Popatlal Mohanlal Chordia, Aurangabad V. Assistant Commissioner of Income-tax,

ITA 781/PUN/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 9916 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 12-07-2018
• Assessment Year: 2008-2009
• Appeal Filed On: 21-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Initiation of penalty proceedings
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E . , , , ' BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AW ASTHY, JM . / ITA NO. 781/PUN/2016 $ $ / ASSESSMENT YEAR : 2008-09 SHRI POPATLAL MOHANLAL CHORDIA 10, AHINSA NAGAR, JALANA ROAD, AURANGABAD-431 001 PAN : AAHPC1004H ....... / APPELLANT / V/S. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-2, AURANGABAD / RESPONDENT ASSESSEE BY : SHRI SUNIL GANOO REVENUE BY : SHRI SUDHENDU DAS / DATE OF HEARING : 12.09.2018 / DATE OF PRONOUNCEMENT : 26.09.2018 / ORDER PER D. KARUNAKARA RAO, AM: THIS IS THE APPEAL FILED BY ASSESSEE AGAINST THE ORDER OF CIT(A)-2, AURANGABAD, DATED 15.03.2016 FOR THE A.Y. 2008-09. 2. BRIEFLY STATED RELEVANT FACTS INCLUDE THAT THE ASSESSEE IS AN INDIVIDUAL AND ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION. ASSESSE E FILED THE RETURN OF INCOME ON 30.09.2008 DECLARING TOTAL INCOME OF RS.46,53,92 1/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSING OFFICER AS SESSED TOTAL INCOME OF ASSESSEE AT RS.1,32,70,263/- AND MADE THE FOLLOWING ADDITION S : TOTAL INCOME AS PER RETURN OF INCOME RS.46,53,919/ - ADD : 1. AS PER PARA NO.3 RS.6,08,322/- 2. AS PER PARA NO.4 RS.1,08,189/- 3. AS PER PARA NO.5 RS.1,50,000 /- 4. AS PER PARA NO.6.1 RS.15,97, 820/- 2 ITA NO.781/PUN/2016 SHRI POPATLAL MOHANLAL CHORDIA 5. AS PER PARA NO.7 RS.20,03,82 0/- 6. AS PER PARA NO.8.4 RS.27,20,215/- 7. AS PER PARA NO.8.5 RS.13,63,5 33/- ------------------------- RS.86,16,344/ ------------------------- TOTAL INCOME RS.1,32,70,263/- ------------------------- THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS SEPARAT ELY U/S.271(1)(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND LEVIED PENALTY OF RS.8,21,508/-. 3. IN THE FIRST APPELLATE PROCEEDINGS, IN CONNECTION WITH THE ADDITIONS @ SL.NO.4,6 & 7 ABOVE, THE ASSESSEE CHALLENGED THE PENALTY LEVIED BY THE AO ON ACCOUNT OF CAPITAL GAINS AMOUNTING TO RS.56,63,568/-. THE BREAK-UP IS GIVEN AS UNDER : SR.NO. HEADS OF ADDITION AMOUNT IN RS. 1 CAPITAL GAINS ACCORDING TO SECTION 50C 15,97,820 2 CAPITAL GAINS NOT OFFERED FOR TAXATION 27,20,215/ - 3 CAPITAL GAINS NOT OFFERED FOR TAXATION 13,63,533 TOTAL 56,63,568 THE CIT(A) AFTER ELABORATELY DISCUSSING THE ISSUE OF CAPIT AL GAINS AND CONSIDERING VARIOUS JUDGMENTAL LAWS PARTLY ALLOWED THE AP PEAL OF THE ASSESSEE. THE PENALTY LEVIED IN RESPECT OF ADDITION OF RS.13 ,63,533/- IS FULLY CONFIRMED AND THE PENALTY LEVIED IN RESPECT OF ADDITION OF R S.6,64,015/- OUT OF RS.15,97,820/- IS ALSO CONFIRMED. CONTENTS OF PARA NO.28 ARE RELEVANT AND THEREFORE WE PROCEED TO EXTRACT THE SAME BELOW : 28. THE PENALTY PROVISION IS TO PROVIDE REMEDY FOR LOSS OF REVENUE FOR WHICH THE ELEMENT OF WILLFUL CONCEALMENT IS NOT ESSENTI AL. THIS IS A CASE WHERE THE ASSESSEE HAD CONCEALED THE PARTICULARS OF INCOME BY NOT OFFERING THE SAME TO TAX IN THE A.Y. 2008-09 AND HAD INSTEAD OFF ERED THE SAME FOR TAXATION IN THE SUBSEQUENT YEAR. IT IS INCONCEIVABLE THAT T HE ASSESSEE DID NOT KNOW THAT HE HAD SOLD THE LANDS DURING THE FINANCIAL YEA R RELEVANT TO THE A.Y. 2008- 09. BY NOT INCLUDING THE AMOUNT OF CAPITAL GAINS I N HIS RETURN OF INCOME, THE ASSESSEE HAD COMMITTED THE DEFAULT OF CONCEALMENT O F INCOME. HENCE I HOLD THAT PENALTY FOR CONCEALMENT HAS BEEN RIGHTLY LEVIED IN RESPECT OF THE TRANSACTIONS RESULTING IN CAPITAL GAINS OF RS.6,64, 015/- AND RS.13,63,533/-. THEREFORE, THE ASSESSING OFFICER IS DIRECTED TO DEL ETE THE PENALTY IN 3 ITA NO.781/PUN/2016 SHRI POPATLAL MOHANLAL CHORDIA RESPECT OF DIFFERENCE IN VALUATION RESULTING IN ADD ITION OF RS.15,97,820/- AND THE PENALTY LEVIED IN RESPECT OF RS.6,64,015/- AND RS.13,63,533/- IS CONFIRMED. 4. AGGRIEVED WITH THE ORDER OF CIT(A), THE ASSESSEE FILED TH E PRESENT APPEAL RAISING THE FOLLOWING GROUNDS : 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED CIT[A] HAS GROSSLY ERRED IN CONFIRMING THE PENALTY LEVIED BY THE LEARNED ASSESSING OFFICER U/S.271[1][C] OF THE I.T. ACT 196 1 ON CAPITAL GAINS OF RS.13,63,533.00 ARISING ON TRANSFER OF AGRICULTURE LAND AT GAT NO.1 42 AT TEESGAON, AURANGABAD. THE IMPUGNED ORDER PASSED BY THE LEARNED CIT[A] IS BAD IN LAW, ARBITRARY, PERVERSE AND DEVOID OF MERIT S AND HENCE THE IMPUGNED PENALTY CONFIRMED BY LEARNED CIT[A] MAY PLEASE BE D ELETED. 2. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, REVISE , SUBSTITUTE, DELETE ANY OR ALL GROUNDS OF APPEAL, IF DEEMED NECESSARY AT THE TIME OF HEARING OF THE APPEAL. 5. BEFORE US, AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE RAISING THE ORAL GROUND RELATING TO RECORDING OF SATISFACTION BY THE AO SUB MITTED THAT THIS IS A CASE WHERE THE AO FAILED TO RECORD VALID SATISFACTION IN T HE ASSESSMENT ORDER DURING WHICH THE PENALTY PROCEEDINGS WERE INITIATED. HIGHLIGHTING THE LEGAL REQUIREMENT OF MAKING A SPECIFIC REFERENCE TO THE SPEC IFIC LIMB OF CLAUSE (C) OF SECTION 271(1) OF THE ACT AND RELYING ON VARIOU S BINDING JUDGMENTS IN THE CASE CIT VS. SHRI SAMSON PERINCHERY (20 17) 392 ITR 4 (BOM.) AS WELL AS THE JUDGMENT OF HONBLE KARNATAKA HIGH C OURT IN THE CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY 359 IT R 565 LD. COUNSEL DEMONSTRATED THAT THE PENALTY LEVIED BY THE AO IS UNSUSTAINABLE IN LAW. IN THIS REGARD, HE BROUGHT OUR ATTENTION TO THE A SSESSMENT ORDER AS WELL AS THE PENALTY ORDER HIGHLIGHTING THE ABOVE LEGAL DEFICIENCIES. 6. PER CONTRA, LD. DR FOR THE REVENUE RELIED ON THE ORDERS OF AO/CIT(A). 7. WE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS O F THE REVENUE. BEFORE PROCEEDING TO ADJUDICATE THE SOLITARY ISSUE RAISED BY THE ASSESSEE, WE PROCEED TO ADMIT THE ORAL GROUND (LEGAL IN NATURE) RAISED BY THE ASSESSEE 4 ITA NO.781/PUN/2016 SHRI POPATLAL MOHANLAL CHORDIA REGARDING THE RECORDING OF PROPER SATISFACTION BY THE AO. IN THIS CONNECTION, WE PERUSED THE ASSESSMENT ORDER DATED 28-12-2010 AN D FIND THE SATISFACTION RECORDED BY THE AO FOR INITIATING THE PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT IS RELEVANT FOR EXTRACTION. THEREFOR E, THE SAME IS REPRODUCED AS UNDER : ASSESSED U/S.143(3) OF THE INCOME TAX ACT, 1961. C HARGE INTEREST U/S.234B, 234D, 244A, AS PER ACT. ISSUE PENALTY SH OW CAUSE NOTICE U/S.271(1)(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME. 7.1 IN PARA NOS. 8.4 AND 8.5 OF HIS ORDER, THE AO WHILE MAKIN G ADDITIONS ON ACCOUNT OF CAPITAL GAINS RECORDED THE FOLLOWING SATISFACTION : 8.4 I THEREFORE ADD RS.27,20,215/- BEING CAPITAL G AINS ON SALE OF LAND AT GAT NO.142 AT TISGAON, DIST. AURANGABAD. AS ASSESSEE HAS CONCEALED THE CAPITAL GAIN AND NOT OFFERED FOR TAXATION DURING THE YEAR. HEN CE PENALTY PROCEEDING U/S.271(1)(C) IS SEPARATELY INITIATED. 8.5 . .. I THEREFORE ADD RS.13,63,533/- BEING CAPITAL GAIN O N SALE OF LAND AT GAT NO.142 AT TISGAON, DIST. AURANGABAD. AS ASSESSEE HAS CONCEALED THE CAPITAL GAIN AND NOT OFFERED FOR TAXATION DURING THE YEAR. HEN CE PENALTY PROCEEDING U/S.271(1)(C) IS SEPARATELY INITIATED. 7.2 WE ALSO PERUSED THE PENALTY ORDER DATED 28.03.2013 A ND FIND THE SATISFACTION RECORDED BY THE AO FOR LEVYING THE PENALTY U/ S.271(1)(C) OF THE ACT IS RELEVANT FOR EXTRACTION. THE SAID SATISFACTION READS AS UNDER: 8. IN VIEW OF THE FACTS MENTIONED ABOVE, I AM SATIS FIED THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF HIS INCOME FROM CAPITAL GAIN AND HAS CONCEALED HIS INCOME TO THE TUNE OF RS.36,25,36 8/- AS SHOWN ABOVE AND THEREBY MADE HIMSELF LIABLE FOR LEVY OF PENALTY U/S. 271(1)(C) OF THE INCOME TAX ACT, 1961. I , THEREFORE, LEVY A PENALTY U/S. 271(1)(C) OF THE INCOME TAX ACT, 1961 OF RS.8,21,508/- WHICH IS @100% OF TA X SOUGHT TO BE EVADED, AS PER CALCULATIONS . FROM THE ABOVE, IT IS EVIDENT THAT AT THE TIME OF INITIATION OF PENALTY PROCEEDINGS IN THE ASSESSMENT, AO MENTIONED BOTH LIMBS OF CLAUSE (C) OF SECTION 271(1) OF THE ACT. THIS MANNER OF RECORDING OF SATIS FACTION SUGGESTS 5 ITA NO.781/PUN/2016 SHRI POPATLAL MOHANLAL CHORDIA THE EXISTENCE OF AMBIGUITY WITH REFERENCE TO APPLICABILITY OF S PECIFIC LIMB. THEREFORE, WE ARE OF THE OPINION THAT CONSIDERING THE ABO VE REFERRED BINDING JUDGMENTS SUCH PENALTY ORDER IS UNSUSTAINABLE IN LAW LEGALL Y. IT IS A SETTLED LEGAL PROPOSITION THAT THE AO IS UNDER OBLIGATION TO SPECIFY THE CORRECT LIMB AT THE TIME OF INITIATION AS WELL AS AT THE TIME OF LEVY OF PENALTY. IN VIEW OF THE ABOVE DELIBERATION ON THIS ISSUE, WITHOUT GOING INTO THE MERITS OF THE PENALTY, WE ARE OF THE OPINION THAT THE PENALTY ORDER IS LIABLE TO BE QUASHED ON THIS LEGAL ISSUE. THUS, THE ORDER OF CIT(A) IS SET-A SIDE AND DIRECT THE AO TO DELETE THE PENALTY ON TECHNICAL GROUNDS WITHOUT GO ING INTO MERITS OF THE CASE. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED ON TECHNICALITIES. ORDER PRONOUNCED ON 26 TH DAY OF SEPTEMBER, 2018. SD/- SD/- ( /VIKAS AWASTHY) ( . /D. KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; / DATED : 26 TH SEPTEMBER, 2018. SATISH ' ) / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS)-2, AURANGABAD 4. THE PR. CIT-2, AURANGABAD. 5. , , # , / DR, ITAT, B BENCH, PUNE. 6. & / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.