Zal Sam Cooper, Satara V. ACIT, Satara Cir., Satara

ITA 318/PUN/2010

• Counselvise Citation: 31824514 RSA 2010
• Duration Of Justice: 1 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 21-11-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 24-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K AMBASTHA
• Keywords: Salary income; Wrong claim

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER I.T.A. NO. 318/PN/2010 : A.Y. 2006-07 ZAL SAM COOPER C/O. COOPER CORPORATION PVT. LTD., L-3 ADDL. MIDC, SATARA 415 004 PAN ABAPC 1125 D APPELLANT VS. ADDL. CIT SATARA CIRCLE, SATARA RESPONDENT APPELLANT BY: SHRI C.H. NANIWADEKAR RESPONDENT BY: SHRI S.K. AMBASTHA DATE OF HEARING: 21-11-2011 DATE OF PRONOUNCEMENT : 29-11-2011 ORDER PER SHAILENDRA KUMAR YADAV, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A)-III PUNE DATED 16-11-2009 FOR A.Y. 2006-07 AGAINST THE CONFIRMATION OF PENALTY LEVIED U/S 271( 1)(C) OF THE ACT. 2. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS CLAIMED SET OFF OF BUSINESS LOSS OF RS. 11,68,982/- AGAINST THE INCOME FROM SALARY AT RS 57,63,308/- WHICH WAS NOT PERMISSIBLE IN VIEW OF THE SPECIFIC PROVISIONS OF S ECTION 71(2A) OF THE ACT. THEREFORE, SET OFF OF BUSINESS L OSS CLAIMED AT RS. 11,68,982/- AGAINST THE INCOME FROM SALARY WAS DISALLOWED AND THE PENALTY PROCEEDINGS WERE INI TIATED 2 ITA NO. 318/PN/2010 ZAL SAM COOPER A.Y. 2006-07 AS THE ASSESSEE HAD CLAIMED WRONG CLAIM OF SET OFF AGAINST THE SALARY INCOME AND THE PENALTY WAS IMPOSED BY IN VOKING THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT WHIC H WAS CONFIRMED BY THE CIT(A). 3. THE STAND OF THE ASSESSEE HAS BEEN THAT IT HAD INADVERTENTLY CLAIMED SET OFF OF LOSS IN BUSINESS A GAINST HIS SALARY INCOME. THIS INADVERTENT MISTAKE WAS NOT DELIBERATELY COMMITTED TO EVADE TAX. IT WAS STATED THAT ALL THE FACTS RELATING TO BUSINESS LOSS AND OTHER HEADS OF INCOME HAD BEEN FULLY DISCLOSED AND THE INADVERTENT MISTAKE OF SET OFF OF LOSS IN BUSINESS AGAINST SALA RY INCOME COULD NOT BE CONSIDERED AS FURNISHING OF INACCURATE PARTICULARS OF INCOME. SO, PENALTY IN QUESTION BE DELETED. ON THE OTHER HAND, THE LEARNED DR RELYING ON THE OR DERS OF AUTHORITIES BELOW CONTENDED THAT THE IGNORANCE OF L AW IS NO EXCUSE. SO PENALTY SHOULD BE UPHELD. 4. AFTER HEARING THE RIVAL SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAS C LAIMED SET OFF OF BUSINESS LOSS AGAINST SALARY INCOME WHIC H WAS DISALLOWED BY THE AUTHORITIES BELOW AND CONSEQUENTL Y, PENALTY IN QUESTION WAS LEVIED BY THE ASSESSING OFF ICER, WHICH WAS CONFIRMED BY THE CIT(A). THE ASSESSEE HA S CLAIMED SET OFF OF BUSINESS LOSS AGAINST SALARY INC OME WHICH WAS NOT FOUND CORRECT. IT IS SINE QUA NON F OR IMPOSITION OF PENALTY THAT THE ASSESSING OFFICER DU RING THE COURSE OF PROCEEDINGS BEFORE HIM, SHOULD BE SATISFI ED THAT THE ASSESSEE HAS (I) CONCEALED HIS INCOME, OR (II) FURNISHED INACCURATE PARTICULARS OF INCOME. THE PENALTY SHOU LD BE IMPOSED ON THE ASSESSEE UNDER THE MAIN PROVISIONS O F SECTION 271(1)(C) OF THE ACT AS A PLAIN READING OF THIS SECTION UNAMBIGUOUSLY INDICATES, PENALTY CAN ONLY B E 3 ITA NO. 318/PN/2010 ZAL SAM COOPER A.Y. 2006-07 LEVIED WHEN THERE IS SOMETHING ON RECORD TO LEAD TO POSITIVE FINDING THAT THE ASSESSEE HAS CONCEALED INCOME OR FURNISHED INACCURATE PARTICULARS THEREOF. CONCEALM ENT AS ALSO FURNISHING OF INACCURATE PARTICULARS CANNOT BE PASSIVE IN NATURE AND, THEREFORE, UNLESS THERE IS M ATERIAL ON RECORD WHICH DEMONSTRATES ACTIVE CONDUCT OF THE ASSESSEE TOWARDS CONCEALMENT OF INCOME OR TOWARDS FURNISHING OF INACCURATE PARTICULARS, PENALTY UNDER THE MAIN SECTION SHOULD NOT BE IMPOSED. IN THE CASE OF CONCEALMENT OF INCOME OR IN THE CASE OF INACCURATE PARTICULARS HAVING BEEN FURNISHED, THERE ARE SITUAT IONS IN WHICH THE ASSESSEE DEEMED TO HAVE CONCEALED THE INC OME OR FURNISHED THE INACCURATE PARTICULARS. THESE ARE THE SITUATIONS IN WHICH EVEN WITHOUT THERE BEING ANYTHI NG TO INDICATE CONCEALMENT OF INCOME OR FURNISHING OF INA CCURATE PARTICULARS, STATUTORY DEEMING FICTION FOR CONCEALM ENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS COM ES INTO PLAY. IN ADDITION TO NORMAL CONNOTATIONS OF CONCEA LMENT AND FURNISHING OF INACCURATE PARTICULARS THUS, A DE EMING FICTION IS ALSO IMPLICIT IN THE SCHEME OF PENALTY P ROVISIONS. THE DEEMING FICTION, BY WAY OF EXPLANATION 1 TO SEC TION 271(1)(C) ENVISAGES TWO SITUATIONS (A) FIRST, WHE RE IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF TOTAL INCOME UNDER THE PROVISIONS OF THE ACT, THE ASSESSE E FAILS TO OFFERS AN EXPLANATION OR THE EXPLANATION OFFERED BY THE ASSESSEE IS FOUND TO BE FALSE BY THE ASSESSING OFFI CER AND, (B) SECOND, WHERE IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF TOTAL INCOME UNDER THE PROVISIONS OF THIS ACT, THE ASSESSEE IS NOT ABLE TO SUBSTANTIATE THE EXPLANATION AND THE ASSESSEE HAD DISCLOSED ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATIO N OF TOTAL INCOME. IN THE PRESENT CASE, THE ASSESSEE HA S BONAFIDELY CLAIMED SET OFF OF BUSINESS LOSS AGAINST THE 4 ITA NO. 318/PN/2010 ZAL SAM COOPER A.Y. 2006-07 SALARY INCOME. THIS BONAFIDE HAS NOT BEEN DEMOLISH ED BY THE REVENUE AUTHORITIES THOUGH THE SET OFF HAS BEE N RIGHTLY DISPROVED IN QUANTUM PROCEEDINGS. QUANTUM PROCEEDI NGS ARE INDEPENDENT OF PENALTY PROCEEDINGS. ACCORDING TO US, INADVERTENT BONAFIDE WRONG CLAIM CANNOT BE THE SOUN D BASIS FOR IMPOSING PENALTY IN QUESTION. ACCORDINGL Y, WE DELETE THE PENALTY IN QUESTION. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. PRONOUNCED IN THE OPEN ON 29 TH NOVEMBER 2011. SD/ - (G.S. PANNU) ACCOUNTANT MEMBER SD/ - SHAILENDRA KUMAR YADAV JUDICIAL MEMBER PUNE DATED THE 29 TH NOVEMBER 2011. ANKAM COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT III PUNE 4. CIT(A)- III PUNE 5. THE D.R, ITAT PUNE BENCH, PUNE 6. GUARD FILE BY ORDER SR. PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES, PUNE.