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2017 (7) TMI 571 - ITAT CHANDIGARH

2017 (7) TMI 571 - ITAT CHANDIGARH - Tmi - Levy of penalty under section 271(1)(c) - assessee made an incorrect claim - Held that:- In the present case that there was a transfer of assets for consideration which had been received by way of book entries and hence, the transfer is not a donation. It is evident from this finding of the I.T.A.T. that the explanation of the assessee that mere book entries were passed, crediting the transferors and debiting the corpus fund was found to be correct. But .....

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nough explanation of the assessee in quantum proceedings will not tantamount to concealment of particulars of income or furnishing of inaccurate particulars of income to attract the levy of penalty under section 271(1)(c) of the Act. - Decided in favour of assessee. - ITA No.876/Chd/2014 - Dated:- 21-11-2016 - SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER For The Appellant : S/Shri Ruchesh Sinha & Mahesh Kumar For The Respondent : Shri Manjit Singh ORDER PER AN .....

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ication filed by the assessee vide order in M.A.No.80/Chd/2015 dated 11.12.2015. In pursuance to the same, the present appeal was fixed before us and was heard by us. 3. Brief facts relating to the case are that the assessee is an educational institution registered under section 12A of the Act. Originally, assessment of the assessee was completed under section 143(3) of the Act vide order dated 28.12.2007 at nil income. Later on, the case was reopened under section 148 of the Act for the reason .....

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from assets acquired during the year. The assessee further argued that the assets had not been transferred for a consideration but were given by way of donation to two other societies and, therefore, no question of capital gain arose as no price was charged for that. The Assessing Officer rejected the contention of the assessee and held that the assets had been transferred at book value of ₹ 1,05,82,364/- and since the entire cost had been allowed as application of income in the year of ac .....

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his order dated 31.12.2009. Against the same, the assessee went in appeal before the I.T.A.T., who vide their order dated 6.1.2012 in ITA No.1046/Chd/2010 upheld the order of the CIT (Appeals). During the penalty proceedings, the assessee filed reply which was not accepted by the Assessing Officer who held that the assessee having not shown the income on account of capital gain had concealed the income to such extent and, therefore, levied penalty under section 271(1)(c) of the Act of ₹ 25 .....

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oks of account whereby the written down value of the assets transferred in the books of the assessee was reduced from the corpus fund of the assessee society. Thus the assessee stated that it was clear, by virtue of this entry, that the assessee had received no consideration for the transfer made. The assessee also pointed out that the fact that no amount due on account of consideration for the transfer made was shown as debtors in the books of the society also lent credence to its contention th .....

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planation to section 271(1)(c) of the Act also no penalty is liable to it. The learned CIT (Appeals) after considering assessee s arguments held that in view of the fact that the arguments of the assessee have been dismissed both by the CIT (Appeals) and the I.T.A.T., the assessee has no case on merits and its contention that no capital gain had accrued to it could not be given any cognizance. Further the learned CIT (Appeals) held that the assessee by not disclosing capital gain earned by it on .....

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s attracted. Thus, the learned CIT (Appeals) upheld the levy of penalty under section 271(1)(c) of the Act. 5. Aggrieved by the same, the assessee filed the present appeal before us. 6. Before us, learned counsel for the assessee reiterated the arguments made before the learned CIT (Appeals) and stated that firstly on merits the addition made was incorrect and the fact that it had been upheld by the I.T.A.T. did not merit due consideration since the order passed by the I.T.A.T. was ex-parte in t .....

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regard categorically stating the transfer of the assets by way of donation, the reduction of the written down value of these assets from the corpus fund of the assessee society and the fact that neither any amount was received by the assessee society on account of these transfers, nor was shown as receivable in the books of the assessee by way of reflecting the societies to whom assets had been transferred as debtors, proves the fact that the assets had been transferred for no consideration at a .....

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er, the learned counsel for the assessee stated that in any case, the assessee had not concealed any particulars of income having reflected the transfer of assets in its Balance Sheet filed alongwith return of income. The learned counsel for the assessee further stated that it was merely a case of claim of the assessee not being accepted by the Revenue which as held in a number of decisions, does not automatically lead to levy of penalty. 7. The learned D.R., on the other hand, relied upon the o .....

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been levied for concealing income being capital gains earned on transfer of fixed assets, to the tune of ₹ 1,05,82,364/-. The learned counsel for the assessee contended that since the managements of various schools run by the assessee society had become burdensome, it was resolved, vide resolution dated 29.1.2005 to transfer certain schools and land to two new societies formed for this purpose i.e. Swami Vivekanand Paramhans Education Society and Swami Vivekanand Mother Sharda Education S .....

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2 Swami Vivekannd Mother Sharda Ed. Society Rs.1,27,75,772 Rs.2,58,07,834 9. Learned counsel for the assessee stated that this amount was reflected in Schedule-C of sundry creditors to the Balance Sheet. The corresponding amount was debited to the corpus fund of the assessee society and reduced therefrom. The learned counsel for the assessee drew our attention to the reconciliation of the corpus fund as follows. CORPUS FUND (31-3-2004) Rs.60999171 Less Assets Transferred (Out of ₹ 10582364 .....

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: The submissions of the assessee are considered and not found logical in view of the fact that assessee has not brought anything new except submitting the submissions which had already been putforth by it during the course of assessment proceedings. As regards assessee s submissions that no sales consideration received in lieu of transfer of fixed assets are not acceptable as in the schedule of fixed assets the assessee has clearly shown transfer/sale of fixed assets to the tune of ₹ 1,0 .....

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sale consideration has been reduced from the credit balance and thus has been received by the appellant through book entries. This findings have also been confirmed by the Ld. CIT(A) in his order vide Para '5.1' and subsequently by the Ld, I.T.A.T. Therefore, the assessee's plea that no consideration has been received or any adjustment by book entries were made for consideration is not tenable. 11. The Ld. CIT (Appeals) has also not controverted this fact but has only stated at para .....

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of assets .Thus, the assessee by making non-genuine claim in the return ahs furnished the particulars which led to reduction in the tax liability. On perusal of assessment record and original return filed by the appellant, it is noted that the return was filed in Form No.2D (Saral) showing Nil income. This form is meant for filing of return by non-corporate assessee s other than persons claiming exemption u/s 11 of the Act but the statement of income annexed with the return shows the claim of e .....

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Schedule. We may add that Fixed Assets Chart only disclose movement in Fixed Assets and not to whom they are transferred or from whom they are acquired. Therefore, we hold that the observation of the Ld. CIT (Appeals) merits no consideration. Clearly, therefore, details of the transaction leading to the alleged earning of capital gain were duly disclosed in the return of income field by the assessee. The Hon'ble Apex Court in the case of CIT Vs. Reliance Petroproducts Pvt. Ltd. (2010) 322 IT .....

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assets leading to the alleged earning of capital gain. Therefore, atleast prima-facie, the assessee cannot be held guilty of furnishing inaccurate particulars of income or concealing the particulars of income to attract the levy of penalty under section 271(1)(c) of the Act. 13. Further, we find that the explanation offered by the assessee stating that the transfer was for no consideration but on the contrary was a donation, is a plausible and duly substantiated explanation. The resolution pass .....

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three societies i.e., sisters concern societies founded with similar objects. 14. Moreover, the fact that the societies to whom the assets were transferred were shown as creditors, lends credence to the explanation of the assessee that no consideration was either received or was receivable on account of the transfer since in such circumstances the societies would have been reflected as debtors and not creditors in the books of account of the assessee. Also the fact that corpus funds have been de .....

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is bonafide. The Explanation-1(A) and (B) of section 271(1)(c) of the Act, therefore, are also not attracted in the present case. Merely because the explanation has been found to be untenable in quantum proceedings, does not lead to the conclusion that it is not a plausible enough explanation for the purpose of deleting the levy of penalty under section 271(1)(c) of the Act. There may have been a number of reasons for rejecting the explanation of the assessee during the quantum proceedings. But .....

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