TMI Blog2012 (9) TMI 136X X X X Extracts X X X X X X X X Extracts X X X X ..... me having been subsequently declared - thus in this case even though the revised return was found to be invalid, the AO accepted the income as declared in the revised return and computation & did not bring any material on record that the declaration of income made by the assessee in his revised return or his explanation was not bonafide - in favour of assessee. - ITA No.2970/Del/2012 - - - Dated:- 31-8-2012 - SHRI A.D. JAIN, SHRI A.N. PAHUJA, JJ. Revenue by Mrs. Anusha Khurana, DR O R D E R A.N.Pahuja:- This appeal filed on 14.06.2012 by the Revenue against an order dated 01.03.2012 of the learned CIT(A)-Karnal, raises the following grounds:- 1) On the facts and in the circumstances of the case, the ld. CIT(A) has erred in law in cancelling penalty of ₹ 10,77,190/- levied u/s 271(1)(c) on account of nondisclosure of short term and long term capital gain in the return originally filed without appreciating the fact that the so called revised return filed including the amount of capital gains was subsequent to the receipt of notices u/s 143(2)/142(1) issued by the department. 2. The appellant craves leave to add or amend the grounds of app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent of ₹ 4,63,388/- to them. In response to another show cause notice dated 10.09.2008 the assessee replied as under:- The assessee did not bonafidely claim TDS on the basis of certificate as rent for four months was refundable which he actually did in the immediately succeeding year. An assessee has to be taxed on real income and not on hypothetical basis. It is understandable that an assessee who was honoured by Hon ble CBDT Chairman at Chandigarh as one of the 16 assessees of NWR in the category of assesses in higher bracket of income, is being questioned vide your show cause to add what has to come to him as his real income. 3.1 After considering the aforesaid reply and in the absence of any evidence of agreement to sell or return of rent, the AO denied deduction of ₹ 4,63,388/-. Inter alia, penalty proceedings u/s 271(1)(c) of the Act were also initiated. 3.2 The AO further noticed that the assessee declared short term capital gain on sale of three properties at ₹ 13,93,279/- (8,49,979+19,000+5,24,250/-) beside from sale of shares at ₹ 47,10,726/-. In response to a show cause notice issued by the AO, seeking details of the properties so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmissions and have gone through the material available on record. We find that there is no dispute on this factual aspect that advance of ₹ 47 lakhs was received by the assessee from M/s PJ Associates on account of sale of the impugned property by the assessee to that party. The dispute is regarding the rental income from the month of December, 2005 to March, 2006 i.e. for four months. It is also admitted factual position that under similar circumstances, the assessee received rental income for the month of April and May, 2006 and the same was also passed on to the buyer by way of the same cheque of dated 8.6.2006 because as per the details available on page No.3 and 4 of the paper book, one cheque No.618356 for ₹ 5,72,806/- was received by that party from the assessee on 5.6.2006. As per the details of this amount, it is on account of rental income received by the assessee from December, 2005 to May, 2006 after deducting TDS of Rs.l,21,076/-. As per the order for assessment year 2007- 08 submitted by the assessee before us, it is seen that the Assessing Officer has not made any addition in the income of the assessee on account of rent for the month of April May, 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under similar circumstances, the revenue has accepted the claim of the assessee in the subsequent year. As per the judgment of Hon'ble Punjab Haryana High Court rendered in the case of CIT v. Reita Biscuits Co. Pvt. Ltd. (supra), if the issue is being decided in subsequent year in favour of the assessee and against the revenue, different view cannot be taken in the preceding year. Hence, this judgment of Hon'ble Punjab Haryana High Court becomes applicable under these facts of the present case and as per the same, the claim of the assessee has to be accepted in the present year also that rental income from December, 2005 to March, 2006 also did not accrue to the assessee. The third important point is that even if it is held that rental income is assessable in the hands of the assessee then this amount of ₹ 4,63,338/ - paid by the assessee to Shri P.J. Singh has to be reduced from the capital gain tax in the hands of the assessee in the subsequent year I.e. assessment year 2007-08 and as a result, the short term capital gain of ₹ 3, 77, 756/ - declared by the assessee in that year will be converted into short term capital loss of ₹ 85,632/-and the diff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the return of income filed by the buyer for the present year, then no addition should be made in the hands of this assessee on account of rent for December, 2005 to March, 2006 and the Assessing Officer should withdraw the credit of TDS of ₹ 82,482/- on rental income for December, 2005 to March, 2006 because if the income is not taxed in the hands of this assessee, credit for TDS cannot be allowed. But if this rental income for December, 2005 to March, 2006 has not been declared by the buyer in its return of income then such rental income has to be taxed in the hands of this assessee. The Assessing Officer should pass necessary order as per law as per above discussion after providing adequate opportunity of being heard to the assessee and to make it clear that burden is on the assessee to bring evidence on record establishing that the buyer has declared this income in its return of income for this assessment year. This ground is allowed for statistical purposes. .. We have heard the rival submissions and have gone through the material available on record. We find that Ld. CIT(A} has worked out the interest income on account of this de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adurgarh which was earlier wrongly credited to land at Panchkula. Since the return was revised voluntarily, relying upon decisions in Cheap Cycle Stores vs. CIT,196 CTR 173 (All.); CIT vs. SV Electricals Pvt. Ltd.,274 ITR 334 (MP);CIT vs. Mrs. Roshan D Rehman,295 ITR 280 (Bom.) and CIT vs. SSP P Ltd.,302 ITR 43 (P H),the assessee pleaded that penalty proceedings should be dropped. However, the AO did not accept the explanation of the assessee and imposed a penalty of ₹ 10,77,190/- for furnishing inaccurate particulars of income of ₹ 60,39,824/- while observing that since the revised return had been filed on 10.9.2008 while notice u/s 143(2) of the Act was issued on 11.10.2007,revised return was not voluntary nor valid. 6. On appeal, the ld. CIT(A) cancelled the penalty, in the following terms:- 1.9 The issue is examined. As discussed above that the appellant declared further income on account of short term and long term capital gain by filing a revised return of income. The appellant impressed upon that no information was available with the department in this regard and the assessment was made by adopting the figures declared by him in the revised return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces, we are of the opinion that no penalty is leviable. It is well settled that assessment proceedings and penalty proceedings are separate and distinct and as held by Hon'ble Supreme Court in the case of Ananthraman Veerasinghaiah Co. Vs. CIT, 123 ITR 457, the finding in the assessment proceedings cannot be regarded as conclusive for the purposes of the penalty proceedings. It is, therefore, necessary to reappreciate and reconsider the matter so as to find out as to whether the addition made in the quantum proceedings actually represents the concealment on the part of the assessee as envisaged in sec. 271(1 )(c) of the Act and whether it is a fit case to impose the penalty by invoking the said provisions. It is also well settled that the criterion and yardsticks for the purpose of imposing penalty u/s 271(1)(c) of the Act are different than those applied for making or confirming the additions. The Hon ble Kerala High Court in the case of CIT v. M. George Bros. [1986] 160 ITR 511 held that where the assessee for one reason or the other agrees or surrenders certain amounts for assessment, the imposition of penalty solely on the basis of the surrender will not be well-founded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... level of the AO to suggest that the assessee concealed the income on account of capital gains, which was offered for taxation suo motu in the revised return. 8.3 Merely because a notice u/s 143(2) had already been issued and the assessee filed revised return thereafter, disclosing additional income towards capital gains, which was not correctly shown in the original return, does not tantamount to detection of concealment of income u/s. 271(1)(c) of the Act . Hon ble Madhya Pradesh High Court in the case of CIT v. S.V. Electricals P. Ltd., 155 Taxman 158 and Hon ble Jharkhand High Court in CIT v. Ashim Kumar Agarwal, 153 Taxman 226 held that where the assessee surrenders his full income, though at a later stage, there was no question of any concealment on his part and consequently, no penalty under Section 271(1)(c) was leviable, and that a omission from return of income did not amount to concealment. Hon ble jurisdictional High Court while adjudicating the issue of levy of penalty u/s 271(1)(c) of the Act in the case of CIT vs. Harnarain in their decision dated 31st October,2011 in ITA no.2072/2010 concluded that surrender of the amount by the assessee after receipt of the ques ..... X X X X Extracts X X X X X X X X Extracts X X X X
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