Shri Hasmukh Jayantilal Thakkar, Ahmedabad V. The Income Tax Officer, Ward-3(3)(2), Ahmedabad

ITA 32/AHD/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8146 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 04-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: D K PARIKH
• Keywords: Bonafide mistake
• Section: 143(3); 54F; 27; 54

Judgement Text

, , ,, ,LK LKLK LK- -- -,E ,E,E ,E- -- -LH LHLH LH IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD OLHE VGEN] OLHE VGEN] OLHE VGEN] OLHE VGEN] YS[KK LNL; YS[KK LNL; YS[KK LNL; YS[KK LNL; , BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ I.T.A. NO.32/AHD/2017 ( / ASSESSMENT YEAR : 2010-11) SHRI HASMUKH JAYANTILAL THAKKAR, 32, SUMERU BUNGLOWS, OPP:RAJSUYU BUNGLOWS, SATELLITE, AHMEDABAD. / VS. INCOME TAX OFFICER, WARD 3(3)(2), AHMEDABAD. ./ ./ PAN/GIR NO. : ABWPT 9680 J ( / APPELLANT ) .. ( !' / RESPONDENT ) # / APPELLANT BY : SHRI D. K. PARIKH, A.R. !' $ # / RESPONDENT BY : SHRI V. K. SINGH, SR. D.R. % &' $ () / DATE OF HEARING 24/05/2018 *+,- $ () / DATE OF PRONOUNCEMENT 29/05/2018 . / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE APPELLATE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-3, AHMEDABAD [CIT(A) IN SHORT] VIDE APPEAL NO.CIT(A)- 3/440/WD.3(3)(2)/15-16 DATED 26/10/2016 ARISING IN THE PENALTY ORDER PASSED UNDER S.271(1)(C) OF THE INCOME TAX ACT, 196 1 (HEREINAFTER REFERRED TO AS 'THE ACT') DATED 31/12/2015 RELEVAN T TO ASSESSMENT YEAR (AY) 2010-11. ITA NO.32/AHD/2017 SHRI HASHMUKHBH AI JAYANTILAL THAKKAR VS. ITO ASST.YEAR 2010-11 - 2 - 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS UNDER:- 1. THE LD .CIT(APPEALS) ERRED BOTH IN LAW AND ON FACTS IN CONFIRMING THE PENALTY OF RS.1,37,734/- LEVIED UNDE R SECTION 271(1) OF THE INCOME TAX ACT, 1961 IN RESPECT OF B ONAFIDE AND INADVERTENT CLAIM OF EXCESS EXEMPTION U/S 54F IGNOR ING THE SUBMISSIONS AND HOLDING THAT THE PENALTY WAS RIGHTL Y LEVIED FOR CONCEALED INCOME FOR WHICH INACCURATE PARTICULARS W ERE FURNISHED. THE LD CIT(APPEALS) OUGHT TO HAVE ACCEPT ED THE PLEA RAISED AND DELETED PENALTY. 2. THE LD C1T(APPEALS) ERRED IN LAW AND ON FACTS IN CONFIRMING THE ORDER LEVYING PENALTY U/S 271(1) WHEN THE EXPLANAT ION FURNISHED BY THE APPELLANT WAS NOT FOUND TO BE FALS E AND SINCE PENALTY PROCEEDINGS ARE QUITE INDEPENDENT OF ASSESS MENT PROCEEDINGS, THE PENALTY OUGHT NOT TO HAVE BEEN LEV IED BASED ON MERE ADDITION. IT BE SO HELD NOW AND PENALTY LEVIED BY AO AND CONFIRMED BY THE CIT(APPEALS) BE CANCELLED. 3. THE ID CIT(APPEALS) FURTHER ERRED IN LAW AND O N FACTS IN NOT CONSIDERING THE BINDING JUDGMENT S OF THE JURISDICT IONAL HIGH COURT AND THE TRIBUNALS DIRECTLY ON THE ISSUE WHICH WERE RELEVANT TO THE FACTS. THERE BEING NO FALSITY IN EX PLANATION AND ALSO THERE BEING NO FIRM CHARGE AS TO CONCEALMENT O R INACCURATE PARTICULARS, THE PENALTY OUGHT TO HAVE BEEN DELETED . IT BE DELETED NOW. 3. ASSESSEE, IN THIS APPEAL HAS CHALLENGED THE PENA LTY LEVIED U/S 271(1)(C) OF THE ACT. 4. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND FILED ITS RETURN OF INCOME CLAIMING EXEMPTION U/S 54F OF THE ACT FOR RS. 15,48,100/-, WHEREAS, HE WAS ENTITLED FOR THE EXEM PTION FOR RS.9,95,988/- ONLY. THEREFORE, THE ADDITION WAS MAD E TO THE TOTAL INCOME OF RS.6,67,917/- ONLY (15,48,100 - 9,95,988) ON ACC OUNT OF EXCESS ITA NO.32/AHD/2017 SHRI HASHMUKHBH AI JAYANTILAL THAKKAR VS. ITO ASST.YEAR 2010-11 - 3 - EXEMPTION CLAIMED U/S 54F OF THE ACT. THE AO, IN I TS ASSESSMENT ORDER FRAMED U/S 143 (3) R.W.S 263 OF THE ACT VIDE DATED 27-07-2015 INITIATED THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. THE AO FINALLY LEVIED THE PENALTY IN ITS ORDER DATE D 31-12-2015 FOR RS. 1,13,734/- BEING 100% OF AMOUNT OF THE TAX SOUGHT T O BE EVADED U/S 271(1)(C) OF THE ACT. 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL TO LEARN ED CIT (A) WHO CONFIRMED THE ORDER OF THE AO. 6. BEING AGGRIEVED BY THE ORDER OF LEARNED CIT(A), ASSESSEE IS IN SECOND APPEAL BEFORE US. THE LEARNED AR BEFORE US S UBMITTED AS UNDER: 2. APPELLANT SOLD LAND FOR RS.19,17,000/- AND LON G TERM CAPITAL GAIN WAS COMPUTED BY APPELLANT AT RS.18,76,687/- WH ICH IS SAME AS COMPUTED BY AO [PARA 3 OF ASSESSMENT ORDER DATED 27 .07.2015 U/S 143(3) R.W.S 263] 3. HOWEVER, THE APPELLANT HAVING MADE INVESTMENT O F RS.15,48,100/- IN THE RESIDENTIAL HOUSE, COMPUTED E XEMPTION BY DEDUCTING RS.15,48,100/- FROM LTCG OF RS.18,76,687/ -AND DECLARED NET CAPITAL GAIN AT RS.3,28,587/- AND AFTER SET OFF OF LOSS ON LTCG DECLARED NET GAIN AT RS.1,15,805/-. THE RETURNED INCOME AND EXEMPTION CLAIMED AS DECLARED WAS ACCEPTED BY ORDER PASSED U/S 143(3) R.W.S 147. 4. HOWEVER, EXEMPTION WAS CLAIMABLE U/S 54F AND NO T S. 54 HENCE EXEMPTION WAS ALLOWABLE ON PROPORTIONATE BASIS OF N ET CONSIDERATION. THE ORDER WAS THEREFORE REVISED BY CIT U/S 263 POIN TING OUT ABOVE ERROR 4. THE AO THEREFORE COMPUTED EXEMPTION U/S 54F AT RS.9,95,988/- (PARA 3 PAGE 2 OF ASSESSMENT ORDER. THE NET LTCG WA S COMPUTED BY ITA NO.32/AHD/2017 SHRI HASHMUKHBH AI JAYANTILAL THAKKAR VS. ITO ASST.YEAR 2010-11 - 4 - AO AT RS. 6,67,917/- AS AGAINST RS. 1,15,805/- AND THUS THERE IS EXCESS CLAIM OF EXEMPTION OF RS.5,52,112/- (RS. 6,67,917-1 ,15,805). 5. THE APPELLANT SUBMITTED THAT THERE WAS BONAFIDE ERROR AS EXEMPTION WAS CALCULATED ON THE BASIS OF INVESTMENT MADE (FIGURE OF INVESTMENT NOT IN DISPUTE) WHICH IS RELEVANT U/S 54 AND NOT U/S 54F WHERE PROPORTIONATE EXEMPTION IS GIVEN BASED ON PRO PORTION OF NET CONSIDERATION INVESTED. THE AO HOWEVER, VIDE PENALT Y ORDER DATED 31.12.2015 CONCLUDED THAT IGNORANCE IS NO EXCUSE AN D HELD THAT APPELLANT COMMITTED DEFAULT BY FURNISHING INACCURATE PARTICULARS OF INCOME / CONCEALMENT OF INCOME. [PARA 11 OF PENALTY ORDER] 6. CONSIDERING BONAFIDE MISTAKE OF THE COUNSEL PRE PARING RETURN AS SUBMITTED TO CIT(A) DUE TO SIMILARITY IN BOTH SECTI ON 54 & 54F , THE PENALTY OUGHT NOT TO BE LEVIED AS HELD IN THE CASES CITED BEFORE CIT(A) IE. SH MAJROJIT SINGH VS ACIT ITA NO: 1108/CHD/2011 (ATTACHED EX-A), SHRI PRABODHKUMAR GUPTA VS A.O. ITA NO: 1032/CHD/20 12 (ATTACHED EX-B) AND SARV PRAKASH KAPOOR VS DCIT ITA NO: 95(AGRA) 2012 2 6 TAXMAN.COM 256 (ATTACHED EX-C) . LD CIT(A) DID NOT CONSIDER THE SAID DECISIONS AND OBSERVED THAT JUDGMENT FROM JURISDICT IONAL ITAT OR GUJARAT HIGH COURT ON THE ISSUE WERE NOT SUBMITTED. 7. ALL INFORMATION AND PARTICULARS WERE FURNISHED A ND THERE WAS NO DISPUTE REGARDING FACT OF INVESTMENT MADE IN NEW HO USE OR FIGURES OF INVESTMENT. THE DIFFERENCE IS DUE TO CONFUSION OF T HE COUNSEL BETWEEN TWO PROVISIONS OF EXEMPTION. IN VIEW OF ABOVE FACTS AND LEGAL POSITION EMERGING FROM THREE DECISIONS, IT IS PRAYED THAT PE NALTY BE DELETED. 8. WITHOUT PREJUDICE TO ABOVE, THERE IS ALSO NO FIR M CHARGE AS TO WHETHER THE AO IS SATISFIED ABOUT INACCURATE PARTIC ULARS OR CONCEALMENT AS IN THE ASSESSMENT ORDER ONLY ISSUE PENALTY NOTI CE IS MENTIONED AND IN THE PENALTY SHOW CAUSE NOTICE, BOTH CHARGES ARE MENTIONED. IN FINAL ORDER OF PENALTY (PARA 11) THE CONCLUSION DRAWN IS ALSO BOTH INACCURATE PARTICULARS/CONCEALMENT OF INCOME. ORDER IS THUS BAD IN LAW. 9. CIT(A) HAS WRONGLY RELIED ON JUDGMENT IN MAK DATA WHICH IS NOT APPLICABLE AND IS RIGHTLY DISTINGUISHED IN THE CASE OF SUVAPRASANNA BHATTACHARYA VS ACIT ITA NO.1 303/KOL/2010 (ATTACHED EX-D) WHERE IN AT PARA 5.1 HON'BLE ITAT H ELD THAT PENALTY IS ITA NO.32/AHD/2017 SHRI HASHMUKHBH AI JAYANTILAL THAKKAR VS. ITO ASST.YEAR 2010-11 - 5 - HELD NOT LEVIABLE AS DUE TO BONAFIDE ADVICE OF COUNSEL EXEMPTION OF CAPITAL GAIN ON SALE OF JEWELLERY WAS WITHDRAWN. THE HON'BLE ITAT ALSO DISTINGUISHED MAK DATA JUDGMENT AT PARA 6 OF O RDER. 7. ON THE OTHER HAND, THE LEARNED DR VEHEMENTLY SUP PORTED THE ORDER OF AUTHORITIES BELOW. 8. WE HAVE HEARD RIVAL CONTENTION AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. FROM THE FOREGOING DISCUSSION, WE NOTE T HAT THE PENALTY HAS BEEN IMPOSED BY THE AO U/S 271 (1)(C) WITHOUT MENTI ONING THE SPECIFIC CHARGE IN ITS PENALTY ORDER DATED 31/12/2015, WHETH ER, IT WAS LEVIED ON ACCOUNT OF CONCEALMENT OF INCOME OR ON ACCOUNT OF F URNISHING OF INACCURATE PARTICULARS OF INCOME. THE RELEVANT EXTR ACT OF THE PENALTY ORDER IS REPRODUCED AS UNDER: 11. IN VIEW OF THE ABOVE, ON THE BASIS OF THE FACT S AND CIRCUMSTANCES OF THE CASE, I AM SATISFIED THAT THE ASSESSEE HAS C OMMITTED DEFAULT U/S 271(1)(C) OF THE ACT BY WAY OF FURNISHING OF INACCU RATE PARTICULARS OF INCOME/CONCEALMENT OF INCOME. IT IS HELD THAT THE A SSESSEE IS LIABLE FOR PENALTY UNDER SECTION 271(1)(C) OF THE ACT, IT IS T HEREFORE DIRECTED THAT THE ASSESSEE SHALL PAY BY WAY OF PENALTY IN ADDITIO N TO THE AMOUNT OF TAX. ON PERUSAL OF ABOVE, IT IS CLEAR THAT THE AO HAS NO T LEVIED THE PENALTY ON THE SPECIFIC CHARGE AS MANDATED U/S 271 (1)(C) OF T HE ACT. IN SUCH FACTS AND CIRCUMSTANCE THE HON'BLE JURISDICTIONAL HIGH CO URT IN THE CASE OF SNITA TRANSPORT PVT. LTD. VS. ASSISTANT COMMISSION ER OF INCOME TAX REPORTED IN 42 TAXMANN.COM 54 HAS HELD THAT PENALTY CANNOT BE IMPOSED WITHOUT MENTIONING THE SPECIFIC CHARGE. THE RELEVAN T EXTRACT OF THE ORDER IS REPRODUCED BELOW: ITA NO.32/AHD/2017 SHRI HASHMUKHBH AI JAYANTILAL THAKKAR VS. ITO ASST.YEAR 2010-11 - 6 - 9. REGARDING THE CONTENTION THAT THE ASSESSING OFFICE R WAS AMBIVALENT REGARDING UNDER WHICH HEAD THE PENALTY WAS BEING IM POSED NAMELY FOR CONCEALING THE PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS, WE MAY RECORD THAT THOUGH IN THE ASSESSMENT ORDER THE ASSESSING OFFICER DID ORDER INITIATION OF PENALTY ON BOTH COUNTS, IN THE ULTIMATE ORDER OF PENALTY THAT HE PASSED, HE CLEARLY HELD THAT LEVY OF PENALTY IS SUSTAINED IN VIEW OF THE FACT THAT THE ASSESSEE HAD CONCEALED THE PARTICULARS OF INCOME. THUS INSOFAR AS FINAL ORDER OF PENALTY WAS CONCERNED, THE ASSESSING OFFICER WAS CLEAR AND PENALTY WAS IMPOSED FOR CONCEALING PARTICULARS OF I NCOME. IN LIGHT OF THIS, WE MAY PERUSE THE DECISION OF THIS COURT IN CASE OF MA NU ENGINEERING WORKS (SUPRA). IN THE SAID DECISION, THE DIVISION B ENCH CAME TO THE CONCLUSION THAT LANGUAGE OF 'AND/OR' MAY BE PROPER IN ISSUING A NOTICE FOR PENALTY, BUT IT WAS INCUMBENT UPON THE ASSESSING AU THORITY TO COME TO A POSITIVE FINDING AS TO WHETHER THERE WAS CONCEALMEN T OF INCOME BY THE ASSESSEE OR WHETHER ANY INACCURATE PARTICULARS OF S UCH INCOME HAD BEEN FURNISHED BY THEM. IF NO SUCH CLEAR CUT FINDING IS REACHED BY THE AUTHORITY, PENALTY CANNOT BE LEVIED. IT WAS A CASE IN WHICH IN FINAL CONCLUSION THE AUTHORITY HAD RECORDED THAT 'I AM OF THE OPINION TH AT IT WILL HAVE TO BE SAID THAT THE ASSESSEE HAD CONCEALED ITS INCOME AND/OR T HAT IT HAD FURNISHED INACCURATE PARTICULARS OF SUCH INCOME.' IT WAS IN T HIS RESPECT THE BENCH OBSERVED THAT 'NOW THE LANGUAGE OF 'AND/OR' MAY BE PROPER IN ISSUING A NOTICE AS TO PENALTY ORDER OR FRAMING OF CHARGE IN A CRIMINAL CASE OR A QUASI- CRIMINAL CASE, BUT IT WAS INCUMBENT UPON THE IAC TO COME TO A POSITIVE FINDING AS TO WHETHER THERE WAS CONCEALMENT OF INCOME BY TH E ASSESSEE OR WHETHER ANY INACCURATE PARTICULARS OF SUCH INCOME HAD BEEN FURNISHED BY THE ASSESSEE. NO SUCH CLEAR CUT FINDING WAS REACHED BY THE IAC AN D, ON THAT GROUND ALONE, THE ORDER OF PENALTY PASSED BY THE IAC WAS LIABLE T O BE STRUCK DOWN.' 9. THE PRINCIPLES LAID DOWN BY THE HONBLE JURISDIC TIONAL HIGH COURT IN THE ABOVE CASE ARE SQUARELY APPLICABLE TO THE FA CTS OF THE CASE ON HAND. THE AO HAS NOT MENTIONED THE SPECIFIC CHARGE IN ITS PENALTY ORDERS WHETHER IT WAS LEVIED FOR CONCEALMENT OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THEREFORE, IN OU R CONSIDERED VIEW, THE PENALTY LEVIED BY THE AO AND CONFIRMED BY THE LEARN ED CIT (A) IS NOT SUSTAINABLE. HENCE, THE GROUND OF APPEAL OF THE ASS ESSEE IS ALLOWED. ITA NO.32/AHD/2017 SHRI HASHMUKHBH AI JAYANTILAL THAKKAR VS. ITO ASST.YEAR 2010-11 - 7 - AS WE HAVE DELETED THE PENALTY IMPOSED BY THE AO & CONFIRMED BY THE LD. CIT-A ON THE TECHNICAL GROUND I.E. NO SPECIFIC CHARGE HAS BEEN INVOKED AS DISCUSSED, THEREFORE WE ARE INCLINED TO REFRAIN OURSELVES FROM ADJUDICATING THE GROUNDS OF APPEAL OF ASSESSEE RAIS ED ON MERITS. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. THIS ORDER PRONOUNCED IN OPEN COURT ON 29/05/2018 SD/- SD/- JKTIKY ;KNO JKTIKY ;KNO JKTIKY ;KNO JKTIKY ;KNO OLHE VGEN OLHE VGEN OLHE VGEN OLHE VGEN U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; YKS[KK LN YKS[KK LN YKS[KK LN YKS[KK LN L; L; L; L; (RAJPAL YADAV) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 29/05/2018 PRITI YADAV, SR.PS !'# $#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT. 3. /01( % 2( / CONCERNED CIT 4. % 2( ( ) / THE CIT(A)-3, AHMEDABAD. 5. 567 !(&01 , ) 01- , 8 / / DR, ITAT, AHMEDABAD 6. 79 :' / GUARD FILE. % & / BY ORDER, ' 5( !( //TRUE COPY// '/& () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD