ITO, Sirsa V. Market Committee, Sirsa

ITA 273/CHANDI/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0089 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 1 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-04-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 17-03-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 14-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Bonafide belief; Revised return
• Section: 143(3)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE VICE PRESIDENT & MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO. 273/CHD/2014 ASSESSMENT YEAR: 2008-09 THE ITO, WARD-1, VS. THE MARKET COMMITTEE, SIRSA SIRSA PAN NO. AAALM0106F (APPELLANT) (RESPONDENT) APPELLANT BY : SH. MANJIT SINGH RESPONDENT BY : SH. TEJ MOHAN SINGH DATE OF HEARING : 17.03.2016 DATE OF PRONOUNCEMENT : 18 .04.2016 ORDER PER H.L.KARWA, VP THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF CIT(A), ROHTAK DATED 02.01.2014 IN CANCELLING THE PENALTY O F RS. 12,15,487/- LEVIED U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'TH E ACT') FOR THE ASSESSMENT YEAR 2008-09. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE FURNISHED ITS RETURN OF INCOME ON 12.9.2008 DECLARING NIL INCOM E AND THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 24.12.2010 AT A TOTAL INCOME OF RS. 2,58,52,540/- BY MAKING INTER ALIA, ADDITIONS OF RS . 73,52,373/- AND RS. 2,57,485/- ON ACCOUNT OF LONG TERM CAPITAL GAINS ON SALE OF SHOPS AT ANAJ 2 MANDI, MALEKAN AND AT COTTON MARKET, SIRSA RESPECTI VELY. THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME REGARDING LONG TERM CAPITAL G AINS. THE ADDITION MADE IN THE ASSESSMENT ORDER WAS CHALLENGED BY WAY OF AN AP PEAL BEFORE THE CIT(A), ROHTAK AND THE CIT(A) VIDE HIS ORDER DATED 7.3.2011 CONFIRMED THE ADDITIONS OF RS. 51,06,547/- AND RS. 2,57,485/- REFERRED TO ABOV E. THE CIT(A) ALLOWED THE RELIEF OF RS. 22,45,826/- ON THE BASIS OF WORKING OF LONG TERM CAPITAL GAINS FURNISHED BY THE ASSESSEE. THE ASSESSEE SUBMITTED I TS REPLY ON 25.1.2012 IN RESPONSE TO THE SHOW CAUSE NOTICE ISSUED U/S 271(1) (C) OF THE ACT. THE ASSESSEE FILED ANOTHER REPLY ON 2.6.2010. THE MAIN CONTENTIO N OF THE ASSESSEE WAS THAT IN THE RETURN OF INCOME, INTER ALIA, PARTICULARS OF LO NG TERM CAPITAL LOSS FROM SALE OF PLOT IN ANAJ MANDI, MALEKAN WAS SHOWN AT RS. 63, 01,476/-. HOWEVER, DURING THE ASSESSMENT PROCEEDINGS, FURTHER INFORMATION IN THIS REGARD WAS FURNISHED AND DURING THIS PROCESS, IT WAS NOTICED THAT SOME CLERI CAL MISTAKE HAD CREPT IN WHILE APPLYING INDEXED COST AND WORKING OUT LONG TERM CAP ITAL LOSS ALTHOUGH THE CORRECT FIGURES OF LONG TERM CAPITAL LOSS WAS AT RS . 11,94,929/-. IT WAS ALSO STATED THAT IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER DETERMINED THE LONG TERM CAPITAL GAINS AT RS. 10,50,897/-. HOWEVER, TH E CIT(A), ROHTAK VIDE HIS ORDER DATED 7.3.2011 AND SUBSEQUENT ORDER DATED 20 .6.2011 HELD THAT THE FIGURES OF LONG TERM CAPITAL LOSS WORKED OUT AT RS. 11,94,9 29/- ( NET LOSS) WAS CORRECT AND HE ACCORDINGLY DIRECTED THE ASSESSING OFFICER T O ALLOW THE RELIEF AFTER VERIFICATION. THE ASSESSEE SUBMITTED THAT ALL THE DETAILS WERE FURNISHED BEFORE THE ASSESSING OFFICER AND THE ASSESSEE WAS UNDER TH E BONAFIDE BELIEF THAT CALCULATION OF LONG TERM CAPITAL LOSS AT RS. 11,94, 929/- WORKED OUT BY IT WAS IN ORDER. ACCORDINGLY, IT WAS CONTENDED THAT FOR B ONA FIDE CLERICAL AND TYPOGRAPHICAL MISTAKE IN THE CALCULATION, PROVISION S OF SECTION 271(1)(C) SHOULD NOT BE INVOKED. AS REGARDS THE WORKING OF LONG TER M CAPITAL GAINS FROM SALE OF SALE OF SHOP IN COTTON MARKET, SIRSA IT WAS STAT ED THAT INDEXED COST OF SHOPS WAS WRONGLY SHOWN IN THE RETURN OF INCOME AS RS. 5, 28,40,383/- BY APPLYING 3 INDEXED COST FOR THE YEAR 2001-02 THROUGH INADVERTE NCE ALTHOUGH CORRECT FIGURE OF INDEXED COST WORKED OUT TO RS. 5,25,82,798/- BEC AUSE DEVELOPMENT EXPENSES OF RS. 70.69 HAD BEEN INCURRED IN THE YEAR 2002-03. IT WAS CONTENDED BY THE ASSESSEE THAT IT BEING THE CLERICAL MISTAKE, THE SA ID ADDITION WAS NOT AGITATED EVEN BEFORE THE CIT(A), ROHTAK. FURTHER COMPLETE F ACTS AND PARTICULARS IN THIS REGARD WERE SUBMITTED BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER DID NOT ACCEPT THE ABOVE REPLIES OF THE ASSESSEE AND HE LD THAT THE ASSESSEE HAD GROSSLY UNDERSTATED THE LONG TERM CAPITAL GAINS EAR NED FROM SALE OF SHOPS AT SIRSA AND MALKEN. ACCORDING TO ASSESSING OFFICER, AS AGAINST LONG TERM CAPITAL GAINS OF RS. 10,50,897/- THE ASSESSEE HAD S HOWN LONG TERM CAPITAL LOSS OF RS. 63,01,476/- ACCORDINGLY, AN ADDITION O F RS. 73,52,373/- WAS MADE. HOWEVER, THE CIT(A) REDUCED THE ADDITION TO RS. 51, 06,547/- AS AGAINST RS. 73,52,373/- MADE BY THE ASSESSING OFFICER. THE ASS ESSING OFFICER FURTHER OBSERVED THAT AS REGARDS THE SHOPS SOLD AT COTTON M ARKET, SIRSA, THE INDEX COST WAS TAKEN AT RS. 5,35,82,798/- AS AGAINST 5,28,40,3 83/- SHOWN BY THE ASSESSEE AND IT RESULTED IN ENHANCEMENT OF CAPITAL GAIN TO R S. 3,63,19,102/- AS AGAINST RS. 3,60,61,617/- AND NET ADDITION OF 2,57,485/- WAS MA DE. THE ASSESSING OFFICER OPINED THAT ASSESSEE HAD FURNISHED INACCURATE PARTI CULARS OF CALCULATION OF LONG TERM CAPITAL GAINS AND HE, THEREFORE, HELD THAT TH E ASSESSEE COMMITTED THE DEFAULT U/S 271(1)(C) OF THE ACT AND IMPOSED A PENA LTY OF RS. 12,15,487/-. 3. ON APPEAL, THE CIT(A) CANCELLED THE PENALTY OBSE RVING THAT ASSESSEE IS A GOVERNMENT DEPARTMENT AND THERE WAS NOT DELIBERATE MOVE TO CONCEAL PARTICULARS OF ITS INCOME. THE LD. CIT(A) FURTHER OBSERVED THAT THE FACT OF THE MATTER IS THAT IT WAS A CLERICAL MISTAKE AND ADMITTED TO BE SO DUR ING THE ASSESSMENT PROCEEDINGS AND THEREFORE, LD. CIT(A) CANCELLED THE PENALTY. 4 4. WE HAVE HEARD THE RIVAL SUBMISSIONS. SHRI TEJ MO HAN SINGH, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN THE PRESENT CASE , COMPLETE FACTS WITH REGARD TO SALE OF SHOPS DURING THE YEAR WERE FURNISHED IN THE RETURN OF INCOME. FURTHER, DUE TO CLERICAL MISTAKE WHILE APPLYING INDEXED COS T SOME MISTAKE OCCURRED WHICH RESULTED IN DISCLOSURE OF LESSER LONG TERM CAPITAL GAIN, BUT THE SAID CALCULATION WAS MADE GOOD DURING THE COURSE OF ASSE SSMENT PROCEEDINGS BY FILING CALCULATION AND REVISED INCOME TAX RETURN. A CCORDING TO LD. COUNSEL FOR THE ASSESSEE, DURING THE COURSE OF ASSESSMENT PROCE EDINGS, THE ASSESSING OFFICER HAS CONSCIOUSLY IGNORED THE REVISED RETURN ON THE P REMISE THAT THE SAME WAS FURNISHED BEYOND THE STATUTORY PERIOD. HE FURTHER P OINTED OUT THAT THE FACTS OF THE PRESENT CASE ARE CLEAR THAT THERE WAS NEITHER C ONCEALMENT OF INCOME NOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. ACC ORDING TO LD. COUNSEL FOR THE ASSESSEE, IN CASE THERE HAPPENS TO BE SOME CLERICAL MISTAKE IN APPLYING INDEXED COST, THE SAME CAN VERY WELL BE CORRECTED EVEN BY THE ASSESSING OFFICER VOLUNTARILY EVEN WITHOUT CONSIDERING THE REVISED RE TURN AND SUCH A CORRECTION DOES NOT AMOUNT TO FURNISHING OF INACCURATE PARTICU LARS OF INCOME. IT IS APPARENT FROM THE RECORDS THAT IN THE RETURN OF INCOME, PART ICULARS OF LONG TERM CAPITAL GAINS FROM SALE OF PLOT IN ANAJ MANDI, MALEKAN WAS SHOWN AT RS. 63,01,476/- HOWEVER, DURING ASSESSMENT PROCEEDINGS THE ASSESSEE FURNISHED FURTHER INFORMATION THAT DUE TO SOME CLERICAL MISTAKE, THE INDEX COST WAS NOT APPLIED CORRECTLY WHILE WORKING OUT THE LONG TERM CAPITAL L OSS ALTHOUGH THE CORRECT FIGURE WAS RS. 11,94,929/-(LOSS). IT APPEARS THAT ASSESSING OFFICER HAD DETERMINED THE LONG TERM CAPITAL GAIN AT RS. 10,50, 897./-. ON APPEAL, THE CIT(A) TOOK THE VIEW THAT FIGURE OF LONG TERM CAPI TAL GAINS WORKED OUT AT RS. 11,94,929/- WAS CORRECT AND ACCORDINGLY DIRECTED TH E ASSESSING OFFICER TO ALLOW THE SAME AFTER VERIFICATION, WHICH WAS ALLOWED BY T HE ASSESSING OFFICER AFTER VERIFICATION. SIMILARLY, WHILE WORKING OUT THE LONG TERM CAPITAL GAINS FROM SALE OF SHOPS IN COTTON MARKET, SIRSA, INDEXED COST OF SHOPS WAS WRONGLY SHOWN IN THE RETURN OF INCOME AT RS. 5,28,40,383/- BY APP LYING THE INDEXED COST FOR THE 5 YEAR 2001-02 THOUGH THE CORRECT FIGURE WORKED OUT A T RS. 5,25,82,798/- BECAUSE DEVELOPMENT EXPENSES OF RS. 70.69 WHICH WAS INCURR ED IN THE YEAR 2002-03 HAD ESCAPED THE NOTICE OF THE ASSESSEE WHILE FILING THE ORIGINAL RETURN. IT IS CLEAR THAT BEING A CLERICAL MISTAKE, THE ADDITION WAS NOT AGIT ATED BEFORE THE CIT(A). IN THE INSTANT CASE, THE ASSESSEE HAD DISCLOSED ALL MATERI AL FACTS BEFORE THE ASSESSING OFFICER. IN OUR OPINION, MERE OMISSION TO COMPUTE C APITAL GAINS CORRECTLY DOES NEITHER AMOUNT TO CONCEALMENT NOR FURNISHING OF INA CCURATE PARTICULARS OF INCOME UNLESS AND UNTIL THERE IS SOME EVIDENCE TO S HOW OR SOME CIRCUMSTANCES FOUND FROM WHICH IT CAN BE GATHERED THAT THE OMISSI ON WAS ATTRIBUTABLE TO AN INTENTION OR DESIRE ON THE PART OF THE ASSESSEE TO CONCEAL THE INCOME SO AS TO AVOID THE IMPOSITION OF TAX THEREON. IN OUR CONSIDE RED VIEW, THERE IS NO CASE OF CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF ITS INCOME IN RESPECT OF THE CAPITAL GAINS IN DISPUTE. SHRI TEJ MOHAN SINGH, LD. COUNSEL FOR THE ASSESSEE HEAVILY RELIED ON THE JUDGEMENT OF THE HON'BLE SUPR EME COURT IN THE CASE OF PRICE WATERHOUSE COOPERS PVT LTD VS. CIT AND ANOTHE R CIT (2010) 348 ITR 306 (SC), WHEREIN THE HON'BLE SUPREME COURT HELD ( HEAD NOTE), AS UNDER;- HELD, ALLOWING THE APPEAL, THAT THE FACTS OF THE C ASE WERE PECULIAR AND SOMEWHAT UNIQUE. NOTWITHSTANDING THAT THE ASSESSEE WAS A REPUTED FIRM AND HAD GREAT EXPERTISE AVAILABLE WITH IT, IT WAS POSSIBLE THAT EVEN THE ASSESSEE COU LD MAKE A 'SILLY' MISTAKE. THE FACT THAT THE TAX AUDIT REPORT WAS FILED ALONG WITH THE RETURN AND THAT IT UNEQUIVOCALLY STA TED THAT THE PROVISION FOR PAYMENT WAS NOT ALLOWABLE UNDER SECTI ON 40A(7) OF THE ACT INDICATED THAT THE ASSESSEE MADE A COMPU TATION ERROR IN ITS RETURN OF INCOME. THE CONTENTS OF THE TAX AUDIT REPORT SUGGESTED THAT THERE WAS NO QUESTION OF THE ASSESSEE CONCEA-LING ITS INCOME OR OF THE ASSESSEE FURNISHIN G ANY INACCURATE PARTICULARS. APART FROM THE FACT THAT TH E ASSESSEE DID NOT NOTICE THE ERROR, IT WAS NOT EVEN NOTICED E VEN BY THE ASSESSING OFFICER WHO FRAMED THE ASSESSMENT ORDER. ALL THAT HAD HAPPENED WAS THAT THROUGH A BONA FIDE AND INADV ERTENT ERROR, THE ASSESSEE WHILE SUBMITTING ITS RETURN, FA ILED TO ADD 6 THE PROVISION FOR GRATUITY TO ITS TOTAL INCOME. THE ASSESSEE SHOULD HAVE BEEN CAREFUL BUT THE ABSENCE OF DUE CAR E, IN A CASE SUCH AS THE PRESENT, DID NOT MEAN THAT THE ASSESSEE WAS GUILTY OF EITHER FURNISHING INACCURATE PARTICULARS OR ATTE MPTING TO CONCEAL ITS INCOME. ON THE PECULIAR FACTS OF THIS C ASE, THE IMPOSITION OF PENALTY ON THE ASSESSEE WAS NOT JUSTI FIED. DECISION OF THE CALCUTTA HIGH COURT REVERSED. 5. IN OUR OPINION, THE RATIO LAID DOWN BY THE HON'B LE SUPREME COURT IN THE CASE OF PRICE WATERHOUSE COOPERS PVT LTD V CIT AND ANOTHER (SUPRA) IS SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CA SE. IN THE INSTANT CASE, THE ASSESSEE IS A GOVERNMENT DEPARTMENT AND THERE WAS A CLERICAL MISTAKE IN COMPUTING THE CORRECT FIGURE OF LONG TERM CAPITAL G AINS / LONG TERM CAPITAL LOSS BY APPLYING CORRECT INDEXED COST, WHICH WAS AD MITTED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THEREF ORE, IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, WE ARE OF THE VI EW THAT THE LD. CIT(A) HAS CORRECTLY CANCELLED THE PENALTY. ACCORDINGLY, WE U PHOLD HIS ORDER AND DISMISS THE APPEAL FILED BY THE REVENUE. 6. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18.04.2016 SD/;- SD/- (RANO JAIN) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT DATED 18 TH APRIL, 2016 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR