DDIT(IT) - 2(1),kolkata., Kolkata V. Raj Narayan Sinha, Kolkata

ITA 867/KOL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5000 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 11 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-04-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 22-03-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 19-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJAT KR KUREAL ACIT
• Keywords: Gift; Valuation report
• Section: 143(3); 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA BEFORE SHRI N.V.VASUSDEVAN, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 867 / KOL / 2013 ASSESSMENT YEAR :2004-05 DDIT(IT)-2(1), AAYAKAR BHAWAN POORVA, 2 ND FLOOR, ROOM NO. 211,110, SHANTIPALLY, KOLKATA-700107 V/S . RAJ NARAYAN SINHA C/O A.S.GUPTA & CO., 10, OLD POST OFFICE ROAD, KOLKATA-01 [ PAN NO.AYRPS 5729 H ] /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI RAJAT KR. KUREAL, ACIT, DR /BY RESPONDENT NONE /DATE OF HEARING 22-03-2016 /DATE OF PRONOUNCEMENT 13-04-2016 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-VI, KOLKATA DATED 07.01.2013. ASSESSMENT WAS FRAMED BY ADIT (IT-II), KOLKATA U/S 143(3) OF THE INCOME T AX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 14.1 1.2006 FOR ASSESSMENT YEAR 2004-05. PENALTY LEVIED BY ASSESSING OFFICER U/S 27 1(1)(C) OF THE ACT VIDE HIS ORDER DATED 31.03.2010. 2. AT THE TIME OF HEARING NONE APPEARED ON BEHALF O F ASSESSEE THOUGH NOTICE OF HEARING SENT TO ASSESSEE THROUGH RPAD. SO WE DECIDE TO HEAR THE PRESENT APPEAL WHERE WE FIND THAT THE HEARING IS PO SSIBLE WITHOUT APPEARANCE OF ASSESSEE OR ITS LEGAL REPRESENTATIVE. ITA NO.867/KOL/2013 A.Y. 2004-05 DDIT(IT)-2(1) KOL. V. RAJ NARAYAN SINHA PAGE 2 3. ONLY ISSUE RAISED BY THE REVENUE IN THIS APPEAL IS THAT THE LD.CIT(A) ERRED IN DELETING THE PENALTY IMPOSED BY AO U/S 271 (1)(C) OF THE ACT. 4. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS A NON-RESIDENT INDIVIDUAL AND HAS EARNED INCOME FROM CAPITAL GAIN & INTEREST INCOME. THE ASSESSMENT WAS COMPLETED BY THE AO U/S 143(3) OF THE ACT AFTER MAKING CERTAIN ADDITIONS AND DISALLOWANCES TO THE TOTAL INCOME OF THE ASSESS EE ON DATED 14.11.2006. IN THE PRESENT CASE, ASSESSEE ALONG WITH HIS BROTHE R INHERITED PROPERTY LOCATED AT 6 QUEENS ROAD, KOLKATA DURING THE YEAR 1998-99 U PON THE DEMISE OF THEIR MOTHER. BOTH THE BROTHERS WERE HAVING 50% OWNERSHIP RIGHT IN THE SAID PROPERTY. THE PROPERTY IN QUESTION WAS COMPRISED OF 1 BIGHA 16 COTTAH AND 18 SQUARE FEET FREEHOLD LAND WITH AN OLD STRUCTURE OF BUILDING THEREON. AS A RESULT OF SALE OF THE PROPERTY THE ASSESSEE GOT THE PROPER TY VALUED AS ON 1 ST APRIL 1981 IN TERMS OF THE PROVISIONS OF SECTION 49 OF TH E ACT READ WITH SECTION 55(2)(B)(II) OF THE ACT. AS PER THE ASSESSEE, THE V ALUATION OF ENTIRE PROPERTY WAS OF RS.1,07,60,000/- AS ON 1.4.1981 AND THE SHAR E OF THE ASSESSEE WAS COMES TO RS.53.80 LACS IN THE SAID PROPERTY. HOWEVE R THE VALUATION OF THE PROPERTY WAS DISREGARDED BY THE AO BY REFERRING THE MATTER TO THE DISTRICT VALUATION OFFICER (FOR SHORT DVO). THE DVO VALUED T HE SAID PROPERTY AT RS. 64.26 LACS AND THE SHARE OF ASSESSEE COMES TO RS. 3 2.13 LACS. ACCORDINGLY, AO WORKED OUT THE CAPITAL GAIN TAX LIABILITY IN THE HANDS OF THE ASSESSEE BY TAKING THE VALUATION OF THE PROPERTY AS ON 1 ST APRIL 1981 IN THE LIGHT OF VALUATION MADE BY THE DVO FOR THE PROPERTY. THE AO WHILE FRAM ING THE ASSESSMENT HAS RECORDED IN THE ASSESSMENT ORDER THAT PENALTY PROCE EDINGS U/S 271(1)(C) R.W.S 274 OF THE ACT IS INITIATED FOR FURNISHING INACCURA TE PARTICULARS ABOUT THE COST OF THE ACQUISITION AND UNDERSTATED THE CAPITAL GAIN. F INALLY, AO LEVIED THE PENALTY OF RS.20.36 LACS BEING 100% OF THE AMOUNT OF TAX SO UGHT TO BE EVADED U/S 271(1)(C) OF THE ACT ON DATED 31 ST MARCH 2010. THE PENALTY WAS LEVIED ON THE ASSESSEE FOR FURNISHING INACCURATE PARTICULARS OF I NCOME AFTER RELYING IN THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF UNION OF INDIA AND OTHERS V. DHARMENDRA TEXTILES PROCESSORS [166 TAXMAN 65 (SC) WHERE IT WAS HELD THAT ITA NO.867/KOL/2013 A.Y. 2004-05 DDIT(IT)-2(1) KOL. V. RAJ NARAYAN SINHA PAGE 3 PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS A CIV IL LIABILITY AND FOR ATTRACTING SUCH LIABILITY, WILLFUL CONCEALMENT IS NOT AN ESSEN TIAL INGREDIENT AS INDICATE AS IS THE CASE IN MATTER OF PROSECUTION UNDER SECTION 276 C OF THE ACT. 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL TO LD CI T(A) WHO HAS DELETED THE PENALTY ON THE GROUND THAT ALL OF MATERIAL FACT S WITH THE REGARD TO THE COMPUTATION OF CAPITAL GAIN INCOME WERE PLACED IN T HE FILE AND THE ASSESSEE HAD NEITHER CONCEALED ANY PARTICULARS OF INCOME NOR FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE AO COLLECTED ALL THE SE INFORMATION FROM THE SUBMISSION OF THE ASSESSEE ONLY AND THERE WAS NO DE LIBERATE ACT ON THE PART OF THE ASSESSEE NEITHER FOR CONCEALING THE PARTICUL ARS OF INCOME NOR SUBMITTING INACCURATE PARTICULARS OF INCOME. ACCORDINGLY THE L EARNED CIT(A) DELETED THE PENALTY IMPOSED BY THE AO. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) REVENUE IS AN APPEAL BEFORE US. 6. WE HAVE HEARD LD. DR AND PERUSED THE MATERIALS A VAILABLE ON RECORD. BEFORE US LD. DR RELIED ON THE ORDER OF AO AND LEFT THE ISSUE TO THE DISCRETION OF THE BENCH. FROM THE AFORESAID MATERIALS AND SUBM ISSION MADE BY LD. DR WE FIND THAT THE ADDITION WAS MADE BY THE AO ON ACC OUNT OF DIFFERENCE IN VALUATION OF THE PROPERTY AS ON 01.04.1981 FURNISHE D BY THE ASSESSEE AND THEREAFTER FURNISHED BY THE DVO. THE ASSESSEE PREFE RRED AN APPEAL BEFORE LD. CIT(A) AGAINST THE QUANTUM ADDITION MADE BY THE AO. THE LD.CIT(A) HAS GIVEN PARTLY RELIEF TO THE ASSESSEE. AFTER THAT ASS ESSEE NEVER PREFERRED AN APPEAL BEFORE US AGAINST THE ORDER OF LEARNED CIT(A ) HENCE AO CONFIRMED THE PENALTY ON THE GROUND THAT THE ASSESSEE HAS FURNISH ED INACCURATE PARTICULARS OF INCOME. NOW THE QUESTION BEFORE US IS WHETHER TH E ASSESSEE IS GUILTY FOR FURNISHING INACCURATE PURPOSE OF INCOME OR NOT. FRO M THE FACTS, IT IS CLEAR FIND THAT ASSESSEE GOT THE PROPERTY VALUED FROM A REGIST ERED VALUER AND ACCORDINGLY THE RETURN OF INCOME WAS FILED. HOWEVER THE AO DISAGREED WITH THE SAME VALUATION AND GOT THE VALUATION DONE FROM THE DVO WHERE THE AO FOUND ITA NO.867/KOL/2013 A.Y. 2004-05 DDIT(IT)-2(1) KOL. V. RAJ NARAYAN SINHA PAGE 4 FOR THE DIFFERENCE IN THE VALUATION OF THE PROPERTY BETWEEN THE REGISTERED VALUER AND DVO. AS A RESULT DIFFERENCE IN THE VALUATION OF THE PROPERTY WAS FOUND ON THE BASIS OF TWO DIFFERENT VALUATION REPORTS. NOW F ROM THE FACTS, IT IS CLEAR THAT THERE WERE 2 VIEWS REGARDING THE VALUATION OF PROPE RTY AS ON 01.04.1981 AND WE HAVE SEEN IN MANY CASES WHERE THE COURTS HAVE D ELETED THE PENALTY WHEN TWO VIEWS ARE POSSIBLE FOR THE PARTICULAR TRAN SACTION. ACCORDINGLY, IN THE INSTANT CASE IN OUR CONSIDERED VIEW THE ASSESSEE CA NNOT BE HELD GUILTY FOR FURNISHING EITHER FOR CONCEALMENT OF INCOME OR FURN ISHING INACCURATE PARTICULARS OF INCOME. WE ALSO FIND IN SUPPORT FROM THE DECISIO N OF HON'BLE JURISDICTIONAL HON'BLE HIGH COURT IN THE CASE OF DURGA KAMAL RICE MILLS V. CIT 265 ITR 25,183 CTR; 130 TAXMANN 553 AS FOLLOWS:- WHEN TWO VIEWS, ARE POSSIBLE, NO PENALTY CAN BE IM POSED IS A PRINCIPLE THAT HAS BEEN ENUNCIATED IN THE SAID TWO DECISIONS IN NA TIONAL TEXTILES V. CIT [2001] 249 ITR 125 (GJ) AND CIT V. P.K. NARAYANAN [ 1999] 238 ITR 905 (KER). IN CIT V. P.K.NARAYANAN [1999] 238 ITR 905 (KER), I T WAS HELD THAT UNLESS THE AMOUNT IS OWNED BY THE ASSESSEE AND THERE IS A CONC LUSIVE FINDING TO THAT EFFECT IT IS NOT HIT BY EXPLANATION 1 TO SECTION 27 1(1)(C). WHEREAS IN NATIONAL TEXTILES V CIT [2001] 249 ITR 125 (GUJ), IT WAS HEL D THAT UNTIL AND UNLESS THE EXPLANATION IS FOUND TO BE FALSE OR MALA FIDE, THE MISCHIEF OF SECTION 271(1)(C) CANNOT BE ATTRACTED. IN THE PRESENT CASE, THERE WAS NOTHING TO INDICATE THAT THE EXPLANATION WAS FALSE OR MALA FIDE. THE LEARNED TRIBUNAL HAS NOT AR RIVED AT ANY SUCH CONCLUSION. HAVING REGARD TO THE FACTS AND CIRCUMST ANCES OF THE CASE, AS WAS HELD IN NATIONAL TEXTILES [2001] 249 ITR 125 (GUL), NO REASONABLE AND POSITIVE INFERENCE COLD BE DRAWN. BECAUSE OF THE TWO STANDS TAKEN BY THE INCOME-TAX AUTHORITY IN THIS CASE BY ADDING THE AMOUNT IN THE INCOME OF THE ASSESSEE AND AGAIN ACCEPTING THE SAME AT THE HANDS OF THE PARTNE RS, THE INCOME-TAX AUTHORITY CANNOT FALL BACK ON ONE AND REJECT THE OT HER. IN ASHOK TIMBER INDUSTRIES [1980] 125 ITR 336 (CAL), IN A SIMILAR C IRCUMSTANCE, IT WAS HELD THAT IT COULD HAVE BEEN TREATED TO BE AN INCOME OF THE F OLLOWING PREVIOUS YEAR WHEN IT I SHOWN AS THE OPENING BALANCE OF THAT PREV IOUS YEAR. THUS, ALSO, TWO VIEWS ARE POSSIBLE. WHEN TWO VIEWS ARE POSSIBLE AND WHEN NO CLEAR AND DEFINITE INFERENCE CAN BE DRAWN, IN A PENALTY PROCE EDINGS, PENALTY CANNOT BE IMPOSED. FURTHER REFERENCE OF ITAT DELHI SMC IN THE CASE O F MITER SAIN (HUF0 V. INCOME-TAX OFFICER, WARD-II IN IT APPEAL NOS. 2856 TO 2858 & 2919 (DEL) OF 2007 & 4416 TO 4419 (DEL) OF 2010 DATED AUGUST 27, 2012 FOR ASSESSMENT YEARS 1993-94 & 1994-95 REPORTED IN [2012] 26 TAXMA NN.COM 67 (DEL) HELD ITA NO.867/KOL/2013 A.Y. 2004-05 DDIT(IT)-2(1) KOL. V. RAJ NARAYAN SINHA PAGE 5 THAT WHETHER PENALTY SHOULD BE IMPOSED FOR FAILURE TO PERFORM A STATUTORY OBLIGATION IS A MATTER OF DISCRETION OF THE AUTHORI TY TO BE EXERCISED JUDICIALLY AND ON A CONSIDERATION OF ALL THE RELEVANT CIRCUMST ANCES. EVEN IF A MINIMUM PENALTY IS PRESCRIBED, THE AUTHORITY COMPETENT TO I MPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY, WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT, OR WHERE THE B REACH FLOWS FROM A BONA FIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN TH E MANNER PRESCRIBED BY THE STATUTE. IT OBSERVED FURTHER AS FOLLOWS:- 23. I HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED. I NOTE THAT IN THE QUANTUM APPEALS CONSIDERED BY ME HEREIN ABOVE, I HAVE ALREADY CONFIRMED THE ADDITIONS MADE IN THIS REGARD. HOWEVE R, I HAVE ALSO NOTED THAT LEVY OF PENALTY IS NOT AUTOMATIC ON CONFIRMATION OF THE QUANTUM. I FURTHER FIND THAT ASSESSEE HAS DULY DISCLOSED THE GIFTS AND THER E WAS NO CONCEALMENT IN THIS REGARD. ONLY THE ASSESSEE HAS FAILED TO PRODUC E THE ALLEGED DONOR THAT THE PENALTY HAS BEEN IMPOSED. I FURTHER FIND THAT S ECTION 271(1)(C) OF THE ACT POSTULATES IMPOSITION OF PENALTY FOR FURNISHING OF INACCURATE PARTICULARS AND CONCEALMENT OF INCOME. ON THE FACTS AND CIRCUMSTANC ES OF THIS CASE, I FIND THAT ASSESSEES CONDUCT WAS NOT CONTUMACIOUS SO AS TO WARRANT LEVY OF PENALTY U/S. 271(1)(C) OF THE IT ACT. UNDER THE CIR CUMSTANCES, I HOLD THAT THE PENALTY WAS NOT LEVIABLE IN THESE CASES. FOR THIS P ROPOSITION, I PLACE RELIANCE TO THE HON'BLE APEX COURT DECISION IN THE CASE OF CIT V. RELIANCE PETRO PRODUCTS (P)) LTD . [2010] 189 TAXMAN 322 (SC). IN THIS CASE VIDE ORD ER DATED 17.3.2010 WHEREIN IT HAS BEEN HELD THAT THE LAW LAI D DOWN IN THE DILIP N. SHROFF V. JT. CIT [2007] 291 ITR 519 / 161 TAXMAN 218 (SC) AS TO THE MEANING OF WORD CONCEALMENT AND INACCURATE CONTINUES TO BE A GOOD LAW BECAUSE WHAT WAS OVERRULED IN THE DHARMENDRA TEXTIL E CASE WAS ONLY THAT PART IN DILIP SHEROFF CASE WHERE IT WAS HELD THAT MEANS REA WAS A ESSENTIAL REQUIREMENT OF PENALTY U/S. 271(1)(C). THE HON'BLE APEX COURT ALSO OBSERVED THAT IF THE CONTENTION OF THE REVENUE IS ACCEPTED T HEN IN CASE OF EVERY RETURN WHERE THE CLAIM IS NOT ACCEPTED BY THE AO FOR ANY REASON, THE ASSESSEE WILL INVITE THE PENALTY U/S. 271(1)(C). THIS IS CLEARLY NOT THE INTENDMENT OF LEGISLATURE. 24. I FURTHER PLACE RELIANCE UPON DECISION OF THE H ON'BLE APEX COURT RENDERED BY A LARGER BENCH COMPRISING OF THREE OF THEIR LORD SHIPS IN THE CASE OF HINDUSTAN STEEL V. STATE OF ORISSA [1972] 83 ITR 26 WHEREIN IT WAS HELD THAT AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF A QUASI-CRIMINAL PROCEEDINGS, AND PENALTY WILL NOT ORDINARILY BE IMPOSED UNLESS THE PARTY OBLIGED EITHER ACTED DELIB ERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST, OR ACTED IN CONSCIOUS DISREGARD OF ITS OBLIGATION. PENALTY WILL NOT ALSO BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IMPOS ED FOR FAILURE TO PERFORM A STATUTORY OBLIGATION IS A MATTER OF DISCRETION OF T HE AUTHORITY TO BE EXERCISED JUDICIALLY AND ON A CONSIDERATION OF ALL THE RELEVA NT CIRCUMSTANCES. EVEN IF A MINIMUM PENALTY IS PRESCRIBED, THE AUTHORITY COMPET ENT TO IMPOSE THE PENALTY ITA NO.867/KOL/2013 A.Y. 2004-05 DDIT(IT)-2(1) KOL. V. RAJ NARAYAN SINHA PAGE 6 WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY, WH EN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT, OR WHER E THE BREACH FLOWS FROM A BONA FIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN T HE MANNER PRESCRIBED BY THE STATUTE. 25. IN THE BACKGROUND OF THE AFORESAID DISCUSSION A ND PRECEDENTS RELIED UPON, I DELETE THE LEVY OF PENALTY U/S. 271(1)(C) IN THES E CASES. 26. IN THE RESULT, ASSESSEES APPEAL IN I.T.A. NOS. 2856, 2857, 2858, 2919/DEL/2007 ARE DISMISSED. THE ASSESSEES APPEAL IN I.T. NOS. 4416, 4417, 4418, 4419/DEL/2010 ARE ALLOWED. TAKING A CONSISTENT VIEWS OF VARIOUS COURTS DECISIO NS AND THE ORDER OF DELHI BENCH AND FACTS OF THE PRESENT, WE CONCLUDE THAT TH E ASSESSEE HAD NOT CONCEALED ANY PARTICULARS OF INCOME AND AS SUCH WE FIND NO INFIRMITY IN THE ORDER OF LD. CIT(A). THIS APPEAL OF REVENUE IS DISM ISSED. 7. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 13 /04/2016 SD/- SD/- (N.V.VASUDEVAN) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP !- 13 / 04 /201 6 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-DDIT(IT)-2(1) AAYAKAR BHAWAN POORVA 2 ND FLOOR, ROOM NO.211 110, SHANTIPALLY , KOLKATA-107 2. /RESPONDENT-RAJ NARAYAN SINHA,C/O A.S.GUPTA &CO.10, OLD POST OFFICE RD, KOL-01 3. ) *+ , , - / CONCERNED CIT KOLKATA 4. , , -- / CIT (A) KOLKATA 5. 012 33*+, , *+ , / DR, ITAT, KOLKATA 6. 267 89 / GUARD FILE. BY ORDER/ , , /TRUE COPY/ / , *+ ,