SAMEER SAMPAT, MUMBAI V. ITO (iT) 2(1), MUMBAI

ITA 4024/MUM/2017

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5896 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2011-2012
• Appeal Filed On: 02-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LAVISH KUMAR
• Keywords: Bonafide mistake; TDS; Capital Gains
• Section: 271(1)(c); 143(3); 201; 274

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES I , MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO. 4 0 2 4 /MUM/201 7 ASSESSMENT YEAR : 20 11 - 1 2 SHRI SAMEER SAMPAT, C/O. J.D. SANGHAVI & CO., 408/409, JOLLY BHAVAN NO. 2, 7, NEW MARINE LINES, MUMBAI [PAN : AA EPS 4095 B ] VS. THE INCOME TAX OFFICER - IT - 2(1) , MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ABHISHEK JHUNJHUNWALA, AR RESPONDENT BY : SHRI LAVISH KUMAR, SR. DR DATE OF HEARING : 20 - 11 - 2018 DATE OF PRONOUNCEMENT : 21 - 12 - 2018 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS) - 58 , MUMBAI , DATED 03 - 0 2 - 201 7 . THE ONLY ISSUE RAISED BY ASSESSEE IN THE SOLE GROUND IS THAT THE CONFIRMATION OF PENALTY U/S. 271(1)(C) OF THE INCOME TAX ACT (ACT) OF RS.1,98,453/ - BY THE CIT(A), BY UPHOLDING THE ORDER OF THE ASSESSING OFFICER (AO). ITA NO. 4 024 /MUM/ 20 17 : 2 : 2 . A SSESSEE ALSO FILED THE REVISED GROUNDS OF APPEAL, CHALLENGING THE IMPOSITION OF PENALTY ON TECHNICAL GROUND THAT THE NOTICE U/S. 274 OF THE ACT HAS BEEN ISSUED IN MECHANICAL MANNER WITHOUT SPECIFYING IN THE ORDER STATING UNDER WHICH OF THE TWO LIMBS I.E., CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME , THE PENALTY WAS IMPOSED TO BE LEVIED BY THE AO. 3. FIRST, WE WOULD LIKE TO ADJUDICATE THE CASE ON THE BASIS OF MERITS . ASSESSEE FILED RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 30 - 09 - 2011, DECLARING TOTAL INCOME OF RS. 1,35,66,080/ - . ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE ACT DETERMINING TOTAL INCOME AT RS. 1,48,50,570/ - BY MAKING ADDITION UNDER THE HEAD SHORT TERM CAPITAL GAIN U/S. 111A OF THE ACT RS. 12,84,489/ - AND LONG TERM CAPITAL GAIN ON SALE OF MUTUAL FUND OF RS. 19,36,537/ - . ACCORDINGLY AFTER COMPLETION OF ASSESSMENT, SHOW CAUSE NOTICE U/S. 274 R.W.S. 271(1)(C) OF THE ACT, CALLING UPON THE ASSESSEE TO SHOW CAUSE AS TO WHY PENALTY SHOULD NOT BE IMPOSED U/S. 271(1)(C) OF THE ACT. ITA NO. 4 024 /MUM/ 20 17 : 3 : 4. THE FACTS IN BRIEF ARE THAT, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO OBSERVED FROM AIR INFORMATION/26AS DETAILS THAT ASSESSEE HAS EARNED SHORT TERM CA PITAL GAIN / LONG TERM CAPITAL GAIN WHICH W ERE NOT SHOWN IN THE RETURN OF INCOME . THE SHOW CAUSE WAS REPLIED BY ASSESSEE ON 14 - 02 - 2014 STATING THAT WHILE FILING THE RETURN OF INCOME, THE SAID INCOME FROM SHORT TERM AND LONG TERM CAPITAL GAINS W ERE INADVE RTENTLY OMITTED TO BE DISCLOSED DUE TO OVERSIGHT . THE ASSESSEE FURTHER CONTENDED THAT THE NON DISCLOSED REPRESENTED MAINLY THE CAPITAL GAIN ON SALE OF MUTUAL FUNDS. THE AR FURTHER SUBMITTED THAT ON THE SAID AMOUNT OF CAPITAL GAIN WHICH WAS NOT DISCLOSING THE RETURN OF INCOME THERE IS NO ADDITIONAL TAX LIABILITY AS TDS ON SUCH TRANSACTIONS I.E., ON MUTUAL FUND TRANSACTIONS WERE ALREADY DEDUCTED AND DEPOSITED . THE AO BRUSHING ASIDE THE CONTENTIONS OF THE ASSESSEE CALCULATED THE TAX ON THE LONG TERM CAPITAL GAIN OF RS. 19,36,539/ - AND SHORT TERM CAPITAL GAIN OF RS. 12,84,487/ - , AND FINALLY IMPOSED PENALTY EQUIVALENT TO 100% OF RS. 7,95,833/ - WHICH ACCORDING TO THE AO WAS TAX SOUGHT TO BE EVADED BY HOLDING THAT ASSESSEE HAS ITA NO. 4 024 /MUM/ 20 17 : 4 : CONCEALED THE INC OME BY NOT DISCLOSING THE CAPITAL GAIN IN THE RETURN OF INCOME. 5. IN THE APPELLATE PROCEEDINGS, LD. CIT(A) CONFIRMED THE PENALTY BY UPHOLDING THE ORDER OF AO THAT ASSESSEE HAS FAILED TO OFFER ANY GENUINE OR BONAFIDE EXPLANATION FOR NOT DISCLOSING THE SAID INCOME BY WAY OF CAPITAL GAINS IN THE RETURN OF INCOME. HOWEVER, HE DIRECTED THE AO TO COMPUTE THE AMOUNT OF PENALTY U/S. 271(1)(C) CORRECTLY AS THE MINIMUM TAX ON THE SAID INCOME WORKS TO RS. 1,98,453/ - BUT NOT RS . 7,95,833/ - AND THUS, DIRECTED THE AO TO REDUCE THE PENALTY TO 100% OF THE TAX OF RS. 1,98,453/ - . 6. AFTER HEARING BOTH THE SIDES AND PERUSING THE MATERIAL PLACED ON RECORD, INCLUDING THE IMPUGNED ORDER, WE FIND THAT ASSESSEE HAS NOT DISCLOSED THE INCOME EARNED FROM CAPITAL GAINS OF RS. 19,36,597/ - TOWARDS LONG TERM CAPITAL GAINS AND RS. 12,84,487/ - TOWARDS SHORT TERM CAPITA L GAINS ON SALE OF MUTUAL FUNDS. WE FURTHER FIND THAT TDS HAS ALREADY BEEN DEDUCTE D ON THE SAID SALE TRANSACTION OF MUTUAL FUNDS AND NO TAX ON THE SAID ADDITIONAL INCOME IS WORKED OUT DUE TO REFUND , AFTER SETTING OF F THE TDS DEDUCTED ON THE OTHER ITA NO. 4 024 /MUM/ 20 17 : 5 : TRANSACTION. DURING THE COURSE OF HEARING, ASSESSEE FILED RE - CONCILIATION OF TDS, ORIGINAL COMPUTATION AS WELL AS THE REVISED COMPUTATION. AS PER THE ORIGINAL COMPUTATION, THE REFUND DUE WAS NIL, WHEREAS FROM THE REVISED COMPUTATION, THE ASSESSEES REFUND OF INCOME TAX WORKS OUT TO RS. 73,550/ - . THE TDS IN THE ORIGINAL COMPUTATION OF INCOME WAS RS. 17,19,593/ - , WHEREAS IN THE REVISED COMPUTATION, THE TDS WAS RS. 19,83,470/ - . AFTER TAKING INTO CONSIDERATION ALL THESE FACTS AND CIRCUMSTANCES, WE ARE OF THE V IEW THAT THE LAPSE ON THE PART OF ASSESSEE IN DISCLOSING THE INCOME BY WAY OF LONG TERM CAPITAL GAIN AND SHORT TERM CAPITAL GAIN IN THE RETURN OF INCOME WHICH WAS APPEARING IN THE AIR INFORMATION FROM WHERE THE AO TOOK THE INFORMATION AND ISSUED SHOW CAUSE NOTICE TO ASSESSEE, IS ONLY AN INADVERTENT MISTAKE ON THE PART OF ASSESSEE. THIS IS MORE SO IN VIEW OF THE FACT THAT BY TAKING INTO ACCOUNT THE INCOME BY WAY OF CAPITAL GAIN, THE ASSESSEE HAS BECOME ENTITLED TO REFUND OF RS. 73,550/ - . IN OUR OP INION, THERE IS NEITHER CONCEALMENT OF INCOME ON THE PART OF ASSESSEE NOR ANY LAPSE IN FURNISHING THE INACCURATE PARTICULARS OF INCOME. THIS CAN ONLY BE TREATED AS GENUINE AND BONAFIDE MISTAKE, WHICH IF NOT POINTED OUT BY THE AO WOULD HAVE ITA NO. 4 024 /MUM/ 20 17 : 6 : CAUSED EVEN LOS S TO THE ASSESSEE, WHICH WOULD HAVE RESULTED DUE TO NON - CLAIM OF LEGITIMATE RE FUND OF INCOME TAX. UNDER THESE CIRCUMSTANCES, WE ARE NOT IN AGREEMENT WITH THE CONCLUSION BY THE LD. CIT(A) THAT THERE IS LAPSE ON THE PART OF ASSESSEE TO RETURN THE INCOME FROM CAPITAL GAIN AND ADMISSION THEREOF BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. ACCORDINGLY, WE SE T ASIDE THE ORDER OF CIT(A) AND DIRECT THE AO TO DELETE THE PENALTY. 7 . IN THE RESULT, THE APPEAL OF ASSESSEE I S ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST DAY OF DECEMBER, 2018 SD/ - SD/ - (SAKTIJIT DEY) (RAJESH KUMAR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / MUMBAI; / DATED : 21 ST DECEMBER, 2018 TNMM ITA NO. 4 024 /MUM/ 20 17 : 7 : / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) , MUMBAI 4. / CIT, MUMBAI 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE / BY ORDER, //TRUE COPY// / (DY./ASST. REGISTRAR) , / ITAT, MUMBAI