DCIT circle I, V. Krishan (Karta of HUF),

ITA 4126/DEL/2007

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2137 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 30-11-2009
• Assessment Year: 2000-2001
• Appeal Filed On: 15-10-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MONA MOHANTY
• Keywords: Deduction for capital gain; Set aside
• Section: 271(1)(c); 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C, NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER & SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO. 4126/DEL/2007 ASSESSMENT YEAR: 2000-01 DCIT, VS. SHRI KRISHAN (KARTA OF HUF), CIRCLE-1, S/O SHRI BABU RAM, MUZAFFARNAGAR. 34/28-ARYA SAMAJ ROAD, MUZAFFARNAGAR. PAN NO. HV-0170 (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. MONA MOHANTY, DR RESPONDENT BY : NONE ORDER PER I.P. BANSAL, J.M. THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DI RECTED AGAINST THE ORDER OF CIT(A) DATED 20 TH AUGUST, 2007 FOR A.Y. 2000-01. GROUNDS OF APPEAL READ AS UNDER: - 1. THE LD CIT(A) ERRED IN LAW AND ON FACTS IN CANC ELING THE PENALTY OF RS. 3,92,000/- LEVIED U/S 271(1)(C) OF THE I.T. ACT , 1961, HOLDING THAT THERE IS NO ANGLE OF CONCEALMENT WITHOUT APPRECIATI NG THE FACTS OF THE CASE. 2. THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN CA NCELING THE PENALTY RELYING ON THE DECISIONS WHICH DIFFERS ON FACTS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ORDER OF THE LD. CIT(A) DESERVES TO BE SET ASIDE AND THAT OF AO BE RESTORED. 2. THE ASSESSEE SOLD CERTAIN PROPERTIES ON WHICH AF TER SETTING OFF THE COST THE CAPITAL GAIN WAS COMPUTED AT RS. 16,96,832 /-. THE DETAIL OF THESE ITA NO. 4126/D/07 2 PROPERTIES IS INCORPORATED AT PAGE 2 OF THE ASSESSM ENT ORDER. AGAINST SUCH CAPITAL GAIN THE ASSESSEE CLAIMED THE COST OF PLOT PURCHASED OF RS. 11,87,500/- WHICH WAS PURCHASED ON 24.03.1999 AND B ALANCE SUM OF RS. 5,09,322/- WAS ADJUSTED AGAINST THE CONSTRUCTION MA DE DURING THE FINANCIAL YEAR 1999-2000 OF RS. 5,50,000/- AND IN THIS MANNER ENTIRE CAPITAL GAIN WAS CLAIMED TO BE EXEMPTED AS BEING COST OF PLOT PURCHA SED AND THE COST OF CONSTRUCTION. THE ASSESSEE BEING OF THE VIEW THAT COST OF PLOT PURCHASED ON 24.03.1999 AND COST OF CONSTRUCTION INCURRED ON HOUSE IN F.Y. 1999- 2000 I.E. A SUMS OF RS. 11,87,500/- & 5,50,000/- BE ING MORE THAN THE CAPITAL GAIN OF RS. 16,96,832/-, THE ASSESSEE WAS N OT REQUIRED TO PAY ANY CAPITAL GAIN TAX AS THE ENTIRE CAPITAL GAIN WAS COV ERED BY INVESTMENT IN NEW HOUSE. THE SAID NEW HOUSE WAS ALSO SOLD BY THE ASS ESSEE AT A SUM OF RS. 17,50,000/- ON 28.03.01 AND ASSESSEE SURRENDERED TH E CLAIM U/S 54(1)(II) IN A.Y. 2001-02. THE AO DID NOT ACCEPT THE ASSESSEES CLAIM IN THE YEAR UNDER CONSIDERATION REGARDING SET OFF OF CAPITAL GA IN AGAINST THE COST OF NEW HOUSE. FIRSTLY, THE AO IS OF THE VIEW THAT COST OF PLOT COULD NOT BE ADJUSTED AGAINST CAPITAL GAIN. SECONDLY, THE AO IS OF THE V IEW THAT RS. 5,50,000/- SHOWN TOWARDS CONSTRUCTION WAS EXCESSIVE. HE ADMIT TED THE CLAIM OF THE ASSESSEE REGARDING COST OF CONSTRUCTION ONLY TO A S UM OF RS. 3,81,500/- AND IN THIS MANNER THE AO COMPUTED THE LONG-TERM CAPITA L GAIN ASSESSABLE IN THE HANDS OF THE ASSESSEE AT A SUM OF RS. 13,99,082 /- AGAINST WHICH CONCEALMENT PENALTY HAS BEEN LEVIED. DURING THE CO URSE OF PENALTY PROCEEDINGS ASSESSEE DID NOT APPEAR AND PENALTY HAS BEEN LEVIED BY THE AO. BEFORE CIT(A) IT WAS SUBMITTED THAT AS THE NEW HOUSE WAS SOLD AND CAPITAL GAIN RELATING THERETO WAS DISCLOSED IN A.Y. 2001-02. FOLLOWING CHART ITA NO. 4126/D/07 3 WAS SUBMITTED TO SHOW THAT THERE WAS NO MATERIAL DI FFERENCE AS THE ENTIRE CAPITAL GAIN HAS BEEN SHOWN/OFFERED IN A.Y. 2001-02 : - PARTICULARS A.Y. 2000-01 A.Y. 2001-02 DECLARED AMOUNT OF CAPITAL GAIN 1696832/- CLAIMED EXEMPT 1696832/- 83750/- 12500/- ON SALE OF HOUSE OF LUCKNOW 1780582 /- 1709332 /- AMOUNT OF CAPITAL GAIN AS PER ASSESSMENT ORDER 1780582/- 1696832/- EXEMPT U/S 54 ( - )381500/ - - 1399082 /- 1696832 /- AMOUNT OF CAPITAL GAIN AS PER APPEAL ORDER 1780582/- 12500/- TO SUMMARIZE TOTAL AMOUNT OF CAPITAL GAIN FOR BOTH T HE YEARS ARE AS UNDER: - ASSTT. YEAR DECLARED AS PER AO AS PER APPEAL ORDER 2000-01 NIL 1399082/- 1780582/- 2001-02 LTCG 1696832/- STCG 12500/ - 1696832/- 40668/ - NIL 12500/ - TOTAL FOR BOTH YEAR 1709332 /- 3136582 /- 1793082 /- 3. IT WAS SUBMITTED THAT ALL THE MATERIAL FACTS REL ATING TO CAPITAL GAIN WAS DISCLOSED. IT WAS SUBMITTED THAT THE ONLY DISPUTE WAS REGARDING THE YEAR OF ASSESSABILITY OF CAPITAL GAIN. IT WAS SUBMITTED TH AT EXEMPTION U/S 54 WAS CLAIMED BY THE ASSESSEE, WHICH HAS PARTLY BEEN ALLO WED BY THE AO AND, THEREFORE, THE ISSUE THAT WHETHER ASSESSEE IS ENTIT LED TO GET EXEMPTION WAS DEBATABLE ON ARGUABLE GROUNDS WHICH WAS ULTIMATELY DECIDED AGAINST THE ASSESSEE. AMOUNT OF LONG-TERM CAPITAL GAIN AROSE I N A.Y. 2000-01 AND IT WAS OFFERED FOR TAXATION. IN THE APPELLATE PROCEED INGS CIT(A) HAD HELD THAT THE SAID AMOUNT IS TAXABLE IN A.Y. 2000-01 AND IN T HE APPEAL EFFECT ORDER FOR A.Y. 2001-02 THE AO HAS DELETED THE SAID ADDITION B Y PASSING THE ORDER U/S 251. IT WAS THUS, SUBMITTED THAT NO CONCEALMENT AC CRUED DURING THE YEAR UNDER CONSIDERATION. ITA NO. 4126/D/07 4 4. ON THE BASIS OF THESE FACTS LD. CIT(A) HAS HELD THAT THERE WAS NO CONCEALMENT OF INCOME BY THE ASSESSEE. THE CHRONOL OGICALLY OF EVENTS HAS MADE IT CLEAR THAT ASSESSEE HAD BONAFIDE MIND FOR C LAIMING THE CAPITAL GAIN EXEMPTION IN THE RETURN FOR A.Y. 2000-01. EXEMPTIO N WAS SOUGHT TO BE CLAIMED ON THE GROUND THAT LUCKNOW HOUSE WAS NOT SO LD AND IT WAS COMPLETED. WHEN LUCKNOW HOUSE WAS SOLD ON 28.02.01 , THE EXEMPTION U/S 54 BECAME UNTANEABLE AND THE ASSESSEE OFFERED T HAT AMOUNT OF CAPITAL GAIN FOR TAXATION IN THE RETURN FILED FOR A.Y. 2001 -02. ON THESE FACTS LD. CIT(A) OBSERVED THAT VIDE HIS ORDER FOR A.Y. 2000-0 1 HE HAS OBSERVED THAT THE CAPITAL GAIN WAS TAXABLE IN A.Y. 2000-01 ITSELF AND THE SAID DECISION WAS ACCEPTED BY ASSESSEE HIMSELF AS NO APPEAL HAS BEEN FILED. THUS, LD. CIT(A) OBSERVED THAT THE ISSUE WAS REGARDING THE YE AR OF CHARGEABILITY OF CAPITAL GAIN AND THERE WAS NO CONCEALMENT OF INCOME BY THE ASSESSEE AND THE PENALTY HAS BEEN DELETED. 5. NOTICE OF HEARING WAS SENT TO ASSESSEE, WHICH HA S BEEN RECEIVED BACK FROM THE POSTAL AUTHORITIES WITH THE REMARKS T HAT ADDRESSEE HAS LEFT THE PREMISES LONG BACK. IN THIS MANNER WE PROCEED TO DECIDE THIS PRESENT APPEAL EX-PARTE QUA THE ASSESSEE AFTER HEARING LD. DR. 6. LD. DR AFTER NARRATING THE FACTS PLEADED THAT PE NALTY HAS WRONGLY BEEN DELETED BY CIT(A). BY CLAIMING EXEMPTION U/S 54, THE ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOME AND, THEREF ORE, THE AO WAS RIGHT IN IMPOSING THE PENALTY. SHE PLEADED THAT ORDER OF CI T(A) SHOULD BE SET ASIDE AND THAT OF AO BE RESTORED. ITA NO. 4126/D/07 5 7. WE HAVE CAREFULLY CONSIDERED THE SUBMISSION OF L D. DR AND ALSO CAREFULLY GONE THROUGH THE FACTS OF THE PRESENT CAS E AS THEY ARE RECORDED IN THE ASSESSMENT ORDER, PENALTY ORDER AND THE ORDER O F CIT(A). THE RETURN OF INCOME IN THE PRESENT CASE WAS ORIGINALLY FILED ON 19.06.2000, WHEREIN EXEMPTION FROM LONG TERM CAPITAL GAIN WAS CLAIMED O N ACCOUNT OF INVESTMENT IN NEW HOUSE (LUCKNOW HOUSE). ONE OF TH E CONDITIONS TO CLAIM THE LONG-TERM CAPITAL GAIN AGAINST INVESTMENT IN NE W HOUSE IS THAT NEW HOUSE SHOULD NOT BE SOLD WITHIN THREE YEARS OF ITS PURCHASE. UP TO THE POINT OF TIME WHEN ASSESSEE FILED THE RETURN, THE ASSESSE E WAS NOT AWARE OF THE FACT THAT NEW HOUSE PURCHASED BY HIM SHALL BE SOLD WITHIN THE PERIOD OF THREE YEARS. NOT KNOWING THAT ASSESSEE MAY HAVE CL AIMED THE EXEMPTION U/S 54. THE BONAFIDE OF THE ASSESSEE IS FURTHER ST RENGTHENED BY THE FACT THAT WHEN HE FILED RETURN OF INCOME FOR A.Y. 2001-0 2 HE SURRENDERED THE CAPITAL GAIN. IN THE APPEAL FOR A.Y. 2001-02 CIT(A ) HELD THAT THE CAPITAL GAIN WAS TAXABLE IN A.Y. 2000-01 AND ACCORDINGLY THE CAP ITAL GAIN OFFERED IN A.Y. 2001-02 WAS DELETED. THERE IS NO MATERIAL ON RECOR D TO SHOW THAT ALL THE PARTICULARS WERE NOT DISCLOSED BY THE ASSESSEE WITH REGARD TO THE SALE AND PURCHASE OF THE PROPERTIES OR WITH REGARD TO INVEST MENT IN THE NEW PROPERTY. THE DISPUTE REALLY IS REGARDING THE YEAR IN WHICH S UCH CAPITAL GAIN COULD BE TAXED. THEREFORE, WE SEE NO INFIRMITY IN THE ORDER OF CIT(A) VIDE WHICH IT HAS BEEN HELD THAT IT IS NOT A FIT CASE WHERE LEVY OF CONCEALMENT PENALTY COULD BE HELD JUSTIFIED. WE DECLINE TO INTERFERE I N THE FINDINGS OF LD. CIT(A) VIDE WHICH THE PENALTY IN THE IMPUGNED CASE HAS BEE N DELETED. ITA NO. 4126/D/07 6 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18.12.2009 (SHAMIM YAHYA) (I.P. BANSAL ) ACCOUNTANT MEMBER JU DICIAL MEMBER DATED: *KAVITA CHOPRA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR