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TMI Blog2017 (11) TMI 1902X X X X Extracts X X X X X X X X Extracts X X X X ..... inaccurate particulars of his income and the penalty has been imposed without any legal justification. Asst. Year:2009-10 4. That the observations made are against facts and are based on surmises & conjectures and do not afford any legal justification to the imposition of penalty. In any case, all the facts & circumstances of the case and the explanation given and evidence available on record have not been properly considered and have not been judicially interpreted and the penalty has been wrongly imposed. 5. That in any case, the alleged approval of the Joint Commissioner of Income tax, Range-II, Jalandhar U/s.274(2) vide his office letter dated 25.06.2012, is granted without application of mind, in a mechanical manner and without affording opportunity to the appellant and the | imposition of penalty is unlawful even on this account. 6. That penalty is not automatic and the penalty can not be imposed merely on the basis of any J addition made. Under the circumstances, the penalty imposed is illegal, unjust and unlawful. 7. That the surrender was made to avoid litigation and to buy peace of mind subject to no penalty and any other penal action and with further specific s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner(Appeals)][or the [Principal Commissioner or] Commissioner] to be false, or (B) such person offers an explanation which he is not able to substantiate [and jails 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 him] " 15. It can be seen from the assessment order, Para 5.4 that the assessee has not filed schedule AIR in the return of income correctly and omitted the information regarding cash deposits, couldn't substantiate it at all during the assessment proceedings, the explanation advanced also can't be said to be bonafide and correct in view to this. Till now, except contesting the case on some legal arguments, nothing on facts have been added by the assessee, and considering the totality of facts and circumstances of the case, I am of the opinion on that the levy of penalty u/s 271(1) (c) of I.T. Act has to be upheld. 16. In the result, the penalty levied u/s 271(1)(c) of I.T. Act at Rs. 8,47,410/- is hereby confirmed. Ground no.2 is thus decided." Asst. Year:2009-10 4. The assessee further carried the matter before the ITAT Bench at Amritsar an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer as well as the Ld. CIT(A) taken into consideration that the assessee omitted information regarding cash deposits and could substantiate at all during the assessment proceedings, and till now nothing of facts have been added by the assessee, therefore, the penalty was levied. Before us, the assessee has filed an application u/s 29 of the I.T. Rules along with the affidavit of the assessee and broker Sh. Raj Kumar and Computer Type Writer Sh. Sarshan Ram. From the Revenue Records the assessee has tried to establish that he is the co- owner along with of 4 kanals, 8 marlas land bearing Khasra No.3003/16 situated at village Surapur, Nawanshahr , along with his younger brother Sh. Harjeet Singh and whose general power attorney was also in favour of assessee and the assessee had agreed to sell the said agricultural land to Sh. Gurnam Singh resident of VPO, Jhander Kalan, Nawanshahar for Rs. 80,00,000/- during the financial year 2008-09 and had received amount of Rs. 22,50,000/- by cash as advanced and out of that the assessee had deposited Rs. 20,00,000/- by cash in his saving bank accounts. Further, the purchaser Sh. Gurnam Singh had gone abroad and deal could not matured and the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e explanation, has been discharged by him, the onus shifts on the Revenue to show that the amount in question constituted the income and not otherwise. 8. Assessee has only stated that he had surrendered the additional sum of Rs. 40,74,000/- with a view to avoid litigation, buy peace and to channelize the energy and resources towards productive work and to make amicable settlement with the income tax department. Statute does not recognize those types of defenses under the explanation 1 to Section 271(l)(c) of the Act. It is trite law that the voluntary disclosure does not release the Appellant-assessee from the mischief of penal proceedings. The law does not provide that when an assessee makes a voluntary disclosure of his concealed income, he had to be absolved from penalty. 9. We are of the view that the surrender of income in this case is not voluntary in the sense that the offer of surrender was made in view of detection made by the AO in the search conducted in the sister concern of the assessee. In that situation, it cannot be said that the surrender of income was voluntary. AO during the course of assessment proceedings has noticed that certain documents comprising of shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the terms necessary to constitute the transfer can be ascertained with reasonable certainty, and the transferee has, in part performance of the contract, taken possession of the property or any part thereof, or the transferee, being already in possession, continues in possession in part performance of the contract and has done some act in furtherance of the contract, and the transferee has performed or is willing to perform his part of the contract, then, notwithstanding that where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed therefore by the law for the time being in force, the transferor or any person claiming under him shall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession, other than a right expressly provided by the terms of the contract: Provided that nothing in this section shall affect the rights of a transferee for consideration who has no notice of the contract or of the part performance thereof. Income Tax Act Section 2 - Definitions In this Act, unless the context otherwise require ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , para 10. An agreement of sale which fulfilled the ingredients of Section 53A was not required to be executed through a Asst. Year:2009-10 registered instrument. This position was changed by the Registration and Other Related Laws (Amendment) Act, 2001. Amendments were made simultaneously in Section 53A of the Transfer of Property Act and Sections 17 and 49 of the Indian Registration Act. By the aforesaid amendment, the words "the contract, though required to be registered, has not been registered, or" in Section 53A of the 1882 Act have been omitted. Simultaneously, Sections 17 and 49 of the 1908 Act have been amended, clarifying that unless the document containing the contract to transfer for consideration any immovable property (for the purpose of Section 53A of 1882 Act) is registered, it shall not have any effect in law, other than being received as evidence of a contract in a suit for specific performance or as evidence of any collateral transaction not required to be effected by a registered instrument. Section 1 7(1A) and Section 49 of the Registration Act, 1908 Act, as amended, read thus: "17(1A). The documents containing contracts to transfer for consideration, any imm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n (v) was inserted by the Finance Act of 1987 w.e.f. 01.04.1988. All that is meant by this expression is to refer to the ingredients of applicability of Section 53A to the contracts mentioned therein. It is only where the contract contains all the six Asst. Year:2009-10 features mentioned in Shrimant Shamrao Suryavanshi (supra), that the Section applies, and this is what is meant by the expression "of the nature referred to in Section 53A". This expression cannot be stretched to refer to an amendment that was made years later in 2001, so as to then say that though registration of a contract is required by the Amendment Act of 2001, yet the aforesaid expression "of the nature referred to in Section 53A" would somehow refer only to the nature of contract mentioned in Section 53A, which would then in turn not require registration. As has been stated above, there is no contract in the eye of law in force under Section 53A after 2001 unless the said contract is registered. This being the case, and it being clear that the said JDA was never registered, since the JDA has no efficacy in the eye of law, obviously no "transfer" can be said to have taken place under the aforesaid document. Si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which never materialized is, at best, a hypothetical income. It is admitted that, for want of permissions, the entire transaction of development envisaged in the JDA fell through. In point of fact, income did not result at all for the aforesaid reason. This being the case, it is clear that there is no profit or Asst. Year:2009-10 gain which arises from the transfer of a capital asset, which could be brought to tax under Section 45 read with Section 48 of the Income Tax Act. 28. In the present case, the assessee did not acquire any right to receive income, inasmuch as such alleged right was dependent upon the necessary permissions being obtained. This being the case, in the circumstances, there was no debt owed to the assessees by the developers and therefore, the assessees have not acquired any right to receive income under the JDA. This being so, no profits or gains "arose" from the transfer of a capital asset so as to attract Sections 45 and 48 of the Income Tax Act. From the observation of the Apex Court it construe that if an agreement to sell is not registered, then it shall have no effect in law for the purposes of Section 53A. In short, there is no agreement in the eyes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Revenue Authorities, however by filing an application u/s 29 of the I.T. Rules tried to substantiate his claim in respect of receiving earnest money of Rs. 22,50,000. No doubt the submissions of the assessee to the effect that the assessee had surrendered the amount in order to buy peace and subject to no penal action lacks merits. However, in view of the judgment referred above, we are of the view that because the Assessee sold his property by making unregistered Agreement to sell and received part payment only and somehow, the said deal could not be finalized , therefore he under the impression that he will return the earnest money to the buyer therefore has not shown the said amount in his income, although the said circumstances have been explained to the revenue authorities however did not yield any result , therefore we are of Asst. Year:2009-10 the considered view that the penalty proceedings are quasi- criminal in nature cannot be fastened only on the probabilities and from the facts as emerged that the assessee has not concealed the particulars of income, hence, we order for deletion of penalty. 8. In the result, the appeal filed by the assessee is allowed and penal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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