TaxTMI 
TaxTMI 
TaxTMI 
2016 (10) TMI 431
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..... CIT(A) erred in deleting the penalty u/s.271 (1 )(c) of the I.T. Act, 1961 of Rs. 42,29,880/- for AY.2009-10 without appreciating the fact that the assessee claimed the cost of acquisition of tenanted property at Rs. 26,06,640/-- i.e,. value as on 01.04.1981 and arrived at indexed cost of Rs. 1,51,70,645/- though the assessee had not paid any consideration for acquisition of the tenanted property and hence the assessee was not entitled for it. This clearly shows that the assessee had furnished inaccurate particulars of income. 2. On the facts and circumstances of the case and in law, the Ld.CIT(A) erred in deleting the penalty u/s.271 (1 )(c) of the LT.Act,1961 of Rs. 42,29,880/- for AY.2009-10 without appreciating the fact that the assessee had not disclosed the sale transaction in his return of income, therefore, the claim of exemption does not arise. 3. On the facts and circumstances of the case and in law, the Ld.CIT(A) erred in deleting the penalty u/s.271 (1 )(c) of the LT.Act,1961 of Rs. 42,29,880/- for A Y.2009-10 without appreciating the fact that if the transaction of the assessee was not detected by the AIR on the basis of which the case was selected for scrutiny, ....
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....e property at Shanti Dharma Co-op. Housing Society, at Mogul Lane, Mahim, Mumbai- 400 016 and in two garages in the building 'B" Balgovind Co-op. Hsg. Society Ltd., Manorama Nagarkar Marg (South), Talkawadi Road., Mahim, Mumbai and also the assessee invested in mutual fund/bonds. During the course of assessment proceedings u/s. 143(3) read with Section 143(2) of the Act , the A.O. observed that the assessee has taken cost of acquisition of tenancy rights at Rs. 20,06,640/- i.e. value as on 1st April, 1981 and arrived at indexed cost The assessee has claimed exemption u/s 54F of the Act in respect of purchase of house property i.e. flat at Shanti Dharma Co-op. Housing Society, at Mogul Lane, Mahim, Mumbai together with two garages in another building. The assessee has also claimed cost of improvement and legal expenses of Rs. 25,97,310/- in respect of property purchased at Shanti Dharma Co-operative Housing Society . It was observed by the A.O. that since the capital gain is on account of transfer of tenancy right and the assessee has not paid any consideration for acquisition of the tenancy rights , the cost of acquisition was taken as Nil in view of provisions of Section 55(2)....
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....,310/- was also disallowed in the AO order on the ground that the same were incurred in respect of the property and not for the tenancy rights. It was also submitted that the assessee claimed deduction u/s. 54F of the Act in respect of investment in Flat at Shanti Dharma Co-operative Housing Society including cost of two garages which were a part of the said residential house although located at different building as garages were not available in the same building. The assessee submitted that deduction u/s. 54F of the Act was disallowed for the second garage premises. The assessee submitted that the assessee has furnished full details of the transactions and had also furnished the details during the course of assessment proceedings . The assessee submitted that the claim was bonafide.It was submitted that Section 55(2) gives an option to the assessee to substitute the fair market value of the asset as on 01-04-1981 and despite the cost of acquisition of tenancy rights being Nil , the assessee cannot be prevented from exercising the option provided to it under law as the tenancy rights became property of the assessee prior to 01-04-1981. It was submitted that it was a bonafide claim....
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....(2007) 291 ITR 519(SC) 8. T Ashok Pai v. CIT (2007)292 ITR 11(SC) 9. CIT v. Reliance Petroproducts Private Limited (2010) 322 ITR 158(SC) 10. D M Manasavi v. CIT (1973) 3 SCC 207(SC) 11. Anantharam Veerasinghaiah v. CIT (1980) Supp SCC 13 The A.O. observed that the assessee has filed return of income late i.e. beyond the period stipulated u/s. 139(1) of the Act. The AO observed that had the AIR not detected the assessee's transaction and the case would not have been selected for scrutiny under CASS, a sum of Rs. 1,86,61,620/- would have escaped assessment. The AO observed that the assessee has not paid any consideration for acquiring the tenanted property and hence as per section 55(2)(a) of the Act, the cost of acquisition of the tenanted property is NIL. The assessee has not produced any documentary evidence with respect to the cost of improvement in respect of the new property purchased and also with respect to legal fees. He observed that the assessee has not filed any quantum appeal against the assessment order u/s 143(3) of the Act. The AO held that the case laws relied upon by the assessee are materially separate and distinguishable. The AO held that these case laws....
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....es. The assessee submitted that the bonafide of the assessee cannot be doubted as the return of income being a technical document was prepared by a professional Chartered Accountant . The return of income was prepared under expert advice and guidance of professional CA and based on the same claims were made in the return of income filed with the Revenue was the contention of the assessee before the learned CIT(A). It was submitted that merely because legal claim of the assessee was not allowed is not a ground for levying penalty as held by the Hon'ble Supreme Court in the case of Reliance Petroproducts Private Limited v. CIT 322 ITR 158(SC). The ld. CIT(A) accepted the contentions of the assessee whereby he observed that the assessee had disclosed the entire facts regarding the sale of the tenancy rights, receipt of Rs. 2.66 crores and the claim of FMV as on 1st April, 1981, indexation and claim of exemption u/s 54F of the Act in the return of income filed with the Revenue for the year under consideration. It is another matter that the claim made by the assessee on the sale proceeds of tenancy rights , indexation and claim of exemption of capital gain was not allowable to him. The....
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....ulars of income by claiming the deduction and indexation in computing the capital gains. The assessee made a legal claim of deduction u/s 54F of the Act and indexation benefit in the return of income filed with the Revenue which was not accepted by the Revenue and merely making a claim which did not found favour with the Revenue will not make the assessee exigible for penalty u/s 271(1)(c) of the Act. The learned CIT(A) held that the case of the assessee is one of the bonafide mistakes which was duly corrected by the assessee immediately after realizing the mistake, hence, penalty is not exigible . The assessee came out with bonafide explanation as to the default committed by the assessee. Accordingly the learned CIT(A) deleted the penalty vide appellate orders dated 26-09-2013. The ld. CIT(A) relied on the following judicial decisions:- 1. Chandra Pal Bagga v. ITAT & Anr. (2003) 261 ITR 67 (Raj.) 2. CIT v. Sri Saradha Textile Processors (P) Ltd. (2006) 286 ITR 499(Mad.) 3. CIT v. Reliance Petroproducts (P) Ltd. (2010) 230 CTR (SC) 320 4. ACIT v. Malu Electrodes (P) Ltd. (2010) 127 TTJ (Nag) 599. 5. Dilip N. Shroff v. JCIT & Anr. 291 ITR 519 (SC) 6. Aggrieved by the appe....
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....the assessee submitted that the additions have been made by the A.O. which has not been challenged in the quantum addition. The assessee submitted that the AO has alleged that it is only due to AIR information received that the assessee case was selected for scrutiny and it came to the notice of the Revenue that the assessee has claimed FMV for the tenancy rights and its indexation which is otherwise not allowable due to Section 55(2)(a) of the Act as cost of acquisition of tenancy right is Nil , while the fact is that the details were submitted by the assessee while filing return of income. He relied upon decision of the Tribunal in the case of ITO v. Smt Chandrika B. Shah in ITA no. 1790/Mum/2009 vide orders dated 07-05- 2010. The ld. Counsel submitted that the assessee's father got the tenancy right much earlier than the year 1981 from his employer who is owner of the said premises , and the father continued with the occupation of the premises even after leaving employment and later on he died . The assessee got tenancy rights after the death of his father. The assessee got award under the direction of the small Cause Court in consent terms whereby he was entitled for 1000 squar....
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....prior to 01-04-1981. The employer of the father of the assessee was owner of the said premises . There was a litigation between the assessee's father and his employer. The father of the assessee died and consequently the assessee acquired the tenancy right after death of his father. There was a compromise/consent terms agreed between the said owner(employer of father) and the assessee , and initially in 1996 vide consent term agreed by both the parties , the assessee was entitled for an area of 800 square feet in the new building to be built in the same plot of land in lieu of surrender of tenancy rights, while additionally 200 square feet was to be given to the assessee on payment of Rs. 13 lacs. The assessee would have been the owner of the newly acquired 1000 square feet in terms of consent terms awarded by the Court. The employer could not provide newly constructed area of 1000 square feet built up in the same complex for 10 years and fresh consent term as mutually agreed was entered into by both the parties which was filed with the Hon'ble Court whereby the assessee in place of earlier consent term will now receive an amount of Rs. 2.66 crores from the employer of his father u....
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....inition of the word 'house'. However, the assessee was allowed deduction u/s 54F of the Act with respect to one garage only . Again,we are of the considered view, that the explanation offered by the assessee is bona fide as the house does not mean four walls and the amenities like garden, garage etc are part and parcel of the residential house in modern times. We also did not find that there is any restriction imposed by the Act on having only one garage with a residential house. The assessee was compelled to take garages in nearby building in the same locality as garages in the same building in which residential flat was acquired by the assessee were not available which was verified by the Revenue. In any case , it is not the case set up by the Revenue that the second garage was never acquired by the assessee and he has set up a ex-facie bogus claim, in-fact it is the claim set up by the assessee which did not found favour with the Revenue and in our considered view, the assessee has a prima facie good arguable case on merits on the instant disallowance made by the Revenue, it is different matter that the assessee did not challenge the quantum assessment framed by the Revenue. Thu....
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....ich did not found favour with the Revenue as it could not be said that an attempt has been made to defraud Revenue or to set up an ex facie illegal claim and in-fact it can only be said that the claim was set up by the assessee in the return of income filed with the Revenue as discussed by us earlier but the same did not found favour with the Revenue, the penalty levied in the instant case by the A.O. in our considered view is not exigible under such circumstances as the assessee has made a bonafide claim for which explanations were duly submitted which are found not to be false neither it was an ex facie illegal claim, albeit the same did not found favour with the Revenue. Merely because the claim set up by the assessee was disallowed by the Revenue as in the present case, in our considered view , the assessee is not liable for penalty u/s 271(1)(c) of the Act keeping in view the facts and circumstances of the case and the explanations with which the assessee came forward to support his claim. The case laws relied upon by the ld. DR are distinguishable as it is not a case where bogus claim was set up and the assessee was cornered by the Revenue and then assessee had to surrender t....