Priya Ratnam Singh, CHENNAI V. ITO International Taxation Ward 2(2), CHENNAI

ITA 2596/CHNY/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1245 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 27-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A SASHI KUMAR
• Assessee Lawyers: D ANAND
• Keywords: Bonafide belief

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B BENCH, CHENNAI . . . , . , BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.2596/CHNY/2017 ( / ASSESSMENT YEAR: 2013-14) SMT. PRIYA RATNAM SINGH, NO.40, 3 RD STREET, BASHYAM NAGAR, CHROMPET, CHENNAI 600 044. VS THE INCOME TAX OFFICER, INTERNATIONAL TAXATION WARD 2(2), CHENNAI. PAN: BHVPS4367K ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI D. ANAND, ADVOCATE / RESPONDENT BY : SHRI A. SASHI KUMAR, JCIT /DATE OF HEARING : 03.07.2018 /DATE OF PRONOUNCEMENT : 04.09.2018 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THE APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-16, CHENNAI, DATED 21.08.2017 IN ITA NO.98/CIT(A)-16/2013-14 FOR THE ASSESSMENT YEAR 2013-14 PASSED U/S.250(6) R.W.S. 271(1)(C) OF THE ACT. 2 ITA NO.2596/CHNY/2017 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN HER APPEAL HOWEVER THE CRUX OF THE ISSUE IS THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING THE PENALTY LEVIED BY THE LD.AO BY INVOKING THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A NON- RESIDENT INDIVIDUAL, FILED HER RETURN OF INCOME FOR THE ASSESSMENT YEAR 2013-14 ON 29.03.2015 ADMITTING TOTAL INCOME OF RS.8,32,100/-. THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE U/S.143(2) OF THE ACT WAS ISSUED ON 18.09.2015. FINALLY ASSESSMENT ORDER WAS PASSED U/S.143(3) OF THE ACT ON 17.03.2016 WHEREIN THE LD.AO MADE ADDITION OF RS.51,98,118/- TOWARDS LONG TERM CAPITAL GAINS BY WITHDRAWING THE CLAIM OF DEDUCTION U/S.54F OF THE ACT BECAUSE THE ASSESSEE HAD NOT CONSTRUCTED A RESIDENTIAL HOUSE BUT ONLY PURCHASED A VACANT RESIDENTIAL HOUSING SITE. THEREAFTER THE LD.AO HAD INITIATED THE PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT AND LEVIED MINIMUM PENALTY OF RS.10,70,813/- BY STATING THAT THE ASSESSEE HAD WILLFULLY CONCEDED THE PARTICULARS OF INCOME AND FURNISHED INACCURATE PARTICULARS. ON APPEAL THE LD.CIT(A) CONFIRMED THE ORDER OF THE LD.AO BY AGREEING WITH HIS VIEW. 3 ITA NO.2596/CHNY/2017 4. BEFORE US THE LD.AR REITERATED THE SUBMISSION MADE BEFORE THE LD.REVENUE AUTHORITIES BY STATING THAT THE ASSESSEE HAD INFORMED HER AUDITOR THAT CONSTRUCTION WILL BE MADE BEFORE MAY 2015 BY MAKING PAYMENT TO THE CONTRACTOR. IT WAS FURTHER SUBMITTED THAT THE AUDITOR OF THE ASSESSEE WITHOUT RECONFIRMING WHETHER THE ASSESSEE HAD CONSTRUCTED THE HOUSE FILED HER RETURN OF INCOME CLAIMING THE DEDUCTION U/S.54F OF THE ACT. THE LD.AR FURTHER ARGUED THAT THE ASSESSEE COULD NOT COMMUNICATE TO THE AUDITOR AS SHE WAS LIVING IN DUBAI. IT WAS THEREFORE PLEADED THAT THE PENALTY LEVIED MAY BE DELETED AS SHE HAD PROMPTLY PAID THE TAX AMOUNTING TO RS.14,76,340/- ALONG WITH INTEREST. THE LD.DR ON THE OTHER HAND VEHEMENTLY ARGUED IN SUPPORT OF THE ORDERS OF THE LD.REVENUE AUTHORITIES. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE MATERIALS ON RECORD. FROM THE FACTS OF THE CASE IT IS APPARENT THAT THERE WERE MISCOMMUNICATIONS BETWEEN THE ASSESSEE AND HER AUDITOR AS SHE WAS LIVING IN DUBAI, DUE TO WHICH THE AUDITOR COULD NOT BE PROPERLY INFORMED ABOUT THE RECENT DEVELOPMENTS. THE AUDITOR OF THE ASSESSEE UNDER THE BONAFIDE BELIEF THAT THE ASSESSEE 4 ITA NO.2596/CHNY/2017 WOULD HAVE CONSTRUCTED THE HOUSE, AS SHE HAS INFORMED HIM EARLIER OF HER PROPOSAL TO CONSTRUCT A RESIDENTIAL HOUSE, FILED HER RETURN OF INCOME CLAIMING DEDUCTION U/S.54F OF THE ACT. IN THIS PRESENT CIRCUMSTANCE, WE ARE OF THE VIEW THAT THE ASSESSEE SHOULD NOT BE PENALIZED FOR THE INADVERTENT MISTAKE COMMITTED BY THE AUDITOR. AT THIS JUNCTURE WE ARE REMINDED OF THE RATIO LAID DOWN BY THE HONBLE APEX COURT IN THE CASE CIT VS. RELIANCE PETROPRODUCTS PVT. LTD., REPORTED IN 322 ITR 158 WHEREIN THE HONBLE COURT OBSERVED AS FOLLOWS:- A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE IT ACT, 1961, SUGGEST THAT IN ORDER TO BE COVERED BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTION 271(1)(C) WOULD EMBRACE THE MEANING OF THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND TO BE CORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. IN ORDER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGINATION, MAKING AN INCORRECT CLAIM IN LAW CANNOT TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. TO ATTRACT PENALTY THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS.____ A MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW, BE ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. 5 ITA NO.2596/CHNY/2017 PLACING RELIANCE IN THE DECISION OF THE HONBLE APEX COURT CITED SUPRA AND CONSIDERING THE FACTS OF THE CASE, WE ARE OF THE CONSIDERED VIEW THE PENAL PROVISIONS U/S.271(1)(C) CANNOT BE APPLIED IN THE CASE OF THE ASSESSEE BECAUSE THE AUDITOR OF THE ASSESSEE HAD INADVERTENTLY MADE THE CLAIM OF DEDUCTION U/S.54F OF THE ACT WITHOUT VERIFYING THE ENTIRE FACTS AND ONLY BASED ON SOME PRIOR COMMUNICATION RECEIVED. THEREFORE WE HEREBY DIRECT THE LD.AO TO DELETE THE PENALTY LEVIED BY HIM WHICH WAS FURTHER CONFIRMED BY THE LD.CIT(A). 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THE 04 TH SEPTEMBER, 2018 AT CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( . ) (A. MOHAN ALANKAMONY) / ACCOUNTANT MEMBER /CHENNAI, /DATED 04 TH SEPTEMBER, 2018 RSR /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ( )/CIT(A) 4. /CIT 5. /DR 6. /GF