TIMBEN TRADING & INVESTMENT CO. PVT. LTD., MUMBAI V. I.T.O. WARD 9(3)(3), MUMBAI

ITA 1656/MUM/2011

• Counselvise Citation: 165619914 RSA 2011
• Duration Of Justice: 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2001-2002
• Appeal Filed On: 28-02-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V V SHASTRI
• Assessee Lawyers: R S SAMRIA
• Keywords: Period of limitation; Cost of acquisition; Wrong claim; Surrender of tenancy right
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI BEFORE SHRI B.R. MITTAL (JUDICIAL MEMBER) AND SHRI J.SUDHAKAR REDDY (ACCOUNTANT MEMBER) ITA NO.1656/MUM/2011 ASSESSMENT YEAR-2001-02 M/S TIMBER TRADING & INVESTMENT CO. PVT. LTD., C/O SAMRIA & CO., CHARTERED ACCOUNTANTS, 2E, COURT CHAMBERS, 35, NEW MARINE LINES, MUMBAI-400 020 PAN-AAACT 3720D VS. THE ITO, WARD 9(3)(3), AAYAKAR BHAVAN, MUMBAI-400 020 (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI R.S. SAMRIA RESPONDENT BY: SHRI V.V. SHASTRI DATE OF HEARING :27.12.2012 DATE OF PRONOUNCEMENT: O R D E R PER B.R. MITTAL, JM : THE ASSESSEE HAS FILED THIS APPEAL FOR ASSESSMENT YEAR 2001-02 AGAINST ORDER OF LD. CIT(A) DT. 20.1.2011 VIDE WHICH LD. CI T(A) HAS CONFIRMED PENALTY ON INCOME OF RS. 1,21,65,000/- U/S. 271(1)( C) OF THE ACT . IN THE APPEAL FILED BY ASSESSEE, ASSESSEE HAS ALSO STATED THAT LEVY OF PENALTY IS BARRED BY LIMITATION AS WELL. 2. THE RELEVANT FACTS GIVING RISE TO THIS APPEAL AR E THAN IN THE RETURN FILED, ASSESSEE HAD SHOWN SHORT TERM CAPITAL GAIN OF RS.9. 06 LAKHS ON SALE OF ONE FLAT. THE ASSESSEE ALSO SHOWED ADVANCES OF RS. 7,0 0,000/- AGAINST SALE OF ANOTHER FLAT. DURING THE COURSE OF ASSESSMENT PROC EEDINGS, ASSESSING OFFICER FOUND THAT ASSESSEE ENTERED INTO AN AGREEMENT WITH M/S. CELICA INVESTMENT & TRADING CO. PVT. LTD. (HEREIN AFTER REFERRED AS CEL ICA) AND SURRENDERED ITS ITA NO. 1656/M/2011 2 TENANCY RIGHT. IN LIEU THEREOF THE ASSESSEE GOT FR OM M/S. CELICA IN THE FORM OF 8 FLATS ADMEASURING 4055 SQ. FT. THE AO STATED THA T AS PER THE AGREEMENT ENTERED INTO, THE DEVELOPER I.E. M/S. CELICA, WAS T O PAY COMPENSATION @ 18% SIMPLE INTEREST ON THE AREA OF SAID FLATS AT THE RA TE OF RS.3000/- PER SQ. FT. IN CASE OF DELAY AND UNTIL ACTUAL PHYSICAL POSSESSION OF SAID FLATS WERE HANDED OVER. THUS, AO CONSIDERED THE VALUE OF THE FLATS A LLOTTED TO ASSESSEE @ 3000 PER SQ. FT AND WORKED OUT VALUE ON ACCOUNT OF SURRE NDER OF TENANCY RIGHT AT THE RATE OF RS. 1,21,65,000/-. THE AO STATED THAT IT WAS A LONG TERM CAPITAL GAIN ON TRANSFER OF TENANCY RIGHTS. FURTHER AO STA TED THAT ASSESSEE SOLD ONE FLAT IN THE ASSESSMENT YEAR UNDER CONSIDERATION AND OFFERED SHORT TERM CAPITAL GAIN OF RS. 9,06,509/-. THE AO STATED THAT ASSESSEE ALSO RECEIVED ADVANCE OF RS. 7,00,000/- AGAINST SALE OF ANOTHER F LAT I.E. FLAT NO. 408 HAVING SUPER BUILT UP AREA OF 620 SQ. FT. AO OBSERVED T HAT STAMP DUTY ESTIMATED VALUE OF THE FLAT @ RS. 3,264/- PER SQ. FT AND ACCO RDINGLY COMPUTED SHORT TERM CAPITAL GAIN OF RS. 3,67,180/- IN THE ASSESSME NT YEAR UNDER CONSIDERATION. 3. BEING AGGRIEVED, ASSESSEE FILED APPEAL BEFORE FI RST APPELLATE AUTHORITY. 4. THE LD. CIT(A) CONFIRMED ACTION OF ASSESSING OFF ICER. THE ASSESSEE FILED FURTHER APPEAL BEFORE TRIBUNAL AND CONTENDED THAT ASSESSEE SURRENDERED TENANCY RIGHTS IN ASSESSMENT YEAR 1994-95 AND AGREE D TO ACCEPT ALTERNATE ACCOMMODATION VIDE TWO AGREEMENTS DT. 13.12.1993 AN D 14.1.1994. THEREFORE, CAPITAL GAIN AROSE ON SUCH TRANSFER ONL Y IN THE ASSESSMENT YEAR 1994-95 AND NOT IN THE CURRENT ASSESSMENT YEAR 2001 -02 I.E. ASSESSMENT YEAR UNDER CONSIDERATION. THE TRIBUNAL REJECTED CLAIM O F ASSESSEE AS ASSESSEE COULD NOT PLACE ANY EVIDENCE TO PROVE EXISTENCE OF TWO AGREEMENTS WHICH WERE SOLE BASIS OF ITS CLAIM. THE TRIBUNAL FOUND T HAT ASSESSEE MADE PAYMENT OF RENT IN RESPECT OF SURRENDERED PREMISES AS LATE AS 14.5.1994 WHICH FELL IN ASSESSMENT YEAR 1995-96. THE TRIBUNAL ALSO FOUND T HAT MUNICIPAL AUTHORITIES COULD GIVE COMMENCEMENT CERTIFICATE TO M/S. CELICA ONLY ON 22.5.1996, I.E. ASSESSMENT YEAR 1997-98 AND GRANTED OCCUPATION CERT IFICATE IN RESPECT OF ITA NO. 1656/M/2011 3 NEWLY CONSTRUCTED PREMISES ONLY ON 16.11.2000, WHIC H FELL IN THE ASSESSMENT YEAR UNDER CONSIDERATION. THEREFORE, TRIBUNAL UPHE LD ACTION OF AO IN BRINGING TO TAX LONG TERM CAPITAL GAIN ON SURRENDER OF TENAN CY RIGHTS IN THE CURRENT YEAR. HOWEVER, TRIBUNAL SET ASIDE THE ASSESSMENT AND DIRECTED THE AO TO RECOMPUTE LONG TERM CAPITAL GAIN AFTER ASCERTAININ G VALUE OF FLATS BASED ON MARKET PRICE OR OTHER CONTEMPORARY MATERIALS IN ORD ER TO MAKE A REASONABLE ESTIMATE OF FULL VALUE OF CONSIDERATION RECEIVED ON TRANSFER OF TENANCY RIGHTS. THE TRIBUNAL ALSO DIRECTED AO TO RECOMPUTE SHORT TE RM CAPITAL GAIN AFTER ASCERTAINING CORRECT VALUE OF FLAT AND ALSO WHETHER ASSESSEE HAD MERELY RECEIVED ADVANCE AGAINST OTHER FLAT I.E. FLAT NO. 4 08 OR THAT ALSO HAD BEEN TRANSFERRED DURING THE YEAR. IN VIEW OF ABOVE, AO C OMPLETED FRESH ASSESSMENT VIDE ORDER DT. 21.12.2009 REASSESSING TH E LONG TERM CAPITAL GAIN OF RS. 1,21,65,000/-, SAME AS IN THE ORIGINAL ASSES SMENT ORDER MADE ON 29.3.2004 AND ALSO ASSESSED SHORT TERM CAPITAL GAIN OF RS. 3,59,629/- ON SALE OF FLATS. IT IS RELEVANT TO STATE THAT SAID FR ESH ASSESSMENTS MADE ON 21.12.2009 REMAINED UNASSAILED. 5. IN VIEW OF ABOVE, AO INITIATED PENALTY PROCEEDING S U/S. 271(1)(C) OF THE ACT STATING THAT ASSESSEE CONCEALED INCOME TO T HE EXTENT OF RS. 1,25,24,629/- (RS. 1,21,65,000/- + 3,59,629/-) AND LEVIED PENALTY OF RS. 28,98,943/- EQUIVALENT TO 100% OF TAX SOUGHT TO BE EVADED VIDE ORDER DT. 25.6.2010. 6. BEING AGGRIEVED, ASSESSEE FILED APPEAL BEFORE FI RST APPELLATE AUTHORITY. THE ASSESSEE CONTENDED THAT PENALTY ORDER IS BARRED BY LIMITATION AS PER SEC. 275 OF I.T. ACT. THE ASSESSEE ALSO CONTENDED BEFOR E LD. CIT(A) THAT LEVY OF PENALTY IS BAD IN LAW, UNJUSTIFIED, UNREASONABLE, E XCESSIVE , VOID AB INITIO AND IS LIABLE TO BE CANCELLED. 7. IN RESPECT OF THE CONTENTION OF ASSESSEE THAT PE NALTY ORDER IS BARRED BY LIMITATION, LD. CIT(A) HAS HELD THAT PERIOD OF L IMITATION TO PASS IMPUGNED ORDER OF PENALTY COMMENCED FROM THE DATE OF ORDER O F FRESH ASSESSMENT I.E. ITA NO. 1656/M/2011 4 21.12.2009 AND WAS TO EXPIRE EITHER ON 31.3.2010 I. E. LAST DATE OF FINANCIAL YEAR IN WHICH SAID ASSESSMENT WAS COMPLETED OR 30.6 .2010 I.E. 6 MONTHS FROM THE END OF THE MONTH IN WHICH IMPUGNED PENALTY PROCEEDINGS WAS INITIATED, WHICHEVER PERIOD EXPIRED LATER. THEREFO RE, IMPUGNED PENALTY ORDER WAS TO BE PASSED ON OR BEFORE 30.6.2010. SINCE PEN ALTY ORDER WAS PASSED ON 25.6.2010, IT IS WELL WITHIN TIME AS PROVIDED U/S. 275 OF THE ACT AND ACCORDINGLY REJECTED THE CONTENTION OF ASSESSEE THA T PENALTY ORDER IS BARRED BY LIMITATION. 8. IN RESPECT OF CONTENTION, AS TO WHETHER LEVY OF P ENALTY IS JUSTIFIED OR NOT, LD. CIT(A) HAS HELD THAT LEVY OF PENALTY IN R ESPECT OF LONG TERM CAPITAL GAIN ON ACCOUNT OF SURRENDER OF TENANCY RIGHTS TO T HE EXTENT OF RS. 1,21,65,000/- IS JUSTIFIED AND ACCORDINGLY CONFIRME D ACTION OF AO TO LEVY PENALTY @ 100% OF TAX SOUGHT TO BE EVADED ON INCOME OF RS. 1,21,65,000/-. HOWEVER, IN RESPECT OF SHORT TERM CAPITAL GAIN OF R S. 3,59,629/- AS COMPUTED BY AO ON SALE OF FLAT, LD. CIT(A) HAS STAT ED THAT ASSESSEE HAD OFFERED TO TAX A HIGHER INCOME AS SHORT TERM CAPITA L GAIN. THERE CANNOT BE ANY CONCEALMENT ON THIS SCORE. HENCE APPEAL OF ASS ESSEE IS PARTLY ALLOWED BY LD. CIT(A). RELEVANT PARAS 9 & 10 OF ORDER OF LD. CIT(A) READ AS UNDER: 9. I HAVE CONSIDERED THE ISSUE. IN CIT VS ATUL MOH AN BIDAL, 317 ITR 01 (SC), THE APEX COURT HELD THAT FOR APPLI CABILITY OF SEC. 271(1)(C) THE CONDITIONS STATED THEREIN MUST E XISTS. THE CONDITIONS ARE THAT THE ASSESSEE SHOULD HAVE CONCEA LED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTI CULARS OF SUCH INCOME BEFORE THE PENALTY U/S. 271(1)(C) COU LD BE LEVIED. THIS HAS BEEN REITERATED IN A RECENT DECIS ION OF THE APEX COURT IN CIT VS RELIANCE PETRO PRODUCTS PVT. L TD. 322 ITR 158, WHEREIN HONBLE APEX COURT INTERPRETED THE MEANING OF THE EXPRESSIONS, CONCEALMENT INACCURATE, AND PARTICULARS USED IN CLAUSE (C) OF SEC. 271(1)(C) AND HELD THAT EVERYTHING WOULD DEPEND UPON THE RETURN OF INCOME F ILED BECAUSE THAT WAS THE ONLY DOCUMENT WHERE THE ASSESS EE CAN FURNISH THE PARTICULARS OF INCOME. THE APEX COURT HELD THAT WHEN THE ASSESSEE FURNISHED ALL DETAILS OF EXPENDI TURE AS WELL AS INCOME IN ITS RETURN WHICH DETAILS IN THEMSELVES WERE NOT FOUND TO BE INACCURATE NOR COULD BE VIEWED AS THE CONCEALMENT OF INCOME ON ITS PART, IT WAS UP TO THE AUTHORITIES ITA NO. 1656/M/2011 5 TO ACCEPT ITS CLAIM IN THE RETURN OR NOT AND MERELY BECAUSE THE ASSESSEE HAD MADE THE CLAIM WHICH CLAIM WAS NOT ACC EPTED OR WAS NOT ACCEPTABLE TO THE REVENUE AS THE SAME WAS N OT SUSTAINABLE IN LAW, THAT BY ITSELF WOULD NOT ATTRAC T THE PENALTY U/S. 271(1)(C). THE APEX COURT HELD THAT WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, UNTRUE OR F ALSE, THE LIABILITY OF PENALTY WOULD ARISE. 10. IN THE INSTANT CASE THE AO ASSESSED LONG TERM C APITAL GAIN ON SURRENDER OF TENANCY RIGHT AND SHORT TERM C APITAL GAIN ON SALE OF FLATS. WHAT THE APPELLANT DECLARED IN ITS RETURN OF INCOME FILED FOR THE RELEVANT YEAR WAS ONLY THE SHORT TERM CAPITAL GAIN ON SALE OF ONE OF THE FLATS WHICH WERE ACQUIRED IN LIEU OF SURRENDER OF TENANCY RIGHTS. THE APPELLANT HAD NOT DECLARED ANY INCOME ON SURRENDER OF TENANCY RIGHTS. THE AO COULD DETECT THIS ONLY WHEN HE MADE ENQUIRIES INTO THE SOURCE OF SHORT TERM CAPITAL GAIN DECLARED IN RESPECT OF S ALE OF A FLAT. EVEN AT THAT STAGE THE APPELLANT INSTEAD OF ADMITTI NG ITS LIABILITY TO DECLARE LONG TERM CAPITAL GAIN ON SURRENDER OF TENANCY RIGHT MADE A FALSE CLAIM THAT IT HAD SURREN DERED THE TENANCY RIGHT IN THE YEAR 1993 AND NO CAPITAL GAIN WAS ASSESSABLE IN THE CURRENT YEAR. THE APPELLANT COUL D NOT PROVE THIS CLAIM EVEN BEFORE THE TRIBUNAL. THIS SHOWS TH AT THE APPELLANT KEPT UNDER THE WRAP THE LONG TERM CAPITAL GAIN BROUGHT TO TAX BY THE AO, WHICH COULD NOT HAVE BEEN DETECTED HAD THE AO NOT LAUNCHED INQUIRY INTO IT SUO MOTTO. THE APPELLANT HAS AGAIN MADE A FALSE CLAIM BEFORE ME CO NTENDING THAT IT HAD FURNISHED ON ITS OWN ALL PARTICULARS NE CESSARY FOR COMPUTATION OF SHORT TERM CAPITAL GAIN ON SURRENDER OF TENANCY RIGHTS. IT HAS ALSO MADE A FALSE CLAIM THA T THE INCOME ASSESSED BY THE AO BY WAY OF LONG TERM CAPITAL GAIN ON SURRENDER OF TENANCY RIGHTS HAD BEEN OFFERED TO TAX BY IT IN A STAGGERED FORM BY WAY OF SHORT TERM CAPITAL GAIN ON SALE OF FLATS IN LATER YEARS. DECLARING LONG TERM CAPITAL GAIN ON SURRENDER OF TENANCY RIGHTS IS ONE THING AND DECLAR ATION OF SHORT TERM CAPITAL GAIN ON SALE OF FLATS ACQUIRED I N LIEU OF SURRENDER OF TENANCY RIGHTS IS ANOTHER THING. BOTH CANNOT BE EQUATED AND ONE CANNOT SUBSTITUTE THE OTHER. THIS IS A CLEAR CASE WHERE THE APPELLANT CONCEALED THE PARTICULARS OF INCOME TO THE EXTENT OF RS. 1,21,65,000/- BEING LONG TERM CAPITAL GAIN ON SURRENDER OF TENANCY RIGHTS. AS HELD IN TH E CASE OF RELIANCE PETRO (SUPRA) CONDITIONS PRESCRIBED IN SEC . 271(1)(C) OF THE I.T. ACT DO EXIST IN RESPECT OF THE AFORESAID ADDITION. HOWEVER, THE SAME IS NOT TRUE IN RESPECT OF SHORT T ERM CAPITAL GAIN OF RS. 3,59,629/- COMPUTED BY AO ON SALE OF FL AT. IN FACT THE APPELLANT HAD OFFERED TO TAX A HIGHER INCOME AS SHORTTERM CAPITAL GAIN. THERE CANNOT BE ANY CONCEALMENT ON T HIS SCORE AS THE ACTION OF THE AO HAS THE EFFECT OF REDUCING THE INCOME ITA NO. 1656/M/2011 6 SO DECLARED. I, THEREFORE, DIRECT THE AO TO RESTRIC T THE PENALTY TO 100% OF THE TAX SOUGHT TO BE EVADED ON INCOME OF RS. 1,21,65,000/-. HENCE ASSESSEE IS IN FURTHER APPEAL BEFORE TRIBUNA L. 9. ON BEHALF OF ASSESSEE, IT WAS CONTENDED THAT PEN ALTY ORDER IS BARRED BY LIMITATION AS THE ORIGINAL ASSESSMENT WAS MADE ON 2 9.3.2004 AND WHEREAS PENALTY ORDER IS PASSED U/S. 271(1)(C) OF THE ACT I S DT. 25.6.2010. LD. AR RELIED ON THE DECISION OF HONBLE ALLAHABAD HIGH CO URT IN THE CASE OF CIT VS MORADABAD GENERAL ART METAL MILLS 282 ITR 510 (ALL) . HE SUBMITTED THAT PENALTY ORDER IS IN RESPECT OF ORIGINAL ASSESSMENT ORDER AND NOT IN RESPECT OF REVISED ASSESSMENT ORDER WHICH WAS PASSED BY AO PUR SUANT TO THE ORDER OF TRIBUNAL DT. 30.01.2009. LD. AR REFERRED TO PAGE-6 OF FRESH ASSESSMENT ORDER DT. 21.12.2009 AND SUBMITTED THAT AO STATED THAT PE NALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT AS INITIATED IN THE ORIGINAL O RDER U/S. 143(3) OF THE ACT ARE SUSTAINED FOR FURNISHING INACCURATE PARTICULARS OF INCOME. HE SUBMITTED THAT PRESENT PENALTY ORDER IS IN CONTINUATION OF PENALTY PROCEEDINGS INITIATED FOR THE ORIGINAL ASSESSMENT ORDER DT. 29.3.2004 AND NOT IN RESPECT OF FRESH ASSESSMENT ORDER. HOWEVER, LD. DR SUBMITTED THAT A O INITIATED FRESH PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT PURSUANT TO F RESH ASSESSMENT ORDER PASSED AFTER THE MATTER WAS SET ASIDE BY ITAT IN RE SPECT OF ORIGINAL ASSESSMENT ORDER. LD. DR REFERRED PAGE-15 OF FRESH ASSESSMENT ORDER DT. 21.12.2009 AND STATED THAT LD. CIT(A) HAS ALSO STAT ED IN PARA-6 OF IMPUGNED ORDER THAT PENALTY IS IN RESPECT OF FRESH ASSESSMEN T ORDER AND AS PER CLAUSE (C) OF SEC. 275(1) OF THE ACT, PERIOD OF LIMITATION PRESCRIBE IS TO PASS PENALTY ORDER IN SIX MONTHS FROM THE END OF THE MONTH IN WH ICH PENALTY PROCEEDINGS ARE INITIATED OR BEFORE EXPIRY OF FINANCIAL YEAR IN WHICH PROCEEDINGS IN THE COURSE OF WHICH ACTION FOR IMPOSITION OF PENALTY IS INITIATED. LD. DR SUBMITTED THAT IN THE PRESENT CASE, FRESH ASSESSMENT ORDER WA S PASSED ON 21.12.2009 AND THEREFORE PERIOD OF 6 MONTHS IS TO EXPIRE AFTER THE RELEVANT FINANCIAL YEAR I.E. ON 30.6.2010. HENCE PENALTY COULD BE IMPOSED ON OR BEFORE 30.6.2010. SINCE PENALTY ORDER IS PASSED ON 25.6.2010, IT IS W ITHIN TIME AS PROVIDED U/S. ITA NO. 1656/M/2011 7 275 OF THE ACT. LD. DR FURTHER SUBMITTED THAT DECI SION OF CIT VS MORADABAD GENERAL ART METAL MILLS(SUPRA) RELIED UPON BY LD. A R IS NOT APPLICABLE TO THE FACTS OF THE CASE. 10. WE HAVE CAREFULLY CONSIDERED SUBMISSIONS OF LD. REPRESENTATIVES OF PARTIES AND ORDERS OF AUTHORITIES BELOW AS WELL AS PROVISIONS OF SEC. 275 OF I.T. ACT. WE HAVE ALSO GONE THROUGH DECISION OF ALL AHABAD HIGH COURT IN THE CASE OF CIT VS MORADABAD GENERAL ART METAL MILLS ( SUPRA) RELIED UPON BY LD. AR. 11. AT THE OUTSET, WE MAY STATE THAT RELIANCE PLACE D BY LD. AR ON THE DECISION OF HONBLE ALLAHABAD HIGH COURT (SUPRA) IS NOT RELEVANT TO THE FACTS OF THE CASE BEFORE US. IN THE SAID CASE, HONBLE ALLA HABAD HIGH COURT OBSERVED THAT EVEN IT IS ASSUMED THAT PENALTY PROCEEDINGS H AS BEEN INITIATED VALIDLY, PENALTY ORDER ITSELF WAS PASSED OUT OF TIME I.E. PE RIOD OF TWO YEARS FROM THE END OF RELEVANT FINANCIAL YEAR. IT WAS ALSO OBSERV ED BY HONBLE ALLAHABAD HIGH COURT THAT EVEN AFTER THE ORDER OF TRIBUNAL, N O FRESH ASSESSMENT ORDER WAS PASSED AND ONLY INCOME WAS RECALCULATED TO GIVE EFFECT TO THE ORDER OF TRIBUNAL GRANTING RELIEF TO ASSESSEE, THUS LIMITATI ON COULD NOT BE COUNTED FROM THAT DATE I.E. JANUARY 27, 1986. HENCE, PENALTY OR DER WAS BARRED BY LIMITATION. HOWEVER, IN THE CASE BEFORE US, IT IS NOT IN DISPUTE THAT TRIBUNAL RESTORED THE MATTER TO AO AFTER STATING THAT ON SUR RENDER OF TENANCY RIGHTS IN THE CURRENT YEAR, THERE WAS A LONG TERM CAPITAL GAI N TO ASSESSEE WHICH IS TO BE RECOMPUTED BY AO AFTER ASCERTAINING THE VALUE OF THE FACTS BASED ON MARKET PRICE OR OTHER CONTEMPORARY MATERIALS IN ORD ER TO MAKE A REASONABLE ESTIMATES OF FULL VALUE OF CONSIDERATION RECEIVED. THE TRIBUNAL ALSO STATED THAT AO IS TO RE-COMPUTE SHORT TERM CAPITAL GAIN AF TER ASCERTAINING CORRECT VALUE OF FLAT AND ALSO TO ASCERTAIN WHETHER IN RESP ECT OF OTHER FLAT ASSESSEE RECEIVED ONLY ADVANCE AND THERE WAS NO SALE OF FLAT IN THE ASSESSMENT YEAR UNDER CONSIDERATION. WE OBSERVE THAT AO PASSED FRE SH ASSESSMENT ORDER DT. 25.12.2009, COPY OF WHICH IS PLACED IN ANNEXURE-IV, AT PAGES 24 TO 30 OF MEMO OF APPEAL. HENCE, WE AGREE WITH LD. DR THAT D ECISION OF HONBLE ITA NO. 1656/M/2011 8 ALLAHABAD HIGH COURT RELIED UPON BY LD. AR (SUPRA) IS NOT APPLICABLE TO THE FACTS OF THE CASE BEFORE US. FURTHER, WE AGREE WITH LD. CIT(A) THAT PENALTY PROCEEDINGS HAS BEEN INITIATED BY AO ON THE BASIS O F FRESH ASSESSMENT ORDER DT. 21.12.2009. THE ASSESSEE HAS NOT DISPUTED SAID FRESH ASSESSMENT ORDER IN ANY APPEAL. HENCE, PENALTY PROCEEDINGS AS PER CLAU SE (C) OF SEC. 275(1) OF THE ACT COULD BE PASSED ON OR BEFORE 30.6.2010. SI NCE PENALTY ORDER IS PASSED ON 25.6.2010, IT IS WELL WITHIN TIME AS PROV IDED U/S. 275 OF THE ACT. HENCE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT(A) THAT PENALTY ORDER IS NOT BARRED BY LIMITATION. ACCORDINGLY, GR OUND NO. 1 TAKEN BY ASSESSEE IS REJECTED. 12. NOW COMING TO SECOND GROUND DISPUTING CONFIRMAT ION OF PENALTY IN RESPECT OF LONG TERM CAPITAL GAIN, AS COMPUTED, LD. AR SUBMITTED THAT ASSESSEE WAS ALLOTTED 8 FLATS IN LIEU OF SURRENDER OF TENANCY RIGHTS. THE ASSESSEE SOLD ONLY ONE FLAT IN THE ASSESSMENT YEAR UNDER CONSIDERATION AND REMAINING FLATS WERE SOLD IN SUBSEQUENT ASSESSMENT YEARS. HE SUBMITTED THAT ASSESSEE OFFERED SHORT TERM CAPITAL GAIN AGGREGATIN G RS.81,69,370/- (I.E. RS. 9,25,509 IN A.Y. 2001-02, RS. 65,56,714/- IN A.Y. 2 002-03 & RS. 6,56,147/- IN A.Y. 2003-04) AND PAID TAX AGGREGATING RS. 29,58,7 80/- WHICH IS MORE THAN THE TAX AS COMPUTED BY AO. HE FURTHER SUBMITTED THA T WHATEVER TAX HAS BEEN COMPUTED BY AO IN THE ASSESSMENT YEAR UNDER CONSIDE RATION IS ON THE BASIS OF INFORMATION GIVEN BY ASSESSEE. HENCE, THERE IS N O FURNISHING OF INACCURATE PARTICULARS BY AO. HE SUBMITTED THAT DISPUTE IS ON LY AS TO WHETHER TOTAL TAX IS TO BE PAID IN ONE ASSESSMENT YEAR I.E. ASSESSMENT Y EAR 2001-02 OR IT IS TO BE PAID IN MORE THAN ONE ASSESSMENT YEAR. HE SUBMITTE D THAT ASSESSEE PAID MORE TAX BY WAY OF SHORT TERM CAPITAL GAIN I.E. AGG REGATING RS. 29,58,780/-, NO PENALTY SHOULD BE LEVIED AND RELIED ON FOLLOWING DECISIONS: 1) CIT VS MANILAL TARACHAND (GUJ) 254 ITR 630 2) METAL ROLLING WORKS LTD. VS CIT - 339 ITR 373 (BOM ) HE SUBMITTED THAT PENALTY SHOULD BE CANCELLED. ITA NO. 1656/M/2011 9 13. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTAT IVE SUPPORTED ORDER OF LD. CIT(A). HE SUBMITTED THAT IF ASSESSEE HAS P AID SHORT TERM CAPITAL GAIN IN SUBSEQUENT ASSESSMENT YEAR, IT DOES NOT TAKE AWA Y THE FACT THAT ASSESSEE HAS NOT DISCLOSED RIGHTLY LONG TERM CAPITAL GAIN AR OSE IT IN A.Y. 2001-02. HE SUBMITTED THAT LD. CIT(A) SHOULD BE UPHELD. 14. WE HAVE CAREFULLY CONSIDERED ORDERS OF AUTHORIT IES BELOW AND SUBMISSIONS OF LD. REPRESENTATIVES OF PARTIES. THE RE IS NO DISPUTE TO THE FACT THAT ASSESSEE SURRENDERED TENANCY RIGHTS IN THE ASS ESSMENT YEAR UNDER CONSIDERATION AND PURSUANT THERETO ASSESSEE GOT 8 F LATS. THE ASSESSEE HAS NOT DISPUTED THE FACT THAT TOTAL AREA OF SAID 8 FLA TS IS 4055 SQ.FT IN THE NEWLY CONSTRUCTED BUILDING, MAKHDOOM SEA PALACE, 132, CAD AL ROAD, MAHIM, MUMBAI. THE ASSESSEE HAS NOT DISPUTED THE FACT THA T RATE OF RS. 3000/- PER SQ. FT WAS AGREED AT WHICH M/S. CELICA TO PAY INTER EST TO ASSESSEE IN CASE OF DELAY IN HANDING OVER POSSESSION OF FLATS ALLOTTED. THUS, AO HAS WORKED OUT LONG TERM CAPITAL GAIN OF RS. 1,21,65,000/- AS COST OF ACQUISITION OF TENANCY RIGHT HAS BEEN TAKEN AT NIL IN TERMS OF SEC. 55(2) OF I.T. ACT. 15. IT IS A FACT THAT ASSESSEE CONTENDED IN THE FIRS T PLACE THAT IT SURRENDERED TENANCY RIGHTS IN THE ASSESSMENT YEAR 1 994-95 BUT TRIBUNAL DID NOT ACCEPT THE SAID CONTENTION OF ASSESSEE. WE OBS ERVE THAT AO HAS COMPUTED LONG TERM CAPITAL GAIN AS PER DIRECTION O F TRIBUNAL THAT ASSESSEE SURRENDERED TENANCY RIGHTS IN ASSESSMENT YEAR UNDER CONSIDERATION. THE TRIBUNAL ALSO DIRECTED AO TO ASCERTAIN VALUE OF FLA TS BASED ON MARKET PRICE AND OTHER CONTEMPORARY MATERIAL IN ORDER TO MAKE A REASONABLE ESTIMATE OF FULL VALUE OF CONSIDERATION RECEIVED. WE OBSERVE T HAT AO HAS ADOPTED A REASONABLE BASIS FOR COMPUTING LONG TERM CAPITAL GA IN ON SURRENDER OF TENANCY RIGHTS OF RS. 1,21,65,000/- AND THE ASSESSE E HAS NOT DISPUTED THE SAID FINDING OF AO AS MADE IN THE FRESH ASSESSMENT ORDER PASSED ON 21.12.2009. WE AGREE WITH LD. CIT(A) THAT DECLARIN G LONG TERM CAPITAL GAIN ON SURRENDER OF TENANCY RIGHT IS ONE THING AND DECL ARATION OF DECLARING SHORT ITA NO. 1656/M/2011 10 TERM CAPITAL GAIN ON SALE OF FLATS ACQUIRED BY ASSE SSEE IN LIEU OF SURRENDER OF TENANCY RIGHT IS AN ANOTHER THING. THEREFORE WE AG REE WITH LD. CIT(A) THAT ON THE FACTS OF THE CASE, THE ASSESSEE MADE A FALS E CLAIM AS FAR AS LONG TERM CAPITAL GAIN WHICH AROSE TO ASSESSEE IN THE AS SESSMENT YEAR UNDER CONSIDERATION. 16. HENCE, WE HOLD THAT DECLARING OF SHORT TERM CA PITAL GAIN BY ASSESSEE IN ASSESSMENT YEAR UNDER CONSIDERATION I.E. ASSESSM ENT YEAR 2001-02 OF RS. 9,06,509/- DOES NOT SATISFY THE FACTS AND CANNOT BE A SUBSTITUTE OF LONG TERM CAPITAL GAIN OF RS. 1,21,65,000/- AND SHORT TERM CA PITAL GAIN OF RS. 3,67,180/- AROSE TO ASSESSEE IN THE ASSESSMENT YEAR UNDER CONSIDERATION. SIMILARLY THE FACT THAT IN THE SUBSEQUENT ASSESSMEN T YEARS I.E. 2002-03 AND 2003-04, DECLARING SHORT TERM CAPITAL GAIN BY ASSES SEE ON SALE OF REMAINING FLATS, WHICH ASSESSEE GOT FROM THE DEVELOPER M/S. C ELICA ON ACCOUNT OF SURRENDER OF TENANCY RIGHTS DOES NOT SET RIGHT THE FACT THAT ASSESSEE HAS NOT RIGHTLY DECLARED LONG TERM CAPITAL GAIN AROSE TO AS SESSEE IN THE ASSESSMENT YEAR 2001-02. THE FACT IS THAT IN THE ASSESSMENT Y EAR UNDER CONSIDERATION, ASSESSEE DID NOT DECLARE CAPITAL GAINS CORRECTLY AN D IT RESULTED IN NOT DISCLOSING CORRECT INCOME LIABLE TO TAX. THE RELIAN CE PLACED BY LD. AR ON THE DECISION OF CIT VS MANILAL TARACHAND (GUJ) (SUPRA) IS NOT APPLICABLE TO THE FACTS OF THE CASE BEFORE US AS IN THAT CASE PENALTY PROCEEDING WAS DIRECTED TO BE INITIATED ON AN ORDER PASSED BY LD. CIT U/S. 263 OF THE ACT AND TRIBUNAL HELD THAT LD. CIT WAS NOT JUSTIFIED IN EXERCISING H IS REVISIONARY JURISDICTION U/S. 263 OF THE ACT. IN THAT CASE, DISPUTE WAS ALSO BETW EEN ASSESSEE AND DEPARTMENT AS TO IN WHICH ASSESSMENT YEAR THE COMPE NSATION RECEIVED BY ASSESSEE WAS TAXABLE. HOWEVER, IN THE CASE BEFORE US, THERE IS NO DISPUTE TO THE FACT THAT LONG TERM CAPITAL GAIN OF RS. 1,21,6 5,000/- AROSE TO ASSESSEE IN ASSESSMENT YEAR 2001-02 AND NOT IN ANY OTHER ASS ESSMENT YEAR, AND ASSESSEE FAILED TO DISCLOSE THE SAME IN THE RETURN FILED. . 17. SIMILARLY, THE CASE OF METAL ROLLING WORKS LTD. VS CIT (SUPRA) RELIED UPON BY LD. AR IS ALSO NOT APPLICABLE TO THE FACTS OF THE CASE AS IN THAT CASE, ITA NO. 1656/M/2011 11 AO HIMSELF WAS NOT SURE OF ASSESSMENT YEAR IN WHICH INCOME WAS TO BE TAXED. IN THAT CONTEXT IT WAS HELD THAT IT WOULD BE IMPROPER TO HOLD THAT ASSESSEE HAD CONCEALED INCOME OR FURNISHED INACCUR ATE PARTICULARS OF INCOME SPECIALLY WHEN ASSESSEE DISCLOSED THE RECEIPT OF R S. 6,00,00,000/- IN THE ORIGINAL RETURN FILED FOR ASSESSMENT YEAR 2002-03 A ND ALSO DISCLOSED AMOUNTS RECEIVED SUBSEQUENTLY AND OFFERED TO TAX BY FILING RETURN OF INCOME. HOWEVER, IN THE CASE BEFORE US, AS MENTIONED HEREINABOVE, AS SESSEE WAS ALLOTTED 8 FLATS ADMEASURING TOTAL AREA OF 4055 SQ. FT IN ASSE SSMENT YEAR 2001-02 AND ON IT LONG TERM CAPITAL GAIN IS COMPUTED AT RS. 1,2 1,65,000/- AND THE SAID COMPUTATION WAS NOT DISPUTED BY ASSESSEE IN FURTHE R APPEAL. THERE IS NO DISPUTE TO THE FACT THAT ASSESSEE INITIALLY CONTEND ED THAT TENANCY RIGHT WAS SURRENDERED IN ASSESSMENT YEAR 1994-95 BUT IT WAS HELD BY TRIBUNAL ON THE BASIS OF THE FACT THAT SURRENDER OF TENANCY HAD TAK EN PLACE IN ASSESSMENT YEAR 2001-02 AND ACCORDINGLY, LONG TERM CAPITAL GAI N HAS ARISEN TO ASSESSEE IN THE ASSESSMENT YEAR 2001-02 . THEREFORE, WE HOL D THAT LD. CIT(A) HAS RIGHTLY HELD THAT THERE WAS CONCEALMENT OF PARTICUL ARS OF INCOME BY ASSESSEE TO THE EXTENT OF LONG TERM CAPITAL GAIN OF RS. 1,21 ,65,000/- IN ASSESSMENT YEAR 2001-02. HENCE, WE UPHOLD ORDER OF LD. CIT(A) AND REJECT GROUND OF APPEAL TAKEN BY ASSESSEE. 18. IN THE RESULT, APPEAL FILED BY ASSESSEE IS DISMI SSED. ORDER PRONOUNCED ON THIS 20 TH DAY OF JANUARY, 2012 SD/- SD/- ( J. SUDHAKAR REDDY) (B.R. MITTAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 20 TH JANUARY, 2012 RJ ITA NO. 1656/M/2011 12 COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR E BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI