Moha Narendra Gandhi , Hyderabad V. Income Tax Officer, Ward-12(5), Hyderabad

ITA 1156/Hyd/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 0736 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 04-06-2020
• Assessment Year: 2015-2016
• Appeal Filed On: 17-07-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S ANDEEP KUMAR MEHTA
• Assessee Lawyers: CLAIMING OF
• Keywords: Capital asset; Gift; Cost of acquisition; Capital Gains
• Section: 271(1)(c); 54EC

Judgement Text

ITA NO 1156 OF 2019 MOHA NARENDRA GANDHI HYDERABAD. PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B SMC BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NO.1156/HYD/2019 ASSESSMENT YEAR: 2015-16 SHRI MOHA NARENDRA GANDHI, HYDERABAD PAN: AORPG1905K VS. INCOME TAX OFFICER WARD 12(5) HYDERABAD (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI A SRINIVAS REVENUE BY : SRI SANDEEP KUMAR MEHTA, DR DATE OF HEARING: 04/06/2020 DATE OF PRONOUNCEMENT: 11/06/2020 ORDER THIS IS ASSESSEES APPEAL FOR THE A.Y 2015-16 AGAIN ST THE PENALTY ORDER U/S 271(1)(C) OF THE ACT CONFIRME D BY THE CIT (A)-1, HYDERABAD, DATED 6.6.2019. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A N EMPLOYEE OF M/S.RAIS ARIF MEMAN, BANGALORE, FILED H ER RETURN OF INCOME FOR THE A.Y 2015-16 ELECTRONICALLY ON 31.08. 2015, DECLARING AN INCOME OF RS.3,63,600/- COMPRISING OF SALARY, LTCG AND INCOME FROM OTHER SOURCES. THE CASE WAS SELECTE D TO SCRUTINY UNDER CASS ON THE GROUND OF LARGE DEDUCTION CLAIME D U/S 54B, 54C, 54D, 54G AND 54GA. THE AO OBSERVED THAT THE A SSESSEE HAD RECEIVED 2000 SHARES AS GIFT FROM HER FATHER WH ICH SHE HAS SOLD DURING THE YEAR AND HAS EARNED CAPITAL GAIN TH EREFROM BUT HAS CLAIMED PART OF THE CAPITAL GAIN AS EXEMPT U/S 54EC AND THE BALANCE OF CAPITAL GAIN HAS BEEN DEPOSITED INTO THE CAPITAL GAIN A/C. THE ASSESSEE HAD CLAIMED INDEXATION COST OF AC QUISITION AT ITA NO 1156 OF 2019 MOHA NARENDRA GANDHI HYDERABAD. PAGE 2 OF 5 RS.41,41,056/- FOR COMPUTING THE LONG-TERM CAPITAL GAIN. HOWEVER, DURING THE ASSESSMENT PROCEEDINGS THE ASSE SSEE WITHDREW THE COST OF ACQUISITION BY ADOPTING THE COST OF ACQUISITION AT RS.ZERO AND CALCULATED THE LTCG AND PAID THE TAXES THEREON. 3. FURTHER, WITH REGARD TO INTEREST INCOME EARNED B Y THE ASSESSEE, THE AO NOTICED THAT THOUGH THE ASSESSEE H AS EARNED SAVINGS BANK INTEREST OF RS.1,62,629/-, THE ASSESSE E HAD OFFERED ONLY RS.47,094/- TO TAX AS INCOME FROM OTHER SOURCE S. WHEN CONFRONTED, THE ASSESSEE OFFERED THE BALANCE OF INT EREST INCOME ALSO TO TAX AND PAID THE TAXES THEREON. THEREAFTER, THE ASSESSEE DID NOT PREFER ANY APPEAL TO THE CIT (A) AND THUS T HE ASSESSMENT ORDER HAS BECOME FINAL. 4. MEANWHILE THE AO INITIATED THE PENALTY PROCEEDIN GS U/S 271(1)(C) AND LEVIED THE MINIMUM PENALTY OF 100 % OF TAXES SOUGHT TO BE EVADED. ACCORDINGLY, THE PENALTY ORDER DATED 3.5.2018 WAS PASSED, AGAINST WHICH THE ASSESSEE PRE FERRED AN APPEAL TO THE CIT (A), WHO CONFIRMED THE ORDER AND THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS OF APPEAL: 1) THE LEARNED COMMISSIONER (APPEALS) ERRED IN CON FIRMING THE PENALTY LEVIED BY THE ASSESSING OFFICER. 2) THE LEARNED COMMISSIONER (APPEALS) DID NOT APPRE CIATE THE FACT THAT THE ASSESSEE HAS REALIZED THE MISTAKE IN CALCULATION OF CAPITAL GAINS EVEN BEFORE RECEIPT OF ANY SHOWN CAUSE NOTICE FROM THE ASSESSING OFFICER AND O FFERED TO PAY TAX. 3) THE LEARNED COMMISSIONER (APPEALS) FAILED TO APP RECIATE THE FACT THAT CALCULATION OF CAPITAL GAINS IS A CUM BERSOME PROCESS, THE ASSESSEE WAS NOT AWARE OF THE COST OF SHARES, SHE ACCEPTED THE MISTAKE VOLUNTARILY AND PAID THE A MOUNT OF DEMAND RAISED BY THE ASSESSING OFFICER. ITA NO 1156 OF 2019 MOHA NARENDRA GANDHI HYDERABAD. PAGE 3 OF 5 4) THE LEARNED COMMISSIONER(APPEALS) HAS NOT GIVEN ANY EMPHATIC FINDING IN HIS ORDER. HE HAS JUST QUOTED T HE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE APPELLA NT WITHOUT COMING TO A FAIR AND INDEPENDENT FINDING AS TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. 5) THE LEARNED COMMISSIONER(APPEALS) FAILED TO APPR ECIATE THE FACT THAT NON-FILING OF APPEAL AGAINST THE QUAN TUM ADDITION WILL NOT BE A GROUND FOR THE ASSESSING OFF ICER TO LEVY PENALTY. YOUR APPELLANT CRAVES LEAVE TO ADD, AMEND OR TO ALT ER THE ABOVE GROUNDS OF APPEAL. 5. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSEE HAS DECLARED LTCG ON SALE OF SHARES AN D HAS ALSO CLAIMED THE COST OF ACQUISITION WHICH WAS AFTER IND EXATION. HE SUBMITTED THAT U/S 55(2) OF THE ACT AND THE EXPLANA TION (B)(II) THEREUNDER, WHERE THE CAPITAL ASSET BECAME THE PROP ERTY OF THE ASSESSEE BY ANY OF THE MODES SPECIFIED IN SUB-SECTI ON (1) OF SECTION 49 AND THE CAPITAL ASSET BECAME THE PROPERT Y OF THE PREVIOUS OWNER BEFORE 1 ST OF APRIL, 2001 MEANS THE COST OF THE ASSET TO PREVIOUS OWNER OR THE RMV OF THE ASSET ARE 1-4-2001 AT THE OPTION OF THE ASSESSEE. IT WAS SUBMITTED THAT T HE ASSESSEES FATHER HAD ACQUIRED THE SHARES PRIOR TO 1-4-2001 ON WHICH BONUS SHARES WERE ALSO ALLOTTED TO HIM FOR WHICH HE INCUR RED THE COST OF ACQUISITION AND THEREAFTER 2000 SHARES WERE GIFTED TO THE ASSESSEE. THUS, THESE SHARES WERE ACQUIRED PRIOR TO 1.4.2001, THE COST OF ACQUISITION TO THE ASSESSEES FATHER IS THE COST OF INDEXATION TO THE ASSESSEE AND THE COST OF INDEXATION ALSO HAD TO BE ALLOWED. HE SUBMITTED THAT BY MISTAKE OR FOR WHATEVER REASON S, THE ASSESSEE HAD WITHDRAWN THE CLAIM OF COST OF ACQUISI TION DURING THE ASSESSMENT PROCEEDINGS AND HAD OFFERED THE ENTI RE GAINS TO TAX AND THE QUESTION OF FURNISHING OF INACCURATE PA RTICULARS DOES NOT ARISE. ITA NO 1156 OF 2019 MOHA NARENDRA GANDHI HYDERABAD. PAGE 4 OF 5 6. AS FAR AS THE INTEREST INCOME IS CONCERNED THE A SSESSEE STATED THAT BY MISTAKE, THE ASSESSEE HAD OFFERED ON LY A PART OF THE INCOME AND DURING THE ASSESSMENT PROCEEDINGS THE AS SESSEE HAD VOLUNTARILY OFFERED THE BALANCE OF INTEREST INCOME ALSO TO TAX. THEREFORE, ACCORDING TO HIM, IT IS A CLEAR CASE OF WITHDRAWAL OF THE ELIGIBLE CLAIM FOR WHICH THE ASSESSEE CANNOT BE FAU LTED AND PENALTY U/S 271(1)(C) COULD NOT HAVE BEEN LEVIED. 7. THE LEARNED DR, HOWEVER, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT WHEN THE ASSES SEE HAS ACQUIRED THE SHARES, THERE WAS NO COST TO THE ASSES SEE AND THEREFORE, THE ASSESSEE OUGHT NOT TO HAVE CLAIMED T HE COST OF ACQUISITION IN HER RETURN OF INCOME AND BY MAKING S UCH A CLAIM, SHE HAS FURNISHED INACCURATE PARTICULARS OF INCOME. THUS, HE PRAYED FOR CONFIRMATION OF PENALTY LEVIED U/S 271(1 )(C) OF THE ACT. 8. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, I FIND THAT THE ASSESSEES FATHER HAD AC QUIRED THE SHARES AND AFTER BEING ALLOTTED THE BONUS SHARES, T HE TOTAL NUMBER OF HIS SHARES WAS 5220, AND IT WAS OUT OF TH ESE 5220 SHARES, THAT THE ASSESSEE HAS BEEN GIFTED 2000 EQUI TY SHARES ON 14.11.2014. THUS, THE ASSESSEE HAS BEEN ALLOTTED SH ARES AFTER ALLOTMENT OF BONUS SHARES BY HER FATHER AND THEREFO RE, EXPLANATION 2 OF SECTION 55(2) WOULD DEFINITELY APP LY AS THE ASSESSEE HAS RECEIVED THE SHARES BY WAY OF GIFT. AS PER EXPLANATION 2 OF SUB-SECTION 2 OF SECTION 55, THE C OST OF ACQUISITION WHEREIN AN ASSET HAS BEEN ACQUIRED U/S 49(1) OF THE ACT, THEN THE COST OF ASSET TO THE PREVIOUS OWNER H AS TO BE CONSIDERED AS COST OF ACQUISITION AND THEREFORE, I DO NOT FIND THAT ANY INCORRECT CLAIM HAS BEEN MADE BY THE ASSESSEE B Y CLAIMING OF ITA NO 1156 OF 2019 MOHA NARENDRA GANDHI HYDERABAD. PAGE 5 OF 5 COST OF ACQUISITION. FOR WHATEVER REASONS DURING TH E ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS WITHDRAWN THE SAME AN D HAS ALSO PAID TAXES. I AM SATISFIED THAT THE CLAIM OF THE A SSESSEE I.E. THE CLAIM OF ACQUISITION WAS BONAFIDE AND THEREFORE, TH E PENALTY U/S 271(1) (C) IS NOT JUSTIFIED. 9. AS REGARDS THE SECOND ISSUE, I FIND THAT THE ASS ESSEE HAS EARNED INTEREST INCOME OF RS. 1,62,629/- THE AS SESSEE HAS NOT OFFERED THE ENTIRE INCOME TO TAX. THIS IS CERTAINLY A CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME AND THE ASSESSEE HAS NOT EXPLAINED AS TO WHY SHE DID NOT REPORT OR O FFER THE ENTIRE INTEREST INCOME TO TAX. THEREFORE, THE PENALTY TO T HE EXTENT OF INTEREST INCOME IS CONFIRMED. 10. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH JUNE, 2020. SD/- (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 11 TH JUNE, 2020. VINODAN/SPS COPY TO: 1 SHRI MOHA NARENDRA GANDHI C/O RAJU & PRASAD, C.AS , 401 DIAMOND HOUSE, ADJ. TO AMRUTHA HILLS, PUNJAGUTTA, HYDERABAD 500082 2 ITO WARD 12(5) AAYAKAR BHAVAN, HYDERABAD 500004 3 CIT (A)-1 HYDERABAD 4 PR. CIT 1 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER