ACIT, Hyderabad V. Sri M Ravinder, Secunderabad

ITA 1010/HYD/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66201 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 05-07-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 12-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M DAYASAGAR
• Assessee Lawyers: A V RAGHURAM
• Keywords: Salary income; Reasonable cause; Wrong claim

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER I.T.A. NO. 1010/HYD/2010 ASSESSMENT YEAR 2005-06 ACIT CIRCLE-10(1) HYDERABAD VS. SRI M. RAVINDER SECUNDERABAD PAN: AFOPM6879A APPELLANT RESPONDENT I.T.A. NO. 315/HYD/2011 ASSESSMENT YEAR 2006-07 DCIT CIRCLE-1(3) HYDERABAD VS. SRI M. RAVINDER SECUNDERABAD PAN: AFOPM6879A APPELLANT RESPONDENT APPELLANT BY: SRI M. DAYASAGAR RESPONDENT BY: SRI A.V. RAGHURAM DATE OF HEARING: 25.07.2012 DATE OF PRONOUNCEMENT: 31.08.2012 O R D E R PER CHANDRA POOJARI, AM: THESE TWO APPEALS BY THE REVENUE ARE DIRECTED AGAI NST DIFFERENT ORDERS OF THE CIT(A)-VI, HYDERABAD DATED 26.4.2010 AND 15.11.2010 FOR A.YS. 2005-06 AND 2006-07. 2. THE REVENUE'S GRIEVANCE IN THESE APPEALS IS WITH RE GARD TO DELETION OF PENALTY BY THE CIT(A) LEVIED U/S. 271(1 )(C) OF THE INCOME-TAX ACT, 1961. 3. BRIEF FACTS OF THE ISSUE, RELATING TO A.Y. 2005-06, ARE THAT THE ASSESSEE IS AN INDIVIDUAL DERIVING INCOME FROM SALARY AND OTHER SOURCES. FOR THE ASSESSMENT YEAR 2005-06 HE HAS FILED I.T.A. NO. 1010/HYD/2010 & ANR. SRI M. RAVINDER ========================== 2 RETURN OF INCOME ADMITTING AN INCOME OF RS. 3,23,47 ,200. THIS INCLUDED LONG TERM CAPITAL GAIN AND SHORT TERM CAPI TAL GAINS ALSO. THE ASSESSING OFFICER COMPLETED THE ASSESSME NT DETERMINING THE INCOME AT RS. 5,51,54,588. THIS IN CLUDES SECURITY TRANSACTION TAX OF RS. 62,48,476 AND DISAL LOWANCE U/S. 94 BEING DIVIDENDS RECEIVED ON SHARES ATTRACTING SH ORT TERM CAPITAL GAIN. DURING THE PENALTY PROCEEDINGS, THE ASSESSEE SUBMITTED THAT THIS IS THE FIRST YEAR OF ASSESSMENT AFTER INTRODUCTION OF PROVISIONS OF TAXING SHORT TERM CAP ITAL GAINS AT CONCESSIONAL RATE WHEREIN THE SECURITY TRANSACTION SHOULD NOT BE CONSIDERED. THIS MISTAKE CREPT IN INADVERTENTLY AN D THE SAME CONTINUED IN THE SUBSEQUENT YEAR ALSO. THEREFORE, THE CLAIM OF SECURITY TRANSACTION TAX DEDUCTION IS MADE BY MISTA KE AND SIMILAR IS THE CASE OF CLAIM OF LOSS IN CASE OF DIV IDEND STRIPPING AND HENCE ACCEPTED FOR ADDITION. IT WAS ALSO SUBMI TTED THAT ALL THE FACTS RELATING TO COMPUTATION OF INCOME IS BEFO RE THE ASSESSING OFFICER AND THERE IS NO INACCURACY IN THE PARTICULARS INASMUCH AS THE SAME DETAILS ONLY ARE USED TO ADD B ACK. HOWEVER, THE ASSESSING OFFICER NOT ACCEPTING THE SU BMISSIONS, LEVIED PENALTY U/S. 271(1)(C) OF RS. 14,12,091 STAT ING THAT CLAIM OF LOSS IS AGREED TO BE WRONGLY MADE. ON APPEAL, THE CIT(A) DELETED THE PENALTY BY HOLDING THAT MERE MAKING OF A CLAIM BY AN ASSESSEE IN HIS ASSESSMENT WHICH IS NOT SUSTAINA BLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME AND SUCH A CLAIM MA DE IN THE RETURN CANNOT BE A REASON FOR LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT. AGAINST THIS, THE REVENUE IS IN APPEAL BE FORE US. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED MATERIAL ON RECORD. IN THIS CASE, THE ASSESSEE CLAIMED SECURIT Y TRANSACTION TAX, INTEREST PAID TO BROKER AND LOSS ON SHORT TERM CAPITAL GAINS FROM SHARES ON WHICH DIVIDEND WAS RECEIVED WHILE CO MPUTING THE SHORT TERM CAPITAL GAINS. THE ASSESSING OFFICE R ADDED THE I.T.A. NO. 1010/HYD/2010 & ANR. SRI M. RAVINDER ========================== 3 SECURITY TRANSACTION TAX OF RS. 50,10,730, INTEREST PAID TO BROKER OF RS. 12,86,814 AND DISALLOWANCE U/S. 94 BE ING DIVIDEND RECEIVED ON SHARES ATTRACTING SHORT TERM CAPITAL GA INS OF RS. 41,95,162. WITH REGARD TO THE LAPSE OF THE ASSESSE E IN CLAIMING THE LOSS ON SHORT TERM CAPITAL GAINS ON THE SHARES IN WHICH DIVIDEND HAS BEEN RECEIVED BY THE ASSESSEE AND WHIC H ATTRACTS DISALLOWANCE U/S. 94 OF THE ACT, 1961 THE ASSESSING OFFICER LEVIED PENALTY U/S. 271(1)(C) OF THE ACT. THUS THER E WAS A WRONG CLAIM OF SET OFF OF EXCESS LOSS UNDER SHORT TERM CA PITAL GAINS TO THE TUNE OF RS. 41,95,162 AND THE SAME WAS ADDED TO THE INCOME OF THE ASSESSEE AND PENALTY U/S. 271(1)(C) OF THE A CT WAS LEVIED. THIS WRONG CLAIM WAS ACCEPTED BY THE ASSESSEE AFTER POINTING OUT BY THE ASSESSING OFFICER. ACCORDING TO THE ASS ESSING OFFICER THE ACCEPTANCE OF WRONG CLAIM WAS NOT VOLUNTARY AND IT WAS DONE AFTER POINTING OUT BY THE ASSESSING OFFICER IN THE COURSE OF ASSESSMENT PROCEEDINGS. IT IS AN ADMITTED FACT TH AT PROVISIONS OF SECTION 48 ARE AMENDED WITH EFFECT FROM 1.4.2005 AS PER WHICH STT IS NOT ALLOWABLE. SIMILARLY, PROVISIONS OF SECTION 94(7)(B) ARE ALSO INTRODUCED WITH EFFECT FROM 1.4.2 005 BY FINANCE (NO. 2) ACT, 2004. THE ASSESSEE FURNISHED FULL DET AILS OF SHARES ON WHICH DIVIDEND WAS RECEIVED AND LOSS WHICH WAS S ET OFF. THE DETAILS ARE AS FOLLOWS: S. NO. NAME OF SCRIP SET-OFF OR EXCESS LOSS ADDED BACK (RS.) 1. RELIANCE GROWTH FUND 1,08,366 2. BALAJI TELE FILMS 7,49,145 3. GODFREY PHILLIPS 30,273 4. ONGC 31,82,692 5. JINDAL STEEL VIJAYANAGAR 1,24,686 6. HPCL (SHORT TERM CAPITAL GAINS BEFORE 30.9.04) 7,49,140 I.T.A. NO. 1010/HYD/2010 & ANR. SRI M. RAVINDER ========================== 4 5. AS THE ASSESSEE FURNISHED ABOVE INFORMATION BEFORE THE ASSESSING OFFICER, IT CANNOT BE SAID THAT THE ASSES SEE HAS CONCEALED ANY PARTICULARS OF INCOME. NOW, THE ISSU E IS LIMTED TO MAKING A WRONG CLAIM BY THE ASSESSEE. THE ASSESSEE EXPLAINED THAT THIS IS THE FIRST YEAR OF ASSESSMENT AFTER INT RODUCTION OF THE ABOVE PROVISIONS AND THE CLAIM MADE BY THE ASSESSEE THOUGH INACCURATE, IT WAS AN INADVERTENT MISTAKE WHICH CAN NOT BE A REASON FOR LEVY OF PENALTY U/S. 271(1)(C) OF THE AC T. THE ASSESSEE RELIED ON THE FOLLOWING CASE-LAW: A) CIT VS. HONEYWELL DACE (INDIA) LTD. (292 ITR 169) ( DEL) WHEREIN, DISMISSING THE APPEAL, IT WAS HELD THAT TH E COMMISSIONER AND THE TRIBUNAL HAVE BOTH CONCURRENTL Y COME TO THE CONCLUSION THAT THE ASSESSED HAD NOT FURNISHED ANY INCORRECT PARTICULARS IN THE RETURN F ILED BY IT AND THAT MERELY BECAUSE THE ASSESSEE HAD NOT BEEN A BLE TO SUBSTANTIATE ITS CLAIM FOR DEDUCTION OF THE AMOUNTS SUFFERED TOWARDS LOSSES, WAS NO GROUND FOR HOLDING THAT THE EXPENSES WERE NOT GENUINE. THERE IS, IN OUR VIE W, NO ERROR OF LAW IN THAT VIEW TO WARRANT INTERFERENCE B Y THIS COURT. SINCE THE ASSESSED HAD ON THE FINDINGS RECOR DED BY THE COMMISSIONER AND THE TRIBUNAL FURNISHED ALL THE PARTICULARS RELATING TO THE EXPENDITURE CLAIMED IN ITS PROFIT AND LOSS ACCOUNT AND ALSO LOSS ON ACCOUNT OF SALE O F SHARES, THE DELETION OF PENALTY BY THE COMMISSIONER AND THE TRIBUNAL WAS LEGALLY JUSTIFIED. B) CIT VS. MEHTA ENGINEERS LTD. (300 ITR 308) (P&H) WHEREIN, DISMISSING THE APPEALS, HELD THAT UNDISPUTEDLY, IN THIS CASE, THE ASSESSEE HAD ONLY CLAIMED CERTAIN EXPENDI TURE INCURRED ON THE EDUCATION OF V ON THE BASIS OF A WR ITTEN AGREEMENT, ACCORDING TO WHICH, HE HAS TO SERVE THE COMPANY FOR AT LEAST THREE YEARS AFTER FINISHING HI S STUDIES ABROAD. IT IS NEITHER THE CASE OF THE REVENUE NOR W AS THERE ANY MATERIAL AVAILABLE ON RECORD THAT THE SAID AGRE EMENT WAS A FALSE AND FABRICATED DOCUMENT. MOREOVER, THER E WAS I.T.A. NO. 1010/HYD/2010 & ANR. SRI M. RAVINDER ========================== 5 NO SUCH FINDING RECORDED BY ANY ADJUDICATING AUTHOR ITY. PENALTY COULD NOT BE IMPOSED UNDER SECTION 271(1)(C ). C) CIT V. RELIANCE PETROPRODUCTS PVT. LTD. (322 ITR 15 8) (SC) WHEREIN HELD THAT WHERE THERE IS NO FINDING THAT AN Y DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE. THERE IS NO QUE STION OF INVITING THE PENALTY UNDER SECTION 271(1)(C). A MER E MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LA W, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PA RTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURAT E PARTICULARS. 6. WE HAVE GONE THROUGH THE ABOVE JUDGEMENTS. IN OUR OPINION, IN VIEW OF THE ABOVE JUDGEMENTS, MERE MAKI NG OF A WRONG CLAIM BY THE ASSESSEE THAT ITSELF SHALL NOT C ONSTITUTE CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME. THE ASSESSING OFFICER HAS TO COMPLETE THE ASSESSMENT AFTER VERIFYING VARIOUS CLAIMS OF THE ASSESSEE. IT IS VERY MUCH NECESSARY TO VERIFY THE CLAIM OF THE ASSESSEE AND I F IT IS A GENUINE CLAIM IT HAS TO BE ALLOWED. THE CLAIM OF T HE ASSESSEE COULD NOT BE ALLOWED BECAUSE PROVISIONS OF THE ACT THAT WERE AMENDED WITH EFFECT FROM 1.4.2005 AND THE ASSESSEE HAS MADE A WRONG CLAIM IN CONSIDERING THE NEW AMENDMENTS AND I N OUR OPINION, THERE IS A BONA FIDE ERROR ON THE PART OF THE ASSESSEE AND THAT CANNOT BE A REASON FOR LEVY OF PENALTY. M ORE SO, THE ASSESSEE ADMITTED THE MISTAKE IN THE COURSE OF ASSE SSMENT PROCEEDINGS. BEING SO, WE ARE OF THE OPINION THAT THERE IS A REASONABLE CAUSE IN THIS CASE. THE PROVISIONS OF S ECTION 271(1)(C) OF THE ACT GIVE DISCRETIONARY POWERS TO T HE ASSESSING OFFICER TO LEVY OR NOT TO LEVY PENALTY IN THE CASE OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS O F INCOME. IN THE CASE OF HINDUSTAN STEEL LTD. VS. CIT OF ORISSA (83 ITR 26) (SC) I.T.A. NO. 1010/HYD/2010 & ANR. SRI M. RAVINDER ========================== 6 IT WAS HELD THAT PENALTY SHOULD NOT BE IMPOSED MERE LY BECAUSE IT IS LAWFUL TO DO SO. THE ASSESSING OFFICER HAS T O EXERCISE HIS DISCRETION JUDICIOUSLY. AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF A QUASI-CRIMINAL PROCEEDING, AND PENALTY WILL NOT ORDINARILY BE IMPO SED UNLESS THE PARTY OBLIGED EITHER ACTED DELIBERATELY IN DEFI ANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST, OR ACTED IN CONSCIOUS DISREGARD OF ITS OBLIGATION. PENALTY WILL NOT ALSO BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETH ER PENALTY SHOULD BE IMPOSED FOR FAILURE TO PERFORM A STATUTOR Y OBLIGATION IS A MATTER OF DISCRETION OF THE AUTHORITY TO BE EX ERCISED JUDICIALLY AND ON A CONSIDERATION OF ALL THE RELEVA NT CIRCUMSTANCES. EVEN IF A MINIMUM PENALTY IS PRESCRI BED, THE AUTHORITY COMPETENT TO IMPOSE THE PENALTY WILL BE J USTIFIED IN REFUSING TO IMPOSE PENALTY, WHEN THERE IS A TECHNIC AL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT OR WHERE THE BR EACH FLOWS FROM A BONA FIDE BELIEF THAT THE OFFENDER IS NOT LI ABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE. IN VIEW OF T HE ABOVE, WE CONFIRM THE ORDER OF THE CIT(A). 7. THE FACTS IN ITA NO. 315/HYD/11 FOR A.Y. 2006-07 AR E SIMILAR TO THE FACTS IN A.Y. 2005-06. HENCE, THE I SSUE RAISED IN THIS APPEAL BY THE REVENUE IS ALSO DISMISSED. 8. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST AUGUST, 2012. SD/- (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED 31 ST AUGUST, 2012 TPRAO I.T.A. NO. 1010/HYD/2010 & ANR. SRI M. RAVINDER ========================== 7 COPY FORWARDED TO: 1. THE ASST. COMMISSIONER OF INCOME-TAX, CIRCLE-10( 1), ROOM NO. 515, IT TOWERS, AC GUARDS, HYDERABAD. 2. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-1( 3), ROOM NO. 413, 4 TH FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD-500 004. 3. SHRI M. RAVINDER, 3-6-100/1, WEST MARREDPALLY, SECUNDERABAD. 4. THE CIT-VI, HYDERABAD. 5. THE CIT-V, HYDERABAD. 6. THE DR B BENCH, ITAT, HYDERABAD