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Income Tax Appellate Tribunal, PUNE “B” BENCH : PUNE
Before: SHRI SATBEER SINGH GODARA & DR. DIPAK P. RIPOTE
BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER I.T.A.No.1320/PUN./2023 Assessment Year 2010-2011 S K Bhansali Associates, The ACIT, Circle-2, 1194/7 Sujay Housing Income Tax Office, PMT Society, Shivajinagar, vs. Pune – 411 005 Bldg., Shankar Sheth Road, Maharashtra. Pune – 411 037. Maharashtra PAN AAHFS8598L (Appellant) (Respondent) For Assessee : Shri Nikhil Pathak For Revenue : Shri Sourabh Nayak, Addl.CIT Date of Hearing : 12.02.2024 Date of Pronouncement : 13.02.2024 ORDER PER SATBEER SINGH GODARA, J.M. :
This assessee’s appeal for assessment year 2010- 2011, arise against the National Faceless Appeal Centre’s [in short “NFAC”] Delhi’s Din & Order no. ITBA/NFAC/S/250/ 11.10.2023 in proceedings 2023-24/1056970017(1), dated u/sec.271(1)(c) of the Income Tax Act, 1961 (in short “the Act”).
Heard both the parties at length. Case file perused.
The assessee pleads the following substantive grounds in the instant appeal :
2 I.T.A.No. 1320/PUN./2023 “The following grounds are taken without prejudice to each other – On facts and in law,
1. The Id. CIT(A) erred in confirming the levy of penalty u/s. 271(l)(c) of Rs.44,07,916/- without appreciating that the penalty levied was invalid in law and hence, the same ought to have been deleted.
2. The assessee submits that the penalty levied u/s. 271(l)(c) of Rs.44,07,916/- is invalid in law since no proper satisfaction has been recorded in the notice issued u/s.274 r.w.s. 271(l)(c) of the Act and accordingly, the penalty order be declared null and void.
3. The Id. CIT(A) erred in not appreciating that in the notice issued dated 27.03.2015 under section 274 r.w.s. 271(l)(c) of the Act, the Id. A.O. had not specified the limb under which the penalty proceedings were being initiated and hence, since the notice issued is illegal, the penalty order passed u/s.274 r.w.s.271(l)(c) be held to be invalid in law.
4. The Id. CIT(A) further erred in not appreciating that even in the assessment order passed u/s.143(3) r.w.s.147, the Id. A.O. had initiated the penalty proceedings for both the limbs which clearly indicates non application of mind on the part of the Id. A.O and hence, in the absence of proper satisfaction being recorded by the Id. A.O., the penalty order passed u/s. 271(l)(c) may be declared null and void.
3 I.T.A.No. 1320/PUN./2023 5. Without prejudice to the above grounds, the assessee submits that the addition made of Rs.1,42,65,106/- on account of alleged cash paid to Tapadiya group for purchase of land is not warranted at all and hence, no penalty can be levied in the hands of the assessee firm in respect of the said addition.
6. The assessee submits that the since the addition made of Rs.1,42,65,106/- is not justified in law, the penalty levied in respect of the said addition is not justified and the same may kindly be deleted.
7. The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal.”
3. We now advert to the relevant facts. There is hardly any dispute that both the learned lower authorities have levied the impugned sec.271(1)(c) penalty of Rs.44,07,916/- on the assessee for the assessment year 2010-2011 in question. The same undisputedly relates to alleged on-money payment of Rs.1,42,65,106/- made by the assessee-vendee to the searched party i.e., M/s. Tapadia group (vendor) in lieu of purchasing various parcels of land in real estate business. And that the search herein admittedly had been conducted on M/s. Geeta and Tapadia concerns on 06.06.2012.
4. It emerges during the course of hearing with the able assistance coming from both the parties that the 4 I.T.A.No. 1320/PUN./2023 Assessing Officer as well as the CIT(A)’s orders u/sec.143(3) r.w.s. 147 assessment dated 27.03.2015 and 21.10.2016, respectively, had made the corresponding sec.69B investments addition of Rs.1,42,65,106/-. This tribunal’s order in assessee’s appeal ITA.No.2609/PUN./2017 decided on 10.07.2019 has confirmed the said addition in it’s hands.
4.1. It is in this factual backdrop that the assessee vehemently argued before us that the Assessing Officer as well as the NFAC have erred in law and on facts in levying the impugned penalty based on the contents of the alleged seized document dated 07.10.2006 indicating the on money payments of Rs.1,42,65,106/-. This is for the precise reason that once it had come on record, assuming but not accepting, that the assessee had made payments on or before the execution of the said seized document carrying a presumption of correctness of the contents thereof as per sec.292C of the Act, the impugned penalty could have been imposed only in assessment year 2006-2007 and not in the impugned assessment year before us i.e., assessment year 2010-2011. Learned counsel further read over the provisions of sec.69B before us that such a quantum addition has to be made in the year of unexplained investment itself than that of the year when actual transfer taken place for registration and other collateral purposes.
5 I.T.A.No. 1320/PUN./2023 5. Mr. Nayak on the other hand strongly supported the impugned penalty. He took us to the assessment findings upheld upto this tribunal’s coordinate bench’s decision (supra) and further invited our attention to the fact that such a course of action challenging taxability of the impugned sum in assessment year 2010-2011 is not maintainable at this belated stage. He next made a strong endeavour to refer to the searched party’s search statements recorded u/sec.132(4) of the Act that the same had formed sufficient material for the department for not only making the quantum addition herein but also levying the consequential penalty in light of sec.271(1)(c) of the Act.
We have heard both the parties at length. The first and foremost question that arises for our apt adjudication is – as to whether the assessee could challenge taxability of the impugned alleged on-money payment of Rs.1,42,65,106/- in assessment year 2010-2011 itself or not ? We find that this tribunal’s coordinate bench’s order in group of appeals ITA.Nos.804 to 809/PN./2012 Shri Mangesh Tupe, Pune vs. ACIT decided on 30.04.2013 has rejected the Revenue’s very contentions as under :
“26. The point made out by the assessee is that having regard to the aforesaid, whereby MTDCL was granted irrecoverable license to commence development of 6 I.T.A.No. 1320/PUN./2023 the land on 26.03.1999 itself, then as per the decision of the Hon’ble Bombay High Court in the case of Chaturbhuj Dwarkadas Kapadia (supra), ‘transfer’ within the meaning of Section 2(47) of the Act takes place and the corresponding capital gain become taxable in assessment year 1999-2000 in terms of Section 45(i) of the Act. The Hon’ble Bombay High in the aforesaid judgement had an occasion to consider the import of the expression ‘transfer’ as per the Section 2(47) of the Act in case of a ‘development agreement’ between the land owner and a developer. As per the Hon’ble Bombay High Court, if a transaction involved the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to under Section 53A of the Transfer of Property Act, 1882 (4 of 1882) or any transaction which has effect of transferring or enabling in enjoyment of transfer property then having regard to the Clauses (v) and (vi) of Section 2(47) of the Act, transfer takes place in the year in which such agreement is entered into. The MOU dated 26.03.1999 between assessee and MTDCL clearly provides for permitting MTDCL to irrecoverably enter and commence and complete development of the land owned by assessee and therefore, there is substantial force in the plea of the assessee that the on date of entering of MOU i.e. 26.03.1999, an event of 7 I.T.A.No. 1320/PUN./2023 ‘transfer’ within the meaning of Section 2(47) of the Act has taken place and therefore the capital gain is liable to be taxed in assessment year 1999-2000. We are conscious that the present proceedings are not in relation to substantive taxation of the impugned amounts but the aforesaid proposition is being considered only to examine whether legally speaking is there justification in the plea of the assessee that the taxability of the impugned capital gain was not legally conclusive in the manner made by the Assessing Officer and that in the eyes of law, the impugned capital gain was taxable in an another manner.
It is well settled proposition that the assessment proceedings and penalty proceedings under Section 271(1)(c) of the Act are independent proceedings and that the conclusions reached in the assessment proceedings are not conclusive so far as the penal provisions are concerned. No doubt a conclusion arrived at in the assessment proceedings is good evidence but the same cannot be considered as conclusive for the purpose of penalty proceedings in as much as the two proceedings are independent proceedings, and, in this connection gainful reference can be made to the judgement of the Hon’ble Supreme Court in the case Khuday Eswara & Sons 83 ITR 639 (SC) and also to the judgement of the Hon’ble Allahabad and Madras High Court in the cases of 8 I.T.A.No. 1320/PUN./2023 Raja Mohd. Amir Ahmad Khan 100 ITR 433 (All.) and B. Muniappa Gounder 102 ITR 787 (Mad.) respectively. In case the assessee in the course of penalty proceedings is able to demonstrate with certain degree of certainty that the addition made in the assessment proceedings was not warranted then the findings in the assessment proceedings cannot be considered as conclusive so as to fasten penal liability under Section 271(1)(c) on the assessee. In support of the aforesaid proposition, we may rely upon the ratio of judgement of the Hon’ble Bombay High Court in the case of Jainarayan Babulal vs. CIT 170 ITR 399 (Bom.) In view of the aforesaid discussion, in our considered opinion, the CIT(A) made no mistake in deleting the penalty imposed by the Assessing Officer with respect to the income by way of Long Term Capital Gain of Rs.30,12,878/- on sale of land. Accordingly, the order of the CIT(A) is affirmed and the appeal of the Revenue in is dismissed.”
6.1. It is thus clear that nothing prevents the assessee from challenging correctness of the impugned penalty proceedings regarding taxability of the quantum addition in the corresponding assessment year. This is indeed restricted to the penalty proceedings only. We keep in mind this fine distinction and proceed to note that there is no seized material pinpointing the assessee having paid the impugned on-money
9 I.T.A.No. 1320/PUN./2023 component of Rs.1,42,65,106/- in assessment year 2010- 2011. We are recording this clinching finding of fact based on the actual date 06.10.2006 found on the seized document itself forming basis of sec.148 proceedings initiated against the assessee. This is indeed coupled with the fact that the contents of the said seized documents sufficiently clarify that the searched party herein i.e., M/s. Tapadia group (vendors) had “received” the above on-money on or before 06.10.2006 rather than in the relevant previous year 2009-2010 before us. Faced with the situation, we hereby conclude that the learned lower authorities have erred in law and on facts in levying the impugned penalty of Rs.44,07,916/- in assessee’s case. The same is directed to be deleted.
All other assessee’s pleadings stand rendered academic once we have decided it’s instant appeal on the foregoing clinching aspect of the contents of the seized documents. Ordered accordingly.
This assessee’s appeal is allowed in above terms.
Order pronounced in the open Court on13.02.2024.