Income Tax Appellate Tribunal - Amritsar
Swaran Singh, Raikot vs Assessee on 4 October, 2012
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.219(Asr)/2012
Assessment year:2006-07
PAN :AEBPS0482D
Dr. Swaran Singh vs. Dy. Commr. of Income Tax,
Raikot. Circle, Moga.
(Appellant) (Respondent)
I.T.A. No.218(Asr)/2012
Assessment year:2008-09
PAN :ARFPS8573A
Dr. Parvinder Singh Sandhu, vs. Dy. Commr. of Income Tax,
Raikot. Circle, Moga.
(Appellant) (Respondent)
Appellants by:Sh. Sudhir Sehgal, Advocate
Respondent by:Sh. R.L. Chhanalia, DR
Date of hearing:04/10/2012
Date of pronouncement:08/10/2012
ORDER
PER BENCH ;
These appeals of two different assessees arise from the two different orders of CIT(A)-II, Ludhiana, each dated 21.03.2012 for the assessment 2 ITA Nos 219 & 218(Asr)/2012 year 2006-07 in the case of Dr. Swaran Singh and for the assessment year 2008-09 in the case of Sh. Parvinder Singh Sandhu.
2. The assessee has raised following grounds of appeal in the case of Dr. Swaran Singh in ITA No.219(Asr)/2012:
"1. That the worthy CIT(A) has erred in confirming the penalty of Rs.9,74,093/- levied by the Assessing Officer u/s 271(1)(c) of the Income-tax Act, 1961.
2. That the confirmation of penalty by the worthy CIT(A) is against the facts and circumstances of the case and also that the CIT(A) has failed to appreciate the fact that no addition has been made in the hands of seller of the property under consideration.
3. That the Ld. CIT(A) has failed to appreciate the fact that the so-
called agreement was only a Photostat copy and could not be relied upon for the purpose of levy of penalty u/s 271(1)(c).
4. That the submission as filed by the appellant has not been considered properly.
5. That the appellant craves leave to add to amend any grounds of appeal before the appeal is finally heard or disposed off."
3. The assessee has raised following grounds of appeal in the case of Sh. Parvinder Singh Sandhu in ITA No.218(Asr)/2012:
"1. That the worthy CIT(A) has erred in confirming the part of penalty u/s 271(1)(c) of the Income-tax Act, 1961.
2. That the confirmation of penalty by the worthy CIT(A) is against the facts and circumstances of the case and also that the CIT(A) has failed to appreciate the fact that no addition has been made in the hands of seller of the property under consideration.
3. That the Ld. CIT(A) has failed to appreciate the fact that the so-
called agreement was only a Photostat copy and could not be relied upon for the purpose of levy of penalty u/s 271(1)(c).
4. That the submission as filed by the appellant has not been considered properly.
3 ITA Nos 219 & 218(Asr)/2012
5. That the appellant craves leave to add to amend any grounds of appeal before the appeal is finally heard or disposed off."
4. First of all, we take up appeal of the assessee in ITA No.219(Asr)/2012. The brief facts in assessee's appeal are that during the assessment proceedings, it was noticed by the AO that the assessee had made investment of Rs.58,75,000/- of his ½ share in the purchase of plot from Smt. Renuka & Miss Jaskimran against the total consideration of Rs.1,17,50,000/- as per agreement dated 07.02.2005. The said agreement was impounded by the Income Tax Department during the course of survey from the business premises of Sh. Sudhir Kumar Gupta, Deed Writer, Raikot on 10.02.2006. Accordingly, summon u/s 131 of the Income Tax Act, 1961 dated 20.02.2009 was issued to the assessee and his statement was recorded on 03.03.2009. In the course of proceedings, the assessee was shown the copy of agreement dated 07.02.2005 who categorically admitted that he was having 50% share in the purchase of this property with other stake holders of this property i.e. Sh. Baldev Krishan with 15% share, Sh. Sudhir Kumar Gupta with 10% share and others having 25% shares. He had further specifically admitted that the investment of Rs.58.75 lacs was made out of which, investment of Rs.20 lacs was already shown in his income tax return filed for the assessment year 2006-07 and the balance investment of 4 ITA Nos 219 & 218(Asr)/2012 Rs.38.75 lacs had been surrendered in his revised return filed for the A.Y. 2005-06 & 2006-07 out of which, investment of Rs.28.75 lacs had been surrendered in his revised return filed for the A.Y. 2006-07 on 26.02.2009 vide acknowledgment No.10053, declaring total income at Rs.33,23,102/- as against the original returned income of Rs.3,48,102/- filed on 31.10.2006. Subsequently, the assessee was asked vide order sheet entry dated 01.07.2010 to prove the source of investment of Rs.28.75 lacs made in the purchase of property and simply stated that the additional income of Rs.28.75 lacs was surrendered in the revised return filed on 26.02.2009 i.e. much after the detection of concealment by the Department on 10.02.2009 during the course of survey u/s 133A in the case of Sh. Sudhir Kumar Gupta, Deed Writer, Raikot wherein the said agreement relating to assessee was found and impounded. Therefore, the unaccounted investment of Rs.28.75 lacs was assessed to tax. Accordingly, penalty proceedings were initiated by the AO. The AO relying upon the decisions of various courts of law observed that revised return could not be treated as purely voluntarily, especially since the assessee had admitted concealment during the course of his statement recorded on 03.03.2009 and considering the submissions of the assessee which are available at pages 1 & 2 of the penalty order, was of the view that the assessee was not able to substantiate his version by adducing 5 ITA Nos 219 & 218(Asr)/2012 documentary evidence and cogent reason and therefore, the AO was of the view that the assessee has concealed his income and has also furnished inaccurate particulars of income in the original return filed on 31.10.2006 Even the assessee also filed the revised return after detection of concealment by the Department. There was no conditional surrender accepted by the department. Accordingly, the AO levied minimum penalty @ 100% o the tax sought to be evaded at Rs.9,74,093/-.
5. Before the Ld. CIT(A), the Ld. AR appearing on behalf of the assessee made the written submissions vide letter dated 24.01.2012 for deletion of penalty, which were not accepted by the Ld. CIT(A) and accordingly, he confirmed the action of the Assessing Officer for imposition of penalty under section 271(1)(c) of the Act.
6. Mr. Sudhir Sehgal, appearing on behalf of the assessee, at the outset, relied upon the submissions made before the A.O. during the penalty proceedings under section 271(1)(c) of the Act and before the ld. CIT(A). He further argued that the statement of the assessee was recorded on 03.03.2009, wherein the sub and stance of statement was that he had agreed under pressure and duress and to buy peace of mind and avoid litigation, for consideration over and above the declared consideration in the title deed. He 6 ITA Nos 219 & 218(Asr)/2012 further stated that the relevant extract of the statement on this issue is as under:
"However, to buy peace of mind and to avoid any litigation with the department, I have surrendered the additional investment reflected at page No.63 amounting to Rs.38.75 lacs in my revised income tax returns subject to no penalty action. Hence, it is once again requested that I should not be penalized as I have voluntarily revised my returns to buy peace of mind and avoid any litigation with the department."
6.1 As the return filed was not a valid return, therefore, the notice u/s 148 was issued to regularize the same. He further argued that though the assessee had surrendered the amount to buy peace of mind and to settle the case and to avoid litigation, the AO has levied the penalty u/s 271(1)(c) of the Act and for that, he has totally relied upon the statement as given by the assessee under pressure and has not brought any material on record to justify that over and above payment made to the seller of the land, namely, Mrs. Renuka Sekhon. There is no material on record brought out by the A.O. except, the statement of the assessee, which has been recorded under pressure. Mr. Sehgal, the Ld. counsel for the assessee argued that it was contended before the A.O. and the ld. CIT(A) that proceedings u/s 271(1)(c) of the Act are quasi criminal proceedings and for which the reliance was placed on the judgment of the Hon'ble Supreme Court in the case of Anantha Ram Veera Singhaih & Co. vs. CIT as reported in 123 ITR 458 and though the findings as given in assessment proceedings constitute a good evidence, but they 7 ITA Nos 219 & 218(Asr)/2012 cannot be said to be conclusive. The same view has been taken by the Hon'ble Delhi High Court in the case of CIT vs. J.K. Synthetics Ltd. 219 ITR 267 and both penalty and assessment proceedings are distinct and separate proceedings. Similarly, the Hon'ble J & K High Court has held in the case of J & K Etc. vs. Sadiq Ali and Bros. 92 ITR 276 that the explanation given by the assessee was not sufficient for the purpose of levy of penalty.
6.2 Mr. Sudhir Sehgal, the ld. counsel for the assessee further argued that the basic evidence found during the course of survey from one Sh. Sudhir Kumar Gupta, deed writer on 10.02.2009 is the photocopy only and no original documents have been produced by the department. Moreover, the photocopy which is considered as document by the Revenue does not bear any signatures of the purchaser of the land and therefore, the said paper cannot be considered as the document and does not carry any evidentiary value. Moreover, the ld. counsel for the assessee, Mr. Sudhir Sehgal further argued that even the seller in the present case had denied her signatures on the photocopy of the agreement found with Sh. Sudhir Kumar Gupta, during survey on him, during the course of reassessment proceedings in her case, which was reopened after the statement of the assessee recorded on 03.03.2009. Therefore the said agreement is not at all a valid agreement. On 8 ITA Nos 219 & 218(Asr)/2012 the basis of the said paper which does not bear the signatures of the assessee, no conclusion for levy of penalty u/s 271(1)(c) of the Act can be drawn. 6.3. Mr. Sudhir Sehgal, the ld. counsel for the assessee, relied upon the decision in the case of Ram Saroop Saini HUF vs. ACIT reported in 15 SOT (Del-Trib.) 470 (placed at PB 26 to 31) and the decision of ITAT Jaipur Bench in the case of P.V. Jewellers vs. Income Tax Officer 45 TTJ (Jaipur Trib) 541 (placed at PB 32 to 34 wherein it has been held that on identical issue, the evidence is reliable as the purchaser has not given on the first page of the document, the requisite court fee stamp is not fixed, the AO did not possess original return and mere photocopy of the document cannot be said to be reliable unless the original document is taken on record. It was further argued that in the case of seller Mrs. Renuka Sekhon, the case was reopened under section 148 of the Act and the seller had denied her signatures and beside that the statement of the assessee was recorded during the course of reassessment proceedings of the sellers i.e. Smt. Renuka Sekhon by the ITO, Chandigarh, wherein the assessee explained the circumstances in which the surrender was made by the assessee and the assessee had challenged the agreement and that being a unenforceable agreement, no addition was made in the case of the seller of the property. The fact that the agreement was never accepted is borne out 9 ITA Nos 219 & 218(Asr)/2012 from the statement of the assessee that the offer was made to avoid litigation and to earn peace of mind and therefore the agreement was not challenged only to avoid litigation and to earn peace of mind. The reliance was also placed on the decision of ITAT,Chandigarh Bench, in the case of ITO, Sirhind vs. Shri Harpal Singh, GPA of Sh. Avtar Singh & Smt. Satinder Kaur, Khamano, in ITA Nos. 363 & 364/CHD/2006dated 09.03.2007 wherein it has been held that where the assessee has made investment in the purchase of lands over and above the amount stated in the purchase deed, the entire case of the revenue is built on the statement made by the seller before the ADI (Inv) that he has received money over and above the amount stated in the registered deed. It was held presumption that whatever is stated on the registered deed is correct unless the contrary is proved by credible evidence, clearly applies in the said case. In the said case satisfaction was not arrived at by the ITO, Ward-III, Khanna in the case of the seller and this aspect cannot be lost sight of. Any inference to the contrary in the case of the purchaser would only be imprudent and arbitrary. 6.4 Mr. Sudhir Sehgal, the ld. counsel for the assessee had placed on record, the statement dated 21.12.2011 of the assessee recorded by the ITO, Chandigarh, in the case of seller Mrs. Renuka Sekhon, copy of assessment order dated 29.12.2001 in the case of Smt. Renuka Sekhon for the 10 ITA Nos 219 & 218(Asr)/2012 assessment year 2005-06, wherein no adverse view has been taken and copy of statement of of Sh. Baldev Krishan recorded by the ITO, Chandigarh in the case of seller Mrs. Renuka Sekhon, which is placed at pages 16 to 20 of the paper book, in support of his argument though these papers were not placed before both the authorities below.
6.5 Mr. Sudhir Sehgal, the ld. counsel for the assessee, further relied upon the decision of the ITAT, Chandigarh Bench in the case of M/s. Rajdeep Builders, Chhota Shimla vs. ACIT, Circle, Shimla, passed in ITA No.666/CHD/2010 for the assessment year 2004-05, dated 27th April, 2012, wherein it has been held vide para 7(i) of the said order that direct documentary evidence, in the shape of validly executed sale deed, if pitted against the mere oral evidence, the documentary evidence would certainly prevail. The said decision of the ITAT, Chandigarh Bench, is directly covered by the decision of the Hon'ble Punjab & Haryana High Court in the case of Paramjit Singh Vs. ITO (2010) 323 ITR 588 (P&H), wherein it has been held that no evidence of any oral agreement or statement would be admissible as between the parties to any such instrument for the purposes of contradicting, varying, adding to or subtracting from its terms. The ITAT, Chandigarh Bench, in the said case also relied upon the decision of the Hon'ble Punjab & Haryana High Court in the case of CIT vs. Satinder 11 ITA Nos 219 & 218(Asr)/2012 Kumar (2001) 250 ITR 484, wherein it has been held that the AO is not competent to make addition in the absence of credible evidence, in respect of investment made over and above the consideration recorded, in the sale deed.
6.6 He further relied upon the decision of the Hon'ble Supreme Court, in the case of CIT vs. Suresh Chandra Mittal, reported in 251 ITR 9 (SC), decision of Hon'ble Punjab & Haryana High Court in the case of CIT vs. Smt,. Sudarshan Gupta 10 DTR 184 (P&H) and decision in the case of CIT vs. Rajnish Nath Aggarwal, 219 CTR 590 (P&H), wherein it has been held that where the assessee has surrendered to buy peace of mind and to avoid litigation and to save himself from penal action, penalty u/s 271(1)(c) of the Act, is not attracted.
7. On the other hand, the Ld. DR, Mr. R.L. Chhanalia, Addl. CIT, relied upon the orders of the Assessing Officer and the ld. CIT(A).
8. We have heard the rival contentions and perused the facts of the case. There is no dispute to the fact that the photocopy of the agreement was impounded during the course of survey conducted at the business premises of Sh. Sudhir Kumar Gupta, Deed Writer, Raikot, on 10.02.2009. It is also not disputed that the said photocopy is not signed by the assessee purchaser.
12 ITA Nos 219 & 218(Asr)/2012 No statement was recorded of said Deed Writer, Sh. Sudhir Kumar Gupta, on the date of survey. It is also not disputed that the department has not brought on record during the assessment proceedings or before the Ld. CIT(A) and even before us any original agreement. The assessee was examined on 03.03.2009 and the statement is placed at PB 2 to 4, where the assessee had made surrender of amount which is over and above shown in the sale deed register but to buy peace of mind and to avoid any litigation with the department. This is evident from the answer of question 7 to 9 pf PB 3-4. The assessee had revised the return on 26.02.2009 declaring additional income much before recording of the statement. The assessee having paid the taxes due on the income so declared and have filed the revised return of his own before recording of the statement and the return has been revised to buy peace of mind to come out of litigation and in the absence of any doubt on the bona fide of the assessee, the penalty u/s 271(1)(c) of the Act cannot be levied in view of the decision of the Hon'ble Supreme Court in the case of CIT vs. Suresh Chandra Mittal reported in (2001) 251 ITR 9 (SC) and the decision of the Hon'ble Punjab & Haryana High Court in the case of CIT vs. Rajiv Garg & Ors. Reported in (2009) 313 ITR 256 and also the decision of the Hon'ble Punjab & Haryana High Court in the case of CIT vs. Smt. Sudarshan Gupta reported in (2008) 10 DTR 184 13 ITA Nos 219 & 218(Asr)/2012 (P&H). Moreover, the copy of the agreement found during the course of survey with Sh. Sudhir Kumar Gupta, Deed Writer, Raikot cannot be treated as document and does not carry any evidentiary value in view of the decision relied upon by Sh. Sudhir Sehgal, the ld. counsel for the assessee in the case of Ram Saroop Saini HUF vs. ACIT (Del-Trib)(supra) and P.V. Jewellers vs. Income Tax Officer (Jaipur Trib) (supra). Moreover, the seller Mrs. Renuka Sekhon had denied her signatures on the said agreement found during the course of survey with Mr. Sudhir Kumar Gupta, Deed Writer, available at paper book on 02.04.2009. Therefore, from all the angles and the material on record, the assessee is not found to have concealed the income or not furnished inaccurate particulars of income and therefore, no penalty u/s 271(1)(c) of the Act, can be levied. Therefore, the AO is directed to delete the penalty so confirmed by the Ld. CIT(A).
8.1 Moreover, the ld. counsel for the assessee, Mr. Sudhir Sehgal, placed on record during the course of arguments, a copy of statement dated 21.12.2011 of the assessee recorded by the ITO Chandigarh, in the case of seller Mrs. Renuka Sekhon, copy of assessment order dated 29.12.2001 in the case of Mrs. Renuka Sekhon for the assessment year 2005-06 where no adverse view has been taken with regard to the on money or money alleged to have received by Mrs. Renuka Sekhon from the assessee alongwith copy 14 ITA Nos 219 & 218(Asr)/2012 of statement of Sh. Baldev Krishan recorded by the ITO, Chandigarh, in the case of seller Mrs. Renuka Sekhon also go to prove that no adverse view in the present case can be taken and the present assessee has not paid any on money over and above as stated in the registered document and therefore, the present assessee has not concealed any income and has not furnished inaccurate particulars of income. Therefore, no penalty under section 271(1)(c) of the Act can be levied on the assessee and penalty so levied is directed to be deleted.
9. Now, we take up the appeal of the assessee in the case of Sh. Parvinder Singh Sandhu, in ITA No.218(Asr)/2012. The brief facts of the case are that a survey u/s 133A of the Act was conducted at the business premises of Sh. Sudhir Kumar Gupta, Deed Writer, Raikot on 10.02.2009. During the course of said survey, various Photostat copies of documents were found related to various parties regarding the sale and purchase of properties. During the course of survey operation an agreement dated 15.1.2007 of sale of plot measuring 58 Biswas @ Rs.57,500/- per Biswa for a total consideration of Rs.33,35,000/- relating to the appellant was found and was impounded by the department. The registered value was shown at Rs. 4 lac only. The assessee was summoned u/s 131 of the Act and the statement of the assessee was recorded on 24.03.2009. It was admitted by 15 ITA Nos 219 & 218(Asr)/2012 the assessee that the said agreement to sell found during the course of survey was quite genuine and that he had sold the said plot to Sh. Paramjit Singh. The assessee further admitted that he had received a total consideration of Rs.29,12,375/- in cash from Sh. Paramjit Singh during the year 2007-08 (AY 2008-09) but the short term capital gain was not shown in the return filed on 30.09.2008 and the same has now been shown in the income tax return for the A.Y. 2008-09 now filed on 20.03.2009 with ITO, Jagraon. The investment on account of purchase of this plot to the tune of Rs.4,15,000/- was also shown in the income tax return for the A.Y. 2007-08 now filed on 20.03.2009 with ITO, Jagraon which was not shown in the original return filed for the A.Y.2007-08 with ITO, Jagraon on 30.09.2008. During the course of assessment proceedings for AY 2008-09 assessee stated that additional income on account of short term capital gain was only Rs.24,97,375/- (29,12,375/- - 4,15,000) on the ground that sale @ Rs.57,500/- per Biswas was in respect of 50.65 Biswas only and not 58 Biswas. The assessee was not able to prove that the plot measuring 50.65 Biswas was sold and not 58 Biswas. Short term capital gain was accordingly computed at Rs.29,20,000/- (Rs.33,35,000/- - Rs.4,15,000/-). Penalty proceedings were also initiated. During the course of penalty proceedings, the Assessing Officer levied the penalty and also held that the assessee 16 ITA Nos 219 & 218(Asr)/2012 involuntarily surrendered the income as the same was surrendered only after being detected by the department and issuance of notice u/s 131 of the Income Tax Act. In this regard, the AO placed reliance upon the case of Chanderpal Bagga vs. ITAT reported in (2003) 26 ITR 67 (Raj.) and CIT vs. Dr. A. Mohd. Abdul Kadir (2003) 260 ITR 650 ( Mad.).
10. The Ld. CIT(A) confirmed the action of the Assessing Officer.
11. We have heard the rival contentions and perused the facts of the case. The facts in the present case are identical to the facts in the case of Dr. Swaran Singh in ITA No.219(Asr)/2012, decided by us, hereinabove except, the fact that the present assessee is a seller in the present case. Therefore, following our decision in the case of Dr. Swaran Singh (supra), where the facts are identical and has been decided by us hereinabove on the even date, the ld. CIT(A) is not justified in confirming the action of the Assessing Officer for levying the penalty under section 271(1)(c) of the Act, since photocopy of the document found with the document writer does not carry any evidentiary value and there is nothing on record placed by the department before any of the authorities below or before us in the form of original document and the surrender has been made by the assessee to buy peace of mind and in view of the decisions of the Hon'ble Supreme Court, in 17 ITA Nos 219 & 218(Asr)/2012 the case of CIT vs. Suresh Chandra Mittal (supra), Hon'ble Punjab & Haryana High Court in the case of CIT vs. Rajiv Garg (supra) and CIT vs. Smt. Sudarshan Gupta 10 DTR 194 (P&H) and other decisions relied upon before us in the case of Dr. Swaran Singh (supra), where we have directed the A.O. to delete the penalty so levied under section 271(1)(c) of the Act, since the assessee is not found to have concealed any income or furnished inaccurate particulars of income. Accordingly, the order of the ld. CIT(A) is reversed. Thus, all the grounds of appeal of the assessee are allowed.
12. As regards levy of penalty on the double claim of LIC under section 80C, the mistake is on account of lawyer, which has been explained by the assessee before the authorities below and also before us and the assessee had revised the return by surrendering the said amount to buy peace of mind and to avoid litigation. Since the error is bona fide error borne out of record and surrender has been made to buy peace of mind and to avoid litigation and in view of various decisions relied upon by the assessee in the cases of CIT vs. Suresh Chandra Mittal (SC) (supra), CIT vs. Rajiv Garg (P&H) (supra) and CIT vs. Smt. Sudarshan Gupta (P & H) (supra), there is no concealment of income or furnishing of inaccurate particulars of income by the assessee and no penalty under section 271(1)(c) can be levied. The penalty 18 ITA Nos 219 & 218(Asr)/2012 so levied is directed to be deleted. Accordingly, the order of the ld. CIT(A) is reversed. Thus, all the grounds of the assessee are allowed.
13. In the result, the appeals filed by both the assessees in ITA No. 219(Asr)/2012 in case of Dr. Swaran Singh & in 218(Asr)/2012 in the case of Sh. Parvinder Singh Sandhu are allowed.
Order pronounced in the open court on 8th October, 2012.
Sd/- Sd/-
(H.S. SIDHU) (B.P. JAIN)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 8th October, 2012
/SKR/
Copy of the order forwarded to:
1. The Assessees: 1) Dr. Swaran Singh (2) Sh. Parvinder Singh Sandhu, Raikot.
2. The DCIT, Circle, Moga.
3. The CIT(A), Bathinda.
4. The CIT, Bathinda.
5. The SR DR, ITAT, Amritsar.
True copy By order (Assistant Registrar) Income Tax Appellate Tribunal, Amritsar Bench: Amritsar.