MS. VARSHA JITENDRA TEKWANI,,BARODA vs. THE ITO, WARD-3(1)(4), BARODA

आदेश/O R D E R

PER WASEEM AHMED, ACCOUNTANT MEMBER:

4. The facts in brief are that the assessee in the present case is an individual and filed her return of income declaring an income of Rs. 1,82,320.00. There was a piece of land which was jointly held by the assessee along with 3 co-owners. Such land was sold by the assessee along with the co-owners for a sum of ₹ 56 Lacs which was valued for the purpose of Stamp duty at ₹ 58,55,000/-. The assessee on the sale of such land has not disclosed any income under the head capital gain in her return of income. Thus the AO, during the assessment proceedings made an addition of ₹ 14,10,039/- on account of long-term capital gain on the sale of property. The view taken by the AO was subsequently confirmed by the learned CIT (A) who has worked out the long-term capital gain at ₹ 9,52,775/-.

4.1 The AO in the assessment initiated the penalty proceedings under section 271(1)(c) of the Act by issuing notice under section 274 of the Act on the ground that the assessee has concealed income qua the sale of impugned land. The assessee during the penalty proceedings submitted that upon receiving the notice from the AO during the assessment proceedings, has disclosed all the facts about the sale of impugned land. As such the assessee never tried to hide any fact about the sale of land during the assessment proceedings. Therefore, no penalty can be levied for concealment of income under the provisions of section 271(1)(c) of the Act.

4.2 However the AO, was not satisfied with the contention of the assessee and held that the assessee had to disclose the material facts about the sale of land only after the case of her was selected under scrutiny. Furthermore, the assessee has not made any disclosure of capital gain on the sale of impugned land in her return of income which implies that the assessee has concealed the particulars of income. Thus, the AO levied the penalty of ₹ 2,16,162/- being 100% of the amount of tax sought to be evaded.

5.1 The assessee before the learned CIT (A) inter-alia submitted that the addition was made for long-term capital gain under the provisions of section 50C of the Act which is a deeming provision and therefore there cannot be any penalty upon the assessee.

6. I have carefully considered the facts and circumstances of the case, the observations of the Assessing Officer, the submissions of the assessee, material available on record and the judicial pronouncements on the subject. The appeal is preferred against the penalty levied u/s 271(l)(c) of the Act on addition on account of long term capital gain on sale of property. During the course of assessment proceedings it was noticed by the AO that the Assessee has sold property situated at Datia, Madhaya Pradesh, as a co-owner. However, appellant has not offered any capital gain/loss in (lie return of income for the year under consideration. Accordingly, addition of Rs. 14,10,039/- was made on account of Long Term Capital Gain by the AO. In appeal against the said addition, the then CIT(A)-3 vide order no. CAIKV4S/20I4- 15 dated 01. 03. 2016 has given pan relief and ITTCG to the extent of Rs.9,52,775/- was confirmed. Assessee preferred appeal before ITAT, Ahmedabad against the above order.

The Hon’ble ITAT vide dated 22/09/2017 dismissed the appeal of the assessee. 6.1 Accordingly. AO initialed and leviedd penalty of Rs.2,16.162/- u/s 271(l)(c) of the Act on the above addition of Rs. 9,52,775/-. The contention of the assessee has been considered and found to be not tenable. The appellant has relied upon decision of Hon'ble ITAT, Ahmedabad in ITA No. 1831/Ahd/2014 dated 20.03.2017 in the case of Kantibhai Mohanbhhai vs. AC1T. The same has been considered, however, the ratio of above decision is not applicable to the appellants case as in the above referred case the assessee has offered Long Term Capital Gain in its return of income and the addition was made over and above the disclosed LTCG u/s 50C by the AO and on that addition penalty u/s 271(l)(c) of the Act was levied. However, in the instant case the assessee has not at all offered Liny long term capital gain on sale of the property in its return of income. The issue of Long Term Capital Gain came to light only because of scrutiny assessment. Hence, A.O has rightly-levied penalty of Rs. 2,16,162/- u/s 271(1)(c) of the Act for concealment of income. Thus the appellant tails on this ground.

7.1 The assessee in the ground of appeal submitted that she has received consideration of ₹11 Lacs only against the amount alleged by the authorities below. The assessee further submitted that she has disclosed all the necessary information during the assessment proceedings qua the sale of property. As such nothing was concealed during the assessment proceedings and therefore the assessee cannot be charged with the penalty in the given facts and circumstances.

We observed that in terms of deeming provisions of section 50C, higher sales consideration of property determined by the DVO did not by itself amount to furnishing inaccurate particulars of income so as to levy penalty under section 271(1)(c) of the act The revenue has also not shown as to how the assessee could be held to have actually received this amount which is in excess of the amount of mentioned in the sale deed . It has also not been shown as to whether any corresponding addition has been made in the hands of the buyer. We further notice that the addition was made totally by invoking the provision contained in section 50C of the act, therefore, penalty cannot be imposed on the income determined on the basis of deeming provision of section 50C as this solitary does not lead to concealment of income or furnishing of inaccurate particulars of income, 9.1 Now, the issue is limited to the penalty on the income to be computed not disclosed by the assessee in the income tax return under the provisions of section 271(1)(c) of the Act. In the present facts of the case, we have to test whether the assessee has concealed the particulars of income in the given facts and circumstances. The income tax return is the only way for the assessee to disclose the income. The assessee in the income tax return furnishes various particulars with respect to different kinds of income. Admittedly, the assessee has not furnished any particular of his income attributable to the impugned sale of land. Thus, it appears that the assessee has not furnished the particulars of income which implies that the assessee has concealed the particulars of income.

9.2 However, before we decide the issue whether the assessee has concealed the particulars of income. It is necessary to note that the expression ‘has concealed the particulars of income’ has not been defined either in section 271(1)(c) or elsewhere in the Act, hence, the common dictionary meaning may be referred to which denotes ‘to hide or withdraw from observation; to cover or keep from sight; to prevent the discovery of; to withhold knowledge of’.

9.3 The Hon’ble Supreme Court in the case of Dilip N Shroff vs. JCIT reported in 161 taxman 218 has discussed that the concealment signifies a deliberate act or omission on the part of the assessee. Thus, to arrive at the conclusion that, the assessee has concealed particulars of income, it has to be tested whether it has been done so with the dishonest intent which cannot be regarded as an innocent act. In other words the element of consciousness in concealing particulars of income coupled with circumstantial evidences should be present in the particular case. Unless, the characters of concealment of income as discussed above are present in any particular case, the penalty provisions under section 271(1)(c) of the Act cannot be attracted.

9.4 In this regard we find pertinent to refer the judgment of Hon’ble supreme court in the case of Hindustan Steel Ltd. v. State of Orissa [1972] 83 ITR 26 (SC), where it was observed that an order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged, either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. However, in the given facts and circumstances, the revenue has not brought anything on record suggesting that the assessee has concealed the particulars of income mala-fide intent. Considering the background of the assessee and the nature of transactions carried out by the assessee, it appears that there was no deliberate Act on the part of the assessee to conceal the income. Accordingly we draw the inference that there was no mala-fide act on the part of the assessee to furnish/ conceal the income on account of sale of the property. In this regard, we find support and guidance from the judgment of Hon’ble Punjab and Haryana High Court in the case of CIT vs. Dipak Kumar reported in 232 CTR 78 wherein it was held as under:

“5. Having heard learned counsel, we are of the view that the question concerning bona fide mistake or belief is more or less a question of fact, which has been decided by the CIT(A) on the basis of the affidavit filed by the counsel. There is no finding of intentional and motivated mistake which might have been resorted to by the assessee-respondent.

6. We are not impressed with the argument of Mr. Sukant Gupta, learned counsel for the appellant-Revenue, that the issue of bona fide belief based on the advise of the counsel should have been raised before the AO and there was no scope for raising such an issue before the CIT(A) because it is an afterthought. However, we do not find any merit in the aforesaid submission. It is not unknown that IT returns are filed through the experts in the IT laws and, therefore, the advise given by the learned counsel can be acted upon with bona fide belief to be correct. There is no rule of law that the aforesaid issue should have been pressed only before the AO or there was any bar on the assessee-respondent not to raise this issue before the appellate authority. The affidavit filed by the counsel of the assessee, has been readily accepted by the CIT(A) as well as by the Tribunal. It is well settled that if on the evidence adduced before the AO or the appellate forum, a possible view has been taken then under s. 260A of the Act, no substantive question of law could be framed merely because another view is possible. The appeal is, thus, without merit and accordingly the same is dismissed.”

9.5 Similarly, we also extend our reliance on the judgment of Hon’ble Madras High Court in the case of CIT vs. Raj Textile in 166 ITR 632 wherein it was held as under:

"While framing the assessment for the assessment year in question the ITO added certain amount, which according to the ITO had not been disclosed by the assessee. The ITO also initiated penalty pro- ceedings under section 271(1)(c) of the Income-tax Act, 1961. In those proceedings, the assessee contended that a mistake had crept in the return filed by the assessee due to inadvertence. The ITO was not satisfied with the explanation and found that the assessee had delibe- rately concealed the particulars of income. The ITO accordingly levied penalty under section 271(1)(c) of the Act. The appeal preferred by the assessee before the Commissioner (Appeals) was allowed. The revenue thereupon preferred further appeal before the Tribunal. The Tribunal upheld the order of the Commissioner (Appeals) and found that the mistake had been made by the assessee inadvertently and that there was no conscious concealment of income. The Tribunal, therefore, upheld the decision of the Commissioner (Appeals). Aggrieved by that order, the department sought a reference but that application was rejected. Hence, the department has filed this application."

9.6 At this juncture, it is also important to note that the land in dispute was acquired dated 25 April 1977 at ₹ 36,915.00 which was taken as the cost of acquisition for the purpose of computing the capital gain capital gain whereas the assessee was given option to take the fair market value of the impugned land as on 1 April 1981 as the cost of acquisition under the provisions of section 55(2)(b) of the Act. However we find that none of the authority below has pointed out in their respective orders whether the assessee was given the opportunity to take the value as on 1 April 1981 as the cost of requisition for the purpose of the capital gain.

9.7 Generally, the rate of the land increases year after year. Thus, the value of the property in dispute, acquired in the year 1977, should have increased as on 1 April 1981 which should have been taken as the cost of acquisition. Thus, no prudent assessee will take the cost of requisition as applicable for the year 1977 when the property was acquired until and unless the facts and circumstances suggest otherwise. But nothing is available on record, neither the revenue has carried out any exercise to find out the actual value of the property as on 1st April 1981. Thus, the revenue is not expected to derive any benefit out of the ignorance of the assessee.

9.8 In view of the above and after considering the facts in totality, we are of the view that there was no deliberate act on part of the assessee to conceal/ furnish inaccurate particulars of income. Therefore, we are of the view that the penalty levied by the AO and sustained by the ld CIT(A) is not maintainable. Hence we direct the AO to delete the penalty imposed u/s 271(1)(c) of the Act. Hence, the ground of appeal of the assessee is allowed.

Order pronounced in the Court on 20/12/2021 at Ahmedabad.