DCIT 22(3), NAVI MUMBAI V. SUMAN N. BHALLA, NAVI MUMBAI

ITA 6700/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1436 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 05-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B S BIST
• Assessee Lawyers: SUBODH RATNAPARAKHI
• Keywords: Depreciation
• Section: 54F; 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E, MUMBAI BEFORE SHRI P.K. BANSAL, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 6700/MUM/2014 : (A.Y : 2010 - 11) DCIT - 22(3), MUMBAI ( APPELLANT ) VS. SMT. SUMAN N. BHALLA 1204, NEEL SIDDHI TOWER, SECTOR 12, PLOT NO. 195, VASHI, NAVI MUMBAI 705 (RESPONDENT) PAN : A DQPB5249M ASSESSEE BY : SHRI SUBODH RATNAPARAKHI REVENUE BY : SHRI B.S. BIST DATE OF HEARING : 19/12/2016 DATE OF PRONOUNCEMENT : 23 /12/2016 O R D E R PER P.K. BANSAL , AM : THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) - 33, MUMBAI DATED 27.8.2014 BY WHICH CIT(A) DELETED THE PENALTY LEVIED BY ASSESSING OFFICER U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) . 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE OWNED ONE HALF SHARE IN TWO HOUSE PROPERTIES, I.E., ONE HALF SHARE IN PALI HALLI AND ONE HALF SHARE IN A FLAT AT VASHI. THE ASSESSEE EARNED CAPITAL GAIN ON THE SALE OF PLOTS AT RS.2,85,86,074/ - . THE ASSESSEE CLAIMED EXEMPTION U/S 54F OF THE ACT 2 SMT. SUMAN N. BHALLA ITA NO. 6700/MUM/2014 AMOUNTING TO RS.51,30,000/ - I N RESPECT OF ANOTHER FLAT PURCHASED AT HEX BLOX, KHARGHAR . THE ASSESSING OFFICER DISALLOWED THE SAME AS ACCORDING TO HIM ASSESSEE OWNED MORE THAN ONE RESIDENTIAL HOUSE, WHICH WAS CONFIRMED BY CIT(A). THE ASSESSING OFFICER LEVIED PENALTY U/S 271(1)(C) OF THE ACT BY OBSERVING AS UNDER: - 5. IN VIEW OF THE ABOVE FACTS AND OBSERVATIONS, IT IS CLEAR THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME ON ACCOUNT OF ADDITIONS MADE IN THE ASSESSMENT ORDER ON ACCOUNT OF CLAIM OF EXEMPTION U/S 54F OF THE I.T. ACT. I AM SATISFIED THAT THE ASSESSEE HAS COMMITTED THE DEFAULT WITHIN THE MEANING OF SECTION 271(1)(C) ON THE ADDITIONS OF RS.51,30,000/ - AS DISCUSSED ABOVE AND THIS IS A FIT CASE F OR THE LEVY OF PENALTY U/S 271(1)(C) OF THE IT ACT. TH E PENALTY LEVIABLE U/S 271(1)(C ) IS AS UNDER: INACCURATE PARTICULARS OF INCOME AS DISCUSSED ABOVE RS.51,30,000/ - TAX THEREON (TAX+SC+EDUCATION CESS) RS.15,85,170/ - 100% OF TAX SOUGHT TO BE EVADED RS.15,85,170/ - 300% OF TAX SOUGHT TO BE EVADED RS.47,55,510/ - THE MINIMUM PENALTY LEVIABLE @ 100% OF THE AMOUNT OF TAX SOUGHT TO BE EVADED WORKS OUT TO RS. 15,85,170/ - AND THE MAXIMUM PENALTY @ 300% WORKS OUT TO RS .47,55,510/ - . I LEVY PENALTY OF RS.15, 85,170/ - U/S 271(1)(C) OF THE INCOME TAX ACT ,1961. THIS ORDER IS PASSED WITH THE PRIOR APPROVAL OF THE JCIT - RANGE - 22(3) VIDE LETTER NO.JT.CIT - 22(3)/PENALTY APPROVAL / 2013 - 14 DT.17.09.2013. WHEN THE MATTER WENT IN APPEAL BEFORE CIT(A), CIT(A) DELETED THE PENALTY U/S 271(1)(C) OF THE ACT. 3. WE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME ALONGWITH THE ORDER OF TAX AUTHORITIES BELOW. WE NOTED THAT THIS IS A CASE WHERE ASSESSEE HAD EARNED CAPITAL GAINS ON SALE OF PLOTS. THE ASSESSEE I NVESTED A SUM OF RS.51,30,000/ - ON THE PURCHASE OF NEW FLAT AT KHARGHAR FOR 3 SMT. SUMAN N. BHALLA ITA NO. 6700/MUM/2014 WHICH EXEMPTION WAS CLAIMED U/S 54F OF THE ACT. THE ASSESSING OFFICER DENIED THE EXEMPTION AS ACCORDING TO HIM, ASSESSEE WAS OWNING MORE THAN ONE RESIDENTIAL HOUSE AS ON THE DATE OF SALE. THE ASSESSEE WAS OF THE VIEW WHILE CLAIMING EXEMPTION THAT SINCE HE WAS HAVING HALF SHARE IN THE TWO HOUSE PROPERTIES, THEREFORE, HE WAS HAVING ONLY ONE HOUSE PROPERTY ON THE DATE OF THE TRANSFER. THE VIEW TAKEN BY THE ASSESSEE WAS SUPPORTED BY THE DECISION OF THIS TRIBUNAL IN THE CASE OF ITO VS. RASIKLAL N. SATRA, [2006] 98 ITD 335 (MUM) IN WHICH IT WAS HELD THAT : - 7. THE ONLY QUESTION REMAINS AS TO WHETHER ASSESSEE CAN BE SAID TO BE THE OWNER OF THAT RESIDENTIAL HOUSE. THE LEGISLATURE HAS US ED THE WORD 'A' BEFORE THE WORDS 'RESIDENTIAL HOUSE'. IN OUR OPINION, IT MUST MEAN A COMPLETE RESIDENTIAL HOUSE AND WOULD NOT INCLUDE SHARED INTEREST IN A RESIDENTIAL HOUSE. WHERE THE PROPERTY IS OWNED BY MORE THAN ONE PERSON, IT CANNOT BE SAID THAT ANYONE OF THEM IS THE OWNER OF THE PROPERTY. IN SUCH CASE, NO INDIVIDUAL PERSON OF HIS OWN CAN SELL THE ENTIRE PROPERTY. NO DOUBT, HE CAN SELL HIS SHARE OF INTEREST IN THE PROPERTY BUT AS FAR AS THE PROPERTY IS CONSIDERED, IT WOULD CONTINUE TO BE OWNED BY CO - OWN ERS. JOINT OWNERSHIP IS DIFFERENT FROM ABSOLUTE OWNERSHIP. IN THE CASE OF RESIDENTIAL UNIT, NONE OF THE CO - OWNERS CAN CLAIM THAT HE IS THE OWNER OF RESIDENTIAL HOUSE. OWNERSHIP OF A RESIDENTIAL HOUSE, IN OUR OPINION, MEANS OWNERSHIP TO THE EXCLUSION OF ALL OTHERS. THEREFORE, WHERE A HOUSE IS JOINTLY OWNED BY TWO OR MORE PERSONS, NONE OF THEM CAN BE SAID TO BE THE OWNER OF THAT HOUSE. THIS VIEW OF OURS IS FORTIFIED BY THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF SETH BANARSI D ASS GUPTA V. CIT [1987 ] 166 ITR 783, WHEREIN, IT WAS HELD THAT A FRACTIONAL OWNERSHIP WAS NOT SUFFICIENT FOR CLAIMING EVEN FRACTIONAL DEPRECIATION UNDER SECTION 32 OF THE ACT. BECAUSE OF THIS JUDGMENT , THE LE G ISLATURE HAD TO AMEND THE PROVISIONS OF SECTION 32 WITH EFFECT F ROM 1 - 4 - 1997 BY USING THE EXPRESSION 'OWNED WHOLLY OR PARTLY'. SO, THE WORD 'OWN' WOULD NOT IN CLUDE A CASE WHERE A RESIDENTIAL HOUSE IS PARTLY OWNED BY ONE PERSON OR PARTLY OWNED BY OTHER PERSON(S). AFTER THE JUDGMENT OF SUPREME COURT IN THE CASE OF SETH B ANARSI DASS GUPTA (SUPRA), THE LEGISLATURE COULD ALSO AMEND THE PROVISIONS OF SECTION 54F SO AS TO 4 SMT. SUMAN N. BHALLA ITA NO. 6700/MUM/2014 INCLUDE PART OWNERSHIP. SINCE, THE LEGISLATURE HAS NOT AMENDED THE PROVISIONS OF SECTION 54F, IT HAS TO BE HELD THAT THE WORD 'OWN' IN SECTION 54F WOULD INCL UDE ONLY THE CASE WHERE A RESIDENTIAL HOUSE IS FULLY AND WHOLLY OWNED BY ASSESSEE AND CONSEQUENTLY WOULD NOT INCLUDE A RESIDENTIAL HOUSE OWNED BY MORE THAN ONE PERSON. IN THE PRESENT CASE, ADMITTEDLY THE HOUSE AT SION, MUMBAI, WAS PURCHASED JOINTLY BY ASSE SSEE AND HIS WIFE. IT IS NOBODY'S CASE THAT WIFE IS BENAMI OF ASSESSEE. THEREFORE, THE SAID HOUSE WAS JOINTLY OWNED BY ASSESSEE AND HIS SPOUSE. IN VIEW OF THE DISCUSSIONS MADE A B OVE, IT HAS TO BE HELD THAT ASSESSEE WAS NOT THE OWNER OF A RESIDENTIAL HOUSE ON THE DATE OF TRANSFER OF ORIGINAL ASSET. CONSEQUENTLY, THE EXEMPTION UNDER SECTION 54F COULD NOT BE DENIED TO ASSESSEE. THE ORDER OF THE LEARNED CIT (APPEALS) IS, THEREFORE, UPHELD. SINCE THE VIEW OF ASSESSEE, ON THE BASIS OF WHICH THE ASSESSEE CLAIME D EXEMPTION U/S 54F OF THE ACT, WAS DULY SUPPORTED BY THE DECISION OF MUMBAI A BENCH OF THE TRIBUNAL IN THE CASE OF RASIKLAL N. SATRA (SUPRA), WE, THEREFORE, ARE OF THE OPINION THAT THE CLAIM MADE BY ASSESSEE U/S 54F OF THE ACT WAS UNDER A BONA FIDE BELI EF. IF ASSESSEE HAD MADE A BONA FIDE CLAIM, IT CANNOT BE SAID THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME OR CONCEALED THE PARTICULARS OF INCOME. THE CASE OF ASSESSEE, IN OUR VIEW, IS DULY COVERED BY THE DECISION OF THE HON'BLE SUPRE ME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD., 322 ITR 158 (SC) IN WHICH IT WAS HELD THAT WHERE ASSESSEE HAS FURNISHED ALL THE DETAILS AND THE DETAILS IN THEMSELVES WERE NOT FOUND TO BE INACCURATE, ANY CLAIM NOT ACCEPTED WOULD NOT RESULT IN CONCEALMENT OF INCOME. NO CONTRARY DECISION WAS BROUGHT BEFORE US BY THE LD. DR EVEN THOUGH HE VEHEMENTLY RELIED ON THE ORDER OF THE ASSESSING OFFICER. WE ACCORDINGLY CONFIRM THE ORDER OF CIT(A) DELETING THE PENALTY U/S 271(1)(C) OF THE ACT. 5 SMT. SUMAN N. BHALLA ITA NO. 6700/MUM/2014 4. IN THE RESULT, THE APPEAL FILED BY REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 3 R D DECEMBER, 2016. SD/ - SD/ - (PAWAN SINGH) JUDICIAL MEMBER ( P.K. BANSAL ) ACCOUNTANT MEMBER MUMBAI, DATE : 2 3 R D DECEMBER, 2016 * SSL * COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, E BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI