ACIT, Faridabad V. M/s N.K. Singla, Faridabad

ITA 713/DEL/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9886 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 12-08-2009
• Assessment Year: 1998-1999
• Appeal Filed On: 26-02-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JA KHAN
• Keywords: Wrong claim
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI G.E. VEERABHADRAPPA : VICE PRESIDENT; A ND SRHI R.P. TOLANI : JUDICIAL MEMBER ITA NO. 713/DEL/09 ASSTT. YR: 1998-99 ACIT, CIRCLE-1, VS. N.K. SINGLA, PROP. FARIDABAD. M/S BHARAT MACHINE TOOLS, PLOT NO. 126/6, FARIDABAD. PAN/GIR NO. 25-050-PX-2939 ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI J.A. KHAN SR. DR RESPONDENT BY : NONE O R D E R PER G.E. VEERABHADRAPPA, V.P: THIS APPEAL, BY THE REVENUE , ARISES OUT OF THE ORD ER DATED 7-1-2009 OF THE CIT(A), FARIDABAD FOR A.Y. 1998-99. 2. THE REVENUE IS AGGRIEVED BY THE DELETION OF PEN ALTY LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE INCOME-TAX A CT, 1961. THE ASSESSEE IS AN INDIVIDUAL AND FILED HIS RETURN FOR A.Y. 1998-99 , DECLARING TOTAL INCOME OF RS. 2,42,225/-. IN THE RETURN FILED, THE ASSESSEE H AD SHOWN INCOME FROM BUSINESS, PROFESSION AND OTHER SOURCES. THE ASSESSE E IN THE CAPITAL ACCOUNT SHOWED ACCRETION THERETO. WHEN ASKED FOR, IT WAS DI SCLOSED THAT HE HAD RECEIVED ADDITIONAL COMPENSATION OF RS. 57,40,952/- . OUT OF THIS, SUM OF RS. 2 33,05,143/- WAS STATED TO BE IN RESPECT OF AGRICULT URAL LAND AND REMAINING AMOUNT OF RS. 24,35,779/- WAS IN RESPECT OF STANDIN G TREES. THE ASSESSEE FURTHER STATED THAT THE SUM RECEIVED AS ENHANCED CO MPENSATION WAS SUBJECT TO REDUCTION BY THE HONBLE HIGH COURT OF PUNJAB & HARYANA AND THE MATTER WAS SUB-JUDICE. IT MAY BE STATED THAT THE INCOME A SSESSED BY THE ASSESSING OFFICER INCLUDED THE ADDITIONAL COMPENSATION. THE A SSESSEE PREFERRED APPEAL BEFORE THE CIT(A), WHO DIRECTED THE RECOMPUTATION O F THE CAPITAL GAIN ON ENHANCED COMPENSATION AND GAVE SOME RELIEF. THE DEP ARTMENT FILED SECOND APPEAL BEFORE THE TRIBUNAL. THE TRIBUNAL VIDE ITS ORDER DATED 22-12-2006 IN ITA NO. 3972/DEL/01 ALLOWED THE APPEAL FILED BY THE REVENUE BY FOLLOWING THE DECISION OF THE SPECIAL BENCH OF THE ITAT IN TH E CASE OF CIT VS. PADAM PRAKASH (HUF)SOT (2006) 10 (DEL.)(SB), WHEREIN THE ENHANCED COMPENSATION WAS DIRECTED TO BE TAXED ON RECEIPT B ASIS. IN RESPECT OF THE ADDITION THAT WAS CONSEQUENTLY MADE, THE ASSESSEE W AS SUBJECTED TO PENALTY ON THE GROUND THAT HE HAD FURNISHED INACCURATE PART ICULARS OF HIS INCOME BY PLACING WRONG CLAIM AND CONCEALING CERTAIN RELEVANT FACTS. THE CIT(A), HOWEVER, WAS OF THE VIEW THAT ALL THE CONFIRMED ADD ITIONS DID NOT NECESSARILY INVITE THE PROVISIONS OF SECTION 271(1)(C) OF THE A CT. ACCORDING TO HIM, THE ASSESSEE HAD FURNISHED ALL THE CORRECT PARTICULARS OF ADDITIONAL COMPENSATION AND INTEREST RECEIVED AND DID NOT CONCEAL ANY INCO ME OR PARTICULARS THEREOF. 3 ACCORDING TO THE LEARNED CIT(A), THE AO HIMSELF ADM ITS THAT THE COMPENSATION AND INTEREST WERE DECLARED IN THE RETU RN OF INCOME BUT WERE CLAIMED TO BE EXEMPT AS NOT TAXABLE AND SUCH ENHANC ED COMPENSATION WAS SHOWN AS ACCRETION TO THE CAPITAL OF THE ASSESSEE. ACCORDING TO HIM, THE ASSESSEE HAD A BONA FIDE BELIEF ON THE ISSUE IN QUE STION. THE JURISDICTIONAL PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. SOHAN PAL HUF IN ITA NO. 582/07 DATED 5-2-2008 HAS DECIDED THE ISSUE OF PENALTY IN RESPECT OF ENHANCED COMPENSATION AND INTEREST IN FAVOUR OF TH E ASSESSEE AND AGAINST THE REVENUE ON THE GROUND THAT THE ASSESSEE HAD BO NA FIDE BELIEF AS TO THE TAXABILITY OF ENHANCED COMPENSATION AND INTEREST TH EREON, SINCE PARTICULARS WERE FILED CORRECTLY AND NO CONCEALMENT HAS OCCURR ED. FOLLOWING THE PRINCIPLE LAID DOWN BY THE JURISDICTIONAL HIGH COUR T ON IDENTICAL FACTS AND CIRCUMSTANCES THE CIT(A) CANCELLED THE PENALTY LEVI ED U/S 271(1)(C OF THE ACT AND THE REVENUE HAS QUESTIONED THIS DECISION O F THE CIT(A). 3. WE HAVE HEARD THE LEARNED DR. NONE WAS PRESENT O N BEHALF OF THE ASSESSEE DESPITE ISSUE OF NOTICE FOR HEARING. WE H AVE ALSO GONE THROUGH THE RECORD CAREFULLY. IN OUR VIEW THE ASSESSEE CANNOT B E SADDLED WITH PENALTY U/S 271(1)(C) ON THE FACTS AND CIRCUMSTANCES OF T HE CA SE. THE ASSESSEE HAD DISCLOSED FULL PARTICULARS OF INCOME BEFORE THE AO. HE HAD A BONA FIDE BELIEF THAT THE SUMS IN QUESTION WERE NOT ASSESSABLE TO T AX. HOWEVER, IT WAS 4 ALTOGETHER DIFFERENT THAT IN QUANTUM APPEAL; THE TR IBUNAL RESTORED THE ADDITION BY REVERSING THE ORDER OF THE CIT(A) ON TH IS ISSUE. IN OUR VIEW, THE ASSESSEE HAS DISCLOSED ALL PARTICULARS OF INCOME AN D HAS NOT CONCEALED EITHER THE INCOME OR THE PARTICULARS THEREOF. EXACTLY IN I DENTICAL CIRCUMSTANCES THE JURISDICTIONAL HIGH COURT OF PUNJAB & HARYANA IN T HE CASE OF CIT VS. SOHAN PAL HUF (SUPRA) HAS HELD THAT THE ASSESSEE HA D A BONA FIDE BELIEF AS TO THE TAXABILITY OF THE ENHANCED COMPENSATION AND INT EREST THEREON. THE LEARNED CIT(A), IN OUR CONSIDERED OPINION, HAS CORR ECTLY FOLLOWED THE RATIO OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS . SOHAN PAL HUF (SUPRA) IN CANCELING THE PENALTY. IN THE LIGHT OF THE SAID DISCUSSION, WE DECLINE TO INTERFERE. 4. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 28-8-2009. SD/- SD/- (R.P. TOLANI ) ( G.E. VEERABHADRA PPA ) JUDICIAL MEMBER VICE PRESIDENT DATED: 28-08-2009. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR 5