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TMI Blog2016 (6) TMI 798X X X X Extracts X X X X X X X X Extracts X X X X ..... non-admitting the appeal by the Commissioner of Income-tax (Appeals) without assigning reasons in respect of quantum addition. 3. The facts of the case as narrated in ITA No. 253/Mds/2016 are that the assessee, an individual is having income from business, capital gains and other sources. The assessee filed his original return of income for the assessment year 2010-11 on March 29, 2012, admitting a total income (Rs.7,31,544). In the statement of income filed with the return of income for the assessment year 2010-11, the assessee had admitted the sale of agricultural land at Neelankarai for Rs. 2,19,69,043 and claimed an exemption of Rs. 1,90,00,000 under section 54B of the Act towards the investment in the purchase of agriculture land at Mahabalipuram. Subsequently, a combined survey under section 133A was conducted in the case of Shri Ameerdeen of M/s. Alpha Commercials and the group of cases on September 13, 2012. In the sworn statement of Shri Ameerdeen stated that he himself and his family members (thirteen co-owners) together had sold a land situated at Neelankarai to M/s. Kannammal Educational Trust and admitted that the land sold was an urban land only and no agricultural a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Accordingly, the Assessing Officer observed that the claims made by the assessee, firstly, with regard to the issue of agricultural land at the first instance and, secondly, regarding the investment in the agriculture land for the claim of deduction under section 54B, were factually wrong. 3.4 On the basis of the facts mentioned above, the Assessing Officer recomputed income of the assessee and assessed the income at Rs. 1,96,98,760 under section 143(3) read with section 147 of the Act on March 8, 2014, as against the taxable income declared at Rs. 7,31,554 in the original return of income filed on March 29, 2012. The Assessing Officer also initiated the penalty proceedings under section 271(1)(c) for filing particulars of income and for concealing the particulars of income and order under section 271(1)(c) was passed on September 26, 2014, by levying a penalty of Rs. 39,13,426. The assessee went in appeal before the Commissioner of Income-tax (Appeals) challenging the quantum addition. 4. In this case, there was a delay of 175 days in filing all these appeals before the Commissioner of Income-tax (Appeals). The assessee filed a condonation petition before the Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the appeal in the interest of justice." 4.1 However, the Commissioner of Income-tax (Appeals) observed that there was no sufficient and reasonable cause for not filing the present appeal, before him, against the reassessment order dated March 8, 2014, within the stipulated period of 30 days from the receipt of the impugned order and rejected the condonation petition and decided the issue on the merits. Against this, the assessee is in appeal before us. 5. As seen from the condonation petition filed by the assessee before the Commissioner of Income-tax (Appeals), the main contention of the assessee's counsel is that due to wrong professional advice and as per the bona fide understanding with the Department, at the time of survey operation, the assessee has accepted the quantum addition on the premise that the Department would not initiate penalty proceedings. However, after passing the reassessment order dated March 8, 2014, the Assessing Officer initiated penalty proceedings, vide notice dated March 8, 2014, under section 274 read with section 271(1)(c) of the Act. The assessee replied to that notice, vide letter dated August 12, 2014, that the assessment order dated Mar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee filed condonation petition as narrated in earlier paragraph. The reasons stated by the assessee is that he has bona fide belief that the Assessing Officer would not levy penalty and close the issue. However, to his surprise, the Assessing Officer initiated penalty proceedings, vide order dated March 8, 2014. The assessee requested the Assessing Officer on several occasions not to levy penalty and the assessee filed a revised return of income on the basis of mutual understanding between the Department and arrived at during the search conducted and there was certain lapses on the part of the assessee like filing of original return due to lack of professional advice. Further, it was stated that the assessee has already paid capital gains before filing the return of income. However, the Assessing Officer finalised the penalty order and it came to the notice of the assessee on the last day of hearing of penalty proceedings on September 25, 2014, that the Assessing Officer is going to levy penalty under section 271(1)(c) of the Act in these assessment years. Hence, the assessee filed appeals against the quantum addition before the Commissioner of Income-tax (Appeals) on Septembe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn out at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. (3) 'Every day's delay must be explained' does not mean that pedantic approach should be made. Why not every hour's delay, every second's delay ? The doctrine must be applied in a rational, common sense and pragmatic manner. (4) When substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. (5) There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs serious risk. (6) It must be grasped that the judiciary is respected not on account of its power to legalise injustice on technical grounds but because it is capable of removing injustice and is expected to do so." 7.1 In our opinion, when substantial justice and techn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer is going to confirm levy of penalty, immediately on September 26, 2014, the assessee filed appeals before the Commissioner of Income-tax (Appeals) challenging the addition. Hence, in our opinion, when delay is for short period of 175 days, it is to be condoned as held by the Supreme Court in the case of Mrs. Sandhya Rani Sarkar v. Smt. Sudha Rani Debi, AIR 1978 SC 537, since the condonation of delay is the discretion of this court and it would depend on each case. In our opinion, when there is sufficient cause for not filing the appeal within the period of limitation, the delay has to be condoned and if we do not condone the delay, it would amount to legalise an illegal order and it is appropriate to exercise the power with the intention that this Tribunal would deliver justice rather than legalise injustice on technicalities. Therefore, this short delay of 175 days is condoned. 8. The ground raised by the assessee on the merits is with regard to allowability of deduction under section 54B of the Act. Since the Commissioner of Income-tax (Appeals) decided the issue on the merits without condoning the delay, is not appropriate. Hence, we remit the issue to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... determining the total income of Rs. 1,96,98,760 (including long-term capital gains of Rs. 1,90,27,203 on March 8, 2014. 10.2 The penalty proceedings of the Act for furnishing inaccurate particulars of income and for concealing the particulars of income, was initiated by the Assessing Officer by issuance of a notice under section271(1)(c) of the Act on March 8, 2014. The following reasons were recorded for the issuance of notice under section 271(1)(c) : "(i) In the statement of income filed along with the original return of income the assessee has claimed exemption under section 54B of the Act towards the capital gains arising out of the agricultural land sold at Neelankarai, Chennai. (ii) During the course of combined survey operations conducted at the business premises of Shri Ameerdeen, it was stated by him that no agricultural activity was carried out at the Neelankarai land and the land was only an urban land. Therefore, the assessee's claim of exemption under section 54B of the Act was wrong. (iii) Further, the assessee neither invested the amount of sale consideration of impugned land in the purchase of agricultural lands nor did he deposit in the Capital Gains A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion had actually taken place. Accordingly, the Assessing Officer imposed a minimum penalty under section 271(1)(c) at 100 per cent. of the tax sought to be evaded which worked out at Rs. 39,13,426. Aggrieved, the assessee went in appeal before the Commissioner of Income-tax (Appeals). 11. The Commissioner of Income-tax (Appeals) observed that the original return of income for the assessment year 2010-11 was filed on March 29, 2012, which was filed beyond the due date for filing of return of income as stipulated under section 139(1) of the Act. The return of income filed on December 27, 2012, in response to notice under section 148 of the Act, cannot be considered as revised return of income as claimed by the assessee in his written submissions filed before the undersigned. The revised return of income can be filed only when the original return of income is filed under section 139(1) of the Act. The present return was filed in response to the notice under section 148 of the Act. 11.1 The Commissioner of Income-tax (Appeals) further observed that from the perusal of the assessment order passed under section 143(3) read with section 147 of the Act dated March 8, 2014, for the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... served that during the penalty proceedings under section 271(1)(c), the Assessing Officer noticed that the assessee had neither invested the sale consideration from the impugned land in the purchase of agricultural land as required under section 54B of the Act nor did he deposit the same in the Capital Gains Account Scheme within the stipulated period as provided in the Act. The learned authorised representative pleaded that the said amount of sale consideration was utilised by the firm, M/s. Alpha Commercials, for the business purposes and had not paid the money to the seller of the agricultural land. 11.4 The Commissioner of Income-tax (Appeals) is also noticed from the above that the capital gains arising out of the sale proceeds of the impugned land at Neelankarai came to the notice of the Department from the sworn statement of Shri Ameerdeen recorded during the course of survey operation under section 133A in the case of M/s. Alpha Commercials. Therefore, the contention of the assessee that he had voluntarily disclosed the capital gains in the revised return of income, was factually incorrect. Firstly, the return of income could not be revised since the original return was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner of Income-tax (Appeals) was considered and after taking into account all the relevant facts and circumstances, it was finally rejected being devoid of any merit and bona fide character. Moreover, the appeal of the assessee against the reassessment order dated March 8, 2014, for the assessment year 2010-11 also stands dismissed on the merits of the case as well. 11.6 According to the Commissioner of Income-tax (Appeals), the grounds of appeal raised by the assessee are found to be devoid of any merits and he has not found any force in the submissions of the assessee that the Assessing Officer has erred in not appreciating the facts of the case and the assessee was not given sufficient opportunity of being heard. Further, the Commissioner of Income-tax (Appeals) observed that all the relevant grounds of appeal were properly and thoroughly dealt with by the Assessing Officer during the reassessment proceedings and also during the penalty proceedings. Moreover, these issues have been thoroughly analysed during the appellate proceedings as well. Accordingly, he observed that the act of withdrawal of exemption by the assessee in the return of income filed in response to the notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vy of penalty in such circumstances was wrong, erroneous, unjustified, incorrect and not sustainable in law. 12.3 The learned authorised representative also submitted that the Assessing Officer failed to appreciate that there was full disclosure of the transaction of the sale of agricultural land at Neelankarai, Chennai in the original return of income filed and ought to have appreciated that in the absence of suppression of the material facts relating to the transaction, the levy of penalty in relation thereto was wrong, erroneous, unjustified, incorrect and not sustainable in law and the order of the assessment has not reached finality and ought to have appreciated that the appeal against the reassessment order is pending for decision before the first appellate authority. The Assessing Officer failed to appreciate that the order impos ing penalty under section 271(1)(c) of the Act was passed out of time, invalid, passed without jurisdiction and not sustainable both on facts and in law. 12.4 According to the learned authorised representative, there was no proper opportunity given before passing of the impugned order and any order passed in violation of the principles of natural ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has concealed the particulars of his income or furnishing of inaccurate particulars of such income. In the present case, the charge against the assessee is that he had concealed the particulars of income that he has received income by way of sale of agricultural land and the income earned from sale of land is liable to be taxed and the assessee has not entitled for deduction under section 54B of the Act. It is no doubt that there is a dispute regarding the taxability of income from sale of land. However, there is a dispute regarding the allowability of deduction under section 54B and the issue regarding allowability of deduction under section54B of the Act is remitted by us to the Assessing Officer for fresh consideration in the earlier paragraph while adjudicating the quantum addition. The findings in those proceedings are not binding the proceedings relating to penalty. The penalty proceedings are independent from the assessment proceedings and it is not the continuation of assessment proceedings. In the penalty proceedings, the Assessing Officer has to be satisfied that the assessee has concealed the particulars of his income or furnished inaccurate particulars of such income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e himself and his family members (13 co-owners) together had sold a land situated at Neelankarai to M/s. Kannammal Educational Trust and admitted that the land sold was an urban land only and no agricultural activities were carried out on the said land and the assessee, herein is one such co-owner of the property. Later, a notice under section 148 was issued on November 27, 2012. In response to the notice, the assessee filed a revised return on December 27, 2012, declaring an income of Rs. 11,64,684 what is declared in the original return and also disclosed capital gains of Rs. 75,25,896, after withdrawing the deduction under section 54B of the Act at Rs. 80,00,000 and paid taxes thereon. According to the Assessing Officer, the assessee had intentionally and wilfully claimed the exemption under section 54B of the Act to evade tax after knowing the fact that no such transaction has actually taken place. Accordingly, the Assessing Officer levied penalty under section 271(1)(c) of the Act at 100 per cent. of tax sought to be evaded. 17. Now, the issue for our consideration is, whether the assessee wilfully claimed wrong deduction under section 54B of the Act. Before the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer observed that just because the assessee has remitted the demand raised by the Department, it cannot be a reason for levying the penalty. However, he has not found the claim of the assessee that the assessee has handed over the money to M/s. Alpha Commercial for investment in residential property. Further, when the assessee has given an explanation that he has given money to Alpha Commercials for the purpose of investment in residential house, it is the duty of the Assessing Officer to examine the records of M/s. Alpha Commercials to find out whether, the claim of the assessee is genuine or not. The Assessing Officer without making investigation, cannot presume that the explanation given by the assessee is false or bogus. In the present case, the assessee submitted a detailed explanation before the Assessing Officer. Thereafter, it is the duty of the Assessing Officer to establish that the assessee has concealed income or furnished inaccurate particulars of income. In the present case, the Assessing Officer has accepted the amount offered by the assessee as his income and levied penalty without making any enquires and investigation to disprove that the explanation given by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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