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TMI Blog2018 (5) TMI 1603X X X X Extracts X X X X X X X X Extracts X X X X ..... hri Rajesh S. Shah For The Revenue : Shri V. Vidhyadhar (Sr.DR) ORDER PER RAMIT KOCHAR, Accountant Member This appeal, filed by the assessee, being ITA No. 3620/Mum/2016 , is directed against appellate order dated 28.03.2016 passed by learned Commissioner of Income Tax (Appeals)-34, Mumbai (hereinafter called the CIT(A) ), for assessment year 2011-12, the appellate proceedings had arisen before learned CIT(A) from penalty order dated 03.07.2014 passed by learned Assessing Officer (hereinafter called the AO ) u/s 271(1)(c) of the Income-tax Act, 1961 (hereinafter called the Act ) for AY 2011-12. 2. The grounds of appeal raised by the assessee in the memo of appeal filed with the Income-Tax Appellate Tribunal, Mumbai (hereinafter called the tribunal ) read as under:- Being aggrieved against order of the Commissioner of Income Tax (A), Mumbai, this appeal petition is being filed to consider the following grounds of appeal, which are independent and without prejudice to each other: 1. On the facts and circumstances of the case, the Commissioner of Income Tax (Appeals) erred in confirming penalty levied under section 271(1)(c) of the act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23,500 1,04,000 1,27,500 Net Sale Consideration 11,51,500 50,46,000 61,97,500 Less Index Cost of acquisition 7,18,285 4,87,703 12,05,988 Total Long term capital gain 4,33,215 45,58,297 49,91,512 Less Exemption u/s 54 cost of New House property - - 37,34,940 Long term capital gain 12,56,572 This working was not reflected in the return of income filed by the assessee with Revenue and on verification of the details, the AO observed that assessee has claimed purchase cost of ₹ 3,10,000/- on property at Vakola, Santacruz (E) which was received in SRA while cost of acquisition was Nil‟ and assessee also claimed brokerage paid of ₹ 5000/- for sale of property at Mira Road . The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y invoked penalty provision u/s. 271(1)(c) for furnishing of inaccurate particulars of income as the assessee in the opinion of the AO has concealed its income of ₹ 11,88,709/- being long term capital gains which were not declared in the return of income filed with the Revenue which led to the issuance of penalty notice by the AO u/s. 271(1)(c). The assessee did not challenge the assessment order passed by the AO dated 24-3-2014 u/s 143(3) as no appeal stood filed by the assessee with learned CIT(A) against the assessment framed by the AO, which attained finality . 4. The assessee submitted before the AO during the course of penalty proceedings u/s 271(1)(c) that penalty proceedings be dropped against the assessee . The assessee also submitted that he is suffering with health problems. The Ld. AO levied the penalty of ₹ 2,44,875/- vide penalty order dated 03-07-2014 passed by the AO u/s 271(1)(c), by holding as under:- 5. I have carefully gone through the assessee's reply letter dated 23.05.2014, it is important to note that the assessee has accepted the assessment order in toto and has not preferred appeal before the CIT(A) and the facts concealment and fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /-. Therefore I impose a Minimum Penalty of ₹ 2,44,875/-. 9. This penalty order has been passed with prior approval of Jt. C.I.T. Range 19(2) Mumbai vide his letter No. Jt. CIT Rg. 19(2)/ Penalty Approval/2014-15 dated 03/07/2014. 5. Aggrieved by the penalty order dated 03-07-2014 passed by the AO u/s 271(1)(c) , the assessee filed first appeal before learned CIT(A) and submitted that assessee is a small time dobhi engaged in washing and ironing of cloth . The assessee submitted that he is 66 years of age and illiterate person having no knowledge of the provisions of 1961 Act. It was submitted that assessee relied on his tax practitioner in filing of its return and assessee got the advice from its tax practitioner that since he has invested in another property and hence there is no need to pay taxes. It was submitted that hence the return of income was filed without declaring long term capital gains. It was also submitted that cost of tenancy had to be taken at the value prevailing as on 01.04.1981 as mother was tenant prior for 01.04.1981 and it is only on death of the mother of the assessee sometime in 1980, the assessee got the tenancy right and it is inadverte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Court decision in the case of CIT v. Reliance Petroproducts Ltd. reported at 322 ITR 158 7. Mumbai-tribunal decision in the case of Skill Infrastructure Ltd. v. ACIT, 139 ITD 25 (Mum.) (Trib) 8. Hon ble Delhi High Court decision in the case of PHI Seeds India Ltd. (2008) 301 ITR 13 Thus it was prayed that the penalty be deleted. The learned CIT(A) after considering the contentions of the assessee confirmed the penalty vide appellate order dated 28-03-2016 , by holding as under:- 5. I have carefully considered the grounds of appeal, statements made by the appellant, assessment order and the order levying penalty u/s.271(1)(c). It is seen that the appellant had filed return of income for A.Y.2011-12 showing income of ₹ 2,48,140/- as income from business. The fact that the appellant had entered into transactions of sale of two flats amounting to ₹ 51,50,000/- and ₹ 11,75,000/- came to light only after return of income submitted by the appellant was selected for scrutiny u/s.143(3) of the I.T.Act. The AO started the process of enquiry into the transaction of sale of flats made by the appellant on the basis of the AIR information available on r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ails to offer an explanation or the explanation offered by the appellant is found to be false by the AO or the CIT(A); and, (b) second, where in respect of any facts material to the computation of total income under the provisions of this Act, the appellant is not able to substantiate the explanation and the appellant fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by the appellant. Thus, the penalty under sec. 271(1)(c) is a penalty for concealment of income or for furnishing of inaccurate particulars, or, under the extended definition by the virtue of Explanation 1 to section 271(1)(c), for a deemed concealment of income. 5.3 In the present case, the appellant has failed to show the income from long term capital gains on account of sale of two fiats in the Return of income. There is no mention in respect of any facts related to the sale of flats in the computation of total income as well as in the return of income. The appellant has explained that the default was on account of the ignorance of law by the appellant as well as ill advice given by the Tax Pract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into play where in respect of facts, materials to the computation of the total income of any person under this act, (i) when the appellant fails to provide an explanation, (ii) when the appellant provides an explanation which is found to be false, and (iii) when the appellant provides an explanation which he fails to substantiate and he fails to prove that the explanation was bona fide and that all the facts necessary for the same and material for computation of income have been duly disclosed by the appellant. 5.4 In the present case, though the appellant has provided an explanation regarding his failure to make any mention in respect of income earned from the sale of flat, the explanation is found to be false as discussed earlier. It is also not a case where the appellant was having any bonafide belief. The appellant himself has also not claimed to have any bonafide belief in his explanation. Instead the appellant has stated that he was relying on the advice given by the tax practitioner. Therefore, clause A of explanation 1 to section 271(1)(c) of the I.T. Act is applicable to the facts of the present case and the appellant is therefore, deemed to have concealed particula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was brought to our notice . 7. We have considered rival contentions and perused the material on record including cited case laws. We have observed that the assessee is dhobi and engaged in washing and ironing of cloth. The assessee has claimed himself to an illiterate person . The assessee has also pleaded to be of old age and not maintaining good health. The assessee has claimed that he was earlier working in Kuwait and returned to India in 2007 due to ill-health and he had by-pass surgery in April 2007. The assessee was not filing any return of income with the Revenue till AY 2010-11 and this is the first return of income filed by the assessee with Revenue. The assessee has sold two flats one at Mira Road and another flat at Vakola , Santacruz (E), Mumbai during relevant year under consideration. The assessee also purchased property during the year under consideration for which the assessee was entitled for exemption u/s 54 of the 1961 Act. The assessee did not disclosed both sale and purchase of the properties undertaken by him during the relevant period under consideration in the return of income filed with the Revenue . The assessee did not disclosed taxable long term capi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also relied upon CBDT circular dated 11-04-1955 to contend that it is the lawful duty of the AO to assist the tax-payer in paying correct taxes and to grant necessary reliefs and deduction even if the same were not claimed by taxpayer. It is the claim of the assessee that he was ill advised by counsel and the assessee being illiterate was having no knowledge of nitty-gritty‟s of the complex provision of 1961 of the Act. It was claimed that assessee was told by his tax practitioner that since he has purchased new residential properties and hence there is no need to pay tax on the sale of properties. The assessee has claimed that once he came to know that he is liable to pay tax he came forward and deposited income-tax after declaring the said income during the course of assessment proceedings. The assessment order framed by the AO was accepted and no appeal was filed. It is also claimed by the assessee had the AO allowed deduction regarding the tenancy cost at a value as on 01.04.1981 and indexation thereof, there would have been no tax liability. Thus in nutshell it is claimed that there is no concealment of particulars of income or furnishing of inaccurate particulars of in ..... 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