DHANANJAY N. MUNGALE, MUMBAI V. ACIT 11(2), MUMBAI

ITA 2805/MUM/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62413 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 02-05-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 11-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G K NAIR
• Assessee Lawyers: MATRUDEV VASUDEVAN
• Keywords: Wrong claim

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D , MUMBAI BEFORE : SHRI P. M. JA GTAP, ACCOUNTANT MEMBER & SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA NO.2805 /MUM/2011 ASSESSMENT YEAR: 2004-2005 DHANANJAY N. MUNGALE, 10A, AMEYA APARTMENT, OFF KASHINATH DHURU RD. NEAR KIRTI COLLEGE, PRABHADEVI, MUMBAI-400 028. PAN NO.AADPM4264H ACIT 11(2), MUMBAI-400 020. APPELLANT VS. RESPONDENT APPELLANT BY : MR. MATRUDEV VASUDEVAN RESPONDENT BY : MR. G.K.NAIR DATE OF HEARING : 2 ND MAY 2012 DATE OF PRONOUNCEMENT : 16 TH MAY 2012 O R D E R PER AMIT SHUKLA (J.M.) : THE APPEAL HAS BEEN FILED BY T HE ASSESSEE AGAINST ORDER DATED 5-1-2011, PASSED BY THE CIT(A)-3, MUMBAI IN RELATION TO THE PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) FOR THE ASSESSMENT YEAR 2004- 2005. 2. THE ASSESSEE IS AGGRIEVED BY LEVY OF PENALTY OF RS.29,800/- ON ACCOUNT OF CLAIM OF SHORT TERM CAPI TAL LOSS ON SALE OF UNITS OF MUTUAL FUND. THE ASSESSEE IS A CHATTE RED ACCOUNTANT AND IS ENGAGED IN THE PROFESSION. IN HE RETURN OF INCOME, HE HAD SHOWN SHORT TERM CAPITAL GAIN OF RS.16,12,867/-. THE ASSESS ING OFFICER NOTICED THAT DURING THE ITA NO : 2805/MUM/2011 2 YEAR, THE ASSESSEE HAD EARNED AN AMO UNT OF RS.16,18,350/- BY WAY OF SHORT TERM CAPITAL GAIN ON SALE OF SHARES AND AN AMOUNT OF RS.3,83,734/- ON ACCOUNT OF REDEMPT ION OF MUTUAL FUND UNITS. IT WAS FURTHER NOTICED BY HIM THAT WHILE CO MPUTING THE NET SHORT TERM CAPITAL GAIN, THE ASSESSEE HAD SET OFF AN AMOUNT OF RS.3,47,167/- AND RS.1,04,050/- WHICH HAS CLAIMED TO BE SHORT TERM CAPITAL LOSS ON SALES OF SHARES AND SHORT TERM CAPITAL LOSS ON SALE OF BONDS. WHILE LOOKING TO THE WORKING OF THE SHORT TERM CAPITA L LOSS OF RS.1,04,050/-, FILED ALONG WITH THE RETURN, THE ASSESSING O FFICER FOUND THAT THE SAME WAS ON ACCOUNT OF SALE/REDEMPTION OF MUT UAL FUND UNITS. ON PERUSAL OF THE DEMAT ACCOUNT AND DETAILS OF SALES AND PURCHASE OF MUTUAL FUND, HE FOUND THAT THE ASSESSEE HAS RECEIV ED DIVIDEND OF RS.3,56,757/- WHICH WAS EARNED FROM MUTUAL FUNDS AND AT THE WHEREAS SAME TIME HE HAS CLAIMED SHORT TERM CAPITAL LOSS ON SA LE OF MUTUAL F UND AT RS.90,250/-. THE WORKING OF SHORT TERM CAPITAL LO SS AND AMOUNT OF DIVIDEND RECEIVED IS GIVEN HEREUNDER :- SR. NO NAME OF MUTUAL FUND DATE OF PURCHASE DATE OF SALE AMOU NT OF STC LOSS SHOWN (RS.) DATE OF RECEIPT OF DIVIDEND AMOUNT OF DIVIDEND RECEIVED 1 RELIANCE GROWTH FUND 01/12/2003 23/02/2004 25,149 19/12/2003 1,26,849 2 DSPML SHORT TERM FUND- DIVIDEND 23/05/2003 03/08/2003 3,267 16/07/2003 1,05,593 3 DSPML SAVINGS PLUS QUARTERLY DIVIDEND 15/09/2003 25/11/2003 5,337 29/09/2003 53,716 ITA NO : 2805/MUM/2011 3 4 DSPML SHORT TERM FUND DIVIDEND 22/05/2003 25/07/2003 2,927 17/07/2003 7,517/- 5 SUNDARAM SELECT MIDCAP DIVIDEND 12/11/2003 09/02/2004 53,570 24/11/2003 67,082 TOTAL 90,250 3,60,757 IN VIEW OF THE PROVISION OF SECTI ON 94(7), THE ASSESSING OFFICER HELD THAT THE SHORT TERM CAPITAL LOSS OF RS.95,000/- WILL NOT BE ALLOWABLE AS THE ASSESSEE HAS RECEIVED HUGE DI VIDEND INCOME. HE ACCORDINGLY DISALLOWED THE SHORT TERM CAPITAL LO SS OF RS.90,250/-. THE ASSESSEE ACCEPTED THE ASSESSMENT AND DID NOT CHALLENGE THE SAID DISALLOWANCE. 3. IT IS ON THIS DISALLOWANCE OF LO SS OF RS.90,250/- THAT THE PENALTY OF RS.29,800/- HAS BEEN LEVIED. THE LEARNED CIT (A) HAS CONFIRMED THE PENALTY ON THE GROUND THAT THE PROVISIONS OF SECTION 94(7) ARE ABSOLUTELY CLEAR AND THE ASSESSEE HA S MADE A FALSE CLAIM OF SHORT TERM CAPITAL LOSS. 4 . LEARNED AR ON BEHALF OF THE ASSE SSEE CONTENDED THAT ALL THE DETAILS WERE FURNISHED AND IT WAS SO LELY DUE TO OMISSION THAT THE LOSS WAS ERRONEOUSLY CLAIMED AND THERE WAS NO FURNISHING OF INACCURATE PARTICULARS. HE RELIED UPON THE DECISION OF THE HONBLE SUPREME IN THE CASE OF RELIANCE PETRO PRODUCTS, REPORTED IN (2010) 323 ITR 158 . ON THE OTHER HAND, LEARNED SR DR SUBMI TTED THAT IT WAS A CLEARLY CASE OF FALSE CLAIM AND WAS IN DIRECT CONT RAVENTION OF LEGAL PROVISIONS OF SECTION 94(7), THEREFORE, LE VY OF PENALTY IS JUSTIFIED. ITA NO : 2805/MUM/2011 4 5 . WE HAVE HEARD THE RIVAL CONTENTIONS AND ALSO PERUSED THE RELEVANT FINDING GIVEN IN THE IMPUGNED ORDERS. HERE IN THIS CASE, THE ASSESSEE HAS CLAIMED S HORT TERM CAPITAL LOSS, WHICH WAS AS PER THE ACTUAL WORKING OF THE AMOUNT OF LOSS QUANTIFIED IN THE TRANSACTION. THOUGH, IN VIEW OF THE PROVISIONS OF SECTION 94(7), SUCH A LOSS IS NOT ALLOWABLE AS THE DIVIDEND INCOME HAD EXCEEDED MORE THAN THE LOSS AMOUNT. THEREFORE, IT CANNOT BE AN INCORRECT CLAIM BUT IT DOES NOT AMOUNT TO FURNISHING OF INACCURATE PA RTICULARS, AS ALL THE DETAILS AND WORKINGS WERE SUBMITTED BY THE ASSESSEE IN HIS RETURN OF INCOME. EVEN THOUGH AS PER THE STATUTE, THE SAID LOSS IS DISALLOWABLE, HOWEVER, FOR THE PURPOSE OF CHARGING THE ASSESSEE, GUILTY OF FURNISHING OF INACCURATE PARTICULARS CANNOT BE UPHELD AS THE FIGURE OF DIVIDEND AND FIGURE OF LOSS WAS DULY AVAILABLE IN T HE RETURN OF INCOME ITSELF EXCEPT THAT SUCH A LOSS CANNOT BE ALLOWED IN VIEW OF SECTION 94(7). THE HONBLE SUPREME COURT IN THE CASE OF M/S RELIANCE PETRO PRODUCTS (SUPRA) HELD THAT MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN THE EYES OF LAW BY ITSELF, WILL NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. THE RELEVANT OBSERVATIONS OF THEIR LORDSHIPS ARE AS UNDER :- . A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME- TAX ACT, 1961, SUGGESTS 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 DETAILS OF THE CLAIM MADE. WHERE NO INFORM ATION GIVEN IN THE RETURN IS ITA NO : 2805/MUM/2011 5 FOUND TO BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PAR TICULARS. 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 CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RE TURN FILED BY THE ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS IN COME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILITY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE, NO EXACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF IN VITING THE PENALTY UNDER SECTION 271(1)(C). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSE SSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. 6. IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE, THE PENALTY OF RS.29,800/- LEVIED BY THE ASSE SSING OFFICER UNDER SECTION 271(1)(C) IS DELETED. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED ORDER PRONOUNCED ON THIS 16 TH DAY OF MAY, 2012. ( P.M.JAGTAP ) ( AMIT SHUKLA ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DT: 16 TH MAY, 2012 PKM ITA NO : 2805/MUM/2011 6 COPY FORWARDED TO : 1. THE APPELLANT, 2. THE RESPONDENT, 3. THE C.I.T. 4. CIT (A) 5. THE DR, B - BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI