NAVIN SINGH, MUMBAI V. DCIT-22(3), MUMBAI

ITA 3796/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0400 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 12-04-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 18-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIKAS KUMAR AGARWAL
• Assessee Lawyers: DEVENDRA S JAIN
• Keywords: Opportunity of being heard
• Section: 54F

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE S/SHRI R.C. SHARMA, AM AND SAKTIJIT DEY, JM . . , , ITA NO. 3796 / MUM/ 20 1 5 ( / ASSESSMENT YEAR: 20 09 - 1 0 ) MR. NAVIN SINGH, FLAT NO.102, BLDG NO.2, SEA BREEZE, PLOT NO.16, SECTOR - 16, NERUL, NAVI MUMBAI - 400706 / VS. DY. COMMISSIONER OF INCOME TAX - 22(3), MUMBAI ( / APPELLANT) : ( / RESPONDENT ) ./ PAN : A P APS7452M / A SSESSEE BY : SHRI DEVENDRA S JAIN /R EVENUE BY : SHRI VIKAS KUMAR AGARWAL / DATE OF HEARING : 12. 4 .20 17 / DATE OF PRONOUNCEMENT : 16.6. 201 7 / O R D E R PER SAKTIJIT DEY, JUDICIAL MEMBER, INSTANT APPEAL OF THE ASSESSEE IS DIRECTED AGA INST THE O R DER DATED 31.3.2015 OF LD.CIT(A) - 26 - MUMBAI CONFIRMING THE IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 FOR ASSESSMEN T YEAR 2009 - 10. 2 ITA NO. 3796 /MUM/1 5 2 . BRIEFLY STATED FACTS ARE THAT AN ASSESSEE IS AN INDIVIDUAL AND IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE SOLD A COMMERCIAL PROPERTY FOR A TOTAL CONSIDERATION OF RS.70,95,550 / - . HOWEVER, NO CAPITAL GAIN WAS OFFERED IN THE RETURN OF INCOME FILED BY HIM. WHEN THESE FACTS CAME TO THE NOTICE OF THE AO DURING THE ASSESSMENT PROCEEDINGS, ON THE BASIS OF AIR INFORMATION , THE AO CALLED UPON THE ASSESSEE TO EXPLAIN THE REASONS FOR NOT OFFERING THE LONG TER M CAPITAL GAINS (LTCG) WHICH ACCORDING TO THE AO WORKED OUT TO RS.56 , 41 , 950/ - . IN RESPONSE TO THE QUERY RAISED BY THE AO IT WAS SUBMITTED THAT SINCE THE ASSESSEE HAS INVESTED MORE THAN THE CAPITAL G AIN AMOUNT IN PURCHASE OF FLATS HE HAS CLAIMED DEDUCTION U/S 54F OF THE ACT . HENCE NOTHING I S PAYABLE TOWARDS LTCG. THE AO, HOWEVER , DID NOT FIND MERIT IN THE SUBMISSIONS OF THE ASSE SS EE. HE OBSERVED , AS PER THE PROVISIONS OF SECTION 54F, THE ASSESSEE WOULD BE ELIGIBLE TO CLAIM DEDUCTION ONLY IF HE DOES NOT OW N MORE THAN ONE RESIDENTIAL PROPERTY AS ON THE DATE OF PURCHASE OF THE NEW ASSETS. HE OBSERVED , AS PER THE DETAILS FURNISHED BY THE ASSESSEE HE WAS OWNER OF TWO RESIDENTIAL PROPERT IES, ONE AT SRI SIDDHIVINAYAK MAHIMA APT, SECTOR - 19, PANVEL, AND ANOTHE R ONE AT B - 02/102, PLOT NO.16, SECTOR 18, NERUL, NAVI MUMBAI. ACCORDINGLY, HE HELD THAT ASSESSEE IS NOT ELIGIBLE TO CLAIM DEDUCTION UNDER SECTION 54F OF THE ACT AND ADDED BACK THE 3 ITA NO. 3796 /MUM/1 5 AMOUNT OF RS.56 , 41 , 950/ - TO THE INCOME OF THE ASSESSEE AS LTCG. AS IT APPE ARS , THE ADDITION MADE ON ACCOUNT OF LTCG WAS NOT CONTESTED BY THE AS S E S SEE BY PREFERRING ANY APPEAL BEFORE APPELLATE AUTHORITY . O N THE BASIS OF ADDITION MADE ON ACCOUNT OF L TCG T HE AO INITIATED PROCEEDINGS FOR IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT . IN RESPONSE TO THE SHOW CAUSE NOTICE , THOUGH , THE ASSESSEE OBJECTED TO IMPO SITION OF PENALTY BY EXPLAINING THAT NEITHER THERE IS CONCEALMENT OF INCOME NOR FURNISH ING OF INACCURATE PARTICULARS OF INCOME.HOWEVER, THE AO REJECT ING THE EXPLANATION OF THE ASSESSEE PASSED AN ORDER IMPOSING PENALTY OF RS.17 , 43 , 363/ - UNDER SE CTION 271(1)(C) OF THE ACT. THOUGH , THE ASSESSEE CHALLENGED THE LEVY OF PENALTY BEFORE THE LD.CIT(A) HE ALSO UPHELD THE PENALTY IMPOSED. 3. THE LD. AR CHALLENG ING THE VALIDITY OF PENALT Y ORDER PASSED SUBMITTED THAT THE AO WHILE RECORDING SATISFACTION IN THE ASSESSMENT OR DER HAS INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) ALLEG ING CONCEALMENT OF INCOME . W HEREAS , IN THE NOTICE ISSUED UNDER SECTION 274 READ WITH SECTION 271(1)(C) OF THE A CT, THE AO HAS NOT MENTIONED WHICH LIMB OF THE PENALTY PROVISION IS PROPOSED TO BE APPLIED BY STRIKING OF F THE UNNECESSARY WORDS. HE SUBMITTED , ULTIMATELY THE AO IMPOSED PENALTY FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE LD.AR SUBMITTED IN THE AF ORESAID FACTUAL MATRIX P RINCIPLE LAID DOWN BY THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF 4 ITA NO. 3796 /MUM/1 5 COMMISSIONER OF INCOME - TAX V. MANJUNATHA COTTON & GINNING FACTORY ( 2013] 35 TAXMANN.COM 250 ( KARNATAKA ) AND THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF C IT V/S SHRI SAMSON PERINCHERY IN INCOME TAX APPEAL NO.1154 OF 2014 ORDER DATED 5 TH JANUARY, 2017 WOULD CLEARLY APPLY. AS FAR AS THE MERITS OF THE ISSUE IS CONCERN, THE AR SUBMITTED , THE REASON FOR WHICH THE AO DENIED ASSESSEE S CLAIM OF DEDUCTION U/S 54F O F THE A CT IS ALSO NOT CORRECT AS THE ASSESSEE IS NOT THE ABSOLUTE OWNER OF THE TWO PROP ERTIES BUT IS THE CO - OWNER . THEREFORE, AS THE ASSESSEE IS NOT EXCLUSIVE OWNER OF THE PRE - EXISTING PROPERT IES , HE CANNOT BE DENIED DEDUCTION U/S 54F. IN THIS CONTEXT, H E RELIED UPON THE FOLLOWING DECISIONS: I) ITO V/S RASIKLAL N SATRA (2006) 98 ITD 335(MUM); (II) DR.SMT.P.K.VASANTHI RANGARAJAN (2012) 23 TAXMANN.COM 299 (MAD). 4. THE LD. DR STRONGLY OBJECTING TO THE TECHNICAL ISSUE RAISED BY THE ASSESSEE SUBMITTED THAT T HE ASSESSEE CANNOT RAISE SUCH ISSUE AT THIS STAGE SINCE IT WAS NOT RAISED BEFORE THE DEPARTMENTAL AUTHORITIES. HE SUBM ITTED , EVEN OTHERWISE ALSO ASSESSEES CLAIM CANNOT BE ACCEPTED SINCE THE AO WHILE RECORDING SATISFACTION FOR INITIATION OF PROCEEDINGS U/ S 271(1)(C) IN THE ASSESSMENT ORDER HAS REFERRED TO BOTH THE LIMBS OF THE PROVISION CONTAINED IN SECTION 271(1)( C ) OF THE ACT. HE SUBMITTED, IN ANY CASE OF THE MATTER THERE IS NO DIFFERENCE BETWEEN CONCEALING PARTICULARS OF INCOME AND FURNISHING INACC URATE PARTICULARS OF INCOME SINCE CONCEALING PARTICULARS 5 ITA NO. 3796 /MUM/1 5 OF INCOME LEADS TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. AS FAR AS THE CONTENTION RAISED BY THE ASSESSEE ON MERITS OF THE ISSUE IS CONCERNED , THE LD.DR SUBMITTED THAT THE FACTS OF JOINT OWNERSHIP WERE NOT RAISED BY THE ASSESSEE BEFORE THE AO . HE SUBMI TT ED , THOUGH , THE ISSUE WAS RAISED BEFORE THE CIT(A) , H E HAS NOT DECIDED IT. 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORDS . A S FAR AS THE FIRST CONTENTION OF THE LD AR CHALLENGING THE VALIDITY OF THE ASSESSMENT PROCEEDINGS DUE TO NON - STRIKING OFF OF THE RELEVANT PORTION IN THE NOTICE ISSUED U/S 274 OF THE ACT , A DMITTEDLY, THE ASSESSEE HAD NOT RAISED THIS ISSUE BEFORE THE LD.CIT(A) . T HEREFORE , THE DEPARTMENT DESERVES A FAIR CHANCE TO REBUT THE CLAIM OF THE ASSESSEE ON SUCH ISSUE WHICH CAN ONLY HAPPEN IF THE ADJUDICATION TAKE S PLACE BEFORE THE LD.CIT(A). AS FAR AS MERITS OF THE ISSUE IS CONCERNED, THE PERUSAL OF THE ASSESSMENT ORDER REVEALS THAT THE AO HAS DE NIED ASSESSEE S CLAIM OF DEDUCTION U/S 54F SOLELY FOR THE REASON THAT THE ASSESSEE IS THE OWNER OF MORE THAN ONE HOUSE ON THE DATE OF PURCHASE OF NEW ASSETS. HOWEVER, IT IS THE CLAIM OF THE ASSESSEE THAT THE PRE - EXISTING PROPERT IES WERE HELD IN JOINT OWN ERSHIP AND THE ASSESSEE WAS NOT EXCLUSIVE OWNER OF THE S E PROPERTIES . T HEREFORE , AS PER THE PROVISION OF SECTION 54F, THE ASSESSEE CANNOT BE HELD TO BE THE OWNER OF MORE THAN ONE RESIDENTIAL HOUSE OTHER 6 ITA NO. 3796 /MUM/1 5 THAN NEW ASSETS . T HOUGH , LD.AR HAS ADMITTED THE FACT THAT THE ASSESSEE HAS NOT CONTESTED THE DECISION OF THE AO IN ASSESSING CAPITAL GAINS , H OWEVER, THAT CANNOT PRECLUDE THE ASSESSEE FROM RAISING THE ISSUE ON MERIT IN PENALTY PROCEEDINGS AS THE ASSESSMENT AND PENALTY PROCEEDINGS ARE TWO DIFFERENT PROCEEDING S AN D IT IS OPEN FOR THE ASSESSEE TO CHALLENGE THE IMPOSITION OF PENALTY PROCEEDINGS ON ALL GROUNDS AVAILABLE TO IT. 6 . NOTABLY, IN CASE OF DR.SMT.P.K.VASANTHI RANGARAJAN (SUPRA), THE HONBLE MADRAS HIGH COURT INTERPRETING THE PROVISIONS CONTAINED U/S 54F HAS HELD THAT HOLDING OF RESIDENTIAL HOUSE PROPERTY AS ON THE DATE OF TRANSFER AS PER SECTION 54F IS WITH REFERENCE TO THE OWNERSHIP OF THE PROPERTY AS AN INDIVIDUAL OR HUF AND NOT ON JOINT OWNERSHIP BASIS . THE ITAT(MUMBAI) IN THE CASE OF RASIKLAL N SATRA (SUPRA) INTERPRETING PROVISIONS OF SECTION 54F HAS HELD THAT IT INCLUDES THE ONLY SUCH RESIDENTIAL HOUSE WHICH IS FULLY AND WHOLLY OWNED BY ONE PERSON AND NOT THE RESIDENTIAL HOUSE OWNED B Y MORE THAN ONE PERSON. THUS, CONSIDER ED IN THE LIGHT OF T HE AFORESAID DECISION, ASSESSEES CASE IN SO FAR AS IT RELATES TO IMPOSITION OF PENALTY U/S 271(1)(C) REQUIRES CONSIDERATION. THOUGH THE AFORESAID CONTENTION WAS RAISED BY THE ASSESSEE BE F OR E THE LD.CIT(A) HE HAS TOTALLY IGNORED THE CLAIM /CONTENTION OF TH E ASSESSEE WHICH IN OUR VIEW IS WHOLLY IMPROPER. THE LD. CIT(A) BEING A QUASI JUDICIAL AUTHORITY WAS 7 ITA NO. 3796 /MUM/1 5 REQUIRED TO NOT ONLY CONSIDER THE SUBMISSIONS OF THE ASSESSEE PROPERTY BUT ALSO TO RECORD HIS FINDINGS ON THEM. THE FAA HAVING FAILED TO DO SO, WE ARE IN CLINED TO SET ASIDE THE IMPUGNED ORDER OF LD.CIT(A) AND REMIT THE MAT T ER BACK TO HIS FILE FOR FRESH ADJUDICATION ON ALL T HE ISSUES RAISED /TO BE RAISED BY THE ASSESSEE BEFORE HIM. THE LD.CIT(A) MUST DECIDE THE ISSUE S RAISED BY THE ASSESSEE AFTER CONSIDERIN G THE SUBMISSIONS OF THE ASSESSEE KEEPING IN VIEW HE PRINCIPLE LAID DOWN IN THE DECISIONS TO BE CI T ED BEFORE HIM. NEEDLESS TO SAY, THE LD. CIT(A) MUST AFFORD R EASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE DECIDING T H E APPEAL . 7 . IN THE RESULT , APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 16.6.2017. S D SD ( . . / R C SHARMA ) ( / SAKTIJIT DEY ) /ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI ; DATED : 16 TH JUNE .2017 SRL,SR.PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERN ED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, T RUE COPY / (DY./ASSTT. REG ISTRAR) , / ITAT, MUMBAI