ACIT 19(3), MUMBAI V. SUNIL DATWANI, MUMBAI

ITA 5784/MUM/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 8616 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 09-08-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 30-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K R LAKSHMI NARAYANAN
• Assessee Lawyers: S K SINGH
• Section: 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I BEFORE SHRI D.K. AGARWAL, JUDICIAL MEMBER AND SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER. ITA NO.5784/MUM/2009 (ASSESSMENT YEAR : 2004-05) ASST. COMMISSIONER OF INCOME TAX 19(3), R.NO.305, 3 RD FLOOR, PIRMAL CHAMBERS, PAREL, MUMBAI-400012 VS. SRI SUNIL DATWANI, C/O ANMOL JEWELLERS, TURNER ROAD, BANDRA (W), MUMBAI-400 050 PAN NO.AABPD2416L APPELLANT. RESPONDENT. APPELLANT BY : SHRI K.R. LAKSHMINARAYANAN. RESPONDENT BY : SHRI S.K. SINGH. O R D E R PER D.K. AGARWAL : THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DT.28.8.2009 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FOR THE ASSESSMENT YEAR 2004-05 CANCELLING THE PENALTY AMOUNTING TO RS.4,58,715 IMPOSED BY THE ASSESSING OFFICER U/S. 271(1)(C) OF THE INCOME TAX ACT, 1961 (THE ACT). 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE HAD SOLD DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2004-05, TWO FLATS AND ALSO CERTAIN NUMBER OF SHARES OF A COMPANY AND CLAIMED EXEMPTION TO THE RESULTANT CAPITAL GAIN U/S. 54 AND 54F OF THE ACT AGAINST PURCHASE OF A NEW RESIDENCE. HOWEVER, ITA NO.5784/MUM//09 - 2 - IN THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICE R WAS OF THE VIEW THAT THE NEW RESIDENCE HAD NOT BEEN PURCHASED WITHIN ONE YEA R PRIOR TO THE DATE OF TRANSFER AS THE NEW RESIDENCE HAD BEEN PURCHASED ON 23.10.2002. THE SAID DATE DID NOT FALL WITHIN ONE YEAR PERIOD FROM THE DATE O F SALE OF OLD RESIDENCE (26.03.2004) OR THE DATE OF TRANSFER OF SHARES OF C OMPANY (29.10.2003). THE CONTENTION OF THE ASSESSEE THAT HE TOOK THE POSSESS ION OF THE NEW RESIDENCE ONLY ON 30.03.2003 AND THE SAID DATE WAS WITHIN ONE YEAR PRIOR TO THE TRANSFER OF OLD FLAT/SHARES WAS NOT FOUND TO BE ACCEPTABLE BY THE A SSESSING OFFICER AS THE ENTIRE PAYMENT FOR PURCHASE OF NEW RESIDENCE HAS BEEN MADE ON OR BEFORE 23.10.2002. ACCORDINGLY, THE ASSESSING OFFICER DENIED THE BENEF IT OF DEDUCTION U/S. 54 AND 54F AND BRING TO TAX THE ENTIRE LONG TERM CAPITAL G AIN. ON APPEAL THE SAID DISALLOWANCE WAS ALSO CONFIRMED BY THE LEARNED CIT( A). ON FURTHER APPEAL, THE TRIBUNAL AFTER CONSIDERING THE FACT AND THE DECISIO N OF HONBLE JURISDICTIONAL HIGH COURT IN CIT VS. BEENA K. JAIN (1996) 217 ITR 263 (BOM) HELD THAT THE ASSESSEE HAS INVESTED THE LONG TERM CAPITAL GAIN ON ACCOUNT OF SALE OF RESIDENCE AND SHARES IN PURCHASING THE RESIDENTIAL HOUSE WITH IN THE SPECIFIED PERIOD PRESCRIBED UNDER THE ACT AND ACCORDINGLY THE ASSESS EE IS ENTITLED TO GET THE EXEMPTION. ITA NO.5784/MUM//09 - 3 - 3. IN THE MEANWHILE, THE ASSESSING OFFICER AFTER C ONSIDERING THE ASSESSEES SUBMISSION IMPOSED PENALTY OF RS.4,58,715 VIDE ORDE R DT.26.03.2009 PASSED U/S. 271(1)(C) OF THE ACT. ON APPEAL, THE LEARNED CIT(A) WHILE OBSERVING THAT ON THE SAME FACTS, TWO VIEWS ARE POSSIBLE, FOLLOWIN G THE DECISION IN CIT VS. CALCUTTA CREDIT CORP 166 ITR 29, DELETED THE PENALT Y IMPOSED BY THE ASSESSING OFFICER. 4. BEING AGGRIEVED BY THE ORDER OF THE LEARNED CIT( A), THE REVENUE IS IN APPEAL BEFORE US CHALLENGING IN ALL THE GROUNDS THE DELETION OF PENALTY IMPOSED BY THE ASSESSING OFFICER. 5. AT THE TIME OF HEARING, THE LEARNED D.R. SUPPORT S THE ORDER OF THE ASSESSING OFFICER. 6. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE A SSESSEE SUBMITS THAT SINCE THE TRIBUNAL HAS DELETED THE DISALLOWANCE OF DEDUCT ION U/S.54 AND 54F MADE BY THE ASSESSING OFFICER, THEREFORE THE LEARNED CIT(A) HAS RIGHTLY DELETED THE PENALTY IMPOSED BY THE ASSESSING OFFICER AND THEREF ORE HIS ORDER BE UPHELD. 7. HAVING CAREFULLY HEARD THE SUBMISSIONS OF THE RI VAL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD, WE FIND MERIT IN THE PLEA OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE TRIBUNAL IN THE ASSESSEE S OWN CASE VIDE ORDER DT.22.9.2010 HAS HELD THAT THE ASSESSEE HAS INVESTE D THE LONG TERM CAPITAL GAIN ITA NO.5784/MUM//09 - 4 - ARISING ON ACCOUNT OF SALE OF RESIDENCE AND SHARES IN PURCHASING RESIDENTIAL HOUSE WITHIN THE SPECIFIED PERIOD PRESCRIBED UNDER THE ACT, THEREFORE, THE ASSESSEE IS ENTITLED TO GET THE EXEMPTION. SINCE T HE ADDITION ITSELF HAS BEEN DELETED BY THE TRIBUNAL ON WHICH THE ASSESSING OFFI CER HAS IMPOSED PENALTY, THEREFORE, WE ARE OF THE VIEW THAT THE PENALTY HAS NO LEGS TO STAND AND ACCORDINGLY WE DECLINE TO INTERFERE WITH THE ORDER PASSED BY THE LEARNED CIT(A) IN DELETING THE PENALTY IMPOSED BY THE ASSESSING OF FICER. THE GROUNDS TAKEN BY THE REVENUE ARE THEREFORE REJECTED. 8. IN THE RESULT THE REVENUES APPEAL STANDS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON 04.02.2011. SD/- SD/- (RAJENDRA SINGH) (D.K. AGARWAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DT. 04.02.2011 *GPR TRUE COPY COPY TO : 1. THE ASSESSEE. 2. THE ASSESSING OFFICER. 3. CIT(APPEALS) 4. CIT 5. DEPARTMENTAL REPRESENTATIVE, ITAT, MUMBAI. BY ORDER DY./ASST.REGISTRAR, ITAT, MUMBAI ITA NO.5784/MUM//09 - 5 - DATE INITIALS 1. DRAFT DICTATED ON 01.02.2011 ITA NO.5784/MUM//09 - 6 - 2. DRAFT PLACED BEFORE AUTHOR 3. DRAFT PROPOSED & PLACED BEFORE SECOND MEMBER 4. DRAFT DISCUSSED & APPROVED BY SECOND MEMBER 5. APPROVED DRAFT COMES TO SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 7. FILE SENT TO BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE ON WHICH FILE GOES TO A.R. 10. DATE OF DISPATCH OF ORDER.