DR. PRAKASH D.SAMANT, MUMBAI V. ASST CIT CEN CIR 3(2), MUMBAI

ITA 1166/MUM/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 9864 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 20-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LOVE KUMAR
• Assessee Lawyers: HARI S RAHEJA
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Period of limitation; Fair market value; Capital receipt
• Section: 143(3); 50C; 153A; 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH MUMB AI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH JUDICIAL MEMBER ITA NO. 1166/MUM/2017 (ASSESSMENT YEAR 2006-07 ) DR. PRAKASH D. SAMANT 1 ST FLOOR, SUNDARA NARAYAN NIWAS, PADMAVATI ROAD, OPP. IIT GATE, POWAI, MUMBAI-400076. PAN: AAEPS0065P VS. DCIT, CC- 3(2) ROOM NO. 402, 4 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020. APPELLANT RESPONDE NT APPELLANT BY : SHRI HARI S. RAHEJA (AR) RESPONDENT BY : SHRI LOVE KUMAR (DR) DATE OF HEARING : 19.09.2018 DATE OF PRONOUNCEMEN T : 26.09.2018 ORDERUNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THIS APPEAL BY ASSESSEE UNDER SECTION 253 OF INCOME -TAX ACT IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-51, MUMBAI DATED 28 .11.2016 FOR ASSESSMENT YEAR 2006-07, WHICH IN TURN ARISES FROM THE PENALTY LEVIED BY ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE AC T DATED 13.03.2015. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LD. CIT(A) ERRED IN CONFIRMING THE LEVY OF PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 AMOUNTING TO RS. 5,00,000/- ON THE GROUND OR GROUND S AS CONTAINED IN THE APPELLATE ORDER OR OTHERWISE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LD. CIT(A) ERRED IN NOT DECIDING ALL THE GROUNDS RAISED IN THE GROUN DS OF APPEAL AND THEREBY ERRED IN CONFIRMING THE LEVY OF PENALTY ON THE GROU ND OR GROUNDS AS STATED IN THE APPELLATE ORDER OR OTHERWISE. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LD. CIT(A) ERRED IN CONFIRMING THE LEVY OF PENALTY DESPITE THE FACT THAT THE LD. ASSESSING OFFICER HAS PASSED THE ORDER LEVYING PENALTY U/S 271(1)(C) MORE THAN ONCE. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LD. CIT(A) ERRED IN CONFIRMING THE LEVYING OF PENALTY DESPITE THE FA CT THAT THE ORDER PASSED BY ITA NO. 1166 MUM 2017-DR. PRAKASH D. SAMANT 2 THE LD. ASSESSING OFFICER IS BARRED BY LIMITATION A S PER THE PROVISIONS OF SECTION 275 OF THE INCOME TAX ACT, 1961. 2. BRIEF FACTS OF THE CASE ARE THAT A SEARCH AND SEIZU RE ACTION WAS CARRIED OUT IN THE SAMANT GROUP ON 30.05.2007. THE ASSESSEE IS THE MAIN PERSON OF THE SAMANT GROUP. CONSEQUENT TO THE SEARCH ACTION NOTIC E UNDER SECTION 153A DATED 4 TH OCTOBER 2007 WAS SERVED UPON THE ASSESSEE TO FILE RETURN OF INCOME. THE ASSESSEE IN RESPONSE TO THE NOTICE UNDE R SECTION 153A DATED 4 OCTOBER 2007, FILED HIS RETURN OF INCOME ON 1 ST NOVEMBER 2007 DECLARING TOTAL INCOME AT RS. 20,49,222/-. IN THE RETURN OF I NCOME FILED IN RESPONSE TO THE NOTICE UNDER SECTION 153A THE ASSESSEE DISCLOSE D ADDITIONAL INCOME OF RS. 14 LAKH ON THE BASIS OF SEIZED DOCUMENT AND THE ASSETS FOUND DURING THE COURSE OF SEARCH. THE ASSESSEE CLAIMED TO HAVE EARN ED LONG-TERM CAPITAL GAIN ON SALE OF TENANCY RIGHT OF RS. 14 LAKHS. THE ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDER UNDER SECTION 143(3) R WS 153A MADE THE ADDITION OF RS. 20,27,250/- ON ACCOUNT OF LONG TER M CAPITAL GAIN ON THE BASIS OF VALUATION BY GOVERNMENT VALUER. ON APPEAL BEFORE COMMISSIONER (APPEALS) THE ADDITION WAS UPHELD. AND ON FURTHER A PPEAL THE ADDITION WAS UPHELD BY TRIBUNAL IN ITS ORDER DATED 28.03.2014. T HE ASSESSING OFFICER INITIATED THE PENALTY ON THE ADDITION MADE BY ASSES SING OFFICER OF RS. 20,27,250/-. IN REPLY TO THE SHOW CAUSE NOTICE, THE ASSESSEE CONTENDED THAT THE TENANCY RIGHT IS TAXABLE ONLY AT THE TIME OF SA LE OF PROPERTY OR AT THE TIME RIGHT IS TRANSFERRED OR SURRENDERED. THE ISSUE IS D EBATABLE AND PENALTY SHOULD NOT BE IMPOSED. THE CONTENTION OF THE ASSESSEE WAS NOT ACCEPTED BY ITA NO. 1166 MUM 2017-DR. PRAKASH D. SAMANT 3 ASSESSING OFFICER HOLDING THAT HE ISSUE IS NOT DEBA TABLE AS THE TENANCY RIGHT IS A CAPITAL ASSET AND THE AMOUNT RECEIVED ON TRANS FER OR RELINQUISHMENT OF TENANCY IS CAPITAL RECEIPT WITHIN THE MEANING OF SE CTION 45 OF THE ACT. THE ASSESSING OFFICER CONCLUDED THAT THE 100% TAX SOUGH T TO BE EVADED ON ESCAPED INCOME IS RS. 4,54,915/- AND THE AMOUNT OF 300% TAX SOUGHT TO BE EVADED IS RS. 1364745/-. THE ASSESSING OFFICER LEVI ED THE PENALTY OF RS. 5,00,000/- IN HIS ORDER DATED 13.03.2015. ON APPEAL BEFORE COMMISSIONER (APPEALS) THE PENALTY ORDER WAS SUSTAINED. THEREFOR E, FURTHER AGGRIEVED BY THE ORDER OF LEARNED COMMISSIONER (APPEALS) THE ASS ESSEE HAS FILED PRESENT APPEAL BEFORE US. 3. WE HAVE HEARD THE SUBMISSIONS OF THE LEARNED AUTHOR ISED REPRESENTATIVE (AR) OF THE ASSESSEE AND LEARNED DEPARTMENTAL REPRE SENTATIVE (DR) FOR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECOR D. THE LEARNED AR OF THE ASSESSEE SUBMITS THAT THE PENALTY ORDER PASSED BY A SSESSING OFFICER IS BARRED BY LIMITATION AS PRESCRIBED UNDER SECTION 27 5 OF THE ACT. THE LEARNED AR FURTHER SUBMITS THAT TRIBUNAL PASSED THE ORDER O N THE QUANTUM ASSESSMENT APPEAL ON 28.03.2014. THE ASSESSING OFFI CER PASSED THE ORDER OF PENALTY ONLY ON 13 TH MARCH 2015. THE ASSESSING OFFICER OUGHT TO HAVE PASSED ORDER WITHIN SIX MONTHS FROM THE ORDER OF TR IBUNAL. THE LEARNED AR FURTHER SUBMITS THAT ORDER OF TRIBUNAL WAS SERVED U PON THE REVENUE ON 7 TH MAY 2015. THE ASSESSEE HAS OBTAINED PROOF OF SERVIC E OF ORDER OF TRIBUNAL FROM THE REGISTRY OF TRIBUNAL BY MAKING AN APPLICAT ION UNDER THE PROVISIONS ITA NO. 1166 MUM 2017-DR. PRAKASH D. SAMANT 4 OF RIGHT TO INFORMATION ACT. THE ASSESSEE WAS PROVI DED PROOF OF SERVICE OF ORDER OF TRIBUNAL UPON THE REVENUE VIDE LETTER (ORD ER) DATED 20 TH MAY 2015 INFORMING THAT THE ORDER OF TRIBUNAL DATED 28.03.20 14 WAS SERVED UPON THE REVENUE ON 7 TH MAY 2014 AND THEREFORE, THE ORDER OF PENALTY IS BA RRED BY PERIOD OF LIMITATION AS PRESCRIBED UNDER SECTION 27 5 OF THE ACT. 4. IN ALTERNATIVE SUBMISSION THE LEARNED AR SUBMITS TH AT EVEN ON MERIT THE ORDER OF PENALTY IS NOT SUSTAINABLE. IT WAS SUBMITT ED THAT THE COORDINATE BENCH OF THE TRIBUNALS AND DCIT VS. TRANS FREIGHT C ONTAINERS LTD. IN ITA NO. 2337/MUMBAI/2016 DATED 24 FEBRUARY 2017 HELD TH AT WHEN THE ASSESSING OFFICER MADE ADDITION BY INVOKING THE PRO VISION OF SECTION 50C, IN SUCH SITUATION ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF PARTICULARS OF INCOME. FURTHER IN DCIT VS. INDIAN EXTRADITION LTD IN ITA NO. 5758/MUM BAI/2016 DATED 22 ND NOVEMBER 2017 HELD THAT THE ADDITION MADE ON ACCOUN T OF DIFFERENCE OF SALE CONDITION CONSIDERATION AS PER THE PROVISION OF SEC TION 50C CANNOT BE A BASIS FOR LEVYING PENALTY UNDER SECTION 271(1)(C) . 5. ON THE OTHER HAND THE LEARNED AR FOR THE REVENUE SU PPORTED THE ORDER OF LOWER AUTHORITIES. THE LD. DR FURTHER SUBMITS THE A SSESSING OFFICER IN PARA 7 OF HIS ORDER OF PENALTY, HAS CLEARLY BROUGHT ON R ECORD THAT THE ASSESSEE CLAIMED THE LONG TERM CAPITAL GAIN ON RELINQUISHING THE TENANCY RIGHT AND CLAIMED OWNERSHIP RIGHT OF PROPERTY BY MAKING PAYME NT OF MEAGRE AMOUNT OF RS. 36,000/-. HOWEVER, THE FAIR MARKET VALUE AS PER THE GOVERNMENT ITA NO. 1166 MUM 2017-DR. PRAKASH D. SAMANT 5 VALUER IS RS. 20,62,250/- AND THE ASSESSING OFFICER MADE ADDITION OF RS. 20,27,250/- TOWARDS LONG TERM CAPITAL GAIN. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PAR TIES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE HAVE AL SO GONE THROUGH THE ORDER OF TRIBUNAL IN ASSESSEES CASE IN QUANTUM ASS ESSMENT PROCEEDING IN ITA NO. 4665/MUMBAI/2011 DATED 28 TH MARCH 2014. THE ADDITIONS ON ACCOUNT OF LONG TERM CAPITAL GAIN WERE CONFIRMED BY THE TRIBUNAL. THERE IS NO DISPUTE THAT THE ASSESSING OFFICER MADE THE ADDI TION OF LONG-TERM CAPITAL GAIN BY INVOKING THE PROVISIONS OF SECTION 50C. THE COORDINATE BENCH OF TRIBUNAL IN TRANS FREIGHT CONTAINERS LTD. (SUPRA) W HILE CONSIDERING ALMOST IDENTICAL FACTS HELD THAT THE ASSESSING OFFICER MAD E THE ADDITION BY INVOKING THE MAIN PROVISION OF SECTION 50C, HELD AS UNDER: 8. WE FIND THAT IN THE PRESENT CASE ALSO THE ASSESS EE HAS FURNISHED THE REGISTERED SALE DEED. THE ASSESSING OFFICER HAS MAD E THE ADDITION BY INVOKING DEEMING PROVISION OF SECTION 50C. NO CASE HAS BEEN MADE OUT ANY INCRIMINATING DOCUMENT ET CETERA BEING FOUND. IN SU CH SITUATION ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PART ICULAR OF INCOME OR CONCEALMENT OF INCOME. FURTHERMORE THE CONDUCT OF A SSESSEE CANNOT BE HELD TO BE CONTUMACIOUS SO AS TO WARRANT LEVY OF PENALTY. T HIS PROPOSITION IS SUPPORTED BY THE DECISION RENDERED BY THE LARGER BE NCH OF HONBLE APEX COURT IN CASE OF THE HINDUSTAN STEEL LTD VERSUS STATE OF ORISSA 83 ITR 26. 7. FURTHER THE COORDINATE BENCH IN INDIAN EXTRACTION L TD (SUPRA) ON SIMILAR FACTS HELD AS UNDER: 6. HAVING HEARD BOTH THE SIDES, WE FIND MERITS IN THE ARGUMENTS OF THE ASSESSEE FOR THE REGIONS THAT THE INFECTION PROVIDED UNDER S ECTION 50C FOR COMPUTATION OF CAPITAL GAIN CANNOT BE EXTENDED TO THE PROVISIONS O F SECTION 271(1)(C) SO AS TO ITA NO. 1166 MUM 2017-DR. PRAKASH D. SAMANT 6 LEVIED PENALTY FOR FURNISHING INACCURATE PARTICULAR S OF INCOME. THIS LEGAL PROPULSION WAS SUPPORTED BY THE DECISION OF HONBLE BOMBAY HIGH COURT IN CASE OF CIT VERSUS FORTUNE HOTELS AND ESTATE PRIVAT E LTD 232 TAXMAN 481(BOM) WHEREIN IT WAS OBSERVED THAT IN TERM OF SE CTION 50C, HIGHER SALE CONSIDERATION OF PROPERTY DETERMINED BY DVO DID NOT BY ITSELF AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME SO A S TO LEVY PENALTY UNDER SECTION 271(1)(C). THE HONBLE CALCUTTA HIGH COURT IN CASE OF CIT VERSUS MADAN THEATRES LTD (SUPRA) OBSERVED THAT ACTUAL AMO UNT RECEIVED FROM SALE OF PROPERTY WAS OFFERED FOR TAXATION. IT WAS ONLY ON T HE BASIS OF DEEMED CONSIDERATION THAT THE PROCEEDING UNDER SECTION 271 (1)(C) WAS INITIATED. THE REVENUE HAD FAILED TO PRODUCE ANY IOTA OF EVIDENCE THAT THE ASSESSEE ACTUALLY RECEIVED MORE THAN THE AMOUNT SHOWN TO HAVE RECEIVE D BY HIM. THE HONBLE SUPREME COURT IN CASE OF CIT VERSUS RELIANCE PETRO PRODUCT VERSUS CIT 322 ITR 158(SC) OBSERVED THAT MERELY BECAUSE THE ASSESS EE HAD CLAIMED THE EXPENDITURE WHICH WAS NOT ACCEPTED OR WAS NOT ACCEP TABLE TO THE REVENUE THAT ITSELF WOULD NOT ATTRACT THE PENALTY UNDER SECTION 271(1)(C). IN THIS CASE, ADMITTEDLY, THE AO HAS LEVIED PENALTY ON THE ADDITI ON MADE TOWARD IN THE COMPUTATION OF LONG-TERM CAPITAL GAIN OF THE INCOME TAX ACT. THEREFORE, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND RESPECTFULLY FOLLOWING THE RATIO OF LAW DISCUSSED ABOVE, WE ARE OF THE VIE W THAT PENALTY CANNOT BE LEVIED UNDER SECTION 271(1)(C) FOR ADDITION MADE ON ACCOUNT OF DIFFERENCE OF FOR SALE CONSIDERATION AS PER THE PROVISIONS OF SECTION 50C OF THE ACT . 8. CONSIDERING THE ABOVE REFERRED DISCUSSION AND THE L EGAL POSITION, WE FIND THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN LEV YING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. HENCE, THE PENALTY LE VIED BY ASSESSING OFFICER UNDER SECTION 271(1)(C) OF RS. 5,00,000/- IS DELETE D. THEREFORE, WE ACCEPT THE ALTERNATIVE SUBMISSION OF THE ASSESSEE. SINCE W E HAVE DELETED THE PENALTY ON THE ALTERNATIVE SUBMISSION OF THE ASSESS EE, HENCE THE DISCUSSION ON THE OTHER SUBMISSIONS OF LD. AR FOR THE ASSESSEE RELATED WITH PASSING OF ITA NO. 1166 MUM 2017-DR. PRAKASH D. SAMANT 7 PENALTY ORDER BEYOND THE PERIOD OF LIMITATION HAS B ECOME ACADEMIC. IN THE RESULT THE GROUNDS OF APPEAL RAISED BY ASSESSEE ARE ALLOWED. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26/09/2018. SD/- SD/- G.S. PANNU PAWAN SINGH ACCOUNTANT MEMBER J UDICIAL MEMBER MUMBAI, DATE: 26.09.2018 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR C BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI