TaxTMI 
TaxTMI 
2020 (8) TMI 445
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....y under Section 271(1)(c) of the Act ?" 4. For appreciation of the question proposed, it would be apposite to deal with the relevant facts :- (i) Appellant is an assessee under the Act. Appellant alongwith 4 others executed an agreement for sale dated 07.12.2004 in respect of a plot of land at Vasai. The total consideration stated in the agreement was Rs. 2,60,00,000.00 and conveyance was to be executed only upon receipt of the entire consideration. The appellant's share in the sale consideration of the said plot of land was 49.2%. During the financial year under consideration, a sum of Rs. 1,05,01,111.00 was received out of the total consideration of Rs. 2,60,00,000.00. Hence during the said financial year conveyance was not executed and possession was not handed over of the said plot. (ii) In the return of income filed by the appellant for the Assessment Year 2005-06, appellant offered to tax his share in the consideration received during the previous year i.e. Rs. 51,66,548.00. (iii) Respondent by notice dated 18.04.2007, called upon the appellant to furnish details of capital gains earned during the year under consideration i.e. Assessment Year 200....
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....-07 and 2007-08 on the above basis respectively. (x) Respondent by letter dated 03.11.2008 informed the appellant that the revised returns would not be accepted in view of the appellant's letter dated 02.06.2008 by which the appellant had requested the respondent to consider the original return as the return in compliance to the notice under Section 148 of the Act. (xi) Appellant thereafter submitted a revised working of capital gains for the Assessment Years 2005-06 and 2006-07 and requested the respondent to complete the assessment for the 3 years, viz; Assessment Years 2005-06, 2006-07 and 2007-08. (xii) Respondent completed the reassessment for the Assessment Year 2005-06 on 26.11.2008 and taxed the appellant's share of capital gains arising on the entire sale consideration of Rs. 2,60,00,000.00 for the said Assessment Year 2005-06. However, while completing the above assessment respondent also initiated penalty proceedings against the appellant for furnishing inaccurate particulars of income as a result of deferring the charge on capital gains arising pursuant to execution of the sale agreement with respect to the said plot of land. (xiii) T....
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....Nishant Thakkar, learned counsel appearing for the appellant at the outset has submitted a brief chronology of the dates and events and taken us through the same, which is reproduced herein :- Sr. No. Date Particulars Exh. Pg. Nos. 1 07-12-2004 Agreement to sell land in Vasai for Rs. 2.6 crores- Appellant's share in land = 49.2%. Appellant receives only Rs. 51.66 Lakhs during F.Y. 2004-05. A 19-27 2 31-10-2005 Return for A.Y. 2005-06 offering Rs. 51,66,548/- and claiming exemption u/s. 54EC of the Act. B 28-30 3 31-03-2005 Assessment Order for A.Y. 2005-06 accepting Assessee's claim D 33-35 4 28-10-2006 Return for A.Y. 2006-07 filed offering Rs. 63,96,000/- as capital gains on Vasai Land being amount received during the year. E 36-42 5 16-11-2007 Return for A.Y. 2007-08 filed offering Rs. 7,38,000/- as capital gains on Vasai land being amount received during the year. F 43-45 6 21-04-2008 148 Notice issued by Respondents for A.Y. 2005-06 to bring to tax the entire gains in A.Y. 2005-06 7 20-08-2008 Revised return filed for A.Y. 2006-07 - withdrawing off....
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....ings, appellant had furnished copy of the agreement for sale which was considered and accepted by the respondent. Appellant had filed income tax returns for the respective Assessment Years i.e. 2005-06 (filed on 31.10.2005), Assessment Year 2006-07 (filed on 28.10.2006) and Assessment Year 2007-08 (filed on 01.11.2007), well before the reassessment notice under Section 148 of the Act came to be issued on 21.04.2008. Hence there was complete disclosure. He submitted that even though after receipt of the reassessment notice if the appellant had accepted assessibility of capital gains in Assessment Year 2005-06, it did not imply or mean that the appellant had furnished inaccurate particulars of income or the appellant had concealed particulars of income. The copy of agreement for sale dated 07.12.2004 was disclosed by the appellant at the time of scrutiny at the first instance i.e. in the Assessment Year 2005-06. The agreement was an unregistered document on a stamp paper worth Rs. 100.00. As per Clause 8 of the agreement, conveyance was required to be executed only upon receipt of the entire consideration which had not been fulfilled. Under Clause 14 of the agreement possession was r....
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.... of Section 271(1)(c) of the said Act therefore deserves to be quashed. 5.2 Mr. Thakkar laid emphasis and relied on the following judgments in support of his submissions :- A. 'Agreement to sell' does not constitute a sale u/s. 2(47)(i) of the Income Tax Act, 1961 ("the Act") and therefore is not a transfer u/s 2(47) of the Act - Alpati Venkataramiah v/s. CIT - 57 ITR 185 (SC). B. Permission /license to enter is not possession under S. 53A of the Transfer of Property Act and hence does not constitute transfer u/s 2(47)(v) of the Act- Sheshasayee Steel P. Ltd. v/s. ACIT - 421 ITR 46 (SC). C. Unregistered agreement to sell on Rs. 100 stamp paper does not result in a transfer u/s. 2(47)(v) of the Act - CIT v/s. Balbir Singh maini 398 ITR 531 (SC). D. Agreement specifically provides for conveyance and possession only on full payment, pending conveyance all permissions etc. in the name of Vendors - hence no de facto transfer for the purposes of 2(47) (vi) of the Act - Sheshasayee Steel p. Ltd. Vs. ACIT - 421 ITR 46(SC). E. When dispute between assessee and revenue is year of tax ability, penalty u/s 271(1)(c) should not be levied: ....
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....ncludes,- (v) any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 1 (4 of 1882); or (vi) any transaction (whether by way of becoming a member of, or acquiring shares in, a co-operative society, company or other association of persons or by way of any agreement or any arrangement or in any other manner whatsoever) which has the effect of transferring, or enabling the enjoyment of, any immovable property. Explanation 1.- For the purposes of sub- clauses (v) and (vi), "immovable property" shall have the same meaning as in clause (d) of section 269UA;] Explanation 2. - For the removal of doubts, it is hereby clarified that "transfer" includes and shall be deemed to have always included disposing of or parting with an asset or any interest therein, or creating any interest in any asset in any manner whatsoever, directly or indirectly, absolutely or conditionally, voluntarily or involuntarily, by way of an agreement (whether entered into in India or outside India) or otherwise, notwithst....
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....y, - (i)...... (ii)...... (iii) in the cases referred to in clause (c) or clause (d), in addition to tax, if any, payable by him, a sum which shall not be less than, but which shall not exceed three times, the amount of tax sought to be evaded by reason of the concealment of particulars of his income or fringe benefits or the furnishing of inaccurate particulars of such income or fringe benefits." 9. Since imposition of penalty is under Section 271 (1) (c) of the Act, as per this provision, if the Assessing Officer or the Commissioner (Appeals) or the Principal Commissioner or Commissioner in the course of any proceedings under the Act is satisfied that any person had concealed the particulars of his income or furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty, in addition to the tax payable by him, a sum which shall not be less than but which shall not exceed three times the amount of tax sought to be evaded by reason of concealment of particulars of his income or furnishing of inaccurate particulars of such income. 10. The two key expressions in Section 271(1)(c) of the Act are "concealment ....
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.... the notice the inapplicable portion is not struck off thus not indicating for which limb the penalty is proposed to be imposed, it would lead to an inference as to nonapplication of mind, thus vitiating imposition of penalty. 13. In Goa Coastal Resorts & Recreation Pvt. Ltd. (supra) both the lower appellate authorities had categorically held that there was no record of satisfaction of the Assessing Officer that there was any concealment of income or that any inaccurate particulars were furnished by the assessee. In such circumstances, this Court held that the two lower appellate authorities had correctly ordered dropping of penalty proceedings against the assessee. It was in that context that this Court noted that in the notice issued in printed format the inapplicable portion was not struck off. Therefore in that case, this Court found that in addition to the notice being defective, there was no finding or satisfaction recorded in relation to concealment or furnishing of inaccurate particulars of income. 14. This Court in a recent judgment passed in the case of Ventura Textiles Ltd. vs. Commissioner of Income Tax - Mumbai City - 11 in Income Tax Appeal No.958 of 2017 dated ....
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....y an authorized person or actually derived by him from a proper source; the term "notice" in its full legal sense embraces a knowledge of circumstances that ought to induce suspicion or belief as well as direct information of that fact." 15. In the present case, concealment of particulars of income was not the charge against the appellant, the charge being furnishing of inaccurate particulars of income. As discussed above, it is trite that penalty cannot be imposed for alleged breach of one limb of Section 271(1)(c) of the Act while penalty proceedings were initiated for breach of the other limb of Section 271(1)(c). This has certainly vitiated the order of penalty. 16. On the ground that while the charge against the assessee was of furnishing inaccurate particulars of income whereas the penalty was imposed additionally for concealment of income, the order of penalty as upheld by the lower appellate authorities could be justifiably interfered with, still we would like to examine whether there was furnishing of inaccurate particulars of income by the assessee in the first place because that was the core charge against the assessee. 17. In CIT Vs Reliance Petroproducts Pvt. ....