TMI Blog2014 (5) TMI 273X X X X Extracts X X X X X X X X Extracts X X X X ..... s of income or concealment of particulars of income – the order of the CIT(A) of cancelling the penalty is upheld – Decided against Revenue. - I.T.A. No. 4763/Del/2013 - - - Dated:- 30-4-2014 - Shri G. D. Agrawal And Shri Chandra Mohan Garg,JJ. For the Appellant : Shri Tapas Ram Mishra For the Respondent : Shri Sameer Sharma, Sr. DR ORDER Per Chandramohan Garg, J. M. This appeal of has been preferred by the revenue against the order of Commissioner of Income Tax(A)-LTU dated 12.06.2013 passed in Appeal No. 20/11-12/C.I.T.(A)-LTU for AY 1998-99 by which penalty order dated 29.11.2012 passed u/s 271(1)( c) of the Income Tax Act, 1961 (for short the Act) has been cancelled. 2. The sole ground raised by the revenue reads as under:- 1. On the facts and in the circumstances of the case, the ld. CIT(A)-LTU has erred in cancelling the penalty of Rs.2,20,28,050/- imposed u/s 271(1)( c) holding that not declaring capital gains of Rs.6,29,37,264/- during the year under consideration did not amount to furnishing of inaccurate particulars of income or concealment of particulars of income. 3. We have heard rival arguments of both the parties and carefully ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts and circumstances of the case and these findings should be independent and without being influenced by the quantum proceedings. The counsel of the assessee submitted that from the notes to accounts, it may be seen that the auditors at Sl.No.14 of the notes had commented that the company had sold its Compressor Division as a going concern to Tecumseh India (P) Ltd. The sale price of fixed assets or current assets and current liabilities to exclude part of the land under dispute as described in Schedule F Note 3 and part of the building at Faridabad. The counsel vehemently contended that the Assessing Officer at page no. 1 of the order u/s 143(3) of the Act had also taken cognizance of clause XIV of the notes to accounts but ignored the very material fact that the assessee had disclosed all necessary and relevant facts in the return of income. Supporting the order of the Commissioner of Income Tax(A), the ld. counsel submitted that the effect of addition made by the Assessing Officer on account of capital gain was merely reduction of loss only and the penalty u/s 271(1)(c) of the Act could not be levied as the amendment in Explanation 4 thereof was not effective for the year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat there was no concealment of the facts is evident by the reference made by the ld. AO in the assessment order to clause 14 of the notes to accounts, which was part of the return of income. Moreover, as held above, the ld. AO was already in possession of the return of income for the A. Y.2000-01, in which the impugned capital gains on the sale of land was disclosed by the appellant. In view of the above, it cannot be held that the appellant had concealed the particulars of income in respect of the sale of land as part of the compressor division of the appellant while the remaining assets were offered for tax in the current year. I find it was more in the nature of difference in opinion about the point of incidence of capital gains. 6.8 In order to ascertain whether the appellant had filed inaccurate particulars of income in respect of the impugned sale of land or not, on careful consideration of the above facts, I find that the appellant had entered MOU with M/s Tecumseh dated 02.07.1997, whereby the Compressor Division of the appellant was to be sold to that company. However, in view of the appellant, the transfer of land measuring 28138 Sq. Mtr. and building thereon, the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve to refund the said advance 50% of sale consideration, if it could not get the land released. In my view, the mechanism of ESCROW account was to provide same kind of security to the appellant after having given the right to easement to the buyer. The Hon'ble ITAT had disregarded the contention of the appellant that the said transfer of land was contingent on de-notification by the Haryana Government, and had observed that the provisions of the MOU allowed the appellant to obtain release of land from the Haryana Govt. However, in my humble submission, it is debatable to hold whether the appellant had already obtained the approval from the Haryana Govt. prior to the impugned transfer of land or not. 6.9 I find that no prudent purpose is served for the appellant by filing inaccurate particulars in the current year while it had already offered for tax the capital gains on sale of the impugned land in A.Y.2000-01. I find that in terms of tax implication also there is not much difference if the profit on sale of the impugned land is taxed in A.Y.1998-99 and not in A.Y. 2000-01. In the current year; i.e. A.Y. 1998-99, if the capital gains on the impugned land was brought to tax, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undue advantage to either of the parties. On the other hand, out of the total consideration involved in transaction (Rs. 52 crores) the major amount had been undisputed and the transaction had completed. The fact that the issue was debatable is proved by the fact that the First Appellate Authority, on examination of the facts, upheld the view of the appellant that the capital gain was not taxable in the current year. Therefore, keeping in view the same, it is held that since the issue was debatable, penalty under Section 271(1)(c) cannot be levied in respect of the addition made by the AO. The appellant had pointed out that the main concern of the AO was also that by showing the income in A.Y.2000-01, the appellant was likely to claim higher index benefit (para 8 of the assessment order). The appellant was asked to work out the difference in the capital gains, if charged to tax in the current year instead of A.Y.2000-01. As per the working given by the appellant, if the capital gain is offered for tax in the current year, the same has tax effect of Rs. 3,26,400 only. The appellant's contention is that the appellant had huge business losses in the current year and hence the capi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In view of above set of facts and circumstances, it cannot be held that the assessee had concealed particulars of income in respect of sale of land as a part of compressor division while the remaining assets were offered for tax in the year under consideration. 8. On careful consideration of the facts and also keeping in view the MOU dated 02.07.1997 between the assessee and the buyer of compressor unit and the provisions of transfer of property Act 1872 and also in the light of ITAT order in the quantum proceedings, we are of the view that the assessee had not received the balance 50% of the sale consideration till the land was released. The provisions of MOU clearly provide that the assessee shall have to refund the said advance of 50% of sale consideration if it could not get the land released. In this situation, the Commissioner of Income Tax(A) rightly held that it is debatable to hold whether the appellant had already obtained approval from the Haryana Government prior to the impugned transfer of land or not. We also hold that the Commissioner of Income Tax(A) rightly held that no prudent purpose could be served for the assessee by filing inaccurate particulars in the curr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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