MEENU THOLIA, Jaipur V. DCIT, Jaipur

ITA 50/JPR/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5168 (ITAT-JAIPUR)
• Duration Of Justice: 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 18-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA CIT DHK
• Assessee Lawyers: RAJEEV PANDEY; DAKSHAYANI PANDEY
• Keywords: Earning of tax free income
• Section: 143(3); 27

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH HKKXPUN] YS[KK LNL; ,OA JH DQY HKKJR] U;KF;D LNL; DS LE{K BEFORE: SHRI BHAGCHAND, AM AND SHRI KUL BHARAT, JM VK;DJ VIHY LA-@ ITA NO. 50/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2010-11. MRS. MEENU THOLIA, PROP. M/S. NAYIKA, THOLIA BUILDING, M.I. ROAD, JAIPUR. CUKE VS. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-2, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAZPT 3911 A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI RAJEEV PANDEY (C.A) & MS DAKSHAYANI PANDEY (ADVOCATE) JKTLO DH VKSJ LS@ REVENUE BY : SHRI R.A. VERMA (ADDL. CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 17.08.2016. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 25/08/2016. VKNS'K@ ORDER PER SHRI KUL BHARAT, JM. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT (A)-I, JAIPUR DATED 23.12.2015 PERTAINING TO A.Y. 2010-11. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE LD. CIT (A) ERRED IN 1) UPHOLDING THE PENALTY ORDER PASSED U/S 271(1)(C) WH ICH IS UNJUST AND NOT FOLLOWING PROVISIONS OF LAW. 2) IN UPHOLDING THE LEVY OF PENALTY OF RS. 3,64,826/- U/S 271(1)(C) AND NOT FOLLOWING PROVISIONS OF LAW. 2 ITA NO. 50/JP/2016 MRS. MEENU THOLIA 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMEN T WAS FRAMED UNDER SECTION 143(3) OF THE IT ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE ORDER DATED 15.03.2013. WHILE FRAMING THE ASSESSMENT, THE AO MA DE ADDITION OF RS. 11,80,857/- ON ACCOUNT OF SALE OF ICICI PRUDENTIAL PORTFOLIO T REATING IT AS SHORT TERM CAPITAL GAIN WHICH WAS WRONGLY CLAIMED AS LONG TERM CAPITAL GAIN AND THEREBY CLAIMED AS EXEMPT. THE AO ALSO MADE DISALLOWANCE OF DEPRECIATI ON OF RS. 55,896/- AND DISALLOWANCE ON ACCOUNT OF STAFF AND LABOUR WELFARE EXPENSES OF RS. 31,760/- AND ALSO INITIATED PENALTY PROCEEDINGS UNDER SECTION 27 1(1)(C) OF THE ACT FOR CONCEALMENT OF PARTICULARS OF INCOME. SUBSEQUENTLY THE AO LEVIE D PENALTY OF RS. 3,64,826/-IN RESPECT OF THE CONCEALMENT OF SHORT TERM CAPITAL GA IN. AGGRIEVED BY THIS ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT (A), WH O AFTER CONSIDERING THE SUBMISSIONS DISMISSED THE APPEAL. 3. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNA L. 4. THE LD. COUNSEL FOR THE ASSESSEE HAS REITERATED THE SUBMISSIONS AS ARE MADE IN THE WRITTEN BRIEF. THE LD. COUNSEL FOR THE ASSES SEE SUBMITTED THAT THE ASSESSEE CARRIES ON THE BUSINESS OF MANUFACTURING AND EXPORT OF FASHIONABLE GARMENTS BOTH INDIAN AND WESTERN AND MADE-UP ETC. HER TOTAL SALE DURING THE YEAR UNDER REVIEW IS RS. 1.77 CRORES OUT OF WHICH RS. 1.39 CRORES WERE E XPORT SALE. OUT OF HER SAVINGS FROM BUSINESS, SHE MAKES INVESTMENTS IN MUTUAL FUND S, PORTFOLIO MANAGEMENT SERVICE AND DERIVES CAPITAL GAIN BOTH LONG TERM AND SHORT TERM. WHILE FRAMING THE ASSESSMENT, THE AO ADDED RS. 11,80,857/- AS CAPITAL GAIN. THE LD. COUNSEL SUBMITTED THAT THIS WAS INADVERTENT MISTAKE. THE L D. COUNSEL SUBMITTED THAT THIS 3 ITA NO. 50/JP/2016 MRS. MEENU THOLIA WAS A BONAFIDE ERROR. THE ASSESSEE HAS BEEN COMPLY ING ALL THE NOTICES RECEIVED FROM THE DEPARTMENT. THE LD. COUNSEL SUBMITTED THAT THE LEVY OF PENALTY WAS UNJUST AND AGAINST THE SETTLED POSITION OF LAW. HE FURTHER SUBMITTED THAT THE JUDGMENTS RELIED UPON BY LD. CIT (A) OF HONBLE SUPREME COURT AND HONBLE DELHI HIGH COURT RENDERED IN THE CASES OF MAK DATA PVT LTD VS. CIT, 358 ITR 593 (SC) AND CIT VS. NG TECHNOLOGIES LTD. 57 TAXMAN.COM 389 (DELHI) RESPECT IVELY ARE NOT APPLICABLE IN THE PRESENT CASE AS THERE IS INADVERTENT MISTAKE BY AUT HORIZED REPRESENTATIVE OF THE ASSESSEE. THE LD. COUNSEL SUBMITTED THAT THE LD. C IT (A) WAS NOT JUSTIFIED IN CONFIRMING THE PENALTY. THE LD. COUNSEL SUBMITTED T HAT INCLUSION OF RS. 11,80,667/- AS EXEMPT INCOME WAS INADVERTENT CLERICAL MISTAKE. THE LD. COUNSEL FURTHER RELIED ON THE JUDGMENTS OF HONBLE SUPREME COURT IN THE CA SE OF PRICE WATERHOUSE COOPERS PVT. LTD. VS. CIT, 348 ITR 306 (SC) AND N. SHROFF VS. JCIT, 291 ITR 519 (SC). HE SUBMITTED THAT DUE TO MISTAKE OF THE CHART ERED ACCOUNTANT, THE ASSESSEE SHOULD NOT BE PENALIZED. THE LD. COUNSEL, THEREFORE , PRAYED THAT PENALTY SO IMPOSED BE DELETED. THE LD. COUNSEL SUBMITTED THAT AN AFFID AVIT BY THE CHARTERED ACCOUNTANT IS ALSO FILED TO PROVE THAT IT WAS A BONAFIDE MISTA KE. 4.1. ON THE CONTRARY, THE LD. D/R SUPPORTED THE ORD ERS OF THE AUTHORITIES BELOW AND ALSO RELIED UPON THE JUDGMENT OF HONBLE DELHI HIGH COURT RENDERED IN THE CASE OF CIT VS. NG TECHNOLOGIES LTD. RELIANCE IS ALSO P LACED ON THE HONBLE SUPREME COURT JUDGMENT RENDERED IN THE CASE OF MAK DATA PVT . LTD. VS. CIT. 4.2. WE HAVE HEARD RIVAL CONTENTIONS, PERUSED THE M ATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELO W. THE ASSESSEE HAS ADMITTED THE MISTAKE FOR CLAIMING THE LONG TERM CAPITAL GAIN IN PLACE OF SHORT TERM CAPITAL GAIN 4 ITA NO. 50/JP/2016 MRS. MEENU THOLIA RESULTING INTO NON-PAYMENT OF CAPITAL GAIN AROSE OU T OF THE TRANSFER OF ASSETS. THE EXPLANATION OF THE ASSESSEE IS THAT IT WAS A BONAFI DE ERROR. FOR BONAFIDE ERROR OF THE PROFESSIONAL, THE ASSESSEE SHOULD NOT SUFFER. AN AF FIDAVIT BY THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO BEEN PLACED ON RECORD. THE HONB LE SUPREME COURT IN THE CASE OF PRICE WATERHOUSE COOPERS PVT. LTD. VS. CIT (SUPRA) HAS HELD AS UNDER :- THE FACT THAT THE TAX AUDIT REPORT WAS FILED ALON G WITH THE RETURN AND THAT IT UNEQUIVOCALLY STATED THAT THE PROVISION FOR PAYMENT WAS NOT ALLOWABLE UNDER S. 40A(7) OF THE ACT INDICATES THAT THE ASSESSEE MADE A COMPUTATION ERROR IN ITS RETURN OF INCOME. APART FROM THE FACT THAT THE ASSESSEE DID NOT NOTICE THE ERROR, IT WAS NOT E VEN NOTICED EVEN BY THE AO WHO FRAMED THE ASSESSMENT ORDER. IN THAT SEN SE, EVEN THE AO SEEMS TO HAVE MADE A MISTAKE IN OVERLOOKING THE CON TENTS OF THE TAX AUDIT REPORT. THE CONTENTS OF THE TAX AUDIT REPORT SUGGEST THAT T HERE IS NO QUESTION OF THE ASSESSEE CONCEALING ITS INCOME. THERE IS ALS O NO QUESTION OF THE ASSESSEE FURNISHING ANY INACCURATE PARTICULARS. IT APPEARS THAT ALL THAT HAS HAPPENED IN THE PRESENT CASE IS THAT THROUGH A BONAFIDE AND INADVERTENT ERROR, THE ASSESSEE WHILE SUBMITTING IT S RETURN, FAILED TO ADD THE PROVISION FOR GRATUITY TO ITS TOTAL INCOME. THIS CAN ONLY BE DESCRIBED AS A HUMAN ERROR WHICH WE ARE ALL PRONE T O MAKE. THE CALIBER AND EXPERTISE OF THE ASSESSEE HAS LITTLE OR NOTHING TO DO WITH THE INADVERTENT ERROR. THAT THE ASSESSEE SHOULD HAV E BEEN CAREFUL CANNOT BE DOUBTED, BUT THE ABSENCE OF DUE CARE, IN A CASE SUCH THE PRESENT, DOES NOT MEAN THAT THE ASSESSEE IS GUILTY OF EITHER FURNISHING INACCURATE PARTICULARS OR ATTEMPTING TO CONCEAL ITS INCOME. GIVEN THE PECULIAR FACTS OF THIS CASE, THE IMPOSITI ON OF PENALTY ON THE ASSESSEE IS NOT JUSTIFIED. THE ASSESSEE HAD COMMITT ED AN INADVERTENT AND BONA FIDE ERROR AND HAD NOT INTENDED TO OR ATTE MPTED TO EITHER CONCEAL ITS INCOME OR FURNISH INACCURATE PARTICULAR S. UNDER THESE CIRCUMSTANCES, THE APPEAL WAS ALLOWED AND THE ORDER PASSED BY THE CALCUTTA HIGH COURT WAS SET ASIDE. THE CHARTERED ACCOUNTANT WHO HAD PREPARED THE COMPU TATION OF INCOME HAS GIVEN AN AFFIDAVIT TO THIS EFFECT. THERE IS NOTHING MATER IAL ON RECORD TO DISBELIEVE THE AFFIDAVIT SO FURNISHED BY THE LD. COUNSEL FOR THE A SSESSEE. THEREFORE, RESPECTFULLY 5 ITA NO. 50/JP/2016 MRS. MEENU THOLIA FOLLOWING THE JUDGMENT OF THE HONBLE SUPREME COURT RENDERED IN THE CASE OF PRICE WATERHOUSE COOPERS PVT. LTD. VS. CIT (SUPRA), WE HE REBY DIRECT THE AO TO DELETE THE PENALTY. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER IS PRONOUNCED IN THE OPEN COURT ON 25.08.201 6. SD/- SD/- ( HKKXPUN ( DQY HKKJR ) ( BHAGCHAND) ( KUL BHARAT ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 25/08/2016. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- SMT. MEENU THOLIA, JAIPUR. 2. THE RESPONDENT THE DY.CIT CIRCLE-2, JAIPUR. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 50/JP/2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR