ROMIN B KOHINOOR, MUMBAI V. ITO 12(1)(4), MUMBAI

ITA 4733/MUM/2010

• Counselvise Citation: 473319914 RSA 2010
• Duration Of Justice: 1 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2006-2007
• Appeal Filed On: 08-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C G K NAIR
• Assessee Lawyers: RAJESH S ATHAVALE
• Keywords: Bonafide belief; Wrong claim

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D : MUMBAI BEFORE SHRI D.K. AGARWAL, (JUDICIAL MEMBER) AND SHRI RAJENDRA SINGH,(ACCOUNTANT MEMBER) ITA NO.4733/MUM/2010 ASSESSMENT YEAR : 2006-07 SHRI ROMIN B. KOHINOOR NANABHOY CHAMBERS, 11/A, GUNBOW STREET, FORT, MUMBAI-400 001. ..( APPELLANT ) P.A. NO. (AGWPK 6639 H) VS. INCOME TAX OFFICER WARD 12 (1)(4) AAYAKAR BHAVAN M.K. ROAD MUMBAI-20. ..( RESPONDENT ) APPELLANT BY : SHRI RAJESH S. ATHAVALE RESPONDENT BY : SHRI C .G.K. NAIR DATE OF HEARING : 16.08.2011 DATE OF PRONOUNCEMENT : 24 TH AUGUST, 2011 O R D E R PER RAJENDRA SINGH (AM). THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 18.3.2010 OF CIT(A) FOR THE ASSESSMENT YEAR 2006-0 7. THE ONLY DISPUTE RAISED BY THE ASSESSEE IN THIS APPEAL IS REGARDING LEVY OF PENALTY OF RS.76,046/- UNDER SECTION 271(1)(C). 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE FOR THE ASSESSMENT YEAR 2006-07 DECLARED LONG TERM CAPITAL GAIN OF RS.7,36,564/- ON REDEMPTION OF THE UNITS OF MUTUAL FUNDS. DURING THE ASSESSMENT ITA NO.4733/M/10 A.Y:06-07 2 PROCEEDINGS, THE AO WHILE EXAMINING THE TAXABILITY OF LONG TERM CAPITAL GAIN ASKED THE ASSESSEE TO SHOW WHETHER SHARE TRANSACTIO N TAX (STT) HAD BEEN PAID. THE ASSESSEE THEN EXPLAINED THAT STT WAS NOT APPLICABLE AS MUTUAL FUND WAS A DEBT FUND. ON BEING POINTED OUT THAT LO NG TERM CAPITAL GAIN FROM DEBT FUNDS WERE TAXABLE, THE ASSESSEE REVISED THE C OMPUTATION AND THE AMOUNT WAS ADDED TO THE TOTAL INCOME. AO ALSO INIT IATED PENALTY PROCEEDINGS FOR CONCEALMENT OF INCOME UNDER SECTION 271(1)(C). IN RESPONSE TO SHOW CAUSE NOTICE, THE ASSESSEE EXPLAINED THAT THE RETUR N HAD BEEN PREPARED BY THE STAFF UNDER THE BONAFIDE BELIEF THAT LONG TERM CAPITAL GAIN WAS EXEMPT. THERE WAS NO DISPUTE THAT THE CAPITAL GAIN WAS LONG TERM CAPITAL GAIN WHICH HAD ARISEN FROM SALE OF UNITS. IT WAS POINTED OUT THAT THE FACT THAT EXEMPTION WAS AVAILABLE ONLY IN RESPECT OF EQUITY ORIENTED UN ITS WHICH WAS OMITTED TO BE CONSIDERED. IT WAS ACCORDINGLY PRAYED THAT NO PENA LTY SHOULD BE LEVIED. AO HOWEVER, DID NOT ACCEPT THE CONTENTIONS RAISED. IT WAS OBSERVED BY HIM THAT THE ASSESSEE DID NOT REVISE THE COMPUTATION AT THE TIME OF ISSUE OF NOTICE UNDER SECTION 143(2) OR WHEN THE NOTICE UNDER SECTI ON 141(1) WAS ISSUED ON 4.8.2008. ONLY WHEN IT WAS SPECIFICALLY POINTED OUT TO THE ASSESSEE ON 18.8.2008, THE ASSESSEE SUBMITTED THAT THE UNITS PE RTAINED TO DEBT FUNDS. FURTHER, THE COMPUTATION WAS REVISED ONLY ON 4.9.20 08 AFTER PASSING OF ASSESSMENT ORDER ON 29.8.2008. THE AO THEREFORE, D ID NOT ACCEPT THE EXPLANATION THAT THE CLAIM WAS BONAFIDE. HE ACCORD INGLY LEVIED PENALTY @ 100% OF TAX SOUGHT TO BE EVADED AMOUNTING TO RS.76, 046/-. 2.1 THE ASSESSEE DISPUTED THE DECISION OF THE AO AN D SUBMITTED BEFORE THE CIT(A) THAT HE WAS UNDER THE BONAFIDE BELIEF THAT T HE LONG TERM CAPITAL GAIN ITA NO.4733/M/10 A.Y:06-07 3 WAS EXEMPT AS THE SAME HAD BEEN REALIZED ON SALE OF LISTED SECURITIES WHICH WERE HELD FOR MORE THAN THREE YEARS. THE ASSESSEE HAD FILED ALL DETAILS NECESSARY FOR COMPUTATION OF CAPITAL GAIN AND IN F ACT ONLY FROM THE DETAILS GIVEN THE AO HAD ENQUIRED ABOUT STT. IT WAS POINTE D OUT THAT IT WAS ONLY A CASE OF WRONG CLAIM AND, THEREFORE, NO PENALTY SHOU LD BE LEVIED. CIT(A) HOWEVER DID NOT ACCEPT THE CONTENTIONS RAISED. HE R EFERRED TO THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. CHEMIEQUIP LTD. (265 ITR 265) AND THE JUDGMENT OF HONBLE HIGH COURT OF OR ISSA IN THE CASE OF CIT VS. INDIAN METAL AND FERRO ALLOYS LTD. (211 ITR 235 ) IN WHICH IT WAS HELD THAT MAKING PATENTLY INADMISSIBLE CLAIM AMOUNTS TO FURNI SHING OF INACCURATE PARTICULARS OF INCOME. AGGRIEVED BY THE SAID DECIS ION THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 2.2. BEFORE US, THE LD. AUTHORISED REPRESENTATIVE R EITERATED THE SUBMISSION MADE BEFORE THE LOWER AUTHORITIES THAT THERE WAS B ONAFIDE MISTAKE IN MAKING THE CLAIM AND THAT THE ASSESSEE HAD FURNISHE D FULL PARTICULARS OF THE TRANSACTIONS INCLUDING COMPUTATION OF CAPITAL GAIN. THE ASSESSEE AGREED TO REVISE THE COMPUTATION AS SOON AS IT WAS BROUGHT TO THE NOTICE. AS REGARDS CLAIM OF THE AO THAT COMPUTATION WAS REVISED AFTER ASSESSMENT ORDER WAS PASSED, IT WAS SUBMITTED THAT AT THE TIME OF HEARIN G ITSELF, THE ASSESSEE HAD AGREED TO REVISE THE COMPUTATION BUT BEFORE THE COM PUTATION WAS FILED THE AO HAD ALREADY PASSED THE ORDER ON 29.8.2008. THE PLEA THAT THE AO HAD HURRIEDLY PASSED THE ORDER WITHOUT WAITING FOR REVI SED COMPUTATION WAS CLEAR FROM THE FACT THAT THOUGH ORDER WAS PASSED ON 29.8. 2008 THE SAME WAS SERVED TO THE ASSESSEE ONLY ON 21.10.2008. IT WAS POINTED OUT THAT THE LONG ITA NO.4733/M/10 A.Y:06-07 4 TERM CAPITAL GAIN HAD ARISEN ON SALE OF LISTED SECU RITIES AFTER HOLDING FOR MORE THAT 3 YEARS. THEREFORE, THE ASSESSEE WAS UNDER TH E BONAFIDE BELIEF THAT THE SAME WAS NOT TAXABLE. HE REFERRED TO THE JUDGMENT O F THE HON'BLE SUPREME COURT IN CASE OF RELIANCE PETROPRODUCTS PVT. LTD. ( 322 ITR 158) IN WHICH IT WAS HELD THAT MAKING A WRONG CLAIM DID NOT AMOUNT T O FURNISHING OF INACCURATE PARTICULARS OF INCOME. HE ALSO REFERRED TO SEVERAL JUDGMENTS OF THE HONBLE HIGH COURTS IN SUPPORT OF THE PLEA THAT N O PENALTY WAS LEVIABLE. THE LD. DR ON THE OTHER HAND STRONGLY SUPPORTED TH E ORDERS OF AUTHORITIES BELOW AND PLACED RELIANCE ON THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ZOOM COMMUNICATION P. LTD.(327 ITR 510). 3. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE R IVAL CONTENTIONS CAREFULLY. THE DISPUTE IS REGARDING LEVY OF PENALT Y UNDER SECTION 271(1)(C) IN RELATION TO ADDITION MADE ON ACCOUNT OF WRONG CLAIM OF EXEMPTION OF LONG TERM CAPITAL GAIN. THE ASSESSEE HAD DECLARED LONG TERM CAPITAL GAIN FROM SALE OF LISTED MUTUAL FUND UNITS WHICH HAD BEEN HEL D FOR MORE THAT THREE YEARS. DURING THE ASSESSMENT PROCEEDINGS IT WAS FO UND THAT LONG TERM CAPITAL GAIN WAS FROM DEBT FUNDS AND NOT EQUITY ORI ENTED FUNDS AND, THEREFORE EXEMPTION WAS NOT AVAILABLE. THE AO THER EFORE INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND ALSO LEVIED PENALTY FOR FURNISHING INACC URATE PARTICULARS OF INCOME @ 100% OF TAX SOUGHT TO BE EVADED AMOUNTING TO RS.7 6,406/-. CIT(A) CONFIRMED THE PENALTY. IN OUR VIEW THE CASE OF THE ASSESSEE IS COVERED BY THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE O F RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA), IN WHICH IT HAS BE EN HELD THAT MAKING WRONG ITA NO.4733/M/10 A.Y:06-07 5 CLAIM DOES NOT AMOUNT TO FILING INACCURATE PARTICUL ARS OF INCOME AND, THEREFORE, PENALTY WILL NOT BE JUSTIFIED. THE ASSE SSMENT ORDER IN THIS CASE CLEARLY SHOWS THAT THE AO INITIATED PENALTY FOR FUR NISHING INACCURATE PARTICULARS OF INCOME AND IN THE PENALTY ORDER THE AO HELD THAT IT WAS A FIT CASE FOR LEVY OF PENALTY FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THE PENALTY HAS BEEN LEVIED FOR MAKING WRONG CLAIM OF E XEMPTION OF LONG TERM CAPITAL GAIN. IN VIEW OF THE JUDGMENT OF HON'BLE S UPREME COURT IN CASE OF RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA), MAKING A WRONG CLAIM DOES NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF I NCOME, THEREFORE, LEVY OF PENALTY FOR FURNISHING INACCURATE PARTICULARS OF IN COME CANNOT BE UP HELD. THE JUDGMENT OF HONBLE HIGH COURT OF DELHI IN CASE O F CIT VS. ZOOM COMMUNICATION PVT. LTD. (SUPRA) IS DISTINGUISHABLE AS IN THAT CASE PENALTY HAD BEEN UPHELD FOR CONCEALING PARTICULARS OF INCOM E AS PER EXPLANATION I OF SECTION 271(1)(C). WE, THEREFORE, SET ASIDE THE O RDER OF CIT(A) AND DELETE THE PENALTY LEVIED. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24.8.2011. SD/- SD/- (D.K. AGARWAL) (RAJENDRA SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 24.8.2011. JV.