SMT. BIJAL DARSHITBHAI PUJARA,,RAJKOT vs. THE DY. COMMR. OF INCOME TAX, CIRCLE-1 (1),, RAJKOT

This assessee’s appeal for A.Y. 2014-15, arises from order of the CIT(A)-1, Rajkot dated 04-07-2018, in proceedings under section 271(1)(c) of the Income Tax Act, 1961; in short “the Act”.

The assessee has taken the following grounds of appeal:

The brief facts of the case are that during the year under consideration, the assessee sold immovable property for an aggregate consideration of � 54,20,000/- on which the assessee has shown long-term capital gains of � 51,83,487/-. However, during the course of assessment proceedings, the assessing officer observed that in the original return of income, the assessee had shown income of � 14,49,880/- but in the said return of income, the assessee had not declared the aforesaid capital gains. It was only during the course of assessment proceedings that the assessee filed revised return of income declaring long-term capital gains of � 51,83,487/- on sale of the aforesaid properties. The assessee’s contention was that assessee had inadvertently omitted to disclose the aforesaid capital gains in the original return of income for the reason that the assessee was under the mistaken impression that the aforesaid land was an agricultural land and hence the capital gains on sale of such land was exempt from taxation. However, the assessing officer rejected the contention of the assessee firstly, on the ground that the revised return had been filed by the assessee beyond the due date prescribed under section 139(4) of the Act and further, it was only once notice under section 142(1) of the Act dated 31-08-2015 was issued that the assessee filed revised return of income, declaring the sale of immovable properties therein. Accordingly, the aforesaid revised return of income cannot be said to have been filed voluntary by the assessee. Accordingly, the assessing officer initiated proceedings under section u/s 271(1)(c) of the Act and proceeded to impose penalty in respect of the aforesaid sale of property, which was not disclosed in the original return of income, u/s 271(1)(c) of the Act.

The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(Appeals) confirming the penalty imposed by the Assessing Officer. The counsel for the assessee drew our attention to notice issued under section 143(2) of the Act dated 31-08-2015 at page 38 of the paper book and submitted that in the aforesaid notice, on the basis of which the assessing officer had levied penalty, there is no mention of sale of any immovable properties by the assessee during the impugned year under consideration. Accordingly, it cannot be inferred by any stretch of imagination that the revised return of income filed by the assessee, in which the assessee declared capital gains tax with respect to the aforesaid immovable properties, was in pursuance to the aforesaid notice under section 143(2) issued by the Department. In fact, perusal of the aforesaid notice also Page No 6 Smt. Bijal Darshitbhai Pujara vs. Dy. CIT does not indicate in any manner whatsoever that the proceedings were in respect of enquiry into the aspect of non-declaration of long-term capital gains with respect to the aforesaid properties. Thereafter, the counsel for the assessee drew our attention to the notice dated 30-06-2016 under section 143(2) of the Act in which for the first time, the issue of sale of immovable property for � 54.2 lakhs was raised by the Department (Query number 4 of the aforesaid notice) whereas the assessee had filed revised return of income on 31-10-2015. Accordingly, the counsel for the assessee submitted that in the instant facts, it is clear that the revised return including therein the details of the sale of immovable properties, was not filed pursuant to notice under section 143(2) of the Act issued by the Department but revised return of income was filed on a prior date.

In response, the Ld. DR submitted that in the instant facts the declaration filed by the assessee disclosing the details of immovable properties cannot be accepted for two reasons: firstly, the revised return of income was filed beyond the due date prescribed under section 139(4) of the Act and hence was non-est in eyes of law, and secondly, the assessment proceedings were initiated under CASS to enquire into the taxability with respect to sale of immovable properties, which was not declared by the assessee in the return of income, but the details thereof were apparent to the Department from the AIR Report.

We have heard the rival contentions and perused the material on record. Looking into the facts of the instant case, we are of the considered view that the revised return of income, in which the assessee disclosed Page No 7 Smt. Bijal Darshitbhai Pujara vs. Dy. CIT details of sale of immovable properties � 54,20,000/- was not in pursuance to notice issued by the Department under section 143(2) of the Act, for the following reasons: firstly, on perusal of notices issued by the Department, it is seen that the query regarding the sale of immovable properties amounting to � 54 .20 lakhs was enquired into for the first time by the Department vide notice dated 30-06-2016, whereas the assessee had already filed revised return of income on 31-10-2015. Secondly, in the notice dated 31-08-2015, there is no mention regarding sale of immovable properties by the assessee, and hence, it cannot be inferred that the assessee made a declaration regarding the sale of immovable properties pursuant to the aforesaid notice. Thirdly, the contention of the Department that the assessment proceedings had been initiated to enquire into the aspect of sale of aforesaid immovable properties by the assessee and therefore, the assessee was aware the reason as to why the assessment proceedings had been initiated is also not acceptable for the reason that the Department has not been able to bring forth any communication/information/evidence to show that it was within the knowledge of the assessee, that the assessment proceedings had been initiated to enquire into the aspect of sale of immovable properties by the assessee. Fourthly, regarding the contention that the revised return of income was filed beyond the due prescribed date, it has been brought to our attention that the return of income was filed online and the same was accepted by the Department website and accordingly the same has been validated by the Department. It is a well-settled principle of law that if the assessee has made disclosure in the return of income, without the Department having brought the fact of omission on part of the assessee to the notice of the assessee, then it cannot be inferred that the revised return Page No 8 Smt. Bijal Darshitbhai Pujara vs. Dy. CIT was filed pursuant to the omission having been detected by the Department. In the case of Jaysukh M. Parmar 33 Taxmann.com 422 (Ahmedabad - Trib.), the Ahmedabad ITAT held that where notice issued under section 131 did not give any indication about any material with Department regarding concealment of income by assessee, merely because thereafter assessee filed revised return, before recording of statement under section 131, declaring additional income, no penalty was imposable upon assessee under section 271(1)(c) of the Act. In the case of Raj Bricks Field46 taxmann.com 281 (Punjab & Haryana), the High Court held that where return filed by petitioner is voluntary, filed in good faith and before detection of any concealment, neither penalty would be levied under section 271(1)(c) nor any criminal proceedings under section 276C could be allowed. In the case of Bhavinkumar M. Dagli 79 taxmann.com 392 (Gujarat), the jurisdictional Gujarat High Court held that where during assessment proceedings, assessee filed revised return declaring additional income and prior to that Department had no material to show that there was some additional income than income disclosed in original return, there was no justification for imposition of penalty on ground that assessee had furnished inaccurate particulars of income.

In the result, the appeal of the assessee is allowed.