ITO CEN THANE, THANE V. RAJA G ROCHLANI, MUMBAI

ITA 7738/MUM/2011

• Counselvise Citation: 773819914 RSA 2011
• Duration Of Justice: 2 year(s) 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 21-05-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 16-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S D SRIVASTAVA
• Assessee Lawyers: DR P DANIAL
• Keywords: Capital asset; Search and seizure; Loose papers; Period of limitation
• Section: 43B; 54F; 54; 132; 139

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE S/SHRI P.M.JAGTAP (AM) AND DR. S. T. M.PAVALAN (JM) ./I.T.A.NO.7738/MUM/2011 ( / ASSESSMENT YEAR: 2008-09) INCOME TAX OFFICER, CEN, PAWAR INDUSTRIAL ESTATE, 2 ND FLOOR, EDULJI ROAD, CHARAI, THANE(W), / VS. SHRI RAJA G ROCHLANI, SHOP NO.2, C-13, ROOM NO.25-26, NETAJI CHOWK, ULHASNAGAR THANE. ( / APPELLANT) ( / RESPONDENT) ./ ./PAN/GIR NO. : ADVPR0299N / APPELLANT BY : SHRI S D SRIVASTAVA /RESPONDENT BY DR.P.DANIAL $ / DATE OF HEARING : 21.5.2014 $ /DATE OF PRONOUNCEMENT : 28.5.2014 / O R D E R PER P.M.JAGTAP,AM: THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A)-1, THANE- DATED 30.8.2011 WHEREBY HE CANCELLED THE PEN ALTY OF RS.42,48,750/- IMPOSED BY THE AO U/S 271 (1)( C ) OF THE INCOME TAX ACT, 1961(THE ACT). 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDU AL WHO IS A PARTNER IN THE FIRM OF M/S MADHAV CONSTRUCTIONS. THE SAID FIRM IS ENG AGED IN THE BUSINESS OF HOUSING DEVELOPMENT AND CONSTRUCTION IN KALYAN AREA. A SEARCH AND SEIZURE ACTION U/S 132 WAS CONDUCTED ON 16.10.2008 IN THE CASES BELONGS TO MADHAV GROUP INCLUDING THE CASE OF ASSESSEE. SIMULTANEOUSLY, SURVEY U/S 133 A OF THE ACT WAS ALSO CARRIED OUT ON SOME OF THE PREMISES BELONGING TO THE SAID GROUP. DURING THE COURSE OF SEARCH/SURVEY, A NUMBER OF DOCUMENTS, LOOSE PAPERS, BOOKS OF ACCO UNTS AND OTHER RECORD WERE SEIZED AND IMPOUNDED WHICH REVEALED AN UNACCOUNTED INVEST MENT MADE BY THE ASSESSEE AS I.T.A.NO.7738/MUM/2011 2 WELL AS HIS FATHER SHRI GOPE ROCHLANI IN M/S MADH AV CONSTRUCTION IN THEIR CAPACITY AS PARTNERS. IN THE STATEMENT RECORDED U/S 132(4) O F THE ACT, SHRI GOPE ROCHLANI ADMITTED THE INVESTMENT OF RS.2.5 CRORES MADE IN M/S MADHAV CONSTRUCTION BY HIM AS WELL AS HIS SON I.E. ASSESSEE AS PARTNER OUT OF THEIR UNDISCLOSED INCOME. HE ALSO AGREED TO SURRENDER AN ADDITIONAL INCOME OF RS.1.25 CRORES EACH IN HIS CASE AS WELL AS IN THE CASE OF ASSESSEE. ACCORDINGLY, IN THE RETU RN OF INCOME FILED FOR THE YEAR UNDER CONSIDERATION, THE ADDITIONAL INCOME OF RS.1.25 CR ORES WAS OFFERED BY THE ASSESSEE. THEREAFTER, PENALTY PROCEEDINGS U/S 271(1)( C ) OF THE ACT WERE INITIATED BY THE AO AND IN THE REPLY FILED TO THE SHOW CAUSE NOTICE ISSUED BY THE AO, IT WAS SUBMITTED BY THE ASSESSEE THAT THE ADDITIONAL INCOME OF RS.1.25 CROR ES HAVING BEEN OFFERED VOLUNTARILY AND THAT TOO ON ESTIMATED BASIS, PENALTY U/S SECTI ON 271(1)( C ) WAS NOT ATTRACTED. THIS EXPLANATION OF THE ASSESSEE WAS NOT FOUND ACC EPTABLE BY THE AO ON THE GROUND THAT THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE AS A CONCLUSION OF SEARCH ACTION COULD NOT BE TREATED AS A VOLUNTARY ACT OF THE ASSE SSEE. ACCORDINGLY, REJECTING THE EXPLANATION OF THE ASSESSEE AND RELYING ON THE PR OVISIONS OF EXPLANATION 5A (II)(B) TO SECTION 271(1)( C ) OF THE ACT, THE AO IMPOSED TH E PENALTY OF RS.42,48,750/- BEING 100% OF THE TAX SOUGHT TO BE EVADED BY THE ASSESSEE ON THE ADDITIONAL INCOME OF RS.1,25,00,000/- DECLARED DURING SEARCH. 3. THE PENALTY IMPOSED BY THE AO U/S 271(1)( C ) O F THE ACT WAS CHALLENGED BY THE AO IN AN APPEAL FILED BEFORE THE LD. CIT(A) A ND ELABORATE SUBMISSIONS WERE MADE ON BEHALF OF THE ASSESSEE BEFORE THE LD. CIT(A) IN SUPPORT OF HIS CASE THAT THE PENALTY IMPOSED BY THE AO U/S 271(1)( C ) OF THE ACT WAS N OT SUSTAINABLE. AFTER DISCUSSING THE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE IN THE L IGHT OF VARIOUS JUDICIAL PRONOUNCEMENTS CITED IN SUPPORT, THE LD. CIT(A) HE LD THAT THE AO WAS NOT JUSTIFIED IN IMPOSING THE PENALTY U/S 271(1)( C ) AND CANCELLED THE SAME FOR THE FOLLOWING REASONS AS SUMMARIZED IN PARA 6.4 OF HIS IMPUGNED ORDER : I.T.A.NO.7738/MUM/2011 3 6.4 AFTER CONSIDERING THE SUBMISSIONS OF THE AR AN D RATIO LAID DOWN BY VARIOUS JUDICIAL AUTHORITIES IN THE CASES REFERRED TO ABOVE AND PARTICULARLY TAKING INTO CONSIDERATION THE FINDINGS OF HONBLE ITAT RAJ KOT BENCH IN THE CASE OF SHABBIR ALLUDDIN LATIWANA V/S DCIT AND SHRI GOPI CHAND RUPCHAND RAJANI (SUPRA) I AM INCLINED TO AGREE WITH THE ASSESSEE TH AT INSPITE OF ASSESSEES CASE NOT BEING COVERED BY THE IMMUNITY PROVIDED UNDER EX PLANATION 5A TO SECTION 271(1)( C ) I HOLD THAT EVEN IF THE ASSESSEE IS NOT IN A POSITION TO ESTABLISH CONCLUSIVELY THAT ADDITIONAL INCOME WAS OFFERED BY HIM VOLUNTARILY BUT AT THE SAME TIME I FIND THAT AO HAS ALSO NOT BEEN ABLE TO IDENTIFY THE VERY FOUNDATION ON THE BASIS OF WHICH ASSESSEE HAD OFFERED ADDITION AL INCOME. THE AO NEITHER IN THE COURSE OF ASSESSMENT PROCEEDINGS NOR IN THE PE NALTY PROCEEDING HAS BEEN ABLE TO LINK DECLARATION OF ADDITIONAL INCOME WITH ANY MATERIAL FOUND EVEN IN THE COURSE OF SEARCH. EVEN THE SALE FIGURE OF RS.8 8.54 CR HAS BEEN ADOPTED PURELY ON THE BASIS. PROFIT IS ESTIMATED AT 40% TO ARRIVE AT ESTIMATED EXPENDITURE. WIP UP TO DATE OF SURVEY IS ESTIMATE AT 62%. I FURTHE R FIND THAT THE INCOME HAS BEEN OFFERED ONLY ON ESTIMATE WHICH IS CLEARLY PROV ED FROM THE STATEMENT U/S 132 (4) WHERE EVERY FIGURE HAS BEEN MENTIONED ON ES TIMATE TO THE EXTENT OF EVEN ROUNDING UP OF THE FIGURES AND THEREFORE IN MY CONSIDERED VIEW IT CANNOT BE HELD THAT THE ADDITIONAL INCOME OFFERED BY THE ASSE SSEE WAS CONCEALED INCOME IN RESPECT OF WHICH INACCURATE PARTICULARS HAD BEEN F URNISHED. I ACCORDINGLY HOLD THAT THE AO IS NOT JUSTIFIED IN LEVYING PENALTY U/ S 271(1)( C ) OF THE ACT IN THE ASSESSEES CASE . THE PENALTY LEVIED IS ACCORDINGLY CANCELLED. AGGRIEVED BY THE ORDER OF LD. CIT(A) CANCELLING T HE PENALTY IMPOSED BY THE AO U/S 271(1)( C ), THE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS OBSERVED THAT THE PENAL TY U/S 271(1)( C ) OF THE ACT WAS ALSO IMPOSED BY THE AO IN RESPECT OF SIMILAR ADDITIONAL INCOME DECLARED DURING THE COURSE OF SEARCH IN THE CASE OF SHRI GOPE ROCHLANI, FATHER OF THE ASSESSEE AND ANOTHER PARTNER IN M/S MADHAV CONSTRUCTION. THE SAID PENALTY IMPOSED BY THE AO, HOWEVER, WAS CANCELLED BY THE LD. CIT(A) AND THE TRIBUNAL UPHELD THE ORDER OF LD. CIT(A) BY ITS ORDER DATED 24.5.2013 PASSED IN ITA NO.7737/MUM/2011 VI DE PARAS 9 TO 14 WHICH READ AS UNDER : 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTI ONS AND PERUSED THE RELEVANT FINDINGS OF THE ASSESSING OFFICER AND THE LEARNED COMMISSIONER (APPEALS). IN THIS CASE, A SEARCH AND SEIZURE ACTIO N WAS TAKEN PLACE AFTER 1 ST JUNE 2007 I.E., ON 16 TH OCTOBER 2008. THE ASSESSEE, DURING THE COURSE OF STATEMENT RECORDED UNDER SECTION 132(4), HAS OFFERE D INCOME OF ` 1.25 CRORES AS ADDITIONAL INCOME FOR THE PREVIOUS YEAR ENDING BEFO RE THE DATE OF SEARCH I.E., YEAR ENDING 31 ST MARCH 2008 RELEVANT TO THE ASSESSMENT YEAR 200809 . THE DUE DATE FOR FILING OF THE RETURN OF INCOME UNDER SECTI ON 139(1) FOR ASSESSMENT YEAR 200809 WAS 30 TH SEPTEMBER 2009, WHEREAS THE ASSESSEE HAS FILED THE RETURN OF I.T.A.NO.7738/MUM/2011 4 INCOME ON 31 ST OCTOBER 2009 I.E., AFTER ONE MONTH FROM THE DATE O F FILING OF THE RETURN OF INCOME AS PROVIDED IN SECTION 139(1). THE DUE DATE FOR FILING OF THE RETURN OF INCOME UNDER SECTION 139(4) FOR THE ASSES SMENT YEAR 200809 WAS 31 ST MARCH 2010. THUS, THE RETURN OF INCOME FILED BY THE ASSESSEE IN THIS CASE WAS AT BEST UNDER SECTION 139(4). THE ISSUE BEFORE US IS W HETHER THE RETURN OF INCOME FILED UNDER SECTION 139(4) CAN BE HELD TO BE THE DUE DATE FOR FILING THE RETURN OF INCOME FOR SUCH PREVIOUS YEAR AS MENTIONED IN CL AUSE (B) OF EXPLANATION 5A TO SECTION 271(1)(C) AND, IF SO, WHETHER THE PENALTY C AN BE LEVIED ON THE FACTS OF THE PRESENT CASE UNDER THE EXPLANATION 5A. FOR BETT ER APPRECIATION OF THE PROVISIONS OF EXPLANATION 5A, THE SAME IS REPRODUCE D HEREIN BELOW: [EXPLANATION 5A. WHERE, IN THE COURSE OF A SEARCH INITIATED UNDER SECTION 132 ON OR AFTER THE 1ST DAY OF JUNE, 2007, THE ASSESSE E IS FOUND TO BE THE OWNER OF (I) ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ART ICLE OR THING (HEREAFTER IN THIS EXPLANATION REFERRED TO AS ASSETS) AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILISING (WHOLLY OR IN PART) HI S INCOME FOR ANY PREVIOUS YEAR; OR (II) ANY INCOME BASED ON ANY ENTRY IN ANY BOOKS OF ACCOU NT OR OTHER DOCUMENTS OR TRANSACTIONS AND HE CLAIMS THAT SUCH ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS REPRESENTS HIS INCOME (WHOLLY OR IN PA RT) FOR ANY PREVIOUS YEAR, WHICH HAS ENDED BEFORE THE DATE OF SEARCH AND, (A) WHERE THE RETURN OF INCOME FOR SUCH PREVIOUS Y EAR HAS BEEN FURNISHED BEFORE THE SAID DATE BUT SUCH INCOME HAS NOT BEEN DECLARED THEREIN; OR (B) THE DUE DATE FOR FILING THE RETURN OF INCOME F OR SUCH PREVIOUS YEAR HAS EXPIRED BUT THE ASSESSEE HAS NOT FILED THE RETURN, THEN, NOTWITHSTANDING THAT SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME FURNISHED ON OR AFTER THE DATE OF SEARCH, HE SHALL, FOR THE PURPOSES OF IMPOSITION OF A PENALTY UNDER C LAUSE (C) OF SUB-SECTION (1) OF THIS SECTION, BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE P ARTICULARS OF SUCH INCOME. 10. ON A PLAIN READING OF THE AFORESAID EXPLANATION , IT IS APPARENT THAT FOLLOWING CONDITIONS ARE ESSENTIAL FOR LEVY OF PENA LTY UNDER SECTION 271(1): (I) THIS EXPLANATION IS APPLICABLE TO AN ASSESSEE IN WH OSE CASE SEARCH HAS BEEN INITIATED UNDER SECTION 132 ON/OR AFTER 1 ST JUNE 2007; FURTHER, (II) DURING THE COURSE OF SEARCH, THE ASSESSEE SHOULD BE FOUND TO BE THE OWNER OF I.T.A.NO.7738/MUM/2011 5 (A) ANY MONEY, BULLION, JEWELLERY, FOR OTHER VALUABLE A RTICLE OR THING TO WHICH AND THE ASSESSEE CLAIMS TO HAVE ACQUIRED SUCH ASSETS BY UTILIZING HIS INCOME FOR ANY PREVIOUS YEAR; OR (B) ANY INCOME WHICH IS BASED ON ANY ENTRY IN ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS AND CLAIMS THAT THESE REPRESENTS INCOME FOR ANY PREVIOUS YEAR WHICH IS EN DED BEFORE THE DATE OF SEARCH; AND FURTHER, (III) IF SUCH ASSET OR INCOME WHICH REPRESENTS THE INCOME OF ANY PREVIOUS YEAR, FIRSTLY, HAS NOT BEEN SHOWN IN THE RETURN OF INCOME WHICH HAS BEEN FURNISHED BEFORE THE DATE OF SEARCH I.E., SUCH INCO ME HAS NOT BEEN DECLARED THEREIN AND SECONDLY, THE DUE DATE FOR FIL ING THE RETURN OF INCOME HAD EXPIRED I.E., THE ASSESSEE HAS NOT SHOWN THIS INCOME IN THE RETURN OF INCOME FILED ON OR BEFORE THE DUE DATE; (IV) THEN ON SUCH INCOME DECLARED BY HIM IN THE RETURN O F INCOME FURNISHED ON OR AFTER THE DATE OF SEARCH, HE IS LIABLE FOR PE NALTY UNDER SECTION 271(1) AND HE IS DEEMED TO HAVE CONCEALED THE PART ICULARS OF HIS INCOME OR FURNISH INACCURATE PARTICULARS OF INCOME. 11. THERE ARE TWO SAVING CLAUSE IN THE AFORESAID EX PLANATION WHEREIN PENALTY CANNOT BE HELD TO BE LEVIABLE UNDER SECTION 271(1)( C), FIRSTLY, THE ASSESSEE HAD SHOWN SUCH ASSET AS MENTIONED IN CLAUSE (I) OR INCO ME AS MENTIONED IN CLAUSE (II) IN THE RETURN OF INCOME FURNISHED BEFORE THE D ATE OF SEARCH AND, SECONDLY, SUCH ASSET AND THE INCOME HAS BEEN SHOWN IN THE RET URN OF INCOME FILED ON THE DUE DATE. THUS, IF ANY ASSESSEE FALLS UNDER THESE S AVING CLAUSES, EXPLANATION 5A CANNOT BE INVOKED. 12, FOR THE PURPOSE OF THE INSTANT CASE, WE HAVE TO SEE WHETHER OR NOT THE ASSESSEE HAS SHOWN THE INCOME IN THE RETURN OF INCO ME FILED ON THE DUE DATE . PROVISIONS OF SECTION 139(1) PROVIDES FOR VARIOUS T YPES OF ASSESSES TO FILE RETURN OF INCOME BEFORE THE DUE DATE AND SUCH DUE DATE HAS BEEN PROVIDED IN THE EXPLANATION 2, WHICH VARIES FROM YEARTOYEAR. WHER EAS, PROVISIONS OF SECTION 139(4) PROVIDES FOR EXTENSION OF PERIOD OF DUE DATE IN THE CIRCUMSTANCES MENTIONED THEREIN AND IT ENLARGES THE TIME LIMIT PR OVIDED IN SECTION 139(1). THE OPERATING LINE OF SUBSECTION 4 OF SECTION 139 PROV IDES THAT ANY PERSON WHO HAS NOT FURNISHED THE RETURN WITHIN THE TIME ALLOWED, HERE THE TIME ALLOWED MEANS UNDER SECTION 139(1), THEN IN SUCH A CASE, THE TIME LIMIT HAS BEEN EXTENDED. WHEREVER THE LEGISLATURE HAS SPECIFIED THE DUE DATE OR HAS SPECIFIED THE DATE FOR ANY COMPLIANCE, THE SAME HAS BEEN CATEGORICALLY SPECIFIED IN THE ACT. FOR E.G., UNDER SECTION 44AB WHERE THE ASSESSEE IS REQU IRED TO GET HIS ACCOUNTS AUDITED BEFORE THE SPECIFIED DATE AND FURNISH BY TH AT DATE, THE SPECIFIED DATE HAS BEEN SPECIFICALLY MENTIONED AS THE DATE PROVIDED IN SECTION 139(1). SIMILARLY, IN SECTION 43B ALSO, THE DUE DATE HAS BEEN SPECIFICALLY PROVIDED AS THE DATE MENTIONED IN SUBSECTION (1) OF SECTION 139. IN THE AFORESAID EXPLANATION 5A, THE LEGISLATURE HAS NOT SPECIFIED THE DUE DATE AS PROVI DED IN SECTION 139(1) BUT HAS MERELY ENVISAGED THE WORDS DUE DATE . THIS DUE DATE CAN BE VERY WELL INFERRED AS DUE DATE OF THE FILING OF RETURN OF INC OME FILED UNDER SECTION 139, WHICH INCLUDES SECTION 139(4). WHERE THE LEGISLATUR E HAS PROVIDED THE CONSEQUENCES OF FILING OF THE RETURN OF INCOME UNDE R SECTION 139(4), THEN THE SAME HAS ALSO BEEN SPECIFICALLY PROVIDED. FOR E.G., SECTION 139(3), PROVIDES THAT I.T.A.NO.7738/MUM/2011 6 FOR THE PURPOSE OF CARRY FORWARD LOSSES UNDER SECTI ONS 72 TO 74A, THE RETURN OF INCOME SHOULD BE FILED WITHIN THE TIME LIMIT PROVID ED UNDER SECTION 139(1), OTHERWISE LOSSES CANNOT BE SETOFF. IN ABSENCE OF S UCH A RESTRICTION, THE LIMITATION OF TIME OF DUE DATE CANNOT BE STRICTLY RECKONED WITH SECTION 139(1). THUS, THE MEANING OF THE WORDS DUE DATE , SANS ANY LIMITATION OR RESTRICTION AS GIVEN IN CLAUSE (B) OF EXPLANATION 5A, CANNOT BE RE AD AS DUE DATE AS PROVIDED IN SECTION 139(1). THE WORDS DUE DATE THEREFORE, CAN ALSO MEAN DATE OF FILING OF THE RETURN OF INCOME UNDER SECTION 139(4). 13. THIS PROPOSITION HAS BEEN EXPLAINED BY THE VARI OUS HIGH COURTS ALSO WHEREIN IN THE CONTEXT OF SECTIONS 54F AND 54(2), I T HAS BEEN INTERPRETED THAT THE DUE DATE OF SECTION 139 CAN BE INFERRED AS DUE DATE UNDER SECTION 139(4) ALSO. THIS PROPOSITION HAS BEEN ELABORATED IN THE FOLLOWI NG DECISIONS: I) CIT V/S RAJESH KUMAR JALAN, [2006] 286 ITR 276 (GAU .). WHEREIN IT HAS BEEN OBSERVED AND HELD AS UNDER: FROM A PLAIN READING OF SUB-S. (2) OF S. 54, IT IS CLEAR THAT ONLY S. 139 IS MENTIONED IN S. 54(2) IN THE CONTEXT THAT THE UNUTI LISED PORTION OF THE CAPITAL GAIN ON THE SALE OF PROPERTY USED FOR RESIDENCE SHOULD B E DEPOSITED BEFORE THE DATE OF FURNISHING THE RETURN OF THE INCOME-TAX UNDER S. 13 9. SEC. 139 CANNOT BE MEANT ONLY AS S. 139(1) BUT IT MEANS ALL SUB-SECTIONS OF S. 139. UNDER SUB-S. (4) OF S. 139, ANY PERSON WHO HAS NOT FURNISHED A RETURN WITH IN THE TIME ALLOWED TO HIM UNDER SUB-S. (1) OF S. 142 MAY FURNISH THE RETURN F OR ANY PREVIOUS YEAR AT ANY TIME BEFORE THE EXPIRY OF ONE YEAR FROM THE END OF THE RELEVANT ASSESSMENT YEAR OR BEFORE THE COMPLETION OF THE ASSESSMENT WHICHEVE R IS EARLIER. SUCH BEING THE SITUATION, IT IS THE CASE OF THE ASSESSEE THAT THE ASSESSEE COULD FULFILL HE REQUIREMENT UNDER S. 54 FOR EXEMPTION OF THE CAPITA L GAIN FROM BEING CHARGED TO INCOME-TAX ON THE SALE OF PROPERTY USED FOR RESIDEN CE UPTO 30TH MARCH, 1998, INASMUCH AS THE RETURN OF INCOME-TAX FOR THE ASST. YR. 1996-97 COULD BE FURNISHED BEFORE THE EXPIRY OF ONE YEAR FROM THE EN D OF THE RELEVANT ASSESSMENT YEAR OR BEFORE THE COMPLETION OF THE ASSESSMENT WHI CHEVER IS EARLIER UNDER SUB- S. (4) OF S. 139. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSESSEE WAS ENTITLED TO CLAIM BENEFIT UNDER S. 54 ON THE ENTIRE AMOUNT RECEIVED BY HIM ON ACCOUNT OF SALE OF HIS HOUSE PROPERTY. II) CIT V/S M/S. JAGRITI AGGARWAL, [2011] 339 ITR 610 ( P&H) , WHEREIN IT HAS BEEN OBSERVED AND HELD AS UNDER: 6. SEC. 54 OF THE ACT CONTEMPLATES THAT THE CAPITA L GAIN ARISES FROM THE TRANSFER OF A LONG-TERM CAPITAL ASSET, BUT IF THE ASSESSEE W ITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFTER THE DATE ON WHICH THE TRA NSFER TOOK PLACE PURCHASES RESIDENTIAL HOUSE, THEN INSTEAD OF THE CAPITAL GAIN , THE INCOME WOULD BE CHARGED IN TERMS OF PROVISIONS OF SUB-S. (1) OF S. 54. AS P ER SUB-S. (2), IF THE AMOUNT OF CAPITAL GAINS IS NOT APPROPRIATED BY THE ASSESSEE T OWARDS THE PURCHASE OF NEW ASSET WITHIN ONE YEAR BEFORE THE DATE ON WHICH THE TRANSFER OF THE ORIGINAL ASSET TOOK PLACE, OR WHICH IS NOT UTILIZED BY HIM FOR THE PURCHASE OR CONSTRUCTION OF THE NEW ASSET BEFORE THE DATE OF FURNISHING THE RETURN OF INCOME UNDER S. 139, THE AMOUNT SHALL BE DEPOSITED BY HIM BEFORE FURNISHING SUCH RETURN NOT LATER THAN DUE DATE APPLICABLE IN THE CASE OF ASSESSEE FOR FUR NISHING THE RETURN OF INCOME I.T.A.NO.7738/MUM/2011 7 UNDER SUB-S. (1) OF S. 139 IN AN ACCOUNT IN ANY SUC H BANK OR INSTITUTION AS MAY BE SPECIFIED. RELEVANT SUB-S. (2) OF S. 54 OF THE A CT READS AS UNDER: XXX XXX XXX 7. THE QUESTION WHICH ARISES IS; WHETHER THE RETURN FILED BY THE ASSESSEE BEFORE THE EXPIRY OF THE YEAR ENDING WITH THE ASSES SMENT YEAR IS VALID UNDER S. 139(4) OF THE ACT? 8. LEARNED COUNSEL FOR THE REVENUE HAS ARGUED THAT THE ASSESSEE WAS REQUIRED TO FILE RETURN UNDER SUB-S. (1) OF S. 139 OF THE ACT IN TERMS OF SUB-S. (2) OF S. 54 OF THE ACT. IT IS CONTENDED THAT SUB-S. (4 ) IS NOT APPLICABLE IN RESPECT OF THE ASSESSEE SO AS TO AVOID PAYMENT OF LONG-TERM CA PITAL GAIN. 9. ON THE OTHER HAND, LEARNED COUNSEL FOR THE RESPO NDENT RELIES UPON A DIVISION BENCH JUDGMENT OF KARNATAKA HIGH COURT IN FATHIMA B AL VS. ITO (2009) 32 DTR (KAR) 243 WHERE IN SOMEWHAT SIMILAR CIRCUMSTANCES, IT HAS BEEN HELD THAT TIME- LIMIT FOR DEPOSIT UNDER SCHEME OR UTILISATION CAN B E MADE BEFORE THE DUE DATE FOR FILING OF RETURN UNDER S. 139(4) OF THE ACT. LEARNE D COUNSEL FOR THE RESPONDENT ALSO RELIES UPON A DIVISION BENCH JUDGMENT OF GAUHA TI HIGH COURT IN CIT VS. RAJESH KUMAR JALAN (2006) 206. CTR (GAU) 361 (2006) 286 ITR 274 (GAU). 10. HAVING HEARD LEARNED COUNSEL FOR THE PARTIES, W E ARE OF THE OPINION THAT SUB- S. (4) OF S. 139 OF THE ACT IS, IN FACT, A PROVISO TO SUB-S. (1) OF S. 139 OF THE ACT. SEC. 139 OF THE ACT FIXES THE DIFFERENT DATES FOR F ILING THE RETURNS FOR DIFFERENT ASSESSEE. IN THE CASE OF ASSESSEE AS THE RESPONDENT , IT IS 31ST DAY OF JULY OF THE ASSESSMENT YEAR IN TERMS OF CI. (C) OF THE EXPLN. 2 TO SUB-S. (1) OF S. 139 OF THE ACT, WHEREAS SUB-S. (4) OF S. 139 PROVIDES FOR EXTE NSION IN PERIOD OF DUE DATE IN CERTAIN CIRCUMSTANCES. IT READS AS UNDER: 11. A READING OF THE AFORESAID SUBSECTION WOULD SH OW THAT IF A PERSON HAS NOT FURNISHED THE RETURN OF THE PREVIOUS YEAR WITHI N THE TIME ALLOWED UNDER SUB S (1) I.E., BEFORE 31 ST DAY OF JULY OF THE ASSESSMENT YEAR, THE ASSESSEE C AN FILE RETURN BEFORE THE EXPIRY OF ONE YEAR FROM THE END O F THE RELEVANT ASSESSMENT YEAR. III) CIT V/S JAGTAR SINGH CHAWLA , PASSED IN INCOME TAX APPEAL NO.71 OF 2012 , VIDE JUDGMENT DATED 20 TH MARCH 2013 WHEREIN IT HAS BEEN OBSERVED AND HELD AS UNDER: THE PROVISIONS OF SECTION 54F(4) OF THE ACT ARE PA RI-MATERIA WITH SECTION 54(2) OF THE ACT. SECTION 54 DEALS WITH THE PROFIT ON SALE OF A RESIDENTIAL HOUSE, WHEREAS SECTION 54F DEALS WITH THE TRANSFER OF ANY LONG TERM CAPITAL ASSETS NOT BEING A RESIDENTIAL HOUSE. A DIVISION BENCH OF THE GAUHATI HIGH COURT IN A CAS E REPORTED AS COMMISSIONER OF INCOME TAX V. RAJESH KUMAR JALAN (2 006) 286 ITR 274, HELD THAT ONLY SECTION 139 OF THE ACT IS MENTIONED IN SE CTION 54(2) OF THE ACT IN THE CONTEXT THAT THE UNUTILIZED PORTION OF THE CAPITAL GAIN ON THE SALE OF PROPERTY I.T.A.NO.7738/MUM/2011 8 USED FOR RESIDENCE SHOULD BE DEPOSITED BEFORE THE D ATE OF FURNISHING THE RETURN OF THE INCOME TAX UNDER SECTION 139 OF THE ACT AND THAT IT WOULD INCLUDE EXTENDED PERIOD TO FILE RETURN IN TERMS OF SUB SECT ION 4 OF SECTION 139 OF THE ACT. IT WAS HELD AS UNDER:- FROM A PLAIN READING OF SUB-SECTION (2) OF SECTION 54 OF THE INCOME-TAX ACT, 1961, IT IS CLEAR THAT ONLY SECTION 139 OF THE INCO ME-TAX ACT, 1961, IS MENTIONED IN SECTION 54(2) IN THE CONTEXT THAT THE UNUTILIZED PORTION OF THE CAPITAL GAIN ON THE SALE OF PROPERTY USED FOR RESIDENCE SHOULD BE D EPOSITED BEFORE THE DATE OF FURNISHING THE RETURN OF THE INCOME-TAX UNDER SECTI ON 139 OF THE INCOME-TAX ACT. SECTION 139 OF THE INCOMETAX ACT, 1961, CANNOT BE M EANT ONLY SECTION 139(1), BUT IT MEANS ALL SUB-SECTIONS OF SECTION 139 OF THE INCOME-TAX ACT, 1961. UNDER SUB-SECTION (4) OF SECTION 139 OF THE INCOME-TAX AC T ANY PERSON WHO HAS NOT FURNISHED A RETURN WITHIN THE TIME ALLOWED TO HIM U NDER SUB-SECTION (1) OF SECTION 142 MAY FURNISH THE RETURN FOR ANY PREVIOUS YEAR AT ANY TIME BEFORE THE EXPIRY OF ONE YEAR FROM THE END OF THE RELEVANT ASS ESSMENT YEAR OR BEFORE THE COMPLETION OF THE ASSESSMENT YEAR WHICHEVER IS EARL IER. THE SAID JUDGMENT WAS RELIED UPON BY A DIVISION BEN CH OF THE KARNATAKA HIGH COURT IN FATHIMA BAI V. ITO, ITA NO.435 OF 2004 DEC IDED ON 17TH OCTOBER 2008 , WHEREIN IT WAS HELD TO THE FOLLOWING EFFECT:- 11. THE EXTENDED DUE DATE UNDER SECTION 139(4) WOU LD BE 31.3.1990. THE ASSESSEE DID NOT FILE THE RETURN WITHIN THE EXTENDE D DUE DATE, BUT FILED THE RETURN ON 27.2.2000. HOWEVER, THE ASSESSEE HAD UTILIZED TH E ENTIRE CAPITAL GAINS BY PURCHASE OF A HOUSE PROPERTY WITHIN THE STIPULATED PERIOD OF SECTION 54(2) I.E., BEFORE THE EXTENDED DUE DATE FOR RETURN UNDER SECTI ON 139. THE ASSESSEE TECHNICALLY MAY HAVE DEFAULTED IN NOT FILING THE RE TURN UNDER SECTION 139(4). BUT, HOWEVER, UTILIZED THE CAPITAL GAINS FOR PURCHASE OF PROPERTY BEFORE THE EXTENDED DUE DATE UNDER SECTION 139(4). THE CONTENTION OF TH E REVENUE THAT THE DEPOSIT IN THE SCHEME SHOULD HAVE BEEN MADE BEFORE THE INITIAL DUE DATE AND NOT THE EXTENDED DUE DATE IS AN UNTENABLE CONTENTION. A DIVISION BENCH OF THIS COURT IN WHICH ONE OF US ( HEMANT GUPTA, J.) WAS A MEMBER, HAD AN OCCASION TO CONSIDER THE PROVISIONS OF SECTION 54(2) OF THE ACT, WHEREIN IT HAS BEEN HELD THAT SUBSECTION (4) OF SEC TION 139 OF THE ACT IS IN FACT A PROVISO TO SECTION 139(1) OF THE ACT. THEREFORE, SI NCE THE ASSESSEE HAS INVESTED THE SALE PROCEEDS IN A RESIDENTIAL HOUSE WITHIN THE EXTENDED PERIOD OF LIMITATION, THE CAPITAL GAIN IS NOT PAYABLE. THE JUDGMENTS IN R AJESH KUMAR JALANS CASE AND FATHIMA BAIS CASE (SUPRA) WERE REFERRED TO. IT HAS BEEN HELD AS UNDER:- HAVING HEARD LEARNED COUNSEL FOR THE PARTIES, WE A RE OF THE OPINION THAT SUB- SECTION (4) OF SECTION 139 OF THE ACT IS, IN ACT, A PROVISO TO SUB-SECTION (1) OF SECTION 139 OF THE ACT. SECTION 139 OF THE ACT FIXE S THE DIFFERENT DATES FOR FILING THE RETURNS FOR DIFFERENT ASSESSES. IN THE CASE OF ASSESSEE AS THE RESPONDENT, IT IS 31ST DAY OF JULY, OF THE ASSESSMENT YEAR IN TERMS O F CLAUSE (C) OF THE EXPLANATION 2 TO SUB-SECTION 1 OF SECTION 139 OF THE ACT, WHERE AS SUB-SECTION (4) OF SECTION 139 PROVIDES FOR EXTENSION IN PERIOD OF DUE DATE IN CERTAIN CIRCUMSTANCES. FROM THE PROPOSITIONS LAID DOWN BY THE AFORESAID DE CISIONS, IT IS ABSOLUTELY CLEAR THAT PROVISIONS OF SECTION 139(4) IS ACTUALLY THE EXTENSION OF THE DUE DATE OF SECTION 139(1) AND, THEREFORE, THE DUE DATE FOR FILING OF THE RETURN OF INCOME CAN ALSO BE RECKONED WITH THE DATE MENTIONED IN SECTION 139(4). I.T.A.NO.7738/MUM/2011 9 14. IN OUR CONSIDERED OPINION, ONCE THE LEGISLATURE HAS NOT SPECIFIED THE DUE DATE AS PROVIDED IN SECTION 139(1) IN EXPLANATION 5A, T HEN BY IMPLICATION, IT HAS TO BE TAKEN AS THE DATE EXTENDED UNDER SECTION 139( 4). IN VIEW OF THE ABOVE, WE HOLD THAT THE ASSESSEE GETS THE BENEFIT / IMMUNITY UNDER CLAUSE (B) OF EXPLANATION TO SECTION 271(1)(C) BECAUSE THE ASSESS EE HAS FILED ITS RETURN OF INCOME WITHIN THE DUE DATE AND, THEREFORE, THE PENALTY LEVIED BY THE ASSESSIN G OFFICER CANNOT BE SUSTAINED ON THIS GROUND. EVEN TH OUGH WE ARE NOT AFFIRMING THE FINDINGS AND THE CONCLUSIONS OF THE LEARNED COM MISSIONER (APPEALS), HOWEVER, AS PER THE DISCUSSION MADE ABOVE, PENALTY IS DELETED IN VIEW OF THE INTERPRETATION OF EXPLANATION 5A TO SECTION 271(1)( C). CONSEQUENTLY, THE GROUND RAISED BY THE REVENUE IS TREATED AS DISMISSED. 5. AS THE ISSUE INVOLVED IN THE PRESENT CASE AND TH E MATERIAL FACTS THERETO ARE SIMILAR TO THE CASE OF SHRI GOPE M ROCHLANI DECIDE D BY THE TRIBUNAL, WE RESPECTFULLY FOLLOW THE DECISION RENDERED BY THE TRIBUNAL IN TH E SAID CASE AND UPHOLD THE IMPUGNED ORDER OF LD. CIT(A) CANCELLING THE PENALTY LEVIED BY THE AO U/S 271 (1)( C ) OF THE ACT. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH MAY, 2014 ) + , 28TH MAY, 2014 SD SD (DR. S. T. M.PAVALAN) (P.M.JAGTAP) ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI: ON THIS 28TH DAY OF MAY, 2014 . . ./ SRL , SR. PS ! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT /APPLICANT 2. / THE RESPONDENT. 3. 1 ( ) / THE CIT(A)- 4. 1 / CIT 5. 2 4 , $ 4 , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) $ 4 , /ITAT, MUMBAI