TaxTMI 
TaxTMI 
2022 (5) TMI 363
X X X X Extracts X X X X
X X X X Extracts X X X X
....nalty under section 271(1)(c) of the Act. 2. Without prejudice to ground no. 1, the levy of penalty @ Rs. 5,54,678/- is too heavy arbitrary and not warranted by the facts of the case." 3. The brief facts of the case are that property of the assessee, which was mortgaged with the bank as guarantor of loan had been taken over by the bank in view of default in loan re-payment by the creditors. The said property was sold in auction by the bank on 03-06-2010. The entire proceeds from the auction were taken by the bank and adjusted against the dues of the creditors. The assessee did not get any amount from the sale of property. The assessee did not declare the long term capital gain on transfer of property referred to above. The assessee's....
X X X X Extracts X X X X
X X X X Extracts X X X X
....80, unless there is deliberate default, penalty for concealment cannot be levied. Thirdly, the assessee submitted that since the appeal of the assessee against the quantum order of the ITAT stands admitted by the High Court, the issue is debatable one and therefore the penalty cannot be levied. The ld. CIT(A) dismissed the assessee's appeal against the penalty order by holding that the Hon'ble Gujarat High Court in the case of CIT vs. Dharamshi B. Shah in ITA No. 189 of 2000 vide order dated 09-06-2014 has held that mere admittance by the High Court does not tantamount to issue being debatable. He further held that the scope of s. 271(1)(c) has also been elaborately discussed by the Supreme Court in UOI vs. Dharmendra Textile Proces....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... making payment of loan, 'K' Financial Corporation sold property so mortgaged and appropriated sale proceeds towards loan taken by 'N'. The High Court held that since purchasers paid entire sale consideration directly to 'K' Financial Corporation and it was only thereafter mortgaged property was released, sale consideration was diverted to 'K' Financial Corporation by overriding title and, in such circumstances, no capital gains accrued to assessee. The assessee submitted that in the instant case, there was no deliberate default on part of the assessee to conceal income and relying on the case of CIT vs. Siddhartha Enterprise 322 ITR 80, the Ld. counsel for the assessee submitted that unless there is delibera....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt of dues of the bank for which the assessee stood guarantor. The second issue for consideration is that if appeal of the assessee against the quantum order of the ITAT stands admitted by the High Court, can it be said that the issue is debatable one and therefore the penalty cannot be levied. We will begin by answering the second issue first. Since the issue is covered by Hon'ble Gujarat High Court in the case of CIT vs. Dharamshi B. Shah in ITA No. 189 of 2000 vide order dated 09-06-2014 wherein it has been held that mere admittance by the High Court does not tantamount to issue being debatable, respectfully following the above decision, we are of the view that mere admission of appeal on quantum would not ipso facto absolve the asse....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nterest due from the assessee and paid over the balance to him. The capital gain that the assessee made was on the immovable property that belonged to him. Therefore, it was on the full price realised that the capital gain and the tax thereon had to be computed. Therefore, the High Court was not correct in holding that amount realised by the sale of the assessee's interest in the property was only Rs. 4,33,960, i.e., Rs. 5,62,980 minus Rs. 1,29,020. Again, the Mumbai ITAT (TM) Bench in the case of Perfect Threads Mills V. DCIT [2020] 113 taxmann.com 384 (Mumbai - Trib.) (TM) held that where on account of non-payment of corporate loan as per agreed terms, a charge on mortgaged property was created by assessee in terms of section 13(2) of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rued to assessee in whose hands income under head 'Capital gains' is sought to be assessed. In this case, the assessee-company did not offer for assessment capital gains arising from sale of certain shares on ground that it did not receive any money on sale of such shares as same had been pledged with credit companies as collateral security for loan taken by 'P' and 'S' from credit companies and credit companies had sold those shares for repayment of loan when 'P' and 'S' failed to repay same. The Assessing Officer held that capital gain tax was leviable on sale of such shares in hands of assessee. The ITAT held that by appropriation of sale proceeds by credit institutions, it was liability of 'P&....