Sudhir M. Pathak, V. ACIT,Cir.10,

ITA 470/PUN/2008

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7577 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 03-04-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHAY DAMLE
• Keywords: Bonafide mistake; Ignorance of law
• Section: 271(1)(c); 43B; 274; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE BEFORE SHRI I.C. SUDHIR (JM) AND SHRI D. KARUNAKARA RAO (AM) ITA NO. 470 /PN/200 8 ( ASSTT. YEAR : 200 4 - 05 ) SHRI SUDHIR M. PATHAK C/O PATSON AUTO PRODUCT PVT. LTD. J - 248, MIDC, EAGLE ESTATE, BHO SARI, PUNE 25 PAN NOT AVAILABLE .. APPELLANT V. ACIT, CENTRAL 10 , AKURDI, PUNE . RESPONDENT APPELLANT BY : SHRI S.N. PURANIK RESPONDENT BY : SHRI A BHAY DAMLE ORDER PER I.C. SUDHIR J M THE ASSESSEE HAS QUESTIONED FIRST AP PELLATE ORDER WHEREBY THE LD CIT(A) HAS UPHELD THE PENALTY LEVIED BY THE A.O U/S. 271(1)(C) OF THE ACT AT RS. 4,04,232/ - . 2. PARTIES HAVE BEEN HEARD AND ARGUMENTS ADVANCED BY THEM HAVE BEEN CONSIDERED IN VIEW OF THE ORDERS OF THE AUTHORITIES BELOW AND TH E DECISIONS RELIED UPON. 3. THE RELEVANT FACTS IN BRIEF ARE THAT THE A.O LEVIED PENALTY U/S. 271(1)(C ) OF THE ACT AT RS. 4,04,232/ - ON THE ADDITION OF RS.13,47,443/ - MADE ON THE BASIS THAT AS PER PROVISIONS OF SECTION 43B, THE INTEREST AMOUNT OF RS.13,47 ,443/ - WAS NOT PAID BY THE ASSESSEE ON OR BEFORE THE DUE DATE FOR FURNISHING THE RETURN OF INCOME UNDER SUB - SECTION (1) OF SECTION 139 OF THE ACT. THE LD CIT(A) UPHELD THE PENALTY REJECTING THE EXPLANATION OF THE ASSESSEE FURNISHED IN DETAIL THAT IT WAS IG NORANCE OF LAW ON ITS PART AND ON ACCOUNT OF INADVERTANCE ON THE PART OF HIS TAX CONSULTANT. LD CIT(A) TREATED THE ITA NO 470 /PN/200 8 SUDHIR M. PATHAK.. A.Y. 2004 - 05 PAGE OF 4 2 EXPLANATION AS LAME EXCUSE. HE REMAINED OF THE VIEW THAT THE ASSESSEE AND HIS TAX CONSULTANT ARE NOT TWO DIFFERENT AND DISTINCT PERSONS SO FAR AS FILING OF RETURN OF INCOME IS CONCERNED. THE SAID ACTION OF THE LD CIT(A) HAS BEEN QUESTIONED BEFORE THE TRIBUNAL. 4. BEFORE THE TRIBUNAL, THE LD. A.R. REITERATED THE SAME SUBMISSIONS REPRODUCED BY THE LD CIT(A) IN PARA NO. 4 OF THE FIRST APPEL LATE ORDER. HE SUBMITTED FURTHER THAT AT PAGE NO. 55 TO 57 OF THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE, THE ASSESSEE HAS MADE AVAILABLE THE AFFIDAVIT O F HIS TAX AUDITOR ACKNOWLEDGING HIS MISTAKE IN PREPARING THE FINAL ACCOUNTS AND STATEMENT OF COMP UTATION OF RETURN OF THE ASSESSEE FOR THE A.Y. 2004 - 05 IN NOT CONSIDERING THE AMOUNT OF UNPAID INTEREST ON TERM LOAN IN THE COMPUTATION OF INCOME SINCE HE DID NOT UP - DATE HIMSELF ABOUT THE AMENDMENT IN SECTION 43B(E) OF THE ACT. THE LD. A.R. SUBMITTED TH AT IT WAS FIRST YEAR OF IMPLEMENTATION OF AMENDMENT IN THE SAID PROVISION. THUS, THE MISTAKE EXPLAINED WAS BONAFIDE. HE PLACED RELIANCE ON THE FOLLOWING DECISIONS : A) MOTILAL PADAMPAT SUGAR MILL, 118 ITR 336(SC) B) DR. ASHOK PATI, 292 ITR 11 (SC) C) DEEP TOOLS PVT. LTD. (P&H) 274 ITR 603 D) SCHELL INTERNATIONAL, 278 ITR 630, BOMBAY E) PATSON AUTO PRODUCTS PVT. LTD., ITA NO. 471/PN/07, A.Y. 2004 - 05,ORDER DATED 30.11.2010 (ITAT, PUNE) F) SMT. UJJWALA SANJAY PAWAR, ITA NO. 1005/PN/2008, BLOCK PERIOD 1988 - 89 TO 1998 - 99, ORDER DT. 04/02/2010 (ITAT, PUNE) G) KARJATKAR LEASING & FINANCE LTD., ITA NOS. 1228 TO 1232/PN/2006, A.Y. 1999 - 00 TO 2003 - 04, ORDER DT. 31 ST JULY 2008 (ITAT, PUNE) ITA NO 470 /PN/200 8 SUDHIR M. PATHAK.. A.Y. 2004 - 05 PAGE OF 4 3 5. THE LD. D.R. ON THE OTHER HAND TRIED TO JUSTIFY THE ORDERS OF THE AUTHORITIES BELOW ON THE BASIS THAT THE MISTAKE EXPLAINED BY THE ASSESSEE CANNOT BE ACCEPTED AS BONAFIDE SINCE FOR THE REVENUE, ASSESSEE AND HIS COUNSEL ARE ONE. IGNORANCE OF LAW CANNOT BE TAKEN AS A BONAFIDE MISTAKE TO DELETE THE PENALTY FOR CONCEALING THE PARTICULARS OF INCOME OR INACCURATE PARTICULARS THEREOF ON THE PART OF THE ASSESSEE. HE SUBMITTED FURTHER THAT IN THE CITED DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF PATSON AUTYO PRODUCTS PVT. LTD. V/S. ACIT (SUPRA), THE FACTS WERE DIFFERE NT SINCE THE OUTSTANDING INTEREST PAYABLE TO A SCHEDULED BANK COULD NOT BE MADE IN THE RETURN OF INCOME BECAUSE THE SAME WAS ALSO NOT REPORTED BY THE TAX AUDITOR IN THE REPORT ISSUED IN TERMS OF SECTION 44AB OF THE ACT. 6. HAVING GONE THROUGH THE DECISION S CITED, WE FIND THAT IN ALMOST SIMILAR CIRCUMSTANCES IN THE CASE OF PATSON AUTO PRODUCTS PVT. LTD. V/S. ACIT (SUPRA), THE PUNE BENCH OF THE TRIBUNAL HAS DELETED THE PENALTY FOLLOWING THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF CIT V/S. MSK C ONSTRUCTION (P.) LTD., 296 ITR 18 (MAD.) , WHEREIN IT HAS BEEN OBSERVED THAT A DISALLOWANCE MADE U/S. 43B OF THE ACT DOES NOT AMOUNT TO CONCEALMENT WITHIN THE MEANING OF SECTION 271(1)(C ) OF THE ACT. LIKEWISE IN THE CASE OF ACIT V/S. SMT. UJJWALA SANJAY PAWAR (SUPRA), THE PUNE BENCH OF THE TRIBUNAL FOLLOWING THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CHANDRAPAL BAGGA VS. ITAT AND ANOTHER (2003), 182 CTR 185 (RAJ.) HAS DELETED THE PENALTY. IN THE SAID CASE, THE HONBLE RAJASTHAN HIGH COU RT HAS BEEN PLESED TO HOLD THAT IF THE DEFAULT OF ASSESSEE IS ATTRIBUTABLE TO WRONG ADVICE OF TAX CONCULTANT, PENALTY FOR CONCEALMENT OF INCOME IS NOT LEVIABLE. IN THE PRESENT CASE ALSO, THE TAX AUDITOR HAS VERY CLEARLY ACCEPTED HIS MISTAKE ON AFFIDAVIT (PAGE NO. 55 TO 57) OF THE PAPER BOOK I N NOT ITA NO 470 /PN/200 8 SUDHIR M. PATHAK.. A.Y. 2004 - 05 PAGE OF 4 4 CONSIDERING THE UNPAID INTEREST ON TERM LOAN WHILE PREPARING THE FINAL ACCOUNT AND STATEMENT OF COMPUTATION OF RETURN DUE TO HIS IGNORANCE OF THE AMENDED PROVISIONS OF SEC. 43B( E ) REGARDING INTEREST ON LOAN F ROM SCHEDULED BANK CAME TO IN EFFECT FROM THE A.Y. 2004 - 05 ITSELF. WE FOLLOWING THE ABOVE CITED DECISION OF PUNE BENCH OF THE TRIBUNAL THUS FIND THAT IN THE PRESENT CASE, THE MISTAKE COMMITTED ON THE PART OF THE CONSULTANT ENGAGED FOR THE PURPOSE WAS BON AFIDE IN NATURE FOR WHICH ASSESSEE CANNOT BE PENALISED.WE THUS WHILE SETTING ASIDE THE ORDERS OF THE AUTHORITIES BELOW DIRECT THE A.O TO DELETE THE PENALTY LEVIED U/S.271(1)(C ) AT RS. 4,04,232/ - . THE GROUND IS ACCORDINGLY ALLOWED. 7. CONSEQUENTLY, APPE AL IS ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 31ST JANUARY,2011 SD/ - SD/ - ( D. KARUNAKARA RAO ) ACCOUNTANT MEMBER ( I.C. SUDHIR ) JUDICIAL MEMBER PUNE , DATED THE 31ST JANUARY , 20 1 1 US COPY OF THE ORDER IS FORWARDED TO : 1. THE A PPELLANT 2. THE RESPONDENT 3. THE CIT V , PUNE 4. THE CIT(A) - II I , PUNE 5. THE D.R. A BENCH, PUNE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE