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TMI Blog2019 (3) TMI 1256X X X X Extracts X X X X X X X X Extracts X X X X ..... 71(1)(c) was levied by the AO goes. The said order of the tribunal has attained finality as appeal filed against the said order before Hon ble Bombay High Court has been dismissed as not pressed owing to low tax effect, consequently penalty levied by the AO u/s 271(1)(c) cannot stand. - decided against revenue X X X X Extracts X X X X X X X X Extracts X X X X ..... ed of a new flat purchased and copy of agreement for purchase of flat by father of the assessee before the AO. On perusal of the purchase agreement entered into by the father of the assessee, the AO was of the opinion that the property which is sold was a short term capital asset as it was held by the assessee for not more than 36 months while the assessee was claiming the same to be long term capital asset. The assessee had claimed that he gave the possession of the property on 14th May 2011 vide clause 2(b) of the sale agreement, as against the sale agreement registered on 06.01.2011 which agreement provided for a period of 10/30 days for giving actual possession of flat by the vendor to the purchaser and hence period of holding of the said property was more than 36 months. 4. The AO as well learned CIT(A) rejected the contentions of the assessee in quantum and the matter finally reached tribunal which granted relief to the assesee in ITA no. 98/Mum/2015 vide appellate order dated 22.07.2016, wherein the tribunal was pleased to grant relief to the assessee by holding based on facts and circumstances of the case that the gains arising from sale of property were long term capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the flat was to be given to the purchaser in the next 10/30 days. And finally the possession of the said flat was granted subsequently on 14-05-2011 with the mutual consent. Before us, learned Counsel for the assessee drew our attention to relevant clause 2(b) of the agreement dated 06-01-2011 and the same reads as under:- "2. The said consideration will be paid by the Purchaser to the Vendor as follows:- (b) The vacant and peaceful possession of the said Flat will be given by the Vendor to the Purchaser in the next 10/30 days because the vendor is himself shifting to another flat where he is to get possession in the next 10/30 days". The learned Counsel for the assessee also referred to the factum of possession given on 14-05-2011 to the purchaser by the assessee. The relevant possession letter in continuation to the agreement dated 06-01-2011 (copy of which is enclosed in assessee's paper book at page 111), which reads as under:- "Today, on the 14th day of May 2011 (14/05/2011) (Seller) Mr. Javed Kamruzzama Khan S/o. Mr. Kamruzzama Ghasi Khan has peacefully handed over the possession of Flat No.9, B Wing admeasuring 519 sq. Ft. Carpet area on the 3rd floor of build ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or capital gains tax purpose, then it is mandatory to bring to tax, the said income, in A.Y. 2005-06 in which event he ought to have excluded the income offered to tax in A.Y. 2006-07, having observed that reckoned from the date of transfer the assessee has not invested, within six months, the sale proceeds in the long term specified assets. The first appellate authority, in para 3.5, impliedly accepts that in the instant case the date of agreement is different from the date of possession; in his opinion the moot point is whether the date of agreement, i.e. 16.03.2005 or the date of possession, i.e. 20.09.2005 is the relevant date for computing capital gains tax. It is well settled that in order to bring the sale proceeds to tax under the head "Capital Gains" transfer of the property has to take place in the relevant previous year and in order to come to the conclusion that the transfer has taken place within section 2(47)(v) of Income Tax Act r.w.s. 53A of Transfer of Property Act twin conditions have to be satisfied, i.e. execution of the agreement and handing over of possession. It is not necessary that both conditions should be satisfied in one year but at the same ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion as under:- "12. As regards the possession, we have taken note of the copies of bills for telephone and water charges, placed before us at pp. 74 to 78, which evidence the fact that the assessee continued to be in possession of the premises even in the financial year 1996-97. A copy of possession letter dt. 10th April, 1998, at pp. 57 of the paper book, shows that the possession was handed over to the developer on 10th April 1998. In any event, in terms of Clause 9 of the development agreement, the possession was to be delivered only after the complete payment was made. Admittedly, this condition was not complied with till the end of the relevant previous year. In these circumstances, when only a small portion of sale consideration was received as earnest/deposit money and when the developer could not have, therefore, exercised his rights under the contract which were to crystallize on making the payments after the receipt of no objection certificate from the authorities, it cannot be said that there is anything to indicate, leave aside establish, "passing of or transferring of complete control over the property in favour of the developer" which is sine qua non for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income wherein it had been held by the AO that the said gains on sale of property are short term capital gains for AY 2011-12 and the assessee was not eligible for deduction u/s. 54 of the Act, vide penalty order dated 29.03.2016 passed by the AO u/s. 271(1)(c) of the 1961 Act. 5.2 The assessee filed first appeal with learned CIT(A) challenging levying of penalty u/s 271(1)(c) of the 1961 Act for concealment of income, wherein learned CIT(A) was pleased to delete the penalty of ₹ 24,14,401/- as levied by the AO on this issue by following the appellate order dated 22.07.2016 in quantum passed by tribunal in ITA no. 98/Mum/2015 for AY 2011-12, vide appellate order 22.08.2017 passed by learned CIT(A) by holding as under:- " 4.3 I have considered the facts of the case and written submissions of the appellant in this regard as against the observations/findings of the AO. The contentions /submissions of the appellant are being discussed and decided as under:- 4.3.1. The facts remains that order of the Hon'ble ITAT in ITA No.98/Mum/2015 dated 22.07.2016 has been received in this case against the quantum addition confirmed by my predecessor in the year under consideration. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee, has itself been finally set aside or cancelled by the Tribunal or otherwise, the penalty cannot stand by itself and the same is liable to be cancelled. Hon'ble Delhi High Court in the case of C1T Vs. R.Dalmia, (1992) 107 Taxation 107, held that no penalty survives after deletion of additions, forming the basis for the levy of penalty. Similar view was taken in Addl. Commissioner of Income- tax v. Badri Kashi Prasad {1993) 200 ITR 206 (All) and Prabhat Oil Traders v. Income-tax Officer (No. 3) (1996) 218 ITR (A.T.) 39 {ITAT, Ahemdabad),City Dry Fish Company v. Commissioner of Income-tax (1999) 238 ITR 63 (A.P.), CIT vs. Mohd. BILK Sakat Ali {2004) 265 ITR 326 (Raj) and AC1T vs. VIP Industries (2009) -122 TTJ 289 (Mum). 5.1 Since the very basis upon which the penalty has been imposed on the amount of ₹ 7,22,18,646/- added by the AO, does not exist in view of the aforesaid order dated 9-3-2012 of the ITAT in quantum appeal, we are of the opinion that penalty levied in relation to the said amount does not survive at this stage. Accordingly, the impugned order is, therefore, set aside to that extent." 4.3.4. In view of the decision of the Hon'ble Tribunal, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this appeal. This for the reason that the tax effect in this appeal is less than ₹ 50 lakhs as provided in CBDT Circular No.3 of 2018 dated 11th July, 2018. 3 Therefore, this Appeal is dismissed, as not pressed. 4 Refund of Court Fees, if any, as per Rules" 6.2 The Ld. DR could not controvert the said position that even appeal filed by Revenue against quantum additions with Hon‟ble Bombay High Court has been dismissed as not pressed owing to low tax effect. 7. We have heard both the parties and perused the material on record. We have observed that the assessee is an individual having income from business and income from other sources. The assessee had sold an immovable property for consideration of ₹ 70 Lakh having a market value of ₹ 1,15,87,600/- on 06.01.2011. The said property was gifted to the assessee by his father on 29.04.2008. The assessee has invested sale proceeds of the aforesaid property on purchase of a new residential flat for a consideration of ₹ 87,88,500/-. The assessee did not declare capital gains in the return of income filed with Revenue. The AO was of the view that the assessee held the property for less than 36 months and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2-13 and not in AY 2011-12 and tribunal further held that the assessee is entitled for deduction u/s 54 of the 1961 Act meaning thereby adverse findings of the AO in quantum are reversed by tribunal. The appeal filed by the revenue against the order of the tribunal in quantum before Hon‟ble Bombay High Court in ITA no. 403 of 2017 has been dismissed as not pressed by Hon‟ble Bombay High Court vide orders dated 27.11.2018 owing to low tax effect. Since, the tribunal has held that gains earned by the assessee on sale of property are long term capital gains chargeable to tax for the AY 2012-13 and further that the assessee is entitled for deduction u/s 54 of the 1961 Act, the whole edifice on which penalty u/s 271(1)(c) was levied by the AO goes. The said order of the tribunal has attained finality as appeal filed against the said order before Hon‟ble Bombay High Court has been dismissed as not pressed owing to low tax effect, consequently penalty levied by the AO u/s 271(1)(c) cannot stand. The learned CIT(A) has passed well reasoned order deleting penalty of ₹ 24,14,101/- levied by the AO u/s 271(1)(c) of the 1961 Act for concealment of particulars of income ..... X X X X Extracts X X X X X X X X Extracts X X X X
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