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ACIT, Mumbai Versus M/s Parle Bottling Pvt. Ltd

2015 (12) TMI 1325 - ITAT MUMBAI

Penalty u/s 271(1)(c) - Held that:- 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 Construction company (1988 (10) TMI 24 - PATNA High Court ) and K.C. Builders vs ACIT (2004 (1) TMI 7 - SUPREME Court ). We are of the view that where the penalty for concealment o .....

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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 t .....

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eting the penalty when the quantum addition was deleted in the case of the assessee on the basis of which penalty was imposed. 2. At the time of hearing, the ld. DR, contended that appeal u/s 260A of the Act has been filed by the Department before the Hon ble High Court against deleting the quantum addition by the Tribunal. The ld. counsel for the assessee defended the conclusion arrived at in the impugned order and submitted the copy of the order as per which the quantum addition was deleted (I .....

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13) 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 ₹ 3,36,912/-, imposed u/s 271(1)© 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 .....

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nged the action of the Ld. CIT(A) in confirming the additions made by the Assessing Officer (hereinafter referred to as the AO) as unexplained investments in relation to jewellery found during the course of search action. 3. The facts in brief are that a search action u/s 132 of the I.T. Act was carried out in the case of Acme Group Companies and related persons. The assessee was also covered in the said search action. The assessee is a partner in various firms engaged in business of builder and .....

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e jewellery and made his submissions vide letter dated 4.10.2010 and further vide letter dated 8.11.2010. He further submitted that looking to the status of family and the customs and the practice of the community to which the family belonged, the jewellery found should be treated as duly explained. The AO however did not agree with the explanation offered by the assessee. He observed that out of the total jewellery found, the jewellery valuing ₹ 21,58,524/- had remained unexplained. He ac .....

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(Son of Appellant) iv) Mrs. Alka Munish Doshi (Daughter in law) v) Master Manav Munish 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, G .....

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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 like marriage, birthday anniversary etc. It was also explained that some of the jewellery was rema .....

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erall carat weight of diamonds approximately matched with that was already accounted by assessee s family members. It was therefore submitted that the additions under section 69A were not warranted in this case. 6. The Ld. CIT(A), after considering the submissions of the assessee observed that it was correct that the overall weight of the gold jewellery declared by the assessee and his family in the books of accounts was in excess of gold jewellery found during the course of search action, howev .....

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ion report furnished by the assessee. The assessee made charts No. I & II in the above manner in relation to gold items, the contents of which have also been reproduced in the impugned order. 7. The Ld. CIT(A), after tallying and making comparative analysis of the items disclosed by the assessee in the approved valuer s report with that of the report made during search action, observed that most of the items mentioned in chart No.I mathed with the description given in the valuation report of .....

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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 mat .....

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e impugned order. Inviting our attention to the page 12 of the impugned order in relation to item No.29 of locker No.571, the description has been mentioned as Tanmanya Pendant with chain . The number of pieces of diamond in the said pendant has been mentioned as 59. The assessee has stated that it matched with item at serial no. 9 of the valuer s report wherein the description has been mentioned as Double String Black Beads Mangalsutra with Pendant wherein the total number of diamonds is also m .....

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of carat value by the government valuer is at 1.68 whereas as mentioned in the valuation report of the assessee is at 2.75. Similarly, in respect of item No.21 Eartopes gold gross weight also matches and number of pieces of diamond also matches. However, there is a small difference in carat weight of diamonds. The Ld. A.R. of the assessee has invited our attention in respect of other items also where the gross gold weight of the items matches with that of the description mentioned in the valuat .....

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o the number of diamonds embedded in the jewellery. So far as the estimation of carat weight is concerned, it is an admitted fact that the weight was not measured 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 .....

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ery, 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 .....

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cided on 20.01.2014, the co-ordinate Mumbai bench of the Tribunal has concluded that when quantity of jewellery disclosed by the assessee is same as the quantity of jewellery found during the course of search, no addition is warranted merely because the description is not matching. It is a vital fact that ladies get jewellery converted as per latest design and for which even the concerned man in the family is being not informed. In these circumstances merely because of conversion of such jewelle .....

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ornaments in the Wealth-tax return did not tally with the ornaments found at the time of search, is no ground for rejecting the assessee s claim of remaking of the ornaments even if the assessee has not preserved the bill of remaking charges. In the case of ACIT vs. Shri Kamalkishan H. Aggarwal in ITA No.777/M/1998 and ITA No.5127/M/1995 & others decided vide common order dated 21.06.13, the Tribunal under somewhat similar circumstances has observed that normal presumption is that during th .....

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e 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 .....

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ms 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 more than that of the jewellery found during the course of search action. In view of the above stated facts and in the light of the proposition of law laid down vide judicial pronouncements on this issue as discussed above, it cannot be said in this case that the jewellery found during the search action w .....

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ellate Authority, Mumbai, deleting penalty of ₹ 18,75,314/-, imposed u/s 271(1)©, even though the quantum addition has been upheld by the ld. Commissioner of Income Tax (Appeals). 2. During hearing of this appeal, the ld. counsel for the assessee, at the outset, pointed out that the quantum addition on the basis of which penalty was imposed has been deleted by the Tribunal in order dated 27/02/2015. The assessee furnished the copy of the order. On the other hand, ld. DR, Shri B. Yadag .....

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ppeals relate to disallowance of claim of deduction u/s.54(1) in respect of residential flats acquired by the assessees in consideration of old house sold to the builder. 3. Rival contentions have been heard and record perused. Facts in brief are that the assessee Vilma Mary Pereira 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 ₹ 3,05,00,000/- vide agreement dated 28.4.2006 to M/s. Aq .....

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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 ₹ 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 .....

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claim. 3. Proof of payment of professional fees and allowability of the same as deduction from the LTCG shown. 4. Basis of division of share of the property sold during the year. Please furnish evidences to support your claim. 5. Please explain why the valuation made by you of the property sold as on 1.4.1981 should not be rejected? 4. In response, the A.R. of the appellant vide letter dated 23.10.2009 submitted as under :- The new flat and car parking is receivable in lieu of old residential pl .....

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he assessee was considered by the A.O. According to the A.O. the new flat and car parking are nothing but additional consideration. If the said new flat is receivable for old flat and old car parking place, how the assessee has claimed indexation on the value of the said properties as on 1.4.1981 against the consideration. If the new flat was to be given in lieu of the old area occupied by the assessee in the old structure, then the value of the said old structure should have been reduced from t .....

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tion 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 .....

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on 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 arising on-sale of property used for residence is only available towards investment [by way of purchase or construction in a new house .....

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of the same. In the instant case, as per AO, the assessee has not fulfilled this condition which is the requirement of the Act. In view of the above, the A.O. held that the assessee is not eligible for exemption u/s.54 of the l.T.Act and accordingly denied the same to the assessee. 7. By the impugned order, the CIT(A) confirmed the disallowance against which the assessees are in further appeals before us. 8. We have considered rival contentions, carefully gone through the orders of the authorit .....

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were made in the assessment order under the head long term capital gains without considering the said amount as reinvestment is neither purchased nor constructed by the assessee. 3. As regards benefit of section 54, this section makes it clear that capital gain arising from the transfer of a house property is exempt from tax provided the following conditions are satisfied :-(a) The house property is a residential house whose income is taxable under the head Income from house property as transfer .....

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n 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 .....

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son to divorce the ordinary meaning of the word purchase as buying for a price or equivalent of price by payment in kind or adjustment towards an old debt or for other monetary consideration from the legal meaning of that word in section 54(1). If you sell your house and make a profit pay Caesar what is due to him. But if you buy or build another subject to the conditions of section 54(1), you are exempt. The purpose is plain the symmetry is simple, the language is plain. Thus the Hon. Supreme C .....

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payment in kind. Therefore the assessee has purchased the residential property and is entitled for exemption u/s.54 of the I T.Act 1961. 9. It is clear from the above that residential house was given to the assessee in consideration of the sale of old house. The sale consideration was partly received in cash and partly in the form of new flats to be constructed on the plot of old house sold by assessee. The new flats agreed to be given to assessee amounts to investment by assessee in residentia .....

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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 .....

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bai 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 an .....

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nd not for commercial use. If there is nothing in the section which requires that the residential house should be built in a particular manner, it seems that the IT authorities cannot insist upon that requirement. A person may construct a house according to his plans and requirements. Most of the houses are constructed according to the needs and requirements and even compulsions. For instance, a person may construct a residential house in such a manner that he may use the ground floor for his ow .....

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they are nearby, an arrangement which can be mutually supportive. He may construct his residence in such a manner that in case of a future need he may be able to dispose of a part thereof as an independent house. There may be several such considerations for a person while constructing a residential house. The physical structuring of the new residential house, whether it is lateral or vertical, should not come in the way of considering the building as a residential house. The fact that the reside .....

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f 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 fro .....

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, 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 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 .....

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me 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 justified. Finally, the appeal of the Revenue is having no merit, therefore, dismissed. 2.3. There is no dispute that quantum addi .....

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. 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 th .....

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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. Comm .....

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