AMIN SHAHABUDDIN ALIBHAI, THANE V. CIT(A) 55,

ITA 4426/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3820 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 23-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARSHAD VENGURLEKAR
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Wrong claim
• Section: 143(3); 50C

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SM C , MUMBAI BEFORE SHRI MAHAVIR SING H (JUDICIAL MEMBER) ITA NO. 4426/MUM/2015 ASSESSMENT YEAR: 2011 - 12 AMIN SHAHABUDDIN ALIBHAI VS. CIT(A) - 55 C - 301, SATYAM BLDG, OPP MUMBAI NIJI BUNGLOW, MIRA RD. THANE PAN NO. AGCPA9290N (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : SHRI. HARSHAD VENGURLEKAR DATE OF HEARING : 02/08/2016 DATE OF PRONOUNCEMENT : 10 /0 8 /2016 O R D ER PER MAHAVIR SINGH , JM : THIS APPEAL BY ASSESSEE IS ARISING OUT OF THE ORDER OF CIT(A) - 55, MUMBAI N APPEAL NO. CIT(A) - 55/INCOME TAX OFFICER(IT) - 1(1)/IT - 98/2014 - 15, DATED 30/03/2015. ASSESSMENT WAS FRAMED BY ITO - WARD(IT) - 1(1), MUMBAI FOR THE AY 2011 - 12, VIDE HIS ORDER DATED 29/03/2014 UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) . THE PENALTY UNDER DISPUTE WAS LEVIED BY THE AO UNDER SECTION 271(1 )(C) OF THE ACT VIDE ORDER DATED 22/09/2014. 2. THE ONLY ISSUE IN THIS APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF LD. CIT(A) CONFIRMING THE ACTION OF THE AO LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF I NCOME IN RESPECT TO DECLARING LONG TERM CAPITAL LOSS AS AGAINST THE SHORT TERM CAPITAL LOSS. 3. BRIEF FACTS RELATED TO THE ISSUE ARE THAT THE ASSESSEE IS NONRESIDENT HAVING SOURCE S OF INCOME IN INDIA I.E; INCOME FROM HOUSE PROPERTY, INCOME FROM CAPITAL GA IN AND INCOME FROM 2 OTHER SOURCES. THE ASSESSEE SOLD ONE PROPERTY AT EVEREST, ANDHERI MUMBAI. THE ASSESSEE CLAIMED LONG TERM CAPITAL LOSS TO THE TUNE OF RS. 5,89,116/ - AFTER TAKING INDEXATION BENEFIT. ACCORDING TO AO THE ASSESSEE AS PER AGREEMENT PURCHASED THIS PROPERTY ON 31/08/2009 AND SOLD THE SAME ON 16/08/2010, WHICH SHOWS THAT THE PROPERTY WAS SOLD WITHIN ONE YEAR. ACCORDING TO AO , SINCE ASSET IS NOT H ELD FOR MORE THAN 36 MONTHS, THIS IS A SHORT TERM CAPITAL ASSET AND INCOME DERIVED FROM THE SAME WOULD BE SHORT TERM CAPITAL LOSS AND INDEXATION BENEFIT ON COST OF ACQUIRING IS TO BE DISALLOWED. ACCORDINGLY THE AO DISALLOWED THE CLAIM OF LTCL CLAIMED BY ASSESSEE AMOUNTING TO RS. 5 ,89,116/ - UNDER SECTION 74 OF THE ACT. THE AO INITIATED PENALTY PROCEEDING UND ER SECTION 271(1)(C) OF THE ACT FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. DURING THE PENALTY PROCEEDINGS , THE ASSESSEE FILED EXPLANATION THAT THE ASSESSEE BEING A NRI OF USA AND HAVING NO KNOWLEDGE OF INDIA TAXATION LAWS, APPOINT AN EXPERT TO OBT AIN LEGAL ADVISE FOR FILING HIS INCOME TAX RETURN. ACCORDING TO ASSESSEE , HE HAS COMPLETELY RELIED UPON ADVICE OFFERED BY HIS TAX CONSULTANT HAVING NO CLUE OR DOUBT O N HIS PROFICIENCY IN TAXATION MATTER. ACCORDING TO THE LD. COUNSEL , THE CLAIM OF LONG TERM CAPITAL LOSS WAS MADE IN GOOD FAITH WITHOUT HAVING ANY KNOWLEDGE OF WRONG CLAIM MADE BY HIS CONSULTANT WHILE FILING OF RETURN OF INCOME. HOWEVER, THE ASSESSING OFFICER WAS NOT CONVINCED BY THE REPLY OF THE ASSESSEE AND HE LEVIED PENALTY UNDER SECTION 271( 1)(C) OF THE ACT FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO ALSO CONFIRM THE ACTION OF THE AO BY OBSERVING IN PARA 5 AS UNDER: 5. I HAVE CONSIDERED THE AO'S ORDER AS WELL AS THE APPELLANT ARS SUBMISSIONS. HAVING CONSIDERED BOTH, I AM IN COMPLETE AGREEMENT WITH THE AO'S CONTENTION THAT THE APPELLANT HAS CONCEALED PARTICULARS OF HIS INCOME AS THE APPELLANTS CLAIM OF LONG TERM CAPITAL GAIN WAS AGAINST THE PROVISIONS OF LAW. EVEN, THE APPELLANTS CLAIM OF DEDUCTION OF INDEXATION OF CAPITAL ASSET FOR WORKING OUT THE CAPITAL GAIN/LOSS WAS COMPLETELY INCORRECT AS THE APPELLANT WAS NOT ENTITLED FOR THE SAME UNDER THE PROVISIONS OF LAW. TH IS IS ONLY BECAUSE THE APPELLANT HELD THE CAPITAL ASSET FOR LESS THAN 36 MONTHS. THUS, MAKING CLAIM OF LONG TERM CAPITAL LOSS BY THE APPELLANT WAS UNJUSTIFIED AND INCORRECT WHICH CLEARLY AMOUNTS TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN VIEW OF THE SAME, I CONSIDER IT PROPER AND APPROPRIATE TO HOLD THAT THE PENALTY ORDER SO PASSED BY THE AO U/S 271(1)(C) OF THE I.T. ACT, 1961 IS JUSTIFIED AND CORRECT. HENCE THE A.OS ORDER IS CONFIRMED. ACCORDINGLY, THE APPELLANTS THIS GROUND OF APPEAL IS DIS MISSED. AGGRIEVED, ASSESSEE PREFERRED THE APPEAL BEFORE THE TRIBUNAL. 4 . I HAVE HEARD RIVAL CONTENTION S AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE . I FIND FROM THE FACTS OF THE CASE THAT THE ASSESSEE HAS FILED EXPLANATION BEFORE THE ASSESS ING OFFICER 3 AND BEFORE CIT(A) THAT THE CLAIM OF LONG TERM CAPITAL LOSS WAS MADE ON THE EXPERT OPINION/LEGAL ADVISE OF THE EXPERT AND HE HAD COMPLETELY RELIED UPON ADVISE OFFERED BY HIS CONSULTANT HAVING NO CLUE OR DOUBT UPON HIS PROFICIENCY IN THE TAXATION . I FIND FROM THE RECORDS THAT THE ASSESSEE HAS CLAIMED LONG TERM CAPITAL LOSS TO THE TUNE OF RS. 5,89,116/ - AND ADJUSTED AGAINST THE CAPITAL GAINS ARISING FROM SALE OF OTHER PROPERTIES. THE ASSESSEE HAS FILED COMPUTATION OF LONG TERM CAPITAL LOSS OF EVERE ST ANDHERI PROPERTY AS UNDER: DATE OF TRANSFER 16 AUG 2010 SALE CONSIDERATION RS. 71,00,000/ - ACQUISITION DETAILS FINANCIAL YEAR COST INDEX COST PURCHASE: 6834770 X 711/632 2009 - 10 68,34,770 RS. 76,89,116/ - CAPITAL GAIN ( - ) RS. 5, 89,116/ - THE AO RECOMPUTED THE SHORT TERM CAPITAL GAIN IN VIEW OF THE FACTS GIVEN AS UNDER: SALE CONSIDERATION OF THE ABOVE PROPERTY - AS PER SECTION 50C OF THE I.T. ACT, 1961 - RS. 71,00,000/ - LESS: COST ACQUISITION OF THE PROPERTY - EVEREST, ANDHERI, MUMBAI RS. 67,33,160/ - SHORT TERM CAPITAL GAINS: RS. 3,66,840/ - 5. I FIND FROM THE ABOVE FACTS THAT THE ASSESSEE HAS FILED COMPLETE PARTICULARS BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDING AND IN HIS RETURN OF INCOME ALSO. THE AO ASSE SSED SHORT TERM CAPITAL GAIN ON SALE OF RESIDENTIAL PROPERTY I.E; EVEREST ANDHERI, MUMBAI FOR A SUM OF RS. 3,66,840/ - . IN VIEW OF THESE FACTS, WHETHER THIS TANTAMOUNTS TO CONCEALMENT OR NOT. I AM OF THE VIEW THAT AS PER RULE OF EVIDENCE THERE IS DISTINCTI ON BETWEEN SET OF FACTS NOT PROVED AND FACTS DISPROVED AND FACTS PROVED. BENEFIT OF PRINCIPLE THAT MERE NON SATISFACTORY NATURE OF EXPLANATION FURNISHED CANNOT AMOUNT TO PROOF OF FALSITY OF EXPLANATION FURNISHED CAN APPLY , IN CASE THE FACT FINDING AUTHORIT Y REACHE S TO A STAGE WHERE IT CAN ONLY CONCLUDE THAT THE FACT ALLEGED IS NOT PROVED, WHICH WOULD RESULT , THAT , EXCEPT REJECTION OF THE EXPLANATION FURNISHED BY THE ASSESSEE, THERE IS NO MATERIAL TO SUSTAIN THE PLEA OF CONCEALMENT. HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. [2010] 322 ITR 158 (SC) HAS HELD THAT WHERE THERE IS NO FINDING THAT ANY DETAIL SUPPLIED BY THE ASSESSEE IN HIS RETURN OF INCOME ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE, THERE IS NO QUESTION OF LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT . A MERE MAKING OF CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF WILL NOT AMOUNT TO 4 FURNISHING OF INACCURATE PARTICULARS OF INCOME OF THE ASSESSEE. IN VIEW OF THE DECISION OF HONBLE SUPREME COURT, IN THE PRESENT CASE ALSO THE ASSESSEE HAS FILED COMPLETE PARTICULARS RELATING TO SALE OF PROPERTY AND MADE A CLAIM OF LONG TERM CAPITAL GAIN INSTEAD OF THE SAME AS SHORT TERM CAPITAL GAIN. IN MY VIEW, THIS IS NOT A FIT CASE FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. ACCORDINGLY, I DELETE THE PENALTY AND ALLOW THE APPEAL OF THE ASSESSEE. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH AUGUST, 2016. SD/ - (MAHAVIR SINGH) JUDICIAL MEMBER MUMBAI ; DATED:10 /08/2016 / 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 AG (ON TOUR)