DCIT, Circle - 12, Kolkata, Kolkata V. M/s. SMIFS Capital Markets Ltd., Kolkata

ITA 1554/KOL/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54701 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2011
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2003-2004
• Appeal Filed On: 06-08-2010
• Court: TRIBUNAL
• Department Lawyers: AJOY KR SINGH
• Assessee Lawyers: A K TULSYAN
• Keywords: Business income; Assessment record; Reassessment proceedings; Set aside; Capital Gains
• Section: 271(1)(c); 143(3); 143(2); 139(1); 147; 148; 154; 139

Judgement Text

1 , C , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH- C, KOL KATA [ , . .. . . .. . , , , , !' ] BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER & SRI C.D. RAO, ACCO UNTANT MEMBER # # # # / ITA NOS. 1554 (KOL) OF 2010 $% &' / ASSESSMENT YEAR 2003-04 DY.COMMISSIONER OF INCOME-TAX CIRCLE-12, KOLKATA. SMIFS CAPITAL MARKETS LTD. KOLKATA. (PAN-AAECS4139D) (*+ / APPELLANT ) - $ - - VERSUS - (./*+/ RESPONDENT ) *+ 0 1 !/ FOR THE APPELLANT: / SRI AJOY KR. SINGH ./*+ 0 1 ! / FOR THE RESPONDENT: / SRI A.K. TULSYAN 2$3 0 ' / DATE OF HEARING : 14/10/2011 4& 0 ' / DATE OF PRONOUNCEMENT : 25/11/2011 !5 / ORDER ( . .. . . .. . ), !' (C.D. RAO), ACCOUNTANT MEMBER : THIS APPEAL BY THE DEPARTMENT IS DIRECTED AGAINST T HE ORDER OF LD. C.I.T.(A), CENTRAL-I, KOLKATA DATED 11/5/2010 FOR ASSESSMENT Y EAR 2003-04. THE ONLY GROUND RAISED IN THIS APPEAL BY THE DEPARTMENT READS AS UN DER :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN DELETING PENALTY OF RS.1,54,84,193/- IMPOSED U/S. 2 71(1)(C) FOR NOT REFLECTING CAPITAL GAINS AND PAYING THE DUE TAX TO THE CENTRAL GOVERNMENT. 2. THE LD. A.O. INITIATED PENALTY PROCEEDING U/S. 271(1)(C) OF THE ACT ON HIS OBSERVATION THAT THERE WAS A SALE OF BUILDING FOR C ONSIDERATION OF RS.5,40,42,750/-. THE OPENING WDV OF THE BLOCK OF ASSETS UNDER THE HE AD BUILDING WAS RS.1,19,08,894/- AND AFTER THE SALE, THE BUILDING BLOCK CEASED TO EX IST. ACCORDING TO THE LD. A.O., THEREFORE, PROFIT AMOUNTING TO RS.4,21,33,856/- [RS .5,40,42,750 RS.1,19,08,894] OUT OF SALE OF THE BUILDING IS REQUIRED TO BE ASSESSED AS SHORT-TERM CAPITAL GAINS U/S. 50 OF THE ACT. THE LD. A.O. OBSERVED FROM THE ASSESSMENT RECORDS THAT THE ASSESSEE DEDUCTED SUM OF RS.3,56,72,413/- FROM BUSINESS INCO ME AS THE PROFIT ON SALE OF FIXED 2 ASSETS FOR SEPARATE CONSIDERATION WITHOUT MENTIONIN G ANY CAPITAL GAINS ARISING OUT OF SUCH DISPOSAL OF FIXED ASSETS IN THE COMPUTATION OF TAXABLE CAPITAL GAINS. THE A.O. REOPENED THE ASSESSMENT AND ISSUED NOTICE U/S. 148 OF THE ACT. IN RESPONSE TO NOTICE U/S. 143(2) OF THE ACT, THE ASSESSEE EXPLAINED THE RETURN AND ADMITTED THAT DUE TO CLERICAL MISTAKE THE ABOVE INCOME OF RS.4,21,33,856 /- WAS NOT ACCOUNTED FOR. ACCORDINGLY, THE SAID SUM WAS ADDED U/S. 50 OF THE ACT IN THE ASSESSMENT FRAMED U/S. 147 OF THE ACT. DURING PENALTY PROCEEDINGS, THE ASS ESSEE EXPLAINED THAT THE INADVERTENT MISTAKE WAS RECOGNIZED BY THE LD. A.O. AS THE SAME WAS APPARENT ON RECORD FROM THE NOTE APPEARING IN THE AUDIT REPORT AS WELL AS FROM COMPUTATION ORIGINALLY MADE WHEREIN IT WAS MENTIONED THAT AN AMOUNT OF RS.3,56, 72,413/- WAS DEDUCTED FROM BUSINESS INCOME AS THE PROFIT ON SALE OF FIXED ASSE TS FOR SEPARATE CONSIDERATION. THE SALE CONSIDERATION WAS DULY DISCLOSED IN THE P/L AC COUNT WHILE REDUCING FROM BUSINESS, BUT BY MISTAKE NOT SEPARATELY TAKEN UNDER THE HEAD CAPITAL GAINS. THEREFORE, THERE WAS A MISTAKE APPARENT FROM RECORD WHICH WAS MISSED FRO M THE NOTICE OF THE ASSESSEE AS WELL AS THE LD. A.O. AND THE SAID OVERSIGHT MISTAKE COULD HAVE BEEN RECTIFIED U/S. 154 OF THE ACT. THEREFORE, THERE WAS NO SUPPRESSION OF AN Y FACT OR CONCEALMENT OF INCOME WHICH MAY INVITE PENAL ACTION. HOWEVER, THE LD. A. O. LEVIED PENALTY OF RS.1,54,84,193/- U/S. 271(1)(C) OF THE ACT BY OBSERVING AS UNDER :- THE EXPLANATION OF THE ASSESSEE HAS BEEN CONSIDE RED. SECTION 139(1) CASTS UPON THE ASSESSEE TO FILE A RETURN VOLUNTARILY IN A PRES CRIBED MANNER AND DULY VERIFIED BY THE ASSESSEE DISCLOSING TRUE AND FAIR INCOME. I N THE INSTANT CASE THE ASSESSEE HAD NOT FILED ANY COMPUTATION VOLUNTARILY SHOWING RS.4,21,33,856/-, THE SHORT TERM CAPITAL GAIN ON SALE OF BUILDING BEING D EPRECIABLE ASSETS. TILL THE MISTAKE HAS BEEN DETECTED BY THE DEPTT. THE SAME WA S NOT OFFERED FOR TAXATION. EVEN IN RESPONSE TO NOTICE U/S 148, IN ITS LETTER D T. 21.12.07 (FILED ON 24.12.07) THE ASSESSEE STATED THAT IT HAD NOT COME ACROSS ANY ESCAPEMENT OF INCOME AND REQUESTED TO TREAT THE RETURN FILED U/S 139 AS RETU RN IN RESPONSE TO NOTICE U/S. 148. THE ASSESSEE HAS ADMITTED THE INCOME ONLY WHE N THE REASONS RECORDED FOR NOTICE U/S 148 WAS PROVIDED TO THEM. THE ASSESSEE S PLEA THAT ALL THE FACTS WERE DISCLOSED IN ITS RETURN IS NOT TENABLE IN VIEW OF E XPLANATION-1 TO SECTION 147. THAT THERE WAS ESCAPEMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS IN THE RETURN ARE VERY MUCH APPARENT. MOREOVER, THE A SSESSEES FILING OF REVISED COMPUTATION AFTER DETECTION CANNOT BE SAID TO BE VO LUNTARY. FURTHERMORE, MENS REA IS NOT REQUIRED TO BE ESTABLISHED FOR CONCEALME NT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. THEREFORE, I CON SIDER IT A FIT CASE FOR IMPOSITION FOR PENALTY U/S. 271(1)(C) OF I.T.ACT, 1 961 3 3. ON APPEAL BEFORE THE LD. C.I.T.(A), THE ASSESSE E MADE DETAILED SUBMISSIONS AND PLACED RELIANCE ON SEVERAL JUDICIAL PRONOUNCEMENTS IN SUPPORT THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT BY THE LD. A.O. WAS NOT JUSTIFIED. THE LD. C.I.T.(A) HAS INCORPORA TED THE SUBMISSIONS AND THE DECISIONS CITED BY THE ASSESSEE AND CANCELLED THE PENALTY ORD ER PASSED BY THE LD. A.O. BY OBSERVING AS UNDER :- 3.1. I HAVE CAREFULLY CONSIDERED SUBMISSION OF THE LD. A.R. THERE IS NO DISPUTE ON THE FACTS OF THE CASE . H THE YEAR UNDER CONSIDERAT ION THE ASSESSEE HAS SOLD CERTAIN DEPRECIABLE FIXED ASSETS IN THE PROFIT AND LOSS ACCOUNTS FILED ALONG WITH THE RETURN OF INCOME ,THE SALE OF FIXED ASSETS HAS BEEN DULY DISCLOSED UNDER THE HEAD OTHER INCOME BY NARRATION PROFIT/LOSS ON SA LE OF FIXED ASSETS. THE DETAIL OF THE SALE OF THE BUILDINGS ALONG WITH AMOU NTS AND THE DATE OF SALE IS ALSO DULY MENTIONED IN THE AUDIT REPORT UNDER FILED UNDE R SECTION 44AB OF THE INCOME TAX ACT 1961 DULY FURNISHED IN FORM 3CA ALON G WITH THE RETURN OF INCOME. HOWEVER, WHILE COMPUTING THE GROSS TOTAL IN COME, THE PROFIT ON SALE OF FIXED ASSETS WERE DEDUCTED FOR SEPARATE CONSIDERATI ON FROM THE HEAD PROFIT & GAINS FROM BUSINESS & PROFESSION , BUT IT IS NOT A DDED BACK AS DEEMED CAPITAL GAIN AS PER PROVISION OF SECTION 50 OF THE INCOME T AX ACT. THE ORDER WAS PASSED UNDER SECTION 143(3) OF THE ACT AND THE A.O ALSO CO MMITTED THE SAME MISTAKE. HE ALSO DEDUCTED THE PROFIT FROM THE SALE OF FIXED ASSET FROM THE NET PROFIT SHOWN IN THE P & L ALE FOR SEPARATE CONDITION BUT F AILED TO ADD BACK AS DEEMED CAPITAL GAIN UNDER THE HEAD CAPITAL GAINS. HOWEVER SUBSEQUENTLY THE MISTAKE WAS DEDUCTED AND THE CASE WAS REOPENED UNDER 148 OF THE ACT. HOWEVER ONCE THE REASON FOR REOPENING WAS COMMUNICATED TO THE AS SESSEE, HE IMMEDIATELY RECTIFIED AND REVISED THE COMPUTATION AND THE ASSES SMENT WAS COMPLETED ACCORDINGLY. .. . 3.6. IN THE INSTANT CASE, THE ONLY CONTROVERSY WAS REGARDING THE OMISSION OF ADDITION OF DEEMED CAPITAL GAIN ON SALE OF FIXED AS SET IN COMPUTATION OF TOTAL INCOME UNDER THE HEAD CAPITAL GAINS AFTER DEDUCTI NG THE SAME FROM THE HEAD BUSINESS INCOME. THERE WAS NO DISPUTE THAT ALL TH E RELEVANT FACTS MATERIAL TO THE COMPUTATION OF TOTAL INCOME WERE DULY FURNISHED BY THE ASSESSEE AND NO DEFICIENCIES IN FURNISHING OF SUCH FACTS HAS BEEN P OINTED OUT BY THE ASSESSING OFFICER. THERE WAS THUS NO CAUSE OF ACTION, FOR DEE MING FICTION BEING TRIGGERED BY THE CONDUCT OF THE ASSESSEE. THIS DEEMING FICTIO N UNDER SECTION 271(1)(C) ONLY SHIFTS THE ONUS OF PROOF ON THE ASSESSEE, AS THIS E XPLANATION ITSELF PROVIDES THAT A PENALTY CAN ONLY BE IMPOSED A) WHEN THERE IS NO E XPLANATION BY THE ASSESSEE, (B) WHEN THE EXPLANATION GIVEN BY THE ASSESSEE IS F OUND TO BE FALSE, AND (C) WHEN THE ASSESSEE PROVIDES AN EXPLANATION WHICH HE FAILS TO SUBSTANTIATE AND HE FAILS TO PROVE THAT THE EXPLANATION WAS BONA FIDE AND THA T ALL THE FACTS NECESSARY FOR THE SAME AND MATERIAL FOR COMPUTATION OF INCOME HAV E BEEN DULY DISCLOSED BY THE 4 ASSESSEE, IN THE INSTANT CASE NONE OF THE ABOVE THR EE CONDITIONS WAS SATISFIED. THEREFORE, UNDER THE SCHEME OF SECTION 271(1)(C), I T WAS NOT A FIT CASE FOR THE IMPOSITION OF PENALTY. 3.7. THE HONBLE SUPREME COURT IN THE RECENT JUDGM ENT IN THE CASE OF CIT VS RELIANCE PETROCHEMICALS (P) LTD (2010) 322 ITR 158 (SC) HAD OPINED THAT IT MUST BE SHOWN THAT THE CONDITIONS UNDER S. 271(1)(C) MUS T EXIT BEFORE THE PENALTY IS IMPOSED. IN THE CONCLUDING PARA IT WAS HELD AS UNDE R: IN THIS BEHALF THE OBSERVATION OF THIS COURT IN SH REE KRISHNA ELECTRICALS VS STATE OF TAMIL NADU (2009) 23 VST 249 (SC) AS REGAR DS THE PENALTY ARE APPOSITE. IN THE AFOREMENTIONED DECISION WHICH PER TAINED TO THE PENALTY PROCEEDINGS IN TAMIL NADU GENERAL SALES ACT, THE CO URT HAD FOUND THAT THE AUTHORITIES BELOW HAD FOUND THAT THERE WERE SOME IN CORRECT STATEMENTS MADE IN THE RETURN. HOWEVER THE SAID TRANSACTIONS WERE REFL ECTED IN THE ACCOUNTS OF THE ASSESSEE THIS COURT THEREFORE OBSERVED: SO FAR AS THE QUESTION OF PENALTY IS CONCERNED THE ITEMS WHICH WERE NOT INCLUDED IN THE TURNOVER WERE FOUND INCORPORATED IN THE APPELLANTS ACCOUNT BOOKS. WHERE CERTAIN ITEMS WHICH ARE NOT INCLUDED I N THE TURNOVER ARE DISCLOSED IN THE DEALERS OWN ACCOUNTS BOOK AND THE ASSESSING AUTHORITIES INCLUDE THESE ITEMS IN THE DEALERS TURNOVER DISALLOWING THE EXEM PTION, PENALTY CANNOT BE IMPOSED. THE PENALTY LEVIED STANDS SET ASIDE 3.8. CONSIDERING ABOVE, IT IS HELD THAT THE OMIS SION OF ADDITION OF DEEMED CAPITAL GAIN ON SALE OF FIXED ASSET IN THE COMPUTAT ION OF TOTAL INCOME UNDER THE HEAD CAPITAL GAINS AFTER DEDUCTING THE SAME FROM THE HEAD BUSINESS INCOME WAS AN INADVERTENT ERROR ON THE PART OF THE ASSESSE E. HOWEVER, SINCE THE ASSESSEE HAS NOT WITHHE1D ANY OF THE RELEVANT PARTI CULARS RELATING TO THE SALE OF THE FIXED ASSETS, EITHER IN THE PROFIT & LOSS ACCOU NT OR IN THE AUDIT REPORT, IT COULD NOT BE HELD THAT THERE WAS ANY MALA FIDE INTE NTION OF THE ASSESSEE TO CONCEAL THE INCOME. ACCORDINGLY, IT IS HELD THAT T HIS IS NOT A FIT CASE FOR IMPOSITION OF PENALTY UNDER SECTION 271(1)(C). HENC E, THE PENALTY ORDER PASSED BY THE ASSESSING OFFICER IS CANCELLED. HENCE THIS APPEAL BY THE DEPARTMENT. 4. AT THE TIME OF HEARING BEFORE US, THE LD. DEPAR TMENTAL REPRESENTATIVE RELIED ON THE PENALTY ORDER PASSED BY THE LD. A.O. HE FURTHE R SUBMITTED THAT THE ASSESSEE HAD NOT FILED ANY COMPUTATION VOLUNTARILY SHOWING THE S HORT-TERM CAPITAL GAIN EARNED ON THE SALE OF FIXED ASSETS TILL THE MISTAKE WAS DETECTED AND POINTED OUT BY THE DEPARTMENT. EVEN IN RESPONSE TO NOTICE U/S. 148 OF THE ACT, THE ASSESSEE URGED FOR ACCEPTANCE OF THE RETURN ORIGINALLY FILED U/S. 139(1) OF THE ACT AND SUBSEQUENTLY ADMITTED ITS MISTAKE FOR NON-INCLUSION OF THE SAID CAPITAL GAIN IN ITS I NCOME. THEREFORE, THERE WAS CLEAR 5 ESCAPEMENT OF INCOME AND FURNISHING OF INACCURATE P ARTICULARS AND THE LD. A.O. HAS JUSTIFIABLY LEVIED PENALTY FOR SUCH OMISSION. HE, THEREFORE, SUBMITTED THAT THE ORDER OF THE LD. C.I.T.(A) CANCELING THE PENALTY ORDER DESER VES TO BE QUASHED. 5. THE LEARNED COUNSEL APPEARING ON BEHALF OF THE ASSESSEE, ON THE OTHER HAND, BY REFERRING TO THE COMPUTATION OF INCOME FILED ALONG WITH THE RETURN OF INCOME, WHICH IS PLACED AT PAGE-13 OF THE ASSESSEES PAPER BOOK, SUB MITTED THAT THE ASSESSEE HAS ALREADY SHOWN THE PROFIT ON SALE OF FIXED ASSETS, B UT INADVERTENTLY NOT SHOWN AS CAPITAL GAINS. HE FURTHER SUBMITTED THAT THE ASSESSMENT OR DER, WHEREIN THE SAID MISTAKE HAS BEEN CREPT IN, WENT UPTO THE TRIBUNAL ON OTHER ISSU ES AND THIS ISSUE HAS NEITHER BEEN POINTED OUT BY THE REVENUE AUTHORITIES NOR NOTICED BY THE ASSESSEE UPTO THE STAGE OF THE TRIBUNAL AND THE SAID MISTAKE WAS NOTICED ONLY WHEN NOTICE U/S. 148 OF THE ACT WAS ISSUED. SINCE THE ASSESSEE HAS FILED ALL THE RELEV ANT DETAILS, IT CANNOT BE CONSTRUED THAT IT HAS FILED INACCURATE PARTICULARS OF INCOME NOR AVOIDED TAX. THE LD. COUNSEL, THEREFORE, REQUESTED TO UPHOLD THE ACTION OF THE LD . C.I.T.(A). 6. AFTER HEARING THE RIVAL SUBMISSIONS AND CAREFUL LY PERUSING THE MATERIAL ON RECORD, WE FIND THAT IN THE ASSESSMENT ORDER PASSED U/S. 147 OF THE ACT, THE PENALTY ORDER PASSED U/S. 271(1)(C) OF THE ACT AS WELL AS T HE ORDER OF THE FIRST APPELLATE AUTHORITY AGAINST WHICH THE DEPARTMENT IS IN APPEAL , THE ONLY CONTENTION OF THE REVENUE IS THAT THE ASSESSEE HAS NOT FILED ANY COMPUTATION VOLUNTARILY SHOWING SHORT-TERM CAPITAL GAIN OF RS.4,21,33,856/- ON SALE OF FIXED A SSETS TILL THE MISTAKE WAS POINTED OUT BY THE DEPARTMENT. THE ASSESSEE ADMITTED ITS INADVE RTENT CLERICAL MISTAKE IN THIS REGARD DURING REASSESSMENT PROCEEDINGS. AT THE SAME TIME IT WAS EXPLAINED BY REFERRING TO THE COMPUTATION OF INCOME FILED ALONG WITH THE RETURN OF INCOME, WHICH IS PLACED AT PAGE-13 OF THE ASSESSEES PAPER BOOK, THA T ALTHOUGH THE ASSESSEE HAS SEPARATELY CONSIDERED THE INCOME FROM HOUSE PROPERT Y AND PROFIT ON SALE OF INVESTMENT IN THE COMPUTATION OF INCOME, BUT THE ASSESSEE DUE TO OVERSIGHT MISTAKE AFTER DEDUCTING THE AMOUNT FROM THE HEAD BUSINESS INCOME , IT OMITTED TO ADD BACK THE INCOME UNDER THE HEAD CAPITAL GAINS ARISING OUT O F SALE OF FIXED ASSETS WHICH HAS RESULTED IN NON-DISCLOSURE OF THE SAID INCOME IN TH E RETURN OF INCOME. WE FURTHER OBSERVE THAT DURING SCRUTINY ASSESSMENT PROCEEDINGS U/S. 143(3) OF THE ACT, THE SAID 6 MISTAKE WAS NOT NOTICED BY THE LD. A.O. AND THE INC OME OUT OF SUCH SALE OF FIXED ASSETS WAS NOT ASSESSED. THE ASSESSMENT WHEREIN THE SAID M ISTAKE ORIGINALLY CREPT IN WENT UPTO THE STAGE OF THE TRIBUNAL AND THE SAID MISTAKE WAS NEITHER DETECTED NOR POINTED OUT BY EITHER OF THE PARTIES AND THE TRIBUNAL DISPOSED OF THE APPEAL ON OTHER ISSUES. IT WAS ONLY WHEN NOTICE U/S. 148 OF THE ACT WAS ISSUED THA T THE SAID MISTAKE CAME INTO LIGHT. WE FURTHER OBSERVE THAT THE LD. C.I.T.(A) IN PARA-3 .1 OF HIS APPELLATE ORDER HAS RECORDED THAT IN THE P/L ACCOUNT FILED ALONG WITH T HE RETURN OF INCOME, THE SALE OF FIXED ASSETS HAS BEEN DULY DISCLOSED UNDER THE HEAD OTHER INCOME BY NARRATION PROFIT/LOSS ON SALE OF FIXED ASSETS. HE HAS FURT HER STATED THAT THE DETAILS OF THE SALE OF THE FIXED ASSETS ALONG WITH THE AMOUNTS AND DATE OF SALE WERE DULY MENTIONED IN THE AUDIT REPORT U/S. 44AB OF THE ACT, WHICH WAS FILED ALONG WITH THE RETURN OF INCOME. SUBSEQUENTLY DURING 148 PROCEEDING WHEN THE MISTAKE WAS DETECTED, THE ASSESSEE FILED REVISED COMPUTATION OF INCOME RECTIFYING THE MISTAK E AND THE ASSESSMENT WAS COMPLETED ON SUCH REVISED COMPUTATION. THE ABOVE FA CTUAL POSITION AND OBSERVATION OF THE LD. C.I.T.(A) COULD NOT BE CONTROVERTED BY THE LD. DEPARTMENTAL REPRESENTATIVE. ON THE ABOVE FACTS, IN OUR CONSIDERED VIEW, THERE WAS NO SUPPRESSION OF DETAILS OF PROFIT ON SALE OF FIXED ASSETS AND THERE COULD NOT BE ANY CON CEALMENT OF INCOME IN SUCH A SITUATION. EXPLANATION 1 TO SEC. 271(1)(C) OF THE ACT PROVIDES THAT A PENALTY CAN BE IMPOSED (A) WHEN THERE IS NO EXPLANATION BY THE ASS ESSEE; (B) WHEN THE EXPLANATION GIVEN BY THE ASSESSEE IS FOUND TO BE FALSE; AND (C) WHEN THE ASSESSEE PROVIDES AN EXPLANATION WHICH HE FAILS TO SUBSTANTIATE AND HE F AILS TO PROVE THAT THE EXPLANATION WAS BONA FIDE AND THAT ALL THE FACTS NECESSARY FOR THE SAME AND MATERIAL FOR COMPUTATION OF INCOME HAVE BEEN DULY DISCLOSED BY THE ASSESSEE. I N THE INSTANT CASE, AS STATED ABOVE, THE ASSESSEE HAS GIVEN THE EXPLANATION FOR OMISSION AND THE SAME WAS NOT PROVED TO BE FALSE. FURTHER THE ASSESSEE HAS SUBSTANTIATED ITS EXPLANATION BY REFERRING TO COMPUTATION OF INCOME, TAX AUDIT REPORT U/S. 44AB E TC. FILED ALONG WITH THE RETURN OF INCOME, WHICH COULD NOT BE DENIED BY THE DEPARTMENT , IN SUPPORT OF SUCH BONA FIDE MISTAKE. THEREFORE, NONE OF THE ABOVE THREE CONDIT IONS WAS SATISFIED TO JUSTIFY THE LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT. 7 6.1. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROCHEMICALS PVT. LTD. [322 ITR 158 (SC)] HAS HELD THAT IT MUST BE SH OWN THAT THE CONDITIONS U/S. 271(1)(C) OF THE ACT MUST EXIST BEFORE THE PENALTY IS IMPOSED. AT PAGE 166 OF THE REPORT, THE HONBLE SUPREME COURT HELD AS UNDER :- IN THIS BEHALF THE OBSERVATIONS OF THIS COURT MADE IN SREE KRISHNA ELECTRICALS V. STATE OF TAMIL NADU [2009] 23 VST 249 AS REGARDS TH E PENALTY ARE APPOSITE. IN THE AFOREMENTIONED DECISION WHICH PERTAINED TO THE PENALTY PROCEEDINGS UNDER THE TAMIL NADU GENERAL SALES TAX ACT, THE COURT HAD FOUND THAT THE AUTHORITIES BELOW HAD FOUND THAT THERE WERE SOME INCORRECT STAT EMENTS MADE IN THE RETURN. HOWEVER, THE SAID TRANSACTIONS WERE REFLECTED IN TH E ACCOUNTS OF THE ASSESSEE. THIS COURT, THEREFORE, OBSERVED (PAGE 251) : SO FAR AS THE QUESTION OF PENALTY IS CONCERNED T HE ITEMS WHICH WERE NOT INCLUDED IN THE TURNOVER WERE FOUND INCORPORATED IN THE APPELLANTS ACCOUNT BOOKS. WHERE CERTAIN ITEMS WHICH ARE NOT INCLUDED I N THE TURNOVER ARE DISCLOSED IN THE DEALERS OWN ACCOUNT BOOKS AND THE ASSESSING AUTHORITIES INCLUDES THESE ITEMS IN THE DEALERS TURNOVER DISAL LOWING THE EXEMPTION, PENALTY CANNOT BE IMPOSED. THE PENALTY LEVIED STAND S SET ASIDE . THE SITUATION IN THE PRESENT CASE IS STILL BETTER A S NO FAULT HAS BEEN FOUND WITH THE PARTICULARS SUBMITTED BY THE ASSESSEE ALONG WITH IT S RETURN OF INCOME. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND RESPECTFULLY FOLLOWING THE RATIO OF AFORESAID DECISION OF HONBLE SUPREME COURT, WE ARE OF THE CONSIDERED OPINION THAT THE LD. A.O. COULD NOT MAKE OUT ANY CASE TO JUSTIFY THAT THE PENALTY IS LEVIABLE U/S. 271(1)(C) OF THE ACT. ON THE OTHER HAND, THE LD. C .I.T.(A) HAS RIGHTLY DELETED THE PENALTY IMPOSED ON THE ASSESSEE KEEPING IN VIEW THE FACT THAT THE ASSESSEE HAS NEITHER CONCEALED THE INCOME NOR FURNISHED INACCURATE PARTI CULARS THEREOF. WE, THEREFORE, CONFIRM HIS ORDER DELETING THE PENALTY OF RS.1,54,8 4,193/- LEVIED BY THE A.O. U/S. 271(1)(C) OF THE ACT. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. SD/- SD/- ( ) ( . .. . . .. . ) !' (MAHAVIR SINGH) JUDICIAL MEMBER (C.D. RA O), ACCOUNTANT MEMBER ( (( ( ' ' ' ') )) ) DATE: 25 -11-2011 8 # # # # / ITA NOS. 1554 (KOL) OF 2010 !5 0 .6 7!6&8- COPY OF THE ORDER FORWARDED TO: 1. *+ / THE APPELLANT : D.C.I.T., CIRCLE-12, KOLKATA. 2 ./*+ / THE RESPONDENT : SMIFS CAPITAL MARKETS LTD., VAIBHAV-4, 4, LEE ROAD KOLKATA70 0 020 3. 5$ () : THE CIT(A), CENTRAL I, KOLKATA. 4. 5$/ THE C.I.T., KOL - 5 <= .$ / DR, ITAT, KOLKATA BENCHES, KOLKATA 6 GUARD FILE . /6 ./ TRUE COPY, !5$2/ BY ORDER, (DKP) > ? / DY/ASSTT. REGISTRAR .