Income Tax Appellate Tribunal - Amritsar
Anish Kumar, S/O. Sh. Harbans Lal, , ... vs Assessee on 3 June, 2013
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IN THE INCOME TAX APPELLATE TRIBUNAL
AMRITSAR BENCH; AMRITSAR.
BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER
AND SH. B.P. JAIN, ACCOUNTANT MEMBER
I.T.A. No. 106 (Asr)/2010
Assessment year: 2006-07
PAN:- AGSPK3927G
Anish Kumar, Vs. Dy. CIT, Circle-I
S/o- Sh. Harbans Lal Bathinda
Prop. Nikku Ram Trading Co.,
New Cloth Market, Bathinda
(Appellant) (Respondent)
Appellant by: Sh. K.R. Jain, Advocate
Respondent by: Sh. Tarsem Lal, D.R.
Date of hearing: 03.06.2013
Date of pronouncement: 11.06.2013
ORDER
PER BENCH
1) The assessee has filed the present appeal against the impugned order dated 24.12.2009, passed by the learned CIT(A), Bathinda, for the assessment year 2006-07 on the following grounds:
i. That the learned CIT(A) has erred in law and on facts while confirming the penalty imposed by the A.O. U/s 271(1)(C). ii. That the learned CIT(A) has not appreciated the facts of the case, explanation offered, verbal and written submissions and proceeded to confirm the penalty arbitrarily.2
iii. That the learned CIT(A) has further erred in law and on facts while confirming the penalty at 300% when the penalty was reduced to 100% vide his order dated 11.09.2008.
iv. That in any case initiation & completion of penalty proceedings by the A.O. are illegal and against facts.
v. Accordingly it is prayed that the penalty imposed may kindly be quashed or such other relief as may be admissible be granted.
2) The assessee filed his return on 09.10.2006 declaring income of Rs. 1,17,92,340/- inclusive of long-term capital gains at Rs. 1,14,80,474/-
and agricultural income at Rs. 49,000/-. The Assessing Officer completed the assessment under Section 143(3) of the Income-tax Act, 1961 (in short "the Act") on 28.12.2007 and noticed that assessee had furnished inaccurate particulars of his income as long-term capital gains were not disclosed at the correct figure which worked out at Rs. 1,20,81,323/- instead of Rs. 1,14,80,474/- as shown by the assessee. In the assessment order, Assessing Officer noticed that the assessee had made sale of two properties on 30.12.2005 for consideration of Rs. 1,26,04,166/- and the cost of these properties were shown to be acquired in the year 1991-92 & 1996-97 at Rs. 2,80,312/- & Rs. 2,50,000/- respectively. After taking into account the cost inflation index of 199 & 305 for the year 1991-92 & 1996-97 respectively, the assessee declared income from long-term capital gain at Rs. 1,14,96,713/-. The assessee was asked to produce copies of registered deeds in respect of properties purchased and sold. 3 From perusal of one of the purchases deeds, it was seen that though the property has been acquired at a cost of Rs. 2,80,312/- but the assessee's share in this property was 1/4th and thus the total cost of acquisition of the assessee should have been Rs. 2,80,312/4=70,078/-. The fact that assessee owns only 1/4th share in this property is further confirmed from the sale deed in which the same share has been sold. The Assessing Officer further noticed that the assessee had purchased this property on 29.05.1998 whereas while computing capital gain, it has been mentioned to be purchased in the year 1991-92 and thus has computed capital gain by taking the cost inflation index of the year 1991-92. The Assessing Officer pointed out these discrepancies to the assessee but the assessee did not tender any explanation in this regard. As such, long term capital gain is worked out as under by taking the cost of acquisition at Rs. 70,078/- and cost inflation index of the year 1998-99 which is 351.
Sale consideration 12604166.00
Less: Cost of acquisition in 1998-99
70078 X 497/351 99227.00
Cost of acquisition in 1996-97
250000 X 497/305 407377.00 506604.00
12097562.00
Less: B/F Long term capital loss A.Y. 2005-06 16239.00
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Balance Long Term Capital Gain 12081323.00
3) The assessee has declared long term capital gain at Rs.
1,14,80,474/- but the correct amount of long term capital gain worked out is Rs. 1,20,81,323/-, as computed above. The Assessing Officer was satisfied that by taking the full share instead of 1/4th share and by claiming the year of acquisition as 1991-92 instead of 1998-99, the assessee has furnished inaccurate particulars of his income and, therefore, penalty proceedings under Section 271(1)(c) of the Act were initiated by issuing a notice on 28.12.2007 under Section 274 read with Section 271(1)(c) of the Act. In response to the same, the Assessee has filed his reply and stated that he had filed appeal before the learned CIT(A) against the quantum that the penalty proceedings may be kept pending but learned CIT(A) had dismissed the appeal of the assessee on 26.03.2008. He has given another opportunity to the assessee while issuing notice on 05.06.2008, under Section 274 read with Section 271(1)(C) of the Act. In response to the same, authorized representative of the assessee appeared and submitted written submission wherein it was admitted that the overstatement of cost of acquisition (Rs. 11,07,453/- instead of Rs. 5,06,604/-) of the land sold during the relevant year was a mistake and was not done with a mala fide intention to evade tax. 5 Assessee further submitted before the Assessing Officer that his accountant has committed a mistake by communicating the total cost of acquisition of the land without taking into account the assessee's share for the same (which was 1/4th of the total area). Also the registered purchase deed could not be located by the proprietor at that instance. After the case was taken up for scrutiny more strenuous efforts were made to locate the said purchase deed and the same was produced in the assessment proceedings as aforesaid. At no point the assessee tried to conceal any facts or to file inaccurate particulars. The said mistake was conducted owing to the fact that the assessee had migrated to Delhi and many documents could not be located at the time of preparation of the income tax return. Hence, there was no concealment of facts or filing of inaccurate particulars by the assessee.
4) After considering the submissions of the assessee the Assessing Officer held that there is no force in the submission of the assessee as the fact remains that the assessee was having 1/4th share in the property which comes to Rs. 70,078/- whereas he showed the entire amount mentioned in the purchase deed at Rs. 2,80,312/- as a cost. Further, the purchase deed was executed on 29.05.1998 and as such, the cost inflation index for the financial year 1998-99 was applicable to work out the long 6 term capital gains whereas the assessee applied the cost inflation index for the financial year 1991-92. The assessee has tried to fabricate evidence by producing a concocted copy of alleged agreement dated 10.03.1992, as the alleged agreement was not found to be registered anywhere and also that the sale deed was shown to have been executed after a gap of more than 6 year which is obviously an unbelievable gap. The fabrication of evidence is confirmed from the fact that the counsel for the assessee did not mention the alleged agreement in the reply to penalty proceedings.
5) In view of the above discussion and facts, the Assessing Officer has held that there is no doubt that the assessee has clearly furnished inaccurate particulars of his income to the extent of suppression of long term capital gains at Rs. 6,00,849/-. Assessee himself has admitted the mistake in his reply in response to penalty proceedings. There was no reasonable cause on the part of the assessee for failure to furnish the accurate particulars of income.
6) Keeping in view the above factual and legal position the Assessing Officer imposed maximum amount which is @ 300% of the tax i.e. Rs. 4,04,490/- as penalty under Section 271(1)(C) of the Act vide order dated 27.06.2008 passed under Section 271(1)(C) of the Act. 7
7) Aggrieved by the same, the assessee filed an appeal before the learned First Appellate Authority who vide impugned order dated 24.12.2009 dismissed the appeal filed by the assessee. Again being aggrieved by the order dated 24.12.2009 passed by of learned CIT(A), Bathinda, assessee has filed the present appeal.
8) Learned counsel for the assessee has filed his written submission before this Bench along with various other documentary evidences in the shape of two paper books. In the first paper books containing pages from 1 to 35, he has attached Reply to penalty letter dated 23.06.2008; Copy of Questionnaire from the Assistant Commissioner of Income Tax, Circle-I, Bathinda; Copy of the order- sheet during the Assessment Proceedings; Copy of the order-sheet during penalty proceedings; Copy of a/c's of Sh. Anish Kumar from 01.04.1991 to 31.03.1992 filed with Income Tax Return; Copy of Agreement for purchase of land & English Translation; Copy of Order of I.T.A.T., Amritsar Bench, I.T.A. No. 232/ASR/2008 in the case of Smt. Charanjit Kaur; Copy of Judgment of Punjab & Haryana High Court in the case of CIT(Karnal) Vs. Smt. Raj Rani; Copy of Judgment of Punjab & Haryana High Court in the case of CIT (Chandigarh) Vs. Sh. Tikka Ram; Copy of Judgment of Punjab & Haryana High Court in the case of CIT(Karnal) 8 Vs. Sh. Amarnath; Copy of Judgment of Supreme Court in the case of Rafiq & another Vs. Munshi Lal & another AIR(1981) and Copy of Written Submission. In the second paper book containing pages from 36 to 93, he has attached Computation of Capital Gain as per Income Tax Return filed by the Assessee; Computation of Capital Gain as computed by the A.O.; Copy of Judgment of Supreme Court in the case of K.C. Builders & ANR Vs. Assistant Commissioner of Income Tax 265 ITR 562(S.C.); Copy of Judgment of High Court of Allahabad in the case of CIT & ANR Vs. Mentha & Allied Products (P) Ltd. (2008) 304 ITR 214 (All); Copy of Judgment of Supreme Court in the case of Hindustan Steel Ltd. Vs. State of Orissa; Copy of Judgment of Punjab & Haryana High Court in the case of CIT Vs. Punjab Kesari Hosiery Factory (2008) 304 ITR 247 (P&H); Copy of Judgment of Punjab & Haryana High Court in the case of Vishwakarma Industries Vs. CIT-I, Asr; Copy of I.T.A.T. (Lucknow Bench) in the case of Star International P. Ltd. Vs. ACIT [2009] 308 ITR (AT) 33, Lucknow; Copy of Judgment of Supreme Court in the case of CIT Vs. Poddar Cement Pvt. Ltd. & Others; Copy of Judgment of Punjab & Haryana High Court in the case of CIT Vs. Sidhartha Enterprises (2010) 322 ITR 80; Copy of Judgment of Punjab & Haryana High Court in the case of CIT, Bathinda Vs. M/s Shere Punjab 9 Agricultural Works; Copy of Judgment of Punjab & Haryana High Court in the case of CIT Vs. SSP(P) Ltd. [2008] 219 CTR (P&H) 486 and Copy of Judgment of Punjab & Haryana High Court in the case of CIT Vs. Rubber Udyog Vikas P. Ltd. [2011] 335 ITR 558 (P&H).
9) Learned D.R. relied upon the impugned order passed by learned CIT(A), Bathinda, dated 24.12.2009 and stated that the assessee had taken full share instead of 1/4th share and also claimed the year of acquisition as 1991-92 instead of 1998-99 and thus, has deliberately furnished the inaccurate particulars of his income in order to avoid due payment taxes. Therefore, the penalty in dispute has rightly been imposed by the Revenue Authority and the same may be upheld by dismissing the appeal filed by the assessee.
10) We have heard both the parties and perused the orders passed by the Revenue Authority alongwith the documentary evidence filed by learned counsel for the assessee.
11) As a matter of record the assessee filed his return of income on 09.10.2006 of Rs. 1,17,92,340/- inclusive of long-term capital gain of Rs. 1,14,80,474/- plus Rs. 49,000/-, which was processed under Section 143(3) of the Act on 27.04.2007. Subsequently, the case of the assessee was selected for scrutiny and notice under Section 143(3) of the Act was 10 issued on 20.08.2007. Detailed questionnaire alongwith notice under Section 142(1) of the Act was also issued on 25.09.2007. In response to these notices, assessee produced books of accounts along with various informations which were examined by the Assessing Officer and he found that the assessee had made sale of two properties on 30.12.2005 for consideration of Rs. 1,26,04,166/- and the cost of these properties was shown to be acquired in the year 1991-92 & 1996-97 at Rs. 2,80,312/- & 2,50,000/- respectively. After taking into account the cost inflation index, the assessee has declared income from long term capital gain at Rs. 1,14,96,713/-. The assessee was asked to produce copies of registered deeds in respect of properties purchased & sold. From perusal of one of the purchase deed, it was seen that though the property has been acquired at a cost of Rs. 2,80,312/- but the assessee's share in this property was 1/4th and thus the total cost of acquisition of the assessee should have been 2,80,312/4=70,078/-. The Assessing Officer further found that the assessee has purchased this property on 29.05.1998 whereas while computing capital gain, it has been mentioned to be purchased in the year 1991-92 and thus has computed capital gain by taking the cost inflation index of the year 1991-92. These discrepancies were pointed out to the assessee but the assessee did not tender any 11 explanation before the Assessing Officer. The Assessing Officer made the addition of Rs. 6,00,849/- under the head 'Long Term Capital Gain' and he initiated the penalty proceeding separately against the assessee under Section 271(1)(c) of the Act for furnishing inaccurate particular of assessee's income. The Assessing Officer issued penalty notice dated 28.12.2007 under Section 274 read with Section 271(1)(c) of the Act to the assessee and assessee filed his reply by stating that he had filed an appeal before the learned CIT(A) against the quantum and requested for keeping the proceeding pending. As another opportunity, the Assessing Officer, after the final decision of appeal filed by the assessee before the learned CIT(A), Bathinda, again issued notice to the assessee on 05.06.2008 under Section 274 read with Section 271(1)(C) of the Act and the assessee submitted his written explanations wherein it was admitted that the overstatement of cost of acquisition (Rs. 11,07,453/- instead of Rs. 5,06,604/-) of the land sold during the relevant year was a mistake and was not done with a mala fide intention to evade tax. After considering the written submission filed by the assessee, the Assessing Officer has held that the assessee has clearly furnished inaccurate particulars of his income to the extent of suppression of long term capital gains at Rs. 6,00,849/- and the assessee himself admitted that it was the 12 mistake of his accountant, however, he could not established any reasonable cause for failure to furnish the accurate particulars of income. And finally the Assessing Officer imposed the maximum amount which is @ 300% of the tax to be awarded i.e. total amounting to Rs. 4,04,490/-. Learned First Appellate Authority has also confirmed the penalty of Rs. Rs. 4,04,490/- imposed by the Assessing Officer under Section 271(1)(c) of the Act by holding that the assessee had taken full share instead of 1/4th share and also claimed the year of acquisition as 1991-92 instead of 1998-99 and thus, he had deliberately furnished the inaccurate particulars of his income in order to avoid due payment taxes.
12) Keeping in view the facts and circumstances as explained above, we are of the considered view that it is matter of record that during the course of assessment proceedings, the Assessing Officer noticed that the assessee has made sale of two properties on 30.12.2005 for consideration of Rs. 1,26,04,166/- and cost of these properties were shown to be acquired in the year 1991-92 & 1966-97 at Rs. 2,80,312/- & 2,50,000/- respectively. After taking into account the cost inflation index for the year 1991-92 & 1996-97, the assessee has declared income from long term capital gain at Rs. 1,14,96,713/-. The Assessing Officer perused the registered deeds in respect of these properties purchased & 13 sold and found that the assessee's share in these properties was 1/4th and the total cost of acquisition of the assessee should have been 2,80,312/4=70,078/-. It was also noticed that the assessee has purchased this property on 29.05.1998 whereas while computing capital gain, it has been mentioned to be purchased in the year 1991-92 and thus has computed capital gain by taking the cost inflation index. These discrepancies were pointed out to the assessee by the Assessing Officer but assessee did not tender any explanation in this regard and he himself admitted in the penalty proceeding that overstatement of cost of acquisition (Rs. 11,07,453/- instead of Rs. 5,06,604/-) of the land sold during the relevant year was a mistake and was not done with a mala fide intention to evade tax. Assessing Officer imposed the penalty after adopting the prescribed procedure under the law @ 300% and the same was confirmed by learned First Appellate Authority.
13) Keeping in view the facts and circumstances of the present case along with the explanation filed by the assessee that the overstatement of cost of acquisition of the land sold during the relevant year was the mistake of his accountant, we are of the view that penalty @ 300% is very much on higher side on account of mistake committed by the assessee's accountant.
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14) The assessee has not produced any evidence supporting the mistake of his accountant. Taking lenient views, we reduce the penalty imposed by the Revenue Authority in the impugned order to 100% from 300% of the tax sought to be evaded in the present case. We are of the view that the assessee has filed inaccurate particular of income to evade the tax due and has also admitted before the Assessing Officer that overstatement of cost of acquisition of the land sold during the relevant year was a mistake of his accountant.
15) As per the record available with us this is a fit case for reducing the penalty to @ 100% from 300%. It is clear case for imposing penalty because the assessee has suppressed his income. Thus, we direct the Assessing Officer to impose the penalty @ 100% of the tax sought to be evaded in the present case.
16) Accordingly, we modify the impugned orders as discussed above by partly allowing the appeal filed by the assessee.
17) In the result, the appeal filed by the assessee is partly allowed. Order pronounced in the open court on 11th June, 2013 Sd/./- Sd/./-
(B.P. JAIN) (H.S. SIDHU)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 11th June, 2013
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/RK/
Copy of the order forwarded to:
1. The Assessee: Anish Kumar, S/o- Sh. Harbans Lal, Prop. Nikku Ram Trading Co., New Cloth Market, Bathinda.
2. The Dy. CIT, Circle-I, Bathinda
3. The CIT(A), Bathinda
4. The CIT, Bathinda
5. The SR DR, I.T.A.T., Asr True copy By order (Assistant Registrar) Income Tax Appellate Tribunal, Amritsar Bench: Amritsar.