VIJAY P. MANJAREKAR, MUMBAI V. ITO - 25 (1)(4), MUMBAI

ITA 5912/MUM/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 4599 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2014-2015
• Appeal Filed On: 15-10-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: USHA GAIKWADLD
• Assessee Lawyers: K K LALKAKA LD
• Keywords: Capital asset; Wrong claim
• Section: 271(1)(c); 143(3); 274; 54

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI , , BEFORE HONBLE SHRI SAKTIJIT DEY, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM (HEARING THROUGH VIDEO CONFERENCING MODE) ./ I.T.A. NO.5912/MUM/2018 ( / ASSESSMENT YEAR: 2014-15) SHRI VIJAY P. MANJREKAR FLAT NO.201, BMC EMPLOYEES PARIMAL CHS LTD. SHIMPOLI ROAD, SHIMPOLI BORIVALI WEST, MUMBAI 400 092 / VS. I TO - 25(1)(4 ) MUMBAI 400 020. $% # ./ # ./PAN/GIR NO. ALHPM-1352-K ( '%' /APPELLANT ) : ( ()%' / RESPONDENT ) ASSESSEE BY : SHRI K.K.LALKAKA-LD. AR REVENUE BY : MS. USHA GAIKWAD LD. SR. DR / DATE OF HEARING : 19/05/2021 / DATE OF PRONOUNCEMENT : 24/05/2021 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. IN THIS APPEAL FOR ASSESSMENT YEAR (AY) 2014-15 , THE ASSESSEE IS AGGRIEVED BY CONFIRMATION OF PENALTY OF RS.8,35,565 /- U/S 271(1)(C) BY LD. COMMISSIONER OF INCOME-TAX (APPEALS)-37, MUMBAI , [IN SHORT REFERRED TO AS CIT(A)] VIDE IMPUGNED ORDER DATED 10/07/2018. THE ASSESSMENT FOR THE YEAR WAS FRAMED BY LD. ASSESSING OFFICER (AO) U/S 143(3) ON 01/12/2016 WHEREAS PENALTY WAS LEVIED VID E ORDER DATED 2 21/06/2017. THE PENALTY, UPON CONFIRMATION BY LD. C IT(A), IS IN FURTHER CHALLENGE BEFORE US. 2. THE LD. COUNSEL FOR ASSESSEE, ASSAILED PENALTY O N LEGAL GROUNDS AS WELL AS ON MERITS. THE LD. AR SUBMITTED THAT MIS TAKE OF MAKING INADMISSIBLE CLAIM IN THE RETURN OF INCOME OCCURRED DUE TO WRONG ADVICE TENDERED BY TAX CONSULTANT WHO HAPPENS TO BE PURCHA SER OF ASSESSEES PROPERTY. ON LEGAL GROUNDS, LD. AR SUBMITTED THAT L D. AO FAILED TO FRAME SPECIFIC CHARGE AGAINST THE ASSESSEE AND THEREFORE, THE PENALTY WAS NOT SUSTAINABLE IN THE EYES OF LAW. THE LD. SR. DR, ON THE OTHER HAND, SUBMITTED THAT THE ASSESSEE MADE A CLAIM WHICH WAS NOT ADMISSIBLE AND THEREFORE, PENALTY WAS RIGHTLY LEVIED ON THE GIVEN FACTS AND CIRCUMSTANCES. 3. WE HAVE CAREFULLY HEARD THE RIVAL SUBMISSIONS AN D PERUSED RELEVANT MATERIAL ON RECORD. OUR ADJUDICATION TO TH E SUBJECT MATTER OF APPEAL WOULD BE AS GIVEN IN SUCCEEDING PARAGRAPHS. 4. FACTS LEADING TO IMPOSITION OF PENALTY ARE THAT DURING ASSESSMENT PROCEEDINGS, IT TRANSPIRED THAT THE ASSESSEE SOLD A FLAT SITUATED AT ANDHERI (WEST), MUMBAI BUT DID NOT OFFER THE CAPITA L GAINS ARISING THERE- FROM IN THE RETURN OF INCOME. THE ASSESSEE ADMITTED THE MISTAKE DURING ASSESSMENT PROCEEDINGS AND OFFERED SHORT-TERM CAPIT AL GAINS OF RS.26.56 LACS IN THE REVISED COMPUTATION OF INCOME. IN THE REVISED COMPUTATION, THE ASSESSEE ALSO OFFERED ADDITIONAL I NTEREST INCOME OF RS.0.27 LACS AND WITHDREW CLAIM OF LOSS FROM HOUSE PROPERTY FOR RS.0.47 LACS. THE TAX DEMAND WAS DULY PAID BY THE A SSESSEE IN DUE COURSE OF TIME. HOWEVER, PENALTY PROCEEDINGS WERE I NITIATED U/S 271(1)(C) IN THE ASSESSMENT ORDER AND A SHOW-CAUSE NOTICE WAS ISSUED 3 U/S 274 R.W.S. 271 ON 01/12/2016 REQUIRING THE ASSE SSEE TO DEFEND THE PROPOSED PENALTY. 5. DURING PENALTY PROCEEDINGS, THE ASSESSEE SUBMITT ED THAT IT RELIED ON THE PROFESSIONAL ADVICE TENDERED BY ONE SHRI JIT ENDRA CHIMANLAL DARJI THAT THE GAIN SO EARNED BY THE ASSESSEE WERE ELIGIB LE FOR DEDUCTION U/S 54 SINCE THE ASSESSEE HAD PURCHASED A NEW FLAT WITH IN TWO YEARS. HOWEVER, IT WAS REALIZED DURING ASSESSMENT PROCEEDI NGS THAT THE PROPERTY SOLD BY THE ASSESSEE WAS NOT ENTITLED FOR DEDUCTION SINCE IT WAS A SHORT-TERM CAPITAL ASSET. UPON REALIZING THE MIST AKE, THE CLAIM WAS WITHDRAWN. UNDER THESE CIRCUMSTANCES, THE ASSESSEE PLEADED FOR DROPPING OF PENALTY PROCEEDINGS. HOWEVER, NOT CONVI NCED, LD. AO IMPOSED A PENALTY OF RS.8.35 LACS INVOKING THE PROV ISIONS OF SEC. 271(1)(C) READ WITH EXPLANATION-1. THE PENALTY, UPO N CONFIRMATION BY LD. CIT(A), IS IN FURTHER APPEAL BEFORE US. 6. BEFORE US, IT IS THE PLEA OF LD. AR THAT THE MI STAKE IN THE RETURN OF INCOME OCCURRED DUE TO WRONG LEGAL ADVICE TENDERED BY THE PURCHASER OF THE PROPERTY WHO HELD HIMSELF TO BE A CHARTERED ACC OUNTANT THOUGH HE WAS ONLY AN ACCOUNTS ASSISTANT IN THE CHARTERED ACC OUNTANT FIRM OF M/S SAMPAT MEHTA & CO. THE SAID ACCOUNTANT FIELD RETURN OF INCOME ON BEHALF OF THE ASSESSEE BY MENTIONING HIS OWN EMAIL AND TELEPHONE NUMBER IN THE INCOME TAX RETURN. THE PERUSAL OF COP Y OF ITR-4 AS PLACED ON RECORD SUPPORTS THE SAID SUBMISSIONS. WE ALSO FIND THAT THE ASSESSEE HAD MADE INVESTMENT OF RS.36 LACS ON 31/07 /2013 IN A NEW RESIDENTIAL FLAT SITUATED AT C-103, BABA SADAN, 4, BUNGALOWS, J.P. ROAD, ANDHERI (W), MUMBAI WHICH IS EVIDENT FROM THE COPY OF AGREEMENT AS PLACED ON RECORD. THE PAYMENT OF THE SAME WAS MADE THROUGH BANK ACCOUNT ON 28/06/2013 AND 04/07/2013. HENCE, THE AS SESSEE WOULD 4 HAVE BEEN ELIGIBLE TO CLAIM DEDUCTION U/S 54 IF THE PROPERTY SOLD WAS A LONG-TERM CAPITAL ASSET. THE ASSESSEE HAS ALSO PLAC ED ON RECORD LETTER DATED 11/10/2018 FROM SHRI JITENDRA CHIMANLAL DARJI ADMITTING THE SAID MISTAKE. THE ASSESSEE HAS ALSO FILED AN AFFIDAVIT A S TO THE ABOVE STATED FACTS. ALL THESE FACTS AND DOCUMENTARY EVIDENCES LE ND STRENGTH TO ASSESSEES SUBMISSIONS THAT THE CLAIM WAS UNDER BON A-FIDE MISTAKE AND THE SAME WAS DULY ACCEPTED DURING ASSESSMENT PROCEE DINGS. UNDER THESE CIRCUMSTANCES, IT COULD NOT BE SAID THAT THE ASSESSEE FAILED TO OFFER ANY EXPLANATION AS TO WRONG CLAIM OR THE EXPLANATIO N FURNISHED BY THE ASSESSEE WAS UNTRUE. THEREFORE, KEEPING IN VIEW THE RATIO LAID DOWN BY HONBLE APEX COURT IN PRICE WATERHOUSE COOPERS PVT. LTD. V/S CIT(348 ITR 306) WHICH HELD THAT NO PENALTY WOULD B E LEVIABLE IN CASE OF BONA-FIDE EXPLANATION, WE ARE INCLINED TO DELETE TH E IMPUGNED PENALTY. THE ADJUDICATION OF ISSUE, ON LEGAL GROUNDS, HAVE T HUS BEEN RENDERED MERELY ACADEMIC IN NATURE. 7. THE APPEAL STANDS PARTLY ALLOWED IN TERMS OF OUR ABOVE ORDER. ORDER PRONOUNCED ON 24 TH MAY, 2021. SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 24/05/2021 SR.PS, JAISY VARGHESE ! / COPY OF THE ORDER FORWARDED TO : 1. '%'/ THE APPELLANT 2. ()%'/ THE RESPONDENT 3. !! (') / THE CIT(A) 4. !! / CIT CONCERNED 5. YZ([, !'[, / DR, ITAT, M UMBAI 6. Z] / GUARD FILE 5 / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.