SHSHIKANT G. BADANI, MUMBAI V. ACIT 19(3), MUMBAI

ITA 3862/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49415 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 05-07-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 13-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ANKURVASHI
• Keywords: Bonafide mistake

Judgement Text

1 ITA NO. 3862/MUM/2010 (ASST YEAR 2006-07) IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI E BENCH MUMBAI BENCHES, MUMBAI BEFORE SHRI PRAMOD KUMAR, AM & SHRI VIJAY PAL RAO, JM ITA NO. 3862/MUM/2010 (ASST YEAR 2006-07) SHASHIKANT G BADANI 22 CLASSIQUE CORNER HILL ROAD BANDRA (W), MUMBAI 50 VS THE AST COMMR OF INCOME TAX 19(3), MUMBAI (APPELLANT) (RESPONDENT) PAN NO. AACPB 7327B ASSESSEE BY SHRI ANKURVASHI REVENUE BY SHRI G P TRIVEDI PER VIJAY PAL RAO, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 2.3.2010 OF THE CIT(A) ARISING FROM THE PENALTY ORDER U/S 271( 1)( C) OF THE I T ACT FOR THE ASSESSMENT YEAR 2006-07. 2 THE ONLY ISSUE ARISES FOR OUR CONSIDERATION AND A DJUDICATION IS WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) IS JUSTIFIED IN CONFIRMING THE PENALTY LEVIED BY THE ASSESSING OFFICER ON ACCOUNT OF ADDIT ION DUE TO RENTAL INCOME OFFERED BY THE ASSESSEE AS INCOME FROM HOUSE PROPERTY, WHIC H WAS TREATED BY THE ASSESSING OFFICER AS INCOME FROM OTHER SOURCES AS WELL AS SOM E PART OF THE LONG TERM CAPITAL GAINS ADMITTED BY THE ASSESSEE, WHICH WAS OFFERED AS SHORT TERM CAPITAL GAINS. 2 ITA NO. 3862/MUM/2010 (ASST YEAR 2006-07) 3 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER TREATED THE RENTAL INCOME OF RS.5,50,000/- AS IN COME FROM OTHER SOURCES INSTEAD OF INCOME FROM HOUSE PROPERTY OFFERED BY THE ASSESSEE. APART FROM THIS, WHEN THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH THE DETAILS O F LONG TERM CAPITAL GAINS OF RS.35,63,453/-, THE ASSESSEE, IN RESPONSE, AGREED THAT THE LONG TERM CAPITAL GAINS WERE BEING CLAIMED WRONGLY. ACCORDINGLY, THE ASSES SEE OFFERED SHORT TERM CAPITAL GAINS OF RS. 29,95,786/- OUT OF THE TOTAL LONG TERM CAPITAL GAINS OF RS. 35,63,453/- ORIGINALLY SHOWN IN THE RETURN OF INCOME. THE SHOR T TERM CAPITAL GAINS OFFERED BY THE ASSESSEE WAS GENERATED FROM EQUITY BASED MUTUAL FUN D I.E. RELIANCE EQUITY DIVIDEND PLAN FUND, SBI MULTICAP COMME DIVIDEND PLA NT FUND AND ACCORDINGLY, THE SHORT TERM CAPITAL GAINS OFFERED BY THE ASSESSEE WA S SUBJECTED TO TAX AT 10%. 3.1 THE ASSESSING OFFICER INITIATED PENALTY PROCEED INGS U/S 271(1)(C) ON ACCOUNT OF ASSESSMENT OF THE RENTAL INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES INSTEAD OF INCOME FROM HOUSE PROPERTY AS WELL AS SHORT TERM CAPITAL GAINS OFFERED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS, WHICH WAS SHOWN IN THE RETURN OF INCOME AS LONG TERM CAPITAL GAINS. ACCORDINGLY , PENALTY OF RS. 5,00,634/- WAS LEVIED VIDE THE ORDER DATED 26.5.2009. 3.2 ON APPEAL, THE CIT(A) CONFIRMED THE LEVY OF PEN ALTY VIDE IMPUGNED ORDER. 4 WE HAVE HEARD THE LD AR OF THE ASSESSEE AND THE L D DR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. AS REGARDS THE TREATM ENT OF RENTAL INCOME BY THE ASSESSING OFFICER AS INCOME FROM OTHER SOURCES IN STEAD OF INCOME FROM HOUSE PROPERTY CLAIMED BY THE ASSESSEE, THE SAME CANNOT BE SAID TO BE CONCEALMENT OF 3 ITA NO. 3862/MUM/2010 (ASST YEAR 2006-07) INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME. THE ISSUE OF TREATMENT OF RENTAL INCOME AS INCOME FROM HOUSE PROPERTY OR INCO ME FROM OTHER SOURCES IS A DEBATABLE ISSUE AND WHEN THERE IS NO CASE MADE OUT BY THE REVENUE THAT THE CLAIM OF THE ASSESSEE IS EITHER BOGUS OR ABSOLUTELY WRONG , THEN THE SAME DOES NOT AMOUNTS TO CONCEALMENT OF INCOME OR FURNISHING OF I NACCURATE PARTICULARS OF INCOME. IT IS SETTLED PROPOSITION OF LAW THAT IF THE CLAIM OF THE ASSESSEE IS NOT ALLOWABLE AS PER THE PROVISIONS OF LAW, IT DOES NO T IPSO FACTO LEAD TO LEVY OF PENALTY UNTIL AND UNLESS THE CLAIM, SO MADE IS EITHER BOGUS /FALSE OR INHERENTLY INCORRECT. IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT I N THE CASE OF RELIANCE PETROPRODUCTS P LTD REPORTED IN 322 ITR 158(SC), N O PENALTY CAN BE LEVIED ON THIS ISSUE OF ASSESSMENT OF INCOME UNDER THE HEAD OTHER SOURCE INSTEAD OF HOUSE PROPERTY. 4.1 AS REGARDS THE ADDITION AS SHORT TERM CAPITAL G AINS INSTEAD OF LONG TERM CAPITAL GAINS ADMITTED BY THE ASSESSEE, WE FIND THA T THE ASSESSEE HAS ADMITTED AND REALIZED ITS MISTAKE IN OFFERING SOME PART OF SHORT TERM CAPITAL GAINS ARISING FROM EQUITY BASED MUTUAL FUNDS AS LONG TERM CAPITAL GAIN S. THEREFORE, THIS IS NOT A CASE OF CONCEALED INCOME DETECTED BY THE ASSESSING OFFI CER, WHICH WAS NOT OFFERED BY THE ASSESSEE TO TAX; BUT THE ASSESSEE, AT THE FIRST OPPORTUNITY AND INSTANCE ACCEPTED THE BONAFIDE MISTAKE OF OFFERING SOME PART OF THE S HORT TERM CAPITAL GAINS UNDER THE HEAD LONG TERM CAPITAL GAINS. APART FROM THIS M ISTAKE, THE ASSESSING OFFICER DID NOT FIND ANY ERROR OF CONCEALMENT OR INACCURATE PAR TICULARS OF INCOME FURNISHED BY THE ASSESSEE. DURING THE COURSE OF PENALTY PROCEED INGS, THE ASSESSEE OFFERED THE EXPLANATION AS UNDER: I HAVE FULLY OFFERED ALL THE INCOME ON REDEMPTION OF MUTUAL FUNDS. WHILE FILING THE RETURN OF INCOME, I HAD MISTAKENLY OFFERED THE G AINS ON REDEMPTION AS 4 ITA NO. 3862/MUM/2010 (ASST YEAR 2006-07) LONG TERM WHILE ACTUALLY, PARTIALLY, IT WAS EXEMPT DIVIDEND AND THE BALANCE WAS SHORT TERM. I HAVE ON MY OWN VOLITION BROUGHT TO YOUR KIND NOTICE THE MISTAKE I HAD COMMITTED. I AM SURE YOU APPRECIATE THAT I HAVE SUBMITTED ALL TH E DETAILS DUTIFULLY AND HONESTLY. IN VIEW OF THE FOREGOING SUBMISSIONS, MY AGE AND A N O.OF DECISIONS TO THE EFFECT THAT PENALTY IS NOT LEVIABLE IN DIFFERENCE O F OPINION, I REQUEST YOU T TAKE A LENIENT VIEW AND DROP THE PENALTY PROCEEDINGS. WHEN THE ASSESSEE HAS ACCEPTED HIS MISTAKE IN THE A SSESSMENT PROCEEDINGS AT THE FIRST AVAILABLE OPPORTUNITY AND OFFERED THE PART OF THE LONG TERM CAPITAL GAINS AS SHORT TERM CAPITAL GAINS, WHICH IS SUBJECTED TO TAX @ 10% , THEN, WE FIND THE EXPLANATION OF THE ASSESSEE IS BONAFIDE, AS REFERRED UNDER CLAUSE B OF EXPLANATION I TO SEC. 271(1) (C) OF THE ACT. SINCE THE PRIMARY FACT S AND MATERIALS RELATING TO THE COMPUTATION OF THE TOTAL INCOME HAVE BEEN DISCLOSED BY THE ASSESSEE ON THIS ISSUE, THEREFORE, NO PENALTY IS WARRANTED. IN THIS VIEW O F THE MATTER, WE DELETE THE PENALTY LEVIED IN THE CASE OF THE ASSESSEE. 5 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE I S ALLOWED. ORDER PRONOUNCED ON THE 13 TH DAY OF JULY 2011. SD/- SD/- (PRAMOD KUMAR ) ACCOUNTANT MEMBER ( VIJAY PAL RAO ) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 13 TH ,JULY 2011 RAJ* COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI