M/s. Future Gaming Solutions India (P) Ltd., CHENNAI V. DCIT, Coimbatore

ITA 1616/CHNY/2012

• Counselvise Citation: 161621714 RSA 2012
• Duration Of Justice: 1 year(s) 8 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-05-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 07-05-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 21-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T N BETGIRI JT
• Assessee Lawyers: R VIJAYARAGHAVAN
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI . . . , . . !' , # '$ % [BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT AND SHRI S. S. GODARA, JUDICIAL MEMBER] ./ I.T.A.NO.1616/MDS/2012 / ASSESSMENT YEAR : 2008-09 M/S FUTURE GAMING SOLUTIONS INDIA (P) LTD 335-339, DAISY PLAZA, 6 TH STREET GANDHIPURAM COIMBATORE 641 012 VS. THE DY. COMMISSIONER OF INCOME-TAX COMPANY CIRCLE I(3) COIMBATORE [PAN AABCM 9751 G] ( &' / APPELLANT) ( ()&' /RESPONDENT) / APPELLANT BY : SHRI R. VIJAYARAGHAVAN, ADVOCATE /RESPONDENT BY : SHRI T.N.BETGIRI, JT.CIT / DATE OF HEARING : 07-05-2014 / DATE OF PRONOUNCEMENT : 07-05-2014 '* / O R D E R PER S.S.GODARA, JUDICIAL MEMBER THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 20 08-09, IS DIRECTED AGAINST ORDER OF THE COMMISSIONER OF INC OME-TAX (APPEALS)-I COIMBATORE DATED 12.6.2012, PASSED IN APPEAL NO.49/ 11-12 PARTLY CONFIRMING PENALTY IMPOSED U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT). I.T.A.NO.1616/12 :- 2 -: 2. IN THE PRESENT APPEAL, THE ASSESSEE CHALLENGES PA RT CONFIRMATION OF PENALTY IMPOSED U/S 271(1)(C) BY THE ASSESSING OFFICER TO THE TUNE OF ` 47,87,805/-, AT THE ENDS OF CIT(A). IT IS TO BE SEEN THAT THE ASSESSING OFFICER HAD IMPOSED PENALTI ES UNDER THREE HEADS I.E DISALLOWANCE U/S 14A, LONG TERM CAPITAL GAINS ON SALE OF LAND AND BUILDING AND REDUCTION OF SHORT TERM CAPITAL LO SS U/S 94(7) OF THE ACT. IN THE LOWER APPELLATE ORDER, THE CIT(A) HAS AFFIRMED THE IMPUGNED PENALTY QUA LATTER TWO HEADS. THEREFORE, THE ASSESSEE IS IN APPEAL. 3. THE ASSESSEE, A COMPANY, RUNS A LOTTERY AGENCY. ON 29.9.2008, IT HAD FILED ITS RETURN DISCLOSING INCOM E OF ` 14,51,92,220/- WITH UNABSORBED SHORT TERM CAPITAL LOSS OF ` 1,42,17,102/-. IN RELEVANT PREVIOUS YEAR, THE ASSESSEE HAD DERIVED INCOMES FR OM LOTTERY TRADE, HOUSE PROPERTY, CAPITAL GAINS FROM SALE OF IMMOVABL E PROPERTY, SHORT TERM CAPITAL LOSS ON SALE OF MUTUAL FUNDS AND DIVID END. THE ASSESSING OFFICER HAD FRAMED REGULAR ASSESSMENT ON 6.12.201 0. IN COURSE THEREOF, HE NOTICED THE ASSESSEE TO HAVE DECLARED L ONG TERM CAPITAL GAINS OF ` 1,64,14,178/- ON SALE OF LAND AND BUILDING TO DPF TEXTILES PVT. LTD VIDE TWO SALE DOCUMENTS. THE ASSESSEE HA D STATED TOTAL VALUE THEREOF AT ` 2,31,66,536/-; WHEREAS ITS BOOKS READ TOTAL VALUE TO I.T.A.NO.1616/12 :- 3 -: BE ` 2,79,30,350/-. ON BEING POINTED OUT THE DIFFEREN CE BETWEEN THE TWO, THE ASSESSEE CHOSE TO FILE A REVISED COMPUTAT ION OF CAPITAL GAINS ON 3.12.2010 I.E VERY WELL BEFORE THE ASSESSMENT OR DER. IN VIEW OF THIS REVISED COMPUTATION, THE ASSESSING OFFICER COM PUTED LONG TERM CAPITAL GAINS AT ` 1,94,75,488/-. SIMILARLY, THE ASSESSEE HAD CLAIMED SHORT TERM CA PITAL LOSS OF ` 3,37,65,457/- STATED TO HAVE ARISEN FROM SALE OF M UTUAL FUNDS IN THE RELEVANT PREVIOUS YEAR. THESE MUTUAL FUNDS HAD B EEN PURCHASED AND SOLD WITHIN A SPAN OF THREE MONTHS. THE ASSESSEE HAD EARNED DIVIDENDS OF ` 1,21,09,370/-. PER ASSESSING OFFICER, SECTION 94( 7) WAS APPLICABLE WHICH STIPULATED THAT SUCH A LOSS HAD TO BE REDUCED BY THE SUM OF DIVIDEND DECLARED WITHIN A PERIOD OF THREE M ONTHS. THUS, HE RECOMPUTED SHORT TERM CAPITAL LOSS. AT NO STAGE, ASSESSEES BOOKS OF ACCOUNT WERE EVER PUT TO DOUBT. COUPLED WITH THIS, THE ASSESSING OFFICER ALSO MADE ANOTHER DISALLOWANCE U/S 14A. A CCORDINGLY, HE ASSESSED ASSESSEES TOTAL INCOME AS ` 14,57,97,686/-. HE ALSO INITIATED PENALTY PROCEEDINGS AGAINST THE ASSESSEE U/S 271(1)(C) OF THE ACT. WE ARE INFORMED IN THE COURSE OF HEARIN G THAT THE ASSESSEE DID NOT PREFER ANY APPEAL. 4. IN PENALTY PROCEEDINGS, THE ASSESSEE STRONGLY CONT ESTED THE ACCUSATION OF HAVING CONCEALED OR FURNISHED INACCUR ATE PARTICULARS OF I.T.A.NO.1616/12 :- 4 -: INCOME AND PLEADED THAT EACH AND EVERY DISALLOWANC E/ADDITION DOES NOT AMOUNT TO AUTOMATIC IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT. HOWEVER, THE ASSESSING OFFICER DID NOT AGREE. IN PENALTY ORDER DATED 28.6.2011, HE HELD THAT THE ASSESSEES AFORE SAID CONDUCT IN NOT STATING THE TRUE AMOUNT FOR THE PURPOSE OF COMPUTIN G LONG TERM CAPITAL GAINS, DISALLOWANCES U/S 94(7) AND 14A(SUPRA) ATTR ACTED IMPOSITION OF MINIMUM PENALTY OF ` 47,87,805/-. 5. IN ASSESSEES APPEAL, THE CIT(A) HAS CONFIRMED THE PENALTIES REGARDING LONG TERM CAPITAL GAINS AND THE RE-WORKIN G OF SHORT TERM CAPITAL LOSS U/S 94(7). THE ONE PERTAINING TO SEC TION 14A STANDS DELETED. 6. WE HAVE HEARD BOTH PARTIES AND GONE THROUGH THE CAS E FILE. IT EMANATES FROM THE ASSESSMENT ORDER, PENALTY ORDE R AND THE CIT(A)S ORDER THAT SO FAR AS ASSESSEES BOOKS OF ACCOUNT REGARDING DECLARATION OF THE TOTAL SALE CONSIDERATION RECEIVE D FROM M/S DPF TEXTILES PVT. LTD ON SALE OF LAND AND BUILDING AS W ELL AS SHORT TERM CAPITAL LOSS (SUPRA) ARE CONCERNED, EVEN THE REVENU E IS FAIR ENOUGH TO ADMIT THAT THE SAME HAD BEEN TRULY REFLECTED THEREI N. THE ASSESSEES ARGUMENT IS THAT IT WAS ONLY A MISTAKE IN ITS MEMO OF INCOME AND IT HAD ALREADY PAID ADMITTED TAX; ALSO HAS NOT BEEN SPECIFICALLY REBUTTED BY THE REVENUE. WE NOTICE THAT APART FROM ASSESSE ES BOOKS, THE I.T.A.NO.1616/12 :- 5 -: AUTHORITIES BELOW HAVE NOT RELIED UPON ANY OTHER MA TERIAL TO RECOMPUTE THE LONG TERM CAPITAL GAINS. IN ADDITI ON TO THIS, THE ASSESSING OFFICER AS WELL AS CIT(A) IN PENALTY PROC EEDINGS HAVE THEMSELVES TERMED THIS ACT OF THE ASSESSEE AS A D ISCREPANCY. THAT BEING THE CASE, WE HOLD THAT A MERE DISCREPANCY IN STATING THE VALUE OF SALE DOCUMENTS DOES NOT AMOUNT TO EITHER CONCEAL MENT OR FURNISHING INACCURATE PARTICULARS OF INCOME U/S 2 71(1)(C) OF THE ACT. IN OUR VIEW, IF THAT COURSE IS ADOPTED, THE NET RES ULT WOULD BE THAT EACH AND EVERY DISALLOWANCE WOULD NOT LEAD TO AUTOM ATIC LEVY OF PENALTY. IT IS A TRITE PROPOSITION OF LAW AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS RELIANCE PETROPRODUCTS PVT. LTD[2010] 322 ITR 158 THAT EACH AND EVERY ADDITION DOES NOT ATTR ACT PENALTY U/S 271(1)(C) OF THE ACT. 7. NOW WE COME TO THE PENALTY QUA RE-WORKING OF SHORT TERM CAPITAL LOSS(SUPRA) IN VIEW OF SECTION 94(7) OF THE ACT. HEREIN ALSO, IT IS NOTICED THAT ONLY ON THE BASIS OF ASSESSEES BOOKS OF ACCOUNT, THE ASSESSING OFFICER HAD REWORKED THE SHORT TERM CAPIT AL LOSS BY APPLYING SECTION 94(7). FROM ORDER OF THE 'TRIBUNAL' DATED 24.10.2013 IN CASE OF SHRI S. MARTIN VS THE DY. CIT IN I.T.A.NO. 1617/MDS /2012, IT IS FOUND THAT IN A SIMILAR PENALTY, IT HAS BEEN HELD THAT ON CE THE ASSESSEE HIMSELF HAD FURNISHED ALL PARTICULARS ON THE BASIS OF WHICH SUCH A SHORT I.T.A.NO.1616/12 :- 6 -: TERM CAPITAL LOSS IS RE-WORKED, DOES NOT AMOUNT TO CONCEALMENT AND FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN THAT CASE, WE HAVE APPLIED CASE LAW [2012] 348 ITR 306 (SC) PRICE WATE RHOUSE COOPERS PVT. LTD VS CIT. THUS, THIS PENALTY IS ALSO DELET ED. 8. IN VIEW OF OUR ABOVE DISCUSSION, THE ASSESSEES AP PEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON WEDNESDAY, THE 07 TH OF MAY, 2014 AT CHENNAI. SD/- SD/- ( . . . ) (DR. O.K. NARAYANAN) !!!!!'#$ / VICE-PRESIDENT ( . . !' ) (S. S. GODARA) % &' / JUDICIAL MEMBER (% / CHENNAI )& / DATED: 07 TH MAY, 2014 RD &*!! +,!-, / COPY TO: ! 1 . / APPELLANT ! 2. / RESPONDENT 3. ! .!/0 / CIT(A) 4. ! . / CIT 5. ,12! 3 / DR 6. 24!5 / GF