TMI Blog2014 (3) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee about the non-taxability in the year of signing the development agreement also stands defeated in view of the contention as to the existence of two views on these issues - the assessee during the penalty proceedings before the assessing officer has given entirely different reason for the default committed by him, clearly shows that did not come out clean with all the facts and particulars of the income even in the return filed in response to notice u/s 148 of the Income-tax Act, or in the assessment proceedings thereafter, which shows that the assessee has deliberately tried to evade tax on capital gains - It was a clear cut case of concealment by the assessee to evade tax – the penalty levied by the CIT(A) is upheld – Decided against Assessee. - ITA No.668/Hyd/2013 - - - Dated:- 10-1-2014 - Chandra Poojari And Asha Vijayaraghavan, JJ. For the Appellant : Shri S Rama Rao For the Respondent : Shri B Yadagiri ORDER:- PER : Asha Vijayaraghavan This appeal is filed by the assessee against the order of the Commissioner of Income Tax (Appeals)-II, Hyderabad dated 12.02.2013 confirming penalty of RS.16,65,027 levied under S.271(1)(c) of the Act for the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n response to the show cause notice issued in that behalf, assessee filed a reply opposing the penalty proposed, vide letter dated 28.01.2011, filed before the Assessing Officer on 15.4.2011. The submissions of the assessee in the said letter dated 28.01.2011 furnished before the Assessing Officer are re-produced as under: "The main reason for not filing the income tax returns that the information pertaining to the details of purchase of the property given for development i. e., sale deed copies related to the year 1978, Will Deed copy of my mother in which she has gifted to me etc., which were kept in a separate file was misplaced by my staff. The file inspite of my best efforts could not be traced for long time. Due to lack of this information, I could not file my Income tax returns within the due date. The information was most important for me to calculate the capital gains and pay the necessary taxes as the cost of purchase of land in the year 1978 and registration and other expenses incurred was avail-able in that file and this information was very much relevant for the calculation of capital gains and the tax. In the meanwhile survey has happened on 19.3.2008. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the assessing officer in his assessment orders. I have fully cooperated with the department and agreed to pay another Rs.12 lakhs in addition to already paid Rs.60 lakhs in order to buy peace with the department. 5. The Assessing Officer, on detailed consideration of the explanation of the assessee, finding no merit in the same, imposed the impugned penalty of Rs.16,65,027, vide order dated 28.6.2011, with the following observations held as follows : 5. .. A. The explanation furnished by the assessee is not acceptable. The reason for not furnishing the return of income i.e, the information pertaining to the details of purchase of property given for development i.e, sale deed copies, will deed copies kept in a separate folder were misplaced by the staff, has no force in it and is not tenable. This reason cannot explain assessee's in action of non-payment of taxes and non-filing of return of income. Without such details, it is very surprising as to how reference could be made to all the previous documents through which the land in question changed hands and finally bequeathed on the assessee through will. On a perusal of the development agreement dated 02.09.2005 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner (appeals) is satisfied that in respect of such assessment year such person has taxable income, then such person. shall, for the purpose of clause (c) of Section 271 (1), be deemed to have concealed the particulars of his' income In respect of such assessment year, notwithstanding that such person furnishes a return of his income at any time after the expiry of the period aforesaid in pursuance of a notice under section 148." Assessee's case exactly suits conditions laid down in the statute. For the Asst. year 2006-07, the period specified in sub-section(1) of section 153 concludes by 31.12.2008 and that assessee had taxable income for the Asst. Year 2006-07. Notice u/s 148 was issued to the assessee on 11.11.2009 i.e., after the period aforesaid and assessee filed return of income on 26.03.2010 admitting a total income of Rs.27,24,330/-. It is for the reason of the survey u/s 133A, the issue of capital gains escaping assessment has come to the notice of the department and only after the issue of notice u/s 148, assessee has filed returns of income. C. Assessee's stand that he has accepted the construction cost at Rs.800/- per sq. ft. as against Rs.725 cer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transfer of property on the date of entering into development agreement. The appellant was also under the impression that no capital gain arises the undivided share of land and that he was getting the property of equal value by surrendering certain part of the land. The appellant was also of the view that there was no transfer as it is a development of the land through developer and does not involve any transfer or capital gain. The appellant was not in a position to get proper advice as to when the capital arises and as to how the capital gain be computed in respect of development agreement. An opinion was sought after the survey. It is advised that the issue has been the subject matter of judicial scrutiny at various stages and even now the matter is not clear. Some of the judgments laid down that the capital gain arises on the day on which the property was handed over to the developer. If such proposition were to be true, the Assessing Officer in the assessment order mentioned that the developer incurred certain expenditure in the year 2004-05 also which clearly indicates that the capital gain arises for the assessment year 2005-06 and not for the assessment year 2006-07. Some ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... follows- 6.1 .... It is pertinent to mention that when there is a survey or search, any assessees would consult tax consultants or experts and seek advice and disclose the true and correct income and file the return of income accordingly. But, the appellant did not do so. During the survey, the issue of development agreement and his share of built up area have come up and also the apartment which he sold in the previous year concerned on which there is capital gains. But, however, the appellant chose not to file return of income till be received a notice u/s 148 and even after that also he tried to conceal income by not furnishing complete particulars. It may also be noted that the appellant did not prefer any appeal against the assessment order and the fact that it has admitted the capital gains during the assessment proceedings will not expatiate the contumacious conduct of the appellant in not having filed the return within the specified time and in not having disclosed the income in the return filed u/s 148. Reliance is placed on the decision of Mumbai ITAT in the case of Charudutt H. Dargat vs ITO (2010) 132 ITR TTJ (Mumbai) 687 where it has been held that where the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view of the matter, it is submitted that the issue was debatable and there was no conclusive finding on the matter, and consequently, no penalty could be imposed in relation to additions made with regard to such debatable issues. 10. Even with regard to the issue of penalty leviable in relation to differential amount of assessee s claim for relief under S.54F, it is submitted that the issue whether the assessee is eligible for relief under S.54F only in relation to one flat or otherwise, is a debatable, and there are decisions on that aspect in favour of the assessee. In this context, he referred to the decision of the Hyderabad Bench A of the Tribunal in the case of Vittal Krishna Conjeevaram V/s. ITO, Ward 10(4), Hyderabad (2013) 36 Taxmann.com.542(Hyd Tribunal.), and the decision of the Delhi High Court in the case of CIT V/s. Geeta Duggal (ITA No.1237/2011 dated 21.2.2013 for assessment year 2007-08, wherein it was held that so long as the building is of a residential nature, relief under S.54F could be allowed even in respect of more than one residential flat, and the word a should not be understood to indicate a singular number. 11. The learned Departmental Represent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the assessability in the year under appeal, the assessee obviously would have filed appeal against the action of the assessing officer, contesting the view taken by the assessing officer. The plea of bona fide view nursed by the assessee about the non-taxability in the year of signing the development agreement also stands defeated in view of the contention as to the existence of two views on these issues. We, therefore, agree with the CIT(A) that but for the survey action, the capital gains in question, would have escaped assessment, and the contentions of the assessee that the assessee was unaware that there was a tax liability on the development of the property. There is no merit in the plea of the assessee that he was advised that the matter was not clear because there were contrasting decisions of the Hyderabad ITAT on the taxation of the same cannot be accepted, in the absence of any evidence in that behalf and contentions of the assessee appear to be evasive and general in nature. The fact that as compared to the reasons given by the assessee before the CIT(A) and this Tribunal for the defaults resulting in the impugned penalty, the assessee during the penalty proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X
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