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Income Tax Appellate Tribunal, DELHI BENCH “F, NEW DELHI
Before: SHRI H.S. SIDHU & SHRI O.P. KANT
Date of Hearing : 10-08-2016 Date of Order : 18-08-2016
ORDER PER H.S. SIDHU : JM
The Revenue has filed the present appeal against the impugned order dated 13/1/2014 passed by the Ld. Commissioner of Income Tax (Appeals)-XXIII, New Delhi on the following grounds:-
1. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the penalty
of Rs. 13 Crores u/s. 271(1)(c), as the assessee filed only a revised computation of income during assessment proceedings in August, 2010 which was not bonafide as the same had been done only after issue of notice u/s. 143(2) for AY 2008-09.
On the facts and in the circumstances of the case the impugned order passed by the Ld. CIT(A) is perverse
both in facts and law.
3. The appellant craves leave to add, alter or amend any of the grounds of appeal before or during the course of the hearing of the appeal.
It is prayed that the order of the CTI(A) being contrary to the facts on record and the settled position of law, be set aside and that of the assessing officer be restored.
2. The facts in brief are that in this case the assessment was completed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred as the Act) at an income of Rs.48,59,11,480/- thereby making an addition of Rs.13,46,08,818/-. During the assessment proceedings, the Assessing Officer initiated penalty proceedings u/s. 271(1)(c) of the Act making the additions on account of expenses against procurement of service charges for land, deemed dividend from M/s. Prama Project Solutions Pvt. Ltd., M/s. Prama Marketing Pvt. Ltd and Sanyog Estate Private Limited u/s. 2(22)(e) of the Act and loss on sale of land at Pawla Khushupur, and legal and professional expenses. The assessee did not file appeal on the issue of addition of Rs.13,00,00,000/-, but instead, he filed appeal for initiation of penalty proceedings u/s. 271(1)(c) of the Act and aggrieved by the order of the Assessing Officer, the assessee filed appeal against quantum before the Ld. CIT(A) on the-remaining additions. The ld. CIT(A) vide order dated 05.10.2011 in Appeal No. 142/10-11 allowed relief on the following grounds:
(a) Short term capital gain of Rs.4,08,800/- is reduced by Rs.1,15,730/- as short term loss u/s. 70(2) and confirmed the balance addition.
(b) Disallowance on account of deemed dividend of Rs.18,60,000/- is reduced to Rs.17,00,000/-.
(c) Dismissed the appeal on the issue of initiation of penalty u/s. 271(1)( c).
Accordingly, show cause notice for imposing penalty was issued on 10.12.2012 fixing the hearing of the case on 17.12.2012.
The reply given by the assessee to the said show-cause notice was considered but not accepted by the Assessing Officer who later imposed a penalty of Rs.4,57,53,537/- on the assesse u/s. 271(1)(c) of the Act vide his order dated 25.3.2013.
Aggrieved with the aforesaid penalty order, assessee preferred an appeal before the Ld. CIT(A), who vide his impugned order dated 13.1.2014 has deleted the penalty in dispute and partly allowed the appeal of the assessee.
Now the Revenue is aggrieved against the impugned order and filed the present appeal before the Tribunal.
At the time of hearing Ld. DR relied upon the order of the AO and reiterated the contentions raised by the Revenue in the grounds and requested that Appeal of the Revenue may be allowed.
On the contrary, Ld. Counsel of the Assessee has relied upon the order of the Ld. CIT(A) and stated that Ld. CIT(A) has passed a well reasoned order which does not need any interference on our part, hence, the same may be upheld and accordingly, the appeal of the Revenue may be dismissed.
We have heard both the parties and perused the records, especially the impugned order passed by the Ld. CIT(A). We find that Ld. First Appellate Authority has elaborately discussed the issue in dispute by considering the submissions of the assessee and adjudicated the issue vide para no. 4.3 to 4.4 at pages 7 to 9 of the impugned order. The said relevant paras are reproduced as under:-
“4.3 I have carefully considered the submissions of the appellant, the arguments put forth by the ld. AR and the penalty order passed by the AO. After careful consideration of all the facts of this case, I have come to certain conclusions. These are numerated below in a chronological order:
(a) The appellant entered into an MOU with M/s. Selene Construction Pvt. Ltd. and M/s Juventus Estates Pvt. Ltd. on 04.06.2007. The MOU is to acquire land at Sector-l03, Sector-104, Gurgaon, Haryana.
(b) As per terms and conditions of allotment of land, the concerned authorities informed the said companies that External Development Charges (EDC) for Gurgaon, Manesar Urban Complex, 20-21 are likely to be enhanced.
(c) Accordingly, a Full and Final Settlement Agreement was signed between the appellant and the said companies on 22.02.2008, as per which the appellant agreed to bear 45% of additional EDC, which was determined at Rs.13 crores.
(d) Once the amount was determined and demanded by the said companies, the appellant recorded it in his books of accounts as a liability.
(e) The appellant filed his return of income u/s. 139(1) on 29.09.2008 declaring an income of Rs.35,13,02,662/-, which was inclusive of the liability of Rs.13 crores, for A.Y.2008-09.
(f) Subsequently, as a measure of settlement of disputes between the appellant and the two companies, another Agreement being Deed of Settlement recording the Consent Terms between the parties was executed on 29.01.2009. As per this Consent Deed, both the companies i.e. M/s. Selene Construction Pvt. Ltd. and M/s. Juventus Estates Pvt. Ltd. agreed to forego and give up all the claims with reference to the amount of Rs.13 crores.
(g) The appellant, under a bona fide belief that this claim made by him in A.Y. 2008-09, had become not payable in A.Y. 2009-10 had written back this liability of Rs.13 crores in A.Y. 2009-10 and paid taxes thereon in accordance with the law.
(h) Thereafter, the appellant, on professional advice, withdrew the claim of expenses of Rs.13 crores made in A. Y. 2008-09 and offered it for taxation in that year. Simultaneously, he also revised his Return of Income for A.Y. 2009-10 by reducing his taxable income with an equivalent amount.
4.4 A careful consideration of the chronological facts, as narrated above, make it abundantly clear that the appellant was under a bona fide belief that Rs.13 crores was a determined liability for A.Y. 2008-09 in accordance with the terms of the Full and Final Settlement Agreement dt. 22.02.2008 signed by him with the two companies. Further, he offered this amount for taxation in A.Y. 2009-10 under a bonafide belief that in accordance with the terms of Deed of Settlement recording the Consent Terms between the parties dt. 29.01.2009,this amount had become not payable and he accordingly, wrote back this amount in his books of accounts and paid taxes thereon in accordance with law.
Thereafter, on professional advice, he has offered it for taxation in A.Y. 2008-09 and simultaneously, reduced it from his income for A.Y. 2009-10. Under these facts and circumstances, it is difficult to fault the assessee and accuse him of concealment of income. It is clear from the facts that the appellant had no intention what-so-ever to conceal this amount of Rs.13 crores. Had this been his intention, he would have never offered it for taxation in A. Y. 2009-10 and he would have never paid taxes thereon as per law. Even the dates of the two agreements entered into by the appellant with the companies on 22.02.2008 and 29.01.2009 go on to 7 support his argument that his belief was bonafide initially, that this amount of Rs.13 crores was a determined liability in A.Y. 2008-09 and became income in A.Y. 2009-10. In fact, the appellant paid taxes on this amount in A.Y. 2009-10 to the tune of Rs.3,13,24,962/- on 27.09.2009. It is also noteworthy that the AO accepted the voluntary surrender of the appellant of an amount of Rs.13 crores for A.Y. 2008-09 in his order u/s. 143(3) dt. 26.11.2010. Furthermore, the AO also accepted the appellant's revised return for A.Y. 2009-10, in the appellant had reduced his income by the said
Rs.13 crores vide his Order u/s. 143(3) of the Act dt.
20.12.2011.Yet, he held the appellant guilty of concealment of income of Rs.13 crores for A.Y. 2008-09.
The AO states in the penalty order that the appellant had filed an appeal before CIT(A) against this addition. In fact, the appellant accepted this addition of Rs.13 crores since he had voluntarily offered it for taxation for A.Y.
2008-09. What he had appealed against before CIT(A) was the decision of the AO to initiate penalty proceedings u/s. 271(1)(c) with reference to this amount of Rs.13 crores. After careful consideration of all the facts and circumstances of this case as enumerated above, I am of the considered opinion that there is no case for imposition of penalty u/s. 271(1)(c) on the appellant with reference to this amount of Rs.13 crores. The AO is therefore, directed not to impose any penalty u/s. 271(1)(c) with reference to this amount of Rs.13 crores.”
7.1 After going through the findings of the Ld. CIT(A), as aforesaid, we are of the considered view that assessee was under a bona fide belief that Rs.13 crores was a determined liability for A.Y. 2008-09 in accordance with the terms of the Full and Final Settlement Agreement dt. 22.02.2008 signed by him with the two companies. It was noted that he offered this amount for taxation in A.Y. 2009-10 under a bonafide belief that in accordance with the terms of Deed of Settlement recording the Consent Terms between the parties dt. 29.01.2009, this amount had become not payable and he accordingly, wrote back this amount in his books of accounts and paid taxes thereon in accordance with law. Thereafter, on professional advice, he has offered it for taxation in A.Y. 2008-09 and simultaneously, reduced it from his income for A.Y. 2009-10.
Under these facts and circumstances, it is difficult to fault the assessee and accuse him of concealment of income. It is clear from the facts that the assessee had no intention whatsoever to conceal this amount of Rs.13 crores. Even the dates of the two agreements entered into by the assessee with the companies on 22.02.2008 and 29.01.2009 go on to support his argument that his belief was bonafide initially, that this amount of Rs.13 crores was a determined liability in A.Y. 2008-09 and became income in A.Y. 2009-10. In fact, the assessee paid taxes on this amount in A.Y. 2009-10 to the tune of Rs.3,13,24,962/- on 27.09.2009. We find that Ld. CIT(A) in his impugned order has noted that the AO accepted the voluntary surrender of the assessee of an amount of Rs.13 crores for A.Y. 2008-09 in his order u/s. 143(3) of the Act dt. 26.11.2010.
Furthermore, the AO also accepted the assessee's revised return for A.Y. 2009-10, in the assessee had reduced his income by the said Rs.13 crores vide his Order u/s. 143(3) of the Act dt. 20.12.2011.
AO held the assessee is guilty of concealment of income of Rs.13 crores for A.Y. 2008-09. The AO mentioned in the penalty order that the assessee had filed an appeal before CIT(A) against this addition.
In fact, the assessee accepted this addition of Rs.13 crores since he had voluntarily offered it for taxation for A.Y. 2008-09. In view of the above, Ld. CIT(A) has rightly held that that there is no case for imposition of penalty u/s. 271(1)(c) of the Act on the assessee with reference to the amount of Rs.13 crores, hence, he rightly directed the AO not to impose any penalty u/s. 271(1)(c) with reference to this amount of Rs.13 crores.
7.2 In the background of the above facts and circumstances of the case, we are of the considered view that the Ld. CIT(A) has passed a well reasoned order which does not need any interference on our part, hence, we uphold the same and reject the grounds raised by the Revenue.
In the result, the appeal of the Revenue is dismissed.
Order pronounced in the Open Court on 18/08/2016.