TMI Blog2019 (6) TMI 1095X X X X Extracts X X X X X X X X Extracts X X X X ..... reason that the assessee did not get his accounts audited as required u/s 44AB of the Act. There is no dispute that the transaction was single transaction. No other expenditure was also claimed by the assessee. The AO did not bring any other material to support that the assessee has carried on the business in the earlier year or subsequent year in the assessment order. There is no issue of complexity involved in the receipts of the assessee. The assessee is a mechanical engineer, as observed from the assessment order and he is not engaged in the business, there are no other business transaction carried on by the assessee as brought out by the AO in the assessment order. Therefore, we hold that the assessee did not get the accounts audited since he was under the bonafide impression that sale transaction of litigated land as capital gains but not business and the same appears to be reasonable cause as required u/s 271B. Accordingly, we hold that there is reasonable cause for not getting the accounts audited - Decided in favour of assessee. - I.T.A.No.78/VIZ/2019 - - - Dated:- 21-6-2019 - Shri V. Durga Rao, Judicial Member And Shri D.S. Sunder Singh, Accountant Member ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orsed on the back of the agreement. The assessee along with others entered into a Tripartite Agreement on 12.11.2007 whereby the rights conferred on him by the above said agreement are to be vested in M/s Fortuna Infrastructure India Pvt. Ltd., Hyderabad. It is submitted that the agreement rights transferred by the assessee did not have any cost of acquisition. Though some payments were made under the agreement these amounts were towards the consideration payable under the agreement by the assessee and would have been adjusted against the same at the time of registration of sale deed in favour of the assessee in the normal course. In other words, the amounts paid under the agreement by the assessee were only advances and they were not the costs incurred for obtaining the agreement rights. Under these circumstances, it is submitted that the amounts realized by the assessee on the transfer of agreement rights in favour of M/s Fortuna Infrastructure (India) Pvt. Ltd. do not constitute taxable capital gains in view of the ratio of the decision of the Hon ble Supreme Court in the case of CIT Vs. B.C.Srinivasa Setty (1981) 128 ITR 294 (SC) and follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. The issue has travelled upto the Tribunal and the Tribunal also confirmed the activity of the assessee as adventure in nature of trade, therefore, held that the assessee is required to get his accounts audited. Failure to get the accounts audited attracts the penalty u/s 271B. Accordingly confirmed the penalty imposed by the AO and dismissed the appeal of the assessee. 5. Against the order of the Ld.CIT(A), the assessee is in appeal before this Tribunal. During the appeal hearing, the Ld.AR submitted that the assessee had entered into sale transaction for purchase of property under litigation and admitted the income as advance. Since the transaction was not finalized, he was under the impression that the amount is not taxable in the year of receipt, but only it is taxable when the transaction is complete. Hence he was under the bonafide impression that the receipt is not at all taxable in the year under consideration. Hence, filed the return of income admitting Nil income, enclosing detailed note along with the return of income. Subsequently, the assessee filed a letter agreeing to tax the receipt as capital gains. However, the AO treate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is there is nothing distinguishable in the supplementary agreement dated 10.04.2010. During the scrutiny proceedings that ensued the contention of the assessee is two fold. Firstly, the assessee contended that the income arising from the said transaction, if any is taxable under Long Term Capital Gain and secondly, since a finality was reached by the virtue of the supplementary agreement dated 10.04.2010, the income would arise in the previous year relevant to the Asst.Year 2011-12 and not in the Asst.Year 2008-09. Further, the assessee filed a letter dated 06.11.2010 by which he agreed to be assessed at ₹ 265/- lakhs being income from Capital Gains, for the Asst.Year 2008-09. The assessee undertook to pay the consequential taxes before 31.12.2010. The assessee however did not payany taxes thereafter. 7.1. We also extract the observations of the AO for which the AO treated the business transactions instead of capital gains and levied the penalty holding that the assessee is liable for penalty u/s 271B of the Act. The following observations made in the Assessment Order dated 30.12.2010 and Appellate order dated 30.11.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with RK Mittal. Even the buyers, M/s Fortune Infra P.Ltd are fully aware that the assessee cannot improve upon the title. Whatever right that he had acquired by virtue of the agreement dated 10.10.2002 is being transferred for a definite consideration. 9. As far as the assessee is concerned, there is no obligation in his part to refund the sale consideration received even if it were proved that the title were defective. Hence it can be stated that gains accrued to the assessee on the date of Tripartite agreement dated 10.11.2007 became final in the previous year relevant to the A.Y. 2008-09. 10. The supplementary tripartite agreement did not cast any additional burden on the part of the assessee. On the other hand, it freed the assessee from the encumbrances / litigation that could have ensued subsequently. Therefore, it is tripartite agreement dated 10.11.2007 that decides the issue that the income chargeable to tax in the A.Y. 2008-09. By virtue of the above observations, it is clear that the assessee derived business income during the year, the receipts from which have exceeded the forty lakh limit prescribed u/s 44AB of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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