DCIT, Circle-1,, v. Rajat Lal, Managing Director,,

ITA 1179/DEL/2006 | 1997-1998
Pronouncement Date: 17-02-2012 | Result: Dismissed

Appeal Details

RSA Number 117920114 RSA 2006
Assessee PAN LDING7784S
Bench Delhi
Appeal Number ITA 1179/DEL/2006
Duration Of Justice 5 year(s) 10 month(s) 6 day(s)
Appellant DCIT, Circle-1,,
Respondent Rajat Lal, Managing Director,,
Appeal Type Income Tax Appeal
Pronouncement Date 17-02-2012
Appeal Filed By Department
Order Result Dismissed
Bench Allotted G
Tribunal Order Date 17-02-2012
Date Of Final Hearing 09-12-2011
Next Hearing Date 09-12-2011
Assessment Year 1997-1998
Appeal Filed On 10-04-2006
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G NEW DELHI) BEFORE SHRI RAJPAL YADAV AND SHRI A.N. PAHUJA ITA NO. 1179/DEL/2006 ASSESSMENT YEAR: 1997-98 DEPUTY CIT VS. SHRI RAJAT LAL MANAGING DIR. CIRCLE-1 M/S. SIRSHADI LAL ENTERPRISES MUZAFFARNAGAR. LTD. 4-A HANSALAYA BARAKHAMBA ROAD N.DELHI-01 (APPELLANT) (RESPONDENT) DEPARTMENT BY: MS. S. MOHANTH Y SR.DR ASSESSEE BY: S/S AJAY VOHRA ADV. & ROHTI GARG CA DATE OF HEARING : 09.12.2011 DATE OF PRONOUNCEMENT : 17.02.2012 ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF LEARNED CIT(APPEALS) DATED 24.01.2006 PASSED FOR ASSESSMENT YEAR 1997-98. THE SOLITARY GRIEVANCE OF THE REVENUE IS THAT LEARNED C IT(APPEALS) HAS ERRED IN DELETING THE PENALTY OF RS.1 00 00 000 IMPOSED BY T HE ASSESSING OFFICER UNDER SEC. 271(1)(C) OF THE INCOME-TAX ACT 1961. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E HAS FILED HIS RETURN OF INCOME ON 27.06.1997 DECLARING AN INCOME OF RS.39 1 8 664. THIS INCLUDES AN AGRICULTURAL INCOME OF RS.1 85 806. THE ASSESSEE DERIVES INCOME FROM SALARY INTEREST INCOME FROM MONEY LENDING SHARES IN FIRM AND OTHER 2 SOURCES. THIS RETURN WAS PROCESSED UNDER SEC. 143(1 )(A) OF THE ACT ON 24.12.1997 ON THE DECLARED INCOME. THE CASE OF THE ASSESSEE WAS SUBSEQUENTLY SELECTED FOR SCRUTINY ASSESSMENT AND A NOTICE UNDER SEC. 143(2) OF THE ACT WAS ISSUED AND SERVED UPON THE ASSESSEE. SHRI KL ANEJA LEARNED ADVOCATE APPEARED BEFORE THE ASSESSING OFFICER ON B EHALF OF THE ASSESSEE AND FURNISHED THE DETAILS CALLED FOR BY THE ASSESS ING OFFICER ON TIME TO TIME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS LEARNE D ASSESSING OFFICER FOUND THAT ASSESSEE WAS HOLDING 7784 SHARES OF COMP ANY M/S. RAJENDRA LAL SHADI LAL & CO. PVT. LTD. THE TOTAL ISSUED SUBSCRIB ED AND PAID UP CAPITAL OF THE SAID COMPANY IS 8000 EQUITY SHARES OF RS.100 EA CH FULLY PAID UP. THE BALANCE 216 SHARES IN THE SAID COMPANY WERE HELD BY SMT. PUNAM LAL W/O THE ASSESSEE. THE ASSESSEE HAD ENTERED INTO AN AGRE EMENT WITH M/S. SRF LTD. EXPRESS BUILDING 9-10 BAHADURSHAH ZAFAR MAR G NEW DELHI TO SELL THE SAID SHARES FOR A CONSIDERATION OF RS. 5 CRORES . THE AGREEMENT WAS EXECUTED BETWEEN BOTH THE PARTIES ON 19.8.1996. THE SALE PROCEED WAS TO BE PAID IN INSTALLMENT; THE DETAILS OF THE INSTALLMEN TS DUE DATE AND DATE ON WHICH ACTUAL PAYMENT WAS RECEIVED HAVE BEEN TABULAT ED BY THE ASSESSEE IN THE STATEMENT OF FACTS. THEY READ AS UNDER: DESCRIPTION AMOUNT PAYABLE ON (DUE DATE) DATE WHEN ACTUALLY RECEIVED & CHEQUE HONOURED 3 1 2 3 4 EARNEST MONEY RS.1 25 00 000 ON SIGNING OF THE AGREEMENT ON 19.8.1996 CHEQUES TENDERED WITH BANK ON 20.8.1996 BUT RETURNED BACK AS UNCASHED REPRESENT ON 23.8.1996 WHEN ENCASHED. FIRST INSTALLMENT RS.1 25 00 000 30.10.1996 5.11.19 96 SECOND INSTALLMENT RS.1 25 00 000 1.1.1997 6/3/1997 (PART AMOUNT RS.65 00 000 RECEIVED) THIRD INSTALLMENT RS.1 25 00 000 30.4.1997 15.2.199 9 TO 10.3.2000 3. THE DISPUTE BETWEEN THE ASSESSEE AND THE REVENUE RELATES TO THE DATE OF TRANSFER OF SHARES I.E. ON WHICH DATE ASSESSEE HAS ACTUALLY SOLD THE SHARES. ACCORDING TO THE ASSESSEE HE HAS SOLD SHARES IN TH E ACCOUNTING YEAR RELEVANT TO ASSESSMENT YEAR 2000-01 AND OFFERED THE CAPITAL GAIN IN THIS ASSESSMENT YEAR WHEREAS ACCORDING TO THE ASSESSING OFFICER T HE AGREEMENT TO SELL WAS EXECUTED ON 19.8.1996 FIRST INSTALLMENT WAS PAID I N THE YEAR RELEVANT TO ACCOUNTING YEAR 1997-98. THUS FOR ALL PRACTICAL PUR POSES IT IS TO BE CONSTRUED THAT SHARES HAVE BEEN TRANSFERRED WITHIN THE MEANING OF SEC. 2(47) OF THE INCOME-TAX ACT 1961 IN THE ACCOUNTING YEAR RELEVANT TO ASSESSMENT YEAR 1997-98. THE ASSESSEE OUGHT TO HAVE OFFERED TH E CAPITAL GAIN TAX IN THIS 4 ASSESSMENT YEAR HENCE HE HAS CONCEALED THE PARTIC ULARS OF INCOME BY FURNISHING INACCURATE PARTICULARS. ASSESSING OFFICE R HAS MADE THE ADDITION OF THE CAPITAL GAIN IN THE TAXABLE INCOME OF THE ASSES SEE WHICH WAS DETERMINED AT RS.5 27 72 842 AS AGAINST RETURNED INCOME OF RS. 39 18 664. HE INITIATED THE PENALTY PROCEEDINGS UNDER SEC. 271(1)(C) ALSO. 4. DISSATISFIED WITH THE ADDITION MADE ON ACCOUNT O F CAPITAL GAIN CALCULATED AT RS.4 77 14 279 ASSESSEE CARRIED THE DISPUTE IN APPEAL BEFORE THE LEARNED CIT(APPEALS). LEARNED FIRST APPELLATE A UTHORITY HAS DELETED THE ADDITION VIDE HIS ORDER DATED 20.5.2000. DISSATISFI ED WITH THE ORDER OF THE LEARNED CIT(APPEALS) REVENUE CARRIED THE MATTER IN DISPUTE BEFORE THE ITAT VIDE ITA NO.3548/DEL/2000. THIS APPEAL OF THE REVENUE HAS BEEN ALLOWED BY THE ITAT. THE ASSESSEE TOOK THE MATTER I N APPEAL BEFORE THE HON'BLE HIGH COURT VIDE ITA NO.6 OF 2005. HON'BLE H IGH COURT HAS ADMITTED THE APPEAL OF ASSESSEE VIDE ORDER DATED 17 .10.2005 AND ALSO STAYED THE RECOVERY OF THE TAX. THE ASSESSEE HAS PLACED ON RECORD COPY OF THE HON'BLE HIGH COURTS ORDER AT PAGE 67 OF THE PAPER BOOK. 5. IN THE PENALTY PROCEEDINGS LEARNED ASSESSING OF FICER HAS OBSERVED THAT BY VIRTUE OF AGREEMENT DATED 19.8.1996 M/S. S RF LIMITED WAS ALLOWED TO ENJOY THE PROPERTY NO.407 & 412 OLYMPUS APARTMEN T ALTAMOUNT ROAD 5 MUMBAI BY TRANSFERRING THE SHARES OF THE COMPANY M/ S. RAJENDRA LAL SHADILAL & CO. LTD. HE FURTHER OBSERVED THAT ON PE RUSAL OF THE AGREEMENT IT WOULD REVEAL THAT SELLER HAD AGREED THAT HE WOULD H AVE NO RIGHT TITLE AND INTEREST IN THE SHARES OF THE COMPANY ON RECEIPT OF FIRST INSTALLMENT AND THE BUYER WILL BECOME THE OWNER OF THE PROPERTY THUS IT EMERGES OUT FROM THE PENALTY ORDER THAT THE LEARNED ASSESSING OFFICER CO NSTRUED THE MEANING OF AGREEMENT AND AS IF ON RECEIPT OF FIRST INSTALLMENT THE SHARE WOULD BE TREATED AS TRANSFERRED WITHIN THE MEANING OF SEC. 2(47) OF THE INCOME-TAX ACT 1961. ACCORDINGLY ASSESSING OFFICER HAS HELD THAT THE AS SESSEE HAS FURNISHED INACCURATE PARTICULARS BY NOT OFFERING CAPITAL-GAIN TAX ON THE TRANSFER OF SHARES. 6. ON APPEAL LEARNED FIRST APPELLATE AUTHORITY HAS DELETED THE PENALTY ON THE GROUND THAT THE ASSESSEE HAS NOT CONCEALED T HE PARTICULARS. HE HAS DISCLOSED THE AGREEMENT OF SALE OF SHARES AND RECEI PT OF FIRST INSTALLMENT ETC. ACCORDING TO THE LEARNED FIRST APPELLATE AUTHORITY THE DISPUTE NOT RELATES TO CHARGEABILITY OF CAPITAL GAIN TAX BUT IT ONLY RE LATES TO THE YEAR OF CHARGEABILITY. ACCORDING TO THE ASSESSING OFFICER THE CAPITAL GAIN TAX IS CHARGEABLE IN ASSESSMENT YEAR 1997-98 WHEREAS ACCOR DING TO THE ASSESSEE IT IS CHARGEABLE IN ASSESSMENT YEAR 2000-01. THIS DIFF ERENCE OF OPINION HAS BEEN EMERGED ON THE INTERPRETATION OF THE AGREEMENT . ACCORDINGLY LEARNED 6 FIRST APPELLATE AUTHORITY HAS HELD THAT THE ASSESSE E DOES NOT DESERVE TO BE VISITED WITH PENALTY UNDER SEC. 271(1)(C) OF THE AC T. HE DELETED THE PENALTY. 7. LEARNED DR WHILE IMPUGNING THE ORDER OF THE LEAR NED CIT(APPEALS) TOOK US THROUGH THE ORDER OF THE ITAT PASSED IN THE QUANTUM APPEAL WHICH IS AVAILABLE ON PAGE NOS. 22 TO 66. SHE EMPHASIZED THA T THE ITAT TOOK INTO CONSIDERATION THE AGREEMENT AND OBSERVED THAT PERUS AL OF THIS AGREEMENT WOULD REVEAL THAT ON PAYMENT OF FIRST INSTALLMENT B Y THE VENDEE THE VENDOR WOULD BE UNDER AN OBLIGATION TO EXECUTE THE TRANSFE R DEED AND ALSO TO TAKE NECESSARY STEPS TO GET ALL THESE SHARES TRANSFERRED IN THE NAME OF VENDEE. THIS TERM OF THE AGREEMENT IS THE DECIDING FACTOR A ND THE POSTPONEMENT OF PAYMENT OF BALANCE INSTALLMENTS WOULD HAVE NO BEARI NG IN CLINCHING THE DATE WHICH IS TO BE CONSIDERED FOR THE TRANSFER OF THE S HARES BECAUSE IN CASE THE VENDEE FAILED TO MAKE THE PAYMENT IN TIME THEN VE NDOR WILL BE ENTITLED TO INTEREST @ 18% PER ANNUM FOR THE PERIOD OF DEFAULT. THE VENDOR HAS NO RIGHT TO REPUDIATE THE AGREEMENT. THE SALE PROCEEDS COULD BE RECOVERED BY EXECUTION OF THE AGREEMENT. THUS ACCORDING TO THE LEARNED DR THE PAYMENT OF FIRST INSTALLMENT IS THE CRUCIAL DATE TO INDICATE THE TRANSFER OF THE SHARES. THIS PAYMENT HAS TAKEN PLACE IN THE ACCOUNT ING YEAR 1997-98 AND THEREFORE THE ASSESSEE OUGHT TO HAVE SHOWN THE CAP ITAL GAIN IN ASSESSMENT YEAR 1997-98. BY NOT SHOWING THE CAPITAL IN THIS AS SESSMENT YEAR THE 7 ASSESSEE HAS FURNISHED INACCURATE PARTICULARS AND D ESERVED TO BE VISITED WITH PENALTY. 8. ON THE OTHER HAND LEARNED COUNSEL FOR THE ASSES SEE SUBMITTED THAT THE ASSESSEE HAS DISCLOSED ALL THE PARTICULARS IN THE R ETURN. HE HAS DISCLOSED THE AGREEMENT. HE HAS DISCLOSED RECEIPT OF FIRST INSTAL LMENT. HE HAS NOT WITHHELD ANY INFORMATION FROM THE DEPARTMENT. LEARNED ASSESS ING OFFICER APPEARS TO HAVE BEEN INFLUENCED BY THE REFERENCE OF TWO FLATS BEARING NOS. 407 AND 412 SITUATED AT OLYMPUS APARTMENT ALTAMOUNT ROAD MUMB AI. THESE TWO FLATS WERE INITIALLY LEASED BY M/S. RAJENDRA LAL SHADILAL & CO. PVT. LTD. TO M/S. SRI RAM FIBERS LTD. (SUBSEQUENTLY NAMED AS M/S. SRF LTD. ) VIDE LEASED DEED DATED 28.7.1989 ON ANNUAL RENT OF RS.15 000 PM . THE LEASE DEED WAS TO BE REVIEWED PERIODICALLY. THE HUNDRED PERCENT SH AREHOLDING OF M/S. RAJENDRA LAL SHADILAL & CO. PVT. LTD. IS BEING LIQU IDATED IN FAVOUR OF M/S. SRF LTD. BY VIRTUE OF SHAREHOLDING PATTERN THESE F LATS WOULD COME TO THE POSSESSION OF M/S. SRF LTD. IT IS NOT THE CASE THAT THESE FLATS WERE GIVEN ON A LEASE FOR A NOMINAL AMOUNT ONLY WHILE TRANSFERRING THE SHARES. THE ISSUE RELATES TO SALE AND PURCHASE OF SHARES ONLY. THE TR ANSFER OF SHARES ULTIMATELY WOULD TAKE PLACE WHEN SHARE CERTIFICATES ARE BRING HANDED OVER TO THE BUYER AND NAME OF THE BUYER IS BEING ENTER IN THE RECORD. THE VENDEE HAS DEFAULTED IN PAYMENT OF INSTALLMENT. ACCORDING TO THE ASSESSE E TRANSFER HAS TAKEN 8 PLACE ON THE PAYMENT OF FINAL INSTALLMENTS. THE ASS ESSEE HAS OFFERED THE CAPITAL GAIN FOR TAXATION IN ASSESSMENT YEAR 2000-0 1. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT VIEW OF THE ASS ESSING OFFICER FOR TAXING THE CAPITAL GAIN IN ASSESSMENT YEAR 1997-98 WAS NOT UPHELD BY THE LEARNED CIT(APPEALS). HE DELETED THE ADDITION. HOWEVER LEA RNED SECOND APPELLATE AUTHORITY I.E. THE ITAT HAS REVERSED THE ORDERS OF THE LEARNED CIT(APPEALS) AND RESTORED THAT OF THE ASSESSING OFFICER. BUT AGA IN APPEAL OF THE ASSESSEE HAS BEEN ADMITTED BY THE HON'BLE HIGH COURT WHICH I NDICATES THAT QUESTION OF LAW ABOUT THE DETERMINATION OF DATE OF TRANSFER IS INVOLVED AND IN SUCH DEBATABLE ISSUE NO PENALTY WOULD BE IMPOSEABLE. FO R BUTTRESSING HIS CONTENTIONS HE RELIED UPON THE THIRD MEMBER DECISI ON OF THE ITAT IN THE CASE OF RUPAM MERCANTILE LTD. VS. DCIT REPORTED IN 91 ITD 237. IN SUPPORT OF HIS CONTENTIONS HE FURTHER RELIED UPON THE FOLL OWING DECISIONS: 1. HON'BLE SUPREME COURTS DECISION IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. 322 ITR 158; 2. ITAT DELHI BENCHS DECISION IN THE CASE OF RAHUL MEHTA VS. ACIT IN ITA NO. 14/DEL/2010; 3. ITAT MUMBAI BEHCHS DECISION IN THE CASE OF M/S. N AYAN BUILDERS & DEV. PVT. LTD. VS. ITO IN ITA NO. 2379/MUM/2009; 4. HON'BLE DELHI HIGH COURTS DECISION IN THE CASE OF M/S. HERO HONDA MOTORS LTD. VS. DCIT IN ITA NO. 2698/DEL/2010 ; 5. HON'BLE DELHI HIGH COURTS DECISION IN THE CASE OF CIT VS. LIQUID INVESTMENTS LTD. IN ITA NO. 240/2009; 6. ITAT DELHI BENCHS DECISION IN THE CASE OF ACIT VS . SH. VIJAY KUMAR JINDAL IN ITA NO. 1237/DEL/2009; 9 7. HON'BLE DELHI HIGH COURTS DECISION IN THE CASE OF CIT VS. DEVSONS LOGISTICS PVT. LTD REPORTED IN 329 ITR 483; & 8. HON'BLE DELHI HIGH COURTS DECISION IN THE CASE OF CIT VS. M/S. MAHANAGAR TELEPHONE NIGAM LTD. IN ITA NO.626/DEL/20 11. 9. THE ASSESSEE HAS PLACED ON RECORD COPIES OF ALL THE DECISIONS IN THE PAPER BOOK. 10. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. SECTION 271(1)(C) OF THE ACT HAS A DIREC T BEARING ON THE CONTROVERSY AND THEREFORE IT IS SALUTARY UPON US TO TAKE NOTE OF THE RELEVANT PROVISIONS OF SECTION 271(1)(C) ALONG WITH EXPLANAT ION 1 WHICH READ AS UNDER: 271. FAILURE TO FURNISH RETURNS COMPLY WITH NOTIC ES CONCEALMENT OF INCOME ETC. (1). IF THE ASSESSING OFFICER OR THE COMMISSIONER ( APPEALS) OR THE CIT IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT IS SATISFIED THAT ANY PERSON (A) AND (B)******** (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY. (I) AND (INCOME-TAX OFFICER )******** (III) IN THE CASES REFERRED TO IN CLAUSE (C) OR CLA USE (D) IN ADDITION TO TAX IF ANY PAYABLE BY HIM A SUM WHICH SHALL NOT BE LESS THAN BUT WHICH SHALL NOT EXCEED THREE TIMES THE AMOUNT OF T AX SOUGHT TO BE 10 EVADED BY REASON OF THE CONCEALMENT OF PARTICULARS OF HIS INCOME OR FRINGE BENEFIT THE FURNISHING OF INACCURATE PARTICU LARS OF SUCH INCOME OR FRINGE BENEFITS: EXPLANATION 1.- WHERE IN RESPECT OF ANY FACTS MATER IAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OF FERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSIONER(APPEALS) OR THE CIT TO BE FALSE OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS N OT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATI ON IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIA L TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM THE N THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME O F SUCH PERSON AS A RESULT THEREOF SHALL FOR THE PURPOSES OF CLAUSE (C ) OF THIS SUB-SECTION BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHI CH PARTICULARS HAVE BEEN CONCEALED. 11. A BARE PERUSAL OF THIS SECTION WOULD REVEAL THA T FOR VISITING ANY ASSESSEE WITH THE PENALTY THE ASSESSING OFFICER OR THE LEARNED CIT(APPEALS) DURING THE COURSE OF ANY PROCEEDINGS B EFORE THEM SHOULD BE SATISFIED THAT THE ASSESSEE HAS; (I) CONCEALED HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. AS FAR AS THE QUA NTIFICATION OF THE PENALTY IS CONCERNED THE PENALTY IMPOSED UNDER THIS SECTION C AN RANGE IN BETWEEN 100% TO 300% OF THE TAX SOUGHT TO BE EVADED BY THE ASSESSEE AS A RESULT OF 11 SUCH CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS. THE OTHER MOST IMPORTANT FEATURES OF THIS SECTION IS DEEMING PROVISIONS REGARDING CONCEALMENT OF INCOME. THE SECTION NOT ONLY COVERED THE SITUATION IN WHICH THE ASSESSEE HAS CONCEALED THE INCOME OR FURNISHED INACCURATE PARTICULARS IN CERTAIN SITUATION EVEN WITHOUT THERE BEING ANYTHIN G TO INDICATE SO STATUTORY DEEMING FICTION FOR CONCEALMENT OF INCOME COMES INT O PLAY. THIS DEEMING FICTION BY WAY OF EXPLANATION I TO SECTION 271(1)( C) POSTULATES TWO SITUATIONS; (A) FIRST WHETHER IN RESPECT OF ANY FAC TS MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME UNDER THE PROVISION S OF THE ACT THE ASSESSEE FAILS TO OFFER AN EXPLANATION OR THE EXPLANATION OF FERED BY THE ASSESSEE IS FOUND TO BE FALSE BY THE ASSESSING OFFICER OR LEARN ED CIT(APPEALS); AND (B) WHERE IN RESPECT OF ANY FACT MATERIAL TO THE COMPU TATION OF TOTAL INCOME UNDER THE PROVISIONS OF THE ACT THE ASSESSEE IS NO T ABLE TO SUBSTANTIATE THE EXPLANATION AND THE ASSESSEE FAILS TO PROVE THAT SU CH EXPLANATION IS BONA FIDE AND THAT THE ASSESSEE HAD DISCLOSED ALL THE FACTS R ELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME. UN DER FIRST SITUATION THE DEEMING FICTION WOULD COME TO PLAYA IF THE ASSESSEE FAILED TO GIVE ANY EXPLANATION WITH RESPECT TO ANY FACT MATERIAL TO TH E COMPUTATION OF TOTAL INCOME OR BY ACTION OF THE ASSESSING OFFICER OR THE LEARNED CIT(APPEALS) BY GIVING A CATEGORICAL FINDING TO THE EFFECT THAT EXPLANATION GIVEN BY THE 12 ASSESSEE IS FALSE. IN THE SECOND SITUATION THE DEE MING FICTION WOULD COME TO PLAY BY THE FAILURE OF THE ASSESSEE TO SUBSTANTIATE HIS EXPLANATION IN RESPECT OF ANY FACT MATERIAL TO THE COMPUTATION OF TOTAL IN COME AND IN ADDITION TO THIS THE ASSESSEE IS NOT ABLE TO PROVE THAT SUCH EXPLANA TION WAS GIVEN BONA FIDE AND ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME HAVE BEEN DISCLOSED BY THE ASSESSEE. T HESE TWO SITUATIONS PROVIDED IN EXPLANATION 1 APPENDED TO SECTION 271(1 )(C) MAKES IT CLEAR THAT THAT WHEN THIS DEEMING FICTION COMES INTO PLAY IN T HE ABOVE TWO SITUATIONS THEN THE RELATED ADDITION OR DISALLOWANCE IN COMPUT ING THE TOTAL INCOME OF THE ASSESSEE FOR THE PURPOSE OF SECTION 271(1)(C) WOULD BE DEEMED TO BE REPRESENTING THE INCOME IN RESPECT OF WHICH INACCUR ATE PARTICULARS HAVE BEEN FURNISHED. 12. LEARNED ASSESSING OFFICER WHILE CONSTRUING THE AGREEMENT DATED 19.8.1996 HAS HARBORED A BELIEF THAT CLAUSE 7 OF TH E AGREEMENT WOULD INDICATE THAT VENDOR HAS NO RIGHT TITLE AND INTERES T IN THE SHARES UPON RECEIPT OF FIRST INSTALLMENT AND THE BUYER WILL BECOME THE OWNER OF THE SAME. IN HIS OPINION ALL OTHER ASPECTS HANDING OVER THE SHARE C ERTIFICATES THEIR GIVING EFFECT IN THE RECORD PAYMENT OF BALANCE AMOUNT ARE PERIPHERAL ISSUES WHICH CANNOT POSTPONE THE FACTUM OF TRANSFER. HE HARBORED THIS BELIEF ON THE 13 GROUND THAT SECTION 2(47) OF THE ACT PROVIDES AN EX HAUSTIVE DEFINITION OF THE TRANSFER. ONCE A CLAUSE OF THE AGREEMENT INDICATE E XTINGUISHMENTS OF THE RIGHT OF THE VENDOR THEN IT WOULD CONSTITUTE THAT T RANSFER HAS TAKEN PLACE. IN OUR OPINION HE MAY BE RIGHT SO BUT FOR THE PURPOSE OF PENALTY UNDER SEC. 271(1)(C) IT CANNOT BE SAID THAT THE ASSESSEE HAS DELIBERATELY FURNISHED INACCURATE PARTICULARS. ACCORDING TO THE ASSESSEE THE VENDEE DID NOT ADHERE TO THE SCHEDULE OF PAYMENT. THE TRANSFER IN FACT WAS NOT COMPLETED ONLY ON RECEIPT OF FIRST INSTALLMENT OF SALE PROCEEDS. HON' BLE DELHI HIGH COURT IN THE CASE OF MTNL LTD. HAS OBSERVED THAT MERELY AN ADDIT ION HAS BEEN MADE PENALTY WOULD NOT GET ATTRACTED AUTOMATICALLY. HON' BLE SUPREME COURT IN THE CASE OF RELIANCE PETRO CHEM HAS OBSERVED THAT WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITIN G PENALTY UNDER SEC. 271(1)(C) OF THE ACT. ASSESSING OFFICER HAS NOT POI NTED OUT ANY FALSITY IN THE DETAILS SUBMITTED BY THE ASSESSEE. THE CONCLUSION D RAWN BY HIM ARE BASED ON THE INTERPRETATION OF THE AGREEMENT. THAT INTERPRET ATION IS STILL SUBJECT TO DEBATE BECAUSE THE VIEW OF THE ASSESSING OFFICER WA S NOT UPHELD BY THE LEARNED CIT(APPEALS). THE I.T.A.T. HAS FURTHER R EVERSED THE VIEW TAKEN BY THE LEARNED CIT(APPEALS) AND THE APPEAL IS STI LL PENDING IN THE HON'BLE HIGH COURT. IT SUGGESTS THAT IT IS A DEBAT ABLE QUESTION AND A QUESTION 14 OF LAW HAS ARISEN WHICH HAS BEEN ADMITTED BY THE HO N'BLE HIGH COURT FOR CONSIDERATION. LEARNED FIRST APPELLATE AUTHORITY HA S CONSIDERED ALL THESE ASPECTS IN THE IMPUGNED ORDER AND ONLY THEREAFTER D ELETED THE PENALTY. LEARNED CIT(APPEALS) HAS OBSERVED THAT THERE HAS BE EN A DIFFERENCE OF OPINION BETWEEN THE ASSESSEE AND THE ASSESSING OFFI CER. CONSIDERING THE WELL REASONED ORDER OF LEARNED FIRST APPELLATE AUT HORITY WE DO NOT SEE ANY MERIT IN THIS APPEAL. IT IS DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 17.02.201 2 SD/- SD/- ( A.N. PAHUJA ) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 17/02/2012 MOHAN LAL COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR