Niten Kumar Goel, Secunderabad V. Income Tax Officer, Ward-10(3), Hyderabad

ITA 1502/Hyd/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6573 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 04-07-2018
• Assessment Year: 2012-2013
• Appeal Filed On: 24-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D PRASAD RAO SR ARII
• Assessee Lawyers: A V RAGHURAM
• Keywords: Business income; Depreciation; Wrong claim; Unabsorbed depreciation; Bonafide mistake
• Section: 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A (SMC), HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 1502/HYD/2017 ASSESSMENT YEAR: 2012-13 SRI NITIN KUMAR GOEL, SECUNDERABAD [PAN: AARPG8239J] VS THE INCOME TAX OFFICER, WARD-10(3), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI A.V. RAGHU RAM, AR FOR REVENUE : SHRI D. PRASAD RAO, SR.AR-II DATE OF HEARING : 04-07-2018 DATE OF PRONOUNCEMENT : 11-07-2018 O R D E R THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF TH E COMMISSIONER OF INCOME TAX (APPEALS)-6, HYDERABAD, DATED 19-05-2017 CONFIRMING PENALTY U/S. 271(1)(C) OF THE INCOME TAX ACT [ACT]. 2. BRIEFLY STATED, ASSESSEE HAD FILED HIS RETURN OF INCOME FOR THE AY 2012-13 ON 05-09-2012 WHEREIN HE H AD ADMITTED A TOTAL INCOME OF RS.2,55,890/- AFTER CLAIMING A SET OFF OF BUSINESS LOSS OF RS.7,91,016/- AND DEPRECIAT ION OF RS.1,30,141/- FOR THE A.Y.2010-11 AGAINST THE BUSINES S INCOME. DEPRECIATION PERTAINING TO A.Y.2010-11 OF RS.2,48,755/- WAS ALSO CLAIMED AS SET OFF AGAINST THE INCOME FROM OTHER SOURCES FOR THE ASSESSMENT YEAR UNDER I.T.A. NO. 1502/HYD/2017 :- 2 - : CONSIDERATION. DURING THE COURSE OF SCRUTINY PROCEEDIN GS, IT WAS FOUND THAT AS PER RETURN OF INCOME FILED BY ASSES SEE FOR THE A.Y. 2010-11, THERE WAS NO LOSS EITHER UNDER THE HE AD BUSINESS INCOME OR DEPRECIATION TO BE BROUGHT FORWAR D AND CARRIED FORWARD TO BE CLAIMED AS SET OFF FROM INCOME. WHEN THE SAME WAS POINTED OUT BY AO, ASSESSEE ACCEPTED THE MISTA KE AND ACCEPTED FOR DISALLOWANCE OF SET OFF OF LOSS/DEP RECIATION CLAIMED IN THE RETURN OF INCOME FILED FOR THE ASSESS MENT YEAR UNDER CONSIDERATION. ACCORDINGLY, ASSESSMENT WAS COMP LETED BY DISALLOWING THE BUSINESS LOSS AND DEPRECIATION CLA IMED TO AN EXTENT OF RS.11,69,914/-. PENALTY PROCEEDING U/S. 271(1)(C) OF THE ACT WAS INITIATED AND NOTICE U/S. 271(1)(C) WAS I SSUED AND SERVED ON ASSESSEE. 2.1. IN REPLY TO THE PENALTY NOTICE, IT WAS SUBMITTED THA T IN THE RETURN OF INCOME FILED FOR AY. 2011-12, BY OVE RSIGHT THE CARRY FORWARD OF UNABSORBED LOSS WAS SHOWN BY HIS C LERICAL STAFF. BASED ON THE RETURN OF INCOME FILED FOR AY. 201 1-12, IT WAS NOTICED THAT THE SET OFF OF UNABSORBED BUSINESS LOSS/DEPRECIATION WAS CLAIMED AGAINST THE INCOME OF AY . 2012- 13. NO SOONER DID THE ASSESSEE CAME TO KNOW OF THIS MISTAKE, A REVISED COMPUTATION OF TOTAL INCOME WAS FILED. IT WA S SUBMITTED THAT ASSESSEE HAD DISCLOSED FULLY AND CORRECTL Y THE DETAILS OF HIS INCOME, BUT DUE TO BONAFIDE MISTAKE COMM ITTED BY HIS CLERICAL STAFF, THE SET OFF OF UNABSORBED BUSIN ESS LOSS AND DEPRECIATION HAD BEEN CLAIMED. I.T.A. NO. 1502/HYD/2017 :- 3 - : 2.2. AO DID NOT ACCEPT THE CONTENTION OF ASSESSEE AS I T WAS ONLY ON VERIFICATION MADE BY HIM THAT IT WAS FOUND THAT THERE WAS NO LOSS TO BE CARRIED FORWARD IN AY. 2010-1 1. AO OBSERVED THAT THE CLAIM OF THAT SET OFF OF LOSS FROM THE I NCOME OF THE CONCERNED ASSESSMENT YEAR COULD NOT BE A BONAFI DE CLERICAL MISTAKE. FURTHER, ACCORDING TO HIM, ASSESSEE CAME FORWARD ONLY TO SUBMIT THE REVISED COMPUTATION AFTER THE SAME WAS POINTED OUT BY THE AO. THEREFORE, IT WAS EVIDENT THAT ASSESSEE WAS WELL AWARE OF THE LOSS CLAIMED FOR SET OFF WAS NOT ELIGIBLE TO BE SET OFF AND CARRY FORWARD. THE REVISED COMPUTATION WAS ALSO FILED ON THE LAST DAY OF FINALISATI ON OF SCRUTINY ASSESSMENT ONLY AFTER THE WRONG CLAIM WAS P OINTED BY AO. AO HELD THAT IT WAS THE RESPONSIBILITY OF ASSESSEE AND HIS AR TO VERIFY THE RETURN OF INCOME BEFORE FILING IT. THE REFORE, ACCORDING TO AO, ASSESSEE WITH A WILFUL INTENTION TO MI SGUIDE THE ASSESSMENT PROCEEDING HAD CLAIMED SET OFF OF FALSE BROUGHT FORWARD LOSSES AND DEPRECIATION AND HAD THEREBY FURN ISHED INACCURATE PARTICULARS. AO FOUND IT TO BE A FIT CASE FOR IMPOSITION OF PENALTY AND LEVIED A MINIMUM PENALTY OF RS. 2,97,476/- U/S. 271(1)(C) OF THE ACT. 3. IN APPEAL BEFORE LD. CIT(A), ASSESSEE REITERATE D THE SUBMISSIONS MADE BEFORE THE AO AND SUBMITTED THAT THERE W AS NEITHER CONCEALMENT NOR FURNISHING OF INACCURATE PARTIC ULAR AS FAR AS ASSESSMENT WAS CONCERNED AND THAT THE CLAIM MA DE WITH REGARD TO SET OFF OF LOSS WAS MADE BY INADVERTEN CE WHICH WAS ACCEPTED WHEN POINTED OUT BY THE AO AND THUS NO P ENALTY SHOULD BE LEVIED. RELIANCE WAS PLACED ON THE DECISIO N OF THE I.T.A. NO. 1502/HYD/2017 :- 4 - : HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PR ODUCTS [322 ITR 158] AND ON THE DECISION OF ITAT, HYDERABA D IN THE CASE OF TAHER ALI (ITA NO.129/H/2013) DATED 30-08-20 13 WHEREIN THE TRIBUNAL DELETED THE PENALTY BY HOLDING TH AT MERE REJECTION OF CLAIM DID NOT AMOUNT TO CONCEALMENT. IT WAS SUBMITTED THAT IT WAS FOR AO TO VERIFY THE RECORDS AND ALL OW ANY CLAIM FOR SET OFF OF LOSS AND BASED ON THE CLAIM BY THE ASSESSEE. WHEN SUCH WAS THE CASE HOLDING THAT THERE WAS CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS ON THE PART OF THE ASSESSEE WAS NOT CORRECT AND THE PENALTY SHO ULD BE DELETED. 3.1. BUT LD.CIT(A) CONFIRMED THE SAME, STATING AS UNDER: 04.0 THE PENALTY ORDER OF THE ASSESSING OFFICER AN D THE SUBMISSION OF THE APPELLANT HAD BEEN CAREFULLY CONSIDERED. THE APPELLANT FAILED TO GIVE ANY REASONABLE EXPLANATION FOR THE PRIMA FA CIE FALSE CLAIM OF BROUGHT FORWARD LOSS & UNABSORBED DEPRECIATION. HE CALLS IT A 'CLERICAL' ERROR BUT HAS NOT SUBSTANTIATED HOW CLAI MING OF A NON- EXISTENT LOSS/DEPRECIATION CAN BE CALLED A CLERICAL ERROR. HE HAS ALSO SAID THAT HE SIMPLY MADE THAT CLAIM ON THE BASIS OF STATEMENT OF INCOME FOR A.Y. 2011-12. IT IS NOT UNDERSTOOD HOW T HE LOSS/DEPRECIATION COULD BE SHOWN IN THE STATEMENT O F A.Y. 2011-12, IF IT WAS ACTUALLY NOT THERE FOR A. Y. 2010-11. MOREOV ER, EVEN THAT WAS ASSESSEE'S OWN STATEMENT AND ONE FALSE STATEMENT CA NNOT CONSTITUTE A REASONABLE EXPLANATION FOR ANOTHER FALSE STATEMEN T. IF THE RATIO OF THE DECISIONS IN THE CASES OF RELIANCE PETRO PRODUC TS AND TAHER ALI (SUPRA) WERE TO BE APPLIED IN THE FASHION DESCRIBED BY THE ASSESSEE, IT WOULD AMOUNT TO GIVING A LICENSE TO EVERYONE TO MAK E A FALSE CLAIM AND, WHEN CAUGHT TO WITHDRAW THE SAME. THUS, THE PR OVISION OF PENALTY U/S. 271(1)(C) OF THE ACT WOULD BE RENDERED ILLUSORY. IT IS HELD THAT THE ASSESSEE MADE A FALSE CLAIM OF BROUGHT FOR WARD LOSS AND UNABSORBED DEPRECIATION AND HAS FAILED TO FURNISH A REASONABLE EXPLANATION FOR THE SAME. I.T.A. NO. 1502/HYD/2017 :- 5 - : 4. REFERRING TO THE PAPER BOOK FILED, LD. COUNSEL SUBMITTED THAT THE MISTAKE HAD OCCURRED IN AY. 2011-12, WHEREIN IN THE COMPUTATION ASSESSEE HAD CLAIMED CERTAIN AMOUNTS AS FOR SET OFF AND CARRIED FORWARD AND REFERR ED TO THE COMPUTATION FILED IN AY. 2011-12. IT WAS FURTHER SUBMI TTED THAT THE SAME WAS CLAIMED IN THIS YEAR ON THE BASIS OF R ETURN OF INCOME FILED IN AY. 2011-12. IT WAS SUBMITTED THAT THE CLAIM OF SET OFF OF LOSS AND DEPRECIATION WAS INADVERTENT CL ERICAL MISTAKE. IT WAS SUBMITTED THAT THERE IS NEITHER CONCEALMENT OF ANY INCOME NOR FURNISHING OF ANY INACCURATE PARTICULA RS DURING THE YEAR. SINCE MISTAKE HAS HAPPENED IN EARLI ER YEAR, THE SAME WAS CLAIMED MISTAKENLY UNDER A BONAFIDE INTE NTION. LD. COUNSEL FURTHER SUBMITTED THAT THE SAME COULD HAVE BE EN ADJUSTED U/S. 154 AS WELL AS THEY ARE AVAILABLE ON RE CORD AND NO PENALTY U/S. 271(1)(C) IS NOT WARRANTED. 5. LD.DR RELIED ON THE ORDER OF AO AND CIT(A) TO SUBMIT THAT THE CLAIM WAS FALSE. 6. I HAVE CONSIDERED THE ISSUE AND EXAMINED THE DOCUMENTS PLACED ON RECORD. EVENTHOUGH THERE IS NO L OSS OR DEPRECIATION TO BE CARRIED FORWARD IN AY. 2011-12 (A S THEY ARE SET OFF IN THAT YEAR) THE COMPUTATION HOWEVER, INDICATED/QUANTIFIED THE BROUGHT FORWARD LOSSES AND DEPRECIATION, WHICH ASSESSEE CLAIMED IN THE COMPUTATION DURING THIS YEAR. IT SEEMS THE MISTAKE HAS HAPPENED I N EARLIER YEAR AND ASSESSEE BONAFIDELY CLAIMED DURING THE YEAR EVEN THOUGH ADVANCE TAX TO A LARGER AMOUNT WAS PAID, WHICH W AS I.T.A. NO. 1502/HYD/2017 :- 6 - : CLAIMED AS REFUND. SINCE THE MISTAKE, IN MY OPINION I S BONAFIDE AND FURTHER THE SET OFF OF LOSSES AND DEPREC IATION CAN ALSO BE MODIFIED ON THE BASIS OF RECORD U/S. 154, THE FACTS DOES NOT LEAD TO LEVY OF PENALTY U/S. 271(1)(C) AND THE S AME DOES NOT COME WITHIN THE CONCEPT OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS DURING THE YEA R. FOR THE MISTAKE COMMITTED IN AY. 2011-12 WHICH AO HAS NOT MODI FIED IN THAT YEAR, NO PENALTY CAN BE LEVIED DURING THIS Y EAR FOR THE REASON THAT THE COMPUTATION OF INCOME RELIED ON CLAIM MA DE IN AY. 2011-12. THE PENALTY LAID U/S. 271(1)(C) OF THE ACT IS THEREFORE DELETED. 7. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH JULY, 2018 SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER HYDERABAD, DATED 11 TH JULY, 2018 TNMM I.T.A. NO. 1502/HYD/2017 :- 7 - : COPY TO : 1. SRI NITIN KUMAR GOEL, C/O. K. VASANT KUMAR, A.V. RAGHU RAM, P. VINOD & M. NEELIMA DEVI, ADVOCATES, 610, BABUKHAN ESTATE, BASHEERBAGH, HYDERABAD. 2. THE INCOME TAX OFFICER, WARD-10(3), HYDERABAD. 3. CIT (APPEALS)-6, HYDERABAD. 4. PR.CIT-6, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.