YOGESH SUNDERLAL SHAH,MUMBAI vs. DCIT 24(1), MUMBAI

O R D E R Per Sanjay Arora, A. M.: This is an Appeal by the Assessee directed against the Order by the Commissioner of Income Tax (Appeals)-34, Mumbai (‘CIT(A)’ for short) dated 06.8.2014, confirming the levy of penalty u/s. 271(1)(c) of the Income Tax Act, 1961 (‘the Act’ hereinafter) for the assessment year (A.Y.) 2008-09 vide order dated 29.4.213.

(A.Y. 2008-09) Yogesh Sunderlal Shah vs. Dy. CIT 3. We have heard the parties, and perused the material on record. In our view, the assessee stands to succeed. That a plausible view shall save penalty is trite law, and for which case law is legion, to some of which we may refer to, as follows: Mak Data (P.) Ltd. vs. CIT [2013] 358 ITR 593 (SC);Union of India v. Dharmendra Textile Processors [2008] 306 ITR 277 (SC); K.P. Madhusudhanan vs. CIT [2001] 251 ITR 99 (SC); B.A. Balasubramaniam and Bros v. CIT [1999] 236 ITR 977 (SC); Addl. CIT vs. Jeevan Lal Shah [1994] 205 ITR 244 (SC); CIT vs. Nathulal Agarwala & Sons [1985] 153 ITR 292 (Pat)(FB). What the assessee has acquired (at a cost of Rs.185 lacs, also incurring the obligation for a peppercorn rent of Rs.500/- per month), is an interest in a residential flat, which can itself be termed as an immovable property, with the acquisition thus further qualifying as a transfer u/s. 2(47) of the Act. The Apex Court has clarified per its decisions in the case of CIT vs. Podar Cement (P) Ltd. [1997] 226 ITR 0625 (SC); R. B. Jodha Mal Kuthilal vs. CIT [1971] 82 ITR 570 (SC); as well as the Hon'ble jurisdictional High Court in CIT vs. Dr. Laxmichand Narpal Nagda [1995] 211 ITR 804 (Bom), that an owner is a person who exercises the rights of an owner in his own right, and the legal title to the property was not necessary. The question that therefore arises for consideration, and as rightly pointed by the tribunal, is if s. 54 contemplates ‘ownership’ by other than the specified modes (of ‘purchase’ and ‘construction’), or could include other modes, as by transfer of perpetual interest therein, as well. Considered thus, the assessee’s claim may perhaps even not qualify to be regarded as ‘wrong’ per se, but only a different, albeit plausible, view. We have, further, in arriving at our foregoing decision, holding non-exigibility to penalty in the present case, also referred to and considered the decisions relied upon by the tribunal in the quantum proceedings (refer para 2). None of them pertain to a case of perpetual tenancy, which obtains in the instant case. Though, surely, the assessee ought to have per its return of income (PB pgs. 2-3) clarified this aspect, stating clearly of the (A.Y. 2008-09) Yogesh Sunderlal Shah vs. Dy. CIT ‘purchase’ being on transferable tenancy basis, the fact of the matter is that he has taken a considered, possible view of the matter, establishing his bona fides. Why, the tribunal has itself in Archana Parasrampuria v. ITO [2015] 68 SOT 550 (Mum)(copy on record) upheld the claim for exemption u/s. 54 on a claim made on acquisition of residential property on transferable tenancy basis. Further, the fact that the appeal against the order by the tribunal in the instant case stands admitted by the Hon’ble Court (PB pgs. 61-62) is also relevant. Even though the same may not by itself be conclusive of the matter, as explained in CIT vs. Dharmshi B. Shah [2014] 366 ITR 140 (Guj) and CIT vs. Splender Construction [2013] 352 ITR 588 (Del), the assessee in the present case has in our view, as afore-stated, established to have an arguable case.