KRIPA SHANAKAR SINGH, MUMBAI V. ITO CIR 21(1)(2), MUMBAI

ITA 4146/MUM/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8084 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 9 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-03-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 23-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAV
• Keywords: Bonafide belief; Reasonable cause; Ignorance of law
• Section: 143(3); 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO.4146MUM./2013 ( ASSESSMENT YEAR : 2006 07 ) KRIPA SHANAKAR SINGH, 701 SAIPRASAD CHS LTD. NER EPF BLDG. SERVICE ROAD, BANDRA (W), MUMBAI 400 051 PAN CFYPS9898P . APPELLANT V/S ITO CIR 21(1)(2). MUMBAI . RESPONDENT ASSESSEE BY : SHRI. MANI JAIN REVENUE BY : SHRI. RAJESH KUMAR YADAV DATE OF HEARING 02.03.2017 DATE OF ORDER - 03.03.2017 O R D E R PER: SHAMIM YAHYA THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER OF CIT - A DATED 03.09.2014 AND PERTAINS TO ASSESSMENT YEAR 2006 - 07 . 2. THE GROUNDS OF APPEAL READ AS UNDER: KRIPA SHANAKAR SINGH ITA NO.4146MUM./2013 2 1. ON THE FACTS AND CIRCUMSTANC ES OF THE APPELLANTS CASE AND IN LAW THE LD. CIT - A ERRED IN CONFIRMING THE PENALTY OF RS. 5,000/ - U/S 271F OF THE INCOME TAX ACT, 1961. 2. THE APPELLANT CRAVES LEAVES TO ADD, TO AMEND, ALTER, MODIFY AND/OR WITHDRAW ANY OR ALL OF THE ABOVE GROUNDS OF APPEAL, EACH OF WHICH ARE WITHOUT PREJUDICE TO ONE ANOTHER. THE APPELLANT PRAYS THIS HONBLE TRIBUNAL TO DELETE THE ADDITIONS MADE BY THE LD. A.O AND CONFIRMED BY THE CIT - A. 3. BRIEF FACTS OF THE CASE LEADING TO THE LEVY OF PENALTY ARE AS UNDER : THE RETURN FOR AY 2006 - 07 WAS FILED ON 2 5/2/2010 DECLARING INCOME OF RS. 12,82,510 AND THE ASSESSMENT U/S 143(3) WAS COMPLETED AT TOTAL INCOME OF RS. 17,89,1 10/ - . THE AO HAD ISSUED THE SHOW CAUSE NOTICE U/S. 271F AS THE ASSESSEE HAD FILED THE RETURN BEYOND THE TIME PERMITTED U/S. 139(4). IN RESPONSE TO THE SHOW CAUSE NOTICE DATED 21/3/2011 U/S 271F ISSUED BY THE AO, THE ASSESSEE REPLIED VIDE LETTER DATED 6/4/2 011 THAT IT WAS UNDER BONAFIDE BELIEF THAT AMOUNT RECEIVED TOWARDS GOODWILL AT THE TIME OF RETIREMENT WAS NOT CHARGEABLE TO TAX. THE RETURN WAS FILED ONLY WHEN THE ASSESSEE CAME TO KNOW THAT THE RECEIPT WAS TAXABLE. THE AO HOWEVER DID NOT ACCEPT THE CONTEN TION OF THE ASSESSEE ON THE GROUND THAT R IGHT FROM AY 2003 - 04 THE ASSESSE E HAS NO WHERE MENTIONED IN ANY RETURNS ABOUT HIS BEING PARTNER IN ANY FIRM AND OTHER DETAILS LIKE SHARE OF PROFIT/REMUNERATION/CAPITAL A/C WITH FIRMS ETC. WERE NOT MENTIONED IN THE R ETURN FILED FOR ANY YEARS. THAT THERE IS HARDLY ANY PROOF THAT THE ASSESSEE KRIPA SHANAKAR SINGH ITA NO.4146MUM./2013 3 RECEIVED AMOUNTS FROM PARTNERSHIP FIRMS. THAT T HE IGNORANCE OF LAW IS CANNOT BE ACCEPTED AS EXCUSE TO FILE RETURN WITH SUCH INORDINATE DELAY. ACCORDINGLY, HE LE VIED THE PENALTY U/S . 271F@ RS. 5,000 / - . 4. UPON ASSESSEES APPEAL LD. CIT - A NOTED THE FOLLOWING SUBMISSIONS OF THE ASSESSEE AS UNDER: BEFORE ME THE LD. AR HAS REITERATED THE SAME ARGUMENT THAT THE ASSESSEE BEING MLA, THE SALARY & ALLOWANCE RECEIVED WERE EXEMPT U/S 10 AND I T WAS UNDER BONAFIDE BELIEF THAT THE RECEIPT TOWARDS GOODWILL FROM THE FIRM AT THE TIME OF RETIREMENT WAS NOT TAXABLE IN VIEW OF THE DECISIONS I N CASE OF 115 ITR 95(BOM), 130 IT R 863(BOM) ETC. HENCE EARLIER NO RETURN WAS FILED. THE RETURN WAS FLIED ONLY WH EN ASSESSEE LEARNT THAT THE RECEIPT OF GOODWILL WAS TAXABLE. 5. HOWEVER, THE LD. CIT - A WAS NOT CONVINCED H E HELD THAT THERE HAS ALREADY BEEN THE CHANGE OF LAW U/S. 55(2), HENCE ASSESSEE S CLAIM OF IGNORANCE OF LAW CANNOT BE ACCEPTED. LD. CIT - A PROCEEDED TO CONFIRM THE LEVY OF PENALTY OF RS. 5,000 / - U/S. 271(F). 6. A GAINST THE ABOVE ORDER ASSESSEES IS AN APPEAL BEFORE US . W E HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THA T PENALTY IN THIS CASE HAS BEEN LEVIED U/S.271 (F) FOR N OT FURNISHING THE RETURN WITHIN THE D UE DATE. THE REASONABLE CAUSE AS ATTRIBUTED BY THE ASSESSEE IN THIS REGARD IS THAT ASSESSEE WAS UNDER A BONAFIDE BELIEF THAT THE INCOME/ALLOWANCE AS MLA WAS EXEMPT U/S. 10(14). FURTHER MORE HE HAS CLAIM ED THAT IN VIEW OF THE EARLIER CASE LAWS WHERE KRIPA SHANAKAR SINGH ITA NO.4146MUM./2013 4 RECE IPT OF GOODWILL FROM THE FIRM AT A TIME OF RETIREMENT WAS NOT TAXABLE HE CONSIDER ED THE SAME EXEMPT. THESE HAVE BEEN SUBMITTED AS REASONAB LE CAUSE FOR THE BONAFIDE BE LIEF OF THE ASSESSEE THAT SINCE THERE WAS ABSENCE OF TAXABLE INCOME SO RETURN OF INCOME WAS NOT NEEDED TO BE FILED. THIS SUBMISSION OF THE ASSESSEE HAS BEEN REJECTED BY THE LD. CIT - A OF THE GROUND THAT THERE HAS ALREADY BEEN THE CHANGE OF LAW WHEREBY THE E FFECT OF DECISIONS RELIED BY THE ASSESSEE IS NO LONGER APPLICABLE. 6. UPON CAREFUL CONSIDERATI ON IN OUR CONSIDER OPINION THE REASONABLE CAUSE ATTRIBUTED BY THE ASSESSEE FOR FAILURE TO COMPLY WITH THE PROVISION OF FILING RETURN ON DUE TIM E IS REASONABLE OF ACCEPTABLE. H ENCE THE ASSESSEE CASE FALSE UNDER THE SWEEP OF SECTION 273 B OF THE I.T. ACT. THE SAID SECTION PROVIDES THA T NO PENALTY SHALL BE IMPOSSED INTER - ALIA FOR FAILURE UNDER THIS SECTION IF THE ASSESSEE PROVES THAT THERE WAS REASONABLE CAUSE OF THE SAID FAILURE. IN THE FACTS AND CIRCUMSTANCES OF THIS CASE REFERRED HERE IN ABOVE IN OUR CONSIDER OPINION THERE WAS REASONABLE CAUSE FOR THE FAILURE OF THE ASSESSEE TO COMPLY WITH THE PROVISIONS OF THE ACT . A CCORDINGLY ASSESSEE SHOULD NOT BE VISITED WITH TH E REGOUR PENALTY U/S. 271(F) OF I.T. ACT. 7. ACCORDINGLY, WE SET ASIDE T HE ORDERS OF LD. CIT - A AND DELETE THE PENALTY . KRIPA SHANAKAR SINGH ITA NO.4146MUM./2013 5 IN THE RESULT THIS APPEAL BY THE ASSESSEE STANDS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 03.03.2017 SD/ - SD/ - RAVISH SOOD SHAMIM YAHIYA JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 03.03.2017 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER NISHANT VERMA SR. PRIVATE SECRETARY (DY./ASSTT.REGISTRAR) ITAT, MUMBAI KRIPA SHANAKAR SINGH ITA NO.4146MUM./2013 6