NIKHIL MUKESH PATEL, MUMBAI V. ACIT 21(1), MUMBAI

ITA 291/MUM/2017

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 9735 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 13-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Keywords: Sale consideration of property below Jantri Value
• Section: 50C; 54F; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B MUMBAI BEFORE SHRI JOGINDER SINGH (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 2 90/MUM/2017 ASSESSMENT YEAR: 2009 - 10 NIRAJ MUKESH PATEL FLAT NO. 6, 2 ND F LOOR, VIBHUTI APARTMENTS, RUIA PARK, GANDHI GRAM ROAD, JUHU, VILE PARLE (W), MUMBAI - 400049. VS. ASST. COMMISSIONER OF INCOME TAX - 21(1), MUMBAI. PAN NO. AAVPP9786F APPELLANT RESPONDENT & ITA NO. 291/MUM/2017 ASSESSMENT YEAR: 2009 - 10 NIKHIL MUKESH PATEL FLAT NO. 6, 2 ND F LOOR, VIBHUTI APARTMENTS, RUIA PARK, GANDHI GRAM ROAD, JUHU, VILE PARLE (W), MUMBAI - 400049. VS. ASST. COMMISSIONER OF INCOME TAX - 21(1), MUMBAI. PAN NO. AAVPP8745J APPELLANT RESPONDENT ASSESSEE BY : M S . DINKLE HARIYA, AR REVENUE BY : MR. NEIL PHILIP, DR DATE OF HEARING : 1 0 /0 9 /2018 DATE OF PRONOUNCEMENT : 19/09/2018 NIRAJ & NIKHIL MUKESH PATEL ITA NOS. 290, 291/MUM/2017 2 ORDER PER N.K. PRADHAN, AM THE CAPTIONED APPEALS FILED BY THE ASSESSEE S ARE DIRECTED AGAINST THE ORDER OF THE COMMISS IONER OF INCOME TAX (APPEALS) - 37 , MUMBAI [IN SHORT CIT(A) ] AND ARISE OUT OF PENALTY PASSED U/S 271(1)(C) OF THE INCOME TAX ACT 1961 (THE ACT). AS COMMON ISSUES ARE INVOLVED, WE ARE PROCEEDING TO DISPOSE THEM OFF THROUGH A CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. ITA NO. 290/MUM/2017 ASSESSMENT YEAR: 2009 - 10 2. THE GROUNDS OF APPEAL FILED BY THE ASSESSEE READ AS UNDER: 1. THE GROUNDS OF APPEAL THAT FOLLOW ARE ALL INDEPENDENT AND WITHOUT PREJUDICE TO EACH OTHER. 2.0 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING PENALTY U/S 271(1)(C) OF THE ACT LEVIED BY ASSESSING OFFICER ON TAXABILITY OF DIFFERENCE OF THE LONG TERM CAPITAL GAINS BY APPLYING PROVISIONS OF SECTION 50C DIRECTLY IN THE HANDS OF APPELLANT (AS ONE OF THE CO - OWNER OF AN AOP) AT THE RATE OF 100% ON TAX SOUGHT TO BE EVADED. 2.0 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN CONFIRMING PENALTY U/S 271(1)(C) OF THE ACT LEVIED BY ASSESSING OFFICER WITH REGARD TO DEDUCTION U/S 54F THOUGH THE SAID DEDUCTION WAS PARTLY ALLOWED BY CIT(A) AND POINTED OUT DURING THE PENALTY PROCEEDINGS. 2.1 TH AT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, YOUR APPELLANTS PRAY THAT THE ORDER OF THE LEARNED CIT(A) BE MODIFIED BY DELETING PENALTY LEVIED ON THE ABOVE ADDITION U/S 271(1)(C) OF THE ACT. NIRAJ & NIKHIL MUKESH PATEL ITA NOS. 290, 291/MUM/2017 3 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE APPELLANT FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR (AY) 2009 - 10 ON 29.07.2009 DECLARING TOTAL INCOME AT RS.58,64,340/ - . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (AO) OBSERVED THAT THE VALUE OF THE PROPERTY SOLD BY THE APPELLANT WAS MENTIONED AT RS.13,50,00,000/ - , WHEREAS AS PER THE STAMP DUTY AUTHORITIES, THE VALUE DETERMINED WAS RS.14,31,53,652/ - , THEREBY ATTRACTING THE PROVISIONS OF SECTION 50C OF THE ACT. ACCORDINGLY, THE AO WORKED OUT THE SHARE OF THE APPELL ANT IN THE LONG TERM CAPITAL GAINS ( LTCG) IN RESPECT OF TRANSACTION OF THE SAID SALE PROPERTY AT RS.91,86,912/ - AS AGAINST RS.58,43,425/ - , THEREBY MAKING ADDITION OF DIFFERENCE OF LTCG OF RS.33,43,491/ - . THE AO ALSO DENIED DEDUCTION U/S 54 TO THE TUNE OF RS.27,82,584/ - CLAIMED BY THE APPELLANT IN HIS RETURN OF INCOME. THEREAFTER, THE AO LEVIED A MINIMUM PENALTY OF RS.7,50,074/ - U/S 271(1)(C) OF THE ACT. 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) DISMISSED THE APPEAL FILED BY THE ASSESSEE BY HOLDING THAT - THE APPELLANT IS UNDER A MANDATORY OBLIGATION TO DISCLOSE ALL THE MATERIAL FACTS IN THE RETURN OF INCOME SO THAT THE ASSESSING OFFICER CAN ARRIVE AT HIS CORRECT INCOME FOR THE Y EAR. FURTHER, B Y OPERATION OF EXPLANATION 1 TO SECTION 271(1)(C), THE ONUS SQUARELY LIES ON THE APPELLANT AND THE FINDINGS GIVEN AT THE TIME OF ASSESSMENT ARE RELEVANT AND HAVE MUCH PROBATIVE VALUE WHERE THE APPELLANT OFFERED NO EXPLANATION/DETAILS. THE AO HAS FURTHER OB SERVED THAT THE APPELLANT HAS NOT DISCHARGED THE ONUS CAST ON HIM EVEN BY A PREPONDERANCE OF PROBABILITIES. THE APPELLANT HAS NOT FURNISHED ANY SATISFACTORY EXPLANATIONS/DETAILS/SUBMISSIONS DURING THE PROCEEDINGS ABOUT NIRAJ & NIKHIL MUKESH PATEL ITA NOS. 290, 291/MUM/2017 4 INACCURATE PARTICULARS REGARDING THE DIFFERENCE OF LONG TERM CAPITAL OF RS.33,43,487/ - AND WITH REGARD TO EXEMPTION U/S 54F OF I.T. ACT. FURTHER, CIT(A) - 32, MUMBAI IN HIS ORDER DATED 29/11/2012 HAS CONFIRMED THE ADDITION OF RS.33,43,487/ - ON ACCOUNT OF LONG TERM CAPITAL GAIN AND RESTRICTED TH E DEDUCTION TO RS.23,75,705/ - U/S 54F OF I.T. ACT. IT IS CLEAR THAT THE APPELLANT HAD CONCEALED THE PARTICULARS OF INCOME/FURNISHED INACCURATE PARTICULARS OF INCOME IN THE RETURN OF INCOME FILED BY HIM. IT CAN SAFELY BE HELD THAT WHERE IN RESPECT OF ANY FA CTS MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THE ACT, SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION WHICH IS FOUND BY THE OFFICERS OF THE INCOME - TAX TO BE FALSE, OR SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, THEN, THE AMOUNT DISALLOWED IN COMPUTING THE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE PURPOSES OF SECTION, BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. THEREFORE , AFTER CONSIDERING THE FACTS OF THE CASE, SUBMISSIONS MADE BY THE APPELLANT AND THE JUDICIAL DECISIONS CITED ABOVE, I FIND THAT THE PENALTY LEVIED IS IN ORDER AND THE SAME IS UPHELD. ACCORDINGLY, THE GROUNDS RAISED BY THE APPELLANT ARE REJECTED. 5. BEFORE US, THE LD. COUNSEL OF THE ASSESSEE SUBMITS THAT PENALTY U/S 271(1)(C) CANNOT B E LEVIED IN CASE WHERE THE ADDITION IS ON ACCOUNT OF INVOCATION OF SECTION 50C BY THE AO. IN THIS REGARD, RELIANCE IS PLACED BY HER ON THE DECISION IN THE CASE OF CIT V. FORTUNE HOTELS & ESTATES (P) LTD. (2014) 52 TAXMANN.COM 330 (BOM . ), CIT V. MADAN THEATERS LTD. (2014) 44 TAXMANN.COM 382 (CAL .) , RENU HINGORANI V. ACIT [ITA NO. 2210/MUM/2010, ORDER DATED 22.12.2010 (MUMBAI TRIBUNAL)], SHRI NIRAJ & NIKHIL MUKESH PATEL ITA NOS. 290, 291/MUM/2017 5 CHIMANLAL MANILAL PATEL V. ACIT [ITA NO. 508/AHD/2010, ORDER DATED 22.06.2012 (MUMBAI TRIBUNAL)], SHRI C. BASKER V. ACIT [ITA NO. 997/MDS/2012, ORDER DATED 12.10.2012 (CHENNAI TRIBUNAL)], ACIT V. M/S VIJAY JYOT SEALTS [ITA NO. 3009/M/2011, ORDER DATED 20.03.2013 (MUMBAI TRIBUNAL)], SMT. DIPTI BARAI V. ITO [ITA NO. 280/M/2012, ORDER DATED 14.08.2013 (MUMBAI TRIBUNAL)] , ACIT V. SUNLAND METAL RECYCLING [ITA NO. 6454/M/2011, ORDER DATED 10.12.2014 (MUMBAI TRIBUNAL)], SMT. TARABAI PAHLAJANI V. ACIT [ITA NO. 2459/M/2012, ORDER DATED 10.06.2015 (MUMBAI TRIBUNAL)], DCIT V. M/S INDIAN EXTRACTION LTD. [ITA NO. 5758/M/2016, ORDE R DATED 22.11.2017 (MUMBAI TRIBUNAL)]. REGARDING THE LEVY OF PENALTY ON DENIAL OF DEDUCTION U/S 54F OF THE ACT, THE LD. COUNSEL SUBMITS THAT A MERE MAKING OF CLAIM, WHICH MAY NOT BE SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE P ARTICULARS REGARDING INCOME OF THE ASSESSEE. RELIANCE IS PLACED BY HER ON THE DECISION IN CIT V. RELIANCE PETROPRODUCTS (P.) LTD . (2010) 189 TAXMAN 322 (SC). 6. ON THE OTHER HAND, THE LD. DR SUPPORTS THE ORDER PASSED BY THE LD. CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. THE 1 ST ISSUE RELATES TO THE LEVY OF PENALTY U/S 271(1)(C) ON THE DIFFERENCE OF VALUATION BETWEEN THE STAMP DUTY AUTHORITIES AND THE ONE SHOWN BY THE ASSESSEE. IN FORTUNE HOTELS & ESTATES (P) LTD. (SUPRA), THE HONBLE BOMBAY HIGH COURT HAS HELD THAT IN TERMS OF SECTION 50C, HIGHER SALES CONSIDERATION OF PROPERTY DETERMINED NIRAJ & NIKHIL MUKESH PATEL ITA NOS. 290, 291/MUM/2017 6 BY DVO DID NOT BY ITSELF AMOUNT TO FURNISHING INACCURATE PARTICULARS OF INCOME SO AS TO LEVY PENALTY U/S 271(1)(C) OF THE ACT. IN MADAN THEATERS LTD . (SUPRA), THE HONBLE CALCUTTA HIGH COURT HAS HELD THAT WHERE ACTUAL AMOUNT RECEIVED ON ACCOUNT OF SALE OF PROPERTY WAS OFFERED FOR TAXATION BUT THE ASSESSING OFFICER, INVOKING SECTION 50C DEEMED SALE CONSIDERATION AT HIGHER SUM, IN ABSENCE OF ANY IOTA OF EVIDENCE THAT THE ASSESSEE HAD RECEIVED MORE AMOUNT THAN THAT SHOWN BY IT, PENALTY U/S 271(1)(C) WAS NOT LEVIABLE. FACTS BEING IDENTICAL, WE FOLLOW THE RATIO LAID DOWN IN THE ABOVE DECISIONS AND DELETE THE PENALTY LEVIED ON THE DIFFERENCE BETWEEN THE VALUE DETERMINED BY THE STAMP DUTY AUTHORITIES AND THE ONE SHOWN BY THE APPELLANT. 7.1 NOW WE TURN TO THE 2ND ISSUE. THERE IS NO DISPUTE THAT THE APPELLANT HAD CLAIMED DEDUCTION OF RS.27,82,584/ - U/S 54 OF THE ACT. THE SAME WAS CLAIMED WHILE FILING THE RETURN OF INCOME. THE AO DENIED THE ABOVE CLAIM MADE BY THE APPELLANT. THE AO HAS MENTIONED THESE FACTS IN THE INTRODUCTORY PARA OF HIS PENALTY ORDER DATED 28.03.2014. IN THE CASE OF RELIANCE PETROPRODUCTS (P) LTD. (SUPRA) , THE HO NBLE SUPREME COURT HAS HELD THAT MERELY BECAUSE ASSESSEE HAD CLAIMED EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO REVENUE, THAT BY ITSELF WOULD NOT ATTRACT PENALTY U/S 271(1)(C) OF THE ACT. FACTS BEING IDENTICAL, WE FOLLOW THE RATI O LAID DOWN THE ABOVE DECISION AND DELETE THE PENALTY LEVIED BY THE AO ON DISALLOWANCE OF CLAIM OF DEDUCTION U/S 54F. NIRAJ & NIKHIL MUKESH PATEL ITA NOS. 290, 291/MUM/2017 7 8. ALSO FACTS BEING IDENTICAL, OUR DECISION IN ITA NO. 290/MUM/2017 APPLIES MUTATIS MUTANDIS TO ITA NO. 291/MUM/2017. 9. IN THE RESULT, THE APPEALS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19/09/2018. SD/ - SD/ - (JOGINDER SINGH) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 19/09/2018 RAHUL SHARMA, SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (SR. PRIVATE SECRETARY) ITAT, MUMBAI