SHRI PRANAV DHANIBHAI PATEL,SURAT vs. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-4, SURAT

Pranav Dhanibhai Patel Vs. DCIT, Cen. Cir.-4, Surat/ITA No.152/SRT/2018 for A.Y. 2011-12 Page 1 of 5

आयकरअपील�यअ�धकरण,सुरत�यायपीठ,सुरत IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT BEFORE SHRI AMARJIT SINGH, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER आ.अ.सं./I.T.A No.152/SRT/2018: �नधा�रण वष�/Assessment Year: 2011-12 Shri Pranav Dhanibhai Patel, V DCIT, Central Circle-4, Surat. 2, Tirupati Society, Ajrmar Chowk, . B/h. Navyug College, Surat. [PAN: ADIPP 5397 G] अपीलाथ� / Appellant ��यथ�/Respondent

�नधा�रतीक�ओरसे /Assessee by Shri Asutosh P. Nanavaty – AR राज�वक�ओरसे /Revenue by Shri Mayank Pandey – Sr.DR

सुनवाईकीतारीख/ Date of hearing: 30.09.2019 उ�घोषणाक�तार�ख/Pronouncement on: 30.09.2019 आदेश /O R D E R PER O.P.MEENA, AM: 1. This appeal at the instance of the Assessee is directed against an order dated 15.10.2018 passed by learned Commissioner of Income tax (Appeals)-4 Surat (in short “the CIT (A)”) for the A.Y. 2011-12. 2. Ground No’s.1 to 9 are against the confirmation of penalty of Rs.7,30,909/- u/s.271(1)(c) of the Act by CIT(A). 3. The learned counsel for the assessee submitted that CIT (A) has failed to appreciate the on the basis of return filed u/s.147 of the Act, hence, penalty based on return filed u/s.147 cannot be levied. Further, in survey under section 133A of the Act was conducted at the

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business premise of advocate Shri Turmish B.Kaniya on 27.11.2012 and certain documents were impounded. The documents revealed that the appellant had carried out transactions of immovable property. The statement on oath of the appellant was recorded by the Investigation Wing wherein he admitted that he had sold a plot at Rs.1,46,19,000/- while jantri value of the land was Rs.3,21,63,265/-. The assessee filed revised return of income on 31.03.2014 declaring total income of Rs.40,43,270/-. The AO held that the transactions were never disclosed by the appellant voluntariy and only when the notice u/s148 was issued on the basis of the impounded documents, the transactions was disclosed and the tax paid on the return income. Assessee filed subsequent return of income u/s.147 of the Act was filed on 31.03.2014 and exemption acquisition of agriculture land at Village Sunari u/s.54B was not claimed and the capital gain of Rs.35,48,100 was disclosed and tax was paid and return was filed voluntarily without any notice u/s.148 of the Act. The assessee admitted that he had sold a plot at Rs.1,46,19,000/- while jantri value of the land was Rs.3,21,63,265/-. The CIT (A) merely noted that return filed u/s.147 of the Act conceding capital gains as taxable capital gains hence; it is concealment of income, is not correct and is not sustainable in law. 4. Per contra, the ld. Sr. D.R. relied about Lower Authorities. 5. We have heard the rival submissions and perused the relevant material on record. The perusal of assessment order shows that the

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assessment has been made on the returned income disclosed in the return filed u/s.147 of the Act. During the course of survey proceedings, long-term capital gain of Rs.35,48,100/- was admitted by the assessee on the ground that the sale consideration shown in stamp duty valuation was more than the amount of consideration shown in agreement. Hence, long-term capital gain was offered as per provision of section 50C of the Act. In the revised return of income date 31.12.2014 the assessee has shown capital gains in original return as it has claimed exemption under section 54B of the Act. It has also been claimed that agricultural land is not capital asset exigible to capital gains. It is only during survey the assessee has admitted capital gains to avoid litigation and buy peace of mind. We find that the claim of the assessee that the agricultural land is not chargeable to tax is appears to be correct. Even if this is not considered as available, even then the assessee has is eligible for deduction under section 54B of the Act. Furthermore, the long-term capital gain has been offered as per provision of section 50C; hence, there is no positive concealment of income. It is trite law that penalty proceedings are distinct and separate proceedings from assessment proceedings. The finding recorded in the assessment order is not conclusive for deciding the imposition of penalty. It only has a persuasive value. Any finding recorded in the assessment order does not mean that the penalty has to be imposed automatically. Just because Appellant’s explanation was

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not found acceptable by the AO, it does not follow that that the Appellant was unable to substantiate his explanation by providing various evidences and judicial opinions. Explanation 1 to section 271(1) (c) of the Act does not therefore cover the case of the Assessee. Based on the above facts of the case; it can be held that the Assessee had made all the necessary disclosures on a bonafide belief, which is not agreeable to the AO, it will not automatically lead to a case for penalty under section 271(1)(c) of the IT Act, 1961. We are, therefore, of the considered view, that the penalty is not sustainable in law in view of the ratio laid down by the Hon’ble Supreme Court in case of CIT v Reliance Petroproducts Pvt. Ltd. [2010] 322 ITR 158 (SC); [2010] 189 Taxman 322(SC) wherein it was held that merely because the assessee has claimed the expenditure, which claim was not accepted or was not acceptable by the revenue, penalty under section 271(1) (c) of the Act cannot be attracted. The learned counsel for the assessee relied in the case of CIT v. Girish Devchand Rajani [2013] 33 taxmann.com 17 (Gujarat) which held that where the assessee to buy peace and to avoid protracted litigation filed revised return disclosing additional income, imposition of penalty under section 271(1)(c) is upon the assessee on the plea that furnishing of inaccurate particulars of income was not justified. The decision relied by the Ld. CIT (A) of Mak Data (P.) Ltd. vs. CIT [2013] 358 ITR 593(SC) / [2013] 38 taxmann.com 448(SC) is not applicable in the case as the disclosure

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made on incorrect assumption of facts and due to provision of section 50C of the Act. The other decision relied by the learned counsel for the assessee and placed in Paper Book of Tribunals as well as High Courts as relied by the assessee are also supports its case. In the light of above discussion, the penalty levied at Rs.7,30,909/- is deleted. Therefore, the grounds of appeal of the assessee are thus, allowed. 6. In the result, the appeal of the assessee stands allowed.

Sd/- Sd/- (AMARJIT SINGH) (O.P.MEENA) (�याियक सद�यतथा/JUDICIAL MEMBER) (लेखा सद�यकेसम� /ACCOUNTANT MEMBER) सुरत/ Surat, �दनांक Dated: 30th September, 2019/S.Gangadhara Rao, Sr.PS Copy of order sent to- Assessee/AO/Pr. CIT/ CIT (A)/ ITAT (DR)/Guard file of ITAT. By order / / TRUE COPY / / Assistant Registrar, Surat