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2016 (9) TMI 497 - ITAT HYDERABAD

2016 (9) TMI 497 - ITAT HYDERABAD - TMI - Penalty levied under S.271(1)(c) - chargeability of capital gain tax - Held that:- We find that the assessee has filed the return of income on 24.5.2005, declaring income of ₹ 1,98,687, whereas the there was a search and seizure operation in the case of M/s. Om R.S. Wines on 12.4.2005. Even before the issuance of notice under S.153C of the Act, the assessee has declared the said transaction in the computation of income. The assessee has never taken .....

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ulars of income, it has been the stand of the assessee that the capital gains is chargeable to tax in the year in which the developer has given the possession of the developed area to the assessee. Though the Assessing Officer has recorded that the assessee has filed a letter stating that the built up area has been handed over to the assessee on 8.3.2004, it is not understandable as to how a building could have been completed within a period of three months of entering into the development agree .....

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ding over of possession to the assessee. The Assessing Officer has come to the conclusion that capital gains have arisen in this year without proper verification of facts. Since the assessee has disclosed all the relevant facts to the Revenue authorities in is computation of income, we are of the opinion that there is no furnishing of inaccurate particulars of income or concealment or income. In the result, penalty levied under S.271(1)(c) is not sustainable - Decided in favour of assessee - .....

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on the other sources of income. Since the assessee has disclosed the loan in the computation of income for the relevant assessment year, it is clear that there is no concealment of income or furnishing of inaccurate particulars of income.Since it has not been proved that the assessee has either furnished inaccurate particulars of income or concealed his income, the impugned penalty imposed by the Assessing Officer is not sustainable.- Decided in favour of assessee - ITA No.1817/Hyd/2013, ITA No. .....

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UF, whose Karta is Shri R. Omprakash. He is also a partner in M/s. Om R.S. Wines, Miyapur. A search and seizure operation under S.132 of the Income Tax Act,1961 was conducted on 12.4.2005 and details of the bank account maintained by the aforesaid firm with Syndicate Bank, Kukatpally, Hyderabad were obtained. From the seized material, it was noticed that there were deposits to the extent of ₹ 21,32,000 in the said account. On enquiry, Shri R.Om Prakash explained the sources as the cash loa .....

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s under S.143(3) read with S.153C of the Act, the Assessing Officer issued various notices and called for various details. After verification of the details furnished by the assessee, the Assessing Officer noticed that the assessee-HUF had purchased 0.20 guntas OF LAND in Survey Nos.72, 73 and 74 at Miyapur, Seri Lingampally in the name of Smt.R.Sai Rani (Karta s wife), along with three other persons. He also observed that the assessee s share in the land is 10% of the total extent of land, and .....

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he builders entered into a supplemental agreement on 8.3.2004 for dividing the share of built up area alongwith the land owners, as per which the assessee has to receive Flat No.301 of 1415 sq. ft. and Flat No.508 of 1000 sq. ft. Thereafter, the Assessing Officer also observed from the computation of total income filed alongwith the return, that the assessee has not admitted capital gains arising on transfer of undivided share of land to the builder in lieu of the built up area received from the .....

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ws defining transfer . The Assessing Officer, however, held that there is a transfer of land by virtue of development agreement and the capital gains arose on the assessee receiving the built up area. He also held that the year of taxation is the year in which the built up area was handed over by the builder to the assessee and since in the case of the assessee, the built up area was received on 8.3.2004, he brought the capital gains to tax in the assessment year 2004-05. Accordingly, he also in .....

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ment as such for levy of penalty under S.271(1)(c) of the Act. The Assessing Officer, however, was not convinced with the explanation of the assessee and held that but for the search and seizure operation, the income would not have been offered to tax by the assessee, and therefore, it is a case of concealment of income and that the penalty is leviable. 6. Aggrieved, the assessee preferred an appeal before the CIT(A), taking a ground that the land did not belong to the HUF, but it belonged to Sm .....

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the Assessing Officer, though, has held that the capital gains is chargeable to tax in the year in which the built up area was received by the assessee, he has brought capital to tax in the year when the supplemental agreement was entered into. He submitted that the development agreement itself was entered into on 15.12.2003, while the supplemental agreement was dated 8.3.2004, and it is not possible for any builder to have constructed the building within such a short period of three months. Fu .....

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,000 for 10% share in purchase of land in Sy. Nos.72 to 74 admeasuring 20 guntas of land and registration charges paid of ₹ 15,000 and the said land is given for development on 15.12.2003 for which the assessee has received ₹ 10,000 as advance from BR Constructions. He submitted that the assessee has not offered the capital gains to tax in the relevant assessment year as the legal position was not clear at that point of time. He submitted that every addition will not automatically at .....

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on 12.4.2005. Even before the issuance of notice under S.153C of the Act, the assessee has declared the said transaction in the computation of income. The assessee has never taken the ground that the said land does not belong to the assessee herein, though it has raised such a ground before the CIT(A) in the first appeal preferred against the penalty order of the Assessing Officer. Thus, it is seen that the land belongs to the assessee and the transaction of development agreement and supplement .....

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r to the assessee on 8.3.2004, it is not understandable as to how a building could have been completed within a period of three months of entering into the development agreement. It appears that the Assessing Officer has taken the supplemental agreement into consideration for presuming that the built up area has been apportioned to the assessee on 8.3.2004, as the supplemental agreement is entered for apportioning the developed area. Supplemental agreement alone cannot be taken as the proof of h .....

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ishing of inaccurate particulars of income or concealment or income. In the result, penalty levied under S.271(1)(c) is not sustainable and the assessee s appeal for assessment year 2004-05 is allowed. ITA No.1818/Hyd/2013 : Assessment year 2005-06 10. As regards the appeal for assessment year 2005-06, the Assessing Officer has observed that the assessee has advanced a loan of ₹ 15,75,000 to M/s. Om R.S.Wines. During the assessment proceedings under S.143(3) read with S.153C of the Act, th .....

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cer observed that the assessee has not offered to tax the sum of ₹ 15,75,000. Therefore, a show cause notice was issued to the assessee. 11. The assessee filed a letter dated 3.12.2007 stating that the assessee, while deposing under S.132 of the Act had he stated that the return of income for the relevant assessment year was not filed and never meant that this amount was undisclosed income. According to him, it was meant that the taxes would be paid on such filing of return and the taxes c .....

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0, receipt from Cecon Builders of ₹ 1,25,000 and cash loan repayment by Smt.R.Sai Rani of ₹ 4,00,000, which was utiiised for advancing the cash loan amounting to ₹ 15,75,000 to the firm, M/s. Om R.S. Wines. The Assessing Officer however observed that the Receipts & Payments Account is not prepared date-wise and only the gross receipts and gross payments are shown and therefore, the authenticity of the statement cannot be verified and ascertained. He thereafter proceeded to .....

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umulate ₹ 15,75,000 only, if the assessee is believed have saved the entire income approximately for four years. He also observed that the household expenses shown by the assessee are very low and therefore, the availability of funds with the assessee is not acceptable. He further observed that the assessee has purchased a Fiat Car worth ₹ 3,25,000 from M/s. Satya Kalyan Constructions Pvt. Ltd., and therefore, the individual also does not have the capacity to advance such fund. He th .....

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r, and hence, the assessee is in second appeal before us. 13. The learned counsel for the assessee, while reiterating the submissions made before the authorities below, has drawn our attention to the return of income filed by the assessee for the relevant assessment year on 24th May, 2005, wherein the assessee has disclosed the loan of ₹ 15,75,000 to M/s. Om R.S.Wines. He also has drawn our attention to the Receipts and Payments Account for the year ending on 31.3.2001 to show that the ass .....

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T, the penalty proceedings being independent proceedings, the evidence filed by the assessee has to be considered independently and valid explanation has to be accepted for deletion of penalty. 14. The Learned Departmental Representative, supported the orders of the authorities below and submitted that the assessee could not explain the availability of funds for the advancing of loans either during the assessment proceedings or during the penalty proceedings, and therefore, Explanation 1(b) unde .....

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