New User   Login      
Tax Management India .com TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2015 (7) TMI 562 - ITAT PUNE

2015 (7) TMI 562 - ITAT PUNE - TMI - Levy of penalty u/s.271(1)(c) - assessee claimed that land to be of the nature of agricultural land as per sec 2(14)(iii) of the Act and accordingly the profit derived from its sale was claimed to be exempt and not liable to tax - Held that:- We find in the instant case the assessee sold certain land and treated the same as agricultural land which is beyond 8 kms from the local limits of municipality and treated such income as non taxable being exempt. We fin .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

As regards the other issue, i.e. the distance of the land from the PCMC is concerned, we find the Tribunal has already given a categorical finding that the land in question is within 8 kms from the PCMC as per the certificate given by the Asst. Director of Town Planning. The above certificate also remains unchallenged. The certificate produced by the assessee from the Talathi was also considered by the Tribunal and was rejected on the ground that it is general in nature and the certificate issue .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

fore the AO, CIT(A) and the Tribunal that the assessee has consciously and deliberately concealed her particulars of income and furnished inaccurate particulars of income arising out of the sale of land. Even the Tribunal in its order has also mentioned that the assessee has taken contradictory stand before the AO and the CIT(A) on this particular aspect. In our opinion, it is a clear case of concealment of income and a deliberate act of omission on the part of the assessee in filing the inaccur .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nafide omission or commission, the decisions would have been applicable but when the particulars given by the assessee consciously to defraud the revenue by not paying the legitimate tax due, the decisions will not come to the help of the assessee. Under these circumstances and in view of the detailed reasoning given by the CIT(A) upholding the levy of penalty we do not find any infirmity in the same. Accordingly, the order of the CIT(A) is upheld so far as the levy of penalty is concerned. - De .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

estricted to the tax sought to be evaded which in the instant case will be the tax sought to be evaded on the capital gain and not on business income. Since the Tribunal has already held that the income in question is long term capital gain, therefore, the tax sought to be evaded is on the long term capital gain which is lower than the tax computed by the AO on the business income. We therefore direct the AO to recompute the penalty treating the income as long term capital gain which has attaine .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he sake of convenience, these were heard together and are being disposed of by this common order. 2. Levy of penalty of ₹ 21,39,266/- u/s.271(1)(c) of the I.T. Act by the Assessing Officer and upheld by the CIT(A) for A.Y. 2005-06 (Rs. 43,91,971/- for A.Y. 2006-07) is the only issue raised by the assessee in the grounds of appeal for both the years. 3. First we take up ITA No.174/PN/2014 for A.Y. 2006-07 as the lead case. Facts of the case, in brief, are that the assessee is an individual .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Thereafter the land was transferred to Sakal Papers Ltd for a consideration of ₹ 2,95,00,000/-. The assessee claimed that land to be of the nature of agricultural land as per sec 2(14)(iii) of the Act and accordingly the profit derived from its sale was claimed to be exempt and not liable to tax. The assessee filed the 7/12 extract of the land and contended that the land was agricultural land and the same was used for agricultural activities on which grass was cultivated and that the grass .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in the month of June 2000 and was cultivated for agricultural purposes for 5 years. However, when the fact gathered by the Assessing Officer was confronted to the assessee, the assessee filed letter dated 16-12-2008 and admitted that it was a capital asset and the claim made to be a bonafide mistake and there was no deliberate intention to evade tax. The assessee also stated that the distance from PCMC limit remained un-noted due to oversight and hence made the wrong claim of exemption by mista .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the power of attorney and who had also obtained loan from Janata Sahakari Bank, Pune on hypothecation/mortgage of the said land. The Assessing Officer thus treated the said transaction as an adventure in the nature of trade and treated profit/gain on sale of land as business income. The assessee, thereafter, challenged the action of the Assessing Officer before the Ld. CIT(A) treating the said land as the capital asset and claimed that it was beyond 8 kms of the PCMC limits and hence the same c .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nce. 7. The Ld. CIT(A) called for a report of the Assessing Officer in this regard. The Assessing Officer in his report denied the claim of the assessee that the said certificate was submitted during assessment proceedings. In the comments the Assessing Officer noted that the certificate obtained from the Asstt. Diiector, Town planning in respect of the distance of land was communicated to the assessee and in response the assessee had filed letter dated 16-12-2008 admitting the mistake and state .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ain'. However on the second issue whether the said land is an agricultural land the contention of the assessee was rejected and held that the land in question was within 8 kms of the PCMC limits. The Ld. CIT(A) also rejected the request of the assessee to admit the additional evidence furnished before him under Rule 46A. It may be pertinent to note that in further appeal filed by the assessee the Tribunal upheld the order of the Ld CIT(Appeals). In its observation regarding the nature of the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of certificate issued by Kamgar Talathi in the interest of justice. As Tribunal being last fact finding /authority, the assessee should have every opportunity to prove his/her cast. Even if the said certificate is admitted, the same is not much more help to the assessee. Assessee has filed the copy of the said certificate at page 11 of the compilation which is in Marathi and English translation at page no. 12. We have anxiously perused the certificate issued by the Kamgar Talathi and we find tha .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rt her case on this point." 8. During the penalty proceedings the Assessing Officer after considering the submission filed by the assessee held that the assessee had made a wrong claim of the land in question to be of the nature of agricultural land and the same was clearly a capital asset which is confirmed by the office of Town Planning & Valuation Department and also admittedly accepted by the assessee in the course of assessment proceedings to be a mistake of treating the land as an .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

or both the assessment years i.e. A.Y. 2005-06 and A.Y. 2006-07. 9. Before CIT(A) it was submitted that the Assessing Officer is unsure of the fact whether it is concealment of particulars of income or furnishing inaccurate particulars of income and the assessment order refers to deliberate attempt to evade the tax whereas the penalty order refers to concealment of particulars of income. The assessee drew the attention of the CIT(A) to the statement of income and accounts which reflect the factu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

that on the issue of distance of 8 kms in paras 7 and 8 of the order, ITAT has clearly indicated that there is evidence in support of the contention of the assessee but the same has not been accepted resulting in negation of the claim and, therefore, at best this is the case of erroneous claim and not a case of concealment of particulars of income as concluded by the Assessing Officer. The assessee submitted that the Assessing Officer has chosen to ignore the judicial precedents cited before hi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the case of CIT Vs Rajiv Bhatara reported in (2013) 94 DTR 137 (P&H) in support of the claim. 10. However, the Ld.CIT(A) was also not satisfied with the explanation given by the assessee and upheld the penalty levied by the Assessing Officer by observing as under : 3.4 The submission made by the appellant has been carefully considered and the material on record perused. The word 'conceal' means to hide, to keep secret. The phrase 'concealed the particulars of his/her income' .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

The appellant in the present case has not included the profit arising out of the sale of land treating the same as non-taxable being not a capital asset u/s 2(14) (iii) of the Act. The appellant has taken a stand that the said land was an agricultural land situated beyond the distance of 8 kms, the limit of the municipal corporation. However, during the course of assessment proceedings the Assessing Officer found the land to be situated in the industrial zone at Maan. Further enquiries carried .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

stance from PCMC limit remained un-noted due to oversight and hence made the wrong claim of exemption by mistake. It has already been seen that the said plot of land was purchased by the appellant when she was hardly 19 years old and who subsequently migrated to Chennai and her father being the sole controlling authority on the basis of power of attorney had also obtained loan amounting to ₹ 3.02 crores" from Janata Sahakari Bank, Pune on the hypothecation/mortgage of the said land. T .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

re help to the assessee as the same was found to be of 'general in nature1 and the same was not considered to support the case of the appellant. It was also noted by the ITAT that the appellant has been taking contradictory stand before the Assessing Officer and the CIT(A) on this particular aspect. The ITAT even considered the judicial decisions relied upon by the appellant and noted that the assessee has failed to prove the land in question is beyond distance of 8 kms from the local limit .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ecifically mentioned that the land was situated within 8 ms of the extended limits of PCMC w.e.f. as early as 11-9-1997 and the purchase of land was made by the appellant during A.Y. 2000-01. Thus the fact on record clearly indicate that the appellant along with her father who had been instrumental in utilizing the land through Power of Attorney were fully aware of the land being situated within 8 kms of the PCMC limits and within the industrial zone. The appellant at no point of time have objec .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

her. It is a clear case of concealment of income and a deliberate act of omission on the part of the appellant in filing inaccurate particulars. Thus the case laws relied upon by the appellant even before the Assessing Officer of the apex court in CIT Vs Reliance Petroproducts P. Ltd, 322 ITR 158 is not applicable to the facts of the present case as in that case the details supplied by the assessee in the return was not found to be incorrect or erroneous and that was held to not attract penalty .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

es not warrant penalty if the facts relating to the same are disclosed. In order to call the particulars as accurate the assessee must believe that the said particulars are accurate on fact and disclosure which has been made in any part of the return which is incorrect or false to the knowledge of the assessee if that fact is established such disclosure cannot take it out from the purview of the act of furnishing of inaccurate particulars thereby concealment of the particulars for the purpose of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

burden of proof shifts from the Department to the assessee. However, legal fiction can be given full effect only when the conditions precedent thereof is satisfied. The word 'inaccurate' signifies a deliberate act or omission on the part of the assessee. Such deliberate act must be either for the purpose of furnishing inaccurate particulars or concealment of income. It also held that under explanation-l the Assessing Officer is required to arrive at a finding that the explanation offere .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

act, material to the computation of the total income of any person, such person fails to offer an explanation or offers an explanation which is found to be false or offer an explanation which he is not able to substantiate and fail to prove that such explanation is bona fide and that all the fact relating to the same and material to the computation of income have disclosed by him then the amount added or disallowed shall be deemed to represent the income in respect of which particulars have been .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nd Weaving Mills, 23 DTR 158 held that only conscious or deliberate wrong doing would attract penalty and on facts the aforesaid decision of the apex court in fact supports the present case as it has already been seen that the action of the appellant is of consciously and deliberately furnishing inaccurate particulars thereby concealed the income knowing fully well that the land in question was a capital asset u/s 2(14) the profit of which was taxable. The decision of Punjab & Haryana High&# .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

aim and substantiate that the land was beyond the limits of 8 kms from Municipal Corporation. In fact in the present case the land was situated in the industrial zone of Maan and the certificate from the Town Planning authority clearly revealed that the land was within 8 kms limits of PCMC w.e.f. 11.09.1997 itself. Thus, the intention of the appellant of consciously concealing the income by furnishing inaccurate particulars becomes evident. The assessee in the aforesaid case relied upon by the a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ity, a fact which was absent in the case relied by the appellant. Hence, on facts the case relied upon by the appellant is distinguishable. 3.5.3 In a recent decision in the case of CIT Vs Manjunatha Cotton & Ginning Factory, ITA No. 2564 of 2005 order dated 13.12.2012 also relied upon by the appellant, the Karnataka High Court has dealt with various principles governing penalty. It has been held that for the applicability of section 271(1)(c), conditions stipulated therein must exist and th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

assessment proceedings, if a direction is mentioned, it constitutes satisfaction of the Assessing Officer. Thus in view of the above, the decision relied upon by the appellant is in fact favour of the revenue. 3.5.4 A false claim should certainly warrant penalty as held in CIT Vs Escorts Finance Ltd (2010) 328 ITR 44 (Del). Where untenable claim for set off of carried forward loss was made in the case of a partner, such a claim could not be accepted as bona fide, so that penalty is exigible - A .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ng officer for A.Y. 2005-06 at ₹ 43,91,971/- and for A.Y. 2006-07 at ₹ 21.39.266/- is upheld and the ground of appeal no. 2 raised by the appellant is dismissed for both the years under consideration. 11. Aggrieved with such order of the CIT(A) the assessee is in appeal before us with the following grounds : 1. On the facts and in the circumstances of the case and in law the honourable Commissioner of Income Tax (Appeals) - II, Pune erred in confirming the penalty of ₹ 21,39,26 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

reads as under : "The learned AO has levied and the honourable CIT (A) has confirmed the penalty under section 271(1)(c) at ₹ 21,39,266/- considering the profit on transfer of land under question as "Profits and Gains of Business". The issue under which head of income the profit should be taxed has reached finality by the honourable ITAT's Order dated 31st January 2013 and the honourable ITAT has confirmed that the income under consideration is taxable as "Capital .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

udication. 14. The Ld. Counsel for the assessee while arguing for both the years strongly challenged the order of the CIT(A). Referring to page 3 of the paper book the Ld. Counsel for the assessee drew the attention of the Bench to the note given below the computation of total income for A.Y. 2006-07 which stated that the assessee during the year has sold agricultural land beyond 8 kms from the local limits of municipality. Profit on the same being non-taxable not included in the computation of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ximately more than 9 kms from PCMC. 14.1 Referring to the decision of the Hon ble Supreme Court in the case of Reliance Petroproducts Ltd. reported in 322 ITR 158 he submitted that the Hon ble Supreme Court in the said decision has held that mere making of the claim which is not sustainable in law by itself will not amount to furnishing the inaccurate particulars regarding the income of the assessee. He also relied on the following decisions and submitted that under somewhat similar circumstance .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ancelled. 14.2 Referring to the additional ground filed by the assessee he submitted that since the Tribunal has categorically given a finding that the income is capital gain and not business income, therefore, penalty, if any, should be restricted to the tax sought to be evaded on the amount of capital gain and not on the business income. Since the tax on the capital gain is lesser than the tax on business profit, therefore, suitable direction may be given for reducing the penalty so computed b .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tegorical finding that the assessee was unable to demolish the evidence gathered by the AO against her. Further, the Tribunal after considering the certificate issued by the Talathi has also held that the same is not supported by any proper map and the distance has been determined by the Talathi on the basis of local enquiry for which the Tribunal has categorically held that the same will be of no help to the assessee. Further, the CIT(A) has already distinguished various decisions cited before .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find in the instant case the assessee sold certain land and treated the same as agricultural land which is beyond 8 kms from the local limits of municipality and treated such income as non taxable being exempt. We find during the course of assessment proceedings the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ipt of the above reply from the assessee this office has made the enquiries from the office of Town Planning & Valuation Department Pune Branch Pune and The Asstt. Director of Town Planning vide his office letter No. Mouje Mann/ Tal. Mulshi/ S.No. 277 No. 1,2,&3 / ADTP/5513/ dated 8.12.2008 has clarified that - 1) The land under transaction is situated within 8 K.M. from the extend limit of Pimpri - Chinchwad Municipal Corporation with effect from the date 11.09.1997. 2) As per the modif .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ted in Municipal Corporation and it cannot be Agricultural land in view of the provisions of Sec. 2(14)(iii)(b) of the Act. The assessee was therefore given an opportunity to explain as to why the income earned on sale of land should not be taxed accordingly. 11. The assessee vide letter date 16.12.2008 has admitted mistake in considering the land as agricultural land as a capital asset. It is submitted in the letter that it was a case of bona fide mistake and not a deliberate mistake in order t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

that the land in question is not an agricultural land. As regards the other issue, i.e. the distance of the land from the PCMC is concerned, we find the Tribunal has already given a categorical finding that the land in question is within 8 kms from the PCMC as per the certificate given by the Asst. Director of Town Planning. The above certificate also remains unchallenged. The certificate produced by the assessee from the Talathi was also considered by the Tribunal and was rejected on the groun .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

penalty can be levied u/s.271(1)(c) of the I.T. Act. 16.1 We find from the various details furnished by the assessee in the paper book as well as the submissions made before the AO, CIT(A) and the Tribunal that the assessee has consciously and deliberately concealed her particulars of income and furnished inaccurate particulars of income arising out of the sale of land. Even the Tribunal in its order has also mentioned that the assessee has taken contradictory stand before the AO and the CIT(A) .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ipal limits. Therefore, the various decisions relied on by the Ld. Counsel for the assessee will not be of any help to the assessee. Had it been a bonafide mistake or bonafide omission or commission, the decisions would have been applicable but when the particulars given by the assessee consciously to defraud the revenue by not paying the legitimate tax due, the decisions will not come to the help of the assessee. Under these circumstances and in view of the detailed reasoning given by the CIT(A .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version