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Income Tax Appellate Tribunal, “C” BENCH, MUMBAI
Before: HON’BLE S/SHRI JOGINDER SINGH (JM), & RAJESH KUMAR,(AM)
Per RAJESH KUMAR, Accountant Member:
This is an appeal filed by the revenue. It is directed against order passed by Ld. CIT(A)-13, Mumbai dated 25.7.2014 for assessment year 2008-09.
The only issue raised in this appeal is against the deletion of the penalty of Rs.16,99,500/- by the ld.CIT(A) as levied by the AO under section 271(1)(c ) of the Act. .
The facts of the case are that the assessee has sold Long Term Capital asset on which he has earned long term capital gain of Rs.2,81,43,901/- and claimed exemption under section 54EC of Rs.1 crore, whereas as a matter of fact, the AO was of the opinion that only Rs.50 lakhs deduction was allowable under the provisions of section 54EC of the Act and accordingly, initiated penalty proceedings on the assessee under section 271(1)(c) of the Act equal to 100% of the tax sought to be evaded i.e. Rs.16,99,500/- for concealment of particulars of income and furnishing inaccurate particulars of income.
At the outset, the ld.AR submitted before us that the issue involved in the quantum appeal on which the penalty has been imposed and was a subject matter of the present appeal was decided in favour of the assessee by the Co-ordinate Bench of the Tribunal in (AY- 2008-09) order dated 4.6.2014 and therefore the very basis on which the penalty was imposed has been deleted by the Co-ordinate Bench of the Tribunal by deciding the appeal of the assessee in his favour and therefore, the appeal filed by the department against the deletion of penalty deserves to be dismissed. 5. We have heard both the parties on the issue and perused the material placed before us including the order of Co-ordinate Bench of the Tribunal deleting the quantum. We find that the quantum of addition on which the penalty was imposed by the AO and deleted by the CIT(A) has finally been decided in favour of the assessee by the Tribunal order (supra) and therefore, the penalty as levied by the AO has no legs to stand. In view of the order of the Tribunal (supra), the appeal filed by the revenue against the deletion of penalty by the ld.CIT(A) deserves to be dismissed. However, for the sake of brevity, we would like to reproduce the operative part of the Tribunal order as under : “5. We have heard both the parties and their contentions have carefully been considered. It is not disputed by the Ld. DR that the decisions relied upon by Ld. AR covers the issue in favour of the assessee. However, Ld. DR has relied upon the decision of Raipur ITAT in the case of Raj Kumar Jain(HUF) (supra). Thus, apparently there is a conflicting view available on the issue. 5.1 It may be relevant to mention here that keeping in view the above position, this Tribunal vide order sheet dated 19/11/2012 has referred this matter to the Hon‟ble President for constitution of Special Bench and the matter was placed before Hon‟ble President. However, Hon‟ble President vide his noting dated 22/10/2013 has observed that there is no need for constitution of Special Bench and the appeal was fixed before regular bench in due course. Accordingly, this appeal has come up for hearing and is being heard.
6. After careful consideration of the arguments of both the parties we found that the Jaipur Bench‟s decision was also cited by the Revenue before ITAT in the case of ITO vs. Ms. Rania Faleiro (supra), wherein the Tribunal has preferred to take a view in favor to the assessee and the observations of the Tribunal are reproduced below: “4. We have also noted that subsequently, a contrary view has been taken by Jaipur bench in Asst. Commissioner of income-tax vs. Raj Kurmar Jain & Sons (HUF), 19 taxmann .com 27 (Jp.). Subsequent to that decision, the Bangalore bench in the case of Vivek Jairazbhoy Vs. Dy. Commissioner of income-tax vide order dtd. 14,12,2012 took view in favour of the assessee. From the provisions of Sec. 54EC we noted that the limit of Rs. 50,00,000/- as given under the proviso is per person per financial year. The plain reading of the section as well as the proviso clearly suggests the same interpretation. There is no ambiguity in the interpretation. Had there been an intention of the legislature to restrict the exemption to Rs.50,00,000/-, the legislature would have provided the embargo in this regard. Restriction relates only to the investment made in any financial year by the assessee. Making of the investment is a condition for availing of the exemption. Condition for availing of the exemption requires that the investment can be made within a period of 6 months. If 6 months falls within a different financial year, as has happened in this case, in our opinion, this Tribunal cannot add
the embargo that the assessee cannot make the investment to avail of the exemption under Section 54EC in the different financial year if he had already made the investment in the financial year in which the capital asset is transferred. In our opinion, the language of Section 54EC is clear and unambiguous and it leads to the interpretation that the assessee can make the investment in two different financial years provided in a financial year the investment made did not exceed Rs.50,00,000/-. We have also gone through the circular no. 3/2008 dtd. 12.3.2008 issued by the CBDT being an explanatory note on the provisions relating to direct taxes in Finance Act, 2007. In para 28.2 thereof the reason foHTfE the limit on the quantum of the investment by a person in a financial year are given as under :
“28.2 The quantum of investible bonds issued by NHAI and REC being limited, it was felt necessary to ensure that the benefit was available to all the investors. For this purpose, it was necessary to ensure that the limited number of bonds available for subscription is also available for small investors. Therefore, with a view to ensure equitable distribution of benefits amongst prospective investors, the government decided to impose a ceiling on the quantum of investment that could be made in such bonds. Accordingly, the said section has been emnded so as to provide for a ceiling on investment by an assessee in such long-term specifield assets. Investments in such specified assets to avail exemption under section 54EC on or after 1st day of April, 2007 will not exceed fifty lakh rupees in a financial year.” From this circular also, it is apparent that the Government only intended to restrict the investment in a particular financial year and accordingly has fixed the limit of Rs. 50,00,000/- as permissible limit in a particular financial year. The Government did not intend to restrict the maximum amount of exemption permissible under Section 54EC. Legislature in our opinion has consciously used the words “in a financial year” in the proviso to Sec. 54EC of the Act. If the legislature wanted to restrict the exemption itself to Rs, 50,00,000/-, it could have simply dispensed with using the words „in a financial year‟. The Hon‟ble Supreme Court while deciding the case of Vikrant Tyres Ltd. Vs. First ITO, 274 ITR 821 laid down law of interpretation of the statute by holding therein as under :
It is settled principle of law that the courts while construing Revenue Acts have to give a fair and reasonable construction to the language of a statute without leaning to one side or the other, meaning thereby that no tax or levy can be imposed on a subject by an Act of Parliament without the words of the state clearly showing an intention to lay the burden on the subject. In this process, the courts must adhere to the words of the statute and the so called equitable construction of those words of the statute is not permissible. The task of the court is to construe the provisions of the taxing enactments according to the ordinary and natural meaning of the language used and then to apply that meaning to the facts of the case and in that process if the tax payer is brought within the net he is caught otherwise he has to go free.
Even in the case of CIT vs. Vegetable Products Ltd., 88 ITR 192 the Hon‟ble Supreme Court has taken view that if there are two views possible, the view favourable to the subject should be taken. In view of the aforesaid discussion, we are of the view that no interference is called for in the order of CIT(A) and CIT(A) has rightly deleted the addition made by the Assessing Officer. We, accordingly, dismiss the appeal filed by the Revenue.
In the result, the appeal filed by the Revenue stands dismissed.
7. Order pronounced in the open court on 18.04.2013” 6.1 In this view of the situation, taking the view adopted by this Tribunal in the case of ITO vs. Ms. Rania Falerio (supra) in which the view taken by Jaipur Bench of ITAT has also been considered, we decide the issue in favour of the assessee and allow the appeal filed by the assessee. The disallowance of Rs.50.00 lacs sustained by Ld. CIT(A) is deleted and appeal filed by the assessee is allowed.
7. In the result, the appeal of the assessee is allowed.”
6. In view of the above decision rendered in quantum appeal we are inclined to dismiss the appeal of the revenue.
In the result, the appeal of the revenue is dismissed. The above order was pronounced in the open court on 8th Dec,2016.