ACIT CIR 12(3), MUMBAI V. RITA AGARWAL, MUMBAI

ITA 1653/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3734 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2007-2008
• Appeal Filed On: 09-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JI TENDRA YADAV
• Assessee Lawyers: BALAN NARAYANAN
• Keywords: Cost of acquisition

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D, MUMBAI BEFORE SHRI D KARUNAKARA RAO, ACCOUNTANT MEMBER & SHRI SANJAY GARG, JUDICIAL MEMBER ITA NO.:1653/MUM/2012 ASSESSMENT YEAR: 2007-08 THE ACIT CIR. 12(3), VS. RITA AGARWAL, MUMBAI. FLAT NO.8, 1 ST FLOOR, EAST WEST COURT, SHAHID BHAGAT SINGH ROAD, COLABA, MUMBAI- 400 021. PAN :AASPA1198D (APPELLANT) (RESPONDENT) APPELLANT BY : MR. JITENDRA YADAV RESPONDENT BY : MR. BALAN NARAYANAN DATE OF HEARING : 18.03.2013 DATE OF PRONOUNCEMENT : 08.05.2013 ORDER PER SANJAY GARG, JM : THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF THE CIT(A) DATED 30.01.2012 PERTAINING TO A.Y 2007-08, DELETIN G THE PENALTY OF RS.39,03,923/- LEVIED BY THE AO ON THE ASSESSEE U/S. 271(1)(C) OF THE I.T ACT.. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E, AN INDIVIDUAL, DURING THE ASSESSMENT YEAR UNDER CONSIDERATION HAD DERIVED INC OME FROM SALARY AND FROM OTHER SOURCES. SHE HAD ACQUIRED A RESIDENTIAL FLAT IN F. Y. 1995-96 FOR RS.2.8 CRORES ALONG WITH HER HUSBAND MR. DINESH KUMAR AGARWAL. THE SHA RE OF THE ASSESSEE IN THAT FLAT WAS 25% AND THE BALANCE 75% SHARE WAS HELD BY HER H USBAND. DURING THE F.Y. 2005-06 HER HUSBAND EXPIRED LEAVING BEHIND THE ASSE SSEE, HIS WIFE, BEING THE SOLE ITA NO. 1653/MUM/2012 AY : 2007-08 2 LEGAL HEIR INHERITED THE SAID PROPERTY. DURING THE A.Y. 2007-08, THE ASSESSEE SOLD THE ABOVE FLAT FOR RS.2.25 CRORES. THE ASSESSEE IN HER INCOME TAX RETURN COMPUTED THE LONG TERM CAPITAL GAIN BY CONSIDERING THE INDEXATIO N FACTOR FROM THE YEAR OF PURCHASE I.E. F.Y. 1995-96 ON THE WHOLE VALUE AND T HEREBY CLAIMED LONG TERM CAPITAL LOSS OF RS.3,36,50113/-. HOWEVER, THE AO RELYING U PON THE EXPLANATION (III) TO SECTION 48 OF THE IT ACT DISAGREED WITH THE CLAIM O F THE ASSESSEE FOR CALCULATING CAPITAL GAIN FROM A.Y. 1996-97 ON THE WHOLE COST OF ACQUISITION AND WAS OF THE VIEW THAT INDEXATION BENEFIT ON 75% OF THE SHARE IN THE FLAT WAS ALLOWABLE FROM THE DATE ON WHICH THE ASSESSEE BECAME THE OWNER OF THE SAME I.E. FROM THE DATE OF EXPIRY OF ASSESSEES HUSBAND, THUS ALLOWED INDEXATION BENEFIT FROM THE ASSESSMENT YEAR 2004- 05 TO ASSESSMENT YEAR 2007-08. THUS, THE AO COMPUT ED LONG TERM CAPITAL LOSS AT RS.1,62,52,952/- AGAINST 3,36,50,113/- AS WAS CLAIM ED BY THE ASSESSEE. PENALTY PROCEEDINGS WERE ALSO INITIATED AGAINST THE ASSESSE E. DURING THE PENALTY PROCEEDINGS, THE AO HELD THAT BY WRONGLY COMPUTING THE LONG TERM CAPITAL LOSS THE ASSESSEE HAD FILED INACCURATE PARTICULARS OF HER IN COME. HE FURTHER OBSERVED THAT HAD THE CASE OF THE ASSESSEE NOT BEEN SELECTED FOR SCRUTINY, THE INCORRECT COMPUTATION OF LONG TERM CAPITAL LOSS CLAIMED BY TH E ASSESSEE WOULD HAVE BEEN ESCAPED AND THE ASSESSEE WOULD HAVE BEEN BENEFITED BY ADJUSTING THE SAID LOSS IN THE SUBSEQUENT YEARS. THE AO FURTHER OBSERVED TH AT THE ASSESSEE DID NOT FILE ANY APPEAL AGAINST THE ORDER OF ASSESSMENT AND AS SUCH ACCEPTED THE ASSESSMENT ORDER AND THEREBY THE FINDING THAT SHE HAD FILED INACCURA TE PARTICULARS OF INCOME. THUS, PENALTY @100% WHICH CAME OUT TO RS.39,03,923/- WAS LEVIED UPON THE ASSESSEE ON ACCOUNT OF FURNISHING INACCURATE PARTICULARS AND, H ENCE, CONCEALMENT OF INCOME. IN APPEAL, THE LEARNED CIT(A) OBSERVED THAT, IN FAC T, THE ASSESSEE HAD RIGHTLY CLAIMED LONG TERM CAPITAL LOSS OF RS.3,36,50,113/- HOLDING THAT EXPLANATION (III) TO SECTION 48 HAS TO BE READ TO MEAN THAT THE INDEXED COST OF ACQUISITION HAS TO BE COMPUTED BY TAKING INTO ACCOUNT THE PERIOD FOR WHIC H THE ASSET WAS HELD BY THE ITA NO. 1653/MUM/2012 AY : 2007-08 3 PREVIOUS OWNER. IN HIS ORDER, HE HAS ALSO JUSTIFIE D HIS FINDING BY RELYING UPON VARIOUS JUDGMENTS OF HONBLE HIGH COURTS IN THIS RESPECT. HE FURTHER OBSERVED THAT WHEN AN EXPLANATION IS OFFERED BY THE ASSESSEE IN SUPPORT O F HIS CLAIM, PENALTY CANNOT BE LEVIED MERELY BECAUSE THE EXPLANATION IS FOUND UNSA TISFACTORY. HE FURTHER OBSERVED THAT THE ASSESSEE DID NOT FILE ANY INACCURATE PARTI ES TO CONCEAL HER INCOME. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE LOSS WHICH WAS NOT ACCEPTED OR ACCEPTABLE TO THE REVENUE THAT BY ITSELF WOULD NOT ATTRACT PENALT Y U/S. 271(1)(C). RELYING UPON VARIOUS JUDGMENTS HE FURTHER OBSERVED THAT WHEN THE RE ARE TWO OPINION POSSIBLE ON AN ISSUE, PENALTY IS NOT LEVIABLE ONLY BECAUSE THE AO DOES NOT AGREE WITH THE VIEW ADOPTED BY THE ASSESSEE OR THAT THE VIEW IS NOT FOU ND TO BE SUSTAINABLE IN LAW. UNDER SUCH CIRCUMSTANCES, IT WOULD BE IMPERATIVE TO EXAMINE WHETHER THE VIEW ADOPTED BY THE ASSESSEE WAS ONE OF THE POSSIBLE VIE WS. THE LEARNED CIT(A) FURTHER OBSERVED THAT THE VIEW ADOPTED BY THE ASSESSEE IN T HE CASE IN HAND IS NOT ONLY THE POSSIBLE VIEW BUT SUCH A VIEW HAS BEEN UPHELD TO BE CORRECT BY THE JURISDICTIONAL HIGH COURT OF BOMBAY IN THE CASE OF MANJULA SHAH IN INCOME-TAX APPEAL NO.3378 OF 2010 DATED 11.10.2011. HE FURTHER OBSERVED THAT ME RELY BECAUSE THE ASSESSEE HAS NOT FILED AN APPEAL AGAINST THE ASSESSMENT ORDER TH AT ITSELF DOES NOT MEAN THAT THE ASSESSEE HAD FILED INACCURATE PARTICULARS OF INCOME . IN FACT, THE AO HAD ALLOWED LONG TERM CAPITAL LOSS AT RS.1,62,52,952/- AGAINST THE CLAIM OF THE ASSESSEE AT RS.3,36,50,113/-. THE SAID CAPITAL LOSS COULD HAVE BEEN CARRIED FOR A PERIOD OF 8 YEARS TO BE ADJUSTED AGAINST LONG TERM CAPITAL GAIN , IF ANY. THE ASSESSEE, BEING A SENIOR CITIZEN OF THE AGE OF ABOUT 67 YEARS AT THAT TIME, WAS NOT EXPECTING ANY LONG TERM CAPITAL GAIN IN FUTURE, HENCE, DID NOT FIND IT FIT TO FILE ANY APPEAL BECAUSE THE SAME WOULD NOT HAVE RESULTED INTO ANY TAX BENEFIT T O HER. THE LEARNED CIT(A) HOLDING THAT THERE CANNOT BE AN AUTOMATIC LEVY OF P ENALTY IN CASE OF REJECTION OF CLAIM, DELETED THE PENALTY LEVIED BY THE AO. ITA NO. 1653/MUM/2012 AY : 2007-08 4 3. WITHOUT GOING INTO THE CONTROVERSY AS TO WHETHER THE DISALLOWANCE WAS RIGHTLY OR WRONGLY MADE BY THE AO IN THE ASSESSMENT ORDER, WE ARE IN AGREEMENT WITH THE OBSERVATION OF THE LEARNED CIT(A) TO THE EXTENT THA T WHERE TWO VIEWS ARE POSSIBLE AND THE ASSESSEE HAS TAKEN ONE OF THE POSSIBLE VIEW S BUT THE AO HAS NOT AGREED TO THAT VIEW THAT ITSELF IS NOT A GROUND FOR LEVY OF P ENALTY. THE VIEW TAKEN BY THE ASSESSEE IN THIS CASE IS ONE OF THE POSSIBLE VIEWS AND THE ISSUE WAS ALSO DEBATABLE HENCE, UNDER SUCH CIRCUMSTANCES IT CANNOT BE SAID T HAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME TO CONCEAL HER INC OME. 4. THE LEARNED DR BEFORE US COULD NOT POINT OUT ANY DEFECT IN THE REASONING GIVEN BY THE LEARNED CIT(A). HE COULD NOT BRING TO OUR NOTICE ANY LAW IN SUPPORT OF HIS GROUNDS OF APPEAL AGAINST THE DELETION OF PENAL TY BY THE LEARNED CIT(A). THE FINDINGS GIVEN BY THE LEARNED CIT(A) ARE WELL REASO NED AND ARE SUPPORTED BY THE JUDGMENT LAW ON THE MATTER. WE DO NOT FIND ANY INF IRMITY IN THE ORDER OF THE LEARNED CIT(A) AND THE SAME IS HEREBY UPHELD. 3. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S HEREBY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH MAY 2013. SD/- SD/- (D KARUNAKARA RAO) (SANJAY GAR G) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DT : 8 TH MAY, 2013 SA COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE C.I.T. CONCERNED MUMBAI 4. THE CIT (A) CONCERNED MUMBAI 5. THE DR, D - BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI