ACIT, CIRCLE-30(1), DELHI vs. DOROTHY FANTHOME, DELHI

The appeal has been preferred by the revenue against order dated 11.11.2019 in appeal no. 41/2018-19 for the assessment year 2015-16 passed by ./2020 Dorothy Fanthome Ld. Commissioner of Income Tax (Appeals)-10, New Delhi, in appeal pending before it against the order dated 30.05.2018 of Assistant Commissioner of Income Tax, Circle -30 (1), New Delhi u/s 271(1)(c) of the Income Tax Act, 1961. On behalf of the assessee the Cross-Objections have been filed.

“1. That, in facts and circumstances of the case, Ld. CIT(A) erred in deleting penalty of Rs. 51,59,540/- u/s 271(1)(c) of the Income Tax Act, 1961. That, in facts and circumstances of the case, Ld. CIT(A) 2. ignored the fact that if case of the assessee was not selected for scrutiny the amount of addition as Long Term Capital Gain would not have come under the purview of tax liability. That, in facts and circumstances of the case, Ld. CIT(A) 3. ignored the fact that the AO shall not be carried away by the plea of the assessee like “voluntary disclosure”, “by peace”, “avoid ./2020 Dorothy Fanthome litigation”, “amicable settlement” etc. to explain away its conduct. The question is whether the assessee has offered any explanation for concealment of particulars of income or furnishing inaccurate particulars of income. That, in facts and circumstances of the case, Ld. CIT(A) 4. ignored the fact that Explanation to Sec. 271(1) raises a presumption of concealment, when a, difference is noticed by the AO between the reported and assessed income. The burden is then on the assessee to show otherwise, by cogent and reliable evidence which was not discharged by the assessee. The appellant craves, leave to add, alter or amend any of 5. the grounds of appeal before or during the course of hearing of the appeal.” 4.1 Assessee in Cross objections has raised following grounds of appeal :- 1 That having regard to the facts and circumstances of the case, Ld. CIT Appeal has rightly quashing/deleting the entire penalty of Rs. 59,60,593/- on the ground that the present case is not a case of furnishing inaccurate particulars of income and further the assessee has disclosed all the material facts in the return of income. 2 Ld. CIT Appeal ought to have deleted the penalty inter- alia on the following grounds. I. That the satisfaction has not been recorded by the assessing officer while imposing the penalty u/s 271(l)(c] which is a pre-requisite condition as per law. II. That the specific charge about the concealment of income or furnishing of inaccurate particulars of income has not been levied.

3. That the cross objector leave to amend, delete or add any of the grounds of appeal at the time of hearing.”

5. Heard the Ld. Representative of the assessee and Ld. Sr. DR and perused the record. It was contended for the Revenue that Ld. First Appellate Authority was carried away by the plea of ignorance and fallen in error in observing that the ld. AO has not recorded due to satisfaction for imposing penalty. On the other hand, it was submitted on behalf of the assessee that there were disputed facts ./2020 Dorothy Fanthome which gave right to bonafide failure to submit income to tax. Assessee is an old woman and widow and thus, was ignorant of technicalities. It was submitted that the order of Ld. First Appellate Authority is correct and in regard to the cross objections it was submitted that the approval given by the Joint Commissioner of Income Tax- Range 30, New Delhi was not a valid approval and was given in a mechanical manner.

6.1 The Assessment order establishes that the Ld. AO has taken into consideration recital while observing on page no. 2 para no. 3 of his order that “sale deed submitted by the assessee stated that all the three lands were situated more than 8 Kms away from the Municipal Limits.” Thereafter based upon the online searched maps of the villages where the land is situated, notices were issued u/s 133(6) of the Act to the Municipal Commissioner for furnishing certain information and maps. Thereafter, an Inspector of Income Tax was sent to Dehradun who along with a local Patwari and using certain Gazettes came to the conclusion that the three plots sold were within 6 kilometers from the western limits of Municipal Corporation, Dehradun.

6.2 Assessee claimed that in the wrong impression, the Municipal Limits were taken from the clocked hour as told by Patwari instead of point taken by the Ld. ./2020 Dorothy Fanthome AO. She was not aware of other technicalities. In the reply which has been reproduced at page no. 8 of the assessment order it was mentioned that as she came to know of the real facts, she had immediately deposited Rs. 77,01,610/- as tax. However, the Ld. AO considered it to be a case of furnishing inaccurate particulars of income. The Ld. CIT(A) took into consideration various judicial precedents to conclude that no case was made out for imposing penalty.

“It is true that mere submitting a claim which is incorrect in law would not amount to giving inaccurate particulars of the income of the assessee, but it cannot be disputed that the claim made by the assessee needs to be bona fine. If the claim besides being incorrect in law is mala fide, Explanation 1 to Section 271(1)(c) would come into play and work to the disadvantage of the assessee.” 8.1 Ld. AO has also relied this judgment but failed to appreciate that on aforesaid observations the Assessee had to be rather benefited. It is a case where there was a bonafide opinion based on advise and confirmation by act of ./2020 Dorothy Fanthome registration of sale deed that land was outside municipal limits. Ld. CIT(A) has rightly relied the judicial precedents to observe that Ld. AO had passed the order of issuance of notice u/s 271(1)(c) of the Act in an automatic manner upon making the addition.