LATE SMT. LEELABAI V. PHADKE (LEGAL HEIR- SHRI RAMCHANDRA V. PHADKE), THANE V. A.C.I.T. CENTRAL CIRCLE 2, THANE

ITA 7476/MUM/2011

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9665 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 16-02-2017
• Assessment Year: 2004-2005
• Appeal Filed On: 04-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T A KHAN
• Keywords: Revised return
• Section: 133A; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI R. C. SHARMA , ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER ./ I.T.A. NO. 7476/MUM/2011 ( / ASSESSM ENT YEAR: 2004 - 05 ) LATE SMT. LEELABAI PHADKE (LEGAL HEIR RAMCHANDRA PHADKE) THOSAR WADA, BRAHMAN ALI, P. O. PAPDY, TALUKA VASAI, DISTRICT - THANE / VS. ASST. CIT, CIRCLE - 2, THANE ./ ./ PAN/GIR NO. ANCPP 7999 L ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI ANIL SATHE / RESPONDENT BY : SHRI T. A. KHAN / DATE OF HEARING : 10.07.2017 / DATE OF PRONOUNCEMENT : 08 .0 9 .2017 / O R D E R PER R. C. SHARMA, A. M.: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER BY THE LD. CIT(A) - I , THANE DATED 25.06.2011 FOR THE ASSESSMENT YEAR (A.Y.) 2004 - 05 . 2. THE GROUND RAISED BY THE ASSESSEE READ AS UNDER: 1. THE LEARNED COMMI SSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE PENALTY U/S. 271(1)(C) OF THE INCOME TAX ACT OF RS.7,41,270/ - . 2 ITA NO. 7476/MUM/2011 (A.Y. 2004 - 05) LATE SMT. LEELABAI PHADKE VS. ASST. CIT 3. FACTS IN BRIEF ARE THAT THE ASSESSEE WAS HEAD OF THE FAMILY AFTER THE DEATH OF HER HUSBAND. SHE HAD FILED HER RETURN OF INCOME FOR A. Y. 2004 - 05 SHOWING CAPITAL GAINS ON THEIR PROPERTY DEAL WITH SHRI ARUN G. VARTAK VIDE MOU DTD. 26 - 05 - 03. A SURVEY WAS CONDUCTED ON THE PREMISES OF SHRI ARUN G. VARTAK , WHEREIN IT WAS NOTICED THAT CERTAIN AMOUNT WAS PAID TO SMT. LEELABAI V. PHADKE. AT THA T TIME THE ASSESSEE WAS ALIVE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE LEGAL HEIR FILED A REVISED RETURN SHOWING ADDITIONAL CAPITAL GAINS AND PAID THE TAXES DUE ON THE ABOVE CAPITAL GAINS. THE LEGAL HEIR IN ORDER TO BUY PEACE OF MIND ALSO PAID VO LUNTARILY THE TAXES AND PART OF THE INTEREST TO KEEP THE RESPECT OF THEIR DECEASED MOTHER. 4. AO ALSO LEVIED PENALTY U/S 271(1)(C) WITH REGARD TO THE INCOME OFFERED IN THE REVISE RETURN. 5. BY THE IMPUGNED ORDER, CIT(A) CONFIRMED THE ACTION OF THE AO AGAI NST WHICH ASSESSEE IS IN FURTHER APPEAL BEFORE US. 6. LEARNED AR RELIED ON THE ORDER OF PUNJAB AND HARYANA HIGH COURT 174 TAXMAN 317, WHEREIN HONBLE COURT HELD AS UNDER: - THE ASSESSEE HAD FILED HIS RETURN OF INCOME TOR THE RELEVANT ASSESSMENT YEAR DECLAR ING CERTAIN INCOME. SUBSEQUENTLY, ON AN INFORMATION RECEIVED FROM THE INVESTIGATION WING THAT THE ASSESSEE HAD ACQUIRED A PROPERTY I N T HE RELEVANT ASSESSMENT YEAR FOR A CONSIDERATION OF RS. 5,06,250 WHICH REMAINED UNDECLARED, THE ASSESSING OFFICER ISSUED A NOTICE UNDER SECTION 148 IN THE MEAN WHILE, THE ASSESSEE HAD EXPIRED AND, ACCORDINGLY, HIS LEGAL HEIR (HIS WIFE) F I L ED RETURN O F INCOME IN RESPONSE TO ABOVE SAID NOTICE SHE EXPRESSED HER UNAWARENESS ABOUT SOURCE OF INVESTMENT MADE IN THE SAID PROPERTY AND. T HEREFORE, THE INCOME DECLARED IN THE REVISED RETURN IN - ELUDED THE AMOUNT OF INVESTMENT IN THE AFORESAID PROPERTY. THE ASSESSING OFFICER COMPLETED 3 ITA NO. 7476/MUM/2011 (A.Y. 2004 - 05) LATE SMT. LEELABAI PHADKE VS. ASST. CIT ASSESSMENT ACCEPTING REVISED RETURN AND ALSO LEVIED PENALTY UNDER SECTION 27I(1)( C) ON T HE ASSESSEE ON THE GROUND THAT THE INVESTMENT IN THE PROPERTY HAD RIOT BEEN DECLARED IN ORIGINAL RETURN. ON APPEAL, THE COMMISSIONER (APPEALS) UPHELD THE IMPOSITION OF PENAL T Y ON SECOND APPEAL, !HE TRIBUNAL DIRECTED THE ASSESSING OFFICER TO DELETE THE PENALTY HOLDING THAT IT WAS A CASE OF BONA F IDE DISCLOSURE MADE NOT MERELY TO AVOID CONSEQUENCES OF LAW, BUT ALSO WITH A VIEW T O AVOID LITIGATION. ON REVENUE'S APPEAL : THE TRIBUNAL (TAD FOUND AS A MATTER OF FACT THAT IN RESPONSE TO NOTICE ISSUED UNDER SECTION 148. THE LEGAL HEI R OF THE ASSESSEE, I.E., HIS WIFE HERSELF HAD FILED THE REVISED RETURN OF INCOME AS THE ASSESSEE HAD DIED, THE LEGAL HEIR, BEING UNAWARE OF T HE SOURCES OF INVESTMENT, FILED RETURN OF INCOME INCLUDING THE IMPUGNED AMOUNT ONLY TO DEMONSTRATE HER BONA FIDES A ND WILLINGNESS NO T LO PROLONG ANY LITIGATION WITH THE REVENUE THEREFORE. T HE DISCLOSURE MADE BY THE LEGAL HEIR OF THE ASSESSEE WAS BONA FIDE AND VOLUNTARY WITH A VIEW TO AVOID LITIGATION AND THEREFORE, DELETION OF PENALTY TINDER SECTION 27L( 1 )(C) WAS JUSTIF IED. 7. RELIANCE WAS PLACED ON THE DECISION OF COCHIN BENCH IN THE CASE OF LATE S VARADARAJULU IN ITA NO.361 TO 366/COCH/2011. RELIANCE WAS ALSO PLACED ON THE DECISION OF ITAT PUNE BENCH IN CASE OF LATE RAMCHANDRA M JHAMTANI IN ITA NO.1519/PN/2012 WHEREIN TRIBUNAL HELD AS UNDER: - PENALTY U/S 271 (L)(C) CONCEALMENT OF INCOME OR INACCURATE PARTICULARS OF INCOME ASSESSEE - INDIVIDUAL FILED RETURN ON 24 TH OCTOBER 2007, DECLARING TOTAL INCOME OF RS.L,08,73,528 WHICH INTER - ALIA, INCLUDED INCOMES UNDER HEAD 'HOUSE PROPERTY', 'BUS/NESS INCOME', 'CAPITAL GAINS' AS WELL AS 'INCOME FROM OTHER SOURCES' ASSESSEE EXPIRED ON 30 TH DECEMBER 2007 AND SUBSEQUENTLY ON 22 ND JANUARY 2009, SURVEY ACTION U/S 133A WAS CARRIED OUT AT BUSINESS PREMISES OF 'X', SON OF DECEASED ASSESSEE DURING COURSE OF SURVEY, DEVELOPMENT AGREEMENT DULY REGISTERED ON 22 ND FEBRUARY 2007, WAS FOUND WHICH WAS ENTERED BY DECEASED ASSESSEE WITH OTHERS IN RESPECT OF SALE OF LAND LEGAL HEIR OF DECEASED ADMITTED THAT THERE WAS SHORT TERM CAPITAL GAIN OF RS.L.20 CRORES FOR WHICH HE FILED REVISED RETURN ON 20 TH MARCH 2009, DECLARING TOTAL INCOME OF RS.2,28,73,530 WHICH, INTER - ALIA, INCLUDED SHORT TERM CAPITAL GAIN ON SALE OF LAND WHICH WAS HITHERTO NOT DECLARED IN ORIGINAL RETURN OF INCOME FILED BY DECEASED ASSESS EE RETURNED INCOME WAS ACCEPTED SUBSEQUENTLY, AO HELD THAT ASSESSEE WAS GUILTY OF FURNISHING OF INACCURATE PARTICULARS OF INCOME QUA NON - DECLARATION OF SHORT TERM CAPITAL GAIN ON LAND IN ORIGINAL RETURN WITHIN 4 ITA NO. 7476/MUM/2011 (A.Y. 2004 - 05) LATE SMT. LEELABAI PHADKE VS. ASST. CIT MEANING OF SECTION 271(L)(C) ACCORDINGLY AO I MPOSED PENALTY OF RS.47,37,93O U/S 271(L)(C) - CIT(A) DELETED PENALTY - HELD, IT WAS CASE OF BONAFIDE DISCLOSURE DONE BY LEGAL HEIR WITH RESPECT TO INCOME TRANSACTED BY ASSESSEE HIMSELF DURING HIS LIFE TIME UNDER THOSE CIRCUMSTANCES IT COULD NOT BE SAID ASSESS EE HAD DELIBERATELY MADE INCORRECT PARTICULARS OF INCOME IN ORIGINAL RETURN OF INCOME QUA IMPUGNED TRANSACTION ASSESSEE HAVING EXPIRED ON 30 TH DECEMBER 2007, HAD NO CHANCE OF CARRYING THROUGH H:S EXPLANATION, IF ANY - EVEN REVENUE HAD NOT LEAD ANY MATERIAL T O POINT OUT REASONS WEIGHING WITH ASSESSEE TO DO SO IN ORIGINAL RETURN TO INVITE PENAL PROVISION OF SECTION 271(L)(C) THUS, CIT(A) MADE NO MISTAKE IN DELETING PENALTY IMPOSED U/S 271(L)(C). IMPUGNED ORDER AFFIRMED REVENUE'S APPEAL DISMISSED 8. ON THE OTHER HAND, LEARNED DR RELIED ON THE ORDER OF THE LOWER AUTHORITIES. 9. WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. FROM THE RECORD, WE FOUND THAT LEGAL HEIR OF THE ASSESSEE HAS BONAFIDELY OFFERE D THE INCOME WHICH WAS ALLEGED TO BE RECEIVED BY THE DECEASED ASSESSEE. THE LEGAL HEIR OF THE ASSESSEE HAS ALSO PAID TAX ON THE ADDITION AL INCOME SO OFFERED. THE LEGAL HEIR WAS NOT AWARE OF WHAT HAS BEEN HAPPEN ED IN THE PAST WHILE HIS MOTHER WAS ALIVE AND SUBSEQUENTLY IT WAS FOUND DURING COURSE OF SEARCH AFTER THE DEATH OF MOTHER THAT S HE HAD RECEIVED SOME CASH MONEY O N SALE OF PROPERTY. SUCH ON MONEY OFFERED BY LEGAL HEIR AND DUE TAXES THEREON ALSO PAID BY LEGAL HEIR. UNDER THESE FACTS AND CIRCUMSTANCES, L EVY OF PENALTY U/S.271(1)(C) IS NOT WARRANTED ON THE LEGAL HEIR. THE ISSUE UNDER CONSIDERATION IS SQUARELY COVERED BY THE DECISION OF PUNJAB AND HARYANA HIGH COURT WHEREIN UNDER SIMILAR FACTS AND CIRCUMSTANCES, IT WAS HELD THAT AS THE ASSESSEE IS DIED, LEG AL HEIR BEING UNAWARE OF SOURCE OF INVESTMENT, FILED RETURN OF INCOME INCLUDING THE IMPUGNED AMOUNT ONLY TO DEMONSTRATE BONAFIDES AND WILLINGNESS AND NOT TO PROLONG ANY LITIGATION WITH THE REVENUE. THEREFORE, THE 5 ITA NO. 7476/MUM/2011 (A.Y. 2004 - 05) LATE SMT. LEELABAI PHADKE VS. ASST. CIT DISCLOSURE MADE BY THE LEGAL HEIR OF THE AS SESSEE WAS BONAFIDE AND VOLUNTARY WITH A VIEW TO CLOSE LITIGATION. UNDER THESE FACTS AND CIRCUMSTANCES , NO PENALTY IS WARRANTED U/S.271(1)(C). AS THE FACTS AND CIRCUMSTANCES ARE PARAMETRIA IN THE INSTANT CASE, RESPECTFULLY FOLLOWING THE DECISION OF PUNJAB AND HARYANA HIGH COURT, WE DO NOT FIND ANY MERIT FOR THE PENALTY SO IMPOSED U/S.271(1)(C). 10. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 08/09/2017 SD/ - SD/ - ( AMARJIT SINGH ) ( R. C. SHARMA ) JUDICIAL MEMBER A CCOUNTANT MEMBER / MUMBAI ; / DATED : 08/09/2017 . . ./ ROSHANI , SR. PS / COPY OF THE ORDER FORWARDED T O : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI