SHAILENDRA P. MITTAL,MUMBAI vs. D.C.I.T. CEN.CIR.47, MUMBAI

This appeal has been filed by the assessee against the order of CIT(A)-38, Mumbai dated 23.11.2012 by taking the following effective ground of appeal :-

1. Learned Commissioner of Income-tax (Appeals) has erred in confirming the action of the Deputy Commissioner of Income-tax in levying penalty of Rs.22,18,495/- under section 271(1)(c) of the Income-tax Act, 1961 on the ground that the appellant has filed inaccurate particulars of income and thereby concealed taxable capital gain arising out of sale of land situated at Mahalunge, Pune. On the facts and circumstances of the case and in law, the penalty levied ought to be deleted.

“14) From the above detailed discussion, I am satisfied that this is a fit case for levy of penalty as the assessee has filed inaccurate particulars of his income and thereby concealed taxable capital gains.

The minimum penalty leviable @ 100% of the tax sought to be evaded works out to Rs.22,18,495/-.

The maximum penalty leviable @ 300% of the tax sought to be evaded works out to Rs.66,55,485/-.

Based on the circumstances of the case, since the assessee has agreed to pay the tax, though at the end, the minimum penalty is levied and the assessee is hereby directed to pay Rs.22,18,495/-.”

“The decision relied upon by the Ld. DR are based on the fact that the amounts surrendered by the assessee was in view of the detection made by the AO and therefore, the decisions are not applicable in the facts of the present case. In the case of CIT vs. Mak Data (supra) the Hon’ble Delhi High Court has note the fact that there was absolutely no explanation from the assessee in respect of the amount surrendered. Only when the AO called upon the assessee to produce the evidence to the nature of the source of amount received as share capital, the creditworthiness of the applicants and genuineness of the transactions the assessee simply folded up and surrendered the sum. Thus it is clear that in the said case the assessee surrendered the income when the AO has concerned the assessee and asked to explain the source, genuineness and creditworthiness of the applicant. Similarly, in the case of CIT vs. Bansal Abushan Bhandar, the assessee offered the undisclosed income on being cornered by the department and it was found that there was a deliberate act of concealment of income by the assessee. In the case of ACIT vs. Smt. Mythile (supra), the Tribunal has noted the fact that the assessee did not filed the return of income within two years from the end of the relevant assessment year as allowed u/s.153(1). As it is clear from the facts of these decisions relied upon by the Ld. DR that in all cases that assessee surrendered the amount only when it was detected or the inquiry was made by the AO in respect of a particular claim of the assessee. Whereas in the case of the assessee there was no such detection of capital gain or any inquiry made by the AO with respect to capital gain in question. The assessee offered the capital gain prior to any such detection by the department and even prior to the completion of enquiry in the assessment proceedings. Therefore, this act and conduct of the assessee cannot be termed as offering the income due to apprehension or being concerned by the revenue. It is not the case of disallowance of any claim, therefore, the question of bogus or absolute incorrect claim of the assessee does not arise. We find that in the peculiar facts of the present case where the land in question is an agricultural land and it remained as an agricultural land but for the purpose of income tax and due to the expansion of the municipal limit of city of Pune it is excluded from the exclusion clause of section 2(14)(iii). Therefore, the explanation of the assessee that she was under bonafide belief that the capital gain arising from the sale of agricultural land is not taxable at the time of filing of the original return is a bonafide explanation and, therefore, does not fall under the explanation to section 271(1)(c). Since the assessment year under consideration does not fall under the year immediately preceding to the assessment year in which search was conducted and, therefore, reference made by the AO to the return filed u/s.153A is not relevant. In view of the above discussion as well as circumstances of the case, we deleted the penalty u/s.271(1)(c).”

Similarly, the penalty levied u/s 271(1)(c) of the Act was also deleted by this Tribunal in in the case of Smt. Sitadevi Mittal vide order dated 3.6.2015, copy of which was also placed before us from page 59 to 64. It is noted that the facts involved in the case of assessee are similar to the facts involved in the case of Smt. Geetadevi Mittal as well as Smt. Sitadevi Mittal. In the impugned case also, assessee has voluntarily filed revised computation of income. Though the Assessing Officer made a reference to the inquiries conducted by the Pune Income tax authorities, it is not made clear as to how it had prompted the assessee to furnish revised computation of income as in the assessment order there is no mention about the inquiry. The Assessing Officer has mentioned about inquiry only in the penalty order. The assessee has duly disclosed the sale of agricultural land in the original return of income and as also stated that it does not fall in the definition of capital asset meaning thereby that assessee was under bona fide belief in the matter. Since the facts and circumstances of the issue under consideration are identical with the case of Smt. Geetadevi Mittal and Smt. Sitadevi Mittal (referred supra), we set aside the order of CIT(A), and on the basis of the aforesaid identical reasoning given in the case of Smt. Geetadevi Mittal and Smt. Sitadevi Mittal, we delete the penalty levied u/s 271(1)(c) of the Act.

Order pronounced in the open court on 23rd December, 2016.