TaxTMI 
TaxTMI 
2011 (3) TMI 606
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....tered into MOU dated 24-8-2001 with the developer, M/s. Maitri Associates (MA) for transfer of rights in the land for an upfront consideration of Rs. 6 crores and 40 per cent of sale proceeds from the sale of the units to be constructed by M/s. MA. Both the parties had filed Form No. 37-I with the Income-tax Department for obtaining permission. As per the said application, the total consideration was shown at Rs. 14,01,64,316 comprising of the upfront amount of Rs. 6 crores and estimated consideration Rs. 8,01,64,360 being the 40 per cent share of the assessee in the sale price. Upon receipt of NOC and the upfront amount of Rs. 6 crores, the development rights in the property was transferred to M/s.MA on 21-3-2002 and possession of the property was also given. 3. The assessee filed the return of income on 31-10-2002 declaring loss of Rs. 1,26,49,993. In this return, no income from transfer of rights in land was shown. There was a search carried out in case of the directors of the assessee company on 12-9-2006 and on the basis of papers seized during search proceedings under section 153C were initiated in case of the assessee in response to which the assessee filed return of inco....
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....under rule 48-I of the Income-tax Rules. The discounted value was computed by the Assessing Officer at Rs. 34,02,51,805 as per the Table given below : Asst. Year Actual Receipts Discounting Factor Discounted value 2002-03 6,00,00,000 100 6,00,00,000 2003-04 10,05,200 108 9,30,741 2004-05 3,08,91,488 117 2,64,84,472 2005-06 7,78,25,620 126 6,17,80,486 2006-07 14,68,37,499 136 10,79,29,945 Value of flats 1,72,91,558 136 1,27,14,380 2007-08 8,37,29,926 147 5,69,85,181 2008-09 2,13,06,326 159 1,34,26,600 43,88,87,617 34,02,51,805 4.1 The Assessing Officer thus computed the long time capital gain at Rs. 18,14,45,690 after deducting the indexed cost of acquisition of Rs. 15,88,06,115. The assessment made by the Assessing Officer was not challenged by the assessee. The Assessing Officer also initiated penalty proceedings under section 271(1)(c) of the Income-tax Act. 5. At the time of penalty proceedings under section 271(1)(c), the assessee submitted before Assessing Officer that it had not offered the capital gain in assessment year 2002-03 as the a....
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.... 3,44,40,616. 6. The assessee disputed the decision of Assessing Officer and submitted before CIT(A) that penalty proceedings were different from assessment proceedings and merely because there was addition in assessment it could not automatically lead to penalty. There was no material brought on record to show that the assessee had concealed particulars of income or furnished inaccurate particulars of income. The assessee had received only an amount of Rs. 6 crores in assessment year 2002-03 and the balance consideration could not be determined at that point of time. Further in case the project was delayed beyond reasonable time, the development agreement could itself be terminated and in that case no income could have accrued. The CIT(A) was satisfied by the explanation given. It was observed by him that on the due date of filing the return of income for assessment year 2002-03 i.e. on 31-10-2002, the total consideration was not determinable. The assessee had originally offered the capital gain in assessment year 2006-07 in which the construction was complete and the flats were sold. Later when notice was issued under section 153C the assessee took legal opinion and declared t....
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....as Kapadia (supra) was delivered only on 13-2-2003 i.e. after the filing of return for the assessment year 2002-03. The issue was debatable and therefore in such cases no penalty should be imposed. Reliance was placed on the following judgments: (i) CIT v. International Audio Visual Co. [2007] 288 ITR 570 (Delhi). (ii) Durga Kamal Rice Mills v. CIT [2004] 265 ITR 25/[2003] 130 Taxman 553 (Cal.) (iii) CIT v. Nath Bros Exim International Ltd. [2007] 288 ITR 670 (Delhi) (iv) Telebuild Construction (P) Ltd. v Asstt. CIT [2007]13 SOT 218 (Mum.) (v) Pharmaceutical Research Associates India (P.) Ltd. [IT Appeal No. 1886 (Mum.) of 2007] 7.1 Reference was also made to the following judgments in support of the case : (i) Dilip N. Shroff v. Jt. CIT [2007] 291 ITR 519/161 Taxman 218 (SC) (ii) T. Ashok Pai v. CIT [2007] 292 ITR 11/161 Taxman 340 (SC) (iii) CIT v. Reliance Petroproducts (P.) Ltd. [2010] 322 ITR 158/189 Taxman 322 (SC) 8. The Learned DR on the other hand strongly supported the order of Assessing Officer. It was pointed out that in the b....
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....ring the indexed cost of acquisition. 9.1 The Assessing Officer on examination of documents and development agreement noted that the assessee had transferred all the rights in the land except TDR and increase in FSI to the developer. The assessee had also received the part consideration of Rs. 6 crores and had handed over the possession of land during assessment year 2002-03. The assessee had also quantified the total consideration of Rs. 14,01,64,316 in the Form No. 37-I submitted to the Income-tax Department. The Assessing Officer therefore concluded that the case of the assessee was covered by the provisions of section 2(47)(v) as per which any transaction involving allowing of handing over possession of any immovable property in part performance of contract as referred in section 53A of the Transfer of Property Act is deemed to be transfer. The assessee in this case had handed over the possession in part performance of the contract and therefore the land was deemed to be transferred in assessment year 2002-03. The Assessing Officer also noted that the assessee had received the total consideration of Rs. 43,88,87,617 including the upfront money of Rs. 6 crores spread over the....
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....red is found to be false or the assessee offers explanation which he is not able to substantiate and fails to prove that the explanation is bona fide and all material facts relating to the computation of income had been disclosed, it will be a case of deemed concealment of particulars of income. The penalty under section 271(1)(c) is a civil liability and willful concealment is not required to be proved by the department as held by the Hon'ble Supreme Court in case of Union of India v. Dharmendra Textiles Processors [2008] 306 ITR 277/174 Taxman 571. The argument of the learned AR that for levy of penalty under section 271(1)(c) it is required to be proved that the assessee had deliberately concealed the particulars of income or filed inaccurate particulars of income in view of the judgment of Hon'ble Supreme Court in case of Dilip N. Shroff (supra) and in case of T. Ashok Pai (supra) cannot be accepted as the said judgment had been considered by the Hon'ble Supreme Court in case of Dharmendra Textiles Processors (supra) and the view taken therein had not been upheld. However we agree with the Learned AR that each and every addition in the assessment cannot automatically lead to pe....
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....capital gain was chargeable in assessment year 2002-03 in view of the provisions of section 2(47)(v). This is supported by the judgment of Hon'ble High Court of Mumbai in case of Chaturbhuj Dwarkadas Kapadia (supra). Even after the said judgment was delivered, the assessee did not revise the return. As regards the opinion of the counsel that the capital gain was chargeable in assessment years 2006-07 to 2008-09 the said opinion was taken after the search conducted and has no relevance in view of the binding decision of the jurisdictional High Court which had already been delivered. The disclosure of capital gain in assessment year 2006-07 also does not prove the bona fides of the assessee as the said return had been filed after the search had been conducted. 9.5 Therefore the plea of the assessee that it was of bona fide belief on the basis of Tribunal decision that no capital gain was chargeable cannot be accepted. We also note that the assessee had not disclosed truly and fully all the material facts relating to the transfer in the return of income for assessment year 2002-03. In the balance sheet for assessment year 2002-03 and also in the audit note, the sum of Rs. 6 crores ....