DCIT 9(2)(1), MUMBAI V. BANSI MALL MANAGEMENT CO. P.LTD, MUMBAI

ITA 1878/MUM/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1820 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 17-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Business expenditure; Wrong claim; Bonafide mistake
• Section: 143(3); 142(1); 115JB

Judgement Text

B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO.1878/ MUM/2017 ( / ASSESSMENT YEAR : 2012 - 13) DCIT 9(2)(1) R.NO. 665A, 6 TH FLOOR, AAYAKAR BHAVAN, M.K ROAD, MUMBAI - 400020 / V. M/S. BANSI M ALL MANAGEMENT COMPANY PRIVATE LTD., KNOWLEDGE HOUSE, SHYAM NAGAR, OFF JOGESHWARI VIKHROLI LINK R OAD, JOGESHWARI - EAST, MUMBAI - 400060 ./ PAN : AACCB7587N ( / APPELLANT ) .. ( / RESPONDENT ) REVENUE BY: SHRI. ANAND MOHAN, CIT(DR) ASSESSEE BY : SHRI. VIPUL JOSHI & MS. DINKLE HARIYA / DATE OF HEARING : 30.08.2018 / DATE OF PRONOUNCEMENT : 22 .1 1 .2018 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER: THIS APPEAL, FILED BY R EVENUE, BEING ITA NO. 1878/MUM/2017, IS DIRECTED AGAINST APPELLATE ORDER DATED 30.12.2016 PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 16, MUMBAI (HEREINAFTER CALLED THE CIT(A)), FOR ASSESSMENT YEAR 2012 - 13 , THE APPELLATE PROCEEDINGS HAD ARISE N BEFORE LEARNED CIT(A) FROM PENALTY ORDER DATED 28.09.2015 PASSED BY LEARNED ASSESSING OFFICER (HEREINAFTER CALLED THE AO) U/S I.T.A. NO.1878/MUM/2017 2 271(1)(C) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER CALLED THE ACT) FOR ASSESSMENT YEAR 2012 - 1 3 . 2. THE GROUNDS OF APPEAL RA ISED BY R EVENUE IN THE MEMO OF APPEAL FILED WITH THE INCOME - TAX APPELLATE TRIBUNAL, MUMBAI (HEREINAFTER CALLED THE TRIBUNAL) READ AS UNDER: - (I) 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN DELETIN G PENALTY UNDER SECTION 271(1)(C) WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAD MADE AN INCORRECT CLAIM OF EXPENDITURE WHICH WAS ACCEPTED ONLY AFTER IT WAS POINTED OUT DURING THE COURSE OF ASSESSMENT PROCEEDINGS?' (II) 'WHETHER ON THE FACTS A ND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN IGNORING THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT V/S RELIANCE PETRO PRODUCTS (P) LTD. REPORTED AS (2010) 322 TTR 158 WHEREIN THE HON'BLE SUPREME COURT HAS HELD IN PARA 8 THAT '......THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED, BECAUSE THAT IS THE ONLY DOCUMENT, WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILITY WOULD ARISE'? THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE DCIT - 9(2)(1) BE RESTORED. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUNDS OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 3. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF MALL MANAGEMENT AND CONSULTANCY & TRADING IN FABRIC MATERIAL. THE ASSESSEE FILED RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR 2012 - 13 ON 29.09.2012 DECLARING TOTAL INCOME AT RS. NIL AFTER CLAIMING CURRENT YEAR LOSS OF RS. 81,48,14,420/ - . THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND ACCORDINGLY NOTICE U/S 143(2) OF THE 1961 ACT WAS ISSUED TO THE ASSESSEE BY THE AO ON 06.08.2013 AND THEREAFTER NOTICE U/S 142(1) OF THE 1961 AC T WAS ALSO ISSUED BY THE AO ON 11.09.2014 AND AGAIN ON 17.12.2014. THERE IS NO DISPUTE SO FAR AS ISSUANCE AND SERVICE OF NOTICES U/S 143(2)/142(1) FOR FRAMING SCRUTINY ASSESSMENT U/S 143(3) OF THE 1961 ACT ARE I.T.A. NO.1878/MUM/2017 3 CONCERNED . THE AO OBSERVED FROM COMPUTATION OF INCOME FILED BY THE ASSESSEE THAT THE ASSESSEE MADE A CLAIM OF RS. 52,37,86,419/ - U/S. 24 OF THE 1961 ACT AS INTEREST EXPENDITURE AGAINST INCOME FROM HOUSE PROPERTY , HOWEVER WHILE COMPUTING INCOME FROM BUSINESS AND PROFESSION , THE ASSESSEE ADDED BACK AN AMOUNT OF RS. 41,11,25,440/ - INSTEAD OF RS. 52,37,86,419/ - TO WHICH THE ASSESSEE EXPLAIN ED THAT IT WAS DUE TO CLERICAL ERROR COMMITTED INADVERTENTLY THAT IT DISALLOWED AN AFORESAID INTEREST EXPENSES OF RS. 41.11 CRORES WHILE COMPUTING INCOME FROM BUSINES S AND PROFESSION INSTEAD OF RS. 52.37 CRORES , WHICH WAS THEN CORRECTED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS BY DISALLOWING RS.52.37 CRORES FROM THE HEAD INCOME FROM BUSINESS OR P ROFESSION . SINCE THE ASSESSEE ACCEPTED THE AFORESAID DISALLOWANCE OF INTEREST OF RS. 52.37 CRORES UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION INSTEAD OF RS. 41.11 CRORES EARLIER DEDUCTED WHILE FILING RETURN OF INCOME , T HE AO ADDED AN AFORESAID AMOUNT OF RS. 11,26,61,005/ - TO THE INCOME OF THE ASSES SEE WHILE FRAMING SCRUTINY ASSESSMENT U/S 143(3), WHICH WAS ACCEPTED BY THE ASSESSEE AND NO FURTHER APPEAL WAS FILED BY THE ASSESSEE ON THIS GROUND WITH LEARNED CIT(A) SO FAR AS CHALLENGE TO QUANTUM ASSESSMENT ON THIS ISSUE IS CONCERNED . THE AO OBSERVED THAT IT IS ALMOST AFTER LAPSE OF TWO YEARS FROM THE DATE OF FILING OF RETURN OF INCOME DURING THE COURSE OF ASSESSMENT PROCEEDINGS THAT THIS MISTAKE WAS CORRECTED BY THE ASSESSEE AND HAD THE CASE OF THE ASSESSEE NOT BEEN SELECTED FOR FRAMIN G SCRUTINY ASSESSMENT U/S 143(3) READ WITH SECTION 143(2) OF THE 1961 ACT , THE ASSESSEE COULD HAVE GOTTEN AWAY WITH INACCURATE CLAIM FILED BY THE ASSESSEE IN THE RETURN OF INCOME. THE AO INITIAT ED PENALTY PROCEEDINGS U/S. 271 (1)(C) OF THE ACT FOR FURNISHI NG OF INACCURATE PARTICULARS OF INCOME/CONCEALMENT OF INCOME BY ISSUING NOTICE DATED 30.03.3015 U/S 271(1)(C) OF THE 1961 ACT . THE AO , THEREAFTER , ISSUED SHOW CAUSE NOTICE DATED 06.08.2015 TO THE ASSESSEE AS TO WHY PENALTY U/S. 271 (1)(C) SHOULD NOT BE LEVIED ON ACCOUNT OF SHORT DISALLOWANCE OF INTEREST EXPENDITURE TO THE TUNE OF RS. 11,26,61,005/ - UNDER THE HEAD INCOME FROM BUSINESS OR I.T.A. NO.1878/MUM/2017 4 PROFESSION WHICH LED TO THE CLAIM OF INCREASED LOSS BY THE ASSESSEE IN THE RETURN OF INCOME FILED WITH THE REVENUE CAUSING PREJUDICE TO THE REVENUE . THE ASSESSEE IN RESPONSE SUBMITTED THAT THE ASSESSEE HA S NEITHER CONCEAL ED THE PARTICULAR S OF INCOME NOR FURNISHED INACCURATE PARTICULARS OF INCOME . THE ASSESSEE SUBMITTED THAT IT WAS ONLY DUE TO INADVERTENT MISTAKE WHI LE FILING OF RETURN OF INCOME THAT IT WRONGLY DISALLOW ED BY ADDING BACK TO THE INCOME A N AMOUNT OF RS. 41.11 CRORE S INSTEAD OF RS. 52.37 CRORE S UNDER THE HEAD INCOME FROM BUSINESS AND PROFESSION . THE ASSESSEE RELIED UPON FOLLOWING JUDGEMENTS: - I) HON'BLE SUPREME COURT DECISION IN THE CASE OF PRICE WATERHOUSE COOPERS V. CIT - [2012] 348 ITR 306 (SC), II) CIT V. BENNET COLEMAN & CO. LTD. - (2013) 259 CTR (BOM) 383 II I) CIT V. SOMANY EVERGREE N KNITS LTD. - (2013) 352 ITR 592 (BOM) IV) M/S. POLAR FIN ANCE LTD. V. LTO - L.T.A. NO. 7366/MUM/2010 THE AO REJECTED THE CONTENTIONS OF THE ASSESSEE AND OBSERVED THAT IT IS ONLY WHEN CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND THE ASSESSEE WAS SPECIFICALLY ASKED BY THE AO WHICH WAS ALMOST AFTER A LAPSE OF TWO YEARS FROM THE DATE OF FILING OF RETURN OF INCOME, T HE ASSESSEE CAME FORWARD AND REVISED COMPUTATION OF INCOME BY MAKING DISALLOWANCE OF INTEREST EXPENDITURE TO THE TUNE OF RS. 52.37 CRORES INSTEAD OF AN AMOUNT OF RS. 41.11 CRORES AS WAS DONE BY THE ASSESSEE IN THE RETURN OF INCOME FILED WITH THE REVENUE . THUS, THE AO OBSERVED THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME BY FURNISHING OF INACCURATE PARTICULARS OF ITS INCOME. I T WAS OBSERVED BY THE AO THAT ALL THE CASES A RE NOT SELECTED FOR FRAMING SCRUTINY ASSESSMENTS AND HAD THE ASSESSEE CASE NOT BEING SELECTED FOR FRAMING SCRUTINY ASSESSMENT U/S 143(3) READ WITH SECTION 143(2) OF THE 1961 ACT , THE ASSESSEE COULD HAVE BENEFITED BY FILING OF INACCURATE PARTICULARS OF IN COME AND HAD THE REVENUE NOT DETECTED THE FURNISHING OF INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE IN I.T.A. NO.1878/MUM/2017 5 RETURN OF INCOME , IT WOULD HAVE CAUSED LOSS TO THE REVENUE. THE AO RELIED UPON FOLLOWING CASE LAWS: - I) CIT V. M/S. DHARMENDRA TEXTILE PROCESS ORS (306 ITR 277) II) ACIT, CIRVLE 46(1), NEW DELHI V. SHRI GOBIND AMBADY VIDE ORDER DATED 25.10.2011 IN ITA NO. 3765/DEL/2011 III) CIT V. ZOOM COMMUNICATION (P.) LTD., REPORTED IN [2010] 191 TAXMAN 179 (DELHI) IV) CIT, AHMADABAD VS. RELIANCE PETROPRODUCTS (P) LTD. [2010] 189 TAXMAN 322, HONBLE SUPREME COURT OF INDIA. THE AO FINALLY CONCLUDED THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME AND FURNISHED INACCURATE PARTICULARS OF INCOME WHICH WAS D ETECTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 143(3) READ WITH SECTION 143(2) OF THE 1961 ACT , W HICH LED TO THE LEVY OF PENALTY OF RS. 3,48,12,251/ - BY THE AO ON THE ASSESSEE U/S. 271(1)(C) OF THE 1961 ACT , VIDE PENALTY ORDERS DATED 28.09.2015 PA SSED BY THE AO U/S 271(1)(C) OF THE 1961 ACT . 4. THE ASSESSEE BEING AGGRIEVED BY THE PENALTY ORDER DATED 28.09.2015 PASSED BY THE AO U/S 271(1)(C) OF THE 1961 ACT FILED FIRST APPEAL WITH LD. CIT(A) AND MADE DETAILED WRITTEN SUBMISSIONS WHICH ARE EXTRACTED BY LEARNED CIT(A) IN HIS APPELLATE ORDER. THE ASSESSE ALSO RELIED UPON SEVERAL JUDICIAL PRECEDENTS WHICH FOUND MENTIONED IN THE APPELLATE ORDER PASSED BY LEARNED CIT(A) TO CONTEND THAT NO PENALTY IS EXIGIBLE U/S 271(1)(C) OF THE 1961 ACT ON THE FACTS AND CIRCUMSTANCES OF THE CASE MAINLY ON THE GROUND THAT IT WAS AN INADVERTENT CLERICAL MISTAKE COMMITTED BY THE ASSESSEE WHILE FILING OF ITS RETURN OF INCOME AND THERE WAS NO MALAFIDE ON THE PART OF THE ASSESSEE TO DEFRAUD REVENUE AND MORE - SO THE ASSESSEE HAS HUGE ACCUMULATED LOSSES WHICH LAPSED DUE TO CHANGE IN SHAREHOLDING OF THE ASSESSEE COMPANY AS BEING HIT BY PROVISIONS OF SECTION 79 OF THE 1961 ACT . T HE LD. CIT(A) ACCEPTED THE CONTENTION S OF THE ASSESSEE AND DELETED THE I.T.A. NO.1878/MUM/2017 6 PENALTY AS WAS LEVIED BY THE AO U/ S 271(1)(C) OF THE 1961 ACT BY HOLDING AS UNDER , VIDE APPELLATE ORDER DATED 30.12.2016 : - 6.2 GROUND NO. 2&3 6.2.1 VIDE THIS GROUND THE APPELLANT HAS AGITATED AGAINST LEVYING OF PENALTY OF RS.3,48,12,251/ - U/S.271(1 )(C) OF THE I.T. ACT. THE APPELLANT COMPANY E - FILED ITS RETURN OF INCOME ON 29.09.2012 DECLARING TOTAL INCOME AT RS. NIL AFTER CLAIMING CURRENT YEAR'S L OSS OF RS,81,48,14,420/ - . THE CASE WAS SELECTED FOR SCRUTINY AND AN ORDER U/S. 143(3) WAS PASSED BY THE A.O. ON 30.03.2015 BY MAKING DISALLOWANCE OF INTEREST EXPENSES OF RS.11,26,61,005/ - AND PENALTY PROCEEDINGS WERE INITIATED ON THE APPELLANT FOR CONCEALMENT / FURNISHING INACCURATE PARTICULARS OF INCOME. SUBSEQUENTLY, THE A.O. PASSED AN ORDER DATED 28.09.2015 U/S,271(1 )(C) OF T HE ACT LEVYING A PENALTY OF RS.3,48,12,251/ - ON THE APPELLANT. 6.2.2 DURING APPELLATE PROCEEDINGS, IT WAS SUBMITTED THAT DURING THE YEAR UNDER CONSIDERATION DUE TO AN INADVERTENT MISTAKE THE APPELLANT DISALLOWED AN AMOUNT OF RS.41.11 CRORES INSTEAD OF RS.5 2.37 CRORES UNDER THE HEAD 'INCOME FROM BUSINESS AND PROFESSION'. THE REASON FOR THE SAME WAS EXPLAINED BY THE APPELLANT BY STATING THAT DURING THE ASSESSMENT YEAR 2010 - 11 I.E. THE IMMEDIATELY PRECEDING YEAR, THE APPELLANT COMPANY HAD CAPITALIZED INTEREST OF RS.11.26 CRORES IN THE COST OF BUILDING AND SAME HAD BEEN REDUCED FROM THE INTEREST DEBITED IN THE P & L A/C. IT WAS FURTHER SUBMITTED THAT APPELLANT COMPANY HAD TAKEN DEDUCTION U/S.24(B) OF RS.11.26 CRORES ALONGWITH AMOUNT DEBITED TO P & L A/C. FOR A.Y .2010 - 11. IT WAS FURTHER EXPLAINED THAT DURING THE A.Y.2012 - 13, THE APPELLANT COMPANY HAD TAKEN THE EXCEL WORKING FILE FOR A.Y.2010 - 11 FOR PREPARING COMPUTATION OF TOTAL INCOME FOR A.Y.2012 - 13 AS THE BASE FILE AND THERE WAS INADVERTENTLY RS.11.16 CRORES AS INTEREST HAD BEEN SHORT DISALLOWED UNDER THE HEAD 'INCOME FROM BUSINESS & PROFESSION', BECAUSE IN EXCEL SHEET A FORMULA LINKED WITH INTEREST DEBITED TO P & L A/C. WAS AFTER REDUCTION OF RS.11.26 CRORES (AS PER A.Y.2010 - 11) AND THE SAME HAD BEEN OVERLOOKED AT THE TIME OF FILING OF RETURN OF INCOME FOR A.Y.2012 - 13 (COMPUTATION OF INCOME FILED BY_THE APPELLANT FOR A.Y.2011 - 12 IS ENCLOSED AS ANNEXURE - 1). 6.2.3 I HAVE EXAMINED THE SUBMISSION OF THE APPELLANT. THE DISALLOWANCE IS EXACTLY THE SAME AS THE AMOUNT TAKEN IN THE EXCEL SHEET OF THE PREVIOUS YEAR - WORKING AND HENCE THE MISTAKE IS ESSENTIALLY DUE TO A BONAFIDE HUMAN ERROR. THE I.T.A. NO.1878/MUM/2017 7 APPELLANT FURTHER POINTED BUT THAT THE APPELLANT IS INCURRING HUGE LOSSES EVERY YEAR AND IN FACT THE UNABSORBED BROUGHT FORWARD LO SSES OF EARLIER YEAR HAD LAPSED DUE TO IMPLICATION OF SECTION 79 OF THE I.T. ACT. THE APPELLANT'S BONAFIDE INTENTION WAS VERY MUCH ESTABLISHED THAT IT HAD NOT RECEIVED ANY BENEFIT OF ANY KIND BY COMMITTING SUCH AN INADVERTENT ERROR. IT WAS FURTHER POINTED OUT THAT THAT ACCUMULATED LOSSES OF RS.70,21,53,416/ - COMPUTED UNDER THE NORMAL PROVISIONS OF THE I.T.ACT AND RS.57,85,84,778/ - U/S. 115JB OF THE I.T. ACT WERE NOT ALLOWED TO BE CARRIED FORWARD AND THEREFORE, THE EFFECTIVE TAX POSITION OF THE APPELLANT DOES NOT CHANGE WITH THE DISALLOWANCE OF THE INTEREST OF RS.11,26,61,005/ - . 6.2.4 THE APPELLANT SUBMITTED THAT DUE TO ONGOING RESTRUCTURING OF ALL THE COMPANIES IN 'BIYANI FAMILY' TO WHICH THE APPELLANT BELONGS, THE AVAILABLE LOSSES FOR A.Y.2012 - 13 & 2013 - 14 W AS AGAIN LAPSED IN F.Y.2013 - 14 AS PER THE STIPULATIONS AND APPLICATION OF SECTION 79 OF THE I.T. ACT. ACCORDING TO THE APPELLANT A PERSON WHO IS FULLY AWARE THAT HIS CARRY FORWARD LOSSES WOULD BE LAPSED DUE TO CHANGE IN SHAREHOLDING UNDER RESTRUCTURING PRO CESS, WOULD NEVER TRY TO CLAIM EXCESS LOSSES WHICH IS GOING TO LAPSE. 6.2.4 SINCE THE MISTAKE WAS A BONAFIDE MISTAKE DUE TO HUMAN ERROR, THEREFORE, APPELLANT PLACED RELIANCE ON THE FOLLOWING CASES IN SUPPORT OF ITS CLAIM. YASMIN PROPERTIES (P) LTD V S. ACIT [(46 ITD 331) (MUMBAI ITAT)] IN THE SAID CASE, WHILE THE HON'BLE ITAT UPHELD THE ADDITION TO INCOME, ON THE QUESTION OF LEVY OF PENALTY UNDER SEC TION 271(1 )(C) OF THE ACT, THE HON'BLE ITAT OBSERVED THAT ALL FACTS RELATING TO THE CLAIM AND MATERIAL RELEVANT TO THE COMPUTATION HAD BEEN DISCLOSED BY THE ASSESSEE AND THE CLAIM WAS MADE BY THE ASSESSEE UNDER A BO NA FIDE BELIEF. THE HON'BLE ITA T HELD THAT IT WAS NOT A FIT CASE FOR LEVY OF PENALTY FOR CONCEALMENT BUT A CASE WHERE A BONAFIDE CLAIM MADE BY T HE ASSESSEE. ACCORDINGLY, THE HON'BLE ITAT DELETED THE PENALTY LEVIED. CIT VS. SUDHIRKUMAR CHOTTUBHAI[250 ITR 528 (BOM)] IN THIS CASE, THE ASSESSEE - PARTNER HAD NOT DISCLOSED THE CASH AMOUNT RECEIVED BY HIM IN LIEU OF SURRENDER OF DISTRIBUTION RIGHTS O F TWO FILMS AT THE TIME OF HIS RETIREMENT FROM THE FIRM. THIS WAS UNDER BONA FIDE BELIEF THAT THE AMOUNT WAS NOT TAXABLE. ON THESE FACTS, IT WAS CONCLUDED I.T.A. NO.1878/MUM/2017 8 THAT THERE IS NO CASE FOR CONCEALMENT JUSTIFYING PENALTY UNDER SECTION 271(L)(C) OF THE ACT. EIH LIMITED VS. CIT [338 ITR 503 (2011) (KOL)] IN THE INSTANT CASE, HON'BLE HIGH COURT HELD THAT UNTENABLE LEGAL CLAIM CANNOT BE A GROUND FOR IMPOSING CONCEALMENT PENALTY. SUZUKI MOTORCYCLE INDIA LTD. VS. ACIT (ITA NO. 6487/DEL/2013 AND 4248/DEL/2010) . ITAT QUASHED PENALTY PROCEEDINGS FOR MAKING WRONG CLAIM OF LONG TERM CAPITAL LOSS ON PROPERTY TRANSACTION. ACCEPTING ASSESSEE'S BONAFIDES, ITAT OBSERVED THAT ASSESSEE'S CLAIM WAS 'WRONG' BUT NEITHER FRAUDULENT NOR FALSE. THOUGH WRONG CLAIM C ANNOT BE ACCEPTED IN QUANTUM PROCEEDINGS, IT CANNOT LEAD TO CONCEALMENT OR FILING OF INACCURATE PARTICULARS TO ATTRACT PENALTY U/S 271(L)(C). OBSERVING TH AT ASSESSEE MADE FULL DISCLOSURE, ITAT HELD THAT MERE WRONG CLAIM & NOT 'FALSE' CLAIM CANNOT LEAD TO I MPOSITION OF CONCEALMENT PENALTY. ACIT VS. ONICRA CREDIT AGENCY OF INDIA LIMITED (ITA NO. 3887/DEL/2012) IN THE INSTANT CASE, THE DELHI ITAT DELETED THE PENALTY UNDER SECTION 271(1 )(C) BY STATING THAT ASSESSEE'S CLAIM W AS 'BON AFIDE' THOUGH INCORRECT'. KANBAY SOFTWARE INDIA (P) LIMITED VS. DCIT [122 TTJ 721 (2009) (PUNE)] IN THE INSTANT CASE, THE PUNE ITAT DELETED THE PENALTY UNDER SECTION 271( 1 )(C) BY STATING THAT PENALTY U/S 271( 1 )(C) WAS NOT LEVIABLE IN CASE OF 'UNTENA BLE' LEGAL CLAIMS. PWC PVT . LTD. V/S CIT [2012] 348 ITR 306 (SC) IN A CASE WHERE THE ASSESSEE, ENGAGED IN MULTI - DISCIPLINARY MANAGEMENT CONSULTANCY SERVICES EMPLOYING MORE THAN THOUSAND EMPLOYEES, HAD MADE A PROVISION FOR GRATUITY TO THE EXTENT OF R S 24.42 CRORES, WHICH WAS NOT ADMISSIBLE U/S 40A(7) BUT HAD NOT DISALLOWED THE SAME IN ITS COMPUTATION OF TAXABLE INCOME, THOUGH - , SUCH DISALLOWANCE WAS POINTED OUT IN THE TAX AUDIT REPORT, THE SUPREME COURT CONSIDERED THAT AN INADVERTENT ERROR ON THE PART OF THE ASSESSEE INDICATING ABSENCE OF DUE CARE AND HAD CANCELLED THE PENALTY. IT WAS HELD, BY THE HON'BLE SUPREME COURT, THAT THE FACTS OF THE CASE WERE PECULIAR AND SOMEWHAT UNIQUE; THAT NOTWITHSTANDING THE FACT THAT I.T.A. NO.1878/MUM/2017 9 THE ASSESSEE WAS A REPUTED FIRM AND H AD GREAT EXPERTISE AVAILABLE WITH IT, IT WAS POSSIBLE THAT EVEN THE ASSESSEE COULD MAKE A 'SILLY' MISTAKE. IT WAS OBSERVED THAT THE CONTENTS OF THE TAX AUDIT REPORT SUGGESTED THAT THERE WAS NO QUESTION OF THE ASSESSEE CONCEALING ITS INCOME OR OF THE ASSESS EE FURNISHING ANY INACCURATE PARTICULARS; THAT APART FROM THE FACT THAT THE ASSESSEE DID NOT NOTICE THE ERROR, IT WAS NOT NOTICED EVEN BY THE AO WHO HAD FRAMED THE ORIGINAL ASSESSMENT ORDER; THAT ALL THAT HAD HAPPENED WAS THAT THROUGH A BONAFIDE AND INADVE RTENT ERROR THE ASSESSEE WHILE SUBMITTING ITS RETURN, FAILED TO ADD THE PROVISION FOR GRATUITY TO ITS TOTAL INCOME; THE ASSESSEE SHOULD HAVE BEEN CAREFUL BUT THE ABSENCE OF DUE CARE, IN SUCH A CASE, DID NOT MEAN THAT THE ASSESSEE WAS GUILTY OF EITHER FURNI SHING INACCURATE PARTICULARS OR ATTEMPTING TO CONCEAL ITS INCOME. [2012] 348 ITR 306 (SC) PWC PVT. LTD. V/S CIT. 6.2.5 AS DISCUSSED IN FOREGOING PARAS IT WAS A BONAFIDE HUMAN ERROR. MOREOVER, IT IS ALSO PROVED FROM THE FACT THAT HUGE CARRIED FORWARD LOSSES WERE LAPSED DURING THE YEAR AND APPELLANT WAS NOT GETTING ANY BENEFIT OUT OF THE WRONG CLAIM. SINCE THE MISTAKE WAS A BONAFIDE HUMAN ERROR, THEREFORE, RESPECTFULLY FOLLOWING VARIOUS JUDGEM ENTS OF THE HON'BLE COURTS AND I TAT AS DISCUSSED ABOVE, THE APPEAL OF THE APPELLANT IS ALLOWED AND PENALTY OF RS.3,22,14,851/ - IS DELETED. 5 . AGGRIEVED BY THE APPELLATE ORDER DATED 30.12.2016 PASSED BY LEARNED CIT(A), THE R EVENUE HAS COME IN AN APPEAL BEFORE THE TRIBUNAL AND LD. DR OPEN ED THE ARGUMENT S WHEREIN HE RELIED UPON PENALTY ORDER DATED 28.09.2015 PASSED BY THE AO U/S 271(1)(C) OF THE 1961 ACT . THE LEARNED DR DREW OUR ATTENTION TO PARA 4 OF THE ASSESSMENT ORDER AND ALSO TO PARA 6 OF THE PENALTY ORDER PASSED BY THE AO. HE ALSO BROUGHT OUR ATTENTION TO PARA 6.2 OF LD. CIT(A) APPELLATE ORDER. THE LD. DR SUBMITTED THAT TH ERE WAS A MISTAKE COMMI T TED BY THE ASSESSEE IN THE R ETURN OF INCOME FILED WITH THE R EVENUE , WHEREIN THE ASSESSEE DISALLOWED AN INTEREST EXPENDITURE TO THE TUNE OF RS. 41.11 CRORES INSTEAD OF RS. 52.37 CRORES , THEREBY CLAIMING ENHANCED LOSS TO THE TUNE OF RS. 81.48 CRORES IN THE RETURN OF INCOME FILED WITH THE REVENUE AS AGAINST CORRECT LOSS OF RS. 70.22 CRORES . IT WAS SUBMITTED THAT THE MISTAKE WAS POINTED BY THE AO TO THE ASSESSEE IN THE CO URSE OF SCRUTINY ASSESSMENT PROCEEDINGS AND IN CONSEQUENCE THERETO THE I.T.A. NO.1878/MUM/2017 10 ASSESSEE FILE D REVISED COMPUTATION OF INCOME AND CORRECTED THE MISTAKE OF RS. 11,26,61,005/ - BY WAY OF DISALLOWING INTEREST EXPENDITURE TO THE TUNE OF RS. 52.37 CRORES INSTEAD OF RS. 41 .11 CRORES AS WAS DONE EARLIER WHILE FILING OF RETURN OF INCOME . THE LEARNED DR SUBMITTED THAT DUE TO THIS MISTAKE AS CLAIMED BY THE ASSESSEE, THE LOS S ES CLAIMED IN THE RETURN OF INCOME FILED WITH THE REVENUE WERE INFLATED TO THE TUNE OF RS. 11.26 CRORES WHICH CAUSE D PREJUDICE TO R EVENUE. IT WAS SUBMITTED THAT T HE ASSESSEE IS CLAIMING THAT IT IS DUE TO ERROR IN THE PRECEDING YEAR IN THE EXCEL SHEET WHICH CAUSED MISTAKE BUT IT I S NOT AN ERROR IN THE PRECEDING YEAR BUT ERROR IN THE AY 2010 - 11. IT WAS SUBMITTED THAT EVEN THOUGH LOSES ARE GOING TO LAPSE DUE TO PROVISIONS OF SECTION 79 OF THE 1961 ACT, BUT THAT DOES NOT GIVE LICENCE TO THE ASSESSEE TO CLAIM MORE LOSS IN THE RETURN OF INCOME FILED WITH REVENUE WH ICH HAS INFACT CAUSED PRE JUDICE TO THE REVENUE. THE LEARNED DR WOULD RELY ON THE PENALTY ORDER PASSED BY THE AO U/S 271(1)(C) OF THE 1961 ACT. 5.2 THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAND DREW OUR ATTENTION TO PAGE NO 2 OF THE PAPER BOOK WHICH IS COMPUTATION OF INCOME FO R AY 2012 - 13 AND IT WAS SUBMITTED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MALL WHICH IS HOUSE PROPERTY AND RENTAL INCOME WERE OFFERED TO TAX UNDER THE HAD INCOME FROM HOUSE PROPERTY . IT WAS SUBMITTED THAT INTEREST EXPENSES TO THE TUNE OF RS. 52,3 7,86,419/ - WERE CLAIMED AS DEDUCTION U/S 24(B) OF THE 1961 ACT AGAINST RENTAL INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY . THEN IT WAS EXPLAINED THAT THE ASSESSEE SHOULD HAVE DEDUCTED /DISALLOWED SIMILAR AMOUNT OF INTEREST EXPENDITURE TO THE TUNE OF RS. 52,37,86,419/ - BY ADDING IT TO INCOME FROM BUSINESS OR PROFESSION AS INTEREST EXPENDITURE WERE DEBITED TO PROFIT AND LOSS ACCOUNT , BUT INSTEAD THE ASSESSEE ADDED BACK INTEREST EXPENDITURE OF RS. 41,11,25,414/ - UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION . IT WAS CLAIMED THAT THIS WAS AN MISTAKE INADVERTENTLY COMMITTED BY THE ASSESSEE WHILE FILING RETURN OF INCOME WITH I.T.A. NO.1878/MUM/2017 11 REVENUE. O UR ATTENTION WAS ALSO DRAWN TO PAGE NO. 39 /PAPER BOOK FILED BY THE ASSESSEE WHICH IS COMPUTATION OF INCOME FOR AY 2010 - 11, WHERE IN EXACTLY THE SAME AMOUNT OF INTEREST O N LOAN FOR BUSINESS CENTRE TO THE TUNE OF RS. 41,11,25,414 / - WAS ADDED TO THE INCOME FROM BUSINESS OR PROFESSION AND SAME AMOUNT WAS DEDUCTED FROM INCOME FROM HOUSE PROPERTY U/S 24(B) OF THE 1961 ACT , WHILE PREPARING COMPUTATION OF INCOME FOR AY 2010 - 11 . IT IS CLAIMED THAT THIS FIGURE OF RS.41,11,25,414/ - WHICH WAS FOR AY 2010 - 11 ERRONEOUSLY GOT CAPTURED IN IMPUGNED ASSESSMENT YEAR 2012 - 13 DUE TO USE OF AN EXCEL SHEET OF AY 2010 - 11 CONTAINING FORMULA BEING USED AS BASE SHEET WHILE ADDING BACK INTEREST TO THE INCOME FROM BUSINESS AS AGAINST THE CORRECT FIGURE OF RS. 52,37,86,419/ - WHICH LED TO HIGHER LOS S ES TO THE TUNE OF RS. 11,26,61,005/ - BEING CLAIMED DUE TO THIS INADVERTENT MISTAKE ON PART OF THE ASSESSEE . IT WAS SUBMITTED THERE WAS A N OLD EXCEL SHEET FOR EARLIER YEARS WHEREIN THE FORMULAS WERE ALREADY INSERTED WHICH WAS USED AS A BASE DOCUMENT FOR FILING IN THE FIGURES FOR AY 2012 - 13 WH ICH LED TO THIS ERROR IN PICKING THE FIGURE FOR DISALLOWANCE OF INTEREST EXPENDITURE FROM BUSINESS INCOME OF AY 2010 - 11 WHILE PREPARING THE COMPUTATION OF INCOME FOR IMPUGNED AY 2012 - 13 . O UR ATTENTION WAS DRAWN TO THE COMPUTATION OF INCOME FOR AY 2010 - 11 AND AY 2012 - 13 WHEREIN THE SAME INTEREST EXPENDITURE OF RS. 41,11,25,414 / - WAS REFLECTED AS BEING ADDED TO BUSINESS INCOME BY WAY OF REDUCTION FROM BUSINESS EXPENSES , WHILE THE ADD BACK TO THE INCOME UNDER BUSINESS INCOME OF INTEREST EXPENDITURE FOR AY 2012 - 13 SHOULD HAVE BEEN AT FIGURE OF RS. 52,37,86,41 9 / - WHICH WAS INDEED A CORRECT FIGURE WHICH OUGHT TO HAVE BEEN REDUCED FROM EXPENSES CLAIMED FOR DEDUCTION AGAINST BUSINESS INCOME . O UR ATTENTION WAS ALSO DRAWN TO PAGE NO. 17 OF THE PAPER BOOK WHEREIN AN AMOUNT OF RS. 52,37,86,419/ - INCURRED TOWARDS INTEREST ON TERM LOAN IN S CHEDULE 5 TO THE AUDITED FINANCIAL STATEMENTS UNDER THE HEAD FINANCE C OST IS REFLECTED , WHICH THE ASSESSEE HAD CLAIMED AS DEDUCTION U/S 24(B) FROM RENTAL INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY . O UR ATTENTION WAS FURTHER DRAWN TO PAGE NO 36 OF I.T.A. NO.1878/MUM/2017 12 THE PAPER BOOK WHEREIN THE LIST OF LENDERS IS REFLECTED TO THE TUNE OF RS. 5,62,99, 07, 807/ - ON WHICH INTEREST WAS PAID BY THE ASSESSEE . THUS IT WAS SUBMITTED THAT IT WAS A CLERICAL MISTAKE INADVERTENTLY COMMITTED WHICH WAS RECTIFIED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS ON BEING POINTED OUT BY THE AO. IT WAS CLAIMED THAT THERE WAS NO INTENTION TO DEFRAUD REVENUE BUT IT WAS A GENUINE AND BONAFIDE MISTAKE COMMITTED WHILE FILING RETURN OF INCOME WITH REVENUE. THE AO HAS NOT DISPUTED THIS FACT BUT SINCE TWO YEARS LAPSED SINCE THE ASSESSEE FILED ITS RETURN OF INCOME WITH REVENUE, WHEN FINALLY THE MISTAKE WAS RECTIFIED BY THE ASSES SEE ON BEING POINTED BY THE AO , THE AO WAS OF THE VIEW THAT HAD THE CASE BE EN NOT SELECTED FOR FRAMING SCRUTINY ASSESSMENT THE MISTAKE WOULD NOT HAVE COME TO NOTICE OF THE REVENUE WHICH WOULD HAVE OTHERWISE CAUSED LOSS TO THE REVENUE BUT FOR DETECTION O WING TO SCRUTINY ASSESSMENT . T HE LEARNED COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT IN THE NOTICE DATED 30.03.2015(PB/PAGE 48) ISSUED FOR INVOKING PENALTY PROVISIONS BY THE AO U/S 271(1)(C) READ WITH SECTION 274 OF THE 1961 ACT, THE RELEVANT PORTION AS TO WHETHER PENALTY PROVISIONS ARE INVOKED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF PARTICULARS OF INCOME WAS NOT ST R UCK OFF BY THE AO . IT WAS SUBMITTED THAT IT IS ONLY AN INADVERTENT MISTAKE WHICH WAS COMMITTED BY THE ASSESSEE WHICH WAS RECTIFIED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS . I T WAS FAIRLY SUBMITTED THAT THE MISTAKE WAS CORRECTED ON BEING POINTED OUT B Y THE AO BUT HOWEVER ASSESSEE HAS NOT GAI N ED ANYTHING FROM THIS MISTAKE AS THE CURRENT YEAR LOSES EVEN AFTER EXCLUDING THIS FIGURE OF RS. 11.26 CRORES WERE MORE THAN RS. 70 CRORE S . THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IT HAD HUGE ACCUMULATED LOS S ES WHICH LAPSED AS WERE BEING HI T BY PROVISIONS OF S ECTION 79 OF THE ACT AS THERE WAS A N 100% CHANGE IN SHAREHOLDING OF THE ASSESSEE DURING THE IMPUGNED YEAR UNDER CONSIDERATION BEFORE THE BENCH . IT IS CLAIMED THAT THERE WA S NO ULTERIOR MOTIVE IN CLAIMING OF HIGHER LO S SES. IT IS SUBMITTE D BY LEARNED COUNSEL FOR THE ASSESSEE THAT T HERE IS NO FINDING OF FACT RECORDED BY THE AUTHORITIES BELOW THAT IT I.T.A. NO.1878/MUM/2017 13 WAS NOT A BONAFIDE MISTAKE . IT WAS SUBMITTED THAT AN EXPLANATION SUBMITTED B Y THE ASSESSEE WAS BONAFIDE AND BY VIRTUE OF EXPLANATION 1 TO SECT ION 271(1)(C) OF THE 1961 ACT ON BEING GENUINE AND BONAFIDE MISTAKE COMMITTED BY ASSESSEE , NO PENALTY IS EXIGIBLE ON THE ASSESSEE. THE ASSESSEE RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF PRICE WATERHOUSE COOPERS PVT. LTD V. CIT , (2012) 348 ITR 306 (SC) . THE ASSESSEE ALSO RELIED UPON D ECISION OF HONBLE BOMBAY HIGH C OURT IN THE CASE OF DIT(IT) V . ASIA ATTRACTIVE DIVIDEND STOCK FUND (2013) 35 TAXMANN.COM 265(BOM.) , DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V. SOMANY EVERGREEN KNITS LIMITED (2013) 352 ITR 592(BOM.) AND DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V. L & T FINANCE LTD. IN ITA NO. 13 6 3 , 1358 & 1359/2015 DATED 4 TH JUNE, 2018. THE ASSESSEE ALSO RELIED UPON THE DECISION OF MUMBAI TRIBUNAL IN TH E CASE OF QPRO INFOTECH LTD. V. DCIT IN ITA NO. 2197/MUM/2013 , ORDER DATED 13.07.2016 AND IT WAS SUBMITTED THAT THE LOSS ES OF THE ASSESSEE LAPSE D OWING TO PROVISIONS OF SECTION 79 OF THE 1961 ACT OWING TO 100% CHANGE IN SHAREHOLDING OF THE ASSESSEE COMPAN Y DURING IMPUGNED YEAR UNDER CONSIDERATION AND THERE IS NO ULTERIOR MOTIVE TO CLAIM HIGHER LO S SES AS THE ASSESSEE DID NOT GAINED ANYTHING BY CLAIMING HIGHER LOSSES . IT WAS ALSO SUBMITTED BY LEARNED COUNSEL FOR THE ASSESSEE THAT E XPLANATION 1 TO SECTION 2 71(1)(C) WAS WRONGLY INVOKED BY THE AO AS THE SAME IS NOT APPLICABLE TO THE FURNISHING OF INACCURATE PARTICULARS OF INCOME WHILE IT CAN BE APPLIED ONLY TO CONCEALMENT OF PARTICULARS OF INCOME . HOWEVER ON BEING CONFRONTED BY THE B ENCH , THE ASSESSEE WITHDRE W THIS PLEA AS NOT SUSTAINABLE IN THE EYES OF LAW OWING TO CATENA OF DECISIONS OF SUPERIOR COURTS . IT WAS ALSO SUBMITTED BY LEARNED COUNSEL FOR THE ASSESSE E TH AT THE AO INVOKED BOTH THE LIMBS OF SECTION 271(1)(C) OF THE 1961 ACT WHILE LEVYING THE PENALTY OF RS. 3,48,12,251/ - WITHOUT SPECIFYING UNDER WHICH LIMB THE PENALTY PROVISIONS U/S 271(1)(C) WERE INVOKED , WHICH IS NOT PERMISSIBLE . THE LEARNED COUNSEL FOR THE ASSESSEE WOULD RELY ON THE APPELLATE ORDER PASSED BY LEARNED CIT(A). I.T.A. NO.1878/MUM/2017 14 5.3 THE LD. DR SUBMITTED IN REJOINDER THAT IT WAS NEVER THE CASE OF THE ASSESSEE BEFORE LD. CIT(A) AS TO THE LIMB UNDER WHICH THE PENALTY PROVISIONS U/S 271(1)(C) WERE INVOKED AND LEVIED BY THE REVENUE, AS NO SUCH PLEA WAS EVER RAISED BEFORE LEARNED CIT(A) AND THE ASSESSEE SHOUL D NOT BE ALLOWED TO RAISE SUCH PLEA FOR THE FIRST TIME BEFORE TRIBUNAL . 6. WE HAVE CONSIDER ED RIVAL CONTENTION S AND PERUSED THE MATERIAL ON RECORD INCLUDING CITED CASE LAWS. W E HAVE OBSERVED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MALL MANAGEMENT AND CONSULTANCY & TRADING IN FABRIC MATERIAL. THE ASSESSEE FILED RETURN OF INCOME WITH REVENUE ON 29.0.2012 DECLARING NIL INCOME WHEREIN IT CLAIMED LO S SES TO THE TUNE OF RS. 81,48,14,420/ - TO BE CARRIED FORWARD . THE ASSESSEE HAS FILED FACTUAL PAPER BOOK CONTAINING 48 PAGES , WHICH IS PLACED IN FILE . THE ASSESSEE HAS ALSO RELIED ON LARGE NUMBER OF JUDICIAL DECISIONS WHICH ARE PLACED IN CASE LAW PAPER BOOK FILED W ITH THE TRIBUNAL, WHICH ARE ALL PLACED IN FILE. THE ASSESSEE HAD ACCUMULATED CARRIED FORWARD UNABSORBED LOSSES UNDER THE 1961 ACT WHICH WERE CARRIED FORWARD FROM EARLIER YEARS . THE ASSESSEE HAS FILED COPIES OF ACKNOWLEDGEMENT OF INCOME - TAX RETURNS FOR AY 2 010 - 11, 2011 - 12 AND 2012 - 13 IN THE PAPER BOOK TO EVIDENCE THE LOSSES SUSTAINED BY IT OVER THESE YEARS .(PAGE 1,39 & 40/PB). E VEN AS PER ITS AUDITED FINANCIAL STATEMENTS PREPARED UNDER THE COMPANIES ACT ,1956 FOR THE FINANCIAL YEAR ENDED 31.03.2012 FILED I N THE PAPER BOOK/PAGE 3 - 19 , THE ACCUMULATED LOSSES AS PER AUDITED FINANCIAL STATEMENTS AS AT 31.03.2012 WERE TO THE TUNE OF RS. 107.64 CRORES (PB/PAGE8) . THE LOSSES AS REFLECTED FOR AY 2010 - 11 IN COMPUTATION OF INCOME FILED ALONG WITH RETURN OF INCOME UN DER THE 1961 ACT WAS TO THE TUNE OF RS. 54.97 CRORES(PAGE 39/PB) AND RS. 40.24 CRORES FOR AY 2011 - 12 (PB/PAGE 40) . WE ARE PRESENTLY SEIZED OF APPEAL FILED BY REVENUE FOR AY 2012 - 13 WHEREIN LOSSES CLAIMED IN THE RETURN OF INCOME FILED WITH REVENUE WERE TO T HE TUNE OF RS. 81.48 CRORES AND EVEN AFTER REMOVING THE LOSS OF RS. 11.26 CRORES OWING TO ALLEGED MISTAKE COMMITTED BY THE I.T.A. NO.1878/MUM/2017 15 ASSESSEE, THE LOSSES UNDER THE 1961 ACT FOR THE YEAR UNDER CONSIDERATION WERE MORE THAN RS. 70 CRORES. THE CASE OF THE ASSESSEE WAS SELECTED BY REVENUE FOR FRAMING SCRUTINY ASSESSMENT UNDER PROVISIONS OF SECTION 143(3) READ WITH SECTION 143(2) OF THE 1961 ACT. I T WAS OBSERVED BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 143(3) READ WITH SECTION 143(2) OF THE 1961 ACT THAT THE ASSESSEE MADE A CLAIM OF RS. 52.37 CRORE S AS DEDUCTION U/S. 24 (B) OF THE 1961 ACT AS AN INTEREST EXPENDITURE AGAINST THE INCOME FROM HOUSE PROPERTY , WHILE ON THE OTHER HAND ONLY RS. 41.11 CRORE WAS ADDED BACK TO THE INCOME FROM BUSINESS OR PROFESSION IN THE COMPUTATION OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR 2012 - 13 UNDER CONSIDERATION BY WAY OF REDUCTION OF BUSINESS EXPENSES . THE ADD BACK WAS REQUIRED BECAUSE RS. 52.37 CRORES WERE DEBITED TO PROFIT AND LOSS ACCOU NT PREPARED BY THE ASSESSEE AS INTEREST EXPENDITURE WHICH CAN BE SEEN FROM P&L A/C AND SCHEDULE 5 FINANCE COST PLACED IN PAPER BOOK/REFER PAGE 9 &17 . THE SAID INTEREST EXPENDITURE OF RS. 52.37 CRORES WAS CLAIMED AS DEDUCTION U/S 24(B) FROM RENTAL INCOME U NDER THE HEAD INCOME FROM HOUSE PROPERTY BY THE ASSESSEE IN RETURN OF INCOME FILED WITH REVENUE , THEN AS A NATURAL COROLLARY TO AVOID DOUBLE DEDUCTION OF SAME EXPENDITURE , THE SAID AMOUNT OF INTEREST EXPENDITURE OF RS. 52.37 CRORES CANNOT BE ALLOWED AS BUSINESS DEDUCTION FROM BUSINESS INCOME AND HENCE THE EXPENSES CLAIMED AS BUSINESS EXPENSES ARE REQUIRED TO BE REDUCED BY THIS AMOUNT OF RS. 52.37 CRORES TO ARRIVE AT INCOME FROM BUSINESS TO AVOID DOUBLE DEDUCTION OF SAME EXPENDITURE . BUT THE ASSESSEE INF ACT CLAIMED DEDUCTION OF INTEREST EXPENDITURE OF RS. 52,37,86,419/ - U/S 24(B) FROM RENTAL INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY WHICH WAS CORRECTLY DONE, BUT WHILE REDUCING THE SAID INTEREST EXPENDITURE OF RS. 52,37,86,419/ - FROM BUSINESS EXPENSES TO BE SET OFF AGAINST BUSINESS INCOME, THE ASSESSEE WRONGLY DEDUCTED RS. 41,11,25,414/ - FROM BUSINESS EXPENSES WHICH LED TO CLAIM OF HIGHER BUSINESS EXPENSES BY RS. 11,26,61,005/ - LEADING TO CLAIM OF TOTAL CURRENT YEAR LOSSES TO THE TUNE OF RS. 8 1,48,14,420/ - WHILE THE CORRECT I.T.A. NO.1878/MUM/2017 16 FIGURE OF LOSS TO BE SHOWN FOR CURRENT YEAR IN RETURN OF INCOME FILED BY THE ASSESSEE WITH REVENUE OUGHT TO HAVE BEEN RS.70,21,53,415/ - BUT FOR THIS MISTAKE . THIS WAS CLAIMED BY ASSESSEE TO BE A N MISTAKE WHICH ON BEING CO NFRONTED BY THE AO DURING ASSESSMENT PROCEEDINGS , THE ASSESSEE EXPLAINED THAT IT I S DUE TO INADVERTENT MISTAKE IN THE COMPUTATION OF INCOME AT THE TIME OF FILING OF RETURN OF INCOME WHICH HAS LED TO CLAIMING OF HIGHER LOSES TO THE TUNE OF RS. 11,26,61,005/ - . THE ASSESSEE HAS CLAIMED THAT THE OLD EXCEL SHEET FOR AY 2010 - 11 CONTAINING FORMULAS WAS USED AS BASE SHEET WHEREIN THE SAME FIGURE OF RS. 41 ,11,25,414/ - WAS AN INTEREST EXPENDITURE FOR AY 2010 - 11 WHICH WAS REDUC ED FROM BUSINESS EXPENSES WHILE COMPUTING BUSINESS INCOME FOR AY 2010 - 11 AND THE SAME FIGURE OF RS. RS. 41,11,25,414/ - TOWARDS INTEREST EXPENDITURE INADVERTENTLY GOT REDUCED FROM BUSINESS EXPENSES WHILE COMPUTING BUSINESS INCOME FOR AY 2012 - 13 INSTEAD OF C ORRECT FIGURE OF RS. 52,37,86,419/ - WHICH AS PER ASSESSEE ITSELF PROVES THAT IT WAS AN INADVERTENT MISTAKE COMMITTED BY THE ASSESSEE AS BOTH THE FIGURES WHICH WAS DEDUCTED FROM BUSINESS EXPENSES FOR BOTH THE YEARS I.E. AY 2010 - 11 AND 2012 - 13 ARE EXACTLY THE SAME WHICH WAS A BONAFIDE MISTAKE AS IT OCCURRED DUE TO FORMULA PLACED IN THE OLD EXCEL SHEET FOR AY 2010 - 11 WHICH SHEET WAS USED FOR COMPUTING THE INCOME FOR AY 2012 - 13 . THE ASSESSEE HAS CLAIMED THAT THERE WAS A CLAIM OF LOSS OF RS. 81.48 CRORES DURIN G THE IMPUGNED YEAR UNDER CONSIDERATION AND EVEN IF THIS MISTAKE OF RS. 11.26 CRORES IS IGNORED , THE N ALSO THE ASSESSEE IS STILL LEFT WITH LOSS OF MORE THAN RS. 70 CRORE S FOR THE CURRENT YEAR . I.E. AY 2012 - 13 THE ASSESSEE HAS ALSO EXPLAINED THAT DURING THE YEAR THERE WAS A MAJOR CHANGE IN SHAREHOLDING OF THE ASSESSEE TO THE TUNE OF 100% WHICH LED TO TRIGGERING OF PROVISIONS OF SECTION 79 OF THE 1961 ACT AND ITS ACCUMULATED LOSSES LAPSED , THUS NO ADVANTAGE COULD BE OBTAINED BY THE ASSESSEE IN ANY CASE BY INFLATING LOSSES AS THE LOSSES LAPSED . IT IS EXPLAINED THAT IT WAS A BONAFIDE HUMAN ERROR WHICH OCCURRED WHILE FILING RETURN OF INCOME DUE TO PECULIAR CIRCUMSTANCES AS NARRATED ABOVE WHICH LED TO CLAIM OF HIGHER LOSSES WHICH WAS A BONAFIDE I.T.A. NO.1878/MUM/2017 17 MISTAKE COMM ITTED INADVERTENTLY DUE TO HUMAN ERROR AND IMMEDIATELY ON BEING NOTIFIED BY THE AO , THE ASSESSEE RECTIFIED THE SAID MISTAKE SUO MOTU DURING ASSESSMENT PROCEDINGS . IT IS EXPLAINED THAT UNDER THE CIRCUMSTANCES , ASSESSEE COULD NOT HAVE DERIVED ANY BENEFIT AND NO LOSS COULD HAVE BEEN CAUSED TO REVENUE OWING TO HIGHER LOSSES CLAIMED AS IN ANY CASE THESE LOSSES LAPSED BEING HIT BY PROVISIONS OF SECTION 79 OF THE 1961 ACT. WE HAVE OBSERVED THAT TWO FOLD EXPLANATIONS OFFERED BY THE ASSESSEE FOR THIS ERRONEOUSLY CLAIM OF HIGHER LOSSES ARE CORRECT. ON THE ONE HAND , THE AMOUNT ADDED BACK TO BUSINESS INCOME ON ACCOUNT OF INTEREST EXPENSES TO THE TUNE OF RS. 41,11,25,414/ - FOR AY 2012 - 13 IS EXACTLY MATCHING WITH INTEREST EXPENDITURE ADDED BACK FOR AY 2010 - 11 WHICH U NDER THE PREPONDERANCE OF PROBABILITIES GIVE CREDENCE TO THE THEORY OF USE OF OLD EXCEL SHEET FOR AY 2010 - 11 CONTAINING FORMULAS AS BASE SHEET FOR COMPUTING INCOME FOR AY 2012 - 13 ,, WHICH LED TO THIS MISTAKE WHILE PREPARING RETURN OF INCOME . THE ASSESSEE H AS ACCEPTED IN QUANTUM ASSESSMENT THAT ASSESSEE HAS TO CLAIM CORRECT LOWER LOSSES AFTER CORRECTING THIS MISTAKE WHICH ASSESSEE DID BY CORRECTING ITS COMPUTATION OF INCOME DURING ASSESSMENT PROCEEDINGS. WE ARE SEIZED OF AN APPEAL AGAINST PENALTY LEVIED BY THE AO WHICH WAS DELETED BY LEARNED CIT(A). IT IS ALSO NOT IN DOUBT ALTHOUGH IT MIGHT BE AN HUMAN ERROR BUT ASSESSEE HAS TO BE VIGILANT WHILE FILING ITS RETURN OF INCOME AS EVERY MISTAKE CANNOT BE EXCUSED EVEN IN PENALTY PROCEEDINGS. THUS, IT IS BEYOND DOU BT THAT LAPSE HAS OCCURRED ON PART OF THE ASSESSEE BUT THE MOOT QUESTION IS WHETHER EVERY MISTAKE COMMITTED BY THE ASSESSEE WHILE FILING RETURN OF INCOME WILL BE VISITED WITH PENAL PROVISIONS. IT DEPENDS UPON FACTS AND CIRCUMSTANCES OF EACH CASE WHICH DIF FER FROM CASE TO CASE AS EVERY MISTAKE COMMITTED IN FILING RETURN OF INCOME CAN NOT BE VISITED WITH LEVYING OF PENALTY WITHIN FOUR CORNER OF THE PROVISIONS OF SECTION 271(1)(C) OF THE 1961 ACT . WE HAVE ALSO OBSERVED FROM THE AUDITED FINANCIAL STATEMENTS FIL ED BY THE ASSESSEE THAT DURING THE YEAR UNDER CONSIDERATION, 100% SHAREHOLDING OF THE ASSESSEE GOT TRANSFERRED TO SUHANI TRADING AND INVESTMENT I.T.A. NO.1878/MUM/2017 18 CONSULTANTS PRIVATE LIMITED , WHICH LED TO TRIGGERING OF PROVISIONS OF SECTION 79 OF THE 1961 ACT LEADING TO LAP SING OF LOSSES . THUS , THIS EXPLANATION OF THE ASSESSEE IS ALSO CORRECT THAT CLAIMING OF THE HIGHER LOSSES COULD NOT HAVE BROUGHT ANY ADVANTAGE TO THE ASSESSEE ON THE FACE OF PROVISIONS OF SECTION 79 OF THE 1961 ACT. I N OUR CONSIDERED VIEW THE RATIO OF DEC ISION OF HONBLE SUPREME COURT IN THE CASE OF PRICE WATERHOUSE COOPERS PRIVATE LTD. V. CIT (2012) 348 ITR 306(SC) IS APPLICABLE ON THE FACTUAL AND CIRCUMSTANTIAL MATRIX SURROUNDING THIS PARTICULAR CASE AND IN OUR CONSIDER ED VIEW THE ASSESSEE HAS FURNISHED BONAFID E AND GENUINE EXPLANATION S AS TO AN INADVERTENT MISTAKE COMMITTED BY IT WHICH WAS AN HUMAN ERROR COMMITTED WHILE FILING ITS RETURN OF INCOME AND THERE CANNOT BE ANY ULTERIOR MOTIVE ATTACHED TO THIS ERROR COMMITTED BY THE ASSESSEE, WHICH HAS TAKEN IT OUT FROM THE CLUTCHES OF PENALTY UNDER THE PROVISION S OF SECTION 271(1)(C) OF THE 1961 ACT AS IT IS WELL SETTLED PROPOSITION OF LAW THAT EVERY ERROR COMMITTED IN FILING OF RETURN OF INCOME CANNOT BE VISITED WITH PENAL PROVISIONS AS ARE CONTAINED IN SECTION 271(1)(C) . THE OPERATIVE PART OF DECISION OF HONBLE SUPREME COURT IN THE CASE OF PRICE WA TERHOUSE COPPERS PRIVATE LIMITED (SUPRA) IS REPRODUCED HEREUNDER: - 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 ALONG 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 ASSESSEE MADE A COMPUTATION ERROR IN ITS RETURN OF INCOME. APART FROM THE FACT THAT THE ASSESSE E DID NOT NOTICE THE ERROR, IT WAS NOT EVEN NOTICED EVEN BY THE 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 ASSESSEE CONCEALING ITS INCOME. THERE IS ALSO NO QUESTION OF THE ASSESSEE FURNISHING ANY INACCURATE PARTICULARS. IT APPEARS TO US THAT ALL THAT HAS HAPPENED IN THE PRESENT CASE IS THAT THROUG H 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 I.T.A. NO.1878/MUM/2017 19 WHICH WE ARE ALL PRONE TO MAKE. THE CALIBRE AND EXPERTISE OF THE ASSESS EE HAS LITTLE OR NOTHING TO DO WITH THE INADVERTENT ERROR. THAT THE ASSESSEE SHOULD HAVE BEEN 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 PA RTICULARS 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 HAD NOT INTENDED TO OR ATTEMPTED TO EITHER CONCEAL ITS INCOME OR FURNISH INACCURATE PARTICULARS. THE ASSESSEE HAS ALSO RIGHTLY RELIED ON DECISIONS OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. L&T FINANCE LIMITED (SUPRA), DIT(IT) V. ASIA ATTRACTIVE DIVIDEND STOCK FUND(SUPRA) AND CIT V. SOMANY EVERGREEN KNITS PRIVATE LIMITED(SUPRA). THE LEARNED CIT(A) HAS PASSED WELL REASONED ORDER DELETING PENALTY WITH WHICH WE CONCURR . WE HAVE EXTRACTED /REPRODUCED IN OUR ORDER IN PRECEDING PARA (S) , THE DECISION OF LEARNED CIT(A) AND WE ARE NOT INCLINED TO INTERFERE WITH THE SAID WELL REASONED ORDER PASSED BY LEARNED CIT(A). THUS , WE ORDER DELETION OF PENALTY OF RS. 3,48,12,251/ - LEVIED BY THE AO U/S 271(1)(C) OF THE 1961 ACT AND WE HOLD THAT LD. CIT(A) HAS RIGHTLY DELETED THE PENALTY OF RS. 3,48,12,251/ - AS LEVIED BY THE AO . WE HEREBY CONFIRM THE WELL REASONED APPELLATE ORDER PASSED BY LD. CIT(A). THE REVENUE FAILS IN THIS APPEAL. WE ORDER ACCORDINGLY. 7. IN THE RESULT APPEAL OF THE RE VENUE IN ITA NO. 1878/MUM/2017 FOR AY 2012 - 13 STAND DISMISSED. ORDER PRONO UNCED IN THE OPEN COURT ON 2 2 .11 .2018. 2 2 .11 .2018 S D / - S D / - ( MAHAVIR SINGH) ( RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 2 2 .11 .2018 NISHANT VERMA SR. PRIVATE SECRETARY I.T.A. NO.1878/MUM/2017 20 COPY TO 1 . THE APPELLANT 2 . THE RESPONDENT 3 . THE CIT(A) CONCERNED, MUMBAI 4 . THE CIT - CONCERNED, MUMBAI 5 . THE DR BENCH, 6 . MASTER FILE // TUE COPY// BY ORDER DY/ASSTT. REGISTRAR ITAT, MUMBAI