TaxTMI 
TaxTMI 
2015 (5) TMI 366
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....CIT (A) was not justified in holding the Learned A.O.'s stand that the assessee had inflated the fair market value of the property as on 01.04.1981 and thereby reduced the capital gain on sale thereof. 4. The Learned CIT (A) was not justified in holding the Learned A.O.'s stand that by assessing the capital gain on sale of land in AY 2007-08 against the AY 2008-09 as offered to tax by the assessee, amounts to concealment of income/ furnishing of inaccurate particulars of Income. 5. The Learned CIT (A) erred in confirming the penalty levied on the ground of disagreeing with the true particulars submitted in support of the Return of Income by the appellant. 6. The Learned CIT (A) erred in confirming the penalty levied on the ground of difference of opinion on estimation of FMV as on 01.04.1981. 7. The Learned CIT (A) erred in confirming the penalty levied on the ground of difference of opinion on year of taxability of income. 8. The Learned CIT(A) erred in confirming the penalty levied, when capital gain is taxed in the A.Y. 2007-08 instead of 2008-09 because of the High Court Judgment (not the Supreme Court Judgment) in case of Chaturbhuj Dwarkadas Kapadia. ....
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....the levy of penalty u/s 271(1)(c) of the Act to Substantively speaking, the penalty u/s 271(1)(c) of the Act has been imposed with respect to addition made by the Assessing Officer on account of long term capital gain earned by the assessee on sale of land at 44/A/1, Dhanori, Pune. Before we proceed to adjudicate the efficacy of the penalty sustained by the income-tax authorities on the Grounds raised in the Memo of Appeal, we may touch-upon an Additional Ground of Appeal raised by the assessee in the course of hearing, which reads as under :- "1] The learned CIT(A) erred in holding that the penalty order u/s 271(1)(c) of the Act is not barred by limitation." 5. In terms of the said Additional Ground of Appeal, it is sought to be canvassed by the assessee that the penalty order passed by the Assessing Officer u/s 271(1)(c) of the Act dated 27.05.2011 is barred by limitation. Since this Ground of Appeal involves a point of law and arises from the facts which are already on record, the same was admitted for adjudication following the parity of reasoning laid down by the Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd. vs. CIT, (1998) 229 ITR 383 (SC). Notabl....
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....2011 was within the period of limitation and in support he relied upon the judgement of the Hon'ble Madras High Court in the case of Rayala Corporation P. Ltd. vs. UOI, 288 ITR 452 (Mad.). 8. We have carefully considered the rival submissions on this aspect. Pertinently, the issue raised by the assessee is fully covered by the judgement of the Hon'ble Madras High Court in the case of Rayala Corporation P. Ltd. (supra). As per the Hon'ble Madras High Court, in a case where assessee has challenged the quantum addition before the Tribunal, the period of limitation for passing of penalty order u/s 271(1)(c) of the Act is to be reckoned as per the provisions of section 275(1)(a) of the Act i.e. within a period of six months from the end of the month in which the order of the Tribunal has been received by the concerned Commissioner of Income Tax or the Chief Commissioner of Income Tax, as the case may be. In this context, the following discussion in the judgement of the Hon'ble Madras High Court in the case of Rayala Corporation P. Ltd. (supra) is relevant :- "A reading of the abovesaid provision makes it clear that the interpretation placed by learned counsel for the petitioner on....
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.....w.s. 147 of the Act was completed on 23.03.2009 assessing a total income at Rs. 76,10,61,683/-. The said income represented an addition made by the Assessing Officer on account of long term capital gain in respect of the land situated at Dhanori, Pune. The assessee company challenged the addition made by the Assessing Officer in appeal before the CIT(A) who has since affirmed the same. However, the Tribunal vide its order dated 06.09.2010 (supra) allowed partial relief whereby the long terms capital gain on sale of land was determined at Rs. 56,89,07,575/-. The Assessing Officer in the meanwhile vide his order dated 27.05.2011 held the assessee guilty of concealment/furnishing of inaccurate particulars of income within the meaning of section 271(1)(c) of the Act qua the aforesaid long term capital gains. The CIT(A) has also upheld the7 levy of penalty but has scaled down it to Rs. 12,76,62,859/- by restricting it to the revised long term capital gain computed after the order of the Tribunal at Rs. 56,89,07,575/- as against Rs. 76,10,61,683/- assessed by the Assessing Officer. 11. The area of difference between assessee and the Revenue with regard to the taxability of the long t....
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....1981 adopted by the assessee and that determined by the Assessing Officer. In assessment year 2005-06 also, the Assessing Officer computed capital gain by adopting the Fair Market Value at Rs. 15.23 per sq.mtr. as against Rs. 1230 per sq.mtr. adopted by the assessee. It was pointed out that the Fair Market Value was adopted by the assessee on the basis of a Valuation Report obtained from a Government Approved Valuer which was very much before the Assessing Officer. In assessment year 2005- 06 also, the said issue travelled before the Tribunal and in its order dated 06.09.2010 (supra) in ITA No.1568/PN/2008 the Fair Market Value of the land as on 01.04.1981 was directed to be adopted at Rs. 665 per sq.mtr.. In assessment year 2005-06 also, the Assessing Officer levied penalty on this aspect of the dispute. The Ld. Representative pointed out that penalty imposed on this aspect of the dispute in assessment year 2005-06 travelled to the Tribunal, and vide its order in ITA No.495/PN/2010 dated 20.03.2012 the Tribunal found it fit to delete the same. Therefore, it was contended by the Ld. Representative that so far as the penalty levied with respect to the difference in computed income o....
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.... to be reasonable at Rs. 665/ - per sq. mtrs. In fact the FMV of the land has been the subject matter of penal ty which was, according to the assessee, is debatable and right ly so, because the Tribunal has also taken the market value with regards to FMV. The adopt ion of FMV is a matter of estimate. I t may vary person to person and adopting the particular FMV at the advice of approved valuer cannot be the sound basis for invoking the provisions of sect ion 271(1) (c) of the Act . As explained above, the assessee could not f i le the return in time. Same thing was explained before the Assessing Officer though not accepted by the him at the relevant point of time. The assessee was trying to give explanation with regards to non ITA filing of the return and to10 justify its claim of FMV in the computation of capital gain. So there is nothing on record to suggest that the assessee had any intent ion to conceal the income. This view gets strength from the fact that the assessee had paid advance tax on the long term capital gain arising from the sale of the balance port ion of the land. So, the assessee was prevented by reasonable cause for not filing the return of income in time. The a....
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....at assessee entered into a Development Agreement with one M/s Raghuleela Builders Pvt. Ltd. on 19.03.2007 which was registered on 04.04.2007. The Ld. Representative at the time of hearing has pointed out that ultimately the Conveyance Deed was executed on 27.03.2008, a copy of which has been placed at pages 177 to 179 of the Paper Book. Notably, assessee considered that the transfer of land giving rise to the levy of capital gains took place during the period 01.04.2007 to 31.03.2008 and accordingly it declared capital gains on sale of such land in the return filed for assessment year 2008-09 on 29.09.2008. The Assessing Officer, however, deemed it fit to tax such capital gain in assessment year 2007-08 itself on the basis of the Development Agreement dated 19.03.2007. The Assessing Officer taxed the capital gain in assessment year 2007-08 on the basis of the judgement of the Hon'ble Bombay High Court in the case of Chaturbhuj Dwarkadas Kapadia vs. CIT, 260 ITR 491 (Bom.). In so far as the merits of such action is concerned, the same has been affirmed by the Tribunal also vide its order dated 06.09.2010 (supra). Be that as it may, for the present, the merits of the controversy are ....
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....efore assessee was justified in declaring capital gain on sale of such land in the previous year 2007-08 corresponding to the assessment year 2008-09. It was, therefore, contended that the issue regarding the taxability of capital gain in assessment year 2007-08 or assessment year 2008-09 is a debatable issue and therefore in such a situation1, 3at least penalty u/s 271(1)(c) of the Act is not leviable. 20. On the other hand, the Ld. CIT-DR has supported the order of the authorities below. It was argued by Ld. CIT-DR that the plea of the assessee that long term capital gain on sale of land was taxable in assessment year 2008-09 was negated by the Tribunal and therefore the Assessing Officer was justified in levying the penalty. It was submitted by the Ld. CIT-DR that the Development Agreement dated 19.03.2007 clearly stated that assessee company handed-over possession of the said land on that date and therefore the said capital gain was liable to be offered in assessment year 2007-08 itself. Because the assessee did not offer it in assessment year 2007-08, the Assessing Officer was justified in levying penalty u/s 271(1)(c) of the Act. 21. We have carefully considered the riv....
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....ssee in the proceedings before the Assessing Officer are concerned, the same have not been found to be erroneous or incorrect. The entire conspectus of the dispute, which we have narrated in the earlier paras would reveal that the crux of the difference between the assessee and the Revenue is the year in which the capital gain is liable to be taxed, having regard to the terms and conditions of the Development Agreement entered by the assessee with the purchaser on 19.03.2007. No doubt, in the quantum proceedings, it has been held that a 'transfer' has occurred in terms of section 2(47)(v) of the Act in assessment year 2007-08 on account of giving of possession following the judgement of the Hon'ble Bombay High Court in the case of Chaturbhuj Dwarkadas Kapadia (supra). So however, the question relevant for the present situation is as to whether assessee's action of declaring such income in assessment year 2008- 09 is bona-fide or not ? It is quite apparent from the copy of the Development Agreement which is placed in the P15aper Book that it was registered on 04.04.2007. It is also clear that the Conveyance Deed was ultimately executed on 27.03.2008 after assessee received the full ....