MINAXI K. MEHTA,MUMBAI vs. ASST CIT 21(1), MUMBAI

The present appeal filed by the assessee is directed against the order passed by the CIT(A)-32, Mumbai, dated. 22.08.2014, which in turn arises from the order passed by the A.O under Sec. 271(1)(c) of the Income Tax Act, 1961 (for short „Act‟) dated 25.03.2013 for A.Y. 2008-09. The assessee has assailed the order of the CIT(A) by raising the following grounds of appeal before us :

The learned Asst. Commissioner of Income Tax erred in levying penalty u/s 271(1)(c) of the Income Tax Act, 1961 and having regard to the fact and circumstances of the case and in law the appellant denies her liability to pay any penalty under the said section. The appellant craves leave to add to alter amend and or delete any or all of the above grounds of appeal

During the course of the assessment proceedings it was observed by the A.O that the assessee had sold a Plot No. B-16 admeasuring 1089 Sq. Yards (out of Plot No. 51) situated at 55, V.L Mehta Road, Juhu Scheme, Vile Parle (W), Mumbai, together with the right to use the FSI and all benefits generated from the said property to Sh. Babulal Khandelwal & Ors. On a perusal of the details, it was noticed by the A.O that though the assessee had sold the aforesaid property vide a registered deed of conveyance dated 30.12.2007 for an amount of Rs. 7,00,00,000/-, but had computed the Long term capital gain (for short „LTCG‟) at Rs. 53,92,569/- by adopting the sale consideration at Rs. 6,25,00,000/-. It was submitted by the assessee that the aforesaid property was received by her as a gift from her mother Smt. Vimla D. Sanghvi, vide a registered gift deed dated 01.09.2003. Further, it was the claim of the assessee that her mother prior P a g e | Mrs. Minaxi K. Mehta Vs. ACIT, Circle 21(1). to gifting of the property had entered into a Joint Development Agreement (for short „JDA‟), dated 05.02.2003 with Sh. Babulal Khandelwal & Ors. for a consideration of Rs. 2.16 crore and had received an advance of Rs. 75,00,000/-. However, due to various disputes and litigations amongst the family members the development agreement did not materialise and hence could not be implemented. It was submitted by the assessee that she had thereafter sold the property under consideration for a sum of Rs. 7 crores to the same person i.e Sh. Babulal Khandelwal & Ors, who after adjusting the amount of Rs. 75,00,000/- which was earlier given by him to her mother Smt. Vimla D. Sanghvi paid the balance amount of Rs. 6,25,00,000/- to the assessee. It was claimed by the assessee that the amount of Rs. 75,00,000/- which was earlier received as an advance at the time of entering into the JDA dated 05.02.2003 was offered by her mother for tax in the assessment year 2003-04. The assessee in order to fortify her aforesaid claim submitted before the A.O that there was a clear mention of the JDA earlier entered into between her mother and the developer i.e. Sh. Babulal Khandelwal & Ors in the registered conveyance deed dated 30.12.2007. However, as the assessee could not place on record any documentary evidence which could prove her claim that an advance of Rs. 75,00,000/- was earlier received by her mother and offered for tax in A.Y. 2003-04, therefore, the A.O adopted the sale consideration at Rs. 7,00,00,000/- and reworked out the LTCG at Rs. 1,28,92,569/-. The A.O while culminating the assessment also initiated penalty proceedings under Sec. 271(1)(c) of the Act. Further, the A.O also issued a „Show cause‟ notice (for short „SCN‟), dated 30.12.2010 under Sec. 274 r.w.s 271 of the Act to the assessee, therein calling upon her to explain as to why penalty under Sec. 271(1)(c) may not be imposed on her.

Aggrieved, the assessee carried the matter before the CIT(A). The CIT(A) vide his order dated 30.09.2011 confirmed the addition of Rs. 75,00,000/- made by the A.O and dismissed the appeal.

The assessee being aggrieved with the order of the CIT(A) carried the same in appeal before the Tribunal. The Tribunal after deliberating on the P a g e | Mrs. Minaxi K. Mehta Vs. ACIT, Circle 21(1). contentions advanced by the assessee was however not persuaded to accept the same. It was observed by the Tribunal that the conveyance deed dated 30.12.2007 executed by the assessee in favour of the purchaser was duly witnessed by the mother of the assessee i.e Smt. Vimla D. Sanghvi. Further, it was observed by the Tribunal that the assessee had failed to place on record any document evidencing her claim that a part of the sale consideration of Rs. 75 lac was earlier received as advance by her mother and offered for tax in her hands. Rather, on the contrary it was observed by the Tribunal that the assessee by executing the receipt of consideration of Rs. 7 crore had acknowledged that the entire sale consideration was received by her. In the backdrop of the aforesaid observations the appeal filed by the assessee was dismissed by the Tribunal, vide its order dated 13.04.2016 viz. Mrs. Minaxi Kishore Mehta Vs. ITO, Ward-21(1), Mumbai (ITA No. 7871/Mum/2011).

The A.O after the dismissal of the quantum appeal of the assessee by the CIT(A), again issued a „Show cause‟ notice under Sec. 274 r.w.s. 271(1)(c), dated 12.02.2013 and called upon the assessee to explain as to why penalty under Sec. 271(1)(c) may not be imposed on her. The assessee filed her reply before the A.O and tried to impress upon him that no penalty under Sec. 271(1)(c) was called for in her case. However, the A.O did not find favour with the contentions advanced by the assessee that no penalty under Sec. 271(1)(c) was liable to be imposed. It was observed by the A.O that the advance of Rs. 75,00,000/- which as claimed by the assessee was earlier given by the developer to the assesses mother would only be an application of the sale consideration received by the assessee and not a diversion at source by virtue of any overriding title over the property. The A.O on the basis of his aforesaid observations concluded that the assessee had furnished inaccurate particulars of income and thereby concealed her income. On the basis of his aforesaid deliberations the A.O imposed a penalty under Sec. 271(1)(c) of Rs. 16,99,500/- on the assessee.

The assessee being aggrieved with the order of the CIT(A) upholding the penalty imposed by the A.O under Sec. 271(1)(c) has carried the matter in appeal before us. The Learned Authorized Representative (for short „A.R.‟) for the assessee at the very outset of the hearing of the appeal, taking us through the facts of case submitted, that part of the sale consideration of Rs. 75,00,000/- was received by the mother of the assessee i.e. Smt. Vimla D. Sanghvi on 05.02.2003 at the time when she had entered into a JDA with the aforesaid developer viz. Sh. Babulal Khandelwal and Ors. It was submitted by the ld. A.R that the assessee on receipt of the balance sale consideration of Rs. 6,25,00,000/- from the said developer at the time of execution of the registered conveyance deed, dated 30.12.2007, had under a bonafide belief worked out the LTCG by adopting the sale consideration at Rs. 6,25,00,000/- i.e the amount which was actually received by her. It was submitted by the Ld. A.R that pursuant to the JDA dated 05.02.2003 entered into by the mother of the assessee Smt. Vimla D. Sanghvi and the aforesaid developer i.e. Sh. Babulal Khandelwal & Ors., certain rights pertaining to the property under consideration got vested with the said developer and in lieu thereof an amount of Rs. 75,00,000/- was paid to her. Alternatively, the Ld. A.R. assailed the validity of the jurisdiction assumed by the A.O for imposing penalty under Sec. 271(1)(c) in the hands of the assessee. It was submitted by the ld. A.R that the A.O without putting the assessee to notice as regards the default for which penalty was sought to be imposed on her, had thus wrongly assumed jurisdiction and imposed penalty under Sec. 271(1)(c). The Ld. A.R in order to drive home his aforesaid contention drew our attention to the copy of the „Show cause‟ notice, dated 30.12.2010 (copy placed on record). The Ld. A.R taking us through the „SCN‟ submitted that as the A.O had failed to strike off the P a g e | Mrs. Minaxi K. Mehta Vs. ACIT, Circle 21(1). irrelevant default, therefore, the assessee had remained divested of an opportunity to explain as to why no penalty under Sec. 271(1)(c) of the Act was liable to be imposed on her. The Ld. A.R in support of his aforesaid contention relied on an order of a coordinate bench of the Tribunal viz. ITAT, Mumbai Bench “C”, Mumbai in the case of M/s Orbit Enterprises Vs. ITO 15(2)(2), Mumbai (ITA No. 1596 & 1597/Mum/2014, dated 01.09.2017) (copy placed on record).

Per contra, the Learned Departmental Representative (for short „D.R‟) relied on the orders of the lower authorities. The Ld. D.R. objected to the assailing of the validity of jurisdiction assumed by the A.O for the reason that no such specific ground of appeal was raised by the assessee. On merits, the Ld. D.R took support of the order passed by the Tribunal while disposing off the quantum appeal of the assessee for the year under consideration. It was submitted by the Ld. D.R that as the assessee had suppressed the LTCG by an amount of Rs. 75,00,000/-, therefore, the CIT(A) had rightly confirmed the penalty imposed by the A.O under Sec. 271(1)(c) of the Act.

We have heard the authorized representatives of both the parties, perused the orders of the lower authorities and the material available on record. We shall first advert to the challenge thrown by the Ld. A.R to the validity of the jurisdiction assumed by the A.O for levying penalty under Sec. 271(1)(c) on the assessee. We find that the validity of the jurisdiction assumed by the A.O for imposing penalty under Sec. 271(1)(c) has been challenged for the first time before us. It is the case of the assessee that as the irrelevant default in the „Show cause‟ notice dated 30.12.2010 was not struck off by the A.O, hence the assessee was not put to notice as regards the default for which she was called upon to explain as to why penalty under Sec. 271(1)(c) may not be imposed on her. We have deliberated on the objection raised by the Ld. D.R that as the assessee had failed to raise a specific ground of appeal as regards the validity of the jurisdiction assumed by the A.O for imposing penalty under Sec. 271(1)(c) on the assessee, thus P a g e | Mrs. Minaxi K. Mehta Vs. ACIT, Circle 21(1). the same could not be looked into while disposing off the present appeal. We have given a thoughtful consideration to the objection raised by the Ld. D.R and find substantial force in the same. We are persuaded to be in agreement with the contention of the ld. D.R that as the assessee had neither challenged the jurisdiction assumed by the A.O for imposing penalty under Sec. 271(1)(c) before the lower authorities, nor has raised any specific ground of appeal before us, thus the same cannot be looked into by us while disposing off the present appeal. In this regard, we may herein observe that as per Rule 11 of the Appellate Tribunal Rules, 1963 an appellant shall not, except with the leave of the Tribunal, urge or be heard in support of any ground not set forth in the memorandum of appeal. Thus, in the absence of a ground of appeal having been raised by the assessee before us as regards the validity of the jurisdiction assumed by the A.O for imposing penalty under Sec. 271(1)(c), we refrain from adverting to and therein adjudicating the same. Further, without prejudice to our aforesaid observations, we find that even otherwise the assessee while challenging the validity of the jurisdiction assumed by the A.O for imposing of penalty under Sec. 271(1)(c), has failed to come up with the complete facts as regards the issue under consideration. We find that though the assessee had placed on record the copy of the „Show cause‟ notice, dated 30.12.2010 issued by the A.O under Sec. 274 r.w.s 271 at the time of passing the assessment order, but had lost sight of the subsequent „Show Cause‟ notice, dated 12.02.2013 which was issued by the A.O. under Sec. 274 r.w.s 271 of the Act. We thus, are of the considered view that as the complete facts/records had not been placed on record by the assessee, thus the adjudication of the issue pertaining to the validity of the jurisdiction assumed by the A.O, which the assessee had for the very first time raised before us cannot also be proceeded with for the said reason.