ACIT 16(1), MUMBAI V. VEENA SINGHAL, MUMBAI

ITA 869/MUM/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 101213 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2007-2008
• Appeal Filed On: 07-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ADAGIRI DR
• Assessee Lawyers: D J SHUKLA
• Section: 143(3)

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ITA NO.869/MUM/2014 ASSESSMENT YEAR: 2007-08 ACIT-16(1), 2 ND FLOOR, MATRU MANDIR, TARDEO ROAD, MUMBAI-400007 / VS. SMT. VEENA SINGHAL, 2A, WOODLANDS, 67 PEDDAR ROAD, MUMBAI-400026 ( / REVENUE) ( !' # /ASSESSEE) PAN. NO. ADUPS 8043F / REVENUE BY SHRI B. YADAGIRI-DR !' # / ASSESSEE BY SHRI D. J. SHUKLA $ % & # ' / DATE OF HEARING : 01/10/2015 & # ' / DATE OF ORDER: 06/10/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DAT ED 13/11/2013 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI, DELETING THE PENALTY OF RS.5,01,113/- IMPOSED U/S 2 71(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) B Y THE ASSESSING OFFICER. SMT. VEENA SINGHAL ITA NO.869/MUM/2014 2 2. DURING HEARING OF THIS APPEAL, THE LD. DR, SHR I B. YADAGIRI, CONTENDED THAT ASSESSEE SOLD THE PROPERT Y THROUGH IRREVOCABLE POWER OF ATTORNEY IN FINANCIAL YEAR 198 8-89 TO A BUILDER FOR RS.19,85,000/- AND REGISTRATION WAS GOT DONE DURING THE YEAR UNDER CONSIDERATION. THE CRUX OF TH E ARGUMENT IS THAT THE POSSESSION OF THE PROPERTY WAS HANDED OVER IN F.Y. 1988-89, THEREFORE, PENALTY WAS RIGHTL Y LEVIED AND MORE SPECIFICALLY WHEN QUANTUM WAS CONFIRMED BY LD. COMMISSIONER OF INCOME TAX (APPEALS) AGAINST WHICH NO APPEAL WAS FILED BY THE ASSESSEE BEFORE THE TRIBUNA L. 2.1. ON THE OTHER HAND, THE LD. COUNSEL FOR THE AS SESSEE, SHRI D.J. SHUKLA FAIRLY AGREED THAT NO APPEAL WAS F ILED BY THE ASSESSEE BEFORE THIS TRIBUNAL AGAINST QUANTUM ADDIT ION BUT THE FACTS ARE THAT THE ASSESSEE DECLARED LONG TERM CAPITAL GAIN WHEREAS THE ASSESSING OFFICER TREATED IT AS INCOME FROM OTHER SOURCES, THEREFORE, IN VIEW OF TRUE DISCLOSURE OF F ACTS, PENALTY IS NOT LEVIABLE. 2.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE ARE RE PRODUCING HEREUNDER THE FACTUAL FINDING RECORDED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) FOR READY REFE RENCE:- 3. FACTS BRIEFLY STATED AS UNDER:- (A) APPELLANT AND HER HUSBAND OWNED AN INHERITED PLOT OF LAND AT PUNE IN WHICH THE APPELLANT AND HER HUSBAND SHRI. RAM ESH SINGHAL HAD 3/4TH AND 1/4TH SHARE. (B) ABOVE LAND WHICH WAS UNDER LAND CEILING WAS SOLD TO MLS. HINDUSTAN BUILDERS (HB) EXECUTING A DEVELOPMENT AGREE MENT DT.3RD MAY, 1988 (AY 1989-90) FOR A TOTAL CONSIDERATIO N OF RS. 2 SMT. VEENA SINGHAL ITA NO.869/MUM/2014 3 LAKHS. THE BUYER (HB) HAD PAID RS. 1,85,000/- ON EXE CUTION OF THE AGREEMENT DT,.3RD MAY, 1988 AND THE BALANCE RS.15,000 /- WAS PAYABLE TO THE OWNER (APPELLANT AND MR. RAMESH SINGHA L) LATER, ON EXECUTION OF CONVEYANCE DEED OF THE SAID PROPERTY. (C) THE PURCHASER OF THE LAND (HB) OBTAINED CLEARANCE UNDER ULC ACT IN 2001 AND STARTED CONSTRUCTION WORK THEREAFTER. (D) M/S. HB APPROACHED APPELLANT VEENA SINGHAL AND S HRI. RAMESH SINGHAL FOR EXECUTION OF FINAL CONVEYANCE DEED IN RES PECT OF PLOT OF LAND IN 2006. (E) IN VIEW OF LONG LAPSE OF TIME, THE OWNERS INSIST ED ON SOME ADDITIONAL CONSIDERATION FOR EXECUTION OF CONVEYANCE DEED. F) ULTIMATELY THE PURCHASER (HB) AGREED TO PAY THE OWN ERS RS.20 LAKHS INSTEAD OF RS.15, 000/- PAYABLE AS PER THE ORIG INAL AGREEMENT DT. 3RD MAY, 1988. (G) ACCORDINGLY THE DEED OF SALE DT.18 OCT, 2006 WAS 'EXECUTED BY SMT. VEENA SINGHAL AND SHRI. RAMESH SINGHAL AND THE SAID PLOT OF LAND WAS CONVEYED TO M/S. (HB). (H) ON EXECUTION OF CONVEYANCE DEED DT.18-10.2006, SMT. VEENA SINGHAL (APPELLANT) RECEIVED RS.15 LAKHS AND SHRI. RA MESH SINGHAL RECEIVED RS.5 LAKHS. 4. THE APPELLANT HAD CONSIDERED THE ADDITIONAL AMOUN T OF RS.15 LAKHS RECEIVED ON EXECUTION OF CONVEYANCE DEED AS LO NG TERM CAPITAL GAIN AND OFFERED FOR TAX ACCORDINGLY. 5. THE LEARNED AO IN ASSESSMENT ORDER ULS.143(3) DT.2. 12.2009 TAXED ADDITIONAL CONSIDERATION RECEIVED BY THE APPELL ANT ON EXECUTION OF CONVEYANCE DEED IN AY 2007-08 I.E. RS. 14,88,750/- AS 'INCOME FROM OTHER SOURCES' INSTEAD OF LONG TERM CAPITA L GAIN DECLARED BY THE APPELLANT IN RETURN OF INCOME (RS. 20 LAKHS REDUCED BY RS.15, 000/- RECOVERABLE AS PER ORIGINAL AGREEMENT D T. 3RD MAY, 1988 = RS.19, 85, 000/- 3/4TH OF RS.19,85, 000/- IS RS.14,88, 750/-). 6. THE APPELLANT HADFILED APPEAL TO CIT(A) WHO CONF IRMED THE ORDER PASSED BY AO AND HELD THAT RS.14,88,750/- WAS TAXAB LE AS 'INCOME FROM OTHER SOURCES' AS AGAINST THE SAID INCOME DECLARED BY THE ASSESSEE IN RETURN OF INCOME AS 'LONG TERM CAPITAL GAI NS'. 7. IN VIEW OF THE ABOVE THE LEARNED AO IN THE ORDER LE VYING PENALTY HELD AS UNDER: ' IN VIEW OF THE ABOVE, I CONCLUDE THAT IN RESPECT O F THE ADDITION CONSIDERED IN THE COMPUTATION OF TOTAL INCOME OF THE ASSESSEE, THE SMT. VEENA SINGHAL ITA NO.869/MUM/2014 4 ASSESSEE HAD FAILED TO OFFER SATISFACTORY EXPLANATIO N AND THAT SUCH EXPLANATION ALSO FAILS TO PASS THE TEST OF BEING BO NA FIDE, HENCE 1 DEEM THAT THE AMOUNT ADDED TO THE TUNE OF RS.14,88, 750/- IN COMPUTING THE OF THE SAID PERSON TO REPRESENT THE IN T HE RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. ACCORDINGLY I PROCEED TO IMPOSE THE PENALTY ULS.271 (L)(C) OF THE ACT WHICH IS COMPUTED AS UNDER:- XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX 11. IT IS FURTHER RESPECTFULLY SUBMITTED THAT SIMILARLY IN THE CASE OF CO-OWNER OF THE SAID LAND SHRI. RAMESH SINGHAL HAVING (L/4TH SHARE IN THE PROPERTY) THE ADDITIONAL AMOUNT RECEIVED FROM M/ S. HB IN AY 2007-08 WAS CONSIDERED IN ORIGINAL ASSESSMENT AS 'INC OME FROM OTHER SOURCES '. HOWEVER, IN THE CASE OF SHRI RAMESH SINGHAL THIS MAT TER WAS TAKEN TO ITAT AND HON'BLE ITAT VIDE ITS ORDER DATED 11.05. 2012 HELD THAT THE ADDITIONAL AMOUNT OF RS.19.85 LAKHS IS TAXABLE AS 'LONG TERM CAPITAL GAINS' NOT AS 'INCOME FROM OTHER SOURCES' AND THE SHARE OFSHRI. RAMESH SINGHAL (L/4TH OF RS.19.85IAKHS RS.4, 96,250/- IS TAXABLE IN HIS HANDS AS LONG TERM CAPITAL GAINS. ' 12. IN VIEW OF ABOVE IT IS RESPECTFULLY SUBMITTED TH AT HON 'BLE ITAT HAVING HELD THAT THE ADDITIONAL AMOUNT RECEIVED IN A Y 2007-08 IS TAXABLE AS LONG TERM CAPITAL GAINS, THERE IS NO INFIRM ITY IN THE APPELLANT HAVING CLAIMED HER 3/4TH SHARE I.E RS.14,8 8,750/- AS LONG TERM CAPITAL GAIN AND AS SUCH THE LEARNED AO BE KINDLY DIRECTED TO CANCEL THE IMPUGNED ORDER LEVYING PENALTY U/S.271 (L)(C) OF RS.5,01,1 13/-.' I HAVE CONSIDERED THE SUBMISSIONS OF THE LEARNED AUTH ORIZED REPRESENTATIVE AND THE ORDER OF THE ASSESSING OFFICER. IT IS SEEN THAT THE ASSESSEE HAD DULY SHOWN ALL FACTS MATERIAL TO THE COMPUTATION OF INCOME, IN THE RETURN FILED BY HER. THE ONLY DIFFERENCE BEING THAT THE IMPUGNED RECEIPT WAS OFFERE D TO TAX AS 'LONG TERM CAPITAL GAIN', WHEREAS THE ASSESSING OFFIC ER HELD IT TO BE 'INCOME FROM OTHER SOURCES'. IT IS ALSO SEEN THAT IN ASSESSEE'S HUSBANDS CASE, WHO IS THE OTHER CO-OWNER OF THE PROPERT Y, THE HON'BLE MUMBAI ITAT HAS HELD THAT SINCE THE MONEY RE CEIVED IN THE CURRENT YEAR ARISES FROM THE TRANSACTION OF TRANSFER OF LAN D, IT HAS TO BE BROUGHT TO TAX UNDER THE HEAD 'CAPITAL GAINS' ONLY AND NOT UNDER THE HEAD 'INCOME FROM OTHER SOURCES'. ALTHOUGH T HE ASSESSEE'S CASE HAS NOT BEEN TAKEN TO THE IT AT, SI NCE THE ISSUE IS IDENTICAL, IT IS IMPLIED THAT THE IMPUGNED RECEIPT I N THE HANDS OF THE ASSESSEE ALSO SHOULD BE BROUGHT TO TAX UNDER THE HEAD 'CAPITAL GAINS' AND NOT UNDER THE HEAD 'INCOME FROM OTHER SOURCE S', WHICH SMT. VEENA SINGHAL ITA NO.869/MUM/2014 5 THE ASSESSEE HAS ALREADY SHOWN IN THE RETURN OF INCOME FILED BY HER. THAT BEING THE CASE, THIS IS NOT A FIT CASE FOR LEVY OF PENALTY UNDER SECTION 271 (L)( C). THE ASSESSING OFFICER IS T HEREFORE DIRECTED TO DELETE THE PENALTY LEVIED IN THIS CASE. THE GROUN D OF APPEAL IS ACCEPTED. 2.3. IF THE OBSERVATION MADE IN THE ASSESSMENT ORD ER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCL USION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSELS, IF KEPT IN JUXTAPOSITION AND ANALYZED, THE FACTS, IN BRIEF, AR E THAT THE ASSESSEE AN INDIVIDUAL FILED HER RETURN OF INCOME D ECLARING INCOME OF RS.12,75,890/- ON 10/05/2007. THE ASSESSM ENT WAS COMPLETED ON 02/12/2009, U/S 143(3) DETERMINING THE TOTAL INCOME AT RS.14,88,290/-. AFTER CONSIDERING T HE CLAIMED DEDUCTION NU/S 80D OF THE ACT, THE NET TAXABLE INCO ME DECLARED IN THE RETURN WAS RS.12,75,890/-, CONSEQUE NTLY, THE LONG TERM CAPITAL GAIN WAS COMPUTED AT RS.12,76,349 /- AND AFTER REDUCING BASIC EXEMPTION OF RS.1,85,000/-, TH E BALANCE TAXABLE LONG TERM CAPITAL GAIN REMAINED AT RS.10,91 ,349/-. THE ASSESSEE PAID TAX AT 20% TOGETHER WITH SURCHARG E AT 10% AND EDUCATION CESS AT 2% WHICH COMES TO RS.2,44,899 /-. THE LONG TERM CAPITAL GAINS OF RS.12,76,349/- WAS C OMPUTED IN CONNECTION WITH SELL OF INHERITED PLOT OF LAND A T PUNE IN WHICH THE ASSESSEE HAD 75% SHARES IN RESPECT OF WHI CH CONVEYANCE DEED WAS EXECUTED DURING FINANCIAL YEAR ENDING 31/03/2004 (A.Y. 2007-08) AND THE ASSESSEE RECEIVED RS.15 LAKHS (75% OF 20 LAKH). AFTER THE DEATH OF SMT. DA YAWATI, THE LAND WAS SOLD TO M/S HINDUSTAN BUILDERS BY WAY OF E XECUTING AN AGREEMENT FOR DEVELOPMENT DATED 03 RD MAY, 1998. THE SMT. VEENA SINGHAL ITA NO.869/MUM/2014 6 ASSESSING OFFICER LEVIED PENALTY ON 29/03/2011 BY A SSESSING THE INCOME AS INCOME FROM OTHER SOURCES IN PLACE OF CLAIMED LONG TERM CAPITAL GAIN. THIS STAND OF THE ASSESSING OFFICER WAS AFFIRMED BY THE LD. COMMISSIONER OF INC OME TAX (APPEALS) IN QUANTUM PROCEEDINGS. NOW, QUESTION ARI SES, WHETHER PENALTY IS LEVIABLE U/S 271(1)(C) OF THE AC T OR RIGHTLY DELETED BY THE LD. COMMISSIONER OF INCOME TAX (APPE ALS). UNDER THE FACTS, NARRATED HEREINABOVE, IT MAY OR MA Y NOT BE A GOOD CASE FOR QUANTUM ADDITION BUT CERTAINLY NOT FOR IMPOSING PENALTY U/S 271(1)(C) AS WAS HELD BY HONB LE APEX COURT IN CIT VS RELIANCE PETRO PRODUCTS LTD. 322 IT R 158 (SC) BY HOLDING THAT A MERE MAKING OF CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO F URNISHING INACCURATE PARTICULARS, THEREFORE, PENALTY IS NOT L EVIABLE. RESPECTFULLY FOLLOWING THE DECISION FROM HONBLE AP EX COURT, WE FIND NO INFIRMITY IN THE CONCLUSION DRAWN BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS). THE APPEAL OF THE REVENUE IS, THEREFORE, DISMISSED. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 01/10/2015. SD/ - (RAMIT KOCHAR) SD/ - (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER $ % MUMBAI; ) DATED : 06/10/2015 SMT. VEENA SINGHAL ITA NO.869/MUM/2014 7 F{X~{T? P.S/. .. %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. +,-. / THE APPELLANT 2. /0-. / THE RESPONDENT. 3. 1 1 $ 2# ( +, ) / THE CIT, MUMBAI. 4. 1 1 $ 2# / CIT(A)- , MUMBAI 5. 45 /# , 1 +,' + 6 , $ % / DR, ITAT, MUMBAI 6. 7! % / GUARD FILE. / BY ORDER, 04,# /# //TRUE COPY// / (DY./ASSTT. REGISTRAR) , $ % / ITAT, MUMBAI