D.C.I.T.Cir - VIII,Kol, Kolkata V. Shri Ram Chandra Agarwal, Kolkata

ITA 1700/KOL/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5110 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2016
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 11-02-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 21-11-2012
• Court: TRIBUNAL
• Department Lawyers: MD S S ALAM JCIT LD
• Assessee Lawyers: K K CHHAPARIAFCA LD A
• Keywords: Capital asset; Gift; Bonafide belief; Wrong claim; Revised return; Bonafide mistake
• Section: 27

Judgement Text

ITA NO.1700/KOL/2012- C-AM SH.RAM CH .AGARWAL 1 IN THE INCOME TAX APPELLATE TRIBUNAL, C BENCH, KOLKATA BEFORE : SHRI N.V. VASUDEVAN, JUDICIAL MEMBER, A ND SHRI M. BALAGANESH, ACCOUNTANT MEMBER ITA NO. 1700/KOL/2012 A.Y 2008-09 D.C.I.T, C.C-VIII, KOLKATA VS. RAM CHAND RA AGARWAL PAN: ACZPA8 989R (APPELLANT) (RESP ONDENT) FOR THE APPELLANT/DEPARTMENT: MD. S.S ALAM, JCIT, LD.SR.DR FOR THE RESPONDENT/ASSESSEE : S HRI K.K. CHHAPARIA,FCA, LD.AR DATE OF HEARING: 11-02-2016 DATE OF PRONOUNCEMENT: 17 -02-2 016 ORDER SHRI M.BALAGANESH, AM THIS APPEAL OF THE REVENUE ARISE OUT OF THE ORDER OF THE LEARNED CIT(A)-I, KOLKATA IN APPEAL NO. 63/CC-VIII/CIT(A)C-I/KOL/11-12 DATED 25 TH SEPTEMBER, 2012 FOR THE ASSESSMENT YEAR 2008-09 AGAINST THE ORDER OF PENALT Y LEVIED BY THE LEARNED AO U/S. 271(1)( C) OF THE INCOME TAX ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT). 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPE AL OF THE REVENUE IS AS TO WHETHER THE PENALTY U/S. 271(1) ( C) OF THE ACT COULD BE LEVIED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE ASSE SSEE BEING INDIVIDUAL HAS FILED HIS ORIGINAL RETURN OF INCOME FOR THE ASSESSMENT YEAR 2 008-09 ON 24-07-2009, WHICH IS BELATED. THE RETURN WAS SELECTED FOR SCRUTINY BY IS SUING NOTICE U/S.143(2) OF THE ACT ON 31- 08-2010. THE ASSESSEE HAD SOLD 7,48,000 EQUITY SHAR ES OF M/S. VISHAL RETAIL LTD IN OFF- MARKET AND MADE A PROFIT OF RS.8,30,00,000/-. THE A SSESSEE WAS UNDER THE BONAFIDE BELIEF ITA NO.1700/KOL/2012- C-AM SH.RAM CH .AGARWAL 2 THAT SINCE THE SHARES OF LISTED COMPANY I.E. M/S. VISHAL RETAIL LTD WERE TRADED ON OFF MARKET, NO CAPITAL GAINS IS TO BE RETURNED THEREON .U/S. 10(38) OF THE ACT, ANY INCOME FROM THE TRANSFER OF A LONG TERM CAPITAL ASSET (LTC ASSE T) BEING AN EQUITY SHARE IN A COMPANY IS EXEMPT FROM TAXATION. THE CONDITION FOR EXEMPTION I S THAT STT IN RESPECT OF THE TRANSACTION OUGHT TO HAVE BEEN CHARGED. SINCE THE S HARES WERE SOLD BY THE ASSESSEE OFF- MARKET I.E. NOT THROUGH STOCK EXCHANGE NO STT WAS P AID. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FILED A REVISE D COMPUTATION OF HIS TOTAL INCOME BY INCLUDING LONG TERM CAPITAL GAINS ON SALE OF SAID SHARES OF M/S. VISHAL RETAIL LTD ON OFF MARKET AS THE STT(SECURITIES TRANSACTION TAX) WAS NOT SUFFERED ON SAID TRANSACTION. THE LD.AO FELT THAT THIS OFFER OF LONG TERM CAPITAL GAI N WAS NOT VOLUNTARILY MADE BY THE ASSESSEE AND IT WAS MADE ONLY WHEN THE ASSESSEE WAS CONFRONTED BY THE LD.AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. HENCE IN THE OPIN ION OF THE LD.AO, IT WAS DETECTED BY THE DEPARTMENT WARRANTING INITIATION OF PENALTY PRO CEEDINGS. THE ASSESSEE TRIED TO EXPLAIN THAT OFFER IN THE REVISED COMPUTATION WAS VOLUNTARI LY MADE BY THE ASSESSEE BEFORE ANY DETECTION BY THE DEPARTMENT. HOWEVER, THE LD.AO PR OCEEDED TO LEVY OF PENALTY U/S. 271(1)( C) AMOUNTING TO RS.94,03,900/-. ON 1 ST APPEAL, THE LD.CIT(A) APPRECIATING THE CONTENTIONS OF THE ASSESSEE AND BY RELYING ON VARIO US DECISIONS DELETED THE LEVY OF IMPUGNED PENALTY. AGGRIEVED, THE REVENUE IS IN APPE AL BEFORE US ON THE FOLLOWING GROUND:- THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, LD. CIT(A) ERRED IN DELETING THE PENALTY OF RS.94,03,9 00/- UNDER SECTION 271(1)( C) OF THE INCOME TAX ACT, 1961. 4. THE LD.DR REITERATED THE FINDINGS OF THE LD.AO I N IMPOSING THE IMPUGNED PENALTY. HE FURTHER ARGUED THAT THE LD. AO COULD ONLY GO ST EP BY STEP AND INITIALLY DETAILS OF PURCHASE AND SALE OF SHARES AND MUTUAL FUNDS WERE C ALLED FOR BY THE LD.AO IN THE COURSE OF ASSESSMENT PROCEEDINGS FOR EXPLANATION. HE ARGUED T HAT WHEN THE CASE GOT SELECTED FOR SCRUTINY, THE ASSESSEE DISCLOSED LONG TERM CAPITAL GAIN IN HIS REVISED COMPUTATION OF INCOME. THE LD.DR FURTHER ARGUED THAT THE ASSESSEE WAS IN COMPLETE KNOWLEDGE THAT STT (SECURITIES TRANSACTION TAX ) WAS NOT SUFFERED ON S UCH SALE OF SHARE TRANSACTION AS IT WAS ITA NO.1700/KOL/2012- C-AM SH.RAM CH .AGARWAL 3 DONE ON OFF MARKET. THUS, THE ASSESSEE OUGHT TO HAV E DISCLOSED THE SAME IN HIS ORIGINAL RETURN OF INCOME. HE ALSO ARGUED THAT THE ASSESSEE HAS MERELY FILED REVISED COMPUTATION OF HIS TOTAL INCOME AND DID NOT BOTHER TO FILE REVI SED RETURN OF INCOME. THUS, THE LD.AO WAS JUSTIFIED IN IMPOSING THE PENALTY. THE LD.DR IN SUPPORT OF HIS ARGUMENTS HAS RELIED ON THE FOLLOWING CASE LAWS:- * 61 TAXMANN.COM 363 (CHANDIGARH TRIBUNAL) *64 TAXMANN.COM 91 (CALCUTTA HIGH COURT) 4.1 IN RESPONSE TO THIS, THE LD.AR ARGUED THAT SINC E THE ORIGINAL RETURN OF INCOME WAS FILED BELATEDLY, THE ASSESSEE COULD NOT FILE ANY RE VISED RETURN OF INCOME AND INSTEAD OF IT ASSESSEE FILED A REVISED COMPUTATION OF TOTAL INCOM E BEFORE COMPLETION OF ASSESSMENT PROCEEDINGS, WHEREIN LONG TERM CAPITAL GAIN ON SALE OF SHARES WAS DULY REFLECTED. THE LD. AR ARGUED THAT THE TAXES FOR THE SAME WERE ALSO PAI D BY THE ASSESSEE. THE ASSESSEE WAS UNDER BONAFIDE BELIEF THAT SINCE THE SHARES TRADED WERE OF LISTED COMPANY, THE STT WAS NOT SUFFERED DUE TO OFF MARKET SHARE SALE TRANSACTI ON, THEREBY CAPITAL GAINS, IF ANY, COULD BE ELIGIBLE FOR EXEMPTION U/S. 10(38) OF THE ACT. THE LD.AR OF THE ASSESSEE HAS ALSO FILED THE COPY OF ORDER-SHEETS THAT WERE RECORDED IN THE COU RSE OF ASSESSMENT PROCEEDINGS. HE DREW OUR ATTENTION TO THE PROCEEDINGS DATED 29-10-2 010, WHEREIN THE LD.AR WAS MERELY ASKED FOR SUBMISSION OF DETAILS OF PURCHASE AND SAL E OF SHARES AND MUTUAL FUNDS AMONG OTHERS. IN RESPONSE TO THE SAME, THE ASSESSEE FILED A REVISED COMPUTATION ON 8-11-2010, WHEREIN LONG-TERM CAPITAL GAIN WAS OFFERED TO TAX O N SALE OF SHARES OF M/S. VISHAL RETAIL LTD AND CONSEQUENTLY, EXEMPTION CLAIMED THEREON WAS WITHDRAWN BY THE ASSESSEE. THIS IS VERY EVIDENT FROM THE FACT THAT OFFER OF DISCLOSURE OF LONG TERM CAPITAL GAIN WAS MADE VOLUNTARILY BY THE ASSESSEE BEFORE DETECTION BY THE DEPARTMENT. MORE SO, THE BELIEF OF THE ASSESSEE IS BONAFIDE IN VIEW OF LISTED COMPANYS SH ARES TRADED BY THE ASSESSEE WHICH CANNOT BE DOUBTED. IN SUPPORT OF HIS ARGUMENTS, THE LD.AR OF THE ASSESSEE HAS PLACED HIS RELIANCE ON VARIOUS JUDGMENTS. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD INCLUDING THE PAPER BOOK AND THE CASE LAWS AS RELIE D UPON BY BOTH THE PARTIES ON THE IMPUGNED ISSUE BEFORE US. WE FIND FROM THE ORDER SH EET ENTRY OF THE ASSESSMENT ITA NO.1700/KOL/2012- C-AM SH.RAM CH .AGARWAL 4 PROCEEDINGS THAT THE LD.AO HAD MERELY CALLED FOR SU BMISSION OF DETAILS OF PURCHASE AND SALE OF SHARES AND MUTUAL FUNDS ON 29-10-2010. TH E ASSESSEE WHILE COLLECTING THE DETAILS FOR THE SAME, UNDERSTOOD A MISTAKE COMMITTED BY HI M IN THE ORIGINAL RETURN OF INCOME BY NOT OFFERING THE LONG TERM CAPITAL GAINS ON SALE OF SHARES OF M/S. VISHAL RETAIL LTD (A LISTED COMPANY) AND STT WAS NOT SUFFERED IN VIEW OF OFF MARKET SHARE SALE TRANSACTION CARRIED OUT BY THE ASSESSEE. WE ALSO FIND THAT THE ASSESSEE WAS UNDER BONAFIDE BELIEF THAT SINCE SUBJECT MENTIONED SHARE WAS A LISTED COMPANY, RESULTANT CAPITAL GAIN THEREON COULD BE EXEMPTED FROM TAX. HOWEVER, IMMEDIATELY ON NOTIC ING THE MISTAKE COMMITTED BY HIM, THE ASSESSEE CAME FORWARD TO FILE A REVISED COMPUTA TION BY DISCLOSING THE LONG-TERM CAPITAL GAINS ON SUCH SALE OF SHARES OF M/S. VISHAL RETAIL LTD BEFORE THE LD.AO TOGETHER WITH THE REASONS FOR NOT DISCLOSING THE SAME IN THE ORIGINAL RETURN OF INCOME. WE ALSO FIND THAT THE ASSESSEE WAS DULY PREVENTED FROM FILING T HE REVISED RETURN OF INCOME FOR THE SAME. THE ORIGINAL RETURN FILED BY HIM WAS BELATED, WHICH PREVENTED THE ASSESSEE FROM FILING OF REVISED RETURN. WE ALSO FIND FROM THE ORD ER SHEET ENTRY THAT THE ASSESSEE WAS NOT CONFRONTED WITH THE ISSUE OF WRONG CLAIM OF EXEMPT ION TOWARDS LONG TERM CAPITAL GAINS ON SALE OF SHARES OF M/S. VISHAL RETAIL LTD AS POI NTED OUT BY THE LD.AO IN HIS PENALTY ORDER VIDE PAGE 2. THE PLEA OF THE ASSESSEE THAT THE CLAIM FOR EXEMPTION U/S. 10(38) OF THE ACT WAS A BONAFIDE MISTAKE MADE BY THE ASSESSEE HAS TO BE ACCEPTED. THERE IS NO MATERIAL ON RECORD TO SHOW THAT THE CLAIM WAS NOT M ADE UNDER BONAFIDE MISTAKE. WE FIND THAT THE CASE LAWS AS RELIED ON BY THE LD.DR WERE I N RESPECT OF SEARCH AND SURVEY CASES AND ADDITION WAS MADE PURSUANT TO MATERIALS FOUND DURI NG THE SURVEY AND SEARCH AND AFTER DETECTION BY THE DEPARTMENT IN THE COURSE OF SEARC H AND SURVEY. HENCE, THE CASE LAWS AS RELIED ON BY THE LD.DR BEFORE US ARE NOT APPLICABLE AND SQUARELY DISTINGUISHABLE TO THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. WE FI ND THAT THE CASE BEFORE US IS A REGULAR ASSESSMENT AND THE ASSESSEE HAS DULY DISCLOSED THE CLAIM OF EXEMPTION U/S. 10(38) OF THE ACT IN THE ORIGINAL RETURN OF INCOME. HENCE, IT CAN BE SAFELY CONCLUDED THAT THE ASSESSEE HAS DISCLOSED THE TRANSACTION OF SHARES COMPLETELY BEFORE THE INCOME-TAX DEPARTMENT IN THE RETURN OF INCOME. WE FIND THAT FOLLOWING CASE LAWS SUPPORT THE FACTS OF THE ASSESSEE:- ITA NO.1700/KOL/2012- C-AM SH.RAM CH .AGARWAL 5 5.1.1. HONBLE HIGH COURT OF PUNJAB AND HARYANA IN THE CAS E OF CIT VS. SHAHABAD CO- OP. SUGAR MILLS LTD (2010) 322 ITR 73 (P&H) , WHEREIN IT HAS BEEN HELD THAT: FROM THE ORDER OF THE TRIBUNAL, WE DO NOT FIND ANY SUCH POINT HAVING BEEN RAISED BY THE REVENUE. IN ANY CASE, REASONING WHICH HAS BEEN APPLIED FOR SETTING ASIDE PENALTY IN RESPECT OF WRONG CLAIM UN DER SECTION 80P OF THE ACT WILL ALSO APPLY TO WRONG CLAIM UNDER THE HEAD OF DE PRECIATION. MAKING OF WRONG CLAIM IS NOT AT PAR WITH CONCEALMENT OR GIVI NG OF INACCURATE INFORMATION, WHICH MAY CALL FOR LEVY OF PENALTY UND ER SECTION 271( 1) ( C) OF THE ACT. 5.1.2. HONBLE HIGH COURT OF PUNJAB AND HARYANA IN THE CAS E OF CIT VS. SIDHARTHA ENTERPRISES (2010) 322 ITR 80 (P&H) , WHEREIN IT HAS BEEN HELD THAT: WE ARE UNABLE TO ACCEPT THE SUBMISSION. THE JUDGME NT OF THE HONBLE SUPREME COURT IN DHARMENDRA TEXTILES PROCESSORSCASE (SUPR A) CANNOT BE READ AS LAYING DOWN THAT IN EVERY CASE WHERE PARTICULARS OF INCOME ARE INACCURATE, PENALTY MUST FOLLOW. WHAT HAS BEEN LAID DOWN IS THA T QUALITATIVE DIFFERENCE BETWEEN CRIMINAL LIABILITY UNDER SECTION 276C AND PENALTY UNDER SECTION 271(1)( C) HAD TO BE KEPT IN MIND AND APPROACH ADOP TED TO THE TRIAL OF A CRIMINAL CASE NEED NOT BE ADOPTED WHILE CONSIDERING THE LEVY OF PENALTY. EVEN SO, CONCEPT OF PENALTY HAS NOT UNDERGONE CHANGE BY VIRTUE OF THE SAID JUDGMENT. PENALTY IS IMPOSED ONLY WHEN THERE IS SOME ELEMENT OF DELIBERATE DEFAULT AND NOT A MERE MISTAKE. THIS BEING THE POSITION, THE FI NDING HAVING BEEN RECORDED ON FACTS THAT THE FURNISHING OF INACCURATE PARTICULARS WAS SIMPLY A MISTAKE AND NOT A DELIBERATE ATTEMPT TO EVADE TAX, THE VIEW TAKEN B Y THE TRIBUNAL CANNOT BE HELD TO BE PERVERSE. 5.1.3. IN THE CASE OF CIT VS. BRAHMAPUTRA CONSORTIUM LTD, THE HONBLE HIG H COURT AT NEW DELHI [ ITA NO. 1582 OF 2010] HAS HELD THAT : 13. THE ASSESSING OFFICER WAS NOT CORRECT IN HOLDI NG THAT SUBMITTING INACCURATE CLAIM WOULD AMOUNT TO GIVING INACCURATE PARTICULARS. SUCH A CONTENTION OF THE DEPARTMENT IS SPECIFICALLY REJECT ED BY THE SUPREME COURT IN A RECENT JUDGMENT IN THE CASE OF CIT VS. RELIANCE PET ROPRODUCTS PVT. LTD (2010) 322 ITR 158. 5.1.4. IN THE LANDMARK JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF HINDUSTAN STEEL VS. STATE OF ORISSA 83 ITR 26 , WHEREIN IT WAS HELD THAT- AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF A QUASI-CRIMINAL PROCEEDINGS, AND PE NALTY WILL NOT ORDINARILY BE IMPOSED UNLESS THE PARTY OBLIGED EITHER ACTED DELI BERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONES T, OR ACTED IN CONSCIOUS DISREGARD OF ITS OBLIGATION. PENALTY WILL NOT ALSO BE IMPOSED MERELY BECAUSE IT ITA NO.1700/KOL/2012- C-AM SH.RAM CH .AGARWAL 6 IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IM POSED FOR FAILURE TO PERFORM A STATUTORY OBLIGATION IS MATTER OF DISCRETION OF THE AUTHORITY TO BE EXERCISED JUDICIALLY AND ON A CONSIDERATION OF ALL THE RELEV ANT CIRCUMSTANCES. EVEN IF A MINIMUM PENALTY IS PRESCRIBED, THE AUTHORITY COMPE TENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY, WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT, OR WHER E THE BREACH FLOWS FROM A BONA FIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE. 5.1.5. IN THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF PRICE WATERHOU SE COOPERS P.LTD VS. CIT REPORTED IN (2012) 25 TAXMANN .COM 400/211 TAXMAN 40/348 ITR 306, WHEREIN IT HAS BEEN HELD THAT:- 17. HAVING HEARD LEARNED COUNSEL FOR THE PARTIES, WE ARE OF THE VIEW THAT THE FACTS OF THE CASE ARE RATHER PECULIAR AND SOMEWHAT UNIQUE. THE ASSESSEE IS UNDOUBTEDLY A REPUTED FIRM AND HAS GREAT EXPERTISE AVAILABLE WITH IT. NOTWITHSTANDING THIS, IT IS POSSIBLE THAT EVEN THE ASSESSEE COULD MAKE A 'SILLY' MISTAKE AND, INDEED THIS HAS BEEN ACKNOWLEDGED BOTH BY THE TRIBUNAL AS WELL AS BY THE HIGH COURT. 18. THE FACT THAT THE TAX AUDIT REPORT WAS FILED AL ONG WITH THE RETURN AND THAT IT UNEQUIVOCALLY STATED THAT THE PROVISION FOR PAYMENT WAS NOT ALLOWABLE UNDER SECTION 40A(7) OF THE ACT INDICATES THAT THE ASSESS EE MADE A COMPUTATION ERROR IN ITS RETURN OF INCOME. APART FROM THE FACT THAT THE ASSESSEE DID NOT NOTICE THE ERROR, IT WAS NOT EVEN NOTICED EVEN BY THE ASSESSING OFFIC ER WHO FRAMED THE ASSESSMENT ORDER. IN THAT SENSE, EVEN THE ASSESSING OFFICER SE EMS TO HAVE MADE A MISTAKE IN OVERLOOKING THE CONTENTS OF THE TAX AUDIT REPORT. 19. THE CONTENTS OF THE TAX AUDIT REPORT SUGGEST TH AT THERE IS NO QUESTION OF THE ASSESSEE CONCEALING ITS INCOME. THERE IS ALSO NO QU ESTION OF THE ASSESSEE FURNISHING ANY INACCURATE PARTICULARS. IT APPEARS T O US THAT ALL THAT HAS HAPPENED IN THE PRESENT CASE IS THAT THROUGH A BONA FIDE AND INADVERTENT ERROR, THE ASSESSEE WHILE SUBMITTING ITS RETURN, FAILED TO ADD THE PROV ISION FOR GRATUITY TO ITS TOTAL INCOME. THIS CAN ONLY BE DESCRIBED AS A HUMAN ERROR WHICH WE ARE ALL PRONE TO MAKE. THE CALIBRE AND EXPERTISE OF THE ASSESSEE HAS LITTLE OR NOTHING TO DO WITH THE INADVERTENT ERROR. THAT THE ASSESSEE SHOULD HAVE BE EN CAREFUL CANNOT BE DOUBTED, BUT THE ABSENCE OF DUE CARE, IN A CASE SUCH AS THE PRESENT DOES NOT MEAN THAT THE ASSESSED IS GUILTY OF EITHER FURNISHING INACCURATE PARTICULARS OR ATTEMPTING TO CONCEAL ITS INCOME. 20. WE ARE OF THE OPINION, GIVEN THE PECULIAR FACTS OF THIS CASE, THAT THE IMPOSITION OF PENALTY ON THE ASSESSEE IS NOT JUSTIFIED. WE ARE SATISFIED THAT THE ASSESSEE HAD COMMITTED AN INADVERTENT AND BONA FIDE ERROR AND HA D NOT INTENDED TO OR ATTEMPTED TO EITHER CONCEAL ITS INCOME OR FURNISH I NACCURATE PARTICULARS. ? ITA NO.1700/KOL/2012- C-AM SH.RAM CH .AGARWAL 7 5.1.6 WE PLACE RELIANCE ON THE THIRD MEMBER DECISION OF THE CO-ORDINATE BENCH OF DELHI TRIBUNAL IN THE CASE OF ADDL CIT VS PREM CHAN D GARG REPORTED IN (2009) 31 SOT 97 (DELHI) (TM ) DATED 11.5.2009 , WHEREIN IT WAS HELD THAT :- 19. THE FACT , WHETHER THERE IS CONCEALMENT OF INC OME OR WHETHER INACCURATE PARTICULARS THEREOF HAVE BEEN FURNISHED IS ESSENTIALLY A QUESTION OF FACT. TO FIND OUT THAT OR TO DECIDE WHICH, ALL THE ATTENDING CIRCUMSTANCES HAVE TO BE TAKEN INTO ACCOUNT. THE QUESTION IS AT WHAT POINT OF TIME THIS MATERIAL FACT IS TO BE FOUND OUT. GENERALLY IT IS WITH REFERENCE TO THE RETURN OF INCOME AND AT THAT TIME IT IS TO BE SEEN WHETHER THERE WAS CONCEALMENT OF INCOME FROM OR FURNISHING OF INACCURATE PARTICULARS THEREOF IN THE RETURN OF INCOME CHARGEABLE TO TAX. BUT THERE MAY BE CASES , WHERE AN INCOME IS NOT DECLARED IN THE RETURN OR THE PARTICULARS OF INCOME SHOWN INACCURATELY IN THE RETURN BUT ASSESSEE ON REALIZATION OF MISTAKE, OMISSION OR MISDEED RECTIFIES THAT AND CORRECT HIMSELF AND CLEANS HIS B REAST, CAN HE STILL BE ACCUSED OF CONCEALMENT THOUGH IN THE RETURN THERE H AS BEEN THE OMISSION? BY THE TIME THE ASSESSING OFFICER TAKES UP THE ISSU E AND COMES ACROSS THE INFORMATION IN HIS POSSESSION, IF THE ASSESSEE MAKE S UP THE DEFICIENCY AND OFFERS THE INCOME OR FURNISHES ACCURATE PARTICULARS HE, IN OUR OPINION, CANNOT BE HELD GUILTY OF CONCEALMENT OF INCOME OR F URNISHING OF INACCURATE PARTICULARS OF HIS INCOME. ANY ACTION RECTIFIED RE LATES BACK TO ORIGINAL ACT AND TO THE DATE AND TIME OF FILING THE RETURN. WH EN THE ASSESSING OFFICER STARTS SCRUTINY OF THE RETURN AND INITIATE ASSESSME NT PROCEEDINGS THERE IS NOTHING CONCEALED AND THE INACCURACY, IF ANY, DISAP PEARED. THEREFORE THE ASSESSEE CANNOT BE HELD GUILTY OF CONCEALMENT. 20. A PERUSAL OF THE PROVISION OF SECTION 271(1)(C ) READ WITH EXPLANATION 1 CLEARLY SHOW THAT IT IS IN THE COURSE OF ANY PROCEE DINGS UNDER THE ACT, ASSESSMENT PROCEEDINGS IN THIS CASE, THAT THE ASSES SING OFFICER IS TO BE SATISFIED THAT THE ASSESSEE HAS CONCEALED THE PARTI CULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME . IT IS THUS TO BE JUDGED AT THIS STAGE AND IF AT THIS STAGE HE HAS DECLARED THE CORRECT INCOME AND / OR FURNISHED ACCURATE PARTICULARS OF HIS INCOME THEN T HERE IS NO SCOPE, IN OUR OPINION, TO ARRIVE AT THE SATISFACTION BY THE ASSES SING OFFICER BECAUSE AT THAT STAGE THERE IS NO SUCH CONCEALMENT. IT DISAPP EARED BY AN ACTION OF THE ASSESSING OFFICER. IN THIS CASE THE ASSESSEE HAS N O DOUBT DID NOT SHOW THE AMOUNTS RECEIVED AS ALLEGED GIFTS AS HIS INCOME,BUT NO DETAILS OF LOANS ARE GIVEN IN THE RETURN NOR ANY OTHER PARTICULARS THERE OF GIVEN BY THE ASSESSEE AT THAT STAGE, NOT TO SPEAK OF INACCURATE ONE. WH EN THE ASSESSMENT WAS TAKEN UP AND A GENERAL ENQUIRY WAS MADE BY THE ASSE SSING OFFICER ITA NO.1700/KOL/2012- C-AM SH.RAM CH .AGARWAL 8 REQUIRING HIM TO FURNISH DETAILS OF ANY LOANS / GIF TS, IF ANY, THE ASSESSEE OFFERED THE AMOUNTS RECEIVED AS ALLEGED GIFTS AS HI S INCOME AND BEFORE IT COULD BE DETECTION BY THE ASSESSING OFFICER. THERE WAS THUS NO CONCEALMENT OF THE PARTICULARS OF HIS INCOME NOR TH ERE REMAINED FURNISHING OF ANY INACCURATE PARTICULARS OF HIS INCOME. IT VA NISHED BEFORE IT COULD BE DETECTED. 21. THE CORRECT AND ACCURATE DISCLOSURE MAY BE BY FILING THE REVISED RETURN OR BY FURNISHING THE PARTICULARS OF SUCH INCOME BEF ORE THE DETECTION BY THE ASSESSING OFFICER. THE MERE FACT THAT THE ASSESSEE HAD NOT REVISED THE RETURNS OR THAT THE OFFER WAS BY LETTER TO AVOID HA RASSMENT TO THE ASSESSEE AND THE DONORS WHO WERE NON-RESIDENT PERSONS, IT CA NNOT CONVERT AN OFFER TO TAX AS CONCEALMENT OF INCOME. THEREFORE, IN MY OPINION THE ASSESSEE HAS NOT FURNISHED INACCURATE PARTICULARS OF THE INCOME IN THE RETURNS. 22. THEREFORE, MERE OMISSION OF THE SURRENDERED INC OME FROM THE RETURN OF AN ITEM OF RECEIPT DOES NEITHER AMOUNT TO CONCEALME NT NOR FURNISHING OF INACCURATE PARTICULARS OF INCOME UNLESS AND UNTIL T HERE IS SOME EVIDENCE TO SHOW EXIST OR SOME CIRCUMSTANCES FOUND FROM WHICH I T CAN BE GATHERED THAT THE OMISSION WAS ATTRIBUTABLE TO AN INTENTION OR A DESIRE ON THE PART OF THE ASSESSEE TO HIDE OR CONCEAL THE INCOME SO AS TO AVO ID THE IMPOSITION OF TAX THEREON. APART FROM THE SURRENDER THERE WAS NOTHIN G MORE ON RECORD TO HOLD THE ASSESSEE GUILTY OF OFFERING THE SAID AMOUN T ON DETECTION OF THE CONCEALMENT. EVEN IN ASSESSMENT ORDER THERE IS NOTH ING OF THAT SORT. IN THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER HAS RA ISED SOME SPECIFIC QUESTION NOT BASED UPON INFORMATION IN THE POSSESSI ON OF THE REVENUE. THESE ARE : SR.NO. 4 BANK STATEMENT OF ALL BANK ACCOUNTS MAI NTAINED BY YOU INDIVIDUALLY OR JOINTLY WITH ANY OTHER PERSON DURIN G THE FINANCIAL YEAR ALONG WITH NARRATION OF EACH DEBIT / CREDIT ENTRY. SR.NO. 9 CASH FLOW STATEMENT FOR THE FINANCIAL YE AR UNDER CONSIDERATION. SR.NO.10-HAD YOU TAKEN / GIVEN ANY LOAN / GIFT DURI NG THE FINANCIAL YEAR UNDER CONSIDERATION ? IF YES, PLEASE FURNISH DETAIL S. 23. ON A PERUSAL OF THE QUESTIONNAIRE, IT IS EVIDEN T IS GENERAL IN NATURE WITHOUT SPECIFYING THE NAMES OF THE DONOR OR ANY OT HER SUCH DETAILS ON THE BASIS WHICH IT COULD BE PRESUMED THAT THE ASSESSING OFFICER HAD INFORMATION TO CALL FOR SPECIFIC INFORMATION. THE QUERY HAD YOU TAKEN / GIVEN ANY LOAN / GIFT DURING THE FINANCIAL YEAR UND ER CONSIDERATION ? ITSELF SUGGESTS THAT THE REVENUE WAS NOT SURE ENOUGH WHETH ER ANY GIFT WAS THERE. ITA NO.1700/KOL/2012- C-AM SH.RAM CH .AGARWAL 9 MERE ASKING OF A QUESTION OR SIMPLY RAISING OF AN E NQUIRY WITHOUT ANYTHING FURTHER DOES NOT TANTAMOUNT TO DETECTION OF CONCEAL MENT. THERE WAS NEITHER ANY DETECTION, NOR ANY INFORMATION IN THE POSSESSIO N OF THE REVENUE, NOR THE MANNER OF ITS COMMUNICATION TO THE ASSESSEE WHICH M IGHT LEAD TO A DETECTION OF CONCEALMENT. 24. THERE WAS NO SPECIFIC PROVOCATION OR AN APPREHE NSION OF DETECTION PREVAILING AT THE TIME WHEN THE OFFER WAS MADE AND IN THE ABSENCE OF ANY SUCH IMMINENT FEAR FROM THE SIDE OF THE REVENUE, IF THE ASSESSEE CAME FORWARD AND PAID THE TAX THEREON BY ADDING THE SAME IN THE RETURNED INCOME, IT HAS TO BE TAKEN AS A VOLUNTARY OFFER TO TAX. ON THE FACE OF THE EVIDENCE IN THE SHAPE OF CONFIRMATION LETTERS, BANK ACCOUNTS, PASSPORT ETC., IN THE HANDS OF THE ASSESSEE, IT MIGHT BE VALID GIF T THAT WOULD HAVE CONVINCED A REASONABLY MINDED PERSON, SPECIALLY A P ERSON EXERCISING A JUDICIAL FUNCTION. THE ACCEPTED POSITION OF LAW IS THAT MERELY BECAUSE AN ASSESSEE HAD AGREED TO THE ASSESSMENT THAT CANNOT B RING IN AUTOMATIC LEVY OF PENALTY. 25. THE FACTS AND CIRCUMSTANCES AND THE MERITS OF T HE CASE AND THE COGENT EVIDENCES PLACED ON RECORD ARE SUCH AS TO EXONERATE THE ASSESSEE FROM CONCEALMENT PENALTY. THE CIT(A) IN MY OPINION IS R IGHT IN DELETING THE PENALTY, HIS ORDER IS AFFIRMED AND THE APPEALS OF T HE REVENUE ARE DISMISSED. 5.1.7. WE FIND THAT THIS DELHI TRIBUNAL DECISION (I.E PREM CHAND GARG CASE) HAS BEEN CONSIDERED AND APPROVED BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS RAMESH CHAND GOYAL IN G.A.NO. 2347 OF 2010 IN ITAT NO. 181 OF 2010 DATED 11.8.2010 WHILE ADJUDICATING THE IMPUGNED ISSUE. WE HAVE HEARD MR.SINHA EXTENSIVELY AND GONE THROUGH THE IMPUGNED JUDGEMENT AND ORDER OF THE LEARNED TRIBUNAL. THE L EARNED TRIBUNAL HAS RECORDED THE FACT THAT THE RECORD DOES NOT SHOW THAT THE ASSESSING OFFICER HAD DETECTED THE ADDITIONAL INCOM E IN THE ASSESSMENT PROCEEDINGS. IT FURTHER RECORDED UPON P ERUSAL OF THE RECORDS THAT SMALL VARIATION IN INCOME WAS DUE TO B ONA FIDE MISTAKES AND DIFFICULTIES IN WORKING OUT THE UNDISCLOSED INC OME. IT IS FURTHER RECORDED THAT THE VOLUNTARY ACTION ON THE PART OF T HE ASSESSEE TO SETTLE THE TAX ISSUES FOR PEACE OF MIND APPEARS FRO M THE CONDUCT OF THE ASSESSEE. WHILE RECORDING THE AFORESAID FACT, THE LEARNED TRIBUNAL ULTIMATELY RELIED ON A DECISION OF THE TRI BUNAL RENDERED IN ITA NO.1700/KOL/2012- C-AM SH.RAM CH .AGARWAL 10 THE CASE OF ADDITIONAL CIT VS PREM CHAND GARG. MR. SINHA, HOWEVER, IS UNABLE TO SAY WHETHER THE EARLIER DECIS ION OF THE TRIBUNAL IN THE CASE OF PREM CHAND GARG HAS BEEN CH ALLENGED OR NOT. MOREOVER, THE LEARNED TRIBUNAL HAS ALSO RELIE D ON A LARGE NUMBER OF DECISIONS OF THE VARIOUS COURT ON THE SAM E POINT. HENCE WHEN THE POINT IS COVERED, WE DO NOT FIND ANY MERIT IN THIS APPEAL FOR ADMISSION. ACCORDINGLY, THE SAME IS DISMISSED. 5.2 WE FIND THAT THE ASSESSEE WAS UNDER BONAFIDE B ELIEF THAT ON OFF MARKET SHARE TRANSACTION OF TRADING IN LISTED COMPANY SHARE, NO CAPITAL GAINS WOULD ARISE. WE HOLD THAT THIS BONAFIDE BELIEF CANNOT BE DOUBTED IN THE FACT S OF THE CASE. WE ALSO HOLD THAT THE ASSESSEE HAD DULY COME FORWARD TO RECTIFY THE MISTA KE IN NOT MENTIONING THE LONG TERM CAPITAL ON SALE OF LISTED COMPANYS SHARES ON OFF M ARKET IN HIS ORIGINAL RETURN OF INCOME, AND ON NOTICING THE SAME THE ASSESSEE IMMEDIATELY F ILED REVISED COMPUTATION OF INCOME DURING ASSESSMENT PROCEEDINGS AND AS ENTERED IN THE ORDER SHEETS BY THE LD.AO. THUS, THE ASSESSEE OFFERED THE SAME VOLUNTARILY BEFORE DETE CTION BY THE DEPARTMENT. WE ALSO FIND THAT THE VERSION OF THE LD.AO IN HIS PENALTY ORDER THAT ASSESSEE WAS CONFRONTED WITH THE SPECIFIC ISSUE ON TAXABILITY OF LONG TERM CAPITAL G AIN ON SALE OF SHARES OF M/S. VISHAL RETAIL LTD IS FACTUALLY INCORRECT. IT IS RELEVANT TO REPR ODUCE HEREIN BELOW THE EXPLANATION 1 TO SECTION 271(1) OF THE ACT. EXPLANATION 1 TO SECTION 271(1) ( C): WHERE IN RESPECT OF ANY FACTS MATERIAL TO THE COMP UTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT- (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMM ISSIONER (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 EXPLANATI ON IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MAT ERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, THEN THE AMOUNT ADDED OR DISALLOWED IN COMPUTING TH E TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE PURP OSES OF CLAUSE ( C) OF THIS SUB-SECTION, BE DEEMED TO REPRESENT THE INCOM E IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. ITA NO.1700/KOL/2012- C-AM SH.RAM CH .AGARWAL 11 IN THE INSTANT CASE, THE ASSESSEE HAD FURNISHED THE EXPLANATION TO THE ASSESSEE BY FILING A REVISED COMPUTATION OF INCOME OFFERING LON G TERM CAPITAL GAINS VOLUNTARILY. WE ALSO FIND THAT THE ASSESSEE HAD ALSO GIVEN EXPLANAT ION FOR NOT OFFERING THE SAME IN THE ORIGINAL RETURN OF INCOME DUE TO HIS BONAFIDE BELIE F AS STATED SUPRA. HIS BONAFIDE EXPLANATION HAS NOT BEEN FOUND TO BE FALSE BY THE L D. AO. FROM THE ABOVE, IT COULD BE SAFELY CONCLUDED THAT AS PER EXPLANATION 1 TO SEC TION 271 (1) ( C ) OF THE ACT, NO PENALTY COULD BE IMPOSED ON THE ASSESSEE IN THE FACTS OF TH E CASE. IN VIEW OF THE AFORESAID FACTS AND RESPECTFULLY FOL LOWING THE VARIOUS JUDICIAL PRECEDENTS MENTIONED HEREIN ABOVE, WE HAVE NO HESITATION IN UP HOLDING THE IMPUGNED ORDER OF THE LD. CIT(A) IN CANCELLING THE PENALTY LEVIED U/S. 27 1(1) ( C) OF THE ACT. THE GROUND RAISED BY THE REVENUE IS DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED AS STATED ABOVE. THIS ORDER IS PRONOUNCED IN OPEN COURT ON 17 -02- 2016 1.. THE APPELLANT: THE DEPUTY COMMISSIONER OF INCO ME TAX, CENTRAL CIRCLE-VIII, ROOM NO. 403, 4 TH FL., AAYKAR BHAWAN POORVA, 110 SHANTI PALLY, E.M B YE PASS, KOL-107. 2 THE RESPONDENT- SHRI RAM CHANDRA AGARWAL, MOUZA -KOUCHPUKUR P.S BHANGORE, KOLKATA (M/S. VISHAL 9 LAL BAZAR ST., KOL-1. 3 /THE CIT, 4.THE CIT(A ) 5. DR, KOLKATA BENCH SD/- ( N.V. VASUDEVAN, JUDICIAL MEMBER ) SD/- (M. BALAGANESH, ACCOUNTANT MEMBER) DATE: DATE 17 -02-2016 COPY OF THE ORDER FORWARDED TO:- ITA NO.1700/KOL/2012- C-AM SH.RAM CH .AGARWAL 12 6. GUARD FILE. TRUE COPY, BY ORDER, ASSTT REGISTRAR **PRADIP SPS