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Income Tax Appellate Tribunal, KOLKATA BENCH “B” KOLKATA
Before: Shri N.V.Vasudevan & Shri Waseem Ahmed
आदेश / O R D E R
PER Waseem Ahmed, AccountantMember:-
This appeal by the assessee is arising out of order of Commissioner of Income Tax (Appeals)-XII, Kolkata in appeal No.17/XII/41(1)/10-11 dated 10.10.2012. Assessment was framed by ITO Ward-41(1), Kolkata u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) vide his order dated 30.12.2009 for assessment year 2005-06. The penalty under dispute was levied by the ITO Ward-41(1) Kolkata u/s 271(1)© of the Act vide his order dated 22.03.2010.
Shiv Kr. Goyal v. ITO Wd-41(1), Kol. Page 2 2. Only issue raised by the assessee in this appeal that the Ld.CIT (A) has confirmed the order of the AO by sustaining the penalty order passed by the AO under section 271(1)(c) of the Act.
Briefly stated facts are that the assessee is an individual and has the income from salary, other sources and short term capital gain. During the year the assessee has sold a piece of land for a value of Rs. 10 lacs by executing the power of attorney in favour of the buyer. The assessee has not declared the capital gain on this transaction of transfer in the return of income and has shown the receipt of Rs. 10 lacs as advance in the balance sheet. However the AO treated this transaction as transfer within the meaning of section 2(47) of the Act and worked out the long term capital gain and taxed the income accordingly. The AO also initiated the penalty proceedings under section 271(1)© of the Act for the concealment of income. The assessee submitted that he had neither furnished inaccurate particulars nor concealed any particulars of income. However, the AO has disregarded the plea of the assessee and levied penalty, stating that the disclosure was made by the assessee only in pursuance of notice issued under section 148 of the Act. Finally the AO has levied the penalty on the basis of concealed income by passing the order under section 271(1)© of the Act @100% of the tax sought to be evaded. Aggrieved Assessee preferred an appeal to Ld. CIT(A) who has upheld the decision of the AO by observing that although this transfer of land was by way of power of attorney yet the assessee was duty bound to disclose the transaction and to offer the income to tax on such transaction.
Aggrieved, assessee is in second appeal before us on the following grounds of appeal. “1) That on the facts and in the circumstances of the case, the Ld. CIT(Appeals) erred in sustaining penalty under section 271(1)© Rs.44,227/- without appreciating that the appellant duly disclosed an advance received Rs.10 lacs against Power of Attorney as Security deposit in the Balance sheet filed alongwith original I.T. Return and as such there should not be any reason to hold that the assessee Shiv Kr. Goyal v. ITO Wd-41(1), Kol. Page 3 concealed the income or furnished inaccurate particulars of such income.
2) That the findings given by Ld. CIT(Appeals) are erroneous , perverse, unjustified and untenable and as such not sustainable under the law.
3) That the Ld. CIT(Appeals) has held that “once the assessee had given a General Power of Attorney in favour of any person, he is duty bound to disclosed any advance or any amount received against the Power of Attorney to the Department but by not doing so” the assessee is liable for penalty, without appreciating that the assessee duly disclosed the advance received against PO in the original I.T. return.
4) That on the facts and in the circumstances of the case, the Ld. CIT(Appeals) ought to have held that the appellant in the return filed in compliance to notice U/s 148 has treated the advance received against POA as sale consideration with a view to buy peace and as such the provisions of section 271(10© are not attracted in the instance case.”
Mr.Soumitra Chowdhury, Ld. AR is appearing on behalf of assessee and Mr.Pinaki Mukherjee, Ld. Senior DR is appearing on behalf of Revenue.
The Ld. AR submitted that the assessee has disclosed the fact in the balance sheet about the receipt of advance. The assessee did not prefer the appeal against the assessment order does not tantamount the acceptance of the concealment of income. But the assessee did so to buy the peace of mind. On the contrary, Ld. DR supported the orders of Authorities below.
We have heard the rival contentions of the parties and perused the materials available on record. The requirement of Sec.271(1)(c) of the Act is that the assessee should have (a) concealed the particulars of income; or (b) furnished inaccurate particulars of income. In the present case, the question is as to whether the assessee concealed particulars of income. The question of furnishing inaccurate particulars of income does not arise in this case because the assessee did not declare any capital gain on transfer of capital asset. Admittedly the assessee did not execute a registered instrument of transfer in favour of the purchaser of the property. The assessee received full Shiv Kr. Goyal v. ITO Wd-41(1), Kol. Page 4 consideration and executed a power of attorney empowering the agent to sell or otherwise alienate his property. The definition of transfer u/s.2(47) of the Act (47) "transfer", in relation to a capital asset, includes,— (i) the sale, exchange or relinquishment of the asset ; or (ii) the extinguishment of any rights therein ; or (iii) the compulsory acquisition thereof under any law ; or (iv) in a case where the asset is converted by the owner thereof into, or is treated by him as, stock-in-trade of a business carried on by him, such conversion or treatment ; or (iva) the maturity or redemption of a zero coupon bond; or (v) any transaction involving 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 in section 53A of the Transfer of Property Act, 1882 (4 of 1882) ; or (vi) any transaction (whether by way of becoming a member of, or acquiring shares in, a co-operative society, company or other association of persons or by way of any agreement or any arrangement or in any other manner whatsoever) which has the effect of transferring, or enabling the enjoyment of, any immovable property. Explanation 1.—For the purposes of sub-clauses (v) and (vi), "immovable property" shall have the same meaning as in clause (d) of section 269UA. Explanation 2.—For the removal of doubts, it is hereby clarified that "transfer" includes and shall be deemed to have always included disposing of or parting with an asset or any interest therein, or creating any interest in any asset in any manner whatsoever, directly or indirectly, absolutely or conditionally, voluntarily or involuntarily, by way of an agreement (whether entered into in India or outside India) or otherwise, notwithstanding that such transfer of rights has been characterised as being effected or dependent upon or flowing from the transfer of a share or shares of a company registered or incorporated outside India; The case of the revenue, as we see it, is that by receiving the entire sale consideration in respect of the property and executing a power of attorney in favour of the purchaser, the assessee has effected a transfer within the meaning of Clause (vi) or Expln-2 to Sec.2(47) of the Act. We are doubtful as Shiv Kr. Goyal v. ITO Wd-41(1), Kol. Page 5 to whether it can be said that by executing a power of attorney the assessee transferred either by parting with or creating interest in immovable property enabled transfer or enjoyment of any immovable property. Power of Attorney by its nature is revocable. There are situations in which power of attorney gets terminated in law viz., when the Principal or the Agent dies. The provisions of Clause-vi to Sec.2(47) of the Act would cover cases of transfer of shares of co-operative societies or company or other association of persons and those provisions will not apply to the present case. The provisions of Expln.2 to Sec.2(47) of the Act would apply to transfer of shares in a company which results in transfer of immovable property. The case of the revenue therefore is not on a sound footing. It is a different matter that the Assessee has accepted the assessment. At the stage of imposing penalty, one has to look at all circumstances before coming to a conclusion that the assessee is guilty of having concealed particulars of income.
Apart from the above aspect, we also notice that the AO got the information about receipt of consideration towards sale of property only from the balance sheet of the assessee. The assessee has shown the sum received by it towards purported sale of property in the balance sheet as “Security Deposit” in the balance sheet. Had it been the intention of the assessee to conceal particulars of income, the same would not have been so reflected in the balance sheet of the assessee. The issue as to whether when sale consideration is received in full and a power of attorney is executed in favour of the purported purchaser, the same would amount to transfer within the meaning of Sec.2(47) of the Act, in our view, is a highly debatable issue. Therefore no fault can be found in the assessee’s assumption that there was no transfer of a capital asset during the previous year and therefore there was no requirement to declare capital gain on sale of property. As we have already stated the disclosure as made by the assessee in the balance sheet is itself sufficient to conclude that the assessee never intended to conceal particulars of income.
Shiv Kr. Goyal v. ITO Wd-41(1), Kol. Page 6 7. Keeping the discussion as above, we are of the view that this is not a fit case for levy of penalty u/s.271(1)(c) of the Act. Consequently, the penalty imposed on the assessee by the AO and confirmed by the CIT(A) is directed to be deleted. The appeal of the Assessee is allowed.