Gangotri Textiles Limited, Coimbatore V. DCIT, Coimbatore

ITA 3413/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4542 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-05-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 20-12-2016
• Court: TRIBUNAL
• Department Lawyers: PARASIVAIAH
• Assessee Lawyers: M JAYASREE
• Keywords: Capital asset; Revised return
• Section: 143(3); 12

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , J UDICIAL MEMBER ./ I.T.A.NO. 3413 /MDS/2016 / ASSESSMENT YEAR :20 12 - 13 M / S. GANGOTRI TEXTILES LIMITED, 35, ROBERTSON ROAD, R.S. PURAM, COIMBATORE. [PAN: A A A C G8018M ] VS. THE DEPUTY COMMISSIONER OF INCOME TAX , CO RPORATE CIRCLE 2 , COIM BATORE . ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : MS. M. JAYASREE , ADVOCATE / RESPONDENT BY : SHRI PARASIVAIAH, CIT / DATE OF HEARING : 0 2 . 0 3 .201 7 / DATE OF P RONOUNCEMENT : 26 . 0 5 .201 7 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 1 , C OIMBATORE DATED 28 . 0 9 .201 6 RELEVANT TO THE ASSESSMENT YEAR 20 12 - 1 3 CHALLENGING THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT [ ACT IN SHORT] . 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAS FILED ITS RETURN OF INCOME ON 26.09.2012 DECLARING TOTAL LOSS OF .33,67,8 6,780/ - . THE RETURN FILED BY THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICE I.T.A. NO. 3413 /M/16 2 UNDER SECTION 143(2) OF THE ACT DATED 13.08.2013 WAS ISSUED AND SERVED ON THE ASSESSEE. IN RESPONSE THERETO, THE AR OF THE ASSESSEE FILED ALL DETAILS INCLUDING FORM 3CA, 3CD AND 10CCB, P&L ACCOUNT, BALANCE SHEET, TAX AUDIT REPORT, TRIAL BALANCE AND INCOME STATEMENT, ETC. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS SOLD TWO LANDED PROPERTIES AT KALAPATTI AND AT DHARAPURAM AND THE CAPITAL GAINS WAS WORKED OUT AT .76,76,230/ - AND .60,54,912/ - RESPECTIVELY TOTALLING TO .1,37,31,142/ - . THE ASSESSING OFFICER NOTICED THAT THE CAPITAL GAINS ARISING OUT O F THE ABOVE SALE WAS NOT ADMITTED BY THE ASSESSEE IN THE RETURN OF INCOME. FURTHER, THE SALE OF WINDMILL AT .21,60,00,000/ - WAS ALSO NOT ADMITTED BY THE ASSESSEE IN THE RETURN OF INCOME FILED. THE STCG ARISING ON THE SALE OF WINDMILL WAS .21,59,90,4 69/ - AFTER REDUCING THE OPENING WDV OF .9,531/ - . IN VIEW OF THE ABOVE, EXPLANATION WAS CALLED FROM THE ASSESSEE. VIDE LETTER DATED 03.03.2015, BEFORE THE ASSESSING OFFICER, THE AR OF THE ASSESSEE HAS ADMITTED TO HAVE OMITTED , BY OVERSIGHT, THE ABOVE SALE INVOLVING LAND AND WINDMILL AND ALSO FILED WORKING OF THE COMPUTATION OF LTCG ON SALE OF LAND AND STCG ON SALE OF WINDMILL. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS COMPLETED ON 12.03.2015 BY ASS ESSING TOTAL INCOME OF .( - ) 11,28,95,087/ - AGAINST THE LOSS OF .33,67,86,780/ - . I.T.A. NO. 3413 /M/16 3 3. THEREAFTER, THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT AND NOTICE WAS SERVED ON THE ASSESSEE. DURING THE COURSE OF PENALTY P ROCEEDINGS, VIDE LETTER DATED 31.07.2015, BY REITERATING THE SUBMISSIONS AS MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS SUBMITTED BEFORE THE ASSESSING OFFICER THAT BY OVERSIGHT, THE LTCG ON SALE OF LAND AND STCG ON SALE OF WINDMILL, HAS NOT BEEN OFFERED UNDER THE CAPITAL GAINS. BY RELYING ON VARIOUS CASE LAW, THE ASSESSEE PLEADED THE ASSESSING OFFICER TO DROP THE PENALTY PROCEEDINGS. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND DISTINGUISHING VARIOUS CASE LAW RELIED ON BY THE ASSESSEE, THE ASSESSING OFFICER LEVIED MINIMUM PENALTY UNDER SECTION 271(1)(C) OF THE ACT AT .7,30,48,152/ - . 4. AGAINST LEVY OF PENALTY, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) AND REITERATED THE SUBMISSIONS AS MADE BEFORE THE A SSESSING OFFICER. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE LD. CIT(A) HAS OBSERVED AS UNDER: 7. HOWEVER, IT IS TO BE NOTICED THAT THE MANAGING DIRECTOR OF THE COMPANY AS THE AUTHORIZED SIGNATORY AFTER HAVING SIGNED THE VERIFICATION COLUMN I N THE RETURN OF INCOME HAD UPLOADED THE RETURN OF INCOME DULY CERTIFYING THE SAME AS TRUE AND CORRECT. THE CHARTERED ACCOUNTANT WHO HAD QUALIFIED THE ACCOUNTS OF THE ASSESSEE COMPANY HAD NOT DISCLOSED THE AFORESAID SALE OF CAPITAL ASSETS, AS EVIDENCED BY T HE RELEVANT COLUMN IN FORM NO. 3CD, SL. NO. 14. THE CHARTERED ACCOUNTANT HAS REPORTED CAPITAL GAINS AS NIL IN THE SAID COLUMN WHICH AGAIN INDICATES THAT THERE WAS DELIBERATE CONCEALMENT IN REPORTING SUBSTANTIAL CAPITAL GAINS WHICH AROSE TO THE ASSESSEE W HICH IS ABOVE .21 CRORES. TRUE DISCLOSURE MEANS, DISCLOSING IN THE RETURN OF INCOME AND IN FORM 3CD, WHICH ARE FILED DURING THE FILING OF RETURN OF I.T.A. NO. 3413 /M/16 4 INCOME. THE ASSESSEE HAS NOT MADE ANY DISCLOSURE RELATING TO CAPITAL GAINS IN THE RETURN OF INCOME FILED. IN VIEW OF THE ABOVE, AND BY FOLLOWING THE DECISION IN THE CASE OF MAK DATA PVT. LTD. V. CIT 38 TAXMANN.COM 448 (SC), THE LD. CIT(A) HAS HELD THAT NON DISCLOSURE OF SALE OF LANDED PROPERTIES AS WELL AS WINDMILL UNDER CAPITAL GAINS SHOULD BE TREATED AS CONCEALMENT OF INCOME AND ACCORDINGLY, CONFIRMED THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT. 5. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. BY REITERATING THE SUBMISSIONS AS MADE BEFORE THE AUTHORITIES BELOW, THE LD. CO UNSEL FOR THE ASSESSEE HAS PLEADED THAT THE ENTIRE SALE PROCEEDS HAVE BEEN TAKEN BY THE BANKERS AGAINST THE INTEREST AND THE PRINCIPAL LOAN AMOUNT. THE LD. COUNSEL FOR THE ASSESSEE HAS FURTHER SUBMITTED THAT BY OVERSIGHT THE ABOVE LTCG ON SALE OF LAND AND STCG ON SALE OF WINDMILL WAS OMITTED TO OFFER UNDER THE CAPITAL GAINS IN THE RETURN OF INCOME FILED ON 26.09.2012 . THEREFORE, THERE WAS NO WILFUL CONCEALMENT OF PARTICULARS FROM ASSESSEE S SIDE AND PLEADED THAT THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT AND CONFIRMED BY THE LD. CIT(A) SHOULD BE DELETED. ON THE OTHER HAND, THE LD. DR HAS STRONGLY SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 6. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUT HORITIES BELOW. IN THE RETURN OF INCOME FILED BY THE ASSESSEE, THE ASSESSEE HAS NOT DISCLOSED THE SALE OF LANDED I.T.A. NO. 3413 /M/16 5 PROPERTIES AS WELL AS SALE OF WINDMILL. THE RETURN FILED BY THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1) OF THE ACT AND THEREAFTER, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND ONE OF THE CRITERIA FOR WHICH THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY WAS CAPITAL GAINS CONSIDERATION IN ITR IS LESS THAN SALE OF PROPERTY REPORTED IN AIR . UPON CALLING VARIOUS DETAILS AND ON PERU SAL OF THE HARD COPY OF THE RETURN, FORM 3CA, 3CD AND 10CCB, P&L ACCOUNT, BALANCE SHEET, TAX AUDIT REPORT, TRIAL BALANCE AND INCOME STATEMENT, ETC., THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS NOT DISCLOSED ANY OF SALES EFFECTED IN THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. WHEN CONFRONTED WITH THE ABOVE, THE ONLY CONTENTION ADVANCED BY THE AR BEFORE THE AUTHORITIES BELOW WAS THAT THE BY OVERSIGHT, THE LTCG ON SALE OF LAND AND STCG ON SALE OF WINDMILL, HAS NOT BEEN OFFERED UNDER THE CAPITAL GAINS AND THE MISTAKE IS BONAFIDE AND INADVERTENT. IT IS AN ADMITTED FACT THAT THE ASSESSEE HAS NOT RECTIFIED THE ABOVE MISTAKE BY FILING A REVISED RETURN DISCLOSING THE TRUE AND COMPLETE PARTICULARS BEFORE SERVICE OF NOTICE UNDER SECTIO N 143(2) OF THE ACT ON 13.08.2013, IN FACT, THE ASSESSEE HAD SUFFICIENT TIME TO RECTIFY AND FILE REVISED RETURN , BUT, IT WAS NOT DONE SO BY THE ASSESSEE. ONLY WHEN THE CASE OF THE ASSESSEE WAS TAKEN UP FOR SCRUTINY AND DURING THE COURSE OF ASSESSMENT PROCE EDINGS, THE AR OF THE ASSESSEE HAS NO OTHER GO BUT SAY THAT THE MISTAKE WAS BONAFIDE AND INADVERTENT. OVER AND ABOVE, THE LD. CIT(A) HAS OBSERVED THAT T HE CHARTERED ACCOUNTANT WHO HA S QUA NT IFIED THE I.T.A. NO. 3413 /M/16 6 ACCOUNTS OF THE ASSESSEE COMPANY HA S NOT DISCLOSED THE AFORESAID SALE OF CAPITAL ASSETS, AS EVIDENCED BY THE RELEVANT COLUMN IN FORM NO. 3CD, SL. NO. 14. THE CHARTERED ACCOUNTANT HAS REPORTED CAPITAL GAINS AS NIL IN THE SAID COLUMN WHICH CLEARLY INDICATES THAT THERE WAS DELIBERATE CONCEALM ENT IN REPORTING SUBSTANTIAL CAPITAL GAINS , WHICH AROSE TO THE ASSESSEE ABOVE .21 CRORES. TRUE DISCLOSURE MEANS, DISCLOSING IN THE RETURN OF INCOME AND IN FORM 3CD, WHICH ARE FILED DURING THE FILING OF RETURN OF INCOME. THE ASSESSEE HAS NOT MADE ANY DISCLOSURE RELATING TO CAPITAL GAINS IN THE RETURN OF INCOME FILED. 6.1 UNINTENTIO NAL, HONEST MISTAKE, COMMISSION OF BONAFIDE ERROR, OR TYPOGRAPHICAL ERROR, IF CORRECTED IMMEDIATELY UPON DISCOVERY, NORMALLY , IT DOES NOT WARRANT LEVY OF PENALTY . IN THIS CASE, THE ASSESSEE FILED THE RETURN OF INCOME ON 26.09.2012 AND NOTICE UNDER 143(2) O F THE ACT WAS ISSUED ON 13.08.2013. TO AGREE WITH THE CONTENTION OF THE ASSESSEE THAT THE MISTAKE WAS BONAFIDE AND INADVERTENT, THE ASSESSEE SHOULD HAVE FILED REVISED RETURN OF INCOME BY INCORPORATING THE LTCG AND STCG, WHICH AROSE DUE TO SALE OF LANDED PR OPERTIES AS WELL AS SALE OF WINDMILL IMMEDIATELY WHEN IT WAS NOTICED BY THE ASSESSEE BEFORE SERVICE OF NOTICE UNDER SECTION 143(2) OF THE ACT , WHICH WAS NOT DONE SO IN THIS CASE . THEREFORE, THE CONTENTION OF THE ASSESSEE THAT THE MISTAKE WAS BONAFIDE AND I NADVERTENT , IS NOT ACCEPTABLE. AFTER CONFRONTING THE NON - DISCLOSURE OF PARTICULARS OF LTCG & STCG WITH THE I.T.A. NO. 3413 /M/16 7 AR OF THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THEREAFTER FILING OF COMPUTATION OF LTCG & STCG , CANNOT BE HELD AS VOLUNTARY DISCL OSURE OF PARTICULARS. IN THIS CASE, IF SCRUTINY ASSESSMENT WAS NOT DONE, THE TRUE AND COMPLETE FACTS OF SALE OF LANDED PROPERTIES AS WELL AS SALE OF WINDMILL WOULD NOT HAVE COME TO THE LIGHT AND SUBSTANTIAL CAPITAL GAINS WOULD HAVE TOTALLY SUPPRESSED. IN V IEW OF THE ABOVE, WE ARE OF THE CONSIDERED OPINION THAT IT IS A CLEAR CUT CASE OF CONCEALMENT OF TRUE AND COMPLETE PARTICULARS IN THE RETURN OF INCOME, WHICH WARRANT PENALTY UNDER SECTION 271(1)(C) OF THE ACT . THE AUTHORITIES BELOW HAVE DISTINGUISHED THE C ASE LAW RELIED ON BY THE ASSESSEE AND NO CASE LAW OF ANY COURT CAN COME TO THE RESCUE IN SUCH SITUATION OF THE ASSESSEE . TH US, PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT WAS RIGHTLY CONFIRMED BY THE LD. CIT(A) AND WE HAVE NO REASON TO INTERFERE WITH THE ORDERS OF THE LD. CIT(A) AND THE GROUND RAISED BY THE ASSESSEE IS DISMISSED . 7 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED . ORDER PRONOUNCED ON THE 26 TH MAY , 201 7 AT CHENNAI. SD/ - SD/ - ( CHANDRA POOJARI ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 26 . 0 5 .201 7 VM/ - I.T.A. NO. 3413 /M/16 8 / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.