ITO 24(1)(1), MUMBAI v. CHANDRIKA B. SHAH, MUMBAI

ITA 1790/MUM/2009 | 2003-2004
Pronouncement Date: 07-05-2010 | Result: Dismissed

Appeal Details

RSA Number 179019914 RSA 2009
Assessee PAN AAEPS7020G
Bench Mumbai
Appeal Number ITA 1790/MUM/2009
Duration Of Justice 1 year(s) 1 month(s) 19 day(s)
Appellant ITO 24(1)(1), MUMBAI
Respondent CHANDRIKA B. SHAH, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 07-05-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 07-05-2010
Date Of Final Hearing 30-04-2010
Next Hearing Date 30-04-2010
Assessment Year 2003-2004
Appeal Filed On 19-03-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C MUMBAI BEFORE SHRI D.K. AGARWAL JM AND SHRI T.R. SOOD AM I.T.A.NO. 1790/MUM/2009 ASSESSMENT YEAR : 2003-04 THE INCOME-TAX OFFICER-24(1)(1) C- 13 607 PRATYAKSHA KAR BHAVAN BANDRA KURLA COMPLEX BANDRA (E) MUMBAI 400 051. VS. SMT. CHANDRIKA B SHAH L/H OF LATE SHRI BHARAT L. SHAH 306 PREMSONS INDUSTRIAL ESTATE CAVES ROAD JOGESHWARI (E) MUMBAI 400 060. PAN: AAEPS 7020 G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ARUN BHARAT RESPONDENT BY : SHRI VIJAY KOTHARI O R D E R PER T.R. SOOD AM: IN THIS APPEAL THE REVENUE HAS RAISED VARIOUS GROUN DS. BUT THE ONLY ISSUE INVOLVED IN THIS APPEAL IS DELETION OF PENALTY OF R S. 27 30 000/- LEVIED UNDER SECTION 271(1)(C) OF THE INCOME-TAX ACT 1961. 2. BRIEF FACTS OF THE CASE ARE THAT MRS. CHANDRIKA B. SHAH IS THE LEGAL HEIR OF LATE SHRI BHARAT L. SHAH HER HUSBAND. SHRI BHARAT L. SHAH HAD RECEIVED A SUM OF RS. 1 30 00 000/- AGAINST SURRENDER OF THE TENANCY RIGHT IN RESPECT OF THE PROPERTY NAMELY YATAN SADAN 24-A MOGHUL LANE MAHIM MUMB AI-400 016 DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2003- 04. HE HAD TAKEN THE FAIR MARKET VALUE AS ON 1.4.1981 AT RS.20 60 400/- AND AFTER INDEXATION THE INDEXED VALUE OF THE TENANCY RIGHT WAS WORKED AT RS. 92 09 988/- AND THE RETURN WAS FILED DECLARING LONG TERM CAPITAL GAINS ON THE TENANCY RI GHT AT RS. 37 90 012/-. IT WAS CLAIMED BY THE ASSESSEE DURING THE ASSESSMENT PROCE EDINGS THAT TENANCY RIGHT WAS ACQUIRED IN 1973 BY M/S. ELREX CORPORATION A PARTN ERSHIP FIRM IN WHICH LATE SHRI BHARAT L. SHAH WAS A PARTNER. THE PARTNERSHIP WAS DISSOLVED IN 1979 AND AFTER THAT BUSINESS WAS TAKEN OVER AND CARRIED ON AS PRO PRIETARY CONCERN BY LATE SHRI BHARAT L.SHAH. ACCORDINGLY THE PROPERTY WAS RECEI VED ON DISSOLUTION OF THE FIRM BY THE MODE OF TRANSFER PRESCRIBED UNDER SECTION 49 (1). LATER ON THIS RIGHT WAS ITA NO.1790/M/09 M/S. SMT. CHANDRIKA B . SHAH 2 SURRENDERED ON 21.11.2002 BY SELLING THIS RIGHT TO KANYAKUMARI BUILDERS PVT. LTD. FOR A SUM OF RS. 1 30 00 000/-. THIS CLAIM WAS REJ ECTED DURING THE ASSESSMENT PROCEEDINGS BECAUSE THE ASSESSEE COULD NOT PRODUCE ANY DOCUMENT REGARDING DISSOLUTION ETC. AND ACQUISITION COST OF THE TENANC Y RIGHTS WAS ADOPTED AT NIL. DURING THE PENALTY PROCEEDINGS ALSO THESE CONTENTIO NS WERE RAISED AND THE SAME WERE REJECTED BY THE ASSESSING OFFICER. 3. ON APPEAL SIMILAR CONTENTION WAS REITERATED AND SOME DOCUMENTS WERE ALSO FILED. THE LEARNED CIT(A) SOUGHT A REMAND REP ORT FOR VERIFICATION OF THESE DOCUMENTS. IN THE REMAND REPORT THE ASSESSING OFFIC ER REPORTED THAT M/S. ELREX CORPORATION WAS A PARTNERSHIP FIRM AND HAD TAKEN TE NANCY RIGHTS VIDE LEAVE AND LICENSE AGREEMENT DATED 16.07.1973 AND THE FIRM WAS DISSOLVED IN 1979. LATE SHRI BHARAT L.SHAH CONTINUED THE BUSINESS IN THE SA ME NAME AND THE SAME PREMISES AS THE PROPRIETOR OF THE CONCERN AFTER DIS SOLUTION OF THE FIRM. HOWEVER SINCE COPY OF THE DISSOLUTION DEED WAS NOT PROVIDED AND THEREFORE IT COULD NOT BE PROVED THAT THE PROPERTY IN QUESTION I.E. TENANCY RIGHTS WERE RECEIVED BY LATE SHRI BHARAT L. SHAH ON DISSOLUTION OF THE FIRM AND THER EFORE NO COST WAS INCURRED ON ACQUISITION OF THE RIGHTS AND THE COST OF THE SAME HAS TO BE TAKEN AT NIL. THE LEARNED CIT(A) AFTER CONSIDERING OF THE SUBMISSION S DELETED THE PENALTY VIDE PARAS 3.1 TO 3.3 OF HIS ORDER WHICH READ AS UNDER: 3.1 I HAVE CONSIDERED THE FACTS OF THE CASE AND SU BMISSIONS OF THE APPELLANT CAREFULLY. LATE MR. BHARAT L. SHAH HA D DISCLOSED THE PROCEED OF RS. 1 30 00 000/- IN RESPECT OF THE SURR ENDER OF THE TENANCY RIGHT UNDER CONSIDERATION. WHILE MAKING THE COMPUTATION F THE LTCG HE CLAIMED THE VALUE OF THE TENANCY RIGHT AS ON 01/04/1981 AS THE SUBSTITUTED COST OF ACQUISITION. AS PER THE PROVISIONS OF SECTION 55(2)(A)(II) OF THE I.T.ACT THE COST OF ACQUISITIO N OF CERTAIN CAPITAL ASSETS INCLUDING THE TENANCY RIGHT SHALL BE TAKEN A T NIL EXCEPTING IN THE CASES FALLING UNDER SECTION 49(1)(I) TO (IV). T HE ACQUISITION OF A CAPITAL ASSET BY AN ASSESSEE BY WAY OF DISTRIBUTION OF ASSETS ON THE DISSOLUTION OF A FIRM IS ONE OF THE MODES SPECIFIED IN SECTION 49(1)(III)(B). IN THIS CASE THE DOCUMENTS CLEARLY S HOW THAT M/S. ELREX CORPORATION PARTNERSHIP FIRM HAD ACQUIRED THE TENA NCY RIGHT OF THE PROPERTY VIDE LIVE AND LICENSE AGREEMENT DATED 16/0 7/1973 AND THE APPELLANT WAS ONE OF THE PARTNERS OF THE FIRM. THE FIRM WAS DISSOLVED IN 1979. M/S. ELREX CORPORATION BECAME THE PROPRIET ORSHIP CONCERN OF ITA NO.1790/M/09 M/S. SMT. CHANDRIKA B . SHAH 3 LATE MR. BHARAT L. SHAH AND HE WAS HOLDING THE TENA NCY RIGHT OF THE SAID PROPERTY THEREAFTER WHICH HE SURRENDERED IN TH E ASSESSMENT YEAR UNDER CONSIDERATION FOR THE AFORESAID SUM OF RS. 1 30 00 000/-. SO HIS CLAIM THAT THE TENANCY RIGHT WAS RECEIVED BY HIM BY WAY OF DISTRIBUTION OF ASSETS ON DISSOLUTION OF THE FIRM A ND THE CONSEQUENT CLAIM OF SUBSTITUTED COST AS ON 01/04/2001 CANNOT B E EQUATED WITH CONCEALMENT OF INCOME OR FILING OF INACCURATE PARTI CULARS OF INCOME. 3.2. MOREOVER THE CLAIM OF SUBSTITUTED COT WAS MADE BY MR. BHARAT L. SHAH IN THE RETURN OF INCOME FILED BY HIM ON 28/11/ 2003. HE DIED IN A ROAD ACCIDENT ON 09/10/2004 AND HIS LEGAL HEIR AND WIFE MRS. CHANDRIKA B. SHAH COULD NOT COLLECT ALL THE NECESSA RY DOCUMENTS AND FURNISH THE SAME DURING THE ASSESSMENT PROCEEDING I N SUPPORT OF THE CLAIM OF THE SUBSTITUTED COST. FOR THE SAME REASON SHE HAD WITHDRAWN THE APPEAL IN THE QUANTUM CASE. THE LIVE AND LICENS E AGREEMENT AND THE INCOME TAX DOCUMENTS OF THE FIRM M/S. ELREX COR PORATION FILED BY THE SUBSEQUENTLY SHOW THAT THE FIRM WAS HOLDING THE TENANCY RIGHT FOR THE PERIOD THEREAFTER. THE ONE CRUCIAL DOCUMENT SHE COULD NOT PRODUCE AT ANY STATE IS THE DEED OF DISTRIBUTION OF ASSETS OF THE FIRM ON ITS DISSOLUTION. THE ASSESSING OFFICER WAS JUSTI FIED IN OPINING THAT THE CLAIM OF SECTION 49(1)(III)(B) AND THE CONSEQUE NT CLAIM OF SUBSTITUTED COST CAN NOT BE ALLOWED FOR WANT OF SUC H DIRECT EVIDENCE. HOWEVER IT CANNOT BE SAID AS A WRONGFUL CLAIM MADE FOR THE PURPOSE OF MISLEADING THE REVENUE. IT WAS A LEGAL CLAIM WHI CH COULD NOT BE SUBSTANTIATED BY THE LEGAL HEIR BY THE DIRECT EVIDE NCE THAT THE TENANCY RIGHT WAS RECEIVED BY HER LATE HUSBAND BY WAY OF DI STRIBUTION OF ASSETS ON DISSOLUTION OF FIRM. THE INABILITY OF THE LEGAL HEIR IN COLLECTING AND FILING SUCH DIRECT EVIDENCE FOR SUBSTANTIATING THE CLAIM MADE BY HER LATE HUSBAND CANNOT BE CATEGORIZED AS CONCEALMENT O F INCOME OR FILING OF INACCURATE PARTICULARS OF INCOME. 3.3 THERE ARE SEVERAL JUDGMENTS OF VARIOUS COURTS THAT THE PENALTY SHOULD NOT BE IMPOSED ON THE FACTS SIMILAR TO THE P RESENT CASE. HONBLE DELHI HIGH COURT HELD IN THE CASE OF CIT V. NATH BROTHERS EXIM INTERNATIONAL LTD. (2007) 288 ITR 670 THAT WHERE FA CTS ARE DISCLOSED BUT THE CLAIM OF DEDUCTION IS WRONGLY MADE CONCEALM ENT PENALTY U/S.271(1)(C) CANNOT BE IMPOSED. HONBLE MADRAS HIG H COURT HELD IN THE CASE OF CIT V. CAPLIN POINT LAB. LTD. [2007] 29 3 ITR 524 THAT WHEN DISALLOWANCE IS MADE ON THE BASIS OF DIFFERENT INTERPRETATION IT CANNOT BE SAID THAT PARTICULARS OF INCOME ARE CONCE ALED OR INACCURATE PARTICULARS ARE FILED. HONBLE CALCUTTA HIGH CURT H ELD IN THE CASE OF CIT V. CALCUTTA CREDIT CORPORATION LTD. 166 ITR 29 THAT WHERE TWO OPINIONS ARE POSSIBLE ON FACTS OF THE CASE PENALTY U/S.271(1)(C) CANNOT BE IMPOSED. HONBLE DELHI HIGH COURT HELD IN THE CA SE OF CIT V. P.H.I. SEEDS INDIA LTD. [2008] 301 ITR 13 THAT THE PENALTY U/S.271(1)(C) IS ATTRACTED IN THOSE INSTANCES WHERE THE ASSESSEE CON CEALS THE PARTICULARS OF INCOME OR FURNISHES INACCURATE PARTI CULARS OF INCOME WITH AN INTENTION TO MISLEAD THE REVENUE AND IT SHO ULD NOT BE IMPOSED IN EVERY CASE WHERE THE RETURN IS NOT ACCEPTED AND THE ASSESSMENT IS FRAMED AT THE INCOME HIGHER THAN THE RETURNED INCOM E. 4. BEFORE US THE LEARNED DEPARTMENTAL REPRESENTATIV E WHILE STRONGLY SUPPORTING THE ORDER OF THE AO SUBMITTED THAT IN TH IS CASE EXPLANATION 1 TO SECTION ITA NO.1790/M/09 M/S. SMT. CHANDRIKA B . SHAH 4 271(1)(C) WOULD BE ATTRACTED BECAUSE THE ASSESSEE H AS NOT BEEN ABLE TO SUBSTANTIATE THE EXPLANATION BECAUSE COPY OF THE DI SSOLUTION DEED WAS NEVER FILED AND THEREFORE PENALTY LEVIED BY THE A.O. WAS JUSTI FIED. 5. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE A SSESSEE SUBMITTED THAT THE PRESENT ASSESSEE I.E. SMT. CHANDRIKA B. SHAH IS THE WIFE OF LATE SHRI BHARAT L. SHAH WHO UNFORTUNATELY DIED IN A ROAD ACCIDENT ON 9.10.2004. HE REITERATED THE SUBMISSION MADE BEFORE THE ASSESSING OFFICER REGARD ING ACQUISITION OF THIS TENANCY RIGHT AND SUBMITTED THAT MRS. CHANDRIKA SHAH COULD NOT LOCATE THE DISSOLUTION DEED AND OTHER PAPERS AT THE TIME OF HEARING OF ADJ UDICATION OF QUANTUM APPEAL AND THAT IS WHY THE APPEAL IN RESPECT OF ADDITION I.E. QUANTUM APPEAL WAS WITHDRAWN BY THE ASSESSEE. LATER ON SOME DOCUMENTS WERE LOCATED WHICH WERE FILED DURING APPEAL PROCEEDINGS UNDER PENALTY PROVI SIONS AND WHICH HAVE BEEN DULY REFERRED TO THE ASSESSING OFFICER BY THE CIT(A ). IN THE REMAND REPORT IT WAS SPECIFICALLY ACCEPTED THAT M/S. ELREX CORPORATION A PARTNERSHIP FIRM HAD ORIGINALLY TAKEN THE TENANCY RIGHTS OF THE PREMISES VIDE LEAV E AND LICENSE AGREEMENT DATRED 16.07.19973. IT WAS ALSO ACCEPTED THAT THE FIRM WA S DISSOLVED IN THE YEAR 1979 AND LATE SHRI BHARAT L. SHAH CONTINUED THE BUSINES S IN THE SAME NAME AT THE SAME PREMISES AS PROPRIETOR. IT IS THEREFORE CLE AR THAT THESE RIGHTS WERE ACQUIRED ORIGINALLY BY THE PARTNERSHIP FIRM WHICH WAS DISSOL VED IN 1979 AND THE ASSESSEE IN TURN RECEIVED THE SAME ON DISSOLUTION OF THE FIRM I N TERMS OF SECTION 49(1)(III)(B) OF THE ACT. THEN HE REFERRED TO SECTION 55(1)(B)(2)(II ) WHEREIN IT IS CLEARLY PROVIDED THAT IF THE PROPERTIES ACQUIRED BY ANY OTHER MODE S PECIFIED IN SUB-SECTION (1) OF SECTION 49 THAN SUCH COST OF ACQUISITION IS TO BE TAKEN AS COST TO PREVIOUS OWNER. HE FURTHER REFERRED TO SECTION 55(2) CLAUSE (B)(II) WHICH GIVES OPTION TO THE ASSESSEE TO ADOPT THE FAIR VALUE OF THE ASSET AS ON 1 ST APRIL 1981. THUS IT IS CLEAR THAT THE ASSESSEE HAD THE RIGHT TO ADOPT THE MARKET VALUE AS ON 1.4.1981. IN ANY CASE IT WAS A BONAFIDE CLAIM OF THE ASSESSEE AND TH E SAME COULD NOT HAVE BEEN ITA NO.1790/M/09 M/S. SMT. CHANDRIKA B . SHAH 5 REJECTED MERELY BECAUSE THE DEPARTMENT WAS HOLDING A DIFFERENT VIEW. IN THIS REGARD HE RELIED ON THE LATEST DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF CIT V. RELIANCE PETROPRODUCTS PVT. LTD. (322 ITR 15 8). 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CARE FULLY IN THE LIGHT OF THE RELEVANT MATERIAL ON RECORD. WE FIND THAT THE CLAIM OF THE ASSESSEE REGARDING ACQUISITION OF TENANCY RIGHT WAS PARTLY ACCEPTED BY THE A.O. IN THE REMAND REPORT SENT TO THE CIT(A). PARA 2.5 OF THE APPELLATE ORDER IN THIS REGARD READS AS UNDER: AS SOME OF THE DOCUMENTS FILED BY THE APPELLANT DUR ING THE APPEAL PROCEEDING WERE NOT LOOKED INTO BY THE ASSESSING OF FICER DURING THE PENALTY PROCEEDING THE SUBMISSIONS OF THE APPELLAN T ALONG WITH THE DOCUMENTS WERE SENT TO HER FOR VERIFICATION AND REP ORT. THE ASSESSING OFFICER REPORTED THAT M/S.ELREX CORPORATI ON PARTNERSHIP FIRM HAD TAKEN THE TENANCY RIGHT OF THE PROPERTY VI DE LIVE AND LICENSE AGREEMENT DATED 16/07/1973 AND THE FIRM WAS DISSOLV ED IN 1979. LATE MR. BHARAT L. SHAH CONTINUED THE BUSINESS IN T HE SAME NAME AND AT THE SAME PREMISE AS PROPRIETOR OF THE CONCER N AFTER DISSOLUTION OF THE FIRM. HOWEVER THE APPELLANT DID NOT FILE ANY DISSOLUTION DEED OF THE FIRM SHOWING THE DISTRIBUTI ON OF ASSETS AND LIABILITIES OF THE FIRM AND SO IT COULD NOT BE PROV ED THAT THE PROPERTY IN QUESTION I.E. THE TENANCY RIGHT WAS RECEIVED BY LATE MR. BHARAT L. SHAH ON DISSOLUTION OF THE FIRM SHE FURTHER REPORT ED. SHE OPINED THAT IN SUCH CIRCUMSTANCES SECTION 49(1) WAS NOT AP PLICABLE TO THIS CASE AND AS THE PROPERTY WAS NOT PURCHASED BY INCUR RING ANY COST THE COST OF ACQUISITION WAS CORRECTLY TAKEN AS NIL. 7. THE ABOVE CLEARLY SHOWS THAT LATE SHRI BHARAT L. SHAH WAS PARTNER OF THE FIRM M/S. ELREX CORPORATION WHICH HAD ACQUIRED PROP ERTY TENANCY RIGHTS ON 16.7.1973 AND THE SAID FIRM WAS DISSOLVED IN 1979. THE A.O. HAS FURTHER ACCEPTED THAT LATE SHRI BHARAT L. SHAH CONTINUED THE BUSINES S IN THE SAME NAME AND IN THE SAME PREMISES AS PROPRIETARY CONCERN AFTER DISSOLUT ION OF THE FIRM. HOWEVER THIS CLAIM WAS STILL REJECTED IN THE ABSENCE OF THE DISS OLUTION DEED. IN ANY CASE THIS CLAIM WAS REJECTED DURING THE ASSESSMENT BECAUSE AC CORDING TO THE A.O. THE COST OF ACQUISITION OF THE TENANCY RIGHT HAS TO BE TAKEN AT NIL BECAUSE OF SECTION 55(2)(A)(II) OF THE ACT. 8. NOW LET US HAVE TO LOOK AT THE RELEVANT PROVISI ONS OF THE ACT.: ITA NO.1790/M/09 M/S. SMT. CHANDRIKA B . SHAH 6 49. [(1)] WHERE THE CAPITAL ASSET BECAME THE PROPERTY OF THE ASSESSEE ( I ) ON ANY DISTRIBUTION OF ASSETS ON THE TOTAL OR PAR TIAL PARTITION OF A HINDU UNDIVIDED FAMILY; ( II ) UNDER A GIFT OR WILL; ( III ) ( A ) BY SUCCESSION INHERITANCE OR DEVOLUTION OR [( B ) ON ANY DISTRIBUTION OF ASSETS ON THE DISSOLUTION OF A FIRM BODY OF INDIVIDUALS OR OTHER ASSOCIATION OF PERSONS WHERE SUCH DISSOLUTION HAD TAKEN PLACE AT ANY TIME BEFORE THE 1ST DAY OF A PRIL 1987. MEANING OF ADJUSTED COST OF IMPROVEMENT AN D COST OF ACQUISITION. 55. (1) FOR THE PURPOSES OF [SECTION 48 AND 49] ( A ) [***] [( B ) COST OF ANY IMPROVEMENT ( 1 ) IN RELATION TO A CAPITAL ASSET BEING GOODWILL OF A BUSINESS [OR A RIGHT TO MANUFACTURE PRODUCE OR PROCESS ANY ARTICLE OR THIN G] [OR RIGHT TO CARRY ON ANY BUSINESS] SHALL BE TAKEN TO BE NIL ; AND ( 2 ) IN RELATION TO ANY OTHER CAPITAL ASSET ] ( I ) WHERE THE CAPITAL ASSET BECAME THE PROPERTY OF TH E PREVIOUS OWNER OR THE ASSESSEE BEFORE THE [1ST DAY OF APRIL [1981 ]] [***] MEANS ALL EXPENDITURE OF A CAPITAL NATURE INCURRED IN MAK ING ANY ADDITIONS OR ALTERATIONS TO THE CAPITAL ASSET ON OR AFTER THE SAID DATE BY THE PREVIOUS OWNER OR THE ASSESSEE AND ( II ) IN ANY OTHER CASE MEANS ALL EXPENDITURE OF A CAP ITAL NATURE INCURRED IN MAKING ANY ADDITIONS OR ALTERATIONS TO THE CAPITAL ASSET BY THE ASSESSEE AFTER IT BECAME HIS PROPERTY AND WHERE THE CAPITAL ASSET BECAME THE PROPERTY OF THE ASSESSEE BY ANY OF THE MODES SPECIFIED IN [SUB-SECTION (1) OF] SECTION 49 BY THE PREVIOUS OWNER BUT DOES NOT INCLUDE ANY EXPENDITURE WHICH IS DED UCTIBLE IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD INT EREST ON SECURITIES INCOME FROM HOUSE PROPERTY PROFITS AND GAINS OF BUSINESS OR PROFESSION OR INCOME FROM OTHER SOUR CES AND THE EXPRESSION IMPROVEMENT SHALL BE CONSTRUED ACCORDI NGLY. (2) [FOR THE PURPOSES OF SECTION 48 AND 49 COST O F ACQUISITION [( A ) IN RELATION TO A CAPITAL ASSET BEING GOODWILL OF A BUSINESS [OR A TRADE MARK OR BRAND NAME ASSOCIATED WITH A BUSINESS ] [OR A RIGHT TO MANUFACTURE PRODUCE OR PROCESS ANY ARTICLE OR THIN G] [OR RIGHT TO CARRY ON ANY BUSINESS] TENANCY RIGHTS STAGE CARRIAGE PERMI TS OR LOOM HOURS ( I ) IN THE CASE OF ACQUISITION OF SUCH ASSET BY THE A SSESSEE BY PURCHASE FROM A PREVIOUS OWNER MEANS THE AMOUNT OF THE PURC HASE PRICE ; AND ( II ) IN ANY OTHER CASE [NOT BEING A CASE FALLING UNDER SUB-CLAUSES ( I ) TO ( IV ) OF SUB-SECTION (1) OF SECTION49 SHALL BE TAKEN TO BE NIL. ( B ) IN RELATION TO ANY OTHER CAPITAL ASSET ] ( I ) WHERE THE CAPITAL ASSET BECAME THE PROPERTY OF TH E ASSESSEE BEFORE THE [1ST DAY OF APRIL [1981]] MEANS THE COST OF ACQUI SITION OF THE ASSET TO ITA NO.1790/M/09 M/S. SMT. CHANDRIKA B . SHAH 7 THE ASSESSEE OR THE FAIR MARKET VALUE OF THE ASSET ON THE [1ST DAY OF APRIL [1981]] AT THE OPTION OF THE ASSESSEE ; ( II ) WHERE THE CAPITAL ASSET BECAME THE PROPERTY OF TH E ASSESSEE BY ANY OF THE MODES SPECIFIED IN [SUB-SECTION (1) OF] SECTION 49 AND THE CAPITAL ASSET BECAME THE PROPERTY OF THE PREVIOUS OWNER BEF ORE THE [1ST DAY OF APRIL [1981]] MEANS THE COST OF THE CAPITAL ASSET TO THE PREVIOUS OWNER OR THE FAIR MARKET VALUE OF THE ASSET ON THE [1ST DAY OF APRIL [1981]] AT THE OPTION OF THE ASSESSEE. 9. A PLAIN READING OF THESE PROVISIONS SHOW THAT CO ST IN THE CASE OF ACQUISITION BY MODES OF TRANSFER UNDER SECTION 49 HAS TO BE TAKEN THE COST OF THE PREVIOUS OWNER. FURTHER SECTION 55(2) GIVES THE MO DE OF CALCULATING THE COST OF ACQUISITION WHICH INCLUDES TENANCY RIGHT ALSO. NORM ALLY THE COST HAS TO BE TAKEN AT THE PURCHASE PRICE OR NIL COST BUT THIS PRINCIPLE DOES NOT APPLY IN THE CASES FALLING UNDER CLAUSE (II) OF THIS PROVISION I.E. CASES FALL ING UNDER SUB-CLAUSE (1) TO (4) OF SUB-SECTION (1) OF SECTION 49 OF THE ACT. CLAUSE (B ) OF THIS SECTION DEALS WITH THE DETERMINATION OF COST IN RESPECT OF ASSETS ACQUIRED UNDER SUB-SECTION (1) OF SECTION 49 AND IT CLEARLY STATES THAT ACQUISITION COST IN S UCH CASES MEANS THE COST OF CAPITAL ASSET TO THE PREVIOUS OWNER OR THE FAIR MARKET VALU E OF THE ASSET ON THE LST DAY OF APRIL 1981 AT THE OPTION OF THE ASSESSEE. 10. BEFORE ANALYZING THESE PROVISIONS FURTHER IT CA N BE EASILY SAID THAT ATLEAST THE ASSESSEE HAD A BONAFIDE BELIEF THAT THE ASSESSE E HAD A RIGHT TO ESTIMATE THE FAIR MARKET VALUE OF THE ASSET AS ON 1 ST DAY OF APRIL 1981. FURTHER WE ATTACH NO IMPORTANCE TO THE FACT THAT COPY OF THE DISSOLUTION DEED COULD NOT BE FILED IN THIS CASE BECAUSE TENANCY RIGHTS WERE SOLD BY LATE SHRI BHARAT L. SHAH WHO IS THE HUSBAND OF THE ASSESSEE WHO UNFORTUNATELY DIED IN A ROAD ACCIDENT ON 9 TH OCTOBER 2004. THE WIDOW OF LATE SHRI BHARAT L. SH AH MIGHT HAVE BEEN ILL ADVISED TO WITHDRAW HER CLAIM DURING THE APPEAL PROCEEDINGS IN QUANTUM APPEAL. BUT THAT DOES NOT LEAD TO THE INFERENCE THAT SHE HAS CONCEDE D THAT THE WRONG PARTICULARS WERE FILED. THE FIRM WAS DISSOLVED IN THE YEAR 1979 AND IT MAY NOT BE POSSIBLE TO LOCATE THE DOCUMENTS LIKE DISSOLUTION DEED AFTER 25 YEARS THAT TOO AFTER THE SAD ITA NO.1790/M/09 M/S. SMT. CHANDRIKA B . SHAH 8 DEMISE OF SHRI BHARAT L.SHAH WHO WAS LOOKING AFTER THE BUSINESS. IN THIS BACKGROUND IT IS VERY CLEAR THAT THE ASSESSEE HAD BONAFIDE BELIEF THAT ACQUISITION COST COULD BE TAKEN AT FAIR MARKET VALUE IN TERMS O F SECTION 55(2)(B)(II) OF THE ACT. 11. IN ANY CASE THE HONBLE SUPREME COURT IN THE R ECENT DECISION IN THE CASE OF CIT V. RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA) HAS OBSERVED AS UNDER: A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME-TAX ACT 1961 SUGGESTS THAT IN ORDER TO BE COVERED BY IT T HERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTION 2 71(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATIO N GIVEN IN THE RETURN IS FOUND TO BE INCORRECT OR INACCURATE THE ASSESSEE C ANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. IN ORDER TO EXPO SE THE ASSESSEE TO PENALTY UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAG INATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE BECAUSE THAT IS THE ONLY DOCUMENT WHERE T HE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH P ARTICULARS ARE FOUND TO BE INACCURATE THE LIABILITY WOULD ARISE. TO ATTRA CT PENALTY THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE NOT EX ACT OR CORRECT NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FA LSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C). A MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NO T AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INAC CURATE PARTICULARS. THIS DECISION WAS TAKEN AFTER CONSIDERING THE DECIS IONS OF THE HONBLE SUPREME COURT IN THE CASE OF UOI VS. RAJASTHAN SPG. & WVG. MILLS [2010] 1 GSTR 66 CIT V. ATUL MOHAN BINDAL [2009] 317 ITR 1 DILI P N. SHROFF V. JCIT [2007] 291 ITR 519 AND THE UNION OF INDIA V. DHARAMENDRA TEXTI LE PROCESSORS [2008] 306 ITR 277. 12. THEREFORE IN VIEW OF THE FACT THAT ASSESSEE HAD RA ISED A BONAFIDE CLAIM AND HAS NOT FILED ANY INACCURATE PARTICULARS OF INC OME WE ARE OF THE VIEW THAT PENALTY HAS BEEN RIGHTLY DELETED BY THE LEARNED CIT (A) AND THEREFORE WE CONFIRM THIS ORDER. ITA NO.1790/M/09 M/S. SMT. CHANDRIKA B . SHAH 9 13. IN THE RESULT THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 7 TH DAY OF MAY 2010. SD. SD. (D.K. AGARWAL) (T. R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED THE 7 TH MAY 2010. KN COPY TO: 1. THE ASSESSEE 2. THE REVENUE 3. THE CIT CITY -24 MUMBAI 4. THE CIT(A)-XXIX MUMBAI 5. THE DR C BENCH MUMBAI BY ORDER /TRUE COPY/ ASST. REGISTRAR ITAT MUMBAI ITA NO.1790/M/09 M/S. SMT. CHANDRIKA B . SHAH 10