Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, JAIPUR BENCHES,”SMC” JAIPUR
Before: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA. No. 207/JP/2023
ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM This appeal is filed by assessee and is arising out of the order of the National Faceless Appeal Centre, Delhi dated 24.02.2023 [here in after (NFAC) / ld. CIT(A) ] for assessment year 2010-11 which in turn arise from the order of the Income Tax Officer, Ward -6(1), Jaipur [ here in after the ld. AO ] passed under section 271(1)(c) of Income Tax Act, 1961 [ here in after referred to as “Act”] dated 26.06.2018.
2. In this appeal, the assessee has raised following grounds: -
“1. That action of Ld AO in levying penalty u/s. 271(1)(c) is bad in law, perverse and against the facts and law. Further action of Ld CIT(Appeal), NFAC in so far as confirming the levy of penalty as levied by Ld AO is absolutely illegal and unjustified in the facts & circumstances of the case.
2. That Ld CIT (Appeal) NFAC has grossly erred in passing of penalty appeal order which precedes to the quantum appeal and which is still pending alongwith application w/rule 46A of IT Rules for disposal with the CIT (Appeals), NFAC.
3. That Ld AO has erred in levying penalty on the sale transaction of immovable property wherein the appellant has put his signature as power of attorney holder for and on behalf of legal owner Mr. Surya Prakash Nathani, Bhilwara. Thus assessment order was erroneously passed in hands of appellant instead of passing of same in the hands of actual and legal owner of the property and which itself vitiates the entire proceedings. That appeal against the impugned assessment order is still pending for disposal before CIT (Appeal), NFAC and without coming out any outcome of appeal case the CIT(A), NFAC has further erred in confirming the penalty without any basis.
4. That Ld AO has erred in levying of penalty and further CIT(A) has further erred in confirming the penalty mechanically and without application of mind and thus entire proceedings are illegal and void- ab- initio.
5. That the appellant craves leave to add, amend or alter any of the ground to this appeal with the request to allow to submit written submission at the time of hearing of appeal.”
3. The fact as culled out from the records is that as per information on record, it was gathered that the assessee has sold immovable property of Rs. 3,20,000/- during the F.Y. 2009-10 relevant to A.Y. 2010-11 which has been valued at Rs. 11,11,200/- of income has been filed for the above assessment year so the above transaction was not verifiable. In view of these facts and circumstances there were sufficient reasons to believe that an amount of Rs. 11,11,200/- has escaped assessment within the meaning of sec. 147 of the I.T. Act, 1961. As such the assessee had not filed his Return of Income for the year under consideration and the transaction was not found to be verifiable from system in the absence of any return of income filed. Therefore, believing that income to the tune of Rs. 11,11,200/- has escaped assessment.
Notice u/s 148 was issued on 27.03.2017 after invoking the provisions of Section 147 of the I.T. Act, 1961. Mean-while, the case was assigned to ITO Ward 6(5), Jaipur u/s 127 of the IT Act, 1961 as per Order No.Pr.CIT-2/JPR/127/2017- 18/411 Dated 02.06.2017 and the assessment records pending assessment u/s 143(3) were received in this Ward on 07.06.2017. Notice u/s 142(1) of the I.T. Act along with the specific questionnaire were issued on 23.06.2017. In response to the notices issued and served/affixed the assessee has not filed any return of income or no submission was filed. Therefore, a final show cause notice was issued on 01.12.2017 fixing for hearing on 08.12.2017. In compliance to final show cause notice dated 01.12.2017, no written submission was filed or any justification was provided so as to reach a conclusion anything contrary to the show cause issued. The assessment being time barring, no further opportunities provided to the assessee and therefore the assessment completed ex-parte. On completion of the assessment a show cause notice was issued seeking explanation of the assessee as to why the penalty u/s. 271(1)(c) of the Act should not be imposed for concealment of income. The assessee has not complied with any of the statutory notices and therefore, the ld. AO levied the penalty u/s. 271(1)(c) of the Act for an amount of Rs. 81,490/-.
4. Aggrieved from the order of the ld. AO levying penalty the assessee carried the matter in appeal before the ld CIT/NFAC. The appeal of the dismissed vide order dated 24.02.2023. The relevant finding of the ld. CIT(A) is reiterated here in below:
“6. The aforesaid non compliances reveal beyond doubt that the appellant has nothing to say in the matter of present appeal. Thus, it appears that the assessee is not interested in prosecution of the present appeal and the same is liable to be dismissed on this ground itself. The law assists those who are vigilant and not those who sleep over their rights. This principle is embodied in the well-known dictum "VIGILATIBUS, NON DORMENTIBUS, JURA SUBVENIUNT. Considering the facts and relying on the decision of the Hon'ble, ITAT, Delhi Bench, in the case of CIT VS Multiplan India Ltd. reported in 38-
ITD-320 and the judgement of the Hon'ble Madhya Pradesh High Court in the case of Estate of Late Tukoji Rao Holker Vs. CWT (1997) reported in 223-ITR-480 the present appeal is hereby dismissed.
The appellant has raised grounds of appeal
No. 1 to 3 which challenge the penalty u/s 271(1)(c) of Act levied by AO of Rs. 81,490/- for concealment of income.However no written submissions were filed in respect of Grounds of Appeal No. 1 to 3. It is noted that the appeal of the appellant has been dismissed by me for non prosecution in para
6. In view thereof the various grounds raised in appeal have become academic in nature. Grounds of Appeal No. 1 to 3 are hereby dismissed. TMENT
8. As a result, the appeal is dismissed”
5. As the assessee did not receive any favour from the appeal so filed before the ld. CIT(A), the present appeal is preferred on the grounds as raised in para 2 above. The ld. AR of the assessee during the pendency of the appeal has placed an additional ground for service which is extracted in below;
“APPLICATION U/RULE 11 OF ITAT RULES, 1963 FOR ALLOWING TO SUBMIT ADDITIONAL GROUND May It Please be your honours,
1. Most respectfully the humble appellant do hereby seeks leave of the Hon'ble Bench for allow to submit Additional Ground which is essential for deciding of the case and which is arising from penalty order dt.20.6.208 and from appeal order passed by CIT(A), NFAC vide order dt.24.2.2023.
ADDITIONAL GROUND: "THAT LD AO HAS ERRED IN LEVYING PENALTY U/S.271(1)(c) BASED ON DLC VALUE U/S. 50C WHICH IS ABSOLUTELY ILLEGAL AND UNJUSTIFIED AND SAME MAY PLEASE BE DELETED."
2. That in the case of CIT, Delhi vs. Jai Parabolic Springs Ltd (reported in 306-ITR-42 Delhi HC) it has been held that "there is no prohibition on the powers of the Tribunal to entertain an additional ground which according to Tribunal arises in the matter and for the just decision of the case."
The Humble appellant with utmost respect request to kindly allow the additional ground in the interest of equity and justice.
3. That facts of the case are that appellant has filed appeal before Hon'ble Tribunal against the appeal order dt.24.2.2023 passed by CIT(A), NFAC against the penalty order passed by Assessing Officer vide their order dt.26.6.2018 on the ground that it is preceded to the quantum appeal case. That appellant has filed appeal against the assessment order dt. 26.12.2017 before CIT(A), Jaipur on dt.15.1.2018 which is transferred to CIT(A), NFAC and since then same is pending for disposal before CIT(A), NFAC. That before decide of quantum appeal the CIT(A). NFAC has passed the penalty appeal order and which is being challenged before Hon'ble Bench.
Thus it is humbly requested to kindly allow the additional ground and. order of CIT(A) as rejected on the ground of non timely e-filing of appeal may please be rejected & oblige.”
Since, there is no additional facts or material is relied upon and therefore, in the interest of justice to the assessee the additional ground so raised by the assessee is admitted for adjudication. In support of the grounds so raised the ld. AR of the assessee also submitted the written submission the same is reiterated here in below:
“With utmost respect the appellant hereby submits the written submission in the case which may please be considered while deciding the appeal. GROUND NO.1: ERRONEOUS ACTION OF LEVY OF PENATLY U/S. 271(1)(C) BASED ON DLC VALUE U/S. 50C OF I.T. ACT
1. That Ld AO while passing the assessment order has made addition of Rs.555600/- in hands of the appellant which is DLC value of sale transaction of agricultural land situated at Khasra no. 293/1 and 293/2 situated at village-kanota, Tehsil-Bassi, Distt: Jaipur. That the Ld AO while passing the penalty order has levied penalty u/s.271(1)(c) on deeming fiction whereas there is no malicious intention of the appellant at any point into entire transaction. That provision of section 271(1)(c) specifically states about levy of penalty only when the assessee “has concealed the particulars of his income or furnished inaccurate particulars of such income, or …………..”
That in several judicial pronouncements it has been held that penalty u/s. 271(1)(c) can not be levied on deeming fiction and wherein the addition made by Ld AO is DLC value of agricultural land sold.
2. That facts of the case are that appellant has got registered a sale deed of sale of agricultural land situated at Khasra no. 293/1 and 293/2 situated at village-kanota, Tehsil-Bassi, Distt: Jaipur as Power of Attorney holder of Mr. Surya Prakash Nathani resident of opp. Railway station, Bhilwara and has received a sale consideration of Rs.1,20,000/- from buyer. The fact about doing sale by appellant as power of attorney holder of Mr. Surya Prakash Nathani is also mentioned in the sale deed (at page no.2 of sale deed). The copy of power of attorney dt.27.10.1998 whereby power is given by Mr. Surya Prakash Nathani to the appellant (Mr. Subhash Patni) was filed before the CIT(A), NFAC in quantum appeal proceedings.
3. That Ld AO passed penalty order u/s 271(1)(c) of the Act has not brought on record that appellant has received anything over and above the actual sale consideration declared in the sale deed. That it is incumbent on AO to bring any evidence that appellant has received over and above to the actual sale consideration for assuming legal jurisdiction to levy penalty. That for making addition no such duty is casted upon AO but while making addition and imposing penalty are quiet different and penalty proceedings are independent proceedings. The income presumed by fiction of law is not the real income unless otherwise prove by adducing additional evidences.
4. That in cases below it has been held that income assessed based on deeming fiction does not contemplate income and thus no penalty can be levied:-
(i). Virendra Singh Verma Vs. ITO (Appeal No.ITA No. 962/JP/2019 – ITAT Jaipur Bench) that Hon’ble ITAT Jaipur Bench while deciding above case has written treatise on the subject and after relying on several case laws and after relying in the case of CIT Vs. Reliance Petroproducts Pvt. Ltd. (322-ITR-158) has held that where the information given by the assessee is not found to be incorrect the assessee cannot be held guilty of furnishing inaccurate particulars of income for the purpose of levying the penalty u/s. 271(1)(c) of the Act. The Hon’ble SC has also observed that merely making a wrong claim does not amount o furnishing inaccurate particulars of income in the absence of finding that any detail by the assessee is incorrect or false.”
(ii). ACIT Vs. N. Meenakshi (319-ITR- Page 262 -Chennai ITAT) wherein penalty levied on difference of DLC and actual transaction value and wherein it was held that even the addition is accepted by assessee, it can not be said to said to furnishing of inaccurate particulars for levy of penalty and accordingly penalty deleted.
(iii). Hindustan Steel Limited Vs. State of Orissa (Supreme Court – 1972 – 83 – ITR page no. 26) wherein it has been held that levying penalty u/s.271(1)(c) the AO has to prove that assessee has consciously made concealment or inaccurate particulars of his income. In the given circumstances only the technical opinion has changed resulting into change in quantum of tax method of tax but nowhere is could be proved that concealment taken place and thus no penalty to be levied.
(iv). Reliance Petro Products Pvt. Ltd. (2010-322-ITR – page 158 – Supreme Court) it has been held that before levying penalty the concerned officer is required to find out that even if there is any failure referred to in the concerned provision, the same is without a reasonable cause. The initial burden is on the assessee to show that there existed reasonable cause which is the reason for the failure referred to in the concerned provision. Thereafter the officer dealing with the matter has to consider whether the explanation offered by the assessee as regards the reason for failure, is on account of reasonable cause. Reasonable cause means an honest belief founded upon reasonable grounds, of the existence of a state of circumstances for the reason stated in his assessment order has rejected arguments and submissions made by the assessee.
(v). DCIT CC Vs. Trans Freight Containers Limited (ITA No.: 2337/Mum/2016)- ITAT Mumbai that Hon’ble bench while deciding the case the bench has relied upon the judgment of Hon’ble Bombay HC in the case of CIT Vs. Fortune Hotels & Estate Pvt. Ltd. and has held that addition by invoking provision of section 50C, penalty u/s. 271(1)(c) is unsustainable. (copy of all judgements are enclosed)
GROUND NO.2: ERRONEOUS ACTION OF LEVY OF PENATLY U/S. 271(1)(C) WITHOUT ASCERTAINING CORRECT FACTS OF CASE
1. That facts of the case are that appellant has got registered a sale deed of sale of agricultural land situated at Khasra no. 293/1 and 293/2 situated at village-kanota, Tehsil-Bassi, Distt: Jaipur as Power of Attorney holder of Mr. Surya Prakash Nathani resident of opp. Railway station, Bhilwara and has received a sale consideration of Rs.1,20,000/- in cash from buyer and which has also been handed over to Mr. Surya Prakash Nathani (actual legal owner of above agricultural land) and of which receipt is submitted before CIT(A), NFAC.
2. The fact about doing sale by appellant as power of attorney holder of Mr. Surya Prakash Nathani is also mentioned in the sale deed (at page no.2 of sale deed). The copy of power of attorney dt.27.10.1998 whereby power is given by Mr. Surya Prakash Nathani to the appellant (Mr. Subhash Chand Patni) is submitted before the CIT(A), NFAC in quantum appeal proceedings. That Ld AO without considering all these facts has passed the penalty order. It is to submit that appellant has also filed an application u/rule 46A before the CIT(A-II), Jaipur on dt. 13.05.2019 and thereafter same is also uploaded on IT Portal. It is here to submit that still the fate of application u/rule 46A is pending for disposal.
3. That in the case of Sidharth Chaudhary Vs. ITO (ITA No.: 890/Del/2020 – ITAT Delhi) has held that “capital gain can not be charged from the person who sold property as attorney of owner. There is no ambiguity under the law for chargeability of capital gain in respect of transfer of any capital asset. It is the owner of capital asset who would be liable for capital gain and in case sale consideration is credited into the account of third party or the attorney of such owner, in that event also the money which has been credited in the account of the third party or the power of attorney cannot be subjected to tax under the head capital gains.” (copy of order is enclosed)
That due to severe medical illness and due to facing of several cheque bouncing cases u/s.138 of Negotiable Instrument Act wherein residential house of assessee was also got auctioned by bank, the appellant was mentally disturbed. Apart from same the appellant was dependent on Mr. Lalit Sharam, Accountant who could not update about having pass of assessment order by Ld AO and all above documents could not be submitted before Ld AO at time of passing of assessment order.
5. That Ld CIT (A), NFCA has grossly erred in passing of penalty order dt.24.2.2023 and which is preceded to the quantum appeal order. That appellant has filed the appeal against the assessment order dt.26.12.2017 before CIT(A), Jaipur on dt.15.1.2018 and which subsequently transferred to CIT(A), NFAC and since then same is pending for disposal. That keeping pending the quantum appeal before CIT(A), NFAC the penalty appeal is decided and which is against the principle of judicial discipline. That on the reasonable belief that first the quantum appeal order shall be passed, the appellant could not submit documents in the penalty appeal record and thus without appreciating the fact that entire documents have been submitted in quantum appeal proceedings, Ld CIT(A), NFAC has passed the order and thus appellant was deprived from making submission in penalty appeal.
6. That the appellant has also filed an application dt. 19.5.2023 under rule 11 of ITAT Rules wherein request is made for allowing to submit additional ground for consideration before Hon’ble Bench and same may please be allowed to taken and be decided in these facts & circumstances of the case. Thus looking to these facts it is humbly requested to kindly consider the case of the appellant and penalty may please be deleted in light of above submissions & oblige.”
6.1 The ld. AR of the assessee also submitted a paper book dated 19.05.2023 the details of the paper relied upon are as under:-
Sr. No. Particulars Page No.
Written submission in the penalty appeal before ITAT 1-4
2. Assessment order dt. 26.12.2017 5-7
3. Copy of Sale deed dt. 31.07.2009 8-14
4. Copy of Power of Attorney dt. 27.10.1998 15-18
Confirmation of receipt of cash payment by Mr. Surya 19 Prakash Nathani from appellant 6. Copy of application filed u/rule 46A along with affidavit 20-55 and medical reports before CIT(Appeals)
7. The ld DR is heard who relied on the findings of the lower authorities and vehemently argued that the assessee has not filed the return of income even though he is supposed to do so and even before ld. CIT(A) the assessee did not appear and present the arguments to support the grounds so raised by him. Therefore, ld. DR prayed to dismiss the appeal of the assessee and alternatively the same may be restored to the file of the ld. CIT(A) as the same has been decided ex party.
In the rejoinder the ld. AR of the assessee in support of the additional grounds submitted that the ld. AO, apropos to the addition made observed as under:-
“Addition on account of long Term Capital Gain: Though, in the absence of full and true particulars reliance is, placed on the certified copy of sale deed /POA obtained from Sub-Registrar-V, Amer. As seen from page-02 of the said sale deed the assessee was power of attorney holder and he had acquired the said property Khasra No. 293/1,293/2, Shiv Colony, Village- Kanota, Tehsil- Bassi, Jaipour, on 27.10.1998. Therefore, the said property was purchased/acquired by the assessee in FY 1998-1999 and sold in the year under consideration for Rs. 1,20,000/- which was valued at Rs. 5,55,600/- by the stamp valuation authority. Thus, the asset was capital in nature and the assessee was liable to pay long term capital gain. Thus, the long term capital gain is calculated as below:- Sale value Rs. 5,55,600/- Less: Purchase price without indexation Rs. Nil (on the basis of details in sale deed) Income from long term capital gain Rs. 5,55,600/- Penalty proceedings u/s 271(1)(c) are being initiated.” submitted that the ld. AO has not given the initial deduction available to the assessee for the year under consideration being the maximum amount not chargeable to tax and also not given the benefit of the consideration already flowed to the assessee which is Rs. 1,20,000/- in this case, the ld. AO also not allowed any indexed cost of acquisition. The ld. AR without prejudice to these facts submitted before us the addition so made is of the amount being the amount considered for the stamp duty u/s. 50C of the Act.
Considering the various judicial decision the levy of penalty on addition made u/s. 50C of the Act is not justified and therefore, even on merits the matter may be decided by the bench to render the justice to the assessee as the matter is of the assessment year 2010-11.
We have heard the rival contentions and perused the material placed on record. The bench noted that on the date of hearing the assessee sought an adjournment before the ld. CIT(A). The ld. CIT(A) has neither dismissed the adjournment application nor given any further date of hearing and he has proceeded ex-party which is not correct and is against the principles of natural justice. Thus, on are of the considered we that the assessee is deprived of the justice and has not been allowed proper opportunity of being heard.
In this circumstances, we have considered whether it is necessary to send the matter back for the decision of ld. CIT(A) but, having regard to the facts that the matter relates to very old assessment year i.e. 2010-11 and also that all the necessary facts and the decisions of the Hon’ble High Court are available before use. We have also proceeded to decide the appeal of the assessee straightway in order to avoid further unnecessary delay. Before us, the ld. AR of the assessee argued from the order of the assessing officer that the assessee has received a sum of rs. 1,20,000/- as consideration and even without considering the cost of acquisition the amount is below the maximum amount not chargeable to tax and therefore, not filed the return of income. The ld. AO considered the consideration as per stamp duty and that too without considering the fact that the assessee has already received a sum of Rs. 1,20,000 and ld. AO has not considered the cost of acquisition. If reduced the consideration of Rs. 1,20,000/- the balance amount is the difference between the consideration and stamp duty value as per provision of section 50 C of the act. Thus, it is not disputed by the ld. DR representing the revenue that the amount after reducing the consideration the sustained amount is on account of the stamp duty valuation and there are various decision of the co-ordinate bench of the tribunal holding the there cannot be levy of penalty on the amount sustained on account of the provision of section 50C of the Act, this view of the tribunal is also confirmed by the Honorable HIGH COURT OF BOMBAY in the case of Commissioner of Income-tax v. Fortune Hotels and Estates (P.)
Ltd. The relevant finding of the high court is as under:
Upon perusal of the order passed by the Tribunal in its entirety and noting the peculiar facts pertaining to the Assessee we are of the view that the question as posed before us and the contentions advanced need not be gone into in any further details. The admitted factual position and which the Tribunal noted is prevailing throughout. The Assessee was the owner of the office premises at Nariman Point, Mumbai and he sold the same during the year previous to the Assessment Year 2004-2005 and sale consideration was Rs.2 crores. The Assessing Officer noted that the market value adopted by the Registrar of Assurances for levy of stamp duty was Rs.3,72,42,000/-. In view thereof by taking recourse to Section 52C(2) the Assessing Officer called upon the Assessee to show cause as to why the full value of consideration received on transfer should not be adopted as per the stamp valuation. The Assessee insisted that the question of valuation of the property should be referred to the Departmental Valuation Officer. That was so referred and the report was submitted by the Valuation Officer dated 27.12.2006 determining the market value of the property at Rs.2,70,03,920/-. The Assessee maintained that the value of Rs.2 crores is actual sale consideration received by it. However, this was not accepted and the difference between the consideration received and determination of the Valuation Officer was declared as tax liability.
To this extent there is no dispute and what later on followed was the imposition of penalty. The Tribunal held that this cannot be taken as a case of furnishing inaccurate particulars of income inasmuch as there was a registered sale deed and there was consideration mentioned therein. That ground was raised and therefore, the document was 15 Subhash Chand Patni vs. ITO, Jaipur forwarded to the Valuer and for determination of the value, by itself would not mean that the Assessee had furnished inaccurate particulars of income or has concealed the income. In these peculiar circumstances the imposition of penalty was not justified, is the conclusion drawn Respectfully, following the ratio of the judgment, in this case we note the amount remain to be added [ after deducting the initial exemption and consideration ] is the only amount added on account of the difference in the stamp duty valuation and the levy of the penalty on that amount is not legal based on the finding of the Bombay High Court we vacate the levy of the penalty in the case and thus, the assessee grounds of appeals are allowed.
In the result, appeal of the assessee is allowed.
Order pronounced in the open Court on 14/06/2023 Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judcial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 14/06/2023 *Ganesh Kr./Santosh आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. vihykFkhZ@The Appellant- Subhash Chand Patni, Jaipur 2. izR;FkhZ@ The Respondent- ITO, Jaipur 3. vk;dj vk;qDr@ CIT 4.