ITO, New Delhi V. Shri Khawar arvez, New Delhi

ITA 3705/DEL/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4190 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 8 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 05-05-2011
• Assessment Year: 1999-2000
• Appeal Filed On: 31-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MONGA
• Keywords: Opportunity of being heard; Set aside
• Section: 143(3); 54F; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D NEW DELHI) BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI B.K. HALDAR, ACCOUNTANT MEMBER I.T.A. NO.3705/DEL/2009 ASSESSMENT YEAR : 1999-2000 INCOME TAX OFFICER, SHRI KHAWAR ARVEZ, WARD-46 (4), 1760-GALI MIR JUMIA, NEW DELHI. V. LAL KUAN, NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.K. MONGA, DR. RESPONDENT BY : NONE. ORDER PER B.K. HALDAR, AM: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORD ER OF CIT(A)- XXX, NEW DELHI DATED 1.6.2009. REVENUE HAS TAKEN FOL LOWING GROUNDS OF APPEALS:- 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE CIT(A) ERRED IN I) DELETING THE PENALTY IMPOSED U/S 271(1)( C) OF THE IT ACT, 1961 AMOUNTING TO `.3,57,950/- BY HOLDING THAT THE ADDIT ION WAS MADE IN THE CASE OF THE ASSESSEE ON THE BASIS OF DIFFERENC E OF INTERPRETATION OF LAW AND THERE WAS NEITHER ANY CONC EALMENT NOR ANY MALA FIDE INTENTION ON THE PART OF THE ASSESSEE . II) CANCELLING THE PENALTY WITHOUT APPRECIATING THE FAC T THAT THE ASSESSEE HAD ON SALE OF SHARES STOCK OPTION MPLAN AS LONG TERM CAPITAL GAIN EXEMPT U/S 54F OF THE INCOME TAX A CT, PAGE 2 OF 5 ITA NO.3705/DEL/2009 1961 SPECIALLY WHEN THE BENEFIT WAS PERQUISITE WITH TH E MEANING OF SECTION 17(2)(III) AND SALARY TAXABLE BY THE VIRTUE OF SECTION 17(1)(IV) OF THE ACT. III) NOT APPRECIATING THE CONTENT OF CIRCULAR NO.710 DAT ED 24.7.1995. IV) CANCELLING THE PENALTY IMPOSED U/S 271(1)( C)/274 OF THE INCOME TAX ACT, 1961 WITHOUT APPRECIATING THE FACT THAT THE PENALTY WAS RIGHTLY IMPOSED IN VIEW OF THE DECISION RE NDERED IN THE CASE OF GARRICK DSILVA V. JCIT (2006) 5 SOT 132 (DEL.) TM, ESPECIALLY WHEN THE LD CIT(A) AS WELL AS HON'BLE I TAT HAS CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. 3. IN THIS CASE THE RETURN OF INCOME WAS FILED ON 1.7. 1999 DECLARING AN INCOME OF `.7,59,880/-. SUBSEQUENTLY THE CASE WAS R EOPENED U/S 147/148 OF THE INCOME TAX ACT, 1961 ON THE GROUND T HAT EXEMPTION U/S 54F WITH REFERENCE TO STOCK OPTION PLAN OF THE EMPL OYEES OF THE COMPANY M/S ELI LILLY RANBAXY LTD. WAS WRONGLY CLAIME D BY THE ASSESSEE. THE ASSESSEE FILED A RETURN OF INCOME IN RESPONSE T O THE ABOVE NOTICE ON 30.1.2002 DECLARING TAXABLE INCOME OF `.1,34,902/- WHICH WAS ACCEPTED BY THE REVENUE U/S 143(3) ORDER DATED 22.3.2002. THIS ASSESSMENT ORDER WAS REVISED BY THE LD CIT, DELHI XV I, NEW DELHI U/S 263 OF THE ACT VIDE HER ORDER DATED 28.6.2002 B Y ENHANCING THE INCOME BY `.11,98,197/- ON ACCOUNT OF PERQUISITE VAL UE OF THE STOCK OPTION AND DENYING THE CLAIM OF EXEMPTION OF `.5,73 ,216/- CLAIMED U/S 54F OF THE ACT. ON APPEAL, ITAT C BENCH, NEW DEL HI VIDE THEIR ORDER IN I.T.A. NO.3944/DEL/2002 DATED 17.9./2003 SET ASIDE THE CASE TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION THAT A F RESH ORDER BE PASSED IN ACCORDANCE WITH LAW AFTER GIVING THE ASSESSEE R EASONABLE OPPORTUNITY OF BEING HEARD. IN PURSUANCE OF THE ABO VE ORDER OF HON'BLE ITAT, A FRESH ASSESSMENT ORDER WAS PASSED ON 30.3.2 005 PAGE 3 OF 5 ITA NO.3705/DEL/2009 WHEREIN THE SHORT TERM CAPITAL GAIN OF `.11,98,197/- WAS COMPUTED ON ACCOUNT OF TRANSFER OF THE STOCK OPTION. IN THE SAID O RDER PENALTY PROCEEDINGS U/S 271(1)(C ) WITH REFERENCE TO THE ABOV E AMOUNT WAS ALSO INITIATED BY THE ASSESSING OFFICER. IN THE QUANTUM, APPEAL, THE ADDITION HAS BEEN UPHELD. THE ASSESSING OFFICER, THEREFO RE, ISSUED FRESH NOTICE OF HEARING WITH REFERENCE TO IMPOSITION OF PENALTY U/S 271(1)( C) OF THE ACT ON 5.12.2006 FIXING THE HEARI NG ON 11.12.2006. HOWEVER, NONE APPEARED ON BEHALF OF THE ASSESSEE. HOWEV ER, ON SUBSEQUENT NOTICE, IT WAS SUBMITTED BY THE LD AUTHORIZE D REPRESENTATIVE FOR THE ASSESSEE THAT ALL PARTICULARS OF I NCOME WERE FURNISHED BY THE ASSESSEE AND NOTHING WAS CONCEALED. IT W AS CONTENDED THAT IN VIEW OF THE FOLLOWING CASE LAWS, NO PENALTY U/S 271(1)( C) WAS EXIGIBLE. 1. CIT V. INTERNATIONAL AUDIO VISUAL C0. (2007) 288 IT R 570 (DEL.) 2. CIT V. NATH BROS. EXIM INSTITUTIONAL LTD. 288 ITR 670 (DEL.). 4. THE ASSESSING OFFICER, HOWEVER, DID NOT ACCEPT THE C ONTENTION OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE CLAIMED WRONG DEDUCTION U/S 54F AS ALSO WRONGLY TREATED THE SALE PRIC E OF SHARES FROM THE STOCK OPTION AS NON TAXABLE. HE, THEREFORE, IMPOSE D PENALTY OF `.10,73,880/- BEING 300% OF THE TAX SOUGHT TO BE EV ADED. AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE LD CIT(A). 5. LD CIT(A), IN THE FACTS OF THE CASE, HELD THAT THE RE WAS NO CONCEALMENT OR MALA FIDE INTENTION OF THE ASSESSEE. THE ADDITION WAS MERELY ON ACCOUNT OF DIFFERENT INTERPRETATION OF LA W. SHE, THEREFORE, DELETED THE IMPUGNED PENALTY. 6. BEFORE US NONE APPEARED ON BEHALF OF THE APPELLAN T. LD DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER OF T HE ASSESSING PAGE 4 OF 5 ITA NO.3705/DEL/2009 OFFICER. HOWEVER, NOTHING WAS BROUGHT ON RECORD OF T HE TRIBUNAL TO SHOW THAT THE ASSESSEE FURNISHED INACCURATE PARTICULARS OF THE IMPUGNED INCOME OR HAD CONCEALED ANY PARTICULARS WIT H REFERENCE TO SUCH INCOME. PENALTY U/S 271(1)( C) WOULD BE EXIGIBL E ONLY WHEN THE ASSESSEE FILES INACCURATE PARTICULARS OF INCOME OR CONCEA LS PARTICULARS OF INCOME. IN THE PRESENT CASE, THERE IS NOTHING ON R ECORD TO SHOW THAT THE ABOVE PRE CONDITION ARE FULFILLED. A WRONG CLAI M BY ITSELF COULD NOT MAKE THE ASSESSEE LIABLE TO PENALTY U/S 271(1)( C) OF T HE ACT WHEN ALL RELEVANT PARTICULARS OF INCOME HAVE BEEN CORRECTLY DISCLOSED TO THE DEPARTMENT. IN THIS VIEW OF THE MATTER, WE FIND NO M ERIT IN THE GROUNDS TAKEN BY THE REVENUE AND REJECT THE SAME. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED, 8. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE O F HEARING I.E. 5 TH MAY, 2011. SD/- SD/- (R.P. TOLANI) (B.K. HAL DAR) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 05.05..2011 COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). DATE OF HEARING 10.5.2011 PAGE 5 OF 5 ITA NO.3705/DEL/2009 DATE OF DICTATION 10.5.2011 DATE OF ORDER SIGNED BY THE HON'BLE MEMBER. DATE OF ORDER SENT TO THE CONCERNED BENCH