PR COMMISSIONER OF INCOME TAX -1 CHANDIGARH vs. BALWINDER SINGH BHUNDER

ITA/175/2016HC Punjab & HaryanaPHHC01110363201622 February 2017Author: MR. JUSTICE SURINDER GUPTA,MRS JUSTICE DAYA CHAUDHARY6 pages
AI SummaryDismissed

What were the facts?

The revenue (Principal Commissioner of Income Tax-I, Chandigarh) appealed against the Income Tax Appellate Tribunal's (ITAT) order dated 08.12.2015, which deleted a penalty of ₹35,87,962 imposed under Section 271(1)(c) of the Income Tax Act, 1961. The penalty was for alleged concealment of income and furnishing inaccurate particulars related to capital gains from a Joint Development Agreement (JDA) for land in Village Kansal, District Mohali. The assessee, Sh. Balwinder Singh Bhunder, was a member of a cooperative society that entered into the JDA. The Assessing Officer had added back a significant portion of the capital gain, which was initially upheld by the CIT(A) but later dismissed by the ITAT. However, the High Court, in a prior decision (C.S. Atwal Vs. CIT), ruled in favour of the assessee regarding the quantum of capital gains. The CIT(A) had deleted the penalty, holding the assessee's bonafides established, which the ITAT upheld.

What did the High Court hold?

The High Court held that the matter was no longer res integra, referring to its own decision in C.S. Atwal's case (supra). In that case, the High Court had decided the issue regarding the taxability of capital gains in such circumstances in favour of the assessee. The Court noted that the prior decision had addressed the scope of Section 2(47)(ii), (v), and (vi), the ingredients of Section 53A of the Transfer of Property Act, 1882, the meaning of 'possession', and whether taxable capital gains arose from the transaction. The conclusions in C.S. Atwal's case established that no possession was given in part performance of the JDA to fall under Section 53A, and the possession delivered was as a licensee. Crucially, it was held that the Tribunal and authorities below were not right in holding the assessee liable for capital gains tax in respect of land for which no consideration had been received and which stood cancelled. Since the quantum proceedings were adjudicated in favour of the assessee, the High Court concluded that no penalty under Section 271(1)(c) would be exigible. The substantial questions of law were answered accordingly, and the appeals were dismissed.

What were the issues?

1. Whether, on the facts and circumstances, the ITAT was right in deleting the penalty under Section 271(1)(c) when the assessee had not fully disclosed the accrued capital gain, even in the return filed under Section 148, and the appeal on the quantum addition was pending before the Supreme Court? (Question of law) 2. Whether, on the facts and circumstances and in law, the ITAT was right in deleting the penalty when the assessee had not fully disclosed the accrued capital gain and thereby furnished inaccurate particulars of income, especially in view of the decision in Suraj Lamp & Industries Private Limited Vs. State of Haryana? Assessee's Contentions: The assessee argued that the issue of quantum addition had been decided in their favour by the High Court in C.S. Atwal's case. Therefore, no penalty under Section 271(1)(c) was exigible. Revenue's Contentions: The revenue contended that the ITAT erred in deleting the penalty because the assessee had not fully disclosed the accrued capital gain and had furnished inaccurate particulars, citing the Suraj Lamp & Industries case. They also highlighted that the disclosure was incomplete even in the Section 148 return and the quantum appeal was pending before the Supreme Court.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 148,Section 2(47)(ii),Section 2(47)(v),Section 2(47)(vi),Section 53A,Section 54F

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of decision: 22.02.2017

The Principal Commissioner of Income Tax-I, Chandigarh

……Appellant

Vs.

Sh. Balwinder Singh Bhunder

…..Respondent

CORAM: HON’BLE MR. JUSTICE AJAY KUMAR MITTAL

HON’BLE MR. JUSTICE RAMENDRA JAIN

Present: Ms. Urvashi Dhugga, Advocate for the appellant.

Ms. Radhika Suri, Sr. Advocate, with

Ms. Rinku Dahiya, Advocate and Mr. Manpreet Singh, Advocate (in ITA Nos. 175 & 176 of 2016)

Mr. Jagmohan Bansal, Advocate (in ITA No. 213 of 2016) for the assessee.

Ajay Kumar Mittal,J.

1.

This order shall dispose of ITA Nos. 175, 176 and 213 of 2016 as according to the learned counsel for the parties, the issue involved in all these appeals is identical. However, the facts are being extracted from ITA No. 175 of 2016. 2. ITA No. 175 of 2016

The order continues below.

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