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आयकर अपीऱीय अधिकरण “ए” न्यायपीठ मुंबई में। IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, MUMBAI BEFORE SHRI R. C. SHARMA, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER आमकय अऩीर सं./I.T.A. No.7476/Mum/2011 (नििाारण वषा / Assessment Late Smt. Leelabai Phadke (Legal heir – Ramchandra Phadke) बिाम/ Thosar Wada, Brahman Ali, P. O. Vs. Papdy, Taluka – Vasai, DistrictThane स्थामी रेखा सं ./ जीआइआय सं ./ PAN/GIR No. (अऩीराथी /Appellant)

Year: 2004-05) Asst. CIT, Circle-2, Thane

ANCPP 7999 L (प्रत्मथी / Respondent)

:

अऩीराथी की ओय से / Appellant by

:

Shri Anil Sathe

प्रत्मथी की ओय से/Respondent by

:

Shri T. A. Khan

:

10.07.2017

सन ु वाई की तायीख / Date of Hearing घोषणा की तायीख / Date of Pronouncement

:

08.09.2017

आदे श / O R D E R Per R. C. Sharma, A. M.: This is an appeal filed by the assessee against the order by the ld. CIT(A)I, Thane dated 25.06.2011 for the assessment year (A.Y.) 2004-05.

2.

The ground raised by the assessee read as under: 1. The learned Commissioner of Income Tax (Appeals) erred in confirming the penalty u/s. 271(1)(c) of the Income Tax Act of Rs.7,41,270/-.

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ITA No. 7476/Mum/2011 (A.Y. 2004 -05) Late Smt. Leelabai Phadke vs. Asst. CIT

3. Facts in brief are that the assessee was head of the family after the death of her husband. She had filed her return of income for A.Y. 2004-05 showing capital gains on their property deal with Shri Arun G. Vartak vide MOU dtd. 26-05-03. A survey was conducted on the premises of Shri Arun G. Vartak , wherein it was noticed that certain amount was paid to Smt. Leelabai V. Phadke. At that time the assessee was alive. During the course of assessment proceedings, the legal heir filed a revised return showing additional capital gains and paid the taxes due on the above capital gains. The legal heir in order to buy peace of mind also paid voluntarily the taxes and part of the interest to keep the respect of their deceased mother.

4. AO also levied penalty u/s 271(1)(c) with regard to the income offered in the revise return. 5. By the impugned order, CIT(A) confirmed the action of the AO against which assessee is in further appeal before us. 6. Learned AR relied on the order of Punjab and Haryana High Court 174 Taxman 317, wherein Hon’ble Court held as under:The assessee had filed his return of income Tor the relevant assessment year declaring certain income. Subsequently, on an information received from the Investigation Wing that the assessee had acquired a property in the relevant assessment year for a consideration of Rs. 5,06,250 which remained undeclared, the Assessing Officer issued a notice under section 148 In the meanwhile, the assessee had expired and, accordingly, his legal heir (his wife) filed return of income in response to above said notice She expressed her unawareness about source of investment made in the said property and. therefore, the income declared in the revised return in- eluded the amount of investment in the aforesaid property. The Assessing Officer completed

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ITA No. 7476/Mum/2011 (A.Y. 2004 -05) Late Smt. Leelabai Phadke vs. Asst. CIT

assessment accepting revised return and also levied penalty under section 27I(1)(C) on the assessee on the ground that the investment in the property had riot been declared in original return. On appeal, the Commissioner (Appeals) upheld the imposition of penalty On second appeal, !he Tribunal directed the Assessing Officer to delete the penalty holding that it was a case of bonafide disclosure made not merely to avoid consequences of law, but also with a view to avoid litigation. On revenue's appeal : The Tribunal (tad found as a matter of fact that in response to notice issued under section 148. the legal heir of the assessee, i.e., his wife herself had filed the revised return of income As the assessee had died, the legal heir, being unaware of the sources of investment, filed return of income including the impugned amount only to demonstrate her bona fides and willingness not lo prolong any litigation with the revenue Therefore. the disclosure made by the legal heir of the assessee was bonafide and voluntary with a view to avoid litigation and therefore, deletion of penalty tinder section 27l(1)(c) was justified. 7. Reliance was placed on the decision of Cochin Bench in the case of Late S Varadarajulu in ITA No.361 to 366/Coch/2011. Reliance was also placed on the decision of ITAT Pune Bench in case of Late Ramchandra M Jhamtani in ITA No.1519/PN/2012 wherein Tribunal held as under:Penalty u/s 271 (l)(c)—Concealment of income or inaccurate particulars of income—Assessee-individual filed return on 24th October 2007, declaring total income of Rs.l,08,73,528 which inter-alia, included incomes under head "House Property", "Bus/ness Income", "Capital Gains" as well as "Income From Other Sources"—Assessee expired on 30th December 2007 and subsequently on 22nd January 2009, survey action u/s 133A was carried out at business premises of "X", son of deceased assessee—During course of survey, development agreement duly registered on 22nd February 2007, was found which was entered by deceased assessee with others in respect of sale of land—Legal heir of deceased admitted that there was short term capital gain of Rs.l.20 crores for which he filed revised return on 20th March 2009, declaring total income of Rs.2,28,73,530 which, inter-alia, included short term capital gain on sale of land which was hitherto not declared in original return of income filed by deceased assessee—Returned income was accepted—Subsequently, AO held that assessee was guilty of furnishing of inaccurate particulars of income qua non-declaration of short term capital gain on land in original return within

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ITA No. 7476/Mum/2011 (A.Y. 2004 -05) Late Smt. Leelabai Phadke vs. Asst. CIT

meaning of section 271(l)(c)—Accordingly AO imposed penalty of Rs.47,37,93O u/s 271(l)(c)-CIT(A) deleted penalty-Held, it was case of bonafide disclosure done by legal heir with respect to income transacted by assessee himself during his life time—Under those circumstances it could not be said assessee had deliberately made incorrect particulars of income in original return of income qua impugned transaction—Assessee having expired on 30th December 2007, had no chance of carrying through h:s explanation, if any-Even Revenue had not lead any material to point out reasons weighing with assessee to do so in original return to invite penal provision of section 271(l)(c)— Thus, CIT(A) made no mistake in deleting penalty imposed u/s 271(l)(c). Impugned order affirmed—Revenue's appeal dismissed 8. On the other hand, learned DR relied on the order of the lower authorities. 9. We have considered rival contentions and carefully gone through the orders of the authorities below. From the record, we found that legal heir of the assessee has bonafidely offered the income which was alleged to be received by the deceased assessee. The legal heir of the assessee has also paid tax on the additional income so offered. The legal heir was not aware of what has been happened in the past while his mother was alive and subsequently it was found during course of search after the death of mother that she had received some cash money on sale of property. Such on money offered by legal heir and due taxes thereon also paid by legal heir. Under these facts and circumstances, levy of penalty u/s.271(1)(c) is not warranted on the legal heir. The issue under consideration is squarely covered by the decision of Punjab and Haryana High Court wherein under similar facts and circumstances, it was held that as the assessee is died, legal heir being unaware of source of investment, filed return of income including the impugned amount only to demonstrate bonafides and willingness and not to prolong any litigation with the revenue. Therefore, the

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ITA No. 7476/Mum/2011 (A.Y. 2004 -05) Late Smt. Leelabai Phadke vs. Asst. CIT

disclosure made by the legal heir of the assessee was bonafide and voluntary with a view to close litigation. Under these facts and circumstances, no penalty is warranted u/s.271(1)(c). As the facts and circumstances are parametria in the instant case, respectfully following the decision of Punjab and Haryana High Court, we do not find any merit for the penalty so imposed u/s.271(1)(c). 10. In the result, appeal of assessee is allowed. Order pronounced in the open court on 08/09/2017 Sd/(AMARJIT SINGH) JUDICIAL MEMBER भुंफई/Mumbai; ददनांक/Dated :

Sd/(R. C. SHARMA) ACCOUNTANT MEMBER 08/09/2017

व.नन.स./Roshani, Sr. PS

आदे श की प्रनिलऱपप अग्रेपषि/Copy of the Order forwarded to : 1. अऩीराथी / The Appellant 2.

प्रत्मथी / The Respondent

3.

आमकय आमुक्त(अऩीर) / The CIT(A)

4. 5. 6.

आमकय आमुक्त / CIT - concerned

ववबागीम प्रनतननधध, आमकय अऩीरीम अधधकयण, भुंफई / DR, ITAT, Mumbai गार्ड पाईर / Guard File

आदे शािसार/ BY ORDER, उप/सहायक पुंजीकार (Dy./Asstt. Registrar)

आयकर अपीऱीय अधिकरण, भंफ ु ई / ITAT, Mumbai