ITO, Chandigarh V. M/s Amritsar Hotels Ltd., Chandigarh

ITA 778/CHANDI/2013

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 8738 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 12-02-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 10-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR AMA RVEER SINGH
• Assessee Lawyers: A K JINDAL; RATTAN KAUR
• Keywords: Cost of acquisition; Difference of opinion

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R. SOOD, ACCOUNTANT MEMBER ITA NO. 778/CHD/2013 ASSESSMENT YEAR: 2007-08 THE ITO, VS M/S AMRITSAR HOTELS LTD., WARD-1(3), CHANDIGARH CHANDIGARH PAN NO.AAECA4047J (APPELLANT) (RESPONDENT) APPELLANT BY : DR. AMARVEER SINGH RESPONDENT BY : SHRI A.K JINDAL & MS RATTAN KAUR DATE OF HEARING : 12.02.2015 DATE OF PRONOUNCEMENT : 13.02.2015 ORDER PER T.R.SOOD, A.M. THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 30.4.2013 OF CIT(A) CHANDIGARH. 2. IN THIS APPEAL REVENUE HAS RAISED THE FOLLOWIN G GROUNDS:- 1. THE LD. CIT(A) HAS ERRED IN DELETING PENALTY U/ S 271(1)(C) OF I.T. ACT, 1961 BECAUSE AN ASSESSEE CAN BE HELD TO HAVE FURNISHED INACCURATE PARTICULARS OF INCOME WHE RE THE ASSESSEE MADE A DEDUCTION, WHICH IS INCORRECT IN LA W AND NOT AS PER PROVISION OF THE ACT. 2. THE APPELLANT CRAVES TO ADD OR AMEND ANY GROUND/GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD OR DISPOSED OFF. 2 3. AFTER HEARING BOTH THE PARTIES WE FIND THAT ASSE SSEE COMPANY CAME INTO EXISTENCE ON THE REORGANISATION BY WAY OF DEMERGER OF PUNJAB TOURISM DEVELOPMENT CORPORATION (IN SHORT PTDC) IN 2003. THIS SCHEME OF DEMERGER WAS APPROVED MY MINISTRY OF COMPANY AFFAIRS ON 1.9. 2004 BUT WAS MADE EFFECTIVE FROM 1.4.2003. ON DEMERGER THE LAND, BUI LDING AND OTHER ASSETS OF AMRITSAR TOURIST COMPLEX WHICH WERE BELONGING TO PT DC BECAME THE PROPERTY OF ASSESSEE COMPANY. THIS PROPERTY WAS SOLD BY THE ASSESSEE COMPANY TO M/S SANGER FINLEASE (P) LTD ON 4.1.2007. THE ASSESSEE C OMPANY RETURNED THE CAPITAL GAIN UNDER THE HEAD SHORT TERM CAPITAL GAIN AS WE LL AS LONG TERM CAPITAL GAIN. THE LONG TERM CAPITAL GAIN PERTAINS TO SALE OF LAND WHEREAS SHORT TERM CAPITAL GAIN PERTAINS TO BUILDING AND FURNITURE ETC. THE LO NG TERM CAPITAL GAIN WAS DETERMINED ON THE BASIS THAT ASSESSEE BECAME THE OW NER OF THE PROPERTY ON 1.4.2003. FURTHER FOR THE PURPOSE OF COMPUTATION O F LONG TERM CAPITAL GAIN, THE COST OF ACQUISITION WAS SUBSTITUTED BY THE FAIR MAR KET VALUE ON 1.4.1981 BECAUSE DEMERGER WAS NOT TO BE TREATED AS TRANSFER U/S 47(V IB) AND, THEREFORE, COST OF PREVIOUS OWNER WAS TO BE SUBSTITUTED. HOWEVER, ASS ESSING OFFICER DID NOT ACCEPT THIS COMPUTATION AND HELD THAT SINCE THE PRO PERTY WAS TRANSFERRED TO BE ASSESSEE BY DEPARTMENT OF TOURISM AND CULTURAL AFFA IRS ON THE ORDERS OF THE GOVT. OF PUNJAB VIDE NOTIFICATION DATED 2.11.2004, THEREFORE, THE DATE OF ACQUISITION WAS BE TAKEN ON 2.11.2004. THUS WHOLE OF THE CAPITAL GAIN WAS TREATED AS SHORT TERM CAPITAL GAIN AND PENALTY PR OCEEDINGS U/S 271(1)(C) OF THE ACT WERE ALSO INITIATED. THE TREATMENT GIVEN BY TH E ASSESSING OFFICER WAS CONFIRMED BY THE TRIBUNAL IN ITA NO. 1096/CHD/2010. 4. IN RESPONSE TO THE SHOW CAUSE NOTICE FOR LEVY OF PENALTY, IT WAS MAINLY SUBMITTED THAT CLAIM OF THE ASSESSEE WAS BONAFIDE B ECAUSE LAND AND OTHER ASSETS WERE TRANSFERRED TO THE PTDC IN 1979 WHICH WAS LATE R TRANSFERRED TO THE ASSESSEE COMPANY ON DEMERGER OF PTDC. THE DEMERGER WAS APPRO VED BY THE MINISTRY OF COMPANY AFFAIRS, GOVERNMENT OF INDIA. THE ORIGINAL ORDERS WERE GIVEN BY THE 3 GOVT. OF PUNJAB IN THE CABINET BY REFERENCE NO. 1/6 0/2003/CABINET/2127 DATED 9.2.2003, THEREFORE, IT CANNOT BE SAID THAT ASSESSE E HAS FURNISHED INACCURATE PARTICULARS OF INCOME AND ASSESSEE MADE ALL THE DI SCLOSURES. RELIANCE WAS PLACED ON THE VARIOUS CASE LAWS INCLUDING THE DECIS ION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS RELIANCE PETRO PRODUCTS PVT LTD 322 ITR 158. HOWEVER, THE ASSESSING OFFICER DID NOT FIND FORCE I N THESE SUBMISSIONS AND ULTIMATELY LEVIED MINIMUM PENALTY @ 100% AMOUNTING TO RS. 9,74,26,830/-. 5. ON APPEAL DETAILED WRITTEN SUBMISSIONS WERE FILE D AND LD. CIT(A) AFTER CONSIDERING THE SAME DELETED THE PENALTY. 6. BEFORE US LD. DR STRONGLY SUPPORTED THE ORDER OF ASSESSING OFFICER. 7. ON THE OTHER HAND LD. COUNSEL OF THE ASSESSEE RE ITERATED THE SUBMISSIONS MADE BEFORE ASSESSING OFFICER AND CIT(A). HE FURTHE R SUBMITTED THAT ASSESSEE HAS MADE ALL THE DISCLOSURES AND IN ANY CASE THE IS SUE WAS TOTALLY DEBATABLE, THE CLAIM MADE BY THE ASSESSEE IS BONAFIDE AND, THEREFO RE, PENAL ACTION WAS NOT ATTRACTED. 8. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND THAT LD. CIT(A) HAS ADJUDICATED THIS ISSUE VIDE PARA 2.3 TO 2.3.7, WHIC H ARE AS UNDER:- 2.3 AS PER THE PROVISIONS OF SECTION 271(1)(C), PE NALTY CAN BE LEVIED, IF THE ASSESSEE HAS CONCEALED PARTICULARS O F ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. FO R THE SAKE OF READY REFERENCE, EXPLANATION- 1 BELOW SECTION 271(1 ) IS REPRODUCED BELOW: EXPLANATION 1. WHERE IN RESPECT OF ANY FACTS MATERI AL TO THE COMPUTER OF THE TOTAL INCOME OF ANY PERSON UNDER TH IS ACT,- (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OF FERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) OR THE COMMISSIONER TO BE FA LSE, OR 4 (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS N OT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATI ON IS BONAFIDE AND THAT ALL THE FACTS RELATING TO THE SAM E AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAV E BEEN DISCLOSED BY HIM, THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING T HE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHALL, FO R THE PURPOSE OF CLAUSE (C) OF THIS SUB-SECTION, BE DEEME D TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULAR S HAVE BEEN CONCEALED. 2.3.1 THUS, WHEN THE ASSESSEE HAS CONCEALED PARTICU LARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS, APPLICA BILITY OF CONDITIONS LAID DOWN IN EXPLANATION-1 (SUPRA) HAVE TO BE EXAMINED. THE ASSESSING OFFICER HAS LEVIED PENALTY FOR CONCEA LMENT, SINCE THE LONG TERM CAPITAL GAIN DECLARED BY THE APPELLANT WA S ASSESSED AS SHORT TERM CAPITA GAIN AND EFFECTIVELY, THE SHORT T ERM CAPITAL GAIN WAS ENHANCED. I FIND THAT THE DISPUTE IN THE INSTAN T CASE IS REGARDING THE DATE OF ACQUISITION. THE CAPITAL GAIN IS TO BE ASSESSED AS LONG TERM OR SHORT TERM DEPENDING UPON THE PERIO D FOR WHICH THE PROPERTY IS HELD AND THIS IN TURN WILL VARY WITH TH E DATE OF THE ACQUISITION OF THE PROPERTY. IF THE YEAR OF ACQUISI TION OF A PROPERTY IS CHANGED, IT MAY BECOME SHORT TERM IF THE PROPERT Y IS HELD FOR LESS THAN THREE YEARS. ALL THE PARTICULARS OF THE PROPER TY WHICH WAS TRANSFERRED DURING THE PREVIOUS YEAR I.E. THE SALE PRICE AND COST OF ACQUISITION WERE FULLY DISCLOSED BY THE APPELLANT A ND THE ASSESSING OFFICER DID NOT FIND ANY DEFECT IN THESE PARTICULAR S. THE CAPITAL GAIN ON SALE OF THE PROPERTY WAS ALSO DULY DISCLOSED IN THE RETURN OF INCOME. THE ONLY DISPUTE BETWEEN THE APPELLANT AND THE DEPARTMENT IS WITH REGARD TO THE DATE OF ACQUISITION. 2.3.2 IT IS SEEN THAT THE APPELLANT HAD DECLARED TH E CORRECT SALE PRICE AND THE IS NOT DISPUTED. THE APPELLANT HAD CL AIMED DATE OF ACQUISITION OF THE LAND AS 01.04.1981 (AS THE PREVI OUS OWNER HAD ACQUIRED IT PRIOR TO THAT DATE) AND HAD SHOWN THE P ROFIT AS COMPUTED ON THE BASIS OF INDEXED COST AS LONG TERM CAPITAL G AIN. THE CLAIM OF THE APPELLANT WAS NOT ACCEPTED BY THE ASSESSING OFF ICER, WHO ADOPTED THE DATE OF ACQUISITION AS 02.11.2004 ON TH E BASIS OF CONVEYANCE DEED AND TAXED THE PROFIT ON SALE OF IMP UGNED LAND AS SHORT TERM CAPITAL GAIN. THE DATE OF ACQUISITION WA S TAKEN BY THE APPELLANT AS 01.04.1981 BECAUSE THE APPELLANT WAS O F THE VIEW THAT DEMERGER WAS NOT TO BE CONSIDERED AS TRANSFER AS PR THE PROVISIONS 5 OF SECTION 47(VIB), BUT THIS VIEW DID NOT FIND FAVO UR WITH THE ASSESSING OFFICER. 2.3.3 THE APPELLANT FILED ITS RETURN OF INCOME BY A DOPTING A PARTICULAR VIEW WITH REGARD TO THE DATE OF ACQUISIT ION OF THE IMPUGNED ASSET AND THAT VIEW WAS NOT ACCEPTED BY TH E ASSESSING OFFICER. MY PREDECESSOR HAD ORDERED THE DATE OF ACQ UISITION TO BE TAKEN AS 01.09.2004 I.E., THE DATE ON WHICH THE SCH EME OF DEMERGER WAS APPROVED BY MINISTRY OF COMPANY AFFAIRS. SUBSEQUENTLY, THE HONBLE ITAT, CHANDIGARH HAS HELD THAT THE DATE OF ACQUISITION TO BE TAKEN AS 02.11.2004. THUS, THE RE WAS A DIFFERENCE OF OPINION AMONG THE APPELLANT, THE ASSE SSING OFFICER AND MY PREDECESSOR REGARDING THE DATE OF ACQUISITIO N TO BE ADOPTED. AS STATED EARLIER, THE DATE OF ACQUISITION WILL AFF ECT THE QUESTION WHETHER THE PROFIT EARNED ON TRANSFER OF ASSETS IS TO BE TAXED AS SHORT TERM CAPITAL GAIN OR LONG TERM CAPITAL GAIN. 2.3.4 HONBLE PUNJAB AND IN HARYANA HIGH COURT HAS HELD IN THE CASE OF AMAR NATH (16DTR326) THAT IN A CASE WHERE A N ASSESSEE H AS FURNISHED ALL THE DETAILS REGARDING CAPITAL GAIN ALONG WITH THE RETURN OF INCOME, IT COULD NOT BE SAID THAT THE ASS ESSEE HAD CONCEALED ANYTHING FROM THE REVENUE. THE HONBLE HI GH COURT HAD HELD THAT ADDITION BY ITSELF WAS NOT SUFFICIENT FOR LEVYING PENALTY U/S 271(1)(C) OF THE ACT. THE HONBLE MADRAS HIGH COURT , IN THE CASE OF M/S CAPLIN POINT LABORATORIES (212 CTR 58), HAS HEL D AS UNDER: IN THIS CASE, THE ASSESSEE HAD ADOPTED A PARTICUL AR VIEW ON THE BASIS OF CERTAIN CASE LAW OR SOME BONA FIDE BEL IEF AND A MERE REJECTION OF THE CLAIM OF THE ASSESSEE BY RELYING O N DIFFERENT INTERPRETATIONS DOES NOT AMOUNT TO CONCEALMENT OF T HE PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF I NCOME, BY THE ASSESSEE. 2.3.5 HONBLE ITAT, DELHI HAS ALSO HELD INTEREST HE CASE OF VEE JAY SERVICE STATION (22 DTR 527) AS UNDER: ON DUE CONSIDERATION OF ALL THE FACTS IN THE LIGH T OF BOARDS CIRCULAR, WE ARE OF THE OPINION THAT THERE IS NO MA LAFIDE INTENTION 6 ON THE PART OF THE ASSESSEE TO FURNISH INACCURATE P ARTICULARS. IT HAS DISCLOSED COMPLETE FACTS BEFORE A.O. IT HAS ALSO AD OPTED A PARTICULAR COMPUTATION FOR THE CAPITAL GAIN WHICH D ID NOT MEET THE APPROVAL OF A.O. BUT THAT DOES NOT MEAN THAT THE AS SESSEE HAS FURNISHED INACCURATE PARTICULARS. IT IS ONLY A DIFF ERENCE OF OPINION BETWEEN THE ASSESSEE AND THE A.O. IN OUR OPINION, A SSESSEE DID NOT DESERVE TO BE VISITED WITH PENALTY IN THE ABOVE CIR CUMSTANCES. 2.3.6 THE ASSESSING OFFICER HAS RELIED UPON THE VAR IOUS DECISIONS OF HONBLE SUPREME COURT AND HIGH COURTS, WHICH ARE DISCUSSED AS UNDER: (I) DHARMENDRA TEXTILES PROCESSORS (206 ITR 277)- THE S AID DECISION HAS BEEN OVERRULED IN THE CASE OF RELIANCE PETRO PRODUCTS (P)LTD. (322 ITR 158). (II) K.P. MADHUSUDANAN (251 ITR 99)- THE RATIO OF THIS DECISION DOES NOT APPLY TO THE CASE OF THE APPELLAN T, SINCE IN THIS CASE IT WAS HELD THAT THE ASSESSEE WILL BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF INCOME UNLESS HE PROVES THAT THE FAILURE TO RETURN THE CORRECT INCOME DID N OT ARISE FORM ANY FRAUD OR NEGLIGENCE ON HIS PART. IN THE CA SE OF THE APPELLANT, IT WAS NOT SO BECAUSE THE DIFFERENCE BETWEEN THE RETURNED INCOME AND ASSESSED INCOME IS ONLY DUE TO THE DIFFERENCE OF OPINION REGARDING THE DATE OF ACQ UISITION OF THE ASSETS SOLD BY THE APPELLANT. (III) SANDEEP KUMAR (298 ITR 106)- IN THIS CASE, FULL INC OME WAS NOT DISCLOSED BY THE APPELLANT DUE TO WHICH IT WAS TREATED AS CONCEALMENT. THE FACTS OF THIS CASE ARE ENTIRELY DISTINGUISHABLE TO THE CASE OF THE APPELLANT AND SO THIS DECISION DOES NOT APPLY TO THE CASE OF THE APPELLAN T. THE RATIO OF OTHER DECISIONS QUOTED BY THE ASSESSIN G OFFICER ALSO DOES NOT APPLY TO THE CASE OF THE APPELLANT. 2.3.7 THE APPELLANT HAD NEITHER CONCEALED ANY INCOM E NOR FURNISHED INACCURATE PARTICULARS OF ITS INCOME IN R ESPECT OF INCOME UNDER THE HEAD CAPITAL GAINS. THE APPELLAN T TOOK A PARTICULAR VIEW IN REGARD TO THE DATE OF ACQUISITIO N OF THE PROPERTY AND THOUGH THAT VIEW HAS NOT FOUND ACCEPTA NCE, IT 7 CANNOT BE SAID THAT THE VIEW TAKEN BY THE APPELLANT WAS NOT ON A REASONABLE AND RATIONAL BASIS. THEREFORE, THE EXPL ANATION OF THE APPELLANT FOR NOT INCLUDING THE PROFIT ON THE SALE OF LAND IN SHORT TERM CAPITAL GAINS IS BONAFIDE AND CANNOT BE REJECT ED. IT IS ACCORDINGLY HELD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN LEVYING PENALTY U/S 271(1)(C)OF THE ACT ON THE ADDI TION MADE ON ACCOUNT OF CAPITAL GAIN AND THE PENALTY LEVIED FOR CONCEALMENT IS CANCELLED. GROUND OF APPEAL NO. 1 IS ALLOWED. 9. IN OUR OPINION THE LD. CIT(A) HAS CORRECTLY ADJU DICATED THE ISSUE BECAUSE THIS IS A CASE OF BONAFIDE CLAIM. IN ANY CASE FULL DISCLOSURE HAVE BEEN MADE, THEREFORE, IT CANNOT BE SAID THAT ASSESSEE HAS CONC EALED ANY PARTICULARS OF INCOME. THE ASSESSEE IS A GOVERNMENT COMPANY AND, THEREFORE, NO BAD INTENTIONS CAN BE SAID TO BE THERE FOR SAVING OF TA X. FURTHER, THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS RELIANCE PETRO PRODUCTS (SUPRA) HAS OBSERVED AS UNDER:- A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961, SUGGESTS THAT IN ORDER TO BE COVERED BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTION 271(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAM MADE. WHERE NO INFO RMATION GIVEN IN THE RETURN IS FOUND TO BE INCORRECT OF INA CCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCU RATE PARTICULARS. IN ORDER TO EXPOSE THE ASSESSEE TO PEN ALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGI NATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THA T EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY TH E ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE T HE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILI TY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLIED IN THE RETURN 8 MUST NO BE ACCURATE, NOT EXACT OR CORRECT NOT ACCOR DING TO THE TRUTH OR ERRONEOUS. 10. THEREFORE, IN OUR OPINION THE LD. CIT(A) HAS CO RRECTLY DECIDED THE ISSUE AND WE UPHOLD HIS ORDER. 11. IN THE RESULT, APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13.02.2015 SD/- SD/- (BHAVNESH SAINI) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 13 TH FEBRUARY,2015 RKK COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR