DDIT, New Delhi V. Sh. Naga Rama Prasad Bonda, Delhi

ITA 45/DEL/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97164 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC 1
• Next Hearing Date: 06-07-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 03-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHIM SINGH
• Keywords: Revised return
• Section: 143(3); 139(5)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC -I, NEW DELHI BEFORE SH. N. K. SAINI, AM ITA NO. 45/DEL./2014 : AS STT. YEAR : 2009-10 DDIT CIRCLE-1(1), INTERNATIONAL TAXATION NEW DELHI VS NAGA RAMA PRASAD BONDA Q-502, ANUPAM APARTMENTS, EAST ARJUN NAGAR, CBD SHAHDARA NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. AAJPB1670N APPELLANT BY : SH. BH IM SINGH, SR. DR RESPONDENT BY : SH. RAJE SH JAIN, C.A. DATE OF HEARING : 06.07.2015 DATE OF PRONOUNCEMENT : 04.09.2015 ORDER PER N.K. SAINI, A.M. THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 1.10.2013 OF THE LD. CIT(A)-XXIX, NEW DELHI. 2. THE ONLY GRIEVANCE OF THE DEPARTMENT IN THI S APPEAL RELATES TO THE DELETION OF PENALTY LEVIED BY THE AO U/S 271(1) (C) OF THE IT ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). ITA NO.45/DEL/2014 2 3. THE FACTS OF THE CASE IN BRIEF ARE THAT TH E ASSESSEE FILED HIS RETURN OF INCOME ON 30.07.2009 DECLARING NIL INCOME AND CLAIMING SHORT TERM CAPITAL LOSS OF RS. 62,09,653/- TO BE CA RRIED FORWARD. HOWEVER, IN THE ASSESSMENT FRAMED U/S 143(3) OF THE ACT VIDE ORDER DATED 22.12.2011, THE AO ALLOWED SHORT TERM CAPITAL LOSS OF RS. 30,27,277/- TO BE CARRIED FORWARD. THE ASSESSEE DID NOT PREFERRED ANY APPEAL AGAINST THE SAID ASSESSMENT ORDER THEREAFTER THE AO LEVIED A PENALTY OF RS. 8,58,653/- U/S 271(1)(C) OF THE ACT. 4. BEING AGGRIEVED THE ASSESSEE CARRIED THE M ATTER TO THE LD. CIT(A) AND SUBMITTED THAT DURING THE COURSE OF COMP UTATION OF SHORT TERM / LONG TERM CAPITAL GAINS ARISING FROM DEALING IN SHARES, AT THE TIME OF PREPARING THE RETURN OF INCOME, WRONG WORK ING OF SHORT TERM AND LONG TERM CAPITAL GAIN OCCURRED BECAUSE SOME L ONG TERM CAPITAL LOSS WAS PICKED UP AS SHORT TERM LOSS AND THE MISTA KE HAPPENED BECAUSE SOME WRONG FORMULA WAS ENTERED INTO XL SEAT USED FOR COMPUTATION OF SHORT TERM/ LONG TERM CAPITAL GAIN/L OSS. IT WAS FURTHER STATED THAT WHEN THE NOTICE U/S 143(2) WAS RECEIVED , THE ASSESSEE CAME TO KNOW OF THE MISTAKE AND FILED THE REVISED D ETAILS OF SHORT TERM CAPITAL LOSS BEFORE THE AO VIDE LETTER DATED 24.10.2011. IT WAS ALSO STATED THAT THE ASSESSEE FILED A REVISED RETUR N OF INCOME DECLARING THEREON FIGURE OF SHORT TERM CAPITAL LOSS AT RS. 30 ,27,277/- BUT THE AO TREATED THE REVISED RETURN AS NON-EST AS IT WAS FI LED BEYOND THE TIME AVAILABLE U/S 139(5) OF THE ACT BUT ASSESSED THE SH ORT TERM CAPITAL LOSS ITA NO.45/DEL/2014 3 TO BE CARRIED FORWARD AT THE SAME FIGURE AS MENTION ED IN THE REVISED RETURN. THE ASSESSEE FURNISHED THE COPY OF THE ORIG INAL WORKING OF CAPITAL GAIN/LOSS AND REVISED AND REVISED WORKING O F THE SAME TO EXPLAIN, THAT HOW, THE MISTAKE HAD CREPT INTO WORKI NG THEREON. IT WAS ALSO POINTED OUT THAT WHEN THE ASSESSEE DISCOVERED THE MISTAKE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, HE REVISED THE RETURN FOR THE SUCCEEDING ASSESSMENT YEARS 2010-11 AND 2011-12 AND PAID THE TAX DUE TO LOWER FIGURE OF BROUGHT FORWARD LOSS. IT WAS FURTHER SUBMITTED THAT THE AFORESAID ACT OF THE ASSESSEE WAS THE PROO F OF BONAFIDE OF THE ASSESSEE AND WHAT ELSE COULD HE DO, TO UNDO THE MIS TAKE, OTHER THAN RECTIFYING ALL THE MATTERS RELATED THERETO AND PAY THE TAXES WHICH WAS ONLY WAY OPEN TO THE ASSESSEE TO SHOW HIS REGRET FO R THE MISTAKE. THE RELIANCE WAS PLACED ON THE JUDGEMENT OF THE HONBL E SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS AND OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. DHARAMPAL P REMCHAND. 5. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIO NS OF THE ASSESSEE DELETED THE PENALTY BY OBSERVING IN PARA 5.1 TO 5.5 . OF THE IMPUGNED ORDER AS UNDER :- 5.1 I HAVE CAREFULLY GONE THROUGH VARIOUS SUBMISSIONS OF THE APPELLANT. THE RELEVANT FACTS ARE THAT THE A PPELLANT FILED HIS RETURN OF INCOME DECLARING THEREIN NIL IN COME AND CLAIMING CARRY FORWARD OF SHORT TERM CAPITAL LOSS O F RS. 62,09,653/-. THE CASE WAS PICKED UP FOR SCRUTINY AN D THE APPELLANT RECEIVED QUESTIONNAIRE DATED 21.09.2011 F ROM THE ITA NO.45/DEL/2014 4 AO VIDE WHICH HE WAS REQUIRED TO GIVE DETAILS REGAR DING HIS CLAIM OF CAPITAL LOSS. IN RESPONSE TO THIS QUESTION NAIRE, THE APPELLANT FILED A REPLY BEFORE AO VIDE LETTER DATED 24.10.2011 THAT RETURN FOR SUBJECT AY HAS BEEN REVISED ON 19.1 0.2011 IN WHICH CLAIM OF SHORT TERM CAPITAL LOSS HAS REVISED TO RS. 30,27,277/-. THE AO HELD THAT REVISED RETURN IS NON -EST BEING BEYOND PRESCRIBED TIME LIMIT U/S 139(5). HOWEVER, T HE AO ACCEPTED THE REVISED FIGURE OF SHORT TERM CAPITAL L OSS IN THE ASSESSMENT ORDER. THE APPELLANT DID NOT FILE ANY AP PEAL AGAINST THE ASSESSMENT ORDER. SUBSEQUENTLY, THE AO HOLDING THAT THE APPELLANT HAS CONCEALED AND FURNISHED INAC CURATE PARTICULARS OF HIS INCOME, LEVIED PENALTY U/S 271(1 )(C) AT RS. 8,59,653, BEING 100% OF TAX SOUGHT TO BE EVADED WIT HIN THE MEANING OF EXPLANATION 4(A) TO SECTION 271(1)(C). 5.2 THE APPELLANT HAS SUBMITTED THAT HE WAS EMPLO YED AND RESIDING IN MOROCCO. HE WORKED OUT THE CAPITAL GAIN / LOSS ON HIS VARIOUS INVESTMENTS IN SHARES BY TAKING HELP FR OM STAFF IN MOROCCO. THE COMPUTATION OF CAPITAL GAIN / LOSS WAS DONE USING XL SHEET AND BECAUSE OF SOME WRONG FORMULA EN TERED INTO XL SHEET, A PORTION OF LONG TERM CAPITAL LOS W AS PICKED UP AS SHORT TERM CAPITAL LOSS. THE APPELLANT FURTHE R SUBMITTED THAT WHEN HE RECEIVED QUESTIONNAIRE WHEREIN ROUTINE DETAILS ABOUT CLAIM OF SHORT TERM CAPITAL LOSS WERE ASKED F OR, WORKING OF CAPITAL LOSS WAS AGAIN RECHECKED AND MIS TAKE WAS DETECTED. PERUSAL OF QUESTIONNAIRE ISSUED BY THE AO REVEALS THAT ONLY A ROUTINE QUESTION ABOUT CAPITAL LOSS HAS BEEN ASKED BY HIM AS REPRODUCED BELOW; PL GIVE DETAILS ABOUT THE CAPITAL GAINS ARISEN TO YOU DURING THE YEAR, WHEREBY YOU HAVE CLAIMED CAPITAL LOSS OF RS. 62,09,653. IT IS NOT THE CASE THAT THE AO HAD FOUND OUT SOME THING WRONG DURING SCRUTINY PROCEEDING AND THE APPELLANT CORRECTED IT AFTER BEING POINTED OUT BY THE AO. IT IS ALSO RELEVANT TO MENTION THAT THE AO ASSESSED THE SAME F IGURE OF SHORT TERM CAPITAL LOSS AS DECLARED BY THE APPELLAN T IN HIS ITA NO.45/DEL/2014 5 REVISED RETURN, THOUGH REJECTED AS NON-EST BY THE A O. THE APPELLANT HAS FURNISHED BOTH COPIES OF WORKING OF C APITAL LOSS, EXPLAINING HOW THE MISTAKE GOT CREPT IN. THER E IS FORCE IN ARGUMENT OF THE APPELLANT SINCE THERE WAS SHORT TERM CAPITAL LOSS IN BOTH ORIGINAL AND REVISED COMPUTATI ON AND THERE WAS NO TAX LIABILITY, THERE COULD NOT BE ANY INTENTION ON THE PART OF THE APPELLANT TO FURNISH WRONG PARTICUL ARS OF HIS INCOME. THE CLAIM OF CARRY FORWARD OF SHORT TERM CA PITAL LOSS WOULD HAVE AFFECTED ONLY FUTURE TAX LIABILITIES AND THE APPELLANT HAS ON HIS OWN REVISED THE RETURNS FOR SU BSEQUENT AY AND PAID THE TAXES DUE. THIS REFLECTS THE BONAFI DES OF THE APPELLANT. 5.3 THE AO HAS ALSO NOT ESTABLISHED HOW PROVISIO NS CONTAINED IN EXPLANATION 1 TO SECTION 271(1)(C) ARE APPLICABLE IN THIS CASE. THE PRESENT CASE DOES NOT FALL UNDER CLAUSE (A) OF EXPLANATION 1 AS THE APPELLANT HAS OF FERED AN EXPLANATION AND IT HAS NOT FOUND BY THE AO TO BE FA LSE. FURTHER, EVEN CLAUSE (B) OF EXPLANATION 1 DOES NOT APPLY AS THE APPELLANT HAS BEEN ABLE TO SUBSTANTIATE HIS EXP LANATION AND ALSO COULD PROVE THAT EXPLANATION IS BONAFIDE. 5.4 THE WORD CONCEAL HAS BEEN DERIVED FROM TH E LATIN WORD CONCELAREWHICH IMPLIES TO HIDE. IT IS HOWE VER IMPLICIT IN THE WORD CONCEALEDTHAT THERE HAS BEEN A DELIBERATE ACT ON THE PART OF THE ASSESSEE. IT IS E STABLISHED PRINCIPLE OF LAW THAT ASSESSMENT AND PENALTY PROCEE DINGS ARE ENTIRELY DIFFERENT & INDEPENDENT AND STANDARD OF EV IDENCE WHICH MAY BE GOOD FOR ASSESSMENT PURPOSE MAY NOT BE GOOD FOR LEVYING PENALTY U/S 271(1)(C). IT HAS ALSO BEEN HELD BY HONBLE SUPREME COURT IN RELIANCE PETROPRODUCTS (SU PRA) THAT IF A CLAIM MADE BY THE APPELLANT IS NOT FOUND SUSTAINABLE BY THE AO DURING ASSESSMENT PROCEEDING, IT DOES NOT AUTOMATICALLY LEAD TO CONCEALMENT OF INCOME. 5.5 IN VIEW OF DISCUSSION SUPRA, I HOLD THAT NONE OF THE PRE- CONDITIONS FOR LEVYING PENALTY AS MENTIONED IN SECT ION 271(1)(C) AND EXPLANATION 1 TO SECTION 271(1)(C) AR E SATISFIED ITA NO.45/DEL/2014 6 IN THE PRESENT CASE. ACCORDINGLY THE IMPUGNED PENA LTY ORDER U/S 271(1)(C) IS QUASHED. THE AO IS DIRECTED TO GRA NT RELIEF ACCORDINGLY. THE GROUNDS OF APPEAL ARE DISPOSED OF ACCORDINGLY. NOW THE DEPARTMENT IS IN APPEAL. 6. THE LD. DR STRONGLY SUPPORTED THE ORDER OF THE AO AND REITERATED THE OBSERVATIONS MADE IN THE ASSESSMENT ORDER IT WAS FURTHER STATED THAT THE ASSESSEE DISCLOSED WRONG FI GURE OF CAPITAL LOSS TO BE CARRIED FORWARD AND AS SUCH CONCEALED THE INC OME BY DISCLOSING THE WRONG FACTS, THEREFORE, THE AO WAS FULLY JUSTIF IED IN LEVYING THE PENALTY U/S 271(1)(C) OF THE ACT. IN HIS RIVAL SUB MISSIONS, THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND STRONGLY SUPPORTED THE IMPUGN ED ORDER PASSED BY THE LD. CIT(A). THE RELIANCE WAS ALSO PLACED ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF PRICE WATE RHOUSE COOPERS PVT. LTD. VS. CIT AND ANOTHER REPORTED AT (2012) 34 8 ITR 306. 7. I HAVE CONSIDERED THE SUBMISSIONS OF B OTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT THE ASSES SEE WRONGLY COMPUTED THE SHORT TERM CAPITAL GAIN TO BE CARRIED FORWARD DUE TO SOME WRONG FORMULA ENTERED INTO COMPUTATION SHEET U SED TO WORK OUT THE SHORT TERM/LONG TERM CAPITAL GAINS / LOSS AND W HEN THE MISTAKE CAME TO HIS NOTICE, THE ASSESSEE CORRECTED THE FIGU RES AND FILED THE REVISED DETAILS OF SHORT TERM CAPITAL LOSS BEFORE T HE AO VIDE LETTER ITA NO.45/DEL/2014 7 DATED 24.10.2011, MUCH BEFORE THE COMPLETION OF TH E ASSESSMENT ON 22.12.2011. THE AO ACCEPTED THE FIGURES OF SHORT TE RM CAPITAL LOSS TO BE CARRIED FORWARD AT RS. 30,27,277/- IN PLACE OF T HE EARLIER CLAIMED LOSS OF RS. 62,09,653/-. HOWEVER, HE LEVIED THE PEN ALTY U/S 271(1)(C) OF THE ACT. FROM THE AFORESAID NARRATED FACTS OF T HE PRESENT CASE, IT IS CRYSTAL CLEAR THAT THE INTENTION OF THE ASSESSEE WA S NOT MALA FIDE BECAUSE HE HIMSELF CORRECTED THE FIGURE, REVISED T HE COMPUTATION AND PAID THE DUE TAX ON THE INCOME OF THE SUCCEEDING Y EARS BECAUSE THE CLAIM OF CARRIED FORWARD OF SHORT TERM CAPITAL LOSS HAD AFFECTED THE FUTURE TAX LIABILITY. ON A SIMILAR ISSUE THE HONBL E SUPREME COURT IN THE CASE OF PRICE WATERHOUSE COOPERS PVT. LTD. VS. CIT, 348 ITR 306 HAS HELD AS UNDER :- ALLOWING THE APPEAL, THAT THE FACTS OF THE CASE WE RE PECULIAR AND SOMEWHAT UNIQUE. NOTWITHSTANDING THAT THE ASSES SEE WAS A REPUTED FIRM AND HAD GREAT EXPERTISE AVAILABLE WI TH IT, IT WAS POSSIBLE THAT EVEN THE ASSESSEE COULD MAKE A SILLYMISTAKE. THE FACT THAT THE TAX AUDIT REPORT WAS FILED ALONG WITH THE RETURN AND THAT IT UNEQUIVOCALLY STA TED THAT THE PROVISION FOR PAYMENT WAS NOT ALLOWABLE UNDER SECTI ON 40A(7) OF THE ACT INDICATED THAT THE ASSESSEE MADE A COMPUTATION ERROR IN ITS RETURN OF INCOME. THE CONT ENTS OF THE TAX AUDIT REPORT SUGGESTED THAT THERE WAS NO QUESTI ON OF THE ASSESSEE CONCEALING ITS INCOME OR OF THE ASSESSEE F URNISHING ANY INACCURATE PARTICULARS. APART FROM THE FACT THA T THE ASSESSEE DID NOT NOTICE THE ERROR, IT WAS NOT EVEN NOTICED EVEN BY THE ASSESSING OFFICER WHO FRAMED THE ASSESSMENT ORDER. ALL THAT HAD HAPPENED WAS THAT THROUGH A BONA FIDE AND INADVERTENT ERROR, THE ASSESSEE WHILE SUBMITTING IT S RETURN, FIALED TO ADD THE PROVISION FOR GRATUITY TO ITS TOT AL INCOME. ITA NO.45/DEL/2014 8 THE ASSESSEE SHOULD HAVE BEEN CAREFUL BUT THE ABSEN CE OF DUE CARE, IN A CASE SUCH AS THE PRESENT, DID NOT MEAN T HAT THE ASSESSEE WAS GUILTY OF EITHER FURNISHING INACCURATE PARTICULARS OR ATTEMPTING TO CONCEAL ITS INCOME. ON THE PECULIAR FACTS OF THIS CASE, THE IMPOSITION OF PENA LTY ON THE ASSESEE WAS NON JUSTIFIED. 8. IN THE PRESENT CASE ALSO THE ASSESSEE HIMSELF CORRECTED THE MISTAKE WHICH WAS ACCEPTED BY THE AO AND PAID THE D UE TAX FOR SUBSEQUENT ASSESSMENT YEARS BECAUSE THE MISTAKE IN THE CALCULATION AFFECTED THE TAX LIABILITY OF THE SUCCEEDING YEARS, THEREFORE, THE ACT OF THE ASSESSEE WAS BONA FIDE AND THERE WAS NO MALA FI DE INTENTION. I THEREFORE CONSIDERING THE TOTALITY OF THE FACTS AS DISCUSSED HEREINABOVE AND BY KEEPING IN VIEW THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF PRICE WATERHOSUE COOPERS P. LT D. VS. CIT (SUPRA) DO NOT SEE ANY INFIRMITY IN THE ORDER OF THE LD. CI T(A) AND MERIT IN THIS APPEAL OF THE DEPARTMENT. 9. IN THE RESULT THE APPEAL OF THE DEPARTMENT IS DISMISSED. (ORDER PRONOUNCED IN THE COURT ON 04/09/2015). SD/- (N. K. SAINI) ACCOUNT ANT MEMBER DATED: 04/ 09/2015 *BINITA* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ITA NO.45/DEL/2014 9 ASSISTANT REGISTRAR DATE INITIAL 1. DRAFT DICTATED ON 01.09.2015 2. DRAFT PLACED BEFORE AUTHOR 02.09.2015 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.