ITA NO. 1888 & 1889/Del/2013
Asstt.Year: 2006-07
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH `H' NEW DELHI
BEFORE SHRI B.C. MEENA, ACCOUNTANT MEMBER
AND
SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER
ITA No. 1888/Del/2013
Assessment Year: 2006-07
Income Tax Officer, vs M/s Tarini Developers,
Ward-27(2), Room NO.1909, A-10, Mansarovar Garden,
E-2, Dr. S.P.M.Civic Centre, New Delhi-110015
Minto Road, (PAN: AAEFT4007C)
New Delhi-110002
ITA No. 1889/Del/2013
Assessment Year: 2006-07
Income Tax Officer, vs Vardan Buildcon,
Ward 27(2), A-10C, Mansarovar Gardne,
New Delhi. New Delhi.
(PAN: AAFFV7307J)
(Appellant) (Respondent)
Appellant by: Shri Sudesh Garg, Adv.
Respondent by: Shri J.P. Chandrakar, Sr. DR
ORDER
PER CHANDRA MOHAN GARG, JUDICIAL MEMBER
These appeals have been filed by the revenue against the order of
CIT(A)-XXIV, New Delhi dated 3.11.2009 in Appeal No. 229/08-09 and in
Appeal No.231/08-09 pertaining to AY 2006-07.
2. The sole ground raised by the revenue in both the appeals is similar
except quantum of penalty which reads as under:-
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ITA NO. 1888 & 1889/Del/2013
Asstt.Year: 2006-07
"On the facts and circumstances of the case, the ld.
CIT(A) erred in:-
(i) Deleting the penalty u/s 271(1)(c)of the Income Tax
Act amounting to Rs.30,07,137/- imposed by AO."
3. Briefly stated the facts giving rise to these appeals are as under:-
"2. Return of income was filed on 31.10.2006
declaring business loss of Rs.6,727/-, Rs.7,182/- and
Rs.6.224/- respectively. The AO assessed the income of the
assessee at Rs.87,39,150/-, Rs.93,18,090/- and
Rs.89,27,660/- after making an addition of Rs.87,45,880/-,
Rs.93,25,2701- and Rs.89,33,8801- respectively. These
additions were made by the AO after treating agricultural
income declared by the assessee on sale of agricultural land
as income under the head "Income from Business and
Profession". The appellant had treated the profit on sale of
land as exempt from tax on the ground that the land
transacted in was agricultural land situated at a distance of
more than 8 km from the limits of any municipality or
cantonment and hence, was not a capital asset in terms of
section 2(14) of the Act. On the other hand, the AO held that
the transaction was a business transaction and therefore,
the profit arising out of these transactions were business
profits. In the penalty orders u/s 271(1)(c), the Assessing
Officer has mentioned that "The AO rejected the attempt of
the assessee to bring the transaction within the purview of
income from capital gains and thereby escaped taxation by
claiming shelter u/s. 2(14)." The appeals filed by the
assessee's have been dismissed by the CIT(A), ITAT and
Hon'ble Delhi High Court. The AO, therefore, initiated
penalty proceedings u/s 271(1)(c) and issued notices to the
appellants giving them an opportunity to explain as 10 why
penalty u/s 271(1)( c) should not be levied on them. In
response, the ARs of the appellants CA Surjit Singh and CA
Samudar Jangir attended the proceedings. They impugned
the penalty proceedings in all the three cases on the
grounds that (i) the penalty proceedings were barred by
limitation; (ii) the AO had not recorded satisfaction for
initiating penalty proceedings by passing the assessment
order; (iii) penalty proceedings are separate from
assessment proceedings; (iv) assessees have neither
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ITA NO. 1888 & 1889/Del/2013
Asstt.Year: 2006-07
concealed any particulars of income nor furnished
inaccurate particulars of income; (v) the land transacted in
was agricultural land and not a capital asset within the
meaning of section 2(14) of the Act; and (vi) explanation 1
to section 271(1)(c) for imposing penalty was not attracted
since assessees had furnished an explanation which was
bona fide and all facts relating to the same and material to
the computation of its total income were disclosed in their
respective returns of income. The AO, in turn, rejected each
of the above contentions of the appellants and held that the
appellants had furnished inaccurate particulars of their
incomes/concealed the particulars of their incomes and
therefore, they were liable for penalty u/s. 271 (1)(c). He
treated the appellants as assessees in default and imposed
individual penalties on them u/s. 271(1)(c) of the Act,
amounting to Rs.29,43,863/- (Malika Developers),
Rs.31,38,886/- (Vardan Buildcon), Rs.30,07,137/- (Tarini
Developers)."
4. The aggrieved assessees preferred appeals before the CIT(A) which were
allowed by passing the impugned order dated 23.1.2013 and the CIT(A)
directed the AO to delete respective penalties in all three appeals.
Consequently, the aggrieved revenue filed three separate appeals before "H"
Bench of the Tribunal with the sole ground as reproduced hereinabove.
5. We have heard arguments of both the sides and carefully perused the
relevant material placed on record, inter alia assessment order, penalty order
and impugned order of the CIT(A) which deleted the penalty. Ld. AR, at the
very outset, submitted a copy of the decision of ITAT "E" Bench dated
30.5.2014 in Appeal No. 1890/Del/2013 for AY 2006-07 in the case of ITO vs
M/s Malika Developers and submitted that the Tribunal has deleted the penalty
in the case of Malika Developers and remaining two assessees viz. M/s Vardhan
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Asstt.Year: 2006-07
Buildcon and M/s Tarini Developers are the respondents in the present appeals.
Ld. AR, drawing our attention towards operative part of the order of the
Tribunal dated 30.5.2014, submitted that the penalty imposed u/s 271(1)(c) of
the Income Tax Act, 1961 has been found to be not sustainable and hence the
appeal filed by the revenue in the case of M/s Malika Developers has been
dismissed, therefore, the present appeals pertaining to other two assessees viz.
M/s Vardhan Buildcon and M/s Tarini Developers also deserve to be dismissed
as the issue is squarely covered in favour of the assessee and against the
revenue, therefore, present appeals should also be dismissed in the same
manner.
6. Replying to the above, ld. DR fairly admitted that the appeal of the
revenue in the case of M/s Malika Developers has been dismissed by the ITAT
"E" Bench vide its order dated 30.5.2014 (supra). However, ld. DR supported
the penalty order and submitted that the CIT(A) directed the AO to delete the
penalty on wrong premises and without any justified reason, therefore, the
appeal of the revenue may be allowed by setting aside the impugned order and
restoring that of the AO.
7. On careful consideration of above submissions, we observe that the
CIT(A) allowed the appeal of the assessee with the following conclusion:-
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Asstt.Year: 2006-07
"4.15 The case of Suren Arvind Bhai Vakil Vs. ITO (2011) 137
TTJ 613 (Ahm), the Hon'ble Tribunal held that "mere rejection
of claim of assessee by relying on different interpretations
does not amount to concealment of particulars of income or
furnishing inaccurate particulars of income by assessee."
Similarly, in the case of Dy. CIT Vs. Ajay Kumar Lal (2011) 12
taxmann.com 491 (Ahm. Trib.), the Hon'ble Tribunal held that
"Mere erroneous claim or mistaken bona fide belief is no
ground for levying penalty u/s. 271(1)(c)". Further, in the case
of ACIT Vs. Megji Mathradas (2011) 7 ITR (Trib.) 749 (Mum),
the Hon'ble Tribunal held that "where assessee had disclosed
full facts in connection with claim made in Return and
disallowance in quantum assessment was due to different of
judicial opinion between Assessing Officer and Assessee,
penalty could not be levied u/s 271(1)(c)." In the case of
Mahinder Siddhu Vs. ACIT (2010) 39 DTR 233 (Del Trib.), the
Hon'ble Tribunal held that "in the absence of any falsity in the
details submitted by the assessee regarding Computation of
Income, penalty u/s 271(1)(c) is not leviable in respect of
inadvertent wrong claim made by assessee for adjustment the
Long Term Capital Loss against Short Term Capital Gains."
4.16 In the light of the discussions in the preceding
paragraphs and the judicial pronouncements cited therein, I
am of the considered opinion that in the instant three cases,
the appellants had revealed all the particulars of the
transaction in their Returns of Income. It is a different matter
that additions have been made in quantum assessment,
treating the profits on purchase and sale of agricultural land
as business profits and not as capital gains. Since, the
appellants has not shown any mala fide intentions and has not
filed any inaccurate particulars of income, penalty u/s
271(1)(c) of the Act is not imposable in these cases. Therefore,
penalty is imposed in these cases u/s 271(1)(c) are hereby
deleted. "
8. We may point out that ld. DR has not disputed the fact that the appellants
had revealed all the particulars of transactions in their return of income of
respective assessment years under consideration. We may also observe that
during the quantum proceedings, the AO treated the profits on purchase and sale
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ITA NO. 1888 & 1889/Del/2013
Asstt.Year: 2006-07
of agricultural land as business profits and not as capital gains and it is also not
in dispute that the assessee filed all details pertaining to the profits on purchase
and sale of agricultural land along with return of its income. Therefore, under
these circumstances, it cannot be said that there was some malafide intention of
the assessee and assessee filed inaccurate particulars of its income or has
concealed particulars of its income with conscious intention to evade tax.
9. From careful reading of the order of the Tribunal in ITA No.
1890/Del/2013 dated 30.5.2014, we observe that the Tribunal in the case of M/s
Malika Developers deleted the penalty with following observations and
findings:-
"6. At the outset, the Ld DR submitted that additions
were confirmed by ITAT and further confirmed by Hon'ble
Delhi High' Court. It was submitted that assessee deliberately
declared the business profit as capital gain in order to avoid
taxation. Therefore, there was existence of mens rea as the
assessee had deliberately furnished wrong particulars and it
was submitted that the case laws relied upon by Ld CIT(A)
were not applicable to the facts of the present case.
7. The Ld AR on the other hand, submitted that the land was
purchased with a view to earn capital gain, .the Assessing
Officer had made addition on deemed basis. It was further
submitted that land was situated outside the municipal limit
and full particulars were furnished and there was no
suppression of facts. The Assessing Officer had made addition
due to difference of opinion and not because of any other
reasons.
8. We have heard the rival submissions of both the parties and
have gone through the material available on record. We find
that though the assessee had lost upto the High Court in the
quantum proceedings yet, losing a case in quantum
proceedings is not a sufficient reason for imposing penalty u/s
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Asstt.Year: 2006-07
271(1)( c) of the Act. The penalty proceedings u Is 271 (1 )(c)
are separate proceedings distinct from the assessment
proceedings and where revenue has to establish separately the
existence of mens rea for imposition of penalty. The assessee
had submitted full particulars regarding. sale and purchase of
land and had claimed the profit as capital gain. From the
particulars filed by the assessee, the Assessing Officer had
come to know about the fact of sale of land, however, he
rejected the claim of assessee and assessed the gain.' as'
business income instead of capital gain as claimed by
assessee. The Hon'ble Supreme Court in the case of Reliance
Petro Products has held that if complete details of transactions
has been revealed by the assessee in its return of income,
penalty u/s 271(1)(c) will not be imposable just because the
claims of the assessee are found to be legally not allowable.
The facts and circumstances of the present case are squarely
covered In favour of assessee vide the Judgment of Hon'ble
Supreme Court in the case of Reliance Petroproducts Ltd.
which has been relied upon by Ld CIT(A). Therefore, we do
not find any infirmity in the order of Ld CIT(A)."
10. On the basis of foregoing discussion, we are in agreement with the
conclusion of the Coordinate Bench of the Tribunal order dated 30.5.2014 that
as per decision of Hon'ble Apex Court in the case of Reliance Petroproducts
(supra), if complete details of transaction has been revealed by the assessee in
its return of income, then penalty u/s 271(1)(c) of the Act will not be imposable
just because the claims of the assessee are found to be legally not allowable. In
the instant case, the assessee furnished all particulars of purchase and sale of
agricultural land which brought profit to the assessee. During the quantum
proceedings, the AO treated the profit as business profit instead of capital gains
as claimed by the assessee, therefore, by any stretch of imagination, it cannot be
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Asstt.Year: 2006-07
held that the assessee has furnished inaccurate particulars of its income or has
concealed particulars of its income. We further hold that merely because the
assessee proposed the impugned profits from sale and purchase of agricultural
land as capital gain but the AO assessed the same under the head of profits and
gains from business and profession, in this situation, penalty u/s 271(1)(c) of the
Act is not imposable as in any case, it cannot be said that the assessee has
furnished inaccurate particulars of its income or has concealed particulars of its
income before the AO during quantum proceedings. Thus, the CIT(A) was
right in deleting the penalty imposed by the AO and we are unable to see any
valid reason to interfere with the impugned order of the CIT(A) in this regard.
Accordingly, sole ground in both the appeals being devoid of merits is
dismissed.
11. In the result, both the appeals of the revenue are dismissed.
Order pronounced in the open court on 29th December, 2014.
sd/- sd/-
(B.C. MEENA) (CHANDRA MOHAN GARG)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated 29th December, 2014
`GS'
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ITA NO. 1888 & 1889/Del/2013
Asstt.Year: 2006-07
Copy of order forwarded to:
1. Appellant
2. Respondent
3. CIT(A)
4. CIT
5. DR
By Order
Deputy Registrar, ITAT
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