Sri Nitin Kumar Shah, Hyderabad V. ACIT, Circle-1(2), Hyderabad

ITA 870/HYD/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69781 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 27-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T DIVAKAR PRASAD
• Assessee Lawyers: LAXMINIVAS SHARMA
• Keywords: Cost of acquisition; Difference of opinion; Revised return
• Section: 54F; 54; 2

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA.NO.870 & 872/HYD/2013 ASSESSMENT YEAR 2005-2006 SRI NITIN KUMAR SHAH VS. ACIT, CIRCLE 1 (2) HYDERABAD 500 001 HYDERABAD PAN AFVPS4805D APPELLANT RESPONDENT APPELLANT BY : SHRI LAXMI NIVAS SHARMA (A.R.) RESPONDENT BY : SHRI T. DIVAKAR PRASAD (DR) DATE OF HEARING : 10.09.2013 DATE OF PRONOUNCEMENT : 10.09.2013 ORDER PER SMT. ASHA VIJAYARAGHAVAN, J.M. : THESE APPEALS ARE PREFERRED BY THE ASSESSEE IS DIR ECTED AGAINST THE ORDER PASSED BY THE CIT(A)-II, HYDERABAD DATED 15 .02.2013 AND PERTAINS TO THE ASSESSMENT YEAR 2005-2006. 2. ITA.NO.870/HYD/2013 : THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL WORKING AS MANAG ING DIRECTOR IN M/S. DEEPAK TRANSPORT AGENCY, FILED RETURN OF INCOM E FOR THE ASSESSMENT YEAR 2005-06 DISCLOSING A TOTAL INCOME O F RS.51,000/-. INFORMATION WAS RECEIVED FROM ITO, WARD 6(3), HYDER ABAD INTIMATING THE ASSESSING OFFICER THAT THE ASSESSEE ALONG WITH OTHER CO-OWNERS PURCHASED AND SOLD A PROPERTY AT BANJARA HILLS, HYDERABAD FOR RS.1,95,00,000/- ON 27.02.2004 AND 30 .11.2004 RESPECTIVELY AND THE SAID PROPERTY WAS PRIMARILY PU RCHASED TO AVAIL EXEMPTION UNDER SECTION 54F OF I.T. ACT, 1961 AND T HAT INCOME HAS ESCAPED ASSESSMENT ON ACCOUNT OF CAPITAL GAINS BY SELLING T HE PROPERTY BEFORE THE STIPULATED TIME AS PER THE PROV ISIONS OF 2 SECTION 54 OF I.T. ACT. ACCORDINGLY, THE ASSESSMEN T WAS REOPENED RECORDING THE REASONS FOR REOPENING U/S. 148 ON 3L. 03.2010. THE ASSESSEE IN RESPONSE TO THE SAID NOTICE FILED A RETURN OF INCOME ON 24.12.2010 DISCLOSING TOTAL INCOME OF RS. 29,00, 850/-. DURING THE RE-ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE SOLD HOUSE PROPERTY OF W HICH HE WAS THE CO-OWNER HAVING 20% SHARE ON 28.05.2003. THE T OTAL PROCEEDS REALIZED ON THE ABOVE PROPERTY WAS RS.1,67 ,44,140/-. DURING THE ASSESSMENT YEAR 2004-05 THE ASSESSEE ALO NG WITH THE OTHER CO-OWNERS PURCHASED A HOUSE PROPERTY IN 8-2-7 03/9, ROAD NO.12, BANJARA HILLS, HYDERABAD AND CLAIMED EXEMPTI ON OF RS.31,41,007/- UNDER SECTION 54 OF THE INCOME-TAX A CT, 1961. DURING THE F.Y. 2004-05 RELEVANT TO A.Y. 2005-06 TH E ASSESSEE ALONG WITH OTHER CO-OWNERS HAS SOLD THE ABOVE SAID PROPERTY FOR RS. 1,95,00,000/ - OUT OF WHICH HIS SHARE WORKED OU T TO RS.32,50,000/ -. AS PER THE PROVISIONS OF SECTION 5 4 IF THE NEW ASSET IS TRANSFERRED WITHIN A PERIOD OF THREE YEARS FROM THE DATE OF ITS ACQUISITION, FOR THE PURPOSE OF COMPUTING THE C APITAL GAIN ON THIS TRANSFER THE COST OF ACQUISITION OF THIS HOUSE PROPERTY WOULD BE REDUCED BY THE AMOUNT OF CAPITAL GAIN EXEMPTED E ARLIER U/S.54, AND THE CAPITAL GAIN ARISING ON THIS TRANSF ER WOULD BE A SHORT TERM CAPITAL GAIN. SINCE THE ASSESSEE SOLD TH E PROPERTY WITHIN 3 YEARS OF REINVESTMENT, THE ASSESSING OFFIC ER CALCULATED SHORT TERM CAPITAL GAIN AT RS.32,50,000/-. 3. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). THE CIT(A) RELINED ON THE DECISION OF HONBLE ITAT, HYDERABAD BENCH IN THE CASE OF SRI MOHD.MAJID KHAN & OTHERS VS. ITO (ITA NO. 499/HYD/2009 FOR A.Y. 2002-03) WHICH RELIED ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF PRAK ASH VS. ITO (312 ITR 40) (BORN) (NAGPUR BENCH) WHEREIN IT WAS H ELD THAT FOR QUALIFYING DEDUCTION U/S.54 OR 54F IT WAS NECESSARY TO HAVE THE INVESTMENT IN THE RESIDENTIAL HOUSE MADE IN THE NAM E OF THE 3 ASSESSEE ONLY. THE LEARNED CIT(A), THEREFORE, HELD THAT THE ASSESSEE THOUGH PURCHASED PROPERTY WITHIN ONE YEAR OF SALE O F THE ORIGINAL PROPERTY, DISPOSED OFF THE NEW PROPERTY WITHIN A PE RIOD OF THREE YEARS FROM THE DATE OF ITS ACQUISITION AND CAPITAL GAINS EXEMPTION CANNOT BE ALLOWED IN RESPECT OF PROPERTY PURCHASED IN THE NAME OF A PERSON OTHER THAN THE ASSESSEE AND THEREFORE, THE CAPITAL GAINS EXEMPTION ALLOWED EARLIER SHOULD BE WITHDRAWN AS PER THE PROVISIONS OF SECTION 54F SUB-SECTION 1 [II]. ACCOR DINGLY, THE LEARNED CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 4. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. WE FIND THAT THE TRIBUNAL IN THE CASE OF OTHER CO-OWNER SHRI GIR ISH DHAROD IN ITA.NO.389/HYD/2013 DATED 04.07.2013 ON SIMILAR FAC TS HELD AS FOLLOWS : 12. THE PROVISIONS OF S.54 SPEAK OF INVESTMENT IN RESIDENTIAL HOUSE PROPERTY, THAT TOO ONLY BY AN ASSESSEE, BEING AN IN DIVIDUAL OR AN HINDU UNDIVIDED FAMILY. THE STATUTORY PROVISION AS SUCH DOES NOT INCLUDE ASSESSEE'S WIFE OR ASSESSEE'S MINOR CHILD REN. HOWEVER, THE COURTS HAVE TAKEN A LIBERAL INTERPRETA TION OF THE STATUTORY PROVISIONS AND EXTENDED THE EXEMPTION AVA ILABLE UNDER S.54 TO THE ASSESSEE, EVEN IN THE CASES OF INVESTME NTS IN THE NAMES OF SPOUSE AND MINOR CHILDREN OF THE ASSESSEE. HOWEVER, SUCH LIBERAL INTERPRETATION CANNOT BE EXTENDED BEYO ND A POINT SO TO COVER INVESTMENTS MADE IN THE NAMES OF OTHER BLO OD RELATIONS OR OTHER RELATIONS. IN THIS VIEW OF THE MATTER, WE FIND NO INFIRMITY IN THE IMPUGNED ORDERS OF THE REVENUE AUTHORITIES. WE ACCORDINGLY UPHOLD THE DISALLOWANCE MADE AND REJECT THE GROUNDS OF THE ASSESSEE IN THIS APPEAL. 5. RESPECTFULLY FOLLOWING THE DECISION IN THE CASE O F THE CO-OWNER SHRI GIRISH DHAROD FOR THE ASSESSMENT YEAR 2005-2006, WE DISMISS THE ASSESSEES APPEAL. 4 6. ITA.NO.872/HYD/2013 : IN THIS CASE, THE ASSESSING OFFICER WHILE INITIATING THE PENALTY PROCEEDINGS BROUGHT TO THE NO TICE OF THE ASSESSEE THAT HE IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 54 A ND HENCE, ADVISED THE ASSESSEE TO FILE REVISED RETURN. ON THE ADVICE OF T HE TAX CONSULTANT, THE ASSESSEE FILED REVISED RETURN ON THE ASSURANCE THAT PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) WOULD NOT BE INITIATED BY TH E DEPARTMENT. THE ASSESSEE FILED REVISED RETURN ON 24.12.2010 DISCLOS ING TOTAL INCOME OF RS.29,00,850/-. THE ASSESSING OFFICER PASSED THE OR DER ON 30.12.2010 TAXING THE INCOME RETURNED. THE ASSESSING OFFICER IN ITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT AGAI NST WHICH THE ASSESSEE APPEALED BEFORE THE CIT(A). 7. THE LEARNED CIT(A) RELYING ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. USHA INTERNATIONAL LTD . IN ITA. NO. 1696/2006 DATED 05.11.2012 AMONG OTHER DECISIONS HELD THAT TH E ASSESSEE HAS DELIBERATELY CONCEALED INCOME AND FURNISHED INACCURA TE PARTICULARS THROUGHOUT THE INCOME TAX PROCEEDINGS AND HENCE THE ACTION OF THE ASSESSING OFFICER IN LEVYING THE PENALTY UNDER SECTIO N 271(1)(C) IS JUSTIFIED. 8. AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US. THE LEARNED COUNSEL FOR THE ASSESSEE, STATED THAT THE ASSESSEE HAD NOT CONCEALE D OR SUBMITTED ANY PARTICULARS AND WAS UNDER THE BONAFIDE IMPRESSION T HAT THE EXEMPTION WOULD BE AVAILABLE UNDER SECTION 54F. THE LEARNED C OUNSEL FOR THE ASSESSEE, PLEADED THAT THERE WAS AN ERROR IN THE INTERPRETATI ON OF PROVISIONS OF SECTION 54F BY THE ASSESSEE WHO WAS UNDER THE IMPRESSION THA T THE SECTION DOES NOT REQUIRE THE NEW RESIDENTIAL PROPERTY TO BE PURCHASED IN THE NAME OF THE ASSESSEE ONLY. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT HE BONAFIDELY BELIEVED THAT HIS PROPERTY CAN BE PURCHASE D IN THE NAME OF RELATIVE NAMELY NEPHEW / SISTER-IN-LAW AS THE SECTIO N MERELY STATES THAT THE ASSESSEE SHOULD HAVE PURCHASE/CONSTRUCT A RESIDENTI AL HOUSE. WE FIND THAT THERE IS A DIFFERENCE OF OPINION IN THE INTERPRETAT ION OF LAW AND THE ASSESSEE IS MISCONCEIVED WITH RESPECT TO THE ELIGIBILITY OF E XEMPTION UNDER SECTION 54F. HOWEVER, SINCE ALL THE PARTICULARS HAVE BEEN R EVEALED BY THE ASSESSEE, THERE IS NO CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS FOR THE LEVY 5 OF PENALTY UNDER SECTION 271(1)(C) TO BE ATTRACTED. FURTHER, WE ALSO OBSERVE THAT THE CRITERIA FOR LEVYING PENALTY IS ON A DIFFERE NT FOOTING AND PENALTY IS NOT TO BE AUTOMATICALLY CONFIRMED ON THE GROUND THAT THE ASSESSEE HAS LOST HIS CASE ON MERITS. HENCE, RELYING ON THE DECISION O F CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. 322 ITR 158 WE DELETE THE PENALT Y OF RS.10,28,091/-. ACCORDINGLY, APPEAL OF THE ASSESSEE IS ALLOWED. 9. IN THE RESULT, ITA.NO.870/HYD/2013 OF THE ASSESSE E IS DISMISSED AND ITA.NO.872/HYD/2013 OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10.09.2013. SD/- SD/- (CHANDRA POOJARI) (SMT. ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD DATE 10 TH SEPTEMBER, 2013. VBP/- COPY TO 1. SHRI NITIN KUMAR SHAH, LAXMINIWASNEETH & CO. 402, 4 TH FLOOR, MOGHULS COURT, BASHEERBAGH, HYDERABAD 500001. 2. ACIT, CIRCLE 1 (2), HYDERABAD. 3. CIT(A) - II, HYDERABAD. 4. CIT - I , HYDERABAD 5. DR B BENCH