Shri Lalubhai P Bathani, Surat V. Deputy Commissioner of Income Tax circle-3(3), Surat

ITA 242/SRT/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2927 (ITAT-SURAT)
• Duration Of Justice: 3 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 15-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANUPAMA SINGLA
• Assessee Lawyers: SAPNESH SHETH
• Keywords: Reasonable cause; Revised return; Bonafide mistake
• Section: 271(1)(c); 273B; 143(3); 274; 143(2); 139(4)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER ITA NO.242/SRT/2017 (AY 2013-14) (H EARING IN VIRTUAL COURT) SHRI LALUBHAI P BATHANI, 36, HAPPY BUNGLOWS, L.H.ROAD, NR. MATAWADI, VARACHHA ROAD, SURAT 395006. PAN : ABBPB 8036 B VS THE DY. COMMISSIONER OF INCOME TAX, CIRCLE-3(3), SURAT. ASSESSEE/ APPELLANT REVENUE/RESPONDENT ASSESSEE BY SHRI SAPNESH SHETH CA REVENUE BY MS. ANUPAMA SINGLA SR.DR DATE OF HEARING 21 . 0 5 .2021 DATE OF PRONOUNCEMENT 15 .0 6 .2021 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX(APPEALS)-3, HEREINAFTER REFERRED AS LD. CIT(A) SURAT DATED 11.09.2017, WHICH IN TURN ARISES OUT OF PENALTY ORDER UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 [HEREINAFTER REFERRED TO AS THE ACT] DATED 16.06.2016 FOR THE ASSESSMENT YEAR (AY) 2013-14. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN IMPOSING PENALTY OF RS.6,15,466/- U/S 271(1)(C) OF THE I.T. ACT, 1961. ITA NO.242/SRT/2017 SHR LALUBHAI P BATHANI (AY 2013-14) 2 2. IT IS THEREFORE PRAYED THAT PENALTY IMPOSED BY ASSESSING OFFICER AND CONFIRMED BY COMMISSIONER OF INCOME-TAX (APPEALS) MAY PLEASE BE DELETED. 3. APPELLANT CRAVES LEAVE TO ADD, ALTER OR DELETE ANY GROUND(S) EITHER BEFORE OR IN THE COURSE OF HEARING OF THE APPEAL. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL, ENGAGED IN THE WORK OF CONSTRUCTION. THE ASSESSEE FILED HIS RETURN OF INCOME FOR AY 2013- 14 ON 26.03.2014 DECLARING TAXABLE INCOME OF RS. 14,80,410/-. THE ASSESSEE, SUBSEQUENTLY REVISED HIS RETURN OF INCOME BY FILING REVISED RETURN ON 18.06.2014 SHOWING TAXABLE INCOME AT RS. 44,68,110/-. IN THE REVISE RETURN OF INCOME THE ASSESSEE DISCLOSED LONG TERM CAPITAL GAIN OF RS.29,87,700/-. THE CASE WAS SELECTED FOR SCRUTINY. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT ON 21.12.2015. DURING THE ASSESSMENT, THE ASSESSING OFFICER (AO) NOTED THAT ASSESSEE VIDE HIS LETTER DATED 24.11.2015 BROUGHT TO THE NOTICE OF AO THAT HE HAS FILED REVISED RETURN AS COMPLETE SALE CONSIDERATION OF LAND WAS NOT DISCLOSED IN ORIGINAL RETURN OF INCOME. THE COMPLETE SALE CONSIDERATION WAS NOT DISCLOSED DUE TO MISTAKE THAT THE CHEQUE OF SALE CONSIDERATION WAS NOT CLEARED IN HIS ACCOUNT TILL THE END OF FINANCIAL YEAR. THE ASSESSEE REALIZED HIS MISTAKE AND RECTIFIED IT BY FILING REVISED RETURN AND OFFERED ADDITIONAL INCOME ON ACCOUNT OF LONG TERM CAPITAL GAIN (LTCG). THE AO AFTER CONSIDERING THE FACT BROUGHT TO HIS NOTICE NOTED THAT ORIGINAL RETURN WAS FILED BEYOND DUE DATE AND THE REVISED RETURN WAS FILED ON ITA NO.242/SRT/2017 SHR LALUBHAI P BATHANI (AY 2013-14) 3 18.06.2014. THOUGH, THE REVISED RETURN IS FILED BEFORE ISSUANCE OF NOTICE UNDER SECTION 143(2), THE REVISED RETURN CANNOT BE TREATED AS THE SAME WAS FILED BEYOND DUE DATE AFTER THE END OF RELEVANT FINANCIAL YEAR. THE ADDITIONAL/ENHANCED INCOME OFFERED BY ASSESSEE ON ACCOUNT OF LTCG WAS NOT ACCEPTED BY AO AS RECORDED IN THE ASSESSMENT ORDER AND ACCORDINGLY MADE ADDITION OF RS. 29,87,700/- AND INITIATED PENALTY. 3. THE AO ISSUED SHOW-CAUSE NOTICE DATED 21.12.2015 UNDER SECTION 274 READ WITH SECTION 271(1)(C) OF THE ACT. IN RESPONSE TO SHOW-CAUSE NOTICE, THE ASSESSEE FILED HIS REPLY DATED 26.05.2016. IN THE REPLY, THE ASSESSEE STATED THAT DURING THE RELEVANT PERIOD, THE ASSESSEE SOLD ONE PROPERTY (ASSET) AND EARNED CAPITAL GAIN. WHILE FILING ORIGINAL RETURN OF INCOME ON 26.03.2014, THE ASSESSEE UNDERSTATED SALE CONSIDERATION BY RS. 29,87,700/- DUE TO MISTAKE OF ACCOUNTANT. THE ACCOUNTANT COMMITTED MISTAKE AS THE CHEQUE OF SALE CONSIDERATION WAS NOT ENCASED IN HIS ACCOUNT BEFORE 31.03.2013. THE ASSESSEE ON COMING TO KNOW ABOUT THE MISTAKE FILED REVISED RETURN ON 18.06.2014 SHOWING CORRECT SALE CONSIDERATION AND PAID BALANCE TAX WITH INTEREST OF RS. 7,90,549/-. THE ASSESSEE FURTHER STATED THAT DURING ASSESSMENT, THE AO TOOK HIS VIEW THAT ORIGINAL RETURN WAS FILED LATE, IT CANNOT BE REVISED ACCORDINGLY MADE ADDITION. THE ASSESSEE HAS PAID DUE TAX, THUS IT HAD NO EVASION OF TAX. THE RETURN WAS REVISED BEFORE ISSUING NOTICE UNDER SECTION ITA NO.242/SRT/2017 SHR LALUBHAI P BATHANI (AY 2013-14) 4 143(2) OF THE ACT. THE ASSESSEE FURTHER STATED THAT CASE WAS SELECTED FOR SCRUTINY IN SEPTEMBER 2014, HOWEVER, THE ASSESSEE HAS FILED REVISED RETURN AND PAID DUE TAX IN JUNE 2014, THUS, THE ASSESSEE HAS NO INTENTION TO EVADE THE TAX. THE ASSESSEE FURTHER EXPLAINED THAT THE FACT THAT ORIGINAL RETURN CANNOT BE REVISED IS TECHNICAL MANNER WHICH MAKE REVISED RETURN INVALID, HOWEVER, IN SPITE OF THE SAME, THE FILING OF REVISED RETURN AND PAYMENT OF BALANCE TAX, IS FACT AVAILABLE ON RECORD. DUE TO TECHNICAL REASON, REVISED RETURN CANNOT BE FILED, IF ORIGINAL RETURN IS FILED BELATEDLY. HOWEVER, STATUTE DID NOT HAVE ANY MECHANISM OR METHOD UNDER WHICH ASSESSEE MAY CAME FORWARD TO ACCEPT HIS MISTAKE AND PAY BALANCE TAX, IF ANY PAYABLE. THE ONLY OPTION AVAILABLE WITH ASSESSEE TO CAME FORWARD, EXCEPT HIS MISTAKE AND PAY THE BALANCE TAX, IF ANY. THUS, THE ONLY OPTION AVAILABLE WITH THE ASSESSEE, WAS TO PAY TAX AND FILE REVISED RETURN, WHICH THE ASSESSEE ADOPTED. THE ASSESSEE HAS NOT CONCEALED ANY INCOME. 4. THE REPLY FILED BY ASSESSEE WAS NOT ACCEPTED BY THE AO. THE AO WAS OF THE VIEW THAT THE BELATED RETURN CANNOT BE REVISED. THE REVISED RETURN CANNOT BE TREATED AS VALID RETURN, THUS, THE ASSESSEE HAS FURNISHED INACCURATE PARTICULAR AND FIT CASE FOR LEVYING OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE AO ACCORDINGLY LEVIED PENALTY @ 100% OF TAX SOUGHT TO BE EVADED ON SUCH LTCG OFFERED BY ASSESSEE IN REVISED RETURN. THE AO WORKED OUT THE PENALTY ITA NO.242/SRT/2017 SHR LALUBHAI P BATHANI (AY 2013-14) 5 OF RS. 6,15,466/- IN HIS ORDER DATED 16.06.2016. ON APPEAL BEFORE THE CIT(A), THE ACTION OF AO IN LEVYING PENALTY WAS UPHELD. THE CIT(A) UPHELD THE PENALTY ON SIMILAR LINES. FURTHER AGGRIEVED, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE THIS TRIBUNAL. 5. WE HAVE HEARD LD. AUTHORIZED REPRESENTATIVE (AR) FOR ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. AR FOR ASSESSEE SUBMITS THAT ASSESSEE FILED HIS RETURN OF INCOME ON 26.03.2014. THE RETURN OF INCOME WAS REVISED WITHIN THREE MONTHS AND FILED REVISED RETURN ON 18.06.2014. THE REVISED RETURN WAS FILED BEFORE ISSUANCE OF NOTICE UNDER SECTION 143(3) OF THE ACT. THE AO THOUGH TREATED THE ORIGINAL RETURN AS INVALID BEING FILED BEYOND THE TIME PERIOD PRESCRIBED UNDER SECTION 139(4) OF THE ACT AND ACCORDINGLY, NOT ACCEPTED THE REVISED RETURN. HOWEVER, THE LD. AO ACCEPTED THE LTCG OFFERED BY ASSESSEE. IN REPLY TO THE SHOW-CAUSE NOTICE UNDER SECTION 274 READ WITH SECTION 271(1)(C), THE ASSESSEE HAS SHOWN SUFFICIENT REASON FOR NOT LEVYING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE AO INSTEAD OF CONSIDERING THE REPLY OF ASSESSEE SYMPATHETICALLY HELD THAT REVISED RETURN CANNOT BE TREATED AS VALID AS THE SAME HAS BEEN FILED BEYOND DUE DATE AND AFTER THE END OF RELEVANT PERIOD. THE LD. CIT(A) ALSO CONFIRMED THE ORDER OF PENALTY OF SIMILAR LINES. THE LD. AR FOR THE ASSESSEE SUBMITS THAT THE ASSESSEE ITA NO.242/SRT/2017 SHR LALUBHAI P BATHANI (AY 2013-14) 6 HAS NEITHER CONCEALED THE INCOME NOR FURNISHED INACCURATE PARTICULAR THEREOF, IN FACT THE ASSESSEE HIMSELF OFFERED INCOME IN THE FORM OF CAPITAL GAIN. THE CAPITAL GAIN OFFERED BY ASSESSEE WAS ACCEPTED AS NO VARIATION WAS MADE IN THE RETURNED INCOME AND ASSESSED INCOME. THERE WAS NO EVASION OF TAX. IN SUPPORT OF HIS SUBMISSION, THE LD. AR OF THE ASSESSEE RELIED UPON THE FOLLOWING DECISION: 1. CIT VS. SURESH CHANDRA MITTAL 252 ITR 009 (SC) 2. CIT VS. BHAVINKUMAR M. DAGLI- 377 ITR 389 (GUJ.) 3. CIT VS. SHANKERLAL NEBHUMAL UTTAMCHANDANI- 311 ITR 327 (GUJ.) 4. PR.CIT VS. SMT. PRABHJOT KAUR CHHABRA 419 ITR 094 (MP) 5. CIT VS. SURAJ BHAN 294 ITR 481 (P&H) 6. SMT. PUSHPABEN P. SONARUPAWALA VS. ACIT- 17 CCH 023 (AHD TRIB. 6. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUPPORTED THE ORDER OF LOWER AUTHORITIES. THE LD. DR SUBMITS THAT THE MISTAKE IN THE ORIGINAL RETURN OF INCOME WAS APPARENT AS THE ASSESSEE HAS NOT OFFERED THE ADDITIONAL INCOME, OFFERED IN THE REVISED RETURN. IN THE ORIGINAL RETURN, THE ASSESSEE FURNISHED INACCURATE PARTICULARS. ADMITTEDLY, THERE WAS DIFFERENCE OF RS. 29,87,700/- AS FAR AS RETURN FILED ON 26.03.2014. THE AO WAS JUSTIFY IN LEVYING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND HAVE GONE THROUGH THE ORDERS OF LOWER AUTHORITIES. WE FIND THAT THERE IS NO DISPUTE ITA NO.242/SRT/2017 SHR LALUBHAI P BATHANI (AY 2013-14) 7 ABOUT THE FILING OF ORIGINAL RETURN OF INCOME ON 26.03.2014 AND SUBSEQUENTLY THE FILING REVISED RETURN OF INCOME ON 18.06.2014. ADMITTEDLY, IN THE REVISED RETURN, THE ASSESSEE OFFERED LTCG OF RS. 29,87,700/-. THE AO THOUGH TREATED THE REVISED RETURN AS INVALID RETURN. HOWEVER, THE AO WHILE PASSING THE ASSESSMENT ORDER ACCEPTED THE LTCG OF RS. 29,87,700/-. IT IS FURTHER A MATTER OF RECORD THAT NO OTHER ADDITION EXCEPT THE ADDITIONAL INCOME OFFERED BY ASSESSEE BY WAY OF LTCG WAS ADDED. IN REPLY TO THE SHOW-CAUSE NOTICE UNDER SECTION 274 READ WITH SECTION 271(1)(C) OF THE ACT DATED 25.06.2016, WHICH IS EXTRACTED IN PARA-4 OF THE PENALTY ORDER, THE ASSESSEE EXPLAINED THAT DUE TO BONAFIDE MISTAKE WHILE FILING ORIGINAL RETURN, THE LTCG WAS NOT OFFERED. THE ASSESSEE EXPLAINED THAT THE MISTAKE WAS DUE TO THE FACT THAT SALE CONSIDERATION PAID THROUGH CHEQUE WAS NOT CLEARED BY 31.03.2013. WE FIND THAT THESE FACTS ARE NOT DISPUTED BY AO. FURTHER, IT IS NOT IN DISPUTE THAT THE ASSESSEE FILED REVISED RETURN BEFORE ISSUING NOTICE UNDER SECTION 143(2) OF THE ACT. THE ASSESSEE HAS ALSO PAID DUE TAX ALONG WITH INTEREST THEREON. IN OUR VIEW, THE ASSESSEE HAS SHOWN REASONABLE CAUSE WITHIN THE MEANING OF SECTION 273B AND NO PENALTY WAS LEVIABLE IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. 8. THE HONBLE PUNJAB & HARYANA HIGH COURT IN CIT VS. SURAJ BHAN [294 ITR 481] BY FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN CIT VS SURESH ITA NO.242/SRT/2017 SHR LALUBHAI P BATHANI (AY 2013-14) 8 CHAND MITTAL (SUPRA) HELD THAT WHEN THE ASSESSEE FILES A REVISED RETURN SHOWING HIGHER INCOME AND GIVES EXPLANATION THAT HE OFFERED HIGHER INCOME TO BUY PEACE OF MIND AND AVOID LITIGATION, PENALTY CANNOT BE IMPOSED MERELY ON ACCOUNT OF HIGHER INCOME HAVING BEEN SUBSEQUENTLY DECLARED. IN VIEW OF THE AFORESAID FACTUAL AND LEGAL DISCUSSION, WE ARE OF THE VIEW THAT NO PENALTY WAS LEVIABLE ON THE FACTS OF THE PRESENT CASE. 9. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER ANNOUNCED ON JUNE, 2021 BY PLACING RESULT ON NOTICE BOARD. SD/- SD/- ( DR ARJUN LAL SAINI) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER SURAT, DATED:15/06/2021 /SK, PS COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR 6. GUARD FILE TRUE COPY/ BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR, ITAT, SURAT