DCIT, Chandigarh V. Sh. Harish Goyal, Chandigarh

ITA 367/CHANDI/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80932 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 07-10-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 07-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Business income; Bonafide belief; Wrong claim; Bonafide mistake

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R. SOOD, ACCOUNTANT MEMBER ITA NO. 367/CHD/2014 ASSESSMENT YEAR: 2007-08 THE DCIT, VS. SH. HARISH GOYAL CIRCLE 4 (1) SECTOR 28-D CHANDIGARH CHANDIGARH PAN NO.AAVPG3228D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANJIT SINGH RESPONDENT BY : SHRI. PARIKSHIT AGGARWAL DATE OF HEARING : 07/10/2014 DATE OF PRONOUNCEMENT : 17.10.2014 ORDER PER T.R.SOOD, A.M. THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 29.01.2014 OF CIT(A) CHANDIGARH. 2. IN THIS APPEAL THE REVENUE HAS RAISED THE FOLLOW ING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT(A) HAS ERRED IN ALLOWING APPEAL OF THE ASSESSE E WITHOUT APPRECIATING THE FACTS OF THE CASE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT(A) HAS ERRED IN DELETING THE PENALTY OF RS. 28, 83,858/- LEVIED U/S 271(1)(C) BY HOLDING THAT WRONG COMPUTATION OF TAX LIABILITY WILL NOT FALL IN THE AMBIT OF SECTION 271(1)(C), WH EREAS THE AMOUNT OF TAX SOUGHT TO BE EVADED IS VERY CLEAR IN THIS CA SE (I.E. RS. 28,83,858/- AS CLAIMED U/S 88E OF THE INCOME TAX AC T, 1961) AND AS HELD BY THE ITAT MUMBAI IN THE CASE OF HARISH P. MASHRUWALA VS. ASSISTANT COMMISSIONER OF INCOME TAX (2010) 139 TTJ563. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT(A) HAS ERRED IN DELETING THE PENALTY OF RS. 28, 83,858/- LEVIED 2 U/S 271(1)(C) ON DISALLOWANCE OF PATENTLY WRONG CLA IM OF REBATE U/S 88E OF THE INCOME TAX ACT, 1961. 3. AFTER HEARING BOTH THE PARTIES WE FIND THAT ASS ESSEE HAS CLAIMED REBATE U/S 88E AMOUNTING TO RS. 25,70,284/- BUT HAD NOT SHOWN INCO ME FROM BUSINESS OF TRADING OF SHARES. THE INCOME FROM SHARES WAS DECLARED UNDER THE HEAD SHORT TERM CAPITAL GAIN, THEREFORE, CLAIM FOR REBATE U/S 88E WAS REJECTED AN D PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT WAS INITIATED. IN RESPONSE TO THE SHOW CAUS E NOTICE FOR LEVY OF PENALTY IT WAS SUBMITTED AS UNDER:- THE ASSESSEE IN THE CASE CITED AS SUBJECT SUBMITT ED HIS RETURN OF INCOME DECLARING BUSINESS INCOME AND SHARE TRADING AND CLAIMED THE BENEFIT OF SECURITY TRANSACTION TAX DEDUCTED AT SOURCE. HIS RETURN INCOME IS NOT ULTIMATELY HELD TO BE CORRECT. SO A REVISED COMPUTATION CHART OF TOTAL INCOME WAS PREPARED WHIC H IS ENCLOSED HEREWITH. HE ADDED THE INCOME FROM SHARE TRADING IN HIS OTHER TOTAL INCOME AND CLAIMED THE BENEFIT OF SECURITY TR ANSACTION TAX. IT IS PRAYED THAT SINCE ALL THE PARTICULARS OF INCOME OR LOSS STOOD DISCLOSED IN THE RETURN OF INCOME AND REAL INCOME C OULD REALLY BE COMPUTED THEREFROM. THEREFORE, AS PER EXPLN. 1B, HE HAS MET WITH OBLIGATION. HIS OBLIGATION STANDS COMPLIED WITH DIL IGENTLY AND NOT NEGLIGENTLY. HE HAS NOT FILED WRONG RETURN DELIBERA TELY OR IN DEFIANCE OF LAW. HE IS NOT GUILTY OF CONSCIOUS OF D ISREGARD OF HIS OBLIGATION. HE ACTED UNDER A BONAFIDE BELIEF THAT H IS RETURN IS CORRECT RETURN. 4. THE ASSESSING OFFICER AFTER EXAMINING THIS SUBMI SSION DID NOT FIND ANY MERIT IN THESE SUBMISSIONS. HE OBSERVED THAT ASSESSEE COULD NOT EXPLAIN THE DISCREPANCY REGARDING CLAIM OF REBATE U/S 88E AND IT WAS ONLY B ECAUSE OF REOPENING OF THE ASSESSMENT THAT THE WRONG CLAIM WAS DENIED, THEREFORE, PENALTY WAS LEVIABLE AND ACCORDINGLY HE LEVIED A MINIMUM PENALTY @ 100% AMOUNTING TO RS. 28 ,83,858/-. 5. ON APPEAL BEFORE CIT(A) IT WAS MAINLY PLEADED TH AT RETURNED INCOME HAS BEEN ACCEPTED, THEREFORE, THERE WAS NO INCOME WHICH CAN BE SAID TO HAVE BEEN CONCEALED BY 3 THE ASSESSEE, THEREFORE, PENALTY WAS NOT LEVIABLE. THE LD. CIT(A) FOUND FORCE IN THE SAME AND DELETED THE PENALTY. 6. BEFORE US LD. DR STRONGLY SUPPORTED THE ORDER OF CIT(A) AND SUBMITTED THAT WRONG CLAIM COULD BE DETECTED ONLY BECAUSE OF REOPE NING OF ASSESSMENT OTHERWISE ASSESSEE WOULD HAVE GOT AWAY WITH THE WRONG CLAIM AND, THEREFORE, PENALTY WAS JUSTIFIED. HE ALSO RELIED ON THE DECISION OF HON'BLE DELHI HIG H COURT IN THE CASE CIT V ZOOM COMMUNICATION P. LTD. IN 327 ITR 510(DELHI). 7. ON THE OTHER HAND, LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSION MADE BEFORE THE CIT(A) AND EMPHASIZED THAT RETURNED INCO ME AND ASSESSED INCOME REMAINS THE SAME. THIS CLEARLY SHOWS THAT NO PARTICULARS OF I NCOME HAVE BEEN CONCEALED. HE CONTENDED THAT CONSULTANT OF THE ASSESSEE FILED THE RETURN UNDER THE WRONG BELIEF THAT IN CASE OF PROFIT FROM SHARES REBATE U/S 88 E WAS AVAI LABLE. HOWEVER, THE SAME REBATE IS AVAILABLE ONLY IF THERE IS INCOME FROM SHARE TRADIN G BUSINESS AND NOT FROM CAPITAL GAINS EARNED FROM THE SHARE TRADING. THEREFORE, THIS IS A CASE OF BONAFIDE MISTAKE AND PENALTY IS NOT LEVIABLE. IN THIS REGARD HE RELIED ON DELHI HI GH COURT DECISION IN CIT V NALWA SONS INVESTMENTS LTD IN 327 ITR 543 (DELHI). 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY AND FIND THAT LD. CIT(A) HAS DECIDED THIS ISSUE IN PARAS 5.2, 5.3, 5.3.1 AND 5.4 WHICH ARE AS UNDER;- 5.2 IN THE INSTANT CASE, THE PENALTY HAS BEEN IMPO SED UNDER SECTION 271(1)(C) ON THE GROUND THAT THE APPELLANT HAD CLAI MED REBATE UNDER SECTION 88E FROM HIS TAX LIABILITY, OF WHICH HE WAS NOT ENTITLED TO. IT IS ABSOLUTELY CLEAR THAT THE APPELLANT HAD MADE THIS C LAIM WITHOUT ANY BASIS. WHY THIS CLAIM WAS NOT DISALLOWED WHEN THE RETURN W AS PROCESSED UNDER SECTION 143(1) IS NOT CLEAR? IN FACT, THE REBATE CO ULD HAVE BEEN WITHDRAWN EVEN BY RECTIFICATION OF THE ORDER U/S 143(1), AS I T WAS A PATENT MISTAKE APPARENT FROM THE RECORDS. IN ANY CASE, THE FACT RE MAINS THAT EVEN ON REASSESSMENT, THE INCOME RETURNED BY THE APPELLANT WAS ACCEPTED. HENCE, IT CANNOT BE SAID THAT THE APPELLANT HAD NOT SHOWN CORRECT TAXABLE INCOME 4 IN HIS RETURN OF INCOME AND ACCORDINGLY, THERE WAS NO JUSTIFICATION FOR LEVY OF PENALTY FOR CONCEALMENT IN THIS CASE. 5.3 IT MAY ALSO BE POINTED OUT THAT QUANTUM OF PEN ALTY THAT CAN BE IMPOSED FOR DEFAULT MENTIONED UNDER SECTION 271(1)( C) IS TO BE COMPUTED AS PER THE PROVISIONS OF SECTION 271(1)(II I), WHICH READS AS UNDER: (III) IN THE CASES REFERRED TO IN CLAUSE(C) OR CLA USE (D), ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM WHICH SHALL NOT BE LESS THAN, BUT WHICH SHALL NOT EXCEED THREE TIMES, THE AMOUNT OF T AX SOUGHT TO BE EVADED BY REASON OF THE CONCEALMENT OF PARTICULARS OF HIS INCOME OR FRINGE BENEFITS OR THE FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME OR FRINGE BENEFITS. 5.3.1 IN NUTSHELL, THE AMOUNT OF PENALTY TO BE LEVI ED IS EQUAL TO THE DIFFERENCE BETWEEN THE TAX ON ASSESSED INCOME AND T HE TAX ON RETURNED INCOME THEREFORE, IF IN A CASE THERE IS NO DIFFEREN CE BETWEEN THE RETURNED INCOME AND THE ASSESSED INCOME, THE TAX SOUGHT TO B E EVADED WOULD BE ZERO AND PENALTY TO BE LEVIED WILL BE NIL. 9. IN OUR OPINION LD. CIT(A) HAS CORRECTLY DECIDED THE ISSUE BECAUSE ASSESSEE HAS NOT CONCEALED ANY PARTICULARS OF INCOME AND INCOME ASSESSED IS UNDISPUTEDLY REMAINS THE SAME. THE ASSESSEE MIGHT HAVE COMMITTED BONAFIDE M ISTAKE IN CLAIMING THE REBATE U/S 88E BUT THAT WOULD NOT MAKE THIS A FIT CASE FOR LEV Y OF PENALTY, THEREFORE, WE FIND NOTHING WRONG WITH THE ORDER OF LD. CIT(A) AND WE CONFIRM T HE SAME. 10. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17.10.2014 SD/- SD/- (BHAVNESH SAINI) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 17.10.2014 RKK COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR 5