ITO, CHENNAI V. Renuka Philip, Bangalore

ITA 1419/CHNY/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8730 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 22-06-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 26-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DURAI PANDIAN
• Assessee Lawyers: S SRIDHAR
• Keywords: Sale consideration of property below Jantri Value; Value adopted by valuation officer; Bonafide belief; Cost of acquisition; Fair market value; Valuation report; Assessment record
• Section: 143(3); 50C; 54F; 147; 54; 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI , . ! ' , #'$ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A. NOS.1418 & 1419/2013 & C.O.NO.140/MDS/2013 (IN ITA NO.1418/MDS/2013) # % &% / ASSESSMENT YEAR : 2005-2006. THE INCOME TAX OFFICER, WARD XV(2) CHENNAI 600 034 VS. SMT. RENUKA PHILIP, HIGH GATES APARTMENTS, NO.50 HIGH STREET, COOKI TOWN, NEW DOOR NO.10, BANGALORE 560 029. [PAN AAGPP 9696M] ( / APPELLANT) ( /RESPONDENT/ CROSS OBJECTOR ) DEPARTMENT BY : SHRI. DURAI PANDIAN, ADDL. CIT ASSESSEE BY SHRI. S. SRIDHAR, ADVOCATE. ! ' ( / DATE OF HEARING : 22-06-2016 )*& ' ( / DATE OF PRONOUNCEMENT : 22-07-2016 / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER : THE APPEALS FILED BY THE REVENUE AND CROSS OBJE CTION BY ASSESSEE ARE DIRECTED AGAINST DIFFERENT ORDERS OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-XII, CHENNAI DATED 14.03.2013 FOR THE ASSESSMENT YEAR 2005-206 PASSED U/S.143(3) AND 271 (1) (C) AND ITA NOS.1418 & 1419/MDS /13 & C.O.NO.140/MDS/13 IN ITA 1418/13) :- 2 -: 250 OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFE RRED TO AS THE ACT). SINCE THE ISSUE IN THESE APPEALS ARE COMM ON IN NATURE, THESE APPEALS ARE CLUBBED, HEARD TOGETHER, AND DISPOSED O F BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. FIRST, WE TAKE UP ITA NO.1418/MDS/2013, ASSESSMENT YEAR 2005-2006 FOR ADJ UDICATION. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS:- 2.1 THE ID. CIT(A) ERRED IN DIRECTING THE ASSESSIN G OFFICER TO ALLOW DEDUCTION ON ACCOUNT OF INDEXED VA LUE OF BUILDINGS AT 65,02,943/- WHEN NO BUILDING EXISTED AT THE TIME OF SALE OF PROPERTY. 2.2 THE ID. CIT(A) OUGHT TO HAVE NOTED THAT THE SAL E DEED CLEARLY MENTIONED THAT THE PROPERTY SOLD AS 'L AND' AND NO BUILDINGS ARE MENTIONED IN THE SALE DEED TO GIVE EFFECT FOR INDEXATION. 2.3 THE ID.CIT(A) ERRED IN ADOPTION OF P W D RATES FOR EXTENSION OF BUILDING DURING THE F.Y. 1995-96 AND F .Y. 1996-97 WHEN THERE WAS NO EVIDENCE AVAILABLE FOR EXTENSION OF BUILDING DURING THE FINANCIAL YEARS 19 95-96 & 1996-97 TO PROVE THAT IMPROVEMENT WAS ACTUALLY CARR IED OUT ON THE EXISTING PROPERTY. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S AN INDIVIDUAL HAVING INCOME FROM CAPITAL GAINS AND INT EREST INCOME AND FILED RETURN OF INCOME ON 31.07.2005 ADMITTING TOTA L INCOME OF >1,11,107/- AND RETURN OF INCOME WAS PROCESSED U/S .143(1) OF THE ACT. SUBSEQUENTLY, THE LD. ASSESSING OFFICER HAVIN G REASONS TO BELIEVE THAT THE INCOME HAS ESCAPEMENT ASSESSMENT ISSUED N OTICE U/S.148 OF THE ACT. IN COMPLIANCE TO NOTICE, THE ASSESSEE FIL ED A LETTER TO CONSIDER ITA NOS.1418 & 1419/MDS /13 & C.O.NO.140/MDS/13 IN ITA 1418/13) :- 3 -: THE RETURN FILED EARLIER FOR THE PURPOSE OF RE-ASSE SSMENT. THE LD. ASSESSING OFFICER ISSUED NOTICE U/S.142(1) OF THE A CT AND THE LD. AUTHORISED REPRESENTATIVE OF ASSESSEE APPEARED FROM TIME TO TIME AND FILED INFORMATION. THE ASSESSEE SOLD HOUSE PROPERTY BY EXECUTING EIGHT SEPARATE SALE DEED ON 26.04.2004, EACH SALE DEED VA LUE BEING >18,00,000/-. THE LD. ASSESSING OFFICER FOUND THE M ARKET VALUE OF THE PROPERTY AS PER SUB REGISTRAR OFFICE, RECORD >22,7 3,412/- WHICH IS HIGHER THAN SALE CONSIDERATION AND APPLIED THE DEEM ING PROVISIONS U/S.50C OF THE ACT AND WORKED OUT DEEMED SALE CONSI DERATION OF EIGHT SALE DEEDS AT >1,81,87,296/-, WHEREAS ASSESSEE HAS ADMITTED ACTUAL SALE CONSIDERATION OF >1,44,00,000/- (BEING >18,00, 000/- X 8 SALE DEEDS) AND THE LD. ASSESSING OFFICER HAS MADE AN A DDITION U/SEC. 50C OF THE ACT >37,87,296/-. THE ASSESSEE HAS CLAIMED EXEMPTION U/S.54 OF THE ACT ON SALE OF RESIDENTIAL HOUSE AS PER STAT EMENT OF TOTAL INCOME. BUT THE LD. ASSESSING OFFICER ON PERUSAL O F THE SALE DEED IS OF THE OPINION THAT THE ASSESSEE IS NOT ELIGIBLE FOR E XEMPTION U/S.54 OF THE ACT BUT U/SEC. 54F OF THE ACT. THE LD. ASSESSING OF FICER ON PERUSAL OF SALE DEED IS OF THE OPINION THAT THE VACANT LAND WAS SOLD BY THE ASSESSEE BUT NOT THE RESIDENTIAL HOUSE AND THE AS SESSEE HAS WRONGLY CLAIMED THE EXEMPTION U/SEC. 54 OF THE ACT AND IS NOT ELIGIBLE FOR INDEX COST OF CONSTRUCTION OF SOLD PROPERTY. ON PE RUSAL OF COMPUTATION OF TOTAL INCOME, THE ASSESSEE HAS CLAIMED EXEMPTIO N U/S . 54 OF THE ITA NOS.1418 & 1419/MDS /13 & C.O.NO.140/MDS/13 IN ITA 1418/13) :- 4 -: ACT ON PURCHASE OF A NEW RESIDENTIAL FLAT ON 25.10. 2004 AT BANGALORE AND THE LD. ASSESSING OFFICER ON PERUSAL OF THE SAL E DEED OF BANGALORE FLAT FOUND THAT THE BANGALORE DEVELOPMENT AUTHORITY (BDA) HAS DEVELOPMENT COMPREHENSIVE FLATS AT BANGALORE CITY AND MARKED SCHEDULE OF PROPERTY WERE THE ASSESSEE FLAT COME WI THIN COMMERCIAL USAGE. THE LD. AUTHORISED REPRESENTATIVE EXPLAINED THAT THE SAID PURCHASED AT BANGALORE WAS CONVERTED INTO RESIDENTI AL PROPERTY AND APPROVED BY BANGALORE DEVELOPMENT AUTHORITY. THE CO NVERSION WAS MADE WITHIN TIME FRAME STIPULATED U/S.54F OF THE A CT. THE LD. AUTHORISED REPRESENTATIVE PRODUCED EVIDENCE AND OR DER OF RE- ASSESSMENT OF NATURE OF PROPERTY FROM BRUHAT BANGAL ORE MAHANAGARA PALIKA ALONGWITH PHOTOS EXPLAINING THAT THE SAID P ROPERTY WAS UTILIZED FOR RESIDENTIAL PURPOSE. BUT THE LD. ASSESSING OFF ICER HAVING CONSIDERED THE FACTS AND PROVISIONS OF SEC. 50C OF THE ACT CALCULATED SALE CONSIDERATION AT MARKET VALUE >1,81,87,296/- A ND HAS DENIED THE INDEX COST OF CONSTRUCTION BUT ALLOWED THE VALUE OF >2,00,000/- FOR 4 GROUNDS AND 64 SQ.FT AS ON 01.04.1981 AND WITH COS T INDEXATION HAS WORKED OUT >5,60,000/- AND CALCULATED LONG TERM CA PITAL GAINS AT >1,76,27,296/- AND ALLOWED EXEMPTION U/S.54F OF TH E ACT ON INVESTMENT IN RESIDENTIAL FLAT AT BANGALORE >1,15, 67,790/- AND WORKED OUT ADJUSTED LONG TERM CAPITAL GAIN AT >60,59,506/ - AND ASSESSED TOTAL INCOME AND PASSED ORDER U/S.143 R.W.S. 147 O F THE ACT DATED ITA NOS.1418 & 1419/MDS /13 & C.O.NO.140/MDS/13 IN ITA 1418/13) :- 5 -: 31.12.2009. AGGRIEVED BY THE ORDER, THE ASSESSEE F ILED AN APPEAL BEFORE COMMISSIONER OF INCOME TAX (APPEALS). SUBSEQ UENTLY, UNDER PROVISIONS OF SEC. 263 OF THE ACT, THE COMMISSIONE R OF INCOME TAX- 10, CHENNAI HAS SET ASIDE THE ORDER PASSED U/S.143 OF THE ACT R.W.S. 147 DATED 31.12.2009 AND REVISION ORDER DATED 31.03.2013 GIVING EFFECT TO SEC. 263 DIRECTIONS WAS PASSED BY DECLINI NG EXEMPTION U/S.54F AS THE ASSESSEE HAS PURCHASED COMMERCIAL PR OPERTY AND CONVERTED INTO RESIDENTIAL AND ASSESSEE HAS NOT DIS CHARGED HIS BURDEN CAST TO PROVE THAT REINVESTMENT QUALIFY FOR DEDUCTI ON U/S.54F OF THE ACT AND THE ASSESSEE CLAIM U/S.54F OF THE ACT OF >1,15 ,67,790/- WAS REJECTED AND ASSESSEE FILED AN APPEAL BEFORE COMMIS SIONER OF INCOME TAX (APPEALS). 4. AS AGAINST THE ORDER U/SE. 143(3) R.W.S147 OF THE A CT, IN THE APPELLATE PROCEEDINGS, THE LD. AUTHORISED REPRESENT ATIVE OF THE ASSESSEE ARGUED THE GROUNDS AND REITERATED THE SUBM ISSIONS OF THE ASSESSMENT PROCEEDINGS AND ALLEGED THAT THE ASSESSE E WAS DEPRIVED FOR CLAIM OF COST OF CONSTRUCTION ON PROPERTY AND CHALLENGED THE APPLICABILITY OF PROVISIONS OF SEC. 50C OF THE ACT . THE LD. COMMISSIONER OF INCOME TAX (APPEALS) CONSIDERED TH E GROUNDS OF APPEAL AND FOUND THAT THE LD. ASSESSING OFFICER HAS ADOPTED GUIDELINE VALUE AS PER SEC. 50C OF THE ACT FOR PROPERTY AT >1 ,81,87,296/- AGAINST SALE CONSIDERATION OF >1,44,00,000/-. FURTHER, THE LD. ASSESSING OFFICER ITA NOS.1418 & 1419/MDS /13 & C.O.NO.140/MDS/13 IN ITA 1418/13) :- 6 -: HAS ALLOWED FAIR MARKET VALUE OF LAND TO THE EXTEN T OF 2,00,000/- AS ON 01.04.1981 AND ALLOWED DEDUCTION U/S.54F OF THE ACT . THE ASSESSEE HAS OBJECTED TO THE ACTION OF THE LD. ASSESSING OFF ICE ON INVOKING PROVISIONS OF SEC. 50C OF THE ACT AND REJECTED THE COST INFLATION INDEXATION ON BUILDING AND THE ASSESSEE FILED ALS O ADDITIONAL GROUNDS BEFORE COMMISSIONER OF INCOME TAX (APPEALS) ON 25.0 1.2011 CHALLENGING THE LD. ASSESSING OFFICERS ACTION. T HE LD. AUTHORISED REPRESENTATIVE EXPLAINED THAT THE PROPERTY SOLD WAS LAND WITH RESIDENTIAL BUILDING AND WAS ACQUIRED PRIOR TO 01. 04.1981. FURTHER, THE ASSESSEE HAS INCURRED COST OF IMPROVEMENT BY WA Y OF ADDITIONS TO BUILDING >20,00,000/- FOR THE FINANCIAL YEAR 2005-2 006, >10,00,000/- FOR FINANCIAL YEAR 2006-2007. FURTHER AS PER THE T ERMS OF THE PURCHASER OF THE PROPERTY THE ASSESSEE DEMOLISHED ENTIRE RESIDENTIAL BUILDING BEFORE REGISTRATION OF PROPERTY AND THE ASSESSEE IS ALSO ENTITLED FOR COST OF IMPROVEMENT OF BUILDING CONSTR UCTION AFTER 01.04.1981. THE LD. COMMISSIONER OF INCOME TAX (AP PEALS) CONSIDERING THE FACTS AND THE ASSESSEE SUBMISSIONS AND THE OBJECTIONS ON INVOKING PROVISIONS OF SEC. 50C OF THE ACT DIREC TED THE LD. ASSESSING OFFICER TO REFER TO VALUATION CELL ON 16.02.2012. IN RESPONSE, THE DISTRICT VALUATION OFFICER (DVO) FILED REPORT DATED 13.12.2012 ESTIMATING THE VALUE OF PROPERTY AS ON 26.04.2004 A T >1,63,69,000/- AS AGAINST SUB-REGISTRAR GUIDELINE VALUE U/SEC. 50C O F THE ACT ITA NOS.1418 & 1419/MDS /13 & C.O.NO.140/MDS/13 IN ITA 1418/13) :- 7 -: >1,81,87,296/-. THE ASSESSEE FILED OBJECTIONS TO THE VALUATION REPORT ON COMMUNICATION OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS). THE LD. AUTHORISED REPRESENTATIVE ALLEGED THAT THE VALUATION OFFICER HAS ALLOWED COST ADJUSTMENT FOR DEFICIENCIES ATTACH ED TO THE PROPERTY @5% AS AGAINST @ 25% AND SAME WAS REJECTED. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ON THE GROUND OF APPLICABILITY OF SEC.50C OF THE ACT. DIRECTED THE LD. ASSESSING OFFICER TO ADOPT THE VALUE DECLARED BY THE DISTRICT VALUATION OFFICER ( DVO) >1,63,69,000/- AS SALE CONSIDERATION FOR CALCULATION OF CAPITAL GA INS. 4.1 ON THE NEXT GROUND OF CLAIM OF COST ACQUISITION OF LAND AND BUILDING THE ASSESSEE IN THE INCOME TAX RETURN CLAI MED FAIR MARKET VALUE OF COST OF LAND, AS ON 01.04.1981 AT >14,00,0 00/- AND ADDITION/COST OF CONSTRUCTION/ IMPROVEMENTS TO BUI LDING IN FINANCIAL YEARS 1995-96 >20,00,000/- AND IN 1996-1997 >10,0 0,000/-. THE LD. ASSESSING OFFICER REJECTED THE CLAIM OF THE ASSESSE E OF COST OF BUILDING AS THE PROPERTY SOLD WAS VACANT LAND AS DESCRIBED IN THE REGISTERED SALE DEED AND CONSIDERED ONLY FAIR MARKET VALUE OF LAND AS ON 01.04.1981 AT >2,00,000/-. THE LD. AUTHORISED REPRE SENTATIVE EXPLAINED THAT THE PROPERTY ALONGWITH RESIDENTIAL B UILDING WAS OWNED BY THE ASSESSEE PRIOR TO 01.04.1981 AND SUBSEQUENTL Y, ASSESSEE MADE EXTENSION OF THE BUILDING AND THE VALUE OF THE BUI LDING AS ON 01.04.1981 INCLUDING FOUR GROUNDS AND 28 SQ.FT WITH BUILDING 8000 SQ.FT ITA NOS.1418 & 1419/MDS /13 & C.O.NO.140/MDS/13 IN ITA 1418/13) :- 8 -: BEING >14,00,000/- AND THE ADDITION OF NEW BUILDING AREA OF 4000 SQ.FT IN FINANCIAL YEAR 1995-96 BEING >20,00,000/- AND IN THE FINANCIAL YEAR 1996-1997 2000SQ.FT WITH COST OF >10,00,000/-. TH E RESIDENTIAL BUILDING WAS SOLD IN THE FINANCIAL YEAR 2004-05 AN D PRIOR TO SALE THE BUILDING WAS LET OUT CONTINUOUSLY BY THE ASSESSEE A ND WAS RECEIVING RENTAL INCOME AND OFFERED TO TAX UNDER INCOME FROM HOUSE PROPERTY AND FILED RETURN OF INCOME. THE LD. AUTHORISED REPR ESENTATIVE FURTHER SUBMITTED THAT THE BUILDING IS LOCATED IN THE PRIME AREA AND THE BUYER WANTED TO PUT STRUCTURE AS PER THEIR DESIGNS AND RE QUIREMENT AND NOT WILLING TO TAKE POSSESSION OF EXISTING BUILDING. T HEREFORE, BUILDING WAS DEMOLISHED PRIOR TO REGISTRATION OF SALE DEED. FUR THER SUPPORTED THE EXISTENCE OF BUILDING, THE ASSESSEE HAS FILED COMP UTATION OF INCOME DISCLOSING RENTAL INCOME FROM HOUSE PROPERTY ALONG WITH COPIES OF INCOME TAX RETURN PRIOR TO ASSESSMENT YEAR 2005-200 6. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) CONSIDERING T HE FACTS AND THE IDENTIFIABLE EVIDENCE IS OF THE OPINION THAT THERE IS A EXISTENCE OF BUILDING ON LAND AND THE ASSESSEE HAS IN EARLIER ASSESSMENT YEARS HAS OFFERED RENTAL INCOME. DUE TO TERMS AND PREREQ UISITE CONDITION OF BUILDER, THE ASSESSEE HAS DEMOLISHED THE BUILDING P RIOR TO REGISTRATION OF SALE DEED. SINCE THE FACTS ARE DULY SUPPORTED W ITH EVIDENCE OF RESIDENTIAL BUILDING EXISTING ON THE LAND AND THE R ENTAL INCOME FROM BUILDING WAS OFFERED TO TAX WITH INCOME TAX DEPARTM ENT AND THE LD. ITA NOS.1418 & 1419/MDS /13 & C.O.NO.140/MDS/13 IN ITA 1418/13) :- 9 -: COMMISSIONER OF INCOME TAX (APPEALS) IS OF THE OPIN ION THAT THE ASSESSEE IS ELIGIBLE FOR INDEXATION OF COST OF BUI LDING IN THE COMPUTATION OF CAPITAL GAINS. 4.2 THE THIRD ISSUE BEING THAT THE ASSESSEE COULD N OT FURNISH DETAILS OF COST OF CONSTRUCTION INCURRED DURING THE FINANCIAL YEAR 1995- 96 AND 1996-97 AND METHODLOGY OF FAIR MARKET VALUE OF BUILDING >14,00,000/- AS ON 01.04.1981. THE LD. COMMISSIONE R OF INCOME TAX (APPEALS) IN ORDER TO ARRIVE AT A PROBABLE VALUE OF COST OF CONSTRUCTION OF THE BUILDING RELIED ON THE PWD RATES FOR CALCULA TING CONSTRUCTION COST AND CALCULATED FAIR MARKET VALUE OF THE BUILDING AT PAGE 7 OF HIS ORDER AND GAVE DIRECTIONS TO THE LD. ASSESSING OFFICER TO CONSIDER INDEX COST OF ACQUISITION OF BUILDING AND CALCULATED LONG TER M CAPITAL GAINS. 4.3. THE LAST GROUND BEING THE ASSESSEE HAS CLAIMED DEDUCTION IN RETURN OF INCOME INVESTMENT IN RESIDENTIAL HOUSE U/ S.54 OF THE ACT >1,15,67,970/- AND THE SAME WAS REJECTED BY THE LD . ASSESSING OFFICER BUT ALTERNATIVELY ALLOWED INVESTMENT IN NEW RESIDE NTIAL PROPERTY U/S.54F OF THE ACT. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) CONSIDERED THE FACTS OF VACANT LAND AND JUDICIAL DECISIONS AND HIGHLIGHTED THE CLAIM OF DEDUCTION U/S.54F OF THE A CT THAT THE (LD. CIT- X, CHENNAI VIDE HIS REVISION ORDER U/S.263 OF THE ACT DATED 14.03.2012, SET ASIDE THE ASSESSMENT TO THE EXTENT TO ALLOWING ITA NOS.1418 & 1419/MDS /13 & C.O.NO.140/MDS/13 IN ITA 1418/13) :- 10 -: DEDUCTION U/S.54 OF THE ACT AND DIRECTED THE LD. AS SESSING OFFICER TO EXAMINE THE ASSESSEES CLAIM OF DEDUCTION U/S. 54F OF THE ACT WHETHER NEW PROPERTY PURCHASED IS A RESIDENTIAL PROPERTY O R NOT, AND THE ASSESSMENT WAS SET ASIDE AND IS PENDING BEFORE LD. ASSESSING OFFICER. SINCE THE SUBJECT MATTER OF DEDUCTION OF U/SEC. 54F OF THE ACT IS PENDING BEFORE LD. ASSESSING OFFICER AS PER ORDER O F THE LD.CIT-X, U/S.263, THE LD. COMMISSIONER OF INCOME TAX (APPEAL S) HAS CONCLUDED THAT THE LD. ASSESSING OFFICER SHALL CAL CULATE EXEMPTION U/S.54F OF THE ACT ON PROPORTIONATE BASIS AND ALLO W LONG TERM CAPITAL GAINS AS REFERRED IN HIS ORDER AT PAGE 9 AS UNDER:- FULL VALUE OF CONSIDERATION AS PER DVOS REPORT R. W.S. 50C : 1,63,69,000/ - LESS : INDEXED COST OF LAND + BUILDINGS AS DISCUSSED ABOVE : 65,023,943/ - LONG TERM CAPITAL GAINS : 98,66,057/ - LESS: DEDUCTION U/S.54F OF THE ACT. ACTUAL INVESTMENT IN NEW PROPERTY : >1,15,67,970/- * DEDUCTION AVAILABLE U/S.54F ON PROPORTIONATE BASIS 1,15,67,970 X 98,66,057 /- 1,63,69,000/- 69,72,341/- ----------------- NET TAXABLE LONG TERM CAPITAL GAINS 28 ,93,716/- ---------------- NOTE * SUBJECT TO THE OUTCOME OF THE SET ASIDE ASSESSMENT TO BE COMPLETED BY THE ASSESSING OFFICER, AS PER THE DIRECTIONS OF THE CITS ORDER U/S.263 OF THE ACT. FURTHER GAVE A DIRECTION TO THE LD. ASSESSING OFFIC ER ON THE DISPUTED ISSUE TO ASSESSES THE LONG TERM CAPITAL GAINS ON SALE OF THE PROPERTY ITA NOS.1418 & 1419/MDS /13 & C.O.NO.140/MDS/13 IN ITA 1418/13) :- 11 -: AT >28,93,716/- AS AGAINST >60,59,506/- EARLIER DE TERMINED U/S.143(3) R.W.S. 147OF THE ACT DATED 31.12.2009. AGGRIEVED B Y THE COMMISSIONER OF INCOME TAX (APPEALS) ORDER, THE REV ENUE ASSAILED AN APPEAL BEFORE TRIBUNAL. 4.4 BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE REITERATED THE SUBMISSIONS ON FINDINGS OF THE LD. ASSESSING OF FICER AND ALSO REFERRED TO THE ASSESSMENT ORDER WERE THE LD. ASSES SING OFFICER HAS NOT ALLOWED THE CLAIM OF BUILDING IN CALCULATION OF LON G TERM CAPITAL GAINS. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ER RED IN DIRECTING THE LD. ASSESSING OFFICER TO ALLOW DEDUCTION OF COS T INFLATION INDEXED VALUE OF BUILDING >65,02,943/-. THE LD. COMMISSION ER OF INCOME TAX (APPEALS) HAS IGNORED THE FINDINGS AND THE INFORMAT ION IN SALE DEED OF NON EXISTENCE OF BUILDING AND ADOPTION OF PWD RATES FOR EXTENSION OF BUILDING IN THE FINANCIAL YEARS 1995-96 AND 1996-97 WERE NO EVIDENCE WAS PRODUCED BY THE ASSESSEE ON THE IMPROVEMENT CA RRIED OUT IN THE EXISTING RESIDENTIAL PROPERTY AND PRAYED FOR SET AS IDE OF THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS). 4.5 CONTRA, THE LD. AUTHORISED REPRESENTATIVE OF T HE ASSESSEE REITERATED THE SUBMISSIONS OF ASSESSMENT PROCEEDIN GS ALONGWITH EVIDENCE AND SUBMISSIONS MADE BEFORE LD. COMMISSIO NER OF INCOME TAX (APPEALS) AND THE GROUNDS RAISED ON DISPUTED IS SUE. FURTHER, LD. AUTHORISED REPRESENTATIVE EXPLAINED THAT THE LD. CO MMISSIONER OF ITA NOS.1418 & 1419/MDS /13 & C.O.NO.140/MDS/13 IN ITA 1418/13) :- 12 -: INCOME TAX (APPEALS) HAS CONSIDERED THE FACTS AND H AVING BEEN SATISFIED HAS CALCULATED INDEX COST OF ACQUISITION OF PROPERTY AS ON 01.04.1981 BOTH LAND AND BUILDING AND ALSO BUILDING EXTENSIONS IN THE FINANCIAL YEAR 1995-96 AND 1996-1997. THE LD. COMM ISSIONER OF INCOME TAX (APPEALS) HAS ADOPTED PWD RATES AS THE S TANDARD RATES AVAILABLE IN THE STATE OF TAMIL NADU AND ALSO THE G ENUINE FACTS BEING THAT THE ASSESSEE IS A OWNER OF THE BUILDING PRIOR TO 01.04.1981 AND WAS IN POSSESSION. THE ASSESSEE ON THE REQUEST OF T HE BUILDER DEMOLISHED BUILDING INCLUDING IMPROVEMENTS AND IN SUPPORT OF EXISTENCE OF BUILDING, THE LD. COMMISSIONER OF INCO ME TAX (APPEALS) HAS PERUSED THE INCOME TAX RETURNS OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2003-04 AND 2004-05 IN RESPECT OF R ENTAL INCOME FROM THE BUILDING AND PRODUCED COPIES OF INCOME T AX RETURN TO SUBSTANTIATE THE CLAIM AND PRAYED FOR DISMISSING TH E APPEAL. 4.6 WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MAT ERIAL ON RECORD AND MATERIAL EVIDENCE FILED. THE CRUX OF T HE DISPUTED ISSUE ARGUED BY THE LD. DEPARTMENTAL REPRESENTATIVE THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DIRECTING THE LD. ASSESSING OFFICER FOR ALLOWING DEDUCTION OF COST INDEXATION VALUE OF BUILDING >65,02,943/-. THE LD. AUTHORISED REPRESENTATIVE ARG UED THAT THE ASSESSEE IS IN POSSESSION OF THE BUILDING PRIOR TO 01.04.1981 AND EXTENSION OF THE BUILDING ARE MADE IN THE FINANCIAL YEAR 1995-96 AND ITA NOS.1418 & 1419/MDS /13 & C.O.NO.140/MDS/13 IN ITA 1418/13) :- 13 -: 1996-97 AND WERE LET OUT. THE RENTAL INCOME FROM B UILDING WAS OFFERED FOR INCOME TAX AND PRODUCED COPY OF INCOME TAX RETURN FOR ASSESSMENT YEAR 2004-05 AND COPY OF RESIDENTIAL E LECTRICITY BILL AND DREW OUR ATTENTION TO THE COPY OF INCOME TAX RETURN OF ASSESSMENT YEAR 2004-05 WERE THE ASSESSEE HAS OFFERED RENTAL I NCOME UNDER THE HOUSE PROPERTY AND DISCLOSED PROPERTY TAX RECEIPTS. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ELABORATEL Y DISCUSSED ON THE EXISTENCE OF BUILDING IN HIS ORDER AND HAVING SATISFIED WITH BUILDING EXISTENCE APPLIED PWD RATES AND CALCULATED INDEX COST OF ACQUISITION. WE FOUND FROM THE ORDER OF ASSESSMENT AND COMMISSIONER OF INCOME TAX (APPEALS) THAT AT THE RE QUEST OF THE BUYER/BUILDER, THE PROPERTY WAS DEMOLISHED AND SALE DEED WAS EXECUTED. THE LD. AUTHORISED REPRESENTATIVE DREW O UR ATTENTION TO THE COPIES OF THE ELECTRICITY BILL OF RESIDENTIAL TO S UPPORT THAT THE BUILDING WAS IN HABITATION AND RENTAL INCOME WAS DERIVED. SO , CONSIDERING THE APPARENT FACTS AND MATERIAL ON RECORD AND EVIDENCE, WE FOUND THE COMMISSIONER OF INCOME TAX (APPEALS) BASED ON EXA MINATION OF THE FACTS OF EXISTENCE OF BUILDING AND INCOME TAX RET URNS WAS OF THE OPINION THAT THE BUILDING WAS IN EXISTENCE AND THE ASSESSEE WAS OFFERING INCOME FROM HOUSE PROPERTY IN THE INCOME T AX RETURN. HENCE, WE ARE NOT INCLINED TO INTERFERE WITH THE ORDER O F COMMISSIONER OF INCOME TAX (APPEALS) AND DISMISS THE REVENUE APPEAL . ITA NOS.1418 & 1419/MDS /13 & C.O.NO.140/MDS/13 IN ITA 1418/13) :- 14 -: 5. NOW, WE TAKE UP C.O.NO.140/MDS/2013 IN ITA NO.1418/MDS/2013:- THE ASSESSEE HAS GROUND NOS. 2 & 3 WERE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFI RMING DETERMINATION OF SALE CONSIDERATION OF >1,63,69,000 /- AS AGAINST ACTUAL CONSIDERATION OF >1,44,00,000/-. 5.1 THE LD. AUTHORISED REPRESENTATIVE ARGUED THAT T HE COMMISSIONER OF INCOME TAX (APPEALS) HAS ADOPTED T HE VALUE DETERMINED BY THE DVO. WE FOUND THAT THE LD. ASSES SING OFFICER HAS ADOPTED THE SUB-REGISTRAR VALUE AS PER PROVISIONS OF SEC. 50C OF THE ACT.>1,81,87,296/-. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ON THE BASIS OF THE SUBMISSIONS OF THE ASSESSEE REFERR ED TO THE VALUATION CELL AND DISTRICT VALUATION OFFICER HAS ESTIMATED T HE VALUE OF THE PROPERTY OF >1,63,69,000/-. THIS VALUATION REPORT WAS COMMUNICATED TO THE ASSESSEE AND THE ASSESSEE FILED SUBMISSIONS ON 04.03.2013 IN RESPECT OF COST ADJUSTMENT FOR THE DEFICIENCIES ATT ACHED TO THE PROPERTY ALLOWED AT 5% AND THE LD. COMMISSIONER OF INCOME TA X (APPEALS) HAS CALCULATED CAPITAL GAINS WHICH IS NOT DISPUTED, SO CONSIDERING THE APPARENT FACTS, WE CONFIRM THE ORDER OF COMMISSIONE R OF INCOME TAX (APPEALS) ON THIS ISSUE. THE GROUND OF THE ASSESSE E IN CROSS OBJECTION IS DISMISSED. ITA NOS.1418 & 1419/MDS /13 & C.O.NO.140/MDS/13 IN ITA 1418/13) :- 15 -: 5.2. THE NEXT GROUND RAISED BY THE ASSESSEE WITH RE SPECT TO COST ADJUSTMENT MADE BY THE DVO AT 5% AND THE CLAIM OF T HE ASSESSEE BEING 25%. 5.3 THE LD. AUTHORISED REPRESENTATIVE SUBMITTED COP Y OF THE VALUATION REPORT ISSUED TO THE ASSESSEE. WE FOUND T HAT THE DVO HAS CALCULATED THE VALUE OF PROPERTY BASED ON THE INFO RMATION AND DETAILS SUBMITTED. THE CONTENTION OF THE ASSESSEE FOR CLAIM OF 25% ADOPTED WAS ARGUED. THE LD. COMMISSIONER OF INCOME TAX (A PPEALS) COULD NOT UNDERSTAND THE REASONS ENVISAGED BY THE ASSESSEE HOW SUCH DEFICIENCIES ATTACHED TO THE PROPERTY WILL ADVERSEL Y AFFECT THE VALUE OF THE PROPERTY. THE LD. COMMISSIONER OF INCOME TAX ( APPEALS) HAS REJECTED THE COST ADJUSTMENT OF 25% AND WE FOUND TH E LD. COMMISSIONER OF INCOME TAX (APPEALS) CONSIDERED THE SE FACT AND DVO REPORT AND DIRECTED THE LD. ASSESSING OFFICER TO AD OPT VALUE AS PER DVO FOR CALCULATION. THEREFORE, WE DO NOT FIND ANY INF IRMITY AND DISMISS THE GROUND IN CROSS OBJECTION FILED BY THE ASSESSEE. 5.4 THE THIRD AND FOURTH GROUND RAISED BY THE ASSES SEE IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN N OT ACCEPTING THE PLEA OF THE COST OF BUILDING AND ESTIMATED COST OF ALLOWANCE AT 5% TOWARDS COST ADJUSTMENT WITHOUT ANY REASONS. WE ON PERUSAL OF THE COMMISSIONER OF INCOME TAX (APPEALS) ORDER AT PAGE 6, FOUND THE ITA NOS.1418 & 1419/MDS /13 & C.O.NO.140/MDS/13 IN ITA 1418/13) :- 16 -: PROBABLE VALUE OF COST OF CONSTRUCTION OF BUILDING IN FINANCIAL YEAR 1981-82, 1995-96 AND 1996-1997 BASED ON THE PWD RAT ES WAS APPLICABLE TO THE STATE OF TAMIL NADU WAS CALCULAT ED AT 50% OF PROBABLE COST OF CONSTRUCTION ADOPTED FOR BUILDING EXISTING AS ON 01.04.1981 FALLING IN FINANCIAL YEAR 1981-1982 AS T HE BUILDING BEING OLD. WE FOUND THE REASONS RECORDED BY THE LD. COMMI SSIONER OF INCOME TAX (APPEALS) THAT THE ASSESSEE COULD NOT SU BMIT ANY DETAILS OF COST OF CONSTRUCTION INCURRED FOR THE FINANCIAL YEAR 1995-96 AND 1996-1997 NOR ASSESSEE WAS ABLE TO FILE ANY DETAILS OF METHOD ON METHODOLOGY IN ARRIVING AT FAIR MARKET VALUE OF L AND AND BUILDING >14,00,000/-. WE ARE OF THE OPINION THAT THE LD. C OMMISSIONER OF INCOME TAX (APPEALS) HAS RIGHTLY CONSIDERED THE FAC TS WITH BASIC REASONS IN RESPECT OF COST OF CONSTRUCTION OF OLD B UILDING AND WE DISMISS THE GROUND OF THE ASSESSEE. 5.5 THE LAST GROUND RAISED BY THE ASSESSEE THAT TH E COMMISSIONER OF INCOME TAX (APPEALS) MENTIONED ABOU T THE PROCEEDINGS OF U/S.263 OF THE ACT PENDING AND THE C LAIM IS SUBJECT TO OUTCOME OF THE SET ASIDE ASSESSMENT TO BE COMPLETED BY THE LD. ASSESSING OFFICER IN PROCEEDINGS U/SEC. 263 OF THE ACT. THE LD. AUTHORISED REPRESENTATIVE CONTENTION THAT THE LD. C OMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE APPRECIATED THAT IT IS A CONCURRENT AUTHORITY. WE ON PERUSAL OF THE CALCULATION OF LONG TERM CAPITAL GAINS ITA NOS.1418 & 1419/MDS /13 & C.O.NO.140/MDS/13 IN ITA 1418/13) :- 17 -: ON SALE OF PROPERTY AT PAGE 9, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS MADE A NOTE IN RESPECT OF REVISIONARY PROCEEDINGS AND PROPORTIONATELY ALLOWED THE CLAIM. SUBSEQUENTLY, THE LD. AUTHORISED REPRESENTATIVE EXPLAINED THAT THE ORDER OF SEC. 263 ON APPEAL WAS DISMISSED AND THE APPEAL HAS BEEN ADMITTED IN THE HIGH COURT AND THE LD. ASSESSING OFFICER HAS PASSED THE CONSEQUENT IAL REVISIONARY ORDER ON 31.03.2013 GIVING EFFECT TO THE DIRECTION EXCLUDING DEDUCTION U/S.54F OF THE ACT AND THE DISPUTED REVISIONARY PRO CEEDINGS ARE PENDING BEFORE HIGH COURT. THEREFORE, WE ARE OF TH E OPINION THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) WAS CORREC T IN HIS ORDER TO MAKE OBSERVATIONS AND WE DISMISS THE GROUND OF THE ASSESSEE. 5.6 IN THE RESULT, THE CROSS-OBJECTION FILED BY THE ASSESSEE IS DISMISSED. 6. NOW, WE TAKE UP ITA NO.1419/MDS/2013 FOR ADJUDICATI ON. THE LD. ASSESSING OFFICER HAS INITIATED PENALTY PRO CEEDINGS ON THE BASIS OF ASSESSMENT ORDER PASSED U/S.147 R.W.S. 143(3) OF THE ACT DATED 31.12.2009. IN THE PENALTY PROCEEDINGS, THE LD. AU THORISED REPRESENTATIVE OF THE ASSESSEE APPEARED AND FILED D ETAILS AND EXPLAINED THE FACT OF COMPUTATION OF CAPITAL GAINS AND EXEMPTION CLAIMED BY THE ASSESSEE AND THE DISPUTED ISSUE BEI NG THE ASSESSEE BEFORE THE SALE OF PROPERTY AS PER TERMS WITH BUILD ER, THE ASSESSEE HAS ITA NOS.1418 & 1419/MDS /13 & C.O.NO.140/MDS/13 IN ITA 1418/13) :- 18 -: DEMOLISHED THE BUILDING EXISTING PRIOR TO 01.04.198 1 AND SUBSEQUENT CONSTRUCTION WORKS. THE LD. ASSESSING OFFICER RELI ED ON THE SALE DEED AND FOUND MENTIONED AS VACANT LAND AND THE ASSESSE E HAS SOLD VACANT LAND AND THEREFORE DECLINED THE CLAIM OF SEC. 54F O F THE ACT. FURTHER, THE ASSESSEE HAS PURCHASED PROPERTY AS DISCLOSED IN THE RETURN OF INCOME ON 25.10.2004 AND THE SAME WAS DISALLOWED IN THE ASSESSMENT PROCEEDINGS. THE LD. ASSESSING OFFICER HAS ALLOWED DEDUCTION U/S.54F INSTEAD OF SEC. 54 OF THE ACT. FURTHER, THE ASSESS EE WAS CLAIMING PROPERTY ALONGWITH EXISTENCE OF BUILDING FROM 01.0 4.1981 AND ALSO INCURRED ADDITIONAL CONSTRUCTION COST IN THE FINAN CIAL YEARS 1995-96 AND 1996-97. THE LD. ASSESSING OFFICER HAS NOT CO NSIDERED THESE FACTS AND ALLOWED ONLY INDEXATION IN RESPECT OF VACANT LA ND AS PER 01.04.1981. CONSIDERING ALL THESE FACTS AND OBJECTI ONS, THE LD. ASSESSING OFFICER HAS PASSED ASSESSMENT ORDER ON 31 .12.2009 AND LEVIED MINIMUM PENALTY OF 100% >12,11,900/-. AGGRI EVED BY THE ORDER, THE ASSESSEE FILED AN APPEAL BEFORE COMMISSI ONER OF INCOME TAX (APPEALS). 6.1 IN THE APPELLATE PROCEEDINGS, THE LD. COMMISSIO NER OF INCOME TAX (APPEALS) HAS CONSIDERED THE SUBMISSIONS , OBJECTIONS AND FINDINGS OF THE LD. ASSESSING OFFICER AND FOUND THA T THE ASSESSEE HAS DISCLOSED ACTUAL SALE CONSIDERATION RECEIVED AS AGA INST SUB-REGISTRAR VALUE ON APPLICATION OF DEEMING PROVISIONS OF SEC. 50C OF THE ACT AND ITA NOS.1418 & 1419/MDS /13 & C.O.NO.140/MDS/13 IN ITA 1418/13) :- 19 -: THE LD. ASSESSING OFFICER HAS DISALLOWED THE DEDUCT ION U/SEC. 54 OF THE ACT BY TREATING PROPERTY SOLD AS VACANT LAND. THE CONTENTION OF THE LD. ASSESSING OFFICER BEING THE ASSESSEE HAS SOLD VACAN T LAND AND THE CLAIM U/S.54 OF THE ACT IS NOT ALLOWABLE AND THE REFORE THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS AND PENALTY I S LEVIED. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) FOUND THAT THE ADDITIONS IN ASSESSMENT PROCEEDINGS BY THE LD. ASSESSING OFFICER SHALL NOT GIVE WAY FOR PENALTY, WHEN DEEMING PROVISIONS OF SEC. 50 C OF THE ACT ACCEPTED. THE PENALTY IS LEVIABLE ONLY IN CASES O F CONCEALMENT OR SUBMITTING INACCURATE PARTICULARS AND THE PENALTY C ANNOT BE SUSTAINED BASED ON THE GUIDELINE VALUE BEING FAIR MARKET VALU E WHICH IS A DEEMING PROVISIONS AND THEREFORE DOES NOT ATTRACT P ENALTY AND RELIED ON THE CO-ORDINATE BENCH DECISION IN THE CASE OF ACIT VS. MEENAKSHI (2009) 125 TTJ 856/319 ITR 262 AND PROVISIONS OF SEC. 271(1)(C) OF THE ACT SHALL NOT ATTRACT WERE THERE ARE NO PARTICU LARS OF CONCEALMENT OR SUBMISSION OF INACCURATE PARTICULARS. THE ASSE SSEE HAS CLAIMED EXEMPTION U/S.54 OF THE ACT SUBSEQUENT TO SALE OF RESIDENTIAL HOUSE PROPERTY AND THE RENTAL INCOME OF THE PROPERTY WAS DISCLOSED UNDER INCOME FROM HOUSE PROPERTY AND RETURN OF INCOME WAS FILED DISCLOSING RENTAL INCOME IN THE ASSESSMENT YEARS 2003-04 AND 2 004-05. THE FACT THAT THE ASSESSEE DEMOLISHED BUILDING BEFORE REGISTRATION SHALL NOT BE A REASON THAT VACANT LAND WAS SOLD FOR LEVY OF PENALTY THOUGH ITA NOS.1418 & 1419/MDS /13 & C.O.NO.140/MDS/13 IN ITA 1418/13) :- 20 -: LD. ASSESSING OFFICER ALLOWED EXEMPTION U/S.54F OF THE ACT. THE LD. ASSESSING OFFICER WAS UNDER BONAFIDE BELIEF AND NO T CONSIDERED THE FACTUAL ASPECTS THAT THE BUILDING WAS EXISTED BE FORE TO DATE OF SALE. WITH THIS FINDINGS, LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS DELETED THE PENALTY. AGAINST THE ORDER OF COMMISSIO NER OF INCOME TAX (APPEALS), THE REVENUE HAS ASSAILED AN APPEAL BEFOR E US. 6.2 BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE ARGUED THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ER RED IN DELETING THE PENALTY AND THE LD. ASSESSING OFFICER HAD DISA LLOWED CLAIM U/S.54 AND 54F OF THE ACT IN THE REVISION PROCEEDINGS AND ASSESSEE IS NOT ELIGIBLE FOR EXEMPTION AS THE PROPERTY PURCHASED IS IN THE NATURE OF COMMERCIAL PROPERTY AND PRAYED FOR ALLOWING THE APP EAL. 6.3 CONTRA, THE LD. AUTHORISED REPRESENTATIVE RELIE D ON THE ORDERS OF THE LD. COMMISSIONER OF INCOME TAX (APPEA LS) AND VEHEMENTLY OPPOSED THE GROUNDS. 6.4 WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MAT ERIAL ON RECORD AND JUDICIAL DECISIONS. THE CRUX OF THE ISS UE BEING WHETHER THE ASSESSEE IS GUILTY OR SUBMITTED INACCURATE PARTICUL ARS IN THE ASSESSMENT PROCEEDINGS. IT WAS EXPLAINED THAT THE ASSESSEE IS THE OWNER OF THE LAND AND BUILDING BEFORE 01.04.1981 AND SUBSEQUENTL Y UNDERTOOK CONSTRUCTION WORKS AS EXTENSION OF BUILDING AND A S PER TERMS OF SALE ITA NOS.1418 & 1419/MDS /13 & C.O.NO.140/MDS/13 IN ITA 1418/13) :- 21 -: WITH PURCHASER, THE BUILDING WAS DEMOLISHED AND SAL E DEED WAS EXECUTED BY THE ASSESSEE. THE FACT THAT THE PENALT Y ORDER ARISED OUT OF THE ASSESSMENT ORDER PASSED U/S.143(3) R.W.S. 14 7 OF THE ACT DATED 31.12.2009 AND THE LD. COMMISSIONER OF INCOME TAX ( APPEALS) IN THE QUANTUM PROCEEDINGS HAVING SATISFIED THAT THERE IS EXISTENCE OF BUILDING AND ALLOWED INDEX COST ACQUISITION AS DEDU CTION FROM SALE CONSIDERATION. THE PROCEEDINGS UNDER SEC. 263 OF TH E ACT ARE BEING CONTESTED AT HIGHER FORUMS AND HAS NOT ATTAINED FIN ALITY. THE REVENUE BEFORE US ARGUED ON THE BASIS OF REVISION ORDER P ASSED U/S.263 OF THE ACT WHICH IS NOT APPROPRIATE. THE FACTS OF THE ASSESSMENT PROCEEDINGS HAVE BEEN CONSIDERED BY THE LD. COMMIS SIONER OF INCOME TAX (APPEALS) AND SATISFIED WITH EVIDENCE AND ALSO THERE IS NO CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS AS THE ASSESSEE HAS CLAIMED EXEMPTION U/S.54FOF THE ACT AND ALSO DISCLO SED RENTAL INCOME FROM THE BUILDING IN EARLIER ASSESSMENT YEARS, WE C ONSIDER THE APEX COURT DECISION OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD 322 ITR 158(SC) AND THE LEVY OF PENALTY CANNOT BE AUTOMATIC AND ADDITION IN ASSESSMENT PROCEEDINGS CANNOT BE A GATEWAY FOR LEV Y OF PENALTY. WE ALSO DRAW SUPPORT FROM THE PRINCIPLES LAID DOWN IN CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY, 359 ITR 565 , (KARNATAKA) WERE IT WAS HELD THAT THE PENALTY PROCEEDINGS ARE N OT AUTOMATIC AND THEY ARE DISTINCT. CONSIDERING THE FACTUAL MATRIX, LEGAL DECISIONS AND ITA NOS.1418 & 1419/MDS /13 & C.O.NO.140/MDS/13 IN ITA 1418/13) :- 22 -: ASSESSMENT RECORDS, WE ARE NOT INCLINED TO INTERFER E WITH THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) AND DISMISS TH E APPEAL OF THE REVENUE. 7. IN THE RESULT, THE APPEALS OF THE REVENUE IN ITA NO S.1418 & 1419/MDS/2013 ARE DISMISSED AND C.O.NO.140/MDS/2013 FILED BY THE ASSESSEE IS ALSO DISMISSED. ORDER PRONOUNCED ON FRIDAY, THE 22ND DAY OF JULY , 2016, AT CHENNAI. SD/- SD/- ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER ( . ! ' ) (G. PAVAN KUMAR) / JUDICIAL MEMBER / CHENNAI , / DATED:22.07.2016 KV - ' .#(/0 10&( / COPY TO: 1 . 23 / APPELLANT 3. ! 4( () / CIT(A) 5. 0 78 .#(# / DR 2. .923 / RESPONDENT 4. ! 4( / CIT 6. 8% : / GF