ASST CIT 19(3), MUMBAI V. RADHKIA DUBASH, MUMBAI

ITA 4384/MUM/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0384 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 15-05-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 24-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRADEEP KUMAR SINGH
• Assessee Lawyers: KISHOR R NAWAL
• Keywords: Wrong claim
• Section: 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G MUMBAI BEFORE SHRI MAHAVIR SINGH (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 4384/MUM/2016 ASSESSMENT YEAR: 2011 - 12 ACIT - 19(3) MATRUMANDIR, 2 ND FLOOR, ROOM NO. 206 TARDEO ROAD MUMBAI - 400007. VS. RADHIKA DUBASH 1 ST FLOOR, KHETANBUNGLOW, 6 M.M. ROAD MALABAR HILL MUMBAI - 400006 PAN NO. AAHPD2067P APPELLANT RESPONDENT REVENUE BY : SHRI PRADEEP KUMAR SINGH, DR ASSESSEE BY : SHRI KISHOR R. NAWAL, AR DATE OF HEARING : 15/05/2017 DATE OF PRONOUNCEMENT: 10/08/2017 ORDER PER N.K. PRADHAN, A.M . THIS IS AN APPEAL FILED BY THE REVENUE. THE RELEVANT ASSESSMENT YEAR IS 2011 - 12. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISS IONER OF INCOME TAX (APPEALS) - 30 , MUMBAI AND ARISES OUT OF THE PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT 1961, (THE ACT). 2. THE GROUND OF APPEAL FILED BY THE REVENUE READ S AS UNDER: - ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, WHETHER THE LD. CIT(A) WAS JUSTIFIED DELETING THE PENALTY LEVIED U/S 271(1)(C), WHERE ITA NO. 4384/MUM/2016 2 THE ASSESSEE HAS NOT FULFILLED THE CONDITIONS PRESCRIBED U/S 54F OF THE I.T. ACT DELIBERATELY CLAIMED THE DEDUCTION U/S 54F OF THE ACT. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED HER RETURN OF INCOME FOR THE AY 2011 - 12 ON 30.09.2011 DECLARING TOTAL INCOME OF RS.42,58,060/ - . THE ASSESSING OFFICER (AO) OBSERVED DURING THE COURSE OF ASSESSMENT PROCEEDINGS THAT THE ASSES SEE HAD SOLD A PROPERTY AT PANVEL FOR A CONSIDERATION OF RS.1,24,57,500/ - AND EARNED LONG TERM CAPITAL GAINS (LTCG) OF RS.1,16,64,231/ - . THE SAME WAS CLAIMED BY THE ASSESSEE AS DEDUCTION U/S 54F AS SHE PAID AN AMOUNT OF RS.14 CRORES FOR ACQUIRING A NEW FLA T. THE AO DENIED THE CLAIM MADE BY THE ASSESSEE ON THE GROUND THAT (I) AN AGREEMENT TO SALE WAS TO BE ENTERED IN DUE COURSE WHICH THE ASSESSEE FAILED TO PRODUCE, (II) THE SAID LETTER OF INTENT IS REVOCABLE, (III) NO SALE DEED HAS BEEN EXECUTED IN FAVOUR OF THE ASSESSEE AND NO POSSESSION OF THE PROPERTY HAS BEEN GIVEN TO THE ASSESSEE TILL THE DATE OF ASSESSMENT ORDER AND (IV) THE CONDITIONS LAID DOWN IN SECTION 54F FOR ALLOWABLITY OF DEDUCTION HAS NOT BEEN FULFILLED BY THE ASSESSEE AND (V) THE CLAIM OF DEDUC TION U/S 54F IS ONLY ON THE BASIS OF THE ALLOTMENT LETTER WITHOUT HAVING ACTUAL POSSESSION OF THE PROPERTY AND ALSO WITHOUT HAVING REGISTRATION OF THE SAID PROPERTY IN THE NAME OF THE ASSESSEE. IN V IEW OF THE ABOVE FACTS AND FOLLOWING THE DECISION IN THE CASE OF M/S SURAJ LAMP AND INDUSTRIES PVT. LTD. VS. STATE OF HARYANA 340 ITR1 (SC) , THE AO DISALLOWED THE CLAIM OF DEDUCTION OF RS.1,16,64,231/ - MADE BY THE ASSESSEE U/S 54F OF THE ACT. THE ASSESSEE ACCEPTED THE ABOVE DISALLOWANCE MADE BY THE AO AND DID N OT FILE ANY APPEAL. ITA NO. 4384/MUM/2016 3 3.1 THE AO THEN, IMPOSED A PENALTY OF RS.11,98,325/ - U/S 271(1)(C) FOR THE REASON THAT THE ASSESSEE FILED INACCURATE PARTICULARS OF HER INCOME. AGGRIEVED BY THE PENALTY ORDER PASSED BY THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE LD . CIT(A). WE FIND THAT THE LD. CIT(A) HELD AS UNDER: 6.3 PERUSED THE RIVAL CONTENTIONS O N THE ISSUE. PENALTY WAS LEVIED U/S 271(1)(C) OF THE ACT FOR WRONG CLAIM OF DEDUCTION BY THE APPELLANT U/S 54F OF THE ACT. AO CONTENDS THAT THE ACT OF THE AO IS DELIBERATE ON E WHICH IS FURNISHING OF INACCURATE PARTICULARS AND LEVIED THE PENALTY U/S 271(1)(C ) OF THE ACT. WHEREAS THE APPELLANT CONTENDS THAT ALL THE PARTICULARS WERE FURNISHED DURING THE ASSESSMENT PROCEEDINGS AND THE AMOUNTS FOR THE NEW FLAT TO CLAIM THE DEDUCTION WAS FULLY PAID AND AS SUCH THE CONDITIONS STIPULATED UNDER THE SECTIONS ARE STRIC TLY COMPLIED WITH AND THE COMPLETION OF THE PROJECT IS NOT IN HER HANDS AND DELAYED BY THE BUILDER DUE TO DELAY IN GETTING PERMISSIONS. ON PERUSAL OF THE EVIDENCES FURNISHED BY THE APPELLANT DURING THE PRESENT PROCEEDINGS, I FOUND THAT THE AMOUNTS WERE PAI D TO THE BUILDER WITHIN THE STIPULATED TIME PERIOD ALLOWED BY THE SECTION TO CLAIM DEDUCTION U/S 54F OF THE ACT. THIS FACT WAS NEVER DISPUTED BY THE AO. THE AO DISALLOWED THE CLAIM ONLY ON THE BASIS OF THE PROJECT IS NOT COMPLETED WITHIN THE TIME STIPULATE D IN THE PROVISIONS. IN VIEW OF THE SAME, I AGREE WITH THE ARGUMENTS OF THE APPELLANT THAT THE DISALLOWANCE IS MERELY ON THE TECHNICAL GROUNDS. ALL THE DETAILS WERE FURNISHED IN THE RETURN WITH REGARD TO THE CLAIM OF DEDUCTION MADE U/S 54F OF THE ACT, AND AS SUCH THERE IS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS. MOREOVER, AR BROUGHT TO MY NOTICE THE DISALLOWANCE OF DE D U CTION U/S 54F OF THE ACT WAS ACCEPTED BY THE APPELLANT WITHOUT FILING ANY APPEAL AND THE TAXES DUE ON SUCH ADDITION WAS DULY PAID AND ENCLOSED A CHALLAN COPY IN PROOF OF THE PAYMENT OF THE TAXES. ON PERUSAL OF THE CASE LAWS OF DIFFERENT JUDICIAL FORUMS CITED BY THE APPELLANT ITA NO. 4384/MUM/2016 4 THEY ALL SUPPORT THE CASE OF THE APPELLANT FOR NON - LEVY OF PENALTY IN THE PRESENT SET OF FACTS. 4. BEFORE US, THE LD. DR SUBMITS THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF HER INCOME IN RESPECT OF CLAIM OF EXEMPTION U/S 54F OF THE ACT AND THEREFORE, THE AO HAS RIGHTLY IMPOSED A PENALTY OF RS.11,98,325/ - U/S 271(1)(C) OF THE ACT. 5. PER CONTRA THE LD. COUNSEL OF THE ASSESSEE SUBMITS THAT THE TOTAL PURCHASE CONSIDERATION OF THE SAID RESIDENTIAL PROPERTY WAS RS.14 CRORE. THE ASSESSEE HAD MADE PART PAYMENTS TOTALLING TO RS.8.55 CRORE DURING THE FINANCIAL YEAR 2009 - 10 AND 2010 - 11. THE BU ILDER HAD ISSUED A LETTER OF INTENT FOR ALLOTMENT OF RESIDENTIAL FLAT IN THE PROPOSED BUILDING KNOWN AS WATERFRONT TOWERS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO PRODUCE EVIDENCE TO COMPLY WITH THE CONDITIONS LAID DOWN IN SECTION 54F. IN REPLY, THE ASSESSEE HAD PRODUCED A COPY OF THE LETTER OF INTENT ALONG WITH THE BANK STATEMENTS, HIGHLIGHTING THE ENTRIES FOR PART CONSIDERATION PAID TO THE BUILDERS. FURTHER, IT WAS SUBMITTED BEFORE THE AO THAT THERE HAD BEEN SUBSTANTIAL DE LAY IN THE EXECUTION OF THE PROJECT BY THE BUILDER AS THE REQUISITE PERMISSION/APPROVAL FROM THE MUNICIPAL CORPORATION OF GREATER MUMBAI WAS NOT AVAILAB LE WITH THEM. THE LD. COUNSEL STATES THAT THE ASSESSEE DID NOT DISPUTE THE DISALLOWANCE OF CLAIM OF DEDU CTION U/S 54F MADE BY THE ASSESSEE BEFORE ANY HIGHER AUTHORITY AS THE BUILDER HAD FAILED TO CONSTRUCT THE BUILDING WITHIN THE TIME LIMIT PRESCRIBED IN SECTION 54F. THE REASONS FOR NON - CONSTRUCTION OF THE BUILDING AND NON - COMPLIANCE OF THE CONDITIONS LAID DOWN IN SECTION 54F WERE NOT IN ITA NO. 4384/MUM/2016 5 CONTROL OF THE ASSESSEE AND SUCH AN ISSUE HAD ARISEN BECAUSE THE CONSTRUCTION WAS NOT COMPLETE IN THE STIPULATED TIME PERIOD BY THE B UILDER. IT IS STATED THAT THE ASSESSEE CONTINUES TO HOLD SUCH AN INVESTMENT IN THE UNDER - CONSTRUCTION PROPERTY. ALSO IT IS SUBMITTED THAT AT NO POINT OF TIME IT WAS THE INTENTION OF THE ASSESSEE TO HIDE ANY FACTS FROM THE AO. 5.1 THE LD. COUNSEL ALSO SUBM ITS THAT THE ASSESSEE HAD MADE PAYMENTS TO THE BUILDER FOR PURCHASE OF NEW RESIDENTIAL FLAT, WHICH WAS NEVER DISAGREED BY THE AO. ONCE, IF IT IS DEMONSTRATED THAT THE CONSIDERATION RECEI VED ON TRANSFER HAS BEEN INVESTED IN THE CONSTRUCTION OF THE RESIDENTI AL HOUSE, THEN THOUGH THE CONSTRUCTION IS NOT COMPLETE IN ALL RESPECTS AND AS REQUIRED BY LAW, THE ASSESSEE SHOULD BE GIVEN BENEFIT OF SECTION 54F . R ELIANCE IS PLACED BY HIM ON THE DECISION IN SARDARMAL KOTHARI 302 ITR 286 (MAD), SMT. RANJEET SANDHU VS. DC IT (2010) 133 TTJ 0064 , SATISH CHANDRA GUPTA VS. ASSESSING OFFICER 54 ITD 508, NARASIMHA RAJU RUDRA RAO VS. ACIT ( ITAT HYDERABAD ), PRADEEP KUMAR CHAWDHRY VS. DCIT (ITAT HYDERABAD) IN ITA NO. 1520/HYD/2013 DATED 31.12.2014. 5.2 ALSO RELIANCE IS PLACED BY H IM ON THE ORDER OF THE CO - ORDINATE BENCH IN SHRI HASMUKH N. GALA VS. INCOME TAX OFFICER 20(1)(3), MUMBAI (ASSESSMENT YEAR 2010 - 11, ORDER DATED 19/08/2015), MR. RAJEEV B. SHAH VS. THE INCOME TAX OFFICER WARD - 19(2)(1) MUMBAI) (ASSESSMENT YEAR 2010 - 11, ORDER DATED 08/07/2016) AND SHRI SAMBANDAM UDAYKUMAR VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 1(1) (ASSESSMENT YEAR 2006 - 07, ORDER DATED 08/07/2016) . ITA NO. 4384/MUM/2016 6 6.1 THE MATTER IN DISPUTE IS NO LONGER RES INTEGRA . IN ORDER TO GET THE BENEFIT U/S 54F, THE ASSESSEE NEED NOT COMPLETE THE CONSTRUCTION OF THE HOUSE AND OCCUPY IT AND IT WAS ENOUGH IF THE ASSESSEE ESTABLISHED THE INVESTMENT OF THE ENTIRE NET CONSIDERATION WITHIN THE STIPULATED PERIOD. WE MAY FRUITFULLY R EFER TO THE DECISION IN CIT VS. SARDARMAL KOT HARI (2008) 302 ITR 286 (MAD) , CIT VS. SAMBANDAM UDAYKUMAR (2012) 345 ITR 389 (KARN); CIT VS. JAWAHAR BHATTACHARJEE (2012) 342 ITR 74 (GAUH); CIT VS. GITA DUGGAL (2013) 357 ITR 153 (DEL). 6.2 IN A RECENT DECISI ON IN CIT VS. B.S. SHANTAKUMARI (2015) 126 DTR 436 (KARN), THE HONBLE KARNATAKA HIGH COURT HAS HELD THAT IF THE ASSESSEE IS ABLE TO ESTABLISH THAT HE HAD INVESTED THE ENTIRE NET CONSIDERATION WITHIN THE STIPULATED PERIOD, IT WOULD MEET THE REQUIREMENT OF SECTION 54F AND AS SUCH, ASSESSEE WOULD BE ENTITLED TO GET THE BENEFIT OF SECTION 54F. THOUGH SUCH CONSTRUCTION OF BUILDING MAY NOT BE COMPLETE IN ALL RESPECT THAT BY ITSELF WOULD NOT DISENTITLE THE ASSESSEE TO THE BE NEFIT FLOWING FROM SECTION 54F. 6.3 IN VIEW OF THE ABOVE POSITION OF LAW , WE SUSTAIN THE ORDER OF THE LD. CIT(A) DELETING THE PENALTY OF RS.11,98,325/ - IMPOSED BY THE AO U/S 271(1)(C). ITA NO. 4384/MUM/2016 7 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN C OURT ON 10/08/2017 . SD/ - SD/ - (MAHAVIR SINGH) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 10/08/2017 RAHUL SHARMA, SR. P.S. 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