Susheel Kumar, New Delhi V. ITO, New Delhi

ITA 362/DEL/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3607 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 24-06-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 27-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PRAVEEN AGGARWAL
• Keywords: Bonafide belief; Revised return; Set aside
• Section: 271(1)(c); 139(5)

Judgement Text

ITA NO. 362/DEL/2010 A.Y. 2005-06 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G NEW DELHI BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 362/DEL/2010 A.Y. : 2005-06 SHRI SUSHEEL KUMAR, VS. ITO, WARD-20(3), C2/21, MODEL TOWN-III, NEW DELHI DELHI 110 009 (PAN: AAHPK9024D) [APPELLANT] (RESPONDENT) ASSESSEE BY : SH. PRAVEEN AGGARWAL, CA DEPARTMENT BY : MRS. LEENA SRIVASTAVA, D.R. PER SHAMIM YAHYA: AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONERS OF INCOME TAX (APPEALS) DATED 16.11.2 009 PERTAINING TO ASSESSMENT YEAR 2005-06. 2. THE ISSUE RAISED IS THAT LD. COMMISSIONER OF INC OME TAX (APPEALS) ERRED IN CONFIRMING THE PENALTY OF RS. 17,899/- U/S 271(1)(C ) OF THE IT ACT. 3. IN THIS CASE THE ASSESSEE FILED RETURN OF INCOME DECLARING AN INCOME OF RS. 11,137/- ON 22.8.2005. THE CASE WAS SELECTED FOR SC RUTINY. ASSESSEE WAS ASKED TO EXPLAIN INVESTMENT AND SOURCE THEREOF THE DOCUMENTA RY EVIDENCE IN RESPECT OF INVESTMENT MADE WITH SBI MUTUAL FUND AND FRANKLIN TEMPLETON MUTUAL FUND. THE ASSESSEE FURNISHED THE NECESSARY REPLY AND ALS O FILED A LETTER GIVING REVISED CALCULATION FOR CAPITAL GAIN, DIVIDEND, INCOME ON P OST OFFICE MIS AND OTHER INTEREST ITA NO. 362/DEL/2010 A.Y. 2005-06 2 AND SHOWED VARIATION OF INCOME. THE CHART SHOWED T HAT ASSESSEE HAD SHOWN DECREASE OF RS. 1970/- ON ACCOUNT OF INTEREST, BUT IT SHOWED INCREASE INCOME IN OTHER HEADS. ASSESSING OFFICER OPINED THAT ASSES SEE HAD NOT FILED REVISED RETURN, AS PER PROVISION OF SECTION 139(5) OF THE I T ACT, AS THE SAME WAS MUCH LATE. ASSESSING OFFICER HELD THAT SINCE THE INVESTMENT F OR PURCHASE OF MUTUAL FUND HAS A DIRECT LINK WITH THE SOURCE OF INVESTMENT EXAMINE D, THE ASSESSEE HAS SURRENDERED THE AMOUNT FOR TAXATION. THE ASSESSING OFFICER DID NOT ALLOW THE BENEFIT OF DECREASE OF INCOME AT RS. 1970/-, BUT ADDED THE INCREASE SHOWN AND ADDED THE SAME TO RS. 147194/-. 4. PENALTY PROCEEDINGS WERE ALSO INITIATED. IN T HE PENALTY PROCEEDINGS ASSESSEE SUBMITTED THAT WHILE SUPPLYING THE INFORM ATION, THE ASSESSEE ITSELF CAME TO KNOW CERTAIN OMISSION AND MISTAKES COMMITTE D BY HIM WHILE COMPUTING THE INCOME AT THE TIME OF FILING THE ORIGINAL RETU RN AND THE SAME WERE RECTIFIED DURING THE COURSE OF ASSESSMENT. ASSESSEE FURTHER SUBMITTED THAT HE WAS NOT AN EXPERT IN THE PROVISION OF INCOME TAX LAWS AND THER E IS NO EVIDENCE OF CONCEALING THE INCOME OR FILING THE INACCURATE PARTICULARS. ASSESSING OFFICER DID NOT ACCEPT THESE CONTENTIONS AND HELD THAT ONLY WHEN THE DEPARTMENT DETECTED THE DISCREPANCY THAT THE ASSESSEE FILED REVISED COMPUT ATION. HENCE HE LEVIED THE PENALTY OF RS. 17899/-. 5. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOM E TAX (APPEALS) CONFIRMED THE PENALTY. 6. AGAINST THIS ORDER THE ASSESSEE IS IN APPEAL BEF ORE US. ITA NO. 362/DEL/2010 A.Y. 2005-06 3 7. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE R ECORDS. IT TRANSPIRED THAT ASSESSING OFFICER HAD ASKED TO FILE THE DETAI LS OF INVESTMENT MADE WITH SBI MUTUAL FUND AND FRANKLIN TEMPLETON MUTUAL FUND. W HILE COMPLYING WITH THE ASSESSING OFFICER S REQUIREMENT ASSESSEE ITSELF C AME TO NOTICE DISCREPANCY IN THE COMPUTATION OF INCOME FURNISHED EARLIER WITH RESPEC T TO CAPITAL GAIN, DIVIDEND, INCOME ON POST OFFICE MIS INCOME OF UTI FUND, INTER EST OF ALLAHABAD FIXED DEPOSITS, INTEREST ON NSC ETC. THE ASSESSEE FIELD REVISED COMPUTATION WHICH ALSO INCLUDED THE DECREASE IN INTEREST INCOME ALSO. BUT THE ASSESSING OFFICER TOOK UP THE INCREASED INCOME IN THE REVISION AND ADDED THE SAME AND HELD THAT THE SAME WAS FURNISHED BY THE ASSESSEE ONLY AFTER THE MISTA KES HAVE BEEN DETECTED BY THE DEPARTMENT. PENALTY WAS ALSO IMPOSED ON THE SAME GROUND. 7.1 WE FIND THAT IT IS NOT CORRECT TO SAY THAT ANY MISTAKE WAS DISCOVERED BY THE DEPARTMENT. ASSESSING OFFICER HAS ONLY ASKED TH E ASSESSEE TO SUBMIT THE DETAILS OF INVESTMENT MADE WITH SBI MUTUAL FUND AND FRANKL IN TEMPLETON MUTUAL FUND. ASSESSEE HAS ITSELF FILED REVISED CALCULATION SHOWI NG VARIATION IN CAPITAL GAIN, DIVIDENDS, INCOME ON POST OFFICE MIS INCOME ON UTI INTEREST OF ALLAHABAD INTEREST DEPOSITS INTEREST OF NSC ETC. HENCE, IT IS CLEAR THAT THERE IS NO QUESTION OF DETECTION OF MISTAKE BY THE DEPARTMENT BEFORE THE A SSESSEE SUBMITTED THE REVISED COMPUTATION. UNDER SUCH CIRCUMSTANCES, IN OUR CONSIDERED OPINION, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCU RATE PARTICULARS OR CONCEALMENT OF INCOME AND HENCE LEVY OF PENALTY U/S 271(1)(C) IS TOTALLY UNJUSTIFIED. 8. IN THIS REGARD WE PLACE RELIANCE FROM THE APEX COURT DECISION RENDERED BY A LARGER BENCH COMPRISING OF THREE OF THEIR LORDSH IPS IN THE CASE OF HINDUSTAN STEEL VS. STATE OF ORISSA IN 83 ITR 26 WHEREIN IT WAS HELD THAT AN ORDER IMPOSING ITA NO. 362/DEL/2010 A.Y. 2005-06 4 PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGA TION IS THE RESULT OF A QUASI- CRIMINAL PROCEEDINGS, AND PENALTY WILL NOT ORDINARI LY BE IMPOSED UNLESS THE PARTY OBLIGED EITHER ACTED DELIBERATELY IN DEFIANCE OF LA W OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST, OR ACTED IN CONSCIOUS DI SREGARD OF ITS OBLIGATION. PENALTY WILL NOT ALSO BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IMPOSED FOR FAILURE TO PERFORM A STATUTORY OBLIGATION IS A MATTER OF DISCRETION OF THE AUTHORITY TO BE EXERCISED JUDIC IALLY AND ON A CONSIDERATION OF ALL THE RELEVANT CIRCUMSTANCES. EVEN IF A MINIMUM PENA LTY IS PRESCRIBED, THE AUTHORITY COMPETENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY, WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE P ROVISIONS OF THE ACT, OR WHERE THE BREACH FLOWS FROM A BONAFIDE BELIEF THAT THE OF FENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE. 9. WE WOULD ALSO LIKE TO REFER TO THE HONBLE APE X COURT DECISION IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS LTD. IN CIVIL APPEAL NO. 2463 OF 2010 VIDE ORDER DATED 17.3.2010 HAS HELD THAT THE LAW LAID DO WN IN THE DILIP SHEROFF CASE 291 ITR 519 (SC) AS TO THE MEANING OF WORD CONCEAL MENT AND INACCURATE CONTINUES TO BE A GOOD LAW BECAUSE WHAT WAS OVERRU LED IN THE DHARMENDER TEXTILE CASE WAS ONLY THAT PART IN DILIP SHEROFF CA SE WHERE IT WAS HELD THAT MENSREA WAS A ESSENTIAL REQUIREMENT OF PENALTY U/S 271(1)(C). THE HONBLE APEX COURT ALSO OBSERVED THAT IF THE CONTENTION OF THE R EVENUE IS ACCEPTED THEN IN CASE OF EVERY RETURN WHERE THE CLAIM IS NOT ACCEPTED BY THE AO FOR ANY REASON, THE ASSESSEE WILL INVITE THE PENALTY U/S 271(1)(C). TH IS IS CLEARLY NOT THE INTENDMENT OF LEGISLATURE. ITA NO. 362/DEL/2010 A.Y. 2005-06 5 10. IN THE BACKGROUND OF THE AFORESAID DISCUSSION AND PRECEDENTS, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE LEVY OF PENALTY. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25/06/2010. SD/- SD/- [RAJPAL YADAV ] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE 25/06/2010 SRB COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES