Veerappan Sivakumar, CHENNAI V. ITO, CHENNAI

ITA 2060/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8145 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 06-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: B RAMAKRISHNAN
• Keywords: Bonafide belief
• Section: 143(3); 54F; 147

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , C B ENCH, CHENNAI . . . , . , % BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.2060/MDS/2016 ( / ASSESSMENT YEAR: 2007-08) MR. VEERAPPAN SIVAKUMAR, 37 OLD NO.16, BALAJI NAGAR, 1 ST STREET, ROYAPETTAH, CHENNAI-14. VS THE INCOME TAX OFFICER, INTERNATIONAL TAXATION-2(2), CHENNAI-34. PAN:AAHPS8804R ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. B.RAMAKRISHNAN, FCA /RESPONDENT BY : MR. A.V.SREEKANTH, JCIT /DATE OF HEARING : 9 TH JANUARY, 2017 /DATE OF PRONOUNCEMENT : 10 TH JANUARY, 2017 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THIS APPEAL IS FILED BY THE ASSESSEE AGGRIEVED BY T HE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS)- 16, CHENNAI DATED 31.05.2016 IN ITA NO.74/CIT(A)-16 /2007- 08 PASSED UNDER SECTION 271(1)(C) R.W.S. 250(6) OF THE ACT. 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN HIS A PPEAL, HOWEVER THE CRUX OF THE ISSUE IS AS FOLLOWS:- THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE MINIMUM PENALTY OF RS.4,37,400/- LEVIED BY THE LEARNED ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE ACT. 2 ITA NO.2060 /MDS/2016 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL FILED HIS RETURN OF INCOME ADMITTING TOT AL INCOME OF RS.3,50,640/- ON 31.07.2007. SUBSEQUENTLY, THE CAS E WAS REOPENED UNDER SECTION 147 OF THE ACT AND FINALLY ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF TH E ACT ON 20.03.2013, WHEREIN THE LEARNED ASSESSING OFFICE R DISALLOWED A PORTION OF THE DEDUCTION CLAIMED UNDER SECTION 54F OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS OBSERVED BY THE LEARNED ASSESSI NG OFFICER THAT THE ASSESSEE HAD JOINTLY SOLD HIS 1/3 RD SHARE IN THE PROPERTY AND THEREAFTER PURCHASED RESIDENTIAL PROPE RTY JOINTLY AND HIS SHARE WAS 1/3 RD , HOWEVER HE CLAIMED DEDUCTION U/S.54FOF THE ACT FOR THE ENTIRE AMOUNT OF RS.65,79 ,698/-. THE LEARNED ASSESSING OFFICER QUERIED AS TO WHY DED UCTION UNDER SECTION 54F SHOULD NOT BE RESTRICTED TO 1/3 RD OF THE TOTAL AMOUNT INVESTED IN THE PROPERTY. THE LEARNED AUTHOR IZED REPRESENTATIVE ARGUED BEFORE THE LEARNED ASSESSING OFFICER THAT NOWHERE IN THE ACT IT IS STATED THAT THE NEW P ROPERTY SHOULD BE PURCHASED IN THE NAME OF THE ASSESSEE. RE LIANCE WAS PLACED IN THE DECISION OF THE HONBLE DELHI HIG H COURT IN THE CASE CIT VS. RAVINDRA KUMAR ARORA VS. CIT REP ORTED IN 3 ITA NO.2060 /MDS/2016 342 ITR 38. HOWEVER, THE LEARNED ASSESSING OFFICER OPINED THAT THE ASSESSEE WOULD BE ENTITLED FOR DEDUCTION UNDER SECTION 54F OF THE ACT ONLY WITH RESPECT TO HIS SHA RE IN THE PURCHASE OF THE PROPERTY AND RESTRICTED THE DEDUCT ION TO RS.32,21,442/-. THEREAFTER THE LD.A.O INVOKED THE P ROVISIONS OF SECTION 271( C) OF THE ACT AND LEVIED MINIMUM PE NALTY OF RS. 4,73,400/-. 4. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) CONFIRMED THE ORDER OF THE LEARNED ASSESS ING OFFICER BY OBSERVING AS UNDER:- I HAVE GIVEN CAREFUL CONSIDERATION TO THE CASE LAW S CITED BY THE APPELLANT AS REFERRED ABOVE AND THEY ARE FOUND TO BE CLEARLY DISTINGUISHABLE HENCE THE PENALTY IS DECIDED AS UNDER: THE ASSESSEE SOLD THE PROPERTY DURING THE FY 2012-13 FOR A TOTAL SALE CONSIDERATION OF RS.3,65,00,000/ - . THE ASSESSEE ADMITTED IN THE RETURN OF INCOME 1/3RD OF SALE CONSIDERATION ON HIS ACCOUNT AT RS.94,93,232/-. THE ASSESSEE HAD 1/3RD SHARE IS ALSO UPHELD BY THE HON'BLE ITAT. ASSESSEE HAD JOINTLY INVESTED FOR PURCHASE OF A PROPERTY TO CLAIM DEDUCTION U/S.54F OF A TOTAL PROPERTY VALUE AT RS.13500000/ - AND IN THIS INVESTMENT THE ASSESSEE HAD 1/ 3RD OF SHARE IN THE PROPERTY THAT CLEARLY SHOWS THAT ASSESSEE HAS HAD KNOWLEDGE THAT INVESTMENT U/S.54F TO HIS SHARE AT 1/3RD VALUE COMES AT RS.45,00,000/ -,HOWEVER ASSESSEE HAD CLAIMED DEDUCTION U/S.54F AT 4 ITA NO.2060 /MDS/2016 RS.63,00,000/ -PLUS PROPORTIONATE STAMP DUTY AND REGISTRATION CHARGES AT RS.5,67,000/- TOTALING TO RS.68,67,000/-.THUS-IT: IS CRYSTAL CLEAR THAT ASSESSEE HAS NOT ONLY MADE EXCESS CLAIM OF DEDUCTION U/S.54F BUT ALSO FURNISHED INACCURATE PARTICULARS OF INCOME LEADING TO CONCEALMENT OF INCOME. THEREFORE I UPHOLD THE ACTION OF THE AO LEVYING PENALTY U/S.271 (1 )(C) OF THE ACT FOR ASSESSEE HAVING FURNISHED INACCURATE PARTICULARS OF INCOME AMOUNTING TO CONCEALMENT OF INCOME @ 100% OF MINIMUM OF RS.4,73,400/-. THE GROUNDS OF APPEAL OF THE ASSESSEE ON THIS ISSUE IS THEREFORE DISMISSED. 5. BEFORE US, THE LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAD DISCLOSED THE ENTIR E TRANSACTION IN HIS RETURN OF INCOME AND THEREFORE D ID NOT CONCEAL ANY PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. HE FURTHER SUBMITTED T HAT THE ASSESSEE HAD RELIED ON VARIOUS CASE LAWS AND UNDER BONAFIDE BELIEF HAD CLAIM DEDUCTION UNDER SECTION 5 4F OF THE ACT. IT WAS THEREFORE PLEADED THAT THOUGH THE ADDIT IONS MAY BE SUSTAINABLE, IT IS NOT A FIT CASE FOR LEVYING OF PENALTY. THE LEARNED AUTHORIZED REPRESENTATIVE ALSO POINTED OUT THAT THE LEARNED ASSESSING OFFICERS NOTICE DATED 20.03.2013 IS DEFECTIVE AND INAPPROPRIATE. 5 ITA NO.2060 /MDS/2016 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE O THER HAND ARGUED IN SUPPORT OF THE ORDERS OF THE REVENUE AUTHORITIES AND REQUESTED FOR CONFIRMING THE PENALT Y LEVIED BY THE LEARNED ASSESSING OFFICER. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE MATERIALS ON RECORD. FROM THE FACTS OF THE CASE IT IS APPARENT THAT THE ASSESSEE HAS ONLY MADE A BONAF IDE CLAIM OF DEDUCTION UNDER SECTION 54F OF THE ACT REL YING UPON CERTAIN DECISIONS WHICH CANNOT BE SIMPLY BRUSHED AS IDE. IN THIS CONTEXT, WE ARE REMINDED OF THE DECISION RENDE RED BY THE HONBLE APEX COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS P.LTD., REPORTED IN 322 ITR 158(SC). THE HONBLE APEX COURT HAD HELD THAT A MERE MAKING OF CLAIM WHICH IS NOT SUSTAINABLE IN LAW, BE ITSELF, WILL NO T AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INC OME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AM OUNT TO FURNISHING OF INACCURATE PARTICULARS. 8. FOLLOWING THE DECISION OF THE HONBLE APEX COURT , WE ARE OF THE CONSIDERED VIEW THAT THE PENALTY LEVIED BY THE 6 ITA NO.2060 /MDS/2016 LEARNED ASSESSING OFFICER WHICH IS FURTHER CONFIRME D BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS NOT SUSTAINABLE. THEREFORE, WE HEREBY DIRECT THE LEARNE D ASSESSING OFFICER TO DELETE THE MINIMUM PENALTY OF RS. 4,37,400/- LEVIED BY THE LEARNED ASSESSING OFFICER . 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 10 TH JANUARY, 2017 SD/- SD/- ( . . . ) ( . ) (N.R.S.GANESAN) ( A.M OHAN ALANKAMONY ) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER # /CHENNAI, ( /DATE: 10.01. 2017 SOMU *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF