TaxTMI 
TaxTMI 
2011 (10) TMI 29
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....ies on 21/3/2002. As per the MOU and the land development agreement, the assessee was to receive Rs.6 crores upfront and balance in the form of 40% of sale proceeds to be received on construction and sale of the flats. 5. In the audited profit and loss account, the balance sheet and the audit report dated 28/10/2002, relating to AY 2002-03, the receipt of Rs.6 crores was shown as advance against the sale of property. It may be noted that while seeking approval from the Appropriate Authority, the assessee in Form No.37-I had estimated the consideration receivable under the MOU / Agreement at Rs.14,01,64,316/-. In the return of income filed for the assessment year 2002-03 on 31/10/2002, the amount of Rs.6 crores was not offered to tax. Even amount disclosed to the Appropriate Authority was not offered to tax. However, a note appended to the Balance Sheet read thus:- " The company has, with an objective to turn its net worth, entered into a property development agreement for its land, against which, it has received an advance payment of 6 crores ". 6. In the Financial Year 2005-06 the assessee received part of the balance consideration from the developer ....
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.... again filed revised return on 26/12/2008, wherein the income was offered to tax in AY 2006-07, 2007-08 and 2008-09 and the capital gain offered in AY 2002-03 was withdrawn. 14. Contrary to the show cause notice dated 26/12/2008, the assessing officer passed the assessment order for AY 2002-03 on 31/12/2008, wherein the total consideration of Rs.43,88,87,617/- received by the assessee during the period 2002 to 2008 have been held liable to be taxed under the head 'income from capital gains' at a discounted value of Rs.34,02,51,805/-. After allowing the cost of indexation the capital gain liable to tax was computed at Rs. 18,14,45,690/-. In the said assessment order passed on 31/12/2008 for AY 2002-03, the assessing officer further held that the assessee had concealed the particulars of its income and furnished inaccurate particulars of income and, therefore, penalty under Section 271(1)(c) was imposable on the assessee. 15. Since the assessment order dated 31/12/2008 was beneficial to the assessee, as capital gains were taxed at a discounted value, the assessee did not challenge the assessment order in so far as it pertains to the computation of capital gain is ....
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....as offered to tax in the subsequent years on receipt of the sale proceeds and, therefore, no fault could be found with the assessee. The decision of this Court in the case of Chaturbhuj Dwarkadas Kapadia V/s. CIT reported in [2003] 260 ITR 491 (Bom) was delivered on 13/2/2003 which is after the filing of the original return of income for AY 2002-03 on 31/10/2002. As per the said decision the capital gain was taxable in 2002-03. However, the revenue itself had challenged the decision before the Apex Court. Moreover, even the assessing officer till the date of passing the assessment order on 31/12/2008 was not confident as to the year of the taxability and the head under which the income was to be taxed. Accordingly, Mr. Mistri submitted that the ITAT was not justified in holding that the assessee was liable to pay penalty under Section 271 (1)(c) of the Act. 19. Counsel for the revenue, on the other hand, supported the order of ITAT. He submitted that even after the decision of this Court in the case of Chaturbhuj Kapadia (supra) the assessee could have revised the return of income which the assessee failed to do. He submitted that on receiving part consideration of Rs.6 c....
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....rior to the decision. Secondly, the revenue itself was aggrieved by the said decision of this Court and had filed S.L.P. challenging the said decision which was ultimately dismissed on 6/2/2004. Thus, the argument of the revenue that in the light of the judgment of this Court in the case of Chaturbhuj Kapadia (supra) the assessee ought to have revised the return of income for AY 2002-03 cannot be accepted. 23. Moreover, in the present case, the assessing officer himself was not sure till the date of passing the assessment order on 31/12/2008 as to whether the assessee is liable to pay capital gains tax and if so in which assessment year and under which head of income. As noted earlier, by a show cause notice issued as late as on 17/1/2008 the assessing officer was of the opinion that the capital gains were not taxable in the hands of the assessee but were taxable in the hands of A.O.P. Thereafter, by a show cause notice dated 24/12/2008 the assessing officer sought to tax the consideration in the hands of the assessee under the head 'business income' in the respective years in which the amounts were received. In the subsequent show cause notice dated 26/12/2008, the asses....