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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 ..... inite 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 justified. - Decided against revenue - ITA NO.1209/Mum/2014 - - - Dated:- 23-11-2015 - Shri Joginder Singh, Judicial Member, and Shri Ashwani Taneja, Accountant Member For The Revenue : Shri Arvind Kumar-DR For The Assessee : Shri Firoze Ahdhyarajina ORDER Per Joginder Singh (Judicial Member) The Revenue is aggrieved by the impugned order dated 02/12/2013 of the ld. First Appellate Authority, Mumbai. The only ground raised in this appeal pertains to deleting 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 aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out of which jewellery valued at ₹ 36,93,026/- was seized. During the course of the assessment proceedings, the AO asked the assessee to show cause why jewellery to the extent which has not been reflected in the return of income should not be treated as unexplained and added to the income of the assessee. 4. The assessee explained the source of the 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 accordingly added the said amount into the income of the assessee u/s 69A of the Act. Aggrieved by the addition made by the AO, the assessee preferred appeal before the Ld. CIT(A). 5. The assessee submitted before the Ld. CIT(A) that the jewellery found during the search action belonged to the members of the Doshi family, including the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder 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, however, the department had to match each and every item found with the items declared in the valuation reports of the Approved Valuers as furnished by the assessee and that the onus was on the assessee to prove the source of acquisition of each and every item of jewellery. He therefore called upon the assessee to prepare an item vise chart showing which of the items could be said to be matching and another chart in respect of items which did not match with the description of items made in the valuation 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as in the valuation report produced by the assessee it has been mentioned as 20.3. Similarly, in respect of item No.19 i.e. Bangles with Rodium the gold gross weight also matched and the pieces of diamonds mentioned also matched. However, the estsimation 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 valuation reports submitted by the assessee and even number of pieces of diamonds in the jewellery also matched. However, there was difference in estimation of carat weight. 10. We find that it is not a case where the items mentioned in the valuation reports submitted by the assessee did not match at all with that of the items of jewellery which were found during the search action. Not only the description of the jewellery sets, bangles, p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 jewellery, cannot be made basis for making addition, when the jewellery disclosed by the assessee either in his own hand or in the hands of their family members prior to the date of search is equal to or more than the jewellery found during the course of search. In the case of Rakesh J. Parikh v. DCIT in IT(SS)A No.136/M/2000 for Block period 01.04.1987 to 25.09.1997 decided vide order dated 26.02.2004, the coordinate bench of the Tribunal has observed that merely because the description of some of the 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 the course of the search, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Revenue is aggrieved by the impugned order dated 10/01/2014 of the ld. First Appellate 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. Yadagiri, defended the imposition of penalty. 2.1. We have considered the rival submissions and perused the material available on record. In view of the above, we are reproducing hereunder the aforesaid order of the Tribunal (ITA No.8797 and 8798/Mum/2010) order dated 27/02/2015 for ready reference:- These two appeals have been filed by two assessees against the order of CIT(A), for the assessment year 2007-08, in the matter of order passed u/s.143(3) of the I.T.Act. 2. Common grievance in both the appeals relate to disallowance of claim of deduction u/s.54(1) in respect of residential flats ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able in lieu of old residential place and old car parking place. Hence there is no additional amenities received from seller hence there should not be addition on account of market value of the said flat and amenities added to total consideration for sale of property during the year. Valuation done by Odilio Fernandes on 31.7.2006 as on 1.4.1981 at ₹ 35 lacs. Your honour may refer to departmental valuer for further verification. In case your honour is not satisfied without valuation report. 4. The aforesaid submission of the 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 the value of the entire property as on 1.4.1981 while computing the LTCG on such sale. However, the assessee has taken the FMV of the entire property as on 1.4.198 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 authorities below and found from the record that during the course of appellate proceedings the assessee has submitted as under :- 1. During the year the assessee with her co owner i.e. her brother Mr.Peter Savio Pereira sold the ancestral residential property for consideration of ₹ 3,05,00,00/- and 3 flats admeesurinq 3150 sq. ft. with one open and two stilt parking in kind. 2. In the assessment order. the A.O. has valued the consideration received in kind for ₹ 3,32,70,540/- and additions 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld debt or for other monetary consideration. The word purchase in section 54 has to be given its common and wider meaning. It should include buying or adjustment towards old debt or for other monetary consideration. 6. In the present case before your honour, the assessee has purchased/constructed the new residential property and paid the consideration equivalent of price by 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 residential house. Therefore, the AO was not justified in adding back the additional consideration given in the form of allotment of three flats by declining claim of deduction u/s.54 of the I.T.Act. 10. In the present case before us, the assessee has purchased/constructed the new residential property and paid the consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The only requirement is that it should be for the residential use and 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 own residence and let out the first floor having an independent entry so that his income is augmented. It is quite common to find such arrangements, particularly post-retirement. One may build a house consisting of four bedrooms (all in the same or different floors) in such a manner that an independent residential unit consisting of two or three bedrooms may be carved out with an independent entrance so that it can be let out. He may even arrange for his children and family to stay there, so that they are nearby, an arrangement which can be mutually supportive. He may construct his residence in such a manner that in case of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lf 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 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 justified. Finally, the appeal of the Revenue is having no merit, therefore, dismissed. 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 not justified in confirming the penalty. Admittedly, the impugned order is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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