TMI Blog2022 (5) TMI 729X X X X Extracts X X X X X X X X Extracts X X X X ..... initially planted fodder and seasonal crops. But due to non-viability of the project, the assessee in the year 2007, planted mango trees and coconut trees. All these facts would lend credence to assessee s belief that the land under consideration was an agricultural land only and any income arising there from would be agricultural income only which is exempt from tax. On the basis of said belief, the assessee separately disclosed sale of agricultural land in the financial statements as well as in the computation of income. Upon perusal of these documents, it could be well said that the transaction was duly disclosed in the financial statement as well as in the return of income and it could not be said that there was any concealment of particulars of income by the assessee. No mala-fide intention could be attributed on the part of the assessee to conceal the income or to furnish inaccurate particulars of income. The assessee made a claim in the return of income which was not accepted by Ld. AO. However, this fact alone would not necessarily justify imposition of penalty as per the decision of Hon ble Supreme Court in the case of CIT V/s Reliance Petro Products Private Ltd. [ 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment order or in the penalty order, the Assessing Officer found as a fact that any document has been concealed or suppressed by the assessee, and hence the Commissioner of Income Tax (Appeals) ought to have cancelled the penalty. 5. The Learned Commissioner of Income Tax (Appeals) failed to note that before levying penalty, it is the duty of the Assessing Officer to bring incriminating fact/cogent material or evidence from which it could be inferred that the appellant has concealed / deliberately furnished inaccurate particulars of its income. 6. The Commissioner of Income Tax (Appeals) erred in not noticing that the Appellant bonafide believed that transfer of agricultural land is exempt and hence no capital gains was offered for taxation; as such there is neither concealment of income nor furnishing of inaccurate particulars of income. As evident the assessee is aggrieved by confirmation of certain penalty u/s 271(1)(c). In the grounds of appeal, the assessee has assailed the penalty on legal grounds as well as on merits. 2. The Ld. AR, drawing attention to the assessment order, assailed the penalty and placed reliance on various judicial pronouncements. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the assessee entered into Joint Development Agreement (JDA) with M/s Akshaya Private Limited (Developer) on 14.12.2009 for the development of said land and constructing residential flats on the land. As per the agreement, the assessee was to provide the land for which 20% of the built-up area was to vest in the assessee. It was opined by Ld. AO that the nature of land automatically changes from agricultural to non-agricultural, once the joint venture agreement is entered into with the developers as held in various judicial decisions. It was also noted by Ld. AO that DTPC (appropriate authority) approval was also obtained in respect of the land on 23/12/2010 for conversion of land into vacant saleable land. The sale deed mentions the fact that land sold was vacant land only at the time of transfer. Therefore, the land was capital asset and income arising from sale thereof would be chargeable to capital gains tax. 4.3 The assessee defended its stand, inter-alia, by submitting that the assessee had transferred agricultural land only. All the approvals and permits were in the name of developer only. However, to avoid any further delay in settling the issue, the assessee pleaded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... distinguishable. Rather the decision of Hon ble Apex Court in CIT V/s Mak Data Private Ltd. (38 Taxmann.com 448) was held to be applicable where the penalty was upheld. Finally, penalty was levied for furnishing of inaccurate particulars of income and the same was quantified at Rs.372 Lacs. Appellate Proceedings 6.1 During appellate proceedings, the assessee assailed the penalty on legal grounds and submitted that the show-cause notice issued by Ld. AO did not bring out exact charge against the assessee. The provisions of Sec.271(1)(c) comprises of two parts i.e., concealment of income and furnishing of inaccurate particulars of income. The show-cause notice has to bring out exact charge or exact offence which the assessee has to meet. In the absence of such specific notice, the notice would be invalid as held in various judicial pronouncements including the decision of Hon ble Karnataka High Court in CIT V/s SAS s Emerald Meadows (73 Taxmann.com 241) against which Special Leave Petition (SLP) filed by the department stood dismissed by Hon ble Supreme Court which is reported as 73 Taxmann.com 248. It was further submitted that the assessee sincerely accepted the view of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome without the knowledge or conscious decision being taken by the assessee especially where they were ably advised by the experienced professionals. The assessee clearly concealed the fact that it was nonagricultural land and by claiming it to be agricultural land in the return of income. The aforesaid fact would not have come to light but for the fact that the case was scrutinized to verify this issue. The assessee also furnished inaccurate particulars of income with regard to what part of income was to be considered under the head business income and what part of the income was assessable under the head capital gains . Therefore, this is a case where both the parts of the offences i.e., concealment of income as well as furnishing of inaccurate particulars of income were involved. The decision of Jaipur Tribunal (Third Member) in the caser of Grass Field Farms and Resorts P. Ltd. (159 ITD 31) was referred to confirm the impugned penalty. Aggrieved, the assessee is in further appeal before us. Our findings and Adjudication 7. Upon careful consideration of factual matrix, we find that the assessee had purchased the impugned land during the year 1995 admeasuring 5.82 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be attributed on the part of the assessee to conceal the income or to furnish inaccurate particulars of income. The assessee made a claim in the return of income which was not accepted by Ld. AO. However, this fact alone would not necessarily justify imposition of penalty as per the decision of Hon ble Supreme Court in the case of CIT V/s Reliance Petro Products Private Ltd. (322 ITR 158). The case law of Hon ble Apex Court in CIT V/s Mak Data Private Ltd. (38 Taxmann.com 448) as cited by lower authorities is a case where offer of surrender of certain amount received as share application money was made by assessee in view of detection made by Assessing Officer in search conducted in case of assessee's sister concern. It was held that said surrender of income was not voluntary in nature and therefore, the authorities were justified in levying penalty under section 271(1)(c). However, the facts in the present case are different and the ratio of this decision, in our considered opinion, is not applicable to the facts of the present case. Rather the ratio of CIT V/s Reliance Petro Products Private Ltd. (supra) would apply. Similar is the ratio of decision of Hon ble High Court of M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It was also observed by Hon ble Court that the impugned notice under section 271(1)(c) did not specifically state as to whether assessee was guilty of concealing particulars of his income or had furnished inaccurate particulars of income. Therefore, there was no specific finding regarding concealment of income against assessee. Hence, the impugned penalty was invalid and same was to be set aside. The adjudication of Hon ble Court was as under: - 18. The first aspect is as to whether there is any concealment of particulars of the assessee's income. At the first instance i.e. during the scrutiny assessment, the assessee sent a letter dated 15.3.2016 explaining the entire transaction wherein he had stated that while filing the return of income, he was under the impression that both the properties were agricultural lands and that there was no tax liability. Consequently, since one of the properties namely the property at Egattur Village was treated to be a capital asset, the long term capital gains were computed and the assessee requested for deduction under Section 54F of the Act, as the sale consideration received was utilized for purchase of a new flat, in which, the name ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k deposits. These facts were never disputed by the Assessing Officer. 23. After receipt of the penalty notice, the assessee submitted a reply dated 11.4.2016 wherein the assessee reiterated the stand taken in his letter dated 15.3.2016. However, the same was not accepted by the Assessing Officer while completing the assessment under Section 143(3) of the Act. The assessee further stated that he had produced all the facts of the transactions namely sale documents, materials, etc., before the Assessing Officer and therefore, it cannot be construed as furnishing of inaccurate particulars. The assessee also pointed out that while allowing exemption under Section 54F of the Act, the Assessing Officer considered 50% of the investments whereas 100% investments were done through banking channels. Therefore, the assessee stated that it cannot be said that correct particulars of income were not furnished. The assessee further pointed out that he was in need of funds for purchase of a new flat, that he sold trees with roots, coconut seedling and other miscellaneous items, that the farming sector was an unorganized sector, that all were sold to agriculturists and that he cannot be compel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ha, learned Senior Standing Counsel appearing for the Revenue seeks to substantiate her case by relying upon the decision of the Hon'ble Supreme Court in the case of Mak Data (P) Ltd. Vs. CIT, II [reported in (2013) 38 Taxmann.com 448] wherein it was held that voluntary disclosure does not release the assessee from mischief of penalty proceedings under Section 271(1)(c) of the Act and in terms of the said provision, the Assessing Officer has to satisfy as to whether the penalty proceedings have to be initiated or not during the course of assessment proceedings and he is not required to record his satisfaction in a particular manner or reduce it into writing. 29. Reliance is also placed on the decision of the Hon'ble Supreme Court in the case of K.P.Madhusudhanan Vs. CIT [reported in (2001) 118 Taxman 324]. The decision of the Hon'ble Supreme Court in the case of Mak Data (P) Ltd., was taken note of by the Division Bench of this Court, to which, one of us (TSSJ) was a party, in the case of CIT, Chennai-IV Vs. Gem Granites (Karnataka) [reported in (2014) 42 Taxmann.com 493] and the aspect as to how onus/burden of proof shifts from the assessee to the Revenue when pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt in the instant case. Therefore, we also find the imposition of penalty to be unjustified. 31. The assessee filed an appeal before the Tribunal, which confirmed the order passed by the CIT(A) that the assessee raised a new stand before the CIT(A). No such new stand has been raised. The stand taken by the assessee after receipt of the notice under Section 143(2) of the Act dated 02.9.2014 has been consistent i.e. before the Assessing Officer while submitting the reply to the penalty notice, in the appeal before the CIT(A) and before the Tribunal. This is evident on a reading of the grounds of appeal filed before the CIT(A) as well as the notes of arguments filed by the assessee before the CIT(A) dated 30.6.2017. Therefore, to that extent, the CIT(A) and the Tribunal have committed an error. 32. The decision of this Court in the case of Sundaram Finance Ltd., was couched on a different factual position wherein the Court rejected the plea of the assessee, which was a limited company, when they raised an argument with regard to the validity of the notice for the first time before the High Court and considering the administrative set up of the said assessee and the fact th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particulars of income' and after applying the decision in the case of Reliance Petro Products (P) Ltd., the Hon'ble Division Bench of this Court dismissed the appeal filed by the Revenue in the following terms : 13.3. The Supreme Court examined the issue threadbare and discussed at length as to what was meant by the expression concealment of particulars of income and/or furnishing inaccurate particulars of income and went on to observe as follows: .....A glance at this provision would suggest that in order to be covered, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. Present is not the case of concealment of the income. That is not the case of the Revenue either. However, the Learned Counsel for Revenue suggested that by making incorrect claim for the expenditure on interest, the assessee has furnished inaccurate particulars of the income. As per Law Lexicon, the meaning of the word particular is a detail or details (in plural sense); the details of a claim, or the separate items of an account. Therefore, the word particulars used in Section 271 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... curate particulars. 10. It was tried to be suggested that Section 14A of the Act specifically excluded the deductions in respect of the expenditure incurred by the assessee in relation to income which does not form part of the total income under the Act. It was further pointed out that the dividends from the shares did not form the part of the total income. It was, therefore, reiterated before us that the Assessing Officer had correctly reached the conclusion that since the assessee had claimed excessive deductions knowing that they are incorrect; it amounted to concealment of income. It was tried to be argued that the falsehood in accounts can take either of the two forms; (i) an item of receipt may be suppressed fraudulently; (ii) an item of expenditure may be falsely (or in an exaggerated amount) claimed, and both types attempt to reduce the taxable income and, therefore, both types amount to concealment of particulars of one's income as well as furnishing of inaccurate particulars of income. We do not agree, as the assessee had furnished all the details of its expenditure as well as income in its Return, which details, in themselves, were not found to be inaccurate no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39. For the above reasons, the assessee has to succeed on all grounds and consequently, it has to be held that the notice initiating the penalty proceedings is defective and invalid and the other findings rendered by the Assessing Officer, the CIT(A) and the Tribunal do not warrant imposition of penalty on the assessee. 40. In the result, the above tax case appeal is allowed, the impugned order passed by the Tribunal is set aside and the substantial questions of law are answered in favour of the assessee. No costs. Similar legal grounds qua framing of specific charge in the notice have been allowed by Hon ble High Court of Bombay in Ventura Textiles ltd. V/s CIT (117 Taxmann.com 182); Hon ble High Court of Karnataka in CIT V/s MWP Ltd. (41 Taxmann.com 496) as well as in Safina Hotels (P.) Ltd. V/s CIT (66 Taxmann.com 334) which has been relied upon by Ld. AR during the course of hearing. We find all these decision supports the case of the assessee on legal grounds. The Ld. CIT-DR has relied on the decision of Hon ble High Court of Madras in the case of Gangotri Textiles Ltd. V/s DCIT (121 Taxmann.com 171) which is distinguishable on facts. In this case, it is the fin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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