Vishwasrao Mahipatrao Patil, Mumbai V. ITO, Pune

ITA 1563/PUN/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2932 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 30-11-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 18-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DHEERAJ KUMAR JAIN
• Assessee Lawyers: SUNIL PATHAK
• Keywords: Capital asset; Additional evidence
• Section: 54B; 54F; 147; 148; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUN E , , !'!! # , $ % BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM / ITA NO. 1563/PN/2012 $& ' !(' / ASSESSMENT YEAR : 2006-07 VISHWASRAO MAHIPATRAO PATIL, PLOT 25, RAWAL NIWAS, N.S. ROAD NO. 2, PARLE SCHEME, VILE PARLE (W), MUMBAI-57 PAN : AHKPP0767A ....... / APPELLANT )& / V/S. THE INCOME TAX OFFICER, WARD 6(4), PUNE / RESPONDENT ASSESSEE BY : SHRI SUNIL PATHAK REVENUE BY : SHRI DHEERAJ KUMAR JAIN / DATE OF HEARING : 30-11-2015 / DATE OF PRONOUNCEMENT : 22-01-2016 * / ORDER PER VIKAS AWASTHY, JM : THE PRESENT APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-III, PUNE DATED 2 9-04-2011 FOR THE ASSESSMENT YEAR 2006-07 PASSED U/S. 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 2 ITA NO. 1563/PN/2012, A.Y. 2006-07 2. THE FACTS OF THE CASE AS EMANATING FROM THE RECORDS ARE: THE ASSESSEE IS A SENIOR GOVERNMENT OFFICER. THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 13-06-200 7 DECLARING TOTAL INCOME OF ` 3,41,750/-. NOTICE U/S. 148 OF THE ACT WAS ISSUED TO THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCE EDINGS U/S. 147 THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE WAS RE QUIRED TO PAY TAX ON THE CAPITAL GAINS EARNED ON SALE OF PROPERTY SITU ATED AT KAKASAHEB GADGIL MARG, PRABHADEVI, MUMBAI. THE ASSESSEE IN HIS RETURN OF INCOME HAD NOT DECLARED CAPITAL GAIN ARISING FROM SALE OF PROPERTY. THE ASSESSEE HAD SOLD THE PROPERTY FOR A CO NSIDERATION OF ` 42 LAKHS WHERE AS THE MARKET VALUE OF THE PROPERTY FOR STAMP DUTY PURPOSE WAS ` 50 LAKHS. THE ASSESSING OFFICER VIDE ORDER DATED 29-12-2009 MADE ADDITION OF ` 30,70,882/- ON ACCOUNT OF LONG TERM CAPITAL GAIN. THE ASSESSEE ACCEPTED THE QUANTUM ADDITIO N. PENALTY PROCEEDINGS U/S. 271(1)(C) WERE INITIATED AGAINST THE ASSESSE E FOR CONCEALING THE PARTICULARS OF INCOME. THE ASSESSING OFFICER VIDE ORDER DATED 28-06-2010 LEVIED PENALTY OF ` 6,26,460/- U/S. 271(1)(C). THE ASSESSEE PREFERRED AN APPEAL AGAINST THE PENALTY O RDER BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) . THE COMMISSIONE R OF INCOME TAX (APPEALS) VIDE IMPUGNED ORDER CONFIRMED THE LEVY OF PENALTY U/S. 271(1)(C) AND DISMISSED THE APPEAL OF THE ASSESSEE. NOW , THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL AGAINST T HE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS). 3. SHRI SUNIL PATHAK APPEARING ON BEHALF OF THE ASSESSEE S UBMITTED THAT THE ASSESSEE IS A SALARIED EMPLOYEE AND WAS IGNORAN T ABOUT THE PROVISIONS OF TAX LAWS. THE ASSESSEE WAS UNDER THE BONA FIDE BELIEF THAT 3 ITA NO. 1563/PN/2012, A.Y. 2006-07 THE CAPITAL GAIN WAS NOT REQUIRED TO BE DECLARED IN THE R ETURN OF INCOME. AS SOON AS THE ASSESSEE CAME TO KNOW THAT HE HAS COMMITTED MISTAKE AND THAT HE WAS REQUIRED TO DISCLOSE CAPITAL GAIN AND PAY TAX THEREON, THE ASSESSEE IMMEDIATELY ACCEPTED HIS MISTAKE A ND COMPLIED WITH THE ORDERS OF ASSESSING OFFICER. NO APPEAL WAS FILED BY THE ASSESSEE AGAINST THE ASSESSMENT ORDER. THE ASSESSEE HAD INVESTED THE AMOUNT OF CAPITAL GAIN ARISING FROM SALE OF PROPERTIES AT PRA BHADEVI, MUMBAI TOWARDS THE PURCHASE OF TWO FLATS IN THE NAME OF HIS WIFE. AT THE TIME OF ASSESSMENT PROCEEDINGS THE ASSESSEE DID NOT INFORM HIS REPRESENTATIVE THAT HE HAD INVESTED SALE PROCEEDS TOWA RDS THE PURCHASE OF FLATS. THE ASSESSEE WAS NOT AWARE THAT HE COULD CLAIM DEDUCTION U/S. 54/54F OF THE ACT. THE LD AR SUBMITTED THAT THE ASSESSEE IS FILING FOLLOWING ADDITIONAL EVIDENCES I.E. (I) A COPY OF BANK ACCOUNT OF THE ASS ESSEE, (II) ALLOTMENT LETTER FROM M/S. JUHU BEACH CORPORATION AND (III) DE ED OF CONFIRMATION IN RESPECT OF FLATS NO. 202 AND 701 FROM M/S. JUHU BEACH CORPORATION, TO SHOW THAT THE ASSESSEE HAD INVESTED TH E SALE PROCEEDS OF THE CAPITAL ASSETS SOLD FOR PURCHASE OF FLATS. THE LD. AR SUBMITTED THAT ALTHOUGH THE ASSESSEE WAS ELIGIBLE TO CLAIM RELIEF U/S. 54/54F OF THE ACT IN RESPECT OF CAPITAL GAIN EARNED, HOWEVER, DUE T O IGNORANCE OF THE ASSESSEE ABOUT THE PROVISIONS OF INCOME TAX ACT, TH E ASSESSEE HAS PAID TAX ON THE CAPITAL GAINS WITHOUT CLAIMING ANY EXEMPTION U/S. 54/54F OF THE ACT. THE LD. AR FURTHER SUBMITTED THAT THE ASSESSEE WAS ELIGIBLE TO CLAIM DEDUCTION U/S. 54/54F ON THE PURCHASE OF FLATS IN THE NAME OF HIS WIFE. IN SUPPORT OF HIS SUBMISSIONS, THE LD. AR DR AWS SUPPORT FROM THE DECISION OF HON'BLE KARNATAKA HIGH COURT IN THE CASE OF DIRECTOR OF IT, INTERNATIONAL TAXATION VS. MRS. JENNIFER B HIDE 4 ITA NO. 1563/PN/2012, A.Y. 2006-07 REPORTED AS 349 ITR 80 AND THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. RAVINDER KUMAR ARORA REPORTED AS 3 42 ITR 38. THE LD. AR CONTENDED THAT NO PENALTY CAN BE LEVIED IN THE FACT S AND CIRCUMSTANCES OF THE PRESENT CASE. 4. ON THE OTHER HAND SHRI DHEERAJ KUMAR JAIN REPRESEN TING THE DEPARTMENT SUBMITTED THAT THE ASSESSEE IS A SR. GOVERN MENT OFFICER, HE IS SUPPOSED TO KNOW THE LAW OF LAND. THE ASSESSEE PU RCHASED THE NEW PROPERTY ON 11-12-2007 THAT IS IN THE PERIOD RELEVA NT TO THE ASSESSMENT YEAR 2008-09, WHEREAS THE ASSESSMENT YEAR UNDER CONSIDERATION IS 2006-07. IT WAS A DELIBERATE ATTEMPT ON THE PART OF THE ASSESSEE TO SUPPRESS THE INCOME. THE LD. DR IN SUPPORT OF HIS SUBMISSIONS PLACED RELIANCE ON THE DECISION OF HON'BLE SUPRE ME COURT OF INDIA IN THE CASE OF UOI VS. DHARMENDRA TEXTILE PROCESS ORS LTD. REPORTED AS 306 ITR 277 AND THE DECISION OF HON'BLE MADRA S HIGH COURT IN THE CASE OF N. RANJIT VS. CIT REPORTED AS 262 CTR 41 1. THE LD. DR FURTHER SUBMITTED THAT EVEN OTHERWISE THE ASSESSEE WAS NOT ELIGIBLE TO CLAIM DEDUCTION U/S. 54/54F AS THE FLATS WERE PURCHASED B Y THE ASSESSEE IN THE NAME OF HIS WIFE. THE ASSESSEE COULD HAVE CLAIMED EXEMPTION UNDER THE PROVISIONS OF SECTION 54/54F OF THE A CT, IF THE FLATS WERE PURCHASED IN HIS OWN NAME. THE ASSESSEE IS NOT ELIG IBLE TO CLAIM DEDUCTION WHERE THE CAPITAL ASSET IS PURCHASED IN THE NA ME OF ANY FAMILY MEMBER OR ANY OTHER PERSON. IN SUPPORT OF HIS SU BMISSIONS, THE LD. DR PLACED RELIANCE ON THE DECISION OF HON'BLE BOMBAY HI GH COURT IN THE CASE OF PRAKASH VS. COMMISSIONER OF INCOME TAX REPOR TED AS 312 ITR 40 (BOM) AND THE DECISION OF HON'BLE PUNJAB AND HARYA NA HIGH 5 ITA NO. 1563/PN/2012, A.Y. 2006-07 COURT IN THE CASE OF JAI NARAYAN VS. INCOME TAX OFFICER REPORTED AS 3 06 ITR 335 (P&H). 5. THE LD. AR CONTROVERTING THE SUBMISSIONS MADE ON BEHA LF OF THE DEPARTMENT SUBMITTED, THAT THE AUTHORIZED REPRESENTATIV E OF THE ASSESSEE BEFORE THE AUTHORITIES BELOW DID NOT ASK THE AS SESSEE ABOUT ANY INVESTMENT MADE BY THE ASSESSEE FROM THE CAPITAL GA INS EARNED. SINCE THE ASSESSEE WAS OBLIVIOUS OF THE DEDUCTION U/S. 54/ 54F, HE DID NOT DISCLOSE THE FACT OF INVESTMENT VOLUNTARILY. AS FAR AS THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF PRAKASH VS. I NCOME TAX OFFICER IS CONCERNED THE FACTS OF THE SAID CASE ARE DISTINGU ISHABLE. THE HON'BLE HIGH COURT IN THE SAID CASE HAD DISALLOWED THE DED UCTION U/S. 54 AS THE INVESTMENT WAS MADE IN THE NAME OF ADOPTED S ON. IN THE PRESENT CASE, THE ASSESSEE HAD MADE INVESTMENT IN THE NAME OF HIS WIFE. THE RELATION OF HUSBAND AND WIFE IS IN FIDUCIARY CAPACITY , THEREFORE, THE RATIO LAID DOWN BY THE HON'BLE BOMBAY HIGH COURT WILL NOT APPLY IN THE INSTANT CASE. THE LD. AR FURTHER SUBMITT ED THAT WHERE TWO VIEWS ARE POSSIBLE, THE VIEW IN FAVOUR OF THE ASSESSEE SHOULD BE TAKEN. THE LD. AR PLACED RELIANCE ON THE DECISION OF HON'BL E SUPREME COURT OF INDIA IN THE CASE OF COMMISSIONER OF INCOME TAX V S. VEGETABLE PRODUCTS LIMITED REPORTED AS 88 ITR 192 (SC). 6. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENT ATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIE S BELOW. WE HAVE ALSO CONSIDERED THE DECISIONS ON WHICH THE RIVAL SIDES HAVE PLACED RELIANCE. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAS NOT DISCLOSED THE CAPITAL GAINS ARISING FROM THE SALE OF PROPERTIES AT PR ABHADEVI, 6 ITA NO. 1563/PN/2012, A.Y. 2006-07 MUMBAI IN THE RETURN OF INCOME. THE ASSESSEE HAD SOLD TH E PROPERTY VIDE SALE DEED DATED 01-02-2006 I.E. IN THE PERIOD RELEVANT TO THE ASSESSMENT YEAR 2006-07. IT IS EQUALLY UNDISPUTED THAT THE ASSESSEE HAD PURCHASED TWO FLATS BEARING NO. 202 ON SECOND FLOOR A ND 701 ON THE SEVENTH FLOOR OF BUILDING AT VILE PARLE, MUMBAI. THE SAI D FLATS WERE PURCHASED BY THE ASSESSEE IN THE NAME OF HIS WIFE. THE FLA TS WERE ALLOTTED VIDE ALLOTMENT LETTER DATED 15-04-2005. THE PAYM ENT OF THE FLATS WAS MADE IN THE MONTH OF JANUARY/FEBRUARY, 2006 FRO M THE BANK ACCOUNT OF THE ASSESSEE. THE DEED OF CONFIRMATION WAS EX ECUTED IN THE NAME OF THE WIFE OF THE ASSESSEE ON 11-12-2007. TO BE ELIGIBLE TO CLAIM DEDUCTION UNDER THE PROVISIONS OF SECTION 54, THE AMOUNT OF CAPITAL GAIN SHOULD BE INVESTED WITHIN ONE YEAR BEFORE OR TWO YEA RS AFTER THE DATE ON WHICH THE TRANSFER TOOK PLACE. SINCE, THE ASSES SEE SOLD THE CAPITAL ASSETS ON 01-02-2006 THE ASSESSEE HAD TIME TO PURCHASE THE FLATS UP TO 29-02-2008. THEREFORE, THE ASSESSEE HAD INVE STED THE AMOUNT TOWARDS THE PURCHASE OF FLATS WITHIN THE SPECIFIED PERIOD. 7. AS REGARDS THE ELIGIBILITY OF ASSESSEE TO CLAIM DEDUCTION ON FLATS PURCHASED IN THE NAME OF WIFE IS CONCERNED, THE ASSESSEE CAN CLAIM EXEMPTION U/S. 54/54F OF THE ACT, IN VIEW OF THE DECISION O F HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. RAVINDER KUMAR ARO RA (SUPRA). THE HON'BLE HIGH COURT IN UNEQUIVOCAL TERMS HAS HELD THAT THE INVESTMENT MADE IN THE NAME OF WIFE IS ELIGIBLE FOR DEDUCTION U /S. 54F OF THE ACT. TO SUPPORT THE STAND OF DEPARTMENT, THE LD . DR HAS PLACED RELIANCE ON THE DECISION RENDERED BY THE HON'BLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF JAI NARAYAN VS. INCOME TAX OFFIC ER (SUPRA). IN THE SAID CASE THE INVESTMENT WAS MADE IN THE AGRICULT URAL LAND IN 7 ITA NO. 1563/PN/2012, A.Y. 2006-07 THE NAME OF SON AND GRANDSON AND THE DEDUCTION WAS CLAIMED U/S. 54B OF THE ACT. THE HON'BLE HIGH COURT DISALLOWED THE SAME. THE LD. DR HAS ALSO DRAWN SUPPORT FROM THE CASE OF PRAKASH VS. COM MISSIONER OF INCOME TAX (SUPRA). IN THE SAID CASE THE HON'BLE BOMBA Y HIGH COURT DENIED THE BENEFIT OF DEDUCTION U/S. 54 TO THE ASSESSEE AS THE PROPERTY WAS CONSTRUCTED IN THE NAME OF ADOPTED SON. THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. RAVINDE R KUMAR ARORA (SUPRA) HAS OBSERVED THAT A PLAIN READING O F PROVISIONS OF SECTION 54F INDICATE THAT IN ORDER TO GET BENEFIT OF SECTIO N, THE CONDITION STIPULATED IN SECTION 54 ARE FULFILLED EVEN IF THE PROPERTY IS P URCHASED IN THE JOINT NAME WITH WIFE. MOREOVER, SECTION 54F MANDATES THAT THE HOUSE SHOULD BE PURCHASED BY THE ASSESSEE AND IT DOES NOT STIPULATE THAT THE HOUSE SHOULD BE PURCHASED IN THE NAME OF ASSE SSEE ONLY. THE HON'BLE HIGH COURT FURTHER HELD THAT THE PROVISIONS OF SEC TION 54F ARE BENEFICIAL PROVISIONS AND SHOULD BE LIBERALLY INTERPRETED IN FAV OUR OF THE EXEMPTION/DEDUCTION TO THE TAX PAYER. THE DEDUCTION SH OULD NOT BE DENIED ON HYPER TECHNICAL GROUND. IN VIEW OF THE ABOVE W E ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HEREIN WAS ELIGIBLE FOR C LAIMING DEDUCTION IN RESPECT OF INVESTMENT IN FLAT U/S. 54/54F OF THE ACT. 8. NOW REVERTING BACK TO THE QUESTION OF LEVY OF PENALTY IT HAS BEEN CONTENDED THAT SINCE THE ASSESSEE HAS NOT DISCLOSED TH E CAPITAL GAIN FROM SALE OF PROPERTY, THE PENALTY HAS BEEN RIGHTLY LEVIED FOR CONCEALING PARTICULARS OF INCOME. THE FACTS OF THE PRESENT CASE SUGG EST THAT IT IS A PECULIAR CASE WHERE THE ASSESSEE WAS NOT AWARE ABOUT THE TAXATION PROVISIONS. THE ASSESSEE HAD NOT DISCLOSED THE CAPITAL G AINS ARISING FROM SALE OF PROPERTY IN HIS RETURN OF INCOME AND AT THE S AME TIME HAD 8 ITA NO. 1563/PN/2012, A.Y. 2006-07 NOT CLAIMED RELIEF U/S. 54/54F OF THE ACT FOR WHICH HE WAS E LIGIBLE. THE ASSESSEE ACCEPTED THE ADDITION MADE IN ASSESSMENT PROC EEDINGS WITHOUT ANY PROTEST. IN SUCH CIRCUMSTANCES THE ADDITION IN ASSESSMENT PROCEEDINGS CAN BE SUSTAINED. HOWEVER, IN OUR CONSIDERED OPINION IT IS NOT A FIT CASE FOR LEVY OF PENALTY UNDER THE PROVISIONS OF S ECTION 271(1)(C) OF THE ACT. 9. THE LD. DR HAS PLACED RELIANCE ON THE DECISION OF HON'BLE MADRAS HIGH COURT IN THE CASE OF N. RANJIT VS. CIT (SUPRA). WE FI ND THAT THE FACTS OF THAT CASE ARE AT VARIANCE WITH THE FACTS OF THE CASE IN HAND. THE HON'BLE HIGH COURT IN THE SAID CASE WHILE CONFIRMING LEV Y OF PENALTY FOR NON-DISCLOSURE OF CAPITAL GAINS IN THE RETURN O F INCOME HAS ALSO OBSERVED THAT IT IS NOT THAT EVERY CASE OF ADDITION WARRANTS LEVY OF PENALTY. THE APPLICATION OF PENAL PROVISIONS IS NOT AUTOMAT IC AND THE LEVY ITSELF DEPENDS UPON THE FACTS AND CIRCUMSTANCES OF E ACH CASE. IN THE PRESENT CASE, THE ASSESSEE HAS ALREADY SUFFERED BY PAYING TAX ON THE AMOUNT ON WHICH HE WAS OTHERWISE ELIGIBLE TO CLAIM DEDU CTION U/S. 54/54F OF THE ACT. IN VIEW OF THE PECULIAR FACTS OF THE CA SE WE DELETE THE PENALTY LEVIED U/S. 271(1)(C) AND ALLOW THE APPEAL OF THE ASSESSEE. 10. IT WOULD NOT BE OUT OF PLACE TO MENTION HERE THAT AS SESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS ARE SEPARATE AND D ISTINCT. IN THE PRESENT CASE, DUE TO IGNORANCE OF TAX LAWS DESPITE THE FACT THE ASSESSEE WAS ELIGIBLE TO CLAIM DEDUCTION U/S. 54/54F OF THE ACT, THE ASSESSEE DID NOT CLAIM DEDUCTION WHICH RESULTED IN ADDITION OF CAPITAL GAIN S IN ASSESSMENT PROCEEDINGS. HOWEVER, IT DOES NOT DEBAR THE ASSESSEE TO RAISE FRESH CLAIM OR TAKE NEW PLEA IN THE PENALTY PROCEEDI NGS. THE 9 ITA NO. 1563/PN/2012, A.Y. 2006-07 ASSESSEE HAS PLACED ON RECORD THE RELEVANT DOCUMENTS TO SHOW THAT THE ASSESSEE WAS ELIGIBLE TO CLAIM RELIEF U/S. 54/54F OF THE ACT. THE DEPARTMENT HAS ALSO NOT RAISED ANY DOUBT OVER THE TRANSACTION W HEREBY THE ASSESSEE HAS PURCHASED FLATS IN THE NAME OF HIS WIFE. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON FRIDAY, THE 22 ND DAY OF JANUARY, 2016. SD/- SD/- ( . . / R.K. PANDA) ( ! ' / VIKAS AWASTHY) #' / ACCOUNTANT MEMBER $ % #' / JUDICIAL MEMBER / PUNE; &# / DATED : 22 ND JANUARY, 2016 RK *+,$-.'/'(- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ' () / THE CIT(A)-III, PUNE 4. ' / THE CIT-III, PUNE 5. !*+ %%,- , ,- , . /01 , / DR, ITAT, A BENCH, PUNE. 6. + 2 34 / GUARD FILE. // ! % // TRUE COPY// #5 / BY ORDER, %6 ,1 / PRIVATE SECRETARY, ,- , / ITAT, PUNE