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Late Shri Padmakar R. Kibe Versus Income Tax Officer, Ward – 8 (2) , Pune

2015 (10) TMI 595 - ITAT PUNE

Levy of penalty u/s. 271(1)(c) - disallowance of excess cost of acquisition claimed by the assessee, while computing capital gains arising on sale of land - Held that:- In the present case, the assessee had furnished the explanation giving reasons for mistake in mentioning the amount of cost of acquisition of land. It has been stated that the mistake was bonafide. In the books of account the amount was correctly mentioned. Since, it was the first year of filing returns by using computer software .....

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assessee. - ITA No. 1301/PN/2014 - Dated:- 28-8-2015 - SHRI R.K. PANDA AND SHRI VIKAS AWASTHY, JJ. For The Assessee : Shri Sunil Pathak For The Revenue : Shri Rajesh Damor ORDER PER VIKAS AWASTHY, JM: The appeal has been filed by the assessee against the order of Commissioner of Income Tax (Appeals)-V, Pune dated 25-04-2014 for the assessment year 2006-07, confirming the levy of penalty u/s. 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as the Act ). The penalty of ₹ 56,44 .....

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-2006, the assessee entered into an agreement dated 07-12-2005 for sale of land situated at village Gahunje with M/s. City Park. The Long Term Capital Gain arising from the sale of land was offered to tax. In the computation of income, the cost of land was declared as ₹ 1,25,84,030/- as against cost shown in books of account at ₹ 12,58,403/-. The brought forward business loss of ₹ 76,22,116/-was adjusted against Long Term Capital Gain on sale of land. At the time of assessment .....

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against the order of Assessing Officer. During the appellate proceedings, the discrepancy in the cost of land as shown in the books of account and as claimed by the assessee was observed by the Commissioner of Income Tax (Appeals). The assessee admitted the mistake in respect of cost of acquisition. The Commissioner of Income Tax (Appeals) withdrew the adjustment of brought forward loss ₹ 24,77,330/- on the ground, that carried forward business loss can be set off only against profits and .....

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ct of denial of adjustment of brought forward business loss. However, the Commissioner of Income Tax (Appeals) rejected the contentions of the assessee with regard to inadvertent error in mentioning the wrong amount of cost of acquisition of land at the time of filing of return of income. Against these findings of Commissioner of Income Tax (Appeals), the assessee is now in appeal before the Tribunal. 3. Shri Sunil Pathak appearing on behalf of the assessee submitted that the assessee had died i .....

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. The cost of acquisition of land was inadvertently punched as ₹ 1,25,84,030/-instead of ₹ 12,58,403/-. This mistake was neither observed by the assessee nor it came to the notice of Assessing Officer during assessment proceedings. The mistake came to light during first appellate proceedings. The assessee immediately accepted the mistake and furnished the explanation for the same. The balance sheet of the assessee shows the correct value of land. There was no deliberate attempt on th .....

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e assessee filed appeal before the Tribunal, the Tribunal allowed the same. Since, the Commissioner of Income Tax (Appeals) in the present case happens to deal with the case of the daughter of the assessee, he is prejudiced against the assessee, as is evident from the findings given by him in the impugned order. The assessee fairly admits that the punching of additional zero (0) while writing the cost of land in computation was a mistake for which valid explanation was furnished. Therefore, no p .....

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oughout the assessment proceedings, the assessee deliberately did not point out the mistake. Even at the time of filing of appeal before the Commissioner of Income Tax (Appeals) the assessee deliberately ignored the alleged mistake. Mentioning of exaggerated cost of land by assessee is a deliberately attempt to suppress the Long Term Capital Gain. By adding zero (0) in the amount of cost of land the long term capital gain was reduced from ₹ 5,13,08,794/- to ₹ 2,95,75,834/-. Thus, the .....

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fore, the action of the assessee in punching extra zero (0) while stating the cost of land is deliberate act and not an inadvertent mistake. The ld. DR submitted that the order of Commissioner of Income Tax (Appeals) is well reasoned and justified. He prayed for sustaining the impugned order. 5. The ld. AR, controverting the submissions of the DR submitted, that the return of income has been filed by Shri Nitin P. Kibe (son) on Late Shri Padmakar R. Kibe and not Smt. Nirupa Kanitkar. In the firs .....

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es. No estate of deceased Late Shri Padmakar R. Kibe is left for the payment of tax. The ld. AR further submitted that in the impugned order the Commissioner of Income Tax (Appeals) has referred to certain forged agreements. Smt. Nirupa Kanitkar was in no way in connected with those agreements as the said agreements were prepared by M/s. New Planet Trading Co. Pvt. The Ld. AR vehemently prayed for dismissing the submissions of the ld. DR. 6. We have heard the submissions made by the representati .....

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e wrong mentioning of figure in the computation has been attributed to the new computer software, wherein the figure zero (0) is set to be part of software and has to be replaced with the actual figure while punching the amount. The error in mentioning the cost of land was pointed out by the Commissioner of Income Tax (Appeals) in assessment appellate proceedings. The Commissioner of Income Tax (Appeals) enhanced the assessed income, as a result penalty proceedings u/s. 271(1)(c) of the Act were .....

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x. Admittedly, in the present case, the return of income has been filed by Shri Nitin P. Kibe, son of Late Shri Padmakar R. Kibe and not by Smt. Nirupa Kanitkar. It is equally undisputed that the assessment year 2006-07 was the first year when computerized return of income was filed. Since, it was a shift from manual filing of return to computerize filing of return, there is high probability that such error may have crept in. 8. We are of the considered opinion that the Commissioner of Income Ta .....

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g amount in the computation of Long Term Capital Gain, which to our mind is reasonable and acceptable within meaning of section 273B of the Act. 9. The Hon ble Madras High Court in the case of CIT Vs. Lakshmi Vilas Bank Ltd. (supra) had upheld the order of Tribunal in deleting the penalty levied u/s. 271(1)(c) of the Act in somewhat similar circumstances. In the said case, the assessee filed its return of income. The assessment was completed u/s. 143(3) of the Act. During the course of the asses .....

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