Bhabesh Majumdar, Kolkata V. ACIT, CIR-45, KOLKATA, Kolkata

ITA 1933/KOL/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6256 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 8 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 03-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Salary income; Revised return; Bonafide mistake
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : D BEN CH, KOLKATA BEFORE : SHRI M. BALAGANESH, ACCOUNTANT ME MBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO. 1933/KOL/2016 A.Y 2009-10 BHABESH MAJUMDAR VS. A.C.I.T, CIR-45, KOLKATA PAN: AERPM 9863J [APPELLANT ] [RESPONDENT ] APPELLANT/ASSESSEE BY : DR SOMNATH GHOSH, LD. AR RESPONDENT/DEPARTMENT : SHRI A.BHATTACHARJEE, ADDL. CIT, LD.DR DATE OF HEARING : 27-03-2018 DATE OF PRONOUNCEMENT : 19-06-2018 ORDER SHRI S.S.VISWANETHRA RAVI, JM: THE ABOVE APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DT. 05- 07-2016 OF THE CIT-A, 13, KOLKATA FOR THE A.Y 2009- 10, WHEREIN HE CONFIRMED THE IMPUGNED PENALTY OF RS.33,79,927/- IM POSED U/S. 271(1) ( C) OF THE ACT BY THE AO. 2. THE ONLY ISSUE IS TO BE DECIDED AS TO WHETHER T HE CIT-A JUSTIFIED IN CONFIRMED THE IMPUGNED PENALTY IMPOSED U/S. 271(1)( C ) OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CA SE. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND ENGAGED IN PARTNERSHIP FIRM UNDER THE NAME AND STYL E M/S. GOLDEN TRUST FINANCIAL SERVICES. THE ASSESSEE DERIVES HIS INCOME FROM SALARY ( PENSION ANNUITY FROM LIC AND GRATUITY), FROM HOUS E PROPERTY AND FROM OTHER SOURCES. ACCORDING TO AO, THE ASSESSEE DISCLOSED SHORT TERM CAPITAL LOSS (RS.7,01,46,528/-) INSTEAD OF LONG TERM CAPITAL LOSS (RS. 2,85,67,594/-) AND LONG TERM CAPITAL LO SS INSTEAD OF SHORT TERM CAPITAL LOSS. IN EXPLANATION BEFORE THE AO, T HE ASSESSEE STATED IN PENALTY PROCEEDINGS THAT DUE TO AN INADVERTENT M ISTAKE BY HIS ACCOUNTANT LONG TERM CAPITAL LOSS HAS BEEN REDUCED AND SHORT TERM ITA NO. 1933/KOL/2016 BHABESH MAJUMDAR 2 CAPITAL LOSS HAS BEEN INFLATED. THE SAME WERE RECTI FIED BY TRUE FIGURES OF LONG TERM CAPITAL LOSS AND SHORT CAPITAL LOSS IN THE REVISED RETURN OF INCOME AND SUBMITTED THAT THERE IS NO CONCEALMENT O F INCOME IN FURNISHING INACCURATE PARTICULARS OF INCOME AND PRA YED TO DROP THE PENALTY PROCEEDINGS INITIATED U/S. 271(1) (C ) OF T HE ACT. ACCORDING TO AO, THE ASSESSEE FAILED TO FURNISH SATISFACTORY EXP LANATION REGARDING THE ABOVE, THE AO DECIDED TO IMPOSE PENALTY @ 100% I .E. AT RS.33,79,927/-. 4. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT- A. THE CIT-A DID NOT CONSIDER THE SUBMISSIONS OF ASSESSEE THAT T HERE WAS BONAFIDE MISTAKE WHICH COMMITTED BY THE ACCOUNTANT AT THE TI ME OF COMPUTING THE LONG TERM CAPITAL GAIN AND SHORT TERM CAPITAL G AIN. BEFORE HIM IN SUPPORT OF HIS CONTENTION AND CLAIM THE ASSESSEE RE FERRED TO THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE PRICE WATERHOUSE COOPERS P.LTD VS. CIT REPORTED IN (2012) 348 ITR 30 6(SC). CIT-A AS SUCH CONFIRMED THE IMPUGNED PENALTY BY RELYING ON V ARIOUS CASE LAWS. 6. BEFORE US THE LD. AR SUBMITS THAT DETAILS OF SHO RT TERM CAPITAL LOSS AND LONG TERM CAPITAL LOSS WERE FILED DURING O RIGINAL ASSESSMENT PROCEEDINGS, WHICH WAS ACCEPTED BY THE AO U/S. 143( 3) OF THE ACT. THE MISTAKE REGARDING SHORT TERM CAPITAL LOSS/GAIN IN PLACE OF LONG TERM CAPITAL LOSS/GAIN AND LONG TERM CAPITAL LOSS/G AIN IN PLACE OF SHORT TERM CAPITAL LOSS/GAIN COMMITTED BY THE ACCOUNTANT WAS DETECTED BY THE AO DURING RE-ASSESSMENT PROCEEDINGS U/S. 147 OF THE ACT. THE LD. AR ARGUED THAT THERE WAS A BONAFIDE MISTAKE COMMITT ED BY THE ACCOUNTANT, WHICH WAS RECTIFIED DURING THE RE-ASSES SMENT PROCEEDINGS U/S. 147 OF THE ACT AND AO ACCEPTED THE SAME U/S. 147 OF THE ACT PROCEEDINGS. BY PLACING HIS RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF PRICE WATERHOU SE COOPERS PVT. LTD VS. CIT REPORTED IN (2012) 348 ITR 306(SC), THE LD.AR OF THE ASSESSEE ARGUED THAT IN SIMILAR FACTS AND CIRCUMSTA NCES THE HONBLE ITA NO. 1933/KOL/2016 BHABESH MAJUMDAR 3 SUPREME COURT IN THE CASE OF SUPRA HELD THAT AN INADVERTENT AND BONA FIDE ERROR AND HAD NOT INTENDED TO OR ATTEMPTE D TO EITHER CONCEAL ITS INCOME OR FURNISH INACCURATE PARTICULAR S AND THAT CAN BE DESCRIBED AS HUMAN ERROR AND REFERRED TO PAGE-45 OF THE PAPER BOOK AND PRAYED TO ALLOW THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE. HE FURTHER PLACED HIS RELIANCE ON AN ORDER OF CO-ORDIN ATE BENCH OF ITAT, LUCKNOW IN THE CASE OF PANKAJ KR. GUPTA AND REFERRE D TO PARA 9 OF THE SAID ORDER AND SUBMITED THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF SUPRA WAS CONSIDERED. 7. ON THE OTHER HAND, THE LD. DR HAS RELIED ON THE ORDERS OF THE AO & CIT-A. 8. HEARD THE RIVAL PARTIES AND PERUSED THE RECORD. WE FIND THAT THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE ARE IDE NTICAL TO THE FACTS AND CIRCUMSTANCES OF THE CASE IN THE CASE OF SUPRA OF THE HONBLE SUPREME COURT, WHEREIN IT WAS CONTENDED THAT THERE WAS A BONAFIDE INADVERTENT ERROR WAS OCCURRED DURING THE SUBMISSIO N OF ITS RETURN IN ADDING THE PROVISION OF GRATUITY TO ITS TOTAL INCOM E AND THE SAME WAS RECTIFIED BY AN AFFIDAVIT STATING THAT DUE TO SOME CONFUSION BECAUSE THE PERSON, WHO PREPARES RETURN OF INCOME WAS UNAWA RE OF THE FACT THAT THE SERVICES OF SOME EMPLOYEES HAD BEEN TAKEN OVER UPON ACQUISITION OF A BUSINESS, BUT THEY ARE NOT MEMBERS OF AN APPROVED GRATUITY FUND UNLIKE OTHER EMPLOYEES OF THE ASSESSE E. WE FIND THAT CONSIDERING THE SUBMISSIONS MADE THROUGH AN AFFIDAV IT OF THE HONBLE SUPREME COURT HAS RIGHTLY POINTED OUT BY THE LD. AR THAT IT WAS A MISTAKE, WHICH CAN BE PRESCRIBED AS AN HUMAN ERROR, BUT DOES NOT MEAN THAT THE ASSESSEE IS GUILTY OF EITHER FURNISHI NG INACCURATE PARTICULARS OR ATTEMPTING TO CONCEAL ITS INCOME. IN THE PRESENT CASE, WE FIND THAT THE AO HAS ACCEPTED THE CLAIM OF ASSES SEE IN THE ORIGINAL ASSESSMENT PROCEEDING U/S. 143(3) OF THE ACT. THER EAFTER, THE SAID MISTAKE STATED TO HAVE BEEN OCCURRED DUE TO ERROR C OMMITTED BY THE ACCOUNTANT FOUND DETECTED DURING THE COURSE OF PRE PARATION OF ITA NO. 1933/KOL/2016 BHABESH MAJUMDAR 4 REVISED RETURN OF INCOME FILED IN RESPONSE TO NOTIC E ISSUED U/S. 148 OF THE ACT. WE FIND THAT THE ASSESSEE ADMITTED THE FAC T OF COMMITTING THE SAID MISTAKE BY HIS ACCOUNTANT AND IMMEDIATELY RECTIFIED THE SAME AND WHICH WAS ACCEPTED BY THE AO U/S. 147 RE-A SSESSMENT PROCEEDINGS. WE FURTHER FIND THAT THE CO-ORDINATE B ENCH ITAT LUCKNOW IN THE CASE OF SUPRA HAS ALSO CONSIDERED THE SAID DECISION OF THE HONBLE SUPREME COURT AND HELD THAT MISTAKE IN FILING RETURN OF INCOME, WHICH WAS RECTIFIED THEREAFTER IN THE RE-AS SESSMENT PROCEEDINGS CANNOT BE BROUGHT TO THE AMBIT OF PROVI SIONS OF SECTION 271(1) ( C) OF THE ACT. WE FIND FORCE IN THE SUBMIS SIONS OF ASSESSEE. THE CASE LAWS AS RELIED ON BY THE ASSESSEE BEFORE U S ARE RELEVANT TO THE PRESENT FACTS OF THE CASE. WE FURTHER FIND THAT THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE ARE SIMILAR AND I DENTICAL TO THAT OF THE CASE SUPRA OF THE HONBLE SUPREME COURT. THE HONBLE SUPREME COURT AND THE CO-ORDINATE BENCH IN THE CASES OF SUPRA DISCUSSED THE ISSUE ANALYZING FACTS AND CIRCUMSTANCES. RELEVANT P ORTION OF THE HONBLE SUPREME COURT IS REPRODUCED HEREIN BELOW:- 14. DURING THE COURSE OF HEARING THIS APPEAL AGAIN ST THE JUDGMENT AND ORDER OF THE CALCUTTA HIGH COURT, WE HAD REQUIRED THE ASSESSEE T O EXPLAIN TO US HOW AND WHY THE MISTAKE WAS COMMITTED. 15. THE ASSESSEE HAS FILED AN AFFIDAVIT DATED 14TH SEPTEMBER, 2012 IN WHICH IT IS STATED THAT THE ASSESSEE IS ENGAGED IN MULTIDISCIPLINARY M ANAGEMENT CONSULTING SERVICES AND IN THE RELEVANT YEAR IT EMPLOYED AROUND 1000 EMPLOYEES . IT HAS A SEPARATE ACCOUNTS DEPARTMENT WHICH MAINTAINS DAY TO DAY ACCOUNTS, PAY ROLLS ETC. IT IS STATED IN THE AFFIDAVIT THAT PERHAPS THERE WAS SOME CONFUSION BEC AUSE THE PERSON PREPARING THE RETURN WAS UNAWARE OF THE FACT THAT THE SERVICES OF SOME E MPLOYEES HAD BEEN TAKEN OVER UPON ACQUISITION OF A BUSINESS, BUT THEY WERE NOT MEMBER S OF AN APPROVED GRATUITY FUND UNLIKE OTHER EMPLOYEES OF THE ASSESSEE. UNDER THESE CIRCUMSTANCES, THE TAX RETURN WAS FINALIZED AND FILLED IN BY A NAMED PERSON WHO WAS N OT A CHARTERED ACCOUNTANT AND WAS A COMMON RESOURCE. 16. IT IS FURTHER STATED IN THE AFFIDAVIT THAT THE RETURN WAS SIGNED BY A DIRECTOR OF THE ASSESSEE WHO PROCEEDED ON THE BASIS THAT THE RETURN WAS CORRECTLY DRAWN UP AND SO DID NOT NOTICE THE DISCREPANCY BETWEEN THE TAX AUDIT RE PORT AND THE RETURN OF INCOME. 17. HAVING HEARD LEARNED COUNSEL FOR THE PARTIES, W E 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. NOT WITHSTANDING 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 ASSESSEE MADE A COMPUTATION ERROR IN ITS RETURN OF INCOME. APART FROM THE FACT THAT THE ASSESSEE DID N OT NOTICE THE ERROR, IT WAS NOT EVEN NOTICED EVEN BY THE ASSESSING OFFICER WHO FRAMED TH E ASSESSMENT ORDER. IN THAT SENSE, EVEN THE ASSESSING OFFICER SEEMS TO HAVE MADE A MIS TAKE 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 ITA NO. 1933/KOL/2016 BHABESH MAJUMDAR 5 INACCURATE PARTICULARS. IT APPEARS TO US THAT ALL T HAT 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 PROVISION FOR GRATUITY TO ITS TOT AL INCOME. THIS CAN ONLY BE DESCRIBED AS A HUMAN ERROR WHICH WE ARE ALL PRONE TO MAKE. THE CAL IBRE AND EXPERTISE OF THE ASSESSEE HAS LITTLE OR NOTHING TO DO WITH THE INADVERTENT ER ROR. THAT THE ASSESSEE SHOULD HAVE BEEN CAREFUL CANNOT BE DOUBTED, BUT THE ABSENCE OF DUE C ARE, IN A CASE SUCH AS THE PRESENT, DOES NOT MEAN THAT THE ASSESSEE 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 SA TISFIED 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 INACCURATE PAR TICULARS. 9. RESPECTFULLY FOLLOWING THE ABOVE, WE ARE OF THE VIEW THAT THE CIT-A WAS NOT JUSTIFIED IN CONFIRMING THE PENALTY I MPOSED BY THE AO U/S. 271(1)(C) OF THE ACT AND, THEREFORE, RS. 33,79 ,927/- IS CANCELLED. THE GROUND RAISED BY THE ASSESSEE IS ALLOWED. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSE SSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19-06-2018 SD/- SD/- M. BALAGANESH S.S. VISWANETHRA RAVI ACCOUNTANT MEMBER JUDICIAL MEMBER DATED :19-06-2018 **PP(SR.P.S.): COPY OF THE ORDER FORWARDED TO: 1 . APP ELLANT/ASSESSEE: SHRI BHABESH MAJUMDAR 41 BALLYGUNG E CIRCULAR ROAD, KOLKATA-700 019. 2 RESPONDENT/DEPARTMENT: ASSISTANT COMMISSIONER OF IN COME, CIRCLE- 45, KOLKATA. 3 . THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER SR.P.S,H.O.O, ITAT .KOL