Shri Kasturchand Popatlal-HUF, Ahmedabad V. ITO, Ward-3(3)(2), Ahmedabad

ITA 2151/AHD/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8914 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 17-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Cost of acquisition; Tax effect
• Section: 271(1)(c); 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD [CONDUCTED THROUGH VIRTUAL COURT] BEFORE SHRI AMARJIT SINGH, ACCOUNTANT MEMBER & MS. MADHUMITA ROY, JUDICIAL MEMBER I.T.A. NO. 2151/AHD/2018 (ASSESSMENT YEAR: 2014-15) SHRI KASTURCHAND POPATLAL- HUF, 18, ASHWAMEGH BUNGLOWS, 132 FT RING ROAD, SHIVRAJANI CROSS ROAD, SATELLITE, AHMEDABAD VS. ITO WARD-3(3)(2) ROOM NO. 502, 5 TH FLOOR, PRATYAKSH KAR BHAVAN, AMBAWADI, AHMEDABAD - 380015 [PAN NO. AABHK 3445C] ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI VARTIK CHOKSHI, AR RESPONDENT BY : SHRI DILIP KUMAR, SR. D.R. DATE OF HEARING 01.06.2020 DATE OF PRONOUNCEMENT 30 . 0 7 . 20 20 O R D E R PER MS. MADHUMITA ROY - JM: THE INSTANT APPEAL FILED BY THE ASSESSEE IS DIRECTE D AGAINST THE ORDER DATED 28.08.2018 PASSED BY THE COMMISSIONER OF INCO ME TAX (APPEALS) 3, AHMEDABAD ARISING OUT OF THE ORDER DATED 27.03.2 017 PASSED BY THE ITO, WD-3(3)(2), AHMEDABAD UNDER SECTION 271(1)(C) OF TH E INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS TO THE ACT) FOR ASS ESSMENT YEAR 2014-15. 2. THE BRIEF FACTS LEADING TO THE CASE IS THIS THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE A.Y. 2014-15 DECLARING TOT AL INCOME AT RS. 7,49,290/- ON 26.07.2014 WHICH WAS FINALIZED UNDER SECTION 143(3) OF THE ITA NO.2151/AHD/2018 SHRI KASTURCHAND POPATLAL-HUF VS. ITO ASST.YEAR 2014-15 - 2 - ACT ON 28.09.2016 DETERMINING TOTAL INCOME AT RS. 7 ,49,380/- AFTER MAKING ADDITION TO THE TUNE OF RS. 19,79,419/- ON ACCOUNT OF LONG-TERM CAPITAL LOSS. IN FACT, DURING THE COURSE OF ASSESSMENT PROCEEDING THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF LONG-TERM CAPITAL LOSS OF RS. 42,10,057/-. HOWEVER, THE LONG-TERM CAPITAL LOSS WAS ALLOWED TO THE TUNE OF RS. 22,30,368/- ONLY FOR THE RELEVANT ASSESSMENT YEAR UNDER REVIEW SINCE THERE WAS A ERROR IN COMPUTING LONG-TERM CAPITAL LOSS. IT IS THE CASE O F THE ASSESSEE THAT THE ERROR TOOK PLACE BECAUSE OF THE PARTICULAR REASON THAT TH E PROPERTY SOLD WAS PURCHASED IN PHASED MANNER I.E. SHOP NO. 4 WAS PURC HASED IN F.Y. 1997-98 AND THE OTHER TWO SHOPS BEING NO. 5 & 6 WERE PURCHA SED IN F.Y. 2000-01. INADVERTENTLY THE PURCHASED DATE OF ALL SHOPS WAS T AKEN AS IF PURCHASED IN THE F.Y. 1997-98. AFTER ACCEPTING THE ERROR THE AS SESSEE SUBMITTED THE REVISED WORKING OF THE INDEXED ACQUISITION COST AND REVISED LONG-TERM CAPITAL LOSS WHICH WAS DULY ACKNOWLEDGE BY THE AUTH ORITIES BELOW. HOWEVER, PENALTY PROCEEDING WAS INITIATED UNDER SEC TION 271(1)(C) BY THE LD. AO FOR FURNISHING INACCURATE PARTICULARS OF INC OME BY CLAIMING EXCESS LONG-TERM CAPITAL LOSS WHICH WAS OTHERWISE NOT ENTI TLED. FINALLY THE PENALTY PROCEEDING WAS CONCLUDED BY IMPOSITION OF PENALTY O F RS. 4,07,761/- UNDER SECTION 271(1)(C) OF THE ACT ON THE COMMITTED DEFAU LT ON ACCOUNT OF FURNISHING OF INACCURATE PARTICULARS OF INCOME/THER EBY LEADING TO CONCEALMENT. THE SAME WAS, IN TURN, CONFIRMED BY T HE FIRST APPELLATE AUTHORITY. HENCE, THE ASSESSEE IS BEFORE US. 3. AT THE TIME OF THE HEARING OF THE INSTANT APPEAL THE LD. COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE PENALTY DOES NOT FULFILL THE CRITERIA LAID DOWN U/S. 271(1)(C) OF TH E ACT. FURTHERMORE, THE LD. ITA NO.2151/AHD/2018 SHRI KASTURCHAND POPATLAL-HUF VS. ITO ASST.YEAR 2014-15 - 3 - AR SUBMITTED BEFORE US THAT WHILE IMPOSING PENALTY BOTH THE LIMBS BEING FURNISHING OF INACCURATE PARTICULAR OF INCOME AND C ONCEALMENT OF INCOME HAS BEEN ALLEGED BY THE LD. AO WHICH IS AMBIGUOUS A ND VAGUE AS WELL. SINCE THE AO HAS NOT SPECIFIED THE ALLEGED GUILT CO MMITTED BY ASSESSEE BY FURNISHING OF INACCURATE PARTICULARS OF INCOME OR C ONCEALMENT OF INCOME WHICH IS NOTHING BUT NON-APPLICATION OF MIND. IN THIS ASPECT, LEARNED AR RELIED UPON THE JUDGMENT PASSED BY THE HONBLE JURI SDICTIONAL HIGH COURT IN THE MATTER OF SNITA TRANSPORT PVT. LTD-VS-ACIT R EPORTED IN 42 TAXMANN.COM 54 WHERE IT WAS HELD THAT WHILE IMPOSIN G PENALTY U/S 271(1)(C) OF THE ACT THE AO SHOULD APPLY HIS MIND A ND MAKE IT CLEAR AS TO WHETHER HE HAS PROCEEDED AND FINALIZED ON THE BASIS THAT THE TAX PAYER HAS CONCEALED HIS INCOME OR HE HAD FURNISHED INACCURATE PARTICULARS OF INCOME, WHICH ACCORDING TO THE LEARNED AR, HAS NOT BEEN FOL LOWED IN THE INSTANT CASE BY THE LEARNED AO WHILE IMPOSING PENALTY AGAIN ST THE ASSESSEE AT THE FINAL STAGE AS ALSO ARGUED BY THE LD. AR. THE LEARNED AR ALSO RELIED UPON THE JUDGMENT PASSE D BY THE GUJARAT HIGH COURT IN THE CASE OF CIT-VS-JYOTI LTD. REPORTE D IN [2013] 34 TAXMANN.COM 65 (GUJARAT), THE ORDER PASSED BY THE H ONBLE TRIBUNAL, AHMEDABAD BENCHES IN THE CASE OF DHARMESH DHULABHAI PRAJAPATI-VS-ITO IN ITA NO.1570/AHD/2017 FOR A.Y. 2011-12 AND ALSO T HE MATTER OF SMT. USHABEN ATULBHAI SHAH IN ITA NO.197/AHD/2017 FOR A. Y 2012-13. 4. WE HAVE HEARD THE RESPECTIVE PARTIES, WE HAVE AL SO PERUSED THE RELEVANT MATERIALS AVAILABLE ON RECORD. WE FIND TH AT THE ORDER IMPOSING PENALTY HAS NOT SPECIFIED THE GUILT COMMITTED BY TH E ASSESSEE FOR SUCH PENALTY AS ALREADY DISCUSSED BY US WHILE DEALING WI TH FACTS OF THE CASE ITA NO.2151/AHD/2018 SHRI KASTURCHAND POPATLAL-HUF VS. ITO ASST.YEAR 2014-15 - 4 - HEREINABOVE. THE FIRST APPELLATE AUTHORITY, HOWEVE R HAS NOT TAKEN INTO CONSIDERATION THE PARTICULAR ASPECT OF THE MATTER. THE PENALTY ORDER PASSED BY THE LD. AO STATES AS FOLLOWS:- 9. IN VIEW OF THE ABOVE, ON THE BASIS OF THE FACTS AND CIRCUMSTANCES OF THE CASE, I AM SATISFIED THAT THE ASSESSEE HAS COMMITTE D DEFAULT U/S 271(1)(C) OF THE ACT BY WAY OF FURNISHING OF INACCURATE PARTICUL ARS OF INCOME/THEREBY LEADING TO CONCEALMENT. IT IS HELD THAT THE ASSESS EE IS LIABLE FOR PENALTY UNDER SECTION 271(1)9C) OF THE ACT, IT IS THEREFORE DIREC TED THAT THE ASSESSEE SHALL PAY BY WAY OF PENALTY IN ADDITION TO THE AMOUNT OF TAX, A SUM CALCULATED AS UNDER: RS. 1. TOTAL INCOME AS PER RETURN OF INCOME FILED 7,49,380 2. CONCEALED INCOME 19,79,419 3. ASSESSED INCOME 7,49,380 4. TAX ON RETURNED INCOME [AS PER (1) ABOVE] 82,254 5. TAX ON ASSESSED INCOME [AS PER (3) ABOVE] 82,254 6. NOTIONAL TAX EFFECT ON DISALLOWANCE OF EXCESS LONG TERM CAPITAL LOSS CLAIMED OF RS. 19,79,419/-. (TAX 20% RS. 19,79,419/-) = RS. 3,95,884 + 3% EC RS. 11,877/-= 4,07,761/- 4,07,761 7. MINIMUM PENALTY LEVIABLE : 100% OF THE TAX EVADED / SOUGHT TO BE EVADED 4,07,761 8. MAXIMUM PENALTY LEVIABLE : 300% OF THE TAX EVADE / SOUGHT TO BE EVADED 12,23,283 5. IN A NUT SHELL, IT APPEARS FROM THE PENALTY ORDE R THAT THE LEARNED AO HAS NOT LEVIED THE PENALTY ON THE SPECIFIC CHARGE A S MANDATED U/S 271 (1)(C) OF THE ACT. IN SUCH FACTS AND CIRCUMSTANCES THE HON 'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SNITA TRANSPORT PVT. LTD. VS. ASSISTANT COMMISSIONER OF INCOME TAX REPORTED IN 42 TAXMANN.COM 54 HAS HEL D THAT PENALTY CANNOT BE IMPOSED WITHOUT MENTIONING THE SPECIFIC CHARGE. THE RELEVANT EXTRACT OF THE ORDER IS REPRODUCED BELOW: 9. REGARDING THE CONTENTION THAT THE ASSESSING OFFIC ER WAS AMBIVALENT REGARDING UNDER WHICH HEAD THE PENALTY WAS BEING IM POSED NAMELY FOR CONCEALING THE PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS, WE MAY RECORD THAT THOUGH IN THE ASSESSMENT ORDER THE ASSESSING OFFICER DID ITA NO.2151/AHD/2018 SHRI KASTURCHAND POPATLAL-HUF VS. ITO ASST.YEAR 2014-15 - 5 - ORDER INITIATION OF PENALTY ON BOTH COUNTS, IN THE ULTIMATE ORDER OF PENALTY THAT HE PASSED, HE CLEARLY HELD THAT LEVY OF PENALTY IS SUSTAINED IN VIEW OF THE FACT THAT THE ASSESSEE HAD CONCEALED THE PARTICULARS OF INCOME. THUS INSOFAR AS FINAL ORDER OF PENALTY WAS CONCERNED, THE ASSESSING OFFICER WAS CLEAR AND PENALTY WAS IMPOSED FOR CONCEALING PARTICULARS OF I NCOME. IN LIGHT OF THIS, WE MAY PERUSE THE DECISION OF THIS COURT IN CASE OF MA NU ENGINEERING WORKS (SUPRA). IN THE SAID DECISION, THE DIVISION B ENCH CAME TO THE CONCLUSION THAT LANGUAGE OF 'AND/OR' MAY BE PROPER IN ISSUING A NOTICE FOR PENALTY, BUT IT WAS INCUMBENT UPON THE ASSESSING AU THORITY TO COME TO A POSITIVE FINDING AS TO WHETHER THERE WAS CONCEALMEN T OF INCOME BY THE ASSESSEE OR WHETHER ANY INACCURATE PARTICULARS OF S UCH INCOME HAD BEEN FURNISHED BY THEM. IF NO SUCH CLEAR CUT FINDING IS REACHED BY THE AUTHORITY, PENALTY CANNOT BE LEVIED. IT WAS A CASE IN WHICH IN FINAL CONCLUSION THE AUTHORITY HAD RECORDED THAT 'I AM OF THE OPINION TH AT IT WILL HAVE TO BE SAID THAT THE ASSESSEE HAD CONCEALED ITS INCOME AND/OR T HAT IT HAD FURNISHED INACCURATE PARTICULARS OF SUCH INCOME.' IT WAS IN T HIS RESPECT THE BENCH OBSERVED THAT 'NOW THE LANGUAGE OF 'AND/OR' MAY BE PROPER IN ISSUING A NOTICE AS TO PENALTY ORDER OR FRAMING OF CHARGE IN A CRIMINAL CASE OR A QUASI- CRIMINAL CASE, BUT IT WAS INCUMBENT UPON THE IAC TO COME TO A POSITIVE FINDING AS TO WHETHER THERE WAS CONCEALMENT OF INCOME BY TH E ASSESSEE OR WHETHER ANY INACCURATE PARTICULARS OF SUCH INCOME HAD BEEN FURNISHED BY THE ASSESSEE. NO SUCH CLEAR CUT FINDING WAS REACHED BY THE IAC AN D, ON THAT GROUND ALONE, THE ORDER OF PENALTY PASSED BY THE IAC WAS LIABLE T O BE STRUCK DOWN.' THE PRINCIPLES LAID DOWN BY THE HONBLE JURISDICTI ONAL HIGH COURT IN THE ABOVE CASE ARE SQUARELY APPLICABLE TO THE FACTS OF THE CASE IN HAND. WE, THUS, FIND FORCE IN SUCH SUBMISSION MADE BY THE LD. AUTHORISED REPRESENTATIVE. IT IS APPARENT ON THE FACE OF IT A ND AO HAS NOT MENTIONED THE SPECIFIC CHARGE IN ITS PENALTY ORDER WHETHER IT WAS LEVIED FOR CONCEALMENT OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE. IN THAT VIEW OF THE MATTER, WE FIND THAT THE PENALTY LEVIED BY THE AO AND CONFIRMED BY THE LEARNED CIT (A) IS NOT SUSTAINABLE IN THE EYE OF LAW. THE PENALTY, THEREFORE, IS DELETED. HENCE, THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO.2151/AHD/2018 SHRI KASTURCHAND POPATLAL-HUF VS. ITO ASST.YEAR 2014-15 - 6 - AS WE HAVE DELETED THE PENALTY IMPOSED BY THE LEAR NED AO & CONFIRMED BY THE LEARNED CIT(A) ON THE TECHNICAL GR OUND, I.E. NO SPECIFIC CHARGE HAS BEEN INVOKED AS DISCUSSED ABOVE, WE ARE INCLINED TO REFRAIN OURSELVES FROM ADJUDICATING THE GROUNDS OF APPEAL O F ASSESSEE RAISED ON MERITS. 5. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 30/07/2020 SD/- SD/- (AMARJIT SINGH) (MS. MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 30/07/2020 TANMAY, SR. PS TRUE COPY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)- 5. , ! ' , #$%% / DR, ITAT, AHMEDABAD 6. &' () / GUARD FILE. / BY ORDER, / (DY./ASSTT. REGISTRAR) !, #$ / ITAT, AHMEDABAD 1. DATE OF DICTATION 01.06.2020 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 02.06.2020 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 29 .06.2020 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT .06.2020 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S .06.2020 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 30 .07.2020 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER