Appeal details
Counselvise Citation
[2016] 132 COUNSELVISE.COM (IT) 4586 (ITAT-KOLKATA)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 6 month(s) 23 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
01-07-2016
Appeal Filed By
Assessee
Bench Allotted
C
Assessment Year
2004-2005
Appeal Filed On
09-12-2013
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH C , KOLKATA [BEFORE HONBLE SHRI M.BALAGANESH, AM & SHRI S.S. VISWANETHRA RAVI, JM] ITA NO.2735/KOL/2013 ASSESSMENT YEAR : 2004-05 SUKHBIR SINGH DHUPIA -VERSUS- A.C.I.T., CIRCLE-39 , KOLKATA KOLKATA (PAN:ADPPD 7774 C) ( APPELLANT ) (RESPONDENT) FOR THE APPELLANT : SHRI VIGYANESHWAR NATH DATTA, A DVOCATE FOR THE RESPONDENT : SHRI RAJAT KUMAR KUREEL, JCIT, SR.DR DATE OF HEARING : 21.06.2016. DATE OF PRONOUNCEMENT : 01.07.2016. ORDER PER SHRI M.BALAGANESH, AM THIS APPEAL OF THE REVENUE ARISES OUT OF TH E ORDER OF THE LEARNED CIT(A) IN APPEAL NO. 05/CIT(A)-IV/2009-10 DATED 27.09.2013 FO R THE ASST YEAR 2004-05 PASSED AGAINST THE ORDER OF ASSESSMENT FRAMED BY TH E LEARNED AO U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS TH E ACT). 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS A S TO WHETHER THE LEARNED CITA IS JUSTIFIED IN UPHOLDING THE LEVY OF PENALTY U/S 271( 1)( C) OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE BRIEF FACTS OF THE CASE IS THAT THE ASSESS EE FILED THE RETURN OF INCOME FOR THE ASST YEAR 2004-05 ON 29.10.2004 SHOWING TOTAL TAXAB LE INCOME OF RS. 1,09,48,890/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSEE FILED DETAILS OF DIVIDEND RECEIVED AND DETAILS OF MUTUAL FUNDS TRANSACTIONS C ARRIED OUT BY THE ASSESSEE. THE ASSESSEE HAD DECLARED LOSS ARISING ON SALE OF MUTUA L FUNDS AND THE ASSESSEE ACCEPTED FOR DISALLOWANCE OF THE SAME INVOKING THE PROVISION S OF SECTION 94(7) OF THE ACT. THE TAXABLE INCOME WAS ASSESSED U/S 143(3) OF THE ACT A T RS. 1,34,70,990/- ON 21.12.2006 AFTER MAKING DISALLOWANCE U/S 94(7) OF THE ACT TO T HE TUNE OF RS. 25,22,098/-. LATER ITA NO.2735/KOL/2013 SUKHBIR SINGH DHUPIA A.YR.2004-05 2 THE ASSESSMENT WAS SUBJECT TO RECTIFICATION PROCEED INGS U/S 154 DATED 3.5.2007 WHEREIN THE DISALLOWANCE U/S 94(7) OF THE ACT WAS R EDUCED TO RS. 6,22,248/-. THE LEARNED AO INITIATED PENALTY PROCEEDINGS U/S 271(1) (C ) OF THE ACT WHILE COMPLETING THE ASSESSMENT U/S 143(3) ON 21.12.2006 FOR THE ORI GINAL DISALLOWANCE MADE U/S 94(7) OF THE ACT. THE PENALTY U/S 271(1)(C ) OF THE ACT WAS LEVIED TO THE EXTENT OF RS. 69,318/- VIDE ORDER DATED 25.3.2009. THE SAID PEN ALTY WAS UPHELD BY THE LEARNED CITA. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS:- 1. FOR THAT THE PENALTY U/S 271(1)(C) OF THE ACT I S NOT TENABLE IN LAW AND IS OPPOSED TO REQUIREMENT OF LAW AND BAD IN LAW. 2. FOR THAT THE IMPOSITION OF PENALTY OF RS.69,318/ - U/S 271(1)(C) OF THE ACT IS UNJUSTIFIED, UNWARRANTED AND UNCALLED FOR. 3. FOR THAT APPELLANT CRAVES LEAVE TO AMEND, ALTER, ADD, DELETE OR SUBSTITUTE ANY OTHER GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 4. THE LEARNED AR ARGUED THAT THE LEARNED AO HAD NOT MENTIONED THE SPECIFIC CHARGE OF OFFENCE COMMITTED BY THE ASSESSEE IN THE PENALTY NOTICE VIZ CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. INSTEAD THE NOTICE MERELY MENTIONED THAT THERE IS A FALSE CLAIM OF LONG TERM CAPITAL GAIN AND SHORT TERM CAPITAL GAIN. ON THIS GROUND, HE ARGUED THAT PEN ALTY LEVIED DESERVES TO BE CANCELLED. HE ARGUED THAT THE LEARNED AO HAVING REDUCED THE DI SALLOWANCE BY RS. 18,99,850/- IN THE RECTIFICATION ORDER U/S 154 DATED 3.5.2007 FAIL ED TO INITIATE PENALTY PROCEEDINGS IN THE SECTION 154 PROCEEDINGS. HENCE PENALTY LEVIED DESERVES TO BE DELETED ON THIS COUNT ALSO. HE FURTHER ARGUED THAT MERE DISALLOWAN CE OF CLAIM WOULD NOT AUTOMATICALLY RESULT IN LEVY OF PENALTY. IN RESPO NSE TO THIS, THE LEARNED DR STATED THAT THE SATISFACTION OF THE LEARNED AO ABOUT THE SPECIF IC CHARGE OF OFFENCE COMMITTED BY THE ASSESSEE IS VERY MUCH DISCERNIBLE FROM THE ASSE SSMENT ORDER. HE ACCORDINGLY ARGUED THAT PENALTY HAS BEEN RIGHTLY LEVIED. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE LEARNED AR STATED THAT THE ASSESSEE HAD HEAVILY DEPENDED ON PORTFOLIO MANAGEMENT SERVICE PROVIDER WHO HAD SUGGESTED HIM T O MAKE INVESTMENT IN CERTAIN MUTUAL FUNDS WHICH WERE ABOUT TO DECLARE HUGE DIVID ENDS IN THE NEAR FUTURE AND HAD ITA NO.2735/KOL/2013 SUKHBIR SINGH DHUPIA A.YR.2004-05 3 ALSO SUGGESTED THE ASSESSEE TO EXIT FROM THE SAID F UNDS AT THE RIGHT TIME. THE ASSESSEE HAD ALSO FAITHFULLY FOLLOWED THE INSTRUCTIONS OF TH E SAID CONSULTANT WITHOUT KNOWING THE INTRICACIES OF THE PROVISIONS OF THE INCOME TAX ACT. WE FIND THAT THE EXPLANATION OFFERED BY THE ASSESSEE IS BONAFIDE AND ONLY DUE TO IGNORANCE OF PROVISIONS OF THE ACT. HOWEVER, THE BELIEF OF THE ASSESSEE SEEMS TO BE BON AFIDE AND THAT CANNOT BE DOUBTED WITH. IT IS WELL SETTLED THAT IGNORANTIA JURIS N ON EXCUSAT MEANING IGNORANCE OF LAW IS OF NO EXCUSE. HOWEVER, THIS MAXIM HAS BEEN DUL Y CONSIDERED BY THE HONBLE APEX COURT IN THE CASE OF MOTILAL PADAMPAT SUGAR MILLS C O. LTD VS STATE OF UTTAR PRADESH & ORS REPORTED IN (1979) 118 ITR 326 (SC) WHEREIN IT WAS OBSERVED THAT : THERE IS NO PRESUMPTION THAT EVERY PERSON KNOWS THE LAW. IT IS OFTEN SAID THAT EVERY ONE IS PRESUMED TO KNOW THE LAW, BUT THAT IS NOT A CORRECT STATEMENT ; THERE IS NO SUCH MAXIM KNOWN TO THE LAW. OVER A HUN DRED AND THIRTY YEARS AGO , MAULA J. POINTED OUT IN MARTINDALE V FALKNER (1846) 2 CB 706 : THERE IS NO PRESUMPTION IN THIS COUNTRY THAT EVERY PERSON KNOWS THE LAW : IT WOULD BE CONTRARY TO COMMON SENSE AND REASON IF IT WERE SO. SCRUTTON L.J. ALSO ONCE SAID : IT IS IMPOSSIBLE TO KNOW ALL THE STATUTORY LAW, AND NOT VERY POSSIBLE TO KNOW ALL THE COMMON LAW. BUT IT WAS LORD ATKIN WHO, AS IN SO MANY OTHER SPHERES, PUT THE POINT IN ITS PROPER CONTEXT WHEN H E SAID IN EVANS VS BARTLAM (1937) AC 473 : . THE FACT IS THAT THERE IS NOT A ND NEVER HAS BEEN A PRESUMPTION THAT EVERY ONE KNOWS THE LAW. THERE IS THE RULE THAT IGNORANCE OF THE LAW DOES NOT EXCUSE, A MAXIM OF VERY DIFFERENT SCOPE AND APPLICATION. IT IS, THEREFORE, NOT POSSIBLE TO PRESUME, IN THE ABSE NCE OF ANY MATERIAL PLACED BEFORE THE COURT , THAT THE APPELLANT HAD FULL KNOW LEDGE OF ITS RIGHT TO EXEMPTION SO AS TO WARRANT AN INFERENCE THAT THE APPELLANT WA IVED SUCH RIGHT BY ADDRESSING THE LETTER DT 25 TH JUNE , 1970 . WE, ACCORDINGLY, REJECT THE PLEA OF WAIVER RAISED ON BEHALF OF THE STATE GOVERNMENT. MOREOVER, WE FIND THAT MERE DISALLOWANCE OF CLAIM M ADE BY THE ASSESSEE CANNOT LEAD TO AUTOMATIC LEVY OF PENALTY. RELIANCE PLACED BY T HE LEARNED AR ON THE FOLLOWING DECISIONS IS WELL FOUNDED:- CIT VS BINANI INVESTMENTS LTD REPORTED IN 383 ITR 6 35 (CAL) CIT VS RELIANCE PETROPRODUCTS (P) LTD REPORTED IN 3 22 ITR 158 (SC) ITA NO.2735/KOL/2013 SUKHBIR SINGH DHUPIA A.YR.2004-05 4 RESPECTFULLY FOLLOWING THE RATIO LAID DOWN IN THE A FORESAID DECISIONS , WE HAVE NO HESITATION IN CANCELLING THE LEVY OF PENALTY IN THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSES SEE ARE ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 01.07.2016. SD/- SD/- [S.S.VISWANETHRA RAVI] [M.BALAGAN ESH] JUDICIAL MEMBER ACCOUNTANT MEMBE R DATE: 01.07.2016. R.G.(.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . SUKHBIR SINGH DHUPIA, C/O TAPARIA & CO., 28, BLACK BURN LANE, 6 TH FLOOR, KOLKATA-700012. 2 THE A.C.I.T., CIRCLE-39, KOLKATA. 3 . THE CIT-XIII, KOLKATA, 4. THE CI T(A)-IV, KOLKATA. 5 . DR, KOLKATA BENCHES, KOLKATA TRUE COPY, BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES
