M/S. SMT. VIJAYA G. SHAHANE, MUMBAI V. THE ITO WD 3(4), THANE

ITA 7634/MUM/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7772 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-02-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 05-01-2010
• Assessment Year: 2000-2001
• Appeal Filed On: 27-12-2007
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIRENDRA OJHA
• Assessee Lawyers: M N NANDGAONKAR
• Keywords: Capital Gains
• Section: 271(1)(c); 54F; 195

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F : MUMBAI BEFORE SHRI D.K. AGARWAL, (JM) AND SHRI RAJENDRA SINGH ,(AM) ITA NO.7634/MUM/2007 ASSESSMENT YEAR : 2000-01 SMT. VIJAYA G. SHAHANE B-3/12, RAVI UDAY SOCIETY COLLEGE ROAD THANE(W)-400 601. ..( APPELLANT ) P.A. NO. (AVOPS 0029 G) VS. INCOME TAX OFFICER WARD 3(4), GROUND FLOOR VARDAN TOWERS, WAGLE ESTATE THANE-400 604. ..( RESPONDENT ) APPELLANT BY : SHRI M.N. NANDGAONKAR RESPONDENT BY : SHR I VIRENDRA OJHA O R D E R PER D.K. AGARWAL (JM). THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER DATED 29.10.07 PASSED BY THE LD. CIT(A) FOR THE ASSESSMENT YEAR 2000-01 PARTLY SUSTAINING THE PENALTY IMPOSED BY THE AO OF RS.2880812/- U/S.271(1)(C) OF THE IT ACT 1961 (THE ACT). 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE IS A N INDIVIDUAL. THE RETURN WAS FILED SHOWING NET INCOME F ROM LONG TERM CAPITAL GAIN RS.8,392/-. HOWEVER, THE ASSESSMENT WAS COMPLE TED ITA NO.7634/M/07 A.Y: 00-01 2 DETERMINING TOTAL INCOME OF RS.53,80,980/- VIDE ORDER DT.31.3.2004 PASSED U/S.143(3) R.W.S. 147 OF THE ACT. ON APPEAL THE L D. CIT(A), HAS DECIDED ALL THE ISSUES AGAINST THE ASSESSEE. IN THE MEANTI ME THE AO ISSUED A SHOW CAUSE NOTICE AS TO WHY PENALTY U/S. 271(1)(C) MAY NOT BE IMPOSED. IN RESPONSE IT WAS OBSERVED BY THE AO THAT THE ASSESSEE SUBMITTED A REPLY DT. 22.3.2007 CONTENDING THAT THE V ARIOUS ISSUES WHICH WERE ADDRESSED TO IN DETAIL IN THE ASSESSMENT PROCEED INGS AS WELL IN THE APPELLATE PROCEEDINGS, THE ASSESSEE HAS PARTIC ULARLY RAISED THE ISSUE THAT THE AO IS IN TWO MINDS REGARDING MAKIN G BOTH SUBSTANTIVE ASSESSMENT AND PROTECTIVE ASSESSMENT OF THE CONSIDERATION IN THE FORM OF A FLAT OF 565 SQ. FT. TH E ASSESSMENTS, IN BOTH SUBSTANTIVE ASSESSMENT AND PROTECTIVE ASSESSMENT, OF CONSIDERATION IN THE FORM OF A FLAT OF 555 SQ.FT. IS B ASED ON MIS- APPRECIATION OF FACTS AS FLATS TOTALLY ADMEASURING 7655 SQ.FT. WERE RECEIVED AS CONSIDERATION FOR TRANSFER OF DEVELOPMENT RI GHTS BY AGREEMENT DT. 20.3.2000 AND THE TOTAL CONSIDERATION O F 7655 SQ.FT. VALUED AT RS.55,11,600/- IS ASSESSED SEPARATELY. IT WAS AL SO SUBMITTED BY THE ASSESSEE THAT BENEFIT OF PROVISIONS OF S ECTION 54F IS ALLOWABLE AS INVESTMENT WAS MADE IN ACQUIRING THE RESIDE NTIAL UNITS IN ONE MULTI-STOREYED BUILDING AND CORRECTLY CLAIMED IN A SSESSMENT YEAR 2000-01, THE YEAR IN WHICH THE LTCG ARE TAXED. IN T HE LIGHT OF THE ABOVE SUBMISSION IT WAS SUBMITTED TO DROP THE PENALTY P ROCEEDING. ITA NO.7634/M/07 A.Y: 00-01 3 HOWEVER, THE AO IN VIEW OF THE FINDING RECORDED IN TH E ASSESSMENT PROCEEDING WAS OF THE VIEW THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF HER INCOME AND FURNISHED INACCURATE PARTICU LARS OF HER INCOME. THEREFORE, PENALTY U/S.271(1)(C) IS LEVIED IN THIS CASE. ACCORDINGLY THE INCOME SOUGHT TO BE EVADED BY THE ASSESSEE IS RS.59,06,490/- ON WHICH HE IMPOSED PENALTY OF RS.28,80, 812/- EQUIVALENT TO 150% OF THE TAX THEREON VIDE ORDER DT .30.3.2007 PASSED U/S.271(1)(C) OF THE ACT. ON APPEAL THE LD. CIT(A) W HILE UPHOLDING THE LEVY OF PENALTY IMPOSED BY THE AO REDUCED THE SAME TO 100% OF THE TAX AS AGAINST 150% OF THE TAX SOUGHT TO BE EVAD ED AND ACCORDINGLY PARTLY ALLOWED THE APPEAL. 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE ASSESSEE IS IN APPEAL BEFORE US TAKING FOLLOWING SOLE GROUND OF APPE AL :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. ASSESSING OFFICER HAS ERRED IN LEVYING AND THE LD. CIT(A) HAS ERRED IN CONFIRMING PENALTY U/S.271(1)(C) FOR THE ASSESSMENT YEAR 2000-01 FOR CONCEALING PARTICULARS OF INCOME AND FURNISHING INA CCURATE PARTICULARS OF INCOME. 4. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE ASSE SSEE AT THE OUTSET SUBMITS, THAT THE ASSESSEE HAS DISCLOSED ALL THE PARTI CULARS OF HER INCOME IN THE CHART OF COMPUTATION OF INCOME FILED ALONG WITH THE RETURN OF INCOME WHEREIN IT WAS INTERALIA SUBMITTED THAT EXEMPTION ITA NO.7634/M/07 A.Y: 00-01 4 U/S.54F FOR LONG TERM CAPITAL GAINS FOR INVESTMENT IN PURCHASES/CONSTRUCTION OF RESIDENTIAL HOUSE IS CLAIMED AND RELIANCE IS PLACED ON FOLLOWING DECISIONS OF THE HONBLE INCOME TAX A PPELLATE TRIBUNAL AND THE DECISIONS OF HONBLE SUPREME COURT AND HIGH COURTS CONSIDERED IN THE SAID DECISION. A) K.G. VYAS 16 ITD 195 B) SMT. FULWANTI C. RATHOD VS. INCOME TAX OFFICE, WARD 28 (2), MUMBAI IN INCOME TAX APPEAL NO.1092/MUM/1995 ORDER D ATED 03.05.2002. HE FURTHER SUBMITS THAT THE TRIBUNAL IN THE QUANTUM AP PEAL IN ASSESSEES OWN CASE IN SMT. VIJAYA G. SHAHANE VS. ITO IN I TA NO.704/MUM/06 FOR ASSESSMENT YEAR 2000-01 DATED 10 TH JUNE, 2009 WHILE OBSERVING THAT IT CANNOT BE SAID THAT THE ASSESSEE A LONE WAS OWNER OF THE ENTIRE PROPERTY HELD THAT CAPITAL GAIN S AS DECLARED BY THE ASSESSEE HAS TO BE ACCEPTED. IT WAS FURTHER HELD THAT THE GAIN IN QUESTION IS LONG TERM CAPITAL GAIN AND NOT SHORT TERM CA PITAL GAIN AS HELD BY THE REVENUE AUTHORITIES. IT WAS ALSO HELD THA T THE AO IS DIRECTED TO TREAT THE CONSIDERATION OF RS.3,99,600/- A S PART OF THE CAPITAL GAINS AND NOT AS INCOME FROM OTHER SOURCES. HE FUR THER SUBMITS THAT CLAIM OF DEDUCTION U/S.54F ON MORE THAN ONE RESIDENTIAL UNITS WAS NOT PRESSED BY THE ASSESSEE IN VIEW OF THE DECISI ON OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF SUSHILA M . JHAVERI (2007) 292 ITR (AT)1 (MUM.). HE ALSO PLACED ON RECORD THE COPY OF THE ORDER OF THE TRIBUNAL APPEARING AT PAGE-22 TO 25A OF THE ASSESSEES PAPER ITA NO.7634/M/07 A.Y: 00-01 5 BOOK. HE FURTHER SUBMITS THAT SINCE THE ASSESSEE HAS DISCLOSED ALL THE PARTICULARS OF HER INCOME AND THE EXEMPTION US/54F ON MORE THAN ONE RESIDENTIAL UNITS WAS CLAIMED IN VIEW OF THE DECISION O F THE TRIBUNAL REFERRED IN CHART OF COMPUTATION OF INCOME, THEREFORE , THERE IS NO CONCEALMENT ON PART OF THE ASSESSEE AND THE PENALTY IMPOSE D BY THE AO AND SUSTAINED BY THE LD. CIT(A) BE DELETED. 5. ON THE OTHER HAND THE LD. DR SUPPORTS THE ORDER OF THE AO AND THE LD. CIT(A). 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RI VAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS SET TLED LAW THAT PENALTY UNDER SECTION 271(1)(C) IS A CIVIL LIABILITY AN D THE REVENUE IS NOT REQUIRED TO PROVE WILLFUL CONCEALMENT AS HELD BY T HE HONBLE SUPREME COURT IN CASE THE OF UNION OF INDIA VS. DHARM ENDRA TEXTILES AND PROCESSORS (2008) 306 ITR 277(SC). HOWEVER, EACH AND EVERY ADDITION MADE IN THE ASSESSMENT CANNOT AUTOMATICALLY LEAD TO LEVY OF PENALTY FOR CONCEALMENT OF INCOME. A CASE FOR IMPOSITION OF PENALTY HAS TO BE EXAMINED IN TERMS OF THE PROVISIONS OF EXPLAN ATION 1 TO SECTION 271(1)(C). SECONDLY, IT IS ALSO A SETTLED LEGAL POSITION THAT PENALTY PROCEEDINGS ARE DIFFERENT FROM ASSESSMENT PROCEEDI NGS. THE FINDING GIVEN IN THE ASSESSMENT THOUGH IS A GOOD EVIDENCE BUT THE SAME IS NOT CONCLUSIVE IN PENALTY PROCEEDINGS AS HELD BY T HE HONBLE ITA NO.7634/M/07 A.Y: 00-01 6 SUPREME COURT IN THE CASE OF ANANTHARAM VEERASINGHAIAH & CO. VS. CIT ((1980) 123 ITR 457 (SC). IN THE INSTANT CASE WE FIND THAT THERE IS NO DISPUTE THAT THE TRIBUNAL HAS ACCEPTED THAT THE ASSE SSEE IS ONE OF THE CO-OWNERS OF THE PROPERTY AND CAPITAL GAIN DECLARED BY THE ASSESSEE HAS TO BE ACCEPTED AS LONG TERM CAPITAL GAIN AND NO T SHORT TERM CAPITAL GAIN AS HELD BY THE REVENUE AUTHORITIES . THE TRIBUNAL HAS ALSO ACCEPTED THAT RECEIPT OF RS.3,99,600/-IS ALSO A PA RT OF CAPITAL GAIN AND NOT INCOME FROM OTHER SOURCES. THUS THE ONLY D ISPUTE IS WITH REGARD TO THE EXEMPTION CLAIMED BY THE ASSESSEE U/S.54F OF THE ACT. ACCORDING TO THE ASSESSEE THE INVESTMENT IN RESIDENTIAL FLA TS AMOUNTING TO RS.20,66,400/- IS ELIGIBLE FOR EXEMPTION U/S.54F OF THE ACT WHEREAS ACCORDING TO THE REVENUE THE ASSESSEE IS ENTITLE D FOR THE EXEMPTION U/S.54F OF RESIDENTIAL UNIT ADMEASURING 725 SQ.FT. @ RS.720 PER SQ.FT. = RS.522000/-. THE EXEMPTION U/S.54F ON R ESIDENTIAL FLATS WAS CLAIMED BY THE ASSESSEE RELYING ON THE DECISION OF THE TRIBUNAL IN K.G. VYAS 16 ITD 195 AND SMT. FULWANTI C. RATHOD VS . ITO IN ITA NO.1092/MUM/95 ORDER DATED 03.05.2002. SINCE THERE WERE CONTRARY VIEWS ON THE SAID ISSUE THE MATTER WAS DECIDED BY THE SP ECIAL BENCH IN THE CASE OF SUSHILA M. JHAVERI (SUPRA), WHEREIN IT HAS B EEN HELD THAT SINCE INVESTMENT WAS MADE IN TWO FLATS LOCATED AT DIFFERE NT LOCALITIES IN MUMBAI, THE ASSESSEE WAS ENTITLED TO EXEMPTION IN RESPE CT OF INVESTMENT IN ONE HOUSE ONLY OF HER CHOICE. THE AO HAV ING ALREADY ITA NO.7634/M/07 A.Y: 00-01 7 ALLOWED EXEMPTION IN RESPECT OF THE HOUSE WHICH PERMITT ED HIGHER DEDUCTION, THE ORDER OF THE AO WAS TO BE RESTORED. F URTHER IT IS NOT THE CASE OF THE REVENUE THAT THE CLAIM OF DEDUCTION MAD E BY THE ASSESSEE IS FOUND TO BE FALSE OR UNTRUE OR THE ASSESSEE IS NOT ENTITLED TO CLAIM SUCH DEDUCTION AL ALL. IT IS REPEATEDLY HELD BY THE COURTS THAT WHEN THE FACTS ARE CLEARLY DISCLOSED IN THE RETURN OF IN COME PENALTY CAN NOT BE LEVIED. MERELY BECAUSE AN AMOUNT IS NOT AL LOWED OR TAXED TO INCOME, IT CANNOT BE SAID THAT THE ASSESSEE HAD FILED I NACCURATE PARTICULARS OR CONCEALED ANY INCOME CHARGEABLE TO TAX. E VEN IF SOME DEDUCTION OR BENEFIT IS CLAIMED BY THE ASSESSEE WRONGLY BU T BONAFIDE AND NO MALAFIDE CAN BE ATTRIBUTED, THE PENALTY WOULD NOT BE LEVIED. THIS BEING SO AND KEEPING IN VIEW THAT THE ASSESSEES CLAIM OF DEDUCTION U/S.54F ON MORE THAN ONE RESIDENTIAL UNITS WA S BASED ON THE TRIBUNAL DECISIONS, SUPRA, WE ARE OF THE VIEW THAT T HERE IS NO CONCEALMENT ON THE PART OF THE ASSESSEE. THIS VIEW ALSO FI NDS SUPPORT FROM THE JUDGMENT OF HONBLE RAJASTHAN HIGH COURT IN CHANDRAPAL BAGGA VS. ITAT & ANOTHER (2003) 261 ITR 67(RAJ.) WHE REIN IT HAS BEEN HELD (PAGE-69) WHEN THE ASSESSEE HAS DISCLOSED THE TRANSACT ION WHICH IS THE BASIS FOR CAPITAL GAINS TAX AND THOUGH WRONG LY CLAIMED EXEMPTION FROM THE CAPITAL GAINS TAX, BUT THAT CANNO T BE A CASE OF PENALTY U/S.271(1)(C) OF THE IT ACT, 1961. IF IT HA S CLAIMED ANY EXEMPTION AFTER DISCLOSING THE RELEVANT BASIC FACTS AND UNDER ITA NO.7634/M/07 A.Y: 00-01 8 IGNORANCE OF THE PROVISIONS OF THE ACT OF 1961, AND NOT OFFERED THAT AMOUNT FOR TAX, IN SUCH CASES, PENALTY SHOULD NOT BE IMP OSED..... IN THIS VIEW OF THE MATTER WE ARE OF THE VIEW THAT THER E IS NO CONCEALMENT ON THE PART OF THE ASSESSEE AND ACCORDINGLY THE PENALTY I MPOSED BY THE AO AND SUSTAINED BY THE LD. CIT(A) IS DELETED. THE GROUND TAKEN BY THE ASSESSEE IS THEREFORE ALLOWED. 7. IN THE RESULT THE ASSESSEES APPEAL STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 02.02.2010. SD/- SD/- (RAJENDRA SINGH) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED:02.02.2010. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR F BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI. ITA NO.7634/M/07 A.Y: 00-01 9 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 5.1.10 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 6.1.10 SR.PS/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/PS 6. KEPT FOR PRONOUNCEMENT ON 02-02-10 SR.PS/PS 7. FILE SENT TO THE BENCH CLERK 03-02-10 SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER