ITO, Ward-1(2)(4), Vadodara V. Jyoti Yogeshkumar Prajapati, Vadodara

ITA 2038/AHD/2018

AI Insights

The case involves an appeal by the Income Tax Department against the order of the CIT(A) which had provided relief to the assessee, Jyoti Yogeshkumar Prajapati. The dispute centered on the imposition of a penalty under section 271(1)(c) of the Income Tax Act, 1961, for alleged inaccurate disclosure of income. The assessee had initially declared a lower income due to a lack of documents proving her share in the properties sold, which was later corrected to reflect a higher income from long-term capital gains. The CIT(A) found that the error was inadvertent and not intentional, leading to the Department's appeal. The Tribunal dismissed the Department's appeal, agreeing with the CIT(A)'s decision.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 131382 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-02-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 12-12-2022
• Assessment Year: 2014-2015
• Appeal Filed On: 27-09-2018
• Other Referred Cases: BTX Chemical Pvt. Limited v/s CIT, Price Waterhouse Coopers Pvt. Ltd. v/s CIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Cost of acquisition; Set aside; Capital Gains
• Section: 271(1)(c); 207

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “B” BENCH Before: Ms. Annapurna Gupta, Accountant Member And Shri Siddhartha Nautiyal, Judicial Member Th e ITO, Ward-1(2 )(4), Ro o m No. 207 , 2 n d Flo or, Aay kar Bhav an, Race Cou rse, Barod a PIN-3900 07 (Appellant) Vs Jy oti Yog eshkumar Prajap ati, A3 /23, Yo giraj Resid ency Nr. Narayan Garden, Op p. Yash Co mpl ex , Go tri, Vado dara-39 0021 PAN: AP TP P9 415Q (Resp ondent) Asses see b y : Shri Man ish J. Sha h & Shri Rushi n Pa tel, A. Rs. Revenue by : Shri S udhendu Das, CIT-D. R. Date of hearing : 13-12 -2022 Date of pronouncement : 17-02 -2023 आदेश /ORDER PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:- This is an appeal filed by the Revenue against the order of the ld. Commissioner of Income Tax (Appeals)-5, Vadodara in Appeal no. CIT(A), Vadodara-5/10812/16-17, in proceeding u/s. 271(1)(c) vide order dated 30/07/2018 passed for the assessment year 2014-15. ITA No. 2038 /Ahd/2018 Assessment Year 2014-15 I.T.A No. 2038/Ahd/2018 A.Y. 2014-15 Page No. ITO vs. Jyoti Yogeshkumar Prajapati 2 2. The Department has taken the following grounds of appeal:- “1. "On the facts and in the circumstances of the case and in law, the Ld. CIT(Appeals) erred in holding that reduction in the capital loss cannot be considered for imposition of penalty and directing the AO to ignore the reduction in capital loss while imposing penalty u/s. 271(1)(c). 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(Appeals) erred in holding that the assessee did not furnish inaccurate particulars if income in terms of provisions of section 271(1)(c) of the Act. 3. The appellant craves leave to add to, amend or alter the above grounds as may be deemed necessary. Relief claimed in appeal It is prayed that the order of the CIT (Appeals) be set aside and that of the Assessing Officer be restored.” 3. The brief facts of the case are that the assessee has filed return of income for the captioned year declaring income of Rs. 26,370/-. During the course of assessment, the assessee filed revised computation of income declaring long term capital gains at Rs. 43,69,774/- in respect of several properties sold by the assessee during the year under consideration. The assessee submitted that the reason for non-disclosure of such capital gains was that at the time of filing of return of income, the land documents were not available with the assessee as the same have been received by her in inheritance and hence computation could not be filed correctly. I.T.A No. 2038/Ahd/2018 A.Y. 2014-15 Page No. ITO vs. Jyoti Yogeshkumar Prajapati 3 4. The assessee in the revised computation has shown 5% share in these lands on which capital gain was computed at Rs. 43,69,774/-. At the time of finalization of order, the Assessing Officer initiated penalty proceedings on the ground that the assessee had furnished revised computation only when the show cause notice was issued to the assessee. In the penalty proceedings, the Assessing Officer confirmed the penalty u/s. 271(1)(c) of the Act on the ground that the assessee had made an incorrect claim in the return of income intentionally so as to evade payment of taxes. 5. The assessee filed appeal against the order before ld. CIT(A). In appeal, the ld. CIT(A) observe that in the return of income the entire sale consideration of five properties sold during the year was taken into consideration by the assessee at Rs. 9,95,43,700/-. However, subsequently, the assessee realized that her share of sale consideration was only 5% but by mistake and in absence of purchase and sale documents at the time of filing of return of income, the entire sale consideration of Rs. 9,95,43,700/- was taken into consideration by the assessee as her own income from sale of aforesaid properties (though her share was only 5%) while computing long term capital gains and 95% was treated as cost of acquisition, resulting into losses. Accordingly, the ld. CIT(A) held that since both the figures of sale consideration and cost of acquisition were taken incorrectly, the mistake prima facie appears to be inadvertent. Moreover, this error occurred owing to absence of purchase and sale deed at the time of filing of return of income. Accordingly, the ld. CIT(A) CIT(A) allowed the assessee’s appeal with the following observations- I.T.A No. 2038/Ahd/2018 A.Y. 2014-15 Page No. ITO vs. Jyoti Yogeshkumar Prajapati 4 “4.2 As a matter of fact, the appellant received 5% sale consideration out of the sale proceeds of 5 properties sold by her father. She has stated that the records of purchase and sale deeds were not readily available and accordingly, her husband Shri Yogesh Prajapati computed the capital gains on the basis of limited information and then got the return filed through a C.A. firm M/s Prakash Thakkar and Co., Vadodara. In this regard, an affidavit dated 19.09.2016 has been filed before the AO. On perusal of the original working of long term capital gain, I find that the entire sale consideration of 5 properties at Rs.9,95,43,700/-was considered and from the same, 95% was treated as cost of acquisition resulting into loss. Undisputedly, the share of appellant in the property sold by her father was only 5%, but by mistake in the absence of purchase and sale deeds, the entire sale consideration was taken into computation of long term capital gains. Since both the figures of sale consideration and cost of acquisition were taken incorrectly, the mistake appears to be inadvertent. Moreover, this error has occurred in the absence of purchase and sale deeds and on account of husband of appellant who is also a CA but not practicing. The Hon'ble jurisdictional High Court in the case of BTX Chemical Pvt. Limited v/s CIT(2007) 288 ITR 196 (Guj) relied upon by the Ld. AR, has held that penalty could not be imposed in respect of the mistake committed by the CA due to oversight. Further, the Ld AR relied upon a decision of Hon'ble Supreme Court in the case of Price Waterhouse Coopers Pvt. Ltd. v/s CIT (2012) 348 ITR 306 (SC), wherein it has been held that no penalty is imposable in respect of the inadvertent and silly mistake. The case of appellant also falls in this category because the entire sale consideration was considered when the share of the appellant was only 5%. 4.2.1 In view of the above factual and legal position, thus I hold that reduction in the capital loss cannot be considered for imposition of penalty. Even otherwise the return of income filed was of Rs.26,370/- and not the loss. Therefore, as per the provisions of Explanation-4 below section 271(l)(c), difference between assessed income and returned income can only be considered for calculation of tax sought to be evaded for imposing penalty. It is also worthwhile to mention that return of income was filed belatedly and hence capital loss could not be allowed to be carried forward and set off against income of subsequent year under this head. Accordingly, there was no incentive I.T.A No. 2038/Ahd/2018 A.Y. 2014-15 Page No. ITO vs. Jyoti Yogeshkumar Prajapati 5 for returning capital loss. Therefore, reduction in capital loss deserves to be ignored while imposing penalty. The AO is directed accordingly. 4.3 Undoubtedly, the appellant has paid advance tax of Rs.13,65,000/- and since there was no other income, the appellant was aware about the tax liability on long term capital gains to that extent. However, the appellant has claimed entire amount as refund in the return of income filed on 03.09.2014 and hence this act of appellant certainly renders herself liable for penalty. Moreover, the revised computation of long term capital gain was filed after issuance of three notices dated 28/08/2015, 02/05/2016 and 24/06/2016 with specific queries and hence the same cannot be considered as a voluntary act. Accordingly, after considering the totality of fact and circumstances of the case, I am of the considered view that the long term capital gains of Rs.43,69,774/- finally added to the returned income of Rs. 26,370/- is to be treated as income in respect of which inaccurate particulars have been furnished. Accordingly, the AO is directed to impose minimum penalty in respect of the tax sought to be evaded, on addition of Rs.43,69,774/-. Thus appellant succeeded partially. 5. In the result, appeal is Partly Allowed.” 6. The Department is in appeal before us against the aforesaid relief given by the ld. CIT(A) to the assessee. From the facts placed before us and the observations made by ld. CIT(A), we find no infirmity in the order of ld. CIT(A) so as to call for any interference. We further note that ld. Departmental Representative has not been able to point out any defect in the factual observations made by ld. CIT(A) while allowing the appeal of the assessee. From the facts placed on record, in our considered view, it is a case where apparently a bonafide mistake was made by the assessee owing to lack of documents at the time of filing of return of income. Accordingly, I.T.A No. 2038/Ahd/2018 A.Y. 2014-15 Page No. ITO vs. Jyoti Yogeshkumar Prajapati 6 looking into the facts in the instant case, we find no infirmity in the order of ld. CIT(A) and the appeal of the Department is hereby dismissed. 7. In the result, the appeal of the Department is dismissed. Order pronounced in the open court on 17-02-2023 Sd/- Sd/- (ANNAPURNA GUPTA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad : Dated 17/02/2023 आदेश क त ल प अ े षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/ आदेश से, उप/सहायक पंजीकार आयकर अपील य अ धकरण, अहमदाबाद