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TMI Blog2015 (12) TMI 1325X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 available on record. In view of the above, we are reproducing hereund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avin 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 found during course of search action could not be regarded as unexplained. The assessee further explained that some of the jewellery was received as gift from relatives on social and religious occasions lik ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms 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 by the order of the Ld. CIT(A), the assessee has come in appeal before us. 9. The Ld. A.R. of the assessee has brought our attention to the details and description of the items as reproduced by the Ld. CIT(A) in the impugned o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aluer 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 Ld. A.R. has further invited our attention to the decision of the Jodhpur Bench of the Tribunal in the case of "DCIT vs. Arjun Dass Kalwani" 101 ITD 337 wherein the Tribunal has held that simply because the assessee could not lead evidence for conv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 the difference in weight is ignored the description of the items of the jewellery almost tallied with that of the items already declared by the assessee. Moreover the overall weight of jewellery already declared by the assessee in her books of accounts is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 builder as per the sale agreement dated 28.4.2006. Furnish copies of agreements entered by you in this respect. Please also explain why the market value of the said flats and amenities should not be added to your total consideration for sale of property during the year while computing the LTCG for the year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fer 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 of the I.T.Act is allowable only when the assessee makes an investment towards purchase or construction of a new house property within the stipulated period. Thus for availing exemption u/s.54, the assessee has to either purchase or construct a new house property. 6. In this regard, the A.O. further held that exemption u/s.54 in respect of capital gains ari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. has considered sale consideration received in cash and kindbut failed to allow the exemption u/s.54 for reinvestment of the said consideration received in kind for acquiring of new residential house properly. 5. The A.O. has misinterpreted the definition of 'purchase' held by the Apex Court in the assessee of CIT vs. T.N. Aravinda Reddy. In this case, the definition of the term 'purchase' has been gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of ITO Vs. Ms. Sushila M. Jhaveri, (2007) 292 ITR (AT) 1 (Mumbai). 12. The issue raised by the AO is also covered by the decision of Hon'ble Delhi High Court in the case of Gita Duggal 257 CTR 208, wherein the Hon'ble High Court held as under:- "Sec. 54/54F uses the expression "a residential house". The expression used is not "a residential unit". This is a new concept introduced by the AO into the section. Sec. 54/54F requires the assessee to acquire a "residential house" and so long as th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 claimed deduction in favour of the assessee. We further note that the ld. Assessing Officer imposed penalty with respect to claimed deduction u/s 54 of the Act, therefore, when the basis no longer survive on the basis of which penalty was imposed, in our view, penalty u/s 271(1)(c) of the Act cannot survive. 2.3. There is no dispute that quantum addition has been deleted by the Tribunal, therefore, in our humble opinion, the ld. Commissioner of Income tax (Appeals) is justified in deleting the penalty. Our view further fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity 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 (Appeals) is not sustainable. Finally, the appeal of the assessee is allowed." 2.2. In the aforesaid order, an elaborate discussion has been made by the Tribunal by taking recourse to various judicial pronouncements. In the present appeal also, there is no dispute that quantum addition has been deleted by the Tribunal, therefore, in our humble opinion, the ld. Commissioner of Income tax (Appeals) is justified in deleting the penalty. Our view further finds support from the decision and the ratio laid down in CIT vs S.P Viz Constructi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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