Ravish Kumar, Delhi vs Assessee

Ravish Kumar, ITO, Prop.M/s. Ravi Drug Store, Ward-28(4) 3351, Bazar Sitaram, Vs. Drum Shape Building, Delhi New Delhi PAN:AANPL3573D (Appellant) (Respondent)

Appellant by : Sh. Anup Sharma, Adv. Respondent by : Sh. Vikram Sahay, Sr. DR

ORDER PER A. T. VARKEY, JUDICIAL MEMBER

This is an appeal arsing from an order of ld CIT(A), XXV, New Delhi dated

12.02.2013 for Assessment Year 2009-10.

2. Brief facts of the case are that the assessee is the proprietor of M/s Ravi

Drug Store and is engaged in the business of chemist. The assessee had filed the

returned income of Rs.2,52,440/-. The case was taken up for scrutiny and it was

found by the AO that the assessee did not declare the long term capital gain of

Rs.6,77,840/- and the bank interest of Rs.5,191/- and accordingly, the AO had

made the additions. The AO had also initiated the penalty proceedings and

had also levied the minimum penalty @ 100% of Rs.1,75,090/- u/s 2741(1)(c) of

the Income Tax Act, 1961 (herein after 'the Act') vide the order of the AO, which

has been confirmed by the ld CIT(A) on the grounds that the assessee has not

been able to explain as to why the long term capital gain and the bank interest

was not declared in the return of income.

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3. Before us the ld AR submitted that the ld Commissioner of Income Tax

(Appeals), XXV, New Delhi (CIT(A) in his order dated 12.02.2013 has erred in

confirming the penalty of Rs.1,75,090/- imposed by the assessing officer vide

order dated June 29,2012 under Section 271(1)(c) of the Act, by not

appreciating the bonafide and reasonable explanation submitted by the

appellant and not commenting on the submission made by the appellant vide

written submissions filed vide letter dated 11.02.2013.

4. Ld DR relied on the order of the ld CIT(A).

5. We have considered the rival submissions and perused the records and

we find that as per AIR information received by the department, the assessee

had sold the property for Rs.50,00,000/-. The assessee was then asked to explain

the property sale for RS.50,00,000/-, which was not shown in the return.

Thereafter, we find that vide letter dated 28.11.2011 and 07.12.2011, the

assessee admitted that there was long term capital gain on sale of the property,

which was computed at Rs.6,77,840/-. The computation of capital gain is as

under:-

"Sale price of property No.3248-3253, Kucha Hafij Banna, Hathi Khanna, Khadur Garh Road, Delhi ½ share Rs.25,00,000/-

Sale price of property No.3248-3253, Kucha Hafij Banna, Hathi Khanna, Bahadur Garh Road, Delhi ½ share Rs.12,50,000/-

Sale price of part of above property Retained by the other owner ½ share Rs.3,50,000/-

Total Rs.41,00,000/-"

6. From the aforesaid computation, it is evident that the AO, had information in respect of sale consideration of Rs.50 lakh out of which Rs.25 lakhs was the share of the assessee.

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7. However, there were two more sale of the property share of which

aggregated to Rs.16 lakhs. After considering the sale, gain has been computed

at Rs.6,77,840/-. In other words the gain finally assessed can reasonably be said

to have been computed on the basis of the sale consideration of the two

properties which have been voluntarily declared by the assessee during the

course of assessment proceedings. The AO has not commented on the

aforesaid voluntary surrender in the order imposing penalty. The penalty has

been levied on the ground that the said gain was not declared in the return.

However, having regard to the fact that the assessee is an individual, who is

running a business of a chemist and has filed the correct computation during

the proceedings when called upon to explain the credit of Rs.50 lakhs on sale of

property, the explanation by the assessee, that the balance addition on bank

interest of Rs.5,191/- was left out by the assessee on the ground over-sight as

stated in the order of assessment is probable. In view thereof we are inclined to

delete the penalty.

8. In the result the appeal allowed.

Order pronounced in the open court on 17.02.2015.

-Sd/- -Sd/- (G. D. AGARWAL) (A. T. VARKEY) VIDE PRESIDENT JUDICIAL MEMBER Dated:17/02/2015 A K Keot

Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT Page 4 of 4

ASSISTANT REGISTRAR ITAT, New Delhi