MANAN N. SHAH, MUMBAI V. DCIT RG 14(1),

ITA 4783/MUM/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62710 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Next Hearing Date: 02-05-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 10-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: NITESH JOSHI
• Keywords: Wrong claim

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH J BENCH BEFORE SHRI B.R.MITTAL(JUDICIAL MEMBER) AND SHRI RAJENDRA (ACCOUNTANT MEMBER) ITA NO.4780 /MUM/2010 ASSESSMENT YEAR: 2004 -05 NALIN P. SHAH, 95 B, MEGHDOOT, FLAT NO.5, MRINE DRIVE, MUMBAI-20 PA NO.AAHPS 3860 K VS. DCIT, CIRCLE 14(1), 2 ND FLOOR, EARNEST HOUSE, NARIMAN POINT, MUMBAI (APPELLANT) (RESPONDENT) ITA NO.4781 /MUM/2010 ASSESSMENT YEAR: 2004 -05 NALIN P. SHAH, HUF 95 B, MEGHDOOT, FLAT NO.5, MRINE DRIVE, MUMBAI-20 PA NO.AAAHN 1589D VS. DCIT, CIRCLE 14(1), 2 ND FLOOR, EARNEST HOUSE, NARIMAN POINT, MUMBAI (APPELLANT) (RESPONDENT) ITA NO.4783/MUM/2010 ASSESSMENT YEAR: 2004 -05 MANAN N SHAH 95 B, MEGHDOOT, FLAT NO.5, MRINE DRIVE, MUMBAI-20 PA NO.ABOPS 2030 F VS. DCIT, CIRCLE 14(1), 2 ND FLOOR, EARNEST HOUSE, NARIMAN POINT, MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI NITESH JOSHI RESPONDENT BY: S/SHRI D.S.SUNDERSINGH/GURUSWAM Y SMT. KUSUM INGALE DATE OF HEARING: 10.5.2012 DATE OF PRONOUNCEMENT: 18.7.2012 ORDER PER RAJENDRA,AM: THESE APPEALS ARE FILED AGAINST SEPARATE ORDERS OF CIT(A)-25,MUMBAI ALL DATED 20.4.2010 FOR THE ASSESSMENT YEAR 2004-05 WITH REGA RD TO CONFIRMATION OF LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT, 1961. 2 ITA NOS : 4780, 4781 & 4783/MUM/2010 2. SINCE COMMON ISSUE IS TAKEN IN ALL THESE APPE ALS, THEY WERE HEARD TOGETHER AND ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CO NVENIENCE. 3. WE TAKE UP THE APPEAL IN THE CASE OF NALIN P. SH AH (INDIVIDUAL), BEING I.T.A. NO.4780/M/ 2010 FOR OUR CONSIDERATION AND THE DECIS ION WILL APPLY MUTATIS-MUTANDIS TO OTHER TWO APPEALS. 4. THE ISSUE RAISED IN THIS APPEAL IS AGAINST CONFI RMATION OF PENALTY OF RS.68,00,000 IMPOSED BY THE ASSESSING OFFICER AO U/S.271(1)(C) O F THE INCONE-TAX ACT, 1961(ACT). 5. FACTS IN BRIEF ARE THAT ASSESSEE FILED HIS RETURN O F INCOME DECLARING TOTAL INCOME OF RS.1.48 CRORES AND ASSESSMENT WAS COMPLETED U/S.143 (3) ON 30.10.2006 AT A TOTAL INCOME OF RS. 1.52 CRORES. DURING THE COURSE OF ASSESSMENT P ROCEEDINGS, AO NOTICED THAT UNDER THE HEAD LONG TERM CAPITAL GAIN, ASSESSEE HAD DECLARE D LOSS OF RS.4.39 CRORES THAT WAS INCLUSIVE OF LOSS INCURRED ON SALE OF UNITS OF US 64.AO DISAL LOWED THE LOSS AND HELD THAT IF INCOME FROM A PARTICULAR SOURCE WAS EXEMPT FROM TAX, LOSS FROM SUCH SOURCE COULD NOT BE SET OFF AGAINST INCOME FROM ANOTHER SOURCE UNDER THE SAME H EAD OF INCOME. THE AO, ACCORDINGLY, DISALLOWED LONG TERM CAPITAL LOSS OF US 64 OF RS.3. 08 CRORES TO BE SET OFF AND TO BE CARRIED FORWARD. AO INITIATED PENALTY PROCEEDINGS AND NOTIC E 271(1)(C) WAS ISSUED TO THE ASSESSEE. AFTER CONSIDERING THE REPLY FILED BY THE ASSESSEE, AO HELD THAT FIRST APPELLATE AUTHORITY(FAA) HAD CONFIRMED THE ACTION OF THE AO W ITH REGARD TO SET OFF AND CARRY FORWARD OF CAPITAL LOSS, THAT FAA HAD REJECTED THE CLAIM OF THE ASSESSEE THAT U/S.10(33),THAT IT WAS ONLY INCOME RECEIVED FROM THE TRANSFER OF UNITS WAS EXEM PT AND NOT THE LOSS. RELYING UPON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF DH ARMENDRA TEXTILES & OTHERS,(14DTR114),HE HELD THAT MENSREA WAS NOT AN E SSENTIAL INGREDIENT OF SECTION 271(1)(C) OF THE ACT. HE LEVIED PENALTY OF RS.68,00,000 UNDE R SECTION 271(1)(C) OF THE ACT. 5.1. ASSESSEE FILED APPEAL BEFORE FAA.AFTER CONSIDE RING THE SUBMISSIONS OF THE ASSESSEE,FAA, HELD THAT THERE WAS NO DISPUTE REGARD ING THE FACT THAT THE ASSESSEE HAS SUSTAINED SOME LOSS, THAT THE FINANCE ACT,2003 INTR ODUCED SECTION 10(33) BY EXEMPTING INCOME ON TRANSFER OF UNITS OF US 64,THAT BEFORE IN SERTION OF SECTION 10(33)INCOME RECEIVED 3 ITA NOS : 4780, 4781 & 4783/MUM/2010 IN RESPECT OF UNITS WAS EXEMPT, THAT CLAIM MADE BY THE ASSESSEE THAT PROVISIONS OF SECTION 10(33) WERE INSERTED TO PROVIDE TAX RELIEF TO AILIN G INVESTORS OF US 64 WAS NOT FACTUALLY CORRECT, THAT ANY LOSS ARISING OUT OF SUCH ASSET WA S TO BE IGNORED AND NO CLAIM OF SET OFF OF LOSS/CARRY FORWARD OF THE SAME COULD BE ALLOWED, TH AT LOSS FROM A SOURCE WHICH IS EXEMPT WAS NOT AN ADMISSIBLE ADJUSTMENT AGAINST ANY INCOME, TH AT THE DESPITE KNOWING THIS FACT, THE ASSESSEE HAD MADE THE CLAIM TO SET OFF/CARRY FORWAR D OF CAPITAL LOSS ON ACCOUNT OF US 64, THAT THE INCOME DID NOT ALWAYS INCLUDE LOSS AS CLAIMED B Y THE ASSESSEE, THAT IT WAS AN ESTABLISHED LEGAL POSITION THAT LOSS FROM A SOURCE WHICH WAS EX EMPT WAS NOT PERMITTED TO BE SET OFF/CARRY FORWARD,THAT THE ASSESSEE HAD CLAIMED THE SET OFF/C ARRY FORWARD OF LOSS WITH THE SOLE INTENTION OF REDUCING ITS TAX LIABILITY,THAT CLAMING LOSS FOR SETTING OFF/CARRY FORWARD WITH THE INTENTION TO REDUCE TAXABLE INCOME TENTAMOUNTED TO FURNISHING OF INACCURATE PARTICULARS. HE HELD THAT AO WAS JUSTIFIED IN LEVYING THE PENALTY U/S.271(1)(C) OF THE ACT. 6. BEFORE US, AUTHORISED REPRESENTATIVE (AR) SUBMITTED THAT CLAIM OF SET OFF OF LOSS WAS MADE BY THE ASSESEE IN THE RETURN OF INCOME FILED, THAT IN THE NOTE ATTACHED WITH THE COMPUTATION ON INCOME FACT OF SALE OF US 64 AND RES ULTANT LOSS AND ITS CARRYING FORWARD WAS DISCLOSED TO THE AO. IN THIS REGARD HE REFERRED TO PG. NO. 47 OF THE PAPER BOOK. HE FURTHER SUBMITTED THAT DENIAL OF CLAIM BY THE AO SHOULD NOT BE EQUATED WITH CONCEALMENT OF PARTICULARS OF INCOME, THAT EVEN OF A WRONG CLAIM W AS MADE IT SHOULD NOT BEEN VISITED BY PENALTY. DEPARTMENTAL REPRESENTATIVE (DR) RELIED UP ON THE ORDER OF THE FAA. 7. AFTER HEARING THE RIVAL SUBMISSIONS AND PERUSING TH E MATERIAL AVAILABLE WE ARE OF THE OPINION THAT PENALTY LEVIED/UPHELD BY THE AO/FAA CA NNOT BE ENDORSED. IN THE CASE UNDER CONSIDERATION ASSESSEE HAD DISCLOSED ALL THE DETAIL S ABOUT SALE OF UNITS OF US 64.AO HAD GATHERED THE INFORMATION ABOUT THE SAID SALE AND LO SS/CARRY FORWARD FROM THE RETURN FILED BY THE ASSESSEE. IN THESE CIRCUMSTANCES IN OUR OPINIO N IT CANNOT BE HELD THAT THE ASSESSEE HAD FILED INACCURATE PARTICULARS OF HIS INCOME. WE ARE OF THE OPINION THAT A WRONG CLAIM MADE BY AN ASSESSEE IS NOT FILING OF INACCURATE PARTICULARS / CONCEALING OF INCOME. NOW IT IS SETTLED LAW THAT MAKING AN INCORRECT CLAIM DOES NOT TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS AND THAT TO ATTRACT PENALTY, THE DETAILS SUPPLIED IN TH E RETURN MUST NOT BE ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. IN THE MATTER UNDER CONSIDERATION FACTS 4 ITA NOS : 4780, 4781 & 4783/MUM/2010 REVEAL THAT DETAILS SUPPLIED BY THE ASSESSEE DID NO T FALL IN ANY OF THESE CATEGORIES. IN THESE CIRCUMSTANCES WE DELETE THE PENALTY LEVIED U/S. 271 (1) (C) OF THE ACT. APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. 8. AS STATED EARLIER IN OTHER TWO APPEALS BEING I.T .A. NO.4781/M/2010 IN THE CASE OF NALIN P. SHAH, HUF AND I.T.A. NO.4783/M/2010 IN THE CASE OF MANAN N SHAH, FACTS AND CIRCUMSTANCES ARE SIMILAR TO THAT OF NALIN P. SHAH SAVE AND EXCEPT CHANGE IN FIGURES. 9. FOLLOWING THE ORDER OF NALIN P SHAH(IND.)WE DELETE THE PENALTY IMPOSED ON THEM. APPEAL FILED BY BOTH THE ASSESSES ALSO STAND ALLOWE D. PRONOUNCED IN THE OPEN COURT ON 18 TH JULY, 2012 SD/- (B.R.MITTAL) JUDICIAL MEMBER SD/- (RAJENDRA) ACCOUNTANT MEMBER MUMBAI, DATED : 18 TH JULY, 2012 ROSHANI COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS),, MUMBAI 4. COMMISSIONER OF INCOME TAX, , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH J MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI