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ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 24 (1) , NEW DELHI Versus SH. PRADEEP SINGH

2016 (9) TMI 1203 - ITAT DELHI

Penalty u/s. 271(1)(c) - determination of liability - guilty of concealment of income - Held that:- Assessee was under a bona fide belief that ₹ 13 crores was a determined liability for A.Y. 2008-09 in accordance with the terms of the Full and Final Settlement Agreement dt. 22.02.2008 signed by him with the two companies. It was noted that he offered this amount for taxation in A.Y. 2009-10 under a bonafide belief that in accordance with the terms of Deed of Settlement recording the Consen .....

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assessee had no intention whatsoever to conceal this amount of ₹ 13 crores. Even the dates of the two agreements entered into by the assessee with the companies on 22.02.2008 and 29.01.2009 go on to support his argument that his belief was bonafide initially, that this amount of ₹ 13 crores was a determined liability in A.Y. 2008-09 and became income in A.Y. 2009-10. In fact, the assessee paid taxes on this amount in A.Y. 2009-10 to the tune of ₹ 3,13,24,962/- on 27.09.2009. W .....

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for A.Y. 2008-09. The AO mentioned in the penalty order that the assessee had filed an appeal before CIT(A) against this addition. In fact, the assessee accepted this addition of ₹ 13 crores since he had voluntarily offered it for taxation for A.Y. 2008-09. In view of the above, Ld. CIT(A) has rightly held that that there is no case for imposition of penalty u/s. 271(1)(c) of the Act on the assessee with reference to the amount of ₹ 13 crores, hence, he rightly directed the AO not t .....

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f Income Tax (Appeals)-XXIII, New Delhi on the following grounds:- 1. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the penalty of ₹ 13 Crores u/s. 271(1)(c), as the assessee filed only a revised computation of income during assessment proceedings in August, 2010 which was not bonafide as the same had been done only after issue of notice u/s. 143(2) for AY 2008-09. 2. On the facts and in the circumstances of the case the impugned order pass .....

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ed as the Act) at an income of ₹ 48,59,11,480/- thereby making an addition of ₹ 13,46,08,818/-. During the assessment proceedings, the Assessing Officer initiated penalty proceedings u/s. 271(1)(c) of the Act making the additions on account of expenses against procurement of service charges for land, deemed dividend from M/s. Prama Project Solutions Pvt. Ltd., M/s. Prama Marketing Pvt. Ltd and Sanyog Estate Private Limited u/s. 2(22)(e) of the Act and loss on sale of land at Pawla Kh .....

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gain of ₹ 4,08,800/- is reduced by ₹ 1,15,730/- as short term loss u/s. 70(2) and confirmed the balance addition. (b) Disallowance on account of deemed dividend of ₹ 18,60,000/- is reduced to ₹ 17,00,000/-. (c) Dismissed the appeal on the issue of initiation of penalty u/s. 271(1)( c). Accordingly, show cause notice for imposing penalty was issued on 10.12.2012 fixing the hearing of the case on 17.12.2012. The reply given by the assessee to the said show-cause notice was .....

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he Tribunal. 5. At the time of hearing Ld. DR relied upon the order of the AO and reiterated the contentions raised by the Revenue in the grounds and requested that Appeal of the Revenue may be allowed. 6. On the contrary, Ld. Counsel of the Assessee has relied upon the order of the Ld. CIT(A) and stated that Ld. CIT(A) has passed a well reasoned order which does not need any interference on our part, hence, the same may be upheld and accordingly, the appeal of the Revenue may be dismissed. 7. W .....

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penalty order passed by the AO. After careful consideration of all the facts of this case, I have come to certain conclusions. These are numerated below in a chronological order: (a) The appellant entered into an MOU with M/s. Selene Construction Pvt. Ltd. and M/s Juventus Estates Pvt. Ltd. on 04.06.2007. The MOU is to acquire land at Sector-l03, Sector-104, Gurgaon, Haryana. (b) As per terms and conditions of allotment of land, the concerned authorities informed the said companies that External .....

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rn of income u/s. 139(1) on 29.09.2008 declaring an income of ₹ 35,13,02,662/-, which was inclusive of the liability of ₹ 13 crores, for A.Y.2008-09. (f) Subsequently, as a measure of settlement of disputes between the appellant and the two companies, another Agreement being Deed of Settlement recording the Consent Terms between the parties was executed on 29.01.2009. As per this Consent Deed, both the companies i.e. M/s. Selene Construction Pvt. Ltd. and M/s. Juventus Estates Pvt. L .....

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ion in that year. Simultaneously, he also revised his Return of Income for A.Y. 2009-10 by reducing his taxable income with an equivalent amount. 4.4 A careful consideration of the chronological facts, as narrated above, make it abundantly clear that the appellant was under a bona fide belief that ₹ 13 crores was a determined liability for A.Y. 2008-09 in accordance with the terms of the Full and Final Settlement Agreement dt. 22.02.2008 signed by him with the two companies. Further, he of .....

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facts and circumstances, it is difficult to fault the assessee and accuse him of concealment of income. It is clear from the facts that the appellant had no intention what-so-ever to conceal this amount of ₹ 13 crores. Had this been his intention, he would have never offered it for taxation in A. Y. 2009-10 and he would have never paid taxes thereon as per law. Even the dates of the two agreements entered into by the appellant with the companies on 22.02.2008 and 29.01.2009 go on to suppor .....

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e appellant's revised return for A.Y. 2009-10, in the appellant had reduced his income by the said ₹ 13 crores vide his Order u/s. 143(3) of the Act dt. 20.12.2011.Yet, he held the appellant guilty of concealment of income of ₹ 13 crores for A.Y. 2008-09. The AO states in the penalty order that the appellant had filed an appeal before CIT(A) against this addition. In fact, the appellant accepted this addition of ₹ 13 crores since he had voluntarily offered it for taxation f .....

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y u/s. 271(1)(c) with reference to this amount of ₹ 13 crores. 7.1 After going through the findings of the Ld. CIT(A), as aforesaid, we are of the considered view that assessee was under a bona fide belief that ₹ 13 crores was a determined liability for A.Y. 2008-09 in accordance with the terms of the Full and Final Settlement Agreement dt. 22.02.2008 signed by him with the two companies. It was noted that he offered this amount for taxation in A.Y. 2009-10 under a bonafide belief th .....

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e him of concealment of income. It is clear from the facts that the assessee had no intention whatsoever to conceal this amount of ₹ 13 crores. Even the dates of the two agreements entered into by the assessee with the companies on 22.02.2008 and 29.01.2009 go on to support his argument that his belief was bonafide initially, that this amount of ₹ 13 crores was a determined liability in A.Y. 2008-09 and became income in A.Y. 2009-10. In fact, the assessee paid taxes on this amount in .....

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