Smt. Urvashi Sanjaykumar Gupta, Surat V. ITO, Ward-2(3)(4), Surat

ITA 346/SRT/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 2103 (ITAT-SURAT)
• Duration Of Justice: 2 year(s) 10 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 03-05-2022
• Assessment Year: 2014-2015
• Appeal Filed On: 27-06-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Onus to prove; Revised return; TDS
• Section: 271(1)(c); 274; 251; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER ITA No. 346/Srt/2019 (AY: 2014-15) Smt. Urvashi Sanjaykumar Gupta, Ratna Vihar Apartment, New City Light, Surat-395007. PAN No. AANPG 4855 C Vs. I.T.O., Ward-2(3)(4), Surat. Appellant/ assessee Respondent/ revenue Appellant represented by Shri Sapnesh Sheth, CA Respondent represented by Shri J.K. Chandani, Sr.DR Date of hearing 04/05/2022 Date of pronouncement 06/05/2022 Order under Section 254(1) of Income Tax Act PER: PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by the assessee is directed against the order of learned Commissioner of Income Tax (Appeals)-3, Surat (in short, the ld. CIT(A) dated 18/04/2019 for the Assessment year 2014-15. The assessee has raised following grounds of appeal: “1. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming the action of assessing officer in imposing penalty of Rs. 3,38,136/- u/s 271(1)(c) of the I.T. Act, 1961. 2. It is therefore, prayed that addition made by assessing officer & confirmed by Commissioner of Income Tax (Appeals) may kindly be deleted. ITA No. 346/Srt/2019 Smt. Urvashi Sanjaykumar Gupta Vs ITO 2 3. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal.” 2. Brief facts of the case are that the Assessing Officer while passing the assessment order for assessment year (A.Y.) 2014-15 made addition of Rs. 12,60,684/- on account of long term capital gain. The Assessing Officer while making addition in para 4 of his order, noted that the assesse vide her letter dated 05/12/2016 surrendered long term capital received on account of shares, which was claimed as exempt in the return of income. The assessee file her revised computation of income and withdrawn the exemption claimed on share transaction of Rs. 12,60,864/-. The Assessing officer accepted revised computation of income and further recorded that the assessee has paid due taxes alongwith applicable interest. The Assessing Officer initiated penalty proceedings under Section 271(1)(c) of the Act. Before passing the penalty order under Section 271(1)(c) of the Act, the assessing officer issued notice under Section 274 read with Section 271(1)(c) dated 06/12/2016. In response to the show cause notice, the Assessing Officer recorded that no body attended the hearing nor filed any explanation. The Assessing officer levied the penalty @ 100% of tax sought to be evaded thereby imposing penalty of Rs. 3,38,136/- being 100% of tax sought to be evaded. ITA No. 346/Srt/2019 Smt. Urvashi Sanjaykumar Gupta Vs ITO 3 3. On appeal before the ld. CIT(A), the assessee filed her detailed written submissions. The detailed written submission of assessee are recorded in para 5 of order of ld. CIT(A). In written submission, the assessee submitted that during the relevant period, the assessee earned long term capital gain on sale of shares of M/s Turbo Tech Engineering Ltd. which was subsequently declared a sham company. Though, the transaction of assessee was supported by documentary evidences and was transacted through banking channel. The assessee and her family member decided to take the benefit of IDS scheme. However, it was the assessee could not take the benefit of IDS as her case was selected for scrutiny and notice under Section 143(2) of the Act has already been issued. The assessee during the course of assessment, surrendered the exemption and shown entire receipts as income from other sources and paid due taxes thereon. The revised computation furnished by assessee was accepted by the Assessing officer. The Assessing Officer imposed penalty on the assessee. The assessee also stated that no concealment was detected by the department. The long term capital gain was not subject matter of scrutiny assessment. The case was selected for scrutiny for limited purpose. The assesse made transaction through registered broker and funds were received through bank after deduction of security transaction tax (STT). The assessee was having sufficient document to discharge her onus and ITA No. 346/Srt/2019 Smt. Urvashi Sanjaykumar Gupta Vs ITO 4 to prove the transaction was genuine. If the assessee would have not declared it, possibly the same might have passed from scrutiny. 4. The ld. CIT(A) after considering the submission of assessee held that the assessee has taken a bogus long term capital gain of ‘Penny Stock’ when the case of assessee was taken for scrutiny, she surrendered this amount to buy peace of mind and to avoid litigation. The plea of assessee that no penalty is leviable as she has accepted his mistake and paid tax, is devoid of merit. The ld. CIT(A) held that the Hon'ble Supreme Court in the case of MAK Data (P) Ltd. Vs CIT (2013) 38 taxmann.com 448 held that voluntary disclosure does not lead to assessee being free from mischief of penal proceedings under Section 271(1)(c) of the Act. The ld. CIT(A) also held that the assessee deliberately and intentionally not disclosed true and correct income with the intention to evade tax. Hence, the Assessing Officer was right in imposing penalty under Section 271(1)(c) of the Act. Further aggrieved, the assessee has filed present appeal before this Tribunal. 5. We have heard the submissions of learned authorised representative (AR) of the assessee and the learned departmental representative (DR) of the revenue. The ld. AR of the assessee submits that no concealment was detected nor any show cause notice on the issue of long term capital gain was issued by the Assessing officer during the assessment. The assessee ITA No. 346/Srt/2019 Smt. Urvashi Sanjaykumar Gupta Vs ITO 5 on her own, surrendered long term capital gain and paid due tax alongwith interest. The assessee filed revised computation. The revised computation was accepted by the Assessing officer. In fact, the assessee wishes to take the benefit of IDS Scheme, however, the benefit of IDS Scheme could not be availed as the case of assessee was already selected for scrutiny. The assessee made transaction through banking channel and received the sale proceed of shares after deduction of STT. The assessee was having sufficient document to discharge her onus to prove the genuineness of transaction, though to avoid the protracted litigation and to buy peace of mind, the assessee surrendered the entire receipt for taxation as the sale of shares of M/s Turbo Tech Engineering Ltd. was subsequently declared as sham company. There is no evasion of tax for concealment of any income as the assessee herself surrendered the income for taxation. To support his submission, the ld. AR of the assesse has relied upon the following decisions: (i) CIT Vs Suresh Chandra Mittal 251 ITR 009(SC) (ii) CIT Vs Bhavinkumar M Dagli 377 ITR 389 (Guj HC) (iii) CIT Vs Shankerlal Nebhumal Uttamchandani 311 ITR 327 (Guj) (iv) Pr.CIT Vs Smt. Prabhjot Kaur Chhabra 419 ITR 094 (MP HC) (v) CIT Vs Suraj Bhan 294 ITR 481 (P&H HC) (vi) PCIT & Ors. Vs Krishna Devi & Ors. 431 ITR 361 (Del HC) ITA No. 346/Srt/2019 Smt. Urvashi Sanjaykumar Gupta Vs ITO 6 (vii) Lalubhai P Bathani Vs DCIT 242/Srt/2017 (Surat Trib) (viii) Smt. Pushpaben P Sonarupawala V ACIT 17 CCH 023 (Ahd. Trib) (ix) Neelu Garg Vs ITO 55 CCH 0459 (Chad Trib). 6. On the other hand, the ld. Sr. DR for the revenue supported the order of lower authorities. The ld. DR for the revenue submits, had the return of income of the assessee was not selected for scrutiny, the income of assessee to the extent of alleged surrender would have escaped from assessment and the assessee successfully might have evaded the tax thereon. The assessee has obtained bogus long term capital gain of penny stock. When the case of assessee was selected for scrutiny, she surrendered these amounts on the pretext to buy peace of mind and to avoid litigation. Once the addition is made in the income of assessee, the penalty is inevitable. The assessee was very well aware that the limited scrutiny could be converted into full-fledged scrutiny. Various case laws relied by the ld. AR of the assessee are not applicable on the facts of the present case. 7. We have considered the rival submissions of both the parties and have gone through the orders of lower authorities. It is not in dispute that during the assessment the assessee filed revised computation of income and surrendered the long term capital gain. It is also undisputed fact that the Assessing officer has not issued any show cause notice to the assessee on ITA No. 346/Srt/2019 Smt. Urvashi Sanjaykumar Gupta Vs ITO 7 the issue of long term capital or on penny stock. The case of assessee throughout the proceeding are that she intended to avail benefit of TDS Scheme, however, the case of assessee has already been selected for scrutiny so she could not apply for availing the benefit of IDS Scheme. The Hon'ble Punjab & Haryana High Court in CIT Vs Suraj Bhan (294) ITR 481 by following the decision of Hon'ble Supreme Court in CIT Vs Suresh Chand Mittal 252 ITR 009 (SC) held that when the assessee files a revised return showing higher income and gives explanation that he offered higher income to buy peace of mind and avoid litigation, penalty cannot be imposed merely on account of higher income having been subsequently declared. 8. In view of the aforesaid factual and legal discussion, we are of the view that no penalty was leviable on the facts of the present case and we direct to delete the same. 9. In the result, this appeal of the assessee is allowed. Order pronounced in the open court on 06 th May 2022 and the result was also placed on the notice board. Sd/- Sd/- (Dr. ARJUN LAL SAINI) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat, Dated: 06/05/2022 *Ranjan ITA No. 346/Srt/2019 Smt. Urvashi Sanjaykumar Gupta Vs ITO 8 Copy to: 1. Assessee – 2. Revenue - 3. CIT(A) 4. CIT 5. DR 6. Guard File By order Sr.Private Secretary, ITAT, Surat