NARINJAN SINGH BAJAJ, MUMBAI V. ITO 4(1)3,

ITA 8784/MUM/2011

• Counselvise Citation: 878419914 RSA 2011
• Duration Of Justice: 2 year(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 09-01-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 28-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 54; 54F

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI . , , , BEFORE SHRI D. KARUNAKARA RAO , ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUD ICIAL MEMBER . / ITA NO. 8784 /MUM./ 2011 ( / ASSESSMENT YEAR : 2004 05 ) SHRI NARINJAN SINGH BAJAJ C/O MR. HARI S. RAHEJA 207, NEELKANTH, 98 MARINE DRIVE MUMBAI 400 002 .. / APP ELLANT V/S I NCOME TAX OFFICER WARD 4(1)(3), MUMBAI .... / RESPONDENT ./ PERMANENT ACCOUNT NUMBER AA CPB2018B / ASSESSEE B Y : MR. HARI S. RAHEJA / REVENUE BY : MR . SURENDRA KUMAR / DATE OF HEARING 0 9 .0 1 .201 4 / DATE OF ORDE R 15.01.2014 / ORDER , / PER AMIT SHUKLA , J.M. THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESSEE, CHALLENGI NG THE IMPUGNED ORDER DATED 25 TH NOVEMBER 2011, PASSED BY THE LEARNED COMMISSIONER (APPEALS) VIII, MUMBAI, IN RELATION TO PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ) FOR THE ASSESSMENT YEAR 2004 05 . THE SOL E ISSUE RAISED BY THE ASSESSEE IS, WHETHER OR NOT THE LEARNED SHRI NARINJA N SINGH BAJAJ 2 COMMISSIONER (APPEALS) WAS JUSTIFIED IN CONFIRMING THE PENALTY OF ` 55,56,000, LEVIED UNDER SECTION 271(1)(C) BY THE ASSESSING OFFICER. 2 . FACTS IN BRIEF : THE ASSESSEE WAS THE OWNER OF A FL AT IN CUFFE PARADE, MUMBAI, WHICH WAS PURCHASED IN THE YEAR 1979 IN HIS INDIVIDUAL NAME. THE SAID FLAT WAS SOLD IN THE ASSESSMENT YEAR 2004 05. THE ASSESSEE, IN HIS RETURN OF INCOME, DECLARED LONG TERM CAPITAL GAIN OF ` 5,86,95,290. THE SAID LONG TERM CAPITAL GA IN WAS CLAIMED AS EXEMPT UNDER SECTION 54 AS THE SAID AMOUNT WAS INVESTED BY HIM IN PURCHASE OF NEW RESIDENTIAL FLAT. THE ASSESSING OFFICER, ON A PERUSAL OF PURCHASE DEED, NOTED THAT THE NEWLY PURCHASED FLAT WAS IN THE NAME OF THE ASSESSEE HIMSELF , HIS WIF E MRS. SURENDER KAUR BAJAJ, HIS SON MR. SANDEEP SINGH BAJAJ AND HIS DAUGHTER IN LAW MRS. HARPREET KAUR BAJAJ. THE ASSESSEE, IN RESPONSE TO THE SHOW CAUSE NOTICE AS TO WHY THE DEDUCTION SHOULD BE RESTRICTED TO 1/4 TH , SUBMITTED THAT THE NAME OF HIS WIFE, SON AND DAUGHTER IN LAW WERE ONLY FOR THE NAME SAKE AND NO INVESTMENT WHATSOEVER WERE MADE BY THESE PERSONS. SINCE THE ASSESSEE WANTED SMOOTH AND AUTOMATIC SUCCESSION AFTER HIS DEMISE WITHOUT NECESSARILY GOING FOR PROBATE O F WILL, HE HAS INCLUDED THE NAMES OF HIS FAMILY MEMBERS. THE ENTIRE INVESTMENT HAS BEEN MADE BY THE ASSESSEE ONLY. IN SUPPORT OF HIS CONTENTION, BANK STATEMENT OF THE ASSESSEE AS WELL AS THE BANK STATEMENT OF HIS FAMILY MEMBERS WERE ALSO FILED. THE ASSESSEES EXPLANATION HAS BEEN DEALT BY TH E ASSESSING OFFICER IN HIS ASSESSMENT ORDER AT PAGE 4 AND 5. HOWEVER, THE ASSESSING OFFICER REJECTED THE ASSESSEES CONTENTION ON THE GROUND THAT THE NEW PROPERTY HAS BEEN PURCHASED IN THE JOINT NAME OF FOUR PERSONS, THEREFORE, THE ASSESSEE IS ONLY ENTITLE D FOR EXEMPTION U /S 54 TO THE EXTENT OF 1/4 TH ONLY. 3 . DURING THE COURSE OF FIRST APPELLATE PROCEEDINGS, THE ASSESSEES PLEA WAS REJECTED. IN THE SE COND APPEAL, THE TRIBUNAL RELYING UPON THE SHRI NARINJA N SINGH BAJAJ 3 DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN PRAKASH V/S IT O, [2008] 173 TAXMAN 311 (BOM.) DECIDED THE ISSUE AGAINST THE ASSESSEE. IN THIS CASE, BEFORE THE BOMBAY HIGH COURT WAS THAT THE ASSESSEE HAD PURCHASED A PROPERTY IN THE NAME OF HIS ADOPTED SON WITH A CLEAR INTENTION TO TRANSFER THE PROPERTY TO HIS ADOPTED SON. THE HIGH COURT HELD THAT ON THE DAY ONE, THE INTENTION OF THE ASSESSEE WAS TO TRANSFER THE PROPERTY IN THE NAME OF THE ADOPTED SON, THEREFORE, EXEMPTION UNDER SECTION 54F WILL NOT BE APPLICA BLE . THE TRIBUNAL, BASED ON THE RATIO LAID DOWN BY THE HIGH C OURT, VIDE ORDER DATED 27 TH JANUARY 2010, CONFIRMED THE FINDINGS OF THE LEARNED COMMISSIONER (APPEALS). IN THE PENALTY PROCEEDINGS, THE ASSESSING OFFICER SOLELY GOING BY THE FINDINGS GIVEN IN THE QUANTUM PROCEEDINGS, LEVIED PENALTY UNDER SECTION 271(1)(C) REJECTING THE ASSESSEES EXPLANATION THAT THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT WAS TOTALLY DIFFERENT FROM THE FACTS OF THE ASSESSEES CASE AND THAT THE ASSESSEES APPEAL HAS ALREADY BEEN ADMITTED BY THE JURISDICTIONAL HIGH COURT AGAINST T H E ORDER OF THE TRIBUNAL. RELIANCE WAS PLACED BY THE ASSESSEE ON VARIOUS OTHER DECISIONS WHEREIN ON SIMILAR FACTS, EXEMPTION UNDER SECTION 54 WAS GIVEN. THE LEARNED COMMISSIONER (APPEALS) ALSO HAS CONFIRMED THE PENALTY AFTER RELYING UPON THE DECISION OF THE HON'BLE SUPREME COURT IN UNION OF INDIA V/S DHARMENDRA TEXTILES PROCESSORS, [2008] 306 ITR 277 (SC). 4 . BEFORE US, THE LEARNED COUNSEL SUBMITTED THAT THE ENTIRE INVESTMENT FOR THE PURCHASE OF THE NEW FLAT WAS MADE BY THE ASSESSEE ONLY WHICH HAS NOT BEEN DI SPUTED BY ANY OF THE AUTHORITIES. ONCE THAT IS SO, THERE IS NO REQUIREMENT UNDER THE LAW THAT PROPERTY SHOULD BE ONLY IN THE NAME OF THE ASSESSEE TO AVAIL THE EXEMPTION. THE NAME OF THE FAMILY PERSONS WERE INCLUDED ONLY FOR THE PURPOSE THAT AFTER ASSESSEE S DEATH THERE SHOULD BE SMOOTH SUCCESSION OF THE PROPERTY AMONGST HIS WIFE AND SON . HE FURTHER SUBMITTED THAT THE DECISION OF SHRI NARINJA N SINGH BAJAJ 4 THE BOMBAY HIGH COURT IN PRAKASH (SUPRA) WAS RENDERED ON ENTIRELY DIFFERENT FACTS AS IN THAT CASE, THE PROPERTY WAS BOUGHT EXCLUSI VELY IN THE NAME OF THE ADOPTED SON WITH A CLEAR INTENTION TO TRANSFER THE SAID PROPERTY IN THE NAME OF ADOPTED SON. IN THE PRESENT CASE, THERE IS NO SUCH INTENTION TO TRANSFER THE ENTIRE FLAT IN THE NAME OF HIS WIFE, SON AND DAUGHTER IN LAW. MOREOVER, NOW THERE ARE CATENA OF DECISIONS BY THE VARIOUS HIGH COURTS , WHEREIN , IT HAS BEEN HELD THAT IF THE INVESTMENT HAD BEEN MADE BY THE ASSESSEE, THEN IT DOES NOT MAKE ANY DIFFERENCE IF THE PURCHASED PROPERTY IS IN THE NAME OF HIS WIFE OR SON OR ANY OTHER FAMILY MEMBERS. FOR THE SAKE OF READY REFERENCE, HE RELIED UPON FOLLOWING CASE LAWS: I ) CIT V/S KAMAL WAHAL, [2013] 30 TAXMAN.COM 34 (DEL.); II ) DIT V/S MRS. JENNEFER BHIDE, [2011] 15 TAXMAN.COM 82 (KAR.); & III ) CIT V/S RAVINDRA KUMAR ARORA, [2012] 342 ITR 38 (DEL.) 5 . APA RT FROM THE ABOVE, HE SUBMITTED THAT THERE ARE VARIOUS TRIBUNAL DECISIONS ALSO ON THIS POINT, A COPY OF WHICH HAVE BEEN PLACED IN THE PAPER BOOK. 6 . HE, THUS, SUBMITTED THAT EVEN THOUGH IN THE QUANTUM PROCEEDINGS, THIS ISSUE HAS BEEN DECIDED AGAINST THE ASS ESSEE, HOWEVER, IN THE PENALTY PROCEEDINGS, THE SAME INFERENCE CANNOT BE DRAWN AS NOW THERE ARE VARIOUS HIGH COURT A S TRIBUNAL DECISIONS WHICH ARE IN FAVOUR OF THE ASSESSEE ESPECIALLY WHEN THE DECISION OF THE BOMBAY HIGH COURT HAS RELIED UPON BY THE TRIBUN AL IS PURELY DISTINGUISHABLE ON FACTS. THUS, THE PENALTY CONFIRMED BY THE LEARNED COMMISSIONER (APPEALS) SHOULD BE DELETED. 7 . ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY RELYING UPON THE ORDER OF THE LEARNED COMMISSIONER (APPEALS), S UBMITTED THAT ONCE THE TRIBUNAL HAS HELD THAT UNDER SUCH FACTS AND SHRI NARINJA N SINGH BAJAJ 5 CIRCUMSTANCES, THE DECISION OF THE BOMBAY HIGH COURT IS APPLICABLE, THEN IT HAS TO BE INFERRED THAT THE CLAIM MADE BY THE ASSESSEE IS UNSUSTAINABLE IN LAW AND, THEREFORE, PENALTY LEVIED BY THE ASSESSING OFFICER AND CONFIRMED BY THE LEARNED COMMISSIONER (APPEALS) IS JUSTIFIED. 8 . WE HAVE HEARD THE RIVAL CONTENTION, PERUSED THE RELEVANT FINDINGS OF THE AUTHORITIES BELOW AND THE MATERIAL AVAILABLE ON RECORD. IN THE PRESENT CASE, EVEN THOUGH THE D URING THE QUANTUM PROCEEDINGS, THE ISSUE OF CLAIM OF EXEMPTION OF LONG TERM CAPITAL GAIN UN DER SECTION 54 HAS BEEN DECIDED AGAINST THE ASSESSEE, HOWEVER, IN THE PENALTY PROCEEDINGS, THE SAME NEEDS TO BE EXAMINED AFRESH AS TO WHETHER THE EXPLANATION GIVEN B Y THE ASSESSEE IS BONAFIDE OR NOT. IT IS A SETTLED PRINCIPLE OF LAW THAT THE PENALTY PROCEEDINGS ARE SEPARATE AND DISTINCT FROM THE QUANTUM PROCEEDINGS. THE FINDINGS GIVEN IN THE ASSESSMENT / QUANTUM ORDER CANNOT BE A FINAL WORD OR CONCLUSIVE SO FAR AS PEN ALTY PROCEEDINGS ARE COVERED AND UPON THE PLEAS OR EXPLANATION WHICH CAN BE TAKEN AT THE PENALTY PROCEEDING STAGE AS THE ASSESSEE MAY GIVE SOME EXPLANATION RELYING UPON THE SAME MATERIAL TO PROVE THAT HE IS NOT GUILTY OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. RIGHT FROM THE BEGINNING , THE ASSESSEE HAS BEEN CONTENDING THAT THE ENTIRE INVESTMENT IN THE PURCHASE OF NEW FLAT HAS BEEN MADE EXCLUSIVELY BY THE ASSESSEE AND IT IS ONLY FOR THE NAME SAKE THAT THE NAMES OF THE IMMEDIA TE FAMILY MEMBERS HAVE BEEN MADE AS A JOINT CO OWNER AND THAT TOO FOR THE PURPOSE OF SMOOTH SUCCESSION OF THE PROPERTY AFTER HIS DEATH. THIS FACT HAS NOT BEEN DISPUTED. THERE IS NO MATERIAL ON RECORD TO SHOW THAT THE ASSESSEES INTENTION HAD BEEN TO TRANSF ER THE NEW FLAT IN THE NAME OF HIS WIFE, SON OR DAUGHTER IN LAW. IN THE PENALTY PROCEEDINGS, THE ASSESSEE HAS DISTINGUISHED THE DECISION OF BOMBAY HIGH COURT ON THE FACTS AND HAS ALSO RELIED UPON THE OTHER DECISIONS WHICH WERE IN FAVOUR OF THE SHRI NARINJA N SINGH BAJAJ 6 ASSESSEE ON SIMILAR SET OF FACTS. AS POINTED OUT BY THE LEARNED COUNSEL THERE ARE VARIOUS DECISIONS OF HIGH COURTS , WHEREIN , THEY HAVE HELD THAT EXEMPTION UNDER SECTION 54 / 54F WOULD BE AVAILABLE TO THE ASSESSEE IF THE HOUSE HAS BEEN PURCHASED BY THE ASSESSEE AND IT IS NOT NECESSARY THAT THE HOUSE SHOULD BE PURCHASED EXCLUSIVELY IN THE NAME OF THE ASSESSEE ONLY. VARIOUS DECISION S WHICH HAVE BEEN CITED ABOVE ARE SQUARELY APPLICABLE IN THE CASE OF THE ASSESSEE ALSO . THE PENALTY HAS BEEN LEVIED AND CONFIRMED BY THE AUTHO RITIES BELOW MAINLY RELYING UPON THE FINDINGS GIVEN IN QUANTUM PROCEEDINGS WITHOUT ESTABLISHING THAT THE ASSESSEES EXPLANATION IS FALSE OR NOT BONAFIDE AT THE TIME OF FILING OF RETURN OF INCOME . A SSESSEES CLAIM IS SUPPORTED BY VARIOUS JUDICIAL PRONOUNCEM ENTS, THEREFORE, IT CANNOT BE HELD THAT THE ASSESSEES CLAIM IS NOT BONAFIDE. THUS, ON THE FACTS OF THE ASSESSEES CASE, WE DO NOT FIND THAT THE PENALTY UNDER SECTION 271(1)(C) CAN BE LEVIED IN CASE OF THE ASSESSEE AFTER INVOKING THE PROVISIONS OF EXPLANAT ION 1 TO SECTION 271(1)(C). ACCORDINGLY, WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE LEARNED COMMISSIONER (APPEALS) AND DELETE THE PENALTY CONFIRMED BY HIM . THUS, THE GROUND RAISED BY THE ASSESSEE IS ALLOWED. 9 . 8. IN THE RESULT, ASSESSEES APPEAL IS TREATED AS ALLOWED. 15 TH JANUARY 2014 ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH JANUARY 2014 SD/ - . D. KARUNAKARA RAO ACCOUNTANT MEMBER SD/ - AMIT SHUKLA JUDICIAL MEMBER MUMBAI, DATED : 15 TH JANUARY 2014 SHRI NARINJA N SINGH BAJAJ 7 / COPY OF THE ORDER FORWARDED TO : ( 1 ) / THE ASSESSEE ; ( 2 ) / THE REVENUE; ( 3 ) ( ) / THE CIT(A ) ; ( 4 ) / THE CIT, MUMBAI CITY CONCERNED ; ( 5 ) , , / THE DR, ITAT, MUMBAI ; ( 6 ) / GUARD FILE . / TRUE COPY / BY ORDER . / PRADEEP J. CHOWDH URY / SR. PRIVATE SECRETARY / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI