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Penalty imposed on Assessee based on his own admission cannot be deleted on the basis of a plea which is merely an afterthought

The contention of the assessee that the payments in question were made to the builder not in the assessment year 2008-2009, but in the earlier years has been rightly rejected by the CIT because, firstly, the payments made in the earlier years if any related to purchase of flat No. B-92 on the 9th floor and not in respect of flat No.A-46 on the 4th floor. If the amounts paid on 07.03.2008 were infact paid in the earlier years, the same would have found place in the agreement dated 07.03.2008.

HIGH COURT OF BOMBAY

Laxmichand Jagshi Vora

versus

Commissioner of Income-tax

WRIT PETITION NO. 1399 OF 2012

OCTOBER  29, 2012

JUDGMENT

J.P. Devadhar, J.

The petitioner is aggrieved by the order passed by the CIT on 28.02.2012 under Section 264 of the Income Tax Act, 1961 (for the short ‘Act’) whereby the revision application filed in connection with an addition made in the assessment order under Section 143(3) dated 27.12.2010 has been rejected.

2. The assessment year involved herein is A.Y. 2008-2009.

3. For the assessment year in question, the return of income was filed by the assessee declaring total income of Rs. 99,489/- on which tax paid was Nil.

4. In the scrutiny assessment proceedings for the assessment year 2008-2009 pursuant to a query raised by the Assessing Officer (A.O.), the assessee by his letter dated 10.12.2010 specifically informed the A.O. that no immovable property was sold or purchased during the assessment year in question. When confronted with the information received from the office of the Sub-Registrar, Thane, the assessee by its letter dated 23.12.2010 admitted to have purchased Flat No. A-46 by paying cash amount of Rs. 9,74,775/-. By the said letter, the assessee offered to pay tax on the entire cash amount of Rs. 9,74,775/- paid to the developer and also agreed to pay tax on the amount of the stamp duty and the registration charges paid thereon. In accordance with the above statement, the assessment order was passed on 27.12.2010 and after initiating penalty proceedings, penalty under Section 271(1)(c) of the Act was imposed by order dated 22.06.2011.

5. On 03.10.2011, the assessee filed an application under Section 264 of the Act by stating that the addition of Rs. 9,74,775/- was not justified as that amount was not paid to the builder in the assessment year 2008-2009, but was paid to the builder during the period from 22.05.1994 to 04.05.2008. Since, the documentary evidence to that effect could not be traced out at the relevant time and the same are now traced out, the assessee requested the CIT to reduce the addition of Rs. 9,74,775/- which was added in the assessment order for AY 2008-2009.

6. By the impugned order, the CIT has rejected the application. Hence, the present writ petition.

7. The grievance of the assessee is that since the evidence regarding the payment of Rs. 9,74,775/- in the earlier years was not readily available, the assessee had erroneously stated that the said amount was paid in cash in the assessment year in question. As the documents now traced out clearly establish that the statement made by the assessee in his letter addressed to the Assessing Officer was erroneous, the CIT ought to have allowed the revision application filed by the assessee. According to the petitioner, the flat no: A-46 was allotted to him in lieu of payments made by him during the period from 1994 to 2008 in respect of flat no:B-92 and therefore, the addition of the said amount AY 2008-2009 is unjustified.

8. We see no merits in the above contention. From the order of the CIT, it is seen that there is total inconsistency in the stand of the assessee at every stage. Initially, when asked as to whether any immovable property was purchased or sold in the assessment year 2008-09, the assessee by his letter dated 10.12.2010 denied to have purchased or sold any immovable property in the assessment year in question. When confronted with a copy of the agreement dated 07.03.2008 received from the office of the Sub-Registrar, Thane, the assessee came round and by its letter dated 23.12.2010 voluntarily offered to pay tax on the amount of Rs. 9,74,775/- paid in cash to the builder as also the stamp duty and registration charges borne by the assessee. Accordingly, the assessment order was passed.

9. The contention of the assessee that the payments in question were made to the builder not in the assessment year 2008-2009, but in the earlier years has been rightly rejected by the CIT because, firstly, the payments made in the earlier years if any related to purchase of flat No. B-92 on the 9th floor and not in respect of flat No.A-46 on the 4th floor. If the amounts paid on 07.03.2008 were infact paid in the earlier years, the same would have found place in the agreement dated 07.03.2008. It is relevant to note that on 04.03.2008 (page 62 of the Petition) the assessee claims that there was corrigendum letter issued by the builder to the effect that flat No. A-46 on the 4th floor is being allotted to the assessee, in lieu of flat no. B-92 on the 9th floor as per the earlier allotment letter dated 22.05.1994. If the corrigendum letter was issued on 04.03.2008, then the same would have found place in the agreement, which was executed on 07.03.2008. In the absence of any indication in the agreement dated 07.03.2008 to the effect that the payments made prior to the assessment year 2008-09 is the consideration paid for the flat No: A-46, it is impossible to accept oral contention of the assessee which is contrary to the document on record. Moreover, if the corrigendum letter was infact issued by the builder 04.03.2008 to the effect that flat No.A-46 was issued in lieu of flat No.B-92, the assessee would not have admitted by his letter dated 23.12.2010 that the consideration for flat No:A-46 under agreement dated 07.03.2008 was paid in cash and offer that amount to tax. In view of the categorical admission on the part of the assessee that the amount of Rs. 9,74,775/- were paid in cash, in our opinion, the entire case sought to be made out by the assessee is only an afterthought and therefore, no fault can be found in the order of the CIT in rejecting the revision application of the assessee.

10. Counsel for the petitioner-assessee strongly relied upon the Judgment of the Gujarat High Court in the case of C. Parikh & Co. v. CIT [1980] 122 ITR 610. In our opinion, the said judgment has no relevance to the facts of the present case. In that case, admittedly over assessment was made due to the assessee’s mistake and accordingly it was held that the commissioner was empowered to grant relief. In the present case, facts on record suggest that the claim now made is contrary to the facts on record and clearly an afterthought. Hence, the decision of the Gujarat High Court in the case of C. Parikh & Co. (Supra) is distinguishable on facts.

11. Strong reliance was also placed by Counsel for the assessee on the decision of the Kerala High Court, in the case of Parekh Bros. v. CIT [1984] 150 ITR 105. In that case, deduction was not claimed during the assessment proceeding or appeals therefrom. In such a case, when an application was made under Section 264 of the Act, it was held that the CIT ought to have considered the claim of the assessee. In our opinion, the said decision has no bearing on the facts of the present case, as the documents now sought to be produced before the CIT do not in any way support the case of the assessee that the agreement dated 07.03.2008 related to purchase of flat No:A-46 in lieu of Flat No: B-92 which the assessee had agreed to purchase in the year 1994. Accordingly, the decision of the Kerala High Court is distinguishable on facts.

12. For the aforesaid reasons, we see no merits in the writ petition and the same is hereby dismissed.

Categories: Income Tax
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