Appeal details
Counselvise Citation
371719914 RSA 2010
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 1 month(s) 29 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
08-07-2011
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
B
Next Hearing Date
05-07-2011
Assessment Year
2004-2005
Appeal Filed On
10-05-2010
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI BEFORE SHRI R.S.SYAL, AM AND SHRI V.DURGA RAO, JM ITA NO.3717/MUM/2010 : ASST.YEAR 2004-2005 SHRI BARKUR DHARMARAJ SHETTY C - WING, EAST WEST INDUSTRIAL CENTRE ANDHERI KURLA ROAD, SAFED POOL MUMBAI 400 072. PAN : AAOPS2318R. VS. THE DY.COMMISSIONER OF INCOME-TAX RANGE 8(3) MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.SHIVARAM RESPONDENT BY : SHRI P.C.MAURYA O R D E R PER R.S.SYAL, AM : THIS APPEAL BY THE ASSESSEE IS DIRECT ED AGAINST THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON 26.02.2010 UPHOLDING PENALTY U/S.271(1)(C) ON THE ISSUE OF SHORT TERM CAPITA L LOSS AND DEDUCTION U/S.80-IB IN RELATION TO THE ASSESSME NT YEAR 2004-2005. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE ASSESSEE EARNED DIVIDEND INCOME OF RS.41.55 LAKHS OUT OF WHICH A SUM OF RS.3 9.44 LAKHS WAS CLAIMED AS EXEMPT U/S.10(33). THE ASSESSEE WAS CALLED UPON TO FURNISH THE DETAILS OF INCOME FROM OTHER SOURCES AND JUSTIFICATION FOR LOSS CLAIMED AS SHORT TERM CAPITAL LOSS. THE ASSESSEE FURNISHED SOME OF THE DETAILS OF CAPITAL GAIN AND LOSS DURING THE ASSESSMENT PROCEEDINGS. IT WAS NOTICED BY THE ASSESSING OFFICE R THAT THE ASSESSEE HAD INCURRED LOSS OF RS.51.08 LAKHS ON REDE MPTION OF THE UNITS OF VARIOUS MUTUAL FUNDS. DETAILS ABOUT ACQUISITI ON OF THE UNITS AND DATES OF REDEMPTION WERE GIVEN BUT THE ASSESSEE DID NOT FURNISH THE RECORD DATES. IN SUCH A SITUATION IT WAS NOT POSSIBLE FOR THE A.O. TO COMPUTE THE PERIOD OF HO LDING OF MUTUAL FUNDS . AS SUCH THE A.O. DISALLOWED THE CLAIM OF SHOR T TERM CAPITAL LOSS OF RS.51. 08 LAKHS AND DID NOT ALLOW THE SET OFF. THE ASSESSEE PREFERRED APPEAL BEFORE THE LEARNED CIT(A) WHO ACCEPTED THE ALTERNATE GROUND OF THE ASSESSEE THAT EVEN IF LOSS WAS NOT A LLOWABLE STILL THE ITA NO.3717/MUM/2010 SHRI BARKUR DHARMARAJ SHETTY. 2 QUANTUM DISALLOWED BY THE A. O. WAS NOT CORRECT IN VI EW OF THE PROVISIONS OF SECTION 94(7) OF THE ACT. SINCE THE ASSESSEE RECEIVED DIVIDEND OF RS.22.74 LAKHS, IN HIS OPINION, DISALLOWANCE COULD NOT HAVE BEEN EXCEEDED FROM THAT LEVEL. HE, THEREFORE, REDUCED THE ADDITI ON TO RS.22.74 LAKHS. THER EAFTER PENALTY WAS IMPOSED U/S.271(1)(C) ON THIS ISSUE, WHICH CAME TO BE UPHELD IN THE IMPUGNED ORDER. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RE LEVANT MATERIAL ON RECORD. IT IS NOTICED THAT DURING THE COUR SE OF APPELLATE PROCEEDINGS BEFORE THE LEARNED CIT(A) THE ASSESSEE FILED DETAILS OF RECORD DATES OF DIVIDEND DECLARATION FROM WHICH IT WAS SEEN THAT THE ASSESSEE WAS COVE RED UNDER THE PROVISIONS OF SECTION 94(7) AS THE PURCHAS E AND SALE OF UNITS HAD TAKE N PLACE THREE MONTHS LATER THE RECORD DATE. IT THUS BECOMES EVID ENT THAT THE ASSESSEE WAS HAVING COMPLETE DETAILS ABOUT DATE OF PURCHASE AND SALE OF THE UNITS ALONG WITH THE RECORD DATES, BUT DESPITE THAT HE DID NOT FURNISH IT UNDER THE FEAR OF EXPOSURE U/S. 94(7). ONCE A CASE IS COVERED U/S.94(7) THE ASSESSEE IS NOT ENTITLED TO CLAIM SUCH SET OFF OF LOSS AGAINST INCOME UNDER OTHER HEADS. THAT IS THE CL EAR MANDATE OF THE PROVISION WHICH WAS NOT FOLLOWED BY THE ASSESSEE IN THE COMPUTATION OF INCOME. IT, THEREFORE, INDICATES THAT THE ASSESSEE INTENTI ONALLY MADE A FRAUDULENT CLAI M OF SET OFF AGAINST THE PROVISIONS OF SECTION 94(7) AND THAT BECAME THE REASON OF HIS NOT FURNISHING THE DETAILS OF RECORD DATES AT TH E ASSESSMENT STAGE DESPITE A SPECIFIC REQUEST OF THE AO. THE CONTENTION OF THE LEARNE D A.R. THAT THE ASSESSEE WAS UNAWARE OF THE LEGAL POSITION IN THIS REGARD IS COMPLETELY UNFOUNDED AS IT CAN BE SEEN FROM THE ATTENDING CIRCUMSTANCES THAT THE ASSESSEE WAS FULLY AWARE OF ALL THIS AND IN ORDER TO TAKE THE BENEFIT OF SET OFF, WHICH WAS NOT AVAILABLE AS PER LAW, HE CHOSE IT EXPEDIENT NOT TO FURNISH THE RECORD DATES BEFORE THE AS SESSING OFFICER. IF TH E ASSESSEE HAD BEEN IGNORANT OF THE LEGAL PROVISION IN THIS REGA RD, HE COULD HAVE AC CEPTED THE ADDITION, ON COMING TO KNOW OF THE CORRECT LEGAL POSI TION, BEFORE THE AO AND NOT PERUSED THE MATTER IN APPEAL. UNFORTUNATELY THE FACT S ARE OTHERWISE. THE ASSESSEE DID NOT COME CLEAN BEFORE THE AO AND CONTINUED THE SAME BY FURTHER TAKING THE ISSUE IN THE FIRST ITA NO.3717/MUM/2010 SHRI BARKUR DHARMARAJ SHETTY. 3 APPEAL AS WELL. IN OUR CONSIDERED OPINI ON SUCH CLAIM MADE BY THE ASSESSEE IS FRAUDULENT AND NO LIBERAL VIEW NEEDS TO BE TA KEN ON THIS SCORE. WE, THEREFORE, HOLD THAT THE PENALTY AS SUSTAINED BY THE LEARNE D CIT(A) IN NOT ALLOWING SET OFF TO THE EXTENT OF DIVIDEND OF RS.22. 74 LAKHS IS FULLY JUSTIFIED. THE ASSESSEES CONTENTION FAILS ON THIS COUNT. 4. THE SECOND GROUND ON WHICH THE ASSESSEE HAS COME UP IN APPEAL BEFORE US IS THE CLAIM FOR DEDUCTION U/S. 80-IB. THE ASSESSEE CLAIMED DEDUCTION AT THE RATE OF 25% BY INCLUDING `OTHER INCOME OF RS. 17.27 LAKHS WITHIN THE INCOME DERIVED FROM THE INDUSTRIAL UNDERTAKING. THE A.O. DISALLOWED THE ASSESSEES CLAIM OF DEDUCTION IN RESPECT OF SUCH OTHER INCO ME, WHICH POSITION WA S ACCEPTED BY THE ASSESSEE AND NO FURTHER APPEAL WAS FILED ON THIS ISSUE, WHICH ULTIMATELY LOWERED THE CLAIM OF DEDUCTION TO THE EXTENT OF RS .3,42,192. THE ASSESSING OFFICER IMPOSED PENALTY ON THIS AMOUNT WHICH CAME TO BE UPHELD IN THE FIRST APPEAL. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RE LEVANT MATERIAL ON RECORD. IT IS NOTICED THAT THE ASSESSEE CLAIMED DEDUCTION U/S.80-IB ON THE BASIS OF THE REPORT OF THE CHARTERED ACCOUNTANT. THE CHARTERED ACCOUNTANT CERTIFIED THE AMOUNT OF DEDUCTION CLAIMED BY THE ASS ESSEE U/S.80-IB AT THE RATE OF 25% BY INCLUDING OTHER INCOME OF RS.17.27 LAKHS. IT IS ON THE BASIS OF TH IS CERTIFICATION BY THE AUDITOR OF THE ASSESSEE TH AT THE DEDUCTION U/S.80-IB AT THIS LEVEL CAME TO BE CLAIMED BY THE ASSESSEE. CHARTERED ACCOUNTAN TS ARE EXPERTS IN TH IS FIELD AND HAVE BEEN STATUTORILY AUTHORIZED TO CERTIF Y THE CORRECT AMOUNT OF DEDUCTION UNDER DIFFERENT PROVISIONS OF THE ACT, INCLUDING SECTION 80-IB. THE RESTING OF ASSESSEES CLAIM ON THE STRENGTH OF SUCH CERTIFI CATE ISSUED BY THE AU DITOR, WHICH WAS EVENTUALLY FOUND TO BE NOT ENTIRELY CORRECT, CANNOT BE CONSIDERED AS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTIC ULARS OF INCOME. IN OUR CONSIDERED OPINION THE ASSESSEE CANNOT BE HELD TO BE CAUGHT WITHIN THE MISCHIEF OF SECTION 271(1)(C) UNDER SUCH CIRCUMSTANCES. THE HONBLE DELHI HIGH COURT IN CIT VS. S.DHANABAN ITA NO.3717/MUM/2010 SHRI BARKUR DHARMARAJ SHETTY. 4 [(2009) 309 ITR 268 (DEL.)] HAS CANCELLED THE PENA LTY U/S.271(1)(C) WHICH WAS IMPOSED BY THE ASSESSING OFFICER IN VIEW OF HIGHER CLAIM OF DEDUCTION ON THE GROUND THAT THE ASSESSEE FILED CLAIM ON TH E BASIS OF INCORRECT ADVICE GIVEN BY HIS CHARTERED ACCOUNTANT. SIMILAR VIEW WAS EXPRESSED BY THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. DEEP TOURS PR IVATE LIMITED [(2005) 274 ITR 603 (P&H)]. IN VIEW OF THE FOREGOING DISCUSSION, WE ARE OF THE CONSIDERED OPINION THAT THE LEARNED CIT(A) WAS NOT JU STIFIED IN UPHOLDING THE PENALTY IMPOSED BY THE ASSESSING OFFICER U/S.271(1)(C). WE, THEREFORE, ORDER FOR THE DELETION OF PENALTY ON THIS AMOUNT. 6. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 8 TH DAY OF JULY, 2011. SD- SD/- ( V.DURGA RAO ) ( R.S.SYAL ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI : 8 TH JULY, 2011. DEVDAS*` COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A) - XVIII, MUMBAI. 5. THE DR/ITAT, MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, MUMBAI.
