Ms. Harjinder Dhiman, New Delhi V. DCIT, Chandigarh

ITA 882/CHANDI/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95542 (ITAT-CHANDIGARH)
• Duration Of Justice: 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-08-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 20-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUNIL VERMA
• Assessee Lawyers: A K JINDAL; RATTAN KAUR
• Keywords: Business income; Share purchase agreement; Bonafide belief; Period of limitation; Additional evidence; Question of law; Cost of acquisition; Difference of opinion; Revised return
• Section: 54; 11; 92C; 54F; 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS.ANNAPURNA MEHROTRA, ACCOUNTANT MEMBER ITA NO. 961/CHD/2014 ASSESSMENT YEAR: 2008-09 THE ACIT, VS MS. HARJINDER DHIMAN, CIRCLE 3(1), SCO 1132-33, CHANDIGARH. SECTOR 22-B, CHANDIGARH. PAN: AACCC4558L & ITA NO. 148/CHD/2013 ASSESSMENT YEAR: 2008-09 THE ACIT, VS MRS HARJINDER DHIMAN, CIRCLE 3(1), SCO 186-187, IST FLOOR, CHANDIGARH. SECTOR 17, CHANDIGARH. PAN: AACCC4558L & ITA NO. 882/CHD/2014 ASSESSMENT YEAR: 2008-09 MS. HARJINDER DHIMAN, VS THE DCIT, SCO 186-187, 1 ST FLOOR, CIRCLE 3(1), SECTOR 17-C, CHANDIGARH. CHANDIGARH. (NOW N: 163,PANCHSHEEL PARK, NEW DELHI. PAN: AACCC4558L (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI SUNIL VERMA ASSESSEE BY : SHRI A.K.JINDAL & MS. RATTAN KAUR DATE OF HEARING : 25.08.2015 DATE OF PRONOUNCEMENT : 10.09.2015 2 O R D E R PER BHAVNESH SAINI,JM THIS ORDER SHALL DISPOSE OF ALL THE ABOVE APPEALS F OR ASSESSMENT YEAR 2008-09 PERTAINING TO THE SAME ASSE SSEE. 2. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF AUTHORITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECORD. THE A PPEALS ARE DECIDED AS UNDER. ITA 148/2013 ( DEPARTMENTAL APPEAL) 3. THIS APPEAL OF DEPARTMENT IS FILED AGAINST THE O RDER OF LD. CIT(APPEALS) CHANDIGARH DATED 30.11.2012 FOR ASSESSMENT YEAR 2008-09. 4. ON GROUND NO. 1, REVENUE CHALLENGED THE ORDER OF LD. CIT(APPEALS) IN DELETING THE DISALLOWANCE OF LOSS O N SHARES/SECURITIES MADE BY ASSESSING OFFICER AS THE ASSESSEE FAILED TO PRODUCE THE STATEMENT OF DEMAT ACCOUNT. 5. THE FACTS OF THE ISSUE ARE THAT THE ASSESSEE HAD ADJUSTED SHORT TERM CAPITAL LOSS OF RS. 1,41,33,145 /- AGAINST LONG TERM CAPITAL GAIN. THE SHORT TERM CAP ITAL LOSS WAS ON ACCOUNT OF INVESTMENT IN PORTFOLIO MANAGEMENT SCHEME (HEREINAFTER REFERRED TO AS 'PMS) OF M/S BNP PARIBAS INVESTMENT SERVICES INDIA (P) LTD. (HEREINAFTER REFERRED TO AS 'M/S BNP'). THE ASSESSI NG 3 OFFICER CALLED FOR INFORMATION FROM M/S BNP. M/S BN P SUPPLIED PROFIT AND LOSS ACCOUNT AND BALANCE SHEET OF PMS ACCOUNT OF THE ASSESSEE. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE LOSS CLAIMED COULD BE VERIFIED FROM T HE DEMAT STATEMENT ONLY AND SO HE ASKED THE ASSESSEE T O GIVE A COPY OF DEMAT STATEMENT, WHICH WAS NOT GIVEN BY HER. ACCORDING TO THE ASSESSING OFFICER, ONLY THE D EMAT ACCOUNT COULD AUTHENTICATE THE PURCHASE AND SALE OF SHARES BY THE ASSESSEE AND SO HE DISALLOWED THE LOS S CLAIMED OF RS. 1,41,33,145/-. 6. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASS ESSEE HAD SUFFERED LOSS OF RS. 1.41 CRORES, DETAILS OF WHICH WERE AS PER AUDIT FINANCIAL STATEMENT OF ASSE SSEE'S PORTFOLIO WITH M/S BNP. IT HAS ALSO BEEN SUBMITTE D THAT THE ASSESSEE HAD USED PORTFOLIO MANAGEMENT SERVICES FROM M/S BNP UNDER WHICH SECURITIES WERE HELD IN A POOL ACCOUNT BY THE PORTFOLIO MANAGER FOR ITS CLIENTS AN D THERE WAS NO REQUIREMENT FOR MAINTAINING A SEPARATE DEMAT ACCOUNT. RELIANCE HAS BEEN PLACED BY THE ASSESSE E ON THE DECISION OF HON'BLE ITAT, PUNE BENCH IN THE CAS E OF M/S ARA TRADING AND INVESTMENTS (P) LTD. (47 SOT 17 2). 7. THE LD. CIT(APPEALS) CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND MATERIAL ON RECORD, FOLLOWING THE DECISION OF ITAT PUNE BENCH IN THE CASE OF M/S ARA TRADING AND INVESTMENTS (P) LTD. (SUPRA) DELETED TH E ADDITION AND ALLOWED APPEAL OF THE ASSESSEE. HIS F INDINGS 4 IN PARA 3.3 TO 3.3.2 OF THE APPELLATE ORDER ARE REP RODUCED AS UNDER : 3 I HAVE CONSIDERED THE SUBMISSION OF THE LD. COUNSEL AND GONE THROUGH THE AUDITED FINANCIAL STATEMENT OF THE PMS PORTFOLIO OF THE APPELLANT WITH M/ S BNP. M/ S BNP H AD ITS PMS OPERATIONS THROUGH A 'POOL BANK ACCOUNT AND 'POOL SE CURITIES ACCOUNT'. THE SAID POOL BANK ACCOUNT AND POOL SECU RITIES ACCOUNT WERE OPENED AND MAINTAINED BY M/S BNP WITH BNP PARIBAS BANK, WHICH IS A SCHEDULED COMMERCIAL BANK AN D IS A DEPOSITORY PARTICIPANT OF NSDL. THE SHARES PURCHASE D/SOLD WERE RECEIVED AND DELIVERED THROUGH 'POOL SECURITIES A CCOUNT. M/S BNP HAS CONFIRMED THAT ALL THE TRANSACTIONS IN TH E ACCOUNT WERE DELIVERY BASED. THE ASSESSING OFFICER DISALLOW ED THE SHORT TERM CAPITAL LOSS CLAIMED BY THE APPELLANT ON THE GROUND THAT THE LOSS WAS VERIFIABLE ONLY IF THE DEMAT ACCO UNT OF THE APPELLANT WAS ON RECORD, BUT THE REASON GIVEN BY THE ASSESSING OFFICER FOR DISALLOWING THE LOSS IS NOT CORRECT, SINCE UNDER THE PMS, THE SHARES REMAIN IN THE POOL ACCOUNT AND ARE NOT TRANSFERRED TO THE DEMAT ACCOUNT OF THE PERSON CONC ERNED. 3.3.1 I HAVE ALSO GONE THROUGH THE DECISION OF THE IT AT, PUNE BENCH IN THE CASE OF M/S ARA TRADING AND INVESTMENTS (P) LTD. (SUPRA), CITED BY THE LD. COUNSEL, IN WHICH IT HAS BEEN HEL D: 'ON THE BASIS OF THE ABOVE DISCUSSIONS AND CONSIDER ING THE ACTIVITY OF THE ASSESSEE ONCE THE ADMITTED POSIT ION IS THAT THE ASSESSEE HIMSELF HAS NOT TRADED THE SHARES AND FOR THE ALLEGED ACTIVITY ENTIRELY DEPENDENT UPON PO RTFOLIO MANAGER APPOINTED TO LOOK AFTER ITS INVESTMENTS THE N IN SUCH PECULIAR CIRCUMSTANCES IS IT LEGALLY JUSTIFIABLE TO HOLD THAT THE ASSESSEE CAN BE SAID TO BE A DEALER IN SHAR ES. IN SUCH A SCENARIO THEIR INVESTMENT IS NEVER TERMED A S A TRADING IN A DAY TO DAY SHARE TRANSACTION BY THE ME MBER OF MUTUAL FUND. IN THE PRESENT CASE AS WELL THE OBJECT IS TO MAXIMIZE THE VALUE OF THE PORTFOLIO HELD BY THE 5 COMPANY AS THE STATUS OF THE COMPANY AS WELL UNDISPUTEDLY DECLARED AS AN INVESTMENT COMPANY.---------- -------------------------------------------------------------------------------------- ONE MORE ASPECT AS EMERGED IS THAT THE TRANSACTIONS WERE ON DELIVERY BASIS AND NOT SPECULATIVE IN NATUR E I.E. WITHOUT TAKING THE DELIVERY. IN THE PRESENT CASE, T HE BADLA TRANSACTION AND THE SPECULATIVE TRANSACTIONS HAVE BE EN SPECIFICALLY FORBIDDEN AS PER THE MUTUAL AGREEMENT, NEVERTHELESS THE SIGNIFICANT ASPECT IS THAT THE DEC ISION TO BUY AND SELL WAS NOT DEPENDENT UPON INVESTOR I.E. THE ASSESSEE-COMPANY BUT ULTIMATELY THE CHOICE AND THE DECISION WAS ENTIRELY OF THE PORTFOLIO MANAGER. THIS DISTINCTION OF SELF GOVERNED BUSINESS ACTIVITY VIZ-A -VIZ ACTIVITY OF SOMEONE ELSE WHO IS AT THE HELM OF AFFAI RS CAN BE A VITAL SIGNIFICANCE. THE SUBTLE DISTINCTION SUC H INTRICATE ISSUE. IN THIS SITUATION WHEN NEITHER THE PURCHASE NOT SALES ARE DECIDED BY THE ASSESSEE BUT FOR THAT PURPO SE THE PORTFOLIO MANAGER IS ASSIGNED, THEN THE TERM 'DE ALING' CANNOT BE ATTACHED WITH THE ASSESSEE. FACTS HAVE REVEALED THAT THE PORTFOLIO MANAGER IS EMPOWERED TO DECIDE WHAT IS TO BE PURCHASED AND WHAT IS REQUIRED TO BE SOLD IN THE MARKET AS ALSO THE TIME OF TRANSACTION , WHICH IS A CORE FACTOR IN THIS BUSINESS: IS ALTOGETHE R UNDER THE CONTROL AND SUPERVISION OF THE PORTFOLIO MANAGER. AS WE HAVE SEEN FROM THE CASE LAW CITED SUP RA MERELY SELLING AND BUYING BY ITSELF DOES NOT MEAN THE BUSINESS ACTIVITY OF SYSTEMATIC PURCHASE AND SALE, NEVERTHELESS IT HAS NOT BEEN DONE DIRECTLY BY THE ASSESSEE IN THE PRESENT CASE.' 3.3.2 THE FACTS OF THE APPELLANTS CASE ARE IDENTICAL TO THE F ACTS OF THE CITED CASE AND SO THE RATIO OF THIS DECISION IS S QUARELY APPLICABLE TO THE CASE OF THE APPELLANT. HENCE, THE AS SESSING OFFICER WAS NOT RIGHT IN DISALLOWING THE SHORT TERM C APITAL LOSS OF 6 RS. 1,41,33,145/- CLAIMED BY THE APPELLANT. GROUND OF APPEA L NO. 2 IS ALLOWED. 8. THE LD. DR RELIED UPON ORDER OF THE ASSESSING OF FICER AND SUBMITTED THAT NO INFORMATION WAS SUPPLIED TO T HE ASSESSING OFFICER AND ADDITIONAL EVIDENCE WAS PRODU CED BEFORE LD. CIT(APPEALS), THEREFORE, MATTER MAY BE REMANDED TO THE ASSESSING OFFICER. 9. ON THE OTHER HAND, LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE AUTHORITIES BELOW AND REFERRED TO PARA 1.29 OF THE ASSESSMENT ORDER I N WHICH THE ASSESSING OFFICER CALLED FOR THE INFORMAT ION FROM M/S BNP PARIBAS INVESTMENT SERVICES INDIA (P) LTD. AND THAT THEY PRODUCED COMPLETE DETAILS BEFORE ASS ESSING OFFICER. THE LD. COUNSEL FOR THE ASSESSEE, THEREFO RE, SUBMITTED THAT DEMAT ACCOUNT IS NOT REQUIRED FOR MU TUAL FUNDS/PORTFOLIO. PB-72 IS PROFIT & LOSS ACCOUNT GIV ING COMPLETE DETAILS ON ACCOUNT OF LOSS ON SALE OF SHAR ES. COMPLETE DETAILS AND CERTIFICATE OF M/S BNP PARIBAS INVESTMENT SERVICES INDIA (P) LTD. IS FILED AT PB-2/I WITH COMPLETE DETAILS OF CAPITAL REGISTER IN RESPEC T OF THE ASSESSEE AND BANK PASS-BOOK OF M/S BNP PARIBAS INVESTMENT SERVICES INDIA (P) LTD. TO SHOW THAT ALL THE TRANSACTIONS WERE CARRIED OUT ACTUALLY BY THE PORTF OLIO MANAGER. PB-75 IS CERTIFICATE ISSUED BY M/S BNP PA RIBAS INVESTMENT SERVICES INDIA (P) LTD. EXPLAINING THAT IN TERMS OF SEBI (PORTFOLIO MANAGERS) REGULATIONS 1993 WHICH WAS INFORCE FOR ASSESSMENT YEAR UNDER APPEAL 7 PRESCRIBING THEREIN THAT THE PORTFOLIO MANAGER MAY HOLD THE SECURITIES BELONGING TO THE PORTFOLIO ACCOUNT I N ITS OWN NAME ON BEHALF OF HIS CLIENT ONLY AS PER CONTRACT. PB-76 IS ALSO A LETTER OF M/S BNP PARIBAS INVESTMENT SERV ICES INDIA (P) LTD. EXPLAINING THAT AS PER NORMAL INDUST RY PRACTICE PREVALENT, ASSESSEE HAD AN ACCOUNT WITH TH EM AND ALL PMS OPERATIONS OF ALL FUNDS AND SECURITIES WERE CONDUCTED THROUGH POOL BANK ACCOUNT AND POOL SECURI TY ACCOUNT. M/S BNP PARIBAS BANK IS SCHEDULED COMMERC IAL BANK AND IS ALSO A DEPOSITORY PARTICIPANT OF NATION AL SECURITIES DEPOSITORY LTD. (NSLD). ALL THE SHARES PURCHASED/SOLD ARE RECEIVED AND DELIVERED RESPECTIV ELY THROUGH THE POOL SECURITIES ACCOUNT. 10. THE LD. COUNSEL FOR THE ASSESSEE, THEREFORE, SU BMITTED THAT IN VIEW OF THE ABOVE, THE OBJECTION OF THE ASS ESSING OFFICER WAS WHOLLY INCORRECT AND LD. CIT(APPEALS) O N PROPER APPRECIATION OF FACTS AND MATERIAL ON RECORD , CORRECTLY DELETED THE ADDITION. 11. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE. THE ASSESSEE PRODUCED COMPLETE DETAILS BEFORE ASSESSING OFFICER. THE ASSESSING OFFICER HAS ALSO OBTAINED INFORMATION FROM M/S BNP PARIBAS INVESTMENT SERVICE S INDIA (P) LTD. UNDER SECTION 133(6) OF THE INCOME T AX ACT. THE PORTFOLIO MANAGER ALSO FILED DETAILED REPLY BEF ORE ASSESSING OFFICER. THE ASSESSEE ALSO PRODUCED PROF IT & LOSS ACCOUNT AND OTHER DETAILS TO SHOW THAT GENUINE 8 TRANSACTIONS WERE CONDUCTED THROUGH POOL SECURITIES ACCOUNT OF PORTFOLIO MANAGER. THE COMPLETE DETAILS THROUGH AUDITED FINANCIAL STATEMENT OF PMS PORTFOLI O OF THE ASSESSEE WITH M/S BNP PARIBAS INVESTMENT SERVIC ES INDIA (P) LTD. WERE PRODUCED ON RECORD WHICH SHOWS THAT M/S BNP PARIBAS INVESTMENT SERVICES INDIA (P) LTD. HAD ITS PMS OPERATIONS THROUGH A POOL BANK ACCOUNT AND POOL SECURITIES ACCOUNT. THE SAID POOL BANK ACCOUNT AND POOL SECURITIES ACCOUNT WERE OPENED AND MAINTAINED BY M /S BNP WITH BNP PARIBAS BANK WHICH IS A SCHEDULED COMMERCIAL BANK AND IS A DEPOSITORY PARTICIPANT OF NSDL. SEBI REGULATIONS NOTED ABOVE ALSO SUPPORT EXPLANATI ON OF ASSESSEE. ALL THE TRANSACTIONS WERE RECEIVED AND DE LIVERED THROUGH POOL SECURITIES ACCOUNT. M/S BNP HAS CONFI RMED THAT ALL THE TRANSACTIONS IN THEIR ACCOUNT ON BEHAL F OF THE ASSESSEE WERE DELIVERY BASED. THE ASSESSING OFFICE R DISALLOWED CLAIM OF ASSESSEE BECAUSE DEMAT ACCOUNT WAS NOT FILED BUT REASON GIVEN BY THE ASSESSING OFFICER WAS INCORRECT BECAUSE THERE WAS NO REQUIREMENT TO MAINT AIN SEPARATE DEMAT ACCOUNT BY ASSESSEE. THE LD. CIT(APP EALS) RIGHTLY RELIED UPON DECISION OF PUNE BENCH IN THE C ASE OF M/S ARA TRADING & INVESTMENTS (P) LTD. FOR THE PURP OSE OF DELETING THE ADDITION. NO MATERIAL IS PRODUCED BEF ORE US TO CONTRADICT FINDING OF FACT RECORDED BY LD. CIT(A PPEALS). THUS, ASSESSEE HAS BEEN ABLE TO PROVE THAT IT HAS I NCURRED LOSS ON SHARES/SECURITIES HANDLED BY PORTFOLIO MANA GER. NO ERRORS HAVE BEEN POINTED OUT IN THE ORDER OF THE LD. CIT(APPEALS). WE, THEREFORE, DO NOT FIND ANY JUSTIF ICATION 9 TO INTERFERE WITH THE ORDER OF LD. CIT(APPEALS) IN DELETING THE ADDITION. THE GROUND NO. 1 OF APPEAL OF REVENU E IS THUS, DISMISSED. 12. ON GROUND NO. 2, REVENUE CHALLENGED THE ORDER O F LD. CIT(APPEALS) IN DELETING THE DISALLOWANCE OF DEDUCT ION UNDER SECTION 54F OF THE INCOME TAX ACT AS THE ASSE SSEE FAILED TO PRODUCE EVIDENCE FOR THE DEPOSIT MADE IN THE CAPITAL GAIN SCHEME ACCOUNT ON OR BEFORE 31.07.2008 OR BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME. 13. THE BRIEF FACTS OF THE ISSUE ARE THAT THE ASS ESSEE HAD SOLD HER ENTIRE SHAREHOLDING OF 25000 SHARES IN M/S SPAN CONSULTANTS (P) LTD. FOR RS. 9,62,67,773/- DUR ING THE YEAR UNDER CONSIDERATION. IN THE REVISED COMPUT ATION OF INCOME FILED BEFORE THE ASSESSING OFFICER, THE A SSESSEE REDUCED AN AMOUNT OF RS. 44,44,328/-, THE UNREALIZE D SALE PROCEEDS, FROM TOTAL SALE CONSIDERATION. THE S UMMARY OF COMPUTATION OF CAPITAL GAIN IS AS UNDER: AMOUNT (IN RS.) TOTAL SALE CONSIDERATION 9,62,67,773/- LESS : UNREALISED PROCEEDS 44,44,328/- NET SALE PROCEEDS 9,18,24,645/- LESS : INDEX COST OF ACQUISITION 32,79,429/- CAPITAL GAIN 8,85,45,216/- LESS : DEDUCTION U/S 54 F 5,00,53,249/- ----------------- LONG TERM CAPITAL GAIN 3,84,91,967/- ----------------- 10 14. REGARDING UNREALISED SALE PROCEEDS OF RS. 44,44,328/-, THE ASSESSEE HAD SUBMITTED THAT THIS A MOUNT WAS HELD IN THE SHAPE OF BANK GUARANTEE AS PER THE TERMS OF SHARE PURCHASE AGREEMENT AND WAS RECEIVED IN THE ACCOUNTING YEAR 2008-09 AND WAS SHOWN IN THE RETURN OF INCOME OF A.Y. 2009-10. THE ASSESSING OFFICER WAS N OT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE AND HELD THAT THE ASSESSEE WAS TO RECEIVE AMOUNT OF RS. 9,62,67,773/- AS FULL AND FINAL PAYMENT AND SO IT W AS TO BE TAKEN AS SALE CONSIDERATION. 15. THE ASSESSING OFFICER ANALYZED THE PROVISION S OF SECTION 54F OF THE ACT AND HELD THAT THE SAID DEDUC TION WAS NOT AVAILABLE TO THE ASSESSEE FOR THE FOLLOWING REASONS: (A) THE SALE PROCEEDS OF SHARES WERE DEPOSITED IN THE CAPITAL GAINS SCHEME ON 05.02.2009, WHICH WAS BEYOND THE DA TE ON WHICH THE APPELLANT WAS SUPPOSED TO HAVE INVESTED I N THE CAPITAL GAINS SCHEME I.E. 31.07.2008. (B) THE ASSESSING OFFICER ASKED THE APPELLANT FOR D ETAILS OF PROPERTIES AND LISTED OUT THE RESIDENTIAL PROPERTIE S HELD BY THE APPELLANT IN PARA 1.20 OF THE ASSESSMENT ORDER AS UNDER : (I) N- 163, PANCHSHEEL PARK, NEW DELHI (II) FLAT NO. C-5, SECOND FLOOR, BRINDAVAN APA RTMENTS, HOSUR ROAD, BANGALORE (III) 92-C, MADANGIR VILLAGE (LALDORA), NEW DELHI SHOPS IN PARA 1.20 OF THE ASSESSMENT ORDER, THE ASSESSING O FFICER HAS CONCLUDED THAT THE APPELLANT WAS NOT ELIGIBLE FOR DED UCTION U/S 11 54F OF THE ACT BECAUSE SHE WAS HOLDING THREE RESIDEN TIAL PROPERTIES AS ON DATE OF TRANSFER OF SHARES. (C) THE APPELLANT HAD MADE INVESTMENTS OF SALE PROC EEDS IN THE RESIDENTIAL PROPERTY - B-361, DEFENCE COLONY, N EW DELHI. AS PER ASSESSING OFFICER, THE INVESTMENT WAS NOT MADE WITHIN THE TIME LIMIT PRESCRIBED IN SECTION 54F OF THE ACT. 16. THE LD. CIT(APPEALS), CONSIDERING THE SUBMISSIO NS OF THE ASSESSEE AND MATERIAL ON RECORD, ALLOWED THIS G ROUND OF APPEAL OF THE ASSESSEE PARTLY. HIS FINDINGS IN APPELLATE ORDER IN PARAS 4.2 TO 4.2.9 ARE REPRODUCED AS UNDER : 4.2 I HAVE GONE THROUGH THE ASSESSMENT ORDER AND TH E SUBMISSIONS FILED BY THE APPELLANT. IT IS SEEN THAT THE ASSESSING OFFICER HAS MENTIONED IN PARA 1.20 OF THE ASSESSMENT ORDER THAT AS ON THE DATE OF TRANSFER OF SHARES THE APPELLANT WAS HAVING THREE PROPERTIES, BUT THE PROPERTY - SHOPS AT 92-C, MADANGIR VILLAGE, NEW DELHI (SR. NO. (III) OF PARA 4.1.2(B)] ABOVE IS NOT A RESIDENTIAL PROPERTY. IN FACT , THE ASSESSING OFFICER HAS HIMSELF MENTIONED THAT THESE AR E SHOPS. 4.2.1 REGARDING THE PROPERTY AT BANGALORE, THE A PPELLANT HAS SUBMITTED THAT THE PROPERTY WAS_ RENTED OUT TO M/S SPAN CONSULTANTS (P) LTD. AND IT WAS NEVER OCCUPIED FOR RESIDENTIAL PURPOSES. THE APPELLANT HAS ALSO SUBMITTED THAT SHE GOT IT CONVERTED TO COMMERCIAL PROPERTY IN THE YEAR 2002 AN D IN SUPPORT OF HER CONTENTION; SHE HAS FILED A COPY OF AN ELECTRICITY BILL ISSUED BY BANGALORE ELECTRICITY SUPPLY COMPANY LTD. THE APPELLANT HAS ALSO SUBMITTED THAT THIS EVIDEN CE COULD NOT BE FILED BEFORE THE ASSESSING OFFICER BECAUSE TH E SAID PROPERTY AT BANGALORE WAS SOLD MUCH BEFORE THE SCRU TINY PROCEEDINGS OF THE CASE. IT HAS ALSO BEEN SUBMITTED THAT IT WAS NOT POSSIBLE TO GET THIS EVIDENCE EASILY AND TH EREFORE THIS EVIDENCE SHOULD ADMITTED UNDER RULE 46A(L)(C) OF THE INCOME TAX RULES 1962. THE SAID ADDITIONAL EVIDENCE WAS 12 FORWARDED TO THE ASSESSING OFFICER FOR COMMENTS AND SHE HAS SUBMITTED THAT THE IMPUGNED PROPERTY IS A RESIDENTI AL PROPERTY AND COMMERCIAL ACTIVITIES COULD NOT HAVE B EEN PERMITTED FROM THIS PROPERTY. THE ASSESSING OFFICER HAS ALSO SUBMITTED THAT NO PROOF OF COMMERCIAL ACTIVITY EXCE PT ELECTRICITY BILL WAS FILED AND SO IT SHOULD NOT BE ACCEPTED. 4.2.2 THE APPELLANT HAS EXPLAINED AS TO WHY IMPUG NED EVIDENCE COULD NOT BE FILED BEFORE THE ASSESSING OFF ICER. AS THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FROM PROD UCING THIS EVIDENCE BEFORE THE ASSESSING OFFICER, WHICH IS RELEVAN T TO THIS GROUND OF APPEAL, IT HAS TO BE ADMITTED. MOREOVER, T HIS IS AN ELECTRICITY BILL ISSUED BY ELECTRICITY SUPPLY COMPANY AND IS A GENUINE DOCUMENT. THE APPELLANT HAD PURCHASED THE IMPU GNED PROPERTY AT BANGALORE IN JUNE, 2002 AND AS PER LETT ER NO. AEE/S2/AAO/1477/305 DATED 02.06.2002 OF ASSISTA NT EXECUTIVE ENGINEER (ELE) OF BANGALORE ELECTRICITY S UPPLY COMPANY LTD, THE ELECTRICITY TARIFF OF THIS PROPERTY WAS CH ANGED TO COMMERCIAL WITH EFFECT FROM THE YEAR 2002. IN FACT, VIDE THIS LETT ER, HE HAS VERY CLEARLY CONVEYED TO THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-10(1), BANGALORE, IN RESPONSE TO HIS QUERY AS T O WHETHER THE IMPUGNED PROPERTY WAS A RESIDENTIAL OR COMMERCI AL PROPERTY, AS UNDER: 'FLAT NO. C-5, BRINDAVAN APARTMENTS, BANGALORE IS A COMMERCIAL PROPERTY. WHEN THE INSTALLATION WAS FIRST SERVICED ON 03.02.2000, IT WAS SERVICED UNDER DOMESTIC TARIFF. AFTERWARDS, ON THE REQUEST OF THE CONSUMER, THE TAR IFF IS CHANGED TO COMMERCIAL FROM THE YEAR 2002.' 4.2.3 FROM THE ABOVE, IT IS EVIDENT THAT THE APPELLANT HA D GOT CHANGED THE ELECTRICITY TARIFF OF THIS PROPERTY TO CO MMERCIAL, SINCE THE AUTHORITIES WOULD NOT HAVE PERMITTED CARRYING ON OF COMMERCIAL ACTIVITY FROM THE RESIDENTIAL PREMISES. THUS, THE PROPERTY AT BANGALORE WAS THOUGH A FLAT, BUT WAS BE ING USED FOR COMMERCIAL PURPOSES AND HENCE CANNOT BE TREATED AS A RESIDENTIAL PROPERTY. ACCORDINGLY, FOR THE PURPOS ES OF SECTION 54F OF THE ACT ALSO, THE PROPERTY CANNOT BE COUNTED TOWARDS 13 RESIDENTIAL PROPERTY. THUS, AS ON THE DATE OF TRANS FER OF SHARES, THE APPELLANT WAS IN POSSESSION OF ONLY ONE RESIDEN TIAL PROPERTY AS AGAINST THREE PROPERTIES MENTIONED IN PARA 1.20 OF THE ASSESSMENT ORDER. 4.2.4 THE ASSESSING OFFICER HAS ALSO MENTIONED IN THE ASSESSMENT ORDER THAT THE APPELLANT HAD NOT DEPOSIT ED THE SALE PROCEEDS IN THE CAPITAL GAINS SCHEME BEFORE THE DUE DATE MENTIONED IN SECTION 54F OF THE ACT. THE APPELLANT HAS RELIED UPON THE DECISIONS OF HON'BLE PUNJAB AND HARYANA HI GH COURTS IN THE CASE OF M/S JAGRITI AGGARWAL (245 CTR 629) A ND HON'BLE KARNATAKA HIGH COURT IN THE CASE OF FATHIMA BAI (32 DT K 243). A PERUSAL OF THESE JUDGEMENTS REVEALS THAT THEIR LORD SHIPS HAVE HELD THAT TIME LIMIT FOR DEPOSIT IN CAPITAL GAINS S CHEME IS TO BE TAKEN AS DUE DATE OF FILING OF RETURN OF INCOME U/S 139(4) OF THE ACT. IN THE INSTANT CASE, THE SALE PROCEEDS WERE DE POSITED IN THE CAPITAL GAINS SCHEME ON 05.02.2009 WHICH IS WELL BEFORE THE DATE OF FILING OF RETURN U/S 139(4) OF THE ACT AND SO THE APPELLANT HAS NOT VIOLATED THIS CONDITION. HENCE, IT IS HELD THAT THE SALE PROCEEDS WERE DEPOSITED WITHIN TIME LIMIT IN THE CAPITAL GAIN SCHEME. 4.2.5 THE ASSESSING OFFICER HAS ALSO MENTIONED IN THE ASSESSMENT ORDER THAT THE RESIDENTIAL PROPERTY WAS NOT ACQUIRED WITHIN THE TIME LIMIT PRESCRIBED IN SECTION 54F OF THE ACT. IN THE INS TANT CASE, THE SHARES WERE SOLD ON 18.7.2007 AND PAYMENTS FOR PURC HASE OF NEW ASSET WERE MADE AS UNDER : DATE AMOUNT (IN RS.) 19.06.2009 50,00,000.00 06.07.2009 1,50,00,000.00 06.07.2009 2,00,00,000.00 06.07.2009 (STAMP DUTY) 18,00,000.00 05.02.2010 25,00,000.00 05.02.2010 25,00,000.00 4.2.6 THE APPELLANT HAS SUBMITTED THAT AS THE PRO PERTY WAS PURCHASED WITHIN THE STIPULATED PERIOD SHE WAS ELIGIB LE FOR DEDUCTION U/S 54F OF THE ACT. THE APPELLANT HAS RELIED UPON THE DECISIONS OF 14 HON'BLE KARNATAKA HIGH COURT IN THE CASE OF SAMBAND AM UDHAY KUMAR (206 TAXMAN 150) AND OF HON'BLE ITAT, CHANDIGA RH IN THE CASE OF SMT. RAJNEET SANDHU [133 TTJ (UO) 64)]. IT HAS BEEN HELD IN THESE JUDGEMENTS THAT THE INTENTION OF THE LEGISLATUR E IS TO ENCOURAGE INVESTMENT IN THE ACQUISITION OF RESIDENTIAL HOUSE AND COMPLETION OF CONSTRUCTION OR OCCUPATION IS NOT TH E REQUIREMENT OF LAW. IT HAS ALSO BEEN HELD THAT AFTER MAKING THE ENTIRE P AYMENT, MERELY BECAUSE A REGISTERED SALE DEED HAD NOT BEEN E XECUTED BEFORE THE STIPULATED PERIOD, THE BENEFIT OF DEDUCT ION U/S 54 OF THE ACT COULD NOT BE DENIED. 4.2.7 IN THE INSTANT CASE, THE APPELLANT HAD ENTERED INTO AN AGREEMENT TO SELL ON 08.07.2009 FOR PURCHASE OF THE IMPU GNED PROPERTY I.E. FIRST FLOOR OF D-361, DEFENCE COLONY, NEW DELHI FROM FOUR PERSONS. THE APPELLANT HAD MADE PAYMENT OF RS. 4,00,0 0,000/- + STAMP DUTY OF RS. 18,00,000/- WITHIN TWO YEARS OF THE SALE OF SHARES AND SO SHE WAS ENTITLED FOR BENEFIT OF RS. 4 ,18,00,000/- UNDER SECTION 54F OF THE ACT. THE BENEFIT OF THE PAYMENT MADE OF RS. 50,00,000/- ON 05.02.2010 CANNOT BE GIVEN TO THE AP PELLANT, SINCE THIS PAYMENT IS BEYOND TWO YEARS FROM THE SALE OF SHARES. 4.2.8 REGARDING UNREALISED VALUE OF SALE PROCEEDS OF RS. 44,44,328/-, IT HAS BEEN SUBMITTED THAT THIS AMOUNT WAS RETAINED BY THE PURCHASER AND IT HAS BEEN OFFERED F OR TAXATION IN THE NEXT YEAR AND SO IS NOT TAXABLE IN THIS YEAR, B UT THIS ARGUMENT CANNOT BE ACCEPTED BECAUSE THIS AMOUNT IS PART OF SALE PROCEEDS, INCOME FROM WHICH IS TAXABLE AS CAPITAL GAIN. SINCE, CAPITAL GAIN IS BEING ASSESSED IN THIS YEAR AND SO THESE PROCEEDS, EVEN THOUGH UNREALISED, HAVE TO BE TAKEN IN TO ACCOUNT IN THIS YEAR. 4.2.9 IN VIEW OF THE ABOVE, IT IS HELD THAT THE APPELLANT IS ELIGIBLE FOR DEDUCTION U/ S 54F IN RESPECT OF INVEST MENT IN THE RESIDENTIAL HOUSE TO THE TUNE OF RS. 4,18,00,000/- O NLY AND THE UNREALISED SALE PROCEEDS HAVE TO BE INCLUDED IN THE TOTAL SALE PROCEEDS OF THE SHARES. THE ASSESSING OFFICER IS DIRE CTED TO RECOMPUTE DEDUCTION U/S 54F OF THE ACT AND TAX CAPIT AL GAIN 15 ACCORDINGLY. GROUND OF APPEAL NO. 3 IS PARTLY ALLOWED.. 17. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE P ARTIES AND PERUSED THE FINDINGS OF AUTHORITIES BELOW. THE LD. DR RELIED UPON ORDER OF THE ASSESSING OFFICER AND SUBM ITTED THAT PROPERTIES AT MUMBAI (PB-8) ARE RESIDENTIAL HO USES. ELECTRICITY BILL FOR COMMERCIAL PROPERTY WOULD NOT PROVE IT TO BE COMMERCIAL PROPERTY. CAPITAL GAIN AMOUNT WAS NOT DEPOSITED ON TIME, ALLOWED UNDER SECTION 139(1) OF THE INCOME TAX ACT. ON THE OTHER HAND, LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE AUTHORITIES BELOW AND SUBMITTED THAT MADANGIR VILLA GE PROPERTIES ARE SHOPS AND ASSESSING OFFICER HAS MENT IONED MUMBAI FLATS AS OFFICE FLATS IN THE ASSESSMENT ORDE R. BANGALORE PROPERTY WAS COMMERCIAL PROPERTY WHICH IS PROVED FROM THE ELECTRICITY BILL AND REPORT OF THE EXECUTIVE ENGINEER. ADDITIONAL EVIDENCES WERE ADMITTED BY LD . CIT(APPEALS), COPIES OF WHICH ARE FILED AT PB-92 TO 102. THE LD. CIT(APPEALS) WAS SATISFIED WITH EXPLANATION OF THE ASSESSEE. THE SALE PROCEEDS WERE DEPOSITED IN THE CAPITAL GAIN SCHEME ON 05.02.2009 WHICH WAS WELL BEFORE THE DATE OF FILING OF THE RETURN UNDER SECTION 139(4) OF THE ACT AND RELIED UPON DECISION OF THE HON'BLE PUNJAB & HARYAN A HIGH COURT IN THE CASE OF CIT V JAGRITI AGGARWAL 33 9 ITR 610. HE HAS ALSO RELIED UPON DECISION OF THE HON'B LE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS J AGTAR SINGH CHAWLA IN ITA 71 OF 2012 DATED 20.03.2013 IN WHICH THE DEPARTMENTAL APPEAL WAS DISMISSED AS THE 16 ASSESSEE HAS PROVED THE PAYMENT OF SUBSTANTIAL AMOU NT OF SALE CONSIDERATION FOR PURCHASE OF RESIDENTIAL PROP ERTY WITHIN THE EXTENDED PERIOD OF LIMITATION FOR FILING OF THE RETURN. 18. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVE NUE. THE LD. CIT(APPEALS) CONSIDERED THE ENTIRE FACTUAL THINGS IN HIS FINDINGS IN WHICH NO INFIRMITY HAS BEEN POIN TED OUT BY THE LD. DR. THE LD. DR SUBMITTED THAT MUMBAI PROPERTIES ARE RESIDENTIAL HOUSES, HOWEVER, ASSESSI NG OFFICER IN THE ASSESSMENT ORDER HAS MENTIONED THE MUMBAI PROPERTIES TO BE OFFICE FLAT AND EVEN NO ADV ERSE VIEW HAVE BEEN TAKEN BY THE ASSESSING OFFICER IN TH E ASSESSMENT ORDER. THEREFORE, WHATEVER CASE IS NOT M ADE OUT BY THE ASSESSING OFFICER, COULD NOT BE MADE OUT BY THE DEPARTMENTAL REPRESENTATIVE. FURTHER, IN THE GROUND OF APPEAL, THE REVENUE HAS CHALLENGED THE FINDINGS OF THE LD. CIT(APPEALS) ONLY ON THE GROUND THAT ASSESSEE FAILE D TO PRODUCE EVIDENCE FOR THE DEPOSIT MADE IN THE CAPITA L GAIN SCHEME ACCOUNT ON OR BEFORE 31.07.2008 OR BEFORE DU E DATE OF RETURN. THE ASSESSEE, HOWEVER, HAS FILED C OPIES OF THE BANK CERTIFICATE AND COPY OF THE PASS BOOK IN T HE PAPER BOOK FROM PAGES 77 TO 82 TO SHOW THAT INVESTM ENT IN THE CAPITAL GAIN SCHEME HAVE BEEN MADE AS PER TH E FINDING OF LD. CIT(APPEALS) ON 05.02.2009 AND ASSES SING OFFICER ALSO NOTED SAME FACT IN PARA 1.16 OF ASSESS MENT ORDER. THE LD. CIT(APPEALS) HAS RIGHTLY RELIED UPON 17 DECISION OF THE JURISDICTIONAL PUNJAB & HARYANA HIG H COURT IN THE CASE OF MS. JAGRITI AGGARWAL (SUPRA) I N WHICH IT WAS HELD THAT, DATE OF FURNISHING OF THE RETURN FOR THE PURPOSE OF CLAIMING EXEMPTION ON ACCOUNT OF CAPITAL GAIN COULD BE UPTO THE DATE UNDER SECTION 139(4) OF THE INCOME TAX ACT. THIS ISSUE IS, THEREFORE, COVERED IN FAVOUR OF THE ASSESSEE AND NO INTERFERENCE IS CALLED FOR ON THIS MATTER. 18(I) WE MAY ALSO NOTE HERE THAT THE LD. CIT(APPE ALS) ADMITTED THE ADDITIONAL EVIDENCE UNDER RULE 46A OF THE IT RULES. THE RECORD REVEALED THAT LD. CIT(APPEALS) R EFERRED THE MATTER TO THE ASSESSING OFFICER FOR FILING THE REMAND REPORT AND ONLY AFTER GIVING OPPORTUNITY OF BEING H EARD TO THE ASSESSING OFFICER, ADMITTED THE ADDITIONAL EVID ENCE. THE ASSESSING OFFICER ALSO FILED REMAND REPORT BEFO RE LD. CIT(APPEALS). THE FINDING OF THE LD. CIT(APPEALS) HAVE NOT BEEN CHALLENGED IN THE GROUND OF APPEAL BY THE REVE NUE, THEREFORE, ADMISSION OF ADDITIONAL EVIDENCE BY LD. CIT(APPEALS) AT APPELLATE STAGE REMAINED UNCHALLENG ED AND CANNOT BE AGITATED NOW IN THE APPEAL. IT MAY A LSO BE NOTED HERE THAT EVEN THOUGH THE FINDINGS GIVEN ON M ERIT HAVE NOT BEEN CHALLENGED BY THE REVENUE DEPARTMENT IN THE PRESENT APPEAL, BUT WE FIND THAT LD. CIT(APPEAL S) CORRECTLY NOTED THAT PROPERTIES AT MADANGIR VILLAGE (DELHI) ARE SHOPS AND FURTHER THE PROPERTY AT BANGALORE WAS COMMERCIAL PROPERTY WHICH IS ALSO CERTIFIED BY ASSI STANT EXECUTIVE ENGINEER, IN HIS LETTER DATED 02.06.2002. SINCE FINDING OF FACTS RECORDED BY THE LD. CIT(APPEALS) H AVE NOT 18 BEEN CHALLENGED THROUGH ANY EVIDENCE OR MATERIAL ON RECORD AND NO SPECIFIC GROUNDS OF APPEAL HAVE BEEN RAISED TO CHALLENGE THE FINDING OF FACT RECORDED BY LD. CIT(APPEALS), NO INTERFERENCE IS CALLED FOR IN THE MATTER. THE LD. CIT(APPEALS) HAS ALSO CONSIDERED AND DISCUS SED WITH REGARD TO PURCHASE OF THE PROPERTY WITHIN THE TIME PRESCRIBED UNDER THE ACT AND FOUND THAT PART PAYMEN TS HAVE BEEN MADE WITHIN THE STIPULATED PERIOD AND AS SUCH, CORRECTLY GIVEN BENEFIT OF THE SAME BY RELYING UPON DECISION OF THE KARNATAKA HIGH COURT AND ORDER OF I TAT CHANDIGARH BENCH. THE DECISION OF THE HON'BLE PUNJ AB & HARYANA HIGH COURT IN THE CASE OF JAGTAR SINGH CHAW LA (SUPRA) ALSO APPLY IN THE CASE OF THE ASSESSEE. 19. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES, AND FINDING OF FACT RECORDED BY THE LD. CIT(APPEALS), WE DO NOT FIND ANY MERIT IN THIS GROU ND OF APPEAL OF THE REVENUE, THE SAME IS ACCORDINGLY DISM ISSED. 20. IN THE RESULT, DEPARTMENTAL APPEAL IS DISMISSED . ITA 961/CHD/2014 (DEPARTMENTAL APPEAL) 21. THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS) CHANDIGARH DATED 14.08.2014 FOR ASSESSMENT YEAR 2008-09 CHALLENGING THE DELETION OF PART PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX A CT. 22. THE FIRST ITEM OF DELETION OF THE PENALTY IS AD DITION OF RS. 84,000/- ON ACCOUNT OF RENTAL INCOME. THE ASSE SSEE 19 HAD RECEIVED RENTAL INCOME OF RS. 1,20,000/- FROM S OUTH ASIA DISTRIBUTORS, WHICH WAS NOT DECLARED IN THE RE TURN OF INCOME. THE EXPLANATION FOR NOT DECLARING THIS INC OME WAS THAT THE PROPERTY WAS LET OUT IN THIS YEAR ONLY AND NO TDS HAD BEEN DEDUCTED AND SO, THE ERROR TOOK PLACE. THE ASSESSING OFFICER ASSESSED THE RENTAL INCOME AT RS. 84,000/- AND INITIATED THE PENALTY ON THIS ADDITION . THE EXPLANATION OF THE ASSESSEE AGAINST LEVY OF PENALTY WAS THAT THE ASSESSEE IS OF 69 YEARS OF AGE AND WAS FIL ING THE RETURN THROUGH CONSULTANT AND ON REALIZING THE MIST AKE, SHE HAD AGREED FOR THE ADDITION. THE ASSESSEE HAD DISCLOSED INCOME MORE THAN RS.2.80 CRORES AND NON DISCLOSURE OF SMALL AMOUNT SHOULD NOT BE CONSIDERED AS INTENTIONAL AND MALAFIDE. 23. THE LD. CIT(APPEALS) CONSIDERED THE SUBMISSION OF THE ASSESSEE AND FOUND THAT NON-DECLARATION OF RENTAL I NCOME WAS AN INADVERTENT ERROR WHICH TOOK PLACE BECAUSE PROPERTY WAS LET OUT IN THIS YEAR ONLY AND TDS WAS ALSO NOT DEDUCTED. THEREFORE, EXPLANATION OF THE ASSESS EE IS BONAFIDE PARTICULARLY KEEPING IN VIEW THE FACT THAT INCOME OF MORE THAN RS. 2.80 CRORES HAS BEEN DECLARED. THEREFORE, NON-DECLARATION OF RS. 84,000/- CANNOT B E CONSIDERED AS INTENTIONAL OR MALAFIDE AND ACCORDING LY, CANCELLED THE PENALTY ON THIS ADDITION. 24. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE P ARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE L D. COUNSEL FOR THE ASSESSEE RELIED UPON DECISION OF TH E GUJRAT 20 HIGH COURT IN THE CASE OF DAHOD SAHAKARI KHARID VEC HAN SANGH LTD. VS CIT 200 CTR 265 IN WHICH IT WAS HELD AS UNDER : ASSESSEE, A CO-OPERATIVE SOCIETY, HAVING DIRECTLY CRE DITED THE AMOUNT RECEIVED FROM THE INSURANCE COMPANY, TO GRATUI TY FUND ACCOUNT INSTEAD OF P&L A/C AND NOT INCLUDED THE SAME IN THE TOTAL INCOME IN THE RETURN DUE TO OVERSIGHT WITHOUT ANY MALA FIDE INTENTION OR MENS REA, PENALTY UNDER S. 271(L)( C) WAS NOT LEVIABLE. AND ALSO RELIED UPON DECISION OF THE GUJRAT HIGH CO URT IN THE CASE OF CIT VS UNION ELECTRIC CORPORATION 200 C TR 636 IN WHICH IT WAS HELD AS UNDER : IN VIEW OF UNDISPUTED FINDING OF FACT RECORDED BY THE TRIBUNAL THAT THE ASSESSEE ITSELF HAD OFFERED THE W RONGFUL CLAIM FOR DISALLOWANCE DURING THE COURSE OF ASSESSM ENT PROCEEDINGS BEFORE THE AO HAD DETECTED THE SAME AND THAT THE BONA FIDES OF THE ASSESSEE WERE EVIDENT, ASSESSEE WA S NOT LIABLE FOR PENALTY UNDER S. 271(L)(C). 25. CONSIDERING THE EXPLANATION OF THE ASSESSEE, WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE. THE ASSESSING OFFICER IN THE ASSESSMENT ORDER RECOR DED THAT AT THE ASSESSMENT STAGE, IT WAS FOUND THAT ASS ESSEE HAS NOT SHOWN RENTAL INCOME OF RS. 1,20,000/- RECEI VED FROM PROPERTY NO. 92C SITUATED AT MADANGIR. THE RE NTAL INCOME OF RS. 1,20,000/- IS DULY CREDITED IN THE BA NK ACCOUNT OF THE ASSESSEE MAINTAINED WITH UCO BANK, C OPY OF WHICH IS PLACED ON RECORD. IT IS, THEREFORE, CL EAR THAT RENTAL INCOME WAS RECEIVED THROUGH BANKING CHANNEL AND WAS CREDITED IN THE BANK ACCOUNT OF THE ASSESSEE IN THE 21 YEAR UNDER CONSIDERATION. THE EXPLANATION OF THE A SSESSEE WAS THAT WHILE PREPARING INCOME TAX RETURN, DUE TO INADVERTENT ERROR, THE SAME COULD NOT BE INCLUDED I N THE RETURNED INCOME. THE ASSESSEE, THEREFORE, OFFERED THE SMALL RENTAL AMOUNT FOR THE PURPOSE OF TAX AT THE ASSESSMENT STAGE ITSELF. THEREFORE, IT COULD NOT B E INFERRED THAT ASSESSEE HAS CONCEALED THE PARTICULAR S OF INCOME OR FILED INACCURATE PARTICULARS OF INCOME BE CAUSE THE RENT WAS RECEIVED IN THE BANK ACCOUNT OF THE AS SESSEE. THE DECISIONS RELIED UPON BY LD. COUNSEL FOR THE AS SESSEE SQUARELY APPLY TO THE CASE OF THE ASSESSEE AND AS S UCH, NO INTERFERENCE IS CALLED FOR IN THE MATTER. THIS GRO UND OF APPEAL OF THE REVENUE IS ACCORDINGLY, DISMISSED. 26. THE OTHER ITEM ON WHICH PENALTY WAS CANCELLED W AS THE ADDITION OF UNREALIZED SALE PROCEEDS AMOUNTING TO RS. 44,53,128/- . THE ASSESSEE HAD SOLD HER SHARES IN M/S SPAN CONSULTANTS (P) LTD. FOR A CONSIDERATION OF RS . 9.62 CR AS PER AGREEMENT DATED 18.07.2007 BUT HAD SHOWN SALE CONSIDERATION OF RS. 9.18 CR ONLY FOR COMPUTATION O F CAPITAL GAIN AND THE REST OF THE AMOUNT OF RS. 44,5 3,128/- WAS TREATED BY ASSESSEE AS UNREALIZED SALE PROCEEDS AND NOT TAKEN INTO ACCOUNT FOR COMPUTATION OF CAPITAL G AIN. THE ASSESSEE SUBMITTED BEFORE ASSESSING OFFICER THA T THIS AMOUNT OF RS. 44,53,128/- WAS RECEIVED IN THE ACCOU NTING YEAR 2008-09 AND WAS DECLARED IN THE RETURN OF INCO ME IN ASSESSMENT YEAR 2009-10. THE ASSESSING OFFICER DID NOT ACCEPT CONTENTION OF THE ASSESSEE AND TAXED THIS AM OUNT 22 ALSO AS CAPITAL GAIN IN THE ASSESSMENT ORDER UNDER APPEAL I.E. 2008-09 AND ALSO LEVIED THE PENALTY UNDER SECT ION 271(1)(C) OF THE ACT. 27. THE ASSESSEES EXPLANATION BEFORE LD. CIT(APPEA LS) WAS THAT THE ASSESSEE WAS UNDER BONAFIDE BELIEF THA T CAPITAL GAIN IS TO BE COMPUTED ON THE BASIS OF CONSIDERATION ACTUALLY RECEIVED AND THAT IS WHY CAP ITAL GAIN WAS DISCLOSED IN TWO YEARS. IT WAS ALSO CONTE NDED THAT RETURN OF INCOME FOR SUBSEQUENT ASSESSMENT YEA R 2009-10 WAS FILED ON 29.07.2009 I.E. MUCH BEFORE TH E CASE WAS SELECTED FOR SCRUTINY FOR YEAR UNDER CONSIDERAT ION. IT WOULD PROVE THAT THE INTENTION OF THE ASSESSEE WAS NOT MALAFIDE. THE LD. CIT(APPEALS) ACCEPTED THE CONTEN TION OF THE ASSESSEE BECAUSE THE ASSESSEE BELIEVED THAT INC IDENCE OF TAX LIABILITY UNDER CAPITAL GAIN ARISES ON ACTUA L RECEIPTS OF SALE PROCEEDS. HOWEVER, IN FACT THE LIABILITY T O PAY THE TAX UNDER THE HEAD CAPITAL GAIN ARISES ON THE DAT E OF TRANSFER OF THE ASSET. THE ASSESSEE HAD DECLARED T HE UN- REALIZED SALE PROCEEDS IN SUBSEQUENT ASSESSMENT YEA R, THEREFORE, IT WAS FOUND THAT IT IS NOT A FIT CASE O F LEVY OF PENALTY AND ACCORDINGLY, CANCELLED THE PENALTY. 28. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL ON RECORD. THE LD. COUNSEL FOR THE AS SESSEE RELIED UPON DECISION OF THE HON'BLE PUNJAB & HARYAN A HIGH COURT IN THE CASE OF CIT V TEK RAM (HUF)14 DTR 0065 IN WHICH IT WAS HELD AS UNDER : 23 WHEN THE MATTER RELATING TO ENHANCED COMPENSATION RECEIVABLE BY THE ASSESSEE WAS STILL IN DISPUTE AND THE ASSESSEE DID NOT OFFER THE AMOUNT OF ENHANCED COMPENSATION AND INTEREST THEREOF FOR TAX CLAIMING THAT IT WAS NOT TAXABLE IN THE RELEVANT ASSESSMENT YEAR, THE CLAIM WAS BONA FIDE AND BASED ON ONE POSSIBLE VIEW AND, THEREFORE, LEVY OF PENALTY UNDER S. 271(1)(C) WAS NOT JUSTIFIE D. DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS SSP (P) LTD. 219 CTR 486 IN WHICH IT WAS HELD AS UNDER : TRIBUNAL HAVING FOUND ON CONSIDERATION OF MATERIAL ON RECORD AND LAW APPLICABLE THAT ASSESSEE HAD NOT FILED INACCURATE PARTICULARS OF INCOME OR CONCEALED ITS INCOME, IN CLAIMING A DEDUCTION AND IN NOT INCLUDING A PARTICULAR ITEM IN TAXABLE TURNOVER, WA S JUSTIFIED IN DELETING PENALTY AND NO SUBSTANTIAL QUESTION OF LAW AROSE OUT OF THE ORDER OF THE TRIBUNAL. JUDGEMENT OF KARNATAKA HIGH COURT IN THE CASE OF CI T & ANR VS N.NAGARAJ BALLAL 33 DTR 156, IN WHICH IT WAS HELD AS UNDER : ASSESSEE HAVING OFFERED AN EXPLANATION AS TO WHY THE IMPUGNED CONTRACT RECEIPTS COULD NOT BE INCLUDED IN THE RELEVANT ASSESSMENT YEAR WHICH IS SUPPORTED BY AN AFFIDAVIT OF HIS CHARTERED ACCOUNTANT AS WELL AS AUDITOR'S REPORT IN FORM NO. 3CD, CIT(A) AND THE TRIBUNAL WERE JUSTIFIED IN ACCEPTING THE SAME AND SETTING ASIDE THE PENALTY UNDER S. 271(L)(C). 29. ON THE OTHER HAND, LD. DR RELIED UPON ORDER OF THE ASSESSING OFFICER. 30. CONSIDERING THE RIVAL SUBMISSIONS, WE DO NOT FI ND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE. THE ASSESSEE HAS RECEIVED THE SALE CONSIDERATION IN TWO YEARS AND ACCORDINGLY, ASSESSEE HAS OFFERED THE SAME FOR THE 24 PURPOSE OF CAPITAL GAINS IN ASSESSMENT YEAR UNDER A PPEAL AS WELL AS IN SUBSEQUENT ASSESSMENT YEAR 2009-10. THE RETURN FOR SUBSEQUENT YEAR WAS FILED BEFORE THE CAS E WAS TAKEN UP FOR SCRUTINY IN ASSESSMENT YEAR UNDER APPE AL. IT WOULD PROVE THAT ASSESSEE NEVER WANTED TO CONCEAL T HE PARTICULARS OF INCOME TO THE REVENUE DEPARTMENT. AL L PARTICULARS WERE DISCLOSED TO THE REVENUE DEPARTMEN T. IT WAS A BONAFIDE ERROR ON THE PART OF THE ASSESSEE TH AT PART OF THE CAPITAL GAIN WOULD BE TAXABLE IN SUBSEQUENT YEAR. SINCE, IT WAS A DIFFERENCE OF OPINION BETWEEN ASSES SING OFFICER AND THE ASSESSEE WITH REGARD TO TAXABILITY OF THE CAPITAL GAIN IN THE YEAR UNDER CONSIDERATION OR SUB SEQUENT YEAR, THEREFORE, IT IS NOT A FIT CASE OF LEVY OF TH E PENALTY OR CONCEALMENT OF INCOME OR FILING INACCURATE PARTICUL ARS OF INCOME. 31. CONSIDERING THE ABOVE DISCUSSION, WE DO NOT FIN D MERIT IN THIS GROUND OF APPEAL OF THE REVENUE, SAME IS ACCORDINGLY, DISMISSED. 32. IN THE RESULT, DEPARTMENTAL APPEAL IS DISMISSED . ITA 882/CHD/2014 (ASSESSEE'S APPEAL) 33. IN THIS APPEAL, ASSESSEE CHALLENGED THE SAME OR DER OF THE LD. CIT(APPEALS) IN SUSTAINING PART PENALTY UND ER SECTION 271(1)(C) OF THE ACT WITH REGARD TO ADDITIO N OF RS. 82,54,249/-. 25 34. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSE SSEE HAD CLAIMED DEDUCTION OF RS. 5,00,53,249/- UNDER SECTIO N 54F OF THE INCOME TAX ACT OUT OF THE CAPITAL GAIN DECLA RED ON SALE OF SHARES OF M/S SPAN CONSULTANTS (P) LTD. TH E DEDUCTION UNDER SECTION 54F OF THE ACT WAS CLAIMED ON ACCOUNT OF PURCHASE OF FIRST FLOOR (UNDER CONSTRUCT ION) OF PROPERTY NO. D-361, DEFENCE COLONY, NEW DELHI. HOW EVER, IN APPEAL, DEDUCTION UNDER SECTION 54F OF RS.4.18 C R WAS ALLOWED WHICH WAS AMOUNT ACTUALLY PAID WITHIN TWO Y EARS OF THE SALE OF SHARES. THE ASSESSING OFFICER HAD I NITIATED PENALTY PROCEEDINGS FOR CONCEALMENT IN RESPECT OF DISALLOWANCE OF DEDUCTION UNDER SECTION 54F OF THE ACT. THE PENALTY FOR CONCEALMENT HAS BEEN LEVIED IN RESP ECT OF EXCESS DEDUCTION CLAIMED OF RS. 82,53,249/- ( RS. 5,00,53,249/- - RS. 4,18,00,000). 35. IT WAS SUBMITTED BEFORE LD. CIT(APPEALS) THAT A LL THE FACTS RELATING TO CLAIM UNDER SECTION 54F OF THE AC T WERE DISCLOSED IN THE REVISED RETURN, THEREFORE NO PENAL TY SHOULD BE IMPOSED FOR CONCEALMENT. 35(I) THE LD. CIT(APPEALS), CONSIDERING THE FACTS OF THE CASE FOUND THAT ASSESSEE HAS CLAIMED DEDUCTION UNDE R SECTION 54F EVEN IN RESPECT OF PAYMENTS MADE BEYOND TWO YEARS AND SALE OF SHARES. THERE WERE NO REASONS FOR THE ASSESSEE TO CLAIM DEDUCTION IN RESPECT OF PAYMENTS WHICH WERE MADE BEYOND TWO YEARS. THE LD. CIT(APPEALS) AL SO RELIED UPON DECISION OF DELHI HIGH COURT IN THE CAS E OF M/S ZOOM COMMUNICATIONS PVT. LTD. 327 ITR 510 AND 26 FOUND THAT ASSESSEE HAS MADE INCORRECT CLAIM AND ACCORDINGLY CONCEALED THE PARTICULARS OF INCOME AND CONFIRMED LEVY OF THE PENALTY UNDER SECTION 271(1)( C) OF THE ACT. 36. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE AUTHORITIES BELOW AND REFER RED TO RECEIPTS AND AGREEMENT FILED IN THE PAPER BOOK TO S HOW THAT AGREEMENTS TO SELL WERE EXECUTED WITHIN TIME AND SINCE SOME WORKS WERE DONE IN THE PROPERTY, THEREFO RE, RECEIPTS HAVE BEEN OBTAINED IN THIS REGARD AND ALSO RELIED UPON ORDER OF ITAT DELHI BENCH IN THE CASE OF VEEJA Y SERVICE STATION V ACIT 22 DTR 527 IN WHICH IT WAS H ELD AS UNDER : ASSESSEE HAVING DISCLOSED COMPLETE FACTS REGARDING GOODWILL ON INTRODUCTION OF A NEW PARTNER, IT CANNOT BE SAID THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS MERELY BECAUSE THERE WAS A DIFFERENCE OF OPINION BETWEEN THE AO AND THE ASSESSEE REGARDING COMPUTATION OF CAPITAL GAINS AND, THEREFORE, LEVY OF PENALTY UNDER S. 271(L)(C) WAS NOT JUSTIFIED. 37. ON THE OTHER HAND, LD. DR RELIED UPON ORDERS OF THE AUTHORITIES BELOW. 38. WE HAVE CONSIDERED RIVAL SUBMISSIONS. IT IS NO T IN DISPUTE THAT ASSESSEE DECLARED ALL THE FACTS WITH R EGARD TO LONG TERM CAPITAL GAIN IN THE RETURN OF INCOME AS W ELL AS BEFORE ASSESSING OFFICER AT THE ASSESSMENT STAGE. THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS NA TH BROS 27 EXIM INTERNATIONAL LTD. 288 ITR 670 HELD AS UNDER : THE ASSESSEE HAD CLAIMED DIVIDEND INCOME AS HIS BUSINESS INCOME AND ACCORDING TO THE ASSESSEE IT WAS ENTITLED TO A DEDUCTION UNDER CLAUSE (BAA) OF THE EXPLANATION TO SECTION 80HHC(4C) OF THE INCOME-TAX ACT, 1961. THE ASSESSING OFFICER DISALLOWED THE CLAIM AND IMPOSED PENALTY. THE TRIBUNAL CAME TO THE CONCLUSION THAT THE ASSESSEE HAD DISCLOSED ALL THE FACTS, AND THEREFORE, EVEN THOUGH IT HAD MADE AN ERRONEOUS CLAIM WHICH COULD NOT BE JUSTIFIED IN LAW, THAT BY ITSELF DID NOT ATTRACT THE PENAL PROVISIONS OF THE ACT. ON APPEAL TO THE HIGH COURT : HELD , DISMISSING THE APPEAL, THAT THERE WAS FULL DISCLOSURE OF ALL RELEVANT MATERIAL. IT COULD NOT B E SAID THAT THE CONDUCT OF THE ASSESSEE ATTRACTED THE PROVISIONS OF SECTION 271(L)(C). THE CANCELLATION OF PENALTY WAS JUSTIFIED. 38(I) THE HON'BLE SUPREME COURT IN THE CASE OF CIT RELIANCE PETROPRODUCTS PVT. LTD. 322 ITR 158 HELD AS UNDER : A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME-TAX ACT,1961 SUGGESTS THAT IN ORDER TO BE COVERED BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTION 271(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND TO BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. IN ORDER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISIONS, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILITY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. 28 WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY U/S 271(1)(C). A MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. 39. THE ISSUE OF CLAIM OF DEDUCTION UNDER SECTION 5 4F WAS AN ISSUE BEFORE THE AUTHORITIES BELOW. THE ASS ESSEE HAS CLAIMED DEDUCTION OF APPROXIMATELY RS. 5 CRORES UNDER SECTION 54F OF THE ACT AND ALSO EXPLAINED VAR IOUS ISSUES WITH REGARD TO PROPERTIES HELD BY ASSESSEE A ND INVESTMENT MADE IN PURCHASE OF PROPERTY AS WELL AS DEPOSIT OF THE AMOUNT IN THE CAPITAL GAIN SCHEME. HOWEVER, IN APPEAL, THE DEDUCTION UNDER SECTION 54F OF RS. 4.18 CR WAS ALLOWED. THE DISPUTE WAS WITH REGA RD TO WHETHER CLAIM OF DEDUCTION UNDER SECTION 54F COULD BE ALLOWED IN RESPECT OF PAYMENTS MADE BEYOND TWO YEAR S OF SALE OF SHARES. IN THE OPINION OF THE ASSESSEE, AS SESSEE WAS ENTITLED FOR DEDUCTION OF THE ENTIRE AMOUNT BUT ASSESSING OFFICER DID NOT ALLOW THE SAME AND IN APP EAL, SUBSTANTIAL RELIEF HAVE BEEN GRANTED TO THE ASSESSE E. THEREFORE, ASSESSEE HAS DISCLOSED ALL THE RELEVANT FACT WITH REGARD TO CLAIM OF DEDUCTION UNDER SECTION 54F . THEREFORE, MERE MAKING A CLAIM WHICH IS NOT SUSTAIN ABLE IN LAW, BY ITSELF WILL NOT AMOUNT TO FURNISHING INA CCURATE PARTICULARS OF INCOME. THE DECISION CITED ABOVE CL EARLY SUPPORT THE CLAIM OF ASSESSEE THAT EVEN IF QUANTUM ADDITION HAS BEEN MAINTAINED AND NOT CHALLENGED BY THE 29 ASSESSEE, WOULD CLEARLY PROVE THAT IT IS NOT A FIT CASE FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT FOR CONCEALMENT OF INCOME OR FILING INACCURATE PARTICUL ARS OF INCOME. 40. CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTA NCES, WE DO NOT FIND JUSTIFICATION TO SUSTAIN THE PENALTY ON THIS ISSUE. WE, ACCORDINGLY, SET ASIDE THE ORDERS OF AU THORITIES BELOW AND CANCEL THE PENALTY. IN THE RESULT, APPEA L OF THE ASSESSEE IS ALLOWED. 41. IN THE RESULT, BOTH DEPARTMENTAL APPEALS ARE DISMISSED AND APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH SEPT,2015. SD/- SD/- (ANNAPURNA MEHROTRA) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 10 TH SEPT.,2015. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT,DR ASSISTANT REGISTRAR, ITAT CHANDIGARH