K M M SITHI FOUSIA BEEVI,CHENNAI vs. ACIT, COIMBATORE

आदेश / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER:

The appeal filed by the assessee is directed against order of the Commissioner of Income-tax (Appeals)-I, Coimbatore in ITA

No.343/13-14, dt 10.10.2014 for the assessment year 2009-2010 passed

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u/s.271(1)(c) and 250 of the Income Tax Act, 1961 (herein after referred

to as ‘the Act’).

Commissioner of Income Tax (Appeals) has erred in confirming the order

of penalty levied by the ld. Assessing Officer without proper reasons and

justification even though assessee has not concealed any income nor

submitted inaccurate particulars but offered income on sale of property

and accepted the addition and not contested.

and having income from house property, business income, capital gains

and income from other sources and filed return of income on 28.09.2009

with total income of �9,04,460/- and the return was processed u/s.143(1)

of the Act. Subsequently, under provisions of Sec. 131(1A) of the Act

statement was recorded from assessee’s husband. The assessee

alongwith her husband purchased land with building on 05.09.2008 at

Coimbatore for a consideration of �1,63,58,100/- including stamp duty,

registration and other expenses of �13,58,100/- from C.K. Natarajan.

There was survey operations u/sec.133A of the Act on C.K. Natarajan

who is in real estate business and Revenue obtained information that on

money of �1,62,00,000/- was paid in cash to C.K. Natarajan for purchase

of aforesaid property. Subsequently, the assessee has sold a part of the

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property alongwith her husband on 09.01.2009 for �30,50,000/- but as

per sworn statement the total consideration paid for the property is

�70,00,000/- but registered for �30,50,000/- only and treated as sale

consideration. The said information was not disclosed by the assessee in

the return of income and ld. Assessing Officer issued notice u/s.148 of the

Act and in response to the notice, the assessee filed a letter explaining as

under:-

" For the above said assessment year I have filed my return of income on 28-09-2009 vide e-filing acknowledgement no. 93211010280909, which copy is enclosed for your ready reference. The said return may please be considered in response to your above notice also and further, / also admit the following income, to be added to my income returned.

In the sworn statement recorded with Mr. Sheik Mohideen, my spouse, on 08- 03-2011, u/s. 131 (1 A) of the income-tax Act, 1961, he voluntarily offered an additional income in respect of purchase of a building at Tatabad, Gandhipuram, from Mr. C.K. Natarajan, which was purchased on 05-09-2008. Part of the above property was sold on 09-01-2009 for which also he voluntarily offered an additional income. The above transaction were made during the financial year relevant to the assessment year 2009-10. Since I am the Co-owner of the above said property, I voluntarily offer the above additional income for the above Assessment Year. The revised capital gain computation statement is enclosed for your kind perusal’’.

Based on the submissions of the assessee the ld. Assessing Officer

calculated short term capital gains on sale of land and after considering

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admitted short term capital gains further added �3,65,139/- in respect of

sale of property and the assessee has offered 50% of her share

�81,00,000/- in purchase of property at Coimbatore referred above and

added to returned income and ld. Assessing Officer completed assessment

u/s.143(3) r.w.s 147 of the Act on 29.03.2013 subsequently, the ld.

Assessing Officer initiated penalty proceedings and the ld. Authorised

Representative explained the facts of the case and reasons for accepting

the additions and submissions made in the assessment proceedings. The

ld. Assessing Officer considered the letter filed by the assessee dated

11.09.2013 requesting for dropping penalty proceedings on Health

conditions and financial conditions by the assessee. The ld. Assessing

Officer observed that but for survey the assessee could not come forward

for disclosure of on money paid and there is clear intention to conceal the

income in transaction of purchase and sale of the property and levied

penalty of �27,82,380/- and passed order u/s.271(1) (c) of the Act dated

30.09.2013. Aggrieved by the penalty order, the assessee filed an appeal

before Commissioner of Income Tax (Appeals).

argued that the assessee relied on the statement of Mr. A. Shaik

Mohideen under u/s.131(1A) of the Act. In order to buy peace with

department and avoid vexatious litigation offered voluntarily income on

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purchase and sale of the property. The assessee’s spouse is suffering from

Diabetes and Severe Hypertenison. The ld. Assessing Officer without

considering the facts relied only on the voluntarily submissions of the

assessee and there is no bonafide evidence available with the Department

except statement and does not have any conclusive material evidence.

The ld. Authorised Representative supported his submissions with the

decision of Supreme Court in the case of CIT vs. Suresh Chandra Mittal

(2001) 251 ITR 9 observed that where the assessee offered high income

to purchase peace and avoid litigation and the Department simply rested

its conclusion on the act of voluntary surrender done by the assessee in

good faith. The High Court was justified in holding that no penalty could

be levied. The ld. Assessing Officer overlooked the submissions of the

assessee on Health ground and financial conditions and hurriedly levied

penalty. The assessee has co-operated in Income Tax proceedings and

there is no contumacious conduct of the assessee and prayed for deletion

of penalty. The ld. Commissioner of Income Tax (Appeals) considered the

submissions and the grounds has called for the records of survey u/sec.

133A and impounded documents observed at para 5 of his order as

under:- ‘’5. I have gone through the submissions made by the appellant and also the order of the Assessing Officer regarding the levy of Penalty u/s 271(1)(c) of the Income Tax Act, 1961. After going through the order of the Assessing Officer, the

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Assessing Officer was requested to submit the Survey Folder along with the Impounded Documents. As seen from the Survey Folder submitted by the Assessing Officer, a letter was addressed by the ITO (Inv.), Coimbatore to the ACIT, Circle-Ill, Coimbatore on 30.03.2011. As seen from this letter, a Survey u/s 133A of the Income Tax Act, 1961 was conducted on 06.01.2011 in the case of Shri C. K. Natarajan, Coimbatore, engaged in real estate and construction business. During the course of survey proceedings; some loose sheets were found and impounded. Out of this, loose sheet No.103 in ANN/PS/LS/IMP had some scribbling regarding the on-money, brokerage etc. made in respect of an immovable property. When clarification was sought, Shri C.K. Natarajan deposed that he had purchased 10 cents of land for Rs.1,50,OO,OOO/- . This property was sold on 05.09.2008 to Shri A. Sheik Mohideen and Smt. K M M Sithi Fouzia Beevi of Coirnbatore, for a total amount of Rs.3,12,70,431/-. The sale was registered for Rs.1,50,00,000/- involving a huge on-money to the tune of Rs.1,62,70,431/-. Under the above circumstances, a discreet enquiry was made in the case of Shri Sheik Mohideen for ascertaining the exact amount of payment made in the case of Shri C.K. Natarajan. During the course of enquiry, clarification was sought from Shri A. Sheik Mohideen regarding the transaction undertaken with Shri C.K. Natarajan. He had deposed that, he along with his wife, has purchased 10 cents of land for a registered value of Rs.1,50,00,000/- at Tatabad 10th Street, Coimbatore from Shri C.K. Natarajan and paid on- money to the tune of Rs.1,62,00,000/-. This investment was said to be made out of the unaccounted income’’.

The ld.CIT(A) found that Assessing Officer has made assessment of on

money �81,00,000/- paid to C.K. Natarajan in respect of purchase of

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property at Coimbatore on money payment was unearthered from the

statement recorded as per loose sheets impounded in the survey u/s.133A

of the Act on seller of the property C.K. Natarajan. The Commissioner of

Income Tax (Appeals) is of the opinion that the total on money payment

of �1,62,00,000/- was paid by assessee and her husband and assessee’s

share of �81,00,000/- was offered in the income tax assessment which

has a conclusive proof and evidence of concealment of income and in

respect of other amount on sale of the property, the ld.CIT(A) observed

that there is no evidence of payment of on money and came to a

conclusion on voluntarily disclosure observed at para 7 of his order as

under:-

‘’7. Regarding the other amount on which concealment Penalty was levied is regarding the on-money received on the sale of 873 sq.ft of land on 09.01.2009 by the assessee. Out of the property purchased at Tatabad, Coimbatore, 873 sq.ft of land was sold on 09.01.2009 for Rs.30,5O,000/-. The assessee admitted that the land was sold for RS.70 Lakhs. Thus, there was an on-money of Rs.39,5O,000/- in this transaction which was admitted by the appellant's husband. As seen from the Survey Folder, there was no evidence available regarding the on-money payment of Rs.39,50,000/- on the sale of the property. This has to be considered as voluntary disclosure made by the assessee during the course of enquiry proceedings. In view of the above, the Penalty levied by the Assessing Officer u/s 271(1)(c) of the Income Tax Act, 1961 is CONFIRMED to the extent of concealed

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income of ₹81 Lakhs. The Assessing Officer is directed to delete the Penalty levied on Rs.39,50,000/-. The grounds of appeal are PARTLY ALLOWED’’.

and partly allowed the appeal. Aggrieved by the Commissioner of Income

Tax (Appeals) order, the assessee assailed an appeal before Tribunal.

submissions made in the assessment proceedings, penalty proceedings

and appellate proceedings and ld. Commissioner of Income Tax (Appeals)

erred in granting partial relief by confirming levy of penalty to the extent

of �81,00,000/- paid on-money and directed to delete the penalty levied

on voluntary disclosure of �39,50,000/- on sale of land. The ld.

Commissioner of Income Tax (Appeals) has relied only on one side of the

disputed issue and has called for the survey folder of the C.K. Natarajan

seller of the property and based on the impounded document of loose

sheets found in survey, came to a concrete conclusion on the enquiry and

clarification from assessee’s husband. The ld Assessing Officer has not

conducted any enquiry except relying on statement recorded from seller

and no proper opportunity was provided before passing the order and

prayed for allowing the appeal.

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findings of the ld. Assessing Officer in penalty proceedings and order of

Commissioner of Income Tax (Appeals) in confirming the addition and

further relied on the decision of Mak Data (Pvt) Ltd. vs. CIT 358 ITR 593

and opposed the grounds of the assessee.

record and judicial decision cited. The ld. Authorised Representative basic

contention that ld. Commissioner of Income Tax (Appeals) has granted

relief to the extent of �39,50,000/- were the assessee has offered

voluntarily income and directed the Assessing Officer to delete but on

remaining �81,00,000/-, the ld. Commissioner of Income Tax (Appeals)

based on the enquiry and survey folder observed in his order at page 5

the survey operation of C.K. Natarajan, who is engaged in real estate

business and construction business and relied on the some loose sheet

and scribbling payments in respect of immovable property and deposition

of C.K. Natarajan and confirmed the penalty to the extent of addition

�81,00,000/- Prime facie there is no independent enquiry by the ld.

Assessing Officer or assessee was provided an opportunity in the appellate

proceedings to verify the incrementing impounded documents which are

against the assessee. So, considering the apparent facts, assessment

proceedings and the findings of the Commissioner of Income Tax

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(Appeals) and survey operations, we are of the opinion that assessee should be given an opportunity to examine and verify the loose sheet no.103 and with scribbling regarding on money payments in respect of immovable property. Therefore, we set aside the order of CIT(A) and remit the file to the Commissioner of Income Tax (Appeals) to consider and verify the claim of assessee.

Order pronounced on Thursday, the 2nd day of June, 2016 at Chennai.

Sd/- Sd/- (ए. मोहन अलंकामणी) (जी. पवन कुमार) (A. MOHAN ALANKAMONY) (G. PAVAN KUMAR) �या�यक सद�य /JUDICIAL MEMBER लेखा सद�य/ACCOUNTANT MEMBER चे�नई/Chennai �दनांक/Dated: 2nd June, 2016. KV क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकर आयु�त (अपील)/CIT(A) 4. आयकर आयु�त/CIT 5. �वभागीय ��त�न�ध/DR 6. गाड� फाईल/GF