Income Tax Appellate Tribunal - Amritsar
The Asstt. Commissioner Of Income Tax, ... vs Sh. Satya Pal Saini, Ex-Mla, Pathankot on 11 August, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
AMRITSAR BENCH; AMRITSAR.
BEFORE SH. T. S. KAPOOR, ACCOUNTANT MEMBER
AND SH. N.K. CHOUDHRY, JUDICIAL MEMBER
I.T.A No.640/(Asr)/2015
Assessment Year: 2007-08
PAN: APUPS5712C.
A. C. I. T., Vs. Sh. Satya Pal Saini,
Circle-VI, Ex-MLA S/o Sh. Piara
Pathankot Lal Saini, Garden Colony,
Mission Road, Pathakot.
(Appellant) (Respondent)
Appellant by: Sh. Rahul Dhawan (D.R.)
Respondent by: Sh. P. N. Arora (Adv.)
Date of Hearing: 02.08.2017
Date of Pronouncement: 11.08.2017
ORDER
PER T. S. KAPOOR (AM):
This is an appeal filed by Revenue against the order of Ld. CIT(A), Amritsar dated 30.09.2015 for Asst. Year: 2007-08.
2. The Revenue has taken the following grounds of appeal:
"(i) On facts and law, the Ld. CIT(A), Amritsar has erred in deleting the penalty not appreciating that (Joint Development Agreement) is "Agreement to Sell" "Possession letter" and "irrevocable Power of Attorney" and "Resolution by the members allowing the society to enter into a contract with the developers." And transfer of asset within the meaning of section 2(47) of the Income Tax Act, 1961.
(ii) On facts and law, the Ld. CIT(A), Amritsar has erred in deleting the penalty not appreciating the applicability of Apex Court Judgment in S. Chathanatha Kaiyalar Vs. The Central Bank of India Ltd. in AIR 1965 SC 1856.2 ITA No. 640(Asr)/2015
Assessment Year: 2007-2008
(iii) On facts and law the Ld. CIT(A), Amritsar failed to appreciate that the assessee had paid/undertook to pay tax on capital gains accruing to him thus admitting that the transaction was of a nature where capital gain was exigible?
(iv) On facts and law, the Ld. CIT(A), Amritsar failed to appreciate that Penalty amount reduced as per the order of the Hon'ble Punjab & Haryana High Court, Chandigarh passed in I.T.A. No. 200 of 2013 (O & M) dated 22.07.2015.
(v) Appellant craves leave to amend or add any or more grounds of appeal.
3. The brief facts of this case are that the assessee was a member of a Housing Society, named as the Punjabi Cooperative House Building Society Ltd. Mohali and was holding a plot of 1,000 yards. The society entered into a tripartite joint development agreement with Hash Building (P.) Ltd. & Tata Housing Development Company Ltd. whereby the assessee was to transfer his land and in lieu of that was to get a sale consideration of Rs. 1,65,00,000/- plus two furnished flats, the value of which was considered to be Rs. 2,02,50,000/-. Out of the total consideration, the assessee received certain amount from Tata Housing Development Company, however, the agreement could not be completed and the assessee did not receive the balance sale consideration and also did not receive the furnished flats. The assessee did not declare any capital gain in the return of income as in his opinion the transaction of sale was not completed. The Assessing Officer, however, held that the transaction had taken place and assessee was liable to declare capital gain in the return of income and therefore he made the addition. Before Ld. CIT(A), and Hon'ble Tribunal, the assessee lost the appeals however, the Hon'ble Punjab & 3 ITA No. 640(Asr)/2015 Assessment Year: 2007-2008 Haryana High Court allowed relief to the assessee and held that assessee was not required to declare, entire capital gains but was required to declare entire capital gain basis of amount received during the year. In the meantime, the penalty order u/s 271(1)(c) of the Act for concealment of particulars of income was initiated and the assessee was imposed the penalty of Rs. 76,72,715/-, however, after giving appeal effect of the order of the Hon'ble Punjab & Haryana High Court, the penalty amount was reduced to Rs. 14,81,040/- which represented the penalty on the capital gains on receipt basis which the assessee had not declared in the original return of income. However, assessee had declared proportionate capital gains in the revised return of income which the Assessing Officer had not considered as the revised return was belated.
4. Against the penalty order, the assessee filed before Ld. CIT(A) who deleted the penalty by holding as under.
"In the original return filed by the assessee on 29-03- 2008, no income under the head capital gains was shown, but on him own motion, the assessee had filed a revised return on 24-02-2010 for the year under consideration disclosing an income of Rs. 21,80,330/- + agriculture income Rs 100,000/- with the remarks "Revised Return" The Assessing Officer however did not accept the revised return on the ground that the return for A Y 2007-08 could be revised on or before 31-03-2009 whereas the assessee had filed the revised return on 24-02-2010 i.e after 31-03-2009 which cannot be treated as revised return all. The fact that all the material facts which were required to compute the correct capital gains were furnished by the appellant in his second return filed on 24-02-2010 claimed as "revised return" was however filed only after the receipt of notice u/s 148 of the Act dated 15-02-2010 served by speed post on 19-02-2010. Therefore the AO was justified in not taking cognizance of the return filed on 24.02.2010.
It is clear from the arguments raised by the appellant that there were certain controversies and disputes in regard to the transfer of plot. In fact, there were various issues which had still not been 4 ITA No. 640(Asr)/2015 Assessment Year: 2007-2008 resolved and the construction of building in which the appellant was to get a flat as a part of sale consideration, has not started till date. In these peculiar circumstances, the belief of the appellant that the capital gains on which he has to pay tax has to be computed only on the basis of the amount which he has actually received, cannot be considered to be totally unreasonable, though it was not strictly legal. This appears to be a reasonable course for not disclosing the income under the head capital gains in the original return filed on 29.03.2008 in respect of property in question.
I have also considered the recent judgment Hon'ble P&H high Court in the case of C.S Atwal Vs CIT, Ludhiana, ITA No.200 of 2013(0&M) dated 22.07.2015. The said appeal was filed before the Hon'ble Punjab & Haryana High Court u/s 260A of the Act against the order dated 29.07.2013, passed u/s 254(1) of the Act passed by the Hon'ble ITAT, Chandigarh'B' bench, Chandigarh is ITA No. 448/Chd/2011 for AY 2007-
08. The hon'ble court had held as under:-
1.0. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
............................................................................ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..............................Perus al of the JDA dated 25.02.2007 read with sale deeds dated 02.03.2007 and 25.04.2007 in respect of 3.08 acres and 4.62 acres respectively would reveal that, the parties had agreed for pro-rata transfer of land.
2. No possession had been given by the transferor to the transferee of the entire land in part performance of JDA dated 25.02.2007 so as to fall within the domain of Section 53A of 1882 Act.
3. The possession delivered, if at all, was as a license for the for the development of the property and not in the capacity of a transferee.
4. Further Section 53A of 1882 Act, by incorporation, stood embodied in section 2(47)(v) of the Act and all the essential ingredients of Section 53A of 1882 Act were required to be fulfilled. In the absence of registration of JDA - dated 25.02.2007 having been executed after 24.09.2007, the agreement does not fall under Section 53A of 1882 Act and consequently Section 2(47)(v) of the Act does not apply.
5. It was submitted by learned counsel for the assessee- appellant that whatever amount was received from the developer, capital gains tax has already been paid on that and sale deeds have also been executed. In view of cancellation of JDA dated 25.02.2007, no further amount has been received and no action thereon has been taken. It was urged that as and when any amount is received, capital gains tax. shall be discharged thereon in accordance with law. In view if of the aforesaid stand, while disposing of the appeals, we observe that the assessee appellants shall remain bound by their said stand.
5 ITA No. 640(Asr)/2015
Assessment Year: 2007-2008
6. The issue of exigibility to capital gains tax having been decided in favour of the assessee, the question of exemption under Section 54F of tine Act would not survive any longer and has been rendered academic.
7. The Tribunal and the authorities below were not right in holding the assessee-appellant to be liable to capital gains tax in respect of remaining land measuring 13.5 acres for which no consideration had been received and which stood cancelled and incapable of performance, at present due to various orders passed by the Supreme Court and the High Court in PILs. Therefore, the appeals are allowed."
The facts of the case of the appellant are identical to those of the above cited case of Sh. C.S Atwal decided by hon'ble Punjab & Haryana High Court vide order dated 22.07.2015. Following the said decision of hon'ble High Court in the case of Sh. C.S Atwal no penalty for filing inaccurate particulars of income u/s 271(1)( c) of the Act survives in the case of the appellant no penalty u/s 271(1)( c) of the Act survives.
In view of discussion, it is held that penalty for filing inaccurate particulars of income has been wrongly levied in the instant case and the same is accordingly cancelled. Grounds of appeal taken by the appellant are allowed".
5. Aggrieved the Revenue is in appeal before us.
6. At the outset, the Ld. DR submitted that the assessee had filed revised return of income wherein the capital gain on the basis of receipt was declared but that return was invalid return as that was not filed within the prescribed period of time and he further submitted that such revised return was filed by assessee in response to notice by department u/s 148 of the Act, and therefore, it was prayed that the order of Ld. CIT(A) may be cancelled and that of Assessing Officer be upheld.
6. The Ld. AR, on the other hand, submitted that the revised return was filed voluntarily and it was further submitted that in the revised return of income, the assessee had declared capital gains on the basis of actual receipts and therefore, there was no concealment of income. The Ld. 6 ITA No. 640(Asr)/2015 Assessment Year: 2007-2008 AR submitted that though the revised return filed by assessee was belated but the penalty proceedings are different and during penalty proceedings, the Assessing Officer was bound to take into account, the revised return of income wherein, complete particulars of transaction of capital gain was disclosed. The Ld. AR further argued that Ld. CIT(A) has deleted the penalty as he considered the explanation of assessee for non disclosure of capital gains as reasonable. The Ld. AR in this respect relied on the Judgment of Hon'ble Amritsar Bench in the case of Sh. Ashok Kumar in ITA No. 571 & 572.
7. We have heard the rival parties and have gone though the material placed on record. We find that assessee filed its return original return of income on 29.03.2008 and subsequently another return of income was filed on 24.02.2010, declaring an income which included the income from capital gain. The said return was to be filed on or before 31.03.2009 whereas it was filed on 24.02.2010 and therefore, while making assessment, the Assessing Officer ignored the revised return and completed the assessment proceedings on the basis of original return. In the penalty proceedings also the Assessing Officer did not consider the fact of assessee having filed the revised return of income and imposed the penalty to the extent of 76,72,715/- which however was reduced to Rs. 14,81,040/-. The reduction in penalty was made to give appeal effect of the order of Hon'ble Punjab & Haryana High Court wherein the Hon'ble Court had held that capital gain was liable to be declared on the basis of 7 ITA No. 640(Asr)/2015 Assessment Year: 2007-2008 actual receipts during the year. The Ld. CIT(A) however deleted the penalty by holding that there were certain controversies and disputes in regard to the transfer of plot and various issues which had still not been resolved and the consideration of building in which the appellant was to get a flat had not started till date and therefore, in these circumstances, the belief of the appellant that the capital gains on which he has to pay tax has to be computed only on the basis of the amount which he has actually received was a reasonable belief. The Ld. CIT(A) has held that though the revised return was not strictly legal but the reason for not disclosing the income under the head of capital gains in the original return was not unreasonable. We find that Ld. CIT(A) has passed a reasoned and speaking order wherein he has upheld the action of Assessing Officer in not accepting the revised return but at the same time, he has considered the cause for not disclosing the capital gains in original return as reasonable and had deleted the penalty.
8. As regards the objection of Ld. DR regarding belated revised return, we further find that Hon'ble ITAT Delhi Bench in the case of Ashok Raj Nath in ITA No. 2970/(Del/2012 vide order dated 31.08.2012 has considered the issue of belated revised return with respect to penalty proceedings and has decided the issue in favour of assessee by holding as under:
"8. We have heard the Id. DR and gone through the facts of the case. As is apparent from the aforesaid facts, the AO levied penalty u/s 271 (1 )(c) of the Act in respect of an amount of Rs.60,39,824/-comprising addition on account of rental income- Rs.4,63,388/- disallowance of interest 8 ITA No. 640(Asr)/2015 Assessment Year: 2007-2008 Rs.2,51,507/-,addition towards short term capital gains on sale of properties-Rs.10,50,950/-;short term capital gains on sale of shares- Rs.1,60,503/- and long term capital gains-Rs.40,98,919/-. The Id. CIT(A) cancelled the penalty on the ground that disallowance of interest was deleted by the ITAT while issue relating to addition towards rental income had been restored to the file of the AO and additional income towards capital gains on sale of properties and shares was disclosed by the assessee suo motu during the course of assessment proceeding. The assessee submitted revised return since in the original return long term capital gain on UTI liquid plus fund institution plan was claimed exempt u/s 10(38) of the Act as also to reflect correct figures of sale of land at Kheri Sadh and rental income. Merely because the assessee disclosed additional income suo motu after issue of a notice u/s 143(2) of the Act, does not amount to detection of concealment by the AO. Apparently, the assessee had given all particulars of his income and had disclosed all facts to the AO during the assessment proceedings.. It is not the case of the AO that in reply to a query of the AO, some new facts were discovered or the AO had dug out some information which was not furnished by the assessee. In such circumstances, we are of the opinion that no penalty is leviable. It is well settled that assessment proceedings and penalty proceedings are separate and distinct and as held by Hon'ble Supreme Court in the case of Ananthraman Veerasinghaiah & Co. Vs. CIT, 123 ITR 457, the finding in the assessment proceedings cannot be regarded as conclusive for the purposes of the penalty proceedings. It is, therefore, necessary to reappreciate and reconsider the matter so as to find out as to whether the addition made in the quantum proceedings actually represents the concealment on the part of the assessee as envisaged in sec. 271(1 )(c) of the Act and whether it is a fit case to impose the penalty by invoking the said provisions. It is also well settled that the criterion and yardsticks for the purpose of imposing penalty u/s 271(1)(c) of the Act are different than those applied for making or confirming the additions. The Hon'ble Kerala High Court in the case of CIT v. M. George & Bros. [1986] 160 ITR 511 held that where the assessee for one reason or the other agrees or surrenders certain amounts for assessment, the imposition of penalty solely on the basis of the surrender will not be well-founded. Hon'ble Punjab and Haryana High Court in the case of CIT v. Suraj Bhan [2007] 159 Taxman 26 while following the decision in CIT v. Suresh Chandra Mittal [2001] 251 ITR 9(SC), held that when an assessee files a revised return showing higher income and gives an explanation that he offered higher income to buy peace of mind and avoid litigation, penalty cannot be imposed merely on account of higher income having been subsequently declared. The Hon'ble Apex Court in CIT v. Suresh Chandra Mittal, [2001] 251 ITR 9/119 Taxman 433, upheld the decision of the Hon'ble Madhya Pradesh High Court rendered in the case of CIT vs. Suresh Chandra Mittal [2000] 241 ITR 124, where in similar circumstances it was held that the initial burden lies on the revenue to establish that the assessee had concealed the income had furnished inaccurate particulars of such income. The burden shifts to the assessee only if he fails to offer any explanation for the undisclosed income or offers an explanation which is found to be false by the Assessing Officer.
8.1 In Qudai International vs. Income Tax Officer 2009 (13) MTC 622 (Trib), the ITAT Lucknow Bench 'A' held that "mere raising of query by the 9 ITA No. 640(Asr)/2015 Assessment Year: 2007-2008 Assessing Officer did not amount to detection of concealment. It cannot therefore, be said that the revised return was filed after detection of concealment and was not voluntary. The term "detection" itself implies the Assessing Officer had reached a conclusion but the query raised by the Assessing Officer was only first step in detection of concealment. If the assessee voluntarily revised the return, it could not be said that it does not fulfill requirements of section 139(5) of the Act." The facts of the present case are also similar to the facts of the aforesaid referred to case.
8.2 Similarly, in the case of Dy. CIT vs. Tarun Agarwal 2009 (13) MTC 831, the ITAT Lucknow Bench 'A' held that "the assessee had surrendered the amount before any specific detection of undisclosed income or even before the issue of notice. Even though a general enquiry was going on and notices had been issued to some of his relatives and the amount might have been surrendered because of compulsion of circumstances, it was not sufficient to penalise the assessee as the factum of detection was not there." In the instant case also, nothing is brought on record that there was any detection at the level of the AO to suggest that the assessee concealed the income on account of capital gains, which was offered for taxation suo motu in the revised return.
8.3 Merely because a notice u/s 143(2) had already been issued and the assessee filed revised return thereafter, disclosing additional income towards capital gains, which was not correctly shown in the original return, does not tantamount to detection of concealment of income u/s. 271(1)(c) of the Act. Hon'ble Madhya Pradesh High Court in the case of CIT v. S.V. Electricals P. Ltd., 155 Taxman 158 and Hon'ble Jharkhand High Court in CIT v. Ashim Kumar Agarwal, 153 Taxman 226 held that where the assessee surrenders his full income, though at a later stage, there was no question of any concealment on his part and consequently, no penalty under Section 271(1)(c) was leviable, and that a omission from return of income did not amount to concealment. Hon'ble jurisdictional High Court while adjudicating the issue of levy of penalty u/s 271 (1 )(c) of the Act in the case of CIT vs. Harnarain in their decision dated 31 st October,2011 in ITA no.2072/2010 concluded that "surrender of the amount by the assessee after receipt of the questionnaire could not lead to an inference that it was not voluntary, in the absence of any material on record to suggest that it was bogus or untrue. It is further evident that there was neither any detection nor any information in the possession of the Revenue which might lead to a conclusion that there was a detection by the Revenue of concealment. Accordingly, the question of law framed is answered against the Revenue and in favour of the assessee. "
9.. In the instant case, the assessee voluntary disclosed additional income during the course of assessment proceedings and paid tax thereon. In the light of view taken in the aforesaid decisions, it cannot be said in the case before us, additional income disclosed during the course of assessment proceedings was not voluntary or that the assessee wanted to conceal the income. Even though the revised return was found to be invalid, the AO accepted the income as declared in the 10 ITA No. 640(Asr)/2015 Assessment Year: 2007-2008 revised return and computation. The AO did not bring any material on record that the declaration of income made by the assessee in his revised return or his explanation was not bonafide. In these circumstances, there appears to be no basis for imposition of penalty on the ground that the assessee furnished inaccurate particulars of income. Since the Revenue have not placed before us any material nor brought to our notice any contrary decision so as to enable us to take different view in the matter, we are not inclined to interfere. Therefore, ground No.1 in the appeal is dismissed.
10. No additional ground having been raised in terms of residuary ground No.2 in the appeal; accordingly, this ground is also dismissed".
In the present case the only objection of Ld. DR is that since the revised return was not valid, no cognizance of the same should have been taken. In this respect, we find that while deleting the penalty, even Ld. CIT(A) has held the revised return to be invalid but he has deleted the penalty by holding that non disclosure of capital gain in the original return of income was based on reasonable cause. We also hold that due to specific circumstances of the case there was reasonable cause for not declaring the capital gain in the original return of income as the assessee did not receive the full consideration and a major dispute arose among the parties. The fact that upto Hon'ble Tribunal the Assessee lost the case in quantum proceedings and only got relief from the Hon'ble Punjab & Haryana High Court makes the issue debatable and for a debatable issue penalty can not be imposed.
The Hon'ble Amritsar Bench in ITA No. 571 and 572 vide order dated 06.08.2012 had deleted the penalty u/s 271(1)(C) wherein the 11 ITA No. 640(Asr)/2015 Assessment Year: 2007-2008 original return was filed as belated return and therefore assessee was not entitled to file revised return of income but assessee filed revised return of income. In that case the Hon'ble Tribunal had held that there was a technical breach of the provisions of Act. The findings of Hon'ble Tribunal are reproduced below:
"9. We have heard the rival contentions and perused the facts of the case. We concur with the views of the Id. CIT(A) and the arguments made by the Ld. Counsel for the assessee, Mr. P.N. Arora, Advocate that though the original return has not been filed under section 139(1) of the Act or in pursuance of notice under section 142(1) of the Act, but the assessee on its own had discovered the omission or wrong statement and has revised the return within just four days of filing of the original return, which was a belated return, is not under dispute. This act of the assessee is deliberate and the assessee was honest in revising the return and stating the facts before the Income tax Department and that was possible only by filing a revised return of income. The assessee had filed the original return under bonafide belief and on finding omission/wrong statement, the assessee revised the return for the reasons mentioned in the revised return and explanation submitted before the authorities below. As per decision of the Hon'ble Supreme Court, in the case of G.L. Didwania vs. ITO reported in 224 ITR 687, where it has been held as under:
"An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or conscious disregard of obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose 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 breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute."
9.1. The ratio laid down by the Hon'ble Supreme Court, in the case of G.L. Didwania vs. ITO (supra), is squarely applicable to the facts of the present case. In the present case, the assessee on finding omission or wrong statement had acted deliberately and has come out with honesty to revise 12 ITA No. 640(Asr)/2015 Assessment Year: 2007-2008 the return within just four days of filing the belated return. There is no dispute to the fact that the assessee had filed the belated return and as per section 139(5), the revised return cannot be filed in such a case. There is technical breach of the provisions of the Act. But at the same it flows from a bonafide belief of the assessee, which has been corrected by revising return immediately after four days of filing the original return. Therefore, relying upon the decision of the Hon'ble Supreme Court, in the case of G.L. Didwania vs. ITO 9ksupra), we find no infirmity in the order of the Ld. CIT(A), who has rightly cancelled the penalty so levied."
9. In view of the above facts and circumstances and in view of the judicial precedents, we hold that Ld. CIT(A) had rightly deleted the penalty.
10. In view of the above, the appeal filed by Revenue is dismissed.
Order pronounced in the open Court on 11.08.2017.
Sd/- Sd/-
(N.K. CHOUDHRY) (T. S. KAPOOR)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 11.08.2017.
/GP/Sr. Ps.
Copy of the order forwarded to:
(1) The Assessee:
(2) The
(3) The CIT(A),
(4) The CIT,
(5) The SR DR, I.T.A.T.,
True copy
By Order