SANTOSH RAJU SHETTY, MUMBAI V. PR.CIT-21, MUMBAI

ITA 1757/MUM/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7368 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2010-2011
• Appeal Filed On: 26-03-2019

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G MUMBAI BEFORE SHRI SAKTIJIT DEY (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 1757/MUM/2019 ASSESSMENT YEAR: 2010-11 MR. SANTOSH RAJU SHETTY 705-705, VAIBHAV PARADISE, AARAM SOCIETY ROAD, VAKOLA, SANTACRUZ EAST, MUMBAI-55. VS. PR. CIT-21, 5 TH FLOOR, PIRAMAL CHAMBERS, PAREL, MUMBAI- 400016. PAN NO. AAGPS4066G APPELLANT RESPONDENT ASSESSEE BY : MR. VIJAY MEHTA, AR REVENUE BY : MS. VIDISHA KALRA, CIT(DR) DATE OF HEARING : 05/08/2019 DATE OF PRONOUNCEMENT : 28/10/2019 ORDER PER N.K. PRADHAN, AM THIS IS AN APPEAL FILED BY THE ASSESSEE. THE RELEVA NT ASSESSMENT YEAR IS 2010-11. THE APPEAL IS DIRECTED AGAINST THE ORDE R PASSED BY THE PRINCIPAL COMMISSIONER OF INCOME TAX-21 [IN SHORT PR. CIT], MUMBAI U/S 263 OF THE INCOME TAX ACT 1961, (THE ACT). 2. IN THE INSTANT CASE, THERE HAS BEEN A DELAY OF 665 DAYS ON THE PART OF THE APPELLANT IN FILING THE APPEAL BEFORE THE TRIBU NAL. ITA 1757/MUM/2019 SANTOSH RAJU SHETTY 2 THE ASSESSEE HAS FILED AN AFFIDAVIT DATED 06.05.20 19 STATING AS UNDER : I, SANTOSH R SHETTY, SON OF RAJU SHETTY, AGED ABOU T 50 YEARS, RESIDING AT 704/705 VAIBHAV PARADISE, AARAM SOCIETY ROAD, VAKOLA SANTAC RUZ EAST MUMBAI 400055 HAVING PAN NO. AAGPS4066G HEREBY SOLEMNLY AFFIRM AN D STATE AS FOLLOWS. 1. I WAS UNDER THE BONA FIDE AND GENUINE BELIEF THAT T HE ORDER PASSED U/S 263 OF THE ACT NEED NOT BE APPEALED BUT I CAN CHALLENGE TH E CONSEQUENTIAL ORDER PASSED BY THE ASSESSING OFFICER BEFORE THE COMMISSI ONER OF INCOME TAX (APPEALS) AND THEREAFTER BEFORE THE HON'BLE TRIBUNA L. ACCORDINGLY I HAVE NOT FILED THE APPEAL AGAINST THE ORDER PASSED U/S 263 O F THE ACT, NOR INTIMATED THE SAME TO MY C A. UNDER BONA FIDE BELIEF. 2. WHEN THE ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) READ WITH THE SECTION 147 READ WITH 263 OF THE ACT RECEIVED BY ME I PREFERRED AN APPEAL AGAINST THE SAID ORDER TO THE COMMISSIONER (APPEAL) . 3. I STATE THAT WHEN I CONSULTED THE TAX COUNSEL IN CO NNECTION WITH THE HEARING OF ABOVE APPEAL, HE ADVISED ME TO PREFER AN APPEAL IMM EDIATELY AGAINST THE ORDER PASSED U/S 263 OF THE ACT. ACCORDINGLY I PREF ERRED AN APPEAL BEFORE THE ITAT IMMEDIATELY AFTER COMING TO KNOW OF THE SAME. I STATE THAT, IN THE INTEREST OF JUSTICE THE CONDON ATION PETITION SHALL BE ALLOWED AND THE APPEAL BE DECIDED ON MERIT. OTHERWISE GRAVE AND IRREPARABLE DAMAGES MAY BEFALL ON ME. I STATE THAT WHATEVER IS STATED HEREIN ABOVE IS TRU E TO THE BEST OF MY KNOWLEDGE AND BELIEF THE SAME TO BE TRUE. 2.1 THE ASSESSEE HAS ALSO FILED AN AFFIDAVIT BY SHR I INNA RAVINDRA SHETTY , THE CHARTERED ACCOUNTANT DATED 25.03.2019 WHICH HI S PRODUCED BELOW: I, INNA RAVINDRA SHETTY, PARTNER OF I. R. SHERRY & ASSOCIATES, CHARTERED ACCOUNTANTS, HAVING MY OFFICE AT 507-509 SAI CHAMBE RS, SANTACRUZ EAST MUMBAI - 400055, HEREBY SOLEMNLY AFFIRM AND STATE A S FOLLOWS: 1. I WAS UNDER THE BONA FIDE AND GENUINE BELIEF THAT T HE ORDER PASSED UNDER SECTION 263 OF THE ACT NEED NOT BE APPEALED BUT THE PETITIONER CAN CHALLENGE ITA 1757/MUM/2019 SANTOSH RAJU SHETTY 3 THE CONSEQUENTIAL ORDER PASSED BY THE ASSESSING OFF ICER BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) AND THEREAFTER BEFORE THE HON'BLE TRIBUNAL. ACCORDINGLY, I HAD NOT ADVISED THE PETITI ONER TO FILE APPEAL AGAINST THE ORDER PASSED UNDER SECTION 263 OF THE ACT. 2. WHEN THE ORDER PASSED BY THE ASSESSING OFFICER UNDE R SECTION 143(3) READ WITH SECTION 147 READ WITH 263 OF THE AC T WAS RECEIVED BY THE PETITIONER, I ADVISED THEN TO PREFER AN APPEAL AG AINST THE SAID ORDER TO THE COMMISSIONER OF INCOME TAX (APPEALS). 3. I STATE THAT WHEN WE CONSULTED THE TAX COUNSEL IN C ONNECTION WITH THE HEARING OF THE ABOVE APPEAL, HE ADVISED US TO IMMEDIATELY P REFER AN APPEAL AGAINST THE ORDER PASSED UNDER SECTION 263 OF THE ACT. 4. I STATE THAT IN THE INTEREST OF JUSTICE THE PETITIO NER'S CONDONATION PETITION MAY BE ALLOWED AND THE APPEAL BE DECIDED ON MERITS. OTH ERWISE GRAVE AND IRREPARABLE DAMAGE SHALL BE CAUSED TO THE PETITIONE R. 5. I STATE THAT WHATEVER IS STATED HEREIN ABOVE IS TR UE TO THE BEST OF ANY KNOWLEDGE AND I BELIEVE THE SAME TO BE TRUE. 2.2 FILING THE ABOVE AFFIDAVITS, THE LD. COUNSEL SU BMITS THAT THE PR. CIT PASSED THE ORDER U/S 263 IN THE PRESENT CASE ON 27. 03.2017 AND THE CHARTERED ACCOUNTANT, WHO WAS LOOKING AFTER THE INC OME TAX MATTERS OF THE APPELLATE WAS UNDER THE GENUINE AND BONA FIDE BELIE F THAT THE ASSESSEE NEED NOT CHALLENGE THE ORDER U/S 263 BUT CAN PREFER AN A PPEAL AGAINST THE CONSEQUENTIAL ORDER PASSED BY THE AO TO THE CIT (A) AND THEREAFTER AN APPEAL TO THE ITAT, IF NEED BE. IT IS THUS EXPLAINE D THAT THE APPELLANT, ACCORDINGLY, DID NOT CHALLENGE THE ORDER PASSED U/S 263, BUT PREFERRED AN APPEAL TO THE CIT (A) AGAINST THE ORDER PASSED BY THE AO U/S 143 (3) R.W.S. 147 R.W.S 263. FURTHER, IT IS EXPLAINED THAT WHEN T HE NOTICE FOR HEARING OF THE SAID APPEAL WAS RECEIVED BY THE APPELLANT, HE A LONG WITH HIS CHARTERED ACCOUNTANT CONSULTED THEIR TAX COUNSEL IN CONNECTIO N WITH THE HEARING OF THE SAID APPEAL AND IN THE SAID MEETING, THE COUNSE L OPINED THAT THE APPELLANT SHOULD HAVE PREFERRED AN APPEAL AGAINST T HE ORDER U/S 263 TO THE ITA 1757/MUM/2019 SANTOSH RAJU SHETTY 4 TRIBUNAL AND THEREAFTER AS PER THE ADVICE OF THE CO UNSEL, THE APPELLANT TOOK IMMEDIATE STEPS TO FILE THIS APPEAL. THUS, IT IS ST ATED THAT ON THE FACTS AND CIRCUMSTANCES NARRATED ABOVE, THERE IS A BONA FIDE AND GENUINE INADVERTENT ERROR COMMITTED BY THE APPELLANT IN NOT FILING THIS APPEAL. 2.3 THE LD. COUNSEL RELIED ON THE DECISION IN COLLECTOR, LAND ACQUISITION VS. MST. KATIJI AND OTHERS (1987) 167 ITR 471 (SC), N BALAKRISHNAN VS. M. KRISHNAMURTHY (1998) 7 SCC 123, BABURAO DEORAO WANKHEDE VS. SEWA SAHAKARI SANSTHA AND ORS. (WP NO. 1974 OF 1979) (BOMBAY HIGH COURT), VIJAY VISHIN MEGHANI VS. DCIT (2017) 398 ITR 250 (BOM), HARDILLIA CHEMICALS LTD. VS. CIT (1996) 221 ITR 194 (BOM), THE ORDER OF THE TRIBUNA L IN M/S DBS BANK LTD. VS. DDIT (CO NO. 189/MUM/2013 FOR AY 1995-96), URUDAVAN INVESTMENT AND TRADING P. LTD. VS. CIT (ITA NO. 3815/MUM/2019 FOR A.Y. 2004-05, SHRI ASHOK PANDURANG GAIKWAD VS. CIT (ITA NO. 6191/MUM/2009 FOR A.Y. 2005-06), MR. KEWAL KUMAR JAIN VS. ACIT (ITA NO. 193/PN/2012 FOR A.Y. 2003-04). 3. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESEN TATIVE (DR) EXPLAINS THAT THERE IS NO JUSTIFICATION FOR CONDONI NG DELAY OF 665 DAYS AS IT IS NOT SUPPORTED BY DOCUMENTS/EVIDENCE. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IN THE CASE OF VIJAY VISHIN MEGHANI (SUPRA), THE HONBLE BOMBAY HIGH COURT HAS HELD THAT CONDONATION OF DELA Y IS NOT TO BE REFUSED UNLESS DELAY IN FILING APPEALS IS SHOWN TO BE DELIB ERATE AND INTENTIONAL. IN BABURAO DEORAO WANKHEDE (SUPRA), THE HONBLE BOMBAY HIGH COURT HAS HELD THAT INTEREST OF JUSTICE DEMANDS THAT THE PETI TION HAS TO BE DECIDED ON MERIT AND DISMISSING IT ON TECHNICAL GROUNDS OF LIM ITATION WOULD RESULT IN MERITORIOUS MATTER BEING THROWN OUT AT VERY THRESHO LD. IN N. BALAKRISHNAN (SUPRA), THE HONBLE SUPREME COURT HAS HELD THAT IN ABSENCE OF ANYTHING ITA 1757/MUM/2019 SANTOSH RAJU SHETTY 5 SHOWING MALA FIDE OR DELIBERATE DELAY AS A DILATORY TACTIC, COURT SHOULD NORMALLY CONDONE THE DELAY ; ACCEPTABILITY OF EXPLA NATION FOR THE DELAY IS THE SOLE CRITERION, LENGTH OF DELAY NOT RELEVANT. WE FIND THAT IN THE INSTANT CASE, THERE IS NOTHING MALA FIDE OR DELIBERATE DELAY AS A DILATORY TACTIC ADOPTED BY TH E ASSESSEE. THEREFORE, FOLLOWING THE RATIO LAID DOWN IN THE ABOVE DECISION S, WE CONDONE THE DELAY OF 665 DAYS. 5. THE ISSUE ON WHICH THE ORDER HAS BEEN PASSED BY THE PR. CIT U/S 263 FALLS IN A NARROW COMPASS. THE FACTS ARE THAT THE A SSESSEE HAD PURCHASED A PLOT OF LAND VIDE AGREEMENT OF SALE DATED 23.11.2006, ALONG WITH OTHE RS FOR A TOTAL CONSIDERATION OF RS. 29,00,000/- WHICH WAS REGISTERED ON 23.11.2006 BY PAYING FULL STAMP DUTY AND REGISTRATI ON CHARGES OF RS. 1,45,000/- AND RS. 29,480/- RESPECTIVELY. THE SAID PROPERTY HAD BEEN SOLD VIDE DEED OF CONVEYANCE DATED 14.12.2009 ALONG WITH OTH ERS FOR A TOTAL CONSIDERATION OF RS. 2,35,00,000/- IN WHICH THE ASS ESSEES PROPORTIONATE SHARE OF SALE PROCEEDS WAS RS. 85,00,000/-. THE DOC UMENT OF CONVEYANCE DEED WAS REGISTERED ON THE SAME DATE I.E. 14.12.200 9 AND ACKNOWLEDGEMENT OF REGISTRATION CHARGES OF RS. 30,4 40/- AND PAYMENT OF STAMP DUTY OF RS. 11,75,000/-. THE PR. CIT RELIED ON THE FOLLOWING PARA OF THE CO NVEYANCE DEED DATED 14.11.2007 WHICH INDICATES THAT THE NOC FOR TRANSFE R OF THE PROPERTY WAS RECEIVED ONLY ON 26.07.2007 ; AND WHEREAS THE PARTIES HAVE APPLIED TO THE DY. CO LLECTOR AND COMPETENT AUTHORITY, THANE URBAN AGGLOMERATION, THANE AND SUR ROUNDING 8 K.M. PERIPHERAL AREA OF GREATER MUMBAI URBAN AGGLOMERATI ON , FOR OBTAINING NO OBJECTION FOR TRANSFER OF THE SAID PROPERTY AND ACC ORDINGLY NO OBJECTION CERTIFICATE IS GRANTED UNDER NO. ULC/TA/T-7 / OWALE /16 DATED 26.07.2007 ITA 1757/MUM/2019 SANTOSH RAJU SHETTY 6 UNDER PROVISIONS OF THE SECTION 26 (1) OF THE URBAN LAND (CEILING AND REGULATION ACT, 1976 TO EFFECTUATE THE LEGAL AND PERFECT TRANS FER OF THE SAID PROPERTY AS INTENDED UNDER THESE PRESENTS. THE PR. CIT THUS OBSERVED THAT THE PROPERTY SOLD BY THE ASSESSEE WAS HELD ONLY FROM 14.11.2007 AS STATED IN THE SALE DEED AND ACCORDINGLY THE SAID PROPERTY WAS SOLD VIDE DEED DATED 14.12.2009, THEREFORE, THE PERIOD OF HOLDING OF THE PROPERTY IS ONLY FOR 25 MONTHS. THER EFORE, HE HELD THAT THE GAIN FOR THE SALE OF PROPERTY DOES NOT QUALIFY AS L ONG TERM CAPITAL GAIN (LTCG) AND HAS TO BE TAXED AS SHORT TERM CAPITAL GA IN (STCG). ACCORDINGLY, THE PR.CIT SET ASIDE THE ORDER OF THE AO WITH THE D IRECTION TO REVISE THE ORDER AFTER CONSIDERING THE GAIN FROM SALE OF LAND AS STCG AND WITHDRAWING THE CLAIM ALLOWED U/S 54F AND AFTER DUE VERIFICATIO N AND PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. 6. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUBM ITS THAT THE ASSESSEE ALONG WITH OTHERS ENTERED INTO DEED OF CONVEYANCE D ATED 24.11.2007 BY PAYING A TOKEN STAMP DUTY OF RS. 200/- JUST TO SUPP LEMENT AND STRENGTHEN THE EARLIER AGREEMENT OF SALE, THOUGH THE PROPERTY HAVE BEEN PURCHASED AND REGISTERED ON 23.11.2006. IT IS STATED THAT THE DEED DATED 14.11.2007 HAD BEEN PREPARED JUST TO SUBSTITUTE THE NAME CONV EYANCE DEED IN PLACE OF AGREEMENT FOR SALE AND THIS IS BECAUSE WHEN TH ERE IS SALE OF LAND, IT SHOULD BE NAMED AS CONVEYANCE DEED INSTEAD OF AG REEMENT TO SALE OR SALE DEED ETC. THE LD. COUNSEL THUS SUBMITS THAT JUST TO RECTIFY THE NOMENCLATURE , CONVEYANCE DEED HAS BEEN PREPARED ON 14.11.2007 WITH A TOKEN STAMP DUTY OF RS. 200/- AND A TOKEN REGISTRAT ION CHARGES OF RS. 580/- THAT TOO WITHOUT ANY CONSIDERATION. THUS, IT IS EXP LAINED BY HIM THE CONVEYANCE DEED DATED 14.11.2007 HAD BEEN PREPARED JUST TO RECTIFY MINOR TECHNICAL DETAILS SUCH AS CAPTION OF THE AGREEMENT/ NOMENCLATURE ETC. ITA 1757/MUM/2019 SANTOSH RAJU SHETTY 7 THE LD. COUNSEL THUS SUBMITS THAT THE ASSESSEE H AS RIGHTLY ACCOUNTED FOR THE SALE OF PROPERTY AS LTCG SINCE THE DATE OF PURCHASE OF PROPERTY BY PAYING STAMP DUTY WAS 23.11.2006, DATE OF SALE OF P ROPERTY BY PAYING STAMP DUTY WAS 14.12.2009 AND THE TIME DIFFERENCE B EING 3 YEARS AND 21 DAYS, IT IS A CASE OF LTCG. 7. ON THE OTHER HAND, THE LD. DR SUBMITS THAT THE P R. CIT HAS RIGHTLY REFERRED TO THE CONVEYANCE DEED DATED 14.11.2007 , WHEREIN THE NOC OF TRANSFER OF THE PROPERTY WAS RECEIVED ONLY ON 26.07 .2007. THEREFORE, IT IS ARGUED BY THE LD. DR THAT THE ORDER PASSED BY THE P R. CIT BE AFFIRMED. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE REASONS FOR OUR DECISION AR E GIVEN BELOW. IT IS WELL-SETTLED THAT IMMOVABLE PROPERTY IS NOT CONVEYED BY DELIVERY OF POSSESSION, BUT BY A DULY REGISTERED DEED. FURTH ER, IT IS THE DATE OF EXECUTION OF REGISTERED DOCUMENT, NOT THE DATE OF D ELIVERY OF POSSESSION OR THE DATE OF REGISTRATION OF DOCUMENT WHICH IS RELEV ANT. ONCE THE EXECUTED DOCUMENTS ARE REGISTERED, THE TRANSFER WILL TAKE PL ACE ON THE DATE OF EXECUTION OF DOCUMENTS AND NOT ON THE DATE OF REGIS TRATION OF DOCUMENTS. IN THIS REGARD, WE RELY ON THE DECISION IN ALAPATI VENKATARAMIAH V. CIT (1965) 57 ITR 185 (SC), CIT V. PODAR CEMENTS PVT. LTD. (1997) 226 ITR 625 (SC) AND CIT V VISHNU TRADING & INVESTMENT CO . (2003) 259 ITR 724 (RAJ). IN THE INSTANT CASE, AS MENTIONED EARLIER, THE ASS ESSEE HAD PURCHASED A PLOT OF LAND VIDE AGREEMENT OF SALE DATED 23.11.2006 ALONG WITH OTHE RS FOR A TOTAL CONSIDERATION OF RS.29,00,000/- WHICH WAS R EGISTERED ON 23.11.2006, BY PAYING FULL STAMP DUTY AND REGISTRAT ION CHARGES OF RS.1,45,000/- AND RS. 29,480/- RESPECTIVELY. THE SA ID PROPERTY WAS SOLD VIDE DEED OF CONVEYANCE DATED 14.12.2009 ALONG WITH OTH ERS FOR A TOTAL ITA 1757/MUM/2019 SANTOSH RAJU SHETTY 8 CONSIDERATION OF RS.2,35,00,000/- , IN WHICH THE A SSESSEES PROPORTIONATE SHARE OF SALE PROCEEDS WAS RS.85,00,000/-. THE ASSESSEE, ALONG WITH OTHERS ENTERED INTO A DEE D OF CONVEYANCE DATED 14.11.2007 BY PAYING A TOKEN STAMP DUTY JUST TO SUPPLEMENT AND STRENGTHEN THE EARLIER AGREEMENT OF SALE, THOUGH TH E PROPERTY HAD BEEN PURCHASED AND REGISTERED ON 23.11.2006. THERE IS ME RIT IN THE CONTENTIONS OF THE LD. COUNSEL THAT AN IMMOVABLE PROPERTY CANNO T BE CONVEYED/SOLD/TRANSFERRED ON A MERE STAMP DUTY OF R S.200/- AND REGISTRATION CHARGES OF RS.580/- AND THAT TOO WITHO UT CONSIDERATION AS HAS BEEN DONE IN THE CONVEYANCE DEED DATED 14.11.2007. AS MENTIONED HERE-IN-ABOVE, IMMOVABLE PROPERTY IS CONVEYED BY A DULY REGISTERED DEED. FURTHER, IT IS THE DATE OF TH E EXECUTION OF REGISTERED DOCUMENT WHICH IS RELEVANT. IN THE INSTANT CASE, TH E DATE OF REGISTRATION IS UNDOUBTEDLY 23.11.2006. THUS, THE ASSESSEE HAS RIGH TLY SHOWN THE SALE AS ARISING OUT OF LTCG. IN VIEW OF THE ABOVE FACTS AND POSITION OF LAW, WE HAVE NO HESITATION IN QUASHING THE ORDER U/S.263 DATED 27.03.2017 PASS ED BY THE PR. CIT. 9. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28.10.2019. SD/- SD/- (SAKTIJIT DEY) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED: 28.10.2019 S. SAMANTA, P.S.(ON TOUR) ITA 1757/MUM/2019 SANTOSH RAJU SHETTY 9 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (ASSISTANT REGISTRAR) ITAT, MUMBAI