Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, DELHI BENCH ‘E’, NEW DELHI
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘E’, NEW DELHI BEFORE SH. C.M.GARG, JM AND SH. PRASHANT MAHARISHI, AM ITA No. 4929/Del/2013 : Asstt. Year: 2003-04
ACIT Vs Mangu Ram Bansal Cent Circle-18. H. No. 844, Sec-14 New Delhi New Delhi
Assessee by : Sh. Anil Kr. Gupta, CA and Arun Kr. Jain , CA Revenue by : Sh. P. Dam Kanunjna , Sr. DR Date of Hearing: 03.11.2015 Date of Pronouncement: 06.11.2015 ORDER Per Prashant Maharishi, AM:
This appeal is preferred by Revenue against the order of CIT (A) – III, New Delhi dated 26.06.2013 confirming the penalty u/s 271(1)(c) of the Income Tax Act,1961 ( hereinafter referred to as the act) raising following grounds : “i) Ld. CIT(A) has erred in deleting penalty u/s 271(1)(c) on the basis of his observation that there was no malafide intention on part of the assessee, which is in contravention of Supreme Court decision in UOI v. Dharmendra Textile Processors 166 Taxman 65(SC). ii) Ld. CIT(A) has erred in treating the asset under consideration as partly residential and partly commercial, thus being eligible for deduction u/s 54F, despite the fact that the original addition has been upheld by Ld. CIT(A) and Hon’ble ITAT also has set aside the matter to the file of the AO on this issue. iii) Ld. CIT(A) has erred in ignoring the fact that in the present case, assessee had wrongly claimed deduction while being aware of well settled legal position, in which case penalty u/s 271(1)(c) is attracted as laid down in CIT(A) vs. Rubber Udyog Vikas P. Ltd. 335 ITR 558.” 02. Assessee is individual filed his return of income on 30th July, 2003 declaring total income of Rs. 43,58,110/-. In the return of income along with long term capital gain of Rs. 46,24,806/- was offered after claiming
ITA No. 4929/Del/2013 ACIT V Shri Mangu Ram Bansal A Y 2003-04 deduction u/s 54F was claimed on account of purchase of new residential house property by the assessee. Assessee has sold 15,30,000/- shares equity shares of M/s Elegance Fabrics P. Ltd. resulting into long term capital gain Rs. 66,14,193/- against which assessee has purchased plot of land admeasuring 167 square yards at old DLF Colony, Gurgaon, Haryana by sale deed dated 28th January, 2002. The appellant had spent approximately Rs. 40 lakhs up to July, 2003 for constructing basement ground floor and first floor and further deposited Rs. 8,00,000/- in the designated capital gain accounts scheme with State Bank of India, therefore, out of the above sum assessee has claimed deduction u/s 54F on proportionate basis for residential purposes u/s 54F of Rs. 19.89 lakhs. In the statement proceedings, the claim of deduction u/s 54F was denied to the assessee. For the reason for sale, deed of new house property is not a residential house property but a commercial law. Further the sanctioned plan of said property is also showing on each floor construction of a hall and a bathroom only therefore AO was of the view that each cannot be used for a purpose of residential purposes. Before the CIT (A), appellant assessee reiterated the arguments but the CIT (A) conquered with the views of assessing officer and denying deduction u/s 54F. We agree with the order of CIT(A) assessee preferred appeal before the ITAT, New Delhi and ITAT vide order dated 24.07.2009 allowed the appeal of the assessee setting aside the matter to the file of assessing officer with direction that AO may verify after site inspection whether the property is residential or commercial. Till to date the AO has not done any verification in pursuance of direction of ITAT. Meanwhile by order dated 17.03.2008 penalty u/s 271(1) (c) was levied of Rs. 4,17,771/- on assessee for furnishing inaccurate particulars and furnishing inaccurate particulars of income. Against this order, assessee preferred an appeal before the CIT (A) who in turn deleted the penalty against the order of CIT (A). Now revenue is in appeal before us.
2 | P a g e
ITA No. 4929/Del/2013 ACIT V Shri Mangu Ram Bansal A Y 2003-04
Before us ld. DR submitted that the assessee has not purchasing the residential house and thereby claiming of deduction u/s 54F of Rs. 19,89,387/- is falls as the property purchased by the assessee is a commercial property. Further, the residential house purported to have been purchased by the assessee is not fit for residence as it has only a hall and a bathroom. Therefore, he submitted that the penalty is leviable u/s 271(1) (c) for concealment of the income. 04. Ld. AR of the assessee submitted that (a) assessee has bonafidly claimed u/s 54F for construction of residential property and the claim has been made of appropriate amount, which is invested in residential house property and no claim, has been made of amount of investment, which was meant for purchase of commercial property. (b) That plot admeasuring 167 square yards is a plot air mark for shop cum residential purposes accordingly as per zoning plant the basement and ground floor can be used for commercial purposes and the first floor is to be used for residential purposes. The claim for deduction is only made for residential purposes. 05. We have considered the rival contentions. In this case, the issue on quantum is set aside by ITAT to the file of AO for verification, which is still pending despite considerable lapse of time. But despite that it is an established judicial precedent that merely confirmation of addition/ disallowance cannot lead to penalty u/s 271(1) (C ) of the act and for penalty fresh examination of facts needs to be carried out whether the conduct of the assessee falls within the four corners of infringements for which penalty is leviable. In this background, we are deciding whether assessee has furnished inaccurate particulars or concealed the particulars of income. In penalty proceedings, even AO is not sure whether assessee is penalized for furnishing inaccurate particulars or for concealment of income. ld. CIT(A) has dealt with the issue as under :- “Finding on Ground of Appeal:-
3 | P a g e
ITA No. 4929/Del/2013 ACIT V Shri Mangu Ram Bansal A Y 2003-04 Upon a consideration of the penalty order and the submissions made by the appellant the short issue to be decided on this case is that whether penalty for concealment of particulars of income/furnished inaccurate particulars of income/furnished inaccurate particulars of income is leviable in case of the appellant with respect to addition of Rs 19,89,387 which is on account of the fact that in the assessment order dated 21.03.06 the AO had made this disallowance holding that the deduction claimed by the assessee u/s 54F for the above amount is not allowable. That as such deduction is allowed only with respect to a property exclusively used for residential purposes and that in the facts of the case it is clear that the property bearing no. M-30, Old DLF Colony, Gurgaon is exclusively commercial property.
From the submission of the appellant filed on 16.12.11 it is noted that his argument is that the plot measuring 167 sq yards at M-30, Old DLF Colony, Gurgaon was per the Zoning Plan having a basement and ground floor which can be used for commercial purposes and the first Floor can be used for residential purposes. That accordingly a deduction of Rs. 19,89,387/- was claimed u/s 54F of the Act in respect of amount invested /spent towards construction of first floor of the property . It has been added that while the CIT (A) Delhi -III had sustained the disallowance of deduction u/s 54F but the ITAT, Delhi has vide order dated 24.07.09 in ITA No. 3334/Del/2009 has set aside the matter to the A.O. to find out whether the property constructed at M-30, Old DLF Colony, Gurgaon answers the question as to whether it is a residential house or not. The assessee has also been directed by the ITAT to produce all necessary evidence in support of if it’s contention that the property constructed is partly residential house. From this order of ITAT it is noted that the assessee had furnished a Certificate from Municipal Authority ,Gurgaon certifying that the plot was shop-cum - residential. That this certificate was not considered by the AO. It is also noted that before the ITAT the Zoning plan as per which the plot can be used for both shop as well as residential premises had been submitted. In the submissions filed during the appellate proceedings the appellant has tiled a copy of the above sanctioned plan for construction of Ground floor and First floor (page 53 of the paper book) which is signed by the Executive Officer, Municipal Council, Gurgaon and as per which it is seen that the first floor plan sanctioned by the Municipal Council, Gurgaon does consist of a bedroom, drawing room, lobby Kitchen and a toilet. Apart from this, a Certificate dated 03.03.06 issued by the executive office, Municipal Council, Gurgaon, has also been placed on record which contains the following narration:- “This is to certify that as per the Zoning Plan of Old DLF Colony this is to certify that plot no. M-30, Old DLF Colony, Gurgaon is shop cum residence. This office has sanctioned the plan accordingly of this plot vide F. No. 12/354/2002-2003/576 dated 07.01.03” The appellant has also enclosed the copy of valuation report issued by Government approved valuer which is dated 22.02.06 in which in column no. 8 against the narration - Is the property situated in- “residential / commercial /mixed area” the words “commercial /residential” are mentioned and in column no. 16 it is again noted that the use of the land is '‘’shopping cum residential -GF for shopping purpose and first floor and second floor for residential purpose.”
4 | P a g e
ITA No. 4929/Del/2013 ACIT V Shri Mangu Ram Bansal A Y 2003-04 Keeping in view all the above facts it is noted that there is a definite case of the appellant that the impugned property is partly commercial and partly residential as is being argued. However, since the present appeal only relates to the issue of imposition of penalty for concealment of income or claim of inaccurate deduction u/s 54F of the IT Act, therefore this appellate proceeding would confine itself only to this issue .In facts of the case it is reasonable to hold that there is no concealment of income/ filing of inaccurate particulars in claiming ratable deduction under section 54F of the IT Act as the claim of deduction has been made on the bona fide belief of the appellant that in terms of section 54F of the IT Act since the impugned premises was partly meant to be used as residential house apart from the user of ground floor for commercial purpose therefore deduction u/s 54F was to be allowed on a proportionate basis . In view of the above discussion and keeping in view the ratio of the judgment in CIT vs. Reliance Petroproducts P. Ltd. 322 ITR 158 (SC), which is applicable to the facts of the case, the penalty imposed for Rs. 4,17,771/-, is directed to be deleted.
Precisely we do not find any infirmity with the order of CIT (A) in deleting the penalty. AO has not found that the claim of the assessee is not bona fide. Further, the assessee before various appellate and assessing authority submitted the full particulars of the claim and none of the documents are incorrect. It is also not the case of AO that even on direction given by ITAT he has verified and found the claim of the appellant false. Therefore in view of this, we confirm the order of CIT (A) deleting the penalty u/s 1(1) (c) of the act of Rs. 4,17,771/-. 07. In the result, appeal of the revenue is dismissed. (Order Pronounced in the Court on 06 /11/2015)
Sd/- Sd/-
(C.M.Garg) (Prashant Maharishi) JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 06 /11/2015 *B. Rukhaiyar* Copy forwarded to: 1.Appellant 2.Respondent 3.CIT 4.CIT(Appeals) 5.DR: ITAT
5 | P a g e
ITA No. 4929/Del/2013 ACIT V Shri Mangu Ram Bansal A Y 2003-04 ASSISTANT REGISTRAR
Date Initial 1. Draft dictated on 05/11/2015 2. Draft placed before author 05/11/2015 3. Draft proposed & placed before the second member 4. Draft discussed/approved by Second Member. 5. Approved Draft comes to the Sr.PS/PS 6. Kept for pronouncement on 7. File sent to the Bench Clerk 8. Date on which file goes to the AR 9. Date on which file goes to the Head Clerk. 10. Date of dispatch of Order.
6 | P a g e