Deeplok Builders Pvt. Ltd., Kolkata V. DCIT,Cir-12, Kolkata, Kolkata

CO 10/KOL/2017

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 2828 (ITAT-KOLKATA)
• Duration Of Justice: 19 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 15-02-2017
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 27-01-2017
• Court: TRIBUNAL
• Department Lawyers: N O N E
• Assessee Lawyers: S L KOCHAR ANIL KOCH AR ARS
• Keywords: Reasonable cause; Wrong claim; Revised return
• Section: 142(1); 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA [BEFORE SHRI N. V. VASUDEVAN, JM & DR. A. L. SAINI , AM] I.T.A NO.750/KOL/2014 ASSESSMENT YEAR: 2009-10 DEPUTY COMMISSIONER OF INCOME-TAX, VS. M/S. DEEPLO K BUILDERS PVT. LTD. CIRCLE-12, KOLKATA. (PAN: AAACD9407D) ( APPELLANT ) ( RESPONDENT ) & C.O. NO. 10/KOL/2017 INI.T.A NO.750/KOL/2014 ASSESSMENT YEAR: 2009-10 M/S. DEEPLOK BUILDERS PVT. LTD. VS. DEPUTY COMMIS SIONER OF INCOME-TAX, CIRCLE-12, KOLKATA. ( CROSS OBJECTOR ) ( RESPONDENT ) DATE OF HEARING: 06.02.2017 DATE OF PRONOUNCEMENT: 15.02.2017 FOR THE REVENUE :N O N E FOR THE ASSESSEE: S/SHRI S. L. KOCHAR& ANIL KOCH AR, ARS ORDER PER DR. A. L. SAINI, AM: THE CAPTIONED APPEAL FILED BY THE REVENUE AND THE C ROSS OBJECTION FILED BY THE ASSESSEEPERTAINING TO ASSESSMENT YEAR 2009-10, ARED IRECTED AGAINST THE ORDER PASSED BY THE LD. CIT(A)-XII, KOLKATA IN APPEAL NO. 42/XII/CIR-12 /12-13 DATED 09.01.2014, WHICH IN TURN ARISES OUT OF PENALTY ORDER PASSED BY THE DCIT, CIR CLE-12, KOLKATA U/S.271(1)(C) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS TH E ACT) FOR AY 2009-10, DATED 27.04.2012. 2. THE BRIEF FACTS OF THE CASE QUA THE ASSESSEEARE THAT THE ASSESSEE HAS FILED ORIGINAL RETURN ON 23-09-2009 SHOWING TOTAL INCOME OF RS.226 79792/- AND CLAIMED DEDUCTION OF RS.50 LACS U/S 54EC OF THE ACT. THE COMPUTATION SHE ET FOR THE SAME WAS FILED. IT FILED REVISED RETURN OF INCOME WITH TOTAL INCOME OF RS.22 508835/-. ASSESSEE CLAIMED DEDUCTION OF RS.50 LACS U/S 54EC OF THE ACT, IN THE REVISED R ETURN OF INCOME ALSO. THE COMPUTATION SHEET FOR THE SAME WAS FILED. THUS,ASSESSEE HAS CLA IMED THE DEDUCTION U/S 54EC OF THE ACT IN THE ORIGINAL AS WELL AS REVISED RETURN OF INCOME .THE CLAIM WAS NOT BY MISTAKE. IT WAS 2 ITA NO.750/KOL/2014 CO NO.1 0/KOL/2017 DEEPLOK BUILDERS PVT. LTD., AY. 2009-10 CLAIMED WITH THE FULL KNOWLEDGE THAT THE INVESTMENT IN BOND HAS TO BE MADE BEFORE SUCH CLAIM U/S 54EC OF THE ACT,CAN BE MADE. THE BASIS OF EXEMPTION WAS ASKED IN NOTICE U/S 142(1) OF THE ACT DATED 08-07-2011.THEREAFTER, ASSE SSEE ADMITTED THAT NO SUCH INVESTMENT WAS MADE IN THE SAID FINANCIAL YEAR. THE QUESTION I S THAT WHETHER THE SAME AMOUNTS TO CONCEALMENT OF INCOME AND FURNISHING INACCURATE PAR TICULARS OF INCOME. THERE IS NO DISPUTE THAT THE ASSESSEE HAS GIVEN THE WRONG INFORMATIONTH AT THERE IS INVESTMENT IN BONDS WHICH QUALIFIES FOR DEDUCTION U/S 54EC OF THE ACT. INFAC T THERE WAS NO SUCH INVESTMENT WHICH QUALIFIES FOR DEDUCTION U/S 54EC OF THE ACT. THE SU BMISSION OF ASSESSEE ALSO DOES NOT CONTEND THE FACT THAT THERE WAS CONCEALMENT OF INCO ME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME. NOW IT REMAINS TO BE SEEN TH AT WHETHER THERE EXISTS A REASONABLE CAUSE FOR CLAIMING THIS INACCURATE DEDUCTION U/S 54 EC OF THE ACT. ASSESSEE SUBMITTED A REPLY ON 24-04-2012 IN RESPONSE TO PENALTY NOTICE U /S 271 (1)(C).THE REASON GIVEN BY ASSESSEE IS THAT THE INVESTMENT WAS MADE ON 31-07-2 007 .I.E., IN FY 2007-08 (AY 2008-09) IN THE BOOKS OF COMPANY M/S.JMB PROPERTIES P LIMITE D. THIS COMPANY WAS MERGED WITH ASSESSEE COMPANY BY ORDER OF HON'BLE KOLKATA HIGH C OURT ON AND FROM 01-04-2007 BUT THE ORDER WAS RECEIVED IN APRIL 2008. THUS THIS BOND GO T REFLECTED IN THE BALANCE SHEET OF ASSESSEE COMPANY FOR FY 2008-09 WHEN THE MERGER ORD ER WAS BEING EFFECTED. ASSESSEE STATES THAT THE STAFF HAS TAKEN THE INVESTMENT APPE ARING IN BALANCE SHEET AS INVESTMENT MADE IN FY 2008-09 AND CLAIMED THE DEDUCTION. HOWEVER TH IS REASON CANNOT BE A REASONABLE EXPLANATION FOR CLAIMING THE DEDUCTION U/S 54EC OF THE ACT.THE ASSESSEE KNEW THE DATE OF INVESTMENT OF THE BOND WHICH IS 31-07-2007 .I.E., I N FY 2007-08. THE ASSESSEE MUST HAVE KNOWN BY THE CASH BOOK THAT THERE HAS BEEN NO CASH OUTFLOW FOR SUCH INVESTMENT. ALSO IT MUST BE CLEAR FROM THE BANK BOOK THAT THERE HAS BEE N NO SUCH INVESTMENT. THIS WAS IN KNOWLEDGE OF ASSESSEE THAT THERE HAS BEEN NO SUCH I NVESTMENT. FURTHER THE AMOUNT OF RS.50 LACS IS NOT SMALL THAT THE INVESTMENT OF THIS MAGNI TUDE AND CLAIM U/S 54EC WILL MISS THE NOTICE OF THE ASSESSEE OR THE ACCOUNTANT. THUS THE ASSESSEE EXPLANATION IS NOT ACCEPTED AND HENCE THEPROVISION OF SECTION U/S 271 (1 )(C) OF IN COME TAX ARC SQUARELY ATTRACTED IN THIS CASE. CONSIDERING THE FACTS MENTIONED ABOVE, THE AO SATISFIED THAT IT IS A FIT CASE FOR IMPOSITION OF PENALTY U/S. 271 (1 )(C) OF THE ACT A ND HE IMPOSED PENALTY OF RS.15,45,000/-. 3 ITA NO.750/KOL/2014 CO NO.1 0/KOL/2017 DEEPLOK BUILDERS PVT. LTD., AY. 2009-10 3. AGGRIEVED AGAINST THE SAID ORDER PASSED U/S. 271 (1)(C) OF THE ACT BY THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A), WHO HAS DELETED THE PENALTY U/S. 271(1)(C) OF THE ACT BY OBSERVING THE FOLLOWING: 5.1.4. I HAVE CAREFULLY CONSIDERED THE SUBMISSION S OF THE APPELLANT & THE IMPUGNED PENALTY ORDER AND I HAVE ALSO GONE THROUGH THE FACTS OF THE CASE AS APPARENT FROM THE RECORDS. I HAVE ALSO TAKEN NOTE OF JUDICIAL PRONOUNCEMENTS RELIED U PON BY THE LD. AR. IN THE CASE OF THE APPELLANT, IT IS OBSERVED THAT SINCE THE APPELLANT HAD NOT MADE ANY INVESTMENTS TO CLAIM DEDUCTION U/S. 54EC, THE AO TREATED THE ENTIRE LONG TERM CAPITAL GAINS ASSESSABLE TO TAX. THIS ORDER OF THE AO HAS NOT BEEN CHALLENGED BY THE APPELLANT FOR THE VERY COGENT REASON THAT THERE WAS MISTAKE ON THE PART OF THE STAFF WHILE CO MPUTING LONG TERM CAPITAL GAINS WHEN DEDUCTION OF RS.50,00,000/- WAS CLAIMED U/S 54EC, W HICH WAS MISTAKENLY CLAIMED ON THE BASIS OF THE RELEVANT ENTRY IN THE AUDITED ACCOUNTS WHICH WAS IN FACT NOT RELATABLE TO THE YEAR OF ASSESSMENT UNDER APPEAL. IT IS REVEALED FROM THE RECORDS THAT THE APPELLANT HAS DULY CREDITED THE SALE PROCEEDS IN ITS ACCOUNTS. IT IS ONLY THE CLAIM OF DEDUCTION U/S 54EC THAT DUE TO THE ERROR COMMITTED IN MAKING OUT COMPUTATION OF INCOME THAT CLAIM WAS MAD E FOR DEDUCTION 54EC OF THE ACT MISTAKENLY ON THE BASIS OF ENTRY IN THE BALANCE SHE ET OF THE APPELLANT PERTAINING TO RS. 50,00,000/- WHICH WAS TAKEN AS INVESTMENT MADE DURI NG THE YEAR FOR WHICH DEDUCTION WAS CLAIMED. ALL THE JUDICIAL PRONOUNCEMENT WHICH HAVE BEEN REFE RRED TO BY THE AR ESTABLISHED THE PARAMOUNT PROPOSITION THAT PENALTY U/S 271(1)( C ) IS NOT LEVIABLE AS THE MISTAKE WAS COMMITTED DUE TO AN ERROR WHICH IS EVIDENT FROM THE ACCOUNTS ITSELF. IT IS OBSERVED THAT THE APPELLANT HAD GOT MERGED WITH ANOTHER COMPANY BY TH E ORDER OF THE HONORABLE HIGH COURT OF CALCUTTA IS A FACT AND THAT IN THE BALANCE SHEET WH ICH FORMED PART OF THE ASSETS AND LIABILITIES OF THE MERGED COMPANY DID SHOW AN ENTRY OF RS. 50,0 0,000/- BEING THE AMOUNT DEPOSITED U/S 54EC. SUCH A MISTAKE COMMITTED IN CLAIMING DEDUCTIO N AGAINST THE LONG TERM CAPITAL GAIN IS IN FACT VERY MUCH ON RECORD AND CANNOT BE TAKEN AS CON CEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN THE LIGHT OF THE ABOVE DISCUSSION & FINDINGS, PE RUSING THE ENTIRE FACTS OF THE CASE AND RESPECTFULLY FOLLOWING THE JUDGMENTS AS CITED A BOVE, I AM OF THE CONSIDERED VIEW THAT LEVY OF PENALTY AS MADE OUT BY THE A.O. U/S 271(1)( C ) OF THE ACT IS NOT CALLED FOR. ACCORDINGLY THE APPEAL IS ALLOWED. 4.AGGRIEVED FROM THE ORDER OF THE LD. CIT(A) THE RE VENUE IS IN APPEAL BEFORE US ANDASSESSEE IS ALSO RAISED CROSS OBJECTION, BEFORE US. THE REVENUE HAS TAKEN FOLLOWING GROUNDS OF APPEAL: 1. THAT IS THE FACTS AND IN LAW OF THE CASE THE LD . CIT(A) ERRED IN DELETING THE PENALTY U/S. 271(1)( C) AMOUNTING TO RS.15,45,000/-. 4 ITA NO.750/KOL/2014 CO NO.1 0/KOL/2017 DEEPLOK BUILDERS PVT. LTD., AY. 2009-10 2. THAT IS THE FACTS AND IN LAW OF THE CASE, THE LD . CIT(A) ERRED IN DELETING THE PENALTY SINCE THE ASSESSEE DELIBERATELY MADE A WRONG CLAIM. 3. THAT THE APPELLANT CRAVES FOR LEAVE TO ADD, DELE TE OF MODIFY ANY OF THE GROUNDS OF APPEAL BEFORE OR ALL THE TIME OF HEARING. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF CR OSS OBJECTIONS: 1.FOR THAT THE ASSUMPTION OF JURISDICTION BY THE A. O. U/S 274/271 OF THE INCOME TAX ACT, 1961 WAS WRONG AND INVAID AND AS SUCH THE LEVY OF PENALTY U/ S 271(1) (C ) AMOUNTING TO RS. 15,39,040/- WAS WRONG & UNCALLED FOR. 2.FOR THAT FURTHER GROUNDS OF APPEAL MAY KINDLY BE ALLOWED TO BE TAKEN AT THE TIME OF HEARING OF THE APPEAL. 3.FOR THAT THERE HAS BEEN DELAY IN SUBMISSION OF TH E CROSS OBJECTION WHICH MAY KINDLY BE CONDONED IN THE CIRCUMSTANCES AS SUBMITTED IN THE ENCLOSED D ECLARATION. 5. THE LD. AR FOR THE ASSESSEE HAS SUBMITTED THAT F IRST OF ALL THE NOTICE ISSUED BY THE AO FOR LEVYING PENALTY U/S. 271(1)(C) OF THE ACT IS DEFECTIVE. THE AO WHILE ISSUING NOTICE/SHOW CAUSE NOTICE DID NOT TICK THE RELEVANT POINT FOR WHICH THE ASSESSEE IS BEING PROSECUTED. LD. AR FOR THE ASSESSEE, THEREFORE, RE LIED ON THE JUDGMENT OF KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNATHA COTTON & GI NNING FACTORY (2013) 359 ITR 565 (KAR) . THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT &ANR. V. MANJUNATHA COTTON AND GINNING FACTORY, 359 ITR 565 (KARN), HAS HELD THAT NOTICE U/S. 274 OF THE ACT SHOULD SPECIFICALLY STATE AS TO WHETHER PENALTY IS BEING PROPOSED TO BE IMPOSED FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE HONBLE HIGH COURT HAS FURTHER LAID DOWN THAT CERTAIN PRINTED FORM WHERE ALL THE GROUND S GIVEN IN SECTION 271 ARE GIVEN WOULD NOT SATISFY THE REQUIREMENT OF LAW. THE COURT HAS ALSO HELD THAT INITIATING PENALTY PROCEEDINGS ON ONE LIMB AND FIND THE ASSESSEE GUILTY IN ANOTHER LIMB I S BAD IN LAW. IT WAS SUBMITTED THAT IN THE PRESENT CASE, THE AFORESAID DECISION WILL SQUARELY APPLY AN D ALL THE ORDERS IMPOSING PENALTY HAVE TO BE HELD AS BAD IN LAW AND LIABLE TO BE QUASHED. 6. LD. DR FOR THE REVENUE HAS PRIMARILY RELIED ON T HE ORDER MADE BY THE AO WHICH WE HAVE ALREADY NOTED IN OUR EARLIER PARA AND IS NOT R EPEATED AGAIN FOR THE SAKE OF BREVITY. 7. HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE MATERIAL AVAILABLE ON RECORD, WE ARE OF THE VIEW THAT THERE IS MERIT ON THE SUBMISSI ON OF THE ASSESSEE, AS THE PROPOSITION 5 ITA NO.750/KOL/2014 CO NO.1 0/KOL/2017 DEEPLOK BUILDERS PVT. LTD., AY. 2009-10 CANVASSED BY THE LD. AR FOR THE ASSESSEE ARE SUPPOR TED BY THE FACTS NARRATED BY HIM.AS THE LD. AR FOR THE ASSESSEE POINTED OUT THAT THE AO HAS NOT TICKED THE RELEVANT POINT OF THE SHOW CAUSE NOTICE FOR PENALTY U/S. 271(1)(C) OF THE ACT AND THE ASSESSEE DOES NOT KNOW FOR WHAT PURPOSE HE IS BEING PROSECUTED. THE ASSESSEE S CASE UNDER CONSIDERATION IS FULLY COVERED BY THE HONBLE KARNATAKA HIGH COURT JUDGMEN T IN MANJUNATHA COTTON & GINNING FACTORY, SUPRA. THEREFORE, WE ARE OF THE VIEW THAT THE PENALTY LEVIED BY AO U/S. 271(1)(C) OF THE ACT HAS NO LEGS TO STAND ON. ACCORDINGLY, WE D ELETE THE PENALTY LEVIED U/S. 271(1)(C) OF THE ACT. 8. THE CROSS OBJECTION FILED BY ASSESSEE IS IN SUPP ORT OF THE ORDER OF LD. CIT(A). THERE IS A DELAY IN FILING THE CROSS OBJECTIONS BY 944 DA YS. SINCE WE UPHELD THE ORDER OF CIT(A) IN DELETING THE PENALTY LEVIED U/S. 271(1)(C ) OF THE ACT AND THE CROSS OBJECTION FILED BY ASSESSEE IS IN SUPPORT OF THE ORDER OF CIT(A), I S DISMISSED BY US BEING INFRUCTUOUS. 9. IN THE RESULT, THE APPEAL FILED BY THEREVENUE AND THE CROSS OBJECTION RAISED BY THE ASSESSEE , ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15.02.2017 SD/- SD/- (N. V. VASUDEVAN) (DR. A. L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 15 TH FEBRUARY, 2017 JD. SR. P.S COPY OF THE ORDER FORWARDED TO: 1. APPELLANT DCIT, CIRCLE-12, KOLKATA. 2. RESPONDENT M/S. DEEPLOK BUILDERS PVT. LTD., IDEAL PLAZA, 11/1, SARAT BOSE ROAD, SOUTH BLOCK, 2 ND FLOOR, KOLKATA-700 020. 3. CIT(A), KOLKATA 4. CIT, KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .