AVAN J MISTRI, MUMBAI V. ITO 15(1)(1), MUMBAI

ITA 114/MUM/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9510 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 04-07-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 07-01-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: J D MISTRI
• Assessee Lawyers: V VIDHYADHAR
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Bonafide belief
• Section: 50C

Judgement Text

P A G E | 1 ITA NO. 114/MUM/2015 MRS. AVAN J. MISTRI VS. ITO IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI G.S.PANNU , AM AND SHRI RAVISH SOOD, JM ./ I.T.A. NO.114 /MUM/201 5 ( / ASSESSMENT YEAR: 2008 - 09 ) MRS. AVAN J. MISTRI MEHERWAN MANSION 59 NAPEANSEA ROAD, MUMBAI 400 006. / VS. INCOME TAX OFFICER - 15(1)(1) AAYAKAR BHAVAN, MUMBAI 400 050. ./ ./ PAN/GIR NO. AKJPM1572C ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI J.D MISTRI, A .R / RESPONDENT BY : SHRI V. VIDHYADHAR, D.R / DATE OF HEARING : 07/09 /2017 / DATE OF PRONOUNCEMENT : 15 /09/2017 / O R D E R PER RAVISH SOOD, JUDICIAL MEMBER: THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER PASSED BY THE CIT(A) - 26, MUMBAI, DATED 24.10.2014 , WHICH IN ITSELF IS DIRECTED AGAINST THE PENALTY IMPOSED BY THE A.O U/S. 271(1)(C) OF THE INCOME TAX ACT, 1961, (FOR SHORT ACT), DATED 20.11.2013 . T HE P A G E | 2 ITA NO. 114/MUM/2015 MRS. AVAN J. MISTRI VS. ITO ASSESSEE ASSAILING THE ORDER OF THE CIT(A) HAD RAISED THE FOLLOWIN G GROUNDS OF APPEAL: - THIS APPEAL IS AGAINST THE ORDER DATED 24.10.2014 OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 26, MUMBAI, (HEREINAFTER REFERRED TO AS THE 'CIT(A)') I N APPEAL AGAINST ORDER DATED 20.11.2013 U/S 271(1 )(C) OF THE INCOME - TAX ACT, 1961, PASSED BY THE INCOME - TAX OFFICER - 15(1)(1), MUMBAI (HEREINAFTER REFERRED TO AS 'THE A.O ') AND RELATES TO THE ASSESSMENT YEAR 2008 - 09. THE UNDERMENTIONED GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO ONE ANOTHER: - 1. THE CIT(A) ERRED IN UPHOLDING PENAL TY U/S 271(1)(C) OF RS 1,00,000/ - IN RESPECT OF ALLEGED LONG TERM CAPITAL GAINS ADDED TO THE INCOME OF THE APPELLANT CHARGEABLE TO TAX. 2. THE CIT(A) FAILED TO APPRECIATE INTER ALIA THAT IN THE INSTANT CASE NO CAPITAL ASSET BELONGING TO THE APPELLANT HAD BEEN TRANSFERRED BY HER AND HENCE: I. AS THE APPELLANT WAS NOT THE OWNER OF THE IMMOVEABLE PROPERTIES TRANSFERRED, NO CAPITAL GAINS AROSE IN HER HANDS DURING THE PREVIOUS YEAR, AND II. THE APPELLANT HAD NOT CONCEALED ANY PARTICULARS OF HER INCOME, NOR HAD SHE SUBMITTED ANY INACCURATE PARTICULARS OF INCOME, AND HENCE THE PROVISIONS OF U/S 271(1)(C) WERE NOT ATTRACTED IN THE PRESENT CASE. 3. THE CIT(A) FAILED TO APPRECIATE INTER ALIA THAT. ASSUMING FOR THE SAKE OF ARGUMENT THAT ANY CAPITAL GAIN AROSE FOR TAXATION IN THE HANDS OF THE APPELLANT, THE COMPUTATION OF CAPITAL GAINS (IF PROPERLY COMPUTED IN ACCORDANCE WITH LAW) RESULTED IN A LOSS AND HENCE NO PENALTY U/S 271(1)(C) OF THE ACT OUGHT TO HAVE BEEN LEVIED. 4. THE CIT(A) FAILED TO APPRECIATE INTER ALIA THAT, ASSUMING FOR THE SAKE OF ARGUMENT THAT ANY CAPITAL GAIN AROSE FOR TAXATION IN THE HANDS OF THE APPELLANT, AND THE COMPUTATION OF CAPITAL GAINS (IF PROPERLY COMPUTED IN ACCORDANCE WITH LAW) RESULTED IN A GAIN, SUCH GAIN AROSE BY VIRTUE OF THE APPLICATIO N OF THE DEEMING PROVISIONS OF SEC.50 C OF THE ACT, AND HENCE NO PENALTY U/S 271(1)(C) OF THE ACT OUGHT TO HAVE BEEN LEVIED. 5. THE CIT(A) FAILED TO APPRECIATE INTER ALIA THAT, ASSUMING FOR THE SAKE OF ARGUMENT THAT ANY CAPITAL GAIN AROSE FOR TAXATION IN THE HANDS OF THE APPELLANT, FOR THE REASONS SET OUT IN THE GROUNDS ABOVE, THE APPELLANTS VIEW THAT NO C HARGEABLE GAIN AROSE WAS A BONA FIDE VIEW DULY SUPPORTED BY LAW, AND HENCE NO PENALTY U/S 271(1)(C) OF THE ACT OUGHT TO HAVE BEEN LEVIED. P A G E | 3 ITA NO. 114/MUM/2015 MRS. AVAN J. MISTRI VS. ITO 6. THE LEARNED CIT (A) FAILED TO DEC IDE ANY OF THE GROUNDS OF APPEAL, ARGUMENTS URGED AND/OR CONTENTIONS RAISED BEFORE HIM WHILE DISPOSING OF THE APPEAL. 7. THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER OR OTHERWISE AMEND ALL OR ANY OF THE ABOVEMENTIONED GROUNDS OF APPEAL. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAD FILED HER RETURN OF INCOME ON 25.07.2008, DECLARING TOTAL INCOME AT RS.1,00,045/ - . THE RETURN OF INCOME WAS PROCESSED AS SUCH U/S 143(1) OF THE ACT . THE CASE OF THE ASSESSEE WAS TAKEN UP FOR SCRUTINY ASSESSMENT U/S 143(2) ON THE BASIS OF AIR INFORMATION. THAT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE A.O OBSERVED THAT A PLOT WHICH WAS OWNE D BY THE FATHER OF THE ASSESSEE, HAD AFTER HIS DEATH DEVOLVED UPON HIS LEGAL HEIRS INCLUDING TH E ASSESSEE, WHEREI N EACH OF THEM GOT ENTITLED TO 1/4 TH SHARE IN THE SAID PROPERTY. I T WAS OBSERVED BY THE A.O THAT ON SUBSEQUENT SALE OF PROPERTY THE ASSESSEE GOT A SUM OF RS.7,85,636/ - AS HER SHARE IN THE SALE CONSIDER A TION . THAT IN THE BACKDROP OF THE AFORESAID FACTS IT WAS OBSERVED BY THE A.O THAT THE ASSESSEE HAD NOT REFLECTED THE SAID SALE TRANSACTION IN HER RETURN OF INCOME. THE A.O ON THE BASIS OF HIS AFORESAID OBSERVATIONS THUS DID NOT FIND FAVOUR WITH THE SUBMISSIONS OF THE ASSESSEE FURNISHED BEFORE HIM DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, AND COMPUTED THE LONG TERM CAPITAL GAIN ON SALE OF THE PROPERTY IN THE HANDS OF THE ASSESSEE AT RS.6,28,508/ - . THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE A.O CA RRIED THE MATTER IN APPEAL BEFORE THE CIT(A). THE CIT(A) AS PER HIS ORDER DATED 13.08.2013 PARTLY ALLOWED THE APPEAL, DIRECTING THAT THE ASSESSEE WAS ENTITLED TO THE BENEFIT OF COST OF INDEXATION FROM 01. 04.1981 . IT WAS FURTHER OBSERVED BY THE CIT(A) THAT THE TOTAL CONSIDERATION RECEIVED ON THE SALE OF THE AFORESAID PROPERTY WAS ONLY RS.22,00,000/ - AND NOT RS.31,42,542/ - , IN WHIC H THE ASSESSEE WAS ENTITLED TO 1/4 TH SHARE. THUS ON THE BASIS OF THE AFORESAID OBSERVATIONS THE CIT(A) WORKED OUT THE SHARE IN THE SALE P A G E | 4 ITA NO. 114/MUM/2015 MRS. AVAN J. MISTRI VS. ITO CONSIDERATION IN THE HANDS OF THE ASSESSEE AT RS.5.50 LAC. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) FURTHER CARRIED THE MATTER IN A PPEAL BE FORE THE TRIBUNAL. THE T RIBUNAL VIDE ITS ORDER DATED 03.02.2017 IN ITA NO. 7460/MUM/2013, THEREIN ACCEPTED THE CONTENTION OF THE ASSESSEE THAT AS THE PROPERTY UNDER CONSIDERATION WAS SITUATED IN A DEVELOPED ZONE, THEREFORE, THE READY RECK O N E R RATE ON 01.04 .1981 FOR THE DEVELOPED VACANT LAND OF RS.60 PER SQ . MTR WAS TO BE ADOPTED , AS AGAINST THE RATE OF RS.12 PER SQ . M TR APPLICABLE TO UNDEVELOPED VACANT LAND , AS HAD BEEN TAKEN BY THE LOWER AUTHORITIES. THE TRIBUNAL THUS ACCEPTING THE AFORESAID CONTENTION OF THE ASSESSEE DIRECTED THE A.O TO TAKE THE MARKET VALUE OF THE PROPERTY AS ON 01.04.1981 , AS PER THE READY RECK ONE R VALUE FOR THE DEVELOPED VACANT LAND AND COMPUTE THE CAPITAL GAINS ACCORDINGLY. THAT PURSUANT TO THE AFORES A ID DIRECTIONS OF THE TRIBUNAL THE LONG TERM CAPITAL LOSS OF RS.5,01,461/ - WAS WORKED OUT IN THE HANDS OF THE ASSESSEE. 3. THAT DURING THE COURSE OF THE HEARING OF THE APPEAL IT WAS SUBMITTED BY THE LD. AUTHORIZED REPRESENTATIVE (FOR SHORT A.R) THAT NOW WHEN ON THE TRANSFER OF THE AFORESAID PROPERTY UNDER CONSIDERAT ION A LONG TERM CAPITAL LOSS HAD EMERGED IN THE HANDS OF THE ASSESSEE, THEREFORE, NO PENALTY U/S 271(1)(C) WAS LIABLE TO BE IMPOSED IN THE HANDS OF THE ASSESSEE. IT WAS FURTHER SUBMITTED BY THE LD. A.R THAT EVEN OTHERWIS E AS THE COMPUTATION OF LTCG IN THE HANDS OF THE ASSESSEE HAD EARLIER RESULTED ONLY BECAUSE OF THE APPLICABILITY OF THE DEEMING PROVISIONS U/S 50C, AND NOT OTHERWISE, THEREFORE , ON THE SAID COUNT ALSO THE ASSESSEE WAS NOT LIABLE TO BE SUBJECTED TO PENALTY U/S 271(1)(C). ALTERNATIVELY, IT WAS SUBMITTED BY THE LD. A.R THAT THE REASON FOR NOT SHOWING THE AFORESAID TRANSACTIONS BY THE ASSESSEE IN HER RETURN OF INCOME WAS BACKED BY THE FACT THAT SHE HAD REMAIN ED UNDER A BONAFIDE BELIEF THAT AS NO PART OF THE SAI D PROPERTY HAD BEEN P A G E | 5 ITA NO. 114/MUM/2015 MRS. AVAN J. MISTRI VS. ITO TRANSFERRED TO HER, THEREFORE, THE SAID TRANSACTION WAS NOT LIABLE TO BE REFLECTED IN HER PERSONAL RETURN OF INCOME. PER CONTRA, THE LD D.R. RELIED ON THE OR DER S OF THE LOWER AUTHORITIES. 4. WE HAVE HEARD THE AUTHORIZED REPRESENTATIVE S FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT PURSUANT TO THE ORDER PASSED BY THE COORDINATE BENCH OF THE TRIBUNAL, VIZ. ITAT, MUMBAI BENCH A, MUMBAI IN ITA NO. 7460/MUM/2013, A LONG TERM CAPITAL LOSS OF RS. 5,01,461/ - ON THE TRANSFER OF THE PROPERTY UNDER CONSIDERATION STANDS WORKED OUT IN THE HANDS OF THE ASSESSEE. WE ARE OF THE CONSIDERED VIEW THAT NOW WHEN THE SALE TRANSACTION OF THE AFORESAID PROPERTY HAD RESULTED INTO A LOSS, TH EREFORE, ON THE SAID COUNT I TSELF NO PENALTY U/S 271(1)(C) WAS LIABLE TO BE IMPOSED , FOR THE REASON THAT THE ASSESSEE HAD NOT SHOWN THE SAID SALE TRANSACTION IN HER RETURN OF INCOME. WE FURTHER FIND SUBSTANTIAL FORCE IN THE CONTENTION OF THE LD. A .R THAT E VEN OTHERWISE PRI O R TO THE ORDER OF THE TRIBUNAL, AS THE LONG TERM CAPITAL GAIN WAS WORKED OUT IN THE HANDS OF THE ASSESSEE BY TAKING THE DEEMED SALE CONSIDERATION AS PER SEC. 50C AT RS. 7,85,636/ - , AS AGAINST THE ACTUAL CONSIDERATION OF RS.5,50,000/ - , T HEREFORE, ON THE SAID COUNT ALSO THE ASSESSEE WAS NOT LIABLE TO BE VISITED WITH ANY PENALTY U/S 271(1)(C) . WE HAVE ALSO PERUSED THE FACTS OF THE CASE AND FIND OURSELVES TO BE IN AGREEMENT WITH THE CONTENTION OF THE ASSESSEE THAT THE AFORESAID TRANSACTION W AS NOT SHOWN BY THE ASSESSEE IN HER RETURN OF INCOME FOR THE REASON THA T SHE REMAINED UNDER A BONAFIDE BELIEF THAT AS THE PROPERTY WAS NOT TRANSFERRED IN HER NAME, THEREFORE, THE SAID SALE TRANSACTION PERTAINING TO THE ESTATE OF HER DECEASED FATHER WAS NOT LIABLE TO BE SHOWN IN HER PERSONAL RETURN OF INCOME . 5. WE HAVE PER U SED THE FACTS OF THE CASE AND ARE OF THE CONSIDERED VIEW THAT IN TOT ALITY OF THE FACTS INVOLVED IN THE PRESENT CASE, NO P A G E | 6 ITA NO. 114/MUM/2015 MRS. AVAN J. MISTRI VS. ITO PENALTY U/S 271(1)(C) WAS LIABLE TO BE IMPOSED IN THE HANDS OF THE ASSESSEE. WE THUS SET ASIDE THE ORDER OF THE CIT(A) AND QUASH THE PENALTY IMPOSED BY THE A.O U/S 271(1)(C) IN THE HANDS OF THE ASSESSEE. 6 . THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PR ONOUNCED IN THE OPEN COURT ON 15 .09.2017 SD/ - SD/ - (G.S.PANNU) (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; 15 .09.2017 PS. ROHIT KUMAR / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI P A G E | 7 ITA NO. 114/MUM/2015 MRS. AVAN J. MISTRI VS. ITO