Income Tax Appellate Tribunal - Bangalore
Sri. K. Narayana Gowda, Bangalore vs Assessee on 8 February, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
BANGALORE BENCH 'B'
BEFORE SHRI N.BARATHVAJA SANKAR, VICE-PRESIDENT
and
SMT. P.MADHAVI DEVI, JUDICIAL MEMBER
IT(SS)A No.04(Bang)/2011
(Block period: from 1-4-1996 to 18-12-2002)
Shri K.Narayana Gowda,
No.193, 3rd Main, 5th Cross,
Chamarajpet,
Bangalore. ... Appellant
PAN: ADMPN 2370 D
Vs.
Asst. Commissioner of Income-tax,
Circle 3(1),
Bangalore. ... Respondent
Appellant by: Shri S.Parthasarathi, Advocate.
Respondent by : Shri Farahat Hussain Qureshi, CIT-II
Date of hearing: 08-02-2012
Date of pronouncement: 30-03-2012
O R D E R
Per N.BARATHVAJA SANKAR, VP:
This is an appeal preferred by Shri K.Narayana Gowda of Bangalore for the block period 1-4-1996 to 18-12-2002 against the order dated 29-10-2010 of the CIT(A)-II, Bangalore, confirming the penalty levied u/s 158BFA(2) of the Income-tax Act, 1961 [hereinafter referred to as "the Act"].
IT(SS)A 04(Bang)/2011 Page 2 of 5
2. The grounds of appeal of the assessee read as under:
1 The learned Commissioner of Income-tax(A) erred in confirming order of the Assessing Officer u/s.158BFA(2) levying penalty in the manner in which he did.
2 The learned CIT(A) erred in upholding the order of the assessing authority under section 158BFA(2), which was passed within the period of limitation and the order levying penalty is bad in law as the same was barred by limitation.
3 The learned CIT(A) failed to appreciate that the penalty ujs.158BFA (2) was not automatic when impugned additions are made to the declared income as held in the following cases and ought to have refrained from levying penalty ujs.158BFA(2) of the Act.
CIT Vs. Moradabad General Art Metal Mills (2006) 282 ITR 510 (All) Suresh Reddy vs. ACIT (2009) 308 ITR(AT) 278 (Chennai) Enfield Industries Ltd vs. DCIT (2008) 296 ITR (AT)136 (Kol) Saluja Hire Purchase Ltd vs. ACIT (2008) 305 ITR(AT) 39 (Lucknow) 305 DCIT vs. Koatex Infrastructure Ltd (2006) 286 ITR (AT)40 (Mum) Super Metal Industries vs. DCIT (2009) 23 DTR 249 (Third Member) (Mum) 4 The learned CIT(A) ought to have appreciated that while selling, the Appellant did not convert the land to non-agricultural purposes; the land was situated beyond the city limits and that property at Karudapalli Village did not belong to the appellant; the property at Chamrajpet which was improved by the appellant was small and not habitable and therefore the appellant's claim for exemption ujs.54F was valid and consequently no penalty u j s.158BFA(2) was eligible.
5 Without prejudice, the learned CIT(A) ought to have appreciated that the undisclosed income having been worked out on an estimate basis, penalty u/s.158BFA(2) was not exigible and ought to have refrained from confirming the penalty.
6 The learned CIT(A) ought to have appreciated that the appellant filed his return of income u/s.158C of the Act and had also explained the various sources of income and investments made and had filed cash flow statement which included substantial agricultural income which were available for various investments made by him. Thus, there was no concealment of income while filing the return and mere disallowance of the claim of the appellant did not justify the levy of penalty.
IT(SS)A 04(Bang)/2011 Page 3 of 5 7 Without prejudice, the penalty levied is arbitrary, excessive and the same is liable to be deleted in toto.
3. At the time of hearing, learned counsel for assessee submitted that the Hon'ble High Court of Karnataka in ITA No.37/2011 C/w ITA Nos.38 & 44/2011 dated 13-09-2011 had set aside the order of the Tribunal on the quantum addition to the assessing authority for redoing the whole thing in the light of their observations therein. Hence, he requested that penalty matter may also be restored to the AO with a direction to take up the same after deciding the quantum appeal as directed by the Hon'ble High Court of Karnataka. He also filed on record copy of the High Court order. We have also heard the learned Departmental Representative who supported the order of the CIT(A) and the AO.
4. We have gone through the order of the Hon'ble High Court which was filed at the time of hearing and placed at pages 71 to 80 of the paper book. On going through the order of the Hon'ble High Court, we find that the matter was remitted back to the appellate authority for recording the whole thing in light of Their observations (vide para 9 of the High Court order). When the same was brought to the notice of the learned counsel for the assessee, it was submitted that it was a typographical error in the order of the High Court and he would get it corrected and file a corrected copy. On 22-3-2012, the junior of learned counsel for the assessee placed on record a rectified copy of the High Court's order in ITA No.37/2011 C/w IT(SS)A 04(Bang)/2011 Page 4 of 5 ITA Nos.38 & 44/2011 on which there is an endorsement of the learned Departmental Representative having received a copy of the order. On going through this corrected order, we find that the Hon'ble High Court has rectified the typographical mistake by replacing the words "assessing authority" in place of "appellate authority" at page 9 of the said order. At paragraphs 7 and 8 of the order of the Hon'ble High Court, it is observed as under:
"7. The fact that he owned three properties is not disputed. But what is disputed in those three properties are residential properties. On this aspect, the authorities have not applied their mind. If as on 1-4- 2001, the assessee owns three residential properties and if he has acquired one more residential property subsequent thereof, then as per the amendment on 1- 4-2001, he would not be entitled to the exemption of capital gains tax. If as on 1-4-2001, the assessee owns one residential property and out of the sale proceeds in the sales effected subsequent to 1-4-2001 he has acquired on more residential property, to the extent of acquisition of one more residential property he is entitled to exemption under section 54 of the Act. This exercise has to be done by the authorities by properly looking into the materials produced by the assessee and if he satisfies the conditions mentioned therein then only he will be entitled to the relief. As this exercise has not been done, we set aside that portion of the order and remand the matter to the Appellate Authority for undertaking that exercise.
Extract
8. Insofar as the total amount of undisclosed income arrived at by the Authorities in these three appeals is concerned, though the assessee has not filed the returns for the relevant years, all the income cannot be treated as undisclosed income. When once the assessee has filed the returns, showed all the income and showed all the investments, the authorities have to look into the source of those investments and if that source is already disclosed certainly that cannot form part of undisclosed income. Otherwise telescoping has to be done, which exercise also has not been done by the authorities. If the assessee is able to show that he IT(SS)A 04(Bang)/2011 Page 5 of 5 had income and out of that income he had made investments and it is only over and above the income, if the income is disclosed that would constitute undisclosed income. Anyhow this is purely a question of fact to be determined after looking into the entire material on record. The authorities have also not properly applied their mind in this regard. Therefore, the said finding also requires to be set aside. The matter has to be remanded back to the Assessing Authority for redoing the whole thing in the light of the above observations."
Since the quantum order of the Tribunal has been restored to the file of the AO, we deem it fit and proper to restore this penalty matter also to the file of the assessing authority to initiate necessary action after completing the quantum proceedings as directed by the Hon'ble High Court.
5. In the result, the appeal of the assessee is allowed for statistical purposes only.
Order pronounced in the open court on 30th March, 2012.
Sd/- sd/-
(Smt. P.Madhavi Devi) (N.Barathvaja Sankar)
JUDICIAL MEMBER VICE-PRESIDENT
Eks
Copy to :
1. Appellant
2. Respondent
3. CIT(A) concerned
4. CIT
5. DR, ITAT, Bangalore
6. Guard file
By Order
Assistant Registrar, ITAT, Bangalore