DCIT, Hyderabad v. M/s M.K.F.Constructions Pvt.Ltd.,, Hyderabad

ITA 1462/HYD/2008 | 2004-2005
Pronouncement Date: 29-01-2010 | Result: Dismissed

Appeal Details

RSA Number 146222514 RSA 2008
Assessee PAN AACCM3861E
Bench Hyderabad
Appeal Number ITA 1462/HYD/2008
Duration Of Justice 1 year(s) 4 month(s) 11 day(s)
Appellant DCIT, Hyderabad
Respondent M/s M.K.F.Constructions Pvt.Ltd.,, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 29-01-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 29-01-2010
Date Of Final Hearing 12-01-2010
Next Hearing Date 12-01-2010
Assessment Year 2004-2005
Appeal Filed On 17-09-2008
Judgment Text
IN THE INCOME-TAX APPELLATE TRIBUNAL HYDERABAD BENCH 'A' BEFORE SHRI N.R.S.GANESAN AND SHRI CHANDRA POOJARI I.T.A.NO.1462/HYD/2008 ASSESSMENT YEAR 2004-05 DY. CIT CIRCLE 16(2) HYDERABAD. .. APPELLANT VERSUS M.K.F. CONSTRUCTIONS PVT. LTD. HYDERABAD. ..RESPONDENT (PAN AACCM3861E) APPELLANT BY : SHRI H.PHANI RAJU RESPONDENT BY : SHRI B.SATYANARAYANA MURTHY O R D E R PER N.R.S.GANESAN JUDICIAL MEMBER: THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT (APPEALS) V HYDERABAD DATED 9-7-2008 DELETING PE NALTY LEVIED UNDER SEC. 271(1)(C) OF THE INCOME-TAX ACT 1961 FOR ASST. YE AR 2004-05. 2. SHRI H.PHANI RAJU LEARNED DEPARTMENTAL REPRESEN TATIVE SUBMITTED THAT THE ASSESSEE IS IN THE BUSINESS OF CONSTRUCTION. FO R THE ASST. YEAR UNDER CONSIDERATION THE ASSESSEE HAS SHOWN PROFIT OF RS. 23 57 742 ON SALE OF AGRICULTURAL LAND AT GOLLAPALLY VILLAGE CHEVELLA M ANDAL. HOWEVER THE ASSESSEE CLAIMED THE SAME AS EXEMPT FORM CAPITAL GAINS TAX. ACCORDING TO THE LEARNED DEPARTMENTAL REPRESENTATIVE THERE WAS A SURVEY UND ER SEC. 133A OF THE ACT IN THE BUSINESS PREMISES OF THE ASSESSEE ON 7-11-2005. CONSEQUENT TO THE SURVEY OPERATION THE ASSESSEE FILED REVISED RETURN ON 3-1 -2006 DISCLOSING THE PROFIT ON SALE OF AGRICULTURAL LAND AS BUSINESS INCOME. ACCOR DING TO THE LEARNED DEPARTMENTAL REPRESENTATIVE MAKING OF FALSE CLAIM OF EXEMPTION WOULD AMOUNT 2 TO FURNISHING INACCURATE PARTICULARS. ACCORDING TO THE LEARNED DEPARTMENTAL REPRESENTATIVE IN THE ABSENCE OF ANY EVIDENCE TO S HOW THAT THE EXEMPTION CLAIMED BY THE ASSESSEE HAD NOT RESULTED IN CONCEAL MENT OF INCOME THE LEVY OF PENALTY IS JUSTIFIED. ACCORDING TO THE LEARNED DEPA RTMENTAL REPRESENTATIVE THE SUBSEQUENT FILING OF REVISED RETURN AFTER SURVEY OP ERATION CANNOT ABSOLVE THE ASSESSEE FROM THE LIABILITY FOR PENALTY. THE LEARNE D DEPARTMENTAL REPRESENTATIVE PLACED HIS RELIANCE ON THE JUDGMENT OF THE APEX COU RT IN THE CASE OF K.P. MADHUSUDANAN V. CIT (2001) 251 ITR 99 AND SUBMITTE D THAT WHEN THE ASSESSEE OFFERED ADDITIONAL INCOME PENALTY CAN BE LEVIED IN THE ABSENCE OF PROPER EXPLANATION FOR NOT DISCLOSING THE SAME IN T HE ORIGINAL RETURN. ACCORDING TO THE LEARNED DEPARTMENTAL REPRESENTATIVE EVEN AN AGREED ADDITION TOWARDS INCOME CAN BE A BASIS FOR LEVYING PENALTY. THE LEAR NED DEPARTMENTAL REPRESENTATIVE FURTHER SUBMITTED THAT THE AGRICULTU RAL LAND WAS SHOWN AS A CURRENT ASSET AS ON 31-3-2004. THEREFORE IT IS STO CK-IN-TRADE. THE SALE OF SUCH LAND HAS TO BE TREATED AS BUSINESS INCOME. THEREFOR E ACCORDING TO THE LEARNED DEPARTMENTAL REPRESENTATIVE THE CIT (A) COMMITTED AN ERROR IN DELETING THE PENALTY LEVIED BY THE ASSESSING OFFICER. 3. ON THE CONTRARY SHRI B.SATYANARAYANA MURTHY LE ARNED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT IT IS NOT A CASE OF FU RNISHING OF INACCURATE PARTICULARS. ACCORDING TO THE LEARNED REPRESENTATIV E THE ASSESSEE DISCLOSED THE PROFIT ON SALE OF AGRICULTURAL LAND. HOWEVER THE A SSESSEE CLAIMED THE SAME AS EXEMPT SINCE THE LAND WAS AGRICULTURAL LAND. ACCORD ING TO THE LEARNED REPRESENTATIVE THE ASSESSEE FURNISHED THE ENTIRE D ETAILS IN THE ORIGINAL RETURN. THE LEARNED REPRESENTATIVE ALSO PLACED RELIANCE ON THE JUDGMENT OF THE APEX 3 COURT IN THE CASE OF G.C.AGARWAL V. CIT 186 ITR 57 1. ACCORDING TO THE LEARNED REPRESENTATIVE THE SURVEY WAS CONDUCTED ON 7-11-20 05. HOWEVER THE ASSESSEE FILED ORIGINAL RETURN ON 29-10-2004 DISCLO SING THE ENTIRE PROFIT ON SALE OF AGRICULTURAL LAND AND CLAIMED THE SAME AS EXEMPT FROM TAX. THEREFORE ACCORDING TO THE LEARNED REPRESENTATIVE IT CANNOT BE SAID THAT THE ASSESSEE CONCEALED ANY PART OF ITS INCOME. SINCE THE RETURN OF INCOME WAS FILED DISCLOSING ALL THE PARTICULARS OF INCOME THE PAYMENT OF TAX O N THE PROFIT ON SALE OF AGRICULTURAL LAND CANNOT BE CONSTRUED AS FURNISHING OF INACCURATE PARTICULARS OR CONCEALING ANY PART OF THE INCOME. THE LEARNED REPR ESENTATIVE PLACED RELIANCE ON VARIOUS CASE LAWS AND SUBMITTED THAT DISCLOSURE OF ADDITIONAL INCOME BY REVISING THE RETURN CONSEQUENT TO SURVEY CANNOT BE CONSTRUED AS CONCEALMENT OF INCOME. THE ASSESSEE ALSO FILED WRITTEN SUBMISSI ONS TO CONTEND THAT THERE WAS NO CONCEALMENT OF ANY PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THEREFORE ACCORDING TO THE LEARNED REPRESENTATIVE THE CIT (A) HAS RIGHTLY DELETED THE PENALTY. 4. WE HAVE CONSIDERED RIVAL SUBMISSIONS ON EITHER S IDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE APPEARS TO HAVE PURCHASED 154.21 ACRES OF LAND AT GOLLAPALLY VILLAGE CHEVELLA MANDA L R.R. DISTRICT AT A COST OF RS.16.92 LAKHS. SUBSEQUENTLY THE ASSESSEE SOLD THE VERY SAME LAND TO PRAGATI GREEN MEADOWS AND RESORTS PVT. LTD. AMEERPET HYDE RABAD. THE PURCHASER SOLD THE ABOVE SAID LAND AFTER PLOTTING. THE ASSESS EE CLAIMED THAT THE LAND WAS AGRICULTURAL LAND AND IT WAS NOT WITHIN THE LIMITS OF THE MUNICIPAL CORPORATION. THEREFORE THE PROFIT ON SALE OF SUCH LAND IS EXEMP T UNDER THE PROVISIONS OF THE INCOME-TAX ACT. IT IS ALSO AN ADMITTED FACT THAT TH E PURCHASE AND SALE OF LAND 4 WAS DISCLOSED TO THE DEPARTMENT. THE PROFIT ON SUCH SALE OF LAND WAS ALSO CORRECTLY DISCLOSED TO THE DEPARTMENT TO THE EXTENT OF RS.23 57 742. THE ONLY DISPUTE BETWEEN THE ASSESSEE AND THE REVENUE IS WHE THER THE PROFIT ON SALE OF SUCH LAND IS EXEMPT AS SALE OF AGRICULTURAL LAND OR IT HAS TO BE TREATED AS BUSINESS INCOME. 5. WE HAVE CAREFULLY GONE THROUGH THE PROVISIONS OF SEC. 271(1)(C) OF THE INCOME-TAX ACT. SEC. 271(1)(C) PROVIDES FOR LEVY OF PENALTY WHEN AN ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURN ISHED INACCURATE PARTICULARS OF SUCH INCOME. IN THIS CASE THE ASSESSEE ORIGINAL LY FILED RETURN DISCLOSED THE PROFIT ON SALE OF LAND AT RS.23 57 742. THEREFORE THE PARTICULARS OF INCOME HAD BEEN DISCLOSED TO THE DEPARTMENT. THE ASSESSEE DISC LOSED THE CORRECT INCOME WHICH ACCRUED ON SALE OF SUCH LAND. THEREFORE WE C ANNOT SAY THAT THE ASSESSEE FURNISHED ANY INACCURATE PARTICULARS OF INCOME ON S ALE OF SUCH LAND. THE ONLY DISPUTE IS WHETHER THE PROFIT ON SALE OF SUCH LAND IS EXEMPT AS SALE OF AGRICULTURAL LAND OR IT IS A BUSINESS INCOME. THIS DIFFERENCE OF OPINION BETWEEN THE ASSESSEE AND THE DEPARTMENT REGARDING EXEMPTION OF THE INCOME CANNOT BE AMOUNT TO FURNISHING OF INACCURATE PARTICULARS. AS SOON S THE MATTER WAS BROUGHT TO THE NOTICE OF THE ASSESSEE THE ASSESSEE ACCEPTED THE SAME AND PAID THE TAX. IN OUR OPINION WHETHER IT IS EXEMPTED INC OME OR NOT WOULD DEPEND UPON THE INTERPRETATION OF THE STATUTORY PROVISIONS AND IT WOULD NOT AMOUNT TO FURNISHING OF ANY INACCURATE PARTICULARS. THE CLAIM OF THE ASSESSEE FOR EXEMPTION OF ANY PART OF INCOME WOULD NOT AMOUNT TO FURNISHING ANY INACCURATE PARTICULARS OF INCOME. THE MATTER WOULD BE ENTIRELY DIFFERENT IN CASE THE ASSESSEE FURNISHED INACCURATE PARTICULARS. THEREFOR E THE MERE CLAIM THAT THE 5 PROFIT ON SALE OF LAND WAS EXEMPT SINCE THE LAND WA S AGRICULTURAL LAND WOULD NOT ATTRACT THE PROVISIONS OF SEC. 271(1)(C). A SIMILAR VIEW WAS TAKEN BY THE RAJASTHAN HIGH COURT IN CHANDRAPAL V. ITAT (2003) 2 61 ITR 67. 6. WE HAVE ALSO CAREFULLY GONE THROUGH THE JUDGMENT OF THE APEX COURT IN THE CASE OF K.P. MADHUSUDAN (SUPRA). IN THE CASE BE FORE THE APEX COURT THE ASSESSEE AGREED FOR ADDITION OF ADDITIONAL INCOME O F RS.93 000. THE ASSESSEE CLAIMED THAT THE ASSESSEE AGREED FOR THE ADDITION I N ORDER TO PURCHASE PEACE WITH THE DEPARTMENT. IN THOSE CIRCUMSTANCES AFTER REFERRING TO THE EXPLANATION TO SEC. 271(1)(C) THE APEX COURT FOUND THAT BY REA SON OF THE EXPLANATION TO SEC. 271(1)(C) OFFERING ADDITIONAL INCOME TO BUY P EACE WOULD NOT ABSOLVE THE ASSESSEE FROM LIABILITY FOR PENALTY. IN THE CASE BE FORE US IT IS NOT A CASE OF MERE AGREEMENT FOR ASSESSMENT OF ADDITIONAL INCOME. THE ASSESSEE HAD ALREADY DISCLOSED THE PROFIT ON SALE OF THE LAND AND CLAIME D EXEMPTION. IT IS THE DUTY OF THE ASSESSING OFFICER TO APPLY THE CORRECT PROVISIO NS OF LAW AND COMPUTE THE TAX THEREON. IN THOSE CIRCUMSTANCES IN OUR OPINION TH E JUDGMENT IN THE CASE OF K.P. MADHUSUDANAN (SUPRA) MAY NOT BE OF ANY ASSISTA NCE TO THE REVENUE. 7. WE HAVE ALSO CAREFULLY GONE THROUGH THE JUDGMENT OF THE APEX COURT IN THE CASE OF G.C.AGARWAL (SUPRA). IN THAT CASE THE QUESTION WAS WHETHER THE DIFFERENCE BETWEEN THE TAX ON THE INCOME SHOWN IN T HE FIRST RETURNS AND THE TAX ON THE INCOMES ASSESSED SHALL BE TAKEN AS THE AMOUN T OF TAX THAT WOULD HAVE BEEN AVOIDED. WE FIND THAT THE FACTS OF THE PRESENT CASE ARE DIFFERENT FROM THE FACTS OF THE CASE BEFORE THE APEX COURT. THEREFORE IN OUR OPINION THIS JUDGMENT OF THE APEX COURT IS ALSO NOT APPLICABLE T O THE FACTS OF THE CASE ON OUR HAND. 6 8. IN VIEW OF THE ABOVE WE DO NOT FIND ANY INFIRMI TY IN THE ORDER OF THE LOWER AUTHORITY. ACCORDINGLY THE SAME IS CONFIRMED. 9. IN THE RESULT THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 29-1-10. SD SD (CHANDRA POOJARI) (N.R.S.GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD 29TH JANUARY 2010. RRRAO. COPY OF THE ORDER FORWARDED TO:- 1. M.K.F. CONSTRUCTIONS PVT. LTD. 6-3-833/A/1 501 I MPERIAL PLAZA SOMAJIGUDA HYDERABAD 500 082. 2. DY. CIT CIRCLE 16(2) HYDERABAD. 3. CIT IV HYDERABAD. 4. CIT (A) V HYDERABAD. 5. DR ITAT HYDERABAD.