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TMI Blog2013 (4) TMI 662X X X X Extracts X X X X X X X X Extracts X X X X ..... ad in law. As from the computation that the land at Haridwar was sold on 7.5.2004 (A.Y. 2005-06) and exemption u/s 54F was claimed. The period of three (3) years stipulated under the Act expires on 7.5.2007 related to AY 2008-09. Technically and legally, the assessee has time to invest on or before 7.5.2007. Meaning thereby that section 54F(3) cannot legally be invoked for AY 2007-08. Thus, there is no concealment by the assessee on account of non-declaration of the said income in this assessment year. Accordingly, the appeal of the assessee deserves to be accepted & penalty order is set aside. In favour of assessee. - ITA No. 765/Del/2012 - - - Dated:- 12-4-2013 - Shri J. S. Reddy And Shri Chandra Mohan Garg,JJ. For the Appellant : Smt. Shashi M. Kapila, Sh. R. R. Maurya For the Respondent : Shri David Z. Chawganthu, ACIT DR ORDER Per Chandra Mohan Garg, J.M. This appeal has been preferred by the assessee (since deceased) against the order of Commissioner of Income Tax(A), Muzaffarnagar in Appeal No.71/11- 12/MZR dated 14.10.2011 for AY 2007-08. 2. At the outset of the argument, ld. counsel of the assessee submitted that the assessee does not want to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot withdrawn in the ITR itself filed for the year under consideration and only some vague figure of Rs.2,22,600/- shown as withdrawn u/s 54F(3) of the Act. Assessment u/s 143(3) of the Act for A.Y. 2005-06 was completed on 28-11-2007. The office note to the assessment order clearly mentions the facts. Return for A.Y. 2007-08 was filed on 31-03-2008 and even then the taxes were not paid on withdrawn deduction in A.Y. 2005-06. The A.O. issued questionnaire dated 22-08-2007 and the appellant vide Question No.29 was required to show cause as to why disallowance of proportionate deduction claimed u/s 54F be not made and added to his income. In response to the query raised, the appellant contended that taxes of Rs.5,47,715/- would be paid; but the appellant deliberately avoided paying taxes on it. Thus penalty u/s 271(1)(c) is clearly attracted on furnishing inaccurate particulars in 'respect of withdrawal of deduction u/s 54F(3) of the Act. It is further observed that the' appellant is in the habit of making wrong claim before the Tax Authorities as under:- (i) The appellant claimed that ITR for A.Y.2007 08 contains withdrawal of deduction 54F(3) of the Act but actually no such deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and now during appellate proceedings has been unsatisfactory and unconvincing. Thus, it is inferred that assessee has failed to rebut the presumption that addition on account of capital gain at Rs.16,09,905/-was because of concealment of true particulars. Once the deduction claimed u/s 54F was held by the A.O. as not genuine and disallowance of the same was made; that itself indicates that the assessee furnished inaccurate particulars of income, the onus shifts on to the assessee to prove that he had not concealed true particulars. Reliance is placed on following decisions: (ii) Ram Sewak. Ram Chandra 151 CTR 294(All.) saying that once explanation to section 271(1)(c) was attracted but there was no evidence that the assessee to show absence of fraud or willful neglect; penalty was justified . (iii) Gurbachan Lal 250 ITR 157(Del) saying that the main import of explanation is that burden is on the assessee to prove that there was no concealment. It cannot be said that the moment a fantastic or an unacceptable explanation is offered, the burden placed on assessee has been discharged and presumption of concealment rebutted. The onus is not on revenue to prove, by some positive m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nowhere recorded his satisfaction that the assessee has submitted inaccurate particulars or has concealed any relevant particulars related to the income during the year under consideration. Therefore, in absence of the same, the penalty cannot be levied. He submitted that it is the precondition to initiate penalty proceedings that the Assessing Officer has to record his satisfaction to the effect that the assessee has either concealed particulars of his income or has furnished inaccurate particulars of his income. Ld. counsel finally submitted that the impugned order, inter alia penalty order, may be set aside by cancelling or setting aside the penalty order. 7. Replying to the above, ld. DR submitted that he has no serious objection to the fact that the assessee Mr. Subodh Gulati expired on 06.07.2007 and all proceedings including assessment, quantum appeal, penalty proceedings and appeal against the penalty order were initiated and decided after the death of assessee. The DR further submitted that legal representative and heirs are duty bound to cooperate with the tax authorities during the relevant proceedings by submitting all the required details and evidence in favour of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he view taken by the Bombay High Court in Commissioner of Income-tax v. Dajibhai Kanjibhai (1991) 189 ITR 41. 10. In our opinion, the legal position is well settled in view of the Supreme Court decisions in Commissioner of Income Tax, Madras. and Anr. v. S.V. Angidi Chettiar (supra) and D.M. Manasvi v. Commissioner of Income Tax, Gujarat, II Ahmedabad (supra), that power to impose penalty under Section 271 of the Act depends upon the satisfaction of the Income Tax Officer in the course of the proceedings under the Act. It cannot be exercised if he is not satisfied and has not recorded his satisfaction about the existence of the conditions specified in clauses (a), (b) and (c) before the proceedings are concluded. It is true that mere absence of the words I am satisfied may not be fatal but such a satisfaction must be spelt out from the order of the Assessing Authority as to the concealment of income or deliberately furnishing inaccurate particulars. In the absence of a clear finding as to the concealment of income or deliberately furnishing inaccurate particulars, the initiation of penalty proceedings will be without jurisdiction. In our opinion, the law is correctly laid down in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment order along with the notice issued u/s 271(1)(c) of the Act and reply filed by the assessee clearly demonstrates that the Assessing Officer had no intention to levy penalty during the course of assessment proceedings on this particular issue of Section 54F of the Act even by reading section 271(1B) of the Act. Thus, we hold that no satisfaction as required by law has been recorded by the Assessing Officer during the assessment proceedings, hence, imposition of penalty is bad in law. 11. On merits, the assessee claimed that section 54F(3) comes into play in the subsequent assessment year i.e. 2008-09. There was no requirement for the assessee to offer the income to tax during the year under consideration. Hence, there is no furnishing of inaccurate particulars and concealment of income during the current financial year related to AY 2007-08. 12. We find from the computation that the land at Haridwar was sold on 7.5.2004 (A.Y. 2005-06) and exemption u/s 54F was claimed. The period of three (3) years stipulated under the Act expires on 7.5.2007 related to AY 2008-09.Technically and legally, the assessee has time to invest on or before 7.5.2007. Meaning thereby that section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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