PRATIMA SHODHAN, MUMBAI V. ITO WD 12(3)(2), MUMBAI

ITA 6446/MUM/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7861 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 08-03-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 01-09-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: O P SHARMA
• Keywords: Reasonable cause; Condonation of delay; Set aside
• Section: 54EC; 27; 54

Judgement Text

` IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C,MUMBAI BEFORE SHRI N.V. VASUDEVAN (JM) & SHRI RAJENDRA SIN GH (AM) I.T.A.NO.6286, 6287/MUM/2009 & 6446/MUM/2010 (ASST. YEAR: 2004-05) SMT. PRATIMA SHODHAN, SHRI PRAKASH JHUNJHUNWALA, C.AS., 5, JOLLY BHAWAN NO. 2, 7, NEW MARINE LINES, CHURCHGATE, MUMBAI-400 020. PAN: AWBPS 3971 M VS. INCOME-TAX OFFICER, WARD 12(3)(2), AAYKAR BHAWAN, M.K. ROAD, MUMBAI-400 020. APPELLANT RESPONDENT APPELLANT BY SHRI PRAKASH JHUNJHUNWALA. RESPONDENT BY SHRI O .P. SHARMA. O R D E R PER RAJENDRA SINGH, AM : THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDERS OF CIT (APPEALS)-XII, MUMBAI, DATED 16-02-2009, 18-02-2009 AND 07-07-2010 RELATING TO ASSESSMENT ORDER, PENALTY ORDER AND ORDER U/S.15 4 FOR THE ASSTT. YEAR 2004- 05. THESE APPEALS ARE BEING DISPOSED OF BY A SINGL E CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. WE FIRST TAKE UP THE APPEAL OF THE ASSESSEE IN ITA NO.6286/MUM/2009 . IN THIS APPEAL, THE ASSESSEE HAS RAISED DISPUTES RELATING TO THE ASSESSMENT ORDER AND HAS CHALLENGED THE ORDE R OF CIT(A) FOR NOT ADMITTING THE APPEAL AS WELL AS ON MERIT OF VARIOUS ADDITIONS . 2.1 BEFORE WE PROCEED TO DEAL WITH THE APPEAL, WE H AVE TO FIRST CONSIDER THE DELAY IN FILING THE APPEAL. THERE HAS BEEN A DELAY OF 184 DAYS IN FILING OF APPEAL BY THE ASSESSEE. THE ORDER OF CIT(A) WAS RECEIVED O N 04-04-2009 AND THE APPEAL ITA NOS.6286-6287-6446/M/10 SMT. PRATIMA SHODHAN. 2 TO THE TRIBUNAL WAS REQUIRED TO BE FILED WITHIN TWO MONTHS BUT THE SAME WAS FILED ON 04-12-2009. THE ASSESSEE HAS FILED CONDONATION A PPLICATION IN WHICH IT HAS BEEN SUBMITTED THAT THE DELAY IN FILING APPEAL BEFO RE THE TRIBUNAL WAS UNINTENTIONAL AND DUE TO COMPELLING REASONS. IT HAS BEEN EXPLAINED THAT THE ASSESSEE WAS A WIDOW AND OVER 65 YEARS OLD AND WITH NO SUPPORTING FAMILY MEMBERS. THE ASSESSEE HAD SHIFTED TO HER BROTHERS HOUSE AT AHMEDABAD AND IN THE PROCESS COULD NOT HAND OVER THE PAPERS TO THE T AX CONSULTANT WHICH WAS THE REASON FOR DELAY. AN AFFIDAVIT TO THAT EFFECT HAS B EEN FILED AND REQUEST HAS BEEN MADE FOR CONDONATION OF DELAY. IT HAS ACCORDINGLY BEEN REQUESTED THAT THE DELAY MAY BE CONDONED AND THE APPEAL MAY BE DISPOSED OF A FTER HEARING THE ASSESSEE. 2.2 WE HAVE HEARD BOTH THE PARTIES IN THE MATTER. C ONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE SATISFIED HAT THE RE WAS REASONABLE CAUSE FOR NOT FILING THE APPEAL IN TIME. WE, THEREFORE, IN TH E INTEREST OF JUSTICE, CONDONE THE DELAY AND ADMIT THE APPEAL FOR ADJUDICATION. 2.3 AFTER HEARING BOTH THE PARTIES, WE FIND THAT T HERE WAS ALSO DELAY OF 382 DAYS IN FILING APPEAL BEFORE THE CIT(A) AND ON HIS GROUND THE CIT(A) HAD DISMISSED THE APPEAL AS UNADMITTED. THE ASSESSEE SU BMITTED BEFORE THE CIT(A) THAT IN THE ASSESSMENT ORDER THE TOTAL TAX IMPACT W AS ONLY RS.12,000/- AND THERE WAS REFUND OF RS.1,47,890/-. THE ASSESSEE, THEREFOR E, DID NOT CONSIDER IT PRUDENT TO FILE APPEAL CONSIDERING THE COST INVOLVED. HOWEV ER, THE ASSESSEE RECEIVED ORDER DATED 28-06-2007 LEVYING PENALTY OF RS.18,28 ,600/- ON 08-10-2007. THEREFORE, WHILE DISCUSSING THE MATTER FOR FILING A PPEAL AGAINST THE PENALTY ORDER, SHE WAS ADVISED BY THE TAX CONSULTANT TO ALSO FILE APPEAL AGAINST THE ASSESSMENT ORDER WHICH WAS THE REASON FOR DELAY. THE CIT(A), H OWEVER, NOTED THAT THE PENALTY ORDER WAS SERVED ON THE ASSESSEE ON 08-10- 2007 AND THE APPEAL WAS FILED ON 06-11-20087. THEREFORE, IN CASE THE ASSESS EE CAME TO THE CONCLUSION TO ITA NOS.6286-6287-6446/M/10 SMT. PRATIMA SHODHAN. 3 FILE THE APPEAL AFTER DISCUSSION WITH THE COUNSEL A T THE TIME OF FILING OF APPEAL AGAINST THE PENALTY ORDER, THEN APPEAL AGAINST THE QUANTUM APPEAL SHOULD ALSO HAVE BEEN FILED ALONG WITH THE PENALTY ORDER, WHICH WAS NOT DONE. THE APPEAL WAS FILED AFTER A LAPSE OF NEARLY 65 DAYS OF FILING THE PENALTY ORDER. THE CIT(A) WAS, THEREFORE, NOT CONVINCED WITH THE REASONS FOR DELAY AND THEREFORE DID NOT CONDONE THE SAME AND DISMISSED THE APPEAL AS UNADMI TTED. 2.4 WE HAVE HEARD BOTH THE PARTIES IN THE MATTER. T HE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE CIT(A). THE LD. D.R., ON THE OTHER HAND, OPPOSED THE CONDONATION OF DELAY AS THE SAME WAS NOT EXPLAINED SATISFACTORILY. BEFORE US ALSO, THE SAME REASONING HAS BEEN GIVEN AS BEFORE THE CIT(A) THAT THE ASSESSEE DECIDED TO FILE APPEAL AFT ER CONSULTATION WITH THE COUNSEL AT THE TIME OF FILING APPEAL AGAINST THE PENALTY. T HE PENALTY ORDER HAD BEEN SERVED ON THE ASSESSEE ON 08-10-2007 AND THE ASSES SEE HAD DISCUSSED THE MATTER WITH THE COUNSEL AROUND THAT TIME WHO ADVISE D FILING APPEAL AGAINST THE QUANTUM ORDER. THE APPEAL IN THE MATTER OF PENALT Y WAS FILED ON 06-11-2007. THE ASSESSEE COULD HAVE EASILY FILED THE APPEAL AG AINST THE QUANTUM ALSO AROUND THE SAME TIME, BUT THERE IS FURTHER DELAY OF 65 DAY S. WE AGREE WITH THE CIT(A) THAT FURTHER DELAY IS NOT EXPLAINED SATISFACTORILY . THEREFORE, WE DO NOT SEE ANY INFIRMITY IN THE ORDER OF CIT(A) IN NOT CONDONING T HE DELAY. THE ORDER OF CIT(A) DISMISSING THE APPEAL AS UNADMITTED IS UPHELD. 3. WE SHALL NOW TAKE UP THE APPEAL OF THE ASSESSEE IN ITA MNO.6287/MUM/2009. IN THIS APPEAL, THE ASSESSEE HAS DISPUTED THE DECIS ION OF CIT(A) IN CONFIRMING PENALTY U/S.271(1)(C) LEVIE D BY THE AO AMOUNTING TO RS.18,48,600/-. 3.1 BEFORE WE PROCEED TO DEAL WITH THE APPEAL, WE N OTE THAT THERE IS DELAY OF 184 DAYS IN FILING THE APPEAL BEFORE THE TRIBUNAL. THE ASSESSEE HAS FILED ITA NOS.6286-6287-6446/M/10 SMT. PRATIMA SHODHAN. 4 APPLICATION FOR CONDONATION OF DELAY WHICH IS SUPPO RTED BY AN AFFIDAVIT. THE SITUATION IS IDENTICAL TO THE CONDONATION OF DELAY IN FILING THE QUANTUM APPEAL BEFORE THE TRIBUNAL. EXPLANATION OF THE ASSESSEE IS ALSO IDENTICAL. WE HAVE ALREADY CONDONED THE DELAY IN FILING THE QUANTUM AP PEAL VIDE PARA 2.3 OF THIS ORDER. FOLLOWING THE SAID DECISION, WE CONDONE THE DELAY IN FILING THE PENALTY APPEAL ALSO AS THE FACTS ARE IDENTICAL AND ADMIT TH E APPEAL. 3.2. THE FACTS RELATING TO THE MERITS OF THE CASE A RE THAT THE ASSESSEE IN THE RETURN OF INCOME HAD DECLARED CAPITAL GAIN OF RS.7, 24,484/- FROM SALE OF DIAMOND AND JEWELLERY. THE ASSESSEE, HOWEVER, COULD NOT PRO DUCE PROOF OF PURCHASE FOR CLAIMING INDEXATION. THE AO, THEREFORE, COMPUTED LO NG-TERM CAPITAL GAIN AT RS.10,35,469/-. THE ASSESSEE HAD ALSO DECLARED LONG -TERM CAPITAL LOSS OF RS.11,48,561/- FROM SALE OF SHARES AND SECURITIES B UT AGAIN THE ASSESSEE COULD NOT FILE PROOF OF PURCHASE TO AVAIL OF INDEXATION. THE CLAIM OF INDEXATION WAS, THEREFORE, DISALLOWED AND THE LONG-TERM CAPITAL LO SS WAS COMPUTED AT RS.8,42,490/-. THE ASSESSEE HAD ALSO LONG-TERM CAPI TAL GAIN OF RS.25,366/- FROM SALE OF SHARES WITHOUT INDEXATION AND ALSO SHO RT-TERM CAPITAL LOSS OF RS.1,18,628/-WHICH WERE ACCEPTED. IN ADDITION, THE ASSESSEE HAD ALSO DECLARED LONG-TERM CAPITAL GAIN FROM SALE OF FLAT AT MUMBAI. THE ASSESSEE HAD SOLD FLAT FOR A TOTAL CONSIDERATION OF RS.4.63 CRORES. THE FLAT H AD BEEN PURCHASED JOINTLY WITH HER HUSBAND SHRI GAURANG G. SHODHAN AND THE MOTHER- IN-LAW SMT. CHANDRAVATI G. SHODHAN ON 11-08-1979. ON DEATH OF SMT. CHANDRAV ATI G. SHODHAN IN JULY 1984, 50% OF HER SHARE WAS INHERITED BY THE ASSESSE E AND BALANCE 50% BY HER HUSBAND. SHRI GAURANG G. SHODHAN EXPIRED IN OCTOB ER 1998 AFTER WHICH THE ASSESSEE INHERITED THE SHARE FROM HIM AND BECAME TH E FULL OWNER OF THE PROPERTY. THE ASSESSEE HAD COMPUTED THE CAPITAL GAI N AT RS.2,54,59,816/- AFTER CONSIDERING THE HOLDING PERIOD OF THE PROPERTY FROM 1-4-1981 AS THE REMAINING ITA NOS.6286-6287-6446/M/10 SMT. PRATIMA SHODHAN. 5 SHARES HAD BEEN INHERITED BY THE ASSESSEE AND THE PREVIOUS OWNERS WERE HOLDING THE SHARES PRIOR TO 1-4-1981. THE AO, HOWEV ER, ALLOWED THE HOLDING PERIOD FROM 1-4-1981 ONLY IN RESPECT OF 1/3 RD SHARE OF THE ASSESSEE AND IN RESPECT OF 1/6 TH SHARE INHERITED FROM THE MOTHER-IN-LAW, THE HOLDI NG PERIOD WAS COUNTED FROM FINANCIAL YEAR 1984-85 AND IN RESPECT OF BALANCE 50% INHERITED FROM HER HUSBAND, THE HOLDING PERIOD WAS RECKONED F ROM 1998-99. THE AO, THEREFORE, COMPUTED LONG-TERM CAPITAL GAIN AT RS.3, 40,25,787/- AND A SUM OF RS.85,65,971/- WAS ADDED TO THE CAPITAL GAIN. THE A O HAD ALSO ADDED A SUM OF RS.40,000/- ON ACCOUNT OF NOTIONAL INCOME FROM HOUS E PROPERTY. THUS, THE TOTAL ADDITION MADE BY THE AO WAS RS.92,23,027/- CONSIST ING OF RS.85,65,971/- ON ACCOUNT OF CAPITAL GAIN ON SALE OF FLAT; RS.3,10,98 5/- ON ACCOUNT OF LONG-TERM CAPITAL GAIN FROM SALE OF DIAMONDS AND JEWELLERY; R S.3,06,071/- ON ACCOUNT OF DISALLOWANCE OF LOSS FROM SALE OF SHARES AND RS.40, 000/- ON ACCOUNT OF HOUSE PROPERTY INCOME. THE AO ALSO INITIATED PENALTY PROC EEDINGS U/S.271(1)(C) AND LEVIED PENALTY @ 100% OF THE TAX SOUGHT TO BE EVADE D AMOUNTING TO RS.18,48,600/-. IN APPEAL, THE CIT(A) CONFIRMED THE ORDER OF PENALTY EXCEPT IN RESPECT OF ADDITION OF RS.40,000/- ON ACCOUNT OF HO USE PROPERTY INCOME, AGGRIEVED BY WHICH THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3.3. BEFORE US, THE LD. A.R. FOR THE ASSESSEE ARGUE D THAT EVEN AFTER ADDITIONS MADE ON ACCOUNT LONG-TERM CAPITAL GAIN FROM SALE O F FLAT AND FROM SALE OF SHARES, THERE WAS NO ADDITION TO TOTAL INCOME AS TH E ENTIRE CAPITAL GAIN WAS EXEMPT UNDER SEC. 54 AND 54EC OF THE I.T. ACT. HE REFERRED TO THE COMPUTATION MADE BY THE AO AT PAGES 3 & 4 OF ASSESSMENT ORDER I N WHICH INCOME FROM CAPITAL GAIN HAD BEEN ASSESSED AT NIL AFTER ALLOWING EXEMPT ION OF RS.1.50 CRORE U/S.54EC AND EXEMPTION U/S.54. THE ONLY OTHER ADDITION WAS R S.40,000/- ON ACCOUNT OF HOUSE PROPERTY INCOME IN RESPECT OF WHICH THE CIT( A) HAD DELETED THE PENALTY. ITA NOS.6286-6287-6446/M/10 SMT. PRATIMA SHODHAN. 6 THEREFORE, THERE WAS NO PENALTY LEVIABLE U/S.271(1) (C) AS NEITHER THERE WAS ANY ADDITIONAL TAX LIABILITY NOR ANY ADDITION TO TOTAL INCOME. 3.4 THE LD. D.R. ON THE OTHER HAND, PLACED RELIANC E ON THE ORDERS OF THE AUTHORITIES BELOW. 3.5 WE HAVE PERUSED THE RECORDS AND CONSIDERED THE RIVAL CONTENTIONS CAREFULLY. THE DISPUTE IS REGARDING LEVY OF PENALT Y U/S.271(1)(C) IN RESPECT OF ADDITIONS MADE IN THE ASSESSMENT. WE FIND THAT IN T HE ASSESSMENT THE AO HAD MADE ADDITION OF RS.85,65,971/- ON ACCOUNT OF LONG- TERM CAPITAL GAIN FROM SALE OF FLAT; RS.3,10,985/- AND RS.3,06,071/- ON ACCOUNT OF LONG-TERM CAPITAL GAIN FROM SALE OF SHARES IN RESPECT OF WHICH PENALTY H AD BEEN LEVIED BY THE AO AND ALSO CONFIRMED BY THE CIT(A). HOWEVER, WE FIND FROM PERUSAL OF ASSESSMENT ORDER THAT EVEN AFTER ADDITIONS ON ACCOUNT OF LONG-TERM C APITAL GAINS MENTIONED ABOVE, THE NET LONG-TERM CAPITAL GAIN ASSESSABLE BY THE AO WAS DETERMINED AT NIL AS THE ASSESSEE HAD BEEN GIVEN EXEMPTION OF CAPITAL GAIN U/S.54 AND 54EC OF THE I.T. ACT FOR INVESTMENTS MADE BY THE ASSESSEE. THEREFORE , ON ACCOUNT OF ABOVE ADDITIONS, THERE WAS NO NET ADDITION TO TOTAL INCOM E AND THERE WAS NO ADDITIONAL TAX LIABILITY. PENALTY U/S.271(1)(C) CAN BE LEVIED ONLY IN RESPECT OF THE TAX SOUGHT TO BE EVADED, BUT WHEN THERE IS NEITHER ANY ADDITI ON TO TOTAL INCOME NOR ANY ADDITIONAL TAX LIABILITY BECAUSE OF ANY ADDITION MA DE, THEN IT CANNOT BE SAID THAT THE ASSESSEE HAD SOUGHT TO EVADE ANY TAX. IN THIS C ASE, THERE WAS MISTAKE IN THE COMPUTATION OF CAPITAL GAIN MADE BY THE ASSESSEE BU T IT HAD NOT AFFECTED THE TOTAL INCOME DECLARED BY THE ASSESSEE AS EXEMPTION HAD BEEN GRANTED U/S. 54 AND 54EC . THEREFORE, IN OUR VIEW, THE PROVISIONS OF SEC. 27 1(1)(C) ARE NOT ATTRACTED AND THE PENALTY LEVIED CANNOT BE SUSTAINE D. WE, THEREFORE, WE ASIDE THE ORDER OF CIT(A) AND DELETE THE PENALTY LEVIED. ITA NOS.6286-6287-6446/M/10 SMT. PRATIMA SHODHAN. 7 4. WE NOW TAKE UP THE APPEAL OF THE ASSESSEE IN ITA NO.6446/MUM/2010. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 07-07-2010 OF CIT(A) U/S.154 OF THE I.T . ACT. THE ASSESSEE HAD FILED PETITION U/S.154 REQUESTING THE CIT(A) TO RECTIFY T HE ORDER PASSED DATED 18-02- 2009 IN RESPECT OF PENALTY U/S.271(1)(C) ON THE GRO UND THAT THERE WAS NO ADDITION TO TOTAL INCOME AS THE ADDITION MADE ON AC COUNT OF LONG-TERM CAPITAL GAIN HAD BEEN ADJUSTED AGAINST THE EXEMPTION ALLOWE D U/S. 54 & 54EC AND THEREFORE THERE WAS NO PENALTY LEVIABLE. THE CIT(A) , HOWEVER, REJECTED THE APPLICATION, AGGRIEVED BY WHICH THE ASSESSEE IS IN APPEAL. 5. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE RECO RDS AND CONSIDERED THE MATTER CAREFULLY. WE HAVE ALREADY DECIDED THE APPEA L OF THE ASSESSEE AGAINST THE ORDER OF CIT(A) DATED 18-02-2009 RELATING TO PENALT Y U/S.271(1)(C). WE HAVE VIDE PARA 3.5 OF THIS ORDER SET ASIDE THE ORDER OF CIT(A) AND DELETED THE PENALTY LEVIED. THEREFORE, THE APPEAL FILED BY THE ASSESSEE AGAINST THE 154 ORDER OF CIT(A) HAS BECOME INFRUCTUOUS AND THE SAME IS DISMI SSED AS INFRUCTUOUS. 10. IN THE RESULT, THE APPEALS OF THE ASSESSEE IN I TA NOS.6286/MUM/209 & 6446/MUM/2010 ARE DISMISSED, WHEREAS THE APPEAL IN ITA NO.6287/MUM/2009 IS ALLOWED. ORDER PRONOUNCED ON THE 18TH DAY OF MARCH, 2 011. SD/- SD/- (N.V. VASUDEVAN) (RAJENDRA SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 18TH MARCH , 2011. NG: COPY TO : 1. ASSESSEE. 2. DEPARTMENT. ITA NOS.6286-6287-6446/M/10 SMT. PRATIMA SHODHAN. 8 3 CIT(A)-XII,,MUMBAI. 4 CIT-XII,MUMBAI. 5.DR,C BENCH,MUMBAI. 6.MASTER FILE. (TRUE COPY) BY ORDER, ASST.REGISTRAR, ITAT, MUMBAI. ITA NOS.6286-6287-6446/M/10 SMT. PRATIMA SHODHAN. 9 DETAILS DATE INITIALS DESIGNA TION 1. DRAFT DICTATED ON 10-03-2011 SR.PS/ 2. DRAFT PLACED BEFORE AUTHOR 14-03-2011 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 ON WHICH FILE GOES TO THE AR 10. DATE OF DISPATCH OF ORDER