Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: VAT RATES :: TDS :: cpt :: ACCOUNTING STANDARDS :: articles on VAT and GST in India :: ARTICLES ON INPUT TAX CREDIT IN VAT :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: VAT Audit :: form 3cd :: ACCOUNTING STANDARD :: TAX RATES - GOODS TAXABLE @ 4% :: Central Excise rule to resale the machines to a new company :: empanelment :: list of goods taxed at 4% :: due date for vat payment
 
 
From the Courts »
 Ravneet Takhar Vs. Commissioner Of Income Tax Ix And Ors.
 Jaiprakash Associates Ltd. Vs. Commissioner Of Income Tax
 Formula One World Championship Limited Vs. Commissioner Of Income Tax, International Taxation-3 And Anr.
 Commissioner Of Income Tax International Taxation-3 Delhi Vs. Formula One World Championship Ltd. And Anr.
 Reliance Communications Ltd vs. DDIT (ITAT Mumbai)
  Sushila Devi vs. CIT (Delhi High Court)
 Ashok Prapann Sharma vs. CIT (Supreme Court)a
  Vatsala Shenoy vs. JCIT (Supreme Court)
  Vatsala Shenoy vs. JCIT (Supreme Court)
 M.K.Overseas Pvt. Ltd. Vs. Pr.Commissioner Of Income Tax-06
 Arshia Ahmed Qureshi Vs. Pr. Commissioner Of Income Tax-21

Shri Gautam Chawla, Prop. M/s R.G. International, Gali No. 139, Gali Post Office, Sadar Bazar, Delhi. Vs ITO, Ward 39(3), New Delhi.
December, 25th 2014
ITA No.5143/Del/2013
Asstt.Year: 2009-10

              IN THE INCOME TAX APPELLATE TRIBUNAL
                   DELHI BENCHES `C' NEW DELHI

       BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER
                         AND
       SHRI CHANDRAMOHAN GARG, JUDICIAL MEMBER

                       ITA NO. 5143/DEL/2013
                       ASSTT.YEAR: 2009-10

Shri Gautam Chawla,                 vs     ITO,
Prop. M/s R.G. International,             Ward 39(3),
Gali No. 139, Gali Post Office,           New Delhi.
Sadar Bazar, Delhi.
(PAN: ADIPC6314Q)
(Appellant)                                  (Respondent)
                            Appellant by: Shri Inderjit Ahuna, Adv.
                          Respondent by: Shri Satpal Singh, Sr. DR

                            O R D E R

PER CHANDRAMOHAN GARG, J.M.

       This appeal has been filed by the assessee against the order of the

CIT(A)-XVIII, New Delhi dated 24.7.2013 in Appeal No. 65/2012-13 for AY

2009-10 by which the CIT(A) upheld the penalty order passed u/s 271(1)(c) r/w

section 274 of the Income Tax Act, 1961 confirming the penalty of

Rs.8,22,041/-.


2.     Although the assesse has raised as many as seven grounds in this appeal

but except ground no.1, other grounds are argumentative and supportive to the

main ground no. 1 which reads as under:-

                                                                             1
ITA No.5143/Del/2013
Asstt.Year: 2009-10

             "1. The learned CIT(A) was not justified to uphold the
        penalty of Rs.8,22,041/- levied u/s 271(1)( c) of the I.T.Act."
3.     Briefly stated the facts giving rise to this appeal are that the assessee filed

return of income on 30.9.2009 declaring income of Rs.3,92,189/-. The case was

selected for scrutiny through CASS and after necessary verification, the AO

made addition of Rs. 39,90,498/- as income from long term capital gain.

Subsequently, the AO issued notice to the assessee for levy of penalty u/s

271(1)(c) of the Act. After considering the explanation of the assessee, the AO

imposed penalty on the assessee with the following conclusion:-


              " As discussed above, the assessee is found covered by
        the clause (A) of Explanastion-1 to section 271 (1) of !.Tax
        Act. Therefore, it is established that the explanation offered by
        the assessee in respect of charging of Long Term capital gains
        of Rs. 39,90,498/- on sale of Bhiwadi Land, Building and Plant
        & Machinery at the time of framing assessment u/s 143(3) vide
        order dated 26.12.2011 and again during the course of penalty
        proceedings was not found supported with corroborative
        evidences. Thus, the default, in question, is patent on the part
        of the assessee and the assessee is liable to levy of penalty u/s
        271(1)(c) of the Act on the amount concealed of Rs.
        39,90,498/-. I, therefore, impose a penalty of Rs. 8,22,041/-
        u/s 271(1)(c) read with Explanation-1 thereto, which is
        equivalent to 100% of tax sought to be evaded."
4.     Being aggrieved by the above penalty order, the assessee preferred an

appeal before the CIT(A) which was also dismissed by passing the impugned

order. The relevant operative part of the order reads as under:-


              "Further, even if it is accepted that the appellant has
        voluntarily withdrawn the claim of Exemption under section
        54F, the case of the appellant is squarely covered by the
        decision of the Honble Delhi High Court in the case of CIT vs.




                                                                                    2
ITA No.5143/Del/2013
Asstt.Year: 2009-10

        MAK Data Ltd vide order dated 22.1.2013 in ITA No.415/2012
        has on the issue of levy of penalty in the case of disclosed
        income, disclosed after enquiry conducted by the Assessing
        Officer has held as under:-
               A survey u/s 133A was conducted on the assessee's
        premises in the course of which certain documents belonged to
        certain entities who had applied for shares in the assessee
        company were found. The AO called upon the assessee to
        prove the nature and source of the monies received as share
        capital, the creditworthiness of the applicants and the
        genuineness of the transactions. The assessee offered Rs. 40.74
        lakhs as income from other sources "to avoid litigation and to
        buy peace". It was made clear that in making the surrender,
        there was no admission of concealment. The AO completed the
        assessment by adding the said sum and levied penalty u/s
        271(1)(c) for furnishing inaccurate particulars of income u/s
        271 (1)(c). This was upheld by the CIT(A) though reversed by
        the Tribunal (included in file) on the ground that there was no
        material to show any concealment and even in the penalty
        order it was not specified as to the particular credit in respect
        of which the penalty was being imposed. It was also
        emphasized by the Tribunal that the assessee had made it clear
        while surrendering that there was no admission of
        concealment and that the offer was made in a spirit of
        settlement. On appeal by the Department to the High Court,
        HELD reversing the Tribunal:
        When the AO called upon the assessee to produce evidence as
        to the nature and source of the amount received as share
        capital, the creditworthiness of the applicants and the
        genuineness of the transactions the assessee simply folded up
        and surrendered the sum of Rs. 40.74 lakhs by merely stating
        that it wanted to "buy peace". In the absence of any
        explanation in respect of the surrendered income, the first part
        of clause (A) of Explanation 1 to s. 271(1)(c) is attracted
        because the nature and source of the amount surrendered are
        facts material to the computation of total income. The absence
        of any explanation regarding the receipt of the money, which
        is in the exclusive knowledge of the assessee leads to an
        adverse inference against the assessee and is statutorily
        considered as amounting to concealment of income under the


                                                                            3
ITA No.5143/Del/2013
Asstt.Year: 2009-10

        first part of clause (A) of the Explanation to s. 271(1)(c) and
        penalty has to be levied.
        In view of the aforesaid, I hold that the Assessing Officer has
        rightly charged the appellant company with concealment and
        furnishing of inaccurate particulars. Accordingly, the penalty
        u/s 271 (1 (c) of the Act is being sustained."
5.     We have heard arguments of both the sides and carefully perused the

relevant material placed on record. From the quantum assessment order, we

observe that as per order sheet entry dated 19.11.2011, the AR was asked to file

the details in respect of property sold and purchased during the year under

consideration and in response to the same, the assessee filed revised

computation of its income on 26.12.2011 by stating that the assessee earned

Rs.39,90,948 as long term capital gain at Bhiwadi, Rajasthan and to offset the

LTCG, the assessee purchasds a residential flat from Shri Vrijesh Kumar Gupta

and made payment of Rs. 40 lakh on various dates through cheques. It was also

stated that unfortunately the assessee could not get possession of the

property/flat due to dispute in the factory of the seller and deal could not

materialise and agreement of sale was cancelled and the seller returned the

payment of Rs.40 lakh through various cheques issued by Axis Bank Ltd. The

assessee further explained that due to these circumstances, the assessee could

not avail exemption u/s 54 of the Act, therefore, the assessee surrendered LTCG

to be taxed and also submitted challans for tax deposited by him of Rs.8,20,000.


6.     From the penalty order, we observe that the assessee also reiterated its

explanation during the penalty proceedings but the AO held that the act of the
                                                                               4
ITA No.5143/Del/2013
Asstt.Year: 2009-10

assessee found covered by clause (a) to Explanation (1) to section 271(1) of the

Act. The CIT(A) upheld the penalty by following the decision of Hon'ble

Jurisdictional High Court of Delhi in the case of CIT vs MAK Data Ltd. order

dated 22.01.2013 in ITA No.415/2012. On careful perusal of the order of the

Jurisdictional High Court of Delhi in the case of MAK Data Ltd, we note that

the case was related with surrender of Rs. 40.74 lakh received as share capital.

In this case, when the AO called upon the assessee to produce evidence as to the

nature and source of the amount received in share capital, the creditworthiness

of the applicants and the genuineness of the transactions, the assessee simply

folded up and surrendered the same amount by merely stating that it wanted to

buy peace. The Hon'ble Jurisdictional High Court held that in absence of any

explanation in respect of surrendered amount the first part of clause (a) of

Explanation 1 to section 271(1)(c) is attracted because the nature and source of

the amount surrendered are facts material to the computation of total income.





7.     In the light of factual matrix of the present case, we observe that the facts

of this case are clearly distinguishable from the case of CIT vs MAK Data Ltd.

(supra) as the present case is related to the withdrawal of claim of section 54 by

the assessee. From the operative part of the quantum assessment order, we

observe that the assessee in its letter dated 26.12.2011 had clearly mentioned the

circumstances beyond the control of the assessee wherein the seller Mr. Vrijesh

Kumar Gupta cancelled the agreement to sell a flat to the assessee and returned


                                                                                  5
ITA No.5143/Del/2013
Asstt.Year: 2009-10

the advance of Rs.40 lakh through cheques of Axis Bank to the assessee. The

assessee further explained that unfortunately the deal of purchase of flat could

not materialise, therefore, he offered the amount of long term capital gain for

taxation and also deposited tax of Rs.8.20 lakh to the exchequer and the assessee

also submitted copies of the challan tax deposited along with explanation dated

26.12.11 which shows sincerity and truthfulness of the assessee during the

quantum proceedings and in this situation, it can safely be presumed that the

assessee offered an explanation during quantum and penalty proceedings which

was quite sustainable and hence, the AO was wrong in holding that the assessee

did not furnish any explanation towards amount of long term capital gain which

was offered for tax during the relevant year under consideration. We may also

note that the provisions of the Act envisaged u/s 54(1)(ii) of the Act also provide

that the amount of long term capital gain should be utilised within a period of

three years. In the extant case, the assessee tried hard to purchase a flat from

Mr. Vrijesh Kumar Gupta to enjoy effect of section 54 of the Act but the deal

failed due to dispute in the family of the seller and finally during the year under

consideration, the assessee offered the amount of long term capital gain for

taxation and also paid the tax within prescribed limit, therefore, the authorities

below were wrong in holding that the assessee did not furnish any explanation in

this regard and the AO grossly erred in holding that the case of the assessee is

found covered by clause (a) of Explanation 2 to section 271(1)(c) of the Act

because the assessee furnished a plausible explanation during the quantum
                                                                                 6
ITA No.5143/Del/2013
Asstt.Year: 2009-10

proceedings which was also filed before the AO during penalty proceedings.

Hence, we reach to a logical conclusion that the AO imposed penalty on the

basis of wrong premises and erroneous interpretation of the provisions of the

Act and the same was wrongly upheld by the CIT(A). Accordingly, we are

inclined to hold that penalty is not leviable on the assessee in the present case.

Hence, sole ground of the assessee is allowed and thus, impugned order is set

aside with a direction to the AO that penalty levied on the assessee is hereby

cancelled and deleted.


8.        In the result, the appeal of the assessee is allowed.


          Order pronounced in the open court on 22.12.2014.

          Sd/-                                                    Sd/-

   (R.S.SYAL)                                    (CHANDRAMOHAN GARG)
ACCOUNTANT MEMBER                                   JUDICIAL MEMBER

DT. 22nd DECEMBER, 2014
`GS'


Copy forwarded to:-

     1.   Appellant
     2.   Respondent
     3.   C.I.T.(A)
     4.   C.I.T. 5. DR
                                                         By Order



                                                     Asstt. Registrar



                                                                                7

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - We Bring IT. Offshore software outsourcing company. We use Global Delivery Model (GDM) and believe in Follow The Sun principle

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions