DCIT CIR 3(3), MUMBAI V. VIJAY SILK HOUSE P.LTD, MUMBAI

ITA 4806/MUM/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 3110 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 29-05-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 20-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH RANJAN
• Keywords: Capital asset; Share purchase agreement; Additional evidence; Reasonable cause; Condonation of delay; Revised return; Ignorance of law
• Section: 2(14)

Judgement Text

F IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI SHAILENDRA KUMAR YADAV, JM AND SHRI RAMIT KOCHAR, AM , I.T.A. NO.4806/MUM/2012 ( / ASSESSMENT YEAR : 2007-08 A.C.I.T. CIR. 3 (3), 6 TH FLOOR, R. NO. 609, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. VS. M/S VIJAYA SILK HOUSE PVT. LTD., 7/23, GRANTS BUILDING, ARTHUR BUNDER ROAD, COLABA, MUMBAI 400 005. PAN : AAACV9295M ( ! / APPELLANT ) .. ( '#! RESPONDENT ) A PPELLANT BY SHRI RAJESH RANJAN R E SPONDENT BY : SHRI ISHWAR PRAKASH RATHI $ %&' ( / DATE OF HEARING : 16-9-2015 )*+, &' ( / DATE OF PRONOUNCEMENT : 30.09.2015 O R D E R PER SHAILENDRA KUMAR YADAV, J.M. : THIS APPEAL HAS BEEN FILED BY THE REVENUE ON FOLLOW ING GROUNDS:- ITA 4806/M/12 2 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. CIT (A) HAS ERRED IN ADMITTING THE APPEAL BY IG NORING THE DELAY OF 433 DAYS IN FILING OF APPEAL WITHOUT APPRECIATIN G THE FACT THAT THE ASSESSEE IS NOT PREVENTED FROM SUFFICIENT CAUSE FOR PRESENTING THE APPEAL WITHIN THE PERIOD. AS THE ASSESSEE IS CO MPANY, THE MD IS ADVISED BY COUNSELORS AND CAS.' 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE ID. CIT (A) HAS ERRED IN ALLOWING EXEMPTION TO THE SHORT TERM CAPITAL GAIN OF RS. 53,98,220/- DISCLOSED BY THE AS SESSEE IN THE RETURN OF INCOME ON THE GROUND THAT SUBJECT MATTER OF STCG WAS AGRICULTURAL LAND AS DEFINED U/S. 2(14) OF THE INCO ME TAX ACT WITHOUT APPRECIATING THE FACT THAT THE SAID CLAIM W AS NOT MADE BY THE ASSESSEE EITHER IN THE ORIGINAL RETURN OF INCOM E OR REVISED RETURN OF INCOME, WHICH IS IN CONTRAVENTION TO THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF M/S. GOETZ (IN DIA) LTD. VS. CIT [284 ITR 323]. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE ID. CIT (A) HAS ERRED IN ALLOWING EXEMPTION TO THE SHORT TERM CAPITAL GAIN OF RS. 53,98,220/- DISCLOSED BY THE AS SESSEE IN THE RETURN OF INCOME ON THE GROUND THAT SUBJECT MATTER OF STCG WAS AGRICULTURAL LAND AS DEFINED U/S. 2(14) OF THE INCO ME TAX ACT WITHOUT TAKING INTO CONSIDERATION THE REMAND REPORT SUBMITTED BY THE AO DURING THE COURSE OF APPELLATE PROCEEDINGS.' 4. THE APPELLANT PRAYS THAT THE ORDER OF CIT (A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFIC ER BE RESTORED'. 2. AS REGARDS TO THIS APPEAL, THE ASSESSEE SEEKS CO NDONATION OF DELAY BY 433 DAYS IN FILING THIS APPEAL BEFORE THE CIT(A) . AS PER FORM NO. 35 AND MEMORANDUM OF APPEAL, THE IMPUGNED ORDER WAS RE CEIVED BY THE ASSESSEE ON 8-6-2009. NOTICE IN ITNS WAS ISSUED TO THE ASSESSING OFFICER. THE ASSESSEE HAS DELAYED FOR 433 DAYS IN FILING OF THIS APPEAL BEFORE THE CIT(A). THE STAND OF THE ASSESSEE BEFOR E THE CIT(A) HAS BEEN ITA 4806/M/12 3 TO CONDONE THE DELAY AND FILED A DETAILED WRITTEN S UBMISSION IN SUPPORT OF ITS CONTENTION. THE WRITTEN SUBMISSION IS AS UN DER:- THE APPEAL IS LATE BY 433 DAYS, WE HAD ALREADY SUB MITTED AN APPLICATION FOR CONDONATION OF DELAY EXPLAINING THE CIRCUMSTANCE FOR SUCH DELAY. THE FACTS OF THE CASE ARE THAT THE ASSESSMENT U/S 1 43 (3) WAS COMPLETED ON 08-06-2009 WHEREIN THE SHORT TERM CAPI TAL GAIN OF RS. 53,98,220/- (I.E. PROFIT ON TRANSFER OF AGRICUL TURAL LAND) WAS CHARGED TO TAX ON THE BASIS OF THE INCOME DECLARED BY ASSESSEE. BUT THE LAND WHICH WAS THE SUBJECT MATTER OF TRANSF ER WAS AGRICULTURAL LAND AND BEING AN AGRICULTURAL LAND TH E ASSET CAN NOT BE TERMED AS CAPITAL ASSET AS DEFINED SECTION 2(14) AND HENCE THE PROFIT ON TRANSFER OF SUCH LAND CANNOT BE CHARGED A S CAPITAL GAIN. BECAUSE OF THE WRONG PRESUMPTION ABOUT THE CHARGEAB ILITY OF TAX ON THIS LAND (IGNORING THE FACT THAT THE LAND IS AG RICULTURAL LAND) THE INCOME WAS DECLARED IN THE RETURN OF INCOME AND EVEN DURING THE COURSE OF ASSESSMENT PROCEEDINGS OR TILL THE TI ME ASSESSMENT COMPLETED, THIS MISTAKE COULD NOT BE RECTIFIED DUE TO THE IGNORANCE OF THE FACTS AND LEGAL PROVISIONS. IT WAS DURING THE COURSE OF APPELLATE PROCEEDINGS O F ONE OF THE RELATIVE OF DIRECTOR THE PORTION OF THE PROFIT ON T HE AFORESAID LAND WAS CHARGED TO TAX BY THEIR ASSESSING OFFICER AND D URING THE COURSE OF APPELLATE PROCEEDINGS WHEN THE MATTER WAS REFERR ED TO THE ANOTHER COUNSEL, IT WAS NOTICED BY THEM THAT THERE SHOULD NOT BE ANY TAX ON TRANSFER OF THIS LAND BECAUSE THE LAND W AS AGRICULTURAL LAND. ON THE 2 ND ISSUE IN APPEAL IN RESPECT OF DISALLOWANCE U/S 14 A AND RULE 8 D ALSO THE JURISDICTIONAL HIGH COURT HAS NOW TAKEN THE VIEW THAT RULE 8 D IS NOT APPLICABLE FOR THE ASST YEAR 2 007-08. SINCE THE TIME FOR FILING OF THE APPEAL HAS EXPIRED BUT NOW WE CAME TO KNOW CORRECT POSITION OF LAW FOR EXEMPTION ON PR OFIT ON TRANSFER OF AGRICULTURE LAND AND DISALLOWANCE UNDER RULE 8 D , WE HAD FILED THIS APPEAL AND THERE IS A DELAY OF 433 DAYS. THE D ELAY IN FILING OF ITA 4806/M/12 4 THIS APPEAL IS FULLY ON ACCOUNT OF INCORRECT CONCLU SION DRAWN BY ASSESSEE ABOUT THE AFORESAID SHORT TERM CAPITAL GAI N. AND UNDER THESE CIRCUMSTANCES, WE SHOULD NOT BE PENALIZED FOR THE SAME. THE ISSUES INVOLVED IS PURELY AN LEGAL ISSUE AND UN DER THE AFORESAID CIRCUMSTANCES, WE PRAY TO YOUR HONOUR TO CONDONE THE GENUINE DELAY AS OTHERWISE IT WOULD LEAD TO GREAT H ARDSHIP AND UN- REPAIRABLE DAMAGE TO THE APPELLANT BY DENYING THE J USTICE ONLY FOR TECHNICAL DEFAULTS OF THE APPELLANT, THAT TOO HAS O CCURRED BASED ON THE LEGAL ADVICE. WE FURTHER PRAY FOR A PRAGMATIC APPROACH FOR CONDONATION OF DELAY WITH A VIEW TO DO EVEN HANDED JUSTICE ON MERITS IN PREFERENCE TO APPROACH WHICH SCUTTLES A D ECISION ON MERITS AND NO INJUSTICE BEING DONE BECAUSE OF A NON -DELIBERATE DELAY. KINDLY CONDONE THE DELAY AND OBLIGE. THE ABOVE SUBMISSION HAS BEEN SUPPORTED BY VARIOUS CASE LAWS. LEARNED AUTHORIZED REPRESENTATIVE REQUESTED TO UPHO LD THE CONDONATION OF DELAY AT THE END OF CIT(A) AND TO UP HOLD THE ORDER ON MERIT. ON OTHER HAND LEARNED DEPARTMENTAL REPRESEN TATIVE SUPPORTED THE ORDER OF ASSESSING OFFICER. 3. AFTER CONSIDERING THE AFORESAID SUBMISSION OF TH E ASSESSEE ON ACCOUNT OF CONDONATION OF DELAY IN FILING OF APPEAL AS WELL AS THE ADDITIONAL EVIDENCES SUBMITTED BY THE ASSESSEE, THE ASSESSING OFFICER WAS ASKED TO SUBMIT REMAND REPORT FOR THE SAME. TH E CIT(A) FOUND THAT THE ASSESSING OFFICER VIDE LETTER DATED 26.03.2012 SUBMITTED HIS REPORT AS UNDER:- THERE IS NO ERROR IN THE ASSESSMENT ORDER PASSED B Y THE ASSESSING OFFICER AND THERE HAS BEEN NO ADDITION UNDER THE HE AD 'CAPITAL GAINS'. HENCE THE ISSUE OF CHARGING TAX ON RS.53,98 ,220/- AS SHORT TERM CAPITAL GAIN ON TRANSFER OF AGRICULTURAL LAND DOES NOT EMANATE FROM THE ASSESSMENT ORDER AND IS THEREFORE NOT OPEN TO APPELLATE PROCEEDINGS. IN CASE THE ASSESSEE HAD WRONGLY OFFER ED AN INCOME ITA 4806/M/12 5 TO TAX IN ITS RETURN OF INCOME IT HAD THE OPTION OF FILING A REVISED RETURN. THE MAXIM 'IGNORANCE FACTI EXCUSAT, IGNORAN TIA JURIS NON EXCUSAT ' STATES THAT IGNORANCE OF LAW CANNOT BE HE LD AS AN EXCUSE AND IN THE PRESENT CASE THERE WAS NO IGNORANCE OF F ACT. WITHOUT PREJUDICE TO THE ABOVE, IT IS CONTENDED THA T THE ASSESSEE VIDE ITS LETTER DATED 25. 05.2009 SUBMITTED DETAILS AND COMPUTATION OF STCG WHILE COPIES OF SALE AGREEMENT PERTAINING TO THE LAND AT AMGAON (CLAIMED SALE VALUE RS.2 CRORE A ND LONAVALA (CLAIMED SALE VALUE RS.14 LAKHS) WERE ALREADY SUBMI TTED BEFORE THE A.O. ON 16.03.2009. CLAUSE L(N) OF THE COPY OF THE DEED OF SALE/OR THE AMGAON LAND CLEARLY MENTIONS 'THAT THE PURCHASE R WILL HAVE TO OBTAIN NECESSARY PERMISSION FOR ANY OTHER PURPOSE/U SE OF THE LAND THAN AGRICULTURAL'. THE DEED OF CONVEYANCE SUBMITTE D FOR THE LONAWALA PLOT ON PAGE 10 THAT THE VENDOR SHALL ALSO GET THE SHARE CERTIFICATE ISSUED BY THE SUMMER HILL PLOT OWNERS C O-OPERATIVE HOUSING SOCIETY LTD. IN THE NAME OF VIJAY SILK HOUS E BEARING CERTIFICATE NO. 50 COMPRISING OF 5 SHARES BEING DIS TINCTIVE NOS. 246 TO 250 (BOTH INCLUSIVE) IN RESPECT OF PLOT NO. 4, S URVEY NO. 41/1 + 41/2 TRANSFERRED TO THE NAME OF THE PURCHASER. THE ADDITIONAL EVIDENCE THAT THE ASSESSEE CLAIMS TO SUBMIT IS THE CERTIFICATE FROM GROUP GRAM PANCHAYAT, AMBHAI-AMGAON-KHUTAL DATED 0510712010, WHICH STATES THAT THE LAND GUT NO. 128, HISSA NO.1 TO 21 AND GUT NO. 130 HISSA NO. 1 & 2 ADMEASURING 2 54 HECTOR, 35 GUNTHA 935.87 ACRE IS 30 KILOMETRES AWAY FROM PA LGHAR NAGAR PARISHAD AND 45 KILOMETRES AWAY FROM BHIWANDI NAGAR PARISHAD. IT FAILS WITHIN THE RURAL AREA OF AMGAON AND DOES N OT FALL WITHIN ANY CITY LIMIT. THE POPULATION OF AMGAON VILLAGE IS 1350 WHICH IS LESS THAN 10,000. IN VIEW OF THE ABOVE REMARKS, THE CONTENTION OF THE ASSESSEE THAT THE DOCUMENTS SUBMITTED BY IT MAY BE ACCEPTED DESERVES TO BE REJECTED UNDER RULE 46A OF THE IT RU LES, 1962 AND THE CASE DESERVES TO BE DECIDED STRICTLY ON MERITS BASED ON THE EVIDENCE ALREADY ON RECORD. 4. THE COPY OF THE REMAND REPORT AS REFERRED ABOVE WAS GIVEN TO THE ASSESSEE FOR MAKING COUNTER COMMENTS FOR THE SAME. THE ASSESSEE IN THIS REGARD HAS FILED ITS SUBMISSION, WHICH IS EXTR ACTED AS UNDER.- ITA 4806/M/12 6 THE APPEAL WAS LATE BY 433 DAYS. THE APPELLANT HAS FILED AN APPLICATION FOR CONDONATION OF DELAY ALONG WITH THE APPEAL DOCUMENTS. THE CAUSE OF SUCH DELAY AND THE JUDICIAL PRECEDENTS WERE EXPLAINED BY OUR LETTER DT. 12-10-2011. FURTHE R THERE IS NO REMARKS IN. THE AFORESAID REMAND REPORT/OR CONDONAT ION OF DELAY. AND THE APEX COURT HAVE CONSTANTLY HELD THAT THE EX PRESSION 'SUFFICIENT CAUSE' SHOULD RECEIVE A LIBERAL CONSTRU CTION AND THE WHEN SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDERATIO NS ARE PITTED AGAINST EACH OTHER, THE CAUSE OF SUBSTANTIAL JUSTIC E DESERVES TO BE PREFERRED. IN VIEW OF THE AFORESAID FACTS AND OUR S UBMISSION DT. 12- 10-2011, WE HEREBY REQUEST YOUR GOOD SELF THAT THE DELAY MAY PLEASE BE CONDONED AND OBLIGE. 5. THE CIT(A) HAS CONSIDERED THE SUBMISSION OF THE ASSESSEE WITH REGARD TO THE CONDONATION OF DELAY IN FILING OF APP EAL AS WELL AS ADDITIONAL EVIDENCES FILED BY THE ASSESSEE IN RESPE CT OF AGRICULTURAL LAND. HE OBSERVED THAT THE DELAY IN FILING OF APPEAL WAS MAINLY ON WRONG PRESUMPTION. THE ASSESSEE WAS NOT AWARE ABOUT THE CHARGEABILITY OF TAX AND RESULTANT THEREWITH THE ASSESSEE COULD NOT CLAIM THE EXEMPTION OF INCOME AS PER THE PROVISIONS OF LAW. IN VIEW OF THE ABOVE, THE CIT(A) OBSERVED THAT THE ASSESSEE HAS A REASONABLE CAUSE F OR DELAY IN FILING OF APPEAL AND CONSIDERING THE FACTUAL POSITION OF THE CASE AND ALSO TAKING NOTE OF JUDICIAL PRONOUNCEMENTS, THE CIT(A) CONDONE D THE DELAY IN FILING OF APPEAL BY THE ASSESSEE. 6. THIS REASONED FINDING OF CIT(A) ON POINT OF COND ONATION NEEDS NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 7. ON MERITS, THE ISSUE IS WITH REGARD TO ALLOWABIL ITY OF EXEMPTION TO THE SHORT TERM CAPITAL GAIN OF RS. 53,98,220/-. IN APPEAL, CIT(A) AFTER HAVING CONSIDERED THE SUBMISSION AS WELL AS THE CAS E LAWS CITED BY THE ITA 4806/M/12 7 ASSESSEE, GRANTED RELIEF TO THE ASSESSEE AND THE SA ME HAS BEEN OPPOSED BY THE REVENUE IN ITS FURTHER APPEAL. THE LD. D.R. SUBMITTED THAT THE CIT(A) ERRED IN ALLOWING CAPITAL EXEMPTION TO THE S HORT TERM CAPITAL GAIN OF RS. 53,98,220/- DISCLOSED BY THE ASSESSEE IN THE RETURN OF INCOME AND PRAYED THAT THE ORDER OF THE CIT(A) BE SET ASID E AND THAT OF THE ORDER OF ASSESSING OFFICER BE RESTORED. ON THE OTH ER HAND, THE LD. AUTHORISED REPRESENTATIVE SUPPORTED THE ORDER OF TH E CIT(A). 8. WE HAVE CONSIDERED THE RIVAL SUBMISSION AND PERU SED THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE ASSESSEE WAS NOT AWARE OF THIS FACT THAT THE SALE PROCEEDS ARISED OUT OF SALE OF AN AGR ICULTURAL LAND IS EXEMPT FROM TAX U/S 10 OF THE ACT HENCE THE ASSESSE E INADVERTENTLY COULD NOT ADDUCE THE SAID FACT BEFORE THE ASSESSING OFFICER AS WELL AS WHILE FILING THE RETURN OF INCOME. THE ASSESSEES C LAIM IS IN ACCORDANCE WITH' THE PROVISIONS OF LAW AND GETS SUPPORT FROM T HE CBDT CIRCULAR NO. L4 (XL-35) DATED 11/0411955, WHEREIN IT HAS BEEN CL EARLY STATED THAT THE OFFICERS OF DEPARTMENT MUST NOT TAKE ADVANTAGE OF IGNORANCE OF AN ASSESSEE AS TO HIS RIGHTS. IT IS DUTY OF THE DEPART MENT TO ASSIST A TAX PAYER IN EVERY REASONABLE WAY, PARTICULARLY IN MATT ER OF CLAIMING AND SECURING RELIEFS. DUE TO NON-AWARENESS, THE ASSESSE E COULD NOT FILE CERTIFICATE FROM THE 'GROUP GRAM PANCHAYAT, AMBHAI- AMGAON, KHUTAL' FOR JUSTIFICATION OF ITS CLAIM. IT IS SETTLED LEGAL POSITION THAT ASSESSEE CAN RAISE ITS LEGAL CLAIM AT ANY STAGE. THE COURSE OF APPELLATE PROCEEDINGS, THE LD. AUTHORISED REPRESENTATIVE OF THE ASSESSEE F ILED A COPY OF CERTIFICATE FROM 'GROUP GRAM PANCHAYAT, AMBHAI-AMGA ON CERTIFIED BY GRAM SEVAK AND SARPANCH, WHICH SUGGESTED THAT THE L AND IS NOT SITUATED IN AREA, WHICH IS COMPRISED WITHIN THE JUR ISDICTION OF A ITA 4806/M/12 8 MUNICIPALITY OR A CANTONMENT BOARD AND WHICH HAS A POPULATION OF NOT LESS THAN TEN THOUSAND OR IN ANY AREA WITHIN SUCH D ISTANCE, NOT BEING MORE THAN EIGHT KILOMETER FROM THE LOCAL LIMITS OF ANY MUNICIPALITY OR CANTONMENT BOARD. THIS FACT HAS NOT BEEN DISPUTED BEFORE US ON BEHALF OF REVENUE. TAKING NOTE OF ALL THE FACTS AVAILABLE ON RECORD, THE CIT(A) FOUND THE ASSESSEES CLAIM PROPER AND APPROPRIATE I N ACCORDANCE WITH THE PROVISIONS OF LAW AND ACCORDINGLY ALLOWED THE S AME. THERE IS NOTHING BROUGHT ON RECORD BY THE REVENUE AGAINST TH IS FACTUAL FINDING OF THE CIT(A). UNDER THESE CIRCUMSTANCES, WE ARE N OT INCLINED TO INTERFERE WITH THE FINDINGS OF CIT(A) BY ALLOWING T HE EXEMPTION TO THE SHORT TERM CAPITAL GAIN OF RS. 53,98,220/- DISCLOSE D BY THE ASSESSEE IN THE RETURN OF INCOME ON THE GROUND THAT SUBJECT MAT TER OF STCG WAS AGRICULTURAL LAND AS DEFINED U/S 2(14) OF THE ACT. WE UPHOLD THE SAME. 9. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH SEPTEMBER, 2015. &)*+, -$ . . *&/% SD/- SD/- (RAMIT KOCHAR) (SHAILAENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBE R 0% MUMBAI; -$ DATED 30/09/2015 $ R.K. , EX SR. PS ! ' #$%& ' &$ COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT ITA 4806/M/12 9 2. '#! / THE RESPONDENT. 3. 1' 2 3 / THE CIT(A)- 7 MUMBAI 4. 1' / CIT- 3, MUMBAI 5. 45 /''$67 (67 , 0% / DR, ITAT, MUMBAI F BENCH 6. / 89: % GUARD FILE. ! ( / BY ORDER, # 4''' //TRUE COPY// )/(* + (DY./ASSTT. REGISTRAR) , 0% / ITAT, MUMBAI