TaxTMI 
TaxTMI 
2016 (5) TMI 1163
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....fered long term capital gain from sale of property for the assessment year 2009-10. From the information available in the income tax data base, the A.O. noticed that the assessee has sold an immovable property during the financial year 2007-08, but the resultant capital gain has not been offered for tax. Therefore, issued a notice u/s 148 of the Income Tax Act, 1961 (hereinafter called as 'the Act') to reopen the assessment u/s 147 of the Act. Subsequently, the case has been converted into scrutiny assessment and accordingly, notice u/s 143(2) of the Act, dated 29.8.2011 was issued. In response to the notice u/s 143(2) of the Act, the authorised representative of the assessee appeared from time to time and furnished the information called for. During the course of assessment proceedings, the A.O. issued a show cause notice and asked to explain why the capital gain on transfer of immovable property should not be levied for the assessment year 2008-09. In response to the show cause notice, the assessee submitted that he had sold the immovable property and as per the requirement of the buyer registered the property by way of 4 registered documents. The assessee further submitt....
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....009-10. Therefore, he had rightly computed the capital gain for the assessment year 2009-10. Though capital gain tax is liable for the A.Y. 2009-10, he had accepted the proposal of the A.O. to tax the capital gain for the assessment year 2008-09 in respect of 3 sale deeds, to cooperate with the department and also for smooth completion of assessment proceedings. Therefore, the A.O. was not correct in coming to the conclusion that there is a concealment of particulars of income which attracts the penalty u/s 271(1)(c) of the Act. The A.O. after considering the explanations furnished by the assessee held that the assessee has sold the property during the financial year 2007-08 and computed the capital gain for the assessment year 2009-10 for which no satisfactory explanations has been offered. The A.O. further held that the assessee has received the entire sale consideration towards 3 sale deeds which was executed in the financial year 2007-08 and the possession of the property has been handed over to the buyer as on the date of registration of sale deed. Therefore, the assessee contention that the possession of the property has been handed over to the buyer after execution of final ....
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.... Act, 1961. 3. The learned Commissioner of Income Tax (Appeals) ought to have appreciated that there was neither concealment of particulars of income nor furnishing of inaccurate particulars of income. 4. The learned Commissioner of Income Tax (Appeals) ought to have appreciated that the appellant was under the bona-fide belief that the capital gain is chargeable to tax in the A.Y.2009-10 and further that the revenue has taxed the rental income by treating the appellant as the owner of the property till A.Y.2009-10 when the possession was actually handed over to the buyer. 5. The learned Commissioner of Income of Income Tax (Appeals) ought to have appreciated that there was no satisfaction on the part of the assessing officer for issue of notice u/s 271(1)(c) of the Act. 6. Any other grounds that may be urged at the time of appeal hearing 5. From these grounds of appeal, the assessee has challenged the CIT(A) order confirming the levy of penalty u/s 271(1)(c) of the Act. The assessee also filed an additional ground by way of memorandum of petition for additional grounds and challenged the legality of the penalty proceedings. The Ld. A.R. submitted that the penalty imp....
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.... that the assessee has wilfilly concealed the particulars of income and also furnished inaccurate particulars of income. It is further submitted that there is no willful concealment of income, as the assessee has declared the capital gain on transfer of immovable property for the assessment year 2009-10 and also paid the resultant tax. It is further submitted that the assessee has agreed the proposal of taxing the long term capital gain for the assessment year 2008-09 to buy peace and also to cooperate with the department for smooth completion of the assessment proceedings. Therefore, the A.O. was not correct in coming to the conclusion that the assessee has concealed the particulars of income which warrants the levy of penalty u/s 271(1)(c) of the Act. 8. The Ld. A.R. further submitted that the facts which leads to imposition of penalty u/s 271(1)(c) of the Act are that the assessee has sold the property and executed four separate sale deeds as per the requirement of the buyer. The sale deeds are registered in two years, i.e. 3 sale deeds are executed in the financial year 2007-08 and one sale deed has been registered in the financial year 2008-09. The assessee claimed that physi....
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....n willfully concealed the particulars of income which is evident from the fact that he did not dispute the capital gain tax for the assessment year 2008-09. The A.O. was of the opinion that although the assessee has received consideration in respect of 3 sale deeds and handed over the possession of the property to the buyer, he has not offered the capital gain for tax. Though he is liable to pay tax for the A.Y. 2008-09, he had not paid any taxes and only when the department has pointed out the concealment, the assessee has accepted the fault and agreed the capital gain to be taxed for the assessment year 2008-09. Therefore, it is a clear concealment of particulars of income which attracts the penalty u/s 271(1)(c) of the Act. It is the contention of the assessee that there is no willful concealment of particulars of income, as he had disclosed the capital gain on total consideration received towards transfer of immovable property for the assessment year 2009-10. The assessee further contended that he had filed the return of income for the assessment year 2009-10 u/s 139(1) of the Act before the department has reopened the assessment for the assessment year 2008-09. The fact remain....
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....ar 2008-09, if the department has not reopened the assessment for the assessment year 2008-09. 12. The assessee has disclosed the capital gain before the department has reopened the assessment u/s 147 of the Act for the assessment year 2008-09. The only difference is that whether the particular capital gain is taxable for the assessment year 2008-09 or 2009-10. It is the contention of the assessee that he was under the bonafide belief that the capital gain is liable only when the final sale deed is executed and also the possession of the property has been handed over to the buyer. In support of his arguments he had filed the details showing that he had handed over the possession of the property during the financial year 2008-09. It is further submitted that the property is under occupation of tenant. The tenant has paid the rent up to June, 2008. The rent has been offered to tax for the assessment year 2009-10. Therefore, we are of the view that the assessee has handed over the possession of the property to the buyer after execution of final sale deed which was executed during the financial year 2008-09. Therefore, there is a merit in the contention of the assessee that he is unde....
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....eeds for the assessment year 2008- 09. Therefore, the A.O. was not correct in coming to the conclusion that the assessee has concealed the particulars of income for the assessment year 2008-09. 14. It is pertinent to discuss here the case law relied upon by the assessee. The assessee relied upon the judgement of Hon'ble Supreme Court of India in the case of CIT Vs. Reliance Petro Products Pvt. Ltd. (2010) 322 ITR 158. The Hon'ble Supreme Court, while deleting the penalty u/s 271(1)(c) of the Act held that mere making a claim which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars of income. The relevant portion is reproduced hereunder: "A glance at the provision of s. 271(1)(c) would suggest that in order to be covered, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. Present is not the case of concealment of the income. That is not the case of the Revenue either. As per Law Lexicon, the meaning of the word "particular" is a detail or details (in plural sense); the details of a claim, or the separate items of an account. Therefore....
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....for any reason, the assessee will invite penalty under s. 271(1)(c). That is clearly not the intendment of the legislature. The Tribunal, as well as, the CIT(A) and the High Court have correctly reached this conclusion. -Sree Krishna Electricals vs. State of Tamil Nadu & Anr. (2009) 23 VST 249 (SC) applied; Reliance Petro products (P) Ltd. (judgment 23rd Oct., 2007 of the Gujarat High Court in Tax Appeal No. 1149 of 2007) affirmed." 15. The assessee relied upon the decision of Hon'ble Karnataka High Court, in the case of CIT vs. Manjunatha Cotton & Ginning factory (2013) 92 DTR 0111. The Hon'ble High court, while deleting the penalty u/s 271(1)(c ) held as under. "Penalty u/s 271(1)(c) is a civil liability. Mens rea is not an essential element for imposing penalty for breach of civil obligations or liabilities. Willful concealment is not an essential ingredient for attracting civil liability. Existence of conditions stipulated in Section 271(1)(c) is a sine qua non for initiation of penalty proceedings u/s 271. The existence of such conditions should be discernible from the Assessment order or order of the Appellate Authority or Revisional Authority. Even if there is no spec....
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....ll the ground mentioned in Section 271 are mentioned would not satisfy requirement of law. The assessee should know the grounds which he has to meet specifically. Otherwise, principles of natural justice is offended. On the basis of such proceedings, no penalty could be imposed to the assessee. Taking up of penalty proceedings on the limb and finding the assessee guilty of another limb is bad in law. The penalty proceedings are distinct from the assessment proceedings. The proceedings for imposition of penalty though emanate from proceedings of assessment, it is independent and separate aspect of the proceedings. The findings recorded in the assessment proceedings in so far as "concealment of income" and "furnishing of incorrect particulars" would not operate as res judicata in the penalty proceedings. It is open to the assessee to contest the said proceedings on merits. However, the validity of the assessment or reassessment in pursuance of which penalty is levied, cannot be the subject matter of penalty proceedings. The assessment or reassessment cannot be declared as invalid in the penalty proceedings. In the light of what we have stated above, it is clear that merely b....