ITO 29(2)(5), MUMBAI vs. PARIS NAVROJI SETHNA, MUMBAI

O R D E R

PER AMARJIT SINGH, JM:

2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) failed to appreciate that the facts of the case relied upon by him is not squarely applicable in the case of the assessee.

3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not appreciating the fact that the assessee himself before the ITAT has withdrawn his appeal which goes on to prove that the assessee has accepted for the enhancement of his income in the case of the quantum assessment. 4 The appellant craves leave to add, to amend alter, substitute or modify any of the above ground or add a fresh ground as and when found necessary either before or at the time of hearing.” 3. The brief facts of the case are that the assessee filed the return of income on 02.01.2009 declaring total income to the tune of Rs.6,19,732/-. The case was selected for scrutiny. The assessment was completed u/s 143(3) of the Act by assessing the income to the tune of Rs.64,72,760/- on 28.12.2010. On verification, it was found that the assessee has sold the land and building but no capital gain was declared in return of income. The notice was given to the assessee who submitted the working of capital gains wherein the assessee claimed exemption u/s 54 of the Act and declared the income as Nil. The assessee purchased the shops which was not residential premises and valuation of the property was taken into consideration as on 1. 4.1981, therefore, the notice was given and after the reply of the assessee, the LTCG was assessed to the tune of Rs.57,27,530/-. The assessee filed an appeal before the CIT(A). The income of the assessee was enhanced to the tune of Rs.1,30,28,930/-, therefore, the assessee has filed an appeal Hon’ble ITAT where the assessee withdraw the appeal regarding the determination of capital gains, thereby, accepting the decision of Ld. CIT(A) who has directed to tax the Long Term Capital Gains on sale of land and Short Term Capital Gains on sale of building. However, 2 A.Y.2008-09 Hon’ble ITAT has directed to allow the expenses incurred towards sale of property equally between the Short Term Capital Gains and Long Term Capital Gains and exemption u/s 54EC of the Act against the Short Term Capital Gain. In view of the decision of the Hon’ble ITAT the total income was brought down to the tune of Rs.1,20,83,032/- from of Rs.1,30,28,930/-. Since the capital gain was not properly declared by assessee, therefore, the notice was given to the assessee. After the reply of the assessee, the Assessing Officer levied the penalty to the tune of Rs.33,41,058/-. The assessee has filed an appeal before the CIT(A) who deleted the penalty, therefore, the revenue has filed the present appeal before us.

3 A.Y.2008-09 7.1 The assessment was completed u/s 143(3) on 28.12.2010 on the total income of Rs.64,72,760/- after making addition of Rs.57,27,530/- being LTCG. 7.2. Aggrieved by the said addition, the assessee filed appeal before CJT(A)-33, Mumbai, who vide order dated 23.01 .2012 had apportioned the immovable properly between movable and immovable property and held that the capital gain arising out of sale of land is Long Term Capital Gains and capital gains arising out of sale of building is Short Term Capital Gains and accordingly h£ directed the Ld. AO to tax the Short Term Capital gains at Rs. 1,21,23,0007- without allowing any exemption u/s. 54 and expenses incurred for transfer of property. As regards Long Term Capital Gains, the Ld. CIT(A) directed to allow the exemption u/s. 54 i.e. cost of new assets purchased being shops and investment in REC bonds, thus directing to determine the LTCG at Rs, Nil. In view of ClT{A)'s directions, the total income of the assessee was enhanced to Rs. 1,30,28,930,'- from Rs. 64,72,760/-. 7.3. The assessee challenged the CIT(A)'s order before the Hon'ble ITAT, Mumbai, However, the assesses had withdrawn its appeal before the Hon'ble ITAT regarding the determination of Capital Gains thereby accepting the decision of Ld. CIT(A)T who had directed to (an the Long Term capital Gains on sale of land and Short Term Capital Gains on sale of building. However, the Hon'ble ITAT had directed the Ld, AO to allow the expenses incurred towards sate of property equally between [he Short Term Capital Gains and Long Term Capital Gains and exemption u/s. 54EC against the Short Term Capital Gains. Following the directions of the Hon’ble ITAT, the Ld. AO calculated the total income at Rs. 1,20,83,0327-. The Ld, AO, keeping in view the above discussion, concluded that the assessee had not declared any income under the head capital Gains' whereas the assessee had accepted that there was Capital Gains (STCG7 LTCG) in the financial year 2007-08 relevant to A,Y. 2008-09, particulars of which had been concealed by the assessee, and after rejecting the explanation offered by the appellant proceeded to levy penalty u/s. 27l(l)(c) and levied penalty of Rs,33,41,058/- being 100% of the tax sought to be evaded. .4. During the appellate proceedings, the appellant stated that the Ld. AO has levied penalty on a wrong presumption that he has not declared any income under the head capital gains. The appellant has submitted a copy of ITR 2 for A,Y, 2008 -09 filed by him. In 4 A.Y.2008-09 schedule CO it is seen that the appellant has declared the details of capital assets, including full value of consideration being Rs.3,10,00,000/-, cost of acquisition after indexation at Rs.1,36,58,400/-, expenditure on transfer at Rs.6,20,000/- and computing the capital gain at Rs.1,67,21,600/-, from where exemption on account of investment of Rs.1,86,58,400/- eligible for deduction "'u/s, 54 EC was claimed and Nil income was offered under the headlong term capital gain is not a ease that the appellant concealed any facts before the department. In this case, pan of the explanation given by the appellant was found to be not acceptable. The appellant further stated that merely because the appellant had made a claim which was rejected, it cannot be said that inaccurate particulars are furnished or claim was malafide. The appellant had relied on the decision of Hon'ble Supreme Court in case of C1T v. Reliance Petro Products P. Ltd 322 ITR 158(SC), wherein it has been held that "where there is no finding that any details supplied by the assessee in its return arc found to be Incorrect or erroneous or false there is no question of inviting the penalty u/s. 271(l)(c). A mere making of a claim which is not sustainable in law will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in that return cannot amount to furnishing inaccurate particulars. 7.5 The ratio laid down in the case of Reliance Petro Products EM Ltd referred to above ti squarely applicable to this case, since in the present case the Ld, AC) has not given any finding thai details supplied by the assessee in its return are incorrect or erroneous or false. It is a case wherein claim made has not been sustained. Therefore respectfully following the decision of Hon'ble Supreme Court (supra), the penalty of Rs, 33,4l,058/- levied u/s 27l(l)(c) is deleted.”