Income Tax Appellate Tribunal - Jaipur
Shri Harish Kumar Vaswani, Jaipur vs Deputy Commissioner Of Income Tax, ... on 6 December, 2018
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IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,"B" JAIPUR
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BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM
vk;dj vihy la-@ITA. No. 1040/JP/2018
fu/kZkj.k o"kZ@Assessment Year : 2014-15
Shri Harish Kumar Vaswani cuke The DCIT,
31, Dhula House Road, Vs. Circle-2,
Babu Bazar, Jaipur. Jaipur.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AATPK 6505 D
vihykFkhZ@Appellant izR;FkhZ@Respondent
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s Assessee by : Shri P. C. Parwal (C.A.)
jktLo dh vksj ls@ Revenue by : Shri P.P.Meena (JCIT)
a
lquokbZ dh rkjh[k@ Date of Hearing : 23/10/2018
mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 06/12/2018
vkns'k@ ORDER
PER: VIKRAM SINGH YADAV, A.M. This is an appeal filed by the assessee against the order of ld. CIT(A)-I, Jaipur dated 07.08.2018 for Assessment Year 2014-15 wherein the assessee has taken following grounds of appeal :-
"1. Under the facts and circumstances of the case, order passed u/s 271(1)(c) is illegal and bad in law.
2. The Ld. CIT(A) has erred on facts and in law in confirming the levy of penalty of Rs. 4 lacs u/s 271(1)(c) of the IT Act, 1961."2 ITA No. 1040/JP/2018
Shri Harish Kumar Vaswani vs.DCIT
2. The ld AR submitted that the AO initiated the penalty proceedings in order U/s 143(3) dated 11.07.2016 by stating that show cause notice U/s 271(1)(c) r.w.s 274 of the Act is issued for concealment of income/furnishing inaccurate particular of income. In the notice issued U/s 274 dated 11.07.2016, it is stated that assessee appears to have concealed particulars of income or furnished inaccurate particulars of income without specifying whether the charge is for concealment of income or for both. In the penalty order dated 27.01.2017, it is stated that assessee is found guilty of furnishing inaccurate particulars of income and therefore, penalty U/s 271(1)(c) is imposed on the concealed income. Thus, on such vague notice issued U/s 271(1)(c) and finding given in the penalty order, penalty is not levible. In support, reliance was placed on various decisions including decision in case of CIT vs. SSA'S Emerald Meadows (2016) 242 Taxman 180 (SC), CIT vs. M/s Manjunatha Cotton & Ginning Factory & Ors. 359 ITR 565 (Kar.) and decision of the Third Member of the Tribunal in case of HPCL Mittal Energy Ltd. vs. ACIT in ITA No. 554 & 555/Asr/2014 dated 07.05.2018.
3. In order to appreciate the aforesaid contentions of the ld AR, we refer to the facts of the case. The assessee filed his return of income declaring total income of Rs. 17,66,330/- wherein he has disclosed income under the head "long term capital gains" amounting to Rs. 9,01,537/- after claiming deduction U/s 54 of the Act amounting to Rs. 17,80,000/-. During the course of assessment proceedings, on perusal of information furnished by the assessee, the Assessing Officer observed that the assessee claimed deduction U/s 54 of the Act on 3 ITA No. 1040/JP/2018 Shri Harish Kumar Vaswani vs.DCIT account of investment made towards purchase of shop against sale of shop during the year under consideration. On being asked as to why the exemption claimed of Rs. 17,80,000/- U/s 54 of the Act on account of purchase of commercial property may not be disallowed and added back to the total income, the assessee submitted a revised computation of total income vide letter dated 01.07.2016 wherein it was submitted that the assessee was in bona fide belief that the exemption allowable not only for residential house but on all type of properties and has wrongly claimed exemption which is hereby surrendered and the amount of tax has been duly deposited.
4. The AO however held that if the assessment proceedings were not initiated U/s 143(3) of the Act, the income to the extent of Rs. 17,80,000/- would have remained untaxed and it was held that the assessee has deliberately concealed his income to the extent of Rs. 17,80,000/- and same was brought to tax in the hands of the assessee and separately penalty proceedings U/s 271(1)(c) of the Act for filing of inaccurate of particulars of income/concealment of income were initiated by way of issue of notice U/s 271(1)(c) of the Act.
5. On perusal of the penalty notice u/s 274 r.w.s. 271(1)(c) of the Act dated 11.07.2016, it is stated therein that "in the course of proceedings before me for the assessment year 2014-15, it appears to me that you have concealed particulars of income or furnished inaccurate particulars of income and a show cause was issued as to why the order imposing aforesaid penalty should not be made as per provisions of the Income Tax Act."
4 ITA No. 1040/JP/2018Shri Harish Kumar Vaswani vs.DCIT
6. We now refer to the penalty order dated 27.01.2017 where in para 2.2, the AO held as under:
"2.2 The assessee, in its original computation deliberately avoided disclosing true particulars and furnished inaccurate particulars by claiming wrong exemption u/s 54, which was as such not available to the assessee. In view of the facts and circumstances peculiar to the present case i.e.
(a) The assessee has clearly furnished inaccurate particulars in respect of exemption u/s 54 of Rs. 17,80,000/- and deliberately shown as exempt u/s 54 in order to suppress his income.
(b) As such, where particulars are disclosed but such disclosure is not correct, true or accurate, it would amount to 'furnishing of inaccurate particulars of income'.
(c) Had the case not been sleeved for scrutiny, the said amount of Rs.
17,80,000/- would have been remained out of ambit from Tax Liability.
The case of the assessee is a clear case of furnishing inaccurate particulars of income. Hence, the assessee is liable for imposition of penalty u/s 271(1)(c) of the Act for the amount of Rs. 17,80,000/-"
And thereafter in para 3, the AO has held that in view of totality of the facts and keeping in view the provisions of Section 271(1)(c) of the Act, the assessee is found guilty of furnishing inaccurate particulars of income to the extent of amount of Rs. 17,80,000/- and for that reasons he is satisfied that assessee has committed default U/s 271(1)(c) of the IT Act and, therefore, penalty U/s 271(1)(c) is imposed on the concealed income which was determined at Rs. 4 lacs and the penalty 5 ITA No. 1040/JP/2018 Shri Harish Kumar Vaswani vs.DCIT order was issued after seeking necessary approval of the Additional Commissioner of Income Tax. On appeal, the ld. CIT(A) has confirmed the said levy of penalty.
7. We have heard the rival contentions and purused the material available on record.
8. Regarding the contention of the ld. AR in context of issue of vague notice and vague findings giving in the penalty order, we find that a similar issue has been dealt with by this Bench in case of Smt. Shipra Jain and Ors. vs. ACIT (ITA No. 922/JP/2018 & others dated 31.10.2018) wherein we have examined the issue at length in context of various authorities (including those which have been relied in the instant case by the ld AR) and our findings are contained at para 4.2 to 4.5 which are reproduced as under:-
"4.2 Now coming to the first contention so raised by the ld. AR that in the absence of any specific charge against the assessee in the penalty notice and subsequently in the penalty order, consequent penalty imposed by AO is illegal and bad in law. We find that Explanation 5A to section 271(1)(c) is a deeming provision and subject to fulfilling the requisite conditions, it deems the assessee to have concealed the particulars of his income or furnished inaccurate particulars of such income similar to what has been provided in clause (c) to section 271(1) of the Act. In search cases as well, the legislature has thus envisaged applicability of one or both of these charges. It is settled position now as held by catena of judicial pronouncements that the 6 ITA No. 1040/JP/2018 Shri Harish Kumar Vaswani vs.DCIT notice initiating the penalty proceedings should specify the charge against the assessee and even where the charge is uncertain at the time of initiation of penalty proceedings, subsequently during the penalty proceedings, the AO must get decisive, which should be reflected in the penalty order, as to whether the assessee is guilty of 'concealment of particulars of income' or 'furnishing of inaccurate particulars of such income'.
4.3 In this regard, useful reference can be drawn to the decision of the Coordinate Bench in case of HPCL Mittal Energy vs Add. CIT reported in 96 Taxman.com 3 where the matter was referred to the Third Member to decide on the issue as to "Whether, in case where the satisfaction of the AO while initiating penalty proceedings u/s. 271(l)(c) of the Income-tax Act, 1961 is with regard to alleged concealment of income by the assessee, whereas the imposition of the penalty is for 'concealment/furnishing inaccurate particulars of income', the levy of penalty is not sustainable?".
After analyzing catena of judicial pronouncements including the decisions which have been cited by the ld AR, the Coordinate Bench speaking through the Third Member has held as under:
"9. On an analysis of the factual matrix narrated above, it is manifested that the AO recorded satisfaction qua the three items of disallowance/additions leading to penalty, as 'concealment of income' in all the assessment orders; initiated penalty in all the four cases by treating them as covered under the expression 'concealment of particulars of income'; and then finally passed 7 ITA No. 1040/JP/2018 Shri Harish Kumar Vaswani vs.DCIT penalty orders on the assessees finding them guilty of 'concealment of particulars of income/furnishing inaccurate particulars of such income'. As against that, the actual position is that all the three items of disallowance/additions fall only under the category of 'furnishing of inaccurate particulars of income'. Now the question arises if the penalty is sustainable in such circumstances?
10. At this juncture, it is pertinent to note that penalty proceedings are distinct from the assessment proceedings. Merely because an addition has been made or confirmed in the assessment, does not, per se, lead to imposition of penalty u/s. 271(l)(c). Penalty proceedings are separately initiated on conclusion of the assessment, in which the assessee is given an opportunity to explain his position qua the imposition of penalty on the additions/disallowances made in the assessment. The AO considers the explanation of the assessee and then decides if the penalty is imposable or not. Further, the opinion of the AO as to concealment of particulars of income or furnishing of inaccurate particulars of such income has to be seen with reference to the day on which he initiates/imposes penalty. Later events, like confirmation or deletion of additions/disallowances in quantum appeals, are irrelevant in this context.
11. It transpires from the above discussion that, insofar as the issue before me is concerned, there are broadly two different stages having bearing on the imposition of penalty, namely, 8 ITA No. 1040/JP/2018 Shri Harish Kumar Vaswani vs.DCIT assessment and penalty. At the assessment stage, the AO has to record a satisfaction in the assessment order as to whether the additions/disallowances, on which penalty is likely to be imposed, represent concealment of particulars of income or furnishing of inaccurate particulars of income. There can be two sub-stages in penalty proceedings requiring the AO to record such satisfaction, viz., at the time of initiating the penalty proceedings and at the time of passing the penalty order. I will deal with such two stages in the present context.
(a) Recording of satisfaction at the assessment stage.
12. It has been noticed hereinabove that the first stage of imposition of penalty is recording of satisfaction by the AO in the assessment order as to whether the assessee concealed the particulars of income or furnished inaccurate particulars of income. There was a lot of litigation on this point. The assessees were contending before the appellate courts that the AO had not recorded proper satisfaction in the assessment order and hence the penalty should be deleted. On the other hand, the Department was contending that the satisfaction was properly recorded. Considering the magnitude of litigation on the point, the Finance Act, 2008, inserted sub-section (1B) to section 271, w.r.e.f. 1.4.1989, which runs as under: --
'Where any amount is added or disallowed in computing the total income or loss of an assessee in any order of assessment or reassessment and the said order contains a direction for initiation of penalty proceedings under clause (c) of sub-section (1), such 9 ITA No. 1040/JP/2018 Shri Harish Kumar Vaswani vs.DCIT an order of assessment or reassessment shall be deemed to constitute satisfaction of the Assessing Officer for initiation of the penalty proceedings under the said clause (c).'
13. The effect of this insertion is that when an amount is added or disallowed in an assessment and the order contains a direction for initiation of penalty proceedings u/s. 271(l)(c), it shall be deemed to constitute satisfaction of the AO for initiation of the penalty proceedings. Crux of the new provision is that a mere direction in the assessment order to initiate penalty proceedings under clause (c) is sufficient to conclude that the AO recorded proper satisfaction as to whether the additions/disallowances are 'concealment of particulars of income' or 'furnishing of inaccurate particulars of income' or both. It is incorrect to argue that even after the insertion of sub-section (1B), the AO still needs to specifically record as to whether each item of addition/disallowance is a case of concealment of particulars of income or furnishing of inaccurate particulars of income. Deeming 'satisfaction' under clause (c) in terms of sub-section (1B) means deeming 'proper satisfaction' and 'proper satisfaction' means getting satisfied as to whether it is a case of concealment of particulars of income or furnishing of inaccurate particulars of such income. It cannot be conceived that a direction to initiate penalty proceedings in the assessment order is only 'satisfaction' and not 'proper satisfaction'. This contention, if taken to a logical conclusion, would mean that after such a direction in the assessment order constituting his satisfaction, the AO should 10 ITA No. 1040/JP/2018 Shri Harish Kumar Vaswani vs.DCIT once again specifically record satisfaction with reference to each addition or disallowance as to whether it is a case of concealment or furnishing of inaccurate particulars. It is obviously an absurd proposition and goes against the unambiguous language of the provision. Thus, it is overt that after insertion of sub-section (1B) to section 271, invariably, the AO should be deemed to have recorded proper satisfaction with reference to each addition/disallowance as to concealment or furnishing of inaccurate particulars, once a direction is contained in the assessment order to initiate penalty u/s. 271(l)(c) of the Act. Requiring the recording of separate satisfaction, once again, by the AO would militate against the deeming provision contained in sub-section (1B). Admittedly, in all the four appeals under consideration, the AO directed to initiate penalty u/s. 271(l)(c) of the Act in the assessment orders. Thus, the Revenue can be safely considered to have successfully passed out the first stage.
(b) Recording of satisfaction at the penalty stage
14. It has been noted above that penalty proceedings are separate from assessment proceedings, which get kicked with the issue of notice u/s. 274 and culminate in the penalty order u/s. 271(l)(c) of the Act. Many a times, penalty initiated in the assessment order on one or more counts by means of notice u/s. 274, is not eventually imposed by the AO on getting satisfied with the explanation tendered by the assessee in the penalty proceedings. In any case, confronting the assessee with the charge against him is sine qua non for any valid penalty 11 ITA No. 1040/JP/2018 Shri Harish Kumar Vaswani vs.DCIT proceedings. It is only when the assessee is made aware of such a charge against him that he can present his side. Thus prescribing the charge in the penalty notice and penalty order is must. Absence of a charge in the penalty notice or not finding the assessee guilty of a clear offence in the penalty order, vitiates the penalty order.
15. The moot question is that what should be the nature of specification of a charge by the AO at the stage of initiation of penalty proceedings and at the time of passing the penalty order. Is the AO required to specify in the penalty notice/order as to whether it is a case of 'concealment of particulars of income'; or 'furnishing of inaccurate particulars of income'; or both of them, which can be expressed by using the word 'and' between the two expressions. When the AO is satisfied that it is a clear-cut case of concealment of particulars of income, he must specify it so in the notice at the time of initiation of penalty proceedings and also in the penalty order. The AO cannot initiate penalty on the charge of 'concealment of particulars of income', but ultimately find the assessee guilty in the penalty order of 'furnishing inaccurate particulars of income'. In the same manner, he cannot be uncertain in the penalty order as to concealment or furnishing of inaccurate particulars of income by using slash between the two expressions. When the AO is satisfied that it is a clear-cut case of 'furnishing of inaccurate particulars of income', he must again specify it so in the notice at the time of initiation of penalty proceedings and also in the penalty order. After initiating penalty 12 ITA No. 1040/JP/2018 Shri Harish Kumar Vaswani vs.DCIT on the charge of 'furnishing of inaccurate particulars of income', he cannot impose penalty by finding the assessee guilty of 'concealment of particulars of income'. Again, he cannot be uncertain in the penalty order as to concealment or furnishing of inaccurate particulars of income by using slash between the two expressions. When the AO is satisfied that it is a clear-cut case of imposition of penalty u/s. 271(l)(c) of the Act on two or more additions/disallowances, one or more falling under the expression 'concealment of particulars of income' and the other under the 'furnishing of inaccurate particulars of income', he must specify it so by using the word 'and' between the two expressions in the notice at the time of initiation of penalty proceedings. If he remains convinced in the penalty proceedings that the penalty was rightly initiated on such counts and imposes penalty accordingly, he must specifically find the assessee guilty of 'concealment of particulars of income' and also 'furnishing of inaccurate particulars of income' in the penalty order. If the charge is not levied in the above manner in all the three clear-cut situations discussed above in the penalty notice and also in the penalty order, the penalty order becomes unsustainable in law.
16. The Hon'ble Karnataka High Court in CIT v. Manjunatha Cotton and Ginning Factory [2013] 359 ITR 565/218 Taxman 423/35 taxmann.com 250 has held that a person who is accused of the conditions mentioned in section 271 should be made known about the grounds on which they intend imposing penalty on him as section 274 makes it clear that assessee has a right to 13 ITA No. 1040/JP/2018 Shri Harish Kumar Vaswani vs.DCIT contest such proceedings and should have full opportunity to meet the case of the Department and show that the conditions stipulated in section 271(l)(c) do not exist as such he is not liable to pay penalty. The Hon'ble High Court went on to hold that:
'Clause (c) deals with two specific offences, that is to say, concealing particulars of income or furnishing inaccurate particulars of income.... But drawing up penalty proceedings for one offence and finding the assessee guilty of another offence or finding him guilty for either the one or the other cannot be sustained in law..... Thus once the proceedings are initiated on one ground, the penalty should also be imposed on the same ground. Where the basis of the initiation of penalty proceedings is not identical with the ground on which the penalty was imposed, the imposition of penalty is not valid'.
17. In Manu Engg. Works (supra) penalty was imposed by noting: 'that the assessee had concealed its income and/or that it had furnished inaccurate particulars of such income'. Striking down the penalty, the Hon'ble High Court held that: 'it was incumbent upon the IAC to come to a positive finding as to whether there was concealment of income by the assessee or whether any inaccurate particulars of such income had been furnished by the assessee. No such clear-cut finding was reached by the IAC and, on that ground alone, the order of penalty passed by the IAC was liable to be struck down.'
18. In Padma Ram Bharali (supra), the Hon'ble High Court did not sustain penalty levied u/s. 271(l)(c) when: 'the initiation of 14 ITA No. 1040/JP/2018 Shri Harish Kumar Vaswani vs.DCIT the penalty proceeding was for concealment of the particulars of income. But the Tribunal finally held that the assessee would be deemed to have concealed the particulars of income or to have furnished inaccurate particulars of such income.'
19. Thus it is evident that when the AO is satisfied at the stage of initiation of penalty proceedings of a clear-cut charge against the assessee in any of the three situations discussed above (say, concealment of particulars of income), but imposes penalty by holding the assessee as guilty of the other charge (say, furnishing of inaccurate particulars of income) or an uncertain charge (concealment of particulars of income/furnishing of inaccurate particulars of income), the penalty cannot be sustained.
20. Another crucial factor to be kept in mind is that the satisfaction of the AO as to a clear-cut charge leveled by him in the penalty notice or the penalty order must concur with the actual default. If the clear-cut charge in the penalty notice or the penalty order is that of 'concealment of particulars of income', but it turns out to be a case of 'furnishing of inaccurate particulars of such income' or vice-versa, then also the penalty order cannot legally stand.
21. Apart from the above three situations in which the AO has clear-cut satisfaction, there can be another fourth situation as well. It may be when it is definitely a case of under-reporting of income by the assessee for which an 15 ITA No. 1040/JP/2018 Shri Harish Kumar Vaswani vs.DCIT addition/disallowance has been made, but the AO is not sure at the stage of initiation of penalty proceedings of the precise charge as to 'concealment of particulars of income' or "furnishing of inaccurate particulars of income'. In such circumstances, he may use slash between the two expressions at the time of initiation of penalty proceedings. However, during the penalty proceedings, he must get decisive, which should be reflected in the penalty order, as to whether the assessee is guilty of 'concealment of particulars of income' or 'furnishing of inaccurate particulars of such income'. Uncertain charge at the time of initiation of penalty, must necessarily be substituted with a conclusive default at the time of passing the penalty order. If the penalty is initiated with doubt and also concluded with a doubt as to the concealment of particulars of income or furnishing of inaccurate particulars of such income etc., the penalty order is vitiated. If on the other hand, if the penalty is initiated with an uncertain charge of 'concealment of particulars of income/furnishing of inaccurate particulars of income' etc., but the assessee is ultimately found to be guilty of a specific charge of either 'concealment of particulars of income' or 'furnishing of inaccurate particulars of income', then no fault can be found in the penalty order.
16 ITA No. 1040/JP/2018Shri Harish Kumar Vaswani vs.DCIT
22. In Manu Engineering Works (supra), the Hon'ble Gujarat High Court noticed that the charge at the stage of initiation of penalty proceedings as well in the penalty order was uncertain and the expression used at both the stages was concealment of particulars of income and/or furnishing of inaccurate particulars of such income. It struck down the penalty by holding that the assessee must have been found to be guilty of a certain charge in the penalty order. It, however, did not find anything amiss with the initiation of penalty on such uncertain charge, which is vivid from the following observations : --
'We find from the order of the IAC, in the penalty proceedings, that is, the final conclusion as expressed in para. 4 of the order:
"I am of the opinion that it will have to be said that the assessee had concealed its income and/or that it had finished inaccurate particulars of such income". Now, the language of "and/or" may be proper in issuing a notice as to penalty order or framing of charge in a criminal case or a quasi-criminal case, but it was incumbent upon the IAC to come to a positive finding as to whether there was concealment of income by the assessee or whether any inaccurate particulars of such income had been furnished by the assessee.'
23. It is thus evident that uncertain charge at the stage of initiation of penalty proceedings can be made good with a clear-cut charge in the penalty order. In any case, existence of a clear-cut charge in penalty order is a must so as to validate any penalty order."
17 ITA No. 1040/JP/2018Shri Harish Kumar Vaswani vs.DCIT 4.4 In the instant case, the Assessing officer has recorded his satisfaction in respect of the five items of disallowance/additions including undisclosed investment on construction of house amounting to Rs 938,800 leading to penalty, as 'concealment of income' in the assessment order passed under section 143(3) r/w 153A, thereafter initiated penalty by issuance of notice u/s 274 r/w 271 dated 21.30.2014 in respect of all the five items of disallowance/additions by treating them as covered under the expression "concealment particulars of income or furnished inaccurate particulars of income" and then finally passed the impunged penalty order u/s 271(1)(c) in respect of undisclosed investment on construction of house amounting to Rs 134,025 (to the extent sustained by the ld CIT(A) out of Rs 938,800) and levied penalty u/s 271(1)(c) amounting to Rs 45,555 by stating as under:
"6. In view of above stated facts and legal position, the assessee under consideration is, clearly liable for penalty u/s 271(1)(c) of the Act is imposed upon him as per following computation:-
Total undisclosed/concealed income liable to penalty Rs. 1,34,025 u/s 271(1)(c) Penalty imposable (100% of tax sought to evaded) Rs. 45,555/- Penalty imposable (300% of tax sought to evaded) Rs. 1,36,665/- Penalty levied (100% of the tax sought to evaded Rs. 45,555/-
In view of the above, a penalty of Rs. 45,555/- is hereby levied u/s 271(1)(c) of the Income-tax Act, 1961. Issued demand notice."18 ITA No. 1040/JP/2018
Shri Harish Kumar Vaswani vs.DCIT 4.5 It is thus a case where the AO has recorded the satisfaction in the assessment order stating that the assessee has concealed his particulars of income whereby the assessee has not disclosed his investment in construction of the house to the extent of expenditure incurred during the previous year relevant to impunged assessment year. Therefore, the notice initiating the penalty proceedings is uncertain where he uses the expression "concealment particulars of income or furnished inaccurate particulars of income". However, during the penalty proceedings, he has given a decisive finding as reflected in the penalty order that the assessee is guilty of 'concealment of particulars of income' by not disclosing the investment in the construction of his house. As held by the Coordinate Bench (supra), the uncertain charge at the time of initiation of penalty has been made good and substituted with a conclusive default at the time of passing the penalty order and that in such a case, no fault can be found in the penalty order." In such a case, we donot see any infirmity in the penalty order so passed by the Assessing officer and the contentions so raised by the ld AR in this regard are not accepted."
9. In the instant case, we find that the notice initiating the penalty proceedings is uncertain where the AO uses the expression "concealment particulars of income or furnished inaccurate particulars of income". However, during the penalty proceedings, he has given a decisive and clear finding as reflected in the penalty order that the assessee is guilty of furnishing inaccurate of particulars of income' as the assessee, in its original computation has deliberately avoided 19 ITA No. 1040/JP/2018 Shri Harish Kumar Vaswani vs.DCIT disclosing true particulars and furnished inaccurate particulars by claiming wrong exemption u/s 54, which was as such not available to the assessee. Therefore, following the legal proposition as discussed above, we are unable to accede to the aforesaid contention of the ld AR.
10. Further, regarding the contentions of the ld AR on merits, we have gone through the computation of income so filed by the assessee along with the original return of income wherein the assessee has shown long term capital gains of Rs 9,01,537 and has claimed exemption under section 54 of the Act amounting to Rs 17,80,000. The computation so filed is silent on the nature and specifics of the property so purchased by the assessee. There is thus clearly lack of disclosure as far as nature of property so purchased by the assessee. On examination thereof, the AO has found that the assessee has sold an immoveable property in form of a shop and has purchased another shop and which is not eligible for exemption under section 54 of the Act. It is thus not a case where there is adequate disclosure of nature of property in the return of income and it is only the legal claim so made by the assessee u/s 54 on appreciation of such facts which has been denied by the AO. Therefore, it is clear case of furnishing inaccurate particulars of income and we see no infirmity in the findings of the AO in this regard.
11. Regarding the contention of the ld AR that the assessee has suo- moto revised the computation of income and even paid the taxes during 20 ITA No. 1040/JP/2018 Shri Harish Kumar Vaswani vs.DCIT the course of assessment proceedings, we are unable to accede to the said contentions of the ld AR and the following findings of the ld CIT(A) contained in para 3.1.2 (ii) are hereby confirmed:
"(ii) The contention of the appellant that the return of income was filed by the accountant and he was not aware of the provisions of the Act is devoid of any merit as it is trite law that ignorance of law is no excuse. Further, the appellant has not filed any documentary evidence to support its contention. It was another contention of the appellant that the first notice was issued to the appellant to attend on 20-06-2016 calling document of property sales consideration as the sale consideration for sale of property in ITR was less than consideration reported along with details of other income and the AO has neither asked for capital gain nor given any notice for capital gains. It was further submitted that it has filed written reply before the AO that it has wrongly claimed the deduction u/s 54, hence filed the revised computation of income and surrendered the amount of long term gain for taxation.
Therefore, the facts were submitted by it on first hearing itself and not detected by AO and thus, the AO could not prove that the deduction was claimed deliberately. It was only a mistake as wrong deduction was claimed and not any concealment of income or furnishing inaccurate particulars. It is to be noted that the case was selected for limited scrutiny and the AO has asked the appellant to furnish the documents relating to sale and purchase of properties during the year under consideration. The appellant has filed revised computation of income as its 21 ITA No. 1040/JP/2018 Shri Harish Kumar Vaswani vs.DCIT wrong claim would have seen the light of the day as soon as it file these documents required by the AO. Thus, it can be said that the filing of revised computation of income was not voluntarily and it revised its computation of income only when cornered by the AO. There is no ambiguity in the provisions of section 54 of the Act that the deduction under said section can be claimed only on the purchase or construction of a residential property and not for purchase of a commercial property. The appellant has made a patent wrong claim, which cannot be allowed to it as per the clear provisions of section 54 of the Act."
12. Before parting, we may add that we have gone the other decisions which have been relied upon by the ld AR and find that the same doesn't support the case of assessee.
13. In light of above discussions and in the entirety of facts and circumstances of the case, the order levying penalty u/s 271(1)(c) is hereby confirmed.
In the result, the appeal of the assessee is dismissed.
Order pronounced in the open court on 06/12/2018.
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(Vijay Pal Rao) (Vikram Singh Yadav)
U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member
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fnukad@Dated:- 06/12/2018.
22 ITA No. 1040/JP/2018
Shri Harish Kumar Vaswani vs.DCIT
*Santosh
vkns'k dh izfrfyfi vxzfs 'kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- Shri Harish Kumar Vaswani, Jaipur.
2. izR;FkhZ@ The Respondent- DCIT, Circle-2, Jaipur.
3. vk;dj vk;qDr@ CIT
4. vk;dj vk;qDr@ CIT(A)
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur.
6. xkMZ QkbZy@ Guard File { ITA No. 1040/JP/2018} vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar.