The DCIT, (OSD)-I, Circle-4, Ahmedabad V. Shri Jagdishchandra T. Thakkar, Ahmedabad

ITA 414/AHD/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 6169 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 22-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N DIVATIA
• Keywords: Capital asset; Wrong claim; Competent authority
• Section: 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ITA NO. 414/AHD/2016 (ASSESSM ENT YEAR: 2009-10) ASST. COMMISSIONER OF INCOME TAX, CIRCLE- 2(1)(2), 1 ST FLOOR, NAVJIVAN TRUST BUILDING, AHMEDABAD-380 009 APP ELLANT VS. M/S. JAGDISHCHANDRA T. THAKKAR, 422, SATYAGRAH CHHAVNI, SATELLITE, AHMEDABAD 382 445 RESP ONDENT PAN: ABRPT9213E /BY REVENUE : SHRI MUDIT NAGPAL, SR. D.R. /BY ASSESSEE : SHRI S. N. DIVATIA, A.R. /DATE OF HEARING : 01.02.2018 /DATE OF PRONOUNCEMENT : 08.02.2018 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS REVENUES APPEAL FOR ASSESSMENT YEAR 2009-10 A RISES AGAINST THE CIT(A)-4, AHMEDABADS ORDER DATED 17.12.2015, IN CA SE NO. CIT(A)-4/141/DCIT- CIR-2(1)(1)/14-15, REVERSING ASSESSING OFFICERS AC TION IMPOSING PENALTY OF RS.16,59,845/-, IN PROCEEDINGS U/S. 271(1)(C) OF TH E INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE PERUSED. ITA NO. 414/AHD/16 [ACIT VS. M/S. JAGDISHCHANDRA T . THAKKAR] A.Y. 2009-10 - 2 - 2. WE NOTICE AT THE OUTSET THAT THE IMPUGNED PENALT Y PROCEEDINGS PERTAIN TO QUANTUM ISSUE OF DISALLOWANCE OF WORK-IN-PROGRESS A MOUNTING TO RS.52LACS. THERE IS NO DISPUTE THAT THE ASSESSEE HAD COMPUTED HIS LO NG TERM CAPITAL GAINS ON SALE OF THE CAPITAL ASSET IN QUESTION. HE THEREAFTER CHOSE TO CLAIM THE IMPUGNED DEDUCTION AS WORK-IN-PROGRESS U/S.54 OF THE ACT. HE HOWEVER SUBMITTED IN COURSE OF SCRUTINY PROCEEDINGS THAT THE RELEVANT CONSTRUCTION COULD NO T BE CARRIED OUT DUE TO THE FACT THAT THE COMPETENT AUTHORITY AUDA HAD REVIEWED ITS APPROVAL. THE ASSESSING OFFICER ACCORDINGLY DISALLOWED THE AMOUNT IN QUESTI ON IN ASSESSMENT ORDER DATED 14.11.2011 AS UPHELD IN CIT(A)S QUANTUM ORDER DATE D 15.10.2012. 3. WE ADVERT TO THE IMPUGNED PENALTY PROCEEDINGS. THE ASSESSING OFFICER PLACED HEAVY RELIANCE ON ABOVE QUANTUM DEVELOPMENTS TO CONCLUDE THAT THE ASSESSEES ACT AND CONDUCT IN CLAIMING WORK-IN-PROG RESS DEDUCTION OF RS.52LACS ATTRACTED BOTH THE LIMBS OF CONCEALMENT AS WELL AS FURNISHING INACCURATE PARTICULARS OF INCOME U/S.271(1)(C) OF THE ACT. HE THEREFORE L EVIED IMPUGNED PENALTY AMOUNTING TO RS.16,59,845/- IN ORDER DATED 27.03.20 14. 4. THE CIT(A) REVERSES ASSESSING OFFICERS ACTION A S UNDER: 5. SUBMISSION OF THE APPELLANT HAS BEEN CONSIDERED W.R. TO THE ASSESSMENT ORDER, PENALTY ORDER AND THE FINDINGS GIVEN BY THE CIT(A), WHILE DECIDING THE QUANTUM APPEAL. THE ONLY GROUND OF APPEAL IS AGAINST THE PENALTY OF RS. 16,59,845/- IMPOSED BY THE AO U/S 271(1)(C) OF THE ACT. THE APPELLANT SOLD ONE IMMOVA BLE PROPERTY DURING THE YEAR AND CLAIMED EXEMPTION U/S 54 OF THE AC TO THE EXTENT OF RS.99,27,155 /- CONSISTING OF RS.47,27,155/- COST OF LAND AND RS.52 LAKHS TOWARDS THE COST OF CONSTRUCTION. AS THE CONSTRUCTION WAS NOT COMPLETED WITHIN THREE YEARS, AS CONDITIONS PRESCRIBED UNDER THE RELEVANT PROVISIONS OF THE ACT. THE AO DISALLOWED T HE TOTAL EXEMPTION OF RS.99,27,155/-. WHILE DECIDING THE APPEAL, THE CIT(A) (APPEAL) ALLO WED THE EXEMPTION TO THE EXTENT OF COST OF LAND I.E. RS.47,27,155/- BUT DID NOT ALLOW CLAIM OF RS.52 LAKHS AS CONSTRUCTION COST BECAUSE CONSTRUCTION WAS NOT COMPLETED. THESE FACTS ARE NOT OBJECTED BY THE APPELLANT ALSO. 5.1 THE AO IMPOSED THE PENALTY UPON RS.52 LAKHS STA TING THAT THE APPELLANT CONCEALED INCOME AND THUS SUBMITTED INACCURATE PARTICULARS OF INCOME BY SUBMITTING INCORRECT CLAIM OF DEDUCTION U/S 54 OF THE ACT. THE APPELLANT CONTE NDED THAT THE CONSTRUCTION COULD NOT BE COMPLETED BECAUSE AHMEDABAD URBAN DEVELOPMENT AUTHO RITY I.E. AUDA DID NOT GRANT PERMISSION TO CONSTRUCT, AS THE PLOT WAS TO BE INCL UDED IN PROPOSE'D TP SCHEME. THE APPELLANT FURTHER SUBMITTED THAT PERMISSION OF CONS TRUCTION WAS GRANTED BY AUDA VIDE ORDER NO.JSK/2010/162 DTD. 06-08-20 10 AND THE SOCI ETY ALSO GAVE PERMISSION VIDE LETTER DATED 13-10-2010 IN PURSUANCE TO THE SAID PERMISSIO N FROM THE AUDA. THE APPELLANT PAID THE PRESCRIBED FEE FOR SUCH PERMISSION. HOWEVER, TH E AUDA INFORMED THE APPELLANT VIDE LETTER DATED 16-09-2010 THAT THE CONSTRUCTION UPON THE PLOT CANNOT BE UNDERTAKEN AS THE ITA NO. 414/AHD/16 [ACIT VS. M/S. JAGDISHCHANDRA T . THAKKAR] A.Y. 2009-10 - 3 - SAID PLOT IS PROPOSED TO BE INCLUDED IN NEW TP SCHE ME. AS THE PERMISSION OF CONSTRUCTION WITHDRAWN BY THE TOWN PLANNING AUTHORITY I.E. AUDA, CONSTRUCTION COULD NOT BE COMPLETED. THE APPELLANT STATED THAT THE REASON FOR NON-COMPLETION OF CONSTRUCTION IS BEYOND HIS CONTROL AND FOR WHICH HE SHOULD NOT BE P ENALIZED. THE APPELLANT CITED CASE LAWS IN THE CASE OF SMT. RAJNEET SANDHU VS. DCIT (49 SOT 7) (CHD) AND SMT. V. A. THARABHAI VS. DCIT (14 ITR (TRB) 15)(CHENN) TO SUPPORT HIS CO NTENTION. 5.2 AFTER GOING THROUGH THE, FACTS OF THE CASE IN T OTALITY, AS MENTIONED ABOVE, THE APPELLANT CANNOT BE HELD RESPONSIBLE FOR CONCEALING INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME. THE APPELLANT SUBMITTED ALL THE FACTS IN THE RETURN OF INCOME FILED AND DURING THE ASSESSMENT PROCEEDINGS. THE REASONS FOR NON-CONSTRUCTION OF HOUSE WERE BEYOND THE CONTROL OF THE APPELLANT FOR WHICH HE CA NNOT BE HELD ACCOUNTABLE AND PUNISHED WITH PENALTY U/S 271(1)(C) OF THE ACT. LOOKING THE FACTS OF THE CASE AND THE CASE LAWS CITED THE PENALTY IMPOSED BY THE AO IS NOT FOUND JUSTIFIE D, HENCE IT IS DELETED. THIS GROUND OF APPEAL IS ALLOWED. 5. BOTH THE LEARNED REPRESENTATIVES STRONGLY REITER ATE THEIR RESPECTIVE STANDS IN FAVOUR OF AND AGAINST THE IMPUGNED PENALTY. LEARNE D DEPARTMENTAL REPRESENTATIVE VEHEMENTLY CONTENDS THAT THE ASSESSEE HAD RAISED AN ALTOGETHER FALSE CLAIM OF WORK- IN-PROGRESS AMOUNTING TO RS.52LACS U/S.54 OF THE AC T. HE HOWEVER FAILS TO DISPUTE THE CIT(A)S CATEGORIC FINDING THAT THE COMPETENT A UTHORITY AUDA HAD IN FACT GRANTED PERMISSION TO THE CONCERNED SOCIETY ON 06.0 8.2010 FOLLOWED BY INTIMATION LETTER DATED 16.09.2010 THAT THEIR SAID PLOT WAS PR OPOSED TO BE INCLUDED IN A NEW TP SCHEME. ALL THESE FACTS SUFFICIENTLY INDICATE THAT THE ASSESSEES DEDUCTION CLAIM OF RS.52LACS IN QUESTION WAS INDEED BASED ON DOCUMENTA RY EVIDENCE. WE ACCORDINGLY FIND NO SUBSTANCE IN REVENUES SOLE GRIEVANCE SEEKI NG TO REVIVE THE IMPUGNED PENALTY AS DELETED IN LOWER APPELLATE PROCEEDINGS. 6. THIS REVENUES APPEAL IS ACCORDINGLY DISMISSED. [PRONOUNCED IN THE OPEN COURT ON THIS T HE 08 TH DAY OF FEBRUARY, 2018.] SD/- SD/- ( AMARJIT SINGH ) ( S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 08/02/2018 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ITA NO. 414/AHD/16 [ACIT VS. M/S. JAGDISHCHANDRA T . THAKKAR] A.Y. 2009-10 - 4 - ! / CONCERNED CIT 4 !- / CIT (A) ( )*+ ,--. . /0 / DR, ITAT, AHMEDABAD 1 +23 45 / GUARD FILE. BY ORDER / . // . /0