JIGNESH D. SHAH, MUMBAI V. ITO,13(1)(2), MUMBAI

ITA 616/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 5611 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: misc
• Appeal Filed On: 05-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Cost of acquisition; Valuation report; Revised return; Set aside
• Section: 271(1)(c); 142(1); 143(1); 143(2); 139(4)

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL SMC-II BENCH, MUMBAI SHRI SHAMIM YAHYA (AM) I.T.A. NO. 616/MUM/2019 (ASSESSMENT YEAR 2010-11) MR. JIGNESH D. SHAH DAGA CHAMBERS 15 NARAYAN DHURU CROSS LANE, MUMBAI 400 003. PAN : AAEPS1734P VS . ITO 13(1)(2) 4 TH FLOOR EARNEST HOUSE NARIMAN POINT MUMBAI 400 021. (APPELLANT) (RESPONDENT) ASSESSEE BY NONE DEPARTMENT BY SHRI PRAMOD NIKALJE DATE OF HEARING 21 .09 . 20 20 DATE OF PRONOUNCEMENT 24.09.2020 O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORD ER OF LEARNED CIT A DATED 25.10.2018 AND PERTAINS TO ASSESSMENT YEAR 20 10-11. 2. THE ISSUE RAISED IS THAT LEARNED CIT APPEALS ERR ED IN SUSTAINING THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE I.T. ACT AMOUNTING TO RUPEES 4,12,242/-. 3. BRIEF FACTS ARE THAT THE RETURN OF INCOME WAS E-FILED U/S 139(4) ON 30/03/2011 DECLARING TOTAL INCOME OF RS. 35,000/-. THE RETURN OF INCOME WAS PROCESSED U/S 143(1) OF THE I.T. ACTON 19/05/2011. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY. THE NOTICE UNDER SECTION 143(2) OF THE I.T. ACT WAS ISSUED ON 28/09/2011 AND DULY SERVED UPON THE ASSES SEE ON 29/09/2011. THEREAFTER THE ASSESSEE HAS FILED HIS REVISED RETUR N OF INCOME ON 31/03/2012 DECLARING TOTAL INCOME OF RS. 20,95,448/-. THEREAFT ER NOTICE U/S. 142(1) OF THE I.T. ACT DATED 2.7.2012 WAS ISSUED TO THE ASSESSEE FOR FURNISHING COPY OF THE RETURN OF INCOME, BALANCE SHEET, PROFIT AND LOSS AC COUNT AND CAPITAL ACCOUNT. MR. JIGNESH D. SHAH 2 THE ASSESSING OFFICER MADE THE ASSESSMENT OF LONG-T ERM CAPITAL GAIN BY OBSERVING AS UNDER :- ON PERUSAL OF AIR INFORMATION IT IS SEEN THAT THE ASS ESSEE HAS PURCHASED IMMOVABLE PROPERTY VALUED AT RS. 1,80,00,000/-. THE ASSESSEE CONTENDED DURING THE ASSESSMENT PROCEEDING THAT, HE HAD SOLD T HE SAID PROPERTY WHICH IS REFLECTED AS PURCHASED IN AIR. THE SALE IS ALSO C ONFIRMED BY THE SUB- REGISTRAR VIDE HIS LETTER DATED 11/10/2012. THE INHE RITANCE PROPERTY WAS ACQUIRED BY THE ASSESSEE JOINTLY WITH HIS TWO SISTERS MRS. VARSHA GANDHI AND MRS. NEETA YAGNIK. THE VALUATION REPORT OF THIS PROPE RTY AS ON 01/04/1981 WAS DETERMINED BY GOVT. APPROVED VALUER RAJESH SHAH ENGINEERS AND CONSULTANT PVT. LTD. AT RS. 7,30,800/- AND THE SAID PROP ERTY WAS SOLD BY THE THEM ON 29/04/2009 AT RS. 1,08,00,000/-. THE CAPITAL GAIN WORKS OUT IS AS UNDER: SALE CONSIDERATION : 1,08,00,000/ - COST OF ACQUISITION AS PER VALUER REPORT RS. 7 F 30,800/- LESS INDEX COST 730800 X 632 /100 = 46,18,656/- TOTAL L.T.C.G. : RS. 61,81,344/- AS THE PROPERTY WAS SOLD BY THREE CO-OWNERS AND HIS SHARE OF PROFIT AS PER ASSESSEE'S LETTER DATED 17/12/2012 IS ONE-THIRD. HENCE , ONE THIRD OF RS. 61,81,344/-, THAT IS RS. 20,60,448/- IS ADDED TO THE TOTA L INCOME OF THE ASSESSEE. SINCE THE ASSESSEE HAD NOT FILED HIS ORIGINAL RETURN OF INCOME AS PER THE PROVISION SUB-SECTION (1) OF THE SECTION 139, AND S UBSEQUENTLY THE REVISED RETURN OF INCOME WAS NOT VALID WHICH IS FILED AFTER RECEIVING OF NOTICE U/S 143(2) OF IT ACT 1961, THE PENALTY U/S 271(1)(C) OF THE I.T . ACT HEREBY INITIATED. 4. FURTHERMORE DURING THE COURSE OF ASSESSMENT PROC EEDINGS U/S. 143(3), THE ASSESSEE VIDE ASSESSING OFFICERS LETTER DATED 23/1 1/2012, WAS ASKED TO EXPLAIN WHY (HE PAYMENT OF RS. 2,80,287/- THROUGH S LATE BANK OF INDIA CREDIT AND SHOULD NOT BE TREATED AS UNEXPLAINED EXPENDITUR E U/S. 69C. THE ASSESSEE VIDE LETTER DATED 17/01/2013, SUBMITTED THAT RS. 65 ,727/- AGAINST THE CREDIT CARD PAYMENT WAS PAID OUT OF PERSONAL SAVINGS. ASSE SSING OFFICER NOTED THAT THE TOTAL INCOME OF THE ASSESSEE IS RS. 35,000/- ON LY, AND THE SOURCE OF PERSONAL SAVING IS NOT EXPLAINED BY THE ASSESSEE. H ENCE, THE CREDIT CARD PAYMENT OF RS. 65,727/- PAID OUT OF PERSONAL SAVING BY THE ASSESSEE WAS TREATED AS UNEXPLAINED U/S 143(3). MR. JIGNESH D. SHAH 3 6. PENALTY UNDER SECTION 271(1)(C) WAS ALSO LEVIED ON THE ABOVE DISALLOWANCE/ADDITION WHICH WAS SUSTAINED BY LEARNE D CIT(A). AGAINST THIS ORDER ASSESSEE IS IN APPEAL BEFORE THE ITAT. 7. I HAVE HEARD LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE RECORD. I FIND THAT THE PRESENT CASE ASSESSING OFFI CER HAS ISSUED NOTICE TO THE ASSESSEE TO FILE THE RETURN OF INCOME. UPON GETTING THE REPLY FROM THE ASSESSEE AND THE REVISED RETURN OF INCOME, THE ASSESSING OFF ICER HAS MADE THE ASSESSMENT OF LONG TERM CAPITAL GAIN WITHOUT ANY FU RTHER ADDITIONAL DISALLOWANCE. IN THIS VIEW OF THE MATTER IN MY CONS IDERED OPINION ASSESSEE CANNOT BE HELD GUILTY OF CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. FURTHER MORE IN MY CONSIDERED OPINION THE C ONDUCT OF THE ASSESSEE IS NOT CONTUMACIOUS AND OF TO WARRANT LEVY OF PENALTY. THIS PROPOSITION DRAWS SUPPORT FROM HONOURABLE SUPREME COURT DECISION IN T HE CASE OF HINDUSTAN STEEL VS. STATE OF ORISSA VS. (83 ITR 26). 8. FURTHERMORE AS REGARDS DISALLOWANCE OF CREDIT CA RD EXPENSE OF RUPEES 65,727/- I FIND THAT IT WILL BE PRESUMPTUOUS TO HOL D THAT A PERSON HAVING THE INCOME INCLUDING THE CAPITAL GAIN OF THE MAGINTUDE OF THE ASSESSEE AS EVIDENT ABOVE CANNOT SAVE THAT MUCH OF MONEY. IN THIS VIEW OF THE MATTER PENALTY FOR CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME IS NOT SUSTAINABLE ON THE SAME LEGAL PROPOSITION AS MENTIO NED ABOVE. ACCORDINGLY I SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND DELET E THE PENALTY. 9. IN THE RESULT ASSESSEE'S APPEAL IS ALLOWED. ORDER PRONOUNCED UNDER RULE 34(4) OF THE ITAT RULES ON 24.9.2020. SD/- (SHAMIM YAHYA) ACCOUNTANT MEMBER MUMBAI; DATED : 24/09/2020 COPY OF THE ORDER FORWARDED TO : MR. JIGNESH D. SHAH 4 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR) PS ITAT, MUMBAI