ACIT CC 25, MUMBAI V. PARLE BOTTLING P.LTD, MUMBAI

ITA 1209/MUM/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2479 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 1998-1999
• Appeal Filed On: 24-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARVIND KUMARDR
• Assessee Lawyers: FIROZE AHDHYARAJINA
• Keywords: Unexplained investment; Capital asset; Gift; Fair market value; Valuation report
• Section: 260A; 27; 54; 132

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.1209/MUM/2014 ASSESSMENT YEAR- 1998-99 ACIT, CC-25, ROOM NO.404, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 / VS. M/S PARLE BOTTLING PVT. LTD. WESTERN EXPRESS HIGHWAY, CHAKALA, ANDHERI (EAST), MUMBAI-4000099 ( / REVENUE) ( ! /ASSESSEE) PAN. NO. AAACP8417H / REVENUE BY SHRI ARVIND KUMAR-DR ! / ASSESSEE BY SHRI FIROZE AHDHYARAJINA ' # $ ! % / DATE OF HEARING : 18/11/2015 $ ! % / DATE OF ORDER: 23/11/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DAT ED 02/12/2013 OF THE LD. FIRST APPELLATE AUTHORITY, M UMBAI. THE ONLY GROUND RAISED IN THIS APPEAL PERTAINS TO D ELETING THE M/S PARLE BOTTLING P. LTD. ITA NO.1209/MUM/2014 2 PENALTY WHEN THE QUANTUM ADDITION WAS DELETED IN TH E CASE OF THE ASSESSEE ON THE BASIS OF WHICH PENALTY WAS I MPOSED. 2. AT THE TIME OF HEARING, THE LD. DR, CONTENDED T HAT APPEAL U/S 260A OF THE ACT HAS BEEN FILED BY THE DE PARTMENT BEFORE THE HONBLE HIGH COURT AGAINST DELETING THE QUANTUM ADDITION BY THE TRIBUNAL. THE LD. COUNSEL FOR THE A SSESSEE DEFENDED THE CONCLUSION ARRIVED AT IN THE IMPUGNED ORDER AND SUBMITTED THE COPY OF THE ORDER AS PER WHICH TH E QUANTUM ADDITION WAS DELETED (ITA NO.877/MUM/2003). THIS FACTUAL MATRIX WAS NOT CONTROVERTED BY THE LD. DR. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. SINCE, QU ANTUM ADDITION HAS BEEN DELETED BY THE TRIBUNAL AND NO CO NTRARY DECISION WAS BROUGHT TO OUR NOTICE BY EITHER SIDE A ND MORE SPECIFICALLY THE REVENUE, WE FIND MERIT IN THE ARGU MENT OF THE ASSESSEE. EVEN OTHERWISE, OUR VIEW FIND SUPPORT FRO M THE DECISION OF THE TRIBUNAL IN THE CASE OF SMT. NEELA P. DOSHI (ITA NO.6859/MUM/2013) ORDER DATED 21/10/2015, WHIC H IS REPRODUCED HEREUNDER FOR READY REFERENCE AND ANALYS IS:- THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DAT ED 07/10/2013 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI, CONFIRMING PENALTY OF RS.3,36,912/-, IMPOSED U/S 27 1(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT). 2. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE, SHRI MAHESH O. RAJOURA, CONTENDED THAT QU ANTUM ADDITION HAS BEEN DELETED BY THE TRIBUNAL VIDE ORDE R DATED M/S PARLE BOTTLING P. LTD. ITA NO.1209/MUM/2014 3 31/07/2015 (ITA NO.3513/MUM/2012), IN THE CASE OF ASSESSEE ITSELF, THEREFORE, IT WAS PLEADED THAT PEN ALTY DOES NOT SURVIVE. THIS FACTUAL MATRIX WAS NOT CONTROVERT ED BY THE LD. DR, SHRI VIJAY KUMAR SONI. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW O F THE ABOVE, WE ARE REPRODUCING HEREUNDER THE RELEVANT PO RTION OF THE AFORESAID ORDER DATED 31/07/2015, ON QUANTUM ADDITION, FOR READY REFERENCE:- ITA NO.3513/M/2012 2. THE ASSESSEE IN THIS APPEAL HAS CHALLENGED THE A CTION OF THE LD. CIT(A) IN CONFIRMING THE ADDITIONS MADE BY THE ASSE SSING OFFICER (HEREINAFTER REFERRED TO AS THE AO) AS UNEXPLAINED INVESTMENTS IN RELATION TO JEWELLERY FOUND DURING THE COURSE OF SE ARCH ACTION. 3. THE FACTS IN BRIEF ARE THAT A SEARCH ACTION U/S 132 OF THE I.T. ACT WAS CARRIED OUT IN THE CASE OF ACME GROUP COMPANIES AND RELATED PERSONS. THE ASSESSEE WAS ALSO COVERED IN THE SAID SEARCH ACTION. THE ASSESSEE IS A PARTNER IN VARIOUS FIRMS ENGAGED IN BUSINESS OF BUILDER AND DEVELOPER. DURING THE COURSE OF THE SEA RCH OPERATION, TOTAL JEWELLERY VALUED AT RS.17330641/- WAS FOUND F ROM THE PREMISES OF THE ASSESSEE, OUT OF WHICH JEWELLERY VA LUED AT RS.36,93,026/- WAS SEIZED. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE AO ASKED THE ASSESSEE TO SHOW CAUS E WHY JEWELLERY TO THE EXTENT WHICH HAS NOT BEEN REFLECTE D IN THE RETURN OF INCOME SHOULD NOT BE TREATED AS UNEXPLAINED AND ADD ED TO THE INCOME OF THE ASSESSEE. M/S PARLE BOTTLING P. LTD. ITA NO.1209/MUM/2014 4 4. THE ASSESSEE EXPLAINED THE SOURCE OF THE JEWELLE RY AND MADE HIS SUBMISSIONS VIDE LETTER DATED 4.10.2010 AND FURTHER VIDE LETTER DATED 8.11.2010. HE FURTHER SUBMITTED THAT LOOKING TO THE STATUS OF FAMILY AND THE CUSTOMS AND THE PRACTICE OF THE COMM UNITY TO WHICH THE FAMILY BELONGED, THE JEWELLERY FOUND SHOULD BE TREATED AS DULY EXPLAINED. THE AO HOWEVER DID NOT AGREE WITH THE EX PLANATION OFFERED BY THE ASSESSEE. HE OBSERVED THAT OUT OF TH E TOTAL JEWELLERY FOUND, THE JEWELLERY VALUING RS.21,58,524/- HAD REM AINED UNEXPLAINED. HE ACCORDINGLY ADDED THE SAID AMOUNT I NTO THE INCOME OF THE ASSESSEE U/S 69A OF THE ACT. AGGRIEVE D BY THE ADDITION MADE BY THE AO, THE ASSESSEE PREFERRED APPEAL BEFOR E THE LD. CIT(A). 5. THE ASSESSEE SUBMITTED BEFORE THE LD. CIT(A) THA T THE JEWELLERY FOUND DURING THE SEARCH ACTION BELONGED TO THE MEMB ERS OF THE DOSHI FAMILY, INCLUDING THE ASSESSEE, THE NAMES OF WHOM ARE MENTIONED AS UNDER: I) MR. PRAVIN H DOSHI (SPOUSE OF APPELLANT) II) MRS. NEELA PRAVIN DOSHI (SELF-APPELLANT) III) MR. MUNISH P DOSHI (SON OF APPELLANT) IV) MRS. ALKA MUNISH DOSHI (DAUGHTER IN LAW) V) MASTER MANAV MUNISH DOSHI (GRAND SON OF APPELLAN T) VI) MR. RAJESH P DOSHI (SON OF APPELLANT) VII) MRS. PRITI RAJESH DOSHI (DAUGHTER IN LAW) VIII) PRAVIN H DOSHI (HUF) IX) MRS. RANJAN BEN R DOSHI. (WIDOW OF LATE SHRI RA TILAL DOSHI) (AUNTY OF SPOUSE) M/S PARLE BOTTLING P. LTD. ITA NO.1209/MUM/2014 5 THE ASSESSEE ALSO FURNISHED THE FOLLOWING EVIDENCES TO EXPLAIN THE SOURCE OF ACQUISITION OF THE JEWELLERY IN QUESTION: A) JEWELLARY VALUATION REPORT DT.1.11.1995 OF SURE SH C KAPOOR, GOVERNMENT APPROVED VALUE (DURING SEARCH ACTION IN 1995) B) JEWELLARY VALUATION REPORT DT.23.4.2004 AS ON 3 1.3.2004 OF SHRENIK R SHAH (JEWELLARY REPORT OBTAINED FOR WEALT H TAX PURPOSE) B) JEWELLARY VALUATION REPORT DT.3.4.2000 AS ON 31. 3.2000 IN CASE OF PRITI RAJESH DOSHI (MAIDEN NAME PRITI VINOD AMBA NI) C) BILLS FOR PURCHASE OF JEWELLARY & MAKING CHARGES ALONG WITH BANK STATEMENT/ PASS BOOK REFLECTING PAYMENT MADE A LONG WITH FEW LEDGER ACCOUNT OF PARTIES. THE ASSESSEE ALSO FILED THE LEDGER OF THE JEWELLER Y ACCOUNT REFLECTING THE JEWELLERY PURCHASED FOR THE RELEVANT PERIOD. THE ASSESSEE FURTHER SUBMITTED THAT CONSIDERING THE FIN ANCIAL STATUS OF THE FAMILY OF THE ASSESSEE, THE JEWELLERY FOUND DUR ING COURSE OF SEARCH ACTION COULD NOT BE REGARDED AS UNEXPLAINED. THE ASSESSEE FURTHER EXPLAINED THAT SOME OF THE JEWELLERY WAS RE CEIVED AS GIFT FROM RELATIVES ON SOCIAL AND RELIGIOUS OCCASIONS LI KE MARRIAGE, BIRTHDAY ANNIVERSARY ETC. IT WAS ALSO EXPLAINED THA T SOME OF THE JEWELLERY WAS REMADE OUT OF THE OLD JEWELLERY. THE ASSESSEE FURTHER SUBMITTED THAT THE TOTAL WEIGHT OF JEWELLERY FOUND MATCHED WITH THE JEWELLERY ACCOUNTED BY THE DOSHI FAMILY. THE ASSESS EE FURTHER SUBMITTED THAT IN CASE OF SOME JEWELLERY, THE DESCR IPTION DID NOT MATCH EITHER DUE TO ABSENCE OF FULL DESCRIPTION OF THE JEWELLERY MADE BY THE DEPARTMENTAL VALUER DURING SEARCH ACTIO N OR DUE TO THE REMAKING OF THE JEWELLERY FROM THE OLD JEWELLER Y ITEMS. IT WAS M/S PARLE BOTTLING P. LTD. ITA NO.1209/MUM/2014 6 SUBMITTED THAT EVEN IN RESPECT OF DIAMOND JEWELLERY , THE OVERALL CARAT WEIGHT OF DIAMONDS APPROXIMATELY MATCHED WITH THAT WAS ALREADY ACCOUNTED BY ASSESSEES FAMILY MEMBERS. IT WAS THEREFORE SUBMITTED THAT THE ADDITIONS UNDER SECTION 69A WERE NOT WARRANTED IN THIS CASE. 6. THE LD. CIT(A), AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE OBSERVED THAT IT WAS CORRECT THAT THE OVERALL WEIGH T OF THE GOLD JEWELLERY DECLARED BY THE ASSESSEE AND HIS FAMILY I N THE BOOKS OF ACCOUNTS WAS IN EXCESS OF GOLD JEWELLERY FOUND DURI NG THE COURSE OF SEARCH ACTION, HOWEVER, THE DEPARTMENT HAD TO MATCH EACH AND EVERY ITEM FOUND WITH THE ITEMS DECLARED IN THE VAL UATION REPORTS OF THE APPROVED VALUERS AS FURNISHED BY THE ASSESSEE A ND THAT THE ONUS WAS ON THE ASSESSEE TO PROVE THE SOURCE OF ACQ UISITION OF EACH AND EVERY ITEM OF JEWELLERY. HE THEREFORE CALLED UP ON THE ASSESSEE TO PREPARE AN ITEM VISE CHART SHOWING WHICH OF THE ITEMS COULD BE SAID TO BE MATCHING AND ANOTHER CHART IN RESPECT OF ITEMS WHICH DID NOT MATCH WITH THE DESCRIPTION OF ITEMS MADE IN THE VALUATION REPORT FURNISHED BY THE ASSESSEE. THE ASSESSEE MADE CHARTS NO. I & II IN THE ABOVE MANNER IN RELATION TO GOLD ITEMS, THE CON TENTS OF WHICH HAVE ALSO BEEN REPRODUCED IN THE IMPUGNED ORDER. 7. THE LD. CIT(A), AFTER TALLYING AND MAKING COMPAR ATIVE ANALYSIS OF THE ITEMS DISCLOSED BY THE ASSESSEE IN THE APPRO VED VALUERS REPORT WITH THAT OF THE REPORT MADE DURING SEARCH A CTION, OBSERVED THAT MOST OF THE ITEMS MENTIONED IN CHART NO.I MATH ED WITH THE DESCRIPTION GIVEN IN THE VALUATION REPORT OF THE AP PROVED VALUER, EXCEPT ITEMS NO.24 & 25 BEING GOLD GINNI AND GOLD C OIN RESPECTIVELY, WHICH THE ASSESSEE CLAIMED TO HAVE BE EN RECEIVED AS GIFT. THE LD. CIT(A), THEREFORE DIRECTED THE AO TO DELETE THE ADDITION IN RESPECT OF THE REMAINING ITEMS MENTIONE D IN CHART NO. I, M/S PARLE BOTTLING P. LTD. ITA NO.1209/MUM/2014 7 EXCEPT THE ABOVE STATED TWO ITEMS AMOUNTING TO RS.8 2,392/- AND RS.75,823/- RESPECTIVELY. IN RELATION TO CHART NO.I I, THE LD. CIT(A) OBSERVED THAT THE ITEMS MENTIONED IN CHART NO.II DI D NOT EXACTLY MATCH WITH THE DESCRIPTION MADE IN THE APPROVED VAL UERS REPORTS. HE, THEREFORE, CONFIRMED THE ADDITIONS IN RESPECT O F ITEMS OF GOLD JEWELLERY MENTIONED IN CHART NO.II. THE LD. CIT(A) ALSO DIRECTED THE ASSESSEE TO PREPAR E SIMILAR CHARTS IN RESPECT OF DIAMOND JEWELLERY. THE ASSESSEE SUBMI TTED THE SAID CHARTS ACCORDINGLY. THE LD. CIT(A), AFTER TALLYING THE EACH OF THE ITEMS WITH THAT OF VALUATION REPORT OF THE APPROVED VALUER, FOUND THAT THOUGH NUMBER OF PIECES OF DIAMONDS IN RESPECT OF DIAMOND JEWELLERY WERE MATCHING IN ALMOST ALL THE ITEMS; HO WEVER, THERE WAS DIFFERENCE IN THE ESTIMATE OF CARAT WEIGHT. HE THER EFORE HELD THAT THE DESCRIPTION DID NOT EXACTLY MATCH IN RESPECT OF DIA MOND JEWELLERY. HE, ACCORDINGLY, CONFIRMED THE ADDITION MADE BY THE AO IN RESPECT OF DIAMOND JEWELLERY. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE HAS COME IN APPEAL BEFORE US. 9. THE LD. A.R. OF THE ASSESSEE HAS BROUGHT OUR ATT ENTION TO THE DETAILS AND DESCRIPTION OF THE ITEMS AS REPRODUCED BY THE LD. CIT(A) IN THE IMPUGNED ORDER. INVITING OUR ATTENTIO N TO THE PAGE 12 OF THE IMPUGNED ORDER IN RELATION TO ITEM NO.29 OF LOCKER NO.571, THE DESCRIPTION HAS BEEN MENTIONED AS TANMANYA PEN DANT WITH CHAIN. THE NUMBER OF PIECES OF DIAMOND IN THE SAID PENDANT HAS BEEN MENTIONED AS 59. THE ASSESSEE HAS STATED THAT IT MATCHED WITH ITEM AT SERIAL NO. 9 OF THE VALUERS REPORT WHEREIN THE DESCRIPTION HAS BEEN MENTIONED AS DOUBLE STRING BLACK BEADS MA NGALSUTRA WITH PENDANT WHEREIN THE TOTAL NUMBER OF DIAMONDS IS ALSO MENTIONED AS 59. HOWEVER, THE CARAT WEIGHT MENTIONE D BY THE DEPARTMENTAL VALUER IS 0.88, WHEREAS, IN THE ASSESS EES VALUATION M/S PARLE BOTTLING P. LTD. ITA NO.1209/MUM/2014 8 REPORT, IT HAS BEEN MENTIONED AS 118. HOWEVER, THE GOLD GROSS WEIGHT MENTIONED BY THE DEPARTMENTAL VALUER IS 21.8 50 WHEREAS IN THE VALUATION REPORT PRODUCED BY THE ASSESSEE IT HA S BEEN MENTIONED AS 20.3. SIMILARLY, IN RESPECT OF ITEM NO .19 I.E. BANGLES WITH RODIUM THE GOLD GROSS WEIGHT ALSO MATCHED AND THE PIECES OF DIAMONDS MENTIONED ALSO MATCHED. HOWEVER, THE ESTSI MATION OF CARAT VALUE BY THE GOVERNMENT VALUER IS AT 1.68 WHE REAS AS MENTIONED IN THE VALUATION REPORT OF THE ASSESSEE I S AT 2.75. SIMILARLY, IN RESPECT OF ITEM NO.21 EARTOPES GOLD GROSS WEIGHT ALSO MATCHES AND NUMBER OF PIECES OF DIAMOND ALSO M ATCHES. HOWEVER, THERE IS A SMALL DIFFERENCE IN CARAT WEIGH T OF DIAMONDS. THE LD. A.R. OF THE ASSESSEE HAS INVITED OUR ATTENT ION IN RESPECT OF OTHER ITEMS ALSO WHERE THE GROSS GOLD WEIGHT OF THE ITEMS MATCHES WITH THAT OF THE DESCRIPTION MENTIONED IN THE VALUA TION REPORTS SUBMITTED BY THE ASSESSEE AND EVEN NUMBER OF PIECES OF DIAMONDS IN THE JEWELLERY ALSO MATCHED. HOWEVER, THERE WAS D IFFERENCE IN ESTIMATION OF CARAT WEIGHT. 10. WE FIND THAT IT IS NOT A CASE WHERE THE ITEMS M ENTIONED IN THE VALUATION REPORTS SUBMITTED BY THE ASSESSEE DID NOT MATCH AT ALL WITH THAT OF THE ITEMS OF JEWELLERY WHICH WERE FOUN D DURING THE SEARCH ACTION. NOT ONLY THE DESCRIPTION OF THE JEWE LLERY SETS, BANGLES, PENDANT, EARTOPES ETC. MATCHED WITH THE VA LUATION REPORT BUT ALSO THE NUMBER OF DIAMONDS EMBEDDED IN THE JEW ELLERY. SO FAR AS THE ESTIMATION OF CARAT WEIGHT IS CONCERNED, IT IS AN ADMITTED FACT THAT THE WEIGHT WAS NOT MEASURED BY EXTRACTING THE DIAMONDS OUT OF THE JEWELLERY, BUT WAS JUST ESTIMATED BY THE DEPART MENTAL VALUER. UNDER SUCH CIRCUMSTANCES, THE MINOR DIFFERENCE IN C ARAT WEIGHT VALUE, ESPECIALLY WHEN THE SAME WAS NOT EXACTLY WEI GHED BY THE DEPARTMENTAL VALUER COULD NOT BE THE SOLE CRITERIA TO HOLD THAT THE DESCRIPTION OF JEWELLERY DID NOT MATCH. THE LD. A.R . OF THE ASSESSEE M/S PARLE BOTTLING P. LTD. ITA NO.1209/MUM/2014 9 HAS FURTHER INVITED OUR ATTENTION TO PAGE NO1 OF TH E PAPER BOOK WHICH IS THE SUMMARY OF THE GOLD JEWELLERY. HE HAS EXPLAINED THAT THE TOTAL GOLD JEWELLERY SHOWN BY THE ASSESSEE AND HIS FAMILY MEMBERS IN THE BOOKS WAS OF 9919.790 GMS. WHEREAS T HE JEWELLERY FOUND AND VALUED BY THE DEPARTMENTAL VALUER WAS OF 9145.380 GMS. WHICH WAS LESS THAN THE JEWELLERY ALREADY DECL ARED BY THE FAMILY MEMBERS OF THE ASSESSEE IN THE BOOKS OF ACCO UNT. SIMILARLY, IN RESPECT OF DIAMOND JEWELLERY, THE ASSESSEE FAMIL Y HAS ALREADY DECLARED 222.80 CARATS OF DIAMOND, WHEREAS, THE DEP ARTMENTAL VALUER HAD ESTIMATED ONLY 203.29 CARAT OF THE DIAMO NDS WHICH WAS LESS THAN THE TOTAL DIAMOND WEIGHT/CARATS DECLARED BY THE ASSESSEE. EVEN THE NUMBER OF DIAMONDS EMBEDDED IN THE EACH IT EM OF THE JEWELLERY MATCHED WITH THAT OF THE VALUATION REPORT . 11. THE LD. A.R. HAS FURTHER INVITED OUR ATTENTION TO THE DECISION OF THE JODHPUR BENCH OF THE TRIBUNAL IN THE CASE OF D CIT VS. ARJUN DASS KALWANI 101 ITD 337 WHEREIN THE TRIBUNAL HAS HELD THAT SIMPLY BECAUSE THE ASSESSEE COULD NOT LEAD EVIDENCE FOR CONVERSION OR REMAKING OF THE JEWELLERY, POSSESSION OF WHICH W AS OTHERWISE ACCEPTED, IT COULD NOT BE SAID THAT HOLDING OF GOLD JEWELLERY TO THAT EXTENT WAS UNEXPLAINED, ESPECIALLY WHEN EVIDENCE WA S AVAILABLE THAT THE ASSESSEE HAD ALREADY BEEN ASSESSED AT MUCH MORE JEWELLERY IN EARLIER ASSESSMENT YEAR. FURTHER, IN THE CASE OF MRS. VINITA S. JHUNJHUNWALA VS. ACIT IN ITA NO.8837/M/2010 FOR A. Y. 2008-09 DECIDED ON 20.01.2014, THE CO-ORDINATE MUMBAI BENCH OF THE TRIBUNAL HAS CONCLUDED THAT WHEN QUANTITY OF JEWELL ERY DISCLOSED BY THE ASSESSEE IS SAME AS THE QUANTITY OF JEWELLER Y FOUND DURING THE COURSE OF SEARCH, NO ADDITION IS WARRANTED MERE LY BECAUSE THE DESCRIPTION IS NOT MATCHING. IT IS A VITAL FACT THA T LADIES GET JEWELLERY CONVERTED AS PER LATEST DESIGN AND FOR WH ICH EVEN THE CONCERNED MAN IN THE FAMILY IS BEING NOT INFORMED. IN THESE M/S PARLE BOTTLING P. LTD. ITA NO.1209/MUM/2014 10 CIRCUMSTANCES MERELY BECAUSE OF CONVERSION OF SUCH JEWELLERY, CANNOT BE MADE BASIS FOR MAKING ADDITION, WHEN THE JEWELLERY DISCLOSED BY THE ASSESSEE EITHER IN HIS OWN HAND OR IN THE HANDS OF THEIR FAMILY MEMBERS PRIOR TO THE DATE OF SEARCH IS EQUAL TO OR MORE THAN THE JEWELLERY FOUND DURING THE COURSE OF SEARC H. IN THE CASE OF RAKESH J. PARIKH V. DCIT IN IT(SS)A NO.136/M/2000 FOR BLOCK PERIOD 01.04.1987 TO 25.09.1997 DECIDED VIDE ORDER DATED 26.02.2004, THE COORDINATE BENCH OF THE TRIBUNAL HA S OBSERVED THAT MERELY BECAUSE THE DESCRIPTION OF SOME OF THE ORNAM ENTS IN THE WEALTH-TAX RETURN DID NOT TALLY WITH THE ORNAMENTS FOUND AT THE TIME OF SEARCH, IS NO GROUND FOR REJECTING THE ASSESSEE S CLAIM OF REMAKING OF THE ORNAMENTS EVEN IF THE ASSESSEE HAS NOT PRESERVED THE BILL OF REMAKING CHARGES. IN THE CASE OF ACIT VS. SHRI KAMALKISHAN H. AGGARWAL IN ITA NO.777/M/1998 AND I TA NO.5127/M/1995 & OTHERS DECIDED VIDE COMMON ORDER D ATED 21.06.13, THE TRIBUNAL UNDER SOMEWHAT SIMILAR CIRCU MSTANCES HAS OBSERVED THAT NORMAL PRESUMPTION IS THAT DURING THE COURSE OF THE SEARCH, THE ENTIRE JEWELLERY FOUND AT RESIDENCE, IN BANK LOCKERS, OTHER PREMISES AND ALSO ON PERSON IS DULY INVENTORI SED. IF THE WEIGHT OF THE JEWELLERY FOUND AT THE TIME OF SEARCH IS MORE THAN THE WEIGHT DECLARED IN WEALTH TAX RETURNS, THE DIFFEREN CE HAS TO BE TAKEN TO BE UNEXPLAINED JEWELLERY UNLESS THE ASSESS EE IS ABLE TO ESTABLISH THAT FRESH JEWELLERY WAS PURCHASED AND SO URCES THEREOF ARE EXPLAINED. IT IS NORMAL THAT SOME OF THE ORNAME NTS ARE DISMANTLED AND REMADE. IT WOULD BE UNREASONABLE TO TAKE A STAND THAT ALL THE ORNAMENTS FOUND AT THE TIME OF SEARCH MUST ACCURATELY COMPARE IN DESCRIPTION AND WEIGHT WITH THE ORNAMENT S DECLARED IN THE WEALTH TAX RETURN. THE POSSIBILITY THAT SOME OF THE ITEMS COULD HAVE BEEN REMADE CANNOT BE RULED OUT. THE IMPORTANT POINT IS THAT THE ORNAMENTS FOUND SHOULD NOT BE IN EXCESS IN QUAN TITY AS COMPARED TO THE ORNAMENTS DECLARED IN THE WEALTH TA X RETURNS. M/S PARLE BOTTLING P. LTD. ITA NO.1209/MUM/2014 11 OUR ATTENTION HAS ALSO BEEN INVITED TO THE DECISION OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF COMMISSIONER O F WEALTH TAX VS. B.M. KANODIA (HUF) WHEREIN THE HONBLE HIGH CO URT IN PARA 5 OF THE ORDER HAS OBSERVED THAT WHERE THE GOVERNME NT VALUER ADOPTED THE WEIGHT OF THE DIAMOND BY ESTIMATING WIT HOUT SEPARATING THE DIAMOND FROM THE METAL, THE REPORTS OF VALUERS COULD NOT BE HELD TO BE ACCURATE AND EXACT AND THAT THE POSSIBIL ITY IN DIFFERENCE OF WEIGHT COULD NOT BE RULED OUT. 12. IN THE CASE IN HAND ALSO, IF THE DIFFERENCE IN WEIGHT IS IGNORED THE DESCRIPTION OF THE ITEMS OF THE JEWELLERY ALMOS T TALLIED WITH THAT OF THE ITEMS ALREADY DECLARED BY THE ASSESSEE. MORE OVER THE OVERALL WEIGHT OF JEWELLERY ALREADY DECLARED BY THE ASSESSE E IN HER BOOKS OF ACCOUNTS IS MORE THAN THAT OF THE JEWELLERY FOUND D URING THE COURSE OF SEARCH ACTION. IN VIEW OF THE ABOVE STATED FACTS AND IN THE LIGHT OF THE PROPOSITION OF LAW LAID DOWN VIDE JUDICIAL PRON OUNCEMENTS ON THIS ISSUE AS DISCUSSED ABOVE, IT CANNOT BE SAID IN THIS CASE THAT THE JEWELLERY FOUND DURING THE SEARCH ACTION WAS UNEXPL AINED. THE ADDITIONS THUS IN THIS CASE ARE NOT WARRANTED AND T HE SAME ARE ORDERED TO BE DELETED. 2.2. IN VIEW OF THE ABOVE, IT CAN BE SAID THAT THE BASIS ON WHICH PENALTY WAS LEVIED, REMAINS NO MORE IN EXISTENCE, THEREFORE, THE PENALTY CANNOT SURVIVE. O UR VIEW FIND SUPPORTS FROM THE DECISION OF THE TRIBUNAL DAT ED 30/09/2015 (ITA NO.2253/MUM/2014) IN THE CASE OF MS . VILMA M. PEREIRA FOR READY REFERENCE:- THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DAT ED 10/01/2014 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI, DELETING PENALTY OF RS.18,75,314/-, IMPOSED U/S 271(1)(C), E VEN THOUGH THE M/S PARLE BOTTLING P. LTD. ITA NO.1209/MUM/2014 12 QUANTUM ADDITION HAS BEEN UPHELD BY THE LD. COMMISS IONER OF INCOME TAX (APPEALS). 2. DURING HEARING OF THIS APPEAL, THE LD. COUNSEL F OR THE ASSESSEE, AT THE OUTSET, POINTED OUT THAT THE QUANTUM ADDITIO N ON THE BASIS OF WHICH PENALTY WAS IMPOSED HAS BEEN DELETED BY THE T RIBUNAL IN ORDER DATED 27/02/2015. THE ASSESSEE FURNISHED THE COPY OF THE ORDER. ON THE OTHER HAND, LD. DR, SHRI B. YADAGIRI , DEFENDED THE IMPOSITION OF PENALTY. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW OF THE AB OVE, WE ARE REPRODUCING HEREUNDER THE AFORESAID ORDER OF THE TR IBUNAL (ITA NO.8797 AND 8798/MUM/2010) ORDER DATED 27/02/2015 F OR READY REFERENCE:- THESE TWO APPEALS HAVE BEEN FILED BY TWO ASSESSEES AGAINST THE ORDER OF CIT(A), FOR THE ASSESSMENT YEAR 2007-08, I N THE MATTER OF ORDER PASSED U/S.143(3) OF THE I.T.ACT. 2. COMMON GRIEVANCE IN BOTH THE APPEALS RELATE TO D ISALLOWANCE OF CLAIM OF DEDUCTION U/S.54(1) IN RESPECT OF RESIDENT IAL FLATS ACQUIRED BY THE ASSESSEES IN CONSIDERATION OF OLD HOUSE SOLD TO THE BUILDER. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. FACTS IN BRIEF ARE THAT THE ASSESSEE VILMA MARY PEREIRA HAS SOLD IMMOVABLE PROPERTY SITUATED AT 'VIOLET VALLEY' (WITH GARAGE) AT JUNCTION OF 26TH AND 30TH ROAD AT BANDRA (W), MUMBAI FOR A TOTA L CONSIDERATION OF RS.3,05,00,000/- VIDE AGREEMENT DA TED 28.4.2006 TO M/S. AQUA MARINE ENTERPRISES. THE SHARE OF THE A SSESSEE IS 23% IN THE SAID PROPERTY AND THE OTHER ASSESSEE MR. PETER PEREIRA WAS M/S PARLE BOTTLING P. LTD. ITA NO.1209/MUM/2014 13 HAVING SHARE OF 77% IN THE SAID HOUSE. FROM THE AGR EEMENT, THE A.O. OBSERVED THAT THE ASSESSEE WAS TO RECEIVE THREE MOR E FLATS I.E. TWO FLATS HAVING A CARPET AREA OF 1200 SQ.FT. EACH AND ONE FLAT HAVING CARPET AREA OF 750 SQ.FT. AND THREE PARKING SPACES (TWO STILT AND ONE OPEN) AS PART OF ADDITIONAL CONSIDERATION. HOWEVER, THE ADDITIONAL CONSIDERATION WAS NOT SHOWN AS PART OF THE TOTAL CO NSIDERATION RECEIVED BY THE ASSESSEE IN HER COMPUTATION OF LTCG ON TRANSFER OF THE SAID PROPERTY DURING THE YEAR. FURTHER, THE ASS ESSEE HAD TAKEN THE FMV OF THE SAID PROPERTY AS ON 1.4.1981 AT RS.3 5,00,000/- ON THE BASIS OF VALUATION REPORT DATED 3.8.2006. IN VIEW O F THIS, VIDE LETTER DATED 21.8.2009, THE A.O. ASKED THE ASSESSEE TO STA TE AS UNDER :- '1. PLEASE PROVIDE THE MARKET VALUE OF TILE ADDITIO NAL FLATS AND OTHER AMENITIES TO BE RECEIVED BY YOU FROM THE BUILDER AS PER THE SALE AGREEMENT DATED 28.4.2006. FURNISH COPIES OF AGREEM ENTS ENTERED BY YOU IN THIS RESPECT. PLEASE ALSO EXPLAIN WHY THE MARKET VALUE OF THE SAID FLATS AND AMENITIES SHOULD NOT BE ADDED TO YOUR TOTAL CONSIDERATION FOR SALE OF PROPERTY DURING THE YEAR WHILE COMPUTING THE LTCG FOR THE YEAR ON SALE OF PROPERTY. 2. PLEASE FURNISH PURCHASE PROOF AT' NHA BONDS AGAI NST WHICH DEDUCTION ULS.54EC HAS BEEN CLAIMED. PLEASE FURNISH COPIES OF RELEVANT BANK EXTRACTS WITH NARRATION OF EACH ENTRY TO SUPPORT YOUR CLAIM. 3. PROOF OF PAYMENT OF PROFESSIONAL FEES AND ALLOW ABILITY OF THE SAME AS DEDUCTION FROM THE LTCG SHOWN. 4. BASIS OF DIVISION OF SHARE OF THE PROPERTY SOLD DURING THE YEAR. PLEASE FURNISH EVIDENCES TO SUPPORT YOUR CLAIM. 5. PLEASE EXPLAIN WHY THE VALUATION MADE BY YOU OF THE PROPERTY SOLD AS ON 1.4.1981 SHOULD NOT BE REJECTED? 4. IN RESPONSE, THE A.R. OF THE APPELLANT VIDE LETT ER DATED 23.10.2009 SUBMITTED AS UNDER :- 'THE NEW FLAT AND CAR PARKING IS RECEIVABLE IN LIEU OF OLD RESIDENTIAL PLACE AND OLD CAR PARKING PLACE. HENCE THERE IS NO ADDITIONAL AMENITIES RECEIVED FROM SELLER HENCE THERE SHOULD N OT BE ADDITION ON ACCOUNT OF MARKET VALUE OF THE SAID FLAT AND AMENIT IES ADDED TO TOTAL CONSIDERATION FOR SALE OF PROPERTY DURING THE YEAR. M/S PARLE BOTTLING P. LTD. ITA NO.1209/MUM/2014 14 VALUATION DONE BY ODILIO FERNANDES ON 31.7.2006 AS ON 1.4.1981 AT RS.35 LACS. YOUR HONOUR MAY REFER TO DEPARTMENTAL V ALUER FOR FURTHER VERIFICATION. IN CASE YOUR HONOUR IS NOT SA TISFIED WITHOUT VALUATION REPORT. 4. THE AFORESAID SUBMISSION OF THE ASSESSEE WAS CON SIDERED BY THE A.O. ACCORDING TO THE A.O. THE NEW FLAT AND CAR PAR KING ARE NOTHING BUT ADDITIONAL CONSIDERATION. IF THE SAID NEW FLAT IS RECEIVABLE FOR OLD FLAT AND OLD CAR PARKING PLACE, HOW THE ASSESSEE HA S CLAIMED INDEXATION ON THE VALUE OF THE SAID PROPERTIES AS O N 1.4.1981 AGAINST THE CONSIDERATION. IF THE NEW FLAT WAS TO BE GIVEN IN LIEU OF THE OLD AREA OCCUPIED BY THE ASSESSEE IN THE OLD STRUCTURE, THEN THE VALUE OF THE SAID OLD STRUCTURE SHOULD HAVE BEEN REDUCED FRO M THE VALUE OF THE ENTIRE PROPERTY AS ON 1.4.1981 WHILE COMPUTING THE LTCG ON SUCH SALE. HOWEVER, THE ASSESSEE HAS TAKEN THE FMV OF THE ENTIRE PROPERTY AS ON 1.4.1981 INTO CONSIDERATION WHILE CO MPUTING THE LTCG ON THE SALE OF SUCH PROPERTY. 5. THE A.R. OF THE ASSESSEE VIDE HIS SUBMISSION DAT ED 12.11.2009 STATED THAT IF MARKET VALUE OF THE NEW FLAT IS ADDE D TO INCOME OF THE ASSESSEE, THEN THE INVESTMENT IN NEW RESIDENTIAL PR OPERTY SHOULD BE ALLOWED U/S.54 AT MARKET VALUE. THE AO. ANALYSED TH E CONTENTION OF THE ASSESSEE. ACCORDING TO THE A.O., EXEMPTION U/S. 54 IS AVAILABLE ONLY WHEN THE ASSESSEE HAS PURCHASED A NEW FLAT ONE YEAR BEFORE OR TWO YEARS AFTER THE DATE OF TRANSFER OR HAS CONSTRU CTED A NEW RESIDENTIAL' HOUSE WITHIN A PERIOD OF THREE YEARS F ROM THE DATE OF TRANSFER OF THE HOUSE PROPERTY (ORIGINAL). THE FLAT S (ALONGWITH CAR 'PARKING SPACES) RECEIVED BY THE ASSESSEE IN THE PR OPOSED BUILDING AS 'ADDITIONAL CONSIDERATION' AGREED UPON IN THE AGREE MENT DATED 28.4.2006 WAS OVER AND ABOVE HER SHARE IN THE MONET ARY CONSIDERATION. THESE FLATS (ALONGWITH CAR PARKING S PACES) FORM PART OF CONSIDERATION RECEIVED BY THE ASSESSEE TOWARDS T RANSFER OF THE M/S PARLE BOTTLING P. LTD. ITA NO.1209/MUM/2014 15 PROPERTY. THIS FLAT IS NEITHER PURCHASED BY THE ASS ESSEE NOR CONSTRUCTED BY HER. THE A.O. HELD THAT SINCE THE AS SESSEE HAS NOT FULFILLED THE CONDITIONS LAID DOWN IN SECTION 54, S HE IS NOT ELIGIBLE FOR EXEMPTION U/S.54 OF THE LT. ACT. THE A.O. HAS FURTH ER ELABORATED THIS ISSUE IN PARA 10 OF THE ASSESSMENT ORDER WHEREIN HE HAS HELD THAT EXEMPTION U/S.54 OF THE I.T.ACT IS ALLOWABLE ONLY W HEN THE ASSESSEE MAKES AN INVESTMENT TOWARDS PURCHASE OR CONSTRUCTIO N OF A NEW HOUSE PROPERTY WITHIN THE STIPULATED PERIOD. THUS F OR AVAILING EXEMPTION U/S.54, THE ASSESSEE HAS TO EITHER PURCHA SE OR CONSTRUCT A NEW HOUSE PROPERTY. 6. IN THIS REGARD, THE A.O. FURTHER HELD THAT EXEMP TION U/S.54 IN RESPECT OF CAPITAL GAINS ARISING ON-SALE OF PROPERT Y USED FOR RESIDENCE IS ONLY AVAILABLE TOWARDS INVESTMENT [BY WAY OF PURCHASE OR CONSTRUCTION IN A NEW HOUSE PROPERTY WITHIN THE TIME LIMIT PRESCRIBED UNDER THE ACT. IN THE CASE UNDER CONSIDE RATION, THE ASSESSEE IS TREATING THE FLATS AND PARKING LOTS REC EIVED BY HER AS ADDITIONAL CONSIDERATION AS INVESTMENT MADE U/S.54. THESE FLATS (ALONGWITH CAR PARKING SPACES) RECEIVED BY THE ASSE SSEE AS PART OF 'CONSIDERATION' CANNOT SIMULTANEOUSLY BE TREATED AS INVESTMENT. IN ORDER TO AVAIL THE EXEMPTION U/S.54, THE ASSESSEE S HOULD HAVE MADE THE INVESTMENT IN A NEW RESIDENCE EITHER BY WAY OF PURCHASE OR CONSTRUCTION OF THE SAME. IN THE INSTANT CASE, AS P ER AO, THE ASSESSEE HAS NOT FULFILLED THIS CONDITION WHICH IS THE REQUI REMENT OF THE ACT. IN VIEW OF THE ABOVE, THE A.O. HELD THAT THE ASSESSEE IS NOT ELIGIBLE FOR EXEMPTION U/S.54 OF THE L.T.ACT AND ACCORDINGLY DEN IED THE SAME TO THE ASSESSEE. 7. BY THE IMPUGNED ORDER, THE CIT(A) CONFIRMED THE DISALLOWANCE AGAINST WHICH THE ASSESSEES ARE IN FURTHER APPEALS BEFORE US. M/S PARLE BOTTLING P. LTD. ITA NO.1209/MUM/2014 16 8. WE HAVE CONSIDERED RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM THE RECORD THAT DURING THE COURSE OF APPELLATE PROCEEDINGS THE ASSE SSEE HAS SUBMITTED AS UNDER :- '1. DURING THE YEAR THE ASSESSEE WITH HER CO OWNER I.E. HER BROTHER MR.PETER SAVIO PEREIRA SOLD THE ANCESTRAL RESIDENTI AL PROPERTY FOR CONSIDERATION OF RS.3,05,00,00/- AND 3 FLATS ADMEES URINQ 3150 SQ. FT. WITH ONE OPEN AND TWO STILT PARKING IN KIND. 2. IN THE ASSESSMENT ORDER. THE A.O. HAS VALUED THE CONSIDERATION RECEIVED IN KIND FOR RS.3,32,70,540/- AND ADDITIONS WERE MADE IN THE ASSESSMENT ORDER UNDER THE HEAD LONG TERM CAPITAL G AINS WITHOUT CONSIDERING THE SAID AMOUNT AS REINVESTMENT IS NEIT HER PURCHASED NOR CONSTRUCTED BY THE ASSESSEE. 3. AS REGARDS BENEFIT OF SECTION 54, THIS SECTION M AKES IT CLEAR THAT CAPITAL GAIN ARISING FROM THE TRANSFER OF A HOUSE P ROPERTY IS EXEMPT FROM TAX PROVIDED THE FOLLOWING CONDITIONS ARE SATI SFIED :- (A) THE HOUSE PROPERTY IS A RESIDENTIAL HOUSE WHOSE INCOME IS TAXABLE UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY' AS TRANSFERRED BY AN INDIVIDUAL OR AN HUF. (B) THE HOUSE PROPERTY (MAY BE SELF OCCUPIED OR LET OUT) IS A LONG TERM CAPITAL ASSET. (C) THE ASSESSEE HAS PURCHASED A RESIDENTIAL HOUSE WITHIN A PERIOD OF ONE YEAR BEFORE THE TRANSFER OR WITHIN TWO YEARS AFTER THE DATE OF TRANSFER OR HAS CONSTRUCTED A RESIDENTIAL HOUSE PRO PERTY WITHIN A PERIOD OF THREE YEARS AFTER THE DATE OF TRANSFER. THE APPELLANT HAS FULFILLED THE PRECONDITION MENTIO NED AT POINT NOS.(A) & (B) ABOVE WAS NOT IN DOUBT. THIS WAS ALSO NOT IN DISPUTE THAT THE ASSESSEE HAD PURCHASED NEW RESIDENTIAL PRO PERTY BY WAY OF CONSTRUCTION. THIS WAS BECAUSE IT WAS CLEAR FROM TH E AGREEMENT WITH DEVELOPER THAT THE DEVELOPER WOULD CONSTRUCT T HE RESIDENTIAL BUILDING ON THE PROPERTY ALIENATED BY THE ASSESSEE TO THE DEVELOPER AND HANDOVER THE RESIDENTIAL HOUSE TO THE ASSESSEE IN CONSIDERATION OF THE SALE OF ORIGINAL RESIDENTIAL PROPERTY. THIS FACT IS CLEAR AND UNAMBIGUOUS. THEREFORE TO SAY THAT THE APPELLANT HA S ALSO COMPLIED THE LAST CONDITION OF SECTION 54 FOR ACQUISITION OF NEW RESIDENTIAL PROPERTY. THE A.O. HAS CONSIDERED SALE CONSIDERATION RECEIVED IN CASH AND KINDBUT FAILED TO ALLOW THE EXEMPTION U/S.54 FOR RE INVESTMENT OF THE M/S PARLE BOTTLING P. LTD. ITA NO.1209/MUM/2014 17 SAID CONSIDERATION RECEIVED IN KIND FOR ACQUIRING O F NEW RESIDENTIAL HOUSE PROPERLY. 5. THE A.O. HAS MISINTERPRETED THE DEFINITION OF ' PURCHASE' HELD BY THE APEX COURT IN THE ASSESSEE OF CIT VS. T.N. ARAV INDA REDDY. IN THIS CASE, THE DEFINITION OF THE TERM 'PURCHASE' HAS BEE N GIVEN AS UNDER: '....... WE FIND NO REASON TO DIVORCE THE ORDINARY MEANING OF THE WORD PURCHASE AS BUYING FOR A PRICE OR EQUIVALENT OF PRI CE BY PAYMENT IN KIND OR ADJUSTMENT TOWARDS AN OLD DEBT OR FOR OTHER MONETARY CONSIDERATION FROM THE LEGAL MEANING OF THAT WORD I N SECTION 54(1). IF YOU SELL YOUR HOUSE AND MAKE A PROFIT PAY CAESAR WHAT IS DUE TO HIM. BUT IF YOU BUY OR BUILD ANOTHER SUBJECT TO THE CONDITIONS OF SECTION 54(1), YOU ARE EXEMPT. THE PURPOSE IS PLAIN THE SYMMETRY IS SIMPLE, THE LANGUAGE IS PLAIN. ' THUS THE HON. SUPREME COURT HAS DEFINED THE TERM 'P URCHASE' AS BUYING FOR A PRICE / EQUIVALENT OF PRICE BY PAYMENT IN KIND OR ADJUSTMENT TOWARDS AN OLD DEBT OR FOR OTHER MONETAR Y CONSIDERATION. THE WORD 'PURCHASE' IN SECTION 54 HA S TO BE GIVEN ITS COMMON AND WIDER MEANING. IT SHOULD INCLUDE BUYING OR ADJUSTMENT TOWARDS OLD DEBT OR FOR OTHER MONETARY CONSIDERATIO N. 6. IN THE PRESENT' CASE BEFORE YOUR HONOUR, THE ASS ESSEE HAS PURCHASED/CONSTRUCTED THE NEW RESIDENTIAL PROPERTY AND PAID THE CONSIDERATION EQUIVALENT OF PRICE BY PAYMENT IN KIN D. THEREFORE THE ASSESSEE HAS PURCHASED THE RESIDENTIAL PROPERTY AND IS ENTITLED FOR EXEMPTION U/S.54 OF THE I T.ACT 1961. 9. IT IS CLEAR FROM THE ABOVE THAT RESIDENTIAL HOUS E WAS GIVEN TO THE ASSESSEE IN CONSIDERATION OF THE SALE OF OLD HOUSE. THE SALE CONSIDERATION WAS PARTLY RECEIVED IN CASH AND PARTL Y IN THE FORM OF NEW FLATS TO BE CONSTRUCTED ON THE PLOT OF OLD HOUS E SOLD BY ASSESSEE. THE NEW FLATS AGREED TO BE GIVEN TO ASSESSEE AMOUNT S TO INVESTMENT BY ASSESSEE IN RESIDENTIAL HOUSE. THEREFORE, THE AO WAS NOT JUSTIFIED IN ADDING BACK THE ADDITIONAL CONSIDERATION GIVEN I N THE FORM OF ALLOTMENT OF THREE FLATS BY DECLINING CLAIM OF DEDU CTION U/S.54 OF THE I.T.ACT. 10. IN THE PRESENT CASE BEFORE US, THE ASSESSEE HAS PURCHASED/CONSTRUCTED THE NEW RESIDENTIAL PROPERTY AND PAID THE M/S PARLE BOTTLING P. LTD. ITA NO.1209/MUM/2014 18 CONSIDERATION EQUIVALENT OF PRICE BY PAYMENT IN KIN D. THEREFORE, THE ASSESSEE IS ENTITLED FOR EXEMPTION U/S.54 OF I.T.AC T, 1961 IN RESPECT OF THESE FLATS. 11. AN ISSUE WAS ALSO RAISED BY THE AO WITH REGARD TO SHARING OF 3 FLATS BETWEEN THE CO-OWNERS OF THE PROPERTY AND THE EXEMPTION U/S.54 ALLOWABLE IN CASE OF INVESTMENT IN ONE RESID ENTIAL FLAT ONLY. IN THIS REGARD, WE FOUND THAT THE DETAILS OF ALLOCATIO N OF AREA OF NEW RESIDENTIAL PROPERTY BETWEEN CO-OWNERS ARE AS FOLLO WS :- NAME RATIO AREA IN SQ.FT. DESCRIPTION MR. PETER S. PEREIRA 77% 2400 FLAT NO.301 & 302 ADJACENT FLATS @ 1200 SQ.FT. EACH ON 3 RD FLOOR AND TWO STILT CAR PARKING SPACE MS VILMA M. PEREIRA 23% 750 FLAT NO.402 ON 4TH FLOOR AND ONE CAR PARKING SPACE THE AFORESAID RATIO OF ALLOCATION BETWEEN CO-OWNERS IS ALREADY ON RECORD OF THE AO AS WELL AS IN THE VALUATION REPORT . FURTHERMORE, THE CO-OWNER WILL GET THE AREA ACCORDING TO THEIR RATIO IN THE NEW RESIDENTIAL PROPERTY. SINCE FLAT NO.301 & 302 ARE S ITUATED IN THE SAME FLOOR AND ADJACENT TO EACH OTHER AND WILL BE T REATED AS ONE SINGLE RESIDENTIAL UNIT FOR THE PURPOSE OF CLAIMING EXEMPTION U/S.54. THE SAME VIEW HAS BEEN TAKEN BY THE SPECIAL BENCH O F THE MUMBAI TRIBUNAL IN THE CASE OF ITO VS. MS. SUSHILA M. JHAV ERI, (2007) 292 ITR (AT) 1 (MUMBAI). 12. THE ISSUE RAISED BY THE AO IS ALSO COVERED BY THE DECISION OF HONBLE DELHI HIGH COURT IN THE CAS E OF GITA DUGGAL 257 CTR 208, WHEREIN THE HONBLE HIGH COURT HELD AS UNDER:- M/S PARLE BOTTLING P. LTD. ITA NO.1209/MUM/2014 19 SEC. 54/54F USES THE EXPRESSION 'A RESIDENTIAL HO USE'. THE EXPRESSION USED IS NOT 'A RESIDENTIAL UNIT'. THIS I S A NEW CONCEPT INTRODUCED BY THE AO INTO THE SECTION. SEC. 54/54F REQUIRES THE ASSESSEE TO ACQUIRE A 'RESIDENTIAL HOUSE' AND SO LO NG AS THE ASSESSEE ACQUIRES A BUILDING, WHICH MAY BE CONSTRUCTED, FOR THE SAKE OF CONVENIENCE, IN SUCH A MANNER AS TO CONSIST OF SEVE RAL UNITS WHICH CAN, IF THE NEED ARISES, BE CONVENIENTLY AND INDEPE NDENTLY USED AS AN INDEPENDENT RESIDENCE, THE REQUIREMENT OF THE SECTI ON SHOULD BE TAKEN TO HAVE BEEN SATISFIED. THERE IS NOTHING IN T HESE SECTIONS WHICH REQUIRE THE RESIDENTIAL HOUSE TO BE CONSTRUCTED IN A PARTICULAR MANNER. THE ONLY REQUIREMENT IS THAT IT SHOULD BE F OR THE RESIDENTIAL USE AND NOT FOR COMMERCIAL USE. IF THERE IS NOTHING IN THE SECTION WHICH REQUIRES THAT THE RESIDENTIAL HOUSE SHOULD BE BUILT IN A PARTICULAR MANNER, IT SEEMS THAT THE IT AUTHORITIES CANNOT INSIST UPON THAT REQUIREMENT. A PERSON MAY CONSTRUCT A HOU SE ACCORDING TO HIS PLANS AND REQUIREMENTS. MOST OF THE HOUSES A RE CONSTRUCTED ACCORDING TO THE NEEDS AND REQUIREMENTS AND EVEN CO MPULSIONS. FOR INSTANCE, A PERSON MAY CONSTRUCT A RESIDENTIAL HOUS E IN SUCH A MANNER THAT HE MAY USE THE GROUND FLOOR FOR HIS OWN RESIDENCE AND LET OUT THE FIRST FLOOR HAVING AN INDEPENDENT ENTRY SO THAT HIS INCOME IS AUGMENTED. IT IS QUITE COMMON TO FIND SUCH ARRAN GEMENTS, PARTICULARLY POST-RETIREMENT. ONE MAY BUILD A HOUSE CONSISTING OF FOUR BEDROOMS (ALL IN THE SAME OR DIFFERENT FLOORS) IN SUCH A MANNER THAT AN INDEPENDENT RESIDENTIAL UNIT CONSISTING OF TWO OR THREE BEDROOMS MAY BE CARVED OUT WITH AN INDEPENDENT ENTR ANCE SO THAT IT CAN BE LET OUT. HE MAY EVEN ARRANGE FOR HIS CHIL DREN AND FAMILY TO STAY THERE, SO THAT THEY ARE NEARBY, AN ARRANGEMENT WHICH CAN BE MUTUALLY SUPPORTIVE. HE MAY CONSTRUCT HIS RESIDENCE IN SUCH A MANNER THAT IN CASE OF A FUTURE NEED HE MAY BE ABLE TO DISPOSE OF A PART THEREOF AS AN INDEPENDENT HOUSE. THERE MAY BE SEVERAL SUCH CONSIDERATIONS FOR A PERSON WHILE CONSTRUCTING A RE SIDENTIAL HOUSE. THE PHYSICAL STRUCTURING OF THE NEW RESIDENTIAL HOU SE, WHETHER IT IS LATERAL OR VERTICAL, SHOULD NOT COME IN THE WAY OF CONSIDERING THE BUILDING AS A RESIDENTIAL HOUSE. THE FACT THAT THE 'RESIDENTIAL HOUSE CONSISTS OF SEVERAL INDEPENDENT UNITS CANNOT BE PER MITTED TO ACT AS AN IMPEDIMENT TO THE ALLOWANCE OF THE DEDUCTION UND ER S.54/54F. IT ISNEITHER EXPRESSLY NOR BY NECESSARY IMPLICATION PR OHIBITED. TRIBUNAL WAS THEREFORE JUSTIFIED IN ALLOWING EXEMPT ION UNDER S.54 IN RESPECT OF ENTIRE INVESTMENT IN CONSTRUCTION OF BAS EMENT, GROUND FLOOR, FIRST FLOOR, SECOND FLOOR AND THIRD FLOOR. 13. IN VIEW OF THE ABOVE DISCUSSION, WE DO NOT FIND ANY MERIT IN THE ACTION OF THE AO FOR DECLINE OF CLAIM OF DEDUCTION U/S.54 IN RESPECT OF M/S PARLE BOTTLING P. LTD. ITA NO.1209/MUM/2014 20 RESIDENTIAL FLATS ALLOTTED BY BUILDER IN CONSIDERAT ION OF SALE OF OLD HOUSE. 14. IN THE RESULT, APPEALS OF BOTH THE ASSESSEES AR E ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 27TH FEB .2015. 2.2. WE FIND THAT THE TRIBUNAL DELIBERATED THE ISS UE WITH RESPECT TO DECLINING THE CLAIM OF DEDUCTION U/S 54 OF THE ACT AND BY FOLLOWING THE DECISION OF THE SPECIAL BENCH IN THE CASE OF ITO VS MS. SUSHILA M. JHAVERI (2007) 292 ITR (AT) 1 (MUM.) AND ALSO THE DECISION FROM HONBLE DELHI HIGH COURT IN GEETA DUG GAL 257 CTR 208 (DEL.) DECIDED THE CLAIMED DEDUCTION IN FAVOUR OF THE ASSESSEE. WE FURTHER NOTE THAT THE LD. ASSESSING OFFICER IMPO SED PENALTY WITH RESPECT TO CLAIMED DEDUCTION U/S 54 OF THE ACT, THE REFORE, WHEN THE BASIS NO LONGER SURVIVE ON THE BASIS OF WHICH PENAL TY WAS IMPOSED, IN OUR VIEW, PENALTY U/S 271(1)(C) OF THE ACT CANNO T SURVIVE. 2.3. THERE IS NO DISPUTE THAT QUANTUM ADDITION HAS BEEN DELETED BY THE TRIBUNAL, THEREFORE, IN OUR HUMBLE O PINION, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS JUSTIFIED I N DELETING THE PENALTY. OUR VIEW FURTHER FINDS SUPPORT FROM THE DE CISION AND THE RATIO LAID DOWN IN CIT VS S.P VIZ CONSTRUCTION COMP ANY 176 ITR 47 (PATNA) AND K.C. BUILDERS VS ACIT 265 ITR 562 (SUPR EME COURT). WE ARE OF THE VIEW WHERE THE PENALTY FOR CONCEALMENT O R FURNISHING INACCURATE PARTICULARS WAS LEVIED AND AFTER DELETIN G THE QUANTUM ADDITION, THERE REMAINS NO BASIS AT ALL FOR LEVYING THE PENALTY. ORDINARILY, PENALTY CANNOT STAND IN ITSELF IF THE A DDITION MADE IN THE ASSESSMENT ITSELF IS SET ASIDE OR CANCELLED BY THE SUPERIOR AUTHORITY/COURT. THE PENALTY CANNOT STAND BY ITSEL F BECAUSE FALSE RESULT MAY BE PRODUCED BY THE FALSITY OF ONE OR MOR E OF THE M/S PARLE BOTTLING P. LTD. ITA NO.1209/MUM/2014 21 CONSTITUENT ITEMS IN THE RETURN. THE WORD INACCUR ATE PARTICULARS WOULD COVER FALSITY IN THE FINAL FIGURE AND ALSO TH E CONSTITUENT ELEMENTS OR ITEMS. THEY SIMPLY WOULD MEAN INACCURA TE IN SOME SPECIFIC OR DEFINITE RESPECT WHETHER IN THE CONSTIT UENT OR SUBORDINATE ITEMS OF INCOME OR THE END RESULT. CONCEALMENT OR FURNISHING INACCURATE PARTICULARS IMPLIES SOME DELIBERATE ACT ON THE PART OF THE ASSESSEE IN WITHHOLDING THE TRUE FACTS FROM THE AUT HORITIES. SINCE, THE BASIS OF LEVYING PENALTY REMAINS NO MORE IN EXI STENCE, AFTER DELETION OF QUANTUM ADDITION, THEREFORE, FROM THIS ANGLE, THE STAND OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS JUSTIFIED. FINALLY, THE APPEAL OF THE REVENUE IS HAVING NO MER IT, THEREFORE, DISMISSED. 2.3. THERE IS NO DISPUTE THAT QUANTUM ADDITION HAS BEEN DELETED BY THE TRIBUNAL, THEREFORE, IN OUR HUM BLE OPINION, THE LD. COMMISSIONER OF INCOME TAX (APPEAL S) IS NOT JUSTIFIED IN CONFIRMING THE PENALTY. ADMITTEDLY, T HE IMPUGNED ORDER IS DATED 07/10/2013, WHEREAS, THE ORDER OF QU ANTUM ADDITION OF THE TRIBUNAL IS DATED 31/07/2015, MEANI NG THEREBY, THE ORDER OF THE TRIBUNAL WAS EVEN NOT EVE N EXISTENCE. OUR VIEW FURTHER FINDS SUPPORT FROM THE DECISION AND THE RATIO LAID DOWN IN CIT VS S.P VIZ CONSTRUCT ION COMPANY 176 ITR 47 (PATNA) AND K.C. BUILDERS VS ACI T 265 ITR 562 (SUPREME COURT). WE ARE OF THE VIEW WHERE T HE PENALTY FOR CONCEALMENT OR FURNISHING INACCURATE PA RTICULARS WAS LEVIED AND AFTER DELETING THE QUANTUM ADDITION, THERE REMAINS NO BASIS AT ALL FOR LEVYING THE PENALTY. O RDINARILY, PENALTY CANNOT STAND IN ITSELF IF THE ADDITION MADE IN THE ASSESSMENT ITSELF IS SET ASIDE OR CANCELLED BY THE SUPERIOR AUTHORITY/COURT. THE PENALTY CANNOT STAND BY ITSEL F BECAUSE FALSE RESULT MAY BE PRODUCED BY THE FALSITY OF ONE OR MORE OF M/S PARLE BOTTLING P. LTD. ITA NO.1209/MUM/2014 22 THE CONSTITUENT ITEMS IN THE RETURN. THE WORD INA CCURATE PARTICULARS WOULD COVER FALSITY IN THE FINAL FIGUR E AND ALSO THE CONSTITUENT ELEMENTS OR ITEMS. THEY SIMPLY WOU LD MEAN INACCURATE IN SOME SPECIFIC OR DEFINITE RESPECT WHE THER IN THE CONSTITUENT OR SUBORDINATE ITEMS OF INCOME OR THE E ND RESULT. CONCEALMENT OR FURNISHING INACCURATE PARTICULARS IM PLIES SOME DELIBERATE ACT ON THE PART OF THE ASSESSEE IN WITHHOLDING THE TRUE FACTS FROM THE AUTHORITIES. S INCE, THE BASIS OF LEVYING PENALTY REMAINS NO MORE IN EXISTEN CE, AFTER DELETION OF QUANTUM ADDITION, THEREFORE, FROM THIS ANGLE, THE STAND OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL S) IS NOT SUSTAINABLE. FINALLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. 2.2. IN THE AFORESAID ORDER, AN ELABORATE DISCUSSI ON HAS BEEN MADE BY THE TRIBUNAL BY TAKING RECOURSE TO VAR IOUS JUDICIAL PRONOUNCEMENTS. IN THE PRESENT APPEAL ALSO , THERE IS NO DISPUTE THAT QUANTUM ADDITION HAS BEEN DELETED B Y THE TRIBUNAL, THEREFORE, IN OUR HUMBLE OPINION, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS JUSTIFIED I N DELETING THE PENALTY. OUR VIEW FURTHER FINDS SUPPORT FROM T HE DECISION AND THE RATIO LAID DOWN IN CIT VS S.P VIZ CONSTRUCT ION COMPANY 176 ITR 47 (PATNA) AND K.C. BUILDERS VS ACI T 265 ITR 562 (SUPREME COURT). WE ARE OF THE VIEW THAT WH ERE THE PENALTY FOR CONCEALMENT OR FURNISHING INACCURATE PA RTICULARS WAS LEVIED AND AFTER DELETING THE QUANTUM ADDITION, THERE REMAINS NO BASIS AT ALL FOR LEVYING THE PENALTY. O RDINARILY, PENALTY CANNOT STAND IN ITSELF IF THE ADDITION MADE IN THE ASSESSMENT ITSELF IS SET ASIDE OR CANCELLED BY THE SUPERIOR AUTHORITY/COURT. THE PENALTY CANNOT STAND BY ITSEL F BECAUSE M/S PARLE BOTTLING P. LTD. ITA NO.1209/MUM/2014 23 FALSE RESULT MAY BE PRODUCED BY THE FALSITY OF ONE OR MORE OF THE CONSTITUENT ITEMS IN THE RETURN. THE WORD INA CCURATE PARTICULARS WOULD COVER FALSITY IN THE FINAL FIGUR E AND ALSO THE CONSTITUENT ELEMENTS OR ITEMS. THEY SIMPLY WOULD M EAN INACCURATE IN SOME SPECIFIC OR DEFINITE RESPECT WHE THER IN THE CONSTITUENT OR SUBORDINATE ITEMS OF INCOME OR THE E ND RESULT. CONCEALMENT OR FURNISHING INACCURATE PARTICULARS IM PLIES SOME DELIBERATE ACT ON THE PART OF THE ASSESSEE IN WITHHOLDING THE TRUE FACTS FROM THE AUTHORITIES. SINCE, THE BA SIS OF LEVYING PENALTY REMAINS NO MORE IN EXISTENCE, AFTER DELETIO N OF QUANTUM ADDITION, THEREFORE, FROM THIS ANGLE, THE S TAND OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS JUSTIFI ED. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 18/11/2015. SD/- SD/- ( ASHWANI TANEJA ) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER ' # MUMBAI; ' DATED : 23/11/2015 F| FA P.S/. .. %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. )*+, / THE APPELLANT 2. -.+, / THE RESPONDENT. 3. / / ' 0! ( )* ) / THE CIT, MUMBAI. 4. / / ' 0! / CIT(A)- , MUMBAI 5. 23 -! , / )*% ) 4 , ' # / DR, ITAT, MUMBAI 6. 5 6# / GUARD FILE. / BY ORDER, .2*! -! //TRUE COPY// / (DY./ASSTT. REGISTRAR) , ' # / ITAT, MUMBAI.