HEMENDRA K SHAH, MUMBAI V. DCIT RG 4(1), MUMBAI

ITA 2754/MUM/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93077 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 02-03-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 24-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JEETENDRA KUMAR DR
• Assessee Lawyers: VIJAY C KOTHARI
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 54F; 80G

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H, MUMBAI , . . , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER ITA NOS.2754 & 7559/MUM/2012 ASSESSMENT YEAR: 2008-09 HEMENDRA K SHAH, 80/4, NEELAM BLDG, E-ROAD, MARINE DRIVE, MUMBAI-400002 / VS. DCIT, RG-4(1), MUMBAI ( '#$ % /ASSESSEE) ( & / REVENUE) P.A. NO. ABDPS8172P '#$ % / ASSESSEE BY SHRI VIJAY C. KOTHARI & / REVENUE BY SHRI JEETENDRA KUMAR-DR ' &( ) % * / DATE OF HEARING : 07/07/2015 ) % * / DATE OF ORDER: 28/08/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDERS D ATED 10/10/2012 AND 19/01/2012 OF THE LD. FIRST APPELLAT E AUTHORITY, MUMBAI. FOLLOWING GROUNDS HAVE BEEN RAIS ED IN THE APPEALS FILED BY THE ASSESSEE:- HEMENDRA K. SHAH ITA NO.2754 & 7559/MUM/2012 2 GROUNDS OF APPEAL IN ITA NO.7559/MUM/2012 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT CONDONING THE DELAY IN FILING OF APPEAL IN SPITE OF THE FACT THAT THE APPELLANT HAD GIVEN PROPER AND FULL EXPLANATION AND STATED THE REASONS FOR THE DELAY IN FILING OF APPEAL, VIDE LETTER AND A FFIDAVIT ENCLOSED ALONGWITH MEMORANDUM OF APPEAL. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT ALLOWING DEDUCTION U/S. 54F OF THE INCOME TAX ACT, 1 961 ON ACCOUNT OF THE NEW RESIDENTIAL HOUSE PURCHASED BY THE APPELLANT 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT ALLOWING DEDUCTION OF THE LONG TERM CAPITAL LOSS INC URRED BY THE APPELLANT DURING THE PREVIOUS YEAR WHILE COMPUTING T HE INCOME ASSESSABLE UNDER THE HEAD 'LONG TERM CAPITAL GAINS' 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN RESTRICTING THE DEDUCTION U/S. 80G TO RS. 2,62,143/- AS AGAINST THE ELIGIBLE CLAIM OF THE APPELLANT OF RS. 7,00,000/-. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN INITIATING PENALTY PROCEEDINGS U/S. 271(1)(C) IN SPITE OF THE F ACT THAT THE APPELLANT HAD AGREED TO THE VARIOUS ADDITIONS/DISALLOWANCES SUB JECT TO THE SPECIFIC CONDITION THAT PENALTY PROCEEDINGS WOULD NOT BE INIT IATED. GROUNDS OF APPEAL IN ITA NO.2754/MUM/2012 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERR ED IN CONFIRMING THE PENALTY LEVIED U/S 271(1) (C) OF THE ACT AND WHILE DOING SO HE AMONGST OTHERS FAILED TO APPRECIATE THAT: A) THE APPELLANT HAD NEITHER CONCEALED THE PARTICULARS OF INCOME NOR HAD HE FURNISHED ANY INACCURATE PARTICULARS OF INCOME. B) THE APPELLANT HAD MADE A VALID CLAIM FOR DEDUCTION U/S 54F OF THE INCOME TAX ACT, 1961. C) THE APPELLANT HAD MADE A VALID CLAIM OF DEDUCTION OF THE LONG TERM CAPITAL LOSS INCURRED BY THE APPELLANT DURING THE PRE VIOUS YEAR WHILE COMPUTING THE INCOME ASSESSABLE UNDER THE HEAD 'LONG T ERM CAPITAL GAIN' D) THE APPELLANT HAD MADE A VALID CLAIM OF DEDUCTION U/S 80G OF THE ACT. 2. DURING HEARING OF THESE APPEALS, SHRI VIJAY C. KOTHARI, LD. COUNSEL FOR THE ASSESSEE, BROADLY, CON TENDED THAT THE DELAY WAS NOT CONDONED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IN SPITE OF THE FACT THAT PROP ER AND FULL EXPLANATION WITH RESPECT TO REASONS OF DELAY WAS EX PLAINED BY THE ASSESSEE ALONGWITH THE SUPPORTING AFFIDAVIT. T HUS, THE LD. HEMENDRA K. SHAH ITA NO.2754 & 7559/MUM/2012 3 COMMISSIONER OF INCOME TAX (APPEALS) IGNORED THE PR INCIPLE OF NATURAL JUSTICE THAT NO PERSON SHOULD BE CONDEMNED UNHEARD. IT WAS ALSO CONTENDED THAT SUBSTANTIAL CAUSE OF JUS TICE SHOULD BE PREFERRED. PLEA WAS ALSO RAISED THAT THE ASSESSE E IS HAVING PRIMA-FACIE A GOOD CASE IN ITS FAVOUR IN CLAIMING T HE DEDUCTION U/S 54F ON ACCOUNT OF NEW RESIDENTIAL HOUSE PURCHAS ED BY THE ASSESSEE. THE INITIATION/IMPOSING OF PENALTY U/S 2 71(1)(C) WAS ALSO CHALLENGED BY THE ASSESSEE. ON THE OTHER HAND, THE LD. DR, SHRI JEETENDRA KUMAR, CONTENDED THAT THE DELAY MAY NOT BE CONDONED AS THE ASSESSEE WAS VERY CASUAL IN HIS APPROACH. THE IMPUGNED ORDERS WERE DEFENDED. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE IS A SHARE BROKER, CARRYING T HE ACTIVITY OF INVESTMENT IN SHARES AND SECURITIES. DURING THE YE AR UNDER CONSIDERATION, THE ASSESSEE EARNED TAXABLE LONG TER M CAPITAL GAINS ON SALE OF SHARES OF BOMBAY STOCK EXCHANGE. AGAINST THE SAID GAINS, THE ASSESSEE FIRSTLY CLAIMED THE DE DUCTION OF SET OFF OF LONG TERM CAPITAL LOSS INCURRED ON SALE OF S HARES AND SECURITIES. THE ASSESSEE ALSO CLAIMED DEDUCTION U/S 54F ON PURCHASE OF NEW RESIDENTIAL HOUSE. THE ASSESSEE PA ID AN AMOUNT OF RS.35 LAKH TO THE BUILDER AGAINST THE ALL OTMENT OF FLAT UNDER CONSTRUCTION, HOWEVER, DUE TO NUMBER OF HURDLES, THE ASSESSEE CANCELED THE DEED AND RECEIVED THE BOO KING AMOUNT BACK IN A.Y. 2009-10. THE ASSESSEE ALSO CLAI MED DEDUCTION U/S 80G ON THE GIVEN DONATION. THE ASSES SEE DISCLOSED THE FACTS/DETAILS OF HIS INCOME IN HIS RE TURN OF INCOME AND ALSO DURING THE COURSE OF ASSESSMENT PRO CEEDINGS. HEMENDRA K. SHAH ITA NO.2754 & 7559/MUM/2012 4 THE ASSESSEE ALSO CLAIMED SET OFF OF LONG TERM CAPI TAL LOSS AND DEDUCTION U/S 54F OF THE ACT. THE ASSESSEE VIDE LET TER DATED 15/11/2010 AGREED FOR RE-COMPUTATION OF ASSESSABLE CAPITAL GAINS SUBJECT TO THE CONDITION THAT NO PENALTY U/S 271(1)(C) OF THE ACT BE LEVIED. HOWEVER, THE CLAIMED RELIEF WAS DENIED TO THE ASSESSEE AND PENALTY WAS ALSO LEVIED. 2.2. THE AGGRIEVED ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) , WHEREIN, THERE WAS A DELAY OF ALMOST ONE YEAR AND EIGHTEEN D AYS. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DID NOT CO NDONE THE DELAY BY CONTENDING THAT NO PROPER EXPLANATION WAS SUBMITTED BY THE ASSESSEE. FOR STATISTICAL PURPOSES THE APPEA L WAS DISMISSED. 2.3. IF THE OBSERVATION MADE IN THE ASSESSMENT ORD ER, LEADING TO ADDITION MADE TO THE TOTAL INCOME AND IM POSITION OF PENALTY U/S 271(1)(C), CONCLUSION DRAWN IN THE IMPU GNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MAD E BY THE LD. RESPECTIVE COUNSEL, IF KEPT IN JUXTAPOSITION AND AN ALYZED, WE FIND THAT ADMITTEDLY, THE LAST DATE FOR FILING THE APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) WAS 28/01/2011 WHICH WAS FILED ON 15/02/2012, MEANING THEREBY, THERE IS A SUBSTANTIAL DELAY IN FILING THE APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS). NOW, QUESTION ARISES WHETHER THERE WAS SUFFICIENT AND GOOD REASON EXPLAINED BY THE ASSESSEE FOR CONDONING THE DELAY. IF THE RE ASONS WERE FOUND TO BE SUFFICIENT AND BONA-FIDE, THE DELAY DES ERVES TO BE CONDONED. BEFORE, WE EVALUATE, THE SUFFICIENCY OF REASONS, IT WOULD BE OF RELEVANCE TO KEEP IN MIND THE BROAD JUD ICIAL HEMENDRA K. SHAH ITA NO.2754 & 7559/MUM/2012 5 THOUGHTS ON THE ISSUE. NO DOUBT FILING OF AN APPEAL IS A RIGHT GRANTED UNDER THE STATUTE TO THE ASSESSEE AND IS NO T AN AUTOMATIC PRIVILEGE, THEREFORE, THE ASSESSEE IS EXP ECTED TO BE VIGILANT IN ADHERING TO THE MANNER AND MODE IN WHIC H THE APPEALS ARE TO BE FILED IN TERMS OF THE RELEVANT PR OVISIONS OF THE ACT. NEVERTHELESS, A LIBERAL APPROACH HAS TO BE ADO PTED BY THE APPELLATE AUTHORITIES, WHERE DELAY HAS OCCURRED FOR BONA FIDE REASONS ON THE PART OF THE ASSESSEE OR THE REVENUE IN FILING THE APPEALS. IN MATTERS CONCERNING THE FILING OF APPEA LS, IN EXERCISE OF THE STATUTORY RIGHT, A REFUSAL TO CONDO NED THE DELAY CAN RESULT IN A MERITORIOUS MATTER BEING THROWN OUT AT THE THRESHOLD, WHICH MAY LEAD TO MISCARRIAGE OF JUSTICE . THE JUDICIARY IS RESPECTED NOT ON ACCOUNT OF ITS POWER TO LEGALIZE IN JUSTICE ON TECHNICAL GROUNDS BUT BECAUSE IT IS CAPA BLE OF REMOVING INJUSTICE AND IS EXPECTED TO DO SO. 2.4. THE HONBLE APEX COURT IN A CELEBRATED DECISI ON IN COLLECTOR, LAND ACQUISITION VS MST. KATIJI & ORS. 1 67 ITR 471 OPINED THAT WHEN TECHNICAL CONSIDERATION AND SUBSTA NTIAL JUSTICE ARE PITTED AGAINST EACH OTHER, THE COURTS A RE EXPECTED TO FURTHER THE CAUSE OF SUBSTANTIAL JUSTICE. THIS IS FOR THE REASON THAT AN OPPOSING PARTY, IN A DISPUTE, CANNOT HAVE A VESTED RIGHT IN INJUSTICE BEING DONE BECAUSE OF A N ON- DELIBERATE DELAY. THEREFORE, IT FOLLOWS THAT WHILE CONSIDERING MATTERS RELATING TO THE CONDONATION OF DELAY, JUDIC IOUS AND LIBERAL APPROACH IS TO BE ADOPTED. IF SUFFICIENT C AUSE IS FOUND TO EXIST, WHICH IS BONA-FIDE ONE, AND NOT DUE TO NE GLIGENCE OF THE ASSESSEE, THE DELAY NEEDS TO CONDONED IN SUCH C ASES. THE HEMENDRA K. SHAH ITA NO.2754 & 7559/MUM/2012 6 EXPRESSION SUFFICIENT CAUSE IS ADEQUATELY ELASTIC TO ENABLE THE COURTS TO APPLY LAW IN A MEANINGFUL MANNER, WHICH S UBSERVES THE END OF JUSTICE- THAT BEING THE LIFE PURPOSE OF THE EXISTENCE OF THE INSTITUTION OF THE COURTS. WHEN SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDERATION ARE PITTED AGAINST EACH OTH ER, THE CAUSE OF SUBSTANTIAL JUSTICE DESERVES TO BE PREFERR ED. THE HONBLE APEX COURT IN VEDABHAI VS SANTARAM 253 ITR 798 OBSERVED THAT INORDINATE DELAY CALLS OF CAUTIOUS AP PROACH. THIS MEANS THAT THERE SHOULD BE NO MALAFIDE OR DILA TORY TACTICS. SUFFICIENT CAUSE SHOULD RECEIVE LIBERAL C ONSTRUCTION TO ADVANCE SUBSTANTIAL JUSTICE. THE HONBLE APEX COUR T IN 167 ITR 471 OBSERVED AS UNDER:- 3. THE LEGISLATURE HAS CONFERRED THE POWER TO COND ONE DELAY BY ENACTING SECTION 51 OF THE LIMITATION ACT OF 1963 I N ORDER TO ENABLE THE COURTS TO DO SUBSTANTIAL JUSTICE TO PART IES BY DISPOSING OF MATTERS ON DE MERITS. THE EXPRESSION SUFFICIENT CAUSE EMPLOYED BY THE LEGISLATURE IS ADEQUATELY ELASTIC T O ENABLE THE COURTS TO APPLY THE LAW IN A MEANINGFUL MANNER WHIC H SUBSERVES THE ENDS OF JUSTICE THAT BEING THE LIFE-PURPOSE OF THE EXISTENCE OF THE INSTITUTION OF COURTS. IT IS COMMON KNOWLEDGE T HAT THIS COURT HAS BEEN MAKING A JUSTIFIABLY LIBERAL APPROACH IN M ATTERS INSTITUTED IN THIS COURT. BUT THE MESSAGE DOES NOT APPEAR TO HAVE PERCOLATED DOWN TO ALL THE OTHERS COURTS IN THE HIE RARCHY. 2.5. FURTHERMORE, THE HON'BLE SUPREME COURT IN THE CASE OF VEDABAI ALIA VAIJAYANATABAI BABURAO PATIL V S. SHANTARAM BABURAO PATIL 253 ITR 798 HELD THAT THE C OURT HAS TO EXERCISE THE DISCRETION ON THE FACTS OF EACH CAS E KEEPING IN MIND THAT IN CONSTRUING THE EXPRESSION SUFFICIENT CAUSE, THE HEMENDRA K. SHAH ITA NO.2754 & 7559/MUM/2012 7 PRINCIPLE OF ADVANCING SUBSTANTIAL JUSTICE IS OF PR IME IMPORTANCE. THE COURT HELD THAT THE EXPRESSION SUF FICIENT CAUSE SHOULD RECEIVE LIBERAL CONSTRUCTION. 2.6. HAVING MADE THE AFORESAID OBSERVATION, WE MAY NOW CONSIDER THE PLEA OF THE ASSESSEE. THE CIRCUMSTANC ES NARRATED BY THE ASSESSEE ARE AS UNDER:- 1. THE APPELLANT HAD FILED HIS RETURN OF INCOME ON 25.9.2008 DISCLOSING TOTAL INCOME OF RS. 1,09,60,190/-. DURING THE PREVIOUS YEAR THE APPELLANT HAD EARNED T AXABLE LONG TERM CAPITAL GAINS ON SALE OF SHARES OF BOMBAY STOCK EXC HANGE. AGAINST THE SAID GAIN, THE APPELLANT HAD FIRSTLY CLAIMED DEDUCT ION FOR SET-OFF OF LONG TERM CAPITAL LOSS INCURRED ON SALE OF SHARES & SECU RITIES. THE APPELLANT HAD ALSO CLAIMED DEDUCTION U/S. 54F ON THE PURCHASE OF A NEWRESIDENTIAL HOUSE. THE APPELLANT HAD PAID AN AMO UNT OF RS. 35,00,000/- TO THE BUILDER AGAINST THE ALLOTMENT OF THE FLAT UN DER CONSTRUCTION. HOWEVER, SINCE THERE WERE A NUMBER OF HURDLES, THE SAID DEAL WAS CANCELLED AND THE APPELLANT RECEIVED BACK THE BOOKI NG AMOUNT IN A.Y. 2009-20,10. THE APPELLANT HAD ALSO CLAIMED DEDUCTIO N U/S. 80-G ON THE DONATION GIVEN. 3. THE APPELLANT HAD TRULY AND FULLY DISCLOSED ALL FACTS, DETAILS AND INFORMATION OF HIS INCOME, BOTH IN THE RETURN OF IN COME FILED AS ALSO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE AP PELLANT HAD CLAIMED SET-OFF OF LONG-TERM CAPITAL LOSS AS PER TH E PROVISIONS OF THE ACT. THE CLAIM OF DEDUCTION U/S. 54F WAS ALSO MADE AS PER THE PROVISIONS OF THE ACT. HEMENDRA K. SHAH ITA NO.2754 & 7559/MUM/2012 8 4. THE APPELLANT, IN SPIRIT OF CO-OPERATION AND TO AVOID UNDUE LITIGATION, AGREED TO WITHDRAW THE CLAIM OF SET-OFF OF LOSS AS ALSO FOR DEDUCTION U/S. 54F. THE APPELLANT VIDE HIS LETTER DATED 15.11 .2010 AGREED FOR THE AFORESAID RECOMPUTATION OF ASSESSABLE CAPITAL GAINS SUBJECT TO THE SPECIFIC CONDITION THAT PENALTY U/S; 271(1)(C) WILL NOT BE INITIATED/LEVIED. 5. HOWEVER TO THE UTTER SURPRISE OF THE APPELLANT, THE A.D. NOT ONLY INITIATED THE PENALTY PROCEEDINGS BUT ALSO LEVIED P ENALTY U/S. 271(1)(C). THE APPELLANT HENCE IS FILING THIS APPEA L, AS THE AD HAS NOT ADHERED TO THE TERMS OF OFFER MADE BY THE APPELLANT VIDE LETTER DATED 15.11.2010. 6. THE APPELLANT ALSO SUBMITS THAT THERE IS A DELAY IN FILING OF THIS APPEAL FOR THE REASONS STATED ABOVE. THE APPELLANT SUBMITS THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, THE DELAY IN FILING OF THIS APPEAL BE CONDONED AND THE APPEAL BE ADMITTED FOR HEARING ON MERITS. 2.7. CONSIDERING THE ENTIRE GAMUT OF FACTS, EXPLA NATION OF THE ASSESSEE AND IN THE ABSENCE OF ANY CONTRARY MATERIAL, WE DEEM IT FIT AND PROPER TO HOLD THAT ASSESSEE HAD A BONAFIDE AND SUFFICIENT REASON FOR THE DELAY IN FILING THE A PPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS). RESPE CTFULLY, FOLLOWING THE OBSERVATION MADE BY HONBLE APEX COUR T (SUPRA), WE ARE CONDONING THE DELAY AND DIRECT THE LD. COMMI SSIONER OF INCOME TAX (APPEALS) TO DISPOSE OFF THE APPEAL OF T HE ASSESSEE AFRESH ON MERIT. HEMENDRA K. SHAH ITA NO.2754 & 7559/MUM/2012 9 2.8. IN ITA NO.2754/MUM/2012, THE ASSESSEE HAS CHALLENGED LEVY OF PENALTY IMPOSED U/S 271(1)(C) OF THE ACT. SINCE, WE HAVE SENT THE MAIN APPEAL OF THE ASSESSEE FOR FRESH ADJUDICATION, THEREFORE, THIS APPEAL IS ALSO REMAND ED BACK TO THE FILE OF THE LD. COMMISSIONER OF INCOME TAX (APP EALS) FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW. THE ASSE SSEE BE GIVEN OPPORTUNITY OF BEING HEARD WITH FURTHER LIBER TY TO FURNISH EVIDENCE, IF ANY, TO SUBSTANTIATE HIS CLAIM. WE AR E CLARIFYING HERE THAT THIS ORDER OF OURS FOR CONDONING THE DEL AY MAY NOT BE QUOTED AS A PRECEDENT AS THE DELAY HAS BEEN COND ONED TO THE PECULIAR FACTS OF THE APPEAL BEFORE US. FINALLY, THE APPEALS OF THE ASSESSEE ARE ALLOWED FO R STATISTICAL PURPOSES ONLY. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN TH E PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 07/07/2015. SD/ - (B.R.BASKARAN) SD/ - (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER ' ( MUMBAI; + DATED : 28/08/2015 F{X~{T? P.S/. .. %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. ,-./ / THE APPELLANT 2. 01./ / THE RESPONDENT. 3. ' 2% ( ,- ) / THE CIT, MUMBAI. 4. ' 2% / CIT(A)- , MUMBAI 5. 4&5 0%' , ,-* ,' 6 , ' ( / DR, HEMENDRA K. SHAH ITA NO.2754 & 7559/MUM/2012 10 ITAT, MUMBAI 6. 7# 8( / GUARD FILE. / BY ORDER, 14-% 0% //TRUE COPY// / (DY./ASSTT. REGISTRAR) , ' ( / ITAT, MUMBAI