VIVEK VINOD VAID, MUMBAI V. ITO 17(3)(5), MUMBAI

ITA 4829/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0120 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 22-11-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 20-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: POOJA SWAROOP
• Assessee Lawyers: SHRI J P BAIRAGRA
• Keywords: Capital asset; Principle of natural justice; Wrong claim; Difference of opinion; Capital receipt; Capital expenditure
• Section: 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH F, MUMBAI BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBERAND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA NO.4829/M/2016 ASSESSMENT YEAR: 2007-08 SHRIVIVEKVINODVAID THE INDUSTRIAL ENGG. CORPORATION,139, SEKSARIA CHAMBERS, NAGINDAS MASTER ROAD, PAN:AAAPV7013N VS. THE INCOME TAX OFFICER, 1 7(3)(5), AAYAKARBHAVAN, MUMBAI (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRIJ. P. BAIRAGRA, A.R. REVENUE BY : MS. POOJASWAROOP DATE OF HEARING :13.06.2017 DATE OF PRONOUNCEMENT :23.06.2017 O R D E R PER D.T. GARASIA, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 19.05.2016 OF THE COMMISSIONER OF INCOME TAX (APPEALS) 28 [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT YEAR 2007-08. 2. THE ONLY GROUND EFFECT TO GROUND. THE CIT(A) ER RED IN CONFIRMING THE LEVY OF PENALTY OF RS.42,07,500/- U/S.271(1)(C) OF THE INCOME TAX ACT, 1961( IN SHORT THE ACT). 3. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT DATED 30.09.2009 DETERMINING TOTAL INCOM E OF RS.4,66,963/- AFTER ALLOWING DEDUCTION U/S.VIA OF THE ACT OF RS.1,08,60 3/-. DURING THE ASSESSMENT PROCEEDING THE ASSESSING OFFICER (HEREIN AFTER REFERRED TO AS THE AO) NOTICED THAT CAPITAL ACCOUNT OF THE ASSESSEE WA S CREDITED WITH AN AMOUNT ITA NO.4829/M/2016 VIVEKVINODVAID 2 OF RS.1,25,00,000/- ON ACCOUNT OF SALE PROCEEDS OF FLATS WHEREAS NO LOSS / GAIN WAS SHOWN IN THE COMPUTATION OF INCOME. IT WAS ALS O OBSERVED THAT ASSESSEE HAS MADE INVESTMENT OF RS.1,24,87,759/- IN RESIDENT IAL PROPERTY AT BANGALORE. ON PERUSAL OF THE DETAILS FILED DURING THE COURSE O F ASSESSMENT PROCEEDING, IT WAS OBSERVED BY THE AO FROM THE AGREEMENTFOR SALE O F PROPERTY ENTERED BETWEEN ASSESSEE AND HIS FATHER MR. VINOD S. VAID W ITH CHETAN SHAH AND MR. DHARMESH SHAH FOR SALE OF APARTMENT NO.6 ON THE 5 TH AND 6 TH FLOOR WITH EXCLUSIVE RIGHT TO TERRACE INCLUDING GARAGE NO.11 A ND THREE PARKING SPACES IN BHAGWATIBHUVANCONDOMINUM THAT MR. VINOD S. VAID, FA THER OF THE ASSESSEE WAS THE OWNER OF THE PROPERTY AND ASSESSEE HAS BEEN INCLUDED AS A CONFIRMING PARTY. CONSEQUENTLY, IN THE ORIGINAL ASSESSMENT OR DER U/S.143(3) OF THE ACT IT WAS HELD BY THE AO THAT AMOUNT CREDITED TO CAPITAL ACCOUNT WAS NOT TREATED AS LONG TERM CAPITAL GAIN HENCE SAME WAS NOT ELIGIBLE FOR DEDUCTION SECTION 54 OF THE ACT AND TAXABILITY OF THE AMOUNT OF RS.1,25, 00,000/- IT WAS HELD THAT SAME HAS TO BE CONSIDERED IN THE HANDS OF FATHER SH RIVINOD S. VAID. 4. SUBSEQUENTLY, AN ORDER U/S.263 OF THE ACT WAS PA SSED BY CIT-12 WITH THE OBSERVATION THAT NEITHER THE ASSESSEE WAS OWNER OF THE SAID PREMISES NOR HAD ANY RIGHTS IN THE SAID PREMISES.THE ASSESSEE GO T PAYMENT OF RS.1,25,00,000/- AS CONSIDERATION FOR VACATING THE BED ROOM OCCUPIED. THE SAME HAS BEEN TREATED AS INCOME FROM OTHER SOURCES U/S.56(1) OF THE ACT. IT WAS ALSO OBSERVED THAT ASSESSEE FAILED TO SUBSTANTI ATE HIS RIGHT IN THE FLAT AND THE ASSESSEE IS SIMPLY RESIDING IN THE FLAT OWNED B Y HIS FATHER, THE FATHER OF ASSESSEE TO GET AWAY FROM THE DISPUTE WITH THE ASSE SSEE HAS PAID THE AMOUNT FOR VACATING THE ROOM OCCUPIED AND KEPT IN LOCK WITH HI M AND THE CONSIDERATION RECEIVED BY THE ASSESSEE WAS NOT ON ACCOUNT OF SALE OF CAPITAL ASSETS OR RELINQUISHING ANY RIGHTS AND SAME WAS RECEIVED FOR VACATING THE ROOM HELD BY HIM IN THE PREMISES UNDER THE HEAD INCOME FROM OTHE R SOURCES AND ORDER PASSED U/S.143(3). ACCORDINGLY, CIT-12 SET ASIDE T HE ORDER WITH A DIRECTION TO ITA NO.4829/M/2016 VIVEKVINODVAID 3 TAX THE CONSIDERATION RECEIVED OF RS.1,25,00,000/- UNDER THE HEAD INCOME FROM OTHER SOURCES. 5. AGGRIEVED BY THIS ORDER U/S.263 ASSESSEE PREFERR ED APPEAL BEFORE ITAT IN RESPECT TO EXERCISE OF POWER BY CIT(A) U/S.263 O F THE ACT WHICH WAS DISMISSED BY THE TRIBUNAL. THE ASSESSMENT PROCEEDI NG U/S.143(3) R.W.S 263 OF THE ACT WAS COMPLETED AND RS.1,25,00,000/- HAS BEEN ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES. SINCE THE ASSESSEE FILE D INACCURATE OF PARTICULARS WITH A VIEW OF AVOID THE TAX ON THE INCOME OF RS.1, 25,00,000/- AO INITIATED THE PENALTY U/S.271(1)(C) OF THE ACT AND AFTER HEARING THE ASSESSEE THE AO HAS LEVIED THE PENALTY OF RS.42,07,500/-@ 100% OF THE T AX TO BE AVOIDED WAS LEVIED. THE MATTER CARRIED TO CIT(A) AND CIT(A) HA S DISMISSED THE APPEAL. 6. THE LEARNED AR SUBMITTED THAT ASSESSEE WAS LIVIN G WITH HIS FATHER FROM CHILDHOOD, MARRIAGE AND BIRTH OF HIS CHILDREN AND T ILL THE YEAR 2003 IN THE FLAT AT MUMBAI. AFTER THE FAMILY DISPUTE ASSESSEE ALONG WI TH HIS WIFE AND CHILDREN SHIFTED TO BANGALORE AND KEPT ONE BED ROOM OCCUPIED BY HIM WAS LOCKED. THE FATHER OF THE ASSESSEE SHRI.VINODVAID HAD ENTERED I NTO AGREEMENT DATED 03.04.2006 FOR SALE OF MUMBAI FLAT WITH MR. DHARMES H SHAH WHEREIN THE ASSESSEE WAS CONFIRMING PARTY. THE ASSESSEE WAS GI VEN RS.1,25,00,000 FROM THE ORIGINAL PURCHASER OF THE FLAT DIRECTLY TO THE ASSESSEE FOR COMPENSATION OF VACANT POSSESSION OF THE ROOM OCCUPIED BY HIM IN MU MBAI FLAT. WHILE FILING THE RETURN ASSESSEE HAS DECLARED AN AMOUNT OF RS.1, 25,00,000/- AS CAPITAL GAIN BEING CONSIDERATION RECEIVED FOR SALE OF HIS SHARE IN MUMBAI FLAT AND THEN DEDUCTION OF AMOUNT INVESTED IN PURCHASE ANOTHER FL AT AT BANGALORE FOR RS.1,24,87,759/- U/S. 54 OF THE ACT. THE AO HAS PA SSED THE ASSESSMENT ORDER U/S.143(3) AND HELD THAT THE AMOUNT IS NOT TAXABLE IN HAND OF ASSESSEE BUT IT IS TAXABLE IN HANDS OF HIS FATHER. THE AO ALSO OBSERV ED THAT IF THE AMOUNT OF RS.1,25,00,000/- TO BE ASSESSED IN HANDS OF THE ASS ESSEE IN TERMS OF CAPITAL GAIN THE ASSESSEE WAS NOT ENTITLED TO ANY DEDUCTION U/S. 54 OF THE ACT. THE SAID ASSESSMENT ORDER WAS REVIEWED U/S.263 OF THE ACT AN D UNDER THE 263 ITA NO.4829/M/2016 VIVEKVINODVAID 4 PROCEEDING MATTER TRAVELLED TO TRIBUNAL, THE TRIBUN AL HAS CLARIFIED THAT ASSESSEE WOULD BE AT LIBERTY TO CONTEST BEFORE CIT(A) OR THE HEAD OF INCOME WHICH IS LIABLE TO BE TAXED. THE ASSESSEE FILED APPEAL BEFO RE HONBLE BOMBAY HIGH COURT IN WHICH APPEAL HAS BEEN ADMITTED BY THE HON BLE BOMBAY HIGH COURT ININCOME TAX APPEAL NO.1986 OF 2013 THE COPY OF HON BLE BOMBAY HIGH COURT ORDER ADMITTED AN APPEAL IS AT PAGE 76 TO 77 OF THE PAPER BOOK. AFTER 263 ORDER THE ASSESSEE WAS ASSESSEE AND THE COMPENS ATION OF AMOUNT OF RS.1,25,00,000/- WAS ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES U/S.56(1) OF THE ACT. THE ASSESEES APPEAL IS ALSO PENDING AGAINST CIT(A)S ORDER AND SAID APPEAL IS PENDING BEFORE THE ITAT. IN THE CASE OF FATHER SHRI.VINODVAID THE TRIBUNAL HAS ALLOWED THE APPEAL AND SHRI. VINODVAID WAS ENTITLED TO DEDUCTION OF RS.1,25,00,000/- U/S.48 (I ) OF THE ACT. THE DEPARTMENT WENT TO HONBLE BOMBAY HIGH COURT AND HONBLE HIGH COURT HAS ADMITTED THE APPEAL OF THE DEPARTMENT AND ASSESSEE AND BOTH ARE DIRECTED TO BE HEARD TOGETHER WHICH HIS AT PAGE 87 TO 89 OF THE PAPER BO OK. THE ASSESSEES SUBMISSION IS THAT AO HAS PASSED THE ORDER U/S.271( 1)(C) OF THE ACT WITHOUT SATISFYING WHETHER THE PENALTY WAS INITIATED OR CON CEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. THE LEARNED AR SUBMITTED THAT THE NOTICE RECEIVED U/S.274 R.W.S.271(1)(C) OF THE ACT DID NOT SPECIFY WHETHER THE PENALTY WAS INITIATED FOR CONCEALMENT OF PARTIC ULARS OF INCOME OR FURNISHING INACCURATE PARTICULAR SO INCOME WHICH IS AT PAGE NO . 101 TO 102 OF THE PAPER BOOK. THE PUNJAB & HARYANA HIGH COURT HAS HELD THA T SATISFACTION OF THE ITO IN THE COURSE OF ASSESSMENT PROCEEDING REGARDING CO NCEALMENT OF INCOME WHICH CONSTITUTE THE BASIS AND FOUNDATION OF THE PR OCEEDING FOR LEVY OF THE PENALTY. THE MANU ENGG.WORKS 122 ITR 306, NEW SORA THIAENGG. CO 282 ITR 642 IS DIRECTLY ON THE ISSUES. THE LEARNED AR FURTHER SUBMITTED THAT THE NOTICE U/S.274 SHOULD SPECIFY WHETHER THE PENALTY I S FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PART ICULARS OF INCOME. MANJUNATHA COTTON& GINNING FACTORY 359 ITR 565, KAR NATAKA HIGH COURT IS DIRECTLY ON THE ISSUE. THE ASSESSEE HAS NOT CONCEA LED INCOME OR FURNISHED ANY ITA NO.4829/M/2016 VIVEKVINODVAID 5 INACCURATE PARTICULARS OF INCOME. AS PER SECTION 2 71(1) (C) OF THE ACT PENALTY IS LEVIABLE IF THE AO SATISFY THAT ASSESSEE HAS CON CEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOM E IF THE ASSESSEE FAILS TO OFFERS ANY EXPLANATION AND IF THE EXPLANATION IS GI VEN BY THE ASSESSEE FOUND TO BE FALSE OR IF THE ASSESSEE IS NOT ABOUT TO SUBSTA NTIATE THE EXPLANATION AND FAILS TO PROVE SUCH EXPENDITURE IF BONAFIDE. IN THE INST ANT CASE THE RECEIPT OF RS..1,25,00,000/- IS TAXABLE UNDER THE HEAD INCOME FROM OTHER SOURCES OR INCOME FROM CAPITAL GAIN. SO QUESTION OF CONCEALME NT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE OF PARTICULARS IS NOT A T ALL ARISE. THE HON'BLE SUPREME COURT IN CASE OF RELIANCE PETROPRODUCTS LTD . 322 ITR 158 HAS TAKEN A VIEW THAT IN ORDER TO EXPOSE THE ASSESSEE TO THE PE NALTY UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISIONS. A MERE MAKING THE CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO FUR NISHING INACCURATE PARTICULARS REGARDING INCOME OF THE ASSESSEE SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO AN INACCURATE PARTICULARS. ASSESSEE HAS FURNISH ED ALL THE DETAILS OF EXPENDITURE AS WELL INCOME IN HIS RETURNS WHICH IN DETAIL THEMSELVES WERE NOT FOUND TO BE INACCURATE OR TO BE VIEWED AS CONCEALME NT OF INCOME IN PART. THE LEARNED AR LASTLY RELIED UPON THE DECISION OF BOMBA Y HIGH COURT IN CASE OF CIT VS. BENNETT COLEMAN & CO. LTD. 259 CTR 383 AND SUBMITTED THAT NO PENALTY CAN BE LEVIED MERELY ON THE CHANGE OF HEAD OF INCOME. LASTLY LEARNED AR SUBMITTED THAT WHEN NO PENALTY CAN BE LEVIED THE MATTER IS DEBATABLE AND PENDING BEFORE HON'BLEHIGH COURT. 7. THE LEARNED DR RELIED UPON THE ORDER OF CIT. TH E ASSESSEE HAS ATTEMPTED TO GIVE A COLOR OF DIFFERENCE OF OPINION TO HIS TRANSACTION AS WHETHER SAME SHOULD BE INCOME. ASSESSEE HAD NO RIGHT IN TH E SAID FLAT BEING SOLD AND HE GOT THE MONEY SIMPLY TO REMOVE THE LOCK WHICH HE HAD PUT IN ONE BED ROOM THEREFORE AWARDED COMPENSATION BY HIS FATHER OR REM OVING THE SAID LOCK. THE ASSESSEE HAD FURNISHED THE INACCURATE PARTICULARS O F HIS INCOME AND CIT(A) HAS ITA NO.4829/M/2016 VIVEKVINODVAID 6 RIGHTLY IMPOSED THE PENALTY AND ITAT HAS ALSO HELD THAT ASSESSEE HAS RECEIVED THE CONSIDERATION FOR SURRENDERING HIS RIGHT IN THE PROPERTY. 8. WE HAVE HEARD THE RIVAL CONTENTION OF BOTH THE P ARTIES. DURING THE COURSE OF HEARING LEARNED AR HAS RAISED THE PRELIMI NARY OBJECTION THAT IN SHOW CAUSE NOTICE FOR LEVY OF THE PENALTY, AO HAS NOT ME NTIONED THE SPECIFIC CHARGE WHETHER PENALTY IS LEVIED FOR CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF THE INCOME. IN SHOW CAUSE NOTICE R ECEIVED U/S.274 R.W.S 271 1(C) WHICH IS IN PRINTED FORM, THE AO HAS NOT TICK ED OUT ANY PARTICULARS AND MERELY INSERTED THE WORDS WRONG CLAIM. THEREFORE D OES NOT SPELL OUT WHETHER THE PENALTY PROCEEDING ARE SOUGHT TO BE LEVIED FOR FURNISHING INACCURATE PARTICULARS OF INCOME FOR CONCEALING PARTICULARS OF SUCH INCOME. HE HAS MERELY INSERTED THE WORDS WRONG CLAIM U/S.54. THUS THE PENALTY NOTICE RECEIVED U/S.274 IS AMBIGUOUS TO THE EXTENT FOR WHI CH THE PENALTY IS INITIATED. THE SAID NOTICEDOES NOT SPECIFIED WHETHER THE PENAL TY IS LEVIED FOR CONCEALMENT OF INCOME OR FOR FURNISHING IN ACCURATE PARTICULARS OF INCOME. THEHONBLE KARNATAKA HIGH COURT IN CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY AND OTHERS 359 ITR 565 HELD THAT NOTICE U/S .274 R.W.S 271(1)(C) OF THE ACT SHOULD SPECIFICALLY STATE THE GROUNDS MENTIONED IN THE SECTION 271(1)(C) I.E. WHETHER IT IS FOR CONCEALMENT OF INCOME OR FURNISHI NG OF INACCURATE PARTICULARS OF INCOME. SENDING PRINTED FORM WHERE ALL THE GROU NDS MENTIONED IN SECTION 271 ARE MENTIONED WOULD NOT SATISFY THE REQUIREMENT OF LAW. THE ASSESSEE SHOULD KNOW THE GROUND WHICH HE HAS TO SPECIFICALLY OTHERWISE PRINCIPAL OF NATURAL JUSTICE IS OFFENDED. ON THE BASIS OF SUCH PROCEEDING NO PENALTY COULD BE IMPOSED TO THE ASSESSEE. THE TAKING OF PENALTY PROCEEDING ON ONE LIMB AND FINDING GUILTY ON OTHER LIMB IS BAD IN LAW.THE KARN ATAKA HIGH COURT HAS HELD THAT THE AO IS EMPOWERED TO INITIATE THE PENALTY PR OCEEDING ONCE HE IS SATISFIED IN THE COURSE OF ANY PROCEEDING THAT THERE IS CONCE ALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF THE TOTAL I NCOME UNDER CLAUSE C. THE CONCEALMENT, FURNISHING INACCURATE PARTICULARS OF I NCOME ARE DIFFERENT. THUS ITA NO.4829/M/2016 VIVEKVINODVAID 7 THE AO WHILE ISSUING THE NOTICE HAS TO COME TO CONC LUSION THAT WHETHER IT IS CASE OF CONCEALMENT OF INCOME OR IT IS A CASE OF FU RNISHING OF INACCURATE PARTICULARS. THE KARNATAKA HIGH COURT HAS HELD TH AT NOTICE U/S.274 OF THE ACT SHOULD SPECIFICALLY STATE AS TO WHETHER THE PENALTY IS BEING PROPOSED TO BE IMPOSED FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS. THE HIGH COURT HAS HELD THAT CERTAIN PRINTED FORM WHERE ALL THE GROUNDS GIVEN IN THE SECTION 271 ARE GIVEN WOULD NO T SATISFY THE REQUIREMENT OF LAW. THE KARNATAKA HIGH COURT HAS HELD THAT IN PRI NTED FORM, THE AO HAS NOT STRUCK OUT THE RELEVANT PART IN STANDARD PROFORMA O F SHOW CAUSE NOTICE, THEREFORE DOES NOT SPELL OUT WHETHER THE PENALTY PR OCEEDINGS ARE SOUGHT TO BE LEVIED FOR FURNISHING INACCURATE PARTICULARS OF INC OME OR CONCEALING PARTICULARS OF SUCH INCOME. AO HAS SIMPLY INSERTED THE WORDS W RONG CLAIM U/S.54. THUS THE PENALTY NOTICE IS AMBIGUOUS AND PENALTY PROCEED ING U/S.271 (1)(C) ARE QUASHED. THE DECISION OF KARNATAKA HIGH COURT WAS UPHELD BY HONBLE SUPREME COURT BY DISMISSING SLP NO.13898/2014. 9. THE JURISDICTIONAL HIGH COURT IN THE CASE OF SHR I SAMSON PERINCHERY 392 ITR BOMBAY 4 WHEREIN THE JURISDICTIONAL HIGH COURT HAS FOLLOWING THE KARNATAKA HIGH COURT AS HELD AS UNDER:- THE ASSESSING OFFICER IS EMPOWERED UNDER THE ACT T O INITIATE PENALTY PROCEEDINGS ONCE HE IS SATISFIED IN THE COURSE OF ANY PROCEEDIN GS THAT THERE IS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF T OTAL INCOME UNDER CLAUSE (C). CONCEALMENT, FURNISHING INACCURATE PARTICULARS OF I NCOME ARE DIFFERENT. THUS, THE ASSESSING OFFICER WHILE ISSUING NOTICE HAS TO COME TO THE CONCLUSION THAT WHETHER IS IT A CASE OF CONCEALMENT OF INCOME OR IS IT AS CASE OF FURNISHING OF INACCURATE PARTICULARS. THE APEX COURT IN THE CASE OF ASHOK P AI REPORTED IN [2007] 292 ITR 11 (SC) AT PAGE 19 HAS HELD THAT CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULAR SO INCOME CARRY DIFFERENT CONNOTATIONS. THE GUJARAT HIGH COURT IN THE CASE OF MANU ENGINEERING REPORTED DIN 122 ITR 306 A ND THE DELHI HIGH COURT IN THE CASE OF VIRGO MARKETING P. LTD., REPORTED IN 171 TA XMAN 156, HAS HELD THAT LEVY OF PENALTY HAS TO BE CLEAR AS TO THE LIMB FOR WHICH IT IS LEVIED AND THE POSITION BEING UNCLEAR PENALTY IS NOT SUSTAINABLE. THEREFORE, WHEN THE ASSESSING OFFICER PROPOSES TO I NVOKE THE FIRST LIMB BEING CONCEALMENT, THEN THE NOTICE HAS TO BE APPROPRIATEL Y MARKED. SIMILAR IS THE CASE FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE S TANDARD PROFORMA WITHOUT STRIKING OF THE RELEVANT CLAUSES WILL LEAD TO AN INFERENCE A S TO NON-APPLICATION OF MIND. ITA NO.4829/M/2016 VIVEKVINODVAID 8 10. WE THEREFORE, RESPECTFULLY FOLLOWING THE DECISI ON OF JURISDICTIONAL HIGH COURT WE ARE OF THE VIEW WHEN THE AO PROPOSED TO IN VOKED THE PENALTY FOR. THEREFORE WHEN THE AO PROPOSED TO INVOKED THE PENAL TY FOR CONCEALMENT OF THE INCOME THE NOTICE SHOULD BE APPROPRIATELY MARKE D. SIMILARLY IS FOR THE FURNISHING INACCURATE PARTICULARS OF INCOME IN THE STANDARD PROFORMA WITHOUT STRIKING THE RELEVANT CLAUSE WILL LEAD TO AN INFERE NCE AS NON-APPLICATION OF MIND OF AO, THEREFORE WE DELETE THE PENALTY. 11. THE HONBLEGUJARAT HIGH COURT IN THE CASE OF MA NNU ENGINEERING 122 ITR 306 HAS HELD THAT IT IS INCUMBENT UPON IAC TO C OME TO A POSITIVE FINDING AS TO WHETHER THERE WAS CONCEALMENT OF INCOME BY TH E ASSESSEE OR WHETHER ANY INACCURATE PARTICULARS OF SUCH INCOME HAS BEEN FURN ISHED BY HIM. IN ABSENCE OF CLEAR CUT FINDING THE ORDER OF PENALTY IS LIABLE TO BE STRUCK ON. THIS VIEW WAS ALSO CONSIDERED BY BOMBAY TRIBUNAL IN CASE OF S HRICHANDRU K. MIRCHANDANIVS. ITO 5368/MUM/2014 DATED 05.04.2017. THE SAME VIEW IS DISCUSSED BY THE TRIBUNAL IN THE CASE OF MEHERJEECA SSINATH HOLDINGS PRIVATE LIMITED VS. ACIT 2555/MUM/2012 DATED 28.04.2017 WHE REIN THE BENCH HAS DISCUSSED THE JUDGEMENT OF BOMBAY HIGH COURT IN CAS E OF KAUSHALYA 216 ITR 660 (BOM) AND ALSO THE JUDGEMENT OF HONBLESUPREME COURT IN CASE OF SHRIDILIP M. SHROFFHAS CLEARLY HELD THAT IF THE NOT ICE DEMONSTRATED NON APPLICATION ON PART OF ASSESSING OFFICER. THE VAGU ENESS AND AMBIGUITY IN THE NOTICE HAS ALSO PREJUDICE TO THE RIGHT OF REASONABL E OPPORTUNITY OF THE ASSESSEE SINCE HE DID NOT KNOW WHAT EXACTLY HE HAS TO FACE. IN THE INSTANT CASE AO HAS ISSUED A NOTICE THAT TO INCORRECT ONE, IN OUR ROUTI NE MANNER. FURTHER, THE NOTICE DID NOT SPECIFY THE CHARGE FOR WHICH THE PENALTY WA S RECEIVED HENCE WE DELETE THE PENALTY. 12. THE THIRD ANGLE OF THE PENALTY HERE THE DISPUTE IS WHETHER THE RECEIPT OF RS.1,25,00,000/- IS TAXABLE UNDER THE HEAD INCOME F ROM OTHER SOURCES OR INCOME FROM CAPITAL GAIN. IN OTHER WORDS IN THIS A PPEAL THE MAIN DISPUTE BETWEEN REVENUE AND THE ASSESSEE IS WHETHER CONSIDE RATION OF RS.1,25,00,000/- ITA NO.4829/M/2016 VIVEKVINODVAID 9 RECEIVED BY THE ASSESSEE IN CONSIDERATION OF RELINQ UISHED HIS RIGHTS WITH REGARDS TO THE SAID PROPERTY IS ASSESSABLE UNDER THE HEAD I NCOME FROM OTHER SOURCES INSTEAD OF UNDER THE HEAD CAPITAL GAIN AS CLAIMED B Y THE ASSESSEE. IN THE INSTANT CASE IN THE ORIGINAL ASSESSMENT ORDER U/S.143(3) OF THE ACT AO HAS EXAMINED THE ISSUE FROM ALL THE ANGLES AND CAME TO CONCLUSIO N THAT AMOUNT IS RECEIVED BY ASSESSEE IS NOT TAXABLE AS LONG TERM CAPITAL GAIN B UT IT IS TAXABLE IN HANDS OF THE FATHER OF THE ASSESSEE. U/S.263 THE COMMISSIONER H AS REVIEWED THE ORDER AND HELD THAT ENTIRE COMPENSATION AMOUNT OF RS.1,25,00, 000/- HAS TO BE ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES U/S.56(1) OF THE ACT. THE BOMBAY HIGH COURT IN CASE OF CIT VS. BENNETT COLEMAN & CO. LTD. 259 CTR 383 HAS HELD THAT NO PENALTY CAN BE LEVIED MERELY ON CHANGE OF HEAD OF INCOME I.E. ASSESSEE HAS DECLARED THE HEAD OF INCOME AS BUSINES S INCOME AND AO HAS ASSESSED THE INCOME UNDER THE HEAD INCOME FROM OTHE R SOURCES. THIS SIMILAR VIEW WAS TAKEN BY THE DELHI HIGH COURT IN THE CASE OF CIT VSNATH BROS EXIM INTERNATIONAL LTD. 288 ITR 680, DELHI WHEN ASSESSE E HAS DISCLOSED ALL THE FACTS AND EVEN THOUGH HE HAS MADE ERRONEOUS CLAIM COULD N OT BE JUSTIFIED IN LAW TO ATTRACT THE PENALTY PROVISION OF THE ACT. 13. LOOKING TO THE ANOTHER ANGLE OF THE PENALTY WE FIND THAT ASSESSEE HAS MADE A CLAIM THAT HE HAS RECEIVED RS.1,25,00,000/- FROM CAPITAL GAIN AND HE HAS FILED ALL THE DETAILS BEFORE AO AND AO DID NOT ALLOW THE CLAIM AND ALL THE PARTICULARS OF THE INCOME WAS FURNISHED IN ITS RETU RN OF INCOME, THEREFORE, ASSESSEE HAS CLAIMED THE CAPITAL GAIN WHICH WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE WITH THE REVENUE THAT COULD NOT ATTRACT THE PENALTY U/S.271(1)(C) OF THE ACT. WE RELYING UPON THE DECISION OF THE HON'B LE SUPREME COURT IN CASE OF RELIANCE PETROPRODUCTS LTD. 322 ITR 158 WHEREIN HONBLESUPREME COURT HAS HELD THATAS PER SECTION 271(1)(C) THERE SHOULD HAVE BEEN CONCEALMENT OF PARTICULARS OF INCOME OF THE ASSESSEE SECONDLY MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. IN THIS CASE, IT IS NOT THE CASE OF THE CONCEALMENT OF PARTICULARS OF INCOME. IN THIS CASE, ALL THE INFOR MATION GIVEN IN THE RETURN WAS ITA NO.4829/M/2016 VIVEKVINODVAID 10 NOT FOUND TO BE INCORRECT OR INACCURATE. IN THIS C ASE, ANY STATEMENT MADE OR ANY DETAIL SUPPLIED BY THE ASSESSEE IS FACTUALLY NOT IN CORRECT HENCE, PRIMA-FACIE ASSESSEE COULD NOT BE HELD GUILTY OR FURNISHING INA CCURATE PARTICULARS OF INCOME. IN ORDER TO EXPOSE THE ASSESSEE TO THE PEN ALTY UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION THE PENALTY PROVI SION CANNOT BE INVOKED. IN THIS CASE ASSESSEE MAINLY MADE A CLAIM OF CAPITAL G AIN WHICH IS AS PER REVENUE ASSESSEE IS NOT ENTITLED BY ITSELF WOULD NOT ATTRAC T THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. WE FIND THAT ASSESSEE HAS ME RELY CLAIMED THE CAPITAL GAIN WHICH WAS NOT ACCEPTABLE OR WAS NOT ACCEPTABLE TO R EVENUE WOULD NOT ATTRACT THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT.THIS VIEW IS ALSO SUPPORTED BY VARIOUS HIGH COURTS INCLUDING TRIBUNALS. THE HON' BLE GUJARAT HIGH COURT 386 ITR 304 IN THE CASE OF NARAYAN C. SHAH HAS ALS O HELD THAT MERELY SUBMITTING AN INCORRECT CLAIM IN LAW FOR THE EXPEND ITURE WOULD NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS OF INCOME. THE TH IRD MEMBER BENCH OF MUMBAI TRIBUNAL REPORTED IN 137 ITD 53 DELHI HAS AL SO TAKEN AN IDENTICAL VIEW IN THE CASE OF NARANGS INTERNATIONAL HOTELS (P ) LTD. WHEREIN THE ASSESSEES CLAIM FOR DEDUCTION OF EXPENDITURE WAS R EJECTED ON THE GROUND THAT IT WAS A CAPITAL EXPENDITURE. IT WAS HELD THAT SINCE THE ASSESSEE HAD MADE PROPER DISCLOSURE OF FACTS MATERIAL TO CLAIM IN QUESTION, THERE WAS NO CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME SO AS TO ATTRACT PENALTY U/S.271(1)(C) OF THE ACT.IN THE CAS E OF S.M. CONSTRUCTION 233 TAXMAN 263, THE ASSESSEE ENTERED INTO A DEVELOPMENT AGREEMENT WITH THE OWNER OF LAND AT PUNE AFTER PAYING CONSIDERATION OF 54 LAKHS. WHEN THE OWNER OF THE LAND CANCELLED THE AGREEMENT, HE PAID THE AS SESSEE A SUM OF RS.1.65 CRORES INCLUDING AMOUNT OF RS.54 LAKHS ORIGINALLY P AID BY THE ASSESSEE. THUS THERE WAS A SURPLUS OF RS.1.00 CRORES. THE ASSESSE E DID NOT OFFER THE SAME AS INCOME ON THE PLEA THAT THE AMOUNT RECEIVED BY HIM IS CAPITAL RECEIPT AND THE SAME WAS ALSO NOT CHARGEABLE TO TAX AS CAPITAL GAIN . THE ASSESSING OFFICER DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND ASSES SED THE RECEIPT, AFTER ALLOWING EXPENSES, AS CAPITAL GAINS. THE LEARNED C IT(A) ALSO CONFIRMED THE ITA NO.4829/M/2016 VIVEKVINODVAID 11 ORDER PASSED BY THE ASSESSING OFFICER AND THE ASSES SEE ALSO ACCEPTED THE ORDER OF THE LEARNED CIT(A) BY NOT PREFERRING THE APPEAL BEFORE THE TRIBUNAL. SUBSEQUENTLY, THE ASSESSING OFFICER LEVIED PENALTY BUT THE SAME WAS DELETED BY THE LEARNED CIT(A) BY HOLDING THAT THE ASSESSEE HAS DISCLOSED RECEIPT OF THE AMOUNT OF RS.11 CRORES AND THE CLAIM UNSUSTAINABLE IN LAW WOULD NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS. THE ORDER PASSED BY THE COMMISSIONER (APPEALS) WAS UPHELD BY THE TRIBUNAL. UNDER THESE OF FACTS, HON'BLEJURISDICTIONAL BOMBAY HIGH COURT UPHELD THE ORDER PASSED BY THE TRIBUNAL BY OBSERVING THAT THERE M/S.BERMACOENGERGY SYSTEM LIMITED HAS BEEN COMPLETE DISCLOSURE OF FACTS AND FURTHER THE C LAIM MADE BY THE ASSESSEE WAS FOUND TO BE NOT BONAFIDE. 14. IN THE INSTANT CASE ALSO, WE NOTICE THAT THE AS SESSEE HAS FURNISHED ALL THE DETAILS AND CLAIM MADE BY THE ASSESSEE, IN OUR VIEW , CANNOT BE CONSIDERED TO BE NOT BONAFIDE, I.E. IT WAS ONE OF THE POSSIBLE CLAIM S. FURTHER THE ASSESSEE HAS OFFERED EXPLANATION BEFORE THE TAX AUTHORITIES AND THE SAME WAS NOT FOUND TO BE FALSE. UNDER THESE SET OF FACTS, WE ARE OF THE VIE W THAT THE IMPUGNED PENALTY IS NOT SUSTAINABLE. ACCORDINGLY, WE SET ASIDE THE ORD ER PASSED BY THE LEARNED CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE T HE PENALTY. 15. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. WE SET ASIDE THE ORDER OF CIT(A) AND DIRECT AO TO DELETE THE PENALTY. ORDER PRONOUNCED IN THE OPEN COURT ON 23.06.2017. SD/- SD/- (G. MANJUNATHA) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 23.06.2017. MP . COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI ITA NO.4829/M/2016 VIVEKVINODVAID 12 THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASSTT.REGISTRAR, ITAT, MUMBAI.