ITO 18(3)(1), MUMBAI V. CHARNJIT SINGH JHASS, MUMBAI

ITA 5856/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1178 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2005-2006
• Appeal Filed On: 04-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEEPAK SUTARIA
• Assessee Lawyers: H ARESHVARDHAN DATAR
• Keywords: Share purchase agreement
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C,MUMBAI BEFORE SHRI D.K. AGARWAL (JM) & SHRI R.K. PANDA (AM ) I.T.A.NO.5856/MUM/2009 (A.Y. 2005-06) INCOME-TAX OFFICER, WARD 18(3)(1), R.NO.207, PIRAMAL CHAMBERS, LALBAUGH, PAREL, MUMBAI-16. VS. SHRI CHARANJIT SINGH JHASS, 168, VEER SAVARKAR MARG, PATEL, MUMBAI-12. PAN: AABPJ6595N APPELLANT RESPONDENT APPELLANT BY SHR I DEEPAK SUTARIA. RESPONDENT BY SHRI H ARESHVARDHAN DATAR. O R D E R PER R.K. PANDA, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 19-08-2009 OF THE CIT(A)-XXVIII, MUMBAI, RELATING TO ASSTT. YE AR 2005-06. 2. THE ONLY EFFECTIVE GROUND RAISED BY THE REVENUE READS AS UNDER : THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN DELETING THE PENALTY OF RS. 2,15,619/- U/S. 271(1)(C) LEVIED BY THE ASSESSING OFFICER WITHOUT A PPRECIATING THE FACT THE ASSESSEE HAD DELIBERATELY SHOWN THE SALE C ONSIDERATION AS ADVANCE RECEIVED IN HIS BALANCE SHEET EVEN AFTER TH E STAMP DUTY WAS PAID AND PROFESSION OF THE PROPERTY WAS HANDED OVER TO THE BUYER SAYING THAT THE SHARES OF THE PROPERTY WERE N OT TRANSFERRED IN THE NAME OF THE BUYER. 2.1 THE FACTS OF THE CASE, IN BRIEF, ARE THAT THE A SSESSEE PURCHASED A SHOP IN VIDYA APARTMENTS, CADELLA ROAD, MAHIM, MUMBAI-400 0 16, ON 14-11-1982 FOR AN AMOUNT OF RS.1,98,000/-. THE AREA OF THE SHOP WAS 4 25 SQ. FT. DURING THE RELEVANT PREVIOUS YEAR, A PORTION OF THE SHOP MEAS URING 285 SQ. FT. WAS SOLD AND REGISTERED ON 01-02-2005 FOR AN AMOUNT OF RS.20,00, 000/-. NO LONG-TERM CAPITAL GAIN WAS OFFERED IN THE RETURN. DURING THE ASSESSME NT PROCEEDINGS, LONG-TERM CAPITAL GAIN OF RS.10,38,350/- WAS BROUGHT TO TAX. ITA 5856/M/09 CHARANJIT SINGH JHASS 2 2.2 THE AO OBSERVED THAT THE PROPERTY WAS REGISTERE D ON 01-02-2005 IN FAVOUR OF THE BUYER, STAMP DUTY WAS ALSO PAID AND POSSESSI ON WAS ALSO HANDED OVER TO THE BUYER. IN SUCH CIRCUMSTANCES, THE ASSESSEE CANN OT SHOW THE SALE CONSIDERATION AS ADVANCE RECEIVED IN HIS BALANCE-SH EET ON THE GROUND THAT THE SHARES OF THE PROPERTY ARE STILL IN THE NAME OF T HE ASSESSEE AND SOCIETY HAD NOT PERMITTED TO TRANSFER THE SAME IN THE NAME OF THE B UYER AS ONLY PART OF THE PROPERTY WAS SOLD. THEREAFTER, THE AO INITIATED PEN ALTY PROCEEDINGS U/S. 271(1)(C) FOR FURNISHING INACCURATE PARTICULARS. 2.3 IN RESPONSE TO THE NOTICE, IT WAS SUBMITTED THA T THE ASSESSEE AGREED THE INADVERTENT OMISSION OF CAPITAL GAIN DURING THE ASS ESSMENT STAGE AND THERE WAS NO DELIBERATE ATTEMPT TO HIDE THE PARTICULARS OF TH E CASE. VARIOUS DECISIONS WERE ALSO RELIED UPON. HOWEVER, THE AO WAS NOT SATISFIED WITH THE VARIOUS EXPLANATIONS GIVEN BY THE ASSESSEE WHO LEVIED A PENALTY OF RS.2, 15,619/- U/S.271(1)(C) OF THE I.T ACT. 3. BEFORE THE CIT(A), THE ASSESSEE REITERATED THE S AME SUBMISSIONS AS MADE BEFORE THE AO, THE DETAILS OF WHICH CAN BE SUMMARIZ ED AS UNDER : (A) THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CARPENTRY AND REPAIRS WORK. (B) THE APPELLANT HAD TAKEN A LOAN FOR THE PU RPOSE OF RUNNING THE BUSINESS AND DUE TO DOWNFALL IN THE BUS INESS, THE LOAN COULD NOT BE REPAID. DUE TO PRESSURE FROM THE FINANCIAL INSTITUTION IT WAS DECIDED TO SELL A PART OF THE SH OP, HOWEVER, THE CO-OPERATIVE SOCIETY REFUSED TO TRANSFER THE SH OP IN THE NAME OF THE BUYER. THIS LED TO IMPRESSION ON THE PA RT OF THE APPELLANT THAT THE TRANSACTION WAS NOT COMPLETE, HE NCE CAPITAL GAIN WAS NOT OFFERED TO TAX. (C) THE APPELLANT WAS UNDER THE IMPRESSION TO OFFER THE CAPITAL GAIN AS AND WHEN THE SHARES OF THE PROPERTY ARE TRANSFERRED IN THE NAME OF THE BUYER. (D) THAT THE PROPERTY WAS SOLD FOR RS.20,00,000/-, HOWEVER ONLY RS.18,00,000/- WAS RECEIVED AND THE BALANCE RS.20,00,000/- IS RETAINED BY THE BUYER WHICH WOULD BE PAID ONLY AFTER TRANSFER OF SHARE CERTIFICATE. ITA 5856/M/09 CHARANJIT SINGH JHASS 3 (E) THAT THE SHARES OF THE PROPERTY ARE STILL IN TH E NAME OF THE APPELLANT. (F) THAT THERE IS NO INTENTION ON THE PART OF THE A PPELLANT TO HIDE LONG TERM CAPITAL GAIN FROM TAX, IN FACT TH E AO HAD COME TO KNOW THE TRANSACTION ONLY FROM THE DETAILS SUBMITTED BY THE APPELLANT. (G) THAT THE APPELLANT HAD AGREED TO PAY LONG TERM CAPITAL GAIN AND NO FURTHER APPEAL WAS PREFERRED ON ASSESSM ENT MADE BY THE AO. IT WAS SUBMITTED THAT THE ASSESSEE WAS UNDER A BON A FIDE BELIEF THAT THE PROPERTY WAS NOT COMPLETELY TRANSFERRED TO THE BUYE R AS THE SOCIETY DID NOT AGREE TO TRANSFER THE SHARE CERTIFICATE OF THE PROP ERTY IN THE NAME OF THE BUYER. THE ASSESSEE HAD FURNISHED FULL PARTICULARS AND EXP LANATIONS SUPPORTED BY DOCUMENTS. THE AO DID NOT PROVE THAT THE EXPLANATIO N IS WRONG. ACCORDINGLY, IT WAS SUBMITTED THAT PENALTY U/S.271(1)(C) IS NOT LEV IABLE. 3.1 BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE AND RELYING ON THE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF KANBAY SOFTWARE INDIA P.LTD. REPORTED IN (2009) 31 SOT 153 AND THE DECISI ON OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF SUNILCHANDRA VOHRA V S. ACIT VIDE ITA NO.4983/MUM/2006, THE CIT(A) DELETED THE PENALTY LE VIED BY THE U/S.271(1)(C) OF THE I.T. ACT. 3.2 AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE R EVENUE IS IN APPEAL BEFORE US. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF AO AND CIT(A) AND THE PAPER BOOK FILE D ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND THE ASSESSEE HAS SHOWN THE SALE CONSIDERATION RECEIVED AS ADVANCES RECEIVED IN THE BALANCE-SHEET. ACCORDING TO THE ASSESSEE, SINCE THE HOUSING SOCIETY DID NOT AGREE TO TRANSFER THE SHARE CERTIFICATE IN THE NAME OF THE BUYER, THE ASSESSEE WAS ITA 5856/M/09 CHARANJIT SINGH JHASS 4 UNDER A BONA FIDE BELIEF THAT TRANSFER IS NOT YET C OMPLETED FOR WHICH IT HAS NOT DECLARED THE CAPITAL GAIN ON ACCOUNT OF THE TRANSFE R. HOWEVER, ACCORDING TO THE REVENUE, SINCE THE PROPERTY WAS REGISTERED ON 1-2-2 005 IN FAVOUR OF THE BUYER, STAMP DUTY WAS ALSO PAID AND POSSESSION WAS HANDED OVER TO THE BUYER, THE ASSESSEE CANNOT SHOW THE SALE CONSIDERATION AS ADVA NCE RECEIVED IN THE BALANCE- SHEET ON THE GROUND THAT THE SHARES OF THE SOCIETY ARE STILL IN THE NAME OF THE ASSESSEE AND THE SOCIETY HAS NOT PERMITTED TO TRANS FER THE SAME IN THE NAME OF THE BUYER AS ONLY PART OF THE PROPERTY WAS SOLD. WE FIND BASED ON THE INFORMATION SUPPLIED BY THE ASSESSEE, THE AO CALLED FOR FURTHER DETAILS AND CAME TO THE ABOVE CONCLUSION. 4.1 IT HAS BEEN HELD BY THE HONBLE SUPREME COURT I N THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. (322 ITR 158) THAT MERELY BECAUSE THE CLAIM MADE BY THE ASSESSEE IS NOT ACCEPTABLE TO THE REVEN UE, THAT ITSELF WOULD NOT ATTRACT PENALTY U/S. 271(1)(C) OF THE I.T. ACT. MER E MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF, WILL NOT AMOUNT T O FURNISHING OF INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. S UCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. IN THE INSTANT CASE, THE ASSESSEE HAS DISCLOSED THE AMOUNT IN HIS BALANCE-SH EET AS ADVANCE RECEIVED AND NOT CONCEALED HIS PARTICULARS OF INCOME. FURTHER, THE SUBMISSION OF THE ASSESSEE THAT THE SOCIETY HAS NOT PERMITTED THE TRANSFER OF THE PROPERTY IN THE NAME OF THE BUYER AND SHARES OF THE SOCIETY ARE STILL IN THE NA ME OF THE ASSESSEE HAS NOT BEEN PROVED TO BE FALSE OR UNTRUE. THEREFORE, FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT CITED ABOVE AND IN VIEW OF THE DETAIL ED ORDER PASSED BY THE CIT(A) DELETING THE PENALTY, WE DO NOT FIND ANY INF IRMITY IN THE SAME. ACCORDINGLY, THE SAME IS UPHELD. THE GROUND RAISED BY THE REVENUE IS DISMISSED. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ITA 5856/M/09 CHARANJIT SINGH JHASS 5 ORDER PRONOUNCED ON THE 9TH DAY OF JULY, 2010. SD/- SD/- (D.K. AGARWAL) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 9TH JULY , 2010 NG: COPY TO : 1. ASSESSEE. 2. DEPARTMENT. 3 CIT(A)-XXVIII,,MUMBAI. 4 CIT-18,MUMBAI. 5.DR,C BENCH,MUMBAI. 6.MASTER FILE. (TRUE COPY) BY ORDER, ASST.REGISTRAR, ITAT, MUMBAI. ITA 5856/M/09 CHARANJIT SINGH JHASS 6 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 25-6-10 SR.PS/ 2 DRAFT PLACED BEFORE AUTHOR 29-6-10 SR.PS/ 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/ 6. KEPT FOR PRONOUNCEMENT ON SR.PS/ 7. FILE SENT TO THE BENCH CLERK SR.PS/ 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER