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2019 (3) TMI 1256
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....1. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the amounting of Rs. 24,14,101/- being penalty levied under section 271(1)(c) of the Income-tax Act, 1961, for the reason that the quantum addition made in the assessment has been deleted by the Hon'ble ITAT, ignoring the fact that the Department has filed appeal before the Hon'ble High Court against the said Hon'ble ITAT's order dated 22.07.2016 and the appeal is still pending". 2."on the facts and in the circumstances of the case and in law, the Ld.CIT(A) deleted the penalty levied under section 271(1)(c) of the Income-tax Act, 1961 amounting to Rs. 24,14,101/-, whereas an addition has been made on the basis that the assessee has not held the flat for three years and hence the capital gain of the assessee is treated as Short term capital gain resulting in disallowance of the claim made under section 54 of the Income-tax Act 1961, by investing in another residential flat". 3. "The appellant prays that the order of the CIT(A) on the above ground be set aside and that of the AO be restored." 4. "The Appellant craves leave to amend or alter any....
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....ins were to be brought to tax in AY 2012-13 and not in AY 2011-12, by holding as under:- " 6. We have heard the rival contentions and gone through the facts and circumstances of the case. The admitted facts are that the assessee's father Mr. Kamruzzaman Ghasi Khan was a tenant of flat No.9, "B" Wing, 3rd floor of "Annville" for more than last ten years. Assessee's father converted his tenancy rights in ownership by paying 112 times of the monthly rent to his landlord vide agreement dated 16-4-2008. This flat "B/9" was gifted by assessee‟s father vide registered Gift Deed dated 29-04-2008. Assessee sold this flat on 07-01-2011 for a sum of Rs. 70 lakhs (the consideration recorded in the Sale Deed). The stamp valuation as per circle rates as valued by Sub-Registrar was at Rs. 1,15,87,600/-. Subsequently, during appellate proceedings before CIT (A), the assessee produced a corrected market value by Sub-Registrar as per circle rate at Rs. 81,11,500/- in place of original value at Rs. 1,15,87,600/-. According to AO, this property was sold by the assessee within thirty two months which is less than thirty six months, the capital gain earned by the assesse....
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....III bearing CTS No.F/769 on village Bandra (W), Taluka Andheri, Bandra Subarban to (Purchaser) Mrs. Nilofar Sameer Shaikh W/o. Mr. Mohmed Sadiq Hamid Shaikh and Mrs. Shehnaz Sultan Mohmed Sadiq Saiyed W/o Mr. Mohmed Sadiq Muhamed Safi Saiyed. The above mentioned property was sold to the purchasers by the seller and agreement registered with the sub-registrar on 07/01/2011 vide BDR-1/257/2011. The seller has not paid any remuneration in any form to the purchasers for the period from 07/01/2011 to 14/05/2011. Till today the seller was responsible for all the Govt. taxes, repair costs, electricity bills etc. From today onwards i.e. 14/05/2011, the purchasers having taken legal possession of the above mentioned property will be responsible for all the expenses and costs related to the above mentioned property. The property has been vacated peacefully and is completely vacant. The purchasers have taken complete possession of the above mentioned property peacefully and become the absolute owners of the said flat and now are free to use the said flat in any manner they like. Mr. Javed Kamruzzama Khan has not left behind any furniture, valuables, documents etc. w....
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....d condition also it would amount to transfer. In this case also there is no dispute that the agreement is dated 16.03.2005 whereas with regard to the date of possession the learned CIT (A) Shri Azad Zabarchand Bhandari assumed that it took place on 20.09.2005, which falls in the financial year relevant to A.Y. 2006-07. In the peculiar nature of this case, if at all the plea of the AO has to be accepted, it would amount to holding that the transfer had not taken place in this year and consequently the sale proceeds cannot be assessed in this year, but the AO having not initiated any proceedings with respect to A.Y. 2005-06 till date the impugned income would escape taxability even in A.Y. 2005-06 and it would really be prejudicial to the interest of the Revenue. Under this peculiar circumstance we have to rationally interpret the findings of the AO as well as the CIT(A) in the backdrop of the clauses in the agreement. As rightly pointed out by the learned counsel for the assessee, the Hon'ble Bombay High Court in the case of Chatrubhuj Dwarkadas Kapadia (supra) has decided the issue by reading the terms of the contract as a whole and by specially taking note of the fact that in ....
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....e of contract as relevant for the purpose of deciding the year of chargeability of capital gains. Therefore, on the facts of the present case, the date of development agreement would not really be relevant to decide the year of chargeability. 13. For the reasons set out above, we are unable to uphold the objections so strenuously argued by the learned Departmental Representative. Even as we do so, we make it clear that whether or not complete control or right to control over the property has passed to developer in the relevant previous year essentially depends on the facts of each case and on, interalia, the rights which have accrued to the developer under the agreement which, in turn, would also depend upon the extent to which developer has discharged his obligations under the contract. This question is thus to be decided on the totality of facts of each case and in the light of the guidance by the binding precedents. With these observations, and in the light of the above discussions, we confirm the conclusions arrived at by the CIT(A) and decline to interfere in the matter". 9. In view of the facts discussed above that in the case of the assess....
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....er consideration. It is seen that the disallowance confirmed by the CIT(A) on the issue of claim of deduction u/s.54 has been allowed in favour of the appellant by the Hon'ble Tribunal. In view of the above decision of Hon'ble ITAT wherein the quantum proceedings in the case of the appellant, which is the basis for levy of penalty and subject matter of this appeal has been allowed in favour of the appellant, therefore now there exists no order for assessment and consequently no addition on which penalty could be levied. 4.3.2. The various courts have consistently held that no penalty survives after deletion of additions/disallowances which formed the basis for imposition of penalty. Therefore, in such circumstances, the consequent penalty in respect of addition made in such quantum proceedings would not survive. Once the additions on the basis of which penalty u/s.271(1)(c) imposed has been deleted, the penalty is to be cancelled as held by Rajasthan High Court in the case of CIT vs. Shishpal (2002} 172 CTR 410. The Hon'ble High Court of Rajasthan in the case of CIT v. Shishpal (supra) has held that once the very foundation for imposition of penalty had become ....
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....f the decision of the Hon'ble Tribunal, the appellant is entitled for deduction u/s.54 of the Act. Therefore, once the addition on the basis of which penalty u/s.271(1)(c) imposed has been deleted, the imposition of penalty is not in accordance with law. In view of the above facts and discussions, there remains no ground to sustain the penalty on the issue of taxability of capital gains. Accordingly, the penalty levied by the AO on this issue is directed to be deleted." 6. The matter has now reached tribunal at the behest of Revenue. The Ld. Counsel for the assessee has at the outset submitted that the tribunal while deciding quantum additions in ITA no. 98/Mum/2015 vide orders dated 22.07.2016 had granted relief to the assessee based on facts and circumstances of the case held that the gains arising from sale of property were long term capital gains and the assessee is entitled for deduction u/s 54. Further, the tribunal held that the gains were to be brought to tax in AY 2012-13 and not in impugned assessment year i.e. AY 2011-12. It was submitted that in view of the tribunal holding that the gains arising from sale of the property are long term capital gains chargeable to....
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....that the assessee held the property for less than 36 months and hence the gains arising are short term capital gains chargeable to tax in AY 2011-12 and further the assessee is not entitled for deduction u/s 54 of the 1961 Act. The assessee has claimed that it gave possession of the property to the buyer on 14.05.2011 although the agreement vide clause 2(b) stipulated to give possession to the buyer within 10/30 days. The contentions of the assessee were negated by the AO wherein the AO held that the gains arising from sale of property are short term capital gains chargeable to tax in AY 2011-12 which led to levy of penalty of Rs. 24,14,401/- by the AO u/s 271(1)(c) of the 1961 Act vide orders dated 29.03.2016 for concealment of income. The quantum additions were decided by the tribunal in ITA No. 98/Mum/2015 vide orders dated 22.07.2016 wherein tribunal held that gains arising from the sale of property were long term capital gains chargeable to tax in AY 2012-13 and not in AY 2011-12. Further, tribunal held tin quantum that the assessee is entitled for deduction u/s 54 of the 1961 Act. The Revenue challenged the order of the tribunal before Hon‟ble Bombay High Court by filin....