ASST CIT 16(1), MUMBAI V. P.N. AMERSY (HUF), MUMBAI

ITA 2383/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2702 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 09-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RADHA KATYAL NARANGDR
• Assessee Lawyers: HIRO RAIAR
• Keywords: Difference of opinion

Judgement Text

, , , , INCOME-TAX APPELLATE TRIBUNAL CBENCH M UMBAI , , BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBER & PAWAN SINGH, JUDICIAL MEMBER ./I.T.A./2383/MUM/2014 , /ASSESSMENT YEAR:2007-08 ACIT-16(1) 2 ND FLOOR, MATRU MANDIR, TARDEO ROAD MUMBAI-400 007. VS. M/S. P.N. AMERSY (HUF) LABURNUM HOUSE, LABURNUM ROAD, GAMDEVI MUMBAI-400 007. PAN:AAAHP 6321 H ( /APPELLANT) ( / RESPONDENT) REVENUE BY: MS. RADHA KATYAL NARANG-DR ASSESSEE BY: SHRI HIRO RAI-AR / DATE OF HEARING: 29.06.2016 / DATE OF PRONOUNCEMENT: 15.07.2016 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER, DATED 20/01/2014, OF THE CIT (A) -27, MUMBAI THE ASSESSING OFFICER (AO) HAS FILED THE PRESENT APPEAL.THE EFFECTIVE GRO UND OF APPEAL DEALS WITH DELETION OF PENALTY LEVIED BY HIM,FOR FURNISHING INACCURATE PAR TICULARS OF INCOME BY THE ASSESSEE,U/S. 271 (1)(C) OF THE ACT. BRIEF FACTS: 2 .ASSESSEE-HUF HAD FILED ITS RETURN OF INCOME ON 26/ 10/2007, DECLARING LOSS OF RS. 95.74 LAKHS.THE AO COMPLETED THE ASSESSMENT ON 31/12/2009 , U/S.143 (3) OF THE ACT,DETERMINING THE INCOME OF THE ASSESSEE AT RS. 3.81 CRORES.DURIN G THE ASSESSMENT PROCEEDINGS, THE AO FOUND THAT ASSESSEE HAD RECEIVED A SUM OF RS. 4.55 CRORES FROM PYRAMID RETAIL LTD AND RS. 5 LAKHS FROM MANECK DAWER FOR SURRENDERING RIGHTS OFF ER PREMISES SITUATED AT MM ESTATE, THAT THE PREMISES WAS OWNED BY A TRUST, THAT IT HAD LEAS ED THE PREMISES TO MOONSHOT INVESTMENT CORPORATION WHO ENTERED SUBLET THE PREMISES TO THE ASSESSEE BY AGREEMENT DATED 14/08/1969, THAT PYRAMID RETAIL LTD. PURCHASED THE SAID PREMISE S FROM THE OWNER AND ENTERED INTO AN AGREEMENT WITH THE ASSESSEE,THAT FOR SURRENDERING T HE RIGHTS THE ASSESSEE WAS PAID A SUM OF RS. 4.55 CRORES AND RS. 5 LAKHS FROM TWO PARTIES,AS STATED EARLIER.THE AO HELD THAT THE RECEIPT WAS TO BE TAXED UNDER THE HEAD CAPITAL GAINS ON TRA NSFER OF TENANCY RIGHTS.INVOKING THE PROVISIONS OF SECTION 45 R.W.S.55 (2) (A) OF THE AC T,HE TAXED THE ENTIRE SUM AS LONG-TERM CAPITAL GAIN (LTCG).HE ALSO INITIATED PENALTY PROCE EDINGS U/S. 271(1)(C).THE ASSESSEE AGITATED THE ISSUE BEFORE THE FIRST APPELLATE AUTHO RITY (FAA),WHO DISMISS THE APPEAL FILED BY IT.THE AO GAVE ONE MORE OPPORTUNITY TO THE ASSESSEE BY ISSUE A NOTICE ON 05/02/2013 AND ASKED IT AS TO WHY PENALTY SHOULD NOT LEVIED.AS PER THE AO,THE ASSESSEE FILED IT AN EXPLANATION 2383-PN AMERSY(HUF) 2 AND SAME WAS PLACED ON RECORD.AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE,THE AO HELD THAT THE ISSUE HAD BEEN UPHELD BY THE FAA, THAT THE AO WAS RIGHT IN INVOKING THE PROVISIONS OF SECTION 55 (2) (A) OF THE ACT, THAT IT WAS A FIT CASE FOR LEVYING PENALTY U/S. 271(1)(C) OF THE ACT,THAT THE ASSESSEE HAD FILED INACCURATE PARTICUL ARS OF INCOME.HE LEVIED A PENALTY OF RS. 1.03 CRORES. 3. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREF ERRED AN APPEAL BEFORE THE FAA. BEFORE HIM,IT WAS ARGUED THAT THE ASSESSEE HAD NOT FURNISH ED INACCURATE PARTICULARS OF INCOME, THAT ALL EXPLANATION AND SUBMISSIONS HAD BEEN MADE TO THE SA TISFACTION OF THE AO, THE ASSESSEE HAD ACTED IN GOOD FAITH,THAT IT HAD DISCLOSED THE FACTS RELATING TO THE TRANSACTION IN THE RETURN OF INCOME CLAIMING THE SAME WAS NOT TAXABLE BASED ON L EGAL ADVICE ALSO RELYING ON DECISIONS OF THE HIGH COURT AND THE TRIBUNAL,THAT THE ASSESSEES CASE WAS NOT OF SURRENDER OF TENANCY, THAT IT WAS NEVER A TENANT-IT WAS A MERE LICENCE HOLDER, THAT THE CASE WAS NOT COVERED BY THE PROVISIONS OF SECTION 55 (2), THAT THE NOTE WAS APP ENDED TO THE COMPETITION OF INCOME FILED ALONG WITH THE RETURN. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE A ND THE PENALTY ORDER, THE FAA REFERRED TO THE EXPLANATION TO THE SECTION 271(1)(C) AND HELD T HAT THE ASSESSMENT PROCEEDINGS AND THE PENALTY PROCEEDINGS WERE INDEPENDENT OF EACH OTHER, THAT AS PER THE EXPLANATION THE ONUS TO ESTABLISH THAT EXPLANATION OFFERED BY AN ASSESSEE W AS BONA FIDE AND ALL THE FACTS RELATING TO SAME AND THE MATERIAL TO COMPUTE ITS INCOME HAD BEE N DISCLOSED BY IT WAS ON THE PERSON WHO HAD BEEN CHARGED WITH CONCEALMENT,THAT THE EXPLANAT ION OF THE ASSESSEE FOR THE PURPOSE OF EVIDENCE OF PENALTY MUST BE AN ACCEPTABLE EXPLANATI ON, THAT IT SHOULD NOT BE A FANTASTIC OR FANCIFUL ONE.REFERRING TO THE CASE OF PFIZER LTD(19 TAXMANM.COM75),HE HELD THAT IF THE ASSESSEE ENTERTAINED BONA FIDE BELIEF THAT THE AMOU NT IN QUESTION WAS NOT CHARGEABLE TO TAX AND A DISCLOSURE WAS MADE PENALTY U/S. 271(1)(C) SH OULD NOT LEVIED. HE FURTHER OBSERVED THAT THE ASSESSEE HAD PLACED ALL THE MATERIAL BEFORE THE AO AND THE RETURN OF INCOME AS WELL AS DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THAT I T WAS A CASE WHERE A BONA FIDES BELIEF LED TO FILING OF A CLAIM WHICH WAS NOT ENTERTAINED, THA T MERELY BECAUSE A DISALLOWANCE HAD BEEN MADE IT WOULD NOT GIVE RISE TO IMPOSITION OF PENALT Y DE HORS THE EXPLANATION FURNISHED DURING THE COURSE OF PENALTY PROCEEDINGS,THAT THE AO HAD N OT DOUBTED THE GENUINENESS OF THE TRANSACTION,THAT THE ASSESSEE HAD OFFERED A BONA FI DE EXPLANATION, THAT THE ASSESSEE HAD FORMED A BONA FIDE BELIEF ON THE BASIS OF EXPERT OPINION G IVEN BY A SUPREME COURT ADVOCATE, THAT A NOTE WAS APPENDED TO THE RETURN OF INCOME, THAT IT COULD NOT BE SAID THAT ASSESSEE HAD NOT PROVIDED ALL THE MATERIAL FACTS FOR COMPUTING THE I NCOME, THAT IT COULD NOT ALSO BE SAID THAT THE 2383-PN AMERSY(HUF) 3 ASSESSEE COULD NOT HAVE ENTERTAINED THE BONA FIDE B ELIEF THAT THE SAID SUM WAS NOT EXIGIBLE TO TAX.RELYING UPON THE JUDGMENT OF RELIANCE PETROPROD UCTS PVT.LTD.,HE DELETED THE PENALTY IMPOSED BY THE AO. 4. BEFORE US,THE DEPARTMENTAL REPRESENTATIVE(DR) ARGUE D THAT THE TRIBUNAL HAD UPHELD THE ADDITION MADE BY THE AO IN QUANTUM APPEAL, THAT THE ASSESSEE HAD CONCEALED THE PARTICULARS OF INCOME.THE AUTHORISED REPRESENTATIVE(AR) SUPPORT ED THE ORDER OF THE FAA AND STATED THAT THE ASSESSEE HAD DISCLOSED ALL NECESSARY FACTS IN ITS RETURN OF INCOME, THAT IN THE COMPUTATION OF INCOME THERE WAS A NOTE ABOUT A TRAN SACTION IN QUESTION,THAT THE ASSESSEE HAD MADE A LEGAL CLAIM THAT WAS REJECTED BY THE AO, THA T THE CLAIM WAS MADE ON A BONA FIDE BELIEF, THAT PROVISIONS OF SEC.55(2)(A) OF THE ACT WERE NOT APPLICABLE, THAT IT WAS NOT A CASE OF TENANCY BY IT WAS A MATTER OF TRANSFER OF RIGHTS,TH AT IT WAS A DEBATABLE ISSUE,THAT REJECTION OF A LEGAL CLAIM WOULD NOT RESULT IN AUTOMATIC LEVY OF C ONCEALMENT PENALTY.HE RELIED UPON THE CASES OF RELIANCE PETROPRODUCTS PVT. LTD. (322 ITR 158); S.M. CONSTRUCTIONS (233 TAXMAN 263);PETALS ENGINEERS (P) LTD.(264 CTR 577);NALIN P . SHAH (ITXA(LOD)49 OF 2013; ADMINISTRATOR OF THE ESTATE OF LATE MR. E.F. DINSHA W (218 TAXMAN 125) AND RUCHA ENGINEERS PVT. LTD. (90 CCH 232). 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE ASSESSEE HAD RECEIVED RS.4.60 CRORES FROM TWO PARTI ES FOR SURRENDERING ITS RIGHTS IN A PROPERTY,THAT THE DETAILS OF THE TRANSACTION IN QUE STION WERE FILED IN THE RETURN OF INCOME,THAT THE ASSESSEE CLAIMED THAT THE AMOUNT RECEIVED BY IT WAS NOT TAXABLE,THAT IT HAD TAKEN LEGAL OPINION FROM A PROFESSIONAL AN ADVOCATE OF THE APE X COURT,THAT THE AO HELD THAT AMOUNT RECEIVED BY THE ASSESSEE WAS TAXABLE U/S. 55 (2)(A) OF THE ACT,THAT THE FAA AND THE TRIBUNAL UPHELD THE ADDITION MADE BY THE ASSESSEE IN QUANTUM APPEALS,THAT THE AO INITIATED PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT,THAT THE ASSES SEE HAD FILED EXPLANATION BEFORE HIM DURING THE PENALTY PROCEEDINGS. WE OBSERVE THAT THE AO MENTIONS THAT THE ASSESSEE H AD FILED SUBMISSIONS FOR NOT LEVYING PENALTY,BUT WHAT WAS THE EXPLANATION HAS NOT BEEN M ENTIONED.HE SIMPLY STATED THAT THE EXPLANATION WAS CAREFULLY CONSIDERED.BUT,WHY THE EX PLANATION WAS NOT ACCEPTABLE HAS NOT BEEN DISCUSSED IN THE PENALTY ORDER. IN OUR OPINION ,FOR LEVYING PENALTY U/S.271(1)(C),IT HAS TO HELD THAT THE EXPLANATION FILED BY THE ASSESSEE IS NOT TENABLE AT ALL.BUT,MERE STATING THAT SUBMISSIONS ARE UNTENABLE IS NOT SUFFICIENT.IT HAS TO BE EXPLAINED AS TO WHY SAME IS UNACCEPT - ABLE.THE REJECTION OF THE EXPLANATION,FILED BY THE ASSESSEE ON COGENT REASONS IS A PRECONDITION 2383-PN AMERSY(HUF) 4 FOR IMPOSING CONCEALMENT PENALTY.WE FIND THAT SAID PRE-REQUISITE IS MISSING IN THE PRESENT CASE. NO JUDICIAL AUTHORITY IS REQUIRED TO BE CITED TO HO LD THAT ASSESSMENT AND PENALTY PROCEEDINGS ARE DIFFERENT AND CONCLUSION DRAWN DURING ASSESSMEN T MAY BE RELEVANT BUT NOT BINDING FOR LEVYING PENALTY U/S.271(1)(C) OF THE ACT.THE PURPOS E OF ASSESSMENT IS TO DETERMINE THE AMOUNT OF DUE TAXES FROM AN ASSESSEE, BUT PENALTY P ROCEEDINGS ARE INITIATED TO COMPENSATE THE STATE OF REVENUE LOSS.SO,A CONCLUSION ARRIVED DURIN G ASSESSMENT HAS TO BE CONFINED TO THE ASSESSMENT ONLY.AN ADDITION OR DISALLOWANCE BY AN A O,WHILE DETERMINING THE TOTAL INCOME OF AN ASSESSEE, AND CONFIRMATION OF SUCH AN ACTION BY THE APPELLATE AUTHORITIES SHOULD NOT LEAD TO AN AUTOMATIC CONCLUSION THAT THE ASSESSEE HAS CONCE ALED THE PARTICULARS OF INCOME OR HAS FILED INACCURATE PARTICULARS.COURTS HAVE ANALYSED BOTH TH E TERMS AND HAVE HELD THAT BEFORE LEVYING THE PENALTY U/S.271(1)(C) AN INDEPENDENT VIEW SHOUL D BE TAKEN.IN THE CASE BEFORE US,THE FACT IS THAT THERE WAS DISPUTE BETWEEN THE AO AND THE ASSES SEE ABOUT TAXABILITY OF AN AMOUNT RECEIVED BY IT DURING THE YEAR UNDER APPEAL.IT IS N OT THE CASE OF THE AO THAT THE STAND TAKEN BY THE ASSESSEE WAS TOTALLY AGAINST THE PROVISIONS OF THE ACT OR THAT PRIMA FACIE IT WAS INADMISSIBLE.MAXIMUM IT COULD BE SAID THAT THERE WA S DIFFERENCE OF OPINION.THUS,THE CLAIM MADE BY THE ASSESSEE WAS A LEGALLY PLAUSIBLE CLAIM. IT IS A DIFFERENT ISSUE THAT IN THE APPELLATE PROCEEDINGS THE STAND OF THE ASSESSEE WAS NEGATED.T HE AO HAD GATHERED THE INFORMATION ABOUT THE TRANSACTION FROM THE RETURN OF INCOME FIL ED BY THE ASSESSEE.THUS,DISCLOSURE OF PRIMARY FACTS WAS THERE.SO,THERE WAS NO CONCEALMENT OF PARTICULARS OF INCOME PER SE.ONCE BASIC FACTS HAVE BEEN DISCLOSED BY THE ASSESSEE IT HAS TO BE HELD THAT HE HAD NOT CONCEALED THE PARTICULARS OF INCOME.BESIDES,PARTICULARS WERE NOT INACCURATE AS IT HAD MADE THE CLAIM THAT IT CONSIDERED TO BE BONAFIDE.CONSIDERING THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE,WE ARE OF THE OPINION THAT THE ORDER OF THE FAA DOES NOT S UFFER FROM ANY LEGAL INFIRMITY. THE CASES,RELIED UPON BY THE AR,ALSO ENDORSE THE VIEW T AKEN BY THE FAA.SO,CONFIRMING HIS ORDER,WE DECIDE THE EFFECTIVE GROUND OF APPEAL IN F AVOUR OF THE ASSESSEE, I.E. AGAINST THE A.O. AS A RESULT,APPEAL FILED BY THE A.O. STANDS DISMISS ED. . ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH JULY, 2016. 15 , 2016 SD/- SD/- ( ( ( ( /PAWAN SINGH) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 15.07.2016. JV.SR.PS. 2383-PN AMERSY(HUF) 5 / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR C BENCH, ITAT, MUMBAI / , , . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.