DCIT,, Ludhiana v. Smt. Mohini Kulwant Ghai,, Ludhiana

ITA 1056/CHANDI/2009 | 2001-2002
Pronouncement Date: 18-08-2010 | Result: Dismissed

Appeal Details

RSA Number 105621514 RSA 2009
Assessee PAN ABGPG1976L
Bench Chandigarh
Appeal Number ITA 1056/CHANDI/2009
Duration Of Justice 9 month(s) 7 day(s)
Appellant DCIT,, Ludhiana
Respondent Smt. Mohini Kulwant Ghai,, Ludhiana
Appeal Type Income Tax Appeal
Pronouncement Date 18-08-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 18-08-2010
Date Of Final Hearing 30-07-2010
Next Hearing Date 30-07-2010
Assessment Year 2001-2002
Appeal Filed On 10-11-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI G.S.PANNU ACCOUNTANT MEMBER AND MS SUSHMA CHOWLA JUDICIAL MEMBER ITA NO. 1056/CHD/2009 ASSESSMENT YEAR: 2001-02 D.C.I.T. CIRCLE VII LUDHIANA V SMT. MOHINI KULWAN T GHAI 45-A AGGAR NAGAR LUDHIANA PAN: ABGPG 1976 L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N.K. SAINI RESPONDENT BY: S/SHRI S.R. CHHABRA & AMARJIT KAMBOJ ORDER PER G.S. PANNU A.M THIS IS AN APPEAL BY THE REVENUE PERTAINING TO ASSE SSMENT YEAR 2001-02 DIRECTED AGAINST THE ORDER OF CIT(A)- II LUDHIANA DATED 25.8.2009 WHICH IN TURN HAS ARISEN FROM THE O RDER PASSED BY THE ASSESSING OFFICER ON 29.9.2008 IMPOSING PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT 1961 (IN SHORT THE ACT) AM OUNTING TO RS. 16 25 157. 2 BRIEFLY PUT THE RELEVANT FACTS ARE AS FOLLOWS. T HE RESPONDENT ASSESSEE IS AN INDIVIDUAL WHO FILED HER RETURN OF I NCOME ON 31.7.2001 DECLARING INCOME OF RS. 74 94 636. IN TH E RETURN OF INCOME FILED SHE DECLARED PROFIT ON PURCHASE AND S ALE OF IMMOVABLE PROPERTIES WHICH WAS OFFERED FOR TAXATION UNDER THE HEAD CAPITAL GAINS AND NET CAPITAL GAIN WAS DECL ARED AT RS. 72 94 301. HOWEVER IN THE ASSESSMENT FINALIZED U/ S 143(3) OF THE 2 ACT ON 27.3.2004 TOTAL INCOME WAS DETERMINED AT R S. 82 07 155 WHICH INTER-ALIA INCLUDED INCOME FROM SALE AND PURC HASE OF IMMOVABLE PROPERTIES AT RS. 80 37 120. THUS AS AG AINST NET LONG TERM CAPITAL GAINS ON PURCHASE AND SALES SHOWN BY T HE ASSESSEE AT RS. 72 94 301 ASSESSING OFFICER ASSESSED IT AT RS. 80 37 1210 AS BUSINESS INCOME. IT TRANSPIRES FROM RECORD THAT TH E ACTION OF THE ASSESSING OFFICER IN ASSESSING THE PROFIT ON SALE A ND PURCHASE OF PROPERTIES AS BUSINESS INCOME HAS BEEN SUSTAINED BY THE TRIBUNAL ALSO VIDE ITA NO. 621/CHANDI/2005 DATED 28.2.2008. SUBSEQUENTLY THE ASSESSING OFFICER HELD THE ASSES SEE GUILTY OF CONCEALMENT AND FURNISHING OF INACCURATE PARTICULAR S OF INCOME WITHIN THE MEANING OF SEC 271(1)(C) OF THE ACT VIDE ORDER DATED 29.9.2008. HE CALCULATED PENALTY EQUIVALENT TO 150 % OF TAX SOUGHT TO BE EVADED ON SUCH CONCEALMENT OF INCOME AND ACC ORDINGLY PENALTY OF RS. 16 25 197 HAS BEEN IMPOSED U/S 271(1 )(C) OF THE ACT. 3 IN APPEAL BEFORE THE LD. CIT(A) ASSESSEE SUBMIT TED THAT THE IMPOSITION OF PENALTY WAS BAD IN LAW AND ON FACTS O F THE CASE. AS PER THE ASSESSEE THE TREATMENT OF GAIN ARISING OUT OF SALE OF IMMOVABLE PROPERTIES AS BUSINESS INCOME INSTEAD OF LONG TERM CAPITAL GAINS DECLARED BY THE ASSESSEE DOES NOT IM PLY ANY CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF SEC 271(1)(C) OF THE ACT. IT WAS ALSO CONTENDED THAT THE CLAIM MADE IN THE RETURN OF INCO ME WAS ON BONAFIDE CONSIDERATIONS AND THEREFORE PENALTY HAS BEEN WRONGLY IMPOSED. THE DETAILED SUBMISSIONS MADE BY THE ASSE SSEE HAVE BEEN REPRODUCED BY THE LD. CIT(A) IN HIS ORDER. AF TER CONSIDERING THE SUBMISSIONS HE HAS SET ASIDE THE LEVY OF PENAL TY ON THE GROUND THAT MERE CHANGE OF HEAD OF INCOME BY THE ASSESSING OFFICER 3 CANNOT BE CONSTRUED AS CONCEALMENT FOR THE PURPOSES OF SEC 271(1)(C) OF THE ACT. APART THERE FROM THE LD. CI T(A) NOTED THAT THERE CAN BE BONAFIDE DIFFERENCE OF OPINION ON THE ISSUE AND THEREFORE THE SAME WOULD NOT JUSTIFY THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. IN PARTICULAR FOLLOWING DISC USSION IN THE ORDER OF LD. CIT(A) CONTAINED IN PARAS NO. 4.2 AND 4.3 IS RELEVANT: 4.2 IN THE WRITTEN SUBMISSIONS THE COUNSELS HAVE REFERRED TO VARIOUS DECISIONS INCLUDING THE DECISION OF THE HON'BLE JURISDICTIONAL BENCH OF ITAT AND THE HON'BLE JURIS DICTIONAL HIGH COURT AS PER WHICH PENALTY U/S 271(1)(C) OF TH E ACT IS NOT LEVIABLE IN CASES INVOLVING GENUINE DIFFERENCE OF OPINION WHERE FACTS ARE DULY DISCLOSED BUT ON ACCOUNT OF BO NAFIDE BELIEF ABOUT NON-TAXABILITY OF INCOME SOME INCOME H AS NOT BEEN INCLUDED BY AN ASSESSEE IN THE TOTAL INCOME. THE DECISION OF THE HON'BLE DELHI TRIBUNAL REPORTED AT 310 ITR 280 (AT)(DEL). JMD ADVISORS (P) LTD WHICH HAS BEEN RELIED UPON THE LD. COUNSELS COVERS THE CASE OF THE APPELL ANT IN HER FAVOUR. THE HON'BLE BENCH HELD IN THIS CASE THAT C HANGE OF HEAD OF INCOME BY THE ASSESSING OFFICER CANNOT BE C ONSTRUED AS CONCEALMENT. IN THE CASE OF THE APPELLANT ALSO WHATEVER ADDITION HAD BEEN MADE FINALLY AND WHICH HAS BEEN U PHELD BY THE HON'BLE ITAT IS ON ACCOUNT OF THE ASSESSING OFF ICER CHANGING HEAD OF INCOME FROM CAPITAL GAINS TO BUSIN ESS. IT CANNOT HOWEVER BE DENIED THAT THE APPELLANT HAD OT HERWISE DISCLOSED ENTIRE FACTS AND FIGURES IN THE RETURN OF INCOME AND DURING ASSESSMENT PROCEEDINGS. KEEPING IN VIEW THE ABOVE DISCUSSED FACTUAL AND LEGAL POSITION AGAIN PENALTY U/S 271(1)(C) OF THE ACT LEVIED BY THE ASSESSMENT PROCE EDINGS CANNOT BE HELD TO BE JUSTIFIED. 4.3 IN THE WRITTEN SUBMISSIONS DATED 28.8.2009 REPR ODUCED AS ABOVE THE LD. LD. COUNSEL HAVE REFERRED TO THE C ASE OF HE APPELLANTS HUSBAND SHRI KULDIP SINGH GHAI. IN THA T CASE ON SIMILAR FACTS THE HON'BLE ITAT CHANDIGARH BENCH VID E THEIR ORDER DATED 28..5.2007 UPHELD THAT PROFIT ON SALE O F PROPERTIES WAS TO BE CHARGED AS CAPITAL GAINS AND N OT BUSINESS INCOME. ONE OF THE PROPERTIES IN QUESTION IN THE CASE OF SHRI KULDIP SINGH WAS AGRICULTURAL LAND IN VILLAGE BISHANPURA. THIS WAS SOLD BY THE APPELLANT AND HER HUSBAND SHRI KULDIP SINGH AS CO-OWNERS. IN THE CASE OF THE APPELLANTS HUSBAND INCOME FROM SUCH PROPERTY HAD B EEN CONSIDERED TO BE EXEMPT HOWEVER IN THE HANDS OF T HE APPELLANT INCOME FROM SALE OF THE SAME PROPERTY WAS TREATED AS BUSINESS INCOME. FROM THE ABOVE FACTS ALSO IT I S QUITE CLEAR THAT THERE COULD BE BONAFIDE DIFFERENCE OF OP INION ON THE ISSUE AND THAT THE CONTENTION OF THE APPELLANT THAT IT WAS HER BONAFIDE BELIEF THAT THE SAID PROFIT WAS ASSESS ABLE AS CAPITAL GAINS IS NOT WITHOUT FORCE. 4 4 AGAINST THE AFORESAID REVENUE IS IN APPEAL BEFOR E US. BEFORE US LD. D.R. CONTENDED THAT THE ASSESSING OF FICER WAS JUSTIFIED IN IMPOSING PENALTY BECAUSE THE INTENTION OF THE ASSESSEE WAS TO EARN PROFIT OUT OF PURCHASE AND SALE OF IMMO VABLE PROPERTIES AND AS SUCH THE ASSESSING OFFICER WAS JUSTIFIED IN ASSESSING SUCH INCOME AS BUSINESS INCOME. HE POINTED OUT THAT THE ASSESSING OFFICER RELIED UPON THE EXPLANATION 1 BELOW SEC 27 1(1)(C) OF THE ACT TO JUSTIFY THE IMPOSITION OF PENALTY IN THIS CA SE. IN THIS REGARD IT WAS SUBMITTED THAT THE STATEMENT OF ASSESSEES H USBAND SHRI KULDIP SINGH GHAI WAS RECORDED BY DDIT U/S 131 OF T HE ACT WHICH SHOWED THAT THE ASSESSEE WAS CARRYING ON SALE AND P URCHASE OF IMMOVABLE PROPERTY AS A BUSINESS VENTURE. THEREFOR E IT IS SOUGHT TO BE SUBMITTED THAT THE CLAIM OF THE ASSESSEE WAS NON-BONAFIDE AND THUS THE LD. CIT(A) ERRED IN DELETING THE PENAL TY LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE ACT. 5 ON THE OTHER HAND LD. COUNSEL FOR THE RESPONDEN T-ASSESSEE HAS VEHEMENTLY DEFENDED THE ORDER OF LD. CIT(A). IN PARTICULAR OUR ATTENTION HAS BEEN DRAWN TO THE WRITTEN SUBMISS IONS FILED BEFORE THE LD. CIT(A) AND WHICH HAVE BEEN REPRODUCE D IN THE IMPUGNED ORDER. IT IS POINTED OUT THAT IN THE PAST YEARS THE ASSESSEE HAS TREATED THE IMMOVABLE PROPERTIES AS IN VESTMENT AND HAS BEEN SHOWING THE PROFIT ON THE SALE AS CAPITAL GAINS WHICH HAS BEEN ACCEPTED BY THE DEPARTMENT IN THE PAST. S ECONDLY IT IS POINTED OUT THAT IN THE QUANTUM PROCEEDINGS THE DE CISION OF THE ASSESSING OFFICER WAS NOT SUSTAINED BY THE LD. CIT( A) THOUGH THE SAID DECISION WAS SUBSEQUENTLY REVERSED BY THE TRIB UNAL VIDE ORDER DATED 28.2.2008 (SUPRA). ACCORDING TO THE LD. LD. COUNSEL FOR THE ASSESSEE AFORESAID POINTS SHOW THAT THE CLAIM OF T HE ASSESSEE WAS 5 NOT MALAFIDE BUT IT SHOWED ONLY A DIFFERENCE OF OPI NION WHICH CANNOT BE TAKEN AS MALAFIDE SO AS TO LEVY PENALTY U /S 271(1)(C) OF THE ACT. IN THE COURSE OF HEARING LD. COUNSEL FOR THE ASSESSEE HAS RELIED UPON THE FOLLOWING DECISIONS: DCIT CIRCLE 4(1) NEW DELHI V. JMD ADVISORS (P) LT D. 124 ITD 223 (DELHI) CIT V. RELIANCE PETROPRODUCTS PVT LTD. 322 ITR 158 (S.C) CIT V. SIIDHARTHA ENTERPRISES. 322 ITR 80 (P&H) CIT V. SHAHBAD CO-OP SUGAR MILLS LTD. 322 ITR 73 ( P&H) 6 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFULL Y. SEC 271(1)(C) OF THE ACT EMPOWERS THE ASSESSING OFFICER TO IMPOSE PENALTY IF TWO PRE-REQUISITES ARE SATISFIED. THE P RE-REQUISITES ARE THAT THE ASSESSEE SHOULD HAVE EITHER CONCEALED THE PARTICULARS OF HIS INCOME OR IN THE ALTERNATE THE ASSESSEE SHOU LD HAVE FURNISHED INACCURATE PARTICULARS OF INCOME. IT IS A TRITE LAW THAT EITHER OF THE TWO PRE-REQUISITES ARE TO BE FULFILLED BEFORE PENA LTY U/S 271(1)(C) OF THE ACT CAN BE IMPOSED. IN THE CONTEXT OF EXPRE SSIONS CONCEALMENT AND INACCURATE PARTICULARS APPEARI NG IN SEC 271(1)(C) OF THE ACT THERE IS A PLETHORA OF JUDGME NTS BY VARIOUS COURTS OF THE COUNTRY. 7 IN THE CASE OF RELIANCE PETRO PRODUCTS LTD (SUPRA ) IT HAS BEEN EXPLAINED BY THE HON'BLE SUPREME COURT THAT THE WOR D PARTICULARS USED IN SEC 271(1)(C) OF THE ACT WOULD EMBRACE THE DETAILS OF THE CLAIM MADE BY THE ASSESSEE. WHEN NO INFORMATION GI VEN IN THE RETURN IS FOUND TO BE INCORRECT OR INACCURATE THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. AS PER HON'BLE SUPREME COURT IN ORDER TO EXPOSE THE ASSESSEE TO PE NALTY IT MUST BE SHOWN THAT THE CASE IS STRICTLY COVERED BY THE PROVISIONS OF 6 SECTION 271(1)(C) OF THE ACT. MAKING OF AN INCORRE CT CLAIM DOES NOT TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF SEC 271(1)(C) OF THE ACT. TH E HON'BLE SUPREME COURT NOTED THAT WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE INCORRE CT OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY U/S 271(1)(C) OF THE ACT. 8 TO THE SIMILAR EFFECT IS THE JUDGMENT OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SHAHBAD SUGAR CO- OP MILLS (SUPRA) WHEREIN IT HAS BEEN OBSERVED THAT MAKING WR ONG CLAIM FOR DEDUCTION DOES NOT AMOUNT TO CONCEALMENT OR GIVING OF INACCURATE PARTICULARS WITHIN THE MEANING OF SEC 271(1)(C) OF THE ACT. 9 IN THE CASE OF SIDHARATH ENTERPRISES (SUPRA) HO N'BLE PUNJAB & HARYANA HIGH COURT AFTER ANALYZING THE JUDGMENT O F HON'BLE SUPREME COURT IN THE CASE OF UNION OF INDIA VS DHA RMENDRA TEXTILE PROCESSORS 306 ITR 277 HELD THAT PENALTY IS TO BE IMPOSED ONLY WHEN THERE IS SOME ELEMENT OF DELIBERA TE DEFAULT AND NOT A MERE MISTAKE. 10 THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT V. BACARDI MARTINI INDIA LTD. 288 ITR 585 (DELHI) HELD THAT TH E EXPRESSION CONCEALMENT CARRIES WITH IT AN ELEMENT OF MENSREA . MERELY BECAUSE THERE IS A DIFFERENCE OF OPINION FOR ALLOWI NG OR DISALLOWING THE EXPENDITURE BETWEEN THE ASSESSEE AND THE ASSES SING OFFICER IT CANNOT BE SAID THAT THE ASSESSEE HAD INTENTION OF C ONCEALING THE INCOME. 11 IN THE BACKGROUND OF AFORESAID PROPOSITIONS WE MAY NOW COME BACK TO THE FACTS OF THE INSTANT CASE. FACTUA LLY SPEAKING IT IS OBVIOUS THAT THE PARTICULARS OF INCOME FILED IN THE RETURN OF INCOME 7 BY THE ASSESSEE HAVE NOT BEEN FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE. THE DIFFERENCE IN THE ASSESSED INCOME HAS R ESULTED MERELY BECAUSE THE GAIN ON PURCHASE AND SALE OF IMMOVABLE PROPERTIES WAS OFFERED IN THE RETURN OF INCOME AS CAPITAL GAI NS WHEREAS THE SAME HAS BEEN ASSESSED AS BUSINESS INCOME BY THE ASSESSING OFFICER. IN OTHER WORDS THE ASSESSING OFFICER HAS NO DIFFERENCE WITH THE ASSESSEE WITH REGARD TO QUANTUM OF INCOME BUT ONLY WITH RESPECT TO THE HEAD OF INCOME UNDER WHICH THE INC OME IS LIABLE TO BE ASSESSED. EVIDENTLY THE CLAIM OF THE ASSESSEE FOR BEING ASSESSED UNDER THE HEAD CAPITAL GAINS DID NOT FIN D FAVOUR WITH THE ASSESSING OFFICER AND SUCH DIFFERENCE HAS RESULTED IN A HIGHER ASSESSED INCOME. IN THESE CIRCUMSTANCES HAVING RE GARD TO THE PARITY OF REASONING LAID DOWN BY THE HON'BLE SUPREM E COURT IN THE CASE OF RELIANCE PETRO PRODUCTS (SUPRA) THE DIFFER ENCE CANNOT BE CONSTRUED AS CONCEALMENT OR FURNISHING OF INACCURAT E PARTICULARS OF INCOME WITHIN THE MEANING OF SEC 271(1)(C) OF THE A CT. IT HAS BEEN POINTED OUT BY THE ASSESSEE ALL ALONG WITHOUT CONT ROVERSION THAT IN THE PAST YEARS SIMILAR INCOME WAS RETURNED AS C APITAL GAINS AND WHICH HAS BEEN ACCEPTED BY THE DEPARTMENT. TH EREFORE WE FIND NO REASONS TO UPHOLD THE STAND OF THE ASSESSIN G OFFICER THAT THE CLAIM MADE IN RETURN OF INCOME WAS MALAFIDE. T HE REFERENCE MADE BY THE ASSESSING OFFICER TO THE STATEMENT REND ERED BY THE HUSBAND OF THE ASSESSEE SHRI KULDIP SINGH GHAI THA T AFTER RETIREMENT THE ASSESSEE WAS MAKING INVESTMENT IN PR OPERTIES AS BUSINESS VENTURE CANNOT DISTRACT FROM THE FACT TH AT IN THE PAST SIMILAR INCOMES HAVE BEEN ACCEPTED AS CAPITAL GAIN BY THE DEPARTMENT. FURTHER THE FACT THAT IN THIS YEAR S UCH INCOME HAS BEEN ASSESSED AS BUSINESS INCOME DOES NOT TAKE A WAY THE 8 BONAFIDES OF THE CLAIM MADE BY THE ASSESSEE IN THE RETURN OF INCOME. THE ASSESSING OFFICER HAS ALSO REFERRED TO THE FINDINGS IN THE ASSESSMENT PROCEEDINGS TO JUSTIFY THE LEVY OF P ENALTY U/S 271(1)(C) OF THE ACT. IN THIS REGARD IT IS QUITE WELL SETTLED THAT THOUGH FINDINGS IN THE ASSESSMENT PROCEEDINGS MAY B E IS RELEVANT BUT IT CANNOT BE CONSIDERED AS CONCLUSIVE FOR IMPOS ITION OF PENALTY U/S 271(1)(C) OF THE ACT. CONSIDERING THE ENTIRE F ACTS & CIRCUMSTANCES OF THE CASE WE FIND THAT THE CLAIM M ADE BY THE ASSESSEE IN THE RETURN OF INCOME WAS BONAFIDE AND T HEREFORE THE ASSESSING OFFICER WAS WRONG IN INVOKING EXPLANATIO N 1 BELOW SEC 271(1)(C) OF THE ACT IN ORDER TO JUSTIFY THE IMPOSI TION OF PENALTY. 12 MOREOVER THE LD. CIT(A) HAS RELIED UPON THE DEC ISION OF DELHI BENCH OF THE TRIBUNAL IN THE CASE OF JMD ADVI SORS PVT LTD (SUPRA) FOR THE PROPOSITION THAT MERE CHANGE OF HE AD OF INCOME BY THE ASSESSING OFFICER IN ASSESSMENT CANNOT BE CONST RUED AS CONCEALMENT AS ENVISAGED IN SEC 271(1)(C) OF THE ACT. THE LD. CIT(A) HAS FURTHER NOTED THAT THE ASSESSEE HAS DISC LOSED THE ENTIRE FACTS AND FIGURES IN THE RETURN OF INCOME AND DURIN G ASSESSMENT PROCEEDINGS AND THEREFORE THERE IS NO CONCEALMENT BY THE ASSESSEE. 13 IN OUR CONSIDERED OPINION HAVING REGARD TO ENTI RE CONSPECTUS OF FACTS AND IN LAW PENALTY IMPOSED BY THE ASSESS ING OFFICER U/S 271(1)(C) OF THE ACT HAS BEEN RIGHTLY DELETED BY T HE LD. CIT(A). WE HEREBY AFFIRM THE ORDER OF LD. CIT(A). 14 IN THE RESULT APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 18.08.2010. SD/- SD/- (SUSHMA CHOWLA) (G.S.PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 18.8.2010 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/THE DR 9