DEVINA MEHRA, MUMBAI V. ITO, WARD - 4(1) (1), MUMBAI

ITA 2590/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79547 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 10-07-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 04-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DURGA DUTTA
• Assessee Lawyers: SATISH MODY

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN (AM) AND VIVEK VARMA, (JM) .. , , ./I.T.A. NO.2590/MUM/2013 ( / ASSESSMENT YEAR : 2008-09) DEVINA MEHRA, #2, CRESCENT CHAMBERS, 4 TH FLOOR, TAMARIND LANE, FORT, MUMBAI-400001 / VS. INCOME TAX OFFICER WARD 4(1)(1), ROOM NO.636, 6 TH FLOOR, AAYAKER BHAVAN, M K ROAD, MUMBAI-400020 ( !' / APPELLANT) .. ( #$!' / RESPONDENT) ! ./ %& ./PAN/GIR NO. :AAHPM4465E !' ' / APPELLANT BY : SHRI SATISH MODY #$!' ( ' /RESPONDENT BY : SHRI DURGA DUTTA ) * ( +, / DATE OF HEARING : 10.7.2014 -. ( +, /DATE OF PRONOUNCEMENT : 31.7.2014 / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 15.02.2013 PASSED BY LD CIT(A)-8, MUMBAI AND IT REL ATES TO THE ASSESSMENT YEAR 2008-09. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN CONFIRMING THE PENALTY OF RS.28,32,635/- LEVIED BY THE AO U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (THE ACT). 2. THE FACTS RELATING TO THE ISSUE UNDER CONSID ERATION ARE STATED IN BRIEF. THE ASSESSEE FILED THE RETURN OF INCOME FOR THE YEAR UN DER CONSIDERATION DECLARING A I.T.A. NO.2590/MUM/2013 2 TOTAL INCOME OF RS.9.00 LAKHS. DURING THE COURSE O F SCRUTINY PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE HAS RECEIVED INTEREST OF RS.47,21,056/- FROM THE INCOME TAX DEPARTMENT ON THE REFUND RECEIVED BY THE ASSESSEE AND THE SAME WAS NOT INCLUDED IN THE RETURN OF INCOME. WHEN QUES TIONED ABOUT THE SAME, THE ASSESSEE ADMITTED THAT IT WAS AN INADVERTENT ERROR AND ACCORDINGLY AGREED FOR ITS ADDITION. ACCORDINGLY, THE AO ADDED THE AMOUNT OF RS.47,21,056/- TO THE TOTAL INCOME OF THE ASSESSEE. THE AO INITIATED PENALTY P ROCEEDINGS BY HOLDING THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOM E AND ALSO FURNISHED INACCURATE PARTICULARS OF INCOME. AFTER HEARING TH E ASSESSEE, THE AO IMPOSED A PENALTY OF RS.28,32,365/-, BEING THE AMOUNT CALCULA TED AT 200% OF THE TAX SOUGHT TO BE EVADED. THE ASSESSEE COULD NOT SUCCEE D IN THE APPEAL FILED BEFORE THE LD CIT(A). HENCE, THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. 3. THE LD A.R SUBMITTED THAT THE ASSESSEE HAS OM ITTED TO INCLUDE THE INTEREST INCOME IN ITS RETURN OF INCOME BY INADVERT ENCE. HE SUBMITTED THAT THE ASSESSEE HAS DULY NARRATED THE BREAK-UP DETAILS OF THE REFUND AMOUNT OF RS.2.14 CRORES RECEIVED FROM THE INCOME TAX DEPARTMENT IN T HE BANK ACCOUNT LEDGER MAINTAINED IN THE BOOKS OF ACCOUNT. HE SUBMITTED T HAT IT IS STATED IN THE NARRATION THAT THE INCOME TAX REFUND WAS RS.1.67 CR ORES AND INTEREST ON IT REFUND WAS RS.0.47 CRORE. ACCORDINGLY, THE LD A.R SUBMITTED THAT THERE WAS NO INTENTION TO CONCEAL THE ABOVE SAID INTEREST INCOME IN THE RETURN OF INCOME. HE FURTHER SUBMITTED THAT THE ASSESSEE HIMSELF HAS GIV EN THE DETAILS OF BANK ACCOUNT TO THE AO DURING THE COURSE OF ASSESSMENT PROCEEDIN G AND WHEN THE MISTAKE WAS POINTED OUT BY THE ASSESSING OFFICER, HE IMMEDI ATELY ADMITTED THE SAME AND AGREED FOR THE ASSESSMENT OF THE INTEREST INCOME. BY PLACING RELIANCE ON THE I.T.A. NO.2590/MUM/2013 3 DECISION DATED 25-09-2012 RENDERED BY THE HONBLE S UPREME COURT IN THE CASE OF PRICE WATERHOUSE COOPERS PVT LTD VS. CIT (APPEAL NO .6924 -2012), THE LD A.R SUBMITTED THAT THE INADVERTENT MISTAKES SHALL NOT G IVE RISE TO PENALTY. HE FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAS LEVIED PEN ALTY @ 200% OF THE TAX SOUGHT TO BE EVADED, WHICH IN ANY CASE, IS ON THE HIGHER SIDE. 4. THE LD D.R, ON THE CONTRARY, SUBMITTED THAT THE CLAIM OF INADVERTENT MISTAKE IS NOT A PROPER EXPLANATION CONTEMPLATED IN SEC. 271(1)(C) OF THE ACT. THE ASSESSEE, HAVING PROPERLY ACCOUNTED THE BREAK U P DETAILS OF THE INCOME TAX REFUND, SHOULD NOT HAVE OMITTED THE SAME TO INCLUDE IT IN THE TOTAL INCOME. ACCORDINGLY HE SUBMITTED THAT THE ASSESSEE HAS CONC EALED THE PARTICULARS OF INCOME AND ALSO FURNISHED INACCURATE PARTICULARS OF INCOME AND HENCE THE LD CIT(A) WAS JUSTIFIED IN CONFIRMING THE PENALTY LEVI ED BY THE AO. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREF ULLY PERUSED THE RECORD. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT TH E ASSESSEE HAS RECEIVED REFUND FROM INCOME TAX DEPARTMENT AND THE SAID REFUND INCL UDED INTEREST AMOUNT OF RS.47,21,056/- GRANTED BY THE DEPARTMENT. THERE IS ALSO NO DISPUTE THAT THE SAID INTEREST IS LIABLE TO BE INCLUDED IN THE TOTAL INCOME OF THE ASSESSEE. IT IS ALSO A FACT THAT THE ASSESSEE HAS GIVEN THE BREAK-U P DETAILS OF THE INCOME TAX REFUND IN THE NARRATION SHOWN FOR ACCOUNTING THE RE CEIPT. HENCE, NORMALLY IT WOULD NOT ESCAPE THE ATTENTION OF THE PERSON SCRUTI NIZING THE BOOKS OF ACCOUNT FOR THE PURPOSE OF COMPUTING THE TOTAL INCOME. BEF ORE US, THE LD A.R FURNISHED A COPY OF BANK ACCOUNT AS AVAILABLE IN THE LEDGER OF THE ASSESSEE TO SHOW THAT THE ASSESSEE HAS GIVEN THE BREAK-UP DETAILS. ON VERIFI CATION OF THE SAME, IT IS NOTICED THAT THE ASSESSEE HAS GIVEN THE BREAK-UP DE TAILS IN THE NARRATION PORTION. I.T.A. NO.2590/MUM/2013 4 ACCORDING TO THE ASSESSEE, THE DETAILS OF BANK ACCO UNT WAS FURNISHED TO THE AO AND FROM THAT DETAILS ONLY, THE AO HAS FOUND OUT TH AT THE ASSESSEE HAS RECEIVED INTEREST. 6. UNDER DOUBLE ENTRY SYSTEM, IF THE CHEQUE RECEIV ED FROM THE DEPARTMENT IS DEBITED TO THE BANK ACCOUNT, THEN A CORRESPONDING C REDIT SHOULD BE GIVEN TO SOME OTHER ACCOUNT. IN THAT SYSTEM, NORMALLY THE I NTEREST RECEIPT IS DIRECTLY CREDITED TO THE INTEREST RECEIPT ACCOUNT. HENCE, A SPECIFIC QUERY WAS PUT TO THE LD A.R TO FIND OUT AS TO HOW THE CREDIT ENTRY WAS A CCOUNTED. THE LD A.R SUBMITTED THAT THE CORRESPONDING CREDIT ENTRY WAS M ADE IN THE CAPITAL ACCOUNT OF THE ASSESSEE. THEN THE LD A.R WAS ASKED TO FURNISH COPY OF CAPITAL ACCOUNT. THOUGH THE LD A.R AGREED TO FURNISH THE SAME, BUT T ILL DATE WE HAVE NOT RECEIVED IT. WE NOTICE THAT THE ASSESSEE HAS MAINTAINED TH E BOOKS OF ACCOUNT IN A COMPUTER SYSTEM. HENCE, NORMALLY THE SAME NARRATIO N GIVEN IN THE BANK ACCOUNT (CONTAINING BREAK-UP DETAILS) SHALL FIND PL ACE IN THE CAPITAL ACCOUNT ALSO. IT IS ALSO IN THE COMMON KNOWLEDGE OF EVERY BODY TH AT THE TOTAL INCOME OF ANY PERSON IS COMPUTED FOR FILING RETURN OF INCOME ONLY AFTER ANALYSING THE CAPITAL ACCOUNT. HENCE, IT IS HARD TO ACCEPT THAT THE ASSE SSEE HAS COMMITTED INADVERTENT MISTAKE BY NOT INCLUDING THE INTEREST I NCOME IN THE COMPUTATION OF THE TOTAL INCOME. 7. THE LD A.R PLACED RELIANCE ON THE DECISION REN DERED BY THE HONBLE SUPREME COURT IN THE CASE OF PRICE WATERHOUSE COOPE RS PVT LTD (SUPRA). THE FOLLOWING OBSERVATIONS SHOW THAT IT WAS AN EXCEPTIO NAL CASE:- 20. WE ARE OF THE OPINION, GIVEN THE PECULIAR FAC TS OF THIS CASE, THAT THE IMPOSITION OF PENALTY ON THE ASSESSEE IS NOT JUSTIF IED. WE ARE SATISFIED THAT THE ASSESSEE HAD COMMITTED AN INADVERTENT AND BONA FIDE ERROR AND I.T.A. NO.2590/MUM/2013 5 HAD NOT INTENDED TO OR ATTEMPTED TO EITHER CONCEAL ITS INCOME OR FURNISH INACCURATE PARTICULARS. IN THE ABOVE SAID CASE, OTHER EVIDENCES SHOWED THAT ASSESSEE HAD COMMITTED INADVERTENT MISTAKE AND IT DID NOT INTEND TO CONCEA L THE INCOME. FOLLOWING OBSERVATIONS MADE BY HONBLE APEX COURT BRING OUT T HIS POINT:- 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 ASSESSEE DID NOT NOTICE THE ERROR, IT WAS NOT EVEN NOTICED EVEN BY THE ASSESSING OFFICER WHO FRAMED THE ASSESSMENT ORD ER. 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 THAT THERE IS NO QUESTION OF THE ASSESSEE CONCEALING ITS INCOME. TH ERE IS ALSO NO QUESTION OF THE ASSESSEE FURNISHING ANY INACCURATE PARTICULA RS. IT APPEARS TO US THAT ALL THAT HAS HAPPENED IN THE PRESENT CASE IS T HAT THROUGH A BONA FIDE AND INADVERTENT ERROR, THE ASSESSEE WHILE SUBMITTIN G ITS RETURN, FAILED TO ADD THE PROVISION FOR GRATUITY TO ITS TOTAL INCOME. THIS CAN ONLY BE DESCRIBED AS A HUMAN ERROR WHICH WE ARE ALL PRONE T O MAKE. THE FACT THAT THE ASSESSEE HAD SHOWN IN THE TAX A UDIT REPORT THAT THE PROVISION FOR PAYMENT OF GRATUITY IS NOT ALLOWABLE U/S 40A(7) OF THE ACT AND THE FACT THAT EVEN THE AO DID NOT NOTICE THE SAID OMISSION HEAVIL Y SUPPORTED THE CASE OF THE ASSESSEE THEREIN THAT IT WAS AN INADVERTENT HUMAN E RROR. 8. HOWEVER, IN THE INSTANT CASE, THE ASSESSEE, B ESIDES CLAIMING THAT IT WAS AN INADVERTENT ERROR, COULD NOT BRING ANY OTHER MATERI AL TO SHOW THAT THE SAID CLAIM WAS BONA FIDE ONE. ON THE CONTRARY, THE BREAK UP D ETAILS GIVEN BY THE ASSESSEE, IN OUR VIEW, MILITATES AGAINST HIS CLAIM FOR THE RE ASON THAT THE INTEREST ELEMENT COULD NOT HAVE ESCAPED THE ATTENTION OF THE PERSON PREPARING THE RETURN OF INCOME ON A SCRUTINY OF THE CAPITAL ACCOUNT OF THE ASSESSEE. HENCE, IN OUR VIEW, I.T.A. NO.2590/MUM/2013 6 THE ASSESSEE COULD NOT TAKE SUPPORT OF THE DECISION OF HONBLE APEX COURT REFERRED SUPRA. 9. IT IS ALSO PERTINENT TO REFER TO THE DECISIO N RENDERED BY HONBLE SUPREME COURT IN THE CASE OF MAK DATA LTD (358 ITR 598), WH EREIN THE HONBLE APEX COURT HAS HELD THAT THE EXPLANATION OFFERED BY THE ASSESSEE DURING THE COURSE OF PENALTY PROCEEDING DETERMINES THE SCOPE OF PENALTY. IN THE INSTANT CASE, APART FROM STATING THAT IT WAS INADVERTENT MISTAKE, THE A SSESSEE COULD NOT FURNISH ANY OTHER EXPLANATION OR MATERIAL. FURTHER THE ASSESSE E HAS ALSO FAILED TO PROVE THAT THE EXPLANATION OFFERED BY HIM IS BONA FIDE ONE. 10. IN VIEW OF THE FOREGOING DISCUSSIONS, WE ARE OF THE VIEW THAT THE LD CIT(A) WAS JUSTIFIED IN CONFIRMING THE PENALTY LEVI ED BY THE AO. HOWEVER, WE NOTICE THAT THE PENALTY HAS BEEN LEVIED @ 200% OF T HE TAX SOUGHT TO BE EVADED. WE CONSIDER IT TO BE ON THE HIGHER SIDE. ACCORDING LY WE MODIFY THE ORDER OF LD CIT(A) AND DIRECT THE AO TO LEVY THE PENALTY @ 100% OF THE TAX SOUGHT TO BE EVADED. WE ORDER ACCORDINGLY. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSES SEE IS PARTLY ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 31ST JULY , 2014. -. ) / 0 1 31ST JULY, 2014 . ( 2* 3 SD SD ( / VIVEK VARMA) ( . . / B.R. BASKARAN ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER ) * MUMBAI: 31 ST JULY,2014. . . ./ SRL , SR. PS I.T.A. NO.2590/MUM/2013 7 !'#$% &%'# / COPY OF THE ORDER FORWARDED TO : 1. !' / THE APPELLANT 2. #$!' / THE RESPONDENT. 3. ) 5+ ( ) / THE CIT(A)- CONCERNED 4. ) 5+ / CIT CONCERNED 5. 62 #+ 7 , , 7 , ) * / DR, ITAT, MUMBAI CONCERNED 6. 2 8* / GUARD FILE. 9 ) / BY ORDER, TRUE COPY : % (ASSTT. REGISTRAR) , 7 , ) * /ITAT, MUMBAI