Smt. Shailaben Chandrakant Patel, Baroda V. The Income Tax Officer, Ward-2(6), Baroda

ITA 3011/AHD/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0500 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 17-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEEPAK SUTARIA
• Assessee Lawyers: M J SHAH
• Keywords: Bonafide belief
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENC H (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI S.S. GODARA, JUDICIAL MEMBER) ITA. NO: 3011/AHD/2013 (ASSESSMENT YEAR: 2009-10) SMT. SHAILABEN C PATEL A/3, BANSURI FLATS, PASHABHAI PARK, RACE COURSE, BARODA-390 007 V/S INCOME TAX OFFICER, WARD- 2(6), BARODA (APPELLANT) (RESPONDENT) PAN: ACUPP3222B APPELLANT BY : SHRI M. J. SHAH, AR RESPONDENT BY : SHRI DEEPAK SUTARIA, SR. D.R . ( )/ ORDER DATE OF HEARING : 21 -09-201 6 DATE OF PRONOUNCEMENT : 23-09-2016 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST TH E ORDER OF LD. CIT(A)-II, BARODA DATED 30.09.2013 PERTAINING TO A. Y. 2009-10. ITA NO. 3011 /AHD/2013 . A.Y. 2009- 10 2 2. THE SHORT GRIEVANCE OF THE ASSESSEE RELATES TO THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. 3. THE ROOTS FOR THE LEVY OF PENALTY LIE IN THE ASSESS MENT ORDER DATED 23.12.2011 MADE U/S. 143(3) OF THE ACT. THE RELEVAN T FINDINGS IN THE ASSESSMENT ORDER READS AS UNDER:- 3. THE ASSESSEE IS A EMPLOYEE OF PRISM INDUSTRIES A ND FOR THE YEAR UNDER REFERENCE. SHE HAS DRAWN SALARY OF RS.36,000/- FROM THE COMPANY. T HE DETAILS OF THE SALARY RECEIVED ARE VERIFIED AND FILED. THROUGH A.I.R INFORMATION, IT IS SEEN THAT, THE ASS ESSEE HAS SOLD PROPERTY FOR A CONSIDERATION OF RS.52,00,000/- . ACCORDINGLY, THE ASSESSEE HAS ASKED TO CLARIFY AND FILED ALL THE REQUISITE DOCUMENTS OF TH E SAID PROPERTY. FROM THE SUBMISSION, IT IS SEEN THAT THE ASSESSES WAS THE OWNER OF THE P ROPERTY LOCATED AT DATTANI TRADE CENTRE, 4 BASEMENT, CHANDAVARKAR ROAD, BORIVALI (W), MUMBAI . THE PROPERTY IN QUESTION WAS ACQUIRED IN JANUARY 1995 FOR A CONSIDERATION OF RS.14,13,067/-(INCLUDING COST OF IMPROVEMENT). THE CRUX IS THAT THE PROPERTY WHICH WAS GIVEN ON A RENT BUT LATTER ON THE ASSESSEE HUSBAND BEING A DIRECTOR HAD MORTGA GED THE SAID PROPERTY. SINCE THE COMPANY WAS NOT IN A POSITION TO REPAY THE LOAN TAKEN FROM THE BANK, THE SAME WAS GIVEN ON COLLATERAL SECURITY BY THE ASSESSEE AND THE PROPERTY WAS ACQUIRED BY THE B ANK AS PART SATISFACTION OF THE LOAN ADVANCED TO THE SAID COMPANY DEFAULT BY THE COMPANY THE SAID PROPERTY WAS TAKEN OVER BY .THE BANK AND DISPOSED O FF WITH A TOTAL CONSIDERATION OF RS.52,00,000/- 4. IN ORDER TO CLARIFY THE CORRECT POSITION THIS OF FICE HAS SHOW CAUSED AS TO WHY THE AMOUNT OF RS.52,00,000/- BE NOT INCLUDED THE INCOME OF THE ASSESSEE AND TAXED UNDER THE HEAD CAPITAL GAIN. THE ASSESSEE VIDE LETT ER DATED 23.12.2012 SUBMITTED THAT THE ASSET IN QUESTION WAS OWNED BY THE ASSESSEE AND WAS MORTGAGED TO THE BANK AND REALIZATION FROM THE SAME WAS TAKEN OVER BY THE BAN K. THE ASSESSEE FURTHER SUBMITTED THAT NO AMOUNT WAS RECEIVED BY THE ASSESSEE AND HENCE TH E AMOUNT IN QUESTION BEING CAPITAL GAIN ON SALE OF PROPERTY WAS NOT OFFERED TO TAX. SU BMISSIONS OF THE ASSESSEE HAVE BEEN CAREFULLY CONSIDERED AND FOUND NOT ACCEPTABLE FOR T HE REASON AS MENTIONED HEREUNDER: 5. THE ASSESSEE WAS THE REAL OWNER OF THE PROPERTY LOCATED AT DATTANI TRADE CENTRE, 4 BASEMENT, CHANDAVARKAR ROAD, BORIVALI (W), MUMB AI AND THE PROPERTY WAS SOLD FOR TOTAL CONSIDERATION OF RS.52,00,000/-. IT IS IMMATERIAL WHERE THE PROPERTY WAS MORTGAGED TO THE BANK AND WAS SOLD BY THE BANK OR WAS SOLD/DISPOSED OFF INDIVIDUALLY BY THE ASSESSEE. THE DISTRESS SAL E AS MENTIONED BY THE ASSESSEE ALSO DOES NOT RESCUE THE ASSESSEE FROM CHARGE OF CAPITAL GAIN ON TRANSFER OF THE PROPERTY. THE ASSESSEE HAD SOLD THE PROPERTY AND HAS RECEIVED CON SIDERATION AGAINST THE SAME. THE AMOUNT IN QUESTION IS THEREFORE LIABLE TO TAX UNDER CAPITAL GAIN. CAPITAL GAIN AFTER GIVING DUE RELIEF AND DEDUCTION IS ADDED TO TOTAL I NCOME(CALCULATION OF LONG TERM ITA NO. 3011 /AHD/2013 . A.Y. 2009- 10 3 CAPITAL GAIN/IS AS PER ANNEXURE) . PENALTY UNDER SECTION 271(1)(C) ARE INITIATED SEPARATELY FOR CONCEALMENT OF INCOME. 4. THE ASSESSEE DID NOT PREFER ANY APPEAL AGAINST THIS ADDITION MADE BY THE A.O. 5. DURING THE COURSE OF THE PENALTY PROCEEDINGS, WHEN A FRESH OPPORTUNITY WAS GIVEN TO THE ASSESSEE TO SHOW CAUSE WHY PENALTY SHOULD NOT BE LEVIED U/S. 271(1)(C) OF THE ACT FOR CONCEALMENT OF INCOME, THE ASSESSEE REPLIED AS UNDER:- SHE HAD PURCHASED PROPERTY AT DATTANI TRADE CENTRE , 4 BASEMENT, CHANDAVARKAR ROAD, BORIVALI (W), MUMBAI, AND THE SA ME WAS MORTGAGED TO THE ORIENTAL BANK OF COMMERCE AS COLLATERAL SECURITY FO R THE LOAN ADVANCED BY THE BANK TO PRISM INDUSTRIES LTD., NOW, PRISM INDUSTRIE S LTD. TO WHOM LOAN WAS GRANTED COULD NOT REPAY THE LOAN AND WAS SUBSEQUENT LY DECLARED SICK COMPANY AND FILED PETITION BEFORE BIFR. IN THE MEANTIME, TH E BANK TO WHICH THE PROPERTY WAS MORTGAGED PROCEEDED TO RECOVER THE LOAN AND MY PROPERTY WHICH WAS MORTGAGED AS COLLATERAL SECURITY WAS TAKEN OVER BY THE BANK. THE BANK PHYSICALLY TOOK OVER THE POSSESSION OF THE PROPERTY. THE BANK SUBSEQUENTLY DISPOSED OFF THE SAID PROPERTY AND ADJUSTED RECEIPT AGAINST THE LOAN OUTSTANDING FROM PRISM INDUSTREIS LTD. AS WOULD BE APPRECIATED IN THE ABOV E TRANSACTION THE BANK SOLD THE PROPERTY AND TOOK AWAY ALL THE MONEY AND HENCE NO A MOUNT WAS RECEIVED BY ME. SINCE NO AMOUNT WAS RECEIVED BY ME AND SALE WAS OUT OF COMPULSION NO AMOUNT WAS OFFERED TO TAX UNDER THE HEAD CAPITAL GAIN. T HIS WAS PRIMARILY AS MENTIONED ABOVE ON THE FIRM BELIEF THAT SINCE NO AM OUNT WAS RECEIVED BY ME I WAS NOT LIABLE TO TAX ON THE CAPITAL GAIN. NON RECEIPT OF ANY MONEY BE ME WAS DRIVING FORCE TO ARRIVE AT THIS CONCLUSION. SUBSEQUENTLY, W HEN MY CASE WAS TAKEN UP FOR SCRUTINY, THE LD. A.O. CALLED FOR DETAILS AND PROCE EDED TO ADD NOTIONAL CAPITAL GAIN (SINCE NO AMOUNT WAS RECEIVED BY ME) IN MY CASE TO INCOME. THE LD. A.O. CONTENTION WAS THAT NON RECEIPT OF MONEY WOULD NOT ABSOLVE ME FROM PAYMENT OF CAPITAL GAIN TAX. THE LD .A.O. ACCORDINGLY FRAMED T HE ASSESSMENT ORDER AND BROUGHT TO TAX THE CAPITAL GAIN. THE ASSESSEE CONTENDED THAT SHE SINCERELY AND HONES TLY UNDER BONAFIDE BELIEF THAT SINCE NO AMOUNT HAS BEEN RECEIVED BY ME SHE WOULD N OT BE LIABLE TO CAPITAL GAIN TAX. AS MATTER OF FACT, I HAVE LOST MY PROPERTY AN D NOW ADDITIONAL TAX LIABILITY IN FORM OF CAPITAL GAIN IS BEING RECOVERED FROM ME. IT IS, THEREFORE, SUBMITTED THAT SHE WAS HONESTLY UNDER THE BELIEF THAT THE PROVISIO NS OF CAPITAL GAIN TAX WOULD NOT BE APPLICABLE IN MY CASE SINCE NO AMOUNT IS ACTUALL Y RECEIVED BY HER AND HENCE ITA NO. 3011 /AHD/2013 . A.Y. 2009- 10 4 SHE DID NOT INCLUDE CAPITAL GAIN IN MY COMPUTATION OF TOTAL INCOME. PENAL PROVISIONS ARE WHATSOEVER TO FILE WRONG INCOME OR T O CONCEAL ANY INCOME OR FILE INACCURATE PARTICULARS OF INCOME. IN HER CASE NO DE LIBERATE ATTEMPT IS MADE TO EVADE TAX. UNDER THE CIRCUMSTANCES, SHE REQUESTS FA CTS OF HER CASE BE SYMPATHETICALLY CONSIDERED (SINCE TAX IS ALREADY RE COVERED) AND PENALTY INITIATED BE DROPPED. 6. THE ABOVE CONTENTION OF THE ASSESSEE DID NOT FIND F AVOUR WITH THE A.O. WHO COMPUTED THE PENALTY AT RS. 4,84,328/-. 7. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) B UT WITHOUT ANY SUCCESS. 8. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE VEHEMEN TLY STATED THAT IF THE ASSESSEE HAD CONTESTED THE ADDITIONS MADE IN TH E ASSESSMENT, THE SAME WOULD HAVE BEEN DELETED IN THE LIGHT OF THE DE CISION OF THE HONBLE KERALA HIGH COURT IN THE CASE OF SMT. THRES SIAMMA ABRAHAM 227 ITR 802. THE LD. COUNSEL FURTHER POINTED OUT TH AT THE SAME VIEW HAS BEEN TAKEN BY THE TRIBUNAL, DELHI BENCHES IN TH E CASE OF GLAD INVESTMENTS PVT. LTD. 102 ITD 227. IT IS THE SAY OF THE LD. COUNSEL THAT THE ASSESSEE WAS UNDER BONA FIDE BELIEF THAT SHE IS NOT LIABLE FOR CAPITAL GAINS TAX. THEREFORE, NO PENALTY SHOULD BE LEVIED. PER CONTRA, THE LD. D.R. STRONGLY SUPPORTED THE FINDINGS OF THE REVENUE AUTHORITIES. 9. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORD ERS OF THE AUTHORITIES BELOW. WE HAVE ALSO GONE THROUGH THE AS SESSMENT ORDER AND THE RELEVANT PORTION OF WHICH IS EXHIBITED ELSE WHERE. WE FIND FORCE IN THE CONTENTION OF THE LD. COUNSEL THAT HAD THE Q UANTUM ADDITION BEEN CONTESTED IN APPEALS, THEN THE ASSESSEE WOULD HAVE GOT THE RELIEF AS PER THE DECISION OF THE HONBLE KERALA HIGH COUR T (SUPRA) AND ALSO BY THE DECISION OF THE CO-ORDINATE BENCH (SUPRA). I N OUR UNDERSTANDING ITA NO. 3011 /AHD/2013 . A.Y. 2009- 10 5 OF THE LAW, WHEN A BONA FIDE CLAIM OF THE ASSESSEE IS BACKED BY JUDICIAL DECISIONS, THE BONA FIDE BELIEF OF THE ASSESSEE CAN NOT BE BRUSHED ASIDE LIGHTLY. IN ANY CASE, IT CANNOT BE A FIT CASE FOR L EVY OF PENALTY U/S 271(1)(C) OF THE ACT. 10. CONSIDERING THE FACTS IN TOTALITY AND IN THE LIGHT OF THE JUDICIAL DECISIONS (SUPRA), WE SET ASIDE THE FINDINGS OF THE LD. CIT(A) AND DIRECT THE A.O. TO DELETE THE PENALTY OF RS. 4,84,328/-. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 23 - 09- 2016 . SD/- SD/- (S. S. GODARA) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD