TMI Blog2015 (5) TMI 366X X X X Extracts X X X X X X X X Extracts X X X X ..... 71(1)(c) of the Act, as held by the Hon’ble Supreme Court in the case of CIT vs. Reliance Petro products Pvt. Ltd., (2010 (3) TMI 80 - SUPREME COURT ). Thus lower authorities have erred in imposing the penalty u/s 271(1)(c) of the Act on the impugned aspect of the matter. - Decided in favour of assessee. - ITA No.441/PN/2012 - - - Dated:- 10-4-2015 - Shri G.S. Pannu And MS. Sushma Chowla JJ. For the Appellant : Mr. Sunil Pathak Mr. Sanket Joshi For the Respondent : Mrs. M.S. Verma, CIT Mr. B. G. Reddy, CIT ORDER Per G. S. Pannu, AM The captioned appeal by the assessee is directed against the order of the Commissioner of Income Tax (Appeals)-III, Pune dated 30.12.2011 which, in turn, has arisen from an order dated 27.05.2011 passed by the Assessing Officer u/s 271(1)(c) of the Income-tax Act, 1961 (in short the Act ) pertaining to the assessment year 2007-08. 2. In this appeal, assessee has raised the following Grounds of Appeal :- 1. The Learned CIT (A) erred in confirming the penalty u/s 271(l)(c). 2. The Learned CIT (A) erred in confirming the penalty of ₹ 12,76,62,859/- on the ground that assessee has concealed the income by wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant had disclosed all the facts correctly and the FMV as on 01.04.1981 was supported by the Registered Valuer's Report. Hence, it is wrong to presume that appellant had concealed the income or filed the inaccurate particulars of income. g. At the best, it could be stated that the claim of the FMV as on 01.04.1981 made by the assessee was a disputable one and in view of the Supreme Court's decision in case of Vegetable Product (88 ITR 192), penalty was not leviable. h. Merely because the Learned A.O. disagree with the true particulars submitted in support of return of income, it cannot be construed that the appellant concealed the particulars of income or furnishe3d incorrect or inaccurate particulars of income for the purpose of Sec. 271(1)(c). i. The learned A.O. failed to refer the valuation of land as on 01.04.1981 to Departmental Valuation Officer, and failed to obtain the DVO S Report. 10. The appellant prays for admission of additional evidences. If any required in supporting this appeal. 11. The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal. 3. In this appeal, although the appellant has raised multipl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ointed out that the assessment order u/s 143(3) r.w.s. 147 of the Act was passed on 23.03.2009 and the show-cause notice u/s 274 r.w.s. 271(1)(c) of the Act was issued on 23.03.2009. The order of the CIT(A)-III, Pune arising from the assessment order dated 23.03.2009 is passed on 31.08.2009. On this basis, assessee submitted that the order of the CIT(A) dated 31.08.2009 was received by the concerned CIT during the financial year 2009-10 and therefore in view of the proviso to section 275(1)(a) of the Act, the Assessing Officer ought to have passed the penalty order on or before 31.03.2011 whereas the impugned order has been passed by the Assessing Officer on 27.05.2011, which is belated. 7. On this aspect, the Ld. CIT-DR opposed the plea of the assessee by pointing out that the assessee company had appealed to the Tribunal against the order of the CIT(A) in quantum proceedings dated 31.08.2009 and therefore the time limit for levy of penalty was to be reckoned in terms of section 275(1)(a) of the Act i.e. within six months from the end of the month in which the order of the Tribunal was received by the Commissioner of Income Tax or Chief Commissioner of Incom5e Tax, as the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1)(c) of the Act in the present case is to be governed by section 275(1)(a) of the Act which provides that the penalty can be levied within six months from the end of the month in which the order of the Tribunal was received by the Commissioner of Income Tax or the Chief Commissioner of Income Tax, as the case may be. From the side of the assessee, there is no dispute that the impugned penalty order has been passed by the Assessing Officer within six months from the end of the month in which the Tribunal order was received by the Commissioner of Income Tax or the Chief Commissioner of Income Tax, as the case may be. Thus, in this factual background and having regard to the parity of reasoning laid down by the Hon ble Madras High Court in the case of Rayala Corporation P. Ltd. (supra), the Additional Ground of Appeal raised by the assessee challenging the limitation in passing the impugned penalty order is hereby dismissed. 10. In order to appreciate the factual background leading to the imposition of penalty u/s 271(1)(c) of the Act, the following facts are relevant. The assessee company in this case filed a return of income on 27.03.2008 declaring Nil income. The assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is placed at page 4 of the Paper Book. 12. Pertinently, on this point it is also relevant to observe that the assessee had sold the land in two tranches. Firstly, in assessment year 2005-06 and balance in assessment year 2008-09. Therefore, assessee offered capital gains in assessment year 2005-06 and 2008-09 and no capital gains was offered in the instant assessment year of 2007-08 initially. The Assessing Officer, however, held that the second tranche of land sold by the assessee was liable for capital gains in assessment year 2007-08 itself and not in assessment year 2008-09. This aspect of the controversy is the second limb of the addition on which the penalty ha8s been levied. Thus, it is notable that the penalty has been levied by the Assessing Officer on two aspects, firstly on the ground that the capital gain was not offered in assessment year 2008-09; and, secondly, that the assessee had adopted the Fair Market Value of the land as on 01.04.1981 at ₹ 1230 per sq.mtr. as against which the Tribunal has directed to adopted the Fair Market Value as on 01.04.1981 at ₹ 665 per sq.mtr.. 13. In this background, at the outset, the Ld. Representative pointed out th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer with regards to capital gain and after rejecting the content ion raised on behalf of the assessee, the Assessing Officer considered the capital gain of ₹ 22,93,91,745/ - which was confirmed by the CIT(A) . In second appeal and the Tribunal vide its order dated 6t h September 2010 in ITA No. 1568/PN/2008 directed the Assessing Officer to compute the capital gain by taking FMV of the land at ₹ 665/ - per sq. mtr as on 1-4-1981. In consequential order , the long term capital gain has been revised by the Assessing Officer at ₹ 8,39,82,576/ - . Thus, the Assessing Officer determined the FMV of the land at ₹ 665/ - per sq. mtr as against ₹ 15.23 per sq. mt r allowed by the Assessing Officer as against ₹ 1230/ - per sq. mt rs as claimed by the assessee. The basis of penal ty is non acceptance of the long term capital loss by the Assessing Officer which was confirmed by the CIT(A) . According to the Assessing Officer , the value of the land adopted by the assessee was unreal is tic and without any basis. He stated that the assessee has adopted the higher value of the land and thereby reduced the income. Accordingly, the above said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f . Moreover , the valuation by approved valuer or otherwise is a matter of estimate. Under facts and circumstances, we hold that the penalty is not justifiable in respect of the addition made on account of computation of capital gain on sale of land at Dhanori . The same is directed to be deleted. 15. Considering the decision of the Tribunal dated 20.03.2012 (supra) in the assessee s own case for assessment year 2005-06 we hold that no penalty is leviable on the income assessable on account of adoption of the Fair Market Value as on 01.04.1981 at ₹ 665 per sq.mtr. as against ₹ 1230 per sq.mtr. adopted by the appellant company. Thus, the Assessing Officer is directed to delete the same. 16. The second issue on which the penalty has been levied is non-offering of the capital gain to tax by the assessee in assessment year 2007-08. On this issue, assessee pointed out that it had offered to tax the long term capital gain in assessment year 2008-09. At the time of hearing, the Ld. Representative for the assessee referred to pages 11 and 12 of the Paper Book to point out that for assessment year 2008-09 assessee duly furnished a return of income on 29.09.2008 decla1ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Station dated 22.05.2007, which has been placed at pages 182 to 185 of the Paper Book. In terms of the said complaint, it is sought to be made out that a mob of about 50 to 60 people entered the said land. Another complaint filed with the Police dated 26.05.2007 is also enclosed at pages 186 to 187 of the Paper Book; the Ld. Representative also referred to an invoice raised by the Security Agency for the period April to June, 2007 to demonstrate that assessee was hiring Security and Labour Services to protect the land. It was therefore contended that the physical possession of the said land was not parted by the assessee in the previous year ending on 31.03.2007 so as to deem it to be a transfer within the meaning of section 2(47)(v) of the Act. 19. We have considered the aforesaid submissions put-forth by the assessee but the same impinges on the merits of the addition which is not the subject-matter of the controversy before us. The assessee had also stated in the course of the hearing that only part consideration was received by the assessee during the year under consideration inasmuch as only a sum of ₹ 38,25,92,925/- out of the total consideration of ₹ 76,51,8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) penalty proceedings are independent of the assessment proceedings and a finding in assessment proceedings that a particular receipt is income cannot automatically be adopted as a finding to that effect in 1t4he penalty proceedings. The Hon ble Supreme Court emphasized that the burden of proof in a penalty proceeding varies from that involved in an assessment proceeding and therefore in the penalty proceedings the taxing authority is bound to consider the matter afresh on the basis of material before it and in the light of the burden cast to ascertain whether the levy of penalty is justifiable. As per the Hon ble Supreme Court, the finding in the assessment order that the disputed amount represented income may constitute good evidence in penalty proceedings but such finding in the assessment proceedings cannot be regarded as conclusive for the purposes of levy of penalty. The aforesaid legal proposition laid down by the Hon ble Supreme Court is relevant in the present context because it is clearly emerging from the orders of the authorities below in the impugned penalty proceedings that assessee has been held guilty for concealment of income and/or furnishing of inaccurate particu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Ld. Representative for the assessee at Bar has not controverted by the Revenue. 22. In the case of Metal Rolling Works Ltd. vs. CIT, (2011) 339 ITR 373 (Bom.), which was relied upon by the assessee before us, the issue was relating to levy of penalty on capital gains. The controversy was the year in relation to which capital gains tax was leviable. The Hon ble High Court disagreed with the Revenue for levy of penalty u/s 271(1)(c) of the Act merely on account of the difference in the year of taxability of capital gains. To the similar effect is the judgement of the Hon ble Bombay High Court in the case of Jayant Vegoils and Chemicals Pvt. Ltd. vs. CIT, (2010) 323 ITR 641 (Bom.). In the case of Jayant Vegoils and Chemicals Pvt. Ltd. (supra), penalty was imposed with respect to the disallowance of a fine levied in lieu of confication of goods. The Assessing Officer had noted that in terms of an order passed by the competent authority, the fine was dropped and therefore the disallowance was justified. Factually, 1it 6was not disputed that the fine in lieu of confiscation had been cancelled by the competent authority, but assessee took the plea that the order passed by the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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