Shri Devish Gnanesh Gala, Ahmedabad V. Dy. Commissioner of Income Tax, Ahmedabad

ITA 1299/AHD/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8400 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-04-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 13-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Cost of acquisition
• Section: 143(3)

Judgement Text

, A IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ ITA NO. 1299/AHD/2015 / ASSTT. YEAR: 2010-2011 SHRI DEVISH GNANESH GALA NAVNEET HOUSE, GURUKUL ROAD, MEMNAGAR, AHMEDABAD. PAN:AKCPG7159E VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-6, AHMEDABAD / (APPELLANT) / (RESPONDENT) ASSESSEE BY : ASEEM THAKKAR, A.R REVENUE BY : RAJDEEP SINGH, SR. D.R ! / DATE OF HEARING : 02/04/2018 '#$ ! / DATE OF PRONOUNCEMENT: 05/04/2018 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAIN ST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) DATED 16.02.2015 PASSED FOR ASSESSMENT YEAR 2010-2011. 2. THE SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT L D. CIT(A) HAS ERRED IN CONFIRMING THE PENALTY OF RS. 6,46,500/- IMPOSED BY THE ASSESSING OFFICER U/S. 271(1)(C) OF THE INCOME TAX ACT. ITA NO.1299/AHD/2015 A.Y. 2010-11 2 3. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS AN INDIVIDUAL. HE HAS FILED HIS RETURN OF INCOME ON 31.07.2010 DECLARING TOTAL INCOME OF RS. 2,64,16,067/-. THIS RETURN WAS REVISED ON 27.03.201 2 DECLARING INCOME AT RS. 1,95,43,760/-. THE ASSESSMENT ORDER WAS PASSED U/S. 143(3) ON 27.02.2013, DETERMINING THE TAXABLE INCOME OF THE A SSESSEE AT RS. 2,26,82,040/-. THE ASSESSEE WAS CO-OWNER WITH 40% S HARES IN THREE FLATS SITUATED AT MUMBAI. THESE WERE SOLD DURING THE YEAR . A DISPUTE AROSE BETWEEN THE ASSESSEE AND THE ASSESSING OFFICER WITH REGARD TO COMPUTATION OF LONG TERM CAPITAL GAIN. INITIALLY ASSESSEE HAS S HOWN SHORT TERM CAPITAL GAIN BUT LATER ON, HE WAS ADVISED TO SHOW LONG TERM CAPITAL GAIN AND ACCORDINGLY HE CLAIMED. THIS STAND OF THE ASSESSEE WAS ACCEPTED BY THE ASSESSING OFFICER. THE DISPUTE RELATES TO DETERMINA TION OF INDEXED COST OF ACQUISITION. ACCORDING TO THE ASSESSEE, THE DATE OF ACQUISITION OF THE FLATS WOULD BE CONSTRUED FROM THE DATE WHEN HE ENTER INTO AN AGREEMENT FOR PURCHASE AND MADE THE PAYMENT PARTIALLY. THE ASSESS EE HAS MADE PAYMENT FOR ACQUIRING THESE FLATS IN 3/4 YEARS. THE ASSESSING OFFICER HAS COMPUTED INDEXED COST ON THE BASIS OF DATES OF PAYM ENTS IN DIFFERENT YEARS. ACCORDING TO THE ASSESSEE THE INDEXED COST O F ACQUISITION WAS OF RS. 1,87,36,874/- WHEREAS ASSESSING OFFICER HAS WORKED OUT INDEXED COST OF RS. 1,55,98,592/-. THE ASSESSING OFFICER HAS MADE A N ADDITION OF RS. 31,38,282/- IN THE COMPUTATION OF LONG TERM CAPITAL GAIN. HE INITIATED PENALTY PROCEEDINGS U/S. 271(1)(C). THE PENALTY @ 1 00% OF THE TAXES SOUGHT TO BE EVADED WAS CALCULATED @ RS. 6,46,486/- @ 300% WAS CALCULATED RS. 19,39,458/-. THE ASSESSING OFFICER H AS IMPOSED THE PENALTY AT RS. 10,00,000/-. 4. ON APPEAL, LD. CIT(A), IN PRINCIPAL CONCURRED W ITH THE ASSESSING OFFICER FOR VISITING THE ASSESSEE WITH PENALTY BUT DIRECT THE ASSESSING OFFICER TO LEVY THE PENALTY @ 100%. IN THIS WAY IMPOSITION OF PENALTY @ RS. 6,46,486/- HAS BEEN CONFIRMED. ITA NO.1299/AHD/2015 A.Y. 2010-11 3 5. BEFORE US, LD. COUNSEL FOR THE ASSESSEE CONTENDE D THAT IN THE CASE OF CO-SHARERS IDENTICAL ISSUE WAS CONSIDERED BY THE TR IBUNAL IN ITA NO. 1300/AHD/2015 (BHAIRAVI ANILBHAI GALA VS. DCIT.) TH E TRIBUNAL HAS DELETED THE PENALTY. HE PLACED ON RECORD COPY OF THE TRIBUN ALS ORDER. HE FURTHER CONTENDED THAT IN THE CASE OF THIRD CO-SHARERS, CIT (A) HAS DELETED THE PENALTY THOUGH HE FAIL TO SUBMITTED ANY ORDER TO TH AT EFFECT BUT MADE STATEMENT AT THE BAR AND WE DO NOT FIND ANY REASON TO DISBELIEVE HIM. 6. ON THE OTHER HAND LD. D.R RELIED UPON ORDER OF T HE CIT(A). 7. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AN D GONE THROUGH THE RECORD CAREFULLY.. WE FIND THAT IDENTICAL FACTS HAV E BEEN CONSIDERED BY THE TRIBUNAL IN THE CASE OF THE CO-SHARERS. THE TRIBUNA L HAS MADE FOLLOWING OBSERVATIONS WHILE DELETING THE PENALTY:- 5. THE ID.AO HAS INITIATED PENALTY PROCEEDINGS ON T HIS ALLEGED EXCESS CLAIM OF INDEXATION COST TO RS.13,62,121/-. THE STAND OF THE ASSESSEE WAS THAT SHE HAS FILED THIS CLAIM ON THE BASIS OF LEGAL ADVICE. EARLIER SH E HAS COMPUTED SHORT TERM CAPITAL GAIN, AND THEREAFTER, ON THE BASIS OF LEGAL ADVICE, SHE HAS CHANGED THE STAND AND CLAIMED LONG TERM CAPITAL GAIN. THIS STAND WAS ACCE PTED. SHE WAS HARBOURING A BELIEF THAT SINCE INITIAL PAYMENT WAS MADE FOR F.Y.2004-05 , THEREFORE, IT IS TO BE CONSTRUED THAT THE ASSET WAS ACQUIRED IN THAT YEAR. THIS FACT HAS ONLY LEAD TO ASSESSMENT OF GAIN AS LONG TERM CAPITAL GAIN. ON THE OTHER HAND, THE I D.AO WAS OF THE OPINION THAT AS PER SECTION 48, ASSESSEE WOULD REDUCE THE FOLLOWING AMO UNTS FROM SALE CONSIDERATION RECEIVED BY HER FOR THE PURPOSE OF COMPUTING LONG T ERM CAPITAL VIZ. (A) EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRANSFER, AND (B) COST OF ACQUISITION OF ASSET AND COST OF ANY IMPROVEMENT TH EREOF. THUS, THE AO WAS OF THE OPINION THAT COST OF ACQUISITION OUGHT TO BE TAKEN FOR THE PURPOSE OF INDEXATION IN THE YEAR SUCH COST WAS INCURRED. SINCE THE ASSESSEE HAS INCURRED THE COST IN YEARS, THEREFORE, THERE IS A VARIATION IN VALUE OF INDEXAT ION. THIS VIEW OF THE AO MET WITH APPROVAL OF THE ID.CIT(A). HOWEVER, AFTER DUE CONSI DERATION OF THE FACTS AND ITA NO.1299/AHD/2015 A.Y. 2010-11 4 CIRCUMSTANCES, WE ARE OF THE VIEW THAT THERE IS NO DELIBERATE ATTEMPT AT THE END OF THE ASSESSEE. SHE HAS DISCLOSED COMPLETE FACTS. SHE HAS DISCLOSED DETAILS OF PAYMENT AS WELL AS RECEIPTS. SHE HAS HARBOURED A BELIEF THAT T HE. ASSET SHOULD BE CONSTRUED AS ACQUIRED WHEN INITIAL AGREEMENT FOR PURCHASE WAS MA DE AND PART PAYMENT WAS MADE. THIS CAN BE A BONA FIDE LAPSE AT THE END OF THE ASS ESSEE, AND SHE SHOULD NOT BE VISITED WITH PENALTY FOR SUCH BELIEF WHICH MAY NOT BE ACCEP TED ULTIMATELY BY THE AO. THEREFORE, WE ALLOW THE APPEAL OF THE ASSESSEE AND DELETE PENA LTY. 8. THERE IS NO DISPARITY ON FACTS. THEREFORE, RESPE CTFULLY FOLLOWING THE ORDER OF THE CO-ORDINATE BENCH IN THE CASE OF CO-SH ARERS, WE ALLOW THIS APPEAL AND DELETE THE PENALTY. 9. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 5 TH APRIL, 2018. SD/- SD/- (PRADIP KUMAR KEDIA) ACCOUNTANT MEMBER MUKUL KR. (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 05/04/2018 %& '() *%)$ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. + / THE RESPONDENT. 3. ,, - / CONCERNED CIT 4. - ( ) / THE CIT(A) 5. )./ '' , / DR, ITAT, 6. /01 2 / GUARD FILE. %& / BY ORDER, 3 / ,4 (DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD