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2016 (4) TMI 458 - ITAT MUMBAI

2016 (4) TMI 458 - ITAT MUMBAI - TMI - Penalty levied u/s 271(1)(c) - assessee claiming benefit u/s 54 - Held that:- In the present case, in our opinion the assessee has neither concealed his income nor has furnished inaccurate particulars of income. The assessee had disclosed all and furnished the particulars with regard to the said sale of property in the return of income and also declared capital gain after claiming benefit u/s 54 of the Act in respect of flat at Rameshwar Co-Op.Hsg Soc, Sant .....

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holding the penalty u/s 271(1)(c) of the Act cannot be sustained - Decided in favour of assessee - I.T.A. No.7967/Mum/2010 - Dated:- 9-3-2016 - SHRI AMIT SHUKLA, JM AND SHRI RAJESH KUMAR, AM For The Appellant : Shri Kantilal B Parekh For The Respondent : Shri Navin Guptra ORDER PER RAJESH KUMAR, AM : This is an appeal filed by the assessee against the order dated 28.06.2010 passed by the ld.CIT(A)-30, Mumbai and it relates to the assessment year 1995-96. 2. Sole ground raised in this appeal is a .....

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erty by way of will from her late husband in 1970. The property consisted of land of about 1003 sq.yards and building comprising ground, first and 2nd floor. During the financial year the assessee entered into an agreement dated 11.9.1993 with M/s Lake End Constructions Pvt Ltd for transfer of the said building for a consideration of ₹ 1,30,00,000/- for development, however retained the first floor of the said building admeasuring about 1800 sq. ft. Subsequently, the assessee made another .....

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construction company till the building is constructed and it handed over 1800 sq.ft area on the first floor to the assessee. The assessee declared the sale of property in the return of income by showing sale consideration of ₹ 1,30,00,000 and cost of acquisition after indexation at ₹ 64,86,946/- which was calculated on the basis of register valuar s report, valuing the property at ₹ 21,05,573/- and from the capital gain so calculated the assessee claimed deduction of ₹ 40 .....

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account while calculating capital gain on the sale of the property and also that the expenses on brokerage charges was claimed at ₹ 4,50,000/- as against ₹ 2.6 lakhs being 2 per cent on the sale consideration of ₹ 1,30,00,000/-. The assessment u/s 147 r.w. section 143(3) of the Act was completed on 27.3.2002 by taking sale consideration for sale of property known as Madhu Sadan to be ₹ 2,25,00,000/- instead of ₹ 1,30,00,000/- shown by the assessee. The AO determine .....

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ad with section 147 at ₹ 1,30,50,059/- after allowing deduction of ₹ 40,27,575/- u/s 54 of the Act qua new flat purchased. 4. The matter travelled up to the Tribunal, however the assessee despite taking the ground against taking of sale considerations at ₹ 2,25,00,000/- did not press the same and pressed only for allowing relief under section 54 in respect of ₹ 95,00,000/-. The Tribunal allowed the second ground of appeal in favour of the assessee as the assessee did not .....

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levied the penalty of ₹ 25,41,970/- on the ground that the assessee furnished in accurate particulars of income and suppressed her income. Aggrieved by the order of the AO, the assessee preferred an appeal before the ld.CIT(A) who confirmed the action of the AO by holding as under : For the above reasons, I am inclined to hold that the value of the flat will constitute part of the consideration for sale of the property by the assessee. The value of the flat has been taken by the AO at  .....

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d doubt as part of an overall scheme where only transaction was sought to be executed. It is only to seek the deduction twice that two agreements were entered into. When appeal was filed by the appellant against this order of CIT(A) Supra before ITAT, the appellant did not dispute the determination of the sale consideration of ₹ 2.25 Crore even though in the grounds of appeal filed, it has duly raised this issue. It is evident from the perusal of details especially the order of the ITAT in .....

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he sides and when these facts are juxtaposed with the provision of sec.271 (1)(c) of Income Tax Act, 1961 it is evident that the appellant is caught by the mischief of Explanation 1 to sec.271 (1 )(c). The explanation offered by the appellant is found to be false and the falsity of the claim of the appellant has to be appreciated in the background of incorrect claim made by the appellant. It's claim that there were two agreements and two different transactions - one by agreement dt.11.09.199 .....

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n my view, the nature of transactions entered into by the appellant by executing two deeds which has been held as 'Sham' clearly attracts penalty, as held by Mumbai IT AT in the case of M/s Ultramarine & Pigments Ltd v. ACIT reported in (2010), 38 DTR 42. The crux of the observation of the Mumbai ITAT in the case of Ultramarine (Supra) is that where the assessee has entered into an artificial arrangement of purchase and lease back transactions to evade tax liability and the transacti .....

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the first floor of the new property after development to the assessee which was also condition in the old agreement dated 11.9.1993. The ld. Counsel submitted that the contention of assessee that interest free security deposit of ₹ 95 lakhs was to be refunded when the builder handed over the possession of the area of 1800 sq. Ft on the first floor of the property and in the event the builder backing out its commitments under the said agreement at-least the assessee would forfeit the secur .....

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investment in the new property as the assessee did not press ground before the Tribunal relating to sales consideration of ₹ 2,25,00,000/- which do not mean that the assessee concealed any income or furnished in accurate particulars of her income. The Co-ordinate Bench directed that the benefit u/s 54 of the Act be allowed in respect of ₹ 95 lakhs. The ld. Counsel, prayed that in view of the above facts, which proved unequivocally that no transfer of 1800 Sq Fts on the first floor o .....

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o the builder vide agreement dated 11.9.1997 to M/s Lake End Constructions Pvt Ltd for development of the property while retaining 1800 sq. ft area on the first floor of the building. We also note that the assessee vide agreement dated 20.7.1994 entered with the said developer agreed to handover the possession of the entire property including 1800 sq. ft. area on the first floor of the property on the condition that the builder would pay interest free security deposit of ₹ 95 lakhs to the .....

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