TaxTMI 
TaxTMI 
2015 (12) TMI 1325
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....ave considered the rival submissions and perused the material available on record. Since, quantum addition has been deleted by the Tribunal and no contrary decision was brought to our notice by either side and more specifically the Revenue, we find merit in the argument of the assessee. Even otherwise, our view find support from the decision of the Tribunal in the case of Smt. Neela P. Doshi (ITA No.6859/Mum/2013) order dated 21/10/2015, which is reproduced hereunder for ready reference and analysis:- "The assessee is aggrieved by the impugned order dated 07/10/2013 of the ld. First Appellate Authority, Mumbai, confirming penalty of Rs. 3,36,912/-, imposed u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter the Act). 2. At the time of hearing, the ld. counsel for the assessee, Shri Mahesh O. Rajoura, contended that quantum addition has been deleted by the Tribunal vide order dated 31/07/2015 (ITA No.3513/Mum/2012), in the case of assessee itself, therefore, it was pleaded that penalty does not survive. This factual matrix was not controverted by the ld. DR, Shri Vijay Kumar Soni. 2.1. We have considered the rival submissions and perused the material av....
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....sh Doshi (Grand Son of Appellant) vi) Mr. Rajesh P Doshi (Son of Appellant) vii) Mrs. Priti Rajesh Doshi (Daughter in law) viii) Pravin H Doshi (HUF) ix) Mrs. Ranjan Ben R Doshi. (widow of late Shri Ratilal Doshi) (Aunty of spouse)" The assessee also furnished the following evidences to explain the source of acquisition of the jewellery in question: a) Jewellary valuation Report dt.1.11.1995 of Suresh C Kapoor, Government Approved Value (during search action in 1995) b) Jewellary valuation Report dt.23.4.2004 as on 3 1.3.2004 of Shrenik R Shah (Jewellary Report obtained for Wealth Tax Purpose) b) Jewellary Valuation Report dt.3.4.2000 as on 31.3.2000 in case of Priti Rajesh Doshi (Maiden name Priti Vinod Ambani) c) Bills for purchase of Jewellary & making charges along with bank statement/ pass book reflecting payment made along with few ledger account of parties. The assessee also filed the ledger of the jewellery account reflecting the jewellery purchased for the relevant period. The assessee further submitted that considering the financial status of the family of the assessee, the jewellery....
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....ively, which the assessee claimed to have been received as gift. The Ld. CIT(A), therefore directed the AO to delete the addition in respect of the remaining items mentioned in chart No. I, except the above stated two items amounting to Rs. 82,392/- and Rs. 75,823/- respectively. In relation to chart No.II, the Ld. CIT(A) observed that the items mentioned in chart No.II did not exactly match with the description made in the approved valuers' reports. He, therefore, confirmed the additions in respect of items of gold jewellery mentioned in chart No.II. The Ld. CIT(A) also directed the assessee to prepare similar charts in respect of diamond jewellery. The assessee submitted the said charts accordingly. The Ld. CIT(A), after tallying the each of the items with that of valuation report of the approved valuer, found that though number of pieces of diamonds in respect of diamond jewellery were matching in almost all the items; however, there was difference in the estimate of carat weight. He therefore held that the description did not exactly match in respect of diamond jewellery. He, accordingly, confirmed the addition made by the AO in respect of diamond jewellery. Aggrieved ....
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....d by extracting the diamonds out of the jewellery, but was just estimated by the Departmental Valuer. Under such circumstances, the minor difference in carat weight value, especially when the same was not exactly weighed by the Departmental Valuer could not be the sole criteria to hold that the description of jewellery did not match. The Ld. A.R. of the assessee has further invited our attention to page No1 of the paper book which is the summary of the gold jewellery. He has explained that the total gold jewellery shown by the assessee and his family members in the books was of 9919.790 gms. whereas the jewellery found and valued by the Departmental Valuer was of 9145.380 gms. which was less than the jewellery already declared by the family members of the assessee in the books of account. Similarly, in respect of diamond jewellery, the assessee family has already declared 222.80 carats of diamond, whereas, the Departmental Valuer had estimated only 203.29 carat of the diamonds which was less than the total diamond weight/carats declared by the assessee. Even the number of diamonds embedded in the each item of the jewellery matched with that of the valuation report. 11. The....
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....rns, the difference has to be taken to be unexplained jewellery unless the assessee is able to establish that fresh jewellery was purchased and sources thereof are explained. it is normal that some of the ornaments are dismantled and remade. it would be unreasonable to take a stand that all the ornaments found at the time of search must accurately compare in description and weight with the ornaments declared in the wealth tax return. The possibility that some of the items could have been remade cannot be ruled out. The important point is that the ornaments found should not be in excess in quantity as compared to the ornaments declared in the Wealth Tax returns. Our attention has also been invited to the decision of the Hon'ble Allahabad High Court in the case of "Commissioner of Wealth Tax vs. B.M. Kanodia (HUF)" wherein the Hon'ble High Court in para 5 of the order has observed that where the government valuer adopted the weight of the diamond by estimating without separating the diamond from the metal, the reports of valuers could not be held to be accurate and exact and that the possibility in difference of weight could not be ruled out. 12. In the case in hand also, if....
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....reira has sold immovable property situated at "Violet Valley" (with garage) at Junction of 26th and 30th Road at Bandra (W), Mumbai for a total consideration of Rs. 3,05,00,000/- vide agreement dated 28.4.2006 to M/s. Aqua Marine Enterprises. The share of the assessee is 23% in the said property and the other assessee Mr. Peter Pereira was having share of 77% in the said house. From the agreement, the A.O. observed that the assessee was to receive three more flats i.e. two flats having a carpet area of 1200 sq.ft. each and one flat having carpet area of 750 sq.ft. and three parking spaces (two stilt and one open) as part of additional consideration. However, the additional consideration was not shown as part of the total consideration received by the assessee in her computation of LTCG on transfer of the said property during the year. Further, the assessee had taken the FMV of the said property as on 1.4.1981 at Rs. 35,00,000/- on the basis of valuation report dated 3.8.2006. In view of this, vide letter dated 21.8.2009, the A.O. asked the assessee to state as under :-"1. Please provide the market value of tile additional flats and other amenities to be received by you from the bui....
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.... if market value of the new flat is added to income of the assessee, then the investment in new residential property should be allowed u/s.54 at market value. The AO. analysed the contention of the assessee. According to the A.O., exemption u/s.54 is available only when the assessee has purchased a new flat one year before or two years after the date of transfer or has constructed a new residential' house within a period of three years from the date of transfer of the house property (original). The flats (alongwith car 'parking spaces) received by the assessee in the proposed building as 'additional consideration' agreed upon in the agreement dated 28.4.2006 was over and above her share in the monetary consideration. These flats (alongwith car parking spaces) form part of consideration received by the assessee towards transfer of the property. This flat is neither purchased by the assessee nor constructed by her. The A.O. held that since the assessee has not fulfilled the conditions laid down in section 54, she is not eligible for exemption u/s.54 of the LT. Act. The A.O. has further elaborated this issue in para 10 of the assessment order wherein he has held that exemption u/s.54 ....
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....e property is a residential house whose income is taxable under the head 'Income from house property' as transferred by an individual or an HUF. (b) The house property (may be self occupied or let out) is a long term capital asset. (c) The assessee has purchased a residential house within a period of one year before the transfer or within two years after the date of transfer or has constructed a residential house property within a period of three years after the date of transfer. The appellant has fulfilled the precondition mentioned at point Nos.(a) & (b) above was not in doubt. This was also not in dispute that the assessee had purchased new residential property by way of construction. This was because it was clear from the agreement with developer that the developer would construct the residential building on the property alienated by the assessee to the developer and handover the residential house to the assessee in consideration of the sale of original residential property. This fact is clear and unambiguous. Therefore to say that the appellant has also complied the last condition of section 54 for acquisition of new residential property. The A.O. ha....
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.... u/s.54 of I.T.Act, 1961 in respect of these flats. 11. An issue was also raised by the AO with regard to sharing of 3 flats between the co-owners of the property and the exemption u/s.54 allowable in case of investment in one residential flat only. In this regard, we found that the details of allocation of area of new residential property between co-owners are as follows :- Name Ratio Area in Sq.Ft. Description Mr. Peter S. Pereira 77% 2400 Flat No.301 & 302 adjacent flats @ 1200 Sq.Ft. each on 3 rd floor and two Stilt car parking space Ms Vilma M. Pereira 23% 750 Flat No.402 on 4th floor and one car parking space The aforesaid ratio of allocation between co-owners is already on record of the AO as well as in the valuation report. Furthermore, the co-owner will get the area according to their ratio in the new residential property. Since flat no.301 & 302 are situated in the same floor and adjacent to each other and will be treated as one single residential unit for the purpose of claiming exemption u/s.54. The same view has been taken by the Special Bench of the Mumbai Tribunal in the case o....
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.... in the way of considering the building as a residential house. The fact that the 'residential house consists of several independent units cannot be permitted to act as an impediment to the allowance of the deduction under s.54/54F. It isneither expressly nor by necessary implication prohibited. Tribunal was therefore justified in allowing exemption under s.54 in respect of entire investment in construction of basement, ground floor, first floor, second floor and third floor." 13. In view of the above discussion, we do not find any merit in the action of the AO for decline of claim of deduction u/s.54 in respect of residential flats allotted by builder in consideration of sale of old house. 14. In the result, appeals of both the assessees are allowed. Order pronounced in the open court on this 27th Feb.2015." 2.2. We find that the Tribunal deliberated the issue with respect to declining the claim of deduction u/s 54 of the Act and by following the decision of the Special Bench in the case of ITO vs Ms. Sushila M. Jhaveri (2007) 292 ITR (AT) 1 (Mum.) and also the decision from Hon'ble Delhi High Court in Geeta Duggal 257 CTR 208 (Del.) decided the....
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....n CIT vs S.P Viz Construction company 176 ITR 47 (Patna) and K.C. Builders vs ACIT 265 ITR 562 (Supreme Court). We are of the view where the penalty for concealment or furnishing inaccurate particulars was levied and after deleting the quantum addition, there remains no basis at all for levying the penalty. Ordinarily, penalty cannot stand in itself if the addition made in the assessment itself is set aside or cancelled by the superior authority/Court. The penalty cannot stand by itself because false result may be produced by the falsity of one or more of the constituent items in the return. The word 'inaccurate particulars' would cover falsity in the final figure and also the constituent elements or items. They simply would mean inaccurate in some specific or definite respect whether in the constituent or subordinate items of income or the end result. Concealment or furnishing inaccurate particulars implies some deliberate act on the part of the assessee in withholding the true facts from the authorities. Since, the basis of levying penalty remains no more in existence, after deletion of quantum addition, therefore, from this angle, the stand of the ld. Commissioner of Income tax ....