSESSEE ITA 6775/MUM/2013 5 SUBMITTED THAT DIFFERENCE BETWEEN VALUE AS DETERMIN ED BY DVO OF RS. 35.75 LACS AND THE ACTUAL SALE CONSIDERATION OF RS. 31.20 LACS, BEING RS. 4.55 LACS WAS ADDED TO THE INCOME OF THE ASSESSEE BY THE AO W HICH WAS NEVER REALIZED BY THE ASSESSEE. THE ASSESSEE SUBMITTED THAT THE LA ND IS AGRICULTURAL LAND, IT IS EXEMPTED FROM CAPITAL GAIN TAX U/S 54-B OF THE A CT. IT WAS SUBMITTED THAT THE LAND SOLD AND PURCHASED BY THE ASSESSEE WERE SI TUATED UNDER GRAMPANCHAYAT AREA AND THE LAND WAS CULTIVATED REGU LARLY BY THE ASSESSEE HIMSELF BEING FARMER AND AGRICULTURAL INCOME WAS DI SCLOSED REGULARLY. IT WAS SUBMITTED THAT SINCE THE LAND SOLD AND PURCHASED WA S PURELY AGRICULTURAL LAND AND THE PROFIT EARNED WAS REINVESTED IN PURCHA SE OF AGRICULTURAL LAND AT RS. 39 LACS, THERE WAS NO QUESTION OF CAPITAL GAINS BEEN CHARGEABLE TO TAX. IT WAS SUBMITTED THAT THESE FACTS WERE NEVER TAKEN INT O CONSIDERATION BY THE AO. THE LD. CIT(A) CONSIDERED THE SUBMISSIONS OF THE AS SESSEE WHEREBY IT WAS OBSERVED BY LEARNED CIT(A) THAT THE ASSESSEE DID NO T DISCLOSE THE TRANSACTION OF PURCHASE AND SALE OF LAND AND THE CAPITAL GAINS EARNED THEREON IN THE RETURN OF INCOME FILED WITH THE REVENUE. IT WAS OB SERVED BY THE LEARNED CIT(A) THAT EVEN THOUGH THE SAID INCOME WAS EXEMPT, STILL IT WAS THE DUTY OF THE ASSESSEE TO SHOW SUCH EXEMPT INCOME IN THE RETU RN OF INCOME FILED WITH THE REVENUE. THE ASSESSEE DID NOT INCLUDE THE PART ICULARS OF CAPITAL GAINS IN THE ORIGINAL RETURN OF INCOME AS WELL AS IN THE REV ISED RETURN OF INCOME FILED WITH THE REVENUE, HENCE, PENALTY U/S 271(1)(C) OF T HE ACT IS LEVIABLE AS THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME RE LATING TO CAPITAL GAINS EARNED BY THE ASSESSEE EVEN TILL ASSESSMENT WAS FRA MED BY THE AO. THE LD. CIT(A) OBSERVED THAT THE ASSESSEE SOLD THE LAND FOR A CONSIDERATION OF RS.31,20,000/- ON 15.02.2008 , AND STAMP DUTY VALUA TION ADOPTED BY REGISTERING AUTHORITIES WAS AT RS. L,39,80,000/-. H OWEVER, THE DVO VALUED THE PROPERTY AT RS.35,75,000/-. THUS, IT IS CLEAR THAT THE ASSESSEE HAS EARNED CAPITAL GAIN AGAINST THIS TRANSACTION WHICH WAS NOT DISCLOSED IN THE ORIGINAL ITA 6775/MUM/2013 6 RETURN AS WELL AS REVISED RETURN OF INCOME FILED WI TH THE REVENUE , DESPITE THE TRANSACTION OF HAVING EARNED CAPITAL GAINS BEING IN THE KNOWLEDGE OF THE ASSESSEE BUT STILL IT WAS NOT DISCLOSED IN THE RETU RN OF INCOME FILED WITH THE REVENUE. THE LEARNED CIT(A) REJECTED THE CONTENTION S OF THE ASSESSEE THAT THE ASSESSEE FAILED TO DISCLOSE THE CAPITAL GAINS BY OM ISSION OR OVERSIGHT OR THAT IT WAS BONAFIDE MISTAKE OR TECHNICAL OR VENIAL BREACH OF THE LAW. THE CONTENTION OF THE ASSESSEE THAT IT WAS AN AGRICULTURAL LAND AN D HENCE EXEMPT FROM CAPITAL GAINS UNDER SECTION 54B OF THE ACT OR THAT THE ASSESSEE REINVESTED THE PROFIT EARNED IN ANOTHER AGRICULTURAL LAND WAS NOT ACCEPTED BY THE LD. CIT(A) AS THE ASSESSEE COULD NOT PROVIDE ANY DETAILS OF S UCH LAND BEING AGRICULTURAL LAND AND ALSO DETAILS OF REINVESTMENT OF AMOUNT IN ANOTHER AGRICULTURAL LAND, EVEN DURING APPELLATE PROCEEDINGS. THE LEARNED CIT (A) FURTHER OBSERVED THAT THE ADDITION OF RS. 13.25 LACS MADE BY THE AO WAS A CCEPTED BY THE ASSESSEE IN QUANTUM PROCEEDINGS AS NO APPEAL WAS PREFERRED B Y THE ASSESSEE AGAINST THE QUANTUM ASSESSMENT ORDER DATED 10-12-2010 PASS ED BY THE AO U/S 143(3) OF THE ACT. THE LD. CIT(A) HELD THAT THE AS SESSEE HAS CONCEALED HIS PARTICULARS OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT AND CONFIRMED THE PENALTY OF RS. 4,50,368/- SO LEVIED B Y THE A.O. , VIDE APPELLATE ORDERS DATED 02/09/2013. 6.AGGRIEVED BY THE APPELLATE ORDERS DATED 02/09/201 3 PASSED BY THE LD. CIT(A) , THE ASSESSEE IS IN APPEAL BEFORE THE TRIBU NAL. 7. THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT PENALTY WAS LEVIED U/S 271(1)(C) OF THE ACT FOR CONCEALMENT OF PARTICULARS OF INCOME W.R.T. CAPITAL GAINS ON SALE OF AGRICULTURAL LAND. IT WAS SUBMITT ED THAT THE QUANTUM ASSESSMENT FRAMED BY THE AO U/S 143(3) OF THE ACT W AS ACCEPTED BY THE ASSESSEE AND NO APPEAL WAS PREFERRED BEFORE THE LD. CIT(A) IN QUANTUM PROCEEDINGS W.R.T. CAPITAL GAIN ON SALE OF AGRICULT URAL LAND BROUGHT TO TAX BY THE REVENUE. IT WAS SUBMITTED THAT SECTION 50C OF T HE ACT IS A DEEMING ITA 6775/MUM/2013 7 SECTION WHICH IS APPLIED BY THE AO WHEREBY DVO VALU ATION OF RS. 35.75 LACS WAS CONSIDERED AS FULL VALUE OF CONSIDERATION. THE ACTUAL CONSIDERATION RECEIVED BY THE ASSESSEE WAS RS. 31.20 LACS. PENAL TY CANNOT BE LEVIED ON THE DIFFERENCE BETWEEN THE DVO VALUATION AND ACTUAL SAL E CONSIDERATION AS THE DVO VALUE IS DEEMED AS FULL CONSIDERATION FOR CHARG EABILITY TO CAPITAL GAINS TAX OWING TO DEEMING FICTION OF SECTION 50C OF THE ACT. THE LD. COUNSEL SUBMITTED THAT THE ASSESSEE WAS UNDER A BELIED THAT HE HAD SOLD AGRICULTURAL LAND AND THE ASSESSEE WAS UNDER THE BONAFIDE BELIE F THAT CAPITAL GAINS ARISING THEREON ARE EXEMPTED FROM CAPITAL GAIN TAX U/S 54B OF THE ACT. IT WAS SUBMITTED THAT THE LAND SOLD WAS AN INDUSTRIAL LAND AND REINVESTMENT IN THE NEW LAND WAS ALSO INTO AN INDUSTRIAL LAND AND NOT A N AGRICULTURAL LAND. REFERENCE WAS DRAWN TO THE SALE AGREEMENT/PURCHASE AGREEMENT WHICH ARE PLACED IN THE PAPER BOOK FILED WITH THE TRIBUNAL. I T WAS ALSO SUBMITTED THAT NO CONSIDERATION HAS BEEN RECEIVED IN THE IMPUGNED ASS ESSMENT YEAR WHICH WAS RECEIVED IN THE SUBSEQUENT YEAR. IT WAS SUBMITTED THAT NO TAXES WERE PAID IN THE SUBSEQUENT YEAR ALSO AS THE SAID CAPITAL GAINS WERE NOT EVEN DECLARED IN THE SUCCEEDING YEAR. IT IS SUBMITTED THAT ASSESSE I S BUYING LAND REGULARLY AND DISCLOSURE HAS BEEN MADE IN THE BALANCE SHEET.IT WA S SUBMITTED THAT THE SALE CONSIDERATION OF THE LAND WAS REDUCED FROM THE BLOC K OF THE ASSET FOR THE NEXT YEAR I.E. FINANCIAL YEAR 2008-09. IT WAS ALSO SUBMI TTED THAT THE LAND WAS PURCHASED FROM THE SAME PERSON(S) TO WHOM THIS LAND UNDER CONSIDERATION WAS SOLD AND HENCE THE ASSESSEE WAS UNDER A BONAFID E BELIEF THAT THE LAND WAS EXCHANGED , THE ASSESSEE DID NOT DISCLOSE AND P AY CAPITAL GAIN ON THE SALE OF THIS LAND WHILE CAPITAL GAINS W.R.T. OTHER TRANS ACTIONS IN PROPERTY WERE PAID. IT WAS SUBMITTED THAT PENALTY CANNOT BE LEVIED ON T HE ADDITIONS MADE U/S 50- C OF THE ACT. THE LD. COUNSEL RELIED ON THE DECISIO N OF MUMBAI BENCH OF THIS TRIBUNAL IN THE CASE OF RENU HINGORANI V. ACIT IN I TA NO. 2210/MUM/2010 FOR THE ASSESSMENT YEAR 2006-07 VIDE ORDERS DATED 22 ND DECEMBER, 2010 AND THE DECISION OF HONBLE HIGH COURT OF CALCUTTA IN T HE CASE OF CIT V. MADAN THEATRES LTD.[2014] 44 TAXMANN.COM 382 (CALCUTTA) A ND SUBMITTED THAT NO ITA 6775/MUM/2013 8 PENALTY U/S 271(1)(C) OF THE ACT CAN BE LEVIED AS T HERE IS NO CONCEALMENT OF INCOME. 8. THE LD. D.R. SUBMITTED THAT THE A.O. HAD MADE EN QUIRIES ABOUT THE SOURCE OF PURCHASE OF LAND DURING THE YEAR AND THE N THE AO CAME TO KNOW THAT THE ASSESSEE HAS SOLD SOME LAND OF WHICH CAPIT AL GAINS WERE NOT OFFERED FOR TAXATION BY THE ASSESSEE. FULL OPPORTUNITY WAS GIVEN BY THE DVO WHILE COMPUTING THE MARKET VALUE OF THE LAND. 9. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND ALS O PERUSED THE MATERIAL AVAILABLE ON RECORD INCLUDING CASE LAWS RELIED UPON BY BOTH THE PARTIES. WE HAVE OBSERVED THAT THE ASSESSEE IS ENGAGED IN THE B USINESS OF STONE CRUSHING AND TRANSPORT. THE ASSESSEE HAD SOLD THE LAND AT VI LLAGE KONDHWA-BUDRUK, TALUKA HAVELI, DISTRICT-PUNE FOR A CONSIDERATION OF RS. 31.20 LACS VIDE SALE AGREEMENT DATED 05-02-2008 WHICH WAS ACQUIRED FOR R S. 22.50 LACS IN THE PRECEDING YEAR, THE CAPITAL GAINS ARISING THERE-FR OM WERE NOT DECLARED IN THE RETURN OF INCOME AS WELL AS REVISED RETURN OF INCOM E FILED BY THE ASSESSEE WITH THE REVENUE. THE ASSESSEE HAS CLAIMED THAT THE ASS ESSEE HAS SOLD AGRICULTURAL LAND AND DID NOT DECLARE THE SHORT TER M CAPITAL GAINS ON THE BONAFIDE BELIEF THAT BEING CAPITAL GAINS ARISING ON SALE OF AGRICULTURAL LAND ARE EXEMPT FROM TAX. THE ASSESSEE IN QUANTUM ASSESSMENT PROCEEDINGS HAVE SUBMITTED THAT AS PER LATEST INFORMATION ABOVE AREA IS DECLARED AS INDUSTRIAL LAND AREA BY GOVERNMENT OF MAHARASHTRA AND THE AREA OF VILLAGE IS DECLARED AS POONA MUNICIPAL CORPORATION , THUS THE ASSESSEE REQUESTED THAT NO PENALTY BE LEVIED U/S 271(1)(C) OF THE ACT AS THE A BOVE FACT WAS NOT INTENTIONALLY CONCEALED BY THE ASSESSEE AND THE INC ONVENIENCE CAUSED TO REVENUE WAS REGRETTED . NO APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST QUANTUM ASSESSMENT ORDER DATED 10-12-2010 FRAMED BY THE AO U/S 143(3) OF THE ACT WHEREBY THE SHORT TERM CAPITAL GAIN WAS BRO UGHT TO TAX BY THE AO WHICH WAS ACCEPTED BY THE ASSESSEE. PERUSAL OF THE DEVELOPMENT AGREEMENT ITA 6775/MUM/2013 9 DATED 29-02-2008 WITH RESPECT TO SALE OF LAND BEING SURVEY NO. 32 HISSA NO 3/27/6 ADMEASURING 00H, 06R MEANS TOTAL AREA 2600 S QUARE METERS LYING BEING SITUATED WITHIN THE LIMITS OF INDUSTRIAL AREA IN THE VILLAGE KONDHVA BUDRUK , PUNE , MIDC AREA (PAGE 87/PB) AND IT IS CL EARLY STATED IN THE DEVELOPMENT AGREEMENT DATED 29-02-2008 AS UNDER(PAG E 91/PB) :- AND WHEREAS :- THE SAID PROPERTIES ARE NOT UNDER CULTIVATION . IT IS A BARREN LAND THERE IS NO SOURCE OF WATER. THE SAID PROPERTY IS U NDER INDUSTRIAL AREA AS PER THE PLAN OF MUNICIPAL CORPORATION OF PU NE. THUS, THE PLEA OF THE ASSESSEE THAT THE LAND IS AN AGRICULTURAL LAND LACKS MERIT AND IS NOT BORNE OUT OF THE RECORDS AND THE A SSESSEE DURING ASSESSMENT ACCEPTED THAT THE LAND IS NOT AGRICULTURAL LAND BUT AN INDUSTRIAL LAND. THUS, THIS EXPLANATION OFFERED BY THE ASSESSEE THAT THE S AID LAND WAS AN AGRICULTURAL LAND AND HENCE NOT EXIGIBLE TO TAX COULD NOT BE HEL D TO BE A BONAFIDE EXPLANATION AS THE FACTS NARRATES A TOTALLY DIFFERE NT STORY THAT THE SAID LAND BEING UNDER MIDC AND A BARREN LAND HAVING NO SOURCE OF WATER IS NOT UNDER CULTIVATION , TO TAKE IT OUT OF AMBIT FROM THE PEN ALTY PROVISIONS U/S 271(1)(C) OF THE ACT. THE PLEA OF THE ASSESSEE THAT THE ASSE SSEE HAS REDUCED THE SALE CONSIDERATION OF THE SAID LAND FROM THE BLOCK OF TH E ASSET IS AGAIN AND HENCE CAPITAL GAINS WERE NOT DECLARED IS AGAIN DEVOID OF MERITS. THE CONCEPT OF BLOCK OF ASSET IS FOR THE ASSETS WHICH ARE ELIGIBLE FOR D EPRECIATION. THE BLOCK OF ASSET IS DEFINED UNDER SECTION 2(11) OF THE ACT AS UNDER: DEFINITIONS. 2. IN THIS ACT, UNLESS THE CONTEXT OTHERWISE REQUIRES , **** **** [( 11 ) 'BLOCK OF ASSETS' MEANS A GROUP OF ASSETS FALLING W ITHIN A CLASS OF ASSETS COMPRISING ( A ) TANGIBLE ASSETS, BEING BUILDINGS, MACHINERY, PLANT OR FURNITURE; ITA 6775/MUM/2013 10 ( B ) INTANGIBLE ASSETS, BEING KNOW-HOW, PATENTS, COPYRIG HTS, TRADE-MARKS, LICENCES, FRANCHISES OR ANY OTHER BUSINESS OR COMM ERCIAL RIGHTS OF SIMILAR NATURE, IN RESPECT OF WHICH THE SAME PERCENTAGE OF DEPRECIATION IS PRESCRIBED;] ***** ***** THE ASSESSEE HELD INDUSTRIAL LAND WHICH WAS SOLD DU RING THE IMPUGNED ASSESSMENT YEAR AND THE LAND IS NOT ELIGIBLE FOR DE PRECIATION AS PER SCHEME OF THE ACT . THUS, THE CONTENTION OF THE ASSESSEE THAT THE ASSESSEE REDUCED THE SALE CONSIDERATION FROM THE BLOCK OF ASSET IS ALSO NOT BORNE OUT FROM THE RECORDS AS ON PERUSAL OF THE FINANCIAL STATEMENT OF THE FINANCIAL YEAR ENDED 31-03-2008 REVEALS THAT THERE WAS NOT BLOCK OF ASSE T CREATED BY THE ASSESSEE FOR THE LAND HELD BY THE ASSESSEE AND THIS LAND WAS SHOWN AS SEPARATELY UNDER THE SCHEDULE OF INVESTMENT(PAGE 45/PB). THE C LAIM OF THE ASSESSEE THAT THE SAID LAND WAS REDUCED FROM THE BLOCK OF NEXT YE AR I.E. FINANCIAL YEAR 2008- 09 IS AGAIN DEVOID OF MERITS AS FIRSTLY THERE IS NO BLOCK OF ASSET AS CREATED BY THE ASSESSEE IN FINANCIAL YEAR 2007-08 AND SECONDLY THIS PLEA IS TAKEN FOR THE FIRST TIME BEFORE THE TRIBUNAL AND ALSO REMAINED SU BSTANTIATED AS THE ASSESSEE HAS NOT EVEN SUBMITTED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR 2008-09 IN THE PAPER BOOK FILED WITH THE TRIBUNAL. THIRDLY , T HE SAID PLEA LACKS MERIT AS THE CONCEPT OF BLOCK OF ASSET IS FOR THE DEPRECIABL E ASSETS. THE ASSESSEE HAS TAKEN ANOTHER PLEA THAT THE LAND WAS SOLD TO THE SA ME PERSON FROM WHOM THE NEW LAND WAS PURCHASED AND HENCE THE ASSESSEE WAS U NDER A BELIEF THAT THERE IS AN EXCHANGE OF LAND WHICH IS NOT EXIGIBLE TO TAX AGAIN LACKS MERIT BECAUSE OF THE CLEAR DEFINITION OF THE WORD TRANS FER U/S 2(47) OF THE ACT IN RELATION TO THE CAPITAL ASSET WHICH INCLUDE EXCHAN GE OF THE ASSET. THE WORD TRANSFER IN RELATION TO A CAPITAL ASSET IS DEFINED AS UNDER: ITA 6775/MUM/2013 11 DEFINITIONS. 2. IN THIS ACT, UNLESS THE CONTEXT OTHERWISE REQUIRES , **** **** ( 47 ) ['TRANSFER', IN RELATION TO A CAPITAL ASSET, INCLU DES, ( I ) THE SALE, EXCHANGE OR RELINQUISHMENT OF THE ASSET ; OR **** **** THUS, THE EXPLANATION OFFERED BY THE ASSESSEE COULD NOT BE CONSIDERED A BONAFIDE EXPLANATION KEEPING IN VIEW THE CLEAR DEFI NITION OF THE WORD TRANSFER UNDER THE PROVISIONS AND SCHEME OF THE ACT AS CONTA INED IN SECTION 2(47) OF THE ACT WHICH IS EXIGIBLE TO TAX UNDER CHAPTER IV-E OF THE ACT. IN ANY CASE THE ASSESSEE ENTERED INTO TWO DIFFERENT AGREEMENTS FOR SALE AND PURCHASE OF LAND AND ALSO THE CONSIDERATION WERE PAID AND RECEIVED I N MONETARY TERMS AT THE TIME OF PURCHASE AND SALE OF TWO DIFFERENT LANDS A ND IT WAS NOT AN EXCHANGE OF LAND. THE ASSESSEE CLAIMED THAT THE DVO VALUATIO N OF RS. 35.75 LACS WAS SUBSTITUTED BY ACTUAL SALES CONSIDERATION OF RS. 31 .20 LACS , WHEREIN THE DIFFERENCE WAS ADDED TO THE INCOME OWING TO DEEMING FICTION CREATED BY SECTION 50C OF THE ACT. WE ARE IN AGREEMENT WITH T HE ASSESSEE THAT THE DEEMING FICTION OF SECTION 50-C OF THE ACT UNDER WH ICH CAPITAL GAINS ARISING FROM SALE OF LAND OWING TO ADOPTION OF DVO VALUE OF RS. 35.75 LACS INSTEAD OF ACTUAL SALE CONSIDERATION OF RS. 31.20 LACS WILL NO T BE HIT BY SECTION 271(1)(C) OF THE ACT, HENCE NO PENALTY IS EXIGIBLE ON THE DIF FERENCE BETWEEN DVO VALUATION AND ACTUAL CONSIDERATION UNLESS IT IS SHO WN BY THE REVENUE THAT THE ASSESSEE HAS NOT SHOWN THE ACTUAL SALE CONSIDERATIO N CORRECTLY AND ON-MONEY IN EXCESS OF ACTUAL SALES CONSIDERATION WAS RECEIVE D BY THE ASSESSEE WHICH WAS NOT DECLARED TO THE REVENUE IN THE RETURN OF IN COME FILED WITH THE REVENUE RELYING ON THE DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF ITA 6775/MUM/2013 12 CIT V. MADAN THEATRES LIMITED (2014) 44 TAXMANN.COM 382(CAL.)/ (2013) 260 CTR 75(CAL.) AND DECISION OF THE TRIBUNAL IN THE CA SE OF RENU HINGORANI V ACIT IN ITA 2210/MUM/2010 DATED 22-12-2010. HOWEVE R, THE ASSESSEE HAS NOT DISCLOSED THE TRANSACTION OF EARNING OF CAPITAL GAINS ON SALE OF LAND IN THE RETURN OF INCOME ALTHOUGH KNOWING WELL THAT IT IS A N INDUSTRIAL LAND WITHIN POONA MUNICIPALITY , THE CONCEALMENT OF THE PARTICU LARS OF SAME WILL BE HIT BY SECTION 271(1)(C) OF THE ACT, HENCE, THE AUTHORITIE S BELOW HAS RIGHTLY LEVIED THE PENALTY U/ S 271(1)(C) OF THE ACT TO THE EXTENT ON THE TAX SOUGHT TO BE EVADED ON DIFFERENCE BETWEEN ACTUAL SALE CONSIDERATION OF RS. 31.20 LACS AND THE PURCHASE PRICE OF THE LAND OF RS. 22.50 LACS AND TO THAT EXTENT OF DIFFERENCE BETWEEN THE ACTUAL SALE CONSIDERATION AND THE PURCH ASE PRICE , WE CONFIRM AND SUSTAIN THE PENALTY LEVIED BY THE A.O. U/S 271( 1)(C) OF THE ACT ON THE TAX SOUGHT TO BE EVADED BY THE ASSESSEE AS THERE WAS A CONCEALMENT OF PARTICULARS OF INCOME WITH RESPECT TO THE CAPITAL G AINS EARNED BY THE ASSESSEE TO THE EXTENT OF DIFFERENCE BETWEEN THE ACTUAL SALE CONSIDERATION AND THE PURCHASE PRICE AS THE ASSESSEE COULD NOT COME OUT W ITH ANY BONAFIDE EXPLANATION OF NOT DISCLOSING AND DECLARING THE SAI D CAPITAL GAINS ON THE SALE OF INDUSTRIAL LAND WHICH WAS WITHIN POONA MUNICIPAL ITY AND MORE-OVER AS ALSO ADDITIONS MADE BY THE AO IN QUANTUM ASSESSMENT ORDE R U/S 143(3) OF THE ACT WERE NOT CHALLENGED BY THE ASSESSEE. THE CONTENTION OF THE ASSESSEE THAT THE SALE CONSIDERATION WAS NOT RECEIVED BY THE ASSESSEE DURING THE PREVIOUS YEAR RELEVANT TO THE IMPUGNED ASSESSMENT YEAR BUT DURING SUBSEQUENT YEAR CAN ALSO BE NOT ACCEPTED , FIRSTLY BECAUSE THE ASSESSEE HAS SOLD THE SAID LAND VIDE SALE DEED EXECUTED IN THE PREVIOUS YEAR RELEVANT TO THE IMPUGNED ASSESSMENT YEAR AND ALSO EVEN DURING THE SUCCEEDING ASSESSMENT YEAR, THE ASSESSEE DID NOT DECLARE THE SAID CAPITAL GAIN IN THE RETURN OF INCOME FILED WITH THE REVENUE. WHILE ON THE OTHER HAND WE ORDER DELETIO N OF PENALTY LEVIED BY THE AUTHORITIES BELOW ON THE ALLEGATION OF TAX SOUGHT T O BE EVADED BY THE ASSESSEE ON DIFFERENCE BETWEEN FULL VALUE OF CONSIDERATION A S DETERMINED BY DVO OF RS. 35.75 LACS AND THE ACTUAL SALES CONSIDERATION OF RS . 31.20 LACS AS THE SAME ITA 6775/MUM/2013 13 WAS BROUGHT TO TAX OWING TO DEEMING FICTION CREATED BY SECTION 50-C OF THE ACT AND NO EVIDENCE HAS BEEN BROUGHT ON RECORD BY T HE REVENUE THAT ANY ON- MONEY IN EXCESS OF ACTUAL SALE CONSIDERATION OF RS. 31.20 LACS WAS ACTUALLY RECEIVED BY THE ASSESSEE WHICH WAS NOT DECLARED AND DISCLOSED TO THE REVENUE IN THE RETURN OF INCOME FILED WITH THE REVENUE BY T HE ASSESSEE. WE ORDER ACCORDINGLY. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA NO. 6775/MUM/2013 FOR THE ASSESSMENT YEAR 2008-09 IS PA RTLY ALLOWED AS INDICATED ABOVE ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH NOVEMBER, 2016. # $% &' 17-11-2016 ( ) SD/- SD/- (C.N. PRASAD) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 17-11-2016 [ .9../ R.K. R.K. R.K. R.K. , EX. SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. : ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. : / CIT- CONCERNED, MUMBAI 5. =>( 99?@ , ?@ , $ / DR, ITAT, MUMBAI E BENCH 6. (BC D / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI