Gopu Venkateswara Rao, Vijayawada V. THE ITO, Ward - 1(4), Vijayawada

ITA 698/VIZ/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1187 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 02-12-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A NARAYANA RAO
• Keywords: Capital asset; Bonafide belief; Initiation of penalty proceedings; Reasonable cause
• Section: 147; 148

Judgement Text

ITA NO.698/VIZAG/2013 GOPU VENKATESWARA RAO, VIJAYAWADA 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NO.698/VIZAG/2013 ( / ASSESSMENT YEAR: 2008-09) GOPU VENKATESWARA RAO VIJAYAWADA VS. ITO , WARD - 1(4) , VIJAYAWADA [PAN: ACPPG1249L ] ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI C. SUBRAHMANYAM, AR / RESPONDENT BY : SHRI A. NARAYANA RAO, DR / DATE OF HEARING : 11.04.2016 / DATE OF PRONOUNCEMENT : 06.05.2016 / O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF CIT(A), VIJAYAWADA DATED 30.9.2013 AND IT PERTAINS TO THE ASSESSMENT YEAR 2008-09. ITA NO.698/VIZAG/2013 GOPU VENKATESWARA RAO, VIJAYAWADA 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL DERIVING INCOME FROM RETAIL BUSINESS FILED HIS RETU RN OF INCOME FOR THE ASSESSMENT YEAR 2008-09 ON 30.3.2009 DECLARING TOTA L INCOME OF ` 1,53,810/-. DURING THE FINANCIAL YEAR, RELEVANT TO ASSESSMENT YEAR 2008-09, THE ASSESSEE HAS SOLD AN IMMOVABLE PROPERT Y BY WAY OF 4 REGISTERED SALE DEEDS FOR A CONSIDERATION OF ` 2,20,83,000/-. THE SAID SALE DEEDS ARE REGISTERED IN TWO FINANCIAL YEARS, I .E. 3 DOCUMENTS ARE REGISTERED IN THE FINANCIAL YEAR 2007-08 AND 1 DOCU MENT IS REGISTERED IN THE FINANCIAL YEAR 2008-09. THE ASSESSEE HAS OFFER ED LONG TERM CAPITAL GAIN FROM SALE OF PROPERTY FOR THE ASSESSMENT YEAR 2009-10. FROM THE INFORMATION AVAILABLE IN THE INCOME TAX DATA BASE, THE A.O. NOTICED THAT THE ASSESSEE HAS SOLD AN IMMOVABLE PROPERTY DURING THE FINANCIAL YEAR 2007-08, BUT THE RESULTANT CAPITAL GAIN HAS NOT BEE N OFFERED FOR TAX. THEREFORE, ISSUED A NOTICE U/S 148 OF THE INCOME TA X ACT, 1961 (HEREINAFTER CALLED AS 'THE ACT') TO REOPEN THE ASS ESSMENT U/S 147 OF THE ACT. SUBSEQUENTLY, THE CASE HAS BEEN CONVERTED INT O SCRUTINY ASSESSMENT AND ACCORDINGLY, NOTICE U/S 143(2) OF TH E ACT, DATED 29.8.2011 WAS ISSUED. IN RESPONSE TO THE NOTICE U/ S 143(2) OF THE ACT, THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE APPEA RED FROM TIME TO TIME AND FURNISHED THE INFORMATION CALLED FOR. DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. ISSUED A SHOW CAUS E NOTICE AND ASKED ITA NO.698/VIZAG/2013 GOPU VENKATESWARA RAO, VIJAYAWADA 3 TO EXPLAIN WHY THE CAPITAL GAIN ON TRANSFER OF IMMO VABLE PROPERTY SHOULD NOT BE LEVIED FOR THE ASSESSMENT YEAR 2008-09. IN RESPONSE TO THE SHOW CAUSE NOTICE, THE ASSESSEE SUBMITTED THAT HE HAD SO LD THE IMMOVABLE PROPERTY AND AS PER THE REQUIREMENT OF THE BUYER RE GISTERED THE PROPERTY BY WAY OF 4 REGISTERED DOCUMENTS. THE ASSE SSEE FURTHER SUBMITTED THAT 3 DOCUMENTS WERE REGISTERED IN THE F INANCIAL YEAR 2007- 08 AND ONE DOCUMENT WAS REGISTERED IN THE FINANCIAL YEAR 2008-09. THOUGH THE PROPERTIES ARE REGISTERED IN THE FINANCI AL YEAR 2007-08, THE POSSESSION OF THE PROPERTY HAS BEEN HANDED OVER TO THE BUYER AFTER EXECUTING THE FINAL SALE DEED, WHICH WAS DONE IN TH E FINANCIAL YEAR 2008- 09. SINCE THE TRANSFER TOOK PLACE IN THE FINANCIAL YEAR 2008-09, THE RESULTANT CAPITAL GAIN HAS BEEN OFFERED TO TAX FOR THE ASSESSMENT YEAR 2009-10. THE A.O. AFTER CONSIDERING THE EXPLANATIO NS OF THE ASSESSEE HELD THAT AS PER SALE DEED THE POSSESSION OF THE PR OPERTY HAS BEEN HANDED OVER TO THE BUYER AS ON THE DATE OF SALE. T HEREFORE, THE TRANSFER AS DEFINED UNDER SEC. 2(47)(V) HAD BEEN TAKEN PLACE DURING THE FINANCIAL YEAR 2007-08 AND ACCORDINGLY COMPUTED THE CAPITAL G AIN FOR THE ASSESSMENT YEAR 2008-09 FOR WHICH THE ASSESSEE HAS AGREED. 3. THEREAFTER, THE ASSESSING OFFICER ISSUED A SHOW CAUSE NOTICE U/S 271(1)(C) R.W.S. 274 OF THE ACT AND PROPOSED TO LEV Y PENALTY U/S ITA NO.698/VIZAG/2013 GOPU VENKATESWARA RAO, VIJAYAWADA 4 271(1)(C) OF THE ACT FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. IN RE SPONSE TO SHOW CAUSE NOTICE, THE ASSESSEE SUBMITTED THAT HE HAD NEITHER CONCEALED THE PARTICULARS OF INCOME NOR FURNISHED INACCURATE PART ICULARS OF INCOME, THEREFORE, THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT IS NOT CORRECT. THE ASSESSEE FURTHER SUBMITTED THAT HE HAD DECLARED THE CAPITAL GAIN FOR THE ASSESSMENT YEAR 2009-10 WHEN FINAL SALE DEED IS EXECUTED AND ALSO POSSESSION OF THE PROPERTY HAS BEEN HANDED OVER TO THE BUYER, WHICH WAS HAPPENED DURING THE FINANCIAL YEAR 2008-09. THE REFORE, THE A.O. WAS NOT CORRECT IN COMING TO THE CONCLUSION THAT TH E ASSESSEE HAS WILLFULLY CONCEALED THE PARTICULARS OF INCOME FOR T HE ASSESSMENT YEAR 2008-09. IT WAS FURTHER SUBMITTED THAT THE IMPUGNED PROPERTY IS A SINGLE PROPERTY, WHICH WAS CONVEYED BY WAY OF 4 SALE DEEDS FOR THE CONVENIENCE OF THE BUYER. THE BUYER INSISTED THAT THE PROPERTY TO BE CONVEYED BY WAY OF 4 SALE DEEDS, ACCORDINGLY, SEPAR ATE SALE DEEDS HAVE BEEN EXECUTED, HOWEVER, THE POSSESSION OF THE PROPE RTY HAS BEEN HANDED OVER AFTER EXECUTION OF FINAL SALE DEED. TH E ASSESSEE FURTHER SUBMITTED THAT THE BUILDING WAS UNDER THE OCCUPATIO N OF TENANT AND THE TENANT HAS VACATED THE BUILDING DURING THE FINANCIA L YEAR 2008-09. THE RESULTANT RENTAL INCOME HAS BEEN OFFERED TO TAX FOR THE ASSESSMENT YEAR 2009-10. THEREFORE, HE HAD RIGHTLY COMPUTED THE CAP ITAL GAIN FOR THE ITA NO.698/VIZAG/2013 GOPU VENKATESWARA RAO, VIJAYAWADA 5 ASSESSMENT YEAR 2009-10. THOUGH CAPITAL GAIN TAX IS LIABLE FOR THE A.Y. 2009-10, HE HAD ACCEPTED THE PROPOSAL OF THE A.O. T O TAX THE CAPITAL GAIN FOR THE ASSESSMENT YEAR 2008-09 IN RESPECT OF 3 SALE DEEDS, TO COOPERATE WITH THE DEPARTMENT AND ALSO FOR SMOOTH C OMPLETION OF ASSESSMENT PROCEEDINGS. THEREFORE, THE A.O. WAS NO T CORRECT IN COMING TO THE CONCLUSION THAT THERE IS A CONCEALMENT OF PA RTICULARS OF INCOME WHICH ATTRACTS THE PENALTY U/S 271(1)(C) OF THE ACT . THE A.O. AFTER CONSIDERING THE EXPLANATIONS FURNISHED BY THE ASSES SEE HELD THAT THE ASSESSEE HAS SOLD THE PROPERTY DURING THE FINANCIAL YEAR 2007-08 AND COMPUTED THE CAPITAL GAIN FOR THE ASSESSMENT YEAR 2 009-10 FOR WHICH NO SATISFACTORY EXPLANATIONS HAS BEEN OFFERED. THE A.O . FURTHER HELD THAT THE ASSESSEE HAS RECEIVED THE ENTIRE SALE CONSIDERA TION TOWARDS 3 SALE DEEDS WHICH WAS EXECUTED IN THE FINANCIAL YEAR 2007 -08 AND THE POSSESSION OF THE PROPERTY HAS BEEN HANDED OVER TO THE BUYER AS ON THE DATE OF REGISTRATION OF SALE DEED. THEREFORE, THE ASSESSEE CONTENTION THAT THE POSSESSION OF THE PROPERTY HAS BEEN HANDED OVER TO THE BUYER AFTER EXECUTION OF FINAL SALE DEED WHICH IS EXECUTE D IN THE ASSESSMENT YEAR 2009-10 IS NOT TENABLE IN LAW. THE A.O. HELD T HAT THE ASSESSEE HAS WILLFULLY CONCEALED THE PARTICULARS OF INCOME AND H ENCE, IT IS A FIT CASE FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. WITH THES E OBSERVATIONS, LEVIED MINIMUM PENALTY OF ` 10,73,674/- U/S 271(1)(C) OF THE ACT. ITA NO.698/VIZAG/2013 GOPU VENKATESWARA RAO, VIJAYAWADA 6 4. AGGRIEVED BY THE PENALTY ORDER, THE ASSESSEE PRE FERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE ASSESSEE SUBMITTED THAT THE A.O. WAS NOT CORRECT IN LEVY OF PENALTY U/S 271(1)( C) OF THE ACT, AS HE HAD NEITHER CONCEALED THE PARTICULARS OF INCOME NOR FURNISHED INACCURATE PARTICULARS OF INCOME. THE ASSESSEE FURTHER SUBMIT TED THAT THERE IS NO DELIBERATE CONCEALMENT OF INCOME FOR THE ASSESSMENT YEAR. HE HAD VOLUNTARILY DECLARED THE RESULTANT CAPITAL GAIN ON TRANSFER OF IMMOVABLE PROPERTY DURING THE FINANCIAL YEAR 2008-09, WHICH W AS FILED BEFORE ISSUE OF NOTICE U/S 148 OF THE ACT. IT WAS FURTHER SUBMIT TED THAT THOUGH THE SALE DEEDS ARE REGISTERED IN THE FINANCIAL YEAR 200 7-08, THE FINAL SALE DEED HAS BEEN EXECUTED IN THE FINANCIAL YEAR 2008-0 9 AND THE POSSESSION OF THE PROPERTY HAS BEEN HANDED OVER IN THE FINANCIAL YEAR 2008-09. ACCORDINGLY, AS PER THE DEFINITION OF TRA NSFER U/S 2(47)(V) OF THE ACT, THE TRANSFER TOOK PLACE ONLY WHEN THE POSS ESSION OF THE PROPERTY IS HANDED OVER TO THE BUYER. THE CIT(A) A FTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE HELD THAT THE ASSESSEE HAS NOT OFFERED ANY REASONS FOR NOT OFFERING THE CAPITAL GAIN IN RESPEC T OF 3 SALE DEEDS FOR THE ASSESSMENT YEAR 2008-09. THE ASSESSEE STATED T HAT HE HAS AGREED FOR THE ADDITIONS PROPOSED BY THE A.O. FOR ASSESSME NT YEAR 2008-09 TO BUY PEACE AND ALSO TO COOPERATE WITH THE DEPARTMENT TO AVOID LITIGATION. THE CIT(A) HELD THAT THE ASSESSEE HAS FAILED TO OFF ER ANY BONAFIDE ITA NO.698/VIZAG/2013 GOPU VENKATESWARA RAO, VIJAYAWADA 7 REASONS FOR NOT OFFERING THE CAPITAL GAINS. THEREF ORE, HELD THAT THE A.O. HAS RIGHTLY LEVIED PENALTY U/S 271(1)(C) OF THE ACT , ACCORDINGLY UPHELD THE PENALTY. AGGRIEVED BY THE CIT(A) ORDER, THE AS SESSEE IS IN APPEAL BEFORE US AND RAISED THE FOLLOWING GROUNDS: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS CONTRARY TO THE FACTS AND ALSO THE LAW APPLICABLE T O FACTS IN THE CASE OF THE APPELLANT. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN CONFIRMING THE PENALTY OF RS.10,73,674 /- LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE INCOME TAX A CT, 1961. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OU GHT TO HAVE APPRECIATED THAT THERE WAS NEITHER CONCEALMENT OF P ARTICULARS OF INCOME NOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OU GHT TO HAVE APPRECIATED THAT THE APPELLANT WAS UNDER THE BONA-F IDE BELIEF THAT THE CAPITAL GAIN IS CHARGEABLE TO TAX IN THE A.Y.20 09-10 AND FURTHER THAT THE REVENUE HAS TAXED THE RENTAL INCOM E BY TREATING THE APPELLANT AS THE OWNER OF THE PROPERTY TILL A.Y .2009-10 WHEN THE POSSESSION WAS ACTUALLY HANDED OVER TO THE BUYE R. 5. THE LEARNED COMMISSIONER OF INCOME OF INCOME TAX (A PPEALS) OUGHT TO HAVE APPRECIATED THAT THERE WAS NO SATISFA CTION ON THE PART OF THE ASSESSING OFFICER FOR ISSUE OF NOTICE U /S 271(1)(C) OF THE ACT. 6. ANY OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF APPEAL HEARING 5. FROM THESE GROUNDS OF APPEAL, THE ASSESSEE HAS C HALLENGED THE CIT(A) ORDER CONFIRMING THE LEVY OF PENALTY U/S 271 (1)(C) OF THE ACT. THE ASSESSEE ALSO FILED AN ADDITIONAL GROUND BY WAY OF MEMORANDUM OF PETITION FOR ADDITIONAL GROUNDS AND CHALLENGED THE LEGALITY OF THE PENALTY PROCEEDINGS. THE LD. A.R. SUBMITTED THAT THE PENALT Y IMPOSED U/S 271(1)(C) OF THE ACT IS LEGALLY UNSUSTAINABLE, AS T HE A.O. HAS NOT ITA NO.698/VIZAG/2013 GOPU VENKATESWARA RAO, VIJAYAWADA 8 RECORDED HIS SATISFACTION WHETHER THE PENALTY IS LE VIED FOR CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF I NCOME. THE A.R. FURTHER SUBMITTED THAT THE A.O. HAS NOT SPECIFIED I N THE NOTICE WHETHER PENALTY PROPOSED TO BE IMPOSED IS FOR CONCEALMENT O F INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. IT IS SUBMITTED THAT IT IS MANDATORY THAT THE A.O. SHOULD BE SPECIFIC AS TO WH ICH OF THE INGREDIENT IS LACKING TO IMPOSE THE PENALTY U/S 271(1)(C) OF T HE ACT. IN SUPPORT OF HIS ARGUMENTS, RELIED UPON THE JUDGEMENT OF HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF CIT VS. MANJUNATHA COTTON & GINNING FACTORY 359 ITR 565. HE ALSO RELIED UPON THE DECISION OF I TAT, VISAKHAPATNAM BENCH IN THE CASE OF B. REVATHI VS. DCIT IN ITA NO. 599/VIZAG/2014. ON THE OTHER HAND, THE LD. D.R. STRONGLY SUPPORTED THE ORDERS OF THE CIT(A). 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MA TERIALS AVAILABLE ON RECORD. THE ASSESSEE CHALLENGED THE L EGALITY OF PENALTY PROCEEDINGS BY STATING THAT THE A.O. HAS NOT RECORD ED HIS SATISFACTION WHETHER THE IMPUGNED PENALTY IS LEVIED FOR CONCEALM ENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCO ME. IT WAS FURTHER CONTENDED THAT BEFORE LEVY OF PENALTY, IT IS MANDAT ORY ON THE PART OF THE A.O., TO ARRIVE AT A SATISFACTION THAT WHETHER THE PENALTY IS FOR ITA NO.698/VIZAG/2013 GOPU VENKATESWARA RAO, VIJAYAWADA 9 CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME. WE DO NOT SEE ANY MERITS IN THE ARGUMENTS OF THE ASS ESSEE FOR THE REASON THAT THE A.O. HAS ISSUED A SHOW CAUSE NOTICE AND PROPOSED TO LEVY PENALTY FOR CONCEALMENT OF PARTICULARS OF INCO ME AND FURNISHING INACCURATE PARTICULARS OF INCOME. THEREFORE, WE AR E OF THE VIEW THAT THE A.O. HAS ARRIVED AT PROPER SATISFACTION BEFORE INIT IATION OF PENALTY PROCEEDINGS AND ACCORDINGLY, THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IS REJECTED. ACCORDINGLY, WE DISMISS THE A DDITIONAL GROUND RAISED BY THE ASSESSEE. 7. THE NEXT ISSUE CAME UP FOR OUR CONSIDERATION IS LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. THE A.O. LEVIED THE PENALTY FOR THE REASONS THAT THE ASSESSEE HAS WILLFULLY CONCEALED THE PARTICULAR S OF INCOME AND ALSO FURNISHED INACCURATE PARTICULARS OF INCOME. THEREF ORE, OPINED THAT IT IS A FIT CASE FOR LEVY OF PENALTY U/S 271(1)(C) OF THE A CT. THE LD. A.R. SUBMITTED THAT THE A.O. WAS NOT CORRECT IN COMING T O THE CONCLUSION THAT THE ASSESSEE HAS WILFILLY CONCEALED THE PARTICULARS OF INCOME AND ALSO FURNISHED INACCURATE PARTICULARS OF INCOME. IT IS F URTHER SUBMITTED THAT THERE IS NO WILLFUL CONCEALMENT OF INCOME, AS THE A SSESSEE HAS DECLARED THE CAPITAL GAIN ON TRANSFER OF IMMOVABLE PROPERTY FOR THE ASSESSMENT YEAR 2009-10 AND ALSO PAID THE RESULTANT TAX. IT I S FURTHER SUBMITTED ITA NO.698/VIZAG/2013 GOPU VENKATESWARA RAO, VIJAYAWADA 10 THAT THE ASSESSEE HAS AGREED THE PROPOSAL OF TAXING THE LONG TERM CAPITAL GAIN FOR THE ASSESSMENT YEAR 2008-09 TO BUY PEACE AND ALSO TO COOPERATE WITH THE DEPARTMENT FOR SMOOTH COMPLETION OF THE ASSESSMENT PROCEEDINGS. THEREFORE, THE A.O. WAS NOT CORRECT IN COMING TO THE CONCLUSION THAT THE ASSESSEE HAS CONCEALED T HE PARTICULARS OF INCOME WHICH WARRANTS THE LEVY OF PENALTY U/S 271(1 )(C) OF THE ACT. 8. THE LD. A.R. FURTHER SUBMITTED THAT THE FACTS WH ICH LEADS TO IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT ARE THAT THE ASSESSEE HAS SOLD THE PROPERTY AND EXECUTED FOUR SEPARATE SALE D EEDS AS PER THE REQUIREMENT OF THE BUYER. THE SALE DEEDS ARE REGIST ERED IN TWO YEARS, I.E. 3 SALE DEEDS ARE EXECUTED IN THE FINANCIAL YEA R 2007-08 AND ONE SALE DEED HAS BEEN REGISTERED IN THE FINANCIAL YEAR 2008 -09. THE ASSESSEE CLAIMED THAT PHYSICAL POSSESSION OF THE PROPERTY HA S BEEN HANDED OVER TO THE BUYER OF THE PROPERTY DURING THE ASSESSMENT YEAR 2009-10. IT IS FURTHER ARGUED THAT WHEN THE FINAL SALE DEED HAS BE EN EXECUTED IN THE FINANCIAL YEAR 2008-09 AND PHYSICAL POSSESSION OF T HE PROPERTY HAS BEEN HANDED OVER DURING THE ASSESSMENT YEAR 2009-10, THE ASSESSEE HAS RIGHTLY COMPUTED THE CAPITAL GAIN IN THE ASSESSMENT YEAR 2009-10. THE FACT THAT THE ASSESSEE HAS AGREED FOR CAPITAL GAINS TO BE ASSESSED FOR THE ASSESSMENT YEAR 2008-09 FOR THE REASONS THAT IT IS IMMATERIAL AS TO THE ITA NO.698/VIZAG/2013 GOPU VENKATESWARA RAO, VIJAYAWADA 11 YEAR OF ASSESSMENT BECAUSE THE CAPITAL GAIN HAS TO SUFFER TAX AND THE PERCENTAGE OF TAX ALSO SAME. THE ASSESSEE HAS AGREE D FOR THE PROPOSAL TO BUY PEACE AND TO COOPERATE WITH THE DEPARTMENT, THEREFORE, IT CANNOT BE HELD THAT IT IS A WILLFUL CONCEALMENT WHICH ATTR ACTS PENALTY U/S 271(1)(C) OF THE ACT. ON THE OTHER HAND, THE LD. D. R. STRONGLY SUPPORTED THE ORDER OF CIT(A). 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MA TERIALS AVAILABLE ON RECORD. THE FACTUAL MATRIX OF THE CAS E IS THAT THE ASSESSEE HAS SOLD AN IMMOVABLE PROPERTY CONSISTING OF LAND A ND BUILDING AND EXECUTED FOUR SEPARATE SALE DEEDS. OUT OF THE 4 SAL E DEEDS, 3 SALE DEEDS HAVE BEEN EXECUTED IN THE FINANCIAL YEAR 2007-08 AN D THE REMAINING ONE SALE DEED HAS BEEN EXECUTED IN THE FINANCIAL YEAR 2 008-09. ACCORDING TO THE ASSESSEE, THE POSSESSION OF THE PROPERTY HAS BE EN HANDED OVER IN THE FINANCIAL YEAR 2008-09 AFTER EXECUTION OF FINAL SALE DEED, THEREFORE, THE TRANSFER AS DEFINED U/S 2(47)(V) OF THE ACT TOO K PLACE IN THE FINANCIAL YEAR 2008-09. THE ASSESSEE FURTHER CONTENDED THAT T HE BUILDING WAS UNDER THE OCCUPATION OF TENANT AND TENANT HAS VACAT ED THE BUILDING DURING THE FINANCIAL YEAR 2008-09. UNLESS THE BUILD ING IS VACANT, HE CANNOT HAND OVER THE PHYSICAL POSSESSION OF THE PRO PERTY TO THE BUYER. THEREFORE, HE HAS EXECUTED A FINAL SALE DEED DURING THE FINANCIAL YEAR ITA NO.698/VIZAG/2013 GOPU VENKATESWARA RAO, VIJAYAWADA 12 2008-09 AND HANDED OVER THE PHYSICAL POSSESSION OF THE PROPERTY. IT IS FURTHER SUBMITTED THAT THE ASSESSEE HAS COMPUTED TH E LONG TERM CAPITAL GAIN AND FILED RETURN FOR THE ASSESSMENT YEAR 2009- 10 AND OFFERED THE CAPITAL GAIN FOR TAX. THEREFORE, THE A.O. WAS NOT CORRECT IN COMING TO THE CONCLUSION THAT THE ASSESSEE HAS NOT DISCLOSED THE CAPITAL GAIN FOR THE ASSESSMENT YEAR 2008-09. 10. THE A.O. LEVIED THE PENALTY U/S 271(1)(C) OF TH E ACT ON THE GROUND THAT THE ASSESSEE WITH A MALAFIDE INTENTION WILLFUL LY CONCEALED THE PARTICULARS OF INCOME WHICH IS EVIDENT FROM THE FAC T THAT HE DID NOT DISPUTE THE CAPITAL GAIN TAX FOR THE ASSESSMENT YEA R 2008-09. THE A.O. WAS OF THE OPINION THAT ALTHOUGH THE ASSESSEE HAS R ECEIVED CONSIDERATION IN RESPECT OF 3 SALE DEEDS AND HANDED OVER THE POSSESSION OF THE PROPERTY TO THE BUYER, HE HAS NOT OFFERED TH E CAPITAL GAIN FOR TAX. THOUGH HE IS LIABLE TO PAY TAX FOR THE A.Y. 2008-09 , HE HAD NOT PAID ANY TAXES AND ONLY WHEN THE DEPARTMENT HAS POINTED OUT THE CONCEALMENT, THE ASSESSEE HAS ACCEPTED THE FAULT AND AGREED THE CAPITAL GAIN TO BE TAXED FOR THE ASSESSMENT YEAR 2008-09. THEREFORE, I T IS A CLEAR CONCEALMENT OF PARTICULARS OF INCOME WHICH ATTRACTS THE PENALTY U/S 271(1)(C) OF THE ACT. IT IS THE CONTENTION OF THE A SSESSEE THAT THERE IS NO WILLFUL CONCEALMENT OF PARTICULARS OF INCOME, AS HE HAD DISCLOSED THE ITA NO.698/VIZAG/2013 GOPU VENKATESWARA RAO, VIJAYAWADA 13 CAPITAL GAIN ON TOTAL CONSIDERATION RECEIVED TOWARD S TRANSFER OF IMMOVABLE PROPERTY FOR THE ASSESSMENT YEAR 2009-10. THE ASSESSEE FURTHER CONTENDED THAT HE HAD FILED THE RETURN OF I NCOME FOR THE ASSESSMENT YEAR 2009-10 U/S 139(1) OF THE ACT BEFOR E THE DEPARTMENT HAS REOPENED THE ASSESSMENT FOR THE ASSESSMENT YEAR 2008-09. THE FACT REMAINS THAT WHETHER THE ASSESSMENT FOR THE ASSESSM ENT YEAR 2008-09 ARE REOPENED OR NOT, THE PARTICULARS OF SALE OF PRO PERTY AND COMPUTATION OF CAPITAL GAIN HAS BEEN FILED WITH THE DEPARTMENT ALONG WITH RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR 2009-10. THER EFORE, THE A.O. WAS NOT CORRECT IN COMING TO THE CONCLUSION THAT THE AS SESSEE HAS WILFILLY CONCEALED THE PARTICULARS OF INCOME WHICH ATTRACTS THE PENALTY U/S 271(1)(C) OF THE ACT. 11. THE ONLY ISSUE WHICH ARISES FOR OUR CONSIDERATI ON IS WHETHER THERE IS CONCEALMENT OF INCOME WHICH ATTRACTS PENALTY UND ER SEC. 271(1)( C) OF THE ACT. BEFORE, WE GO INTO THE MERITS OF THIS CAS E, LET US UNDERSTAND THE POSITION OF LAW AS ENUMERATED U/S 271(1)(C) OF THE ACT. SECTION 271(1)(C) OF THE ACT PROVIDES FOR LEVY OF PENALTY, IN A CASE WHERE THE A.O. OR CIT(A) IS SATISFIED THAT THE PERSON HAS CON CEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS O F SUCH INCOME, SUCH PERSON MAY BE DIRECTED TO PAY PENALTY OF A SUM EQUA L TO NOT LESS THAN ITA NO.698/VIZAG/2013 GOPU VENKATESWARA RAO, VIJAYAWADA 14 100% AND NOT MORE THAN 300% OF TAX SOUGHT TO BE EVA DED. THE CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME SHOULD BE REFERRED TO RETURN OF INCOME FILED BY THE ASSESSEE, BOOKS OF ACCOUNTS AND OTHER DOCUMENTS AVAILABLE WIT H THE AUTHORITIES AT THE TIME OF PROCEEDINGS UNDER THIS ACT. IN THE PRE SENT CASE ON HAND, ADMITTEDLY, THE ASSESSEE HAS NOT DISCLOSED THE CAPI TAL GAIN IN RESPECT OF 3 SALE DEEDS, THOUGH THE SALE DEEDS ARE COMING WITH IN THE FINANCIAL YEAR 2007-08. BUT, HE HAD DECLARED THE CAPITAL GAIN IN RESPECT OF ALL THE 4 SALE DEEDS FOR THE ASSESSMENT YEAR 2009-10 AND PAID THE CAPITAL GAIN TAX AS PER LAW. IT IS THE CONTENTION OF THE ASSESS EE THAT THE CAPITAL GAIN IS LIABLE FOR THE ASSESSMENT YEAR 2009-10, AS THE T RANSFER AS DEFINED U/S 2(47)(V) OF THE ACT TOOK PLACE DURING THE ASSESSMEN T YEAR 2009-10. WE FIND FORCE IN THE ARGUMENTS OF THE ASSESSEE FOR THE REASON THAT THE ASSESSEE HAS DISCLOSED THE CAPITAL GAIN AND FILED T HE RETURN FOR THE ASSESSMENT YEAR 2009-10 ON 13.9.2010 AND DISCLOSED THE CAPITAL GAIN TOWARDS TRANSFER OF PROPERTY. THE ASSESSEE HAS DIS CLOSED THE CAPITAL GAIN AND PAID THE TAXES FOR THE ASSESSMENT YEAR 200 9-10, BEFORE THE CASE WAS REOPENED FOR THE A.Y. 2008-09. THEREFORE, WE ARE OF THE VIEW THAT THE A.O. WAS NOT CORRECT IN COMING TO THE CONC LUSION THAT THE ASSESSEE WOULD NOT HAVE DISCLOSED THE CAPITAL GAIN FOR THE ASSESSMENT ITA NO.698/VIZAG/2013 GOPU VENKATESWARA RAO, VIJAYAWADA 15 YEAR 2008-09, IF THE DEPARTMENT HAS NOT REOPENED TH E ASSESSMENT FOR THE ASSESSMENT YEAR 2008-09. 12. THE ASSESSEE HAS DISCLOSED THE CAPITAL GAIN BEF ORE THE DEPARTMENT HAS REOPENED THE ASSESSMENT U/S 147 OF THE ACT FOR THE ASSESSMENT YEAR 2008-09. THE ONLY DIFFERENCE IS THAT WHETHER T HE PARTICULAR CAPITAL GAIN IS TAXABLE FOR THE ASSESSMENT YEAR 2008-09 OR 2009-10. IT IS THE CONTENTION OF THE ASSESSEE THAT HE WAS UNDER THE BO NAFIDE BELIEF THAT THE CAPITAL GAIN IS LIABLE ONLY WHEN THE FINAL SALE DEED IS EXECUTED AND ALSO THE POSSESSION OF THE PROPERTY HAS BEEN HANDED OVER TO THE BUYER. IN SUPPORT OF HIS ARGUMENTS HE HAD FILED THE DETAIL S SHOWING THAT HE HAD HANDED OVER THE POSSESSION OF THE PROPERTY DURING T HE FINANCIAL YEAR 2008-09. IT IS FURTHER SUBMITTED THAT THE PROPERTY IS UNDER OCCUPATION OF TENANT. THE TENANT HAS PAID THE RENT UP TO JUNE, 2 008. THE RENT HAS BEEN OFFERED TO TAX FOR THE ASSESSMENT YEAR 2009-10 . THEREFORE, WE ARE OF THE VIEW THAT THE ASSESSEE HAS HANDED OVER THE P OSSESSION OF THE PROPERTY TO THE BUYER AFTER EXECUTION OF FINAL SALE DEED WHICH WAS EXECUTED DURING THE FINANCIAL YEAR 2008-09. THEREF ORE, THERE IS A MERIT IN THE CONTENTION OF THE ASSESSEE THAT HE IS UNDER BONAFIDE BELIEF THAT HE IS LIABLE TO PAY CAPITAL GAIN TAX FOR THE ASSESSMEN T 2008-09. IT IS NOT A CASE OF A.O. THAT THE ASSESSEE NEVER DISCLOSED THE CAPITAL GAIN TAX IN THE ITA NO.698/VIZAG/2013 GOPU VENKATESWARA RAO, VIJAYAWADA 16 REGULAR RETURNS FILED FOR THE ASSESSMENT YEAR 2009- 10. THE ASSESSEE HAS VOLUNTARILY FILED THE RETURN OF INCOME AND DISCLOSE D THE CAPITAL GAIN FOR THE ASSESSMENT YEAR 2009-10. UNDER THESE CIRCUMSTA NCES, WE ARE OF THE VIEW THAT THE A.O. WAS INCORRECT IN COMING TO T HE CONCLUSION THAT THE ASSESSEE HAS WILLFULLY CONCEALED THE PARTICULARS OF INCOME, WHICH ATTRACTS PENALTY U/S 271(1)(C) OF THE ACT. 13. THE QUESTION WHETHER THERE WAS A REASONABLE CAU SE FOR WHICH THE REQUIREMENT OF CONCERNED PROVISIONS OF SECTION COUL D NOT BE COMPLIED WITH IS PRIMARILY A ESSENTIAL QUESTION OF FACT AND IT HAS TO BE DECIDED IN EACH CASE ON CONSIDERATION OF MATERIAL PLACED BEFOR E THE CONCERNED AUTHORITY. THE LEVY OF PENALTY U/S 271(1)(C) OF TH E ACT IS NOT AUTOMATIC. BEFORE LEVY OF PENALTY, THE CONCERNED OFFICER IS RE QUIRED TO FIND OUT THAT ANY VIOLATION REFERRED TO IN THE SAID PROVISIONS IS WITHOUT A REASONABLE CAUSE. THE INITIAL BURDEN IS ON THE ASSESSEE TO SHO W THAT THERE EXISTS A REASONABLE CAUSE WHICH WAS THE REASON FOR THE FAILU RE REFERRED TO IN THE CONCERNED PROVISIONS OF THE ACT. THEREFORE, THE AS SESSING OFFICER DEALING WITH THE MATTER IS TO CONSIDER WHETHER THE EXPLANAT IONS OFFERED BY THE ASSESSEE OR THE PERSON AS THE CASE MAY BE IS REASON ABLE AND AS REGARDS THE REASON WAS ON ACCOUNT OF REASONABLE CAUSE. IN T HE PRESENT CASE ON HAND, ON PERUSAL OF THE AVAILABLE RECORDS, WE FIND THAT THE ASSESSEE HAS ITA NO.698/VIZAG/2013 GOPU VENKATESWARA RAO, VIJAYAWADA 17 VOLUNTARILY DISCLOSED THE CAPITAL GAINS FOR THE ASS ESSMENT YEAR 2009-10 ON TRANSFER OF IMMOVABLE PROPERTY. WHETHER THE PART ICULAR CAPITAL GAIN IS TAXABLE FOR THE ASSESSMENT YEAR 2008-09 OR 2009- 10 IS A FINDING OF FACT WHICH NEEDS TO BE EXAMINED WITH REFERENCE TO T HE FACTS AVAILABLE ON RECORD. THE ASSESSEE PROVED THAT HE HAD HANDED OVE R THE POSSESSION OF THE PROPERTY IN THE FINANCIAL YEAR 2009-10. IT IS A LSO UNDISPUTED FACT THAT HE HAD DISCLOSED THE CAPITAL GAIN FOR THE A.Y. 2009 -10. PENALTY U/S 271(1)(C) OF THE ACT COULD BE IMPOSED WHEN ALL THE NECESSARY FACTS WERE NOT DISCLOSED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER. WE FURTHER NOTICED THAT WHEN THE FACTS WAS BROUGHT TO THE NOTI CE OF THE ASSESSEE, THE ASSESSEE HAS ACCEPTED THE PROPOSAL MOOTED BY TH E A.O. AND OFFERED THE CAPITAL GAIN IN RESPECT OF 3 SALE DEEDS FOR THE ASSESSMENT YEAR 2008- 09. THEREFORE, THE A.O. WAS NOT CORRECT IN COMING TO THE CONCLUSION THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOM E FOR THE ASSESSMENT YEAR 2008-09. 14. IT IS PERTINENT TO DISCUSS HERE THE CASE LAW RE LIED UPON BY THE ASSESSEE. THE ASSESSEE RELIED UPON THE JUDGEMENT OF HONBLE SUPREME COURT OF INDIA IN THE CASE OF CIT VS. RELIA NCE PETRO PRODUCTS PVT. LTD. (2010) 322 ITR 158. THE HONBLE SUPREME COURT, WHILE DELETING THE PENALTY U/S 271(1)(C) OF THE ACT HELD THAT MERE ITA NO.698/VIZAG/2013 GOPU VENKATESWARA RAO, VIJAYAWADA 18 MAKING A CLAIM WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS OF INCO ME. THE RELEVANT PORTION IS REPRODUCED HEREUNDER: A GLANCE AT THE PROVISION OF S. 271(1)(C) WOULD SU GGEST THAT IN ORDER TO BE COVERED, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUS T HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. PRESENT IS N OT THE CASE OF CONCEALMENT OF THE INCOME. THAT IS NOT THE CASE OF THE REVENUE EITHER. AS PER LAW LEXICON, THE MEANING OF THE WORD PARTIC ULAR IS A DETAIL OR DETAILS (IN PLURAL SENSE); THE DETAILS OF A CLAIM, OR THE SEPARATE ITEMS OF AN ACCOUNT. THEREFORE, THE WORD PARTICULARS USED IN THE S. 271(1)(C) WOULD EMBRACE THE MEANING OF THE DETAILS OF THE CLAIM MAD E. IT IS AN ADMITTED POSITION IN THE PRESENT CASE THAT NO INFORMATION GI VEN IN THE RETURN WAS FOUND TO BE INCORRECT OR INACCURATE. IT IS NOT AS I F ANY STATEMENT MADE OR ANY DETAIL SUPPLIED WAS FOUND TO BE FACTUALLY INCOR RECT. HENCE, AT LEAST, PRIMA FACIE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. THE WORDS ARE PLAIN AND SIMPLE. IN OR DER TO EXPOSE THE ASSESSEE TO THE PENALTY UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY ANY STRETCH OF IMAGINATION, MAKING AN INCORRECT CLAIM IN LAW CANNO T TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. THEREFORE, IT I S OBVIOUS THAT IT MUST BE SHOWN THAT THE CONDITIONS UNDER S. 271(1)(C) MUST E XIST BEFORE THE PENALTY IS IMPOSED. THERE CAN BE NO DISPUTE THAT E VERYTHING WOULD DEPEND UPON THE RETURN FILED BECAUSE THAT IS THE ON LY DOCUMENT, WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INC OME CIT VS. ATUL MOHAN BINDAL (2009) 225 CTR (SC) 248 : (2009) 28 DT R (SC) 1 : (2009) 9 SCC 589 FOLLOWED. READING THE WORDS 'INACCURATE' AND 'PARTICULARS' IN CONJUNCTION, THEY MUST MEAN THE DETAILS SUPPLIED IN THE RETURN, WHICH ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TRUTH OR ERR ONEOUS. IN THIS CASE, THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY TH E ASSESSEE IN ITS RETURN WERE FOUND TO BE INCORRECT OR ERRONEOUS OR F ALSE. SUCH NOT BEING THE CASE, THERE WOULD BE NO QUESTION OF INVITING TH E PENALTY UNDER S. 271(1)(C). A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING INCOME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETU RN CANNOT AMOUNT TO THE INACCURATE PARTICULARS. THE ASSESSEE HAD FU RNISHED ALL THE DETAILS OF ITS EXPENDITURE AS WELL AS INCOME IN ITS RETURN, WHICH DETAILS, IN THEMSELVES, WERE NOT FOUND TO BE INACCURATE NOR COU LD BE VIEWED AS THE CONCEALMENT OF INCOME ON ITS PART. IT WAS UP TO THE AUTHORITIES TO ACCEPT ITS CLAIM IN THE RETURN OR NOT. MERELY BECAU SE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPT ED OR WAS NOT ITA NO.698/VIZAG/2013 GOPU VENKATESWARA RAO, VIJAYAWADA 19 ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT ATTRACT THE PENALTY UNDER S.271(1)(C). IF THE CONTENTION OF THE REVENUE IS ACCEPTED THEN IN CASE OF EVERY RETURN WHERE THE CLAIM MADE IS NOT AC CEPTED BY AO FOR ANY REASON, THE ASSESSEE WILL INVITE PENALTY UNDER S. 271(1)(C). THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE. THE TRIBUNAL, AS WELL AS, THE CIT(A) AND THE HIGH COURT HAVE CORRECTLY REACHE D THIS CONCLUSION. SREE KRISHNA ELECTRICALS VS. STATE OF TAMIL NADU & ANR. (2009) 23 VST 249 (SC) APPLIED; RELIANCE PETRO PRODUCTS (P) LTD. (JUDGMENT 23RD OCT., 2007 OF THE GUJARAT HIGH COURT IN TAX APPEAL NO. 1149 OF 2007) AFFIRMED. 15. THE ASSESSEE RELIED UPON THE DECISION OF HONBL E KARNATAKA HIGH COURT, IN THE CASE OF CIT VS. MANJUNATHA COTTO N & GINNING FACTORY (2013) 92 DTR 0111. THE HONBLE HIGH COURT, WHILE DELETING THE PENALTY U/S 271(1)(C ) HELD AS UNDER. PENALTY U/S 271(1)(C) IS A CIVIL LIABILITY. MENS REA IS NOT AN ESSENTIAL ELEMENT FOR IMPOSING PENALTY FOR BREACH O F CIVIL OBLIGATIONS OR LIABILITIES. WILLFUL CONCEALMENT IS NOT AN ESSENTI AL INGREDIENT FOR ATTRACTING CIVIL LIABILITY. EXISTENCE OF CONDITIONS STIPULATE D IN SECTION 271(1)(C) IS A SINE QUA NON FOR INITIATION OF PENALTY PROCEEDINGS U/S 271. THE EXISTENCE OF SUCH CONDITIONS SHOULD BE DISCERNIBLE FROM THE A SSESSMENT ORDER OR ORDER OF THE APPELLATE AUTHORITY OR REVISIONAL AUTH ORITY. EVEN IF THERE IS NO SPECIFIC FINDING REGARDING THE EXISTENCE OF THE CORRECTIONS MENTIONED IN SECTION 271(1)(C), AT LEAS T THE FACTS SET OUT IN EXPLANATION 1(A) & (B) IT SHOULD BE DISCERNIBLE FRO M THE SAID ORDER WHICH WOULD BY A LEGAL FICTION CONSTITUTE CONCEALMENT BEC AUSE OF DEEMING PROVISION. EVEN IF THESE CONDITIONS DO NOT EXIST I N THE ASSESSMENT ORDER PASSED, AT LEAST, A DIRECTION TO INITIATE PROCEEDIN GS U/S 271(1)(C) IS A SINE QUA NON FOR THE ASSESSMENT OFFICER TO INITIATE THE PROCEEDINGS BECAUSE OF THE DEEMING PROVISION CONTAINED IN SECTION 1(B). T HE SAID DEEMING PROVISIONS ARE NOT APPLICABLE TO THE ORDERS PASSED BY THE COMMISSIONER OF APPEALS AND THE COMMISSIONER. THE IMPOSITION OF PENALTY IS NOT AUTOMATIC. IMPOSI TION OF PENALTY EVEN IF THE TAX LIABILITY IS ADMITTED IS NOT AUTOMA TIC. EVEN IF THE ASSESSEE HAS NOT CHALLENGED THE ORDER OF ASSESSMENT LEVYING TAX AND INTEREST AND HAS PAID TAX AND INTEREST THAT BY ITSELF WOULD NOT BE SUFFICIENT FOR THE AUTHORITIES EITHER TO INITIATE PENALTY PROCEEDINGS OR IMPOSE PENALTY, UNLESS IT IS DISCERNIBLE FROM THE ASSESSMENT ORDER THAT, I T IS ON ACCOUNT OF SUCH UNEARTHING OR ENQUIRY CONCLUDED BY AUTHORITIES IT H AS RESULTED IN PAYMENT OF SUCH TAX OR SUCH TAX LIABILITY CAME TO BE ADMITT ED AND IF NOT IT WOULD ITA NO.698/VIZAG/2013 GOPU VENKATESWARA RAO, VIJAYAWADA 20 HAVE ESCAPED FROM TAX NET AND AS OPINED BY THE AO I N THE ASSESSMENT ORDER. ONLY WHEN NO EXPLANATION IS OFFERED OR THE EXPLANA TION OFFERED IS FOUND TO BE FALSE OR WHEN THE ASSESSEE FAILS TO PRO VE THAT THE EXPLANATION OFFERED IS NOT BONAFIDE, AN ORDER IMPOSING PENALTY COULD BE PASSED. IF THE EXPLANATION OFFERED, EVEN THOUGH NOT SUBSTANTIATED BY THE ASSESSEE, BUT IS FOUND TO BE BONAFIDE AND ALL FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, NO PENALTY COULD BE IMPOSED. THE DIRECTION REFERRED TO IN EXPLANATION IB TO SEC TION 271 OF THE ACT SHOULD BE CLEAR AND WITHOUT ANY AMBIGUITY. IF THE A O HAS NOT RECORDED ANY SATISFACTION OR HAS NOT ISSUED ANY DIRECTION TO INITIATE PENALTY PROCEEDINGS, IN APPEAL, IF THE APPELLATE AUTHORITY RECORDS SATISFACTION, THEN THE PENALTY PROCEEDINGS HAVE TO BE INITIATED BY THE APPELLATE AUTHORITY AND NOT THE ASSESSING AUTHORITY. NOTICE U/S 274 OF THE ACT SHOULD SPECIFICALLY STAT E THE GROUNDS MENTIONED IN SECTION 271(1)(C) I.E., WHETHER IT IS FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INCORRECT PARTICULARS O F INCOME. SENDING PRINTED FORM WHERE ALL THE GROUND MENTIONED IN SECT ION 271 ARE MENTIONED WOULD NOT SATISFY REQUIREMENT OF LAW. THE ASSESSEE SHOULD KNOW THE GROUNDS WHICH HE HAS TO MEET SPECIFICALLY. OTHERWISE, PRINCIPLES OF NATURAL JUS TICE IS OFFENDED. ON THE BASIS OF SUCH PROCEEDINGS, NO PENALTY COULD BE IMPO SED TO THE ASSESSEE. TAKING UP OF PENALTY PROCEEDINGS ON THE LIMB AND FI NDING THE ASSESSEE GUILTY OF ANOTHER LIMB IS BAD IN LAW. THE PENALTY PROCEEDINGS ARE DISTINCT FROM THE ASSESSMENT PROCEEDINGS. THE PROCEEDINGS F OR IMPOSITION OF PENALTY THOUGH EMANATE FROM PROCEEDINGS OF ASSESSME NT, IT IS INDEPENDENT AND SEPARATE ASPECT OF THE PROCEEDINGS. THE FINDINGS RECORDED IN THE ASSESSMENT PROCEEDING S IN SO FAR AS CONCEALMENT OF INCOME AND FURNISHING OF INCORREC T PARTICULARS WOULD NOT OPERATE AS RES JUDICATA IN THE PENALTY PROCEEDI NGS. IT IS OPEN TO THE ASSESSEE TO CONTEST THE SAID PROCEEDINGS ON MERITS. HOWEVER, THE VALIDITY OF THE ASSESSMENT OR REASSESSMENT IN PURSUANCE OF W HICH PENALTY IS LEVIED, CANNOT BE THE SUBJECT MATTER OF PENALTY PRO CEEDINGS. THE ASSESSMENT OR REASSESSMENT CANNOT BE DECLARED AS IN VALID IN THE PENALTY PROCEEDINGS. IN THE LIGHT OF WHAT WE HAVE STATED ABOVE, IT IS CL EAR THAT MERELY BECAUSE THE ASSESSEE AGREED FOR ADDITION AND ACCORD INGLY ASSESSMENT ORDER WAS PASSED ON THE BASIS OF THIS ADDITION AND WHEN THE ASSESSEE HAS PAID THE TAX AND THE INTEREST THEREON IN THE ABSENC E OF ANY MATERIAL ON RECORD TO SHOW THE CONCEALMENT OF INCOME, IT CANNOT BE INFERRED THAT THE SAID ADDITION IS ON ACCOUNT OF CONCEALMENT. MOREOV ER, THE ASSESSEE HAS OFFERED THE EXPLANATION. THE SAID EXPLANATION IS N OT FOUND TO BE FALSE. ITA NO.698/VIZAG/2013 GOPU VENKATESWARA RAO, VIJAYAWADA 21 ON THE CONTRARY, IT IS HELD TO BE BONAFIDE. IN FAC T IN THE ASSESSMENT PROCEEDINGS THERE IS NO WHISPER ABOUT THESE CONCEAL MENT. THE VERY FACT THAT THE ASSESSEE AGREED TO PAY TAX AND DID NOT CHA LLENGE THE ASSESSMENT ORDER, IT IS CLEAR THE CONDUCT OF THE ASSESSEE CANN OT BE CONSTRUED AS MALAFIDE. THEREFORE, THE TRIBUNAL WAS JUSTIFIED IN SETTING ASIDE THE ORDERS PASSED BY THE APPELLATE AUTHORITY AS WELL AS THE AS SESSING AUTHORITY. IN SO FAR AS THE IMPOSITION OF PENALTY IS CONCERNED, I T IS NOT IN ACCORDANCE WITH LAW. NO FAULT COULD BE FOUND WITH THE TRIBUNA L FOR DELETING THE PENALTY. 16. IN THE PRESENT CASE ON HAND, THE ASSESSEE HAS D ISCLOSED NECESSARY FACTS, BEFORE THE A.O. BEFORE THE ASSESSMENT WAS RE OPENED FOR THE IMPUGNED ASSESSMENT YEAR. THEREFORE, WE ARE OF THE VIEW THAT IT IS NOT A FIT CASE FOR LEVY OF PENALTY FOR CONCEALMENT OF I NCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. THEREFORE, WE DI RECT THE A.O. TO DELETE THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. 17. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 6 TH MAY16. SD/- SD/- ( . ) ( . ) (V. DURGA RAO) (G. MANJUNATHA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 6.5.2016 VG/SPS ITA NO.698/VIZAG/2013 GOPU VENKATESWARA RAO, VIJAYAWADA 22 )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT GOPU VENKATESWARA RAO, D.NO.11-4 5-30, TAVVAVARI STREET, VIJAYAWADA 2. / THE RESPONDENT ITO WARD-1(4), VIJAYAWADA 3. + / THE CIT, VIJAYAWADA 4. + ( ) / THE CIT (A), VIJAYAWADA 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // 12 . (SR.PRIVATE SECRETARY) . , # / ITAT, VISAKHAPATNAM