Kunalben N.Shah, Ahmedabad V. The ACIT.,Circle-1, Bhavnagar

ITA 1734/AHD/2012

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 2416 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 02-12-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 06-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NOGENDRA SINGH
• Assessee Lawyers: RIDDHI SHAH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD BEFORE S/SHRI RAJPAL YADAV, JM, & MANISH BORAD, AM. ITA NO.1734/AHD/2012 ASST. YEAR: 2008-09 KUNALBEN N. SHAH, C/O B. R. POPAT & CO., CHARTERED ACCOUNTANTS, 320, GALAXY MALL, 3 RD FLOOR, OPP. JHANSI KI RANI BRTS BUT STOP, SATELLITE ROAD, AHMEDABAD. VS. ASSTT.CIT, CIRCLE-1, BHAVNAGAR. APPELLANT RESPONDENT PAN AFUPS 6410H APPELLANT BY RIDDHI SHAH, AR RESPONDENT BY NOGENDRA SINGH, DR DATE OF HEARING: 2/12/2015 DATE OF PRONOUNCEMENT: 01/03/2016 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER . THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF CIT(A)-XX, AHMEDABAD DATED 4.7.2012. PENALTY ORDER U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) WAS FRAMED ON 23.06.2011 BY ACIT, CIRCLE-1, BHAVNAGAR. THE ASSESS EE HAS RAISED FOLLOWING GROUNDS OF APPEAL :- ITA NO. 1734/AHD/2012 ASST. YEAR 2008-09 2 THE LD. CIT(A)-XX, AHMEDABAD HAS ERRED ON FACTS AN D IN LAW IN 1. CONFIRMING THE PENALTY OF RS.70,550/- WHICH WAS LEVIED BY THE ACIT, CIR-1, BHAVNAGAR UNDER SECTION 271(1)(C) OF T HE ACT. CONSIDERING THE FACTS OF THE CASE AND THE PROVISION S OF LAW, AS INTERPRETED BY VARIOUS COURTS AND TRIBUNALS, HE OUG HT TO HAVE DELETED THE SAME. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, DELETE OR ALTER ONE OR MORE GROUNDS OF APPEAL. 2. BRIEFLY STATED FACTS AS CULLED OUT FROM THE ASSESSM ENT RECORDS ARE THAT THE ASSESSEE IS AN INDIVIDUAL CARRYING ON THE BUSINESS OF TRADING IN OLD AND USED SHIP MACHINERIES ETC. AND H AS FILED HIS RETURN OF INCOME ON 19.08.2008 DECLARING TOTAL INCOME OF R S.10,49,970/-. THE CASE WAS SELECTED FOR SCRUTINY ASSESSMENT AND N OTICE U/S 143(2) OF THE ACT WAS ISSUED ON 30.08.2009 AND DULY SERVED UPON THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDIN GS IT WAS OBSERVED BY THE ASSESSING OFFICER THAT ASSESSEE HAS DEBITED AN AMOUNT OF RS.2,07,551/- IN THE P & L A/C UNDER THE HEAD LOSS ON SALE OF ASSETS. HOWEVER, IN THE COMPUTATION OF INCOME LO SS ON SALES OF FIXED ASSET WAS NOT ADDED BACK TO THE PROFIT BECAUS E SALE OF ASSET IS NOT AN ALLOWABLE EXPENDITURE. ON BEING ASKED TO CLA RIFY THE SAME, ASSESSEE SUBMITTED THAT DUE TO OVERSIGHT THE SAME W AS NOT CONSIDERED WHILE FILING THE INCOME-TAX RETURN AND W E AGREE FOR THE DISALLOWANCE OF LOSS OF RS.2,07,551/-. ACCORDINGLY ASSESSMENT WAS FRAMED BY DISALLOWING THE LOSS OF RS. 2,07,551/- AS WELL AS ADDING A PENALTY OF RS.3,750/- BEING DISALLOWABLE AND IN TOT AL ADDITION OF RS.2,11,301/- WAS MADE AND INCOME OF THE ASSESSEE W AS ASSESSED AT RS.12,61,270/-. SIMULTANEOUSLY PENALTY NOTICE WA S ALSO ISSUED. ITA NO. 1734/AHD/2012 ASST. YEAR 2008-09 3 ASSESSEE DID NOT PREFER ANY APPEAL ON THE QUANTUM. PENALTY U/S 271(1)(C) WAS FRAMED ON THE BASIS THAT AS THE ASSES SEE HAS MADE WILLFUL CONCEALMENT OF INCOME AND DELIBERATELY FURN ISHED INACCURATE PARTICULARS OF INCOME BY NOT ADDING LOSS ON SALE OF FIXED ASSET OF RS.2,07,551 TO THE INCOME AND DUE TO THIS REASON AS SESSEE WAS HELD LIABLE TO PAY PENALTY U/S 271(1)(C) OF THE ACT AT R S.70,550/- 3. AGAINST THE PENALTY ORDER, ASSESSEE PREFERRED APPEA L BEFORE LD. CIT(A) AND LD. CIT(A) DISMISSED THE APPEAL OF ASSES SEE BY OBSERVING AS UNDER :- 3.3 I HAVE GIVEN CAREFUL CONSIDERATION TO THE FACT S OF THE CASE. BY NOT ADDING BACK THE INADMISSIBLE DEBIT TO THE PROFIT AN D LOSS ACCOUNT WHILE COMPUTING THE INCOME, APPELLANT FURNISHED INACCURAT E PARTICULARS OF INCOME. IMMEDIATELY ON AOS POINTING OUT, APPELLANT ACCEPTED THAT THE AMOUNT WAS INADMISSIBLE AND AGREED FOR ITS DISALLOW ANCE. THERE ARE NO TWO OPINIONS REGARDING THE INADMISSIBILITY OF THE S AID SUM. APPELLANTS OMISSION OR COMMISSION CANNOT BE SIMPLY EXPLAINED A WAY BY SAYING THAT IT WAS AN INADVERTENT MISTAKE. IF THIS PLEA WE RE TO BE ACCEPTED, EVERY TAX PAYER CAN TAKE CHANCES IN FURNISHING INAC CURATE PARTICULARS AND ON BEING CAUGHT CAN CLAIM IT TO BE DUE TO INADV ERTENCE. APPELLANT IS DERIVING SIZEABLE INCOME (INCOME ADMITTED FOR TH E YEAR UNDER CONSIDERATION BEING RS.10,49,970/-). HER BOOKS OF A CCOUNTS ARE AUDITED AND SHE IS HAVING THE SERVICES OF PROFESSIO NAL. THEREFORE, I AM NOT INCLINED TO ACCEPT THE CONTENTIONS OF THE AR. N ONE OF THE CASE LAWS RELIED ON IS APPLICABLE TO THE FACTS OF THE INSTANT CASE. I HOLD THAT APPELLANT FURNISHED INACCURATE PARTICULARS OF INCOM E. THEREFORE, LEVY OF PENALTY U/S 271(1)(C) IS IN ORDER. IMPUGNED PENALTY ORDER IS CONFIRMED. 4. AGGRIEVED, ASSESSEE IS NOW IN APPEAL BEFORE THE TRIBUNAL. LD. AR FURTHER SUBMITTED THAT LOSS ON SALE OF FIXED ASSET WAS CLEARLY SHOWN IN THE AUDITED PROFIT AND LOSS ACCOUNT AND DU E TO OVERSIGHT ON THE PART OF THE PERSON PREPARING COMPUTATION OF INC OME THIS AMOUNT ITA NO. 1734/AHD/2012 ASST. YEAR 2008-09 4 OF LOSS ON SALE OF FIXED ASSET OF RS.2,07,551/- WAS NOT ADDED BACK TO THE INCOME OF THE ASSESSEE AND THE SAME WAS DULY AC CEPTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS ITSELF AND THE RE WAS NO MALA FIDE INTENTION OF CONCEALMENT OF INCOME IN THE MIND OF ASSESSEE. DURING THE COURSE OF PENALTY PROCEEDINGS ALSO THE F ACTS OF THE CASE WERE REITERATED AGAIN TO CONTEND THAT THERE WAS NO CASE OF EITHER FURNISHING INACCURATE PARTICULARS OF INCOME OR CONC EALMENT OF INCOME. THIS MISTAKE OF NOT ADDING LOSS ON SALE OF FIXED AS SET TO THE TOTAL INCOME WAS CLEARLY A MISTAKE APPARENT ON RECORD AND ASSESSEE SHOULD NOT BE TREATED AS HAVING FURNISHED INACCURAT E PARTICULARS OF INCOME OR CONCEALED INCOME. LD. AR FURTHER SUBMITTE D THAT THE ADDITIONS MADE BY THE ASSESSING OFFICER WERE ON THE BASIS OF AUDITED FINANCIAL ACCOUNTS FURNISHED BY ASSESSEE HIMSELF AN D WHEN ALL THE RELEVANT DOCUMENTS WERE WITH THE DEPARTMENT, THEN T HERE CANNOT BE ANY CASE OF CONCEALMENT. IN SUPPORT OF HER SUBMISSI ON, LD. AR RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CAS E OF PRICE WATERHOUSE COOPERS (P) LTD. VS. CIT (2012) 25 TAXMA NN.COM 400 (SC). 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE ONLY ISSUE IN THIS APPEAL IS THAT AS SESSEE HAS SHOWN LOSS ON SALE OF FIXED ASSET IN ITS BOOKS OF ACCOUNT S AT RS.2,07,551/- AND THE SAME WAS SHOWN IN THE AUDITED PROFIT AND LO SS ACCOUNT. HOWEVER, DURING PREPARING COMPUTATION OF INCOME LOS S ON SALE OF FIXED ASSED BEING DISALLOWABLE EXPENDITURE WAS NOT ADDED BACK TO THE PROFIT AS PER PROFIT AND LOSS ACCOUNT RESULTING IN SHOWING TOTAL INCOME LESS BY RS.2,07,551/-. ON COMING ACROSS THIS FACT DURING ASSESSMENT PROCEEDINGS ITSELF ASSESSEE ACCEPTED THE MISTAKE AND ITA NO. 1734/AHD/2012 ASST. YEAR 2008-09 5 AGREED FOR ADDING THE AMOUNT OF RS.2,07,551/- TO TH E TOTAL INCOME. ASSESSING OFFICER WENT AHEAD IMPOSING PENALTY U/S 2 71(1)(C) OF THE ACT AT RS.70,550/- FOR CONCEALMENT OF INCOME AND FU RNISHING OF INACCURATE PARTICULARS OF INCOME. WE ALSO FIND THAT ASSESSEE IS A REGULAR INCOME-TAX PAYEE AND BOOKS OF ACCOUNTS ARE AUDITED U/S 44AB OF THE ACT AND INCOME OF RS.10,49,970/- HAS BE EN DECLARED. LOSS ON SALE OF FIXED ASSET AT RS.2,07,551/- WAS SH OWN IN AUDITED PROFIT AND LOSS ACCOUNT AND THIS IMPUGNED LOSS HAS BEEN THE RESULT OF SALE OF FIXED ASSET AND SO THIS TRANSACTION CERTAIN LY HAS TRAVELLED IN THE BOOKS OF ACCOUNT AND GOT PLACED IN THE AUDITED FINANCIAL STATEMENT AND, THEREFORE, THERE CANNOT BE ANY CONCE ALMENT OF PARTICULARS IN THIS CASE. WE ALSO FIND THAT HONBLE SUPREME COURT IN THE CASE OF PRICE WATERHOUSE COOPERS (P) LTD. VS. C IT (SUPRA) HAS DEALT SIMILAR ISSUE AND WHILE ADJUDICATING THE ISSU E PROVISIONS TOWARDS PAYMENT OF GRATUITY WHICH WAS NOT ALLOWABLE EXPENDITURE WAS NOT ADDED BACK TO THE TOTAL INCOME EVEN IF INDICATE D IN THE TAX AUDIT REPORT AND THEIR LORDSHIPS HAVE DECIDED THE SAME IN FAVOUR OF ASSESSEE BY OBSERVING AS UNDER :- 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 A SSESSEE IS UNDOUBTEDLY A REPUTED FIRM AND HAS GREAT EXPERTISE AVAILABLE WITH IT. NOTWITHS TANDING THIS, IT IS POSSIBLE THAT EVEN THE ASSESSEE COULD MAKE A 'SILLY' MISTAKE AND, INDEED T HIS HAS BEEN ACKNOWLEDGED BOTH BY THE TRIBUNAL AS WELL AS BY THE HIGH COURT 18. THE F ACT THAT THE TAX AUDIT REPORT WAS FILED ALONG WITH THE RETURN AND THAT IT UNEQUIVOCAL LY STATED THAT THE PROVISION FOR PAYMENT WAS NOT ALLOWABLE UNDER SECTION 40A(7) OF THE ACT I NDICATES THAT THE ASSESSEE MADE A COMPUTATION ERROR IN ITS RETURN OF INCOME. APART FR OM THE FACT THAT THE ASSESSEE DID NOT NOTICE THE ERROR, IT WAS NOT EVEN NOTICED EVEN BY T HE ASSESSING OFFICER WHO FRAMED THE ASSESSMENT ORDER. IN THAT SENSE, EVEN THE ASSESSING OFFICER SEEMS TO HAVE MADE A MISTAKE IN OVERLOOKING THE CONTENTS OF THE TAX AUDIT REPORT . 19. THE CONTENTS OF THE TAX AUDIT REPORT SUGGEST THAT THERE IS NO QUESTION OF THE ASS ESSEE CONCEALING ITS INCOME. THERE IS ALSO NO QUESTION OF THE ASSESSEE FURNISHING ANY INA CCURATE PARTICULARS. IT APPEARS TO US THAT ITA NO. 1734/AHD/2012 ASST. YEAR 2008-09 6 ALL THAT HAS HAPPENED IN THE PRESENT CASE IS THAT T HROUGH A BONA FIDE AND INADVERTENT ERROR, THE ASSESSEE WHILE SUBMITTING ITS RETURN, FAILED TO ADD THE PROVISION 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 BEEN CAREFUL CANNOT B E DOUBTED, BUT THE ABSENCE OF DUE CARE, IN A CASE SUCH AS THE PRESENT DOES NOT MEAN T HAT 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, THA T THE IMPOSITION OF PENALTY ON THE ASSESSEE IS NOT JUSTIFIED. WE ARE SATISFIED THAT TH E ASSESSEE HAD COMMITTED AN INADVERTENT AND BONA FIDE ERROR AND HAD NOT INTENDED TO OR ATTE MPTED TO EITHER CONCEAL ITS INCOME OR FURNISH INACCURATE PARTICULARS. 21. UNDER THESE CIR CUMSTANCES, THE APPEAL IS ALLOWED AND THE ORDER PASSED BY THE CALCUTTA HIGH COURT IS SET ASIDE. NO COSTS. 6. AS THE FACTS OF THE CASE BEFORE US ARE ALMOST ID ENTICAL TO THE FACTS IN ISSUE DECIDED BY HONBLE APEX COURT, WE MO ST RESPECTFULLY APPLYING THE RATIO OF ABOVE DECISION OF HON. APEX C OURT TO THE PRESENT CASE, WE ARE OF THE OPINION THAT ASSESSEE SHOULD NO T BE VISITED WITH PENALTY U/S 271(1)(C) OF THE ACT AND ACCORDINGLY WE QUASH THE ORDER OF LD. CIT(A) AND ALLOW THE APPEAL OF ASSESSEE. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST MARCH, 2016 SD/- SD/- (RAJPAL YADAV) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 1/3/2016 MAHATA/- ITA NO. 1734/AHD/2012 ASST. YEAR 2008-09 7 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD 1. DATE OF DICTATION: 16/02/2016 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 19/02/2016 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 1/3/16 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: