TMI Blog2016 (12) TMI 243X X X X Extracts X X X X X X X X Extracts X X X X ..... and the land is not eligible for depreciation as per scheme of the Act . Thus, the contention of the assessee that the assessee reduced the sale consideration from the Block of asset is also not borne out from the records as on perusal of the financial statement of the financial year ended 31-03-2008 reveals that there was not block of asset created by the assessee for the land held by the assessee and this land was shown as separately under the schedule of investment(page 45/pb). The assessee has sold the said land vide sale deed executed in the previous year relevant to the impugned assessment year and also even during the succeeding assessment year, the assessee did not declare the said capital gain in the return of income filed with the Revenue. While on the other hand we order deletion of penalty levied by the authorities below on the allegation of tax sought to be evaded by the assessee on difference between full value of consideration as determined by DVO of ₹ 35.75 lacs and the actual sales consideration of ₹ 31.20 lacs as the same was brought to tax owing to deeming fiction created by Section 50-C of the Act and no evidence has been brought on record by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y be deleted. 3. The Brief facts of the case are that the assessee filed return of income on 29th September, 2008 declaring total income of ₹ 67,17,110/-. The assessee is engaged in the business of stone crushing and transport. The A.O. noted during the assessment proceedings u/s 143(3) of the Act read with Section 143(2) of the Act that the assessee had purchased a land at Baramati for a consideration of ₹ 39 lacs. The assessee was asked to explain the source of this investment during quantum assessment proceedings u/s 143(3) r.w.s 143(2) of the Act. During the course of assessment proceedings u/s 143(3) r.w.s. 143(2) of the Act, the assessee submitted that the assessee had purchased a piece of land for a consideration of ₹ 22.50 lacs in the preceding year and the same was sold for a total consideration of ₹ 31.20 lacs during the impugned assessment year which was utilized by the assessee for purchase of land at Baramati. The assessee had not disclosed short term capital gain earned on the sale of the land in the return of income filed with the Revenue and when asked the assessee submitted that the capital gain earned was not disclosed in the return of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not leviable on agricultural land and hence he did not disclose the said capital gains in the return of income filed with the Revenue can also be not accepted as there is a column in the return of income under which exempt income is required to be disclosed. The assessee failed to disclose such exempt income in the original return of income filed on 29/09/2008 nor the same was disclosed in the revised return of income filed on 06/12/2010. The A.O. observed that the assessee not only concealed the particulars of income in respect to the capital gains earned but has also failed to offer an explanation showing reasonable cause in terms of Section 273B of the Act , hence, penalty u/s 271(1)(c) of the Act is leviable in the case of the assessee and accordingly penalty of ₹ 4,50,363/- was levied by the AO u/s 271(1)(c) of the Act , being 100% of the tax sought to be evaded by the assessee, vide penalty order dated 22-06-2011 passed by the AO u/s 271(1)(c) of the Act 4. Aggrieved by the penalty order dated 22-06-2011 passed by the A.O. u/s. 271(1)(c) of the Act, the assessee filed first appeal before the ld. CIT(A). 5. Before the ld. CIT(A) , the assessee submitted that the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng earned capital gains being in the knowledge of the assessee but still it was not disclosed in the return of income filed with the Revenue. The learned CIT(A) rejected the contentions of the assessee that the assessee failed to disclose the capital gains by omission or oversight or that it was bonafide mistake or technical or venial breach of the law. The contention of the assessee that it was an agricultural land and hence exempt from capital gains under section 54B of the Act or that the assessee reinvested the profit earned in another agricultural land was not accepted by the ld. CIT(A) as the assessee could not provide any details of such land being agricultural land and also details of reinvestment of amount in another agricultural land, even during appellate proceedings. The learned CIT(A) further observed that the addition of ₹ 13.25 lacs made by the AO was accepted by the assessee in quantum proceedings as no appeal was preferred by the assessee against the quantum assessment order dated 10-12-2010 passed by the AO u/s 143(3) of the Act. The ld. CIT(A) held that the assessee has concealed his particulars of income within the meaning of Section 271(1)(c) of the Act a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ief that the land was exchanged , the assessee did not disclose and pay capital gain on the sale of this land while capital gains w.r.t. other transactions in property were paid. It was submitted that penalty cannot be levied on the additions made u/s 50- C of the Act. The ld. counsel relied on the decision of Mumbai bench of this Tribunal in the case of Renu Hingorani v. ACIT in ITA No. 2210/Mum/2010 for the assessment year 2006-07 vide orders dated 22nd December, 2010 and the decision of Hon ble High Court of Calcutta in the case of CIT v. Madan Theatres Ltd.[2014] 44 taxmann.com 382 (Calcutta) and submitted that no penalty u/s 271(1)(c) of the Act can be levied as there is no concealment of income. 8. The ld. D.R. submitted that the A.O. had made enquiries about the source of purchase of land during the year and then the AO came to know that the assessee has sold some land of which capital gains were not offered for taxation by the assessee. Full opportunity was given by the DVO while computing the market value of the land. 9. We have considered the rival contentions and also perused the material available on record including case laws relied upon by both the parties. We h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly different story that the said land being under MIDC and a barren land having no source of water is not under cultivation , to take it out of ambit from the penalty provisions u/s 271(1)(c) of the Act. The plea of the assessee that the assessee has reduced the sale consideration of the said land from the Block of the asset is again and hence capital gains were not declared is again devoid of merits. The concept of Block of Asset is for the assets which are eligible for depreciation. The Block of Asset is defined under section 2(11) of the Act as under: Definitions. 2. In this Act, unless the context otherwise requires,- **** **** [(11) block of assets means a group of assets falling within a class of assets comprising- (a) tangible assets, being buildings, machinery, plant or furniture; (b) intangible assets, being know-how, patents, copyrights, trade-marks, licences, franchises or any other business or commercial rights of similar nature, in respect of which the same percentage of depreciation is prescribed;] ***** ***** The assessee held industrial land which was sold during the impugned assessment year and the land is not eligible for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cs , wherein the difference was added to the income owing to deeming fiction created by Section 50C of the Act. We are in agreement with the assessee that the deeming fiction of Section 50-C of the Act under which capital gains arising from sale of land owing to adoption of DVO value of ₹ 35.75 lacs instead of actual sale consideration of ₹ 31.20 lacs will not be hit by section 271(1)(c) of the Act, hence no penalty is exigible on the difference between DVO valuation and actual consideration unless it is shown by the Revenue that the assessee has not shown the actual sale consideration correctly and on-money in excess of actual sales consideration was received by the assessee which was not declared to the Revenue in the return of income filed with the Revenue relying on the decision of Hon ble Calcutta High Court in the case of CIT v. Madan Theatres Limited (2014) 44 taxmann.com 382(Cal.)/ (2013) 260 CTR 75(Cal.) and decision of the tribunal in the case of Renu Hingorani v ACIT in ITA 2210/Mum/2010 dated 22-12-2010. However, the assessee has not disclosed the transaction of earning of capital gains on sale of land in the return of income although knowing well that it is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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