Income Tax Appellate Tribunal - Hyderabad
Ali Asghar Ceizure, Hyderabad vs Ito, Ward - 7(1), Hyderabad on 31 January, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCHES "A" (SMC), HYDERABAD
BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER
I.T.A. No. 1354/HYD/2014
Assessment Year: 1998-99
Ali Asghar Ceizure, The Income Tax Officer,
HYDERABAD Vs Ward-7(1),
[PAN: ARDPA5861B] HYDERABAD
(Appellant) (Respondent)
For Assessee : Shri P.C. Yadav, AR
For Revenue : Smt. Suman Malik, DR
Date of Hearing : 17-01-2018
Date of Pronouncement : 31-01-2018
ORDER
This is an appeal by assessee against the order of the Commissioner of Income Tax (Appeals)-18, Mumbai, dated 24-03-2014 having concurrent jurisdiction at Hyderabad.
2. Briefly stated, assessee is a resident of Switzerland and having passport of Switzerland. He owned a particular piece of land to an extent of 2.30 acres at Road No. 10, Banjara Hills, Hyderabad. During the search and seizure operations in the case of M/s Nagarjuna Construction Company Ltd, Investigation Officers have come to know that there was a purchase of open land to an extent of 13.560 Sq. Yds., by the said company and has paid various amounts to seven people, one such being an amount of Rs. 15 Lakhs in the name of Ali Asghar Ceizure at 10-2-247, Asif Nagar, Hyderabad. The same I.T.A. No. 1354/Hyd/2014 :- 2 -:
was intimated to the Assessing Officer (AO), who initiated proceedings u/s. 147 of the Income Tax Act [Act] for AY. 1998- 99, as the said transaction seems to have happened between October to December, 1997. It was the contention of assessee that he was in Switzerland and no notices u/s. 148 and 142(1) or 143(2) were served on him. However, AO passed an order u/s. 143(3) r.w.s. 148 on 28-03-2003, wherein the AO has noted that the said amount was received, not as owner of the land but as brokerage and hence the same is taxable. The reasons for shifting the advance sale consideration to brokerage is not stated in the order. This order was not served immediately on assessee, as it was served on some other person, who returned the same to the department as wrongly served.
2.1. Ultimately, a copy of the order was sent by mail after obtaining the address from the court proceedings and assessee acknowledged the receipt of the order on 03-01-2005.
Subsequently, assessee filed a petition u/s. 264 before the CIT, who dismissed u/s. 264 with the following observation:
"Any way, the matter is subjudice in the civil courts and the decision of the courts on ownership of land and whether impersonation as claimed has taken place, is vital to decide the taxability or otherwise of such amounts in the hands of the petitioner. Hence, I decline to interfere with the impugned assessment order".
3. After rejection of 264 by the order dt. 30-03-2007, AO finalized the proceedings u/s. 271(1)(c) and levied penalty u/s. 271(1)(c), while acknowledging that the matter is subjudice in the Civil Court and the decision of the Court on I.T.A. No. 1354/Hyd/2014 :- 3 -:
ownership of land and whether impersonation has claimed has taken place is yet to be decided. AO acknowledges that he has no other alternative, in view of the time limitation, for finalization of penalty proceedings and accordingly, he levied a minimum penalty of Rs. 4,25,000/-.
4. Assessee contested the penalty before the Ld.CIT(A) that he is not in receipt of any amount but the assessment made was based on wrong information, that there was impersonation and alienation of lands and assessee is still contesting the transfer of property and hence proceedings u/s. 271(1)(c) are not warranted. Ld.CIT(A), however, rejected all the contentions and confirmed the penalty. Hence the present appeal.
5. In this appeal, assessee raised various grounds not only on the issue on merits but also on two issues i.e., (i) that the notice issued does not contain whether penalty is for concealment of income or for furnishing inaccurate particulars;
(ii) that the order of penalty is barred by limitation;
5.1. Since the later additional ground was not contested before the Ld.CIT(A), the DR was asked to obtain comments of the AO. AO has sent the following report dt. 11-01-2008, placed on record, as under:
"2. In this case the subject matter is levy of penalty u/s 271(1)(c). The assessee preferred appeal, before the Hon'ble ITAT, against the order of the CIT(Appeals) which was in favour of the department. The Ld CIT(Appeals) dismissed the appeal, as the I.T.A. No. 1354/Hyd/2014 :- 4 -:
assessee failed to give any proper explanation stating that the matter is pending before the Civil Court for decision and the assessee requested to keep the penalty proceedings in abeyance. The assessee preferred appeal before the ITAT against the above order on 28.07.2014.
3. The assessee has preferred additional ground on 27.12.2017, that the penalty order was passed beyond the due date.
This ground was preferred before the Hon'ble ITAT for the first time. This ground was not preferred by the assessee before the CIT(Appeals) during first appellate proceedings. Therefore, the additional ground may not be admitted at this juncture, since he had not pointed out this issue either at the stage of receiving the order or during the first appeal proceedings.
4. As per the records for the asst year 1998-1999 in the case of the assessee, the date of issue of penalty order u/s 271(1)© is 28.09.2007. In this case, order u/s 264 of the Income Tax Act, 1961 was passed by the CIT-VI, Hyderabad vide order F No:17(1)/CIT-6, Hyd/ 05-06 on 30.03.2007. Therefore, the penalty order u/s 271(1)(c), issued on 28.09.2007, was within 6 months from the date of issue of order u/s 264".
6. Ld. Counsel submitted that the penalty notice is a common notice for two penalties, even though it was stated as for 271(1)(c) and referred to page 2 of the notice, wherein the notice was also issued for non-compliance of the notices u/s. 142(1)/143(2) and also for concealment of particulars of income or for furnishing of inaccurate particulars of such income. It was the contention that notice issued per se is not correct. Moreover, the Asst. order was passed in March, 2003, whereas the penalty should have been finalized by September, 2003. The provisions of Section 271(1)(c) puts the limitation of six months from the end of month in which action for imposition of penalty is initiated. Therefore, order passed in September, 2007 is barred by limitation. It was further submitted that subsequent proceedings u/s 264, after the I.T.A. No. 1354/Hyd/2014 :- 5 -:
expiry of the time presribed, does not give life to proceedings u/s. 271(1)(c) which have already been lapsed. It was further submitted that on merits, the matter is still subjudice and Revenue has not established that assessee has received consideration and has transferred the property. In these circumstances, it was the submission that penalty is not warranted.
7. Ld.DR, however, defended the orders of AO and CIT(A).
8. I have considered the issue and examined the documents placed on record. As per the communication of AO dt. 25-01-2005, the communication received from Investigation Wing of the department on 03-04-2002 clearly indicates that M/s. Nagarjuna Construction Company had paid advance money towards purchase of open land to seven individuals, first one being Shri Ali Asghar Ceizure, Rs. 15 Lakhs. When the communication is very clear that it was the receipt of advance money towards purchase of open land, at best Rs. 15 Lakhs could have been considered as sale consideration and assessee's capital gains could have been worked out. For the reasons best known to the AO, he treated the same as brokerage and taxed the entire amount as the income of assessee in ex-parte order, which was not served on assessee immediately. The penalty proceedings initiated on 28-03-2003 stated to be for concealment of income also have not been served immediately.
I.T.A. No. 1354/Hyd/2014 :- 6 -:
8.1. Be that as it may, the provisions of 271(1)(c) clearly comes into picture which states that no order imposing a penalty under this chapter shall be passed after expiry of financial year in which the proceedings in the course of which action for imposition of penalty has been initiated or completed or six months from the end of month in which action for imposition of penalty is initiated, whichever period expires later. Thus, since there is no appeal on the order u/s. 143(3), AO should have finalized penalty proceedings on or before 30-
09-2003. Since the order has not been passed by that date, the penalty proceedings got lapsed. Subsequent action u/s. 264 in the year 2005 does not give any life to the penalty proceedings, even though 275(1)(b) of the Act gives extended period of time till the completion of revision proceedings. It is to be noted that the application u/s. 264 has been filed on 08- 01-2005. By that time, time limit for completion of penalty proceedings has already been expired. Therefore, the subsequent action of AO in finalising the penalty proceedings after the completion of order u/s. 264 cannot be considered proper and therefore, the penalty proceedings finalized are to be held as barred by limitation, hence bad in law.
8.2. Apart from that, it is also seen that the notice does not indicate whether the penalty proceedings initiated is for concealment or for furnishing of inaccurate particulars. As seen from the record, assessee is not in India at the relevant point of time. There may be merit in assessee's contentions that he was impersonated and being owner of the land is contesting the matters before the court of law. Not only the I.T.A. No. 1354/Hyd/2014 :- 7 -:
CIT acknowledges the same fact, as stated in the order u/s. 264, the AO also in the penalty proceedings acknowledged the same. In view of that, there is merit in assessee's contention that he has neither concealed any income nor furnished inaccurate particulars, so as to attract penalty proceedings. Both on merits as well as on limitation of time, the order of penalty by AO cannot be upheld. I have no hesitation in deleting the penalty so levied. Grounds of assessee are accordingly considered allowed.
9. In the result, appeal of assessee is allowed.
Order pronounced in the open court on 31st January, 2018 Sd/-
(B. RAMAKOTAIAH) ACCOUNTANT MEMBER Hyderabad, Dated 31st January, 2018 TNMM I.T.A. No. 1354/Hyd/2014 :- 8 -:
Copy to :
1. Ali Asghar Ceizure, C/o. Mrs. Zehara Sultana, C/o. M.M. Firdos, Advocate, 11-3-942, 1st Floor, New Mallepally, Hyderabad.
2. The Income Tax Officer, Ward-7(1), Hyderabad.
3. CIT (Appeals)-18, Mumbai.
4. CIT-VI, Hyderabad.
5. D.R. ITAT, Hyderabad.
6. Guard File.