Fortunet Information Technology, V. ACIT,

ITA 335/PUN/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3360 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 16-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARESHWAR SHARMA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE BEFORE SHRI I.C. SUDHIR (JM) AND SHRI D. KARUNAKARA RAO (AM) ITA NO. 335/PN/2009 (ASSTT. YEAR : 2005-06) FORTUNET INFORMATION TECHNOLOGY PVT. LTD. SHRI BHAGWAN G HASABNIS, 1/11, ANAND PARK, NEAR OLD OCTROI NAKA, CHINCHWADGAON, PUNE 411 033 PAN: AAACF6068N . APPELLANT V. ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-9, PUNE . RESPONDENT APPELLANT BY : SHRI C.H. NANIWADEKAR RESPONDENT BY : SHRI. HARESHWAR SHARMA ORDER PER D. KARUNAKARA RAO, AM THIS APPEAL BY THE ASSESSEE IS FILED AGAINST THE ORD ER OF THE CIT(A)- III, PUNE DATED 6.12.2008 FOR THE A.Y. 2005-06. GROUNDS RAISED BY ASSESSEE READ AS UNDER : 1. THE LEARNED CIT (A) ERRED ON FACTS AND IN LAW IN UPHOLDING PENALTY OF RS. 2,21,750/- UNDER SECTION 271 (1)(C) OF THE INCOME TAX ACT 1961. 2. THE LEARNED CIT(A) FAILED TO APPRECIATE THE FACT S & CIRCUMSTANCES OF THE CASE PROPER PERSPECTIVE. HE FAILED IN PARTICULA R IN NOT APPRECIATING THAT ERROR WAS A GENUINE MISTAKE AND WAS NOT MALAFIED. HE FURTHER FAILED TO APPRECIATE THE ARGUMENTS ADVANCED BY THE ASSESSEE I N THIS BEHALF. 2. AT THE VERY OUTSET, THE LD. COUNSEL FOR THE ASSESS EE MENTIONED THAT WHILE FILING THE RETURN OF INCOME, ASSESSEE MADE A CLAIM OF DEDUCTION FOR PAYMENT OF INTEREST OF RS 8,85,794/- WHICH IS INADVERTENT , UNINTENTIONAL AND BONA FIDE MISTAKE AND IT IS APPARENT FROM THE RECORDS. THE SAID M ISTAKE WAS SUBSEQUENTLY RECTIFIED VIDE COVERING LETTER DT. 26.4.2007 AND WITHD REW THE IMPUGNED CLAIM. THE REVENUE AUTHORITIES LEVIED THE PENALTY ON THIS AMOUN T BY STATING THAT THE SAID CLAIM IN EFFECT HAS THE INFLUENCE ON THE QUANTUM OF RETURNE D LOSS, THEREBY THE PENALTY WAS LEVIED AND CONFIRMED BY THE A.O AND CIT(A) RESPECTIV ELY. 3. IN THIS REGARD, THE LD COUNSEL STATED THAT IF THERE IS AN INTENTIONAL SUPPRESSION OF INCOME OR LOSS, ASSESSEE WOULD NOT HAV E MADE SUCH CLAIMS AND RELIED ITA NO 335/PN/2009 FORTUNET INFORMATION TECHNOLOGY P. LTD. A.Y.2005-06 2 ON THE RELEVANT INFORMATION DISCLOSED IN THE RETURN OF INCOME/LOSS. WITH THE HELP OF THE COPIES OF THE COMPUTATION OF INCOME FOR RELEVANT AYS, LD COUNSEL DEMONSTRATED THE NECESSITY FOR DISTINGUISHING THE CASES OF INADVE RTENT MISTAKES FROM THE CASES OF THE CONCEALMENT OF INCOME. THUS, FINALLY, THE COUN SEL RELIED ON THE CO-ORDINATE BENCH DECISION IN THE CASE OF KANBAY SOFTWARE INDI A (P) LTD., 119 ITD 153 (PUNE) FOR THE PROPOSITION THAT THE MISTAKE OF INADVERTENCE O F CLERKS SHOULD NOT BE EXPOSED TO THE CONCEALMENT PENALTY U/S. 271(1)(C ). LD COUN SEL FURTHER RELIED ON THE SUPREME COURT JUDGMENT IN THE CASE OF RELIANCE PETROPRO DUCTS (P) LTD. (36 DTR (SC) 449 ) FOR DELETION OF THE PENALTY IN CASES OF THIS KIND. ON THE OTHER HAND, LD D.R. FOR THE REVENUE RELIED ON THE ORDERS OF THE A.O A ND CIT(A). 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE FACT S FURNISHED BEFORE US AND SO ARE THE ORDERS OF JUDICIAL AUTHORITIES. THE MAI N PLANK OF THE ARGUMENT OF THE ASSESSEE IS THAT WHEN THE MISTAKE IS SO OBVIOUS BY VIRTUE OF DISCLOSURE OF THE RELEVANT FACTS IN THE RETURN OF INCOME FILED BEFORE TH E REVEUE, THE PENALTY IS NOT LIVIABLE. FROM THE FACTS, WE FIND THE ASSESSEE HAD D ISCLOSED RELEVANT PARTICULARS IN THE COMPUTATION OF INCOME. IT IS ALSO SEEN THAT TH E SAID CLAIM WAS WITHDRAWN VIDE THE LETTER OF THE ASSESSEE DT. 26.4.2007. ON OBSERVIN G THE RELEVANT FACTS, WE FIND THAT THE REQUISITE INFORMATION WAS AVAILABLE ON THE RETURN AND THE ARGUMENT OF THE ASSESSEE APPEARS TO BE A BONA FIDE ONE AND NOT WITH INTENTION TO REDUCE THE CLAIM. THE EXPLANATION OF THE ASSESSEE IS FOUND TO BE AN A CCEPTABLE ONE. THEREFORE, IN OUR OPINION, THE CASE OF THE ASSESSEE COVERED BY THE CON TENTS OF THE PARA 38 OF THE CO- ORDINATE BENCH DECISION IN THE CASE OF KANBAY SOFTWA RE INDIA (P) LTD. (SUPRA). RELEVANT PART OF PARA 38 READ AS FOLLOWS : 38 AN ADDITION TO INCOME DOES NOT ALWAYS HAVE A CAUSE AND EFFECT RELATIONSHIP WITH THE DISCHARGE OF ASSE SSEES OBLIGATIONS UNDER S. 139(1), BECAUSE WHEN AN ASSESSEE DULY DISCHARGES HI S OBLIGATIONS UNDER S. 139(1), THERE CAN STILL BE ADDITIONS TO, OR DISALLO WANCE FROM, THE RETURNED INCOME DUE TO A VARIETY OF REASONS, VIZ. GENUINE VA RIATIONS IN PERCEPTIONS OF THE ASSESSEE VIS--VIS THE AO ABOUT A LEGAL INTERPR ETATION, THE CHANGES IN JUDGE MADE OR STATUTE LAW BETWEEN THE PERIOD WHEN A N IT RETURN IS FILED AND WHEN THE ASSESSMENT IS FRAMED, EXTRANEOUS FACTORS AFFECTING ABILITY OF THE ASSESSEE TO ESTABLISH CERTAIN FACTS BASED ON WHICH DEDUCTIONS ARE CLAIMED, AND EVEN PLAIN INADVERTENT CLERICAL ERRORS . EXCEPT TO THE EXTENT SUCH CASES WILL BE CAUGHT BY THE MISCHIEF OF EXPLANATIONS APP ENDED TO S. 271(1)(C), THESE CASES CANNOT, THEREFORE, BE VISITED WITH PENA L CONSEQUENCES . 5. IN VIEW OF THE ABOVE, THIS IS NOT A FIT CASE FOR LEVY OF PENALTY. ACCORDINGLY, GROUNDS OF THE APPEAL ARE ALLOWED . ITA NO 335/PN/2009 FORTUNET INFORMATION TECHNOLOGY P. LTD. A.Y.2005-06 3 6. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 27TH DAY OF AU GUST 2010. SD/- SD/- (I.C. SUDHIR) JUDICIAL MEMBER (D. KARUNAKARA RAO ) ACCOUNTANT MEMBER PUNE, DATED THE 27TH AUGUST, 2010 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-V, PUNE 4. THE CIT(A)-III, PUNE 4. THE D.R. A BENCH, PUNE 5. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE