ITO 29(2)(5), MUMBAI V. PARIS NAVROJI SETHNA, MUMBAI

ITA 3952/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0647 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 10-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: IN CIRCUMSTANCES OF CA SE
• Keywords: Capital asset; Cost of acquisition
• Section: 143(3); 54

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI R. C. SHARMA , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO. 3952 / MUM/ 201 6 ( / ASSESSMENT YEAR: 20 08 - 09 ) ITO 29(2)(5) BUILDING NO. C - 10, ROOM NO. 205, INCOME TAX OFFICER, PRATYAKSHA KAR BHAVAN, BANDRA KURLA COMPLEX BANDRA (E), MUMBAI - 400051 / VS. PARVIS NAVROJI SETHNA A/1401, LAKE CASTLE, HIRANANDANI, POWAI MUMBAI - 400076 ./ ./ PAN/GIR NO. : AAQPS 7479 D ( / APPELLA NT ) .. ( / RESPONDENT ) / DATE OF HEARING : 16 . 1 1 .2017 / DATE OF PRONOUNCEMENT : 09. 02 . 201 8 / O R D E R PER AMARJIT SINGH, J M: THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 02 .0 3 .2016 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 40 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 20 09 - 09 . 2 . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE PENALTY LEVIED U/S 271(1)(C). REVENUE BY : SHRI M. C. OMI NINGSHEN (DR) ASSESSEE BY: SHRI DR. K. SHIVRAM & MS. NEELAM JADHAV ITA NO. 3952 /M/2016 A.Y.20 08 - 09 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) FAILED TO APPRECIATE THAT THE FACTS OF THE CASE RELIED UPON BY HIM IS NOT SQUARELY APPLICABLE IN THE CASE OF THE ASSESSEE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN NOT APPRECIAT ING THE FACT THAT THE ASSESSEE HIMSELF BEFORE THE ITAT HAS WITHDRAWN HIS APPEAL WHICH GOES ON TO PROVE THAT THE ASSESSEE HAS ACCEPTED FOR THE ENHANCEMENT OF HIS INCOME IN THE CASE OF THE QUANTUM ASSESSMENT. 4 THE APPELLANT CRAVES LEAVE TO ADD, TO AMEND ALT ER, SUBSTITUTE OR MODIFY ANY OF THE ABOVE GROUND OR ADD A FRESH GROUND AS AND WHEN FOUND NECESSARY EITHER BEFORE OR AT THE TIME OF HEARING. 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME ON 02.01.2009 DECLARING TOTAL INC OME TO THE TUNE OF RS.6,19, 732/ - . THE CASE WAS SELECTED FOR SCRUTINY . THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT BY ASSESSING THE INCOME TO THE TUNE OF RS.64,72,760/ - ON 28.12.2010. ON VERIFICATION , IT WAS FOUND THAT THE ASSESSEE HAS SOLD THE LAND AND BUILDING BUT NO CAPITAL GAIN WAS DECLARED IN RETURN OF INCOME. T HE NOTICE WAS GIVEN TO THE ASSESSEE WHO SUBMITTED THE WORKING OF CAPITAL GAINS WHEREIN THE ASSESSEE CLAIMED EXEMPTION U/S 54 OF THE ACT AND DECLARED THE INCOME AS NIL. THE ASSESSEE PURCHA SE D THE SHOPS WHICH WAS NOT RESIDENTIAL PREMISE S AND VALUATION OF THE PROPERTY WAS TAKEN INTO CONSIDERATION AS ON 1 . 4.1981 , THEREFORE, THE NOTICE WAS GIVEN AND AFTER THE REPLY OF THE ASSESSEE , THE LTCG WAS ASSESSED TO THE TUNE OF RS.57,27,530/ - . THE ASSES SEE FILED AN APPEAL BEFORE THE CIT(A) . T HE INCOME OF THE ASSESSEE WAS ENHANCED TO THE TUNE OF RS.1,30,28,930/ - , THEREFORE, THE ASSESSEE HAS FILED AN APPEAL HONBLE ITAT WHERE THE ASSESSEE WITHDRAW THE APPEAL REGARDING THE DETERMINATION OF CAPITAL GAINS , TH EREBY , ACCEPTING THE DECISION OF LD. CIT(A) WHO HAS DIRECTED TO TAX THE LONG TERM CAPITAL GAINS ON SALE OF LAND AND SHORT TERM CAPITAL GAINS ON SALE OF BUILDING. HOWEVER, ITA NO. 3952 /M/2016 A.Y.20 08 - 09 3 HONBLE ITAT HAS DIRECTED TO ALLOW THE EXPENSES INCURRED TOWARDS SALE OF PROPERTY EQU ALLY BETWEEN THE SHORT TERM CAPITAL GAINS AND LONG TERM CAPITAL GAINS AND EXEMPTION U/S 54EC OF THE ACT AGAINST THE SHORT TERM CAPITAL GAIN. IN VIEW OF THE DECISION OF THE HONBLE ITAT THE TOTAL INCOME WAS BROUGHT DOWN TO THE TUNE OF RS. 1,20,83,032/ - FROM OF RS.1,30,28,930/ - . SINCE THE CAPITAL GAIN WAS NOT PROPERLY DECLARED BY ASSESSEE, THEREFORE, THE NOTICE WAS GIVEN TO THE ASSESSEE . A FTER THE REPLY OF THE ASSESSEE , THE ASSESSING OFFICER LEVIED THE PENALTY TO THE TUNE OF RS.33,41,058/ - . TH E ASSESSEE HAS FI LED AN APPE AL BEFORE THE CIT(A) WHO DELETE D THE PENALTY , THEREFORE, THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US. 4. WE HAVE HEARD THE ARGUMENT ADVANCED BY THE LD. REPRESENTATIVE OF THE PARTIES AND PERUSED THE RECORD. THE LD. REPRESENTATIVE OF THE RE VENUE HAS ARGUED THAT THE ASSESSEE DID NOT DISCLOSE THE LONG TERM CAPITAL GAIN/ SHORT TERM CAPITAL GAIN IN HIS RETURN OF INCOME, THEREFORE, THE ASSESSING OFFICER HAS RIGHTLY RAISED THE ADDITION AND THE PENALTY WAS ALSO PROPERLY LEVIED BUT THE CIT(A) HAS WR ONGLY DELETED THE PENALTY, THEREFORE, IN THE SAID CIRCUMSTANCES THE FINDING OF THE CIT(A) IS NOT JUSTIFIABLE HENCE LIABLE TO BE SET ASIDE. ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE ASSESSEE HAS STRONGLY PLACED RELIANCE UPON THE ORDER PASSED BY THE C IT(A) IN QUESTION. BE FORE GOING FURTHER, WE DEEMED IT IS NECESSARY TO ADVERT THE FINDING OF THE CIT(A) ON THIS ISSUE ON RECORD: - 7.AFTER TAKING INTO CONSIDERATION THE AOS FINDINGS AND THE APPELLANTS SUBMISSIONS AND ORDER SHEET NOTINGS, AS WELL AS THE F ACTS OF THE CASE, DECISION ON THE GROUND RAISED BY THE APPELLANT, IS MADE HERE UNDER: - ITA NO. 3952 /M/2016 A.Y.20 08 - 09 4 7.1 THE ASSESSMENT WAS COMPLETED U/S 143(3) ON 28.12.2010 ON THE TOTAL INCOME OF RS.64,72,760/ - AFTER MAKING ADDITION OF RS.57,27,530/ - BEING LTCG. 7.2. AGGRIEVED BY THE SAID ADDITION, THE ASSESSEE FILED APPEAL BEFORE CJT(A) - 33, MUMBAI, WHO VIDE ORDER DATED 23.01 .2012 HAD APPORTIONED THE IMMOVABLE PROPERLY BETWEEN MOVABLE AND IMMOVABLE PROPERTY AND HELD THAT THE CAPITAL GAIN ARISING OUT OF SALE OF LAND IS LONG TERM CAPIT AL GAINS AND CAPITAL GAINS ARISING OUT OF SALE OF BUILDING IS SHORT TERM CAPITAL GAINS AND ACCORDINGLY H DIRECTED THE LD. AO TO TAX THE SHORT TERM CAPITAL GAINS AT RS. 1,21,23,0007 - WITHOUT ALLOWING ANY EXEMPTION U/S. 54 AND EXPENSES INCURRED FOR TRANSFER OF PROPERTY. AS REGARDS LONG TERM CAPITAL GAINS, THE LD. CIT(A) DIRECTED TO ALLOW THE EXEMPTION U/S. 54 I.E. COST OF NEW ASSETS PURCHASED BEING SHOPS AND INVESTMENT IN REC BONDS, THUS DIRECTING TO DETERMINE THE LTCG AT RS, NIL. IN VIEW OF CLT{A)'S DIRECTI ONS, THE TOTAL INCOME OF THE ASSESSEE WAS ENHANCED TO RS. 1,30,28,930,' - FROM RS. 64,72,760/ - . 7.3. THE ASSESSEE CHALLENGED THE CIT(A)'S ORDER BEFORE THE HON'BLE ITAT, MUMBAI, HOWEVER, THE ASSESSES HAD WITHDRAWN ITS APPEAL BEFORE THE HON'BLE ITAT REGARDING THE DETERMINATION OF CAPITAL GAINS THEREBY ACCEPTING THE DECISION OF LD. CIT(A) T WHO HAD DIRECTED TO (AN THE LONG TERM CAPITAL GAINS ON SALE OF LAND AND SHORT TERM CAPITAL GAINS ON SALE OF BUILDING. HOWEVER, THE HON'BLE ITAT HAD DIRECTED THE LD, AO TO ALL OW THE EXPENSES INCURRED TOWARDS SATE OF PROPERTY EQUALLY BETWEEN [HE SHORT TERM CAPITAL GAINS AND LONG TERM CAPITAL GAINS AND EXEMPTION U/S. 54EC AGAINST THE SHORT TERM CAPITAL GAINS. FOLLOWING THE DIRECTIONS OF THE HONBLE ITAT, THE LD. AO CALCULATED THE TOTAL INCOME AT RS. 1,20,83,0327 - . THE LD, AO, KEEPING IN VIEW THE ABOVE DISCUSSION, CONCLUDED THAT THE ASSESSEE HAD NOT DECLARED ANY INCOME UNDER THE HEAD CAPITAL GAINS' WHEREAS THE ASSESSEE HAD ACCEPTED THAT THERE WAS CAPITAL GAINS (STCG7 LTCG) IN THE F INANCIAL YEAR 2007 - 08 RELEVANT TO A,Y. 2008 - 09, PARTICULARS OF WHICH HAD BEEN CONCEALED BY THE ASSESSEE, AND AFTER REJECTING THE EXPLANATION OFFERED BY THE APPELLANT PROCEEDED TO LEVY PENALTY U/S. 27L(L)(C) AND LEVIED PENALTY OF RS,33,41,058/ - BEING 100% O F THE TAX SOUGHT TO BE EVADED. .4. DURING THE APPELLATE PROCEEDINGS, THE APPELLANT STATED THAT THE LD. AO HAS LEVIED PENALTY ON A WRONG PRESUMPTION THAT HE HAS NOT DECLARED ANY INCOME UNDER THE HEAD CAPITAL GAINS. THE APPELLANT HAS SUBMITTED A COPY OF ITR 2 FOR A,Y, 2008 - 09 FILED BY HIM. IN ITA NO. 3952 /M/2016 A.Y.20 08 - 09 5 SCHEDULE CO IT IS SEEN THAT THE APPELLANT HAS DECLARED THE DETAILS OF CAPITAL ASSETS, INCLUDING FULL VALUE OF CONSIDERATION BEING RS.3,10,00,000/ - , COST OF ACQUISITION AFTER INDEXATION AT RS.1,36,58,400/ - , EXPENDITURE O N TRANSFER AT RS.6,20,000/ - AND COMPUTING THE CAPITAL GAIN AT RS.1,67,21,600/ - , FROM WHERE EXEMPTION ON ACCOUNT OF INVESTMENT OF RS.1,86,58,400/ - ELIGIBLE FOR DEDUCTION ''U/S, 54 EC WAS CLAIMED AND NIL INCOME WAS OFFERED UNDER THE HEADLONG TERM CAPITAL GA IN IS NOT A EASE THAT THE APPELLANT CONCEALED ANY FACTS BEFORE THE DEPARTMENT. IN THIS CASE, PAN OF THE EXPLANATION GIVEN BY THE APPELLANT WAS FOUND TO BE NOT ACCEPTABLE. THE APPELLANT FURTHER STATED THAT MERELY BECAUSE THE APPELLANT HAD MADE A CLAIM WHI CH WAS REJECTED, IT CANNOT BE SAID THAT INACCURATE PARTICULARS ARE FURNISHED OR CLAIM WAS MALAFIDE. THE APPELLANT HAD RELIED ON THE DECISION OF HON'BLE SUPREME COURT IN CASE OF C1T V. RELIANCE PETRO PRODUCTS P. LTD 322 ITR 158(SC), WHEREIN IT HAS BEEN HELD THAT 'WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARC FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY U/S. 271(L)(C). A MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW W ILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THAT RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. 7.5 THE RATIO LAID DOWN IN THE CASE OF RELIANCE PETRO PRODUCTS EM LTD REFERRED TO ABOVE TI SQUARELY APPLICABLE TO THIS CASE, SINCE IN THE PRESENT CASE THE LD, AC) HAS NOT GIVEN ANY FINDING THAI DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE INCORRECT OR ERRONEOUS OR FALSE. IT IS A CASE WHEREIN CLAIM MADE HAS NOT BEEN SUSTAINED. THE REFORE RESPECTFULLY FOLLOWING THE DECISION OF HON'BLE SUPREME COURT (SUPRA), THE PENALTY OF RS, 33,4L,058/ - LEVIED U/S 27L(L)(C) IS DELETED. 5 . ON APPRAISAL OF THE ABOVE SAID FINDING, WE NOTICED THAT THE CIT(A) WAS OF THE VIEW THAT THE ASSESSEE HAS DECLAR ED THE CAPITAL GAIN IN HIS RETURN OF INCOME FOR THE A.Y. 2008 - 09. IN SCHEDULE CO, THE ASSESSEE DECLARED THE ITA NO. 3952 /M/2016 A.Y.20 08 - 09 6 DETAIL OF CAPITAL ASSETS INCLUDING FULL VALUE OF CONSIDERATION OF RS.3,10,00,000/ - COST OF ACQUISITION AFTER INDEXATION AT RS.1,67,21,600/ - FROM WHE RE THE EXEMPTION ON ACCOUNT OF INVESTMENT OF RS.1,86,58,400/ - ELIGIBLE FOR DEDUCTION U/S 54EC OF THE ACT WAS CLAIMED. NIL INCOME WAS OFFERED WAS LONG TERM CAPITAL GAIN. ACCORDINGLY, THE ASSESSEE DECLARED ALL THE TRANSACTIONS BELONGING TO SALE OF LAND/BUILD ING. HOWEVER, THE EXPLANATION OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE . T HE CLAIM OF THE ASSESSEE WAS REJECTED WHICH CANNOT BE SAID TO FURNISH THE INACCURATE PARTICULARS AND TO CONCEALMENT OF INCOME. THE CIT(A) HAS RELIED UPON THE CASE TITLED AS CIT VS. RE LIANCE PETRO PRODUCTS P. LTD. 322 ITR 158 (SC), IN WHICH IT IS SPECIFICALLY HELD THAT THE CLAIM WHICH IS NOT SUSTAINABLE IN THE EYES OF LAW DOES NOT AMOUNT TO FURNISH INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. IN VIEW OF THE SAID LAW , THE CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE AND DELETE THE PENALTY. THE FACTS ARE NOT DISTINGUISHABLE AT THIS STAGE ALSO. ACCORDINGLY, WE ARE OF THE VIEW THAT THE CIT(A) HAS PASSED THE ORDER JUDICIOUSLY AND CORRECTLY WHICH IS NOT LIABLE TO BE INTERFERE WITH AT THIS APPELLATE STAGE. ACCORDINGLY, WE CONFIRMED THE ORDER OF THE CIT(A) AND DISMISSED THE APPEAL OF THE REVENUE. 6 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS HEREBY ORDERED TO BE D ISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 09 . 02 . 2018 . SD/ - SD/ - ( R. C. SHARMA ) (AMARJIT SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; DATED : 09 . 02 . 2018 VIJAY ITA NO. 3952 /M/2016 A.Y.20 08 - 09 7 / 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// / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI