SUSHIL K AGARWAL, MUMBAI V. ASST CIT CIR 122(3), MUMBAI

ITA 508/MUM/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2166 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 9 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 20-10-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 17-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K KARDA M
• Assessee Lawyers: K GPOAL
• Keywords: Ignorance of law
• Section: 143(3); 10(10D)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI BEFORE SHRI B.R.BASKARAN (AM) AND SHRI RAM LAL NEGI ( JM) ITA NO 508/MUM/2013 ASSESSMENT YEAR: 2008-09 SUSHIL K AGARWAL, 302 VIKAS 11 BANK STREET FORT MUMBAI- 400 001. PAN AABPA1544N VS. ASST. CIT CIT CIR 12 (3) ROOM NO 658, 6 TH FLOOR, AAYAKAR BHAWAN, M K ROAD MUMBAI. 400020 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI. K. GPOAL RESPONDENT BY : SHRI. A.K. KARDAM DATE OF HEARING: 1 8 /10 /2 016 DATE OF PRONOUNCEMENT: 28/10/20 16 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAINST ORDER DATED 26/11/2012 PASSED BY THE CIT(APPEALS)-23, MUMBAI, F OR THE ASST. YEAR 2008- 09, WHEREBY THE LD. CIT(A) CONFIRMED THE PENALTY IM POSED BY THE AO UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT 1961( FOR S HORT THE ACT). 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE F ILED ITS RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR DECLARING THE TOTAL INCOME OF RS. 58,46,940/. THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT AND ULTI MATELY THE ASSESSMENT ORDER WAS PASSED U/S 143(3) OF THE ACT, DETERMINING THE TOTAL INCOME OF RS. 86,30,940/- INTER ALIA MAKING AN ADDITION OF RS. 27,80,000/-RECEIVED BY T HE ASSESSEE AS MATURITY PROCEEDS OF LIC POLICY (KEYMEN INSURANCE POLICY) PENALTY PROCEEDINGS WERE ACCORDINGLY INITIATED AND AFTER TA KING INTO CONSIDERATION THE 2 ITA NO 508/MUM/2013 ASSESSMENT YEAR: 2008-09 SUBMISSIONS OF THE ASSESSEE, PENALTY OF RS 8,59,020 /-U/S 271(1)(C) OF THE ACT WAS IMPOSED BY THE AO. THE PENALTY ORDER WAS FURTHE R CONFIRMED BY THE LD. CIT(A) IN 1 ST APPEAL FILED BEFORE THE CIT(A). THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST THE IMPUGNED ORDER PASSED BY THE L D. CIT(A). THE SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE LD. CIT(A) H AS ERRED IN CONFIRMING THE ORDER OF THE AO IMPOSING PENALTY U/S 271(1)(C) OF T HE ACT. 3. BEFORE US THE LD. COUNSEL FOR THE ASSESSEE SUBMI TTED THAT THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) IS ERRONEOUS AS THE ASSESSEE HAS NEITHER CONCEALED THE PARTICULARS OF HIS INCOME NOR FURNISH ED ANY INACCURATE PARTICULARS THEREOF. THE ASSESSEE WAS UNDER THE BONA FIDE BELIEF THAT THE AMOUNT RECEIVED ON MATURITY RECEIVED LIFE INSURANCE POLICY IS EXEMPT FROM TAX U/S 10(10D) OF THE ACT. DURING THE ASSESSMENT PROCE EDINGS WHEN THE DETAILS WERE SUBMITTED ONLY THEN THE ASSESSEE CAME TO KNOW FROM THE AO THAT THE AMOUNT RECEIVED ON MATURITY OF KEYMEN INSURANCE PO LICY WAS REQUIRED TO BE OFFERED FOR TAX DURING THE RELEVANT ASSESSMENT YEAR . ACCORDINGLY, THE ASSESSEE AGREED TO PAY THE TAX THEREON AND DID NOT FILE ANY APPEAL AGAINST THE ASSESSMENT ORDER. SO, THE MISTAKE WAS BONA FIDE AND NOT INTENTIONAL. RELYING ON THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN PRICE WATERHOUSE COOPERS (P) LTD. VS. CIT [2012] TAXMANN.COM 400(SC) , HONBLE DELHI HIGH COURT IN CIT V. SOCITEX [2012] 24 TAXMANN.COM 309(DELHI) AND THE DECISION RENDERED BY THE AHMADABAD BENCH OF THE ITAT IN CHIMANLAL MANILAL PETAL VS. CIT (ITA NO 508/AHD/2010, SUBMITTED THAT IN VIEW OF THE AFORESAID DECISIONS, THE IMPUGNED ORDER IS LIABLE TO BE SET ASIDE. 4. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESEN TATIVE (DR) RELYING ON THE CONCURRENT FINDING OF THE AUTHORITIES BELOW SUB MITTED THAT THE ASSESSEES PLEA IS AN AFTERTHOUGHT, MOREOVER, THE ASSESSEES P LEA OF IGNORANCE OF LAW CANNOT BE ACCEPTED. 3 ITA NO 508/MUM/2013 ASSESSMENT YEAR: 2008-09 5. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PART IES AND ALSO GONE THROUGH THE MATERIAL ON RECORD. AS PER THE SETTLED LAW ASSESSMENT AND PENALTY PROCEEDINGS ARE TWO DIFFERENT AND INDEPENDENT PROCE EDINGS AS THE STANDARD OF PROOF FOR IMPOSITION OF PENALTY IS DIFFERENT FROM T HAT ON WHICH AN ADDITION OF AN INCOME ON QUANTUM SIDE COULD BE SUSTAINED. ALTHOUGH , THE FINDINGS GIVEN IN ASSESSMENT PROCEEDINGS ARE RELEVANT AND ADMISSIBLE IN PENALTY PROCEEDINGS YET THOSE FINDINGS ARE NOT CONCLUSIVE SO FAR AS THE PEN ALTY PROCEEDINGS ARE CONCERNED BECAUSE THE CONSIDERATIONS THAT ARISE IN PENALTY PROCEEDINGS ARE DIFFERENT FROM THOSE IN THE ASSESSMENT. ADMITTEDLY, IN THE PRESENT CASE THE ASSESSEE DID NOT OFFER TO TAX THE AMOUNT RECEIVED A S MATURITY BENEFIT OF LIC POLICY UNDER THE BONA FIDE BELIEF THAT NO TAX IS REQUIRED TO BE PAID ON THE AMOUNT RECEIVED BY THE POLICY HOLDER ON MATURITY OF LIC POLICY. NORMALLY THE MATURITY PROCEEDS OF LIC POLICY ARE NOT TAXABLE EXC EPT THOSE SPECIFIED IN SECTION 10(10D) OF THE ACT. HENCE, THE ASSESSEE ACTED UNDER BONA FIDE IMPRESSION THAT THE LIC MATURITY PROCEEDS ARE NOT TAXABLE. 6. IT HAS BEEN STATED THAT THE POLICY IN QUESTION W AS KEYMEN INSURANCE POLICY AND THIS FACT ESCAPED THE ATTENTION OF THE PERSON WHO PREPARED THE TAX RETURN. IN OUR VIEW, THERE IS MERIT IN THE SUBMISSI ONS OF THE ASSESSEE. IT IS NOT THE CASE OF THE AO THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS RELATING TO THE LIC POLICY. HENCE, WE ARE OF THE VIEW THAT THE ASSESSEE HAS OFFERED A PLAUSIBLE EXPLANATION TO SUBSTANTIATE HIS CONTENTIO N AND DISCHARGED THE BURDEN PLACED UPON HIM UNDER EXPLANATION 1 TO SECTI ON 271 OF THE ACT. HENCE, IN VIEW OF THE PECULIAR FACTS OF THIS CASE, WE ARE OF THE CONSIDERED VIEW THAT THIS IS NOT A FIT CASE WHERE PENALTY CAN BE IMPOSED U/S 271(1)(C) OF THE ACT. WE, THEREFORE, SET ASIDE THE IMPUGNED ORDER PASSED BY T HE LD. CIT(A) AND ALLOW THE SOLE GROUND OF APPEAL OF THE ASSESSEE AND DELETE TH E PENALTY. 4 ITA NO 508/MUM/2013 ASSESSMENT YEAR: 2008-09 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR TH E AY 2008-09 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH OCTOBER, 2016 SD/- SD/- ( B.R.BASKARAN ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED:28/10/2016 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. !' , $ !'% , / DR, ITAT, MUMBAI 6. &' ( / GUARD FILE. / BY ORDER, ) //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI PRAMILA