Income Tax Appellate Tribunal - Jaipur
Nitin Pal Singh, Jaipur vs Acit, Jaipur on 29 May, 2017
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IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR
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BEFORE: SMT. DIVA SINGH, JM & SHRI VIKRAM SINGH YADAV, AM
vk;dj vihy la-@ITA No.214/JP/15
fu/kZkj.k o"kZ@Assessment Year : 2006-07
Shri Nitin Pal Singh, B-23, cuke The ACIT, Circle-5, Jaipur
Govind Marg, Adarsh Nagar, Vs.
Jaipur.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN No. AFGPS8812R
vihykFkhZ@Appellant izR;FkhZ@Respondent
vk;dj vihy la-@ITA No.212/JP/15
fu/kZkj.k o"kZ@Assessment Year : 2006-07
Shri Narendra Pal Singh HUF, cuke The ACIT, Circle-5, Jaipur
B-23, Govind Marg, Adarsh Vs.
Nagar, Jaipur.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN No. AADHN7212G
vihykFkhZ@Appellant izR;FkhZ@Respondent
vk;dj vihy la-@ITA No.211/JP/15
fu/kZkj.k o"kZ@Assessment Year : 2006-07
Shri Vipin Jeet Singh, B-23, cuke The ACIT, Circle-5, Jaipur
Govind Marg, Adarsh Nagar, Vs.
Jaipur.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN No. ALZPS6028G
vihykFkhZ@Appellant izR;FkhZ@Respondent
fu/kZkfjrhdh vksj ls@Assessee by : Shri Shrawan Kumar Gupta
jktLo dh vksj ls@Revenue by : Shri O.P. Bhateja (Addl.CIT)
lquokbZ dh rkjh[k@Date of Hearing : 21/03/2017
ITA No. 214, 212 & 211/JP/2015,
Shri Nitin Pal Singh& Others Vs. The ACIT, Jaipur
?kks"k.kk dh rkjh[k@Date of Pronouncement: 29/05/2017
vkns'k@ORDER
PER: SHRI VIKRAM SINGH YADAV, A.M. These are three appeals filed by the respective assessees involving common issue of levy penalty u/s 271(1)(c) of the Act arising out of the order of the ld. CIT (A), Jaipur of even date i.e, 21.01.2015 for A.Y. 2006-07 in case of Shri Nitin Pal Singh, Shri Narendra Pal Singh HUF for A.Y. 2006-07 and Vipin Jeet Singh for A.Y. 2006-07. Since common issue of levy of penalty with similar fact pattern are involved in all these appeals, the same were heard together and disposed off by consolidated order. For the sake of discussion, the case of Shri Nitin Pal Singh has been taken as lead case with consent of the both the parties.
2. Briefly the facts of the case that during the year under consideration, the assessee sold agricultural land at village Nevta Tehsil Sanganer, Jaipur for Rs. 26,31,459 and after considering the cost of land at Rs. 17,83,600/-, the long term capital gains of Rs 8,47,859 were computed. The assessee also claimed exemption u/s 54B of the Act in respect of purchase of another agricultural land of Rs. 479,333/- at village Phulera, Jaipur. The assessee accordingly worked out long term capital gains of Rs. 368,526 on which taxes were duly paid and reported in the return of income. Subsequently, the assessee filed a revised return wherein the cost of the land was taken as Rs. 1,12,769/- as against Rs. 17,83,600/- shown in the original return and deduction u/s 54B of the Act was claimed at Rs. 14,21,878/- as against Rs. 4,79,333/- shown in the original return. The Assessing Officer did not accept revised return stating that since the original return was filed beyond the time limit for filing the return u/s 139(1) of the Act, the assessee was not entitled to file a revised return under section 139 (5) of the Act. Further the Assessing Officer allowed the indexed cost of land sold at Rs. 1,12,769/- as against 2 ITA No. 214, 212 & 211/JP/2015, Shri Nitin Pal Singh& Others Vs. The ACIT, Jaipur Rs. 17,83,600/- shown in the original return of income for the reason that the assessee was not able to prove the development/improvement in the said land and has not filed any documentary evidence in that regard. Further, deduction under section 54B was restricted to Rs. 4,79,333/- as shown in the original return of income. The income of the assessee was accordingly computed determining the long term capital gain of Rs. 20,39,357/- as against Rs. 3,68,526/- shown by the assessee in its original return of income. The AO simultaneously initiated the penalty proceeding u/s 271(1)(c) of the Act.
3. Being aggrieved, the assessee carried the matter in appeal before the ld. CIT(A). The ld. CIT(A) allowed the cost of improvement of land in the hands of the assessee at Rs. 4,54,500/- and taking into consideration, the indexed cost of land as adopted by the Assessing Officer at Rs. 1,12,796/-, the total deduction from the sale consideration was determined at Rs. 5,67,269/- as against the claim of the assessee of Rs. 17,83,600/- in the original return of income and the disallowance to the extent of Rs. 12,16,331/- regarding cost of improvement of land was confirmed. Both the parties have accepted the said finding of the ld. CIT(A) and the same has attained finality in absence of any further appeal. Further, the issue regarding revised return not accepted of the Assessing Officer was not pressed by the assessee before the ld. CIT(A). Similarly, the additional claim u/s 54B made under the revised return was not pressed before the ld. CIT(A).
4. In light of above factual matrix,difference between the original return of income and the assesseed income relates to disallowance of Rs. 12,16,331/- regarding development/improvement cost of the land which is the subject matter of impugned penalty order passed by the Assessing officer and which is in consideration before this Bench.
3ITA No. 214, 212 & 211/JP/2015, Shri Nitin Pal Singh& Others Vs. The ACIT, Jaipur
5. The AO as well as ld CIT(A) has stated that the appellant has not been able to offer any explanation with respect to its claim of cost of development/improvement in the cost of land in the original return of income and it was accordingly held that the appellant has furnished inaccurate particulars of income. In this regard, the ld AR submitted that necessary explanations have been provided before the ld CIT(A) in the quantum proceedings and drawn our attention to the findings of the ld. CIT(A) in the quantum proceedings which are reproduced as under:
"I have considered facts of the case and arguments taken by Sh. Sethi quite carefully. It is a fact that copies of bills/vouchers regarding cost of improvement were not furnished before the assessing officer. However, considering the fact that the appellant was not maintaining regular books of accounts and he was not having absolute ownership over the plots under consideration which were held jointly with other family members therefore, in my considered view there was a reasonable cause because of which these details and evidence could not be furnished during the course of assessment proceedings. According to me under rule 46A(1)(c) such additional evidence are hereby admitted. Though the appellant did not maintain proper capital account and balance sheet as well as no books of accounts are maintained therefore, claimed cost of improvement is not verifiable. However, existence of the same cannot be denied keeping in view the specific mention in sale deed bearing No. 103764 regarding 15 bigha and 1 biswa land that there is pakka boundary wall constructed in the parri pheri of the said agricultural land along with pakka constructed house. Though, the vouchers were furnished but it did not reconcile with the cost of improvement as claimed by appellant and moreover it is also not verifiable that such cost has been incurred in respect of the plot under consideration. Similar mention was found in another sale deed bearing registration No. 103763 for 8 bigha and 3 biswa land that said land is having on two side pakka constructed boundary wall. Under these circumstances, such cost of improvement has to be estimated and in absence of verifiable details regarding exact period of improvement particularly when different persons having share in the same land has shown has shown in different years the cost of improvement which is not possible once the work is done jointly by 4 ITA No. 214, 212 & 211/JP/2015, Shri Nitin Pal Singh& Others Vs. The ACIT, Jaipur different co-owners of the land under consideration and therefore, I consider such cost of improvement as incurred during the accounting year relevant to A.Y under consideration which means that on such cost no indexation benefit is to be allowed. Now a fair estimate is required to be made for such cost of improvement. Considering the vouchers furnished by different co-owners in their respective appeals which are being decided simultaneously by me in other two cases also namely Vipin Jeet Singh and Narendra Pal Singh HUF. In my considered view it shall be justifiable to estimate such cost of improvement on construction of pakka boundary wall at Rs. 1 Lac per bigha and wherever, such land consist of certain pakka construction then such estimated cost of improvement is adopted at Rs. 1.25 lac per bigha. Since, as per sale document bearing registration number 103764 which is in respect of 15 bigha and 1 biswa land the appellant is having 5/24 share therefore, his share in biga terms comes 3.1 bigha and land as per this sale deed is having pakka boundary wall construction and constructed house thereupon and therefore, on the appellant share such cost of improvement is worked out at Rs. 3,87,500/-. Similarly, in respect of 8 bigha and 3 biswa land involved in the sale deed as per registration No. 103763 there is a mention of construction of pakka boundary wall and appellant share is 1/12th which means that the appellant was having ownership over 0.67 bigha land and @ Rs. 1 Lac per bigha such cost of improvement on estimate basis in this case is worked out at Rs. 67,000/- with this discussion total cost of improvement in the case of appellant is worked out at Rs. 4,54,500/- without giving any further benefit on account of indexation since it is presumed that such cost of improvement has been incurred in the accounting year relevant to A.Y. under consideration because there were no regular books and supporting evidence regarding exact period of such incurring of cost of improvement. With this discussion and considering indexed cost of land as adopted by assessing officer at Rs. 1,12,769/- total deduction from the sale consideration is required to be made at Rs. 5,67,269/- as against such claim of Rs. 17,83,600/- and the disallowance to the extent of Rs. 12,16,331/- regarding indexed cost of land and improvement is hereby confirmed."
6. The above finding of the ld. CIT(A) though rendered in the context of quantum proceedings are equally relevant in the penalty proceedings as both 5 ITA No. 214, 212 & 211/JP/2015, Shri Nitin Pal Singh& Others Vs. The ACIT, Jaipur the parties have relied on the same in support of their respective positions and in absence of any separate and independent findings by the AO in the penalty proceedings. The ld CIT(A) has clearly mentioned that existence of the expenditure towards the cost of improvement of land cannot be denied keeping in view the specific mention thereof in sale deed bearing registration no. 103764 wherein it is stated that there was pakka boundary wall along with pakka constructed house. Similarly, in sale deed bearing registration no. 103763, it is stated that the land is having pakka constructed wall on two sides. Therefore, the incurrence of the expenditure towards cost of improvement/development of land was duly explained and demonstrated by the assessee through verifiable documentation in form of sale deed and which has been duly verified and taken into consideration by the ld CIT(A). At the same time, regarding the exact quantum of such expenditure, the ld. CIT(A) stated that it is a fact that the copies of biils/vouchers regarding cost of improvement were not furnished before the AO. However, considering the fact that appellant was not maintaining regular books of accounts and he was not having absolute ownership over the plots under consideration which were held jointly with other family members, there was reasonable cause for not furnishing such details and vouchers during the assessment proceedings and same were admitted as additional evidence and examined by the ld CIT(A). Therefore, besides the sale deeds, there were bills/vouchers which were produced in support of such expenditure. At the same time, given the fact that such improvement has been carried out over a period of time jointly by different family members having share in the same land and has been claimed and shown in different years, the ld CIT(A) held that a fair estimation for such cost of improvement should be made in hands of respective family members and such estimation has now attained finality in absence of any further appeal by either of the parties. Considering the vouchers furnished by the different co-owners namely Nitin Pal Singh, Vipin Jeet Singh, Narendra Pal Singh HUF, 6 ITA No. 214, 212 & 211/JP/2015, Shri Nitin Pal Singh& Others Vs. The ACIT, Jaipur the cost of improvement has been worked out by the ld. CIT(A) at Rs. 4,54,500/- in the hands of the assessee.
7. In light of above, it cannot be said that the assessee has furnished inaccurate particulars of income where there is due disclosure in the return of income and necessary explanation and supporting evidence has been provided in support of such expenditure. The incurrence of the expenditure has thus not been doubted by the Revenue but given the peculiar facts of the case involving long period during which such expenditure has been incurred and that too, by different co-owners and the fact that the assessee doesnt maintain regular books of accounts , an estimation approach was adopted by the lower authorities while denying the claim of the assessee towards the cost of improvement of land. In our view, the disallowance of expenditure in such peculiar facts of the case cannot be basis for levy of penalty under section 271(1)(c) of the Act. In this regard, the ld. AR has referred to the decision of Hon'ble Rajasthan High Court in case of CIT vs. Mahendra Singh Khedla 71 DTR 189 wherein it was held that where the additions made by the Assessing officer were based on estimate, penalty under section 271(1)(c) could not be levied. Similar view has been taken by the Hon'ble Rajasthan High Court in case of CIT Vs. Krishi Tyre Retreading & Rubber Industries (2014) 360 ITR 580 ( Raj).
8. In light of above discussions and in the entirety of facts and circumstances of the case, we are of the view that the penalty under section 271(1)(c) cannot be invoked in the instant case. The penalty amounting to Rs 4,22,837 levied by the AO under section 271(1)(c) is hereby deleted. The Ground taken by the assessee is thus allowed.
ITA No. 212/JP/15&ITA No.211/JP/15 7ITA No. 214, 212 & 211/JP/2015, Shri Nitin Pal Singh& Others Vs. The ACIT, Jaipur In case of Vipin Jeet Singh (ITA No.212/JP/15), under similar fact pattern, the cost of development/improvement of land has been allowed at Rs. 4,54,500/- and disallowance of Rs 132,731 has been confirmed while computing the long term capital gains. The penalty of Rs 131,773 has been levied u/s 271(1)(c) in relation to such disallowance of cost of development/improvement of land. Similarly, in case of Narendra Pal Singh HUF (ITA No.211/JP/15),the cost of development/improvement of land has been allowed at Rs. 645,500/- and disallowance of Rs 16,60,658 has been confirmed while computing the long term capital gains. The penalty of Rs 5,17,272 has been levied u/s 271(1)(c) in relation to such disallowance of cost of development/improvement of land. In both of these cases, both the parties have relied on the findings of the Ld. CIT(A) in quantum proceedings wherein he has has given similar finding stating that the incurrence of the expenditure cannot be doubted. At the same time, the expenditure has to be estimated given the long period during which such expenditure was incurred and the fact that such expenditure has been incurred by various co-owners and accordingly, an estimation of such expenditure towards the cost of improvement/development of land was made and the same has attained finality. Given the identical fact pattern of these two cases with the facts, as we have examined earlier, in case of Shri Nitin Pal Singh (ITA No. 214/JP/15), our findings and directions contained therein shall applymutatismutandis in these two cases. The penalty levied u/s 271(1)(c) in these two cases is accordingly deleted and the ground of appeal taken by the respective assessees is allowed.
In the result, all appeals filed by the respective assessee are allowed.
Order pronounced in the open court on 29/05/2017.
8
ITA No. 214, 212 & 211/JP/2015,
Shri Nitin Pal Singh& Others Vs. The ACIT, Jaipur
Sd/- Sd/-
(Diva Singh) (VIKRAM SINGH YADAV)
U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member
Jaipur
Dated:- 29/05/2017
Santosh*
vkns'k dh izfrfyfi vxzfs "kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- Shri Nitin Pal Singh, Shri Narendra Pal Singh HUF and Shri Vipin Jeet Singh, B-23, Govind Marg, Adarsh Nagar, Jaipur.
2. izR;FkhZ@ The Respondent- The ACIT, Circle-5, Jaipur
3. vk;dj vk;qDr@ CIT
4. vk;dj vk;qDr¼vihy½@The CIT(A)
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT,
6. xkMZ QkbZy@ Guard File (ITA No. 214, 212 & 211/JP/2015) vkns'kkuqlkj@ By order, lgk;d iathdkj@ Assistant. Registrar.9