Mahinder Kumar Gupta, New Delhi V. ACIT, New Delhi

ITA 643/DEL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2751 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2007-2008
• Appeal Filed On: 08-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S R SENAPATI
• Keywords: Capital asset; Bonafide belief; Cost of acquisition
• Section: 143(3)

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL, DELHI BENCH E, NEW DELHI BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 643/DEL./2016 ASSESSMENT YEAR: 2007-08 SH. MAHINDER KUMAR GUPTA, 26, JOR BAGH, NEW DELHI PAN- AAAPG4148F (APPELLANT) VS. A.C.I.T., CIRCLE 53(1), NEW DELHI. (RESPONDENT) ASSESSEE BY SH. K. SAMPATH, ADVOCATE REVENUE BY SH. S.R. SENAPATI, SR. DR ORDER PER L.P. SAHU, A.M.: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 23.12.2015 OF LD.CIT(A)-18, NEW DELHI FOR THE ASSES SMENT YEAR 2007-08, CHALLENGING THE SUSTENANCE OF PENALTY OF RS.14,58,6 00/- IMPOSED U/S. 271(1)(C) OF THE IT ACT, 1961 (THE ACT FOR SHORT) ON THE FOLLOWING GROUNDS : 1. BECAUSE THE LD. COMMISSIONER OF INCOME TAX (APP EALS) ERRED IN LAW AS WELL AS ON FACTS WHILE CONFIRMING THE LEVY OF PE NALTY OF RS.14,58,600/-. 2. BECAUSE, THE LD. LOWER AUTHORITIES HAVE ERRED WH ILE LEVYING PENALTY U/S 271(1)(C) TREATING DECLARATION OF RS.1,30,00,00 0/- AS LONG TERM CAPITAL GAINS AS WRONG AND ERRONEOUS. 3. BECAUSE EVEN OTHERWISE ASSESSEE BONAFIDELY DECLA RED RS.130,00,000/- AS INCOME FROM LONG TERM CAPITAL GA INS AS THE SAID DATE OF HEARING 14.03.2018 DATE OF PRONOUNCEMENT 27 .03.2018 ITA NO. 643/DEL./2016 2 AMOUNT WAS PART AND PARCEL OF SALE OF PROPERTY THOU GH ASSETS COMPRISE OF FURNITURE & FIXTURES ONLY. 4. BECAUSE EVEN OTHERWISE PENALTY OF RS,14,58,000/- U/S 271(1)(C) HAVE BEEN LEVIED AS THE AMOUNT OF RS.1,30,00,000/- HAVE BEEN TREATED AS THE INCOME FROM OTHER SOURCES I.E. ONLY ON ACCOUNT OF CHANGE OF HEAD. 5. BECAUSE EVEN OTHERWISE CHANGE OF HEAD OF INCOME AS DECLARED IN THE RETURN IS NEITHER CONCEALMENT OF INCOME NOR INCOME FROM FILING OF INACCURATE PARTICULARS OF INCOME AS HELD IN RELIANC E PETROCHEMICALS LTD. 6. BECAUSE EVEN OTHERWISE THERE WAS A BONAFIDE CLAI M AND DECLARED INCOME FROM LONG-TERM CAPITAL GAIN AND THE SAME WAS TRUTHFULLY REPORTED IN HIS RETURN OF INCOME HERE THERE WAS NO CONCEALMENT OF INCOME. 7. BECAUSE EVEN OTHERWISE LD. AO HAS CHOSE TO TREA T THE SAID INCOME IN SOME OTHER HEAD AND COULDN'T CHARACTERIZE THE PARTI CULARS AS REPORTED IN THE RETURN AS INACCURATE PARTICULARS OR AS SUPPRESSION OF FACTS UNDER THE NATURE AND CIRCUMSTANCES OF THE CAS E. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSMENT OF ASSESSEE WAS COMPLETED ASSESSMENT IN THIS CASE WAS COMPLETED AT AN INCOME OF RS.16,52,83,130/- U/S 143(3) ON 24.12.2009 AGAINST THE INCOME OF RS. 16,41,58,113/- RETURNED BY ASSESSEE BY WAY OF REVIS ED RETURN. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE DECLARED NET LONG TERM CAPITAL GAIN OF RS.16, 10,98,333/- ARISING OUT OF SALE OF HOUSE PRO PERTY, (HAVING 1/4 TH SHARE) AT PROPERTY NO. 4, 30, JANUARY MARG, NEW DELHI, SHO WING THE RECEIPT OF SALE CONSIDERATION AGAINST BUILDING WORTH RS.22,83,33,33 3/- AND FURNITURE WORTH RS.1,50,00,000/-. THE ASSESSING OFFICER OBSERVED TH AT THE WHILE COMPUTING THE ITA NO. 643/DEL./2016 3 CAPITAL GAINS, THE ASSESSEE WRONGLY INCLUDED AN AM OUNT OF RS.1.50 CRORES RECEIVED AGAINST THE SALE OF FURNITURE AND FITTINGS TO THE TOTAL SALE CONSIDERATION OF RS.24,33,33,500/-, AS THE FURNITU RE SOLD WAS NEITHER AFFIXED TO THE BUILDING STRUCTURE NOR WAS A CAPITAL ASSET. HE, THEREFORE, OBSERVED THAT SINCE THE ASSESSEE WAS NOT REGULARLY TRADING IN FUR NITURE, THE SALE CONSIDERATION RECEIVED AGAINST SALE OF FURNITURE, B EING THE SOLITARY TRANSACTION, WOULD BE TREATED AS INCOME FROM OTHER SOURCES. THE ASSESSING OFFICER, THEREFORE, AFTER DEDUCTING THE ESTIMATED COST OF FU RNITURE TO THE TUNE OF RS.20,00,000/-, ADDED THE REMAINING SUM OF RS.1,30, 00,000/- TO THE INCOME OF THE ASSESSEE AS INCOME FROM OTHER SOURCES. 3. IN QUANTUM APPEAL, THE LD. CIT(A) REVERSED THE A BOVE VIEW OF ASSESSING OFFICER OBSERVING THAT FURNITURE AND FIXTURE SOLD F OR RS.1.5 CRORES WAS AN INTEGRAL PART OF THE SALE CONSIDERATION OF ASSESSEE S SHARE IN PROPERTY AND THERE WAS NO LOGIC TO ALLOW ANY COST OF ACQUISITION IN RESPECT OF FURNITURE AND FIXTURE SEPARATELY. THE LD. CIT(A), THEREFORE, HELD THAT THE ASSESSEE HAD RIGHTLY SHOWN THE TOTAL SALE CONSIDERATION FOR THE PURPOSE OF COMPUTATION OF LONG- TERM CAPITAL GAINS AND DIRECTED THE ASSESSING OFFIC ER TO CONSIDER THE SUM OF RS.1.5 CRORES FOR WORKING OUT THE LONG TERM CAPITAL GAINS. ITA NO. 643/DEL./2016 4 4. THE REVENUE CHALLENGED THE ABOVE ORDER OF LD. CI T(A) BEFORE THE ITAT, WHO REMITTED THE CASE BACK TO THE ASSESSING OFFICER OBSERVING THAT NO STAMP DUTY WAS PAID ON THE EXTRA AMOUNT OF RS.6 CRORES RE CEIVED BY THE FOUR CO- OWNERS; THAT AS PER THE LETTER OF PRAJESH MARKETING PVT LTD., THE TAX LIABILITY WAS ALSO TO BE TAKEN CARE OF BY PRAJESH MARKETING P VT. LTD; AND THAT THE LD. CIT(A) DID NOT CONSIDER THE CLAIM OF COST OF ACQUIS ITION OF FURNITURE AND FIXTURE OF RS.20 LACS FOR COMPUTING THE LONG TERM CAPITAL G AIN. 5. IN PURSUANCE TO ORDER OF ITAT, THE ASSESSING OFF ICER AGAIN MADE ADDITION OF RS.1,30,00,000/- AS INCOME FROM OTHER S OURCES VIDE FRESH ASSESSMENT ORDER. 6. BASED ON THE ABOVE ADDITION, THE ASSESSING OFFIC ER INITIATED PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE IT ACT. THE CONTE NTION OF THE ASSESSEE BEFORE THE ASSESSING OFFICER WAS THAT MERE CHANGE IN THE H EAD OF INCOME DOES NOT CONSTITUTE CONCEALMENT OF INCOME OR FURNISHING OF I NACCURATE PARTICULARS OF INCOME, PARTICULARLY WHEN ALL THE DETAILS OF INCOME WERE SHOWN IN THE RETURN OF INCOME AND THE PARTICULARS OF INCOME IMPLIES FUR NISHING OF DETAILS OR INFORMATION ABOUT THE INCOME, WHICH THE ASSESSEE DI D IN THE INSTANT CASE. MERELY BECAUSE THE INCOME DECLARED UNDER ONE HEAD W AS HELD TAXABLE IN OTHER ITA NO. 643/DEL./2016 5 HEAD, WOULD NOT AMOUNT TO SATISFY THE INGREDIENT OF SECTION 271(1)(C) OF THE ACT. THE ASSESSING OFFICER BEING NOT SATISFIED BY T HE EXPLANATION OF THE ASSESSEE, IMPOSED PENALTY OF RS.14,58,600/- U/S. 27 1(1)(C) OF THE ACT FOR CONCEALMENT OF INCOME AFTER RELYING ON THE DECISION OF HONBLE DELHI HIGH COURT IN CIT VS. ZOOM COMMUNICATIONS PVT. LTD., 327 ITR 51. THE APPEAL FILED AGAINST PENALTY ORDER STOOD DISMISSED BY THE LD. CI T(A) BY RELYING ON VARIOUS DECISION, VIDE THE IMPUGNED ORDER. AGGRIEVED, THE A SSESSEE IS IN APPEAL BEFORE US. 7. THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE AS SESSEE HAD BONAFIDELY DECLARED THE AMOUNT OF RS.1,30,00,000/- AS LONG TER M CAPITAL GAINS AS THE SAID AMOUNT WAS INTEGRAL PART OF THE BUILDING SOLD. IT W AS SUBMITTED THAT THE IMPUGNED AMOUNT HAS BEEN TAXED BY ASSESSING OFFICER AS INCOME FROM OTHER SOURCES, THEREBY CHANGING THE HEAD OF TAXABILITY. I T WAS SUBMITTED THAT THE IMPUGNED PENALTY HAS BEEN IMPOSED ON CONCEALMENT OF INCOME, BUT THE AUTHORITIES BELOW HAVE FAILED TO CONSIDER THAT THE ABOVE INCOME WAS WELL DECLARED BY THE ASSESSEE IN ITS RETURN OF INCOME, T HOUGH IN DIFFERENT HEAD UNDER THE BONAFIDE BELIEF. IT WAS SUBMITTED THAT TH E DECISIONS RELIED BY THE AUTHORITIES BELOW DO NOT APPLY IN THE PRESENT CASE, AS THE SAME ARE BASED ON DIFFERENT SET OF FACTS. THOUGH THE CLAIM OF LONG TE RM CAPITAL GAIN MADE BY THE ITA NO. 643/DEL./2016 6 ASSESSEE WAS BONA FIDE, BUT REJECTION OF SUCH CLAIM BY ASSESSING OFFICER WOULD NOT CONSTITUTE CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IT WAS ALSO SUBMITTED THAT MERE MAKING O F A CLAIM WHICH IS NOT SUSTAINABLE IN LAW, WOULD BY ITSELF NOT AMOUNT TO F URNISHING OF INACCURATE PARTICULARS. RELIANCE IS PLACED ON THE FOLLOWING DE CISIONS : (I). CIT V. RELIANCE PETRO PRODUCT (P.) LTD. [20 10] 322 ITR 158 (SC) (II). CIT V. DHARAMPAL PREMCHAND LTD. [2011] 329 IT R 572 (DELHI) (III). CIT V. SOCIETEX [2013] 212 TAXMAN 73 (DELHI) (MAG.) (IV). KARAN RAGHAV EXPORTS (P.) LTD. V. CIT [2012] 349 ITR 112 (DELHI) (MAG.) 8. ON THE OTHER HAND, THE LD. DR RELIED ON THE DECI SION REACHED BY THE LD. CIT(A) IN THE IMPUGNED ORDER AND SUBMITTED THAT THE LD.CIT(A) HAS DISTINGUISHED ALL THE DECISIONS RELIED BY THE ASSES SEE AND HAS ALSO GIVEN DISTINGUISHING FEATURES IN THE IMPUGNED ORDER. IT WAS SUBMITTED THAT THE ASSESSEE HAD SHOWN THE INCOME UNDER THE HEAD INCOM E FROM LONG TERM CAPITAL GAINS INSTEAD OF INCOME FROM OTHER SOURCE S, WHICH ALLUDES THAT THE ASSESSEE HAS CONCEALED THE TRUE PARTICULARS OF INCO ME, ENTAILING PENALTY U/S. 271(1)(C) OF THE ACT. HE STRONGLY SUPPORTED THE ORD ER OF THE LD. CIT(A). 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAV E GONE THROUGH THE ENTIRE MATERIAL AVAILABLE ON RECORD. IT IS AN UNDIS PUTED FACT THAT THE PARTICULARS OF INCOME OF RS.1,30,00,000/- WAS DECLARED BY THE A SSESSEE IN ITS RETURN OF ITA NO. 643/DEL./2016 7 INCOME, TAXABLE AS LONG-TERM CAPITAL GAINS. THE CON TENTION OF THE ASSESSEE HAS BEEN THAT IT WAS DONE UNDER THE BONAFIDE BELIEF THA T THE FURNITURE AND FIXTURES SOLD WITH THE BUILDING PARTAKE THE CHARACTER OF SAL E CONSIDERATION OF CAPITAL ASSET. HE, THEREFORE, HAD SHOWN THE IMPUGNED INCOME AS INCOME FROM CAPITAL GAINS. THE BONAFIDE OF THE ASSESSEE APPEARS TO HAVE NOT BEEN CONSIDERED BY THE LD. AUTHORITIES BELOW IN RIGHT PERSPECTIVE. IT IS NOTABLE THAT AT THE INITIAL STAGE OF QUANTUM PROCEEDINGS, THERE WERE TWO DIFFER ENT OPINIONS OF THE REVENUE AUTHORITIES ITSELF ON THIS ISSUE, INASMUCH AS THE ASSESSING OFFICER TREATED THE IMPUGNED SUM AS INCOME FROM OTHER SOURC ES WHEREAS THE LD. CIT(A) IN FIRST ROUND OF APPEAL BY THE ASSESSEE TRE ATED THE SAME AMOUNT AS INCOME FROM LONG-TERM CAPITAL GAIN. ONCE, THE REVEN UE AUTHORITIES HAD EXPRESSED TWO VIEWS ON THE SAME ISSUE, HOW THE BONA FIDE OF THE ASSESSEE TO SHOW THE SAID AMOUNT AS INCOME FROM LONG TERM CAPIT AL GAINS COULD BE DOUBTED BY THE AUTHORITIES BELOW. HOWEVER, THE FACT REMAINS, THAT THE ASSESSEE HAD DECLARED ALL PARTICULARS OF THE IMPUGN ED RECEIPTS BEFORE THE REVENUE AUTHORITIES. MOREOVER, WE ARE SATISFIED WIT H THE CONTENTION OF THE ASSESSEE THAT A CLAIM MADE BY ASSESSEE, IF NOT FOUN D SUSTAINABLE UNDER LAW, THE SAME WOULD NOT AMOUNT TO CONCEALMENT OF INCOME OR F URNISHING OF INACCURATE PARTICULARS OF INCOME FOR SADDLING PENALTY AGAINST THE ASSESSEE AS HELD BY HONBLE APEX COURT IN RELIANCE PETROPRODUCTS (SUPRA ), AS ALSO IN SEVERAL OTHER ITA NO. 643/DEL./2016 8 DECISIONS RELIED BY THE ASSESSEE, WHICH APPEAR TO H AVE WRONGLY BEEN DISTINGUISHED BY THE LD. CIT(A) IN THE ATTENDING FA CTS OF THE PRESENT CASE. IT IS ALSO NOTABLE THAT THERE IS NO COMMENTS OF THE AUTHO RITIES BELOW ON DECLARATION OF THE IMPUGNED AMOUNT IN THE RETURN OF INCOME, THO UGH IT WAS SHOWN UNDER DIFFERENT. ONLY THE HEAD OF INCOME HAS BEEN CHANGED BY THE ASSESSING OFFICER. THEREFORE, THERE BEING NO CONCEALMENT OF THE IMPUGN ED SALE CONSIDERATION ON THE PART OF ASSESSEE, WE DO NOT FIND IT A FIT CASE TO IMPOSE PENALTY U/S. 271(1)(C) OF THE IT ACT. NO CONTRARY MATERIAL IS LA ID ON RECORD ON BEHALF OF THE REVENUE TO SUSTAIN THE IMPUGNED ORDER. THE DECISION S RELIED BY THE LD. CIT(A) DO NOT CONTAIN THE FACTS AS INVOLVED IN THE PRESENT CASE. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS FOUND FULL OF MERITS AND IS FIT TO BE ALLOWED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH MARCH, 2018. SD/- SD/- (BHAVNESH SAINI) ( L.P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 27 TH MARCH, 2018 *AKS* COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI