ACIT, CHENNAI V. M/s. Sri Lakshmi Associates, CHENNAI

ITA 1740/CHNY/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4992 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 07-06-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 18-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P B SEKHARAN
• Assessee Lawyers: R SIVARAMAN
• Section: 142(1); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH B CHENNAI BEFORE SHRI U.B. BEDI, J.M. AND SHRI N.S. SAINI, AM .. I.T.A. NO. 1740/MDS/2010 ASSESSMENT YEARS 2007-08 THE A.C.I.T BUSINESS CIRCLE II CHENNAI VS. M/S SRI LAKSHMI ASSOCIATES 4, MOOKAMBIKA COMPLEX LADY DESIKA ROAD, MYLAPORE, CHENNAI 600 004. (PAN NO. AAVFS 9518 A) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI R. SIVARAMAN DEPARTMENT BY : SHRI P.B. SEKHARAN O R D E R PER N.S. SAINI, A.M :- THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER PASSED BY THE LD. CIT(A)-VI, CHENNAI DATED 17.08.20 10 FOR ASSESSMENT YEAR 2007-08. PAGE 2 OF 8 I.T.A. NO.1740 /MDS/2010 2. THE ONLY ISSUE INVOLVED IN THIS APPEAL IS THAT T HE LD. CIT(A) ERRED IN DELETING THE PENALTY OF RS. 4,31,586/- LEV IED U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961 [IN SHORT, THE ACT]. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSEE IN ITS RETURN OF INCOME CLAIMED SHORT TERM CAPITAL GAINS OF RS. 19,65,940/- ON SALE OF SH ARES. ON THE DATE OF HEARING ON 5.11.2009, WHILE FURNISHING THE DETAI LS CALLED FOR BY THE ASSESSING OFFICER, THE ASSESSEE INFORMED THE AS SESSING OFFICER THAT THEY HAVE REMITTED FURTHER TAX OF RS. 6,06,657 /- ON 18.11.2009 AND FILED REVISED COMPUTATION OF INCOME STATEMENT. IT WAS STATED THEREIN THAT IN THE ORIGINAL COMPUTATION, THEY HAD MISTAKENLY TAKEN RATE OF TAX @ 10% IN RESPECT OF ENTIRE SHORT TERM C APITAL GAINS AND THAT A PART OF THE SHORT TERM CAPITAL GAINS HAD NOT SUFFERED STT AND TAX SHOULD HAVE BEEN CALCULATED @ 30% FOR THAT PORT ION. RECTIFYING THIS MISTAKE, FURTHER TAX PAYABLE AMOUNTING TO RS. 6,06,657/- WAS PAID ON 18.11.2009 ITSELF AND CHALLAN WAS FURNISHED TO THE ASSESSING OFFICER. AFTER EXAMINING THE DETAILS FURNISHED, TH E ASSESSING OFFICER PAGE 3 OF 8 I.T.A. NO.1740 /MDS/2010 COMPLETED ASSESSMENT ON 26.11.2009 ACCEPTING THE IN COME RETURNED AND THE TAX WORKING AS PER THE REVISED STA TEMENT. 4. THE ASSESSING OFFICER, THEREAFTER, INITIATED PEN ALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT HOLDING THAT T HE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME. THE AS SESSING OFFICER OBSERVED THAT THE DISCLOSURE BY THE ASSESSING OFFIC ER CANNOT BE CONSIDERED AS HAVING BEEN MADE VOLUNTARILY AND THAT IT WAS MADE ONLY AFTER SPECIFIC REQUISITION MADE BY NOTICE U/S 142(1) CALLING FOR DETAILS OF PROFIT ON SALE OF SHARES AND THAT THE SA LE THROUGH OPEN OFFER WAS DONE BY THE COMPANY AS PART OF A SCHEME O F RESTRUCTURING SHRIRAM GROUP COMPANIES AND NOT THROUGH STOCK EXCHA NGE AND THIS DILUTED THE CLAIM OF THE ASSESSEE THAT IT CONSIDERE D THEM AS STT PAID TRANSACTIONS. HE ALSO RELIED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF DHARMENDRA TEXTILE PRO CESSORS 306 ITR 277 [SC] AND ALSO ON THE DECISION OF THE HON'BL E SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS [P] LTD 322 ITR 158 STATING THAT IT HAS BEEN HELD BY THE HON'BLE SUPREME COURT THAT IF THE ASSESSEE FURNISHED INACCURATE PARTICULARS OF INCOME , THE ASSESSING OFFICER CAN LEVY PENALTY. ACCORDINGLY, HE LEVIED P ENALTY OF RS. PAGE 4 OF 8 I.T.A. NO.1740 /MDS/2010 4,31,586/- BEING THE AMOUNT OF TAX SOUGHT TO BE EVA DED BY THE ASSESSEE. 5. ON APPEAL, THE LD. CIT(A) OBSERVED THAT THE ASSE SSING OFFICER HAS HEAVILY RELIED ON EXPLANATION TO SECTION 271(1) (C) OF THE ACT TO CONCLUDE THAT IT IS NO LONGER NECESSARY TO ESTABLIS H THAT THE ASSESSEE HAD DELIBERATELY OR WILLFULLY FURNISHED INACCURATE PARTICULARS OF INCOME TO LEVY PENALTY. HE RELIED ON THE ORDER OF THE HON'BLE SUPREME COURT IN THE CASE OF DHARMENDRA TEXTILE PRO CESSORS [SUPRA] IN COMING TO THIS CONCLUSION. HE ALSO RELIED ON TH E DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS [SUPRA] WHEREIN IT HAS BEEN HELD THAT IF ASSESSEE F URNISHED INACCURATE PARTICULARS OF INCOME, THE ASSESSING OFF ICER CAN LEVY PENALTY. HE OBSERVED THAT THE ASSESSEE HAS COMPUTE D ITS INCOME THE VARIOUS HEADS INCLUDING SHORT TERM CAPITAL GAIN S AND THAT IT WAS QUITE LIKELY THAT IT COULD NOT HAVE BEEN A MISTAKE IN CALCULATING TAX BY FINE TUNING IT INTO STT AND NON STT PAID TRANSAC TIONS, ESPECIALLY AS LARGE NUMBER OF TRANSACTIONS RESULTING IN SHORT TERM CAPITAL GAINS HAVE BEEN DONE IN THE YEAR THROUGH A RECOGNIZED STO CK BROKER IN STOCK EXCHANGE. HE FURTHER OBSERVED THAT IN CALCUL ATING THE TAX, PAGE 5 OF 8 I.T.A. NO.1740 /MDS/2010 THE INCOME IN THE RETURN FILED ON 24.9.2007, THE AP PELLANT HAS CONSIDERED THE INTEREST PAYABLE U/S 234B AND 234C O F THE ACT ALSO AND CALCULATED IT. THIS SHOWS THAT THE ASSESSEE HA D NO INTENTION TO AVOID OR WITHHOLD ANY TAX OR INTEREST DUE TO THE GO VERNMENT AND THE CLAIM THAT THE RATE OF TAX OR INTEREST WAS TAKE N AT 10% MISTAKENLY BY INADVERTENCE WAS PLAUSIBLE. THE ASSE SSEE RECTIFIED THE MISTAKE IMMEDIATELY WHEN IT FOUND THE SAME WHIL E GATHERING DETAILS CALLED FOR IN THE NOTICE ISSUED U/S 142(1) OF THE ACT AND PAID THE DIFFERENCE AMOUNT OF TAX IMMEDIATELY. THEREFOR E, THERE WAS NO REASON TO LEVY PENALTY IN THE CASE OF THE ASSESSEE. HE ALSO RELIED ON THE DECISION OF THE HON'BLE DELHI COURT IN THE CASE OF CIT VS. DEEKSHA HOLDINGS [P] LTD [2010] 186 TAXMAN 183 [DE L] THE ORDERS OF THE TRIBUNAL CANCELLING THE PENALTY WHEN AN INCOME ITSELF HAD BEEN OMITTED TO BE SHOWN BY MISTAKE WAS CONFIRMED BY THE HIGH COURT. 6. THE LD. D.R. SUPPORTED THE ORDER OF THE AO WHERE AS THE LD. A.R. SUPPORTED THE ORDER OF THE LD. CIT(A). PAGE 6 OF 8 I.T.A. NO.1740 /MDS/2010 7. WE FIND THAT THE ASSESSEE HAS DISCLOSED RETURNED INCOME OF RS. 32,75,650/- AND THE ASSESSED INCOME WAS ALSO RS. 32 ,75,650/-. THUS THE ASSESSEE HAS BEEN ASSESSED AT THE VERY SAM E INCOME AT WHICH IT WAS DISCLOSED BY IT IN HIS RETURN OF INCOM E. THE ONLY DIFFERENCE BETWEEN THE RETURNED INCOME AND ASSESSED INCOME IS THAT IN THE RETURNED INCOME ASSESSEE CLAIMED THE EN TIRE SHORT TERM CAPITAL GAINS OF RS. 19,65,490/-WAS ASSESSABLE TO T AX @ 10% U/S 111A OF THE INCOME-TAX ACT, 1961 WHEREAS AS PER THE ASSESSMENT ORDER, ONLY RS. 42,646/- WAS ASSESSABLE @ 10% AND B ALANCE SHORT TERM CAPITAL GAINS OF RS. 19,23,294/- WAS ASSESSABL E AT THE NORMAL RATE OF TAX. THE ASSESSEE EXPLAINED THAT IT HAS EN TERED INTO A NUMBER OF TRANSACTIONS OF SALE OF SHARES AND OUT OF WHICH ON A LARGE NUMBER OF TRANSACTIONS STT WAS PAID AND THEREFORE, AT THE TIME OF FILING OF THE RETURN, HE WAS UNDER A BONAFIDE BELIE F THAT THE ENTIRE TRANSACTION WHICH RESULTED IN SHORT TERM CAPITAL GA INS WAS ASSESSABLE @ 10%. HOWEVER, WHILE PREPARING DETAILS TO BE FURNISHED IN RESPONSE TO NOTICE U/S 142(1), ASSESSEE CAME TO KNOW THAT ON SHORT TERM CAPITAL GAINS OF RS. 19,23,294/- STT WA S NOT CHARGED AND, THEREFORE, SAME WAS ASSESSABLE AT NORMAL RATE OF TAX. THE ASSESSEE IMMEDIATELY AFTER NOTICING THE ABOVE MISTA KE ON HIS PART PAGE 7 OF 8 I.T.A. NO.1740 /MDS/2010 PAID BALANCE AMOUNT OF TAX ALONGWITH DUE INTEREST T HEREON. THE ASSESSEE DURING THE COURSE OF HEARING NEVER TRIED T O HIDE OR CONCEAL ANY FACT TO EVADE TAX. WE FIND THAT THE REVENUE HA S BROUGHT NO MATERIAL TO CONTROVERT THE ABOVE EXPLANATION OF THE ASSESSEE. IN OUR CONSIDERED OPINION, IT IS WELL SETTLED POSITION OF LAW THAT IN LEVYING PENALTY U/S 271(1)(C) OF THE ACT NOT ONLY RETURN OF INCOME IS RELEVANT BUT ALSO ENTIRE CONDUCT OF THE ASSESSEE DU RING THE COURSE OF ASSESSMENT PROCEEDINGS IS ALSO RELEVANT. WE FIN D THAT NO MATERIAL HAS BEEN BROUGHT ON RECORD TO SHOW THAT TH E ASSESSEE HAS TRIED TO EVADE FURNISHING OF INFORMATION RELATING T O SHORT TERM CAPITAL GAINS DURING THE COURSE OF ASSESSMENT HEARI NG OR TRIED TO CONCEAL FACT OF NON PAYMENT OF STT IN RESPECT OF CE RTAIN TRANSACTIONS. IN THESE CIRCUMSTANCES, WE DO NOT FI ND ANY ERROR IN THE ORDER OF THE LD. CIT(A) IN DELETING THE LEVY OF PENALTY OF RS. 4,31,586/- PAGE 8 OF 8 I.T.A. NO.1740 /MDS/2010 8. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE COURT ON 7 TH JUNE 2011. SD/- SD/- (U.B.S BEDI ) (N.S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 7 TH JUNE, 2011. VL/- COPY TO: ASSESSEE/AO/CIT (A)/CIT/ D.R./GUARD FILE