SUBHASH SHARMA,JAIPUR vs. DCIT, CIRCLE-6, JAIPUR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCH ’B’, JAIPUR Jh jes'k lh- 'kekZ] ys[kk lnL; ,oa h Jh fot; iky jkWo] U;kf;d lnL; ds le{k BEFORE: SHRI RAMESH C. SHARMA, AM & SHRI VIJAY PAL RAO, JM vk;dj vihy la-@ITA No. 205/JP/2020 fu/kZkj.k o"kZ@Assessment Year : 2014-15. cuke Shri Subhash Sharma The Dy. Commissioner of Vs. 718, Meera Marg,, Income Tax, Circle-6, Jhotwara Road, Jaipur. Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN No. AGXPS 0784 N vihykFkhZ@Appellant izR;FkhZ@Respondent

fu/kZkfjrh dh vksj ls@ Assessee by : Shri S.R. Sharma (CA) & Shri R.K. Bhatra (CA) jktLo dh vksj ls@ Revenue by : Smt. Runi Pal (DCIT) lquokbZ dh rkjh[k@ Date of Hearing : 21.07.2020. ?kks"k.kk dh rkjh[k@ Date of Pronouncement : 21/07/2020. vkns'k@ ORDER PER R.C . SHARMA, AM : This is an appeal by the assessee against the order of ld. CIT (A)-2, Jaipur for the assessment year 2014-15, in the matter of penalty imposed under section 271(1)(c) of the I. T. Act. 2. Rival contentions have been heard and perused. Facts in brief are that the assessee is an Individual deriving income from salary, house property and other sources. The assessee for the year under consideration filed return of income u/s 139(1) declaring total income of Rs. 1,07,53,630/- which included Long Term Capital Gain of Rs. 94,72,909/- earned on sale of agricultural land which was jointly held in

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equal share with his brother Sunil Sharma. After processing the return, the AO issued

notice under section 148. In the order framed under section 143(3) read with section

147, the AO made an addition on account of Capital Gains earned on sale of agricultural

land. On the addition so made, AO also levied penalty under section 271(1)(c), which

was confirmed by the ld. LD. CIT (A) and assessee is in further appeal before us.

section 271(1)(c) of the Income Tax Act, 1961, should specify under which limb of

Section 271(1)(c) of the Act, the penalty proceedings had been initiated i.e. whether for

concealment of particulars of income or furnishing of inaccurate particulars of income.

In the absence of which no penalty should be levied on the assessee as determination

of such limb is sine qua non for imposition of penalty under section 271(1)(c). Reliance

was placed on the decision of Hon'ble Karnataka High Court in the case of CIT vs. SSA’s

Emerald Meadows reported in 2015(11) TMI 1620, wherein Hon'ble’ble Court has held

that :-

“ 3. The Tribunal has allowed the appeal filed by the assessee holding the notice issued by the Assessing Officer under section 274 read with section 271(1)(c) of the Income Tax Act, 1961 (for short ‘the Act’) to be bad in law as it did not specify which limb of Section 271(1)(c) of the Act, the penalty proceedings had been initiated i.e. whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The Tribunal, while allowing the appeal of the assessee has relied on the decision of the division Bench of this Court rendered in the case of Commissioner of Income Tax vs. Manjunatha Cotton And Ginning Factory (2013) 359 ITR 565.

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The department has filed SLP in the Hon'ble Supreme Court which has been dismissed.

Therefore, Hon'ble Supreme Court has approved the findings made by Hon'ble

Karnataka High Court in the case of CIT vs. SSA’s Emerald Meadows and CIT vs.

Manjunatha Cotton & Ginning Factory & Others (2013) 359 ITR 565. Hon'ble Karnataka

High Court in the case of Manjunatha Cotton & Ginning Factory (2013) 359 ITR 565

(Karnataka) after referring to the decision of Hon'ble Supreme Court in the case of T.

Ashok Pai, 292 ITR 11 held as under :-

“ ……Concealment, furnishing inaccurate particulars of income are different. Thus the Assessing Officer while issuing notice has to come to the conclusion that whether is it a case of concealment of income or is it a case of furnishing of inaccurate particulars. The Hon'ble Apex Court in the case of Ashok Pai reported in 292 ITR 11 at page 19 has held that concealment of income and furnishing inaccurate particulars of income carry different connotations. The Gujarat High Court in the case of Manu Engineering reported in 122 ITR 306 and the Delhi High Court in the case of Virgo Marketing reported in 171 taxman 156, has held that levy of penalty has to be clear as to the limb for which it is levied and the position being unclear penalty is not sustainable. Therefore, when the Assessing Officer proposes to invoke the first limp being concealment, then the notice has to be appropriately market. Similar is the case for furnishing inaccurate particulars of income. The Standard proforma without striking

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of the relevant clauses will lead to an inference as to non application of mind …..?”

3.1 The ld. A/R further contended that the above ratio laid down in the case of

Manjunatha Cotton & Ginning Factory (supra) has been followed by various High Courts

in the below mentioned cases :-

i) Shri Samson Perinchery, ITA No. 1154, 953, 1097, 1226 of 2014 (Order dated 5.01.2017)(Bombay High Court). ii) SSA’s Emerald Meadows (2016) 73 taxmann.com 241 (Karnataka High Court) iii) Mitsu Industries Ltd., ITA No. 216 of 2004, Gujarat High Court. iv) Narayana Heights & Towers vs. ITO Ward-2-4, Jaipur ITA No. No. 1033/JP/2016.

3.2. With regard to the merits of the addition and the penalty imposed thereon,

contention of the ld. A/R was that the inadvertent human error of taking wrong/in

excess cost of acquisition while computing Long Term Capital Gain was bonafide and

unintentional and committed by tax return preparer of counsel of assessee due to

oversight only as he could not notice that the entire land was not sold but only a part of

it was so sold and therefore the entire cost of acquisition of land was not to be taken

and only proportionate cost is to be taken.

section 292B, mistake in the notice can be rectified. She further relied on the orders

passed by the lower authorities.

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of the authorities below. We have also deliberated on the judicial pronouncements

referred by the lower authorities in their respective orders as well as cited by the ld.

A/R and ld. D/R during the course of hearing before us, in the context of factual matrix

of the case. From the record, we find that assessee jointly with his brother Shri Sunil

Sharma sold ½ share in agricultural land. The said agricultural land was purchased

long back in 1989 measured 18 Bigha 2 Biswa for Rs. 2,04,905/-. The assessee’s share

in this land was 9 Bigha 1 Biswa. The assessee sold in this year 2 Bigha 6 Biswa out of

his share. However due to clerical mistake the assessee and his brother Sunil Sharma in

computation took cost of their respective part at Rs. 102303/- instead of Rs. 26037/-.

The assessee at the time of filing of return of income given the purchase deed to Tax

Return preparer staff of his tax consultant. But the tax return preparer staff of tax

consultant due to inadvertent mistake claimed the entire cost of acquisition of

assessee’s share of land measuring to 9 bigha 1 biswa i.e. Rs. 102303/- in computation

of long term capital gain while the land sold was 2 bigha 6 biswa out of said land the

proportionate cost of which worked to Rs. 26037/- only. The assessee also got

information from his brother of said mistake but by that time notice u/s 148 was

received by assessee. The assessee therefore, while filing return in compliance to notice

u/s 148 corrected the mistake in computation of capital gain and filed return of income

declaring total income of Rs. 1,11,69,992/- which included Long Term Capital Gain of

Rs. 98,89,268/- in place of Rs. 94,72,909/- declared in original return. The ld. AO also

completed assessment u/s 143(3) /147 on returned income filed in compliance to notice

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under section 148 but initiated penalty proceedings u/s 271(1)(c). The notice issued by

the Assessing Officer under section 271(1)(c) of the Income Tax Act, 1961 is bad in law

in as much as it did not specify in which limb of section 271(1)(c) of the Income Tax

Act, 1961 the penalty proceedings has been initiated, i.e. whether for concealment of

income or furnishing of inaccurate particulars of income.

5.1. It is pertinent to note that in the notice, AO has not clearly mentioned the limb,

on the basis of which, penalty was proposed to be imposed. The AO in assessment

order or penalty notices did not specify the limb under which the penalty was initiated

and simply issued a pre-printed notice without striking off the unnecessary portions of

the notice. If the AO was of the view that the assessee has concealed the income or

furnishing inaccurate particulars of income then he should have deleted or not

mentioned the other limb for imposition of penalty i.e. concealing the particulars of

income. The above act of the AO clearly shows that the entire exercise of initiation of

penalty proceedings has been done without application of mind.

5.2. With regard to the merits of the penalty so levied, we find that it was an

inadvertent human error while taking the costs of acquisition at the time of computation

of capital gain. It was a bonafide and unintentional mistake which was rectified during

the course of assessment itself. The Hon'ble Supreme Court in case of Price Water

House Coopers P. Ltd. vs. CIT (2012) 348 ITR 306 held that ‘ the assessee should have

been careful but in absence of due care in a case did not mean that assessee was guilty

of either furnishing inaccurate particulars or attempting to conceal the income. Thus no

penalty can be levied for a bona fide/inadvertent/human error’.

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5.3. Further Hon'ble M.P. High Court in case of CIT vs. SKY Auto Products Pvt. Ltd.

(2004) 271 ITR 335 held that where the assessee, a new businessman claimed

depreciation for the full year in the first year of starting production though he was

entitled only to fractional depreciation, it was a case of bonafide mistake on the part of

the assessee. Such a ground cannot be a good ground for imposition of penalty u/s

271(1)(c).

5.4. The Hon'ble Supreme Court in the case of M/s. K.C. Builders vs. ACIT (2004) 265

ITR 562 held that mere omission from the return of an item of receipt does neither

amount to be concealment nor deliberate furnishing of inaccurate particulars of income

unless and until there is some evidence to show or some circumstances found from

which it can be gathered that the omission was attributable to an intention or desire on

the part of the assessee to hide or conceal the income so as to avoid the imposition of

tax thereon. In the view of the above there was neither concealment nor the assessee

furnished the inaccurate particulars of income.

5.6. In view of the above discussion, we do not find any merit for the penalty so

levied under section 271(1)(c) of the IT Act. The AO is directed to delete the same.

Order is pronounced in the open court on 21/07/2020.

Sd/- Sd/- ( jes'k lh- 'kekZ ) (fot; iky jkWo ½ (VIJAY PAL RAO) (RAMESH C. SHARMA ) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member

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Jaipur Dated:- 21/07/2020. Das/ आदेश की प्रतिलिपि अग्रेषित@ब्वचल वf जीम वतकमत वितूंतकमक जवरू

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