Income Tax Appellate Tribunal - Amritsar
Income Tax Officer, Dasuya vs Balbir Singh Miani S/O Sh. Lakh Singh,, ... on 20 January, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
AMRITSAR BENCH: (CIRCUIT BENCH AT JALANDHAR)
BEFORE SHRI A. D. JAIN, JUDICIAL MEMBER, AND
SHRI T.S. KAPOOR, ACCOUNTANT MEMBER
I.T.A No. 354/ASR/2015
(ASSESSMENT YEAR-2007-08)
ITO , Vs.. Shri Balbir Singh Miani S/o
Dasuya. Sh. Lakhi Singh, VPO
Lakhinder Singh, Tehsil
Dasuya, Distt. Hoshiarpur.
PAN No.ACQPC5590B
(Revenue) (Assessee)
Revenue by Shri Bhawani Shankar,DR.
Assessee by Shri . J. K. Passi, AR.
Date of Hearing 16.01.2017
Date of Pronouncement 20 .01.2017
ORDER
PER, A. D. JAIN, JUDICIAL MEMBER:
This is department's appeal for Assessment Year 2007-08, against the CIT(A)'s action of deleting the concealment penalty of Rs.36,42,369/-, levied on the assessee.
2. The brief facts as per the record are that the assessee was a member of Housing Society of MLAs and Ex-MLAs, called Punjabi Co-operative Housing Building Society Ltd., Mohali which was the owner of 21.2 acres of land in Village I.T.A No. 354/ASR/2015 2 Kansal, District Mohali. This society entered into a tripartite joint development agreement on 24.02.2007 with M/s Hash Builders (P.) Ltd, Chandigarh and M/s Tata Housing Development Company Ltd., Mumbai . By virtue of this agreement, the Society would transfer its land for development in lieu of monetary consideration and also consideration in kind to the members of the society. The assessee was owning 500 sq. yards of land in the society. The total consideration was settled at Rs.82,50,000/- plus allotment of one flat of 2250 sq. ft. to the assessee, out of which, the assessee had received Rs.15 lacs in February, 2007. Another payment of Rs.18 lacs was received by the assessee in April, 2007. The assessee filed his return of income for the year under consideration, declaring therein, income of Rs.1,57,578/- plus agricultural income of Rs.7.50 lacs. Thereafter, on receipt of information in connection with non declaration of Long Term Capital Gains on the sale/transfer of the plot of the assessee by the society on behalf of its members to M/s Hash Builders (P.) Ltd. Chandigarh and M/s Tata Housing Development Company Ltd., Mumbai, the AO reopened the assessment in the case of the assessee by issuance of a notice u/s 148 of the Act on 22.12.2009, stated to have been served on the assessee on 07.01.2010, declaring the same income/agricultural income, as declared by him in the original return of income. The AO noticed that as per the agreement, each of the members of the society, including the assessee, was to receive Rs.82.50 lacs in cash and a furnished flat measuring 2250 sq. ft., with market value of Rs.1,01,25,000/-, calculated @ I.T.A No. 354/ASR/2015 3 Rs.4,500/- per sq. ft. Thus, the total consideration for transfer of the plot came to Rs.1,83,75,000/-. The AO computed the income of the assessee by way of capital gains by adopting this amount as sale consideration. The assessment was completed at an assessed income of Rs.1,79,17,320/- which included long term capital gains of Rs.1,77,59,742/-. The deduction claimed by the assessee u/s 54F of the IT Act was denied for non fulfillment of the specified conditions. The ld. CIT(A), vide order dated 29.03.2011, partly allowed the appeal of the assessee. The ld. CIT(A) confirmed the action of the AO with regard to taxability of long term capital gain. However, he allowed deduction u/s 54F of the Act to the extent of Rs.15,26,000/-. Deduction in respect of deposit of Rs.18 lac was not allowed. The ITAT, Amritsar Bench, vide order dated 19.08.2013, dismissed the assessee's appeal. The assessee's appeal against the said Tribunal Order has since been allowed by the Hon'ble Punjab and Haryana High Court.
3. In the penalty proceedings, vide order dated 07.02.2013, passed u/s 271(1)(c) of the Act, the AO levied penalty of Rs.36,42,369/-, for allegedly concealing and filing inaccurate particulars of income in respect of long term capital gain. The ld. CIT(A), vide the impugned order dated 01.04.2015, deleted the penalty.
4. Aggrieved, the department is in appeal.
5. The ld. DR has contended that the ld. CIT(A) has erred in deleting the penalty rightly imposed by the AO, failing to appreciate that the addition on which I.T.A No. 354/ASR/2015 4 the penalty was imposed, was made by the AO on the basis of the facts gathered during the assessment proceedings.
6. On the other hand, the ld. Counsel for the assessee has strongly supported the impugned order.
7. We have heard the parties and have perused the material on record. While deleting the penalty, the ld. CIT(A) has held as follows:
"5.4 On careful consideration of the provisions of section 271(1)(c) of the Act and Explanation 1 to section 271(1)(c) of the Act, I am of the opinion that the penalty for concealment can be levied when the assessee has either concealed the particulars of his income or has furnished inaccurate particulars of his income or is not able to give any satisfactory explanation in regard to any matter which is material to the computation of his income. Now we examine the facts of the case of the assessee in above context. It is noteworthy that the view taken by the Assessing Officer that the amount of long term capital gains has to be computed by taking the total consideration, actually received or receivable by the appellant towards sale consideration and that the total amount of long term capital gains is assessable as the income of the year under, appeal has been upheld by the honorable jurisdictional Tribunal. Therefore, the limited point for consideration is whether the appellant has a reasonable explanation for his omission to disclose the income by way of long term capital gains in the return. In the return filed on 30.07.2007 i.e. before the issue of notice under section 148, the appellant had disclosed the facts relating to transfer of his plot at Chandigarh as under:-I.T.A No. 354/ASR/2015 5
"Sold plot at Chandigarh allotted by Punjabi Coop. House Building Society Ltd. Mohali to MLA, 21.2 Acres to TATA & HASH & TODC for Rs.82,50,000/-. Gain will be invested in purchase of Residential House."
In view of the above note, the assessee has not disclosed any income from long term capital gains on the sale of his plot. In my opinion, the assessee has fully disclosed the facts relating to sale of his plot and has not disclosed any long term capital gains as he was to construct a new residential house and claim deduction under section 54F of the Act. Not only this, the assessee has also deposited Rs. 15,26,000/- in the Capital Gains Scheme before filing his return of income. It is also an undisputed fact that there were certain controversies and disputes with regard to transfer of plot. In fact, I understand that the various issues have still not been resolved and the construction of the building, in which the appellant was to get as a part of sale consideration, has not started till date. In these particular facts and in the circumstances, the belief of the appellant that the long term capital gains, on which he has to pay tax, has to be computed only on the basis of the amount which has actually been received by him in cash, cannot be considered to be totally unreasonable, though it is not strictly legal. The fact that all the material facts which were required to compute the long term capital gains although incorrectly were furnished by the appellant in his return filed on 30.07.2007, establish his bonafide credentials.
5.5 In view of the above stated facts and in the circumstances of the case and in view of the discussion made in the preceding paragraphs, it is held that the Assessing Officer is not justified in levying penalty of Rs.36,42,369/- in this case under section 271(l)(c) of the Act for concealing and filing inaccurate particulars of income. The penalty of I.T.A No. 354/ASR/2015 6 Rs.36.42,369/- levied by the Assessing Officer in this case under Section 271(l)(c) of the Act is, therefore, directed to be deleted. In the result, the grounds No. 1 and 2 of appeal taken by the assessee are allowed."
8. It is seen that in the original return filed by the assessee, the assessee has stated to have sold the plot by the society, measuring 21.2 acres, to M/s Tata Housing Development Company Ltd., Mumbai and M/s Hash Builders Pvt. Ltd., Chandigarh, and TODC, for a sum of Rs.82.50 lacs, and that the gain would be invested in the purchase of Residential House. As such, the assessee had not disclosed any income from long term capital gain. The assessee, therefore, as correctly taken into consideration by the ld. CIT(A), had fully disclosed in his return of income originally filed, all the facts relating to the sale of his plot and had not declared any long term capital gain on such sale, since he had stated that he was to invest the same in the purchase of Residential House. Further, the assessee had also deposited a sum of Rs.15,26,000/- in the Capital Gains Scheme before filing his return of income. The transfer of the plot being clouded in controversy, the construction of the building in which the assessee was to get a part of the sale consideration, had not hitherto started. Thus, obviously, the belief of the assessee that the Long Term Capital Gain, on which tax would have to be paid, was required to be computed only on the basis of the amount actually received by him in cash, cannot be said to be a malafide belief. Since all the material facts stood I.T.A No. 354/ASR/2015 7 duly disclosed by the assessee, the bonafides of the assessee cannot be called in question.
9. The above facts and circumstances, in our considered opinion, have correctly been taken into consideration by the ld. CIT(A) and the penalty levied on the assessee has rightly been deleted.
10. We find no discrepancy in the order under appeal, for the above discussion and the grievance of the department in this regard is found to be unjustified. The same is, accordingly, rejected.
11. In the result, the appeal is dismissed.
Order pronounced in the open court on 20/01/2017.
Sd/- Sd/-
(T. S. KAPOOR) (A.D. JAIN)
ACCOUTANT MEMBER JUDICIAL MEMBER
Dated 20 /01/2017
*AKV* on tour
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
By Order AR/Sr.P.S./P.S.