TMI Blog2013 (4) TMI 915X X X X Extracts X X X X X X X X Extracts X X X X ..... the above background the learned counsels have made their submission. 3. The appeal in the case of Shri Mangesh Tupe in ITA No. 804/PN/2012 pertaining to the assessment year 2003-04 is taken up as the lead case. This appeal by the assessee pertaining to the assessment year 2003-04 is directed against the order of the CIT(A) dated 26.12.2011 which, in turn, has arisen from an order dated 30.06.2010 passed by the Assessing Officer levying penalty of ₹ 13,64,540/- under Section 271(1)(c) of the Act. 4. Briefly put the facts are that a search action under Section 132(1) of the Act was conducted on the assessee on 21.02.2008. In response to a notice issued under Section 153A of the Act for assessment year 2003-04, assessee filed a return of income on 08.10.2009 declaring Nil income and agricultural income of ₹ 5,04,200/-. An assessment under Section 143(3) read with Section 153A of the Act was finalized by the Assessing Officer on 31.12.2009 determining total income of ₹ 53,86,150/- wherein additions were made on account of Long Term Capital Gain (LTCG), undisclosed investment in bank deposits and agricultural income treated as undisclosed income, amounting to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and that the same belonged to the assessee. The Assessing Officer in the course of assessment proceedings noticed that during the previous year relevant to the assessment year 2003-04 under consideration, assessee had made cash deposits of ₹ 18,69,073/- which was considered as unexplained investment of the assessee. The Assessing Officer has further recorded in the assessment order dated 31.12.2009 that assessee agreed to the said addition vide order sheet no5t ing dated 08.12.2009. Subsequently, when the assessee was show-caused as to why penalty under Section 271(1)(c) of the Act be not levied for the said additions, the claim of the assessee was that he agreed to such additions merely in order to buy peace and that the Department had no evidence to show that assessee had actually earned such income. However, the Assessing Officer held that assessee had concealed and furnished inaccurate particulars of income qua the aforesaid addition and that the assessee s case was covered by Explanation- 5A to Section 271(1)(c) of the Act. Before the CIT(A), assessee reiterated the aforesaid argument and also pointed out that because of mere admission and in the absence of any concrete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erms thereof the assessee is deemed to have concealed the impugned income or furnished inaccurate particulars of such income i.e. ₹ 18,69,073/- representing undisclosed investment in the two impugned bank accounts standing in the name of Mr. Anand S. Bhope. It is also factually emerging that no return of income for assessment year 2003- 04 was filed by the assessee prior to the search action carried under Section 132 (1) of the Act. The alternative plea of the assessee with regard to the quantum of penalty levied, in our view, is also misplaced. As per the assessee, the addition of ₹ 18,69,073/- represents only the cash deposit/entries in the impugned bank account whereas cash withdrawal entries are also there, and thus addition was warranted only with regard to the peak balance during the year, after netting the cash withdrawals. In this connection the CIT(A) has observed that assessee failed to establish any co-relation between the cash deposits and withdrawals. Even before us, there is no material referred to by the assessee to show any co-relation 7b etween the deposits and withdrawals and therefore the aforesaid plea of the assessee has been rightly rejected by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Section 271(1)(c) of the Act. According to the learned counsel, the assessee had duly explained the cash deposits appearing in the bank account as being out of agricultural income and that the said explanation was consistently furnished right from the time of search and during the assessment proceedings. The learned counsel pointed out that there was no evidence with the Department to show that the agricultural income declared was false, and the addition was accepted by the assessee only to buy peace and avoid litigation. At the time of hearing, the learned counsel relied upon the judgement of the Hon ble Bombay High Court in the case of Bhimji Bhanjee Co. 146 ITR 144 (Bom.) for the proposition that mere agreement to an addition does not mean that there was concealment or furnishing inaccurate particulars of income within the meaning of Section 271(1)(c) of the Act. 11. On the other hand, the learned Departmental Representative appearing for the Revenue has pointed out that the CIT(A) has rightly upheld the levy of penalty by considering the findings of the Assessing Officer contained in the assessment order, which clearly show that no agricultural activity was carried ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the return of income was undisclosed income. Having regard to the facts and circumstances, the stand of the assessee of having carried out any agricultural activity stands disproved and accordingly concealment and furnishing of inaccurate particulars of income qua the stated agricultural income stands established within the meaning of Section 271(1)(c) of the Act. Therefore the CIT(A) was justified in upholding the action of the Assessing Officer in imposing penalty under Section 271(1)(c) of the Act and the assessee has to fail on this aspect also. 14. In the result, the appeal of the assessee in ITA No. 804/PN/2012 is hereby dismissed. 15. Now, we may take up the cross appeal preferred by the Revenue for the assessment year 2003-04 vide ITA No. 771/PN/2012. As noted earlier the grievance of the Revenue is with regard to the action of the CIT(A) in deleting the penalty imposed by the Assessing Officer under Section 271(1)(c) of the Act with respect to the addition of ₹ 30,12,878/- made on account of LTCG on sale of lands. 16. In order to appreciate the controversy, it would be appropriate to briefly touch upon the facts regarding the impugned addition. The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le to be taxed in assessment year 1999-2000 and not in the assessment year under consideration in the light of the judgement of the Hon ble Bombay High Court in the case of Chaturbhuj Dwarkadas Kapadia 260 ITR 491 (Bom.). As per the CIT(A), even during the penalty proceedings assessee could agitate that an income subject to penalty was indeed not taxable at all, and accordingly CIT(A) found merit in assessee s plea that impugned incom1e2 by way of LTCG on sale of land was not taxable in the instant year and therefore it could not be said that there was any concealment or furnishing of inaccurate particulars in order to levy penalty under Section 271(1)(c) of the Act. Against the aforesaid decision, Revenue is in appeal before us. 17. Before us, the learned Departmental Representative has submitted that plea of the assessee that impugned capital gain was not taxable during the year under consideration was a fresh plea raised only in the proceedings before the CIT(A) and the same was neither raised during the assessment proceedings and nor in the penalty proceedings before the Assessing Officer. As per the Departmental Representative, the CIT(A) was wrong in considering such a ple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respective years. In the return of income filed in pursuance to notice under Section 153A of the Act for the assessment year 2003-04, no capital gain was declared on the ground that the same would be offered to tax in the years when the consideration would be actually received. In fact, we find that in the return of income filed, assessee appended the following note : - The assessee and his family owned around 18 acres in Hadapsar, Magarpatta City, Pune. The assessee had entered into a Memorandum of Understanding as per which the assessee family had agreed to give the said land for development and the consideration would be paid on the basis of the land developed and sold by Magarpatta Township Development Co. Ltd. (MTDCL). Accordingly, MTDCL has issued land cost certificate giving details of the amount payable to the a 1 s 4 sessee. However, during the year, the assessee has received much lesser sale consideration and hence, the capital gain is offered to tax on the basis of the sale consideration actually received and not on the basis of the amount shown in the land cost certificate issued by MTDCL 21. The Assessing Officer confronted the assessee that the capital ga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ho were to receive consideration from MTDCL. Nevertheless the assessee had still not handed over the possession of his share of land but was receiving the land cost certificates issued by the MTDCL, indicating his share in the consideration for the lands developed and sold during the year, and it did not indicate amounts actually paid to the assessee in different years. It was in this background, the assessee explained that in the statement recorded under Section 132(4) of the Act, assessee agreed to offer capital gains on the basis of the amounts actually received from year to year. In the returns of income filed after the search, assessee disclosed the capital gains on the basis of consideration actually received and not on the basis of the consideration shown payable by MTDCL from year to year. 23. The moot point to consider is whether merely because the Assessing Officer has chosen to bring to tax capital gain on the basis of the amounts payable to the assessee year to year as per the land cost certificates issued by MTDCL as against the disclosure of capital gains made by the assessee on the basis of the actual amounts received from MTDCL, would it constitute concealment or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e land cost certificates issued by MTDCL. Elaborating on this point, the learn1e7d Representative for the assessee submitted that the manner of taxing the impugned capital gains was contrary to the prevailing legal position. It is sought to be made out that if one was go by legal position, and which is supported by the judgement of the Hon ble Bombay High Court in the case of Chaturbhuj Dwarkadas Kapadia (supra), the entire capital gain accrued in the assessment year 1999-2000 and no capital gain was assessable during the under consideration. It is submitted that having regard to the aforesaid, the assessment may have been completed on a different basis but if as per the legal position the particular addition/assessment was not warranted, the levy of penalty under Section 271(1)(c) of the Act would have to fail. We find that the CIT(A) has accepted the aforesaid plea of the assessee and has accordingly, deleted the penalty levied under Section 271(1)(c) of the Act. 25. The plea of the assessee is that Section 45(1) of the Act provides for taxability of capital gains in the year of the transfer of capital asset. In the present case, the MOU with MTDCL was entered on 26.03.1999 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... event of transfer within the meaning of Section 2(47) of the Act has taken place and therefore the capital gain is liable to be taxed in assessment year 1999-2000. We are conscious that the present proceedings are not in relation to substantive taxation of the impugned amounts but the aforesaid proposition is being considered only to examine whether legally speaking is there justification in the plea of the assessee that the taxability of the impugned capital gain was not legally conclusive in the manner made by the Assessing Officer and that in the eyes of law, the impugned capital gain was taxable in an another manner. 27. It is well settled proposition that the assessment proceedings and penalty proceedings under Section 271(1)(c) of the Act are independent proceedings and that the conclusions reached in the assessment proceedings are not conclusive so far as the penal provisions are concerned. No doubt a conclusion arrived at in the assessment proceedings is good evidence but the same cannot be considered as conclusive for the purpose of penalty proceedings in as much as the two proceedings are independent proceedings, and, in this connection gainful reference can be made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2008-09 respectively. In this appeal, assessee is agitated the levy of penalty under Section 271(1)(c) of the Act on an amount of ₹ 43,09,784/- representing income from the sources, which was declared in the return filed in pursuance to notice under Section 153A(a) of the Act post-search and the same was not declared originally in the return filed under Section 139(1) of the Act for the assessment year 2007-08. 32. In this connection, it is notable that in this case search was initiated under Section 132 of the Act on 21.02.2008 and therefore the provision of Explanation 5A to Section 271(1)(c) of the Act are applicable. In terms of sub-clause (a) of Explanation 5A to Section 271(1)(c) of the Act, the assessee is deemed to have concealed the particulars of impugned income and therefore, we find no error in the order of the CIT(A) sustaining the penalty imposed by the Assessing Officer. 33. In the result, appeal of the assess in ITA No. 808/PN/2013 pertaining to assessment year 2007-08 is hereby dismissed. 34. Insofar assessment year 2008-09 is concerned, a preliminary issue has been raised by the assessee, which is to the effect that the order passed by the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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