ACIT Cir 1[2] Pune, Pune V. Mangesh Tupe, Pune

ITA 775/PUN/2012

• Counselvise Citation: 77524514 RSA 2012
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 16-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Capital asset; Peak credit
• Section: 143(3); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NOS. 804 TO 809/PN/2012 (ASSESSMENT YEARS: 2003-04 TO 2008-09) SHRI MANGESH TUPE 147, MAGARPATTA HADAPSAR, PUNE 411 028 PAN : AELPT 5216 G . APPELLANT VS. ASST. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 2 (3) PUNE . RESPONDENT ITA NOS. 771 TO 776/PN/2012 (ASSESSMENT YEARS: 2003-04 TO 2008-09) ASST. COMMISSIONER OF INCOME TAX CIRCLE 1 (2) PUNE . APPELLANT VS. SHRI MANGESH TUPE 147, MAGARPATTA HADAPSAR, PUNE 411 028 PAN : AELPT 5216 G . RESPONDENT ITA NOS. 766 TO 770/PN/2012 (ASSESSMENT YEARS: 2004-05 TO 2008-09) ASST. COMMISSIONER OF INCOME TAX CIRCLE 1 (2) PUNE . APPELLANT VS. SMT. GULABBAI TUPE 147, MAGARPATTA HADAPSAR, PUNE 411 028 PAN : AELPT 9275 P . RESPONDENT ITA NOS. 804 TO 809/PN/2012 ITA NOS. 771 TO 776/PN/2012 ITA NOS. 766 TO 770/PN/2012 ITA NOS. 800 TO 803/PN/2012 ITA NOS. 777 TO 780/PN/2012 ITA NOS. 800 TO 803/PN/2012 (ASSESSMENT YEARS: 2003-04 & 2005-06 TO 2007-08) SMT. VARSHA TUPE 147, MAGARPATTA HADAPSAR, PUNE 411 028 PAN : AELPT 9274 N . APPELLANT VS. ASST. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 2 (3) PUNE . RESPONDENT ITA NOS. 777 TO 780/PN/2012 (ASSESSMENT YEARS: 2004-05 TO 2007-08) ASST. COMMISSIONER OF INCOME TAX CIRCLE 1 (2) PUNE . APPELLANT VS. SHRI VARSHA TUPE 147, MAGARPATTA HADAPSAR, PUNE 411 028 PAN : AELPT 9274 N . RESPONDENT APPELLANT BY : MR. NIKHIL PATHAK RESPONDENT BY : MR. ACHAL SHARMA DATE OF HEARING : 15-04-2013 DATE OF PRONOUNCEMENT : 30-04-2013 ORDER PER G. S. PANNU, AM THE CAPTIONED APPEALS RELATE TO THREE ASSESSEES BE LONGING TO THE SAME FAMILY AND INVOLVE CERTAIN COMMON ISSUES AND THEREF ORE, THEY HAVE BEEN CLUBBED AND HEARD TOGETHER AND A COMMON ORDER IS BE ING PASSED FOR THE SAKE OF CONVENIENCE AND BREVITY. 2. IN ALL THE APPEALS THE COMMON ISSUE RELATES TO P ENALTY IMPOSED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE IN COME TAX ACT, 1961 (IN SHORT THE ACT). IT WAS A COMMON POINT BETWEEN THE PARTIES THAT THE ITA NOS. 804 TO 809/PN/2012 ITA NOS. 771 TO 776/PN/2012 ITA NOS. 766 TO 770/PN/2012 ITA NOS. 800 TO 803/PN/2012 ITA NOS. 777 TO 780/PN/2012 PENALTIES HAVE BEEN LEVIED IN THE CAPTIONED CASES A S A RESULT OF ASSESSMENTS MADE CONSEQUENT TO A SEARCH ACTION UNDERTAKEN BY TH E DEPARTMENT ON 21.02.2008. IN THE ABOVE BACKGROUND THE LEARNED COU NSELS HAVE MADE THEIR SUBMISSION. 3. THE APPEAL IN THE CASE OF SHRI MANGESH TUPE IN I TA NO. 804/PN/2012 PERTAINING TO THE ASSESSMENT YEAR 2003-04 IS TAKEN UP AS THE LEAD CASE. THIS APPEAL BY THE ASSESSEE PERTAINING TO THE ASSESSMENT YEAR 2003-04 IS DIRECTED AGAINST THE ORDER OF THE CIT(A) DATED 26.12.2011 WH ICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 30.06.2010 PASSED BY THE ASSESS ING OFFICER LEVYING PENALTY OF RS. 13,64,540/- UNDER SECTION 271(1)(C) OF THE ACT. 4. BRIEFLY PUT THE FACTS ARE THAT A SEARCH ACTION U NDER SECTION 132(1) OF THE ACT WAS CONDUCTED ON THE ASSESSEE ON 21.02.2008. IN RESPONSE TO A NOTICE ISSUED UNDER SECTION 153A OF THE ACT FOR ASSESSMENT YEAR 2003-04, ASSESSEE FILED A RETURN OF INCOME ON 08.10.2009 DECLARING N IL INCOME AND AGRICULTURAL INCOME OF RS. 5,04,200/-. AN ASSESSMENT UNDER SECTI ON 143(3) READ WITH SECTION 153A OF THE ACT WAS FINALIZED BY THE ASSESS ING OFFICER ON 31.12.2009 DETERMINING TOTAL INCOME OF RS. 53,86,150/- WHEREIN ADDITIONS WERE MADE ON ACCOUNT OF LONG TERM CAPITAL GAIN (LTCG), UNDISCLOS ED INVESTMENT IN BANK DEPOSITS AND AGRICULTURAL INCOME TREATED AS UNDISCL OSED INCOME, AMOUNTING TO RS. 30,12,878/-, RS. 18,69,073/- AND RS. 5,04,200/- RESPECTIVELY. THE ASSESSEE HAS ACCEPTED THE ADDITIONS MADE IN THE ASS ESSMENT ORDER DATED 30.12.2009. SUBSEQUENTLY, THE ASSESSING OFFICER HEL D THE ASSESSEE GUILTY OF HAVING CONCEALED THE INCOME AND FURNISHED INACCURAT E PARTICULARS OF INCOME IN RESPECT OF THE AFORESTATED THREE ADDITIONS, WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT AND LEVIED PENALTY OF RS. 13,6 4,540/- EQUIVALENT TO 100% OF TAX SOUGHT TO BE EVADED VIDE ORDER DATED 30 TH JUNE, 2010. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A), WHO VIDE HIS IMPUGNED ORDER DATED 26.12.2011 DELETED THE PENALTY LEVIED IN RELA TION TO THE LTCG OF ITA NOS. 804 TO 809/PN/2012 ITA NOS. 771 TO 776/PN/2012 ITA NOS. 766 TO 770/PN/2012 ITA NOS. 800 TO 803/PN/2012 ITA NOS. 777 TO 780/PN/2012 RS. 30,12,878/- WHILE SUSTAINING THE PENALTY WITH R ESPECT TO THE OTHER TWO ADDITIONS MADE ON ACCOUNT OF UNDISCLOSED INVESTMENT IN BANK DEPOSITS AND TREATING OF AGRICULTURAL INCOME AS UNDISCLOSED INCO ME AMOUNTING TO RS. 18,69,073/- AND RS. 5,04,200/- RESPECTIVELY. TH E ASSESSEE AS WELL AS THE REVENUE ARE IN APPEAL BEFORE US BY WAY OF CROSS-APP EALS. WHEREAS THE ASSESSEE VIDE ITA NO. 804/PN/2012 IS AGGRIEVED WITH THE ORDER OF THE CIT(A) SUSTAINING THE PENALTIES WITH RESPECT TO THE ADDITI ONS ON ACCOUNT OF UNDISCLOSED INVESTMENT IN BANK DEPOSITS AND TREATIN G OF AGRICULTURAL INCOME AS UNDISCLOSED INCOME, ON THE OTHER HAND, THE REVENUE IN ITS CROSS APPEAL VIDE ITA NO. 771/PN/2012 IS AGGRIEVED WITH THE ORDER OF THE CIT(A) IN DELETING THE PENALTY WITH RESPECT TO THE ADDITION MADE ON ACCOUN T OF LTCG ON SALE OF LAND. ACCORDINGLY, THE CROSS-APPEALS ARE TAKEN UP TOGETHE R. 5. IN THIS BACKGROUND, WE TAKE UP FOR DISCUSSION, T HE PENALTY LEVIED WITH RESPECT TO THE ADDITION OF RS. 18,69,073 REPRESENTI NG UNEXPLAINED INVESTMENT IN THE BANK ACCOUNT, WHICH IS THE FIRST ISSUE RAISE D BY THE ASSESSEE IN ITS APPEAL IN ITA NO. 804/PN/2012 (SUPRA). DURING THE C OURSE OF SEARCH ACTION UNDER SECTION 132(1) OF THE ACT, THE ASSESSEE WAS F OUND IN POSSESSION OF BANK PASSBOOKS OF TWO BANK ACCOUNTS NAMELY SB A/C N O. 20341 IN CANARA BANK, HADAPSAR BRANCH, PUNE AND SB A/C NO. 10442579 03 IN CENTRAL BANK OF INDIA, HADAPSAR BRANCH, PUNE; SUCH ACCOUNTS STOOD I N THE NAME OF THE ASSESSEES DRIVER, ONE MR. ANAND S. BHOPE. THE ASSE SSEE IN HIS STATEMENT RECORDED AT THE TIME OF SEARCH AND ALSO THEREAFTER IN THE POST-SEARCH ENQUIRIES ADMITTED THAT THE CASH DEPOSITS MADE IN THE AFORESA ID BANK ACCOUNTS WERE MADE BY HIM AND THAT THE SAME BELONGED TO THE ASSES SEE. THE ASSESSING OFFICER IN THE COURSE OF ASSESSMENT PROCEEDINGS NOT ICED THAT DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2003- 04 UNDER CONSIDERATION, ASSESSEE HAD MADE CASH DEPOSITS OF RS. 18,69,073/- WHICH WAS CONSIDERED AS UNEXPLAINED INVESTMENT OF THE ASSESSEE. THE ASSE SSING OFFICER HAS FURTHER RECORDED IN THE ASSESSMENT ORDER DATED 31.12.2009 T HAT ASSESSEE AGREED TO ITA NOS. 804 TO 809/PN/2012 ITA NOS. 771 TO 776/PN/2012 ITA NOS. 766 TO 770/PN/2012 ITA NOS. 800 TO 803/PN/2012 ITA NOS. 777 TO 780/PN/2012 THE SAID ADDITION VIDE ORDER SHEET NOTING DATED 08. 12.2009. SUBSEQUENTLY, WHEN THE ASSESSEE WAS SHOW-CAUSED AS TO WHY PENALTY UNDER SECTION 271(1)(C) OF THE ACT BE NOT LEVIED FOR THE SAID ADD ITIONS, THE CLAIM OF THE ASSESSEE WAS THAT HE AGREED TO SUCH ADDITIONS MEREL Y IN ORDER TO BUY PEACE AND THAT THE DEPARTMENT HAD NO EVIDENCE TO SHOW THA T ASSESSEE HAD ACTUALLY EARNED SUCH INCOME. HOWEVER, THE ASSESSING OFFICER HELD THAT ASSESSEE HAD CONCEALED AND FURNISHED INACCURATE PARTICULARS OF I NCOME QUA THE AFORESAID ADDITION AND THAT THE ASSESSEES CASE WAS COVERED B Y EXPLANATION- 5A TO SECTION 271(1)(C) OF THE ACT. BEFORE THE CIT(A), AS SESSEE REITERATED THE AFORESAID ARGUMENT AND ALSO POINTED OUT THAT BECAUS E OF MERE ADMISSION AND IN THE ABSENCE OF ANY CONCRETE EVIDENCE, PENALTY WA S NOT LEVIABLE. FURTHER, ASSESSEE CONTENDED THAT THE LEVEL OF ADDITION MADE WAS UNWARRANTED AND POINTED OUT THAT IN THE IMPUGNED BANK ACCOUNT THERE ARE NOT ONLY CASH DEPOSITS BUT ALSO CASH WITHDRAWAL; THUS, THE ADDITI ON WAS MAINTAINABLE ONLY WITH REGARD TO THE PEAK AMOUNT OF DEPOSITS NET OF W ITHDRAWALS MADE. THE ASSESSEE SUBMITTED ALTERNATIVELY THAT THE PENALTY B E RETAINED WITH RESPECT TO THE AFORESAID ADDITION ONLY ON THE AMOUNT OF PEAK D EPOSITS I.E. AFTER CONSIDERING THE CASH WITHDRAWALS ALSO. THE CIT(A) H AS HOWEVER UPHELD THE LEVY OF PENALTY ON THE GROUND THAT THE DEPOSITS IN QUESTION WERE ADMITTED BY THE ASSESSEE AS HIS OWN UNDISCLOSED INCOME AND THER EFORE THE PENALTY WAS JUSTIFIABLY IMPOSED. THE ALTERNATIVE PLEA HAS BEEN REJECTED BY THE CIT(A) BY OBSERVING THAT THERE WAS NO CO-RELATION BETWEEN THE DEPOSITS AND WITHDRAWALS AND THAT SUCH A NEW PLEA COULD NOT BE RAISED DURING PENALTY PROCEEDINGS. AGAINST THE SUSTENANCE OF PENALTY, ASSESSEE IS IN A PPEAL BEFORE US. 6. BEFORE US, LEARNED COUNSEL FOR THE ASSESSEE HAS NOT DISPUTED THE ASSERTION OF THE ASSESSING OFFICER THAT THE PROVISI ONS OF EXPLANATION- 5A TO SECTION 271(1)(C) OF THE ACT ARE ATTRACTED IN THE P RESENT SITUATION, SO HOWEVER, IT IS STATED THAT THE PENALTY BE RETAINED ONLY WITH RESPECT TO THE ADDITION QUANTIFIED ON THE BASIS OF PEAK NET CREDIT APPEARIN G IN THE BANK ACCOUNT. ITA NOS. 804 TO 809/PN/2012 ITA NOS. 771 TO 776/PN/2012 ITA NOS. 766 TO 770/PN/2012 ITA NOS. 800 TO 803/PN/2012 ITA NOS. 777 TO 780/PN/2012 7. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPR ESENTATIVE APPEARING FOR THE REVENUE, HAS DEFENDED THE IMPOSITION OF PEN ALTY ON THE BASIS OF THE POINTS RAISED IN THE ORDER OF THE AUTHORITIES BELOW , WHICH WE HAVE ALREADY ADVERTED TO IN THE EARLIER PORTION OF THE ORDER, AN D THE SAME ARE NOT BEING REPEATED FOR THE SAKE OF BREVITY. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. IN THE PRESENT CASE, A SEARCH ACTION UNDER SECTION 132(1) OF THE A CT WAS CARRIED OUT ON 21.02.2008 AND ASSESSEE WAS FOUND TO BE OWNER OF TW O BANK ACCOUNTS, DETAILED EARLIER, WHICH STOOD IN THE NAME OF ONE MR . ANAND S. BHOPE. THE ASSESSEE ALSO ACCEPTED THAT THE CASH DEPOSITS MADE IN THE IMPUGNED BANK ACCOUNTS BELONGED TO HIM AND ACCORDINGLY AN AMOUNT OF RS. 18,69,073/- REPRESENTING CASH DEPOSITS DURING THE YEAR UNDER CO NSIDERATION HAVE BEEN CONSIDERED AS UNDISCLOSED INVESTMENT OF THE ASSESSE E. OSTENSIBLY, THE PROVISIONS OF SUCH EXPLANATION 5A TO SECTION 271(1) (C) OF THE ACT ARE APPLICABLE IN THE PRESENT CASE AND IN TERMS THEREOF THE ASSESSEE IS DEEMED TO HAVE CONCEALED THE IMPUGNED INCOME OR FURNISHED INA CCURATE PARTICULARS OF SUCH INCOME I.E. RS. 18,69,073/- REPRESENTING UNDIS CLOSED INVESTMENT IN THE TWO IMPUGNED BANK ACCOUNTS STANDING IN THE NAME OF MR. ANAND S. BHOPE. IT IS ALSO FACTUALLY EMERGING THAT NO RETURN OF INCOME FOR ASSESSMENT YEAR 2003- 04 WAS FILED BY THE ASSESSEE PRIOR TO THE SEARCH AC TION CARRIED UNDER SECTION 132 (1) OF THE ACT. THE ALTERNATIVE PLEA OF THE ASS ESSEE WITH REGARD TO THE QUANTUM OF PENALTY LEVIED, IN OUR VIEW, IS ALSO MIS PLACED. AS PER THE ASSESSEE, THE ADDITION OF RS. 18,69,073/- REPRESENTS ONLY THE CASH DEPOSIT/ENTRIES IN THE IMPUGNED BANK ACCOUNT WHEREAS CASH WITHDRAWAL ENTRI ES ARE ALSO THERE, AND THUS ADDITION WAS WARRANTED ONLY WITH REGARD TO THE PEAK BALANCE DURING THE YEAR, AFTER NETTING THE CASH WITHDRAWALS. IN THIS C ONNECTION THE CIT(A) HAS OBSERVED THAT ASSESSEE FAILED TO ESTABLISH ANY CO-R ELATION BETWEEN THE CASH DEPOSITS AND WITHDRAWALS. EVEN BEFORE US, THERE IS NO MATERIAL REFERRED TO BY ITA NOS. 804 TO 809/PN/2012 ITA NOS. 771 TO 776/PN/2012 ITA NOS. 766 TO 770/PN/2012 ITA NOS. 800 TO 803/PN/2012 ITA NOS. 777 TO 780/PN/2012 THE ASSESSEE TO SHOW ANY CO-RELATION BETWEEN THE DE POSITS AND WITHDRAWALS AND THEREFORE THE AFORESAID PLEA OF THE ASSESSEE HA S BEEN RIGHTLY REJECTED BY THE CIT(A), WHICH WE HEREBY AFFIRM. THEREFORE, THE ACTION OF THE LOWER AUTHORITIES IN IMPOSING THE PENALTY UNDER SECTION 2 71(1)(C) OF THE ACT IN RELATION TO INCOME OF RS. 18,69,073/- REPRESENTING UNDISCLOSED INVESTMENT IN THE BANK ACCOUNTS STANDING IN THE NAME OF MR. ANAND S. BHOPE IS HEREBY AFFIRMED. ACCORDINGLY, ASSESSEE FAILS ON THIS ASPEC T. 9. THE SECOND ISSUE RAISED BY THE ASSESSEE IS TO T HE EFFECT THAT NO PENALTY UNDER SECTION 271(1)(C) IS LEVIABLE WITH RE SPECT TO THE ADDITION OF RS. 5,04,200/-. IN THE RETURN OF INCOME FILED IN RE SPONSE TO NOTICE UNDER SECTION 153A OF THE ACT, ASSESSEE DECLARED AGRICULT URAL INCOME OF RS. 5,04,200/-, WHICH HAS BEEN TREATED BY THE ASSES SING OFFICER AS UNEXPLAINED IN THE ASSESSMENT ORDER DATED 31.12.200 9. DURING THE ASSESSMENT PROCEEDINGS, ASSESSEE WAS ASKED TO EXPLA IN THE SOURCE OF CERTAIN DEPOSITS IN THE BANK AND THE SAME WERE EXPLAINED AS THE DEPOSIT OF THE SALE PROCEEDS OF AGRICULTURAL PRODUCE. THE APPELLANT FUR THER EXPLAINED THAT HIS FAMILY OWNED AGRICULTURAL LAND AT KOLWADI, THEUR AD MEASURING 13 ACRES AND THAT HE WAS ALSO CULTIVATING ANOTHER 13 ACRES OF LA ND OWNED BY HIS UNCLE. THE ASSESSING OFFICER CONDUCTED ENQUIRIES AND HAS RECOR DED A FINDING IN THE ASSESSMENT ORDER THAT NO AGRICULTURAL ACTIVITY WAS CARRIED OUT IN THE STATED LAND FOR THE LAST 10 YEARS; THE ASSESSING OFFICER HAS AL SO NOTED THAT ASSESSEE DID NOT SUBMIT ANY EVIDENCE IN SUPPORT OF HIS AGRICULTU RAL INCOME EXCEPT THE OWNERSHIP OF LAND. ON BEING CONFRONTED, IT IS NOTED IN THE ASSESSMENT ORDER THAT VIDE ORDER SHEET NOTING DATED 08.12.2009 ASSES SEE ADMITTED THAT THE AGRICULTURAL INCOME CLAIMED AT RS. 5,04,200/- WAS U NEXPLAINED. THE ASSESSING OFFICER HAS LEVIED PENALTY ON THE AFORESAID ADDITIO N, WHICH HAS BEEN UPHELD BY THE CIT(A) ON THE GROUND THAT THERE WAS NO MATERIAL TO NEGATE THE FINDING OF THE ASSESSING OFFICER THAT THE AGRICULTURAL INCOME SHOWN BY THE ASSESSEE WAS BOGUS. ITA NOS. 804 TO 809/PN/2012 ITA NOS. 771 TO 776/PN/2012 ITA NOS. 766 TO 770/PN/2012 ITA NOS. 800 TO 803/PN/2012 ITA NOS. 777 TO 780/PN/2012 10. BEFORE US, LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE PENALTY HAS BEEN SUSTAINED BY THE CIT(A) WITHOUT AP PRECIATING THE FACT THAT EVEN DURING SEARCH ACTION, ASSESSEE HAD EXPLAINED T HAT HE WAS CARRYING ON AGRICULTURAL ACTIVITIES AND THE SAID ASPECT COULD N OT BE DISPUTED. MERELY BECAUSE THE ASSESSEE COULD NOT SUBSTANTIATE THE QUA NTUM OF AGRICULTURAL INCOME DECLARED, CANNOT BE TREATED AS CONCEALMENT O R FURNISHING OF INACCURATE PARTICULARS OF INCOME UNDER SECTION 271(1)(C) OF TH E ACT. ACCORDING TO THE LEARNED COUNSEL, THE ASSESSEE HAD DULY EXPLAINED TH E CASH DEPOSITS APPEARING IN THE BANK ACCOUNT AS BEING OUT OF AGRIC ULTURAL INCOME AND THAT THE SAID EXPLANATION WAS CONSISTENTLY FURNISHED RIGHT F ROM THE TIME OF SEARCH AND DURING THE ASSESSMENT PROCEEDINGS. THE LEARNED COUN SEL POINTED OUT THAT THERE WAS NO EVIDENCE WITH THE DEPARTMENT TO SHOW T HAT THE AGRICULTURAL INCOME DECLARED WAS FALSE, AND THE ADDITION WAS ACC EPTED BY THE ASSESSEE ONLY TO BUY PEACE AND AVOID LITIGATION. AT THE TIME OF HEARING, THE LEARNED COUNSEL RELIED UPON THE JUDGEMENT OF THE HONBLE BO MBAY HIGH COURT IN THE CASE OF BHIMJI BHANJEE & CO. 146 ITR 144 (BOM.) FOR THE PROPOSITION THAT MERE AGREEMENT TO AN ADDITION DOES NOT MEAN THAT THERE W AS CONCEALMENT OR FURNISHING INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT. 11. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REP RESENTATIVE APPEARING FOR THE REVENUE HAS POINTED OUT THAT THE CIT(A) HAS RIGHTLY UPHELD THE LEVY OF PENALTY BY CONSIDERING THE FINDINGS OF THE ASSESSIN G OFFICER CONTAINED IN THE ASSESSMENT ORDER, WHICH CLEARLY SHOW THAT NO AGRICU LTURAL ACTIVITY WAS CARRIED OUT IN THE STATED LAND, AND THIS ASPECT HAS NOT BEE N REBUTTED BY THE ASSESSEE ON THE BASIS OF ANY EVIDENCE. IT WAS THUS, CONTENDE D THAT THE PENALTY HAS BEEN RIGHTLY IMPOSED. ITA NOS. 804 TO 809/PN/2012 ITA NOS. 771 TO 776/PN/2012 ITA NOS. 766 TO 770/PN/2012 ITA NOS. 800 TO 803/PN/2012 ITA NOS. 777 TO 780/PN/2012 12. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. DURING THE ASSESSMENT PROCEEDINGS, ASSESSEE WAS ASKED TO EXPLA IN CERTAIN DEPOSITS IN BANK ACCOUNT AMOUNTING TO RS. 5,04,200/-, WHICH THE ASSESSEE EXPLAINED AS INCOME FROM AGRICULTURE. THE ASSESSEE HAD DISCLOSED RS. 5,04,200/- AS AGRICULTURAL INCOME IN THE RETURN OF INCOME FILED I N RESPONSE TO NOTICE UNDER SECTION 153A OF THE ACT FOR THE ASSESSMENT UNDER CO NSIDERATION. THE ASSESSING OFFICER HOWEVER DID NOT ACCEPT THE CLAIM OF THE ASSESSEE AND INSTEAD HELD THAT AMOUNT OF RS. 5,04,200/- WAS INCO ME FROM UNDISCLOSED SOURCES. THE ASSESSEE HAS ACCEPTED SUCH ADDITION. T HE PLEA OF THE ASSESSEE IS THAT HE WAS OWING AGRICULTURAL LANDS ADMEASURING 13 ACRES AND ALSO CLAIMED TO HAVE CULTIVATED 13 ACRES OF LAND BELONGING TO HI S UNCLE. IT HAS ALSO BEEN SUBMITTED THAT EVEN IN THE COURSE OF STATEMENT RECO RDED ON 17.04.2008, ASSESSEE HAD EXPLAINED THAT HE WAS CARRYING ON AGRI CULTURAL ACTIVITIES. A COPY OF SUCH STATEMENT HAS BEEN PLACED IN THE PAPER BOOK AT PAGES 50 TO 68 WHEREIN ASSESSEE STATED THAT HE WAS INVOLVED IN AGR ICULTURAL ACTIVITIES FROM 1983 ONWARDS AND THAT HE WAS A B.SC. (AGRI.) GRADUA TE. BEFORE US, THE LEARNED COUNSEL HAS EMPHASIZED THAT THE EXPLANATION OF THE ASSESSEE OF BEING ENGAGED IN AGRICULTURAL ACTIVITIES WAS BONAFIDE, AN D THAT MERELY BECAUSE ASSESSEE COULD NOT SUBSTANTIATE THE QUANTUM OF INCO ME OR THE FACT THAT HE AGREED TO THE SAID ADDITION, CANNOT BE CONSTRUED AS CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME WITHIN THE MEAN ING OF SECTION 271(1)(C) OF THE ACT. 13. IN OUR CONSIDERED OPINION, IN ORDER TO TEST THE CHARGE OF CONCEALMENT MADE BY THE REVENUE, IT IS NECESSARY TO EXAMINE THE MANNER IN WHICH THE IMPUGNED ADDITION HAS BEEN MADE BY THE ASSESSING OF FICER. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS CATEGOR ICALLY ASSERTED THAT AS A RESULT OF THE ENQUIRIES CONDUCTED NO AGRICULTURAL A CTIVITY WAS FOUND TO HAVE BEEN CARRIED OUT ON THE STATED LANDS IN THE LAST 10 YEARS. THE AFORESAID ASSERTION OF THE ASSESSING OFFICER IS UNCONTROVERTE D. OSTENSIBLY THERE IS NO ITA NOS. 804 TO 809/PN/2012 ITA NOS. 771 TO 776/PN/2012 ITA NOS. 766 TO 770/PN/2012 ITA NOS. 800 TO 803/PN/2012 ITA NOS. 777 TO 780/PN/2012 EVIDENCE THAT ASSESSEE HAS CARRIED OUT ANY AGRICULT URAL ACTIVITY AND THE ASSESSEE ADMITTED THAT THE AGRICULTURAL INCOME DECL ARED IN THE RETURN OF INCOME WAS UNDISCLOSED INCOME. HAVING REGARD TO THE FACTS AND CIRCUMSTANCES, THE STAND OF THE ASSESSEE OF HAVING CARRIED OUT ANY AGRICULTURAL ACTIVITY STANDS DISPROVED AND ACCORDINGLY CONCEALME NT AND FURNISHING OF INACCURATE PARTICULARS OF INCOME QUA THE STATED AGR ICULTURAL INCOME STANDS ESTABLISHED WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT. THEREFORE THE CIT(A) WAS JUSTIFIED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN IMPOSING PENALTY UNDER SECTION 271(1)(C) OF THE ACT AND THE ASSESSEE HAS TO FAIL ON THIS ASPECT ALSO. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT A NO. 804/PN/2012 IS HEREBY DISMISSED. 15. NOW, WE MAY TAKE UP THE CROSS APPEAL PREFERRED BY THE REVENUE FOR THE ASSESSMENT YEAR 2003-04 VIDE ITA NO. 771/PN/201 2. AS NOTED EARLIER THE GRIEVANCE OF THE REVENUE IS WITH REGARD TO THE ACTI ON OF THE CIT(A) IN DELETING THE PENALTY IMPOSED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE ACT WITH RESPECT TO THE ADDITION OF RS. 30,12,878/- MADE ON ACCOUNT OF LTCG ON SALE OF LANDS. 16. IN ORDER TO APPRECIATE THE CONTROVERSY, IT WOUL D BE APPROPRIATE TO BRIEFLY TOUCH UPON THE FACTS REGARDING THE IMPUGNED ADDITIO N. THE ASSESSEE AND HIS FAMILY MEMBERS OWNED AROUND 18 ACRES OF LAND IN HAD APSAR. THE ASSESSEE AND HIS FAMILY MEMBERS ALONGWITH A NUMBER OF OTHER AGRICULTURISTS GAVE THEIR LAND TO ONE MAGARPATTA TOWNSHIP DEVELOPMENT CORPORA TION LTD. (MTDCL) FOR DEVELOPMENT IN TERMS OF AN MOU DATED 26.03.1999. TH E MTDCL WAS TO UNDERTAKE DEVELOPMENT IN PHASES AND ACCORDINGLY IT TOOK POSSESSION OF THE PIECES OF LAND BELONGING TO VARIOUS AGRICULTURISTS OVER THE YEARS, IT DID NOT TAKE OVER THE ENTIRE LAND IN ONE GO, SIMILARLY, THE CONS IDERATION WAS ALONG BEING ITA NOS. 804 TO 809/PN/2012 ITA NOS. 771 TO 776/PN/2012 ITA NOS. 766 TO 770/PN/2012 ITA NOS. 800 TO 803/PN/2012 ITA NOS. 777 TO 780/PN/2012 PAID IN INSTALLMENTS. THE ASSESSING OFFICER NOTED T HAT AT THE END OF EACH YEAR, MTDCL WAS ISSUING LAND COST CERTIFICATES ON THE BAS IS OF PRO-RATA SHARE OF THE LANDOWNER IN THE TOTAL LAND DEVELOPED AND SOLD IN A PARTICULAR YEAR. THE ASSESSING OFFICER HAD NOTICED THAT ON PERUSAL OF TH E LAND COST CERTIFICATES ISSUED BY MTDCL FOR THE YEAR UNDER CONSIDERATION IT WAS FOUND THAT ASSESSEE HAD ACCRUED SALE CONSIDERATION OF RS. 2,92,722/-. T HE ASSESSEE HAD NOT DISCLOSED ANY CAPITAL GAIN FOR THE YEAR UNDER CONSI DERATION IN THE RETURN OF INCOME FILED RESPONSE TO A NOTICE UNDER SECTION 153 A OF THE ACT. THE ASSESSEE HAD EXPLAINED THAT HE HAD DISCLOSED THE CO RRESPONDING CAPITAL GAIN ON ACTUAL RECEIPT BASIS AND NOT ON THE BASIS OF THE LAND COST CERTIFICATES ISSUED BY THE MTDCL AS NO AMOUNT WAS ACTUALLY RECEIVED DUR ING THE YEAR UNDER CONSIDERATION. HOWEVER, THE ASSESSEE AGREED TO TAXI NG OF CAPITAL GAINS ON ACCRUAL BASIS DURING THE ASSESSMENT PROCEEDINGS. AC CORDINGLY, THE ASSESSING OFFICER COMPUTED LONG TERM CAPITAL GAIN (LTCG) AT R S. 30,12,878/- AS DETAILED IN PARA 6.3 OF THE ASSESSMENT ORDER DATED 31.12.2009 WHICH ALSO INCLUDED THE CAPITAL GAIN BELONGING TO ASSESSEES T WO MINOR CHILDREN AS PER THE PROVISIONS OF SECTION 64 (1A) OF THE ACT. THE ASSES SEE ACCEPTED THE ADDITION AND NO APPEAL WAS PREFERRED AGAINST THE SAME. SUBSE QUENTLY, THE ASSESSING OFFICER HELD THE ASSESSEE GUILTY OF CONCEALMENT AND FURNISHING OF INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF SECTION 271(10)(C) OF THE ACT WITH RESPECT OF THE AFORESAID INCOME. THE CIT(A) HAS SIN CE DELETED THE PENALTY IMPOSED BY THE ASSESSING OFFICER ON THE GROUND THAT HAVING REGARD TO THE CLAUSES OF THE MOU DATED 26.03.1999 (SUPRA) THE TRA NSFER OF LAND TOOK PLACE IN THE FINANCIAL YEAR 1998-99 RELEVANT TO THE ASSESSME NT YEAR 1999-2000 ITSELF AND THEREFORE, THE IMPUGNED CAPITAL GAIN WAS LIABLE TO BE TAXED IN ASSESSMENT YEAR 1999-2000 AND NOT IN THE ASSESSMENT YEAR UNDER CONSIDERATION IN THE LIGHT OF THE JUDGEMENT OF THE HONBLE BOMBAY HIGH C OURT IN THE CASE OF CHATURBHUJ DWARKADAS KAPADIA 260 ITR 491 (BOM.). AS PER THE CIT(A), EVEN DURING THE PENALTY PROCEEDINGS ASSESSEE COULD AGITA TE THAT AN INCOME SUBJECT TO PENALTY WAS INDEED NOT TAXABLE AT ALL, AND ACCOR DINGLY CIT(A) FOUND MERIT IN ITA NOS. 804 TO 809/PN/2012 ITA NOS. 771 TO 776/PN/2012 ITA NOS. 766 TO 770/PN/2012 ITA NOS. 800 TO 803/PN/2012 ITA NOS. 777 TO 780/PN/2012 ASSESSEES PLEA THAT IMPUGNED INCOME BY WAY OF LTCG ON SALE OF LAND WAS NOT TAXABLE IN THE INSTANT YEAR AND THEREFORE IT CO ULD NOT BE SAID THAT THERE WAS ANY CONCEALMENT OR FURNISHING OF INACCURATE PARTICU LARS IN ORDER TO LEVY PENALTY UNDER SECTION 271(1)(C) OF THE ACT. AGAINST THE AFO RESAID DECISION, REVENUE IS IN APPEAL BEFORE US. 17. BEFORE US, THE LEARNED DEPARTMENTAL REPRESENTAT IVE HAS SUBMITTED THAT PLEA OF THE ASSESSEE THAT IMPUGNED CAPITAL GAIN WAS NOT TAXABLE DURING THE YEAR UNDER CONSIDERATION WAS A FRESH PLEA RAISED ON LY IN THE PROCEEDINGS BEFORE THE CIT(A) AND THE SAME WAS NEITHER RAISED D URING THE ASSESSMENT PROCEEDINGS AND NOR IN THE PENALTY PROCEEDINGS BEFO RE THE ASSESSING OFFICER. AS PER THE DEPARTMENTAL REPRESENTATIVE, THE CIT(A) WAS WRONG IN CONSIDERING SUCH A PLEA WHILE DEALING WITH THE PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT AS THE SAME WOULD AMOUNT TO REOPENING OF TH E ASSESSMENT WHICH WAS NOT PERMISSIBLE. 18. APART THEREFROM, IT HAS ALSO BEEN CONTENDED THA T HAVING REGARD TO THE TERMS AND CONDITIONS OF THE MOU DATED 26.03.1999 TH E CONSIDERATION ACCRUING WITH TO THE ASSESSEE COULD NOT BE QUANTIFIED OR COM PUTED IN ASSESSMENT YEAR 1999-2000 AND THEREFORE CIT(A) ERRED IN ACCEPTING T HE PLEA OF THE ASSESSEE THAT THE CAPITAL GAIN WAS ASSESSABLE IN ASSESSMENT YEAR 1999-2000 AND NOT IN ASSESSMENT YEAR UNDER CONSIDERATION. 19. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. SECTION 271(1)(C) OF THE ACT EMPOWERS THE ASSESSING OFFICER TO IMPOSE PENALTY IF HE IS SATISFIED THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. OSTENSIBLY, THE ESSENTIAL PRE-REQUISITES OF SECTION 271(1)(C) OF THE ACT ARE THAT THE ASSESS EE SHOULD HAVE EITHER CONCEALED THE INCOME OR FURNISHED INACCURATE PARTIC ULARS OF SUCH INCOME. ACCORDINGLY, IN ORDER TO TEST THE EFFICACY OF THE P ENALTY IMPOSED BY THE ITA NOS. 804 TO 809/PN/2012 ITA NOS. 771 TO 776/PN/2012 ITA NOS. 766 TO 770/PN/2012 ITA NOS. 800 TO 803/PN/2012 ITA NOS. 777 TO 780/PN/2012 ASSESSING OFFICER IN THIS CASE, IT WOULD HAVE TO BE EXAMINED AS TO WHETHER THE ASSESSEE HAD CONCEALED OR FURNISHED INACCURATE PART ICULARS OF INCOME RELATING TO CAPITAL GAINS ON TRANSFER/SALE OF LAND TO MTDCL. THE CHARGE MADE BY THE ASSESSING OFFICER IS THAT THE ASSESSEE HAS CONCEALE D AND FURNISHED INACCURATE PARTICULARS OF INCOME WITH RESPECT TO THE LTCG ASSE SSED AT RS. 30,12,878/- ON ACCOUNT OF SALE OF LAND TO MTDCL. 20. IN ORDER TO ADJUDICATE THE CONTROVERSY, IT WO ULD BE APPROPRIATE TO BRIEFLY CULL OUT THE RELEVANT FACTS AND THE BACKGROUND IN W HICH THE CHARGE OF CONCEALMENT AND FURNISHING OF INACCURATE PARTICULAR S OF INCOME HAS BEEN MADE AGAINST THE ASSESSEE. THE ASSESSEE AND HIS FAM ILY MEMBERS OWNED AROUND 18 ACRES OF LAND AT HADAPSAR AND AS PER AN M OU DATED 26.03.1999 ENTERED INTO WITH MTDCL, ASSESSEE, HIS FAMILY MEMBE RS ALONG WITH A NUMBER OF OTHER AGRICULTURISTS GAVE THE LAND FOR DEVELOPME NT TO MTDCL, A COPY OF THE SAID MOU HAS BEEN PLACED IN THE PAPER BOOK AT PAGES 1 TO 18. PRIOR TO THE SEARCH ACTION, ASSESSEE HAD NOT FILED ANY RETURN OF INCOME AND IT WAS ONLY IN THE COURSE OF SEARCH, ASSESSEE SUBMITTED THE TRANSF ER OF LAND TO MTDCL AND IN A STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT, ASSESSEE AGREED TO OFFER THE CAPITAL GAIN ON SALE OF LAND IN RESPECTIV E YEARS. IN THE RETURN OF INCOME FILED IN PURSUANCE TO NOTICE UNDER SECTION 1 53A OF THE ACT FOR THE ASSESSMENT YEAR 2003-04, NO CAPITAL GAIN WAS DECLAR ED ON THE GROUND THAT THE SAME WOULD BE OFFERED TO TAX IN THE YEARS WHEN THE CONSIDERATION WOULD BE ACTUALLY RECEIVED. IN FACT, WE FIND THAT IN THE RET URN OF INCOME FILED, ASSESSEE APPENDED THE FOLLOWING NOTE : - THE ASSESSEE AND HIS FAMILY OWNED AROUND 18 ACRES IN HADAPSAR, MAGARPATTA CITY, PUNE. THE ASSESSEE HAD ENTERED INT O A MEMORANDUM OF UNDERSTANDING AS PER WHICH THE ASSESSEE FAMILY HAD AGREED TO GIVE THE SAID LAND FOR DEVELOPMENT AND THE CONSIDERATION WOULD BE PAID ON THE BASIS OF THE LAND DEVELOPED AND SOLD BY MAGARPATTA TOWNSHIP DEVE LOPMENT CO. LTD. (MTDCL). ACCORDINGLY, MTDCL HAS ISSUED LAND COST CE RTIFICATE GIVING DETAILS ITA NOS. 804 TO 809/PN/2012 ITA NOS. 771 TO 776/PN/2012 ITA NOS. 766 TO 770/PN/2012 ITA NOS. 800 TO 803/PN/2012 ITA NOS. 777 TO 780/PN/2012 OF THE AMOUNT PAYABLE TO THE ASSESSEE. HOWEVER, DUR ING THE YEAR, THE ASSESSEE HAS RECEIVED MUCH LESSER SALE CONSIDERATIO N AND HENCE, THE CAPITAL GAIN IS OFFERED TO TAX ON THE BASIS OF THE SALE CON SIDERATION ACTUALLY RECEIVED AND NOT ON THE BASIS OF THE AMOUNT SHOWN IN THE LAN D COST CERTIFICATE ISSUED BY MTDCL 21. THE ASSESSING OFFICER CONFRONTED THE ASSESSE E THAT THE CAPITAL GAINS BE TAXED ON ACCRUAL BASIS, ON THE BASIS OF LAND COS T CERTIFICATE ISSUED BY THE MTDCL FROM YEAR TO YEAR. NOTABLY, SINCE MTDCL HAD T AKEN OVER A LARGE CHUNK OF LAND FOR DEVELOPMENT, THE SAME WAS DEVELOP ED IN PHASES OVER A NUMBER OF YEARS. IN TERMS OF THE MOU, MTDCL ISSUED LAND COST CERTIFICATES FROM YEAR TO YEAR TO DIFFERENT LANDOWNERS, WHICH IN DICATED THE AMOUNT PAYABLE TO THE RESPECTIVE OWNERS (I.E. THE ASSESSEE) ON THE BASIS OF THE OVERALL LAND DEVELOPED AND SOLD DURING THE RESPECTIVE YEARS. THE LAND COST CERTIFICATES SO ISSUED ONLY INDICATED THE CONSIDERATION RECEIVABLE BY THE ASSESSEE PROPORTIONATE TO HIS PORTION OF LAND DEVELOPED BY T HE MTDCL IN A GIVEN YEAR. THE ASSESSEE EXPLAINED TO THE ASSESSING OFFICER THA T DURING THE YEAR UNDER CONSIDERATION NO AMOUNT WAS RECEIVED FROM MTDCL EVE N THOUGH AS PER THE LAND COST CERTIFICATES ISSUED, ASSESSEE WAS ENTITLE D TO A CERTAIN SUM. THE ASSESSING OFFICER, HOWEVER TAXED THE CAPITAL GAINS ON THE BASIS OF THE YEARLY LAND COST CERTIFICATES ISSUED BY MTDCL, AS THE SAME REFLECTED CONSIDERATION ACCRUING TO THE ASSESSEE. THE ASSESSEE DID NOT CONT EST THE SAID DECISION OF THE ASSESSING OFFICER IN BRINGING TO TAX THE CAPITA L GAINS ON THE BASIS OF LAND COST CERTIFICATES ISSUED BY MTDCL CONSIDERING THAT THE TRANSACTION IN QUESTION WAS UNIQUE AND A COMPLEX MATTER, WHEREBY THE LAND O WNERS WHO HAD TRANSFERRED THE LAND TO MTDCL FOR DEVELOPMENT WERE TO RECEIVE CONSIDERATION OVER THE PERIOD WHEN MTDCL UNDERTOOK ACTUAL DEVELOP MENT OF LAND. IT MAY ALSO BE NOTEWORTHY THAT THE ASSESSING OFFICER HAS N OTED IN PARA 6.1 OF THE ASSESSMENT ORDER THAT IN FACT THE ASSESSEE HAD NOT GIVEN THE ACTUAL POSSESSION OF HIS PORTION OF LAND TO MTDCL IN THIS YEAR, BUT WAS OBTAINING THE LAND COST CERTIFICATES ON PRO-RATA BASIS AND THE EXPLANATION FOR THE AFORESAID ITA NOS. 804 TO 809/PN/2012 ITA NOS. 771 TO 776/PN/2012 ITA NOS. 766 TO 770/PN/2012 ITA NOS. 800 TO 803/PN/2012 ITA NOS. 777 TO 780/PN/2012 FEATURE IS THAT THE DEVELOPMENT OF LAND WAS BEING C ARRIED OUT BY MTDCL AS PER MOU OVER AN EXTENDED PERIOD OF TIME AND IN A PH ASED MANNER. 22. PERTINENTLY, AT THIS POINT WE MAY NOTICE THAT B EFORE THE LOWER AUTHORITIES ASSESSEE POINTED OUT THE COMPLEXITY IN TAXING THE I MPUGNED TRANSACTION IN THE HANDS OF THE AGRICULTURISTS. IT WAS EXPLAINED THAT THE MANNER OF TAXATION OF CAPITAL GAIN ADOPTED BY THE ASSESSING OFFICER WAS A CCEPTED BY THE ASSESSEE ONLY CONSIDERING THE COMPLEXITY INVOLVED BUT ALL TH E SAME IT WAS AD-HOCISM AND THAT SUCH PROPOSAL WAS INDEED ACCEPTED BY ALL T HE AGRICULTURISTS WHO WERE TO RECEIVE CONSIDERATION FROM MTDCL. NEVERTHELESS T HE ASSESSEE HAD STILL NOT HANDED OVER THE POSSESSION OF HIS SHARE OF LAND BUT WAS RECEIVING THE LAND COST CERTIFICATES ISSUED BY THE MTDCL, INDICATING H IS SHARE IN THE CONSIDERATION FOR THE LANDS DEVELOPED AND SOLD DURI NG THE YEAR, AND IT DID NOT INDICATE AMOUNTS ACTUALLY PAID TO THE ASSESSEE IN D IFFERENT YEARS. IT WAS IN THIS BACKGROUND, THE ASSESSEE EXPLAINED THAT IN THE STAT EMENT RECORDED UNDER SECTION 132(4) OF THE ACT, ASSESSEE AGREED TO OFFER CAPITAL GAINS ON THE BASIS OF THE AMOUNTS ACTUALLY RECEIVED FROM YEAR TO YEAR. IN THE RETURNS OF INCOME FILED AFTER THE SEARCH, ASSESSEE DISCLOSED THE CAPI TAL GAINS ON THE BASIS OF CONSIDERATION ACTUALLY RECEIVED AND NOT ON THE BASI S OF THE CONSIDERATION SHOWN PAYABLE BY MTDCL FROM YEAR TO YEAR. 23. THE MOOT POINT TO CONSIDER IS WHETHER MERELY BE CAUSE THE ASSESSING OFFICER HAS CHOSEN TO BRING TO TAX CAPITAL GAIN ON THE BASIS OF THE AMOUNTS PAYABLE TO THE ASSESSEE YEAR TO YEAR AS PER THE LAN D COST CERTIFICATES ISSUED BY MTDCL AS AGAINST THE DISCLOSURE OF CAPITAL GAINS MADE BY THE ASSESSEE ON THE BASIS OF THE ACTUAL AMOUNTS RECEIVED FROM MTDCL , WOULD IT CONSTITUTE CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT. AT THE OUT SET, IT WOULD BE APPROPRIATE TO OBSERVE THAT SO FAR AS THE BONAFIDES OF THE MANN ER OF OFFERING CAPITAL GAINS IN THE RETURN OF INCOME BY THE ASSESSEE IS CONCERNE D, THERE IS NO INFIRMITY. IN ITA NOS. 804 TO 809/PN/2012 ITA NOS. 771 TO 776/PN/2012 ITA NOS. 766 TO 770/PN/2012 ITA NOS. 800 TO 803/PN/2012 ITA NOS. 777 TO 780/PN/2012 FACT, THE NOTE APPENDED TO THE RETURN FILED BY THE ASSESSEE IN PURSUANCE TO NOTICE UNDER SECTION 153A OF THE ACT, AND WHICH HAS BEEN REPRODUCED BY US ELSEWHERE IN THE ORDER, CLEARLY BRINGS OUT THAT THE ASSESSEE FULLY DISCLOSED THE MANNER IN WHICH THE CAPITAL GAIN WAS BEING OFFERED. IN THE SAID NOTE, ASSESSEE DISCLOSED THAT IN TERMS OF MOU, MTDCL HAD ISSUED LA ND COST CERTIFICATES GIVING DETAILS OF THE AMOUNT PAYABLE TO THE ASSESSE E; IT WAS ALSO EXPLAINED THAT THE AMOUNTS ACTUALLY RECEIVED FROM MTDCL WAS M UCH LESSER AND THEREFORE, THE CAPITAL GAINS WERE BEING OFFERED TO TAX IN RESPECTIVE YEARS ON THE BASIS OF SALE CONSIDERATION ACTUALLY RECEIVED AND N OT ON THE AMOUNTS SHOWN PAYABLE TO THE ASSESSEE IN THE LAND COST CERTIFICAT ES ISSUED BY MTDCL. IN THE SAID NOTE, ASSESSEE NOT ONLY DISCLOSED THE MANNER O F DECLARING CAPITAL GAINS BUT ALSO THE RATIONALE FOR THE SAME. IT IS ANOTHER MATTER THAT THE ASSESSING OFFICER DID NOT AGREE TO ASSESSEES PLEA THAT THE C APITAL GAINS BE TAXED ON ACTUAL RECEIPT BASIS. THE POINT IS THAT THE CLAIM M ADE BY THE ASSESSEE WAS A BONAFIDE CLAIM AND MERELY BECAUSE IT HAS NOT BEEN U LTIMATELY UPHELD BY THE ASSESSING OFFICER, IT CANNOT BE IPSO FACTO CONSTRUED AS CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME WITH IN THE MEANING OF SECTION 271(1)(C) OF THE ACT. 24. AT THIS POINT WE MAY BRIEFLY TOUCH UPON THE PLE A RAISED BY THE ASSESSEE THAT HAVING REGARD TO THE NUMBER OF AGRICULTURISTS INVOLVED AND THE PECULIAR NATURE OF MOU WHEREBY THE BENEFITS FROM THE DEVELOP MENT OF THE LAND ACCRUE TO THE AGRICULTURISTS OVER THE YEARS, THE SAME WAS PECULIAR AND A COMPLEX TRANSACTION. PERTINENTLY, THE DEVELOPMENT OF LAND W AS UNDERTAKEN BY MTDCL IN PHASES OVER THE YEARS AND THE BENEFITS WERE ACCR UING TO THE AGRICULTURISTS FROM YEAR TO YEAR INCLUDING THE BENEFIT OF ESCALATI ON IN PRICE OF THE DEVELOPED SALEABLE UNITS. THE ASSESSEE CLAIMED THAT AN ADHOC FORMULA HAS BEEN ADOPTED BY THE DEPARTMENT IN TAXING THE CAPITAL GAI NS IN THE HANDS OF THE AGRICULTURISTS ON THE BASIS OF THE AMOUNTS DISCLOSE D AS PAYABLE TO THE RESPECTIVE AGRICULTURISTS IN THE LAND COST CERTIFIC ATES ISSUED BY MTDCL. ITA NOS. 804 TO 809/PN/2012 ITA NOS. 771 TO 776/PN/2012 ITA NOS. 766 TO 770/PN/2012 ITA NOS. 800 TO 803/PN/2012 ITA NOS. 777 TO 780/PN/2012 ELABORATING ON THIS POINT, THE LEARNED REPRESENTATI VE FOR THE ASSESSEE SUBMITTED THAT THE MANNER OF TAXING THE IMPUGNED CA PITAL GAINS WAS CONTRARY TO THE PREVAILING LEGAL POSITION. IT IS SOUGHT TO B E MADE OUT THAT IF ONE WAS GO BY LEGAL POSITION, AND WHICH IS SUPPORTED BY THE JU DGEMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CHATURBHUJ DWARKAD AS KAPADIA (SUPRA), THE ENTIRE CAPITAL GAIN ACCRUED IN THE ASSESSMENT YEAR 1999-2000 AND NO CAPITAL GAIN WAS ASSESSABLE DURING THE UNDER CONSIDERATION. IT IS SUBMITTED THAT HAVING REGARD TO THE AFORESAID, THE ASSESSMENT MAY HAVE BEEN COMPLETED ON A DIFFERENT BASIS BUT IF AS PER THE LEGAL POSITION THE PARTICULAR ADDITION/ASSESSMENT WAS NOT WARRANTED, THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT WOULD HAVE TO FAIL. WE FIND TH AT THE CIT(A) HAS ACCEPTED THE AFORESAID PLEA OF THE ASSESSEE AND HAS ACCORDIN GLY, DELETED THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT. 25. THE PLEA OF THE ASSESSEE IS THAT SECTION 45(1) OF THE ACT PROVIDES FOR TAXABILITY OF CAPITAL GAINS IN THE YEAR OF THE TRA NSFER OF CAPITAL ASSET. IN THE PRESENT CASE, THE MOU WITH MTDCL WAS ENTERED ON 26. 03.1999 AND IN TERMS THEREOF THE AGRICULTURISTS/LANDOWNERS GAVE AN IRREC OVERABLE LICENCE TO MTDCL FOR DEVELOPMENT OF LAND. IN SUPPORT OF THE AFORESAI D, OUT ATTENTION WAS INVITED TO CLAUSE 2 OF THE MOU WHICH READ AS UNDER :- ON THE EXECUTION OF THESE PRESENTS THE SECOND PART Y, THEIR REPRESENTATIVES AND WORKMEN HAVE BEEN PERMITTED TO ENTER THE SAID PROPERTY BY WAY OF IRREVOCABLE PERMISSIVE LICENSE TO COMMENC E AND COMPLETE DEVELOPMENT AND CONSTRUCTION/S WORK THEREON AS CONT EMPLATED BY THIS INDENTURE AND FOR IMPLEMENTING OTHER PURPOSES OF TH IS INDENTURE SUCH AS ACCEPTING BOOKINGS IN TERMS HEREOF, RAISING FINANCE ETC., FOR THE DEVELOPMENT AND CONSTRUCTION AND ALL OTHER PURPOSES FOR THE LAW FUL AND EFFECTUAL CONSTRUCTION UPON AND SALE OF THE SAID PROPERTY. THE SAID PERMISSIVE LICENSE BEING COUPLED WITH MONETARY INTEREST SHALL BE IRREV OCABLE. ITA NOS. 804 TO 809/PN/2012 ITA NOS. 771 TO 776/PN/2012 ITA NOS. 766 TO 770/PN/2012 ITA NOS. 800 TO 803/PN/2012 ITA NOS. 777 TO 780/PN/2012 26. THE POINT MADE OUT BY THE ASSESSEE IS THAT HA VING REGARD TO THE AFORESAID, WHEREBY MTDCL WAS GRANTED IRRECOVERABLE LICENSE TO COMMENCE DEVELOPMENT OF THE LAND ON 26.03.1999 ITSELF, THEN AS PER THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CHATURBHUJ DWARKADAS KAPADIA (SUPRA), TRANSFER WITHIN THE MEANING OF SECTION 2 (47) OF THE ACT TAKES PLACE AND THE CORRESPONDING CAPITAL GAIN BECOME TAXABLE I N ASSESSMENT YEAR 1999-2000 IN TERMS OF SECTION 45(I) OF THE ACT. THE HONBLE BOMBAY HIGH IN THE AFORESAID JUDGEMENT HAD AN OCCASION TO CONSIDER THE IMPORT OF THE EXPRESSION TRANSFER AS PER THE SECTION 2(47) OF T HE ACT IN CASE OF A DEVELOPMENT AGREEMENT BETWEEN THE LAND OWNER AND A DEVELOPER. AS PER THE HONBLE BOMBAY HIGH COURT, IF A TRANSACTION INVOLVE D THE ALLOWING OF THE POSSESSION OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO UNDER SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882 (4 OF 1882) OR ANY T RANSACTION WHICH HAS EFFECT OF TRANSFERRING OR ENABLING IN ENJOYMENT OF TRANSFE R PROPERTY THEN HAVING REGARD TO THE CLAUSES (V) AND (VI) OF SECTION 2(47) OF THE ACT, TRANSFER TAKES PLACE IN THE YEAR IN WHICH SUCH AGREEMENT IS ENTERED INTO. T HE MOU DATED 26.03.1999 BETWEEN ASSESSEE AND MTDCL CLEARLY PROVIDES FOR PER MITTING MTDCL TO IRRECOVERABLY ENTER AND COMMENCE AND COMPLETE DEVEL OPMENT OF THE LAND OWNED BY ASSESSEE AND THEREFORE, THERE IS SUBSTANTI AL FORCE IN THE PLEA OF THE ASSESSEE THAT THE ON DATE OF ENTERING OF MOU I.E. 2 6.03.1999, AN EVENT OF TRANSFER WITHIN THE MEANING OF SECTION 2(47) OF T HE ACT HAS TAKEN PLACE AND THEREFORE THE CAPITAL GAIN IS LIABLE TO BE TAXED IN ASSESSMENT YEAR 1999-2000. WE ARE CONSCIOUS THAT THE PRESENT PROCEEDINGS ARE N OT IN RELATION TO SUBSTANTIVE TAXATION OF THE IMPUGNED AMOUNTS BUT TH E AFORESAID PROPOSITION IS BEING CONSIDERED ONLY TO EXAMINE WHETHER LEGALLY SP EAKING IS THERE JUSTIFICATION IN THE PLEA OF THE ASSESSEE THAT THE TAXABILITY OF THE IMPUGNED CAPITAL GAIN WAS NOT LEGALLY CONCLUSIVE IN THE MANN ER MADE BY THE ASSESSING OFFICER AND THAT IN THE EYES OF LAW, THE IMPUGNED C APITAL GAIN WAS TAXABLE IN AN ANOTHER MANNER. ITA NOS. 804 TO 809/PN/2012 ITA NOS. 771 TO 776/PN/2012 ITA NOS. 766 TO 770/PN/2012 ITA NOS. 800 TO 803/PN/2012 ITA NOS. 777 TO 780/PN/2012 27. IT IS WELL SETTLED PROPOSITION THAT THE ASSESSM ENT PROCEEDINGS AND PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT ARE INDEPENDENT PROCEEDINGS AND THAT THE CONCLUSIONS REACHED IN THE ASSESSMENT PROCEEDINGS ARE NOT CONCLUSIVE SO FAR AS THE PENAL PROVISIONS A RE CONCERNED. NO DOUBT A CONCLUSION ARRIVED AT IN THE ASSESSMENT PROCEEDINGS IS GOOD EVIDENCE BUT THE SAME CANNOT BE CONSIDERED AS CONCLUSIVE FOR THE PUR POSE OF PENALTY PROCEEDINGS IN AS MUCH AS THE TWO PROCEEDINGS ARE I NDEPENDENT PROCEEDINGS, AND, IN THIS CONNECTION GAINFUL REFERENCE CAN BE MA DE TO THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE KHUDAY ESWARA & S ONS 83 ITR 639 (SC) AND ALSO TO THE JUDGEMENT OF THE HONBLE ALLAHABAD AND MADRAS HIGH COURT IN THE CASES OF RAJA MOHD. AMIR AHMAD KHAN 100 ITR 433 (ALL.) AND B. MUNIAPPA GOUNDER 102 ITR 787 (MAD.) RESPECTIVELY . IN CASE THE ASSESSEE IN THE COURSE OF PENALTY PROCEEDINGS IS ABLE TO DEM ONSTRATE WITH CERTAIN DEGREE OF CERTAINTY THAT THE ADDITION MADE IN THE A SSESSMENT PROCEEDINGS WAS NOT WARRANTED THEN THE FINDINGS IN THE ASSESSMENT P ROCEEDINGS CANNOT BE CONSIDERED AS CONCLUSIVE SO AS TO FASTEN PENAL LIAB ILITY UNDER SECTION 271(1)(C) ON THE ASSESSEE. IN SUPPORT OF THE AFORESAID PROPOS ITION, WE MAY RELY UPON THE RATIO OF JUDGEMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF JAINARAYAN BABULAL VS. CIT 170 ITR 399 (BOM.) IN VI EW OF THE AFORESAID DISCUSSION, IN OUR CONSIDERED OPINION, THE CIT(A) M ADE NO MISTAKE IN DELETING THE PENALTY IMPOSED BY THE ASSESSING OFFICER WITH R ESPECT TO THE INCOME BY WAY OF LONG TERM CAPITAL GAIN OF RS. 30,12,878/- ON SALE OF LAND. ACCORDINGLY, THE ORDER OF THE CIT(A) IS AFFIRMED AND THE APPEAL OF THE REVENUE IN ITA NO. 771/PN/2012 IS DISMISSED. 28. IN THE RESULT, APPEAL OF THE REVENUE I.E. ITA N OS. 771/PN/2012 IS HEREBY DISMISSED. 29. IN SO FAR AS THE APPEALS OF THE ASSESSEE IN ITA NOS. 805 TO 807/PN/2012 PERTAINING TO ASSESSMENT YEARS 2004-05 TO 2006-07 RESPECTIVELY ITA NOS. 804 TO 809/PN/2012 ITA NOS. 771 TO 776/PN/2012 ITA NOS. 766 TO 770/PN/2012 ITA NOS. 800 TO 803/PN/2012 ITA NOS. 777 TO 780/PN/2012 ARE CONCERNED THE SAME INVOLVE ISSUES WHICH HAVE BE EN DEALT WITH BY US IN ITA NO. 804/PN/2012 FOR ASSESSMENT YEAR 2003-04, AN D THEREFORE OUR DECISION IN ITA NO. 804/PN/2012 FOR THE ASSESSMENT YEAR 2003-04 WOULD APPLY MUTATIS MUTANDIS IN ITA NOS. 805 TO 807/PN/2012 PERTAINING TO ASSESSMENT YEARS 2004-05 TO 2006-07 RESPECTIVELY. A S A RESULT THE APPEALS OF THE ASSESSEE IN ITA NOS.805 TO 807/PN/2012 ARE HERE BY DISMISSED. 30. IN SO FAR AS THE APPEALS OF THE REVENUE IN ITA NOS. 772 TO 776/PN/2012 PERTAINING TO ASSESSMENT YEAR 2004-05 T O 2008-09 IS CONCERNED, THE ISSUE RAISED IS SIMILAR TO THAT CONSIDERED IN I TA NO. 771/PN/2012 FOR ASSESSMENT YEAR 2003-04, AND ACCORDINGLY OUR DECISI ON THEREIN WOULD MUTATIS MUTANDIS APPLY TO THE OTHER APPEALS ALSO. ACCORDING LY, THE APPEALS OF THE REVENUE IN ITA NO.S 772 TO 776/PN/2012 ARE ALSO DIS MISSED. 31. NOW, IN THE CASE OF SHRI MANGESH TUPE, THE ONLY OTHER APPEALS REMAIN ARE ITA NOS. 808 TO 809/PN/2012 PERTAINING TO ASSES SMENT YEARS 2007-08 AND 2008-09 RESPECTIVELY. IN THIS APPEAL, ASSESSEE IS A GITATED THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON AN AMOUNT OF RS. 43,09,784/- REPRESENTING INCOME FROM THE SOURCES, WHICH WAS DEC LARED IN THE RETURN FILED IN PURSUANCE TO NOTICE UNDER SECTION 153A(A) OF THE ACT POST-SEARCH AND THE SAME WAS NOT DECLARED ORIGINALLY IN THE RETURN FILE D UNDER SECTION 139(1) OF THE ACT FOR THE ASSESSMENT YEAR 2007-08. 32. IN THIS CONNECTION, IT IS NOTABLE THAT IN THIS CASE SEARCH WAS INITIATED UNDER SECTION 132 OF THE ACT ON 21.02.2008 AND THER EFORE THE PROVISION OF EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT ARE APPLICABLE. IN TERMS OF SUB-CLAUSE (A) OF EXPLANATION 5A TO SECTION 271(1)( C) OF THE ACT, THE ASSESSEE IS DEEMED TO HAVE CONCEALED THE PARTICULARS OF IMPU GNED INCOME AND THEREFORE, WE FIND NO ERROR IN THE ORDER OF THE CIT (A) SUSTAINING THE PENALTY IMPOSED BY THE ASSESSING OFFICER. ITA NOS. 804 TO 809/PN/2012 ITA NOS. 771 TO 776/PN/2012 ITA NOS. 766 TO 770/PN/2012 ITA NOS. 800 TO 803/PN/2012 ITA NOS. 777 TO 780/PN/2012 33. IN THE RESULT, APPEAL OF THE ASSESS IN ITA NO. 808/PN/2013 PERTAINING TO ASSESSMENT YEAR 2007-08 IS HEREBY DISMISSED. 34. INSOFAR ASSESSMENT YEAR 2008-09 IS CONCERNED, A PRELIMINARY ISSUE HAS BEEN RAISED BY THE ASSESSEE, WHICH IS TO THE EFFECT THAT THE ORDER PASSED BY THE ASSESSING OFFICER LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS NULL AND VOID. THE AFORESAID PLEA IS RAISED ON THE BASIS OF SECTION 271AAA OF THE ACT. 35. SECTION 271AAA DEALS WITH LEVY OF PENALTY ON TH E UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR IN THE CASE OF AN ASSESSEE WHERE SEARCH UNDER SECTION 132 OF THE ACT HAS BEEN INITIATED ON OR AFTER 01.06.2007. IN THE PRESENT CASE, THE SEARCH HAS BEEN INITIATED UNDER S ECTION 132 OF THE ACT ON 21.02.2008 AND ACCORDINGLY THE SPECIFIED PREVIOUS YEAR AS PER EXPLANATION (B) (II) OF SECTION 271AAA OF THE ACT IS THE PREVIO US YEAR ENDING ON 31.03.2008 CORRESPONDING TO THE ASSESSMENT YEAR 2008-09. MOREO VER, IT IS ALSO CLEAR THAT THE INCOME ASSESSED BY THE ASSESSING OFFICER FALLS WITHIN THE MEANING OF UNDISCLOSED INCOME DEFINED IN EXPLANATION (A)(I) TO SECTION 271AAA OF THE ACT. THUS, THE PROVISIONS OF SECTION 271AAA OF THE ACT GOVERN THE LEVY OF PENALTY FOR THE ASSESSMENT YEAR 2008-09, AND ACCORD INGLY IN VIEW OF SUB-SECTION (3) OF SECTION 271AAA OF THE ACT, NO PE NALTY UNDER SECTION 271(1)(C) OF THE ACT CAN BE LEVIED IN RESPECT OF TH E IMPUGNED INCOME. 36. IN VIEW OF THE AFORESAID LEGAL POSITION, WE HOL D THAT THE IMPUGNED ORDER OF THE ASSESSING OFFICER DATED 30.06.2010 LEVYING P ENALTY UNDER SECTION 271(1)(C) OF THE ACT IS UNTENABLE. WE HOLD SO. ACCO RDINGLY, THE ORDER OF THE CIT(A) FOR ASSESSMENT YEAR 2008-09 IS SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO DELETE THE PENALTY IMPOSED UNDER SECTIO N 271(1)(C) OF THE ACT. ITA NOS. 804 TO 809/PN/2012 ITA NOS. 771 TO 776/PN/2012 ITA NOS. 766 TO 770/PN/2012 ITA NOS. 800 TO 803/PN/2012 ITA NOS. 777 TO 780/PN/2012 37. IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA NO . 809/PN/2012 FOR ASSESSMENT YEAR 2008-09 IS ALLOWED. 38. THE OTHER CAPTIONED APPEALS IN THE CASES OF SMT . GULABBAI TUPE (ITA NOS. 766 TO 770/PN/2012), SMT. VERSA TUPE (ITA NOS. 777 TO 780/PN/2012 AND ITA NO. 800 TO 803/PN/2012) FOR THE RESPECTIVE ASSESSMENT YEAR, CONTAIN ISSUES SIMILAR TO THOSE CONSIDERED IN THE CASE OF SHRI MANGESH TUPE IN THE ABOVE PARAGRAPHS. THE SAID APPEALS ARE ALSO DISPOSED-OFF IN THE LIGHT OF DECISION IN THE CASE OF SHRI MANGESH TUPE, AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH APRIL, 2013. SD/- SD/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 30 TH APRIL, 2013 SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-CENTRAL, PUNE; 4) THE CIT, CENTRAL, PUNE; 5) THE DR, B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// PRIVATE SECRETARY I.T.A.T., PUNE