Shri Meghjibhai P. Virani, RAJKOT-GUJARAT V. The Deputy Commissioner of Income Tax, Central Circle-1, RAJKOT-GUJARAT

ITSSA 57/RJT/2012

• Counselvise Citation: [2013] 121 COUNSELVISE.COM (IT) 9375 (ITAT-RAJKOT)
• Duration Of Justice: 10 month(s) 3 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 10-07-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-06-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 06-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C MATHEWS
• Assessee Lawyers: J C RANPURA
• Keywords: Capital asset; Search and seizure; Cost of acquisition
• Section: 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBULAL: RAJKOT BENCH: RAJKOT BEFORE SHRI T K SHARMA, JM AND SHRI D K SRIVASTAVA, AM IT (SS) A NO. 57 /RJ T/201 2 ASSESSMENT YEAR : 200 5 - 0 6 SHRI MEGHJI P VIRANI BALAJI, CHITRAKUT SOCIETY, AKSHAR MARG, RAJKOT PAN: AB QPV 899 6 F V. ACIT, CENTRAL CIRCLE - 1, RAJKOT DATE OF HEARING : 20 .0 6 .2013 DATE OF PRONOUNCEMENT : 10 .0 7 .2013 ASSESSEE BY : SHRI J C RANPURA, CA REVENUE BY : SHRI K C MATHEWS, DR ORDER D. K. SRIVASTAVA : THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER PASSED BY THE CIT(A) - IV, AHMEDABAD ON 29 . 06 .20 12 , ON THE FOLLOWING GROUNDS: - 1.0 THE GROUNDS OF APPEAL MENTIONED HEREUNDER ARE WITHOUT PREJUDICE TO ONE ANOTHER. 2.0 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - IV, AHMEDABAD [CIT(A)] ERRED ON FACTS AS ALSO IN LAW IN CONFIRMING THE LEVY OF PENALTY OF RS.25,000/ - U/S 271(1)(C) OF THE ACT. THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT MAY KINDLY BE DELETED. 3.0 YOUR HONORS APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER, OR WITHDRAW ANY OR MORE GROUNDS OF APPEAL ON OR BEFORE THE HEARING OF APPEAL. 2. THE ASSESSEE IS AN INDIVIDUAL. S EARCH AND SEIZURE OPERATION U/S 132 OF THE INCOME - TAX ACT WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE ON 27.10.2005 A S A RESULT OF WHICH NOTICE U/S 153A WAS ISSUED AND SERVED ON THE ASSESSEE CALLING UPON HIM TO FILE HIS RETURN OF INCOME. THE RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 20.02.2007 RETURNING TOTAL INCOME AT RS.55,574/ - AS AGAINST WHICH HIS TOTAL INCOME WAS ASSESSED AT RS.37,82,792/ - AFTER ADDING , INTER - ALIA , A SUM OF RS.1,30,850/ - (REDUCED TO RS.1,09,561/ - ON APPEAL BY THE ASSESSEE) ON ACCOUNT OF CAPITAL GAIN ON SALE OF PROPERTY. IT IS WITH REFERENCE TO THE AFORESAID ADDITION THAT THE IMPUGNED PENALTY HAS B EEN LEVIED U/S 271(1)(C) BY THE ASSESSING OFFICER. 2 57 - RJT - 2012 SHRI MEGHJI P VIRANI 3. PERUSAL OF THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER SHOWS THAT THE ASSESSEE HAD SOLD A PLOT OF LAND FOR RS.2,40,300/ - WHICH WAS PURCHASED BY HIM FOR A SUM OF RS.80,000/ - . STAMP DUTY OF RS. 8,700/ - WAS ALSO PAID. THE ASSES S ING OFFICER WORKED OUT THE COST OF ACQUISITION AT RS.88,700/ - AND INDEXED COST OF ACQUISITION AT RS.1,09,450/ - . SINCE THE SAID PROPERTY WAS SOLD FOR RS.2,40,300/ - , THE ASSESSING OFFICER WORKED OUT THE AMOUNT OF CAPITAL GAIN AT RS.1,30,850/ - AND TAXED THE SAME, WHICH, ON APPEAL, HAS BEEN REDUCED BY THE CIT(A) TO RS.1,09,561/ - . THE ASSESSING OFFICER ALSO INITIATED THE PROCEEDINGS FOR LEVY OF PENALTY U/S 271(1)(C) WITH REFERENCE TO THE AFORESAID ADDITION. ON APPEAL, THE LD CIT( A) CONFIRMED THE IMPUGNED ADDITION FOR THE DETAILED REASONS GIVEN BY HIM IN HIS APPELLATE ORDER . H E HAS ALSO CONFIRMED THE IMPUGNED PENALTY LEVIED BY THE ASSESSING OFFICER. 4 . AGGRIEVED BY THE ORDER PASSED BY THE LD CIT(A), THE ASSESSEE IS NOW IN APPEA L BEFORE THIS TRIBUNAL. IN SUPPORT OF APPEAL, THE LD . AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS FILED WRITTEN SUBMISSIONS WHICH READ AS UNDER: - 1.0 CONSEQUENT UPON THE SEARCH AND SEIZURE ACTION U/S.132 OF THE INCOME - TAX ACT, 1961 (HEREINAFTER REFER RED TO AS THE ACT) CARRIED OUT AT THE RESIDENTIAL PREMISED OF THE DIRECTORS OF BALAJI WAFERS PVT. LTD., SEARCH WAS ALSO CARRIED OUT AT THE RESIDENTIAL PREMISES OF THE APPELLANT ON 27.10.2005. 2.0 THE AO, VIDE ORDER U/S. 153A OF THE ACT, DATED 31.12.2007 ASSESSED THE TOTAL INCOME AT 37,82,792/ - WHEREIN HE HAD MADE VARIOUS ADDITIONS/DISALLOWANCE INCOME. HOWEVER, AFTER CONSIDERING THE ORDER OF THE LD. CIT (A) MAJORITY OF ADDITIONS/DISALLOWANCES WERE DELETED AND ADDITION OF 1,09,561/ - MADE ON ACCOUNT OF CAP ITAL GAIN ON SALE OF PROPERTY WAS RETAINED. 3.0 DURING PENALTY PROCEEDING U/S.271(1)(C) OF THE ACT, THE APPELLANT SUBMITTED THAT HE HAD VOLUNTARILY VIDE PARA 18.1 AND 18.2 OF LETTER DATED 01.12.2007 OFFERED THE CAPITAL GAIN ON SALE OF A PLOT AT SURVEY NO .520, KUVADVA STATING THAT THE SAME WAS REMAINED TO BE CONSIDERED IN THE RETURN OF INCOME FILED. BEFORE THE AO THE APPELLANTS CONTENTION WAS THAT SINCE THE CAPITAL GAIN COULD NOT BE OFFERED THROUGH OVERSIGHT UNDER A BONA FIDE MISTAKE 3 57 - RJT - 2012 SHRI MEGHJI P VIRANI AND WAS OFFERED VOLUN TARILY WITHOUT ANY FINDING BY THE AO, PENALTY COULD NOT BE LEVIED. 4.0 HOWEVER, THE AO REJECTED THE APPELLANTS EXPLANATION AND SUBMISSION AND LEVIED PENALTY OF RS.25,000/ - U/S. 271(1)(C) OF THE ACT. 5.0 THE LD. CIT (A) ALSO DISREGARDED THE APPELLANTS S UBMISSION AND HELD THAT THE APPELLANTS DISCLOSURE WAS NOT VOLUNTARY AND BONA FIDE AS THE SAME WAS ONLY AFTER SEARCH. THE LD. CIT (A) FURTHER HELD THAT OMISSION ON THE APPELLANTS PART WAS DELIBERATE AND ACCORDINGLY CONFIRMED THE PENALTY OF RS.25,000/ - 6 .0 THE APPELLANT SUBMITS THAT THE AO AND THE LD. CIT (A) BOTH FAILED TO APPRECIATE THE FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE THAT THE DETAILS OF SALE OF CAPITAL ASSET BEING LAND WAS BEFORE THE AO AND THE APPELLANT COMMITTED A BONA FIDE MISTAKE IN NOT INCLUDING THE CAPITAL GAIN IN RETURN OF INCOME FILED FOR RELEVANT ASSESSMENT YEAR. SUCH BONA FIDE MISTAKE CANNOT BE EQUATED WITH CONCEALMENT OF INCOME OR FURNISHING INACCURATE OF INCOME WHEN THE APPELLANT HAD HIMSELF COME FORWARD AND DREW THE ATTENTI ON OF DEPARTMENT AND OFFER THE ITEMS LEFT. 7.0 RELIANCE IS PLACED ON THE FOLLOWING DECISIONS. (I) THE HONBLE COURT OF KERALA IN THE CASE OF CIT VS. KERALA SPINNERS LTD. 247 ITR 541(KER), WHEREIN THE HONBLE HIGH COURT POINTED OUT THAT THE EXPLANATION IT SELF PROVIDES THAT WHERE ALL THE FACTS RELATING TO THE ADDITION HAD BEEN DISCLOSED BY THE ASSESSEE AND THE EXPLANATION IN RESPECT OF ENTRIES IN THE BOOKS ARE BONA FIDE, IT IS ONLY A CASE OF ASSESSEES FAILURE TO ESTABLISH HIS CASE, IT IS NOT A CASE FOR PEN ALTY FOLLOWING THE RATIO OF THE DECISION IN THE CASE OF CIT VS. MUSSADILAL RAM BHAROSE 165 ITR 14 (SC) FOR ITS CONCLUSION. 4 57 - RJT - 2012 SHRI MEGHJI P VIRANI (II) THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. BENNETT COLEMAN & CO. LTD. IN INCOME TAX APPEAL (LOD) NO.2117 OF 2012. [COPY OF GIST IS ATTACHED AT PAGE NO. 20] (III) THE HONBLE SUPREME COURT IN THE CASE OF PICE WATERHOUSE COOPERS PVT LTD VS. CIT 348 ITR 306 (SC) [COPY OF ABSTRACT IS ATTACHED AT PAGE NO.21] 8.0 THE APPELLANT PRAYS THAT PENALTY LEVIED BY THE AO AND AS CONFIRMED BY THE LD CIT(A) IN THIS MATTER MAY KINDLY BE DELETED. 5 . IN REPLY, THE LD DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER PASSED BY THE ASSESSING OFFICER AND THE LD . CIT(A). 6 . WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY CONSIDERED THEIR SUB MISSIONS. IT IS THE CASE OF THE ASSESSEE THAT THE ASSESSEE HIMSELF HAS OFFERED THE CAPITAL GAIN ARISING ON SALE OF AGRICULTURAL LAND AT VILLAGE KUVADVA TO TAX BEFORE THE ASSESSING OFFICER AS EVIDENT FROM PARA GRAPH 18.1 AND 18.2 OF THE ASSESSEES LETTER DA TED 01.12.2007 SUBMITTED BEFORE THE ASSESSING OFFICER. THE AFORESAID TWO PARAGRAPHS NAMELY 18.1 AND 18.2 READ AS UNDER: - 18.1 DETAILS OF PROPERTIES SOLD DURING THE RELEVANT PREVIOUS YEARS ARE AS UNDER: SALE DATE DETAILS OF PROPERTY AND OWNER AMOUNT 15 .07.2004 AGRICULTURAL LAND AT S.NO.520 AT VILLAGE KUVADVA ADMEASURING 2 ACRE 15 ARE 2,40,300 22.01.2004 PLOT NO.4 AT S.NO.77, NANA MAVA, RAJKOT WHICH WAS ACQUIRED BY ME AND SHRI HANSRAJBHAI DHANJIBHAI VIRANI ON 27.05.1985 FOR RS.40,000/ - . DETAILS IN THIS RESPECT IS FURNISHED AT PARA 30.3. BELOW. 6,07,000 18.2 AS THE LONG TERM CAPITAL GAIN REALIZED ON SALE OF SUCH PROPERTIES WERE REMAINED TO BE CONSIDERED IN THE WORKING OF INCOME ADMITTED, IT IS REQUESTED THAT THE RETURNED INCOME MAY KINDLY BE ENHANCED WI TH THE AMOUNT OF CAPITAL GAIN. 5 57 - RJT - 2012 SHRI MEGHJI P VIRANI 7 . BASED ON THE AFORESAID FACTS, THE CASE OF THE ASSESSEE IS THAT THE ASSESSEE HIMSELF HAS OFFERED THE IMPUGNED SUM OF CAPITAL GAIN BEFORE THE ASSESSING OFFICER AND THEREFORE HIS CONDUCT IN MAKING A TRUE AND FULL DISCLOSURE OF ALL THE RELEVANT FACTS BEFORE THE ASSESSING OFFICER WAS BONAFIDE. THE AFORESAID SUBMISSIONS MADE BY THE LD AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE COULD NOT BE REBUTTED BY THE LD DEPARTMENTAL REPRESENTATIVE. SINCE THE ASSESSEE HIMSELF HAD VOLUNTEERE D TO FURNISH NOT ONLY THE RELEVANT INFORMATION BUT ALSO OFFERED THE IMPUGNED SUM TO TAX WITHOUT THE SAME BEING DETECTED BY THE DEPARTMENT, THE IMPUGNED PENALTY LEVIED BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD CIT(A) IS CANCELLED. THE APPEAL FILED BY THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED ON 10 . 0 7 . 201 3 SD/ - SD/ - (T. K. SHARMA) ( D. K. SRIVASTAVA) JUDICIAL MEMBER ACCOUNTANT MEMBER RAJKOT: 10 .07 .2013 B T COPY OF ORDER FORWARDED TO: - 1 . APPELLANT SHR I MEGHJI P VIRANI, BALAJI, CHITRAKUT SOCIETY, AKSHAR MARG, RAJKOT 2 . RESPONDENT - ACIT, CENTRAL CIRCLE - 1, RAJKOT 3 . CONCERNED CIT - II, AHMEDABAD 4 . CIT (A) - IV , AHMEDABAD 5 . DR, ITAT, RAJKOT 6 . GUARD FILE. BY ORDER TRUE COPY PRIVATE SECRETARY, ITAT, RAJKOT