PADMINI TRUST, MUMBAI V. ITO 14(1)(4), MUMBAI

ITA 5188/MUM/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4215 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-01-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 16-02-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 19-07-2013
• Court: TRIBUNAL
• Assessee Lawyers: RAJESH CHAMARIA
• Keywords: Revised return
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER I.T.A. NO.5188/M/2013 (ASSESSMENT YEAR: 2010 - 2011 ) PADMINI TRUST, 1 ST FLOOR, 19, BHULESHWAR ROAD, BHULESHWAR, MUMBAI - 02. / VS. ITO - 14(1)(4), EARNEST HOUSE, 2 ND FLOOR, MUMBAI 400 021. ./ PAN : AAAAP 5842 L ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI VIJAY MEHTA & MR. RAJESH CHAMARIA / RESPONDENT BY : SHRI DURGA DUTT, DR / DATE OF HEARING : 30.11.2015 / DATE OF PRONOUNCEMENT : 28 .01.2016 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 19.7.2013 IS AGAINST THE ORDER OF THE CIT (A) - 25, MUMBAI DATED 24.5.2013 FOR THE ASSESSMENT YEAR 2009 - 2010. 2. THIS APPEAL RELATES TO THE PENALTY U/S 271(1)(C) OF THE ACT AND THE GROUNDS RAISED IN THIS APPEAL REVOLVE AROUND VARIOUS ASPECT OF THE PENALTY. ASSESSEE DESIRES THE PENALTY SHOULD NOT HAVE BEEN CONFIRMED BY THE CIT (A) CONSIDERING THE VOLUNTARY NATURE OF THE DISCLOSURES. THIS IS THE CASE OF CHANGE OF HEAD OF INCOME AS IT DOES NOT WARRANT ANY LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. RELEVANT FACTS IN THIS REGARD ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME DECLARING THE TOTAL INCOME OF RS. 5,00,393/ - . IN THE RETURN OF INCOME, AO NOTICED THAT CERTAIN INCOME WAS CLAIMED AS EXEMPT. THE ASSESSEE D ULY INFORMED THE ASSESSING OFFICER ABOUT THE ERROR. THE DETAILS OF SUCH ERRORS ARE AS UNDER: - 1. SHORT TERM CAPITAL GAIN ON MUTUAL FUND INCREASES FROM 84,118/ - TO RS. 2,22,85,893/ - . 2. LONG TERM CAPITAL LOSS ON MUTUAL FUND OF R S. 7,40,755/ - (AFTER INDEXATION) NOT CLAIMED. 3. DIVIDEND INCOME REVISED FROM 4,85,37,726/ - TO RS. 1,61,51,850/ - . 2 3. ASSESSEE FILED THE REVISED COMPUTATION OF INCOME CORRECTING THE ABOVE MISTAKES. ASSESSEE ALSO FILED REVISED RETURN OF INCOME INCORPORATING THE ABOVE. HOWEVER, AO TREATED TH E SAME AS NON EST AND THE SAID IS BEYOND THE LIMITATION OF TIME ALLOWED BY THE STATUTE. AO CONSIDERED THE PARTICULARS AVAILABLE ON THE REVISED COMPUTATION OF INCOME / RETURN OF INCOME AND DETERMINED THE TOTAL INCOME AT RS. 2,27,02,168/ - AGAINST THE RETURN INCOME OF RS. 5, 00,393/ - . AO LEVIED THE PENALTY U/S 271(1)(C) OF THE ACT VIDE HIS LETTER DATED 15.3.2012. THE CASE OF THE AO IN THE ORDER OF THE PENALTY IS THAT BUT FOR THE SCRUTINY AND THE INITIATION OF THE QUESTIONNAIRES ISSUED TO THE ASSESSEE. THE ABOVE INCOME WOULD HAVE BEEN CLAIMED AS EXEMPT AND WOULD HAVE GONE WITHOUT SUBJECTING THE SAME TO THE TAX. ASSESSEE DEMONSTRATED THAT THE PARTICULARS WERE ACTUALLY DISCLOSED IN THE RETURN OF INCOME FILED BUT UNDER THE WRONG SOURCE OF INCOME UNDER THE HEAD CAPITAL GAINS. AO REASONED THAT IT IS THE DUTY OF THE ASSESSEE TO FILE CORRECT COMPUTATION OF INCOME WITHOUT ANY ERRORS AND OTHERWISE , PENALTY SHOULD HAVE LEVIED. AO RELIED ON VARIOUS DECISIONS IN SUPPORT OF HIS REASONING. HOWEVER, T HE CASE OF THE CASE ASSESSEE IS THAT IT IS A BONA FIDE MISTAKE THAT THE INCOME WAS DISCLOSED IN THE RETURN UNDER THE WRONG HEADS OF INCOME . THE FACT OF NOT CLAIMING THE LONG TERM CAPITAL LOSS IN THE RETURN OF INCOME WAS QUOTED IN SUPPORT OF THE ABOVE. IN SUCH CASES, BONA FIDE IS PRIMA FACI E EVIDENT IN THE CONDUCT OF THE ASSESSEE. ASSESSEE ALSO MENTIONED THAT THE SIMILAR ERRORS WERE NOTICED IN THE OTHER GROUP CASES OF THE ASSESSEE (PARA 5 OF THE PENALTY ORDER IS RELEVANT IN THIS REGARD). AT THE END, AO LEVIED THE PENALTY OF RS. 75,66,350/ - . 4. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, CIT (A) EXAMINED THE BRIEF FACTS OF THE CASE AND ANALYZED THE DEVELOPMENTS LEADING TO THE LEVY OF PENALTY BY THE AO AND CONSIDERED VARIOUS DECISIONS ON THE ISSUE OF LEVY OF PENALTY BEFORE CO NFIRMING THE PENALTY LEVIED BY THE ASSESSING OFFICER. CONTENTS OF PARA 5 OF THE IMPUGNED ORDER ARE RELEVANT IN THIS REGARD. 5. DURING THE PROCEEDINGS BEFORE US, LD COUNSEL FOR THE ASSESSEE DEMONSTRATED THE FACT OF DISCLOSURE OF RELEVANT DETAILS IN THE RET URN OF INCOME BUT UNDER THE WRONG HEADINGS. HE ALSO SUBMITTED THAT THE ERRORS WERE RECTIFIED DULY DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND PAID RELEVANT TAXES. HE ALSO SUBMITTED THAT COMPENSATORY INTEREST ON THE ADVANCE TAX DUE ON THE INCOME, WHIC H WAS NOT ORIGINALLY SUBJECT TO TAX WHILE FILING THE RETURN OF INCOME WERE ALSO PAID. HE ALSO 3 SUBMITTED THAT THE RELEVANT INCOME WAS WRONGLY DECLARED UNDER THE WRONG HEAD OF INCOME AND THEREFORE, THERE IS NO DEFAULT OF DISCLOSURE IN THE RETURN OF INCOME. RELYING ON THE VARIOUS DECISIONS, LD COUNSEL FOR THE ASSESSEE SUBMITTED SO LONG AS THE PARTICULARS OF INCOME WHICH DISCLOSED, THE ALLEGATION OF CONCEALMENT NATURE IS NOT SUSTAINABLE. FURTHER, MENTIONING THE ASSESSEES CONDUCT IN NOT CLAIMING CERTAIN CAPI TAL GAIN LOSS, LD COUNSEL FOR THE ASSESSEE TRIED TO DEMONSTRATE THE BONA FIDE OF THE ASSESSEE. HE ALSO BROUGHT OUR ATTENTION TO THE CONTENTS OF PAGE 37 AND 39 OF THE PAPER BOOK, WHICH ARE BASICALLY THE AFFIDAVITS OF THE ACCOUNTANT, LD COUNSEL FOR THE ASSE SSEE DEMONSTRATED THAT THE MISTAKE CANNOT BE ATTRIBUTABLE TO THE ASSESSEE BUT TO HIS CHARTERED ACCOUNTANTS. HE ALSO SUBMITTED THAT SIMILAR ERRORS WERE RECTIFIED IN THE GROUP CASES OF THE ASSESSEE AND THE TRIBUNAL HAS DELETED THE PENALTY ON SIMILAR CASES O N SIMILAR FACTS. 6. ON THE OTHER HAND, LD DR FOR THE REVENUE HEAVILY RELIED ON THE ORDERS OF THE AO AND THE CIT (A). 7. ON HEARING BOTH THE PARTIES AND ON PERUSAL OF THE PAPER BOOK FILED BEFORE US, WE FIND THERE IS WRONG CATEGORIZATION OF CAPITAL GAINS AND LOSS AND THE SAME ARE EVIDENT FROM THE PAPERS FILED BEFORE US. THEREFORE, WE AGREE WITH THE LD COUNSELS ARGUMENT THAT IT IS A CASE OF WRONG CATEGORIZATION OF THE INCOME UNDER THE WRONG HEAD. THE REVISED COMPUTATION OF INCOME BASICALLY CORRECTS THE MIS TAKE IN SUCH WRONG CATEGORIZATION. IT IS THE CASE WHERE ASSESSEE PAID TAXES ON THE EXTRA INCOME COMPUTED BY VIRTUE OF THE REVISED COMPUTATION ALONG WITH THE STATUTORY INTEREST U/S 234A, 234B AND 234C AS THE CASE MAY BE. IT IS A SETTLED ISSUE THAT PENALTY CANNOT BE EXCISABLE IN A CASE WHERE THE INCOME WAS DISCLOSED BUT UNDER THE WRONG HEAD OF INCOME . THEREFORE, CONSIDERING THE ABOVE, WE ARE OF THE OPINION THIS IS NOT A FIT CASE FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. ACCORDINGLY, ALL THE GROUNDS RA ISED BY THE ASSESSEE ARE ALLOWED. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUN CED IN THE OPEN COURT ON 2 8 T H JANUARY, 2016. S D / - S D / - ( AMARJIT SINGH ) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 2 8 .1.2016 4 . . ./ OKK , SR. PS / 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 . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI