South India Surgicals Co. Ltd., CHENNAI V. ACIT, CHENNAI

ITA 916/CHNY/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6853 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 04-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Wrong claim
• Section: 271(1)(c); 143(3); 274

Judgement Text

, , IN THE INCOME-TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . , , BEFORE SHRI DUVVURU RL REDDY, JUDICIAL MEMBER & SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ I.T.A.NO.916/CHNY/2019 / ASSESSMENT YEAR :2015-16 M/S. SOUTH INDIA SURGICAL COMPANY LTD., NEW NO. 117, OLD NO. 65, WALLAJAH ROAD, ANNA SALAI, CHENNAI 600 002. [PAN:AAACS5091E] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 6(2), CHENNAI. ( /APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE / RESPONDENT BY : SHRI AR.V. SREENIVASAN, JCIT / DATE OF HEARING : 03.07.2019 /DATE OF PRONOUNCEMENT : 29.07.2019 / O R D E R PER DUVVURU RL REDDY, JUDICIAL MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 15, CHENNAI DATED 28.02.2019 RELEVANT TO THE ASSESSMENT YEAR 2015-16 PASSED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 [ACT IN SHORT]. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME BELATEDLY FOR THE ASSESSMENT YEAR 2015-16 ON 05.11.2015 DECLARING A TOTAL INCOME OF .(-) 4,51,72,033/-. THE CASE WAS SELECTED FOR SCRUTINY AND ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT BY ASSESSING I.T.A. NO.916/CHNY/19 2 TOTAL INCOME AT .15,51,44,390/- BY MAKING VARIOUS ADDITIONS. SUBSEQUENTLY, PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) R.W.S. 274 OF THE ACT WERE INITIATED. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE ASSESSING OFFICER LEVIED PENALTY OF .4,19,09,428/- UNDER SECTION 271(1)(C) OF THE ACT. ON APPEAL, THE LD. CIT(A) CONFIRMED THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT. 3. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. IT WAS THE SUBMISSION OF THE LD. COUNSEL THAT IN THE RETURN OF INCOME, THE ASSESSEE HAS ADMITTED THE PROFIT AROSE OUT OF LAND SALE AMOUNTING TO .15,40,40,938/- AS EXEMPT. IT WAS FURTHER SUBMISSION THAT THERE WAS NO SURVEY OR SEARCH OPERATION CARRIED OUT, THEREBY THE DEPARTMENT INVENTED ANY UNDISCLOSED INCOME WARRANTING LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. IT WAS FURTHER SUBMISSION THAT PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS NOT WARRANTED UNDER DEBATABLE ISSUE. IT WAS FURTHER SUBMISSION THAT THE ASSESSEE HAS FURNISHED COMPLETE PARTICULARS OF INCOME FOR ASSESSMENT AND THEREFORE, THE ASSESSEE HAS NOT CONCEALED ANY PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS AND PRAYED THAT THE PENALTY LEVIED SHOULD BE DELETED. ON THE OTHER HAND, THE LD. DR STRONGLY SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 4. WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW INCLUDING PAPER I.T.A. NO.916/CHNY/19 3 BOOK FILED BY THE ASSESSEE. WITH REGARD TO LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT, IN THE RETURN OF INCOME THE ASSESSEE CLAIMED THE PROFIT AROSE OUT OF LAND SALE AMOUNTING TO .15,40,40,938/- AS EXEMPT. HOWEVER, THE CLAIM OF THE ASSESSEE WAS NOT ACCEPTED BY THE DEPARTMENT AND CAPITAL GAIN TAX WAS LEVIED AND BROUGHT TO TAX. THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS AND LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON THE GROUND THAT THE ASSESSEE HAS WILFULLY CONCEALED THE INCOME. ADMITTEDLY, THERE WAS NO SURVEY OR SEARCH UNDER THE INCOME TAX ACT. THOUGH BELATEDLY, THE ASSESSEE VOLUNTARILY FILED THE RETURN OF INCOME BY ADMITTING THE ENTIRE INCOME OF THE ASSESSEE AND FURNISHED ALL THE PARTICULARS. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, BASED ON THE DETAILS FURNISHED BY THE ASSESSEE, THE ASSESSING OFFICER HAS OBSERVED THAT THE CLAIM OF THE ASSESSEE IS NOT EXEMPT AND ACCORDINGLY, THE TAX LEVIED WAS ACCEPTED. 4.1 THEREAFTER, THE ASSESSING OFFICER HAS LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON THE GROUND THAT THE ASSESSEE HAS WILFULLY CONCEALED THE PARTICULARS OF INCOME. IT WAS THE SUBMISSION OF THE LD. AR THAT THE LAND WAS CLASSIFIED AS AGRICULTURAL LAND AND THE REPORT OF THE INSPECTOR, IT DEPARTMENT CLEARLY ESTABLISHES THAT THERE IS COCONUT TREES, BANANA TREES, DRUMSTICK TREES, ETC. IT WAS THE SUBMISSION THAT THE ASSESSING OFFICER HAS ACCEPTED THE SAME, BUT HE DENIED CLAIM SINCE THERE IS A BUILDING AND SWIMMING POOL EXISTING IN SOME PART OF THE LAND AND THE ASSESSEE HAS ALSO I.T.A. NO.916/CHNY/19 4 CLAIMED DEPRECIATION ON THE BUILDING AND SWIMMING POOL. IT WAS FURTHER SUBMISSION THAT SALE DEED IS ALSO CLEARLY ESTABLISHES THE NATURE OF LAND IS AGRICULTURAL LAND AND MOREOVER, THERE WAS NO CONVERSION OF THE LAND. HE FURTHER SUBMITS THAT THE ASSESSEE HAS VOLUNTARILY SHOWN THE SALE TRANSACTION IN THE RETURN OF INCOME, BUT CLAIMED AS EXEMPT FROM THE TAX. THE LD. COUNSEL FURTHER SUBMITTED THAT THERE IS NO WILFUL CONCEALMENT OR INACCURATE PARTICULARS FURNISHED BY THE ASSESSEE, BUT IT IS ONLY A WRONG CLAIM SINCE THE CLASSIFICATION OF THE LAND, SALE DEED AND DUE TO THE EXISTENCE OF THE COCONUT TREES AND OTHER TREES, THE ASSESSEE CLAIMED IT AS AGRICULTURAL LAND. IT WAS FURTHER SUBMISSION THAT EVEN THE DATE OF SALE, ALL THE LAND REVENUE RECORDS ESTABLISHES THAT THE NATURE OF THE LAND WAS AGRICULTURAL LAND AND THUS, BY RELYING UPON THE FOLLOWING DECISIONS, IT WAS PRAYED FOR DELETING THE PENALTY. 4.2 IN THE CASE OF UNION OF INDIA V. DHARMENDRA TEXTILE PROCESSORS 306 ITR 277, THE HONBLE SUPREME COURT HAS POINTED THAT A MERE MAKING A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF WOULD NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SIMILAR VIEW WAS ALSO TAKEN BY THE HONBLE SUPREME COURT IN THE CASE OF CIT V. RELIANCE PETROPRODUCTS (P.) LTD. 322 ITR 158. IN VIEW OF THE ABOVE JUDICIAL PRONOUNCEMENT AND IN VIEW OF THE FACTS AND CIRCUMSTANCES, WE FIND FORCE IN THE ARGUMENTS OF THE LD. COUNSEL. IN THIS CASE, WE FIND THAT THE ASSESSEE HAS MADE A CLAIM IN THE RETURN OF INCOME, WHICH WAS NOT ACCEPTED I.T.A. NO.916/CHNY/19 5 BY THE ASSESSING OFFICER AND BASED ON SUCH CLAIM OF THE ASSESSEE, FORMING AN OPINION THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME IS NOT CORRECT IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF UNION OF INDIA V. DHARMENDRA TEXTILE PROCESSORS (SUPRA). UNDER THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT STANDS DELETED. THUS, THE GROUND RAISED BY THE ASSESSEE IS ALLOWED. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THE 29 TH JULY, 2019 AT CHENNAI. SD/- SD/- (S. JAYARAMAN) ACCOUNTANT MEMBER (DUVVURU RL REDDY) JUDICIAL MEMBER CHENNAI, DATED, THE 29.07.2019 VM/- /COPY TO: 1. / APPELLANT, 2. / 2. / RESPONDENT, 3. ( ) /CIT(A), 4. /CIT, 5. /DR & 6. /GF.