AVAN J MISTRI, MUMBAI vs. ITO 15(1)(1), MUMBAI

आदेश / O R D E R

PER RAVISH SOOD, JUDICIAL MEMBER:

“This appeal is against the order dated 24.10.2014 of the Commissioner of Income Tax (Appeals) - 26, Mumbai, (hereinafter referred to as the "CIT(A)") in appeal against Order dated 20.11.2013 u/s 271(1)(c) of the Income-tax Act, 1961, passed by the Income-tax Officer -15(1)(1), Mumbai (hereinafter referred to as 'the A.O") and relates to the Assessment Year 2008-09. The undermentioned grounds of appeal are without prejudice to one another:-

1. The CIT(A) erred in upholding penalty u/s 271(1)(c) of Rs 1,00,000/- in respect of alleged long term capital gains added to the income of the appellant chargeable to tax.

2. The CIT(A) failed to appreciate inter alia that in the instant case no capital asset belonging to the appellant had been transferred by her and hence: i. as the appellant was not the owner of the immoveable properties transferred, no capital gains arose in her hands during the previous year, and ii. the appellant had not concealed any particulars of her income, nor had she submitted any inaccurate particulars of income, and hence the provisions of u/s 271(1)(c) were not attracted in the present case.

3. The CIT(A) failed to appreciate inter alia that. assuming for the sake of argument that any capital gain arose for taxation in the hands of the appellant, the computation of capital gains (if properly computed in accordance with law) resulted in a loss and hence no penalty u/s 271(1)(c) of the Act ought to have been levied.

4. The CIT(A) failed to appreciate inter alia that, assuming for the sake of argument that any capital gain arose for taxation in the hands of the appellant, and the computation of capital gains (if properly computed in accordance with law) resulted in a gain, such gain arose by virtue of the application of the deeming provisions of Sec.50C of the Act, and hence no penalty u/s 271(1)(c) of the Act ought to have been levied.

5. The CIT(A) failed to appreciate inter alia that, assuming for the sake of argument that any capital gain arose for taxation in the hands of the appellant, for the reasons set out in the grounds above, the appellants vie w that no chargeable gain arose was a bonaf ide view duly supported by law, and hence no penalty u/s 271(1)(c) of the Act ought to have been levied.

P a g e | Mrs. Avan J. Mistri Vs. ITO 6. The learned CIT(A) failed to decide any of the grounds of appeal

, arguments urged and/or contentions raised before him while disposing of the appeal.

7. The Appellant craves leave to add to, alter or otherwise amend all or any of the abovementioned grounds of appeal.”

2. Briefly stated, the facts of the case are that the assessee had filed her return of income on 25.07.2008, declaring total income at Rs.1,00,045/-. The return of income was processed as such u/s 143(1) of the ‘Act’. The case of the assessee was taken up for scrutiny assessment u/s 143(2) on the basis of AIR information. That during the course of the assessment proceedings the A.O observed that a plot which was owned by the father of the assessee, had after his death devolved upon his legal heirs including the assessee, wherein each of them got entitled to 1/4th share in the said property. It was observed by the A.O that on subsequent sale of property the assessee got a sum of Rs.7,85,636/-as her share in the sale consideration. That in the backdrop of the aforesaid facts it was observed by the A.O that the assessee had not reflected the said sale transaction in her return of income. The A.O on the basis of his aforesaid observations thus did not find favour with the submissions of the assessee furnished before him during the course of the assessment proceedings, and computed the long term capital gain on sale of the property in the hands of the assessee at Rs.6,28,508/-. The assessee being aggrieved with the order of the A.O carried the matter in appeal before the CIT(A). The CIT(A) as per his order dated 13.08.2013 partly allowed the appeal, directing that the assessee was entitled to the benefit of cost of indexation from 01.04.1981. It was further observed by the CIT(A) that the total consideration received on the sale of the aforesaid property was only Rs.22,00,000/- and not Rs.31,42,542/-, in which the assessee was entitled to 1/4th share. Thus on the basis of the aforesaid observations the CIT(A) worked out the share in the sale P a g e | Mrs. Avan J. Mistri Vs. ITO consideration in the hands of the assessee at Rs.5.50 lac. The assessee being aggrieved with the order of the CIT(A) further carried the matter in appeal before the Tribunal. The Tribunal vide its order dated 03.02.2017 in therein accepted the contention of the assessee that as the property under consideration was situated in a developed zone, therefore, the ready reckoner rate on 01.04.1981 for the developed vacant land of Rs.60 per sq. mtr was to be adopted, as against the rate of Rs.12 per sq. mtr applicable to undeveloped vacant land, as had been taken by the lower authorities. The Tribunal thus accepting the aforesaid contention of the assessee directed the A.O to take the market value of the property as on 01.04.1981, as per the ready reckoner value for the developed vacant land and compute the capital gains accordingly. That pursuant to the aforesaid directions of the Tribunal the long term capital loss of Rs.5,01,461/- was worked out in the hands of the assessee.

3. That during the course of the hearing of the appeal it was submitted by the ld. Authorized Representative (for short A.R) that now when on the transfer of the aforesaid property under consideration a long term capital loss had emerged in the hands of the assessee, therefore, no penalty u/s 271(1)(c) was liable to be imposed in the hands of the assessee. It was further submitted by the ld. A.R that even otherwise as the computation of LTCG in the hands of the assessee had earlier resulted only because of the applicability of the deeming provisions u/s 50C, and not otherwise, therefore, on the said count also the assessee was not liable to be subjected to penalty u/s 271(1)(c). Alternatively, it was submitted by the ld. A.R that the reason for not showing the aforesaid transactions by the assessee in her return of income was backed by the fact that she had remained under a bonafide belief that as no part of the said property had been