DILJIT SINGH,MOHALI vs. ITO, MOHALI

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ITA 578/CHANDI/2017Status: DisposedITAT Chandigarh08 March 2018AY 2008-093 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee's explanation regarding the declaration of capital gains based on actual receipt was bonafide, considering the dispute over the year of accrual and the complexity of the issue. The penalty was deleted as there was no intentional concealment of income.

What were the facts?

The assessee, a member of a housing society, was involved in a tripartite development agreement for land. The Assessing Officer computed substantial capital gains and levied penalty. The assessee argued that taxes were paid before the notice under section 148 and that the capital gains were declared based on actual receipt.

What were the issues?

Whether penalty under Section 271(1)(c) is leviable when the assessee has declared capital gains based on actual receipt and there is a dispute regarding the year of accrual and the valuation of consideration.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, CHANDIGARH BENCHES ‘A’ CHANDIGARH

Before: SMT. DIVA SINGH & DR. B.R.R. KUMAR

For Respondent: Smt. Chandrakanta
Hearing: 12/12/2017Pronounced: 08/03/2018

PER DR. B.R.R. KUMAR, A.M:

The above appeals have been filed by the Assessee against the order of

Ld. CIT(A)-2, Chandigarh dt. 02/01/2017.

The assessee has raised the following effective grounds of appeal : 2.

3.

On the facts and circumstances of the case the Ld. CIT(A) has erred in having held that the capital gains even on the actual amount received, have not been disclosed in the return of income.

4.

On the facts and circumstances of the case the Ld. CIT(A) has erred in having held that the assessee is liable for penalty under section 271(1)(c) at 100% on the actual amount of consideration received by the appellant.

Brief facts of the case are that a Housing Society, named as The Defence 3. Services Co-operative House Building Society Ltd., Mohali (hereinafter referred to as 'Society') consisting of 207 members was formed, which was the owner of 27.3 acres of land in Village Kansal, District Mohali. This Society entered into a tripartite development agreement (hereinafter referred to as 'agreement') on 27.04.2007 with life Hash Builders Pvt. Ltd., Chandigarh (hereinafter referred to as

'Hash') and M/s Tata Housing Development Company Ltd., Mumbai (hereinafter referred to as THDC), by virtue of which the society would transfer its land for development in lieu of monetary consideration and also consideration in kind to the members of the society. The assessee was also a member of the said society owning 500 sq. yards plot of land. This arrangement made by way of joint development agreement constituted transfer of capita! asset. The total consideration was settled at Rs. 80,00,000/- as monetary consideration and furnished flat of 2250 sq. feet as consideration in kind. The total cost of the furnished flats comes to approximately Rs, 1,01,25,000/- @ 4500 per sq. feet and thus total consideration accruing to the assessee was taken by the assessing officer at Rs. 1,81,25,000/-. After allowing the cost of acquisition, the long term capital gains were computed at Rs. 1,78,25,000/-.

Penalty of an amount of Rs. 40,39,145/- was levied on the amount of Rs. 1,78,25,000/- deemed to have been concealed by the assessee.

4.

In the quantum proceedings the addition made by the Assessing Officer stands deleted, leaving the issue as to whether the levy of concealment of penalty on the declaration of long term capital gain at Rs. 29,76,424/- which was calculated on the basis of sale consideration actually received i.e. Rs. 32 lacs is valid in law or not.

5.

Before us the Ld. AR argued that original return was filed on 23/09/2008 and the revised return was filed on 13/11/2009. The taxes pertaining to the Long Term Capital Gain was paid on 11/11/2009. The notice under section 148 was issued on 26/10/2009 and assessment was completed on 09/12/2010. Penalty notice was issued on 09/12/2010 and served through affixture.

The Ld. AR argued that there was no intention on the part of the assessee to conceal the particular of income and the taxes have been already paid before the issue of the notice under section 148 receipt of which was disputed by the assessee.

6.

We also find that the Assessing Officer has verified on 29/11/2010 from the society office and found that the assessee was residing at USA. Before the Ld. CIT(A) the assessee has shown evidences regarding the revised return filed by the assessee declaring the capital gain on the basis of actual receipt by the assessee i. e. Rs. 32 lacs in lieu of transfer of capital asset is in consonance with the decision of the jurisdictional High Court i.e. Hon'ble Punjab & Haryana High

Court in the case of C.S. Atwal and others Vs. CIT(2015)59 Taxmann.com 35. It is also in dispute as to which year the capital gains arise in the hands of the assessee. It is a fact on record that the Tripartite Agreement has fell through and further adherence to the project envisaged has not taken place. The matter travelled upto the Hon’ble Supreme Court as to how to determine the capital gain taxable which goes to prove that a major question of law is involved and there are two opinions on the issue. The penalty notice was not served on the assessee as the assessee is in USA as per the observation of the Assessing Officer in his order. Hence keeping in view the totality of the facts and circumstances of the case it cannot be said that assessee has concealed the particulars of income or furnished inaccurate particular of income intentionally. The explanation given by the assessee can be treated as bonafide in the peculiar facts of the case. Hence the penalty levied is hereby directed to be deleted.

7.

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

Order pronounced in the Open Court.

Sd/- Sd/- (DIVA SINGH) (DR. B.R.R. KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 08/03/2018 AG

Copy to: The Appellant, The Respondent, The CIT, The CIT(A), The DR

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