J.R. MOOKHEY, MUMBAI V. ITO 11(2)(4), MUMBAI

ITA 287/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3420 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Assessment Year: 2005-2006
• Appeal Filed On: 12-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K BEPARI
• Assessee Lawyers: J R MOOKHEY
• Keywords: Reopening of assessment; Capital asset; Reasonable cause

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI J BENCH, MUMBAI BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER. ITA. NO. 287/MUM/2015 (ASSESSMENT YEAR:2005-06) SHRI J. R. MOOKHEY 410, ANANT DEEP CHAMBERS, 273/277, NARSHI NATHA STREET, MUMBIA 400 009 APPELLANT VS. ITO 11(2)(4), AAYAKAR BHAVAN, M. K. ROAD, NEW MARINE LINES, MUMBAI 400 020 RESPONDENT PAN: AAGPM6741C /BY APPELLANT : SHRI J. R. MOOKHEY, A.R. /BY RESPONDENT : SHRI S. K. BEPARI, D.R. /DATE OF HEARING : 22.08.2016 /DATE OF PRONOUNCEMENT : 26.08.2016 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-3, MUMBAI, DAT ED 28.11.2013 FOR A.Y. 2005-06, WHEREIN PENALTY U/S.27 1(1)(C) ON THE CLAIM OF 54EC OF THE ACT HAS BEEN OPPOSED. ITA NO.287/MUM/15 A.Y. 05-06 [J. R. MOOKHEY VS. ITO ] PAGE 2 2. ASSESSEE IS AN INDIVIDUAL FILED HIS RETURN OF INCOM E FOR A.Y. 2005-06 DECLARING TOTAL INCOME OF RS.2,44,269/-. A SSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT ON 12.12.2007 A CCEPTING THE TOTAL INCOME AS DECLARED. IN COMPUTATION OF TOTAL I NCOME, ASSESSEE HAS SHOWN INCOME FROM PROFESSION FROM SHOR T TERM CAPITAL GAIN / LONG TERM CAPITAL GAIN AND INCOME FR OM OTHER SOURCES. INCOME FROM CAPITAL GAIN HAS ARISEN DUE TO TRANSFER OF LAND AND BUILDING TO THE PARTNERSHIP FIRM OF WHICH ASSESSEE BECAME PARTNER W.E.F. 02.04.2004. SINCE, ASSESSEE H AS CONTRIBUTED HIS LAND AND BUILDING AT MAFCO APM, VAS HI, NAVI MUMBAI TOWARDS HIS CAPITAL OF FIRM CREDITED TO HIS ACCOUNT WITH RS.95,00,000/-. ASSESSEE HAS BIFURCATED HIS CAPIT AL BETWEEN THE LAND AT RS.83,50,000/-AND BALANCE AMOUNT OF RS.11,5 0,000/- VALUE OF THE FACTORY BUILDING WHICH WAS TAKEN ON TH E WRITTEN DOWN VALUE WITH MINOR ADJUSTMENT. ON THE BASIS OF B IFURCATION, TRANSFER OF THE LAND WAS SHOWN AS LONG TERM CAPITAL GAIN AND GAIN ARISING OUT OF THE TRANSFER OF FACTORY BUILDING WAS SHOWN AS SHORT TERM CAPITAL GAIN. THIS WAS DONE AS PER THE PROVISI ONS OF THE SECTION 45(3) OF THE ACT. ASSESSEE HAD FILED BEFOR E ASSESSING OFFICER A COPY OF LEASE DEED OF 1981 WITH CIDCO AND A COPY OF PARTNERSHIP DEED DATED 02.04.2004 AND ALSO A COPY O F A RETIREMENT DEED DATED 01.04.2005, AND COPY OF NABAR D BOND WITH OTHER RELEVANT DOCUMENT BEFORE ASSESSING OFFICER AT THE TIME OF ORIGINAL ASSESSMENT. ASSESSING OFFICER AFTER LOOKI NG INTO ALL ASPECT OF THE CASE PASSED THE ASSESSMENT ORDER DATE D 12.12.2007 ACCEPTING RS.2,44,269/- DECLARED BY ASSESSEE. THER EAFTER, ASSESSEE RECEIVED A NOTICE U/S.148 OF THE ACT DATED 19.01.2009 FOR FILING THE RETURN OF REASSESSMENT PROCEEDING AN D IN RESPONSE TO SAME, ASSESSEE VIDE HIS LETTER DATED 16-02-2009 SUBMITTED ITA NO.287/MUM/15 A.Y. 05-06 [J. R. MOOKHEY VS. ITO ] PAGE 3 THAT THE ORIGINAL RETURN FOR A.Y.2005-06 FILED ON 3 1.08.2005 MAY BE TREATED AS RETURN FILED IN RESPONSE TO THE SAID NOTICE. ASSESSEE SUBMITTED TO EXPRESS THE FACT AS TO WHY REASSESSMEN T PROCEEDING. ASSESSEE WAS ASKED AS TO WHY PENALTY SHOULD NOT INI TIATED U/S. 271(1)(C) OF THE ACT. SO, ASSESSING OFFICER PRIOR TO THIS PROCEEDED WITH RE-ASSESSMENT PROCEEDINGS. IN REASSESSMENT PR OCEEDINGS, ASSESSING OFFICER APPLIED HIS MIND TO LONG TERM CAP ITAL GAIN AND SHORT TERM CAPITAL GAIN U/S.45(3) OF THE ACT WHICH IS BASIS FOR REOPENING OF ASSESSMENT. ASSESSING OFFICER COMPLETE D ASSESSMENT ON 29.12.2009 MAKING THE ADDITION OF RS. 81,62,650/- AS SHORT TERM CAPITAL GAIN ON THE TRANS FER OF LAND AND BUILDING, HOWEVER HE TREATED HIS ENTIRE CONSIDE RATION OF RS. 95,00,000/- TOWARDS THE FACTORY BUILDING AND NO AMO UNT WAS TREATED TOWARDS THE LAND ON WHICH BUILDING WAS CONS TRUCTED. ASSESSEE FILLED APPEAL BEFORE CIT(A) WHO BY HIS ORD ER DATED 28.01.2011 UPHELD THE REOPENING OF ASSESSMENT. AS REGARD TO THE QUANTUM, CIT(A) HAS RIGHTLY DIVIDED INTO TWO PA RTS I.E. SHORT TERM CAPITAL GAIN OF THE FACTORY AND LONG TERM CAPI TAL GAIN OF THE LAND. HOWEVER, HE DIRECTED THE ASSESSING OFFICER A S TO EXACT VALUE OF LAND TO FIND AT RELEVANT TIME FROM CIDCO O R FROM THE REGISTRAR OF ASSURANCE OFFICE AT VASHI AS REGARD TH E EXEMPTION FROM CAPITAL GAIN ON INVESTMENT MADE IN NABARD BOND AND HE OBSERVED THAT SAID INVESTMENT WAS NOT MADE WITHIN T HE PRESCRIBED TIME I.E. WITHIN SIX MONTHS OF TRANSFER. 2.1 THE APPEALS FILED BEFORE ITAT BY THE DEPARTMENT AS WELL AS ASSESSEE, WHEREIN ITAT AFTER DISMISSING THE APPEAL FILED BY DEPARTMENT AS WELL AS ASSESSEE WITH THE DIRECTION T O ASSESSING OFFICER GIVING EFFECT TO THE CIT(A) ORDER DATED 28. 01.2011 AND ITA NO.287/MUM/15 A.Y. 05-06 [J. R. MOOKHEY VS. ITO ] PAGE 4 THEREFORE DISMISSED THE APPEAL AND CONFIRMED THE OR DER OF CIT(A). THEREAFTER, MISCELLANEOUS PETITION FOR RECTIFICATIO N OF THE TRIBUNALS ORDER DATED 23.04.2013 AND ITAT VIDE ORD ER DATED- 29.11.2013 RECALLED THE ORDER DATED 23.04.2013 AND THEREAFTER, PASSED THE FRESH ORDER DATED 29.11.2013 DISMISSING THE APPEAL. IN THE MEANTIME, ASSESSING OFFICER PROCEEDED TO LEV Y OF PENALTY U/S.271(1)(C) OF THE ACT AMOUNTING TO RS.37,30,588/ -, WHICH WAS CONFIRMED BY CIT(A). 2.2 BEFORE US, LEARNED AUTHORIZED REPRESENTATIVE SU BMITTED THAT CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE PENALTY. ASSESSEE HAS NOT CONCEALED INCOME FROM DEPARTMENT NOR FURNISHED ANY INACCURATE PARTICULAR OF INCOME. ASSESSEE COULD NO T PURCHASE THE BONDS IN TIME BECAUSE SOME DISPUTES AMOUNT ASSE SSEE AND ERSTWHILE PARTNER WHO WAS SUPPOSED TO MAKE PAYMENT FOR ALLEGED TRANSFER OF PROPERTY IN QUESTION BY WAY OF PARTNERS HIP DEED, WHICH IS BASIS FOR CAPITAL GAIN IN QUESTION. BASIC ALLY, IT IS A DISPUTE OF CAPITAL GAIN, THE QUANTUM HAS BEEN DECID ED AGAINST ASSESSEE ON WHICH PENALTY HAS BEEN LEVIED UPON. HO WEVER, TAX HAS BEEN PAID BY ASSESSEE ON QUANTUM ADDITION. THE STAND OF ASSESSEE HAS BEEN THAT THOUGH QUANTUM ADDITION HAS BEEN DECIDED AGAINST HIM, BUT FACT REMAINS THAT PAYMENTS WERE RECEIVED LATE FROM INCOMING PARTNER. IN FACT, ACCO RDING TO ASSESSEE IN PERSON WHO SUBMITTED THAT PAYMENT WAS N OT RECEIVED IN ON GO BUT IT WAS RECEIVED IN VARIOUS INSTALLMENT S AND WHICH IS EVIDENT FROM THE FACTS THAT SALE BROUGHT IN THE NAM E OF ASSESSEE HIMSELF AND HAS NOT BEEN TRANSFERRED IN THE NAME OF ALLEGED PARTNERSHIP DEED. WITHOUT PREJUDICE TO ISSUE IN QU ANTUM, WE ARE OF THE VIEW THAT ASSESSEE WAS PREVENTED BY REASONAB LE CAUSE IN ITA NO.287/MUM/15 A.Y. 05-06 [J. R. MOOKHEY VS. ITO ] PAGE 5 NOT ABLE TO PURCHASE BONDS IN TIME FOR WHICH EXEMPT ION HAS NOT BEEN GRANTED TO HIM IN QUANTUM PROCEEDINGS. THE QU ANTUM PROCEEDINGS ARE DIFFERENT FROM PENALTY PROCEEDINGS AND ASSESSEE HAS NOT CONCEALED HIS INCOME NOR FURNISHED ANY INAC CURATE PARTICULARS OF INCOME OF ASSESSEE. HE COULD NOT PU RCHASE THE BONDS IN TIME WHICH IS NOT IN DISPUTE. ASSESSEE CO ULD NOT DO THE SAME BECAUSE HE WAS PREVENTED BY REASONABLE CAUSE A S DISCUSSED ABOVE. BUT, THERE IS NOTHING ON RECORD T O SUGGEST THAT HE HAS CONCEALED THE INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. SO, PENALTY IN QUESTION IS NOT JUSTIFIE D. SAME IS DIRECTED TO BE DELETED. 3. IN THE RESULT, THE APPEAL FILED BY ASSESSEE IS A LLOWED. PRONOUNCED IN THE OPEN COURT ON THIS THE 26 TH DAY OF AUGUST, 2016. SD/- SD/- ( RAJESH KUMAR ) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBE R MUMBAI: DATED 26/08/2016 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. / ASSESSEE 3. %&%'( ) / CONCERNED CIT 4. )- / CIT (A) 5.-./00'(, '( , %& / DR, ITAT, MUMBAI 6./4567 / GUARD FILE. BY ORDER / , / % , '( , %&