Income Tax Appellate Tribunal - Delhi
Ramendra Jain Shri, New Delhi vs Department Of Income Tax on 22 March, 2010
1 ITA No.2924/Del/2011
Asstt.Year: 2007-08
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH `F' NEW DELHI
BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT
AND
SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER
I.T.A.No.2924/Del/2011
Assessment Year : 2007-08
Dy.Commissioner of Income Tax, vs Shri Ramendra Jain,
Circle 41(1), Room No.306, F-233, Antriksh Aptt.,
rd
3 Floor, Mayur Bhawan, Prashant Vihar Extn.
Con. Place, New Delhi. Sec-14, Rohini,
New Delhi-110085.
(PAN: AACPJ6832G)
(Appellant) (Respondent)
Appellant by: Shri Deepak Sehgal, Sr.DR
Respondent by : Shri Rajeev Jain, CA
ORDER
PER CHANDRA MOHAN GARG, JUDICIAL MEMBER
This appeal has been filed by the revenue against the order of Commissioner of Income Tax(A)-XXX, New Delhi dated 22.3.2010 for AY 2007-08 by which the Commissioner of Income Tax(A) allowed the appeal of the assessee setting aside the penalty order dated 28.06.2010 passed by the Assessing Officer u/s 271(1)(c) of the Income Tax Act, 1961(for short the Act).
2. The only ground in this appeal by the revenue reads as under:- 2 ITA No.2924/Del/2011 Asstt.Year: 2007-08
"On the facts and in the circumstances of the case, the ld. CIT(A) has erred in deleting the penalty of Rs.8,85,280/- imposed by the A.O. u/s 271(1)( c) of the I.T.Act."
3. Brief facts giving rise to this appeal are that the assessment for AY 2007-08 was completed by the AO vide order dated 29.12.2009 made u/s 143(3) of the Act on total taxable income of Rs.50,47,590 against the returned total income of Rs.11,83,814 by making net addition to the returned income aggregating to Rs.38,63,776 representing mainly the amount of interest on enhanced compensation. pertaining to the period from 12.5.1976 to 17.12.1991 but received during the year under consideration for compulsory acquisition of land of the assessee by the Government.
4. During the assessment proceedings, a notice u/s 143(2) of the Act was issued on 09.07.2008 by Registered Post to the assessee which was duly served on the assessee. After affording an opportunity of being heard to the assessee, the Assessing Officer made an addition of Rs.44,26,404/- for the amount of interest on enhanced compensation received under the court order during the year under consideration. The Assessing Officer observed that as there is no cost of acquisition against the interest received on amount of compensation received for compulsory land acquisition, therefore, the interest amount is to be taxed as long term capital gain and added to the total income. The Assessing Officer also recorded his 3 ITA No.2924/Del/2011 Asstt.Year: 2007-08 satisfaction about the initiation of penalty proceedings u/s 271(1)(c) of the Act for the failure of the assessee to disclose the correct income. Subsequently, the Assessing Officer also passed an order u/s 154 of the Act and revised the income of the assessee to Rs.37,64,560.
5. In the penalty proceedings, the Assessing Officer observed that the assessee has filed the return of income on 14.08.2007 which was much after the amendment of the Act which has taken place w.e.f. 01.04.1988. The Assessing Officer issued a show cause notice during the penalty proceedings and levied the penalty of Rs.8,85,280 with the following observations:-
" The show cause notice was issued on 27.11.2009 and assessee filed a reply dated 04.12.2009 in response to this show cause notice. In this reply also the assessee has not offered the income received on account of interest on compensation despite of being made aware of the judgement of the Hon'ble Supreme Court in the case of CIT Vs. Ghanshyam (HUF). This shows that the assessee has no intention at all to offer this income for tax even when he was made aware of the Supreme Court judgement which is squarely applicable to the case of the assessee. Only when the assessee was cornered about this concealment he offered this income for tax vide letter dated 24.12.2009 which is after almost a month from the date of issue of show cause notice by which he was· confronted with the judgement of the Hon'ble Supreme Court. This shows the intention of the assessee to conceal the income till the point when he is left with no other option except to accept the fact that the income is taxable and he cannot avoid payment of taxes by any means. This fact gains further strength from the fact that the total amount received by the assessee and his family was Rs.1,69,23,905/- out of which assessee's share was Rs.44,26,404/- and balance amount 4 ITA No.2924/Del/2011 Asstt.Year: 2007-08 of Rs.1,24,97,501/- which belongs to all the family members of the assessee and an amount of Rs.23,23,269/- pertains to M.D. Jain(HUF) where assessee has 1/5th share and none of them has offered this income for tax till date. In case assessee's argument that they were not aware of the latest judgement of Supreme Court regarding taxability of the enhanced compensation then these incomes totaling to Rs.1,24,97,501/- should have been offered for tax by the family members of the which also include the assessee as one of the beneficiaries being part of M.D.Jain (HUF). After considering these facts, there remains no doubt that the assessee has no intention of offering this income for tax on his own if show cause was not issued."
I
6. The assessee filed an appeal before the Commissioner of Income Tax(A)-XXX, New Delhi, which was allowed with the following observations:-
"6. I have considered the submissions made by the appellant and I am of the view that although the penalty is not leviable in this case in view of the fact that the issue involved in this case is whether the assessee has really tried to conceal his income or furnished inaccurate particulars of his income is a debatable issue in view of conflicting decisions of Mumbai, Hyderabad and Delhi ITAT. The case of Dharmendra Textile Processors Ltd. (2008) 306 ITR 0277 (SC) had been considered by Supreme Court in the case of Reliance Petro Products Pvt.Ltd.[2010] 322 ITR 0158 (SC). All other Supreme Court cases before the order of Reliance Petro Products (supra) have been reviewed by Hon'ble Supreme Court.
According this is not a case for imposition of penalty u/s 271 (1)(c). I am of the view that no malafide act can be attributed to the assessee and imposition of penalty. Thus, on the facts and circumstances of the present case, penalty 5 ITA No.2924/Del/2011 Asstt.Year: 2007-08 is not justified and therefore, penalty imposed by the AO U/S 271(1)(c) of the I.T.Act is cancelled."
7. Ld. DR submitted that the assessee is a judicial officer who is supposed to be the guardian of law and a role model for the society to lead by example of a law abiding citizen. The DR further submitted that the conduct of the assessee was totally contrary to this expected behaviour as it is very much clear from the facts and circumstances of the case that the assessee had tried to evade taxes by making all efforts till the end despite being made aware of the legal position and issued a show cause notice against him in this regard. Ld. DR supported the penalty order and vehemently contended that the Commissioner of Income Tax(A) cancelled the penalty on erroneous grounds and his findings are not sustainable on legal grounds.
8. Replying to the above submissions, the assessee's representative submitted that the assessee had no intention to conceal the income from tax; the assessee is a sincere taxpayer and always submitted true and full particulars of his income without concealing any facts. The AR further submitted that after a long legal battle passing through several stages, the assessee finally received an amount of Rs.44,26,404 during November 2006 from the Land Acquisition Collector. The amount so received represented 6 ITA No.2924/Del/2011 Asstt.Year: 2007-08 the interest on enhanced compensation for the period from 12.05.1976 (the date of taking over possession of land by the Government) till 17.12.1991. The AR further submitted that as the amount received by the assessee represented the amount of interest on enhanced compensation under the court orders and it was related from the earlier period. Therefore, it was not taxable during the year under consideration, rather the same was taxable during the corresponding assessment years i.e. 1977-78 to 1992-93 o spread over basis in terms of the legal position as upheld by the Hon'ble Supreme Court in Rama Bai vs Commissioner of Income Tax 181 ITR 400. The AR also submitted that the assessee had made a detailed disclosure in his return regarding the amount received and tax treatment given to the same through a note annexed to the return of income for AY 2007-08.
9. The AR also placed his reliance on the recent judgement of Hon'ble Supreme Court in the cases of Commissioner of Income Tax vs Reliance Petro Products Pvt. ltd.(2010) 322 ITR 158(SC), Union of India vs Dharmdendra Textile Processors Ltd. (2008) 306 ITR 277(SC) and Commissioner of Income Tax vs Ghanshyam (HUF) 2009 315 ITR 1 (SC).
10. After careful consideration of the submissions of both the parties, and after perusal of the quantum and penalty orders and in the light of citations 7 ITA No.2924/Del/2011 Asstt.Year: 2007-08 placed before us, we observe in the case of Rama Bai (supra) the Hon'ble Apex Court held that the interest on enhanced compensation of land compulsorily acquired under the Land Acquisition Act 1984, awarded by the Court on a reference u/s 18 of the Land Acquisition Act or on further appeal has to be taken to have accrued not on the date of the order of the court granting enhanced compensation but as having accrued year after year from the date of delivery of possession of land till the date of such order and such interest cannot be assessed to income tax in one lump sum in the year in which the order is made.
11. In the present case, the assessee's submissions before the authorities below were that in the case of Commissioner of Income Tax vs Ghanshyam (HUF) (supra), it was held that interest on enhanced compensation awarded u/s 28 of the Land Acquisition Act is a part of compensation whereas the larger Benches of the Supreme Court have held that the interest on enhanced compensation is a revenue interest and not a part of compensation.
12. In our considered opinion, the offence as contemplated in the provisions of section 27(1)(c) of the Act relates to the concealment of particulars of income or furnishing of inaccurate particulars of income in the return of income. In the present case, we have no reason to hold that the assessee has either concealed the particulars of income or furnished 8 ITA No.2924/Del/2011 Asstt.Year: 2007-08 inaccurate particulars of income in his return as the assessee had made a detailed disclosure regarding the amount received and tax treatment of the same through a detailed note annexed to the return of income.
13. In view of above, we observe that the Assessing Officer was not justified in holding that the assessee has concealed the particulars of his income or had furnished inaccurate particulars of his income. Per contra, we observe that the ld. Commissioner of Income Tax(A) rightly held that this is not a case of imposition of penalty u/s 271(1)(c) of the Act and we are unable to see any malafide act attributable to the assessee for imposition of penalty. Accordingly, we finally hold that this appeal of the revenue is devoid of merits and deserves to be dismissed and we dismiss the same.
14. In the result, the appeal of the revenue is dismissed.
Order pronounced in the Open Court on 11.01.2013.
-Sd/- Sd/- (G.D. AGRAWAL) (CHANDRAMOHAN GARG) VICE PRESIDENT JUDICIAL MEMBER DT. 11th JANUARY 2013 'GS' 9 ITA No.2924/Del/2011 Asstt.Year: 2007-08 Copy forwarded to:- 1. Appellant 2. Respondent 3. C.I.T.(A) 4. C.I.T. 5. DR By Order Asstt.Registrar