SH. HARPREET SINGH,NEW DELHI vs. ITO, NEW DELHI

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ITA 6132/DEL/2013Status: DisposedITAT Delhi27 January 2017AY 2008-094 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee's explanation for the mistake was bonafide and inadvertent, as the intention to deposit the amount under the specified scheme was clear. Therefore, the penalty levied was deleted.

What were the facts?

The assessee sold an ancestral property and claimed exemption for long-term capital gains by depositing the sale proceeds in a bank. However, the deposit was not made under the Capital Gains Account Scheme, 1988, as intended. The assessee later filed a revised return offering the gain for tax, claiming the omission was inadvertent.

What were the issues?

Whether a penalty under Section 271(1)(c) is leviable when an assessee makes an inadvertent mistake in depositing funds for capital gains exemption, and whether the assessee furnished inaccurate particulars of income.

Which sections of the Income-tax Act were involved?

Section 54,Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

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Income Tax Appellate Tribunal, DELHI BENCHES : “C” NEW DELHI

For Appellant: Shri Arvind Kumar, Adv. &

PER J.SUDHAKAR REDDY, ACCOUNTANT MEMBER

1.

This is an appeal filed by the assessee against the order of the Ld.CIT(A)-XVII, New Delhi dated 31.8.2013 pertaining to the Assessment Year (AY) 2008-09.

2.

The assessee is an individual and is working as a Director in M/s Parkwood Developers P.Ltd. He along with two of his other relatives were co-owners in an ancestral property. This property was sold and long term capital gains had arisen. The assessee has received Rs.3.25 crores being 1/3rd share of inherited property at Chandigarh which was sold. The assessee calculated capital gains at Rs.2,78,33,566/-. As per S.54 of the Income Tax Act, 1961 (the Act) as the amount capital gains was not utilised by the assessee for purchase or construction of new residential house before the due date of furnishing of return of income, he claimed that the amount has been deposited in accordance with the capital gains account scheme, 1988 with the Punjab National Bank, Minto Road, New Delhi on 9.8.2008 and 12.8.2008. The A.O. verified this claim of the assessee. M/s Punjab National Bank while acknowledging that the assessee had deposited these amounts of Rs.2,80,00,000/- on 9.8.2008 and 12.8.2008, submitted that the amounts were not deposited under the Capital Account Scheme, 1988. When pointed out the assessee filed a revised return offering the long term capital gain for tax. He claimed that, while depositing the money in the bank the assessee in advertently did not mention that this money should be deposited under the capital gain account scheme only. The A.O. completed the assessment determining the total income at Rs.3,10,09,080/-. Thereafter he initiated penalty u/s 271(1)(c ) of the Act on the ground that the assessee had concealed the true particulars of income. Later penalty u/s 271(1)(c ) was levied on 30.5.2011 by holding that the assessee has wilfully and knowingly filed inaccurate particulars of income.

3.

Aggrieved the assessee carried the matter in appeal. The first appellate authority rejected the contentions of the assessee that there was an inadvertent mistake on his part in not stating in the application for deposit before the banking authorities that the amounts in question should be held as deposits under the capital gain account scheme. Further aggrieved the assessee is before us.

4.

After hearing rival contentions we find that in this case, non mentioning of the account in which the amount has to be deposited in the bank by the assessee, while making fixed deposits, has lead to this addition. The intention of the assessee to deposit the amount in the bank specified u/s 54 of the Act cannot be doubted. Thus in our view the explanation given by the assessee is bonafide. The mistake is inadvertent.

5.

Though the A.O. initiated penalty proceedings on the ground that there was concealment of income, while passing order u/s 271(1)(c ) of the Act, the charge has been framed as wilfully and knowingly filing inaccurate particulars of income. In our view the assessee had furnished all necessary information and there is no intention of furnishing inaccurate particulars of concealment of income.

5.1. We place reliance on the following cases. (i) The Hon’ble Supreme Court while deciding the case of CIT vs. Reliance Petro Products Private Limited reported in (2010) 322 ITR 158 has observed that the legislature did not intend to impose penalty on every assessee whose claim was rejected by the assessing officer. What was sought to be covered under section 271 (1)(c ) is concealment of “particulars of income” or furnishing of “inaccurate particulars of income”. On the basis of various judicial precedents it can be discerned that the facts and circumstances in each case has to be seen in the context and the penalty provision should be applied to see whether there was a concealment of particulars of income or whether the appellant has furnished inaccurate particulars of income. (ii) Dilip N. Shroff Vs. JCIT, (2007) 291 ITR 519, wherein the Hon'ble Supreme Court held as follows: "83. It is of some significance that in the standard proforma used by the Assessing Officer in issuing a notice despite the fact that the same postulates that inappropriate words and paragraphs were to be deleted, but the same had not been done. Thus, the Assessing Officer himself was not sure as to whether he had proceeded on the basis that the assessee had concealed his income or he had furnished inaccurate particulars. Even before us, the learned Additional Solicitor General while placing the order of assessment laid emphasis that he had dealt with both the situations.

84.

The impugned order, therefore, suffers from non-application of mind. It was also bound to comply with the principles of natural justice. [SeeMalabar Industrial Co. Ltd. v. Commissioner of Income Tax, Kerala State, (2000) 2 SCC 718J"

6.

Applying the propositions laid down in the above cases to the facts of the present case and keeping in view our finding that the explanation given by the assessee is bonafide and that the mistake was inadvertent, we delete the penalty levied u/s 271(1)(c ) of the Act and allow the appeal of the assessee.

7.

In the result assessee’s appeal is allowed. Order pronounced in the Open Court on 27th January, 2017.

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