ACIT, Chandigarh V. Smt. Champa Goel, Panchkula

ITA 760/CHANDI/2012

• Counselvise Citation: 76021514 RSA 2012
• Duration Of Justice: 3 year(s) 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 28-09-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 25-07-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Assessee Lawyers: AJAY JAIN
• Keywords: Capital asset; Search and seizure; Bonafide belief
• Section: 2(14); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI H.L.KARWA, VICE PRESIDENT AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO.760/CHD/2012 (ASSESSMENT YEAR : 2004-05) THE A.C.I.T., VS. SMT.CHAMPA GOEL, CENTRAL CIRCLE-II, # 530, SECTOR 10, CHANDIGARH. PANCHKULA. PAN: AGJPG7067J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.K. MITTAL, DR RESPONDENT BY : SHRI AJAY JAIN DATE OF HEARING : 28.09.2015 DATE OF PRONOUNCEMENT : 05.10.2015 O R D E R PER RANO JAIN, A.M . : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (CENTRAL), GURGAON DATED 25.5.2012 FOR ASSESSMENT Y EAR 2004-05. 2. THE FACTS OF THE CASE ARE THAT THE RETURN OF IN COME UNDER SECTION 139(1) OF THE INCOME TAX ACT, 1961 (I N SHORT THE ACT) WAS FILED ON 8.10.2004 DECLARING INCOME OF RS.1,39,195/-. LATER ON, SEARCH AND SEIZURE OPERAT ION IN THE CASE OF ASSESSEE WAS CARRIED OUT AS ON 27.9.2007. IN 2 RESPONSE TO NOTICE UNDER SECTION 153A OF THE ACT, T HE ASSESSEE FILED RETURN OF INCOME DECLARING INCOME OF RS.15,02 ,145/-. THIS RETURN INCLUDED SHORT TERM CAPITAL GAIN OF RS. 14,87,235/- ON COMPULSORY ACQUISITION OF AGRICULTURAL LAND. TH E ASSESSMENT UNDER SECTION 153A OF THE ACT WAS COMPLE TED AT AN INCOME OF RS.15,02,805/-. PENALTY PROCEEDINGS UNDE R SECTION 271(1)(C) OF THE ACT WERE INITIATED BY THE ASSESSIN G OFFICER. THE EXPLANATION OF THE ASSESSEE BEFORE THE ASSESSIN G OFFICER DURING THE PENALTY PROCEEDINGS WAS THAT THE SHORT T ERM CAPITAL GAIN OF RS.14,87,235/- WAS DECLARED FOR THE AGRICULTURAL LAND ACQUIRED BY HUDA AT SAKETARI. SINCE IT WAS AN AGRICULTURAL LAND AND AS PER THE PROVISIONS OF SECTION 2(14) OF THE ACT DOES NOT COME UNDER THE PURVIEW OF CAPITAL GAINS, THEREFORE, THE PROVISIONS OF SECTION 271(1)( C) OF THE ACT ARE NOT ATTRACTED IN THIS CASE. THE ASSESSING OFFI CER DID NOT FIND HIMSELF IN AGREEMENT WITH THE SUBMISSIONS OF T HE ASSESSEE AND INVOKING THE PROVISIONS OF EXPLANATION -5A OF SECTION 271(1)(C) OF THE ACT LEVIED PENALTY OF RS.4 ,35,407/-. 3. BEFORE THE LEARNED CIT (APPEALS), THE CONTENTIO N OF THE ASSESSEE WAS THAT THE LAND IN QUESTION WAS NOT A CAPITAL ASSET BEING AGRICULTURAL LAND, HENCE THE GAIN WAS E XEMPT FROM TAX. IT WAS SUBMITTED THAT THE AMOUNT WAS ADDED IN THE RETURN OF INCOME ONLY TO REACH THE AMOUNT OF SURREN DER MADE DURING THE COURSE OF SEARCH. IN THE ALTERNATIVE, IT WAS SUBMITTED THAT THE AGRICULTURAL LAND OF THE ASSESSE E HAS BEEN COMPULSORILY ACQUIRED BY THE LAO, PANCHKULA, WHICH IS NOT TAXABLE. THE LAND IN QUESTION IS NOT A CAPITAL ASS ET WITHIN THE 3 DEFINITION OF CAPITAL ASSET GIVEN IN SECTION 2(14) OF THE ACT, AS THE LAND IS NOT SITUATED IN ANY AREA WITHIN THE JUR ISDICTION OF ANY MUNICIPALITY OR CANTONMENT BOARD HAVING A POPUL ATION OF 10000 OR MORE OR IN ANY OF THE NOTIFIED AREAS. PLA CING RELIANCE ON THE JUDGMENT OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. SHEO RAM, 117 TAXMAN 347 (DEL) IT WAS STATED THAT ANY AGRICULTURAL LAND SITUATED IN THE V ILLAGE SHALL NOT PARTAKE THE CHARACTER OF CAPITAL ASSET AS PER T HE PROVISIONS OF SECTION 2(14) OF THE ACT AS IT IS AN AGRICULTURAL LAND. IT WAS ALSO SUBMITTED THAT THESE FACTS WERE STATED DURING THE COURSE OF PENALTY PROCEEDINGS ALSO. THE GAIN ON AGRICULTURAL LAND IS NOT TAXABLE AND, THEREFORE, TH E QUESTION OF PENALTY DOES NOT ARISE. THE SAID INCOME WAS NOT IN CLUDED IN THE ORIGINAL RETURN AS THE ASSESSEE WAS UNDER THE BONAFIDE BELIEF THAT THE GAIN ON AGRICULTURAL LAND IS NOT TA XABLE. IT WAS ARGUED THAT THE COUNSEL FOR THE ASSESSEE HAS GIVEN AN ADVICE THAT THE GAIN ON AGRICULTURAL LAND IS NOT TAXABLE, THEREFORE, IT WAS NOT INCLUDED IN THE RETURN OF INCOME. PLACING RELIANCE ON THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COU RT IN THE CASE OF CIT VS. DHILLON RICE MILLS (S.D.)(2005) 275 ITR 206 (P&H), IT WAS PRAYED THAT ON THE ADVICE OF THE TECH NICAL EXPERT THE ASSESSEE HAD NOT INCLUDED THE SAID AMOUNT IN IT S RETURN OF INCOME AND AS SUCH, PENALTY ON THE SAME CANNOT BE L EVIED. THE LEARNED CIT (APPEALS) AGREED WITH THE SUBMISSIO NS OF THE ASSESSEE AND HELD THAT SINCE THE CAPITAL GAIN ARISI NG IN THIS CASE IS OUTSIDE THE GAMUT OF TAXATION, RELYING ON THE JUDGMENT OF DHILLON RICE MILLS (S.D.) (SUPRA) SHE D ELETED THE PENALTY SO LEVIED BY THE ASSESSING OFFICER. 4 4. AGGRIEVED BY THE ORDER OF THE LEARNED CIT (APPE ALS), THE REVENUE HAS COME UP IN APPEAL BEFORE US CHALLEN GING THE DELETION OF PENALTY IMPOSED BY THE ASSESSING OFFICE R UNDER THE PROVISIONS OF EXPLANATION-5A OF SECTION 271(1)(C) O F THE ACT. 5. THE LEARNED D.R. ARGUING BEFORE US RELIED UPON THE ORDER OF THE ASSESSING OFFICER LEVYING THE PENALTY AND SUBMITTED THAT SINCE THE ASSESSEE HAS MADE DISCLOSU RE OVER AND ABOVE WHAT WAS DISCLOSED IN THE RETURN FILED UN DER SECTION 139(1) OF THE ACT AFTER THE SEARCH AND SEIZ URE OPERATION, IT IS A FIT CASE FOR INVOKING THE EXPLAN ATION-5A OF SECTION 271(1)(C) OF THE ACT AND, HENCE THE PENALTY SO LEVIED BY THE ASSESSING OFFICER BE CONFIRMED. 6. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES AND EMPHASIZED ON THE FACT THAT IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE THE INCOME ARISING ON ACC OUNT OF ACQUISITION OF AGRICULTURAL LAND BEING NOT TAXABLE, THE QUESTION OF LEVYING PENALTY DOES NOT ARISE AT ALL. 7. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BO TH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHORITIE S BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECORD. THE U NDISPUTED FACTS OF THE CASE ARE THAT THE SEARCH OPERATION TOO K PLACE AS ON 27.9.2007 I.E. AFTER 1.6.2007. IT IS ALSO UNDI SPUTED THAT REGULAR RETURN OF INCOME UNDER SECTION 139(1) OF TH E ACT WAS FILED ON 8.10.2004 I.E. BEFORE THE DATE OF SEARCH. THE DISCLOSURE OF INCOME WAS MADE IN THE RETURN FILED IN RESPONSE 5 TO NOTICE UNDER SECTION 153A OF THE ACT I.E. AFTER THE DATE OF SEARCH. AS SUCH THE PROVISIONS OF EXPLANATION-5A TO SECTION 271(1)(C) OF THE ACT ARE APPLICABLE IN THIS CASE. THE STANCE OF THE ASSESSEE IS THAT THE DISCLOSURE OF THE AMOUNT O F RS.14,87,235/- WHILE FILING THE RETURN IN RESPONSE TO NOTICE UNDER SECTION 153A OF THE ACT WAS MADE IN ORDER TO REACH THE AMOUNT OF SURRENDER MADE DURING THE COURSE OF SEARC H, WHICH IN FACT IS HER INCOME WHICH IS NOT CHARGEABLE TO TA X. FROM THE PERUSAL OF THE ORDERS OF BOTH THE LOWER AUTHORI TIES, WE FIND THAT NOWHERE THIS ISSUE HAS BEEN CONSIDERED IN CORR ECT PERSPECTIVE. BEFORE THE ASSESSING OFFICER IN PROCE EDINGS UNDER SECTION 143(3)/153A OF THE ACT, SINCE THE AMO UNT WAS INCLUDED IN THE RETURN OF INCOME, THERE WAS NO OCCA SION FOR HIM TO DISCUSS THE SAME. HOWEVER, NEITHER DURING T HE PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT NOR BEFORE THE LEARNED CIT (APPEALS), ANY EFFORTS WERE MADE TO VER IFY CERTAIN FACTS. SOME QUESTIONS STILL REMAIN UNANSWERED. W HETHER THE ASSESSEE HAD MADE THE SURRENDER ON ACCOUNT OF INCOM E FROM SALE OF SAME PROPERTY? WHETHER THE AMOUNT SURRENDE RED AT THE TIME OF SEARCH CAN BE CORRELATED TO THE AMOUNT SHOWN IN THE RETURN FILED IN RESPONSE TO NOTICE UNDER SECTI ON 153 OF THE ACT? AND MOST IMPORTANTLY WHETHER THE INCOME SO ARISING OUT OF SALE OF LAND IS EXEMPT FROM TAX OR NOT? THE SE ISSUES ARE TO BE VERIFIED BY THE ASSESSING OFFICER. THE D ECISION OF THE LEARNED CIT (APPEALS) BASED ON THE FACT THAT DI SCLOSURE WAS NOT MADE ON THE ADVICE OF THE COUNSEL OF THE AS SESSEE IS TOTALLY MISPLACED. SINCE THE REASON FOR WHICH THE SAID AMOUNT WAS NOT DISCLOSED IN THE RETURN ORIGINALLY FILED BY THE ASSESSEE 6 MAY BE BY THE ADVICE OF THE COUNSEL, BUT THE SAID F ACT IS NOT AT ALL RELEVANT FOR DECIDING THE ISSUE IN QUESTION. WHATEVER WAS THE REASON FOR NOT INCLUDING THE SAME IN THE OR IGINAL RETURN DOES NOT EFFECT THE PENALTY TO BE LEVIED AFT ER SEARCH. SINCE IT IS QUITE EVIDENT THAT THE AMOUNT HAVING BE EN INCLUDED IN THE RETURN FILED IN RESPONSE TO NOTICE UNDER SE CTION 153A OF THE ACT, THE PROVISION OF EXPLANATION-5A TO SECT ION 271(1)(C) OF THE ACT ARE DEFINITELY APPLICABLE TO THE CASE. HOWEVER, IN THE ABSENCE OF ANY SPECIFIC FINDING WITH REGARD TO THE ISSUES AS STATED HEREINABOVE, WE ARE INCLINED TO SENT THE ISSUE TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE QUESTIO N OF LEVY OF PENALTY, IN VIEW OF OUR OBSERVATION AS MADE HEREINA BOVE. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 5 TH DAY OF OCTOBER, 2015. SD/- SD/- (H.L.KARWA) (RANO JAIN) VICE PRESIDENT ACOUNTANT MEMBER DATED : 5 TH OCTOBER, 2015 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH 7