ACIT, New Delhi V. Sh. Mangu Ram Bansal, New Delhi

ITA 4929/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97738 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 03-11-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 21-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA
• Assessee Lawyers: ARUN KR JAIN; ANIL KR GUPTA
• Section: 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E, NEW DELHI BEFORE SH. C.M.GARG, JM AND SH. PRASHANT MAHARISHI, AM ITA NO. 4929/DEL/201 3 : ASSTT. YEAR: 2003-04 ACIT VS MANGU RAM BANSAL CENT CIRCLE-18. H. NO. 844, SEC -14 NEW DELHI NEW DELHI ASSESSEE BY : SH. ANIL KR. GUPTA, CA AND ARUN KR . JAIN , CA REVENUE BY : SH. P. DAM KANUNJNA , SR. DR DATE OF HEARING: 03.11.2015 DATE OF PRONOUNCEMENT: 06.11.2015 ORDER PER PRASHANT MAHARISHI, AM: 01. THIS APPEAL IS PREFERRED BY REVENUE AGAINST THE ORD ER OF CIT (A) III, NEW DELHI DATED 26.06.2013 CONFIRMING THE PENALTY U/S 271(1)(C) O F THE INCOME TAX ACT,1961 ( HEREINAFTER REFERRED TO AS THE ACT) RAISING FOLLOW ING GROUNDS : I) LD. CIT(A) HAS ERRED IN DELETING PENALTY U/S 271(1)(C) ON THE BASIS OF HIS OBSERVATION THAT THERE WAS NO MALAFIDE INTENTIO N ON PART OF THE ASSESSEE, WHICH IS IN CONTRAVENTION OF SUPREME COURT DECISION IN UOI V. DHARMENDRA TEXTILE PROCESSORS 166 TAXMAN 65(SC). II) LD. CIT(A) HAS ERRED IN TREATING THE ASSET U NDER CONSIDERATION AS PARTLY RESIDENTIAL AND PARTLY COMMERCIAL, THUS BEING ELIGI BLE FOR DEDUCTION U/S 54F, DESPITE THE FACT THAT THE ORIGINAL ADDITION HA S BEEN UPHELD BY LD. CIT(A) AND HONBLE ITAT ALSO HAS SET ASIDE THE MATT ER TO THE FILE OF THE AO ON THIS ISSUE. III) LD. CIT(A) HAS ERRED IN IGNORING THE FACT THAT IN THE PRESENT CASE, ASSESSEE HAD WRONGLY CLAIMED DEDUCTION WHILE BEING AWARE OF WELL SETTLED LEGAL POSITION, IN WHICH CASE PENALTY U/S 271(1)(C) IS ATTRACTED AS LAID DOWN IN CIT(A) VS. RUBBER UDYOG VIKAS P. LTD. 335 ITR 55 8. 02. ASSESSEE IS INDIVIDUAL FILED HIS RETURN OF INCOME O N 30 TH JULY, 2003 DECLARING TOTAL INCOME OF RS. 43,58,110/-. IN THE R ETURN OF INCOME ALONG WITH LONG TERM CAPITAL GAIN OF RS. 46,24,806/- WAS OFFERED AFTER CLAIMING ITA NO. 4929/DEL/2013 ACIT V SHRI MANGU RAM BANSAL A Y 2003-04 2 | PA GE DEDUCTION U/S 54F WAS CLAIMED ON ACCOUNT OF PURCHAS E OF NEW RESIDENTIAL HOUSE PROPERTY BY THE ASSESSEE. ASSESSEE HAS SOLD 1 5,30,000/- SHARES EQUITY SHARES OF M/S ELEGANCE FABRICS P. LTD. RESUL TING INTO LONG TERM CAPITAL GAIN RS. 66,14,193/- AGAINST WHICH ASSESSEE HAS PURCHASED PLOT OF LAND ADMEASURING 167 SQUARE YARDS AT OLD DLF COLONY , GURGAON, HARYANA BY SALE DEED DATED 28 TH JANUARY, 2002. THE APPELLANT HAD SPENT APPROXIMATELY RS. 40 LAKHS UP TO JULY, 2003 FOR CON STRUCTING BASEMENT GROUND FLOOR AND FIRST FLOOR AND FURTHER DEPOSITED RS. 8,00,000/- IN THE DESIGNATED CAPITAL GAIN ACCOUNTS SCHEME WITH STATE BANK OF INDIA, THEREFORE, OUT OF THE ABOVE SUM ASSESSEE HAS CLAIME D DEDUCTION U/S 54F ON PROPORTIONATE BASIS FOR RESIDENTIAL PURPOSES U/S 54 F OF RS. 19.89 LAKHS. IN THE STATEMENT PROCEEDINGS, THE CLAIM OF DEDUCTION U /S 54F WAS DENIED TO THE ASSESSEE. FOR THE REASON FOR SALE, DEED OF NEW HOUSE PROPERTY IS NOT A RESIDENTIAL HOUSE PROPERTY BUT A COMMERCIAL LAW . FURTHER THE SANCTIONED PLAN OF SAID PROPERTY IS ALSO SHOWING ON EACH FLOOR CONSTRUCTION OF A HALL AND A BATHROOM ONLY THEREFORE AO WAS OF THE VIEW TH AT EACH CANNOT BE USED FOR A PURPOSE OF RESIDENTIAL PURPOSES. BEFORE THE CIT (A), APPELLANT ASSESSEE REITERATED THE ARGUMENTS BUT THE CIT (A) C ONQUERED WITH THE VIEWS OF ASSESSING OFFICER AND DENYING DEDUCTION U/ S 54F. WE AGREE WITH THE ORDER OF CIT(A) ASSESSEE PREFERRED APPEAL BEFOR E THE ITAT, NEW DELHI AND ITAT VIDE ORDER DATED 24.07.2009 ALLOWED THE APPEAL OF THE ASSESSEE SETTING ASIDE THE MATTER TO THE FILE OF AS SESSING OFFICER WITH DIRECTION THAT AO MAY VERIFY AFTER SITE INSPECTION WHETHER THE PROPERTY IS RESIDENTIAL OR COMMERCIAL. TILL TO DATE THE AO HAS NOT DONE ANY VERIFICATION IN PURSUANCE OF DIRECTION OF ITAT. MEA NWHILE BY ORDER DATED 17.03.2008 PENALTY U/S 271(1) (C) WAS LEVIED OF RS. 4,17,771/- ON ASSESSEE FOR FURNISHING INACCURATE PARTICULARS AND FURNISHIN G INACCURATE PARTICULARS OF INCOME. AGAINST THIS ORDER, ASSESSEE PREFERRED A N APPEAL BEFORE THE CIT (A) WHO IN TURN DELETED THE PENALTY AGAINST THE ORD ER OF CIT (A). NOW REVENUE IS IN APPEAL BEFORE US. ITA NO. 4929/DEL/2013 ACIT V SHRI MANGU RAM BANSAL A Y 2003-04 3 | PA GE 03. BEFORE US LD. DR SUBMITTED THAT THE ASSESSEE HAS NO T PURCHASING THE RESIDENTIAL HOUSE AND THEREBY CLAIMING OF DEDUCTION U/S 54F OF RS. 19,89,387/- IS FALLS AS THE PROPERTY PURCHASED BY T HE ASSESSEE IS A COMMERCIAL PROPERTY. FURTHER, THE RESIDENTIAL HOUSE PURPORTED TO HAVE BEEN PURCHASED BY THE ASSESSEE IS NOT FIT FOR RESID ENCE AS IT HAS ONLY A HALL AND A BATHROOM. THEREFORE, HE SUBMITTED THAT THE PE NALTY IS LEVIABLE U/S 271(1) (C) FOR CONCEALMENT OF THE INCOME. 04. LD. AR OF THE ASSESSEE SUBMITTED THAT (A) ASSESSEE HAS BONAFIDLY CLAIMED U/S 54F FOR CONSTRUCTION OF RESIDENTIAL PROPERTY AN D THE CLAIM HAS BEEN MADE OF APPROPRIATE AMOUNT, WHICH IS INVESTED IN RE SIDENTIAL HOUSE PROPERTY AND NO CLAIM, HAS BEEN MADE OF AMOUNT OF I NVESTMENT, WHICH WAS MEANT FOR PURCHASE OF COMMERCIAL PROPERTY. (B) THAT PLOT ADMEASURING 167 SQUARE YARDS IS A PLOT AIR MARK FOR SHOP CUM RESIDENTIAL PURPOSES ACCORDINGLY AS PER ZONING PLANT THE BASEME NT AND GROUND FLOOR CAN BE USED FOR COMMERCIAL PURPOSES AND THE FIRST F LOOR IS TO BE USED FOR RESIDENTIAL PURPOSES. THE CLAIM FOR DEDUCTION IS ON LY MADE FOR RESIDENTIAL PURPOSES. 05. WE HAVE CONSIDERED THE RIVAL CONTENTIONS. IN THIS C ASE, THE ISSUE ON QUANTUM IS SET ASIDE BY ITAT TO THE FILE OF AO FOR VERIFICATION, WHICH IS STILL PENDING DESPITE CONSIDERABLE LAPSE OF TIME. B UT DESPITE THAT IT IS AN ESTABLISHED JUDICIAL PRECEDENT THAT MERELY CONFIRMA TION OF ADDITION/ DISALLOWANCE CANNOT LEAD TO PENALTY U/S 271(1) (C ) OF THE ACT AND FOR PENALTY FRESH EXAMINATION OF FACTS NEEDS TO BE CARR IED OUT WHETHER THE CONDUCT OF THE ASSESSEE FALLS WITHIN THE FOUR CORN ERS OF INFRINGEMENTS FOR WHICH PENALTY IS LEVIABLE. IN THIS BACKGROUND, WE ARE DECIDING WHETHER ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OR CO NCEALED THE PARTICULARS OF INCOME. IN PENALTY PROCEEDINGS, EVEN AO IS NOT S URE WHETHER ASSESSEE IS PENALIZED FOR FURNISHING INACCURATE PARTICULARS OR FOR CONCEALMENT OF INCOME. LD. CIT(A) HAS DEALT WITH THE ISSUE AS UND ER :- FINDING ON GROUND OF APPEAL:- ITA NO. 4929/DEL/2013 ACIT V SHRI MANGU RAM BANSAL A Y 2003-04 4 | PA GE UPON A CONSIDERATION OF THE PENALTY ORDER AND THE SUBMISSIONS MADE BY THE APPELLANT THE SHORT ISSUE TO BE DECIDED ON THIS CAS E IS THAT WHETHER PENALTY FOR CONCEALMENT OF PARTICULARS OF INCOME/FURNISHED INAC CURATE PARTICULARS OF INCOME/FURNISHED INACCURATE PARTICULARS OF INCOME IS LEVIABLE IN CASE OF THE APPELLANT WITH RESPECT TO ADDITION OF RS 19,89,387 WHICH IS O N ACCOUNT OF THE FACT THAT IN THE ASSESSMENT ORDER DATED 21.03.06 THE AO HAD MADE THI S DISALLOWANCE HOLDING THAT THE DEDUCTION CLAIMED BY THE ASSESSEE U/S 54F FOR THE A BOVE AMOUNT IS NOT ALLOWABLE. THAT AS SUCH DEDUCTION IS ALLOWED ONLY WITH RESPECT TO A PR OPERTY EXCLUSIVELY USED FOR RESIDENTIAL PURPOSES AND THAT IN THE FACTS OF THE CASE IT IS CL EAR THAT THE PROPERTY BEARING NO. M-30, OLD DLF COLONY, GURGAON IS EXCLUSIVELY COMMERCIAL P ROPERTY. FROM THE SUBMISSION OF THE APPELLANT FILED ON 16.12 .11 IT IS NOTED THAT HIS ARGUMENT IS THAT THE PLOT MEASURING 167 SQ YARDS AT M-30, OLD D LF COLONY, GURGAON WAS PER THE ZONING PLAN HAVING A BASEMENT AND GROUND FLOOR WHIC H CAN BE USED FOR COMMERCIAL PURPOSES AND THE FIRST FLOOR CAN BE USED FOR RESIDE NTIAL PURPOSES. THAT ACCORDINGLY A DEDUCTION OF RS. 19,89,387/- WAS CLAIMED U/S 54F OF THE ACT IN RESPECT OF AMOUNT INVESTED /SPENT TOWARDS CONSTRUCTION OF FIRST FLOOR OF THE PROPERTY . IT HAS BEEN ADDED THAT WHILE THE CIT (A) DELHI -III HAD SUSTAINED THE DISALLOWANCE OF DEDUCTION U/S 54F BUT THE ITAT, DELHI HAS VIDE ORDER DATED 24.07.09 I N ITA NO. 3334/DEL/2009 HAS SET ASIDE THE MATTER TO THE A.O. TO FIND OUT WHETHER TH E PROPERTY CONSTRUCTED AT M-30, OLD DLF COLONY, GURGAON ANSWERS THE QUESTION AS TO WHET HER IT IS A RESIDENTIAL HOUSE OR NOT. THE ASSESSEE HAS ALSO BEEN DIRECTED BY THE ITA T TO PRODUCE ALL NECESSARY EVIDENCE IN SUPPORT OF IF ITS CONTENTION THAT THE PROPERTY CONSTRUCTED IS PARTLY RESIDENTIAL HOUSE. FROM THIS ORDER OF ITAT IT IS NOTED THAT THE ASSESS EE HAD FURNISHED A CERTIFICATE FROM MUNICIPAL AUTHORITY ,GURGAON CERTIFYING THAT THE PL OT WAS SHOP-CUM - RESIDENTIAL. THAT THIS CERTIFICATE WAS NOT CONSIDERED BY THE AO. IT I S ALSO NOTED THAT BEFORE THE ITAT THE ZONING PLAN AS PER WHICH THE PLOT CAN BE USED FOR B OTH SHOP AS WELL AS RESIDENTIAL PREMISES HAD BEEN SUBMITTED. IN THE SUBMISSIONS FILED DURING THE APPELLATE PROCE EDINGS THE APPELLANT HAS TILED A COPY OF THE ABOVE SANCTIONED PLAN FOR CONSTRUCTION OF GR OUND FLOOR AND FIRST FLOOR (PAGE 53 OF THE PAPER BOOK) WHICH IS SIGNED BY THE EXECUTIVE OFFICER, MUNICIPAL COUNCIL, GURGAON AND AS PER WHICH IT IS SEEN THAT THE FIRST FLOOR PLAN SANCTIONED BY THE MUNICIPAL COUNCIL, GURGAON DOES CONSIST OF A BEDROOM, DRAWING ROOM, LOBBY KITCHEN AND A TOILET. APART FROM THIS, A CERTIFICATE DATED 03.03.06 ISSUE D BY THE EXECUTIVE OFFICE, MUNICIPAL COUNCIL, GURGAON, HAS ALSO BEEN PLACED ON RECORD WH ICH CONTAINS THE FOLLOWING NARRATION:- THIS IS TO CERTIFY THAT AS PER THE ZONING PLAN OF OLD DLF COLONY THIS IS TO CERTIFY THAT PLOT NO. M-30, OLD DLF COLONY, GURGAON IS SHOP CUM RESIDENCE. THIS OFFICE HAS SANCTIONED THE PLAN ACCORDINGLY OF THIS PLOT VIDE F . NO. 12/354/2002-2003/576 DATED 07.01.03 THE APPELLANT HAS ALSO ENCLOSED THE COPY OF VALUATI ON REPORT ISSUED BY GOVERNMENT APPROVED VALUER WHICH IS DATED 22.02.06 IN WHICH IN COLUMN NO. 8 AGAINST THE NARRATION - IS THE PROPERTY SITUATED IN- RESIDENTIAL / COMME RCIAL /MIXED AREA THE WORDS COMMERCIAL /RESIDENTIAL ARE MENTIONED AND IN COLU MN NO. 16 IT IS AGAIN NOTED THAT THE USE OF THE LAND IS 'SHOPPING CUM RESIDENTIAL -GF FOR SHOPPING PURPOSE AND FIRST FLOOR AND SECOND FLOOR FOR RESIDENTIAL PURPOSE. ITA NO. 4929/DEL/2013 ACIT V SHRI MANGU RAM BANSAL A Y 2003-04 5 | PA GE KEEPING IN VIEW ALL THE ABOVE FACTS IT IS NOTED THA T THERE IS A DEFINITE CASE OF THE APPELLANT THAT THE IMPUGNED PROPERTY IS PARTLY COMM ERCIAL AND PARTLY RESIDENTIAL AS IS BEING ARGUED. HOWEVER, SINCE THE PRESENT APPEAL ONL Y RELATES TO THE ISSUE OF IMPOSITION OF PENALTY FOR CONCEALMENT OF INCOME OR CLAIM OF IN ACCURATE DEDUCTION U/S 54F OF THE IT ACT, THEREFORE THIS APPELLATE PROCEEDING WOULD CONF INE ITSELF ONLY TO THIS ISSUE .IN FACTS OF THE CASE IT IS REASONABLE TO HOLD THAT THERE IS NO CONCEALMENT OF INCOME/ FILING OF INACCURATE PARTICULARS IN CLAIMING RATABLE DEDUCTIO N UNDER SECTION 54F OF THE IT ACT AS THE CLAIM OF DEDUCTION HAS BEEN MADE ON THE BONA FI DE BELIEF OF THE APPELLANT THAT IN TERMS OF SECTION 54F OF THE IT ACT SINCE THE IMPUGN ED PREMISES WAS PARTLY MEANT TO BE USED AS RESIDENTIAL HOUSE APART FROM THE USER OF GR OUND FLOOR FOR COMMERCIAL PURPOSE THEREFORE DEDUCTION U/S 54F WAS TO BE ALLOWED ON A PROPORTIONATE BASIS . IN VIEW OF THE ABOVE DISCUSSION AND KEEPING IN VIEW THE RATIO OF THE JUDGMENT IN CIT VS. RELIANCE PETROPRODUCTS P. LTD. 322 ITR 158 (SC) , WHICH IS APPLICABLE TO THE FACTS OF THE CASE, THE PENALTY IMPOSED FOR RS. 4,17,771/-, IS DI RECTED TO BE DELETED. 06. PRECISELY WE DO NOT FIND ANY INFIRMITY WITH THE ORD ER OF CIT (A) IN DELETING THE PENALTY. AO HAS NOT FOUND THAT THE CLA IM OF THE ASSESSEE IS NOT BONA FIDE. FURTHER, THE ASSESSEE BEFORE VARIOUS APPELLATE AND ASSESSING AUTHORITY SUBMITTED THE FULL PARTICULARS OF THE CLA IM AND NONE OF THE DOCUMENTS ARE INCORRECT. IT IS ALSO NOT THE CASE OF AO THAT EVEN ON DIRECTION GIVEN BY ITAT HE HAS VERIFIED AND FOUND T HE CLAIM OF THE APPELLANT FALSE. THEREFORE IN VIEW OF THIS, WE CON FIRM THE ORDER OF CIT (A) DELETING THE PENALTY U/S 1(1) (C) OF THE ACT OF RS. 4,17,771/-. 07. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. (ORDER PRONOUNCED IN THE COURT ON 06 /11/201 5) SD/- SD/- (C.M.GARG) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTA NT MEMBER DATED: 06 /11/2015 *B. RUKHAIYAR* COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(APPEALS) 5.DR: ITAT ITA NO. 4929/DEL/2013 ACIT V SHRI MANGU RAM BANSAL A Y 2003-04 6 | PA GE ASSISTANT REGISTRAR DATE INITIAL 1. DRAFT DICTATED ON 05/11/2015 2. DRAFT PLACED BEFORE AUTHOR 05/11/2015 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 5. APPROVED DRAFT COMES TO THE SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 7. FILE SENT TO THE BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.