TMI Blog2011 (3) TMI 606X X X X Extracts X X X X X X X X Extracts X X X X ..... armesh Shah for the Respondent. ORDER Rajendra Singh, Accountant Member. This appeal by the revenue is directed against the order dated 15-12-2009 of the CIT(A) for the assessment year 2003-04. The only dispute raised by the revenue in this appeal is regarding deletion of penalty levied by the Assessing Officer under section 271(1)(c) of the Income-tax Act. 2. Briefly stated, the facts of the case are that the assessee had acquired a leasehold land bearing Plot No. 104, Sion-Matunga (E), Mumbai measuring 9620.05 sq. meter by way of indenture of deed of 25-11-1970. The assessee had constructed a factory and administration building on the said plot and manufacturing activities were being carried on. The business was closed due to labour unrest and heavy losses. The assessee therefore decided to sell the land. The assessee entered into MOU dated 24-8-2001 with the developer, M/s. Maitri Associates (MA) for transfer of rights in the land for an upfront consideration of Rs. 6 crores and 40 per cent of sale proceeds from the sale of the units to be constructed by M/s. MA. Both the parties had filed Form No. 37-I with the Income-tax Department for obtaining permission. As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntified. The consideration clearly mentioned was Rs. 6 crores + 40 per cent share in the sale price of flats. The assessee had received the sum of Rs. 6 crores i.e., part consideration in assessment year 2002-03 itself. The transaction was therefore covered under section 2(47)(v) as transfer by way of part performance of contract. The applicability of section 2(47)(v) was supported by the judgment of Hon'ble High Court of Mumbai in case of Chaturbhuj Dwarkadas Kapadia of Bombay (supra). The assessee had handed over possession of the land at the time of agreement on 21-3-2002. The apportioned consideration for transfer was determined by the Assessing Officer under the provisions of section 269UA(2) which provided for determination of consideration as discounted value of future payments by applying interest rate of 8 per cent as provided under rule 48-I of the Income-tax Rules. The discounted value was computed by the Assessing Officer at Rs. 34,02,51,805 as per the Table given below : Asst. Year Actual Receipts Discounting Factor Discounted value 2002-03 6,00,00,000 100 6,00,00,000 2003-04 10,05,200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee had not concealed particulars of income or filed inaccurate particulars of income and therefore no penalty should be imposed. 5.1 Assessing Officer however did not accept the contentions raised. It was observed by him that difference in legal opinion was of no help to the assessee as the assessee had obtained the second opinion only after the start of enquiries by the department in the matter. The Assessing Officer also noted that the assessee was not correct in stating that the law was not clear. The law was very clear and the transaction was covered as part performance of contract under section 2(47)(v). The Assessing Officer had simply acted in the assessment under the provisions of law which was very clear. The assessee had therefore by not offering the capital gain in assessment year 2002-03 concealed the particulars of income and penalty was leviable. The Assessing Officer therefore levied the penalty at the rate of 100 per cent of tax sought to be levied which was computed at Rs. 3,44,40,616. 6. The assessee disputed the decision of Assessing Officer and submitted before CIT(A) that penalty proceedings were different from assessment proceedings and merely bec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls. The assessee had not concealed any facts. It had declared the transactions in the returns. He referred to the balance sheet for assessment year 2002-03 at page 50 of the paper book in which the sum of Rs. 6 crores was shown as advance against sale of properties. He also referred to the note 7 of the auditors at page 56 of the report in which it was mentioned that Company's net worth had been completely eroded and with an objective to turn around it had entered into a property development agreement for the land and it had received an advance payment of Rs. 6 crores. It was pointed out that at the time of filing return of income for assessment year 2002-03 there were decisions of the Tribunal as per which development agreement did not amount to transfer. The reference was made to the decision of Mumbai Bench of the Tribunal in case of Dy. CIT v. Asian Distributors Ltd. [2001] 119 Taxman 171 (Mag.). It was also pointed out that judgment of Hon'ble High Court of Mumbai in case of Chaturbhuj Dwarkadas Kapadia (supra) was delivered only on 13-2-2003 i.e. after the filing of return for the assessment year 2002-03. The issue was debatable and therefore in such cases no penalty should b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which had been estimated at Rs. 8,01,64,316. The assessee however did not declare any capital gain in respect of the transfer of land in the return of income filed for assessment year 2002-03 on 31-10-2002. Subsequently there was a search conducted under section 132 of the Income-tax Act in case of directors of the assessee company on 12-9-2006 and based on the documents found and seized at the time of search, proceedings were initiated under section 153C in case of the assessee company in response to which the assessee filed the return for assessment year 2002-03 in which the capital gain was declared in respect of the transfer of land on the basis of consideration of Rs. 14,01,61,316 as stated by the assessee in Form No. 37-I submitted before the Income-tax Department for obtaining clearance before transferring the land. The assessee computed the capital loss of Rs. 1,86,41,755 after considering the indexed cost of acquisition. 9.1 The Assessing Officer on examination of documents and development agreement noted that the assessee had transferred all the rights in the land except TDR and increase in FSI to the developer. The assessee had also received the part consideration of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... livered only on 13-2-2003 and was not available at the time of filing the return of income by the assessee for the assessment year 2002-03. The assessee had not declared the capital gain under the bona fide belief that the same was not taxable. It has also been submitted that there were differences of opinion even among the counsels one of which stated that capital gain had to be charged in assessment year 2002-03 while other opined that it was to be taxed in assessment years 2006-07 to 2008-09. It has accordingly been prayed that the penalty should be deleted. 9.3 We have carefully considered the various aspects of the matter. In our view a case for penalty under section 271(1)(c) has to be evaluated in terms of the provisions of Explanation 1 to section 271(1)(c) as per which in respect of any addition to the total income if the assessee fails to offer any explanation or explanation offered is found to be false or the assessee offers explanation which he is not able to substantiate and fails to prove that the explanation is bona fide and all material facts relating to the computation of income had been disclosed, it will be a case of deemed concealment of particulars of income. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee had received a sum of Rs. 1.30 crores on 31-3-1988 and the balance sum of Rs. 50 lakhs was to be received in May 1988. The Assessing Officer had held that the assessee had transferred the possession of land and the transaction amounted to transfer in assessment year 1988-89. The Tribunal however noted that as per the agreement, possession of the land was to be given only on payment of last instalment which fell in May, 1988, and till such time, the assessee had right to revoke the contract in certain eventuality. The revenue had no material to prove that possession of the land had been given by 31-3-1988. It was therefore held that no capital gain could be charged in assessment year 1988-89. In case of the assessee it is not in dispute that the possession of the land had been handed over on 21-3-2002 and part consideration of Rs. 6 crores had also been received and therefore the capital gain was chargeable in assessment year 2002-03 in view of the provisions of section 2(47)(v). This is supported by the judgment of Hon'ble High Court of Mumbai in case of Chaturbhuj Dwarkadas Kapadia (supra). Even after the said judgment was delivered, the assessee did not revise the retu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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