Y. Anil Kumar Reddy, Hyd, Hyderabad V. ITO,Ward-3(2), Hyderabad, Hyderabad

ITA 1174/HYD/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6022 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 18-02-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 21-09-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M SITARAM
• Assessee Lawyers: V RAGHAVENDRA RAO
• Keywords: Gift; Revised return

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI B.RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO.1174/HYD/2015 : ASSESSMENT YEARS 2008- 09 SHRI Y.ANIL KUMAR REDDY, HYDERABAD (PAN AAPPY1023 L) V/S INCOME TAX OFFICER WARD 3(2), HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI V.RAGHAVENDRA RAO RESPONDENT BY : SHRI M.SITARAM DR DATE OF HEARING 18.02.2016 DATE OF PRONOUNCEMENT 23.02.2016 O R D E R PER B.RAMAKOTAIAH, ACCOUNTANT MEMBER : THIS APPEAL IS BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME-TAX(APPEALS) GUNTUR DATED 29 .5.2015 CONFIRMING AND ALSO LEVYING PENALTY AT 300% UNDER S.271(1)(C) OF THE ACT. VARIOUS GROUNDS RAISED ARE ON THE ISSUE OF LEV Y OF PENALTY BY LEARNED COMMISSIONER OF INCOME-TAX(APPEALS). 2. BRIEFLY STATED, FACTS ARE THAT ASSESSEE HAS EA RNED CAPITAL GAINS BY SALE OF SHARES WHICH ARE NOT LISTED. WHILE FILING E-RETURN ASSESSEE WORKED OUT LONG TERM CAPITAL LOSS AND SHOR T TERM CAPITAL GAIN. THE ASSESSING OFFICER IN THE SCRUTINY ASSESSMENT HA S ENQUIRED AND NOTICED THAT THE SALE CONSIDERATION WAS SHORT COMPU TED. ASSESSEE EXPLAINED THAT THE DIFFERENCE WAS DUE TO ADOPTING D OLLAR RATE, BUT ITA NO.1174/HYD/2015 SHRI Y.ANIL KUMAR REDDY, HYDERABAD 2 ADMITTED A HIGHER AMOUNT, WHICH WAS NOT IN DISPUTE. WHILE DOING SO, SHARES RECEIVED BY WAY OF GIFT WAS TAKEN AS SHORT T ERM WHEREAS THE SHARES WERE HELD BY THE DONOR FOR A LONGER PERIOD, THEREBY THE LONG TERM LOSS AND SHORT TERM GAIN VARIED. ACCORDINGLY, ASSESSEE FILED REVISED COMPUTATION IN THE COURSE OF SCRUTINY PROCE EDINGS, WHEREBY THE SHORT TERM GAIN WAS INCREASED BY AN AMOUNT OF RS.43 ,22,876, WHEREAS LONG TERM CAPITAL LOSS HAS INCREASED BY AN AMOUNT O F RS.58,42,876. THE LONG TERM CAPITAL LOSS SO ARRIVED AT RS.2,55,42,301 WAS, HOWEVER, NOT ALLOWED TO BE CARRIED FORWARD, AS ASSESSEE HAS NOT CLAIMED THE SAME IN THE RETURN FILED. 3. ASSESSING OFFICER INITIATED PENALTY PROCEEDING S WITHOUT SPECIFYING THE NATURE OF PENALTY, WHETHER FOR SHORT DECLARATION OF SALE VALUE OR SHORT COMPUTATION OF TAXABLE CAPITAL GAINS . HOWEVER, ASSESSEE EXPLAINED BOTH AS BONA FIDE MISTAKES. WITHOUT CONS IDERING THE SAME, NOT EVEN ACKNOWLEDGING IN THE ORDER, ASSESSING OFFI CER LEVIED PENALTY OF RS.14,11,562 BY GIVING THE FOLLOWING REASONS- AS SEEN FROM THE ABOVE, IT IS CLEAR THAT THE ASSES SEE HAD FAILED TO FURNISH THE CORRECT TOTAL INCOME WHEN THE ORIGINAL RETURN OF INCOME WAS FILED. THE SHORT TERM CAPITAL GAINS ON SALE OF EQUITY SHARES WAS SHORT COMPUTED IN THE TOT AL INCOME. THE INCOME DECLARED BY THE ASSESSEE IS INAC CURATE AND THE DETAILS FILED IN THE RETURN OF INCOME ARE A LSO INACCURATE. THE RETURN OF INCOME FILED BY THE ASSES SEE WAS INACCURATE INSOFAR AS THE TOTAL INCOME IS CONCERNED . THE ISSUE OF SHORT COMPUTATION OF CAPITAL GAINS CAME TO LIGHT ONLY DURING THE COURSE OF SCRUTINY ASSESSMENT. IT IS THEREFORE, A CLEAR CASE OF CONCEALMENT WHICH ATTRAC TS THE ITA NO.1174/HYD/2015 SHRI Y.ANIL KUMAR REDDY, HYDERABAD 3 PENAL PROVISIONS OF SECTION 271(1)(C) OF THE IT ACT . I THEREFORE LEVY PENALTY U/S. 271(1)(C) OF THE I.T. A CT, 1961, AS UNDER : 4. ASSESSEE FILED AN APPEAL BEFORE THE LEARNED CO MMISSIONER OF INCOME-TAX(APPEALS) . ON RECORD, CIT(A) MUMBAI HAS ISSUED FIRST NOTICE OF HEARING AT HYDERABAD ON 14.3.2015, WHICH CLEARLY STATED ATTENDANCE WAS NOT NECESSARY, IF THE APPEAL IS TO B E DECIDED ON WRITTEN SUBMISSIONS. ASSESSEE DID NOT APPEAR BUT FILED WRIT TEN SUBMISSIONS DATED 4.3.2013. LATER, THREE MORE NOTICES WERE ISS UED ON 29.12.2014, 23.1.2015 AND 20.2.2015 BY THE LD. CIT(A), GUNTUR P OSTING THE CASE AT HYDERABAD. AS NONE APPEARED, THE LEARNED CIT(A) DEC IDED THE APPEAL EX-PARTE, BUT INTERESTINGLY REFUSED TO CONSIDER THE WRITTEN SUBMISSIONS, AND FURTHER LEVYING PENALTY AT 300% OF THE TAX SO UGHT TO BE EVADED, EVEN WITHOUT HAVING ANY PROCEEDINGS FOR SUCH LEVY A ND WITHOUT GIVING NOTICE TO ASSESSEE. 5. THE LEARNED CIT(A)S ORDER LEVYING PENALTY IS AS UNDER- 6. AFTER CAREFUL CONSIDERATION OF THE FINDINGS OF THE ASSESSMENT ORDER AND WRITTEN SUBMISSION FILED BY T HE APPELLANT, THE GROUNDS OF APPEAL ARE DECIDED AS UND ER: 6.2 THE APPELLANT FAILED TO FURNISH THE CORRECT TOT AL INCOME WHEN THE ORIGINAL RETURN OF INCOME WAS FILED. THE I SSUE OF SHORT COMPUTATION OF CAPITAL GAINS CAME TO LIGHT ON LY AT THE TIME OF SCRUTINY PROCEEDINGS. THEN ONLY THE APPELLA NT FILED REVISED RETURN OF INCOME. 6.3 THEREFORE, IT IS A CLEAR CASE OF CONCEALMENT. THE PROVISIONS U/S. 271(1)(C) EXPLANATION 1(A & B) CLEA RLY ATTRACTS. THE EXPLANATION 1(A&B) AS UNDER: ITA NO.1174/HYD/2015 SHRI Y.ANIL KUMAR REDDY, HYDERABAD 4 EXPLANATION 1. WHERE IN RESPECT OF ANY FACTS MATE RIAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSO N UNDER THIS ACT- (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION WHICH IS FOUND BY THE [ASSESSING] OFFICER OF THE [(COMMISSIONER (APPEALS)] [OR THE COMMISSIONER] TO BE FALSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE [AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT ALL THE FACTORS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM] THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE PURPOSES OF CLAUSE (C) OF THIS SUB-S ECTION BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. THEREFORE, THE WRITTEN SUBMISSIONS FILED BY THE APPELLANT WERE NOT CONSIDERED. 7. AS PER THE PROVISIONS U/S. 271(1)(C), THE COMMISSIONER OF INCOME-TAX(APPEALS) CAN ALSO LEVY PENALTY. THEREFORE, MAXIMUM 300% OF PENALTY U/S. 271(1)(C) I.E.RS.42,34,686/- LEVIED, DUE TO FAILURE OF THE APPELLANT BEFORE ME TO PROVE THAT THE ABOVE TRANSACTIONS WERE NOT CONCEALED. 8. IN THE RESULT, THE APPEAL IS DISMISSED. 6. AFTER CONSIDERING THE RIVAL CONTENTIONS AND PER USING THE DOCUMENTS PLACED ON RECORD, WE ARE NOT IN A POSITIO N TO APPRECIATE THE ACTION OF THE ASSESSING OFFICER AND THE CIT(A) IN LEVYING PENALTY. FIRST OF ALL, THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT NOWHERE HAS GIVEN A FINDING THAT ASSESSEE HAD CONCEALED PAR TICULARS OF INCOME OR ITA NO.1174/HYD/2015 SHRI Y.ANIL KUMAR REDDY, HYDERABAD 5 FURNISHED INACCURATE PARTICULARS. WHAT ASSESSING OF FICER NOTED IN THE ORDER IS ONLY MISTAKES IN COMPUTATION. HOW THE MIST AKES IN COMPUTATION CAN BE CONSIDERED AS CONCEALMENT WAS NOT EXPLAINED AND AS EXTRACTED ABOVE, THE ORDER OF ASSESSING OFFICER LEVYING PENAL TY MAKES AN INTERESTING POINT THAT THE RETURN FILED IS INACCURA TE AND THE SHORT COMPUTATION CAME TO LIGHT ONLY DUE TO SCRUTINY. T HE BONA FIDE MISTAKE COMMITTED IN TAKING THE DATE OF ACQUISITION OF SOME GIFTED SHARES CANNOT BE CONSIDERED AS FURNISHING OF INACCURATE PARTICUL ARS. THE GENUINENESS OF THE MISTAKES CAN BE GAUGED FROM THE FACT THAT AD OPTION OF DOLLAR VALUE WAS REVISED HIGHER AND ASSESSEE DID NOT EVEN MAKE A CLAIM FOR CARRY FORWARD OF LONG TERM CAPITAL LOSS. THEREFORE, IN OUR VIEW, THE FACTS DO NOT WARRANT LEVY OF PENALTY. 7. THE ORDER OF THE LEARNED CIT(A) IS EVEN MORE I NTERESTING. WHEN THE NOTICES ISSUED CLEARLY STATES THAT ATTEND ANCE IS NOT NECESSARY, IF YOU WISH THAT THE APPEAL MAY BE DECID ED ON THE BASIS OF YOUR WRITTEN SUBMISSIONS, THE LEARNED CIT(A) REJEC TED THE WRITTEN SUBMISSIONS FILED. PART OF THE SUBMISSION WAS EVEN EXTRACTED, BUT SURPRISINGLY NOT CONSIDERED. EVEN MORE INTERESTING IS LEVYING PENALTY AT 300% STATING THAT CIT(A) HAS POWER TO LEVY PENALTY. LEARNED CIT(A) DID NOT NOTICE THAT PENALTY PROCEEDINGS WERE NOT IN ITIATED BY THE OFFICE OF CIT(A), BUT BY ASSESSING OFFICER. THE PROCEEDING S ARE NOT FOR LEVY OF PENALTY, BUT FOR ADJUDICATING THE APPEAL AGAINST PE NALTY ALREADY LEVIED. THE ENHANCEMENT OF PENALTY FROM 100% TO 300% SHOULD HAVE BEEN BY WAY OF PRIOR NOTICE TO ASSESSEE AND AFTER DUE PROCE DURE. IF ASSESSEE HAS NOT RESPONDED TO THE NOTICES OF LEARNED CIT(A), THE PENALTY THAT CAN BE LEVIED IS FOR NON-ATTENDANCE. IN NO WAY, THE 300% PENALTY CAN BE LEVIED BY LEARNED CIT(A). ITA NO.1174/HYD/2015 SHRI Y.ANIL KUMAR REDDY, HYDERABAD 6 8. FOR THESE REASONS, WE CANCEL THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND ALLOW THE GROUNDS RAISED BY THE ASSESSEE. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOW ED. ORDER PRONOUNCED IN THE COURT ON 23.02.2016 SD/- SD/- (S.S.VISWANETHRA RAVI) (B.RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER. DT/- 23 RD FEBRUARY, 2016 COPY FORWARDED TO: 1. SHRI Y.ANIL KUMAR REDDY, C/O. M/S. P.R.DATLA & * CO., CHARTERED ACCOUNTANTS, 6-3-788/A/9, FIRST FLOOR, DRUGA NAGAR, AMEERPET, HYDERABAD 500 016 2. INCOME TAX OFFICER WARD 3(2), HYDERABAD 3. 4. COMMISSIONER OF INCOME - TAX(APPEALS) GUNTUR COMMISSIONER OF INCOME-TAX-I, HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE ITAT, HYDERABAD B.V.S.