Ita/63/2015 Of Satbir Nijjjer v. Comissioner Of Income Tax (Appeals)

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH ITA No.63 of 2015 (O&M)Date of decision: 18.1.2016 Satbir Nijjer Vs, .....- Appe Commissioner of Income lax (Appeals), Aayakar Bhawan, MaqboolRoad, Amritsar. ....mesponden 1. Whether Reporters of local papers may be allowed to see thejudgment?2. To be referred to the Reporters or not?YES3. Whether the judgment should be reported 1n the Digest? CORAM: HON’BLE MR. JUSTICE AJAY KUMAR MITTALHON’ BLE MRS. JUSTICE RAJ RAHUL GARG Present: Mr. B.B.Bagga, Advocate for the appellant-assessee,| Mr. Denesh Goyal, Advocate for the respondent-revenue. Ajay Kumar Mittal,J, 1]This appeal has been preferred by the appellant-assessee underSection 260A of the Income Tax Act, 1961 (in short, “the Act”) against theorder dated 23.5.2014, Annexure A.14 passed by the Income Tax AppellateTribunal, Amritsar Bench, Amritsar (in short, “the Tribunal’) in ITANo.579/(Asr)/2011 for the assessment year 2008-09, claiming followingsubstantial questions of law:- ‘‘1) Whether the income clearly exempted from ambit of IncomTax Act can constitute basis for claim of tax, interest, penalty,only on the ground that factum of non taxability of the sale proceeds, being outside the purview of capital gain as pernotification of Central Government was not known to theassessee at the stage of filing return under section 139 ofIncome Tax Act?notification of Central Government was not known to theassessee at the stage of filing return under section 139 ofIncome Tax Act? 11) Whether the facts and documents of the present case justifythe impugned orders?the impugned orders? 111) Whether the learned Commissioner of Income Tax(Appeals) has not grossly erred in failing to judiciouslyconsider the material question of non taxability of the saleproceeds as capital gain by also declining to remand back thematter to the Assessing Officer in exercise of the jurisdictionvested in the authorities below under section 250(4) ofIncome Tax Act and whether resultantly the impugned orderbeing made by material irregularity in exercise ofJurisdiction vested in the said authority under section 250(4)of Income Tax Act is sustainable in the eyes of law?(Appeals) has not grossly erred in failing to judiciouslyconsider the material question of non taxability of the saleproceeds as capital gain by also declining to remand back thematter to the Assessing Officer in exercise of the jurisdictionvested in the authorities below under section 250(4) ofIncome Tax Act and whether resultantly the impugned orderbeing made by material irregularity in exercise ofJurisdiction vested in the said authority under section 250(4)of Income Tax Act is sustainable in the eyes of law? iv) Whether the learned Appellate Tribunal has not grosslyerred in failing to judiciously consider the material questionof non taxability of the sale proceeds as capital gain by againdeclining to remand back the matter to the Assessing Officerin exercise of the jurisdiction vested in the authorities belowunder Rule 28 of Appellate Tribunal Rules, 1963 of IncomeTax and whether the consequently impugned order beingmade by material irregularity 1n exercise of jurisdictionvested in the said authority under Rule 28 of the AppellateTribunal Rules, 1963 of Income Tax 1s sustainable in theeyes of law?erred in failing to judiciously consider the material questionof non taxability of the sale proceeds as capital gain by againdeclining to remand back the matter to the Assessing Officerin exercise of the jurisdiction vested in the authorities belowunder Rule 28 of Appellate Tribunal Rules, 1963 of IncomeTax and whether the consequently impugned order beingmade by material irregularity 1n exercise of jurisdictionvested in the said authority under Rule 28 of the AppellateTribunal Rules, 1963 of Income Tax 1s sustainable in theeyes of law? | |A few facts relevant for the decision of the controversyinvolved as narrated in the appeal may be noticed. The appellant filed hisinvolved as narrated in the appeal may be noticed. The appellant filed his | |A few facts relevant for the decision of the controversyinvolved as narrated in the appeal may be noticed. The appellant filed hisinvolved as narrated in the appeal may be noticed. The appellant filed his income tax return for the financial year 2007-08 relating to assessment year2008-09 through his Chartered Accountant declaring gross income of4 2,24,44,720/- on 26.3.2009 though the due date was 31.7.2008 on account of the reasons beyond his control. Further, due to inadvertent error in theoffice of the Chartered Accountant of the appellant, the self assessed taxlability as reflected in the return was mentioned to the tune of|L63,71,260/-and qua the payment of tax again there was erroneous declaration as “paid”while it was not paid in the said income tax return. During the course ofsummary assessment under Section 143(1) of the Act, the Assessing Officerraised a demand ofLT67,31,828/- vide notice dated 20.10.2009, AnnexureA.2. The land of the appellant measuring 24 kanals 7 marlas in VillageMeharbanpur, Tehsil Amritsar, District Amritsar which was falling outsidethe notified 6 kilometers range from the municipal limits was sold for a totalconsideration ofan2.50 crores vide sale deed dated 25.3.2008, AnnexureA.3. According to the appellant, this land being outside 6 kilometers ofmunicipal limits is not capital asset as per section 2(14) of the Act asapplicable to the relevant date and proceeds of the sale in respect of the saidland are not subject to capital gain tax. The Assessing Officer treated theerror committed by the appellant as wrong verification in the return videimpugned notice dated 20.10.2009, Annexure A.2. The appellant was calledupon to deposit a sum of=a67,31,828/-. The Deputy Commissioner ofIncome Tax (DCIT) issued order of penalty under section 221(1) of the Actdated 30.12.2009, Annexure A.6. The appellant comphed with theimpugned order. Due to paucity of funds, there was also delay in filingappeal by the appellant. The order of the DCIT against penalty of |LT50 lacswas assailed by the appellant before the Commissioner of Income Tax(Appeals) [CIT(A)]. Subsequently, as per the notification regarding!exemption of the capital gain in respect of land of the appellant being 6 ITA No.63 of 2015 (O&M) kilometers of the municipal limits, it was noticed that no liability could befastened on the appellant. An application was moved by the appellant in thepending appeal. The CIT(A) dismissed the appeal of the appellant andpassed impugned order dated 7.10.2011 under Section 250(6) of the Act,Annexure A.7 confirming the penalty of=a50 lacs levied under section 221(1) of the Act vide penalty order dated 30.12.2009, Annexure A.6. The saidorder was challenged by the appellant before the Tribunal under Rule 47(1)of the Income Tax Rules, 1962 (in short, “the Rules’). During the pendencyof the appeal before the Tribunal, an application for rectification of theorder of the Assessing Officer under Section 154 of the Act was also filedon 3.2.2012, Annexure A.8 by the appellant before the Assessing Officerwhich was dismissed vide order dated 16.2.2012, Annexure A.9. Theappellant filed appeal against the said order before CIT(A) under Section250(6) of the Act. Vide order dated 15.1.2014, Annexure A.11, the appealwas dismissed by the CIT(A). Still not satisfied, the appellant filed appealbefore the Tribunal. An application for amendment of the grounds of appealwas also filed before the Tribunal. Vide order dated 23.5.2014, AnnexureA.14, the Tribunal dismissed both the appeal and the application filed by theappellant. Hence the instant appeal by the appellant-assessee. 3]We have heard learned counsel for the parties.4From the perusal of the impugned order passed by the Tribunal,we find that it has been rightly recorded by the Tribunal that 1f the returnhad been filed wrongly or any claim had been made wrongly or the assesseeafter filing the return under section 139(1) of the Act discovered anyomission or any wrong statement therein, he could have furnished a revised ITA No.63 of 2015 (O&M) 3]We have heard learned counsel for the parties.4From the perusal of the impugned order passed by the Tribunal,we find that it has been rightly recorded by the Tribunal that 1f the returnhad been filed wrongly or any claim had been made wrongly or the assesseeafter filing the return under section 139(1) of the Act discovered anyomission or any wrong statement therein, he could have furnished a revised ITA No.63 of 2015 (O&M) return at any time before the expiry of one year from the end of the relevantassessment year or before completion of assessment whichever was earlierunder section 139(5) of the Act. Alternatively, under Section 264 of the Act,the assessee could file a petition for revision within one year from the dateon which the order in question was communicated to him or the date onwhich he otherwise came to know of it whichever was earlier. The assesseechose not to adopt any of the options for getting the revision of the claim.The Tribunal concurred with the findings recorded by the CIT(A) and theAssessing Officer in rejecting the assessee'’s rectification applicationbecause the mistake sought to be amended was not prima facie mistake.Secondly the assessee was submitting corroborating evidence with therectification application which required investigation and verification andthus the same was outside the purview of the provisions of Section 154 ofthe Act. The relevant findings recorded by the Tribunal read thus:- “We have heard the rival contentions and perused the facts ofthe case. As regards the additional ground raised by theassessee at this juncture with regard to the mistake on the legaladvice of the counsel for the assessee who stated to haveincluded wrongly the capital gains, infact this 1s not properforum to revise the claim by taking the shelter of additionalground. If the return had been filed wrongly and claim had beenmade wrongly and the assessee after filing the return undersection 139(1) discovers any omission or any wrong statementtherein, he may furnish a revised return at any time beforeexpiry of one year from the end of the relevant assessment yearor before completion of assessment, whichever is earlier undersection 139(5) of the Act. Alternatively, under Section 264 ofthe Act, the assessee could file a petition for revision within oneyear from the date on which the order in question was communicated to him or date on which he otherwise came toknow of it, whichever is earlier. But the assessee just chose notto adopt any of the courses for getting the revision of theclaims. Therefore, the additional ground raised by the assesseecannot be admitted and therefore rejected. communicated to him or date on which he otherwise came toknow of it, whichever is earlier. But the assessee just chose notto adopt any of the courses for getting the revision of theclaims. Therefore, the additional ground raised by the assesseecannot be admitted and therefore rejected. 9.1 As regards other grounds, the order passed under section143(1) by the AO created a demand ofa67,31,830/- against theassessee, as the assessee did not deposit tax under section 140Aof the Act. The return of income in the present case was filed on26.3.2009 which was a belated return. The assessee had claimedas per column No.9(c) regarding tax paid 1.e. self assessment taxof|Ly63,31,260/- has been paid and tax payable as per columnNo.10 at page 2 of the return of income has been declared as nil,The case was processed under section 143(1) of the Act on20.10.2009 creating a demand ofLT67,31,828/- as the claim ofthe assessee regarding payment of self assessment tax of463,31,260/- was found to be wrong since no taxes have beenpaid and wrong verification in the return of Income was made,The intimation for the wrong and incorrect claim made by theassessee was given on 21.10.2009 to the assessee. Infact, theassessee submitted that the amount given to M/s Nijjer AgroFoods, a family concern unless 1s received back, no taxes andinterest can be paid by him. Such an explanation by the assesseecannot go to prove a good and sufficient cause for not payingtaxes under section 140 of the Act. After even sellingagricultural land in the year 2008, as mentioned herein above,the assessee preferred to investment in his own concern M/sNiyjer Agro Foods, instead of making payment of taxes toincome tax department which infact 1s a preferred liability,Therefore, again such account of the assessee cannot go provegood and sufficient cause for not levying penalty under section221(1) of the Act. As per Explanation 221(1), the assessee shallnot cease to be liable to any penalty merely by reason of the factthat before the levy of penalty he has paid to the tax. Infact, in the present case, the penalty under section 221(1) of the Act waslevied on 30.12.2009 on which date, the assessee was enjoyingthe money by investing the same in his sister concern 1n whichhe 1s stated to have incurred losses and by placing balance sheetof such company cannot help the assessee to prove good andsufficient cause and such action of investing money in the saidconcern M/s Niyjar Agro Foods appears to be quite intentionalfor avoiding preferred liability of income tax. Therefore, therecannot be any good and sufficient cause established before anyof the authorities below or even before us for not levyingpenalty. 9.2. In the facts and circumstances of the case, we find noinfirmity in the order of the learned CIT(A) who has actuallyconfirmed the levy of penalty under section 221(1) of the Act.Thus, grounds | to 3 of the assessee are confirmed and theappeal is dismissed, 10. Now we take up appeal of the assessee in ITA No.187(Asr)/2014. The brief facts of the case are that the assessee filed anapplication under Section 154 of the Act dated 3.2.2012alongwith copy of letter dated 1.2.2012 with the report of theTehsildar I, Amritsar. The AO rebutted the case laws reliedupon on the plea that some case laws are not applicable beingquite distinguishable from the facts of the present case, whereasin all the stated case laws rectification was sought against orderunder section 143(1) of the Act. The AO after placing relianceon the following case laws, rejected the application undersection 154 being maintainable; 1)CIT vs. Keshri Metal P. Limited,(1999) 237 ITR 165 (SC) 2)Gammon India Limited vs. CIT(1995) 214 ITR 50 (Bom.) 3)T.S. Balaram ITO vs. Volkar Bros(1971) 82 ITR 50 (SC) 42CIT vs. Hero Cycles P. Limited,228 ITR 463 (SC) 10.1 The AO further held that rectification 1s not possible ifthe question 1s debatable. Mistake apparent from recordmust be obvious and patent mistake and not something which 1)CIT vs. Keshri Metal P. Limited,(1999) 237 ITR 165 (SC) 2)Gammon India Limited vs. CIT(1995) 214 ITR 50 (Bom.) 3)T.S. Balaram ITO vs. Volkar Bros(1971) 82 ITR 50 (SC) 42CIT vs. Hero Cycles P. Limited,228 ITR 463 (SC) 10.1 The AO further held that rectification 1s not possible ifthe question 1s debatable. Mistake apparent from recordmust be obvious and patent mistake and not something which can be established by a long drawn process of reasons onpoints on which there may conceivably be two opinions.Moreover, the documents outside the records and the law 1simpermissible when applying the provisions of section 154of the Act. 11. The learned CIT(A) confirmed the order of the AssessingOfficer. 12. We have heard the rival contentions and perused the factsof the case. The brief facts in the present case are that theassessee has suo moto filed his return dated 26.3.2009 forassessment year 2008-09 declaring total income of42,24,44,720/- comprising of salary ofa9 lacs, LTC gain of|L2,15,44,386/-, mcome from other sources at=a335/- andagricultural income for rate purposes ata11,46,465/-. Theabove LIC gain has been reflected on the transfer of hisagricultural holdings situated in village Meharbanpura,Tehsil Amritsar I, which later on claimed to be an agriculturalland situated beyond 6 kilometers from Amritsar Municipalcorporation limits and as such does not fall as a capital assetunder section 2(14) of the Act but has suo moto determinedhis self assessment tax liability of =a50 lacs. This return wasprocessed under section 143(1) on 20.10.2009 creating ademand of LC67,31,830/-. Later on the assessee soughtreversal of his returned income claiming exempt LIC gainwhich has been erroneously shown by him. However, the AOhas rejected the rectification application being notmaintainable on the plea that the mistake sought to beamended is not a mistake apparent from record and thematter is outside the purview of rectification on points ofdebatable nature on which more than two opinions are likelyto be drawn, thereby deriving support from various case lawscited 1n support thereto. 12.1 We concur with the view of the learned CIT(A) that theAO is quite justified in rejecting the assessee's rectification application because the mistake sought to be amended is nota prima facie mistake. Secondly, the assessee 1s submittingcorroborating evidence with the rectification applicationwhich requires investigations and verification and as such thesame 1s outside the purview of provisions of section 154 ofthe Act. However, the correct course would have been byseeking remedy by moving revision application under section264 before the CIT II Amritsar soliciting for revision of orderpassed under section 143(1) of the Act or by filing revisedreturn. 12.2 As regards to the various Tribunal's decisions cited bythe learned counsel in support of his contention, the same areof little help as the issue in question 1s quite debatable onwhich more than two opinions could be drawn and secondlythe additional evidence filed alongwith the rectificationapplication requires long drawn investigations andverification. Accordingly, the matter is quite outside thepurview of provisions of section 154 of the Act being not aprima facie mistake apparent from record. 12.3 Accordingly, in view of our findings in ITA No.579/(Asr)/2011 herein above in assessee’'s Own case and oufindings herein above, we find no infirmity in the order ofthe learned CIT(A) who has rightly confirmed the action ofthe AO. Thus, all the grounds of the assessee are dismissed.” Incidentally, it may be noticed that learned counsel for the appellant-assessee had relied upon judgments reported in Sanchit Software andSolutions P. Limited vs. Commissioner ofIncome Tax and others,(2012)349 ITR 404 (Bom.),Commissioner ofIncome Tax vs. Mitesh Impex,‘TaxAppeal No.2562 of 2009 decided on 2.4.2014 (Ahmedabad), |JuteCorporation of India Limited vs. Commissioner of Income Tax andanother,AIR 1991 SC 241 and|The Commissioner of Income Tax UP, 12.3 Accordingly, in view of our findings in ITA No.579/(Asr)/2011 herein above in assessee’'s Own case and oufindings herein above, we find no infirmity in the order ofthe learned CIT(A) who has rightly confirmed the action ofthe AO. Thus, all the grounds of the assessee are dismissed.” Incidentally, it may be noticed that learned counsel for the appellant-assessee had relied upon judgments reported in Sanchit Software andSolutions P. Limited vs. Commissioner ofIncome Tax and others,(2012)349 ITR 404 (Bom.),Commissioner ofIncome Tax vs. Mitesh Impex,‘TaxAppeal No.2562 of 2009 decided on 2.4.2014 (Ahmedabad), |JuteCorporation of India Limited vs. Commissioner of Income Tax andanother,AIR 1991 SC 241 and|The Commissioner of Income Tax UP, Lucknow vs. The Kanpur Coal Syndicate, Kanpur,AIR 1965S SC 325.Suffice it to observe that the proposition of law expounded thereunder 1sunexceptionable but the said pronouncements were based on the factualmatrix involved therein which 1s different from the present case. Thus, noadvantage can be derived by him therefrom, 4]The concurrent findings recorded by the authorities below havenot been shown to be illegal or perverse in any manner warrantinginterference by this Court. Consequently, no substantial question of lawarises. [he appeal stands dismissed. (Ajay Kumar Mittal)Judge January 18, 2016@?&@ (Ray Rahul Garg)Judge