DARAB DUBASH PVT. LTD., MUMBAI V. DCIT-1(1), MUMBAI

ITA 2905/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8003 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 20-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUM BAI BEFORE S/SHRI RAJENDRA, A.M. AND SANDEEP GOSAIN,J.M . ITA NO. 2905/MUM/2016 / ASSESSMENT YEAR: 2010-11 M/S. DARAB DUBASH PVT.LTD. DARABSHAW HOUSE, 4TH FLOOR BALLARD ESTATE, MUMBAI-400 001. PAN: AAACD 1573 G VS. DCIT-1(1) AAYAKAR BHAVAN, MUMBAI-20. APPELLANT ) RESPONDENT ) REVENUE BY: SHRI V. JUSTIN ASSESSEE BY: SHRI MADHUR AGARWAL DATE OF HEARING: 26/09/2017 / DATE OF PRONOUNCEMENT: 20.12.2017 1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) -PER RAJENDRA,AM: CHALLENGING THE ORDER,DATED 21.01.2016,OF THE CIT ( A)-2, MUMBAI THE ASSESSEE HAS FILED THE PRESENT APPEAL.ASSESSEE-COMPANY,DERIVING INCOME FRO M INVESTMENT IN LONG TERM AND SHORT TERM ASSETS,FILED ITS RETURN OF INCOME,ON 15/10/2010,DEC LARING TOTAL INCOME AT RS.4.20 LAKHS.THE ASSESSING OFFICER(AO)COMPLETED THE ASSESSMENT U/S.1 43(3)OF THE ACT,ON 06/03/2013, DETERMIN - ING ITS INCOME AT RS.20.82 LAKHS. 2. EFFECTIVE GROUND OF APPEAL IS ABOUT CONFIRMATION O F LEVY OF PENALTY OF RS.2.98 LAKHS.DURING THE COURSE OF ASSESSMENT PROCEEDINGS,THE AO FOUND T HAT THE ASSESSEE HAD COMPUTED THE BUSINESS LOSS AT RS.5,74,715/-,THAT IT HAD NOT OFFERED CAPIT AL GAINS ON SALE OF SHARES OF RS.19,32,854/-.THE AO BROUGHT THE FACT TO THE NOTICE OF THE ASSESSEE.I N ITS RESPONSE,THE ASSESSEE SUBMITTED THAT THE SHORT TERM CAPITAL GAIN(STCG)OF RS.15,76, 282/-WAS NOT INCLUDED IN THE COMPUTATION INADVERTENT -LY.AFTER CONSIDERING THE SUBMISSION OF THE ASSESSE E,THE AO ADDED THE CAPITAL GAIN ON SALE OF SHARES OF RS.19.32 LAKHS TO THE TOTAL INCOME OF THE ASSESSEE.HE ALSO INITIATED PENALTY U/S.271(L)(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME.VIDE HIS ORDER,DATED 30-09-2013,THE AO LEVIED A PENALTY OF RS.2 ; 98 ; 630/-, U/S.271(L)(C) OF THE ACT WITH REGARD TO THE ADDITION MADE ON ACCOUNT OF STCG,EARNED BY THE ASSESSEE,ON SALE OF SHARE.HE HELD THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME LEADING TO CONCEALMENT OF INCOME. 2905/M/16 M/S. DARAB DUBASH PVT.LTD. 2 3. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE FILED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA) AND MADE DETAILED SUBMISSIONS. IT RE LIED UPON THE CASES OF PRICE WATERHOUSE COOPERS PVT. LTD.,ANWAR ALI (76 ITR 696),K. R. CHIN NI KRISHNA CHETTY (246ITR121)AND RELIANCE PETROPRODUCTS.AFTER CONSIDERING THE ASSESS MENT ORDER, PENALTY ORDER AND THE SUBMISSIONS OF THE ASSESSEE,HE HELD THAT PERUSAL OF THE COMPUTATION OF INCOME FILED BY THE APPELLANT REVEALED THAT EVEN WITHOUT OFFERING THE S AID STCG IT HAD TO PAY TAX OF RS.50,387/-. HE ALSO REPRODUCED THE COMPUTATION OF TOTAL INCOME OF THE ASSESSEE AND OBSERVED THAT IT HAD TO PAY ADVANCE TAX BY 30/07/2009,THAT FINALLY IT PAID TAX ON 10-10-2013 I.E.AFTER THE COMPLETION OF THE ASSESSMENT,THAT THE CASE LAWS RELIED UPON BY THE AP PELLANT WERE NOT RELEVANT TO THE FACTS OF THE CASE UNDER CONSIDERATION,THAT AS PER THE COMPUTATIO N OF TAX ON INCOME,THE ASSESSEE HAD NOT PAID TAX OF RS.50,387/-,THAT MERE DISCLOSING THE STCG IN THE COMPUTATION OF INCOME WAS NOT SUFFICIENT, THAT THE ASSESSEE HAD SOLD THE SHARES D URING THE YEAR UNDER CONSIDERATION,THAT IT HAD NOT PAID ADVANCE-TAX ON THE SAME EVEN THOUGH IT HAD SUBSTANTIAL PROFIT ON SALE OF SHARES,THAT HAD THE CASE BEEN NOT SELECTED FOR SCRUTINY THE TAX ON PROFIT EARNED ON SALE OF SHARES HAD REMAINED UNDETECTED,THAT IN THE COMPUTATION OF TOTAL INCOME IT HAD NOT CONSIDERED THE CAPITAL GAIN,THAT HAD IT BEEN PAID THE TAX PORTION RELATING TO THE STCG L EVY OF PENALTY COULD HAVE BEEN EXONERATED,THAT HAVING NOT PAID THE TAX IT HAD MISLEAD THE AO BY CL AIMING A REFUND OF RS.2,39,182/-,THAT IT HAD FURNISHED INACCURATE PARTICULARS BEFORE THE AO. ACC ORDINGLY,THE FAA CONFIRMED THE PENALTY ORDER OF THE AO. 3. BEFORE US,THE AUTHORISED REPRESENTATIVE(AR) STATED THAT THE ASSESSEE HAD DISCLOSED ALL THE NECESSARY DETAILS ABOUT THE CAPITAL GAINS, HAT THE WORKING OF THE CAPITAL GAIN WAS FURNISHED DURING THE ASSESSMENT PROCEEDINGS, THAT THERE WAS AN INADV ERTENT MISTAKE ON THE PART OF THE ACCOUNTANT NOT SHOWING THE DISPUTED AMOUNT, THAT THE PERSON CO NCERNED HAD FILED AN AFFIDAVIT IN THAT REGARD, THAT IF THE COMPUTATION MADE BY THE ASSESSEE WAS CO NSIDERED IT WAS A CASE OF REFUND, THAT WHILE PAYING THE ADVANCE TAX THE ASSESSEE HAD CONSIDERED THE AMOUNT AS PER HIS BOOKS OF ACCOUNT, THAT THE FIRST APPELLATE AUTHORITY HAD TAKEN A WRONG FIG URE. HE REFERRED TO PAGE NO.27,22, 20 AND 19 OF THE PAPER BOOK. HE RELIED UPON THE CASE OF PRIC E WATER COOPERS PVT. LTD. (348ITR306). THE DR ARGUED THAT THE ASSESSEE HAD NOT DISCLOSED THE R ELEVANT FACTS OF CAPITAL GAIN, HAD IT NOT BEEN SELECTED FOR SCRUTINY,THE ASSESSEE WOULD HAVE TAKEN THE BENEFIT OF NOT PAYING THE TAXES. HE REFERRED TO THE CASE OF ZOOM COMMUNICATIONS. 2905/M/16 M/S. DARAB DUBASH PVT.LTD. 3 IN THE REJOINDER THE AR STATED THAT THE CIT(A) HAD NOT CONSIDERED THE CASE OF PRICE WATER COOPERS PVT. LTD., THAT ONE OF THE REASON FOR UPHOL DING THE PENALTY ORDER WAS NON-PAYMENT OF ADVANCE TAX. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE FAA, WHILE DECIDING THE APPEAL HAS MAINLY DEALT WITH PAY MENT OF TAXES AND THAT ONE OF THE REASONS FOR UPHOLDING THE ORDER OF THE AO IS NON-PAYMENT OF ADV ANCE TAX BY THE ASSESSEE.HE HAS MENTIONED THAT HAD THE ASSESSEE PAID THE TAX PORTION RELATING TO THE STCG LEVY OF PENALTY COULD HAVE BEEN EXONERATED . IN OUR OPINION,THE ONE OF THE BASIS FOR CONFIRMING THE PENALTY ORDER IS TOTALLY FLAWED.PAYMENT OF TAXES HAD ITS OWN CONSEQUENCES AND PAYMENT/NON-PAYM ENT OF TAXES CANNOT BE AND SHOULD NOT BE BASIS OF LEVYING OR NON LEVYING OF PENALTY U/S.271( 1)(C)OF THE ACT.WE WOULD LIKE TO MENTION THAT THE OBJECT BEHIND ENACTMENT OF SEC.271(1)(C) OF TH E ACT IS TO PROVIDE A REMEDY FOR LOSS OF REVENUE AND IT IS A CIVIL LIABILITY,THAT IMPOSITION OF PENALTY U/S.271(1)(C) IS NOT AKIN TO OR LIKE CRIMINAL PROCEEDINGS AND THE QUESTION OF MENS REA O R MALA FIDES ON THE PART OF THE ASSESSEE NEED NOT BE EXAMINED AND IS NOT RELEVANT.IN SUCH CASES,I T HAS TO BE EXAMINED AS TO WHAT WAS THE EXPLANATION OF THE ASSESSEE DURING THE PENALTY PRO CEEDINGS AND WHETHER SAME COULD BE TREATED A BONA FIDE EXPLANATION.IN OTHER WORDS,IF AN ASSESSEE FAILS TO OFFER THE EXPLANATION ABOUT FILING OF INACCURATE PARTICULARS OR CONCEALING THE PARTICULAR S OF INCOME,OR HE OFFERS THE EXPLANATION WHICH IS FOUND BY THE AUTHORITIES TO BE FALSE,OR HE OFFER S EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FI DE THEN PENALTY U/S.271(1)(C) OF THE ACT CAN BE IMPOSED.THE FAA HAS NOT EXAMINED THIS VITAL ASPECT- THE EXPLANATION FILED BY THE ASSESSEE ABOUT NON LEVY OF PENALTY.HE HAS TO COMMENT UPON IT AND T AKE A DECISION ACCORDINGLY.WE HOLD THAT THE MATTER NEEDS PROPER ADJUDICATION.THEREFORE,IN THE I NTEREST OF JUSTICE,WE ARE REMITTING BACK THE MATTER TO THE FILE OF THE FAA.HE IS DIRECTED TO DEC IDE THE ISSUE AFTER AFFORDING A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE.EFFECTIVE GR OUND OF APPEAL IS DECIDED IN FAVOUR OF THE ASSESSEE,IN PART. AS A RESULT,APPEAL FILED BY THE ASSESSEE STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH DECEMBER, 2017. 20 TH , 2017 SD/- SD/- ( /SANDEEP GOSAIN) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER 2905/M/16 M/S. DARAB DUBASH PVT.LTD. 4 MUMBAI; /DATED : 20.12.2017. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR E BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.