NARENDRA N. KHANDELWAL, MUMBAI V. ITO WD 16(12), MUMBAI

ITA 7291/MUM/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3406 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 14-03-2016
• Assessment Year: 1994-1995
• Appeal Filed On: 11-12-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Cost of acquisition; Fair market value; Valuation report
• Section: 143(3); 133A; 147; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI . . , , !' #$, % , & BEFORE SHRI R.C.SHARMA, AM AND SHRI AMARJIT SINGH, JM / I.T.A. NO.7291/M/13 ( %' ( / ASSESSMENT YEAR: 1994-95) NARENDRA N. KHANDELWAL C- 006, OBEROI SPRINGS, NEW LINK ROAD, LOKHANDWALL COMPLEX, ANDHERI (WEST), MUMBAI - 400053 ' / VS. INCOME TAX OFFICER20(2)(3) ROOM NO. 411, 4 TH FLOOR, PIRAMAL CHAMBERS, LALBAUG, MUMBAI - 400012 ./ ./ PAN/GIR NO. : AAMPK9715A ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 14.03.2016 !' /DATE OF PRONOUNCEMENT: 23.03.2016 #$ / O R D E R PER AMARJIT SINGH, JM: THIS IS AN APPEAL AGAINST THE ORDER DATED 23.10.201 3 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-31 , MUMBAI [HEREINAFTER REFERRED TO AS THE LEARNED CIT(A)] R ELEVANT TO THE ASSESSMENT YEAR 1994-95. ASSESSEE BY: SHRI APURVA R. SHAH DEPARTMENT BY: SHRI. SUMIT KUMAR ITA NO.7219/MUM/13 A.Y. 1994-95 2 2. THE APPELLANT HAS TAKEN FOLLOWING GROUNDS OF APP EAL:- 1. IN CONFIRMING THE LEVY OF PENALTY OF RS.5,69,296/- WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE. 2. IN CONFIRMING THE LEVY OF PENALTY ON A MATTER WHICH INVOLVED FAIR MARKET VALUATION AS OF 1.4.1981 WHERE THE APPELLANT HAD RELIED UPON A REPORT MADE BY A REGISTERED VALUE. 3. IN CONFIRMING THE LEVY OF A PENALTY ON ISSUE OF DEDUCTIBILITY OF TRANSFER FEES WHICH HAD AS SUCH BEEN ACTUALLY PAID BY THE APPELLANT AND CLAIMED AS A COST RELATED TO THE SALE OF PROPERTY. 4. IN PASSING AN ORDER ON A EX-PARTE BASIS IN THE MATTER. 5. IN CONFIRMING A PENALTY WHICH WAS CALCULATED AT A TAX RATE INCLUDING SURCHARGE AND CESS. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILE D HIS RETURN OF INCOME FOR A.Y.1994-95 ON 24.07.1995 DECLARING THE TOTAL INCOME OF RS.1,50,200/-. SUBSEQUENTLY, THE CASE WAS REOPENED U/S. 147 OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT) FOR A RE ASON THAT DURING THE F.Y. RELEVANT TO A.Y. 1994-95, THE ASSESSEE HAD RECEIVED A SUM OF RS.1.36 CRORES ON SALE OF FLAT FOR WHICH THE ASSESS EE DID NOT OFFER THE TAX ON THE CAPITAL GAIN. THESE FACTS HAVE BEEN REV EALED AT THE TIME OF SURVEY ACTION U/S. 133A OF THE ACT CONDUCTED AT THE RESIDENTIAL ITA NO.7219/MUM/13 A.Y. 1994-95 3 PREMISES OF THE ASSESSEE. DURING THE ASSESSMENT PR OCEEDINGS, THE ASSESSEE FILED HIS RETURN OF INCOME FOR A.Y. 1994-9 5 DECLARING TAXABLE INCOME OF RS.80,40,390/- ON 09.03.2001 AS HE DID NO T FILE THE RETURN OF INCOME IN RESPONSE TO NOTICE U/S. 148 OF THE ACT . THE ASSESSMENT U/S. 143(3) R.W.S. 147 OF THE ACT WAS COMPLETED ON 14.03.2001 ASSESSING THE TOTAL INCOME OF RS.93,70,139/- AFTER MAKING CERTAIN ADDITIONS / DISALLOWANCES. THE MAIN ADDITIONS WERE MADE ON ACCOUNT OF LONG TERM CAPITAL GAIN AND DISALLOWANCE OF SHORT TERM CAPITAL LOSS. THE ASSESSEE OFFERED THE TAX ON THE CAPITAL GAIN OF RS.77,55,636/- IN THE RETURN OF INCOME FILED ON 09. 03.2001. AT THE TIME OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED THAT THE ASSESSEE HAD OPTED THE COST OF ACQUISITION OF THE SAID FLAT AS O N 01.04.1981 OF RS.19,37,250/- IN VIEW OF THE VALUATION REPORT DATE D 05.03.2001. THE ASSESSING OFFICER INVESTIGATED THE MATTER AFTER DUE CONSIDERING THE SALE OF THE FLAT IN THE SAME BUILDING DURING THE RE LEVANT PERIOD WHICH WORKOUT TO THE TUNE OF RS.9,84,000/- INSTEAD OF RS. 19,37,250/- AS TAKEN BY THE ASSESSEE. THE ASSESSING OFFICER DISAL LOWED THE EXCESS CLAIM ON TRANSFER FEES OF RS.4,09,833/- AND RS.1,03 ,909/-. ACCORDINGLY, THE ASSESSING OFFICER HAS COMPUTED THE LONG TERM CAPITAL GAIN TO THE TUNE OF RS.1,02,97,140/- AS AGA INST CAPITAL GAIN OFFERED BY THE ASSESSEE AMOUNTING TO RS.77,55,636/- . SUBSEQUENTLY, THE HONBLE ITAT HAS RESTORED THE ISSUE TO THE LEAR NED CIT(A). THE LEARNED CIT(A) HAS CONFIRMED THE SAID ADDITION MADE BY THE ASSESSING OFFICER WHICH WAS AGAIN UPHELD BY THE HON BLE ITAT. ITA NO.7219/MUM/13 A.Y. 1994-95 4 THEREAFTER THE ACTION U/S. 271(1)(C) WAS INITIATED AND NOTICE DATED 15.02.2011 WAS SERVED UPON THE ASSESSEE, WHO ALSO R EPLIED THE SAME BY VIRTUE OF LETTER DATED 03.03.2011. THE ASSESSIN G OFFICER HAS HELD THAT THE ASSESSEE HAS FAILED TO ESTABLISHED THE GEN UINENESS OF THE COST OF ACQUISITION ADOPTED BY HIM AND CLAIMED OF UNEXPL AINED TRANSFER FEES AND THEREBY SUPPRESS THE LONG TERM CAPITAL BY RS.25,41,504/- HENCE, IMPOSE THE PENALTY TO THE TUNE OF RS.5,69,29 6/-. THEREAFTER THE SAID PENALTY WAS CONFIRMED BY THE LEARNED CIT(A) IN THE YEAR IN QUESTION. THEREFORE, THE ASSESSEE IS BEFORE US. 4. WE HAVE HEARD THE ARGUMENTS ADVANCED BY THE LEAR NED REPRESENTATIVE OF THE PARTIES AND PERUSED THE RECOR DS. THE LEARNED REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT THE ADDITION IN QUESTION HAS BEEN MADE BY THE ASSESSING OFFICER BY TAKING TH E DIFFERENT FAIR MARKET VALUE OF THE FLAT AS ON 01.04.1981 AND THE S AME CANNOT BE THE BASE TO LEVY THE PENALTY, THEREFORE, IN THE SAID CI RCUMSTANCES THE PENALTY ORDER IS LIABLE TO BE SET ASIDE IN ACCORDAN CE WITH LAW. ON THE OTHER HAND THE LEARNED REPRESENTATIVE OF THE DEPART MENT HAS REFUTED THE SAID CONTENTIONS. KEEPING IN VIEW OF THE ARGUM ENT ADVANCED BY THE LEARNED REPRESENTATIVE OF THE PARTIES, IT CAME INTO NOTICE THAT THE PRESENT CASE IS IN CONNECTION WITH THE A.Y. 1994-95 OF THE ASSESSEE. IN THE INSTANT CASE THE ASSESSEE FILED HIS ORIGINAL RETURN OF INCOME IN THE SAID ASSESSMENT YEAR ON 24.07.1995 DECLARING HI S TOTAL INCOME TO THE TUNE OF RS.1,50,200/-. SUBSEQUENTLY, SURVEY AC TION U/S. 133A OF ITA NO.7219/MUM/13 A.Y. 1994-95 5 THE ACT WAS CONDUCTED ON 23.10.1997 AT THE RESIDENT IAL PREMISES OF THE ASSESSEE. ASSESSEE AN INDIVIDUAL AND PARTNER I N M/S. LAXMI EXPORTS AND AT THE TIME OF SURVEY BUSINESS PREMISES WERE SHUT DOWN. THE STATEMENT OF ASSESSEE WAS RECORDED AND IN VIEW THE STATEMENT OF ASSESSEE, IT CAME INTO NOTICE THAT THE ASSESSEE REC EIVED A SUM OF RS.1.36 CRORES ON ACCOUNT OF SALE OF FLAT WHICH HAD NOT BEEN OFFERED FOR TAXATION. BESIDE THIS THE ASSESSEE WAS HAVING ACCOUNTS IN THREE BANKS AND COPIES OF BANKS ACCOUNTS REVEALED TOTAL C REDIT OF RS.2.13 CRORES. THEREAFTER THE ASSESSEE FILED THE RETURN O F INCOME FOR A.Y. 1994-95 DECLARING TAXABLE INCOME OF RS.80,40,390/- ON 09.03.2001. IN THE SAID RETURN THE ASSESSEE OFFERED THE CAPITAL GAIN TO THE TUNE OF RS.77,55,636/- ON ACCOUNT OF SALE PROCEEDS RECEIVED BY HIM AT RS.1,36,61,100/- IN RESPECT OF SALE OF RESIDENTIAL FLAT NO. 303, 3 RD FLOOR, PRABHU KUTIR CO-OP. HSG. SOC. LTD., ALTAMOUNT ROAD, MUMBAI. THE SAID FLAT WAS PURCHASED FROM NARENDRA NATH TRUST TO WHICH HE WAS SOLE BENEFICIARY. THE SAID FLAT WAS PURCHASED FOR RS.52,000/- BY THE SAID TRUST ON 14.09.1963. THEREAFTER THE ASSESSEE OPTED COST OF ACQUISITION OF FLAT AS ON 04.04.1981 AT RS.19,37,25 0/- VIDE ITS LETTER DATED 13.03.2001. ON ENQUIRY IT WAS FOUND THAT IN THE SAME BUILDING FLAT NO. 402 WAS SOLD IN NOVEMBER, 1981 FOR THE SA LE CONSIDERATION OF RS.6,50,000/- I.E. AT THE RATE OF RS.588 PER SQ. FT . THEREFORE IN THE SAID CIRCUMSTANCES THE VALUATION REPORT OF THE ASSESSEE BECAME DOUBTFUL. THEREAFTER, THE ASSESSMENT WAS DONE ESTIMATING THE COST OF THE FLAT TO THE TUNE OF RS.9,84,000/- AGAINST RS.19,37,250/-. ACCORDINGLY, THE ITA NO.7219/MUM/13 A.Y. 1994-95 6 TRANSFER FEES WAS ALSO DEDUCTED AND THE FEES TO THE TUNE OF RS.1,03,909 WAS ASSESSED AS TRANSFER FEES WHICH HAS PAID TO PRA BHU KUTIR SOCIETY. NO DOUBT THE VALUATION REPORT SUBMITTED BY THE ASSE SSEE WAS DISBELIEVED BY THE ASSESSING OFFICER ON THE BASIS O F MARKET RATE PREVAILING THE AREA BUT IT IS REQUIRED TO SEEN THAT THERE CAN BE CAUSE TO IMPOSE PENALTY OR NOT. IT IS ALSO REQUIRED TO BE S EEN THAT IT CAN BE VIEWED AS THE CASE OF CONCEALMENT OF PARTICULAR OF HIS INCOME OR FURNISHING AN IN ACCURATE PARTICULARS OF HIS INCOME . IN THE INSTANT CASE THE ASSESSEE FILED THE RETURN FOR THE A.Y. 1994-95 ON 24.07.1995 DECLARING TOTAL INCOME OF RS.1,50,200/-. WHEN THE SURVEY ACTION U/S. 133A OF THE ACT WAS TAKEN AT THE RESIDENCE OF THE A SSESSEE THEN IT CAME INTO NOTICE THAT THE ASSESSEE RECEIVED THE SUM OF RS.1.36 CRORES ON SALE OF FLAT WHICH HE HAD NOT OFFERED FOR TAXATI ON IN THE A.Y.1994- 95 EXCEPT THIS AN AMOUNT OF RS.2.13 CRORES WAS ALSO FOUND IN HIS THREE BANK ACCOUNTS. APPARENTLY THE SALE TRANSACTION OF THE SALE OF FLAT OF THE ASSESSEE WAS NOT OFFERED AS TAX ON LONG TERM CA PITAL GAIN / SHORT TERM CAPITAL GAIN IF ANY IN THE RELEVANT ASSESSMENT YEAR. AFTER THE SURVEY ASSESSEE OFFERED THE CAPITAL GAIN TO THE TUN E OF RS.77,55,636/- ON ACCOUNT OF SALE PROCEED RECEIVED BY HIM AT RS. 1 9,37,250/- IN RESPECT OF RESIDENTIAL FLAT. IT IS CORRECT THAT IF THE CASE OF ASSESSEE IS BASED UPON ONLY ON THE FACTS THAT THE DEMAND OF THE VALUATION REPORT CAN BE TREATED LEVY THE PENALTY. BUT IN THIS CASE THE FACTS ARE OTHERWISE. IT IS CLEAR CASE OF CONCEALMENT OF PART ICULARS OF HIS INCOME RECEIVED ON ACCOUNT OF ABOVE MENTIONED FLAT AND FUR NISHING INACCURATE ITA NO.7219/MUM/13 A.Y. 1994-95 7 PARTICULARS BY NOT DISCLOSING THE TRANSACTION IN HI S RETURN FILED ON 24.07.1995 DECLARING HIS TOTAL INCOME TO THE TUNE O F RS.1,50,200/-. TRANSACTION WAS CAME IN TO THE NOTICE AFTER THE SUR VEY REPORT. IN VIEW OF THE SAID CIRCUMSTANCES WE ARE OF THE VIEW THAT I T IS NOT THE CASE OF ASSESSMENT BY THE ASSESSING OFFICER ON THE BASIS OF VALUATION REPORT OR MARKET RATE INFACT IT IS THE CASE OF CONCEALMENT OF PARTICULARS OF HIS INCOME AND FURNISHING INACCURATE HIS PARTICULARS. THEREFORE FINDING NO JUSTIFIABLE GROUND TO INTERFERE WITH THE FINDING OF LEARNED CIT(A) ORDER IN QUESTION, THE APPEAL OF THE ASSESSEE IS HE REBY DISMISSED. 5. ACCORDINGLY THE APPEAL FILED BY THE ASSESSEE IS HEREBY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD MARCH , 2016. SD/- SD/- (R.C.SHARMA) (AMARJIT SINGH) # / ACCOUNTANT MEMBER %& # /JUDICIAL MEMBER ' ( MUMBAI; )# DATED : MARCH, 2016 MP MP MP MP ITA NO.7219/MUM/13 A.Y. 1994-95 8 * +%'#, -,(' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. * ( ) / THE CIT(A)- 4. * / CIT 5. -./ &&01 , 01' , ' ( / DR, ITAT, MUMBAI 6. /34 5 / GUARD FILE. ' / BY ORDER, - & //TRUE COPY// ./$ ! /(DY./ASSTT. REGISTRAR) , ' ( / ITAT, MUMBAI