Shri Bansilal Lakhimal Kanjani, Ahmedabad V. The Dy.CIT.,Circle-3, Ahmedabad

ITA 2021/AHD/2015

• Counselvise Citation: 202120514 RSA 2015
• Duration Of Justice: 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 27-11-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 08-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Assessee Lawyers: A C SHAH
• Keywords: Question of law; Revised return
• Section: 54F; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH BEFORE: S H RI PRAMOD KUMAR , ACCOUNTANT MEMBER AND SHR I S. S. GODARA , JUDICIAL MEMBER BANSILAL LAKHIMAL KANJANI, PROP. OF M/S. GERMAN CHEMICALS, PLOT NO. 139, PHASE - II, GIDC, NARODA, AHMEDABAD - 3800025 PAN: ACYPK5537C (APPELLANT) VS THE DCIT, CIRCLE - 3, AHMEDABAD (RESPONDENT) REVENUE BY : S H RI DINESH S INGH , SR. D . R. ASSESSEE BY: S H RI A.C. SHAH , A.R. DATE OF HEARING : 27 - 11 - 2 015 DATE OF PRONOUNCEMENT : 30 - 11 - 2 015 / ORDER P ER : S. S. GODARA , J UDICIAL MEMBER : - THIS ASSESSEE S APPEAL FOR A.Y. 200 8 - 09 , AR ISES FROM ORDER OF THE CIT(A) - 7, AHMEDABAD DATED 22 - 05 - 2015 IN APPEAL NO. CIT(A) - I T A NO . 2021 / A HD/20 15 A SSES SMENT YEAR 200 8 - 09 I .T.A NO. 2021 /AHD/20 15 A.Y. 2008 - 09 PAGE NO BANSILAL LAKHIMAL KANJANI VS. DCIT 2 7/397/14 - 15 , IN PROCEEDINGS UNDER SECTION 271(1 ) (C) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE AS SESSEE S SOLE SUBSTANTIVE GROUND CHALLENGES THE LOWER APPELLATE ORDER AFFIRMING SECTION 271(1)(C) PENALTY OF RS. 37,67,280/ - IMPOSED BY THE ASSESSING OFFICER IN ORDER DATED 23 - 05 - 2014. FACTS OF THE CASE ARE IN A NARROW COMPASS. THE ASSESSEE SOLD HIS CAPI TA ASSET/A PLOT OF LAND 17 - 09 - 2007 FOR RS. 3.2 CRORES. THE SAME WAS PURCHASED IN JUNE, 2001 FOR RS. 22,82,284/ - . THIS RESULTED IN LONG TERM CAPITAL GAINS OF RS. 2,91,17,877/ - . THE ASSESSEE CLAIMED SECTION 54F DEDUCTION ON ACCOUNT OF INVESTMENT IN RESIDE NTIAL HOUSES AMOUNTING TO RS. 1,82,87,774/ - AND ALSO IN REC BONDS OF RS. 50 LACS THEREBY OFFERING HIS CAPITAL GAINS OF RS. 58,30,103/ - FOR BEING TAXED. THE ASSESSING OFFICER NOTICED HIM TO HAVE PURCHASED RESIDENTIAL HOUSES FROM HIS THREE SONS AND THEIR WI VES WHO ARE STATED TO HAVE ACQUIRED THE SAME ON 28 - 07 - 2006 THROUGH THREE SEPARATE SALE DEEDS. THERE IS NO DISPUTE THAT ASSESSEE S AGREEMENT OF SALE/GENERAL POWER OF ATTORNEY WAS EXECUTED ON A RS. 100 STAMP PAPER WITH NOTARIZATION. THERE IS NO FURTHER QUA RREL BETWEEN THE PARTIES THAT THIS TRANSFER DOCUMENT IS AN UNREGISTERED ONE. THE ASSESSING OFFICER OBSERVED IN ASSESSMENT ORDER DATED 28 - 12 - 2010 INTER ALIA THAT THERE WAS NO EVIDENCE FORTHCOMING ENTERING ASSESSEE S NAME IN THE CONCERNED CO - OPERATIVE SOCIE TY NAME QUA TRANSFER OF THE OWNERSHIP OF THE PROPERTY, NO SUCH EVIDENCE CAME IN RECORDS OF MUNICIPAL CORPORATION OR AUDA. HE DID NOT TREAT ASSESSEE S ABOVE STATED THREE AS VALID TRANSFER ON THE GROUND THAT THE PROPERTY IN QUESTION CARRIED MORTGAGE CHARGE OF I .T.A NO. 2021 /AHD/20 15 A.Y. 2008 - 09 PAGE NO BANSILAL LAKHIMAL KANJANI VS. DCIT 3 M/S KOTAK MAHINDRA BANK AND THE SAME HAD NOT BEEN PASSED TO THE ASSESSEE. HIS TREE SONS NAMELY ; ASHOK, MANOHARLAL AND JAGDISH WERE ALSO SUMMONED AS TO WHETHER THEY HAD DECLARED CONSEQUENTIAL CAPITAL GAINS OR NOT. IT EMANATED THAT ALL THREE OF THEM HAD FILED REVISED RETURN AFTER RECEIVING SUMMONS. THE ASSESSING OFFICER CONCLUDED IN THESE FACTS AND CIR CUMS T AN CES THAT THE ASSESSEE S ALLEGED INVESTMENT TRANSACTION WAS IN THE NATURE OF FAMILY SETTLEMENT HAVING ITS PURPOSE AVOIDING THE IMPUGNED LONG TERM CA PITAL GAINS FROM BEING TAXED. HE FURTHER ALLEGED THAT THE ASSESSEE HAD ADOPTED DUBIOUS METHOD AND COLOURABLE DEVICE IN HIS DEDUCTION CLAIM. THIS MADE HIM TO DISALLOW ASSESSEE S 54F DEDUCTION CLAIM IN ASSESSMENT ORDER DATED 28 - 12 - 2008. HE WAS FURTHER OF THE VIEW THAT ASSESSEE S ACT AND CONDUCT AMOUNTED TO CONCEALMENT AND FURNISHING INACCURATE PARTICULARS OF INCOME UNDER SECTION 271(1) (C) OF THE ACT. HE ACCORDINGLY INITIATED IMPUGNED PENALTY PROCEEDINGS. 3 . THE ASSESSEE PREFERRED APPEAL. THE CIT(A) UPH ELD ASSESSING OFFICER S ACTION IN ORDER DATED 26 - 09 - 2011. A CO - ORDINATE BENCH OF THE TRIBUNAL IN ITA 2647/AHD/2011 DEC I DED ON 20 - 09 - 2013 UPHELD THE SAME. THE ASSESSEE FILED TAX APPEAL NO. 116 OF 2014. THE HON BLE JURISDICTIONAL HIGH COURT HAS ADMITTED T HIS APPEAL BY FORMULATING SUBSTANTIAL QUESTION OF LAW AS TO WHETHER ALL THE LOWER AUTHORITIES INCLUDING TRIBUNAL HAVE ERRED IN HOLDING THAT THE ASSESSEE HAS NOT AT ALL PURCHASED A RESIDENTIAL HOUSE REQUIRED U/S. 54F OF THE ACT. THIS IS THE ULTIMATE STATUS OF QUANTUM PROCEEDINGS. I .T.A NO. 2021 /AHD/20 15 A.Y. 2008 - 09 PAGE NO BANSILAL LAKHIMAL KANJANI VS. DCIT 4 4 . WE COME TO PENALTY PROCEEDINGS NOW. THE ASSESSEE STRONGLY CONTESTED THE PENALTY PROPOSAL. HE PLEADED THAT IT IS A CASE OF MERE REJECTION OF DEDUCTION CLAIM INSTEAD OF THAT INVOLVING CONCEALMENT OF FURNISHING OF INACCURATE P ARTICULARS OF INCOME. THE ASSESSING OFFICER REJECTED THIS EXPLANATION BY QUOTING CHRONOLOGY OF EVENTS IN QUANTUM PROCEEDINGS. HE WOULD TREAT ASSESSEE S ALLEGED DEFAULT TO BE COVERED U/S. 271(1) (C) OF THE ACT RESULTING IN IMPOSITION OF THE IMPUGNED PENALT Y OF RS . 37,67,280/ - . THE SAME STANDS AFFIRMED IN THE LOWER APPELLATE PROCEEDINGS. 5 . WE HAVE HEARD BOTH THE PARTIES. CASE FILE PERUSED. RELEVANT FACTS NARRATED IN THE PRECEDING PARAGRAPHS ARE NOT REPEATED FOR THE SAKE OF BREVITY. THERE CAN HARDLY BE ANY DISPUTE ABOUT TRITE PROPOSITION OF LAW THAT QUANTUM AND PENALTY ARE TWO SEPARATE PROCEEDINGS. EA CH AND EVERY ADDITION OR DISALLOWANCE DOES NOST NECESSARILY IN IMPOSITION OF PENALTY. WE KEEP IN MIND THIS PROPOSITION AND ADVERT TO FACTS OF THE CASE. THE ASSESSEE CLAIMS TO HAVE PURCHASED/REINVESTED THE THREE HOUSE PROPERTY IN QUESTION FROM HIS SONS AND DAUGHTERS - IN - LAW BY WAY OF A NOTARIZED AFFIDAVIT. THERE IS NO DISPUTE ABOUT THE SAME TO BE AN UNREGISTERED DOCUMENT. THE AUTHORITIES BELOW AS WELL A S A CO - ORDINATE BENCH OF THE TRIBUNAL HOLD THIS TRANSFER DOCUMENT AS NOT A VALID ONE FOR ABOVE STATED CO - LATERAL REASONS I.E. THE THREE SONS FIELD REVISED RETURNS AFTER RECEIVING SUMMONS, THE MORTGAGEE BANK AS WELL MUNICIPAL AND CO - OPERATIVE SOCIETIES RECO RDS DO NOT RECOGNIZE THE TRANSFER IN QUESTION . THIS IS NOT THE REVENUE S CASE THAT ANY PROVISION OF THE INCOME TAX ACT I .T.A NO. 2021 /AHD/20 15 A.Y. 2008 - 09 PAGE NO BANSILAL LAKHIMAL KANJANI VS. DCIT 5 INCLUDING THE IMPUGNED DEDUCTION PROVISION ENSHRINED U/S. 54F PRESCRIBES A REGISTERED SALE DEED OR TRANSFER AGREEMENT . WE QUOTE CASE LA W OF (2002) 254 ITR 22 (DEL) BALRAJ VS. CIT HOLDING THAT SECTION 54 STIPU LA TES ONLY PURCHASE OF A RESIDENTIAL PROPERTY AND REGISTRATION THEREOF IS NOWHERE IMPERATIVE. THE HON BLE APEX COURT IN (1979) 120 ITR 46 CIT VS. T. N . ARVINDA REDDY INTERPRETS THE W ORD PURCHASE IN SECTION 54 TO MEAN THE ONE TAKEN IN COMMON PARLANCE I.E. BUY FOR A PRICE OR EQUIVALENT OF PRICE BY PAYMENT IN KIND OR ADJUSTMENT TOWARDS DEBT OR FOR OTHER MONETARY CONSIDERATION AND ALSO A RELEASED DEED IN ASSESSEE S FAVOUR BY OTHER CO - PART NER ALSO COVERS THE SAME. THERE IS ONE MORE DECISION OF HON BLE HIGH COURT IN ITA 609/2014 DECIDED ON 11 - 09 - 2015 CIT VS. KAPIL NAGPAL TAKING NOTE OF THE ABOVE STATED CASE LAW THEREBY HOLDING THAT SECTION 54 DOES NOT ENVISAGE TRANSFER OF ACTUAL OWNERSHIP A S THE SAME SPEAKS OF PURCHASE ONLY. THE REVENUE FAILS TO DISPUTE THE ABOVE STAT ED LEGAL AND FACTUAL POSITION . WE HOLD IN THESE CIRCUMSTANCES THAT LD. CO - ORDINATE BENCH S VIEW REJECTING ASSESSEE S SECTION 54F DEDUCTION CLAIM BASED ON PURCHASE OF PROPERTIE S IN QUESTION NOT ALLOWABLE ON THE GROUND THAT THE SAME IS NOT A FORMAL TRANSFER UNDER RELEVANT STATUTORY PROVISIONS, IS NOT ENTIRELY FREE FROM DOUBT. IT HAS COME ON RECORD THAT ITS CORRECTNESS IS SUBJECT MATTER OF AN APPEAL ALREADY ADMITTED IN THE HON BL E JURISDICTIONAL HIGH COURT (SUPRA). SECONDLY, THE FACT ALSO REMAINS THAT THE ASSESSEE RAISED A DEDUCTION CLAIM WHICH HAS BEEN REJECTED AFTER TREATING THE SAME AS A COLOURABLE EXERCISE. BE THAT AS IT MAY, WE ARE DEALING WITH PENALTY PROCEEDINGS AND TH E ABOVE STATED QUANTUM FINDINGS DO NOT MEAN THAT THE I .T.A NO. 2021 /AHD/20 15 A.Y. 2008 - 09 PAGE NO BANSILAL LAKHIMAL KANJANI VS. DCIT 6 ASSESSEE CAN BE HELD CONCEALED AND FURNISHED INACCURATE PARTICULARS OF INCOME. WE ACCORDINGLY REJECT REVENUE S ARGUMENTS SUPPORTING THE IMPUGNED PENALTY OF RS. 37,67,280/ - . THE SOLE SUBSTANTIVE GROUND RAISED IN THIS APPEAL SUCCEEDS. 6. THIS ASSESSEE S APPEAL IS ALLOWED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 30 - 11 - 2015 SD/ - SD/ - ( PRAMOD KUMAR ) ( S. S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHM EDABAD : DATED 30 /11 /2015 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,