VELVET HOLDINGS P.LTD, MUMBAI V. DCIT CC 31, MUMBAI

ITA 3896/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83588 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2004-2005
• Appeal Filed On: 16-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: NILESH MEHTA
• Keywords: Depreciation
• Section: 147; 27; 143(3); 115JB; 139(5)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE HONBLE S/SHRI H.L. KARWA, PRESIDENT AND B. R.BASKARAN (AM) . . , . . , ./I.T.A. NO. 3896/MUM/2013 ( / ASSESSMENT YEAR :2004-05) M/S VELVET HOLDINGS PVT LTD., 32, MADHULI, DR A B ROAD, WORLI, MUMBAI-400018 / VS. DY. COMMISSIONER OF INCOME TAX - CENTRAL CIRCLE-31, ROOM NO.409,AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 ( ! / APPELLANT) .. ( '# ! / RESPONDENT) ./ $% ./PAN/GIR NO. : AAACV4445R ! & / APPELLANT BY : SHRI NILESH MEHTA '# ! ' & /RESPONDENT BY : NONE ( ) ' * + / DATE OF HEARING : 26.8.2014 ,- ' * + /DATE OF PRONOUNCEMENT : 27.8.2014 / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 01- 03-2013 PASSED BY LD CIT(A)-37, MUMBAI AND IT RELAT ES TO THE ASSESSMENT YEAR 2004-05. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN CONFIRMING THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. 2. AT THE TIME OF HEARING, IT WAS SUBMITTED THAT TH E REVENUE HAS ENGAGED A SPECIAL COUNSEL NAMED DR. P. DANIEL TO REPRESENT TH IS MATTER. HOWEVER, FROM THE RECORD, WE DO NOT FIND HIS POWER OF ATTORNEY. FURTHER, WE NOTICE THAT NEITHER THE SAID SPECIAL COUNSEL NOR THE REVENUE HAS MOVED ANY PETITION SEEKING I.T.A. NO. 3896/MUM/2013 2 ADJOURNMENT OF THE CASE. HOWEVER, THE LD A.R SUBMI TTED THAT HE HAS BEEN INFORMED THAT THE SPECIAL COUNSEL HAS BEEN HOSPITAL IZED. THE LD D.R, WHO WAS PRESENT AT THE TIME THIS APPEAL WAS TAKEN UP, EXPRE SSED HIS IGNORANCE ABOUT THE CASE AS WELL AS ABOUT THE SPECIAL COUNSEL. HENCE, WE PROCEED TO DISPOSE OF THIS APPEAL EX-PARTE, WITHOUT THE PRESENCE OF THE DEPART MENTAL REPRESENTATIVE. 3. THE FACTS THAT LED TO LEVY OF PENALTY U/S 27 1(1)(C) ARE STATED IN BRIEF. THE ASSESSEE IS A NOTIFIED ENTITY AS PER THE PROVISIONS OF SPECIAL COURT (TORTS) ACT, 1992, AS IT WAS INVOLVED IN THE SECURITIES SCAM, 19 92. IT FILED A BELATED RETURN FOR THE YEAR UNDER CONSIDERATION ON 22.01.2007 DECL ARING A TOTAL INCOME OF RS.17,03,508/- COMPUTED U/S 115JB OF THE ACT. SINC E THE RETURN WAS FILED BEYOND THE TIME LIMIT PRESCRIBED U/S 139(5) OF THE ACT, THE AO IGNORED THE SAME AND HENCE INITIATED PROCEEDINGS U/S 147 OF THE ACT. THEREAFTER, THE ASSESSMENT WAS COMPLETED U/S 143(3) R.W.S. 147 OF THE ACT ON 1 0-10-2007 DETERMINING THE TOTAL INCOME AT RS.2,03,84,540/-. DURING THE COURS E OF ASSESSMENT PROCEEDING, THE AO NOTICED THAT THE ASSESSEE HAS COMPUTED LONG TERM CAPITAL LOSS OF RS.6,02,19,893/- ON SALE OF AN IMMOVABLE PROPERTY L OCATED AT GOPAL MANSION. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS BEEN CLAIMING DEPRECIATION ON THE ABOVE SAID PROPERTY SINCE 1994-95 ONWARDS. HENCE, BY APPLYING THE PROVISIONS OF SEC. 50, THE AO COMPUTED SHORT TERM C APITAL GAIN OF RS.1,99,01,079/- ON SALE OF THE ABOVE SAID PROPERTY . THE TRIBUNAL ALSO CONFIRMED THE ORDER OF THE AO ON THIS ISSUE, VIDE I TS ORDER DATED 23-08-2013. THE ASSESSING OFFICER, AFTER THE RECEIPT OF ORDER O F THE FIRST APPELLATE AUTHORITY, PASSED PENALTY ORDER LEVYING MINIMUM PENALTY OF RS. 74,59,213/- IN RESPECT OF THE ABOVE SAID ADDITION TREATING THE SAME AS A CASE OF FURNISHING OF INACCURATE I.T.A. NO. 3896/MUM/2013 3 PARTICULARS OF INCOME. IN THE APPEAL FILED BY THE ASSESSEE, THE LD CIT(A) ALSO CONFIRMED THE PENALTY. HENCE, THE ASSESSEE HAS FIL ED THIS APPEAL BEFORE US. 4. WE HAVE HEARD THE LD A.R AND PERUSED THE RECORD. THE LD A.R SUBMITTED THAT THE ASSESSEE HAD STOPPED CLAIMING DEPRECIATION ON THE IMPUGNED PROPERTY FOR MORE THAN THREE YEARS PRIOR TO ITS SALE. HENCE , THE ASSESSEE CONSIDERED THE GAIN ARISING ON ITS SALE AS LONG TERM CAPITAL GAIN. AT THAT POINT OF TIME, THE VIEW TAKEN BY THE ASSESSEE WAS SUPPORTED BY THE DECISION OF MUMBAI BENCH OF TRIBUNAL IN THE CASE OF MRS. ROHITA SUBRAMANIAN VS. DCIT (75 TTJ 101). ACCORDINGLY, HE SUBMITTED THAT THE VIEW TAKEN BY TH E ASSESSEE TO COMPUTE LONG TERM CAPITAL LOSS IS ONE OF THE POSSIBLE VIEWS. HE FURTHER SUBMITTED THAT THE ASSESSEE HAS FURNISHED ALL THE DETAILS RELATING TO THE SALE OF PROPERTY AND ALSO THAT RELATING TO THE COMPUTATION OF CAPITAL GAIN. ACCORDINGLY HE SUBMITTED THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN HOLDING THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME. HE FURTHER SUBMI TTED THAT THE HONBLE SUPREME COURT, IN THE CASE OF RELIANCE PETRO PRODUCTS LTD ( 322 ITR 158), HAS HELD THAT THE PENALTY IS NOT LEVIABLE IN RESPECT OF THE CLAIM S, WHICH ARE NOT SUSTAINABLE IN LAW. ACCORDINGLY HE SUBMITTED THAT THE CLAIM OF LO NG TERM CAPITAL LOSS BECAME UNSUSTAINABLE ON ACCOUNT OF INTERPRETATION OF PROVI SIONS OF LAW IN A MANNER DIFFERENT TO THAT MADE BY THE ASSESSEE. ACCORDINGL Y, HE PRAYED THAT THE IMPUGNED PENALTY SHOULD BE DELETED. 5. WE FIND MERIT IN THE CONTENTIONS OF LD A.R. THE RE IS NO DISPUTE THAT THE ASSESSEE HAS FURNISHED ALL THE DETAILS RELATING TO THE SALE OF PROPERTY AND ALSO THAT RELATING TO ITS PURCHASE. THE ONLY DIFFERENCE WAS WITH REGARD TO THE COMPUTATION OF INCOME ARISING ON ITS SALE. THE ASS ESSEE HAS COMPUTED LONG I.T.A. NO. 3896/MUM/2013 4 TERM CAPITAL LOSS BY PLACING RELIANCE ON THE DECISI ON RENDERED BY THE MUMBAI BENCH OF TRIBUNAL. HOWEVER, THE ASSESSING OFFICER HAS COMPUTED SHORT TERM CAPITAL GAIN ON THE BASIS OF INTERPRETATION OF THE ACT. THUS, IT IS SEEN THAT IT IS ONLY A CASE RELATING TO THE MANNER OF COMPUTATION O F INCOME ARISING ON SALE OF PROPERTY. THUS, THE CLAIM MADE BY THE ASSESSEE WAS FOUND NOT SUSTAINABLE IN LAW BY THE AUTHORITIES. IN THAT CASE, IN OUR VIEW, THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS (REFERRED SUPRA), SHALL APPLY TO THE FACTS OF INSTANT CASE. ACCORDIN GLY, WE SET ASIDE THE ORDER OF LD CIT(A) AND DIRECT THE AO TO CANCEL THE PENALTY. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 27TH AUGUST, 2014 . ,- ( . /0 1 2 27TH AUGUST, 2014 - ' 3) 4 SD/- SD/- ( . . / H.L. KARWA) ( . . , / B.R. BASKARAN ) / PRESIDENT / ACCOUNTANT MEMBER / ( ) MUMBAI: 27TH AUGUST,2014. . . ./ SRL , SR. PS ! ' / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '# ! / THE RESPONDENT. 3. ( 6* ( ) / THE CIT(A)- CONCERNED 4. ( 6* / CIT CONCERNED 5. 78 3 '*9 , + 9 , / ( ) / DR, ITAT, MUMBAI CONCERNED 6. 3 : ) / GUARD FILE. ; ( / BY ORDER, TRUE COPY < $ (ASSTT. REGISTRAR) + 9 , / ( ) /ITAT, MUMBAI