VIJAY BHAGWANDAS RAHEJA, MUMBAI V. DCIT CENT. CIR. 29, MUMBAI

MA 70/MUM/2016

• Counselvise Citation: [2017] 124 COUNSELVISE.COM (IT) 5474 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 15 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 03-02-2017
• Appeal Filed By: Assessee
• Bench Allotted: F
• Assessment Year: 2010-2011
• Appeal Filed On: 18-03-2016
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Depreciation
• Section: 50C; 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) & SHRI PAWAN SINGH (JM) M.A.NO. 70/MUM/2016 IN I.T.A. NO. 2768 /MUM/20 14 (ASSESSMENT YEAR 20 10 - 11 ) VIJAY BHAGVANDAS RAHEJA RAHEJA CHAMBERS LINKING ROAD MAIN AVENUE SANT ACRUZ WEST MUMBAI - 400 054. VS. DCIT CC - 29 ROOM NO. 409 4 TH FLOOR AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400 020. ( APPELLANT ) ( RESPONDENT ) PAN NO . AABPR5985N ASSESSEE BY SHRI K. GOPAL DEPARTMENT BY S HRI SANJEEV JAIN DATE OF HEARING 30.9. 201 6 DA TE OF PRONOUNCEMENT 3 .2 . 201 7 O R D E R PER B.R. BASKARAN (AM) : - THE ASSESSEE HAS FILED THIS MISCELLANEOUS APPLICATION SEEKING RECALL OF ORDER DATED 16.12.2015 PASSED IN THE HANDS OF THE ASSESSEE IN ITA NO.2768/MUM/2014 RELATING TO ASSESSMENT YEAR 2010 - 11, WHEREIN THE TRIBUNAL HAS REVERSED THE ORDER OF THE LD CIT(A) AND CONFIRMED THE PENALTY LEVIED BY THE AO U/S 271(1)(C) OF THE ACT TO THE EXTENT OF 100% OF THE CONCEALED INCOME. 2. THE ASSESSEE OWNED A GUEST HOUSE AND HELD THE SAME AS HIS BUSINESS ASSET. ACCORDINGLY HE HAD CLAIMED DEPRECIATION THEREON. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE SOLD THE SAME. THE ASSESSEE, HOWEVER, TREATED THE GUEST HOUSE AS LONG TERM CAPITAL ASSET AND DECLARED LONG TERM CAPITAL GAIN ON SALE OF THE SAME, WHICH IS APPARENTLY IN DEFIANCE OF THE PROVISIONS OF SEC. 50C OF THE ACT. THE ASSESSEE CLAIMED TO HAVE NOT RECEIVE D THE NOTICE DATED 22.11.2012 ISSUED BY THE ASSESSING OFFICER IN THIS REGARD. VIJAY BHAGVANDAS RAHEJA 2 HENCE THE AO ISSUED ANOTHER NOTICE THROUGH THE NOTICE SERVER A ND ALSO BY SPEED POST AND THE SAME APPEARS TO HAVE BEEN SERVED ON THE ASSESSEE ON 27.11.2012. IN THE MEAN TIME, THE ASSESSEE FILED A REVISED COMPUTATION OF INCOME BY A LET T ER DATED 26.11.2012 OFFERING SHORT TERM CAPITAL GAIN ON SALE OF GUEST HOUSE. THE A O ACCORDINGLY COMPLETED THE ASSESSMENT AND THEREAFTER LEVIED PENALTY U/S 271(1)(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME @ 200%. THE LD CIT(A) DELETED THE SAME AND HENCE THE REVENUE PREFERRED APPEAL BEFORE THE TRIBUNAL. THE TRIBUNAL DID NOT AGREE WITH THE VIEW TAKEN BY THE LD CIT(A) AND ACCORDINGLY REVERSED HIS ORDER. HOWEVER, THE TRIBUNAL RESTRICTED THE PENALTY TO 100%. 3. THE ASSESSEE HAS MOVED THIS MISCELLANEOUS APPLICATION WITH THE FOLLOWING SUBMISSIONS: - THE APPLICANT IS IN RECEIPT OF THE HON'BLE ITAT'S ORDER DATED 16.12.2015 ON 02 - 02 - 2016 WHEREIN THE TRIBUNAL HAD BEEN PLEASED TO ALLOW PARTLY DEPARTMENT'S APPEAL AGAINST CIT (A)'S ORDER DELETING ENTIRELY PENALTY OF RS.3,44,29,216/ - LEVIED BY THE LEARNED ASSESSING OFFICER U /S.271(1)(C) OF THE INCOME TAX ACT, 1961 200% OF THE TAX SOUGHT TO HE AVOIDED. THE TRIBUNAL WHILE MAINTAINING THE PENALTY HAD REDUCED THE PENALTY FROM 200% TO 100%. THE APPLICANT SEEKS THE KIND INDULGENCE OF THE ITAT TO SUBMIT THE PRESENT MISC. APPLICATION FOR THEIR KIND CONSIDERATION AS THE APPLICANT FEELS THAT A MISTAKE HAS CREPT IN ITAT'S ORDER. THE BRIEF BACKGROUND OF THE CASE IS GIVEN BELOW. THE APPLICANT IS AN INDIVIDUAL. HE HAD SOLD A DEPRECIABLE ASSET DURING THE YEAR AND DECLARED THE GAINS ARISING T HEREFROM AS LONG TERM CAPITAL GAIN AND PAID TAXES THEREON @ 20% ON THE BASIS OF BOMBAY HIGH COURT'S DECISION IN THE CASE OF CIT VS. ACE BUILDERS PVT. LTD. - 281 ITR 210 (BOM). VIJAY BHAGVANDAS RAHEJA 3 DURING THE ASSESSMENT PROCEEDINGS, AN APPREHENSION AROSE TO HIM THAT THE DEPARTM ENT MAY HOLD THAT THE SAME IS ASSESSABLE AS SHORT TERM CAPITAL U/S. 50. THEREFORE, IN ORDER TO AVOID ANY POSSIBLE LEVY OF PENALTY SOON AFTER THE ASSESSMENT PROCEEDINGS HAD BEEN TAKEN UP AND BEFORE ISSUE OF NOTICE BY THE ASSESSING OFFICER THE APPLICANT FILE D A LETTER ON 26.11.2012 COMPUTING AND DECLARING THE GAINS AS SHORT TERM CAPITAL GAIN. HOWEVER, THE LEARNED ASSESSING OFFICER LEVIED PENALTY U/S.271(1)(C) AT 200% OF THE TAX ON THE DIFFERENCE BETWEEN THE SHORT TERM CAPITAL GAINS AND LONG TERM CAPITAL GAINS . THE ASSESSING OFFICER HAD STATED IN THE PENALTY ORDER THAT SHOW CAUSE NOTICE THOUGH DATED 22.11.2012 WAS SERVED ON THE APPLICANT ON 27.11 .2012. ON APPEAL TO CIT (A), THE LEARNED CIT (A) DELETED THE ENTIRE PENALTY TAKING INTO ACCOUNT AMONG OTHER THINGS ON FOLLOWING DECISIONS: CIT VS. RELIANCE PETRO PRODUCTS - 322 FIR 158 (SC) CIT VS. HARYANA WAREHOUSING CORP. - 314 ITR 215 (SC) CIT VS. UP STATE WAREHOUSING CORP. - 195 ITR 273 (ALL) [SLP FILED BY DEPARTMENT DISMISSED BY SUPREME COURT] KANBAY SOFTWARE (I) PV T. LTD., VS. DCIT - 31 SOT 153 (PUNE) CIT VS. ACE BUILDERS PVT. LTD. - 281 ITR 210 (BOM) CIT VS. PRADEEP KUMAR - 246 ITR 94 (J&K) THE DEPARTMENT TOOK THE MATTER BEFORE TRIBUNAL. IN THE COURSE OF PROCEEDINGS BEFORE 1TAT, AR OF THE ASSESSEE CITED MUMBAI ITA T'S DECISION IN THE CASE OF' SMITA CONDUCTORS LTD. 'PRESCRIPTIONS OF SECTION 50 ARE TO BE EXTENDED ONLY TO STAGE OF COMPUTATION OF CAPITAL GAIN AND, THEREFORE, CAPITAL GAIN RESULTING FROM TRANS:PR OF DEPRECIABLE ASSET WHICH WAS HELD FOR MORE THAN THREE YEA RS WOULD RETAIN CHARACTER OF LONG TERM CAPITAL GAIN FOR PURPOSES OF ALL OTHER PROVISIONS OF ACT' THE AR PLEADED BEFORE ITAT THAT IN VIEW OF THE ABOVE DECISION, THE GAIN THAT AROSE TO THE ASSESSEE ON SALE OF DEPRECIABLE ASSET VIJAY BHAGVANDAS RAHEJA 4 TOOK THE CHARACTER OF LONG TERM CAPITAL GAIN AND THEREFORE THE ASSESSEE IN THE RETURN OF INCOME HAD CORRECTLY COMPUTED THE GAIN @ 20% AS LONG TERM CAPITAL GAIN. CONSEQUENTLY THERE WAS NO CONCEALMENT INVOLVED IN NOT CHANGING THE GAINS AS SHORT TERM CAPITAL GAIN AND PENALTY WAS NOT LEVIAB LE. THE HON'BLE ITAT AT PARA 5 OF ITS ORDER HAD DULY NOTED THE DECISION IN PARA 5 OF ITS ORDER AND MADE FOLLOWING REMARKS. 'HE FURTHER PLACED RELIA NCE ON THE DECISION RENDERED BY THE CO - ORDINATE BENCH IN THE CASE OF SMITA CONDUCTORS LTD., VS. DCIT (2014) ( 40 TAXMANN.COM 514) AND SUBMITTED THAT THE TRIBUNAL HAS HELD THAT THE ASSETS HELD FOR MORE THAN THREE YEARS WOULD RETAIN THE CHARACTER OF LONG TERM CAPITAL ASSET.' HOWEVER, THE HON' BLE ITAT DID NOT APPROVE THE ORDER OF CI T (A) DELETING THE PENALTY BUT PARTLY ALLOWED DEPARTMENT'S APPEAL AND RETAINED PENALTY TO THE EXTENT OF 100%. WITH GREATEST RESPECT TO THE ITAT THE APPLICANT HUMBLY FEELS THAT THERE IS FAILURE ON THE PART OF ITAT TO HOLD THAT THE GAINS ARISING ON ACCOUNT O F SALE OF DEPRECIABL E A SSET IS LONG TERM CAPITAL GAIN AND THE APPLICANT IS NOT GUILTY OF CONCEALING PARTICULARS OF INCOME. THIS FAILURE TO TAKE NOTE OF THE DECISION OF THE CO - ORDINATE BENCH AND ENDORSE THE DELETION OF ENTIRE PENALTY APPEARS TO BE A MISTAKE READILY APPARENT FROM RECORD. THE APPLICANT WOULD FERVENTLY PRAY THAT THE HON'BLE TRIBUNAL MAY KINDLY RECALL ITS ORDER DATED 16.12.2015 AND PASS FRESH ORDERS. 4. THE LD A.R SUBMITTED THAT THE TRIBUNAL HAS TAKEN THE DECISION UNDER THE IMPRESSION THAT T HE ASSESSEE HAS AVOIDED THE NOTICE ISSUED BY THE AO. HE SUBMITTED THAT THE ASSESSEE RECEIVED A NOTICE U/S 142(1) FOR THE FIRST TIME ON 27.6.12 AND IN THAT LETTER THE AO DID NOT RAISE ANY QUERY WITH REGARD TO CAPITAL VIJAY BHAGVANDAS RAHEJA 5 GAIN. THEREAFTER THE ASSESSEE HAS VOLU NTARILY SUBMITTED THE REVISED COMPUTATION OF INCOME DECLARING SHORT TERM CAPITAL GAIN ON SALE OF GUEST HOUSE. HE SUBMITTED THAT THERE IS NO REASON TO DRAW ADVERSE INFERENCE AGAINST THE ASSESSEE. HE FURTHER SUBMITTED THAT THE VIEW TAKEN BY THE ASSESSEE TO OFFER THE GAINS AS LONG TERM CAPITAL GAIN IS SUPPORTED BY THE TWO DECISION RELIED UPON BY THE ASSESSEE, VIZ., ACE BUILDERS P LTD (281 ITR 210)(BOM) AND SMITA CONDUCTORS LTD VS. DCIT (2014)(41 TAXMANN.COM 514). ACCORDINGLY THE LD A.R SUBMITTED THAT THE AS SESSEE HAD TAKEN A POSSIBLE VIEW IN THIS MATTER AND HENCE THE TRIBUNAL HAS OMITTED TO CONSIDER THE SAME. ACCORDINGLY HE SUBMITTED THAT THE ORDER PASSED BY THE TRIBUNAL SUFFERS FROM THE ABOVE SAID INFIRMITIES AND HENCE THE SAME NEEDS TO BE RECALLED. 5. ON THE CONTRARY, THE LD D.R SUBMITTED THAT THE ASSESSEE IS PUTTING FORTH THE VERY SAME FACTS AND THE TRIBUNAL HAS TAKEN A CONSCIOUS VIEW OF THE MATTER BY CONSIDERING THOSE FACTS AND ALSO AFTER DULY DISTINGUISHING THE CASE LAW RELIED UPON BY THE ASSESSEE. HE SUBMITTED THAT THE PLEA PUT FORTH BY THE ASSESSEE WOULD RESULT IN REVIEWING THE ORDER PASSED BY THE TRIBUNAL AND HENCE THE SAME IS LIABLE TO REJECTED. 6. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORD. WE FIND MERIT IN THE SUBMISSION OF LD D.R. ALL THE FACTS HAVE BEEN CONSIDERED BY THE TRIBUNAL AND THE TWO DECISIONS RELIED UPON BY THE ASSESSEE WERE ALSO DULY CONSIDERED AND DISTINGUISHED. ACCORDINGLY THE TRIBUNAL HAS TAKEN A VIEW ON THE ISSUES URGED BY THE ASSESSEE. THE PETITION FILED B Y THE ASSESSEE, IN OUR VIEW, ONLY REQUESTS THE TRIBUNAL TO RECONSIDER THE DECISION, WHICH THE TRIBUNAL IS NOT ENTITLED TO DO U/S 254(2) OF THE ACT. ACCORDINGLY WE ARE OF THE VIEW THAT THE PRAYER MADE BY THE ASSESSEE WOULD AMOUNT TO REVIEWING THE ORDER PAS SED BY THE TRIBUNAL. ACCORDINGLY WE DECLINE TO INTERFERE WITH THE ORDER PASSED BY THE TRIBUNAL. VIJAY BHAGVANDAS RAHEJA 6 7. IN THE RESULT, THE MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE IS DISMISSED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 3 . 2 .201 7. SD/ - SD/ - (PAW AN SINGH ) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 3 / 2 / 20 1 7 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESP ONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( DY./ASSTT. REGISTRAR) PS ITAT, MUMBAI