Smt. Maya K. Dharwani, Ahmedabad V. The Income tax Officer, Ward-7(2)(3), Ahmedabad

MA 2/AHD/2023

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 1421 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 18 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 26-06-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Ahmedabad
• Next Hearing Date: 09-05-2024
• Assessment Year: 2013-2014
• Appeal Filed On: 08-01-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Capital Gains
• Section: 54; 271(1)(c); 54F; 254(2); 54EC

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, अहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठअहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठ ‘A’ अहमदाबाद। अहमदाबाद।अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD BEFORE SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER Misc. Application No.2/Ahd/2023 IN ITA No.2094/Ahd/2018 Assessment Year : 2013-14 Smt.Maya K. Dharwani Block No.88, B-Ward Opp: Railway Station Kuber Nagar Ahmedabad. Vs. ITO, Ward-7(2)(3) Nature View Building Ahmedabad. Assessee by : Shri S.N. Divatia, AR & Shri Samir Vora, AR Revenue by : Shri Sanjay Kumar, Sr DR सुनवाई क琉 तारीख/D a t e o f H e a r i n g : 1 0 / 0 5 / 2 0 2 4 घोषणा क琉 तारीख /D a t e o f Pr o n o u n c e m e n t : 2 7 / 0 6 / 2 0 2 4 आदेश आदेशआदेश आदेश/O R D E R PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER By way of this Misc. Application, the assessee seeks recall of the order passed by the Tribunal in ITA No.2094/Ahd/2018 dated 31.10.2022 by pointing certain factual error in the said order. 2. In the MA, the assessee has pointed out that the Tribunal has failed to appreciate certain significant facts while passing the impugned order resulting in dismissal of the assessee’s appeal. The relevant pleadings made in the MA read as under: “4. The applicant submits with greatest respect that the impugned order has been passed without fully and properly appreciating the factual position that the appellant had challenged the computation of capital gains including the exemptions claimed u/s 54F & 54EC by way of appeal before this Tribunal being ITA No.461/AHD/2017 which was disposed off vide order dt 11.10.2018 wherein relief to the extent of RS. 30 lacs u/s 54Fwas allowed. The applicant submits that in consequence to this order the computation of taxable capital gains has gone substantial reduction and as a consequence, MA No.2/Ahd/2023 2 the quantum of penalty would also get reduced even presuming for the sake of argument though not admitting the merits of the matter/case/penalty. 5. The applicant submits that the order of the Tribunal passed in said ITA dt 11.10.2018 was filed with office of Tribunal on 12.02.2020 and with respondent on 13.02.2020. However the Tribunal has failed to take into consider the same while disposing the penalty appeal. 6. Under the above facts and circumstances, the applicant submits that the order passed by the Hon'ble Tribunal may be recalled and the appeal may be fixed for fresh hearing for disposal, otherwise it would cause great injustice and hardship to the applicant without any cause attributable to it.” 3. The Ld DR vehemently opposed the application of the assessee. 4. Heard both the parties on the issue. The assessee vide the present application seeks rectification in the order passed by the ITAT in ITA No. 2094/Ahd/2018 dated 31- 10-22, confirming the levy of penalty u/s 271(1)(c) of the Act by the AO. The mistake pointed out in the order sought to be rectified being that penalty has been confirmed even on the portion of addition/disallowance, in relation to which relief was granted to the assessee in quantum appeal by the ITAT vide its order dated 11.10.2018 and this despite the fact that the order passed in quantum proceedings was placed before the Bench during the course of hearing in the penalty appeal. The ITAT it was pointed out had granted relief to the extent of Rs.30 lakhs. 5. For deciding this application, we first verified the facts of the case and found that it is true and correct that penalty has been confirmed by the ITAT even on the quantum of addition/ disallowance which was deleted by the ITAT in appeal of the assessee in quantum proceedings. 6. As per the facts of the case derived from the order passed by the ITAT in ITA No.2094/Ahd/2018 dated 31/10/22 confirming the levy of penalty and in which order rectification is sought by way of the MA No.2/Ahd/2023 3 present Miscellaneous Application, penalty imposed by the AO u/s 271(1)(c) of the Act and confirmed by the ITAT amounted to Rs.12,77,200/-. The said penalty was levied on disallowance of exemption of capital gains earned, u/s 54F & 54EC of the Act. The assessee had initially claimed exemption u/s 54EC of the Act on an amount of Rs.41,00,000/- invested in Bonds and u/s 54F of the Act on account of Rs.20,00,000/- deposited in capital gains account scheme. Subsequently, the assessee filed a revised statement of income restricting his claim of exemption to that u/s 54F of the Act only on account of investment in purchase of property to the tune of Rs.30,00,000/-.Both the original claim and revised claim of exemption were found by the AO/CIT(A) as not allowable and accordingly penalty levied. Perusal of the order levying penalty reveals that penalty was levied on concealment of income of Rs.62 lacs computed on the basis of difference in the capital gains returned by the assessee of Rs.6,93,054/- after claiming exemption of 61 lacs(41lacs +20lacs) and that assessed by the AO after denying all claims of exemption, original as well as revised, at Rs.68,93,054/-. It is this penalty of Rs.12,77,200/-, on concealment of particulars of income of Rs.62 lacs pertaining to claim of exemption u/s 54EC/54F which was confirmed by the ITAT in its order passed in ITA No.2094/Ahd/2018. 7. The order passed by the ITAT in quantum appeal of the assessee in ITA No. 461/Ahd/2017dated 11.10.2018 reveals that its claim to exemption of capital gains u/s 54F of the Act to the tune of Rs.30lacs was allowed by the ITAT. 8. The ITAT dealt with the issue of claim of exemption under section 54F of the Act at para-6 of its order and found that the claim was disallowed for the reason that new house was not purchased MA No.2/Ahd/2023 4 within the stipulated time as prescribed under the law. But it went to hold that since the assessee had invested Rs.30 lakhs in the said property within stipulated period prescribed under section 54F of the Act, therefore, the assessee was eligible to deduction of exemption under section 54F to the extent of Rs.30 lakhs. Accordingly, the ITAT partly allowed the assessee’s appeal. The relevant para-6 of the order of the ITAT in the quantum proceedings is produced hereunder: “6. We have heard both the sides and perused the material on record carefully. The assessing officer has not allowed the claim of deduction u/s. 54F of the act stating that the assessee should have purchased a new house on or after 9th Nov, 2011 on or before 8th Nov, 2014, however, the assessee has purchased residential house property on 16th Sep, 2015 which was beyond the two years prescribed limit u/s. 54F(1) of the act. On perusal of material on record it is noticed that there was an agreement on sale of immovable property between the seller Shri Tanumal Janimal Kachwani as a seller of the property and assessee as purchaser of the property dated 14th Feb, 2013 for sale of property for consideration of 55 lacs. The assessee has paid payment of Rs. 30 lacs vide two cheques of Rs. 15 lacs each drawn on bank bearing No. 267004 and 267005 dated 29th Jan, 2013. However, the first party Sh.Tanumal J Kachwani was expired on 30/08/2014 which resulted delay in execution of the sale deed. Because of pending legal proceedings the final sale deed of the property was executed by the son of the seller Shri Manohar Lal T. Kacahwani on 16th Sep, 2015 and the remaining balance of Rs. 15 lacs was paid vide cheque No. 212382 and 218383 of Rs. 7 lacs and 8 lacs dated 11th Sep, 2015. In the light of the above facts and circumstances we observed that on expiry of the seller the title of the property was cleared after some time in favour of Shri Mohan Mohanlal T. Kachbani which resulted in execution of sale deed on 16/09/2015. We have perused the decision in the case of Sanjeevlal case of the Hon’ble Supreme Court wherein the assessee has entered into an agreement to sell the house on 27th Dec, 2002 and the sale deed could not be executed for the reason that the assessee had been prevented from dealing with the residential house by the order of the court due to pending litigation. The relevant part of the judgment of hon’ble supreme court of India in the case of Sanjiv Lal vs. CIT 365 ITR 389 para 23 to 26 is reproduced as under:- "23. Consequences of execution of the agreement to sell are also very clear and they are to the effect that the appellants could not have sold the property to someone else. In practical life, there are events when a person, even after executing an agreement to sell an immovable property in favour of one person, tries to sell the property to another. In our opinion, such an act would not be in accordance with law because once an agreement to sell is executed in favour of one person, the said person gets a right to get the property transferred in his favour by filing a suit for specific performance and therefore, without hesitation we can say that some right, in respect of the said property, belonging to the appellants had been extinguished and some right had been created in favour of the vendee/transferee, when the agreement to sell had been executed. 24. Thus, a right in respect of the capital asset, viz. the property in question had been transferred by the appellants in favour of the vendee/transferee on 27th December, 2002. The sale deed could not be executed for the reason that the appellants had been prevented from dealing with the residential house by an order of a competent court, which they could not have violated. 25. In view of the aforestated peculiar facts of the case and looking at the definition of the term 'transfer" as defined under Section 2(47) MA No.2/Ahd/2023 5 of the Act, we are of the view that the appellants were entitled to relief under Section 54 of the Act in respect of the long term capital gain which they had earned in pursuance of transfer of their residential property being House No. 267, Sector 9-C, situated in Chandigarh and used for purchase of a new asset/residential house. 26. The appeals are, therefore, allowed with no order as to costs. The impugned judgments are quashed and set aside and the Authorities are directed to re-assess the income of the appellants for the Assessment Year 2005-2006, after taking into account the fact that the appellants were entitled to the relief, subject to fulfilment of other conditions." It is crystal clear that the decision in the case of Sanjeevlal was delivered after taking into account the peculiar facts of the case that the sale deed could not be executed because of the pending litigation and the competent court has prohibited the assessee to execute the sale deed therefore it is held that the assessee was entitled for relief under section 54 of the act. In the case of the assessee also the property in question could not be purchased because of unavoidable circumstances as the first party seller of the property was expired before execution of the sale deed because of legal proceedings related to the clearance of tile of the property there was delay in execution of final sale deed as elaborated supra in this order. However, we consider that the assessee has only invested an amount of Rs. 30 lacs as explaleviined above in this order within the stipulated period prescribed in the provision of section 54F of the act , therefore, we restrict the deduction u/s. 54F of the act to the amount of Rs. 30 lacs as final agreement could not be executed because of unavoidable circumstances in the form of pending legal proceedings due to sudden demise of the first party seller of the property. Accordingly the appeal of the assessee is partly allowed.” 9. Thus, it is amply clear that the exemption denied by the AO under section 54F was allowed by the ITAT to the tune of Rs.30 lakhs. While penalty has been confirmed by the ITAT even on the addition/disallowance deleted by the ITAT in quantum proceedings. Therefore, the facts as stated by the Ld. Counsel for the assessee that the ITAT has confirmed penalty even on the addition deleted is found to be factually correct. 10. The facts relating to the issue of levy of penalty having been noted by us as above, confirmation levy of penalty under section 271(1)(c) of the Act on the addition which stood deleted by the ITAT was clearly a mistake apparent from the record. 11. Coming to the aspect of the order passed by the ITAT in the quantum proceedings being available to the Bench while hearing the penalty appeal and non-consideration of the same tantamounted to MA No.2/Ahd/2023 6 error in the order of the ITAT, we find from perusal of the case records that the order was very much filed during the course of hearing. 12. From the records before us, pertaining to the present appeal, we find that vide letter dated 11.2.2020 addressed to the Hon’ble Vice- President, ITAT seeking early hearing in the matter, the assessee had submitted that the quantum appeal of the assessee had been disposed of by the ITAT in ITA No.461/Ahd/2017 granting relief to the assessee to the extent of Rs.30 lakhs. The contents of the said application read as under: Name of the appellant Smt Maya K. Dharwani Ahmedabad. PAN : AEFPD 1506 D A.Y : 2013-14 Order appealed against Order U/s.250 passed on 25-7- 2018byCIT(A)-7, A'bad MAY IT PLEASE THE HON. VICE PRESIDENT The above named applicant has filed on 09-10-2018 appeal against the appellate order passed u/s.250 on 25-07-2018 for A.Y.2013-14 by CIT(A)-7 Abad, being ITA No.2094/Ahd/2018 whereby the appellant has challenged (i) the PENALTY IMPOSED U/S 271(1)(C) OF Rs. 12,77,200/- . 2.0 The applicant states that the Ld. AO had imposed the impugned penalty in respect of disallowance of exemption claimed u/s 54F and 54EC which was challenged in appeal before Tribunal vide appeal No. 461/AHD/2017 and now the said appeal is disposed of by its order dt. 11-10-2018 whereby the relief u/s 54 has upheld whereas the exemption u/s 54F is restricted to RS. 30 lacs being the amount as per agreement. The copy of this order is enclosed. In view of the above facts and circumstances of the case, the applicant humbly prays for early hearing of the appeal. Date; 11/02/2020 Sd/- [APPLICANT] 13. The copy of the order passed in ITA No.461/Ahd/2017 dated 11.10.2018 is also found in the case record. Further, we have noted that, after the appeal was heard on 21.2.2020, subsequently vide order sheet entry dated 13.3.2020, the case was released, noting that while the ld.counsel for the assessee had argued that the entire MA No.2/Ahd/2023 7 addition pertaining to which penalty had been levied, stood deleted by the ITAT in quantum proceedings, however, perusal of order of the ITAT in quantum proceedings in ITA No.461/Ahd/2017 reveals that only part addition was deleted. The order sheet entry in this regard is reproduced hereunder: 14. It is clearly evident from the above that during the course of hearing, which took place before the ITAT on various occasions, the assessee in the first instance itself had placed copy of the order of the ITAT in quantum proceedings demonstrating the fact that of having been granted relief to the extent of Rs.30 lakhs, which was even taken note of by the Bench, when the appeal was first heard on 21.2.2020. Therefore, it cannot be denied that order of the ITAT in the quantum proceedings was very much part of the records and non-consideration of the same, while dealing with the appeal of the assessee, in penalty proceedings, does tantamount to a mistake apparent from record. Even if the assessee did not refer to the same when the appeal was finally heard the fact remains that the order was very much part of the record before us and non-consideration of the same tantamounted to error in the order of the ITAT. MA No.2/Ahd/2023 8 15. Even otherwise, we may state that even if the assessee had failed to place on record the order passed by the ITAT in the quantum proceedings granting relief to the assessee to the extent of Rs.30 lakhs, the said order being a public document, non-consideration of the effect of the same in penalty proceedings would still tantamount to mistake apparent from the record. The fact remains that in the quantum proceedings, the assessee has been granted relief to the tune of Rs.30 lacs allowing exemption u/s. 54F of the Act to the said extent against capital gains returned and confirming penalty on this addition which stands deleted by the ITAT, is clearly impermissible in law. There cannot be any case for penalizing the assessee for an offence which has been found to have not been committed at all, and therefore, the confirmation of penalty on this aspect i.e. on the addition which stood deleted by the ITAT, was in any case a mistake which was eligible for rectification under section 254(2) of the Act. It is a clear and apparent mistake and the MA filed by the assessee needs to be allowed, which we hold so. We, therefore, of the view that present MA needs to be allowed. Accordingly, we allow the MA filed by the assessee. The order passed in ITA No.2094/Ahd/2018 dated 31/10/22 is recalled and the Registry is directed to list the above appeal of the assessee in the ordinary course of hearing. 16. In the result, the MA of the assessee is allowed. Order pronounced in the Court on 27 th June, 2024 at Ahmedabad. Sd/- Sd/- (SIDDHARTHA NAUTIYAL) JUDICIAL MEMBER (ANNAPURNA GUPTA) (ACCOUNTANT MEMBER) Ahmedabad, dated 27/06/2024 vk* MA No.2/Ahd/2023 9 आदेश क琉 灹ितिलिप अ灡ेिषत आदेश क琉 灹ितिलिप अ灡ेिषतआदेश क琉 灹ितिलिप अ灡ेिषत आदेश क琉 灹ितिलिप अ灡ेिषत/Copy of the Order forwarded to : 1. अपीलाथ牸 / The Appellant 2. 灹瀄यथ牸 / The Respondent. 3. संबंिधत आयकर आयु猴 / Concerned CIT 4. आयकर आयु猴(अपील) / The CIT(A) 5. िवभागीय 灹ितिनिध, आयकर अपीलीय अिधकरण / DR, ITAT, 6. गाड榁 फाईल / Guard file. आदेशानुसार आदेशानुसारआदेशानुसार आदेशानुसार/BY ORDER, उप उपउप उप/सहायक पंजीकार सहायक पंजीकारसहायक पंजीकार सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, अहमदाबाद अहमदाबादअहमदाबाद अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation- : 06-06-2024 2. Date on which the typed draft is placed before the Dictating Member 25.06.2024 3. Date on which the approved draft comes to the Sr.P.S./P.S. – 25.06.2024 4. Date on which the fair order is placed before the Dictating Member for Pronouncement ...27.06.2024................. 5. Date on which the file goes to the Bench Clerk ..27.06.2024.... 6. Date on which the file goes to the Head Clerk.................................. 7. The date on which the file goes to the Assistant Registrar for signature on the order.......................... 8. Date of Despatch of the Order..................