TaxTMI 
TaxTMI 
2019 (2) TMI 809
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....m family pension. For the assessment year under dispute, the assessee originally filed the return of income on 30.07.2008 declaring total income of Rs. 52,773/-. In the computation of income, the sources of income shown are family pension of Rs. 52,773/- and agricultural income of Rs. 66,000/-. Subsequently, during the assessment proceedings, the assessee filed a revised return declaring 'NIL' income. In both the returns of Smt.Chinnatalli and Shri K.V.V.Prasad, the assessees have appended the notes relating to the amount received by them in property transaction and stated the reasons why it is not taxable. The AO on the basis of facts and the information available on record noticed that assessee had entered into an agreement of sale-cum-GPA on 10.10.2002 with Shri R.K. Mittal for purchase of 9507 sq.yds. of land at Somajiguda, Hyderabad which was under litigation since 1996. AO further noticed that though Shri R.K. Mittal has decretal right over the property by virtue of a court order he was not in possession of the property. To enforce his decretal right over the property, Shri R.K. Mittal has also filed a petition in the court for execution of decree in his favour. AO observ....
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....he income to 'Nil' and claiming the refund of the advance tax paid. From the submissions of assessee and on the facts and materials on record, the AO observed that the assessee had entered into the agreement of sale with Shri R.K. Mittal knowing fully well that the property was under litigation and paid an amount of Rs. 50,000/- to Shri R.K. Mittal. The assessee also knew that Shri R.K. Mittal was only having decretal rights over property and not having the physical possession of the same. The value of the property intended to be purchased was very high compared to the available means of the assessee as the proposed sale consideration to Shri R.K. Mittal is to the tune of Rs. 53.00 crores, whereas the assessee did not have the sources to pay such huge amount. The AO recorded the statement from the assessee and found that the assessee has entered into such transaction due to more profit. It was also stated by the assessee that she took the risk in dealing with disputed property with a view to earn the profit . It was further stated by her that looking at the high margin of profit in such nature of transaction involving disputed property, she has entered into the transaction. F....
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....u/s 271(1)(c) by an order u/s 274 r.w.s. 271(1)(c) dated 07.03.2013 and imposed penalty of Rs. 98,77,719/- against S.Chinatalli and Rs. 1,14,72,375/- against Shri K.V.V.Prasad. The AO in the penalty order reiterated the observations of the CIT(A) and the assessment order which reads as under : 1. The assessee while entering into an agreement for purchase of land from RK Mittal is fully aware that Shri Mittal is only a decree holder and that the land in question in litigation. 2. During the course of scrutiny proceedings, the assessee himself has admitted that such lands in litigation would be available for a cheaper price and once the litigation is cleared, they would fetch a handsome price. Therefore, the idea is to trade in such lands not to make any investment, For any Investment, safety is the first and foremost factor for consideration which is conspicuous by its absence in the present deal. 3. The assessee entered into a land deal for Rs. 26.71 crores. The assessee did not possess adequate money to finalize the deal. It is only with the intention of finding an immediate buyer, the assessee entered into the deal. 4. That the amounts paid as advance did not constitut....
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...., the AO held that the assessee has fully concealed her income particulars and furnished them inaccurately, thereby it is a clear attempt to conceal her income particulars and or furnished inaccurate particulars of income seeking to avoid taxes and accordingly held that the case is fit case for levy of penalty u/s 271(1)(c) and levied the concealment penalty in both the cases of Smt.Chinatalli and Shri K.V.V.Prasad. 5. Against the order of the AO, the assessee went on appeal before the CIT(A) and the Ld.CIT(A) observed that the assessee has neither furnished the inaccurate particulars nor concealed the income and accordingly, there is no case for levying penalty u/s 271(1)(c), hence deleted the penalty levied u/s 271(1)(c) of the Act. The Ld.CIT(A) relied on the decisions of Reliance Petro Products Private Limited (322 ITR 158) (SC) and the decisions of Hon'ble Bombay High Court in the case of Metal Rolling Works Limited Vs. CIT ,339 ITR 373 and CIT-21 Vs. Advaita Estate Development Pvt. Ltd. vide I.T.A No.1498 of 2014 dated 17.02.2017. 6. During the appeal hearing, the Ld.DR strongly supported the order of the AO and argued that the assessee has concealed the income and furnishe....
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....right on the amounts received thus the same cannot be treated as income in the impugned assessment year till the date of complete settlement of the disputes. The income accrues to the assessee only on settlement of the disputes but not in the year of receipt. The assessee had got the right over the money received only after the supplementary agreement, thus viewed that if the same is to be treated as income it should be assessed in the F.Y.2010-11, related to the A.Y.2011-12 but not in the A.Y.2008-09. The assessee has taken the support from the decision of CIT vs Hindustan Housing and Land Development trust Ltd(1986) 161 ITR 524 and the decision of CIT vs Jai Prakash Om Prakash Co.Ltd(1961) 41 ITR718(Punj). The assessee contended that the amount received from M/s Fortuna Infrastructure India Private Limited has to be treated as advance in the impugned assessment year and cannot be treated as income pending settlement of dispute. According to the assessee, the sum received by the assessee is also not taxable as capital gains, since the cost of the acquisition was Nil. Further, the assessee is under the impression that since, the supplementary agreement was finally reached on ....
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.... the right under an agreement of sale is a mere right to specific performance or a right to sue and therefore not transferable u/s. 6(e) of the Transfer of Property Act, 1882 and hence such right did not constitute a capital asset and hence the transfer of agreement right would not give rise to taxable capital gains. Reference in this context may kindly be made to CIT Vs, R.Dalmia (1984) 149 ITR 250 (Del) and CIT Vs. R. Dalmia (Decd) (1987) 163 ITR 517 Under these circumstances the assessee submits that the transfer of agreement rights under the Tripartite Agreement did not give rise to taxable capital gains. For detailed appreciation of all the aspects involved a copy of the agreement of sale cum power of attorney dt. 10.10.2002 executed in favour of the assessee and a copy of the registered Tripartite Agreement dt. 12.11.2007, which are enclosed, may kindly be perused."- The department took a view that the income is taxable in the A.Y. 2008-09 under the head business income, since, nature of transaction is venture in the nature of trade and the agreement has reached finality during the previous year relevant to the A.Y. 2008-09. The department has taken this view since....
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....ly and the department has not collected any other information which was not submitted by the assessee in the return of income independently. Though the Ld.DR relied on the decision of Dharmendra Textiles Processors, the Hon'ble Supreme Court did not held that in all the cases where the addition is confirmed, the penalty shall follow automatically. This view is fortified by the decision of coordinate Bench of Mumbai Tribunal in the case of Assistant Commissioner of Income-tax, Central Circle 32, Mumbai. v. VIP Industries Ltd., [2009] 30 SOT 254 (Mumbai) In the case referred above the coordinate bench of ITAT held as under: "Therefore, it would be clear that the penalty proceedings are distinct from the assessment proceedings and, hence, it becomes amply clear that any addition made does not automatically lead to the imposition of penalty under section 271(1)(c). In the penalty proceedings, the assessee is given a chance to explain his case. If he successfully explains his position and is not trapped within the parameters of clause (c) of section 271(1) along with the Explanation deeming the concealment of income, the penalty cannot be imposed. In the instant case, the assessee had....
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....ant case, the entire particulars are placed before the AO which was not disputed by the AO. Hon'ble High Court of Andhra Pradesh in ITA No.684/Vizag/2016 in Principal CIT-1, Visakhapatnam Vs. Smt. Baisetty Revathi, held that it is necessary to make the assessee to know for which offence the notice has been issued while quashing the notice u/s 271(1)(c). In the instant case as observed from the penalty order, the AO is not sure of the offence committed by the assessee for levying the penalty. The AO himself is confused with regard to concealment of income or furnishing of inaccurate particulars. Hon'ble High Court of Punjab & Haryana in the case of CIT Vs. Haryana Warehousing Corporation [2009] [314 ITR 215 (P&H)] distinguishing Dharmendra Textiles (supra) held that where assessee has claimed a deduction disclosing all material facts, but the deduction was disallowed though the conflicting decisions exist on the subject, penalty cannot be levied. In the case of CIT & Anr. Vs. Euro Footwear Ltd. &Anr. (2015) (94 CCH 0153), Hon'ble High Court of Allahabad held that mere making of claim that is unsustainable in law by itself shall not amount to furnishing of inaccurate particular....