LATE SHRI MAHAVIR PRASAD GUPTA THROUGH L.H SHRI SUSHIL GUPTA, MUMBAI V. ITO WD 20(4), MUMBAI

ITA 2783/MUM/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 3035 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 1988-1989
• Appeal Filed On: 23-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MAURYA PRATAPDR
• Assessee Lawyers: NARAYAN ATAL
• Keywords: Unexplained investment; Capital asset; Gift; Business expenditure; Fair market value; Valuation report
• Section: 69C; 142(1); 148; 54; 132; 27

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.2783/MUM/2014 ASSESSMENT YEAR 1988-89 LATE SHRI MAHAVIR GUPTA THROUGH LEGAL HEIR SHRI SUSHIL GUPTA, 161-C, MITTAL TOWER, NARIMAN POINT, MUMBAI-400021 / VS. INCOME TAX OFFICER, WARD-12(3)(1), AAYAKAR BHAVAN, M.K. ROAD MUMBAI-400020 ( !' # /ASSESSEE) ( $ / REVENUE) PAN. NO. AALPG1065E !' # / ASSESSEE BY SHRI NARAYAN ATAL $ / REVENUE BY SHRI MAURYA PRATAP-DR $% & # ' / DATE OF HEARING : 15/10/2015 & # ' / DATE OF ORDER: 05/11/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DA TED 28/01/2014 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI, CONFIRMING PENALTY OF RS.39,15,712/- IMPOSED U/S 27 1(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) A ND FURTHER LATE SHRI MAHAVIR GUPTA THROUGH LEGAL HEIR SHRI SUSHIL GUPTA ITA NO.2783/MUM/2014 2 ERRED IN HOLDING THAT ASSESSEE HAS NOT SUBSTANTIATI NG THAT THE SOURCE OF MONEY WAS M/S MANGLA BROTHERS. 2. DURING HEARING OF THIS APPEAL, THE LD. COUNSE L FOR THE ASSESSEE, SHRI NARAYAN ATAL, CONTENDED THAT QU ANTUM ADDITION WAS DECIDED IN FAVOUR OF THE ASSESSEE AS B USINESS EXPENDITURE VIDE ORDER DATED 31 ST OCTOBER, 2014 (ITA NO. 4239/MUM/2011), THEREFORE, IMPOSITION AS WELL AS CONFIRMATION OF PENALTY IS NOT JUSTIFIED. 2.1. ON THE OTHER HAND, THE LD. DR, SHRI MAURYA PR ATAP, DEFENDED IMPOSITION AS WELL AS CONFIRMATION OF PENA LTY BY CONTENDING THAT VIDE LETTER DATED 13/05/1994, THE A MOUNT OF RS.75 LAKH WAS PAID TO CUSTOM AUTHORITIES AS PENALTY/REDEMPTION FINE. 2.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. BEFORE CO MING TO ANY CONCLUSION, WE ARE EXPECTED TO ANALYZE THE FACT S FIRST. IT IS NOT A SIMPLE CASE OF IMPORTING THE GOODS/IMPOSIT ION OF PENALTY. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE DECLARED TOTAL INCOME OF RS.1,47,020/- IN HIS RETURN FILED O N 28/6/1988, WHICH WAS ACCEPTED U/S 143(1) OF THE INC OME TAX ACT, 1961 ON 10/10/1998. SUBSEQUENTLY, THE LD. ASSESSING OFFICER RECEIVED INFORMATION FROM CIRCLE- 19(1), VIDE LETTER DATED 13/05/1994 THAT SHRI M.P. GUPTA MADE PENALTIES OF RS.75 LACS FOR IMPORTING ALMONDS CONTR AVENING THE PROVISION OF THE IMPORT POLICY, ON OPEN MARKET LICENCE. SINCE THE PENALTIES WERE NOT ALLOWABLE DEDUCTION, T HE LATE SHRI MAHAVIR GUPTA THROUGH LEGAL HEIR SHRI SUSHIL GUPTA ITA NO.2783/MUM/2014 3 ASSESSMENT WAS REOPENED WITH THE ISSUANCE OF NOTICE U/S 148 OF THE ACT ON 29/03/1995, WHICH WAS DULY SERVED UPON THE ASSESSEE. THE ASSESSEE DID NOT FILE RETURN OF INCOME IN RESPONSE TO THE SAID NOTICE. SUBSEQUENTLY, NOTICES U/S 143(2) AND 142(1) WERE SERVED UPON THE ASSESSEE TO WHICH T HERE WAS NO COMPLIANCE FROM THE ASSESSEE SIDE. ANOTHER NOTIC E U/S 143(2) WAS SERVED UPON THE ASSESSEE ON 15/1/1995 TO WHICH ALSO THERE WAS NO COMPLIANCE. LATER ON THE CASE WA S TRANSFERRED TO THE PRESENT ASSESSING OFFICER (ITO W ARD 17(7)). FURTHER NOTICES U/S 143(2) AND 142(1) ALONG WITH LE TTER DATED 07/03/1996 WERE ISSUED TO THE EARLIER ITO TO WHICH ALSO THERE WAS NO COMPLIANCE. ANOTHER NOTICE WAS ISSUED TO THE ASSESSEE THROUGH WHICH VARIOUS DETAILS (AS MENTIONE D IN THE LETTER DATED 07/03/1996) WERE ASKED FOR. THE ASSESS EE ATTENDED THE PROCEEDINGS AND FURNISHED THE DETAILS. THE ASSESSEE WAS USING IMPORT LICENCE OF M/S RAJNIKANT BROTHERS, AN EXPORT HOUSE. THE ASSESSEE PAID SERVICE CHARGES EQUIVALENT TO 25% OF CIF VALUE (AS PER CLAUSE-D) OF THE AGREEMENT DATED 14/10/1985. THE ASSESSEE WAS ASKED TO FURNISH NECESSARY DETAILS I.E. TERMS AND CONDITIONS FOR THE USE OF IMPORT LICENCE BY THE ASSESSEE WHICH WAS ISS UED TO M/S RAJNIKANT BROTHERS ALONG WITH BOOKS OF ACCOUNTS , MAINTAINED BY THE ASSESSEE, DETAILS OF PENALTIES PA ID BY THE ASSESSEE, ETC.. THE ASSESSEE, VIDE LETTER DATED 20/ 01/1997 SUBMITTED AS UNDER:- REGARDING REDEMPTION FINE FOR RS.72,00,000/- ON IM PORT OF ALMOND ON M/S RAJNIKANT BROS. (THE IMPORTER). I HAV E TO SUBMIT AS UNDER:- LATE SHRI MAHAVIR GUPTA THROUGH LEGAL HEIR SHRI SUSHIL GUPTA ITA NO.2783/MUM/2014 4 THE CONSIGNMENT OF ALMONDS WAS IMPORTED BY M/S RAJN IKANT BROS. IN EXPORTS HOUSE AGAINST AN IMPORT LICENCE WHICH WA S NOT TRANSFERABLE AND ISSUED IN THEIR NAME. I HAVE ONLY ACTED AS IN A AGEN/CO-AGENT IN THE TRANSACTION. IT IS TRUE THAT THE REDEMPTION FINE PLUS PENALTY WA S INITIALLY IMPOSED BY THE COLLECTOR OF CUSTOMS. MADRAS ON M/S RAJNIKAN T BROS. HOWEVER, THE HONBLE TRIBUNAL HAD REDUCED REDEMPTIO N FINE TO RS.75,00,000/- AND WAIVED PERSONAL PENALTY IN TOTO. UNFORTUNATELY WE ARE NOT HAVING AT THIS MOMENT A COPY OF THE ORDE R IN OUR FILES. AS FAR AS I REMEMBER THE TRIBUNAL HAD PASSED A REMA RKS TO THE EFFECT THAT ANYBODY IN IMPORTERS POSITION WOULD HA VE BEEN MISLEAD BY THE ORDER PASSED BY THE HONBLE SUPREME COURT (D UE TO WHICH THE LICENCE CAME TO BE ISSUED) AND THE CLARIFICATIO N GIVEN BY THE JT. CCINT (NOW CALLED JT. DCFT). IN ANY CASE THE IMPORT S WERE MADE BY M/S RAJNIKANT BROS. AND THE ORDER WAS PASSE D AGAINST M/S RAJNIKANT BROS. AND NOT AGAINST ME. HOWEVER, I N THE ORDER IS MY NAME HAVE BEEN MENTIONED BY THE ADJUDICATING AUT HORITY. THERE IS NO QUESTION OF MY FINE TO WHERE THE CONSIG NMENTS FOR INCOME TAX PURPOSE. 2.3. WE NOTE FROM THE ASSESSMENT ORDER THAT INITIA LLY THE ASSESSEE TRIED TO EXPLAIN, THROUGH HIS SUBMISSIONS, THAT THE PENALTY AMOUNT OF RS.75 LAKH WAS PAID BY THE M/S RA JNIKANT BROS. AS THE IMPORT WAS MADE BY THEM. THE ASSESSING OFFICER VIDE ORDER SHEET ENTRIES DATED 28/11/1996, 27/01/19 97, 21/02/1997 AND 04/03/1997 AND VARIOUS LETTERS ISSUE D TO ON 02/03/1996, 24/01/1997 AND 24/02/1997 WAS ASKED TO PRODUCE THE EVIDENCE. THE ASSESSEE DENIED THE PAYME NT OF PENALTY, THEREFORE, SUMMONS WERE ISSUED TO M/S RAJN IKANT BROS., WHO FURNISHED THE FOLLOWING DETAILS:- LATE SHRI MAHAVIR GUPTA THROUGH LEGAL HEIR SHRI SUSHIL GUPTA ITA NO.2783/MUM/2014 5 (A) ZEROX COPY OF AGREEMENT DATED 14/10/1985 ENTER ED BETWEEN M/S RAJNIKANT BROTHERS AND SHRI M. P. GUPTA (PRESENT ASSESSEE) FOR THE USE OF IMPORT LICENCE. (B) COPY OF ACCOUNT IN RESPECT OF ALMONDS IN THE NA ME OF SHRI M.P. GUPTA REGARDING PURCHASE AND SALE. 2.4. PURSUANT TO SUMMONS ISSUED TO M/S RAJNIKANT BROS. SHRI INDRESH K. SHAH, ACCOUNTANT, ATTENDED TH E OFFICE OF THE ASSESSING OFFICER AND HIS STATEMENT WAS RECO RDED, WHEREIN, IN RESPONSE TO QUESTION NO. 4, WITH RESPEC T TO MODUS OPERANDI OF THE TRANSACTIONS AND USE OF THE IMPORT LICENCE, IT WAS TENDERED BY HIM THAT MR. M.P. GUPTA IMPORTED AL MONDS IN MADRAS PORT ON 20/12/1985 BY USING THE LICENCE A ND THE MATERIAL WAS IMPORTED IN THE NAME OF M/S RAJNIKANT BROS. AND THE TOTAL CONSIDERATION OF IMPORT MATERIAL LIKE DUTY (RS.56 LAKH), FINE/PENALTY (AS PER MADRAS CUSTOMS O RDER DATD 27/10/1986) (RS.75 LAKH), FOREIGN PAYMENT(RS.55,65, 487/-), CLEARING CHARGES AND EXPENSES (RS.15,72,487/-) AND SERVICE CHARGES OF M/S RAJNIKANT BROS. (AS PER AGREEMENT DA TED 14/10/1985) (RS.12,50,000/-), ETC. (TOTAL RS.2,14,8 7,974/) WERE PAID BY SHRI M.P. GUPTA. IN SPECIFIC REPLY T O QUESTION NO.5 WITH RESPECT TO PAYMENT OF REDEMPTION FINE/PEN ALTY PAID TO MADRAS CUSTOM, IT WAS TENDERED THAT THE AMOUNT O F RS.75 LAKH WAS PAID BY SHRI M.P. GUPTA. IT WAS CLARIFIED THAT AS PER AGREEMENT M/S RAJNIKANT BROS. ONLY RELATED TO S ERVICE CHARGES. LATE SHRI MAHAVIR GUPTA THROUGH LEGAL HEIR SHRI SUSHIL GUPTA ITA NO.2783/MUM/2014 6 2.5. WE FURTHER NOTE THAT THE LD. ASSESSING OFFICE R AT PAGE 5 ONWARDS HAS DULY DISCUSSED THE TERMS AND CON DITIONS OF AGREEMENT AND FINALLY CONCLUDED THAT SHRI M.P. G UPTA PAID THE REDEMPTION FINE/PENALTY OF RS.75 LAKH AND THUS, THE EXPENDITURE WAS COVERED U/S 69C OF THE ACT TREATING THE SAME AS INCURRED BY THE ASSESSEE FROM UNEXPLAINED S OURCES. 2.6. THE ASSESSING OFFICER VIDE ORDER DATED 14/03/ 2012 HELD THAT PENALTY IS NOT ALLOWABLE EXPENDITURE, THE REFORE, PROCEEDINGS WERE REOPENED BY ISSUANCE OF NOTICE U/S 148 OF THE ACT. SCRUTINY ASSESSMENT WAS COMPLETED U/S 143( 3) R.W.S 147 OF THE ACT DETERMINING THE TOTAL INCOME AT RS.76,66,650/-, THEREBY MAKING AN ADDITION OF RS.75 LAKH, U/S 69C OF THE ACT ON ACCOUNT OF UNEXPLAINED EXPEND ITURE PAID BY THE ASSESSEE IN THE FORM OF FINE/PENALTY TO THE CUSTOMS. PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT WERE INITIATED SEPARATELY FOR FURNISHING INACCURATE PART ICULARS OF INCOME BY ISSUANCE OF NOTICE U/S 271(1)(C)/274 OF T HE ACT. NOW, THERE ARE CERTAIN FACTS, WHICH ARE OOZING OUT FROM THE RECORD, ARE SUMMARIZED AS UNDER:- (I) IT IS UNDISPUTED FACT THAT SHRI M.P.GUPTA (PRES ENT ASSESSEE) ENTERED INTO AN AGREEMENT WITH M/S RAJNIK ANT BROS. ON THE TERMS AND CONDITIONS ENSHRINED IN THE AGREEMENT. (II) THAT SHRI M.P. GUPTA USED THE IMPORT LICENCE O F M/S RAJNIKANT BROS. ON PAYMENT OF SERVICE CHARGES OF EQ UIVALENT LATE SHRI MAHAVIR GUPTA THROUGH LEGAL HEIR SHRI SUSHIL GUPTA ITA NO.2783/MUM/2014 7 TO 25% OF CIF VALUE OF GOODS AS LICENCE CHARGES AS PER AGREEMENT DATED 14/10/1985. (III) THAT FROM THE BEGINNING ITSELF, THE ASSESSEE WAS CLAIMING THAT ALL THE PAYMENTS INCLUDING FINE/PENALTY WERE P AID BY M/S RAJNIKANT BROS. AND NOT BY THE ASSESSEE. (IV) THAT THE ACCOUNTANT OF M/S RAJNIKANT BROS. CAT EGORICALLY TENDERED THAT THE AMOUNTS WERE PAID BY SHRI M.P. GU PTA. (V) THAT THE CONSIGNMENTS OF ALMONDS WAS IMPORTED B Y SHRI M.P. GUPTA, USING THE IMPORT LICENCE ISSUED TO M/S RAJNIKANT BROS. (VI) INITIALLY THE PRESENT ASSESSEE TRIED TO EXPLAI N THAT THE IMPORT WAS MADE BY M/S RAJNIKANT BROS AND DID NOT COOPERATE THE DEPARTMENT AS IS EVIDENT FROM FINDING CONTAINED AT PAGE 4 OF THE ASSESSMENT ORDER. (VII) IT IS CLEAR THAT SHRI M.P. GUPTA USED THE LIC ENCE AND ALL THE TRANSACTIONS INCLUDING THE PAYMENT OF PENALTY W AS MADE BY HIM, AS IS CLARIFIED FROM THE AGREEMENT ENTERED BETWEEN THEM. HOWEVER, THE TRIBUNAL, VIDE ORDER DATED 31/10/2014 (ITA NO.4239/MUM/2011) FOUND THAT THE AMOUNT PAID BY THE ASSESSEE TO THE CUSTOM AUTHORITIES WAS IN THE NATUR E OF REDEMPTION FINE AND NOT PENALTY AND ACCORDINGLY IT WAS ALLOWED AS BUSINESS EXPENDITURE. THE APPEAL OF THE ASSESSEE WAS ALLOWED. FOLLOWING THE ORDER OF THE TRIBUNAL, S INCE, THE LATE SHRI MAHAVIR GUPTA THROUGH LEGAL HEIR SHRI SUSHIL GUPTA ITA NO.2783/MUM/2014 8 QUANTUM ADDITION HAS BEEN DELETED, IN OUR VIEW, PEN ALTY CANNOT SURVIVE. OUR VIEW FIND SUPPORTS FROM THE DE CISION OF THE TRIBUNAL DATED 31/10/2015 IN THE CASE OF SMT. N EETA P. DOSHI (ITA NO.6859/MUM/2013), THE RELEVANT PORTION OF WHICH IS REPRODUCED HEREUNDER FOR READY REFERENCE:- THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DA TED 07/10/2013 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI, CONFIRMING PENALTY OF RS.3,36,912/-, IMPOSED U/S 27 1(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT). 2. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE, SHRI MAHESH O. RAJOURA, CONTENDED THAT QU ANTUM ADDITION HAS BEEN DELETED BY THE TRIBUNAL VIDE ORDE R DATED 31/07/2015 (ITA NO.3513/MUM/2012), IN THE CASE OF ASSESSEE ITSELF, THEREFORE, IT WAS PLEADED THAT PEN ALTY DOES NOT SURVIVE. THIS FACTUAL MATRIX WAS NOT CONTROVERT ED BY THE LD. DR, SHRI VIJAY KUMAR SONI. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW O F THE ABOVE, WE ARE REPRODUCING HEREUNDER THE RELEVANT PO RTION OF THE AFORESAID ORDER DATED 31/07/2015, ON QUANTUM ADDITION, FOR READY REFERENCE:- ITA NO.3513/M/2012 2. THE ASSESSEE IN THIS APPEAL HAS CHALLENGED THE A CTION OF THE LD. CIT(A) IN CONFIRMING THE ADDITIONS MADE BY THE ASSESSING O FFICER (HEREINAFTER REFERRED TO AS THE AO) AS UNEXPLAINED INVESTMENTS I N RELATION TO JEWELLERY FOUND DURING THE COURSE OF SEARCH ACTION. LATE SHRI MAHAVIR GUPTA THROUGH LEGAL HEIR SHRI SUSHIL GUPTA ITA NO.2783/MUM/2014 9 3. THE FACTS IN BRIEF ARE THAT A SEARCH ACTION U/S 132 OF THE I.T. ACT WAS CARRIED OUT IN THE CASE OF ACME GROUP COMPANIES AND RELATED PERSONS. THE ASSESSEE WAS ALSO COVERED IN THE SAID SEARCH AC TION. THE ASSESSEE IS A PARTNER IN VARIOUS FIRMS ENGAGED IN BUSINESS OF B UILDER AND DEVELOPER. DURING THE COURSE OF THE SEARCH OPERATION, TOTAL JE WELLERY VALUED AT RS.17330641/- WAS FOUND FROM THE PREMISES OF THE AS SESSEE, OUT OF WHICH JEWELLERY VALUED AT RS.36,93,026/- WAS SEIZED. DURI NG THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE AO ASKED THE ASSESSEE T O SHOW CAUSE WHY JEWELLERY TO THE EXTENT WHICH HAS NOT BEEN REFLECTE D IN THE RETURN OF INCOME SHOULD NOT BE TREATED AS UNEXPLAINED AND ADD ED TO THE INCOME OF THE ASSESSEE. 4. THE ASSESSEE EXPLAINED THE SOURCE OF THE JEWELLE RY AND MADE HIS SUBMISSIONS VIDE LETTER DATED 4.10.2010 AND FURTHER VIDE LETTER DATED 8.11.2010. HE FURTHER SUBMITTED THAT LOOKING TO THE STATUS OF FAMILY AND THE CUSTOMS AND THE PRACTICE OF THE COMMUNITY TO WH ICH THE FAMILY BELONGED, THE JEWELLERY FOUND SHOULD BE TREATED AS DULY EXPLAINED. THE AO HOWEVER DID NOT AGREE WITH THE EXPLANATION OFFER ED BY THE ASSESSEE. HE OBSERVED THAT OUT OF THE TOTAL JEWELLERY FOUND, THE JEWELLERY VALUING RS.21,58,524/- HAD REMAINED UNEXPLAINED. HE ACCORDI NGLY ADDED THE SAID AMOUNT INTO THE INCOME OF THE ASSESSEE U/S 69A OF THE ACT. AGGRIEVED BY THE ADDITION MADE BY THE AO, THE ASSESSEE PREFER RED APPEAL BEFORE THE LD. CIT(A). 5. THE ASSESSEE SUBMITTED BEFORE THE LD. CIT(A) THA T THE JEWELLERY FOUND DURING THE SEARCH ACTION BELONGED TO THE MEMBERS OF THE DOSHI FAMILY, INCLUDING THE ASSESSEE, THE NAMES OF WHOM ARE MENTI ONED AS UNDER: I) MR. PRAVIN H DOSHI (SPOUSE OF APPELLANT) II) MRS. NEELA PRAVIN DOSHI (SELF-APPELLANT) III) MR. MUNISH P DOSHI (SON OF APPELLANT) IV) MRS. ALKA MUNISH DOSHI (DAUGHTER IN LAW) LATE SHRI MAHAVIR GUPTA THROUGH LEGAL HEIR SHRI SUSHIL GUPTA ITA NO.2783/MUM/2014 10 V) MASTER MANAV MUNISH DOSHI (GRAND SON OF APPELLAN T) VI) MR. RAJESH P DOSHI (SON OF APPELLANT) VII) MRS. PRITI RAJESH DOSHI (DAUGHTER IN LAW) VIII) PRAVIN H DOSHI (HUF) IX) MRS. RANJAN BEN R DOSHI. (WIDOW OF LATE SHRI RA TILAL DOSHI) (AUNTY OF SPOUSE) THE ASSESSEE ALSO FURNISHED THE FOLLOWING EVIDENCES TO EXPLAIN THE SOURCE OF ACQUISITION OF THE JEWELLERY IN QUESTION: A) JEWELLARY VALUATION REPORT DT.1.11.1995 OF SURE SH C KAPOOR, GOVERNMENT APPROVED VALUE (DURING SEARCH ACTION IN 1995) B) JEWELLARY VALUATION REPORT DT.23.4.2004 AS ON 3 1.3.2004 OF SHRENIK R SHAH (JEWELLARY REPORT OBTAINED FOR WEALTH TAX PURP OSE) B) JEWELLARY VALUATION REPORT DT.3.4.2000 AS ON 31. 3.2000 IN CASE OF PRITI RAJESH DOSHI (MAIDEN NAME PRITI VINOD AMBANI) C) BILLS FOR PURCHASE OF JEWELLARY & MAKING CHARGES ALONG WITH BANK STATEMENT/ PASS BOOK REFLECTING PAYMENT MADE ALONG WITH FEW LEDGER ACCOUNT OF PARTIES. THE ASSESSEE ALSO FILED THE LEDGER OF THE JEWELLER Y ACCOUNT REFLECTING THE JEWELLERY PURCHASED FOR THE RELEVANT PERIOD. THE AS SESSEE FURTHER SUBMITTED THAT CONSIDERING THE FINANCIAL STATUS OF THE FAMILY OF THE ASSESSEE, THE JEWELLERY FOUND DURING COURSE OF SEAR CH ACTION COULD NOT BE REGARDED AS UNEXPLAINED. THE ASSESSEE FURTHER EXPLA INED THAT SOME OF THE JEWELLERY WAS RECEIVED AS GIFT FROM RELATIVES ON SO CIAL AND RELIGIOUS OCCASIONS LIKE MARRIAGE, BIRTHDAY ANNIVERSARY ETC. IT WAS ALSO EXPLAINED THAT SOME OF THE JEWELLERY WAS REMADE OUT OF THE OL D JEWELLERY. THE ASSESSEE FURTHER SUBMITTED THAT THE TOTAL WEIGHT OF JEWELLERY FOUND MATCHED WITH THE JEWELLERY ACCOUNTED BY THE DOSHI F AMILY. THE ASSESSEE FURTHER SUBMITTED THAT IN CASE OF SOME JEWELLERY, T HE DESCRIPTION DID NOT MATCH EITHER DUE TO ABSENCE OF FULL DESCRIPTION OF THE JEWELLERY MADE BY THE DEPARTMENTAL VALUER DURING SEARCH ACTION OR DUE TO THE REMAKING OF LATE SHRI MAHAVIR GUPTA THROUGH LEGAL HEIR SHRI SUSHIL GUPTA ITA NO.2783/MUM/2014 11 THE JEWELLERY FROM THE OLD JEWELLERY ITEMS. IT WAS SUBMITTED THAT EVEN IN RESPECT OF DIAMOND JEWELLERY, THE OVERALL CARAT WEI GHT OF DIAMONDS APPROXIMATELY MATCHED WITH THAT WAS ALREADY ACCOUNT ED BY ASSESSEES FAMILY MEMBERS. IT WAS THEREFORE SUBMITTED THAT THE ADDITIONS UNDER SECTION 69A WERE NOT WARRANTED IN THIS CASE. 6. THE LD. CIT(A), AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE OBSERVED THAT IT WAS CORRECT THAT THE OVERALL WEIGH T OF THE GOLD JEWELLERY DECLARED BY THE ASSESSEE AND HIS FAMILY IN THE BOOK S OF ACCOUNTS WAS IN EXCESS OF GOLD JEWELLERY FOUND DURING THE COURSE OF SEARCH ACTION, HOWEVER, THE DEPARTMENT HAD TO MATCH EACH AND EVERY ITEM FOUND WITH THE ITEMS DECLARED IN THE VALUATION REPORTS OF THE APPROVED VALUERS AS FURNISHED BY THE ASSESSEE AND THAT THE ONUS WAS ON THE ASSESSEE TO PROVE THE SOURCE OF ACQUISITION OF EACH AND EVERY ITEM OF JEWELLERY. HE THEREFORE CALLED UPON THE ASSESSEE TO PREPARE AN IT EM VISE CHART SHOWING WHICH OF THE ITEMS COULD BE SAID TO BE MATCHING AND ANOTHER CHART IN RESPECT OF ITEMS WHICH DID NOT MATCH WITH THE DESCR IPTION OF ITEMS MADE IN THE VALUATION REPORT FURNISHED BY THE ASSESSEE. THE ASSESSEE MADE CHARTS NO. I & II IN THE ABOVE MANNER IN RELATION T O GOLD ITEMS, THE CONTENTS OF WHICH HAVE ALSO BEEN REPRODUCED IN THE IMPUGNED ORDER. 7. THE LD. CIT(A), AFTER TALLYING AND MAKING COMPAR ATIVE ANALYSIS OF THE ITEMS DISCLOSED BY THE ASSESSEE IN THE APPROVED VAL UERS REPORT WITH THAT OF THE REPORT MADE DURING SEARCH ACTION, OBSERVED T HAT MOST OF THE ITEMS MENTIONED IN CHART NO.I MATHED WITH THE DESCRIPTION GIVEN IN THE VALUATION REPORT OF THE APPROVED VALUER, EXCEPT ITE MS NO.24 & 25 BEING GOLD GINNI AND GOLD COIN RESPECTIVELY, WHICH THE AS SESSEE CLAIMED TO HAVE BEEN RECEIVED AS GIFT. THE LD. CIT(A), THEREFORE DI RECTED THE AO TO DELETE THE ADDITION IN RESPECT OF THE REMAINING ITEMS MENT IONED IN CHART NO. I, EXCEPT THE ABOVE STATED TWO ITEMS AMOUNTING TO RS.8 2,392/- AND RS.75,823/- RESPECTIVELY. IN RELATION TO CHART NO.I I, THE LD. CIT(A) OBSERVED THAT THE ITEMS MENTIONED IN CHART NO.II DI D NOT EXACTLY MATCH WITH THE DESCRIPTION MADE IN THE APPROVED VALUERS REPORTS. HE, LATE SHRI MAHAVIR GUPTA THROUGH LEGAL HEIR SHRI SUSHIL GUPTA ITA NO.2783/MUM/2014 12 THEREFORE, CONFIRMED THE ADDITIONS IN RESPECT OF IT EMS OF GOLD JEWELLERY MENTIONED IN CHART NO.II. THE LD. CIT(A) ALSO DIRECTED THE ASSESSEE TO PREPAR E SIMILAR CHARTS IN RESPECT OF DIAMOND JEWELLERY. THE ASSESSEE SUBMITTE D THE SAID CHARTS ACCORDINGLY. THE LD. CIT(A), AFTER TALLYING THE EAC H OF THE ITEMS WITH THAT OF VALUATION REPORT OF THE APPROVED VALUER, FOUND T HAT THOUGH NUMBER OF PIECES OF DIAMONDS IN RESPECT OF DIAMOND JEWELLERY WERE MATCHING IN ALMOST ALL THE ITEMS; HOWEVER, THERE WAS DIFFERENCE IN THE ESTIMATE OF CARAT WEIGHT. HE THEREFORE HELD THAT THE DESCRIPTIO N DID NOT EXACTLY MATCH IN RESPECT OF DIAMOND JEWELLERY. HE, ACCORDINGLY, C ONFIRMED THE ADDITION MADE BY THE AO IN RESPECT OF DIAMOND JEWELLERY. AGG RIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE HAS COME IN APPEAL BEFORE US. 9. THE LD. A.R. OF THE ASSESSEE HAS BROUGHT OUR ATT ENTION TO THE DETAILS AND DESCRIPTION OF THE ITEMS AS REPRODUCED BY THE L D. CIT(A) IN THE IMPUGNED ORDER. INVITING OUR ATTENTION TO THE PAGE 12 OF THE IMPUGNED ORDER IN RELATION TO ITEM NO.29 OF LOCKER NO.571, T HE DESCRIPTION HAS BEEN MENTIONED AS TANMANYA PENDANT WITH CHAIN. THE NUM BER OF PIECES OF DIAMOND IN THE SAID PENDANT HAS BEEN MENTIONED AS 5 9. THE ASSESSEE HAS STATED THAT IT MATCHED WITH ITEM AT SERIAL NO. 9 OF THE VALUERS REPORT WHEREIN THE DESCRIPTION HAS BEEN MENTIONED AS DOUB LE STRING BLACK BEADS MANGALSUTRA WITH PENDANT WHEREIN THE TOTAL N UMBER OF DIAMONDS IS ALSO MENTIONED AS 59. HOWEVER, THE CARAT WEIGHT MENTIONED BY THE DEPARTMENTAL VALUER IS 0.88, WHEREAS, IN THE ASSESS EES VALUATION REPORT, IT HAS BEEN MENTIONED AS 118. HOWEVER, THE GOLD GRO SS WEIGHT MENTIONED BY THE DEPARTMENTAL VALUER IS 21.850 WHEREAS IN THE VALUATION REPORT PRODUCED BY THE ASSESSEE IT HAS BEEN MENTIONED AS 2 0.3. SIMILARLY, IN RESPECT OF ITEM NO.19 I.E. BANGLES WITH RODIUM TH E GOLD GROSS WEIGHT ALSO MATCHED AND THE PIECES OF DIAMONDS MENTIONED A LSO MATCHED. HOWEVER, THE ESTSIMATION OF CARAT VALUE BY THE GOVE RNMENT VALUER IS AT 1.68 WHEREAS AS MENTIONED IN THE VALUATION REPORT O F THE ASSESSEE IS AT 2.75. SIMILARLY, IN RESPECT OF ITEM NO.21 EARTOPES GOLD GROSS WEIGHT ALSO MATCHES AND NUMBER OF PIECES OF DIAMOND ALSO M ATCHES. HOWEVER, LATE SHRI MAHAVIR GUPTA THROUGH LEGAL HEIR SHRI SUSHIL GUPTA ITA NO.2783/MUM/2014 13 THERE IS A SMALL DIFFERENCE IN CARAT WEIGHT OF DIAM ONDS. THE LD. A.R. OF THE ASSESSEE HAS INVITED OUR ATTENTION IN RESPECT O F OTHER ITEMS ALSO WHERE THE GROSS GOLD WEIGHT OF THE ITEMS MATCHES WITH THA T OF THE DESCRIPTION MENTIONED IN THE VALUATION REPORTS SUBMITTED BY THE ASSESSEE AND EVEN NUMBER OF PIECES OF DIAMONDS IN THE JEWELLERY ALSO MATCHED. HOWEVER, THERE WAS DIFFERENCE IN ESTIMATION OF CARAT WEIGHT. 10. WE FIND THAT IT IS NOT A CASE WHERE THE ITEMS M ENTIONED IN THE VALUATION REPORTS SUBMITTED BY THE ASSESSEE DID NOT MATCH AT ALL WITH THAT OF THE ITEMS OF JEWELLERY WHICH WERE FOUND DURING T HE SEARCH ACTION. NOT ONLY THE DESCRIPTION OF THE JEWELLERY SETS, BANGLES , PENDANT, EARTOPES ETC. MATCHED WITH THE VALUATION REPORT BUT ALSO THE NUMB ER OF DIAMONDS EMBEDDED IN THE JEWELLERY. SO FAR AS THE ESTIMATION OF CARAT WEIGHT IS CONCERNED, IT IS AN ADMITTED FACT THAT THE WEIGHT W AS NOT MEASURED BY EXTRACTING THE DIAMONDS OUT OF THE JEWELLERY, BUT W AS JUST ESTIMATED BY THE DEPARTMENTAL VALUER. UNDER SUCH CIRCUMSTANCES, THE MINOR DIFFERENCE IN CARAT WEIGHT VALUE, ESPECIALLY WHEN T HE SAME WAS NOT EXACTLY WEIGHED BY THE DEPARTMENTAL VALUER COULD NO T BE THE SOLE CRITERIA TO HOLD THAT THE DESCRIPTION OF JEWELLERY DID NOT MATCH. THE LD. A.R. OF THE ASSESSEE HAS FURTHER INVITED OUR ATTENT ION TO PAGE NO1 OF THE PAPER BOOK WHICH IS THE SUMMARY OF THE GOLD JEWELLE RY. HE HAS EXPLAINED THAT THE TOTAL GOLD JEWELLERY SHOWN BY THE ASSESSEE AND HIS FAMILY MEMBERS IN THE BOOKS WAS OF 9919.790 GMS. WHEREAS T HE JEWELLERY FOUND AND VALUED BY THE DEPARTMENTAL VALUER WAS OF 9145.3 80 GMS. WHICH WAS LESS THAN THE JEWELLERY ALREADY DECLARED BY THE FAM ILY MEMBERS OF THE ASSESSEE IN THE BOOKS OF ACCOUNT. SIMILARLY, IN RES PECT OF DIAMOND JEWELLERY, THE ASSESSEE FAMILY HAS ALREADY DECLARED 222.80 CARATS OF DIAMOND, WHEREAS, THE DEPARTMENTAL VALUER HAD ESTIM ATED ONLY 203.29 CARAT OF THE DIAMONDS WHICH WAS LESS THAN THE TOTAL DIAMOND WEIGHT/CARATS DECLARED BY THE ASSESSEE. EVEN THE NU MBER OF DIAMONDS EMBEDDED IN THE EACH ITEM OF THE JEWELLERY MATCHED WITH THAT OF THE VALUATION REPORT. LATE SHRI MAHAVIR GUPTA THROUGH LEGAL HEIR SHRI SUSHIL GUPTA ITA NO.2783/MUM/2014 14 11. THE LD. A.R. HAS FURTHER INVITED OUR ATTENTION TO THE DECISION OF THE JODHPUR BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. ARJUN DASS KALWANI 101 ITD 337 WHEREIN THE TRIBUNAL HAS HELD THAT SIMPLY BECAUSE THE ASSESSEE COULD NOT LEAD EVIDENCE FOR CO NVERSION OR REMAKING OF THE JEWELLERY, POSSESSION OF WHICH WAS OTHERWISE ACCEPTED, IT COULD NOT BE SAID THAT HOLDING OF GOLD JEWELLERY TO THAT EXTE NT WAS UNEXPLAINED, ESPECIALLY WHEN EVIDENCE WAS AVAILABLE THAT THE ASS ESSEE HAD ALREADY BEEN ASSESSED AT MUCH MORE JEWELLERY IN EARLIER ASS ESSMENT YEAR. FURTHER, IN THE CASE OF MRS. VINITA S. JHUNJHUNWAL A VS. ACIT IN ITA NO.8837/M/2010 FOR A.Y. 2008-09 DECIDED ON 20.01.20 14, THE CO- ORDINATE MUMBAI BENCH OF THE TRIBUNAL HAS CONCLUDED THAT WHEN QUANTITY OF JEWELLERY DISCLOSED BY THE ASSESSEE IS SAME AS THE QUANTITY OF JEWELLERY FOUND DURING THE COURSE OF SEARCH, NO ADD ITION IS WARRANTED MERELY BECAUSE THE DESCRIPTION IS NOT MATCHING. IT IS A VITAL FACT THAT LADIES GET JEWELLERY CONVERTED AS PER LATEST DESIGN AND FOR WHICH EVEN THE CONCERNED MAN IN THE FAMILY IS BEING NOT INFORMED. IN THESE CIRCUMSTANCES MERELY BECAUSE OF CONVERSION OF SUCH JEWELLERY, CANNOT BE MADE BASIS FOR MAKING ADDITION, WHEN THE JEWELLERY DISCLOSED BY THE ASSESSEE EITHER IN HIS OWN HAND OR IN THE HANDS OF THEIR FAMILY MEMBERS PRIOR TO THE DATE OF SEARCH IS EQUAL TO OR MORE THA N THE JEWELLERY FOUND DURING THE COURSE OF SEARCH. IN THE CASE OF RAKESH J. PARIKH V. DCIT IN IT(SS)A NO.136/M/2000 FOR BLOCK PERIOD 01.04.1987 T O 25.09.1997 DECIDED VIDE ORDER DATED 26.02.2004, THE COORDINATE BENCH OF THE TRIBUNAL HAS OBSERVED THAT MERELY BECAUSE THE DESCR IPTION OF SOME OF THE ORNAMENTS IN THE WEALTH-TAX RETURN DID NOT TALLY WI TH THE ORNAMENTS FOUND AT THE TIME OF SEARCH, IS NO GROUND FOR REJEC TING THE ASSESSEES CLAIM OF REMAKING OF THE ORNAMENTS EVEN IF THE ASSE SSEE HAS NOT PRESERVED THE BILL OF REMAKING CHARGES. IN THE CASE OF ACIT VS. SHRI KAMALKISHAN H. AGGARWAL IN ITA NO.777/M/1998 AND I TA NO.5127/M/1995 & OTHERS DECIDED VIDE COMMON ORDER D ATED 21.06.13, THE TRIBUNAL UNDER SOMEWHAT SIMILAR CIRCUMSTANCES H AS OBSERVED THAT NORMAL PRESUMPTION IS THAT DURING THE COURSE OF THE SEARCH, THE ENTIRE JEWELLERY FOUND AT RESIDENCE, IN BANK LOCKERS, OTHE R PREMISES AND ALSO ON LATE SHRI MAHAVIR GUPTA THROUGH LEGAL HEIR SHRI SUSHIL GUPTA ITA NO.2783/MUM/2014 15 PERSON IS DULY INVENTORISED. IF THE WEIGHT OF THE J EWELLERY FOUND AT THE TIME OF SEARCH IS MORE THAN THE WEIGHT DECLARED IN WEALTH TAX RETURNS, THE DIFFERENCE HAS TO BE TAKEN TO BE UNEXPLAINED JE WELLERY UNLESS THE ASSESSEE IS ABLE TO ESTABLISH THAT FRESH JEWELLERY WAS PURCHASED AND SOURCES THEREOF ARE EXPLAINED. IT IS NORMAL THAT SO ME OF THE ORNAMENTS ARE DISMANTLED AND REMADE. IT WOULD BE UNREASONABLE TO TAKE A STAND THAT ALL THE ORNAMENTS FOUND AT THE TIME OF SEARCH MUST ACCURATELY COMPARE IN DESCRIPTION AND WEIGHT WITH THE ORNAMENTS DECLARED IN THE WEALTH TAX RETURN. THE POSSIBILITY THAT SOME OF THE ITEMS COUL D HAVE BEEN REMADE CANNOT BE RULED OUT. THE IMPORTANT POINT IS THAT TH E ORNAMENTS FOUND SHOULD NOT BE IN EXCESS IN QUANTITY AS COMPARED TO THE ORNAMENTS DECLARED IN THE WEALTH TAX RETURNS. OUR ATTENTION HAS ALSO BEEN INVITED TO THE DECISION OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF COMMISSIONER O F WEALTH TAX VS. B.M. KANODIA (HUF) WHEREIN THE HONBLE HIGH COURT IN PARA 5 OF THE ORDER HAS OBSERVED THAT WHERE THE GOVERNMENT VALUER ADOPTED THE WEIGHT OF THE DIAMOND BY ESTIMATING WITHOUT SEPARATING THE DIAMOND FROM THE METAL, THE REPORTS OF VALUERS COULD NOT BE HELD TO BE ACCURATE AND EXACT AND THAT THE POSSIBILITY IN DIFFERENCE OF WEIGHT CO ULD NOT BE RULED OUT. 12. IN THE CASE IN HAND ALSO, IF THE DIFFERENCE IN WEIGHT IS IGNORED THE DESCRIPTION OF THE ITEMS OF THE JEWELLERY ALMOST TA LLIED WITH THAT OF THE ITEMS ALREADY DECLARED BY THE ASSESSEE. MOREOVER TH E OVERALL WEIGHT OF JEWELLERY ALREADY DECLARED BY THE ASSESSEE IN HER B OOKS OF ACCOUNTS IS MORE THAN THAT OF THE JEWELLERY FOUND DURING THE CO URSE OF SEARCH ACTION. IN VIEW OF THE ABOVE STATED FACTS AND IN THE LIGHT OF THE PROPOSITION OF LAW LAID DOWN VIDE JUDICIAL PRONOUNCEMENTS ON THIS ISSU E AS DISCUSSED ABOVE, IT CANNOT BE SAID IN THIS CASE THAT THE JEWELLERY F OUND DURING THE SEARCH ACTION WAS UNEXPLAINED. THE ADDITIONS THUS IN THIS CASE ARE NOT WARRANTED AND THE SAME ARE ORDERED TO BE DELETED. 2.2. IN VIEW OF THE ABOVE, IT CAN BE SAID THAT THE BASIS ON WHICH PENALTY WAS LEVIED, REMAINS NO MORE IN EXI STENCE, LATE SHRI MAHAVIR GUPTA THROUGH LEGAL HEIR SHRI SUSHIL GUPTA ITA NO.2783/MUM/2014 16 THEREFORE, THE PENALTY CANNOT SURVIVE. OUR VIEW FIN D SUPPORTS FROM THE DECISION OF THE TRIBUNAL DATED 30/09/2015 (ITA NO.2253/MUM/2014) IN THE CASE OF MS. VILMA M. PEREI RA FOR READY REFERENCE:- THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATED 10/01/2014 OF THE LD. FIRST APPELLATE AUTHORITY, MUMBAI, DELETING P ENALTY OF RS.18,75,314/-, IMPOSED U/S 271(1)(C), EVEN THOUGH THE QUANTUM ADDITION HAS BEEN UPHELD BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS). 2. DURING HEARING OF THIS APPEAL, THE LD. COUNSEL FOR THE ASSESSEE, AT THE OUTSET, POINTED OUT THAT THE QUANTUM ADDITION ON THE B ASIS OF WHICH PENALTY WAS IMPOSED HAS BEEN DELETED BY THE TRIBUNA L IN ORDER DATED 27/02/2015. THE ASSESSEE FURNISHED THE COPY OF THE OR DER. ON THE OTHER HAND, LD. DR, SHRI B. YADAGIRI, DEFENDED THE IMPOSITIO N OF PENALTY. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND P ERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW OF THE ABOVE, WE ARE REPRODUCING HEREUNDER THE AFORESAID ORDER OF THE TRIBUNAL (ITA NO. 8797 AND 8798/MUM/2010) ORDER DATED 27/02/2015 FOR READY REF ERENCE:- THESE TWO APPEALS HAVE BEEN FILED BY TWO ASSESSEES A GAINST THE ORDER OF CIT(A), FOR THE ASSESSMENT YEAR 2007-08, IN THE MATT ER OF ORDER PASSED U/S.143(3) OF THE I.T.ACT. 2. COMMON GRIEVANCE IN BOTH THE APPEALS RELATE TO DIS ALLOWANCE OF CLAIM OF DEDUCTION U/S.54(1) IN RESPECT OF RESIDENTIAL FL ATS ACQUIRED BY THE ASSESSEES IN CONSIDERATION OF OLD HOUSE SOLD TO THE B UILDER. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSE D. FACTS IN BRIEF ARE THAT THE ASSESSEE VILMA MARY PEREIRA HAS SOLD IMM OVABLE PROPERTY SITUATED AT 'VIOLET VALLEY' (WITH GARAGE) AT JUNCTIO N OF 26TH AND 30TH ROAD AT BANDRA (W), MUMBAI FOR A TOTAL CONSIDERATION OF RS.3,05,00,000/- VIDE AGREEMENT DATED 28.4.2006 TO M/S. AQUA MARINE ENTERPRISES. THE LATE SHRI MAHAVIR GUPTA THROUGH LEGAL HEIR SHRI SUSHIL GUPTA ITA NO.2783/MUM/2014 17 SHARE OF THE ASSESSEE IS 23% IN THE SAID PROPERTY AND THE OTHER ASSESSEE MR. PETER PEREIRA WAS HAVING SHARE OF 77% IN THE SAID HOUSE. FROM THE AGREEMENT, THE A.O. OBSERVED THAT THE ASSESSEE WAS TO RECEIVE THREE MORE FLATS I.E. TWO FLATS HAVING A CARPET AREA OF 1200 SQ .FT. EACH AND ONE FLAT HAVING CARPET AREA OF 750 SQ.FT. AND THREE PARKING SP ACES (TWO STILT AND ONE OPEN) AS PART OF ADDITIONAL CONSIDERATION. HOWE VER, THE ADDITIONAL CONSIDERATION WAS NOT SHOWN AS PART OF THE TOTAL CONS IDERATION RECEIVED BY THE ASSESSEE IN HER COMPUTATION OF LTCG ON TRANSFE R OF THE SAID PROPERTY DURING THE YEAR. FURTHER, THE ASSESSEE HAD TA KEN THE FMV OF THE SAID PROPERTY AS ON 1.4.1981 AT RS.35,00,000/- ON T HE BASIS OF VALUATION REPORT DATED 3.8.2006. IN VIEW OF THIS, VIDE LETTER DATED 21.8.2009, THE A.O. ASKED THE ASSESSEE TO STATE AS UNDER :- '1. PLEASE PROVIDE THE MARKET VALUE OF TILE ADDITION AL FLATS AND OTHER AMENITIES TO BE RECEIVED BY YOU FROM THE BUILDER AS PER THE SALE AGREEMENT DATED 28.4.2006. FURNISH COPIES OF AGREEME NTS ENTERED BY YOU IN THIS RESPECT. PLEASE ALSO EXPLAIN WHY THE MARKET V ALUE OF THE SAID FLATS AND AMENITIES SHOULD NOT BE ADDED TO YOUR TOTAL CONS IDERATION FOR SALE OF PROPERTY DURING THE YEAR WHILE COMPUTING THE LTCG FOR THE YEAR ON SALE OF PROPERTY. 2. PLEASE FURNISH PURCHASE PROOF AT' NHA BONDS AGAINS T WHICH DEDUCTION ULS.54EC HAS BEEN CLAIMED. PLEASE FURNISH COPIES OF R ELEVANT BANK EXTRACTS WITH NARRATION OF EACH ENTRY TO SUPPORT YOUR CLAIM. 3. PROOF OF PAYMENT OF PROFESSIONAL FEES AND ALLOW ABILITY OF THE SAME AS DEDUCTION FROM THE LTCG SHOWN. 4. BASIS OF DIVISION OF SHARE OF THE PROPERTY SOLD DU RING THE YEAR. PLEASE FURNISH EVIDENCES TO SUPPORT YOUR CLAIM. 5. PLEASE EXPLAIN WHY THE VALUATION MADE BY YOU OF THE PROPERTY SOLD AS ON 1.4.1981 SHOULD NOT BE REJECTED? 4. IN RESPONSE, THE A.R. OF THE APPELLANT VIDE LETTER DATED 23.10.2009 SUBMITTED AS UNDER :- 'THE NEW FLAT AND CAR PARKING IS RECEIVABLE IN LIEU OF OLD RESIDENTIAL PLACE AND OLD CAR PARKING PLACE. HENCE THERE IS NO ADDITIO NAL AMENITIES RECEIVED FROM SELLER HENCE THERE SHOULD NOT BE ADDITION ON ACCO UNT OF MARKET VALUE OF THE SAID FLAT AND AMENITIES ADDED TO TOTAL CONSID ERATION FOR SALE OF PROPERTY DURING THE YEAR. VALUATION DONE BY ODILIO FERNANDES ON 31.7.2006 AS ON 1.4.1981 AT RS.35 LACS. YOUR HONOUR MAY REFER TO DEPARTMENTAL VALUER F OR FURTHER VERIFICATION. IN CASE YOUR HONOUR IS NOT SATISFIED W ITHOUT VALUATION REPORT. LATE SHRI MAHAVIR GUPTA THROUGH LEGAL HEIR SHRI SUSHIL GUPTA ITA NO.2783/MUM/2014 18 4. THE AFORESAID SUBMISSION OF THE ASSESSEE WAS CONSI DERED BY THE A.O. ACCORDING TO THE A.O. THE NEW FLAT AND CAR PARKING AR E NOTHING BUT ADDITIONAL CONSIDERATION. IF THE SAID NEW FLAT IS RE CEIVABLE FOR OLD FLAT AND OLD CAR PARKING PLACE, HOW THE ASSESSEE HAS CLAIMED IN DEXATION ON THE VALUE OF THE SAID PROPERTIES AS ON 1.4.1981 AGAINST THE CONSIDERATION. IF THE NEW FLAT WAS TO BE GIVEN IN LIEU OF THE OLD AREA OCCUPIED BY THE ASSESSEE IN THE OLD STRUCTURE, THEN THE VALUE OF THE S AID OLD STRUCTURE SHOULD HAVE BEEN REDUCED FROM THE VALUE OF THE ENTIRE P ROPERTY AS ON 1.4.1981 WHILE COMPUTING THE LTCG ON SUCH SALE. HOWEVE R, THE ASSESSEE HAS TAKEN THE FMV OF THE ENTIRE PROPERTY AS ON 1.4.19 81 INTO CONSIDERATION WHILE COMPUTING THE LTCG ON THE SALE OF SUCH PROPERTY. 5. THE A.R. OF THE ASSESSEE VIDE HIS SUBMISSION DATED 1 2.11.2009 STATED THAT IF MARKET VALUE OF THE NEW FLAT IS ADDED TO INCO ME OF THE ASSESSEE, THEN THE INVESTMENT IN NEW RESIDENTIAL PROPERTY SHOULD BE ALLOWED U/S.54 AT MARKET VALUE. THE AO. ANALYSED THE CONTENTION OF T HE ASSESSEE. ACCORDING TO THE A.O., EXEMPTION U/S.54 IS AVAILABL E ONLY WHEN THE ASSESSEE HAS PURCHASED A NEW FLAT ONE YEAR BEFORE OR TWO YEARS AFTER THE DATE OF TRANSFER OR HAS CONSTRUCTED A NEW RESIDENTI AL' HOUSE WITHIN A PERIOD OF THREE YEARS FROM THE DATE OF TRANSFER OF THE HOUSE PROPERTY (ORIGINAL). THE FLATS (ALONGWITH CAR 'PARKING SPACES ) RECEIVED BY THE ASSESSEE IN THE PROPOSED BUILDING AS 'ADDITIONAL CO NSIDERATION' AGREED UPON IN THE AGREEMENT DATED 28.4.2006 WAS OVER AND A BOVE HER SHARE IN THE MONETARY CONSIDERATION. THESE FLATS (ALONGWITH CAR PARKING SPACES) FORM PART OF CONSIDERATION RECEIVED BY THE ASSESSEE TOWARDS TRANSFER OF THE PROPERTY. THIS FLAT IS NEITHER PURCHASED BY THE ASS ESSEE NOR CONSTRUCTED BY HER. THE A.O. HELD THAT SINCE THE ASSESSE E HAS NOT FULFILLED THE CONDITIONS LAID DOWN IN SECTION 54, SHE IS NOT EL IGIBLE FOR EXEMPTION U/S.54 OF THE LT. ACT. THE A.O. HAS FURTHER ELABORATED THIS ISSUE IN PARA 10 OF THE ASSESSMENT ORDER WHEREIN HE HAS HELD THAT EXEMPTIO N U/S.54 OF THE I.T.ACT IS ALLOWABLE ONLY WHEN THE ASSESSEE MAKES AN INVESTMENT TOWARDS PURCHASE OR CONSTRUCTION OF A NEW HOUSE PROPERTY WITHI N THE STIPULATED LATE SHRI MAHAVIR GUPTA THROUGH LEGAL HEIR SHRI SUSHIL GUPTA ITA NO.2783/MUM/2014 19 PERIOD. THUS FOR AVAILING EXEMPTION U/S.54, THE ASSES SEE HAS TO EITHER PURCHASE OR CONSTRUCT A NEW HOUSE PROPERTY. 6. IN THIS REGARD, THE A.O. FURTHER HELD THAT EXEMPTION U/S.54 IN RESPECT OF CAPITAL GAINS ARISING ON-SALE OF PROPERTY USED FOR RESIDENCE IS ONLY AVAILABLE TOWARDS INVESTMENT [BY WAY OF PURCHASE OR CONSTRUCTION IN A NEW HOUSE PROPERTY WITHIN THE TIME LIMIT PRESCRIBED UN DER THE ACT. IN THE CASE UNDER CONSIDERATION, THE ASSESSEE IS TREATING T HE FLATS AND PARKING LOTS RECEIVED BY HER AS ADDITIONAL CONSIDERATION AS INVESTMENT MADE U/S.54. THESE FLATS (ALONGWITH CAR PARKING SPACES) RE CEIVED BY THE ASSESSEE AS PART OF 'CONSIDERATION' CANNOT SIMULTAN EOUSLY BE TREATED AS INVESTMENT. IN ORDER TO AVAIL THE EXEMPTION U/S.54, THE ASSESSEE SHOULD HAVE MADE THE INVESTMENT IN A NEW RESIDENCE EITHER BY WAY OF PURCHASE OR CONSTRUCTION OF THE SAME. IN THE INSTANT CASE, AS PER AO, THE ASSESSEE HAS NOT FULFILLED THIS CONDITION WHICH IS THE REQUIREMENT O F THE ACT. IN VIEW OF THE ABOVE, THE A.O. HELD THAT THE ASSESSEE IS NOT ELIGI BLE FOR EXEMPTION U/S.54 OF THE L.T.ACT AND ACCORDINGLY DENIED THE SAME TO THE ASSESSEE. 7. BY THE IMPUGNED ORDER, THE CIT(A) CONFIRMED THE DIS ALLOWANCE AGAINST WHICH THE ASSESSEES ARE IN FURTHER APPEALS BEFORE US. 8. WE HAVE CONSIDERED RIVAL CONTENTIONS, CAREFULLY G ONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM THE REC ORD THAT DURING THE COURSE OF APPELLATE PROCEEDINGS THE ASSESSEE HAS SUB MITTED AS UNDER :- '1. DURING THE YEAR THE ASSESSEE WITH HER CO OWNER I. E. HER BROTHER MR.PETER SAVIO PEREIRA SOLD THE ANCESTRAL RESIDENTIA L PROPERTY FOR CONSIDERATION OF RS.3,05,00,00/- AND 3 FLATS ADMEES URINQ 3150 SQ. FT. WITH ONE OPEN AND TWO STILT PARKING IN KIND. 2. IN THE ASSESSMENT ORDER. THE A.O. HAS VALUED THE CON SIDERATION RECEIVED IN KIND FOR RS.3,32,70,540/- AND ADDITIONS WERE MAD E IN THE ASSESSMENT ORDER UNDER THE HEAD LONG TERM CAPITAL GAINS WITHOUT CONSIDERING THE SAID AMOUNT AS REINVESTMENT IS NEITHER PURCHASED NOR CONST RUCTED BY THE ASSESSEE. 3. AS REGARDS BENEFIT OF SECTION 54, THIS SECTION MA KES IT CLEAR THAT CAPITAL GAIN ARISING FROM THE TRANSFER OF A HOUSE PROPERTY I S EXEMPT FROM TAX PROVIDED THE FOLLOWING CONDITIONS ARE SATISFIED :- LATE SHRI MAHAVIR GUPTA THROUGH LEGAL HEIR SHRI SUSHIL GUPTA ITA NO.2783/MUM/2014 20 (A) THE HOUSE PROPERTY IS A RESIDENTIAL HOUSE WHOSE INC OME IS TAXABLE UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY' AS TRANSF ERRED BY AN INDIVIDUAL OR AN HUF. (B) THE HOUSE PROPERTY (MAY BE SELF OCCUPIED OR LET O UT) IS A LONG TERM CAPITAL ASSET. (C) THE ASSESSEE HAS PURCHASED A RESIDENTIAL HOUSE WITHI N A PERIOD OF ONE YEAR BEFORE THE TRANSFER OR WITHIN TWO YEARS AFTER TH E DATE OF TRANSFER OR HAS CONSTRUCTED A RESIDENTIAL HOUSE PROPERTY WITHIN A PERIOD OF THREE YEARS AFTER THE DATE OF TRANSFER. THE APPELLANT HAS FULFILLED THE PRECONDITION MENTIONED AT POINT NOS.(A) & (B) ABOVE WAS NOT IN DOUBT. THIS WAS ALSO NOT IN DIS PUTE THAT THE ASSESSEE HAD PURCHASED NEW RESIDENTIAL PROPERTY BY WAY OF CONS TRUCTION. THIS WAS BECAUSE IT WAS CLEAR FROM THE AGREEMENT WITH DEVELOPE R THAT THE DEVELOPER WOULD CONSTRUCT THE RESIDENTIAL BUILDING O N THE PROPERTY ALIENATED BY THE ASSESSEE TO THE DEVELOPER AND HANDOVE R THE RESIDENTIAL HOUSE TO THE ASSESSEE IN CONSIDERATION OF THE SALE OF ORIGINAL RESIDENTIAL PROPERTY. THIS FACT IS CLEAR AND UNAMBIGUOUS. THEREFO RE TO SAY THAT THE APPELLANT HAS ALSO COMPLIED THE LAST CONDITION OF SEC TION 54 FOR ACQUISITION OF NEW RESIDENTIAL PROPERTY. THE A.O. HAS CONSIDERED SALE CONSIDERATION RECEIVED I N CASH AND KINDBUT FAILED TO ALLOW THE EXEMPTION U/S.54 FOR REINVESTMEN T OF THE SAID CONSIDERATION RECEIVED IN KIND FOR ACQUIRING OF NEW RESIDENTIAL HOUSE PROPERLY. 5. THE A.O. HAS MISINTERPRETED THE DEFINITION OF 'PU RCHASE' HELD BY THE APEX COURT IN THE ASSESSEE OF CIT VS. T.N. ARAVINDA REDDY. IN THIS CASE, THE DEFINITION OF THE TERM 'PURCHASE' HAS BEEN GIVEN AS UN DER: '....... WE FIND NO REASON TO DIVORCE THE ORDINARY M EANING OF THE WORD PURCHASE AS BUYING FOR A PRICE OR EQUIVALENT OF PRIC E BY PAYMENT IN KIND OR ADJUSTMENT TOWARDS AN OLD DEBT OR FOR OTHER MONE TARY CONSIDERATION FROM THE LEGAL MEANING OF THAT WORD IN SECTION 54(1). IF YOU SELL YOUR HOUSE AND MAKE A PROFIT PAY CAESAR WHAT IS DUE TO HIM. BUT IF YOU BUY OR BUILD ANOTHER SUBJECT TO THE CONDITIONS OF SECTION 5 4(1), YOU ARE EXEMPT. THE PURPOSE IS PLAIN THE SYMMETRY IS SIMPLE, THE LANGU AGE IS PLAIN. ' THUS THE HON. SUPREME COURT HAS DEFINED THE TERM 'PURCHA SE' AS BUYING FOR A PRICE / EQUIVALENT OF PRICE BY PAYMENT IN KIN D OR ADJUSTMENT TOWARDS AN OLD DEBT OR FOR OTHER MONETARY CONSIDERAT ION. THE WORD 'PURCHASE' IN SECTION 54 HAS TO BE GIVEN ITS COMMON A ND WIDER MEANING. IT SHOULD INCLUDE BUYING OR ADJUSTMENT TOWARDS OLD DEBT OR FOR OTHER MONETARY CONSIDERATION. 6. IN THE PRESENT' CASE BEFORE YOUR HONOUR, THE ASSES SEE HAS PURCHASED/CONSTRUCTED THE NEW RESIDENTIAL PROPERTY AN D PAID THE CONSIDERATION EQUIVALENT OF PRICE BY PAYMENT IN KIN D. THEREFORE THE ASSESSEE HAS PURCHASED THE RESIDENTIAL PROPERTY AND IS ENTITLED FOR EXEMPTION U/S.54 OF THE I T.ACT 1961. LATE SHRI MAHAVIR GUPTA THROUGH LEGAL HEIR SHRI SUSHIL GUPTA ITA NO.2783/MUM/2014 21 9. IT IS CLEAR FROM THE ABOVE THAT RESIDENTIAL HOUSE WAS GIVEN TO THE ASSESSEE IN CONSIDERATION OF THE SALE OF OLD HOUSE. T HE SALE CONSIDERATION WAS PARTLY RECEIVED IN CASH AND PARTLY IN THE FORM OF NEW FLATS TO BE CONSTRUCTED ON THE PLOT OF OLD HOUSE SOLD BY ASSESSEE . THE NEW FLATS AGREED TO BE GIVEN TO ASSESSEE AMOUNTS TO INVESTMENT BY AS SESSEE IN RESIDENTIAL HOUSE. THEREFORE, THE AO WAS NOT JUSTIFIED IN ADDING BACK THE ADDITIONAL CONSIDERATION GIVEN IN THE FORM OF ALLOTMENT OF THREE FLATS BY DECLINING CLAIM OF DEDUCTION U/S.54 OF THE I.T.ACT. 10. IN THE PRESENT CASE BEFORE US, THE ASSESSEE HAS P URCHASED/CONSTRUCTED THE NEW RESIDENTIAL PROPERTY AND PAID THE CONSIDERAT ION EQUIVALENT OF PRICE BY PAYMENT IN KIND. THEREFORE, THE ASSESSEE IS ENTITLED FOR EXEMPTION U/S.54 OF I.T.ACT, 1961 IN RESPECT OF THESE FLATS. 11. AN ISSUE WAS ALSO RAISED BY THE AO WITH REGARD TO SHARING OF 3 FLATS BETWEEN THE CO-OWNERS OF THE PROPERTY AND THE EXEMPTIO N U/S.54 ALLOWABLE IN CASE OF INVESTMENT IN ONE RESIDENTIAL FLAT ONLY. IN THIS REGARD, WE FOUND THAT THE DETAILS OF ALLOCATION OF AREA OF N EW RESIDENTIAL PROPERTY BETWEEN CO-OWNERS ARE AS FOLLOWS :- NAME RATIO AREA IN SQ.FT. DESCRIPTION MR. PETER S. PEREIRA 77% 2400 FLAT NO.301 & 302 ADJACENT FLATS @ 1200 SQ.FT. EACH ON 3 RD FLOOR AND TWO STILT CAR PARKING SPACE MS VILMA M. PEREIRA 23% 750 FLAT NO.402 ON 4TH FLOOR AND ONE CAR PARKING SPACE THE AFORESAID RATIO OF ALLOCATION BETWEEN CO-OWNERS IS ALREADY ON RECORD OF THE AO AS WELL AS IN THE VALUATION REPORT. FURTHERM ORE, THE CO-OWNER WILL GET THE AREA ACCORDING TO THEIR RATIO IN THE NEW RESIDENTIAL PROPERTY. SINCE FLAT NO.301 & 302 ARE SITUATED IN THE SAME FLO OR AND ADJACENT TO EACH OTHER AND WILL BE TREATED AS ONE SINGLE RESIDEN TIAL UNIT FOR THE LATE SHRI MAHAVIR GUPTA THROUGH LEGAL HEIR SHRI SUSHIL GUPTA ITA NO.2783/MUM/2014 22 PURPOSE OF CLAIMING EXEMPTION U/S.54. THE SAME VIEW HAS BEEN TAKEN BY THE SPECIAL BENCH OF THE MUMBAI TRIBUNAL IN THE CASE OF ITO VS. MS. SUSHILA M. JHAVERI, (2007) 292 ITR (AT) 1 (MUMBAI). 12 . THE ISSUE RAISED BY THE AO IS ALSO COVERED BY THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF GITA DUGGAL 257 CTR 208, WHEREIN THE HONBLE H IGH COURT HELD AS UNDER:- SEC. 54/54F USES THE EXPRESSION 'A RESIDENTIAL HOU SE'. THE EXPRESSION USED IS NOT 'A RESIDENTIAL UNIT'. THIS IS A NEW CONC EPT INTRODUCED BY THE AO INTO THE SECTION. SEC. 54/54F REQUIRES THE ASSESSEE TO ACQUIRE A 'RESIDENTIAL HOUSE' AND SO LONG AS THE ASSESSEE ACQU IRES A BUILDING, WHICH MAY BE CONSTRUCTED, FOR THE SAKE OF CONVENIENCE, IN SUCH A MANNER AS TO CONSIST OF SEVERAL UNITS WHICH CAN, IF THE NEED ARISES , BE CONVENIENTLY AND INDEPENDENTLY USED AS AN INDEPENDENT RESIDENCE, THE REQUIREMENT OF THE SECTION SHOULD BE TAKEN TO HAVE BEEN SATISFIED. THERE IS NOTHING IN THESE SECTIONS WHICH REQUIRE THE RESIDENTIAL HOUSE TO BE CON STRUCTED IN A PARTICULAR MANNER. THE ONLY REQUIREMENT IS THAT IT SHO ULD BE FOR THE RESIDENTIAL USE AND NOT FOR COMMERCIAL USE. IF THERE IS NOTHING IN THE SECTION WHICH REQUIRES THAT THE RESIDENTIAL HOUSE SHOULD BE BUILT IN A PARTICULAR MANNER, IT SEEMS THAT THE IT AUTHORITIES C ANNOT INSIST UPON THAT REQUIREMENT. A PERSON MAY CONSTRUCT A HOUSE ACCORDIN G TO HIS PLANS AND REQUIREMENTS. MOST OF THE HOUSES ARE CONSTRUCTED ACCO RDING TO THE NEEDS AND REQUIREMENTS AND EVEN COMPULSIONS. FOR INSTANCE , A PERSON MAY CONSTRUCT A RESIDENTIAL HOUSE IN SUCH A MANNER THAT HE MAY USE THE GROUND FLOOR FOR HIS OWN RESIDENCE AND LET OUT THE FI RST FLOOR HAVING AN INDEPENDENT ENTRY SO THAT HIS INCOME IS AUGMENTED. I T IS QUITE COMMON TO FIND SUCH ARRANGEMENTS, PARTICULARLY POST-RETIREMENT . ONE MAY BUILD A HOUSE CONSISTING OF FOUR BEDROOMS (ALL IN THE SAME OR DIFFERENT FLOORS) IN SUCH A MANNER THAT AN INDEPENDENT RESIDENTIAL UNIT C ONSISTING OF TWO OR THREE BEDROOMS MAY BE CARVED OUT WITH AN INDEPENDENT ENTRANCE SO THAT IT CAN BE LET OUT. HE MAY EVEN ARRANGE FOR HIS CHILDR EN AND FAMILY TO STAY THERE, SO THAT THEY ARE NEARBY, AN ARRANGEMENT WHICH CA N BE MUTUALLY SUPPORTIVE. HE MAY CONSTRUCT HIS RESIDENCE IN SUCH A MANNER THAT IN CASE OF A FUTURE NEED HE MAY BE ABLE TO DISPOSE OF A PART THEREOF AS AN INDEPENDENT HOUSE. THERE MAY BE SEVERAL SUCH CONSIDER ATIONS FOR A PERSON WHILE CONSTRUCTING A RESIDENTIAL HOUSE. THE PHYSICAL S TRUCTURING OF THE NEW RESIDENTIAL HOUSE, WHETHER IT IS LATERAL OR VERTIC AL, SHOULD NOT COME IN THE WAY OF CONSIDERING THE BUILDING AS A RESIDENTIAL HOUSE. THE FACT THAT THE 'RESIDENTIAL HOUSE CONSISTS OF SEVERAL INDEPENDEN T UNITS CANNOT BE PERMITTED TO ACT AS AN IMPEDIMENT TO THE ALLOWANCE OF THE DEDUCTION UNDER S.54/54F. IT ISNEITHER EXPRESSLY NOR BY NECESS ARY IMPLICATION PROHIBITED. TRIBUNAL WAS THEREFORE JUSTIFIED IN ALLOW ING EXEMPTION UNDER S.54 IN RESPECT OF ENTIRE INVESTMENT IN CONSTRUCTIO N OF BASEMENT, GROUND FLOOR, FIRST FLOOR, SECOND FLOOR AND THIRD FLOOR. LATE SHRI MAHAVIR GUPTA THROUGH LEGAL HEIR SHRI SUSHIL GUPTA ITA NO.2783/MUM/2014 23 13. IN VIEW OF THE ABOVE DISCUSSION, WE DO NOT FIND ANY MERIT IN THE ACTION OF THE AO FOR DECLINE OF CLAIM OF DEDUCTION U/S.54 I N RESPECT OF RESIDENTIAL FLATS ALLOTTED BY BUILDER IN CONSIDERATION OF SALE OF OLD HOUSE. 14. IN THE RESULT, APPEALS OF BOTH THE ASSESSEES ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 27TH FEB.2 015. 2.2. WE FIND THAT THE TRIBUNAL DELIBERATED THE ISSUE WITH RESPECT TO DECLINING THE CLAIM OF DEDUCTION U/S 54 OF THE AC T AND BY FOLLOWING THE DECISION OF THE SPECIAL BENCH IN THE CASE OF ITO VS MS. SUSHILA M. JHAVERI (2007) 292 ITR (AT) 1 (MUM.) AND ALSO THE DECISION FR OM HONBLE DELHI HIGH COURT IN GEETA DUGGAL 257 CTR 208 (DEL.) DECIDED THE CLAIMED DEDUCTION IN FAVOUR OF THE ASSESSEE. WE FURTHER NOTE THAT THE LD. ASSESSING OFFICER IMPOSED PENALTY WITH RESPECT TO CLAIMED DEDU CTION U/S 54 OF THE ACT, THEREFORE, WHEN THE BASIS NO LONGER SURVIVE ON T HE BASIS OF WHICH PENALTY WAS IMPOSED, IN OUR VIEW, PENALTY U/S 271(1 )(C) OF THE ACT CANNOT SURVIVE. 2.3. THERE IS NO DISPUTE THAT QUANTUM ADDITION HAS B EEN DELETED BY THE TRIBUNAL, THEREFORE, IN OUR HUMBLE OPINION, TH E LD. COMMISSIONER OF INCOME TAX (APPEALS) IS JUSTIFIED IN DELETING THE PE NALTY. OUR VIEW FURTHER FINDS SUPPORT FROM THE DECISION AND THE RATIO LAID D OWN IN CIT VS S.P VIZ CONSTRUCTION COMPANY 176 ITR 47 (PATNA) AND K.C. BUI LDERS VS ACIT 265 ITR 562 (SUPREME COURT). WE ARE OF THE VIEW WHERE THE P ENALTY FOR CONCEALMENT OR FURNISHING INACCURATE PARTICULARS WA S LEVIED AND AFTER DELETING THE QUANTUM ADDITION, THERE REMAINS NO BASIS AT ALL FOR LEVYING THE PENALTY. ORDINARILY, PENALTY CANNOT STAND IN IT SELF IF THE ADDITION MADE IN THE ASSESSMENT ITSELF IS SET ASIDE OR CANCELLED B Y THE SUPERIOR AUTHORITY/COURT. THE PENALTY CANNOT STAND BY ITSELF BECAUSE FALSE RESULT MAY BE PRODUCED BY THE FALSITY OF ONE OR MORE OF THE CONSTITUENT ITEMS IN THE RETURN. THE WORD INACCURATE PARTICULARS WOULD COVER FALSITY IN THE FINAL FIGURE AND ALSO THE CONSTITUENT ELEMENTS OR I TEMS. THEY SIMPLY WOULD LATE SHRI MAHAVIR GUPTA THROUGH LEGAL HEIR SHRI SUSHIL GUPTA ITA NO.2783/MUM/2014 24 MEAN INACCURATE IN SOME SPECIFIC OR DEFINITE RESPEC T WHETHER IN THE CONSTITUENT OR SUBORDINATE ITEMS OF INCOME OR THE EN D RESULT. CONCEALMENT OR FURNISHING INACCURATE PARTICULARS IMP LIES SOME DELIBERATE ACT ON THE PART OF THE ASSESSEE IN WITHHOLDING THE TRUE FACTS FROM THE AUTHORITIES. SINCE, THE BASIS OF LEVYING PENALTY RE MAINS NO MORE IN EXISTENCE, AFTER DELETION OF QUANTUM ADDITION, THERE FORE, FROM THIS ANGLE, THE STAND OF THE LD. COMMISSIONER OF INCOME TAX (APPE ALS) IS JUSTIFIED. FINALLY, THE APPEAL OF THE REVENUE IS HAVING NO MERIT, THEREFORE, DISMISSED. 2.3. THERE IS NO DISPUTE THAT QUANTUM ADDITION HAS BEEN DELETED BY THE TRIBUNAL, THEREFORE, IN OUR HUMBLE O PINION, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFI ED IN CONFIRMING THE PENALTY. ADMITTEDLY, THE IMPUGNED O RDER IS DATED 07/10/2013, WHEREAS, THE ORDER OF QUANTUM ADD ITION OF THE TRIBUNAL IS DATED 31/07/2015, MEANING THEREBY, THE ORDER OF THE TRIBUNAL WAS EVEN NOT EVEN EXISTENCE. OUR V IEW FURTHER FINDS SUPPORT FROM THE DECISION AND THE RATIO LAID DOWN IN CIT VS S.P VIZ CONSTRUCTION COMPANY 176 ITR 47 (PATNA) AND K.C. BUILDERS VS ACIT 265 ITR 562 (SUPREME COURT). WE AR E OF THE VIEW WHERE THE PENALTY FOR CONCEALMENT OR FURNISHIN G INACCURATE PARTICULARS WAS LEVIED AND AFTER DELETIN G THE QUANTUM ADDITION, THERE REMAINS NO BASIS AT ALL FOR LEVYING THE PENALTY. ORDINARILY, PENALTY CANNOT STAND IN ITSEL F IF THE ADDITION MADE IN THE ASSESSMENT ITSELF IS SET ASIDE OR CANCELLED BY THE SUPERIOR AUTHORITY/COURT. THE PENALTY CANNO T STAND BY ITSELF BECAUSE FALSE RESULT MAY BE PRODUCED BY THE FALSITY OF ONE OR MORE OF THE CONSTITUENT ITEMS IN THE RETURN. TH E WORD INACCURATE PARTICULARS WOULD COVER FALSITY IN THE FINAL FIGURE AND ALSO THE CONSTITUENT ELEMENTS OR ITEMS. THEY S IMPLY WOULD MEAN INACCURATE IN SOME SPECIFIC OR DEFINITE RESPEC T WHETHER IN THE CONSTITUENT OR SUBORDINATE ITEMS OF INCOME OR T HE END RESULT. CONCEALMENT OR FURNISHING INACCURATE PARTICULARS IM PLIES SOME LATE SHRI MAHAVIR GUPTA THROUGH LEGAL HEIR SHRI SUSHIL GUPTA ITA NO.2783/MUM/2014 25 DELIBERATE ACT ON THE PART OF THE ASSESSEE IN WITHH OLDING THE TRUE FACTS FROM THE AUTHORITIES. SINCE, THE BASIS OF LEVYING PENALTY REMAINS NO MORE IN EXISTENCE, AFTER DELETIO N OF QUANTUM ADDITION, THEREFORE, FROM THIS ANGLE, THE STAND OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS NOT SUSTAIN ABLE. FINALLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. 2.3. THERE IS NO DISPUTE THAT QUANTUM ADDITION HAS BEEN DELETED BY THE TRIBUNAL, THEREFORE, IN OUR HUMBLE O PINION, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUS TIFIED IN CONFIRMING THE PENALTY. ADMITTEDLY, THE IMPUGNED O RDER IS DATED 28/01/2014, WHEREAS, THE ORDER OF QUANTUM ADD ITION OF THE TRIBUNAL IS DATED 31/10/2014, MEANING THEREBY, THE ORDER OF THE TRIBUNAL WAS EVEN NOT EVEN EXISTENCE, WHEN T HE LD. COMMISSIONER OF INCOME TAX (APPEALS) TOOK A VIEW. OUR VIEW FURTHER FINDS SUPPORT FROM THE DECISION AND THE RAT IO LAID DOWN IN CIT VS S.P VIZ CONSTRUCTION COMPANY 176 ITR 47 ( PATNA) AND K.C. BUILDERS VS ACIT 265 ITR 562 (SUPREME COUR T). WE ARE OF THE VIEW WHERE THE PENALTY FOR CONCEALMENT O R FURNISHING INACCURATE PARTICULARS WAS LEVIED AND AF TER DELETING THE QUANTUM ADDITION, THERE REMAINS NO BASIS AT ALL FOR LEVYING THE PENALTY. ORDINARILY, PENALTY CANNOT STAND IN I TSELF IF THE ADDITION MADE IN THE ASSESSMENT ITSELF IS SET ASIDE OR CANCELLED BY THE SUPERIOR AUTHORITY/COURT. THE PENALTY CANNO T STAND BY ITSELF BECAUSE FALSE RESULT MAY BE PRODUCED BY THE FALSITY OF ONE OR MORE OF THE CONSTITUENT ITEMS IN THE RETURN. THE WORD INACCURATE PARTICULARS WOULD COVER FALSITY IN THE FINAL FIGURE AND ALSO THE CONSTITUENT ELEMENTS OR ITEMS. THEY S IMPLY WOULD MEAN INACCURATE IN SOME SPECIFIC OR DEFINITE RESPECT LATE SHRI MAHAVIR GUPTA THROUGH LEGAL HEIR SHRI SUSHIL GUPTA ITA NO.2783/MUM/2014 26 WHETHER IN THE CONSTITUENT OR SUBORDINATE ITEMS OF INCOME OR THE END RESULT. CONCEALMENT OR FURNISHING INACCURA TE PARTICULARS IMPLIES SOME DELIBERATE ACT ON THE PART OF THE ASSESSEE IN WITHHOLDING THE TRUE FACTS FROM THE AUT HORITIES. SINCE, THE BASIS OF LEVYING PENALTY REMAINS NO MORE IN EXISTENCE, AFTER DELETION OF QUANTUM ADDITION, THER EFORE, FROM THIS ANGLE, THE STAND OF THE LD. COMMISSIONER OF IN COME TAX (APPEALS) IS NOT SUSTAINABLE. FINALLY THE APPEAL OF THE ASSESSEE IS ALLOWED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 15/10/2015. SD/- SD/- ( RAJESH KUMAR ) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER % MUMBAI; ( DATED : 05/11/2015 F{X~{T? P.S/. . . %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. *+,- / THE APPELLANT 2. ./,- / THE RESPONDENT. 3. 0 0 1# ( *+ ) / THE CIT, MUMBAI. 4. 0 0 1# / CIT(A)- , MUMBAI 5. 3$4 .# , 0 *+' * 5 , % / DR, ITAT, MUMBAI 6. 6! 7% / GUARD FILE. / BY ORDER, /3+# .# //TRUE COPY// / (DY./ASSTT. REGISTRAR) , % / ITAT, MUMBAI.