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Income Tax Appellate Tribunal, MUMBAI “J” BENCH, MUMBAI
Before: SHRI SHAILENDRA KUMAR YADAV, JUDICIAL & SHRI RAJESH KUMAR.
अपीलाथ� क� ओर से /By Appellant : Shri J. R. Mookhey, A.R. ��यथ� क� ओर से/By Respondent : Shri S. K. Bepari, D.R. सुनवाई क� तार�ख/Date of Hearing : 22.08.2016 घोषणा क� तार�ख/Date of Pronouncement : 26.08.2016 ORDER PER SHAILENDRA KUMAR YADAV, J.M:
This appeal has been filed by assessee against the order of Commissioner of Income-Tax (Appeals)-3, Mumbai, dated 28.11.2013 for A.Y. 2005-06, wherein penalty u/s.271(1)(c) on the claim of 54EC of the Act has been opposed.
A.Y. 05-06 [J. R. Mookhey vs. ITO] Page 2
Assessee is an individual filed his return of income for A.Y. 2005-06 declaring total income of Rs.2,44,269/-. Assessment was completed u/s.143(3) of the Act on 12.12.2007 accepting the total income as declared. In computation of total income, assessee has shown income from profession from short term capital gain / long term capital gain and income from other sources. Income from capital gain has arisen due to transfer of land and building to the partnership firm of which assessee became partner w.e.f. 02.04.2004. Since, assessee has contributed his land and building at Mafco APM, vashi, Navi Mumbai towards his capital of firm credited to his account with Rs.95,00,000/-. Assessee has bifurcated his capital between the land at Rs.83,50,000/-and balance amount of Rs.11,50,000/- value of the factory building which was taken on the written down value with minor adjustment. On the basis of bifurcation, transfer of the land was shown as long term capital gain and gain arising out of the transfer of factory building was shown as short term capital gain. This was done as per the provisions of the Section 45(3) of the Act. Assessee had filed before Assessing Officer a copy of Lease Deed of 1981 with CIDCO and a copy of partnership deed dated 02.04.2004 and also a copy of a retirement deed dated 01.04.2005, and copy of Nabard bond with other relevant document before Assessing Officer at the time of original assessment. Assessing Officer after looking into all aspect of the case passed the assessment order dated 12.12.2007 accepting Rs.2,44,269/- declared by assessee. Thereafter, assessee received a notice u/s.148 of the Act dated 19.01.2009 for filing the return of reassessment proceeding and in response to same, assessee vide his letter dated 16-02-2009 submitted A.Y. 05-06 [J. R. Mookhey vs. ITO] Page 3 that the original return for A.Y.2005-06 filed on 31.08.2005 may be treated as return filed in response to the said notice. Assessee submitted to express the fact as to why reassessment proceeding. Assessee was asked as to why penalty should not initiated u/s. 271(1)(c) of the Act. So, Assessing Officer prior to this proceeded with re-assessment proceedings. In reassessment proceedings, Assessing Officer applied his mind to long term capital gain and short term capital gain u/s.45(3) of the Act which is basis for reopening of assessment. Assessing Officer completed assessment on 29.12.2009 making the addition of Rs. 81,62,650/- as short term capital gain on the transfer of land and building, however he treated his entire consideration of Rs. 95,00,000/- towards the factory building and no amount was treated towards the land on which building was constructed. Assessee filled appeal before CIT(A) who by his order dated 28.01.2011 upheld the reopening of assessment. As regard to the quantum, CIT(A) has rightly divided into two parts i.e. short term capital gain of the factory and long term capital gain of the land. However, he directed the Assessing Officer as to exact value of land to find at relevant time from CIDCO or from the Registrar of Assurance office at vashi as regard the exemption from capital gain on investment made in NABARD bond and he observed that said investment was not made within the prescribed time i.e. within six months of transfer.
2.1 The appeals filed before ITAT by the department as well as assessee, wherein ITAT after dismissing the appeal filed by department as well as assessee with the direction to Assessing Officer giving effect to the CIT(A) order dated 28.01.2011 and A.Y. 05-06 [J. R. Mookhey vs. ITO] Page 4 therefore dismissed the appeal and confirmed the order of CIT(A). Thereafter, Miscellaneous Petition for rectification of the Tribunal’s order dated 23.04.2013 and ITAT vide order dated- 29.11.2013 recalled the order dated 23.04.2013 and thereafter, passed the fresh order dated 29.11.2013 dismissing the appeal. In the meantime, Assessing Officer proceeded to levy of penalty u/s.271(1)(c) of the Act amounting to Rs.37,30,588/-, which was confirmed by CIT(A).
2.2 Before us, learned Authorized Representative submitted that CIT(A) was not justified in upholding the penalty. Assessee has not concealed income from department nor furnished any inaccurate particular of income. Assessee could not purchase the bonds in time because some disputes amount assessee and erstwhile partner who was supposed to make payment for alleged transfer of property in question by way of partnership deed, which is basis for capital gain in question. Basically, it is a dispute of capital gain, the quantum has been decided against assessee on which penalty has been levied upon. However, tax has been paid by assessee on quantum addition. The stand of assessee has been that though quantum addition has been decided against him, but fact remains that payments were received late from incoming partner. In fact, according to assessee in person who submitted that payment was not received in on go but it was received in various installments and which is evident from the facts that sale brought in the name of assessee himself and has not been transferred in the name of alleged partnership deed. Without prejudice to issue in quantum, we are of the view that assessee was prevented by reasonable cause in A.Y. 05-06 [J. R. Mookhey vs. ITO] Page 5 not able to purchase bonds in time for which exemption has not been granted to him in quantum proceedings. The quantum proceedings are different from penalty proceedings and assessee has not concealed his income nor furnished any inaccurate particulars of income of assessee. He could not purchase the bonds in time which is not in dispute. Assessee could not do the same because he was prevented by reasonable cause as discussed above. But, there is nothing on record to suggest that he has concealed the income or furnished inaccurate particulars of income. So, penalty in question is not justified. Same is directed to be deleted.
In the result, the appeal filed by assessee is allowed.
Pronounced in the open Court on this the 26th day of August, 2016.
Sd/- Sd/- (RAJESH KUMAR) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai: Dated 26/08/2016 True Copy S.K.SINHA आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. राज�व / Revenue 2. आवेदक / Assessee 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त- अपील / CIT (A) 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, मुंबई / DR, ITAT, Mumbai 6. गाड� फाइल / Guard file. By order/आदेश से,
उप/सहायक पंजीकार, आयकर अपील�य अ�धकरण, मुंबई ।