Income Tax Appellate Tribunal - Indore
Shri Cdr, Udai Singh, Bhopal vs The Acit 3(1), Bhopal on 19 January, 2017
CDR Udai Singh
ITA No. 791/Ind/2014
आयकर अपील य अ धकरण, इ दौर यायपीठ, इ दौर
IN THE INCOME TAX APPELLATE TRIBUNAL,
INDORE BENCH, INDORE
ी डी.ट .गरा सया, या यक सद य तथा
ी ओ.पी.मीना, लेखा सद य के सम%
BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER
AND SHRI O.P. MEENA, ACCOUNTANT MEMBER
आ.अ.सं./I.T.A. No.791/Ind/2014
नधा(रण वष( /Assessment Year: 2010-11
CDR Udaisingh
Bhopal
PAN - AGLPS - 7299C :: अपीलाथ+ /Appellant
Vs
ACIT 3(1)
Bhopal :: ,-यथ+ /Respondent
नधा(.रती क/ ओर से/Assessee by Shri Ajay Tulsiyan &
Shri Pankaj Shah
राज व क/ ओर से/Revenue by Shri K.G. Goyal
सन
ु वाई क/ तार ख 12.1.2017
Date of hearing
उ4घोषणा क/ तार ख 19.1.2017
Date of pronouncement
आदे श /O R D E R
PER SHRI D.T. GARASIA, JM
This appeal has been filed by the assessee against the order of the learned CIT(A)-II, Bhopal, dated 30.9.2014. 1 CDR Udai Singh ITA No. 791/Ind/2014
2. The short facts of the case are that the assessee is a Defence Officer belonging to Indian Navy. During the year under consideration he was posted as Commodor and In- charge of the Bhopal unit of NCC. The assessee did not declare short term capital gain on sale of two immovable properties during the year, therefore, the addition of Rs.36,13,794/- was made on account of undeclared short term capital gains and penalty proceedings were initiated. In reply to show cause notice, the assessee has submitted as under :-
"The return of income for A.Y. 2010-11 was filed on 30.07.2010 declaring a income of Rs. 15,97,530/-. In this case the assessment was completed under section 143(3) of income tax act on 25.03.2013 and income was assessed at Rs.,52,11,320/-. An addition of Rs. 36,13,794/- was made on account of Long Term Capital Gain arose on the sale of two immovable properties.
2 CDR Udai Singh ITA No. 791/Ind/2014
2. During the course of assessment, penalty proceedings were initiated under section 271(1)(c) of the Income tax Act on account of non disclosure of Short Term Capital Gain ofRs. 36,13,794/- in the original return of income filed by the assessee. A notice u/s 271(1)(c) dated 25.03.2013 was issued and the assessee was show caused as to why penalty should not be levied. But neither anyone appeared nor any reply was filed. Due to change in incumbency, assessee was issued another show cause notice u/s 271(1)(c) on 17.07.2013, and hearing was fixed on 22.07.2013.
3. In response to the show cause notice dated 17.07.2013, assessee sought an adjournment and finally filed a written reply dated 16.09.2013. Certain point of assessee's reply are being reproduced as under for ready reference :-
"1. From this year the assessee a retired Defence Officer, changed his IT counsel and engaged the 3 CDR Udai Singh ITA No. 791/Ind/2014 services of Shri Seemant Kala, Adocate. While filing the return, Shri Kala asked for details of the immovable property. Full details were not available with the assessee at that time. He merely stated that the property sold was old. The assessee did not know of STCG & LTCG. He further stated that his wife is also an earning member and IT payer whose funds may be included in the purchase consideration besides three other persons who contributed total Rs. 21,00,000/- for the immovable property purchased for Rs. 35,90,225/-. He had confusion whether it was to be treated as HUF property or property belonging to an AOP, though purchased on his name. The ld. Counsel filed the return accordingly on 30.07.2010. The assessee had bona fide belief that sale of the immovable property is immaterial. It was only when a questionnaire dated 19.11.2012 from the ld. Assessing Officer was received that the 4 CDR Udai Singh ITA No. 791/Ind/2014 counsel insisted for the details of sales of the property. A revised computation of income was accordingly filed showing short term capital gains.
2. It is submitted that there was no detection of this additional income by the department. The department did not possess any evidence in this regard. It was a voluntary declaration by the assessee after examining the facts again. Compliance in this regard could not be made on 04.12.12 since the assessee was pre occupied due to terminal illness of his father in law who was totally dependent on the assessee and staying with him (father-in-law expired on 05.01.2013 - in proof thereof evidences enclosed) and as the gathering of facts took time. The revised computation was filed on 18.12.2012 on verification of the material."
3. After considering the reply, the Assessing Officer was of the view that the assessee has engaged the services of 5 CDR Udai Singh ITA No. 791/Ind/2014 tax consultant Shri Seemant Kala, Advocate, and he has represented the assessee. The Assessing Officer asked the assessee to give details but the assessee could not produce the details during the assessment proceedings. Therefore, this contention of the assessee is not acceptable. In respect of the assessee's contention that he has voluntarily offered his income during the tax proceedings is not acceptable because a questionnaire dated 19.11.2012 was received from the Assessing Officer and thereafter the assessee has filed the details and offered the additional income. Therefore, the Assessing Officer has levied the penalty. The learned CIT(A) has confirmed the same.
4. The learned counsel for the assessee submitted that the penalty has been levied on the ground that the assessee has not offered short term capital gains on sale of two properties. The assessee has revised the return but it was barred by limitation but the assessee has deposited 6 CDR Udai Singh ITA No. 791/Ind/2014 self assessment tax to avoid levy of penalty. The assessee is an Officer in Indian Navy. During the general query raised by the Assessing Officer the assessee has filed complete details and he has revised the return showing short term capital gains on sale of two lands and copies of purchase and sale deed were submitted. The assessee submitted that the assessee has entered into sale agreement and also obtained the power of attorney. The said land was not registered in the name of the assessee and the said property was not transferred to him and, therefore, the assessee was under the impression that the liability of short term capital gains should be on the owner of the land. Moreover, when the Assessing Officer asked specific information regarding immovable property, the assessee has voluntarily submitted the revised return. Moreover, the assessee is a defence Officer in the Indian Navy. He was coming from the outside world and he was totally ignored 7 CDR Udai Singh ITA No. 791/Ind/2014 of the provisions of the Income Tax Act, therefore, it was his bonafides. Therefore, penalty should be cancelled.
5. On the other hand, the learned DR relied upon the orders of the authorities below. The learned DR submitted that the assessee has earned short term capital gains in respect of two immovable properties which were acquired on 22.1.2008. As per AIR information, the assessee's case was taken up for scrutiny. The assessee has paid due taxes. Here in this case, the assessee has revised the return after inquiry by the department and the penalty is rightly levied.
6. We have heard both the sides. Looking to the facts and circumstances of the case, we find that in the instant case it is an admitted fact that the penalty proceedings were initiated by the Assessing Officer wherein the assessee has taken the contention that he is a retired Defence Officer and he has engaged the services of Shri Seemant Shri 8 CDR Udai Singh ITA No. 791/Ind/2014 Seemant Kala, Advocate. While filing the return of income Shri Seemant Kala has filled details of immovable properties. He stated that the property was sold and in pursing the property, many other persons have also contributed. Therefore, he was under confusion that it may be treated as HUF property or AOP. The assessee is a retired Naval Officer and he has come from an outer world. Therefore, he was not able to pay taxes to show the short term capital gains. We find that the assessee himself has offered the same before detection by the department. Moreover, similar issue had come up before the Hon'ble Delhi Tribunal in the case of ACIT vs. Ashok Raj Nath; ITA No. 2970/Del/2012 wherein the Tribunal after considering the decisions of various High Courts has deleted the penalty by observing as under :-
"8. We have heard the ld. DR and gone through the facts of the case. As is apparent from the aforesaid facts, the AO levied penalty u/s 271(1)(c) of the 9 CDR Udai Singh ITA No. 791/Ind/2014 Act in respect of an amount of `60,39,824/-comprising addition on account of rental income-`4,63,388/-;disallowance of interest-`2,51,507/-,addition towards short term capital gains on sale of properties-`10,50,950/-;short term capital gains on sale of shares-`1,60,503/- and long term capital gains- `40,98,919/-. The ld. CIT(A) cancelled the penalty on the ground that disallowance of interest was deleted by the ITAT while issue relating to addition towards rental income had been restored to the file of the AO and additional income towards capital gains on sale of properties and shares was disclosed by the assessee suo motu during the course of assessment proceeding. The assessee submitted revised return since in the original return long term capital gain on UTI liquid plus fund institution plan was claimed exempt u/s 10(38) of the Act as also to reflect correct figures of sale of land at Kheri Sadh and rental income. Merely because the assessee disclosed additional income suo motu after issue of a notice u/s 143(2) ITA No.2970/Del./2012 10 of the Act, does not amount to detection of concealment by the AO. Apparently, the assessee had given all particulars of his income and had disclosed all facts to the AO during the assessment proceedings.. It is not the case of the AO that in reply to a query of the AO, some new facts were discovered or the AO had dug out some information 10 CDR Udai Singh ITA No. 791/Ind/2014 which was not furnished by the assessee. In such circumstances, we are of the opinion that no penalty is leviable. It is well settled that assessment proceedings and penalty proceedings are separate and distinct and as held by Hon'ble Supreme Court in the case of Ananthraman Veerasinghaiah & Co. Vs. CIT, 123 ITR 457, the finding in the assessment proceedings cannot be regarded as conclusive for the purposes of the penalty proceedings. It is, therefore, necessary to reappreciate and reconsider the matter so as to find out as to whether the addition made in the quantum proceedings actually represents the concealment on the part of the assessee as envisaged in sec. 271(1)(c) of the Act and whether it is a fit case to impose the penalty by invoking the said provisions. It is also well settled that the criterion and yardsticks for the purpose of imposing penalty u/s 271(1)(c) of the Act are different than those applied for making or confirming the additions. The Hon'ble Kerala High Court in the case of CIT v. M. George & Bros. [1986] 160 ITR 511 held that where the assessee for one reason or the other agrees or surrenders certain amounts for assessment, the imposition of penalty solely on the basis of the surrender will not be well-founded. Hon'ble Punjab and Haryana High Court in the case of CIT v. Suraj Bhan [2007] 159 Taxman 26 while following the decision in CIT v. Suresh Chandra Mittal [2001] 251 ITR 11 CDR Udai Singh ITA No. 791/Ind/2014 9(SC), held that when an assessee files a revised return showing higher income and gives an explanation that he offered higher income to buy peace of mind and avoid litigation, penalty cannot be imposed merely on account of higher income having been subsequently declared. The Hon'ble Apex Court in CIT v. Suresh Chandra Mittal, [2001] 251 ITR 9/119 Taxman 433, upheld the decision of the Hon'ble Madhya Pradesh High Court rendered in the case of CIT vs. Suresh Chandra Mittal [2000] 241 ITR 124, where in similar circumstances it was held that the initial burden lies on the revenue to establish that the assessee had concealed ITA No.2970/Del./2012 11 the income had furnished inaccurate particulars of such income. The burden shifts to the assessee only if he fails to offer any explanation for the undisclosed income or offers an explanation which is found to be false by the Assessing Officer.
8.1 In Qudai International vs. Income Tax Officer 2009 (13) MTC 622 (Trib), the ITAT Lucknow Bench 'A' held that "mere raising of query by the Assessing Officer did not amount to detection of concealment. It cannot therefore, be said that the revised return was filed after detection of concealment and was not voluntary. The term "detection" itself implies the Assessing Officer had reached a conclusion but the query raised by the 12 CDR Udai Singh ITA No. 791/Ind/2014 Assessing Officer was only first step in detection of concealment. If the assessee voluntarily revised the return, it could not be said that it does not fulfill requirements of section 139(5) of the Act." The facts of the present case are also similar to the facts of the aforesaid referred to case. 8.2 Similarly, in the case of Dy. CIT vs. Tarun Agarwal 2009 (13) MTC 831, the ITAT Lucknow Bench 'A' held that "the assessee had surrendered the amount before any specific detection of undisclosed income or even before the issue of notice. Even though a general enquiry was going on and notices had been issued to some of his relatives and the amount might have been surrendered because of compulsion of circumstances, it was not sufficient to penalise the assessee as the factum of detection was not there." In the instant case also, nothing is brought on record that there was any detection at the level of the AO to suggest that the assessee concealed the income on account of capital gains, which was offered for taxation suo motu in the revised return.
8.3 Merely because a notice u/s 143(2) had already been issued and the assessee filed revised return thereafter, disclosing additional income towards capital gains, which was not correctly shown in the original return, does not tantamount to detection of concealment of income u/s. 271(1)(c) 13 CDR Udai Singh ITA No. 791/Ind/2014 of the Act . ITA No.2970/Del./2012 12 Hon'ble Madhya Pradesh High Court in the case of CIT v. S.V. Electricals P. Ltd., 155 Taxman 158 and Hon'ble Jharkhand High Court in CIT v. Ashim Kumar Agarwal, 153 Taxman 226 held that where the assessee surrenders his full income, though at a later stage, there was no question of any concealment on his part and consequently, no penalty under Section 271(1)(c) was leviable, and that a omission from return of income did not amount to concealment. Hon'ble jurisdictional High Court while adjudicating the issue of levy of penalty u/s 271(1)(c) of the Act in the case of CIT vs. Harnarain in their decision dated 31st October,2011 in ITA no.2072/2010 concluded that "surrender of the amount by the assessee after receipt of the questionnaire could not lead to an inference that it was not voluntary, in the absence of any material on record to suggest that it was bogus or untrue. It is further evident that there was neither any detection nor any information in the possession of the Revenue which might lead to a conclusion that there was a detection by the Revenue of concealment. Accordingly, the question of law framed is answered against the Revenue and in favour of the assessee."
Respectfully following the above order of the Tribunal, we delete the penalty.
14CDR Udai Singh ITA No. 791/Ind/2014
7. In the result, the appeal of the assessee is allowed.
The order has been pronounced in open Court on 19th January, 2017.
Sd/- Sd/-
(ओ.पी.मीना) (डी.ट .गरा सया)
लेखा सद य या यक सद य
(O.P.Meena) (D.T.Garasia)
Accountant Member Judicial Member
दनांक /Dated : 19th January, 2017.
Dn/
15