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Order u/s.254(1)of the Income-tax Act,1961(Act) लेखा लेखा सद�य लेखा लेखा सद�य सद�य राजे�� सद�य राजे�� राजे�� केकेकेके अनुसार राजे�� अनुसार अनुसार PER RAJENDRA, AM- अनुसार Challenging the roder dt.14.10.13 of CIT(A)-32, Mumbai the Assessing Officer (A.O.) has filed the present appeal.The effective Ground of appeal deals with deleting the penalty of Rs.36.82 lakhs,levied u/s. 271(1)(c) of the Act for furnishing inaccurate particulars of income by the assessee . Brief Facts:- 2.Assessee-Co-operative Housing Society(CHS)filed its return of income on 2.8.2002, declaring total income of Rs.15,874/-.Initially, the return was processed u/s.143(1) of the Act. Subsequently,a notice u/s. 148 was issued and the AO completed the assessment u/s.143(3) r.w.s.147 of the Act on 29.12.2009 determining income of the assessee at Rs.1.20 crores. While completing the assessment, an addition of Rs.90 lakhs was made treating the sale of land as business transaction against the claim of the assessee as LTCG and the deduction claimed u/s.54EA of the Act.Besides, an addition of Rs.30.80 lakhs was made on account of receipt of transfer fee by treating it as Revenue receipt,which the assessee had claimed to be exempt, u/s.80P,on the principles of mutuality. The AO initiated penalty proceedings for the aforesaid two additions.
3.In the meanwhile the assessee challenged the additions before the First Appellate Authority (FAA). He confirmed the action of the AO in treating the receipt consequent to sale of plot of land as business income.With regard to addition made on account of transfer fee, he allowed 1
205/Mum/2014(Suvarnagar-CHS) relief of Rs.50,000/- and confirmed the balance addition of Rs.30.30 lakhs. The AO vide his order,dt.30.03.2012,imposed a penalty of Rs.36,82,979/-on the assessee for furnishing inaccurate particulars of income for the year under consideration.
4.Aggrieved by the order of the AO,the assessee preferred an appeal before the FAA who allowed the appeal of the assessee.He held that sale of common plot by the society was a capital receipt and had to be taxed as LTCG ,that the AO was not justified in treating the receipt on sale of plot as business income.With regard to transfer fee the FAA held that the receipt was exempt in view of the decision of Adarsh CHS Ltd.
5.During the course of hearing before us, the Departmental Representative (DR) stated that the matter could be decided on merits. It is noticed that in the quantum appeal the Tribunal (ITA 179/M/2011 dt.11.4.14) had set aside the issue of sale of plot of land to the file of the AO.We would like to reproduce the relevant portion of the said order which reads as under (para 4 & 5):- “4.Before us,it has been admitted by both the parties that this issue had come up for consideration before the Tribunal in assessee’s own case in IT no.7168/Mum./2008 and in case of other societies also, who were one of the parties in the sale of the said plot. In the said decision, the Tribunal has set aside this issue to the file of the Assessing Officer for deciding the same afresh as per the direction given by the Tribunal dated 17th November 2005, relevant observation and directions of the Tribunal are as under:– “We have heard the arguments of both the sides and also perused the relevant material on record. It is observed that the amount of similar nature was received by 14 cooperative housing societies including the four assessee societies in the present case on account of sale consideration of plot of land jointly owned by them. When the issue relating to head of income under which the said amount was chargeable to tax had come up for consideration in the cases of the assessee before the Tribunal in the first round, the Tribunal found it relevant to ascertain as to what had happened in the cases of other societies. None of the parties appearing before the Tribunal, however, could furnish the relevant details in this regard. The issue, therefore, was restored by the Tribunal to the file of the A.O. for deciding the same afresh after taking into consideration the final decision rendered on a similar issue in the case of other cooperative housing societies. It appears from the orders of the authorities below that the direction of the Tribunal, however, has not been complied with and the issue has been decided without complying with the directions of the Tribunal. At the time of hearing before us, the learned Counsel for the assessee has submitted that although the assessee in the present case have details about the exact address of the remaining cooperative housing societies, they are not in a position to enforce their attendance before the A.O. or their compliance to the notice issued by the A.O. u/s 133(6). In our opinion, if these details are furnished by the assessee to the A.O., the latter is sufficiently empowered to enforce the attendance of the other cooperative housing societies or the necessary compliance or part so as to decide 2
205/Mum/2014(Suvarnagar-CHS) the issue as per the direction given by the Tribunal in the first round vide his order dated 17th Nov. 2005. We, therefore, restore this issue once again to the file of the A.O for deciding the same afresh as per the direction given by the Tribunal vide its order dated 17th Nov. 2005.The assessees are directed to furnish the addresses of the other cooperative housing societies to the A.O. who shall enforce their compliance in order to decide this issue as per the direction given by the Tribunal.” 5.In view of the aforesaid decision of the Tribunal, we set aside the impugned order passed by the learned Commissioner (Appeals) and restore the issue back to the file of the Assessing Officer and direct him to decide the same in view of the observations and directions given by the Tribunal in the aforesaid case. Thus, ground no.1, is allowed for statistical purposes.” As the Tribunal had restored back the matter to the file of AO, so, penalty would not survive as far as addition made on account of sale of plot of land is concerned.
With regard to transfer fee we find that the Tribunal had dealt the issue as under: “11.After carefully considering the rival submissions and also the case laws relied upon by the learned Counsel for the assessee, we find that this issue is squarely covered by the decision of the Bombay High Court in Mittal Co–operative Housing Society Ltd. (supra), wherein the Court observed and held as under:– “The notification issued by the State of Maharashtra putting restrictions on the amount of transfer fee when the member desires to transfer his shares or occupancy rights are only in respect of housing residential societies. In the instant case, the appellants are not housing residential societies and consequently, those notifications would not be applicable. The bye-laws are nothing but the contract between the Society and the member. Under these bye-laws, it is the member who has to make the payment. Any inter se arrangement between the incoming members and the transferee is irrelevant insofar as the Society is concerned. There is an agreement by which the amount is paid by the transferee. Insofar as Society is concerned, even if receipt is issued in the name of transferee it is the nature of admission fee which could be appropriated, only on the transferee being admitted.Merely because the amount may be appropriated earlier, it will not lose the character of the amount being paid by a member. In these circumstances, the identity of the contributor and beneficiary being satisfied and considering the provisions of Maharashtra Co-operative Societies Act and rules framed thereunder, surplus can be disposed of in favour of the members only or for the objects for which they may specify.” 12.Thus, respectfully following the decision of the Bombay High Court cited supra, we set aside the impugned order passed by the learned Commissioner (Appeals) and hold that the amount of transfer fee of Rs.30.30 lakhs is not taxable in view of the principles of mutuality. Thus, ground no.2, is allowed.”
From the above order it is clear that the Tribunal had allowed the appeal filed by the assessee, while deciding the quantum proceedings. In these circumstances, penalty levied by the AO has to be cancelled. Effective Ground of appeal is decided against the AO.
205/Mum/2014(Suvarnagar-CHS)