TMI Blog2015 (7) TMI 562X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 issued on the basis of local enquiry is not supported by any proper map. The Tribunal has further held that distance cannot be determined on the basis of local enquiries as mentioned by the “Kamgar Talathi” in his certificate. Thus, the land in question is neither agricultural land nor situated beyond a distance of 8 kms or more from the municipal area, i.e. PCMC herein question. As 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) on this particular aspect. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Respondent : Shri Y.K. Bhaskar ORDER PER R.K. PANDA, AM : The above 2 appeals filed by the assessee are directed against the common order dated 30-09-2013 of the CIT(A)-II, Pune relating to Assessment Years 2005-06 2006-07 respectively. For the 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 and filed her return of income on 30-07-2008 declaring total income of ₹ 2,75,990/-. During the course of assessment proceedings the AO noted that the assessee sold part of land at S.No 277 situated in the industrial area at Maan, Pune to M/s W B Engineers Pvt. Ltd on 29-3-2005 for a consideration of ₹ 2,30,00,000/- and the balance portion of the said land was sold in the subsequent A.Y. 2006-07 to M/s. Global Infras ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 cannot be treated as capital asset u/s. 2(14) and, therefore, the profit or gain on transfer was not taxable. 6. The assessee also challenged the action of the Assessing Officer in treating the profit on sale of the plot of land as business income and contended to treat the same as capital gain. The assessee, to prove her stand, also produced certificates of the Kamgar Talathi, Maan, Tal: Mulshi, Dist: Pune and filed the same under Rule 46A with a request to admit the said certificate as an evidence. 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 stated that the distance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. Hence, certificate of Talathi which is filed by the assessee does not support 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 agricultural land exempt and not liable for tax. The Assessing Officer, regarding the certificate of Talathi produced before the Ld CIT(A), noted that the assessee not only made a wrong claim before the Assessing Officer but also before the Ld. CIT(A) during the appellate proceedings. The Assessing Officer thus levied minimum penalty of ₹ 43,91,971/- for A.Y. 2005-06 and ₹ 21,39,266/- for A.Y. 2006-07 after having satisfied that the assessee had concealed the particulars of income for 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 Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duction or exemptions claimed by the assessee in his/her return. The word 'conceal' involves a knowledge on the part of the assessee of the real income when giving the particulars. Concealment might arise even if the statement as to the income is guarded one, as for e.g. the enquiry should be made to ascertain the correct income. If there is deliberate underestimate of income, an inference of concealment can be drawn. Concealment of income may arise in various ways. 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 out by the Assessing Officer with the office of the Town Planning Agricultural Dept and the Asstt. Director of Town planning revealed that the said land was situated within 8 kms to the extent limit Chinchwad Municipal cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 objected to the certificate given by the Asstt. Director of Town Planning nor even controverted its correctness rather chose to file a certificate from the Talathi which has been found to be of no help to the appellant. Thus the appellant had consciously filed inaccurate particulars and concealed the income arising out of the sale of land. The findings of the Hon'ble ITAT clearly point out to the fact that the issue was neither debatable as claimed by the appellant nor an erroneous claim made by 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 fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed by him. The Assessing Officer in the present case has clearly given a finding as to how and in what manner the appellant had furnished inaccurate particulars of her income. 3.5.1 Thus in view of the Explanation I to sec 271(1)(c) which provides that where in respect of any fact, 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 concealed for the purposes of sec 271(1)(c). Thus in view of Explanation I to sec 271(1)(c), the primary onus is on the assessee to prove that there was no concealment. The fact of the present case do not show the conduct of the appellant to be bonafide and innocent rather the contumacious conduct of the appellant can reasonably be inferred. 3.5.2 The other case of the apex court relied upon by the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 the facts as brought out above clearly show that the conditions u/s 271(1)(c) exist and hence the levy of penalty is justified. The Court with respect to the satisfaction of A.O. for initiation of penalty proceedings has held that the provisions of section 271(1)(c) makes it abundantly clear that satisfaction should be that assessee has concealed particulars of his income or furnished inaccurate particulars of such income and even in the absence of those expressed words or findings recorded in the 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 - ACIT V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are required to be looked into the additional ground raised by the assessee for both the years is admitted for adjudication. 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 total income. Referring to page 13 of the paper book he drew the attention of the Bench to the similar noting in the computation statement for A.Y. 2006-07. He submitted that full details were there and the assessee has not concealed any particulars of her income. Further, the assessee during the course of hearing before the Tribunal has also filed certificate from the Talathi which states that the land sold by the assessee is at a distance of approximately more than 25 kms from PMC and is approximately more than 9 kms from PCMC. 14.1 Referring to the decision of the Hon b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ished various decisions cited before him and which are being relied on by the Ld. Counsel now. Since it is a clear case of concealment of income and furnishing of inaccurate particulars of income, therefore, the penalty levied by the AO and upheld by the CIT(A) should be confirmed. The Ld. Departmental Representative however submitted that the penalty can be reduced treating the income as capital gain since the Tribunal being the final fact finding authority has held that such income to be in the nature of capital gain. 16. We have 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 AO on the basis of information gathered by him confronted the same to the assessee to which the assessee admitted her mistake vide letter dated 16-12-2008 and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ground that it is general in nature and the certificate issued on the basis of local enquiry is not supported by any proper map. The Tribunal has further held that distance cannot be determined on the basis of local enquiries as mentioned by the Kamgar Talathi in his certificate. Thus, the land in question is neither agricultural land nor situated beyond a distance of 8 kms or more from the municipal area, i.e. PCMC herein question. Under these circumstances the question that arises is as to whether 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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