ITO, Jaipur V. JADAV DEVI DANGAYACH, Jaipur

ITA 869/JPR/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5382 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 18-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA
• Assessee Lawyers: VARUN BANSAL
• Keywords: Capital receipt
• Section: 54B; 54F

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH FOE FLAG ;KN O] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI VIKRAM SINGH YA DAV, AM VK;DJ VIHY LA- @ ITA NO. 869/JP/2013 FU/KZKJ.K O'K Z @ ASSESSMENT YEARS : 2007-08 INCOME TAX OFFICER, WARD 1(4), JAIPUR. CUKE VS. JADAV DEVI DANGAYACH, 903, BABA HARISH CHANDRA MARG, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ABXPD 5266 F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS @ REVENUE BY : SHRI RAJ MEHRA (JCIT) FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI VARUN BANSAL (CA) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 15/02/2016 MN?KKS'K .KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 27/04/2016 VKNS'K@ ORDER PER: R.P. TOLANI, J.M.: THIS IS AN APPEAL FILED BY DEPARTMENT AGAINST THE O RDER OF LD. CIT (A)-I, JAIPUR DATED 13/09/2013 FOR AY 2007-08, SOLE GROUND RAISED IS AS UNDER : WHETHER ON THE FACTS AND IN THE CIRCUMSTANCE OF TH E CASE AND IN LAW THE LD. CIT (A) WAS JUSTIFIED IN DELET ING THE PENALTY OF RS. 81,53,522/- LEVIED BY THE ASSESS ING OFFICER U/S 271(1)(C) OF THE I.T. ACT. 2. BRIEF FACTS ARE, THE PENALTY IN QUESTION WAS IMP OSED BY. LD. AO ON AN ISSUE THAT THE ASSESSEE RETURNED AMOUNT IN QUEST ION AS NON-COMPETE ITA 869/JP/2013_ ITO VS JADAV DEVI DANGAYACH 2 FEE FOR RELINQUISHMENT OF HER RIGHTS IN THE FIRM M/ S SEQUIN ESTATE, JAIPUR. THE LD ASSESSING OFFICER REJECT TO TREAT THE SAME AS NON-COMPETE FEE AND INSTEAD TREATED IT AS LONG TERM CAPITAL GAINS. HOWEV ER, THE ASSESSEES ALTERNATE CLAIM U/S 54F AND 54B ETC. WERE NOT CONSID ERED. IN RESPONSE TO PENALTY PROCEEDINGS, ASSESSEE FILED DETAILED EXPLAN ATION CLAIMING THAT PENALTY WASS NOT EXIGIBLE. THE LD AO HOWEVER, IMPOSED THE SAME. 3. AGGRIEVED, THE ASSESSEE PREFERRED FIRST APPEAL A GAINST THE PENALTY ORDER. THE LD CIT(A) DELETED THE PENALTY BY FOLLOWING OBSERVATIONS. 4.2 THUS, THE NOTE ATTACHED WITH THE RETURN CLEARLY INDIC ATED THE NATURE OF TRANSACTION UNDER TAKEN BY THE APPELLANT AS ALSO THE NATURE OF CLAIM MADE BY HER. IN SUCH A SITUATION IT CANNOT BE SAID THAT THE APPELLANT HAD CONCEALED INCOME OR HAD FURNISHED INACCURATE PARTICULARS OF HER INCOME. AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETRO (322 ITR 158), MERELY MAKING A CLAIM, WHICH IS NOT FOUND SUST AINABLE IN LAW, BY ITSELF, DOES NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN THE PRESENT CASE, A CLAIM WAS MADE BY THE APPELLANT THAT THE AMOUNT RECEIVED FROM THE FIRM ON HER RETIREMENT WAS IN THE NATURE OF CAPITAL GAINS. TH IS CLAIM DID NOT FIND FAVOUR WITH THE AO AND THE HIGHER AUTHO RITIES. HOWEVER, MERELY BECAUSE A CLAIM MADE BY THE APPELLAN T HAS BEEN REJECTED, IT DOES NOT TANTAMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. ITA 869/JP/2013_ ITO VS JADAV DEVI DANGAYACH 3 THE PENALTY, THEREFORE, APPEARS TO BE UNCALLED FOR A ND IS, ACCORDINGLY, CANCELLED. 4. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. THE LD DR VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFF ICER. 5. LD. AR OF THE ASSESSEE CONTENDS THAT THE PENALTY IN QUESTION WAS IMPOSED BY THE LD ASSESSING OFFICER WHEN THE QUANTUM PROCEEDINGS WERE PENDING BEFORE THE HONBLE ITAT. NOW THE QUANTUM PROC EEDINGS HAVE BEEN DECIDED BY ITAT, HOLDING THAT THE AMOUNT IN QUE STION IS NOT A CAPITAL RECEIPT AS NON-COMPETE FEE BUT REPRESENTS T HE AMOUNT AS LTCG. HOWEVER, BY FOLLOWING OBSERVATIONS THE MATTER IS SET ASIDE TO AO TO CONSIDER THE ASSESSEES CLAIMS OF EXEMPTION U/S 54F , 54EC, U/S 54B AT RS. 2,42,05,334/- WHICH ARE TO BE ALLOWED BY LD. AO A FTER DUE VERIFICATION:- 10. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH TH E PARTIES AND PERUSED THE MATERIAL ON RECORD. THE ASSESSEE IS A 90 YEARS OLD LADY. THERE IS NO PAST AND SUBSEQUENT EXPERIENCE IN THE LINE OF CONSTRUCTION/REAL ESTATE BUSINESS. SHE ONLY OWNED LA ND WHICH WAS TAKEN IN THE FIRMS ACCOUNT AS A CAPITAL CONTRIB UTION MADE BY HER AT RS. 7,56,000/-, WHICH WAS INCREASED BY RS. 2,42,44,000/- AND TREATED THE SAME AS A CAPITAL CON TRIBUTION. THE ASSESSEE FIRM HAS DEDUCTED TDS BY TREATING THIS A MOUNT AS NON COMPETE FEES BUT REAL NATURE OF TRANSACTION WAS THAT ITA 869/JP/2013_ ITO VS JADAV DEVI DANGAYACH 4 THE ASSESSEES LAND WAS GOT TRANSFERRED TO THE PARTN ERSHIP FIRM I.E. M/S SEQUINE REAL ESTATE AND SHE WAS PAID IN TOT AL, AMOUNT OF RS. 2.5 CRORES THROUGH THIS PARTNERSHIP DEED. THE PURPOSE OF THIS TRANSFER THROUGH PARTNERSHIP DEED WAS NOT TO P AY STAMP DUTY ON TRANSFER OF IMMOVABLE PROPERTY ON DLC RATE. THE ASSESSEE HAD DISCLOSED THESE RECEIPTS AS CAPITAL RE CEIPTS AT RS. 2.5 CRORES AND AFTER CLAIMING OF INDEXATION, THE TO TAL CAPITAL GAIN HAD WORKED OUT AT RS. 2,42,05,334/- CLAIMED DED UCTION U/S 54F, 54EC, U/S 54B AT RS. 2,42,05,334/- AND HAD SHOWN NET TAXABLE CAPITAL GAIN NIL, WHICH HAS NOT BEEN VER IFIED BY THE LD ASSESSING OFFICER AT THE TIME OF ASSESSMENT PROC EEDINGS. WE HOLD THAT THE NATURE OF TRANSACTION IS COVERED U/S 54(3) OF THE ACT, THEREFORE, THE ASSESSING OFFICER IS DIRECTED T O VERIFY THE DEDUCTION MADE BY THE ASSESSING OFFICER FROM THE CA PITAL GAIN DISCLOSED BY THE ASSESSEE IN HER RETURN. THE ASSESSE ES APPEAL ON THIS GROUND IS PARTLY ALLOWED. LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT THIS IS NOT A FIT CASE FOR PENALTY IN VIEW OF THE FOLLOWING REASONS: (I) THE PENALTY WAS DELETED BY THE LD CIT(A) ON CONSI DERATION OF MERITS, DESPITE HIS QUANTUM ORDER AGAINST THE ASSES SEE DATED 30/1/2012 AND WITHOUT CONSIDERING THE ASSESSEES CLAIM ABOUT E LIGIBILITY OF EXEMPTIONS U/S 54EC, 54F AND 54B. THE LD CIT(A) DELET ED THE PENALTY BY CLEAR FINDINGS OF FACTS THAT ALL THE DETAILS AND PA RTICULARS IN RESPECT OF ASSESSEES CLAIM WERE FILED ALONG WITH THE RETURN OF INCOME AND RELIED ON ITA 869/JP/2013_ ITO VS JADAV DEVI DANGAYACH 5 THE HON'BLE SUPREME COURT DECISION IN THE CASE OF C IT VS. RELIANCE PETRO PRODUCTS PVT. LTD. 322 ITR 158 (SC). IT HAS BEEN HEL D THAT WHEN ALL THE RELEVANT PARTICULARS ARE FILED ALONGWITH THE RETURN, THEN THE PENALTY CANNOT BE IMPOSED MERELY BECAUSE THE CLAIM HAS NOT BEEN ALLOWED OR REDUCED. CONSEQUENT TO THE ITAT OBSERVATIONS IN ITS ORDER, THE BALANCE OF CONVENIENCE ON MERITS HAS TILTED MORE IN FAVOR OF T HE ASSESSEE INASMUCH AS THE ITAT HAS DIRECTED TO ALLOW THE ASSESSEES CLA IM OF EXEMPTION U/S 54B, 54F AND 54EC OF THE ACT AFTER DUE VERIFICATION . IT CLEARLY INDICATES THAT THE RELEVANT PARTICULARS ABOUT THE NATURE OF R ECEIPT AND THE DETAILS ABOUT CLAIM OF EXEMPTION ARE ALL ON THE RECORD & BA SED THEREON TO ITAT DIRECTED THE ASSESSING OFFICER TO VERIFY THE CLAIM. 5.1 THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA) IS APPLICABLE ON AL L FORCE TO FACTS IN THE ASSESSEES CASE AND MERE SO AFTER THE ITATS UNAMBIG UOUS OBSERVATIONS, BASED WHEREON THE ASSESSEES CLAIM HAS BEEN PARTLY A LLOWED AS MENTIONED ABOVE. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. WE FI ND MERIT IN THE CONTENTIONS OF THE LD AR OF THE ASSESSEE. THOUGH ITA T HAS HELD THAT THE RECEIPT IN QUESTION NOT TO BE IN THE NATURE OF NON- COMPETE FEE BUT AS ITA 869/JP/2013_ ITO VS JADAV DEVI DANGAYACH 6 LTCG ELIGIBLE FOR RELEVANT DEDUCTIONS/EXEMPTIONS U/S 54F, 54B AND 54EC. CONSEQUENTLY, THE ASSESSEES ALTERNATE GROUND HAS B EEN PARTLY ALLOWED BY DIRECTING THE ASSESSING OFFICER TO VERIFY THE CL AIMS OF THE ASSESSEE U/S 54F, 54B AND 54EC OF THE ACT. 6.1 I EMERGES FROM THE RECORD THAT ALL THE RELEVANT FACTS AND CIRCUMSTANCES WERE DISCLOSED BY THE ASSESSEE IN THE RETURN OF INCOME AS WELL AS DURING THE COURSE OF ASSESSMENT PROCEEDINGS. CONSEQUENTLY RELYING ON THE HON'BLE SUPREME COURT DECISION IN TH E CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA), THE LD CI T(A) HAS TAKEN JUST AND PROPER DECISION BY RELYING ON THE ABOVE JUDGMENT. TH EREFORE, THE ORDER OF THE LD CIT(A) IS UPHELD. 7. IN THE RESULT REVENUE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27/04/2016. SD/- SD/- FOE FLAG ;KNO VKJ-IH-RKSYKUH (VIKRAM SINGH YADAV) (R.P.TOLANI) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 27 TH APRIL, 2016 * RANJAN VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE ITO, WARD 1(4), JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- SMT. JADAV DEVI DANGAYACH, JAIPUR. 3. VK;DJ VK;QDR@ CIT ITA 869/JP/2013_ ITO VS JADAV DEVI DANGAYACH 7 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 869/JP/2013) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR