PRATHAMESH VIVEK KHOT,MUMBAI V. INCOME TAX OFFICER NATIONAL E ASSESSMENT CENTRE DELHI, MUMBAI

ITA 3091/MUM/2023

AI Insights

The case revolves around the penalty proceedings initiated against Shri Prathamesh Vivek Khot by the Income Tax Officer (ITO) under Section 270A for allegedly misreporting income by claiming an exemption under Section 54F, which was denied. The ITO argued that the assessee owned more than one residential property, thus disqualifying him from the exemption. The assessee contended that one of the properties was inherited and not purchased, and thus, he was entitled to the exemption. The Tribunal agreed with the assessee, noting that the claim was made in good faith based on his understanding and the facts presented.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 473418 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 19-11-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 18-07-2023
• Laws Referred To: Section 54F, Section 270A, Section 270AA
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANISH AJUDIYA
• Keywords: Capital asset; Transfer pricing; International transaction; Bonafide belief; Wrong claim; Benefit of exemption
• Section: 54F; 270AA

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, ‘C’ BENCH MUMBAI BEFORE: SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA No.3091/Mum/2023 (Assessment Year :2018-19) Shri Prathamesh Vivek Khot 1502, 1503, Dreams 1 A Wing, LBS Marg Bhandup West Mumbai – 400 078 Vs. Income Tax Officer National E-Assessment Centre Delhi PAN/GIR No.BSBPK6695K (Appellant) .. (Respondent) Assessee by None Revenue by Shri Manish Ajudiya Date of Hearing 19/11/2024 Date of Pronouncement 27/11/2024 आदेश / O R D E R PER AMIT SHUKLA (J.M): The aforesaid appeal has been filed by the assessee against order dated 25/05/2023 passed by NFAC, Delhi in relation to the penalty proceedings u/s.270A. 2. None appeared on behalf of the assessee despite of service of notice, accordingly, appeal of the assessee is decided on merits. ITA No.3091/Mum/2023 Shri Prathamesh Vivek Khot 2 3. From the perusal of the records it is seen that assessee has claimed exemption u/s. 54F of Rs.18,38,442/-. The ld. AO on perusal of the computation of income, noted that assessee had shown income from house property from two properties, thus, he inferred that once the assessee owns two residential properties and the income of both the properties have been offered by the assessee in the return, therefore, in terms of Section 54F, assessee is not entitled for the claim of exemption from capital gains u/s.54F. 4. In response to the show-cause notice assessee stated as under:- \"The property at Flat 1501, Dream Wings is received by assessee Mr. Prathamesh Khot on the death of his mother Late Smt. Veena Vivek Khot through WILL and is not purchased by the assessee. The property at Regency Nirman Ltd, Titwala is purchased by Mr. Vivek Khot jointly with Mr. Prathamesh Khot on 27.02.2015. In view of the above, the assessee is having only one property other than Flat 1801 at the time of transfer/sale of jewellery (i.e long term capital asset), hence the exemption benefit u/s exemption benefit u/s 54F shall not be denied to the assessee.” 5. However, the ld. AO after quoting the relevant provisions of Section 54F held that the exemption cannot be allowed because assessee owns more than one residential property and accordingly, the claim of exemption of Rs.18,38,442/- was denied. The assessee did not prefer any appeal against such disallowance. However, the ld. AO had initiated the penalty proceedings u/s.270A and held that wrong claim of exemption ITA No.3091/Mum/2023 Shri Prathamesh Vivek Khot 3 u/s.54F is misreporting and it is a fit case for levy of penalty u/s. 270A (9) of the Act. 6. Before the ld. CIT (A) assessee had stated as under:- “In this regard I would like to state that, In the given case, I have shown capital gain correctly in the computation / return of income and claimed deduction u/s 54F of Rs. 18,38,442/-, During the assessment proceedings I have furnished all the details including property agreements requested by the learned assessing officer. As per the AO's order the deduction u/s 54F of Rs. 18,38,442/- cannot be allowed as I own more than two house property on the date of purchase of new house. However it is to be noted that, I have received one house ie Flat 1502, Bldg 1A Dreams, through inheritance from my mother on her demise, which is not purchased by me. The other house is purchased by me along with my father Mr.Vivek Khot. The demand arises due to interpretation of Law with regards to section 54F and it is not intentional misreporting or under reporting of income. I have accepted the stand taken by the AQ and has paid the necessary tax along with interest as per the notice of demand u/s 156 Key details for Immunity from Imposition of Penalty u/s 270A Sr. No. Particular Particular 1 Returned Income 29,66,890 2 Assessed Income as per order dated 07.04.2021 48,05,332 3 Date of Notice of Demand 07.04.2021 4 Amount of Tax demand 5,30,372 5 Details of Payment of Tax as mentioned below 5,30,372 ITA No.3091/Mum/2023 Shri Prathamesh Vivek Khot 4 1.Challan -1 BSR 6910333 Date 20/04/2021Challan No.50322 Amount Paid Rs.80,372 2.Challan -2 BSR 6910333 Date 19/04/2021Challan No.50096 Amount Paid Rs.2,50,000 3.Challan -3 BSR 6910333 Date 17/04/2021Challan No.50074 Amount Paid Rs 2,00,000 7. Assessee had also applied for immunity before the ld. AO as per Section 270AA but it was beyond period of one month. It was further stated that assessee had paid the taxes alongwith interest and has not filed any appeal, therefore, he is entitled for immunity of imposition of penalty u/s. 270A although there was delay in filing Form 68 within the time period. Again the copy of Form 68 was filed before the ld. AO and also before the ld. CIT (A) to grant immunity. However, the ld. CIT (A) held that immunity u/s.270AA can be granted only if the application is made within one month from the end of the month in which order passed by the ld. AO was received by the assessee. Simply on that basis he has confirmed the penalty. 8. Before us ld. DR submitted that, here in this case assessee is not entitled for immunity u/s.270AA because such immunity is not available if the penalty is levied under Sub-Section (9) of Section 270A. Therefore, ld. AO even otherwise also could not have granted immunity. On merits it is fit case of misreporting ITA No.3091/Mum/2023 Shri Prathamesh Vivek Khot 5 because assessee made wrong claim when he already had one house. 9. After considering the relevant finding given in the impugned orders and the facts as culled out from the records, it is seen that assessee had received one flat through inheritance from his late mother and was not purchased by him. The other property was purchased by him alongwith his father. This fact was duly stated before the ld. AO as well as was also reported in the computation of income. The claim of exemption u/s. 54F is available to an individual from the transfer of long term capital asset and assessee had purchased a residential house in India. The proviso to section 54F states that the exemption shall not be available if the assessee owns more than one residential house other than new asset on the date of transfer of original asset. The assessee did not have any house in his own name and had received on the demise of his mother as inheritance and if assessee had made a claim for exemption from capital gain for a property purchased by him alongwith his father through his own funds and claimed deduction u/s 54F which fact was duly reported, then same cannot be held that it is a case of underreporting of income in consequence of misreporting. Clause (9) has various instances wherein it is treated to be a misreporting of income. The ld. AO has not mentioned as to which of the clauses of Sub-Section (9) is applicable. For the sake of ready reference Sub-Section (9) of Section 270 A reads as under:- ITA No.3091/Mum/2023 Shri Prathamesh Vivek Khot 6 “270A(9). The cases of misreporting of income referred to in sub- section (8) shall be the following, namely:- (a) misrepresentation or suppression of fact; (b) failure to record investments in the books of account; (c) claim of expenditure not substantiated by any evidence, (d) recording of any false entry in the books of account; (e) failure to record any receipt in the books of account having a bearing on total income, and (f) failure to report any international transaction or any transaction deemed to be an international transaction or any specified domestic transaction, to which the provisions of Chapter X apply 10. In this case it is neither a case of misrepresentation or suppression of fact because assessee has duly placed all the facts before the ld. AO as well as in the return of income. Other clauses from ‘b’ to ‘f’ are also not applicable to show that it is a case of misreporting of income. If ld. AO is levying the penalty by invoking Section 270A (9), then it is incumbent upon the AO to specify under which limb of Section 270A (9) he is initiating or is levying the penalty for misreporting of income. Penalty u/s 270 A is not automatic or adjunct to any addition made by the AO. Misreporting has to be established and onus is on the AO to give finding as how it amounts to misreporting under the clauses of sub section (9) of section 270A. Accordingly, on these facts when assessee had duly stated all the facts and stated that he was under a bonafide belief that the only property which he has ITA No.3091/Mum/2023 Shri Prathamesh Vivek Khot 7 purchased in his name (alongwith his father) on transfer of capital asset was the only property which was owned by him, and therefore on purchasing this property he can claim exemption u/s 54F. The other property which was bequeathed to him after demise of his mother and came as inheritance belonged to his mother and not him. On such bonafide belief and when this fact has been duly stated and reported, then where is the question of misrepresentation or suppression of fact. At best it is an inference of AO on interpretation of statute and not something he has found out any suppression of facts on his own or by any inquiry. Thus in this case, it cannot be held that it is a case of levy of penalty u/s.270A. Accordingly, penalty levied and confirmed by the ld. CIT (A) is deleted. 11. In the result, appeal of the assessee is allowed. Order pronounced on 27th November, 2024. Sd/- (GIRISH AGRAWAL) Sd/- (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated 27/11/2024 KARUNA, sr.ps Copy of the Order forwarded to : BY ORDER, 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// ITA No.3091/Mum/2023 Shri Prathamesh Vivek Khot 8 (Asstt. Registrar) ITAT, Mumbai "