Saurabh Arvind Desai, Ahmedabad V. ACIT, Noida

ITA 5196/DEL/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5848 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 8 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2007-2008
• Appeal Filed On: 03-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S R SENAPATI
• Keywords: Wrong claim; Revised return
• Section: 14A

Judgement Text

1 ITA NO. 5196/DEL/2016 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G NEW DELHI BEFORE SHRI G. D. AGRAWAL, PRESIDENT AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER ITA NO. 5196/DEL/201 6 ( A.Y 2007-08) SAURABH ARVIND DESAI 11, RUSHIL BUNGLOWS, B/H PRIDE HOTEL NEAR AUDA FIRE STATION, BODAKDEV AHMEDABAD AGMPD2427J (APPELLANT) VS ACIT CIRCLE-1 NOIDA (RESPONDENT) APPELLANT BY SH. ARUN KISHORE, CA RESPONDENT BY SH. S. R. SENAPATI, SR. DR ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER DATED 29/07/2016 PASSED BY CIT(A)-1, NOIDA. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. THAT THE ORDER OF LD. CIT APPEALS-1 IN APPEAL NO. 152/2015-16/NOIDA (AY - 2007-08) DT. 12.07.2016 IS ILLEGAL, UNJUST, O PPOSED TO FACTS AND SUFFERS FROM THE VICE OF ARBITRARY ACTS. 2. (I) THAT ON FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW THE LD. CIT APPEALS HAS ERRED IN NOT DEALING WITH GROUND NO.2. (II) THAT THE PENALTY ORDER WAS THE TIME BARRED ORD ER NOT SERVED UPON THE APPELLANT WITHIN THE STIPULATED TIME. 3. (I)THAT WITHOUT PREJUDICE TO THE ABOVE CONTENTIONS ON THE FACTS AND DATE OF HEARING 05.06.2018 DATE OF PRONOUNCEMENT 07.06.2018 2 ITA NO. 5196/DEL/2016 CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT A PPEALS ERRED IN CONFIRMING THE PENALTY OF RS. 10,50,000/- ILLEGALLY LEVIED. (II) THAT ALL FACTS OF THE CASE WERE TRANSPARENTLY AVAILABLE ON RECORD. BY REVISING THE RETURN AND CLAIMING LONG TERM CAPITAL GAIN ON SALE OF ESOPS ORIGINALLY DECLARED AS SHORT TERM CAPITAL GAIN, THE RE IS NO CONCEALMENT OF INCOME. 4. (I)THAT WITHOUT PREJUDICE TO THE ABOVE CONTENTIONS ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT A PPEALS HAS ERRED IN IGNORING THE WRITTEN SUBMISSIONS AND CASE LAWS REFE RRED UNDER IDENTICAL CIRCUMSTANCES. (II) THAT PENALTY U/S 271(L)(C) IS NOT ATTRACTED ON DEB ATABLE ISSUES. (III) THAT THE APPELLANT IS NOT BE PENALIZED FOR ACTING ON THE ADVICE OF HIS CONSULTANT, FOR MINIMIZING HIS TAX LIABILITY. 3. THE ASSESSEE IS EMPLOYED WITH FREESCALE SEMICOND UCTOR INDIA PVT. LTD., NOIDA AND EARNING SALARY. FOR ASSESSMENT YEAR 2007- 08, THE ASSESSEE FILED HIS RETURN ON 31.7.2007 DECLARING INCOME OF RS. 1,55,48 ,470/-, WHICH INCLUDED SHORT TERM CAPITAL GAIN. SUBSEQUENTLY, THE ASSESSEE FILED A REVISED RETURN ELECTRONICALLY ON 31.3.2009 WHEREIN THE ASSESSEE DE CLARED INCOME OF RS. 1,52,92,030/-. IN THIS REVISED RETURN, THE ASSESSEE TREATED THE CAPITAL GAIN A S LONG TERM CAPITAL GAIN, WHICH WAS ORIGINALLY SHOWN AS SHORT TERM CAPITAL GAIN. T HE CASE WAS SELECTED UNDER SCRUTINY. THE ASSESSING OFF ICER NOTICED THAT THE ASSESSEE HAS INCOME FROM CAPITAL GAIN ON SALE OF SH ARES UNDER EMPLOYEES STOCK OPTION PLAN (ESOP). THE ASSESSING OFFICER HEL D THAT THE DATE OF PURCHASE OF THESE SHARES WOULD BE THE DATE WHEN THE EMPLOYEE EXERCISED HIS OPTION AND CONSEQUENTLY, THE GAIN WOULD BE SHORT-TERM CAPITAL GAIN. THE AO ACCORDINGLY ASSESSED CAPITAL GAIN OF RS.98,49,788/- ON SALE OF ESOP/RSU UNDER THE HEAD SHORT TERM CAPITAL GAIN AS AGAINST LONG TERM CAPI TAL GAIN SHOWN BY THE ASSESSEE. 4. PENALTY PROCEEDINGS U/S 271(1)(C) OF THE I.T. AC T, 1961 WAS ALSO INITIATED BY ISSUING NOTICE U/S 274 READ WITH SECTION 271(1)( C). IN THE MEANTIME 3 ITA NO. 5196/DEL/2016 AGAINST THE ASSESSMENT ORDER, THE ASSESSEE PREFERRE D AN APPEAL BEFORE THE CIT(A). THE CIT(A) VIDE ORDER DATED 29/11/2010 DI SMISSED THE APPEAL OF THE ASSESSEE. 5. THE ASSESSING OFFICER WHILE PASSING PENALTY ORD ER U/S 271(1)(C) HELD THAT THE CIT(A) IN QUANTUM CONFIRMED THAT THE PROFI T ON SALE OF ESOP SHARES COMES TO RS.97,17,279/- WHICH IS ASSESSABLE AS SHOR T TERM CAPITAL GAIN INSTEAD OF LONG TERM CAPITAL GAIN. THE ASSESSEE HA S ALREADY SHOWN SHORT TERM CAPITAL GAIN OF RS.10,56,000/- AND THEREFORE T HE ASSESSING OFFICER HELD THAT THE ASSESSEE FURNISHED INACCURATE PARTICULARS WITH REGARD TO SHORT TERM CAPITAL GAIN OF RS.86,61,279/. THE ASSESSING OFFIC ER FURTHER OBSERVED THAT THE ASSESSEE MADE A FALSE CLAIM OF SHORT TERM CAPIT AL GAIN OF RS. 86,61,279/- AS LONG TERM CAPITAL GAIN IN THE ITR WITH A VIEW TO PAY LESS TAX. THERE WERE OTHER ADDITIONS I.E. SHORT TERM CAPITAL GAIN AT RS. 5,376/- AND ADDITIONS AS UNEXPLAINED MONEY U/S 69A AT RS. 11,035/-. FOR THES E ADDITIONS ALSO, THE ASSESSING OFFICER IMPOSED PENALTY. 6. BEING AGGRIEVED BY THE PENALTY ORDER, THE ASSESS EE FILED THE APPEAL BEFORE THE CIT(A). THE CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE. 7. THE LD. AR SUBMITTED THAT THE ASSESSING OFFICER AS WELL AS THE CIT(A) WAS NOT CORRECT IN IMPOSING PENALTY. THE LD. AR RELIED UPON THE DECISION OF THE HON'BLE SUPREME COURT IN CASE OF CIT VS. RELIANCE P ETRO PRODUCTS PVT. LTD 322 ITR 158 (S.C). THE LD. AR SUBMITTED THAT ALL THE D OCUMENTS RELATING TO THE ADDITIONS WERE BEFORE THE ASSESSING OFFICER DURING THE REGULAR ASSESSMENT PROCEEDINGS. IN FACT, WHILE IMPOSING THE PENALTY T HERE IS A RECORDED FINDING BY THE ASSESSING OFFICER THAT THE ASSESSEES CLAIM TO TREAT PART OF THE CAPITAL GAIN AS LONG TERM CAPITAL GAIN IS A MATTER OF OPINION. THUS, THE ASSESSING OFFICER HIMSELF ADMITS THAT THERE IS A DIFFERENCE OF OPINIO N AND THERE IS NO CASE FOR FURNISHING OF INACCURATE PARTICULARS. AS REGARDS A DDITIONS OF RS.5,376/- & 4 ITA NO. 5196/DEL/2016 8,276/- & 11,035/-, THE LD. AR SUBMITTED THAT THE ASSESSEE IS A REGULAR TAX PAYER AND INADVERTENTLY THE SAME WAS ESCAPED WHILE FILING THE RETURNS. BUT THE ASSESSEE HAS VOLUNTARILY SURRENDERED THE SAID AMOUN T BEFORE THE REVENUE AUTHORITIES. THE LD. AR FURTHER SUBMITTED THAT THI S WAS DUE TO THE ASSESSEES PRE-OCCUPATION IN NOIDA JOB. THEREFORE, THE ASSES SEE SHOULD HAVE NOT BEEN PENALIZED. 8. THE LD. DR RELIED UPON THE PENALTY ORDER AND CIT (A) ORDER. THE LD. DR FURTHER SUBMITTED THAT THE ASSESSEE HAS NOT CONTEST ED THE ADDITION BEFORE THE TRIBUNAL. 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. THE REVENUE HAS NOT MADE OUT ANY CASE THAT THE ASSESSEE FILED INACCURATE PARTICULARS. IN FACT ALL THE PARTICULAR S WERE BEFORE THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS. THE HON BLE APEX COURT IN CASE OF RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA) HELD AS UN DER: 18. WE MUST HASTEN TO ADD HERE THAT IN THIS CASE, THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RE TURN WERE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE. SUCH NOT BEING THE CASE, THERE WOULD BE NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271( 1)(C) OF THE ACT. A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LA W, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO THE INACCURATE PARTICULARS. 19. IT WAS TRIED TO BE SUGGESTED THAT SECTION 14A OF THE ACT SPECIFICALLY EXCLUDED THE DEDUCTIONS IN RESPECT OF THE EXPENDITU RE INCURRED BY THE ASSESSEE IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE ACT. IT WAS FURTHER POINTED OUT THAT THE DIVIDENDS FROM THE SHARES DID NOT FORM THE PART OF THE TOTAL INCOME. IT WAS, THEREFORE, REITERATED BEFORE US THAT THE ASSESSING OFFICER HAD CORRECTLY REACHED TH E CONCLUSION THAT SINCE THE ASSESSEE HAD CLAIMED EXCESSIVE DEDUCTIONS KNOWING T HAT THEY ARE INCORRECT; IT AMOUNTED TO CONCEALMENT OF INCOME. IT WAS TRIED TO BE ARGUED THAT THE FALSEHOOD IN ACCOUNTS CAN TAKE EITHER OF THE TWO FO RMS; (I) AN ITEM OF RECEIPT MAY BE SUPPRESSED FRAUDULENTLY; (II) AN ITEM OF EXP ENDITURE MAY BE FALSELY (OR IN AN EXAGGERATED AMOUNT) CLAIMED, AND BOTH TYPES A TTEMPT TO REDUCE THE 5 ITA NO. 5196/DEL/2016 TAXABLE INCOME AND, THEREFORE, BOTH TYPES AMOUNT TO CONCEALMENT OF PARTICULARS OF ONE'S INCOME AS WELL AS FURNISHING O F INACCURATE PARTICULARS OF INCOME. 20. WE DO NOT AGREE, AS THE ASSESSEE HAD FURNISHED ALL THE DETAILS OF ITS EXPENDITURE AS WELL AS INCOME IN ITS RETURN, WHICH DETAILS, IN THEMSELVES, WERE NOT FOUND TO BE INACCURATE NOR COULD BE VIEWED AS THE CONCEALMENT OF INCOME ON ITS PART. IT WAS UP TO THE AUTHORITIES TO ACCEPT ITS CLAIM IN THE RETURN OR NOT. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT, IN OUR OPINION, ATTRACT THE PENALTY UNDE R SECTION 271(1)(C). IF WE ACCEPT THE CONTENTION OF THE REVENUE THEN IN CASE O F EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTED BY ASSESSING OFFICER FOR ANY REASON, THE ASSESSEE WILL INVITE PENALTY UNDER SECTION 271(1)(C). THAT I S CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE. THUS, THE APEX COURT DECISION IN CASE OF RELIANCE P ETRO PRODUCT (SUPRA) IS APPLICABLE IN ASSESSEES CASE. REGARDING THE OTHER TWO ADDITIONS, THE ASSESSEE EXPLAINED HIS GENUINE MISTAKE AND HAS SURRENDERED T HE SAID AMOUNT TO THE REVENUE AUTHORITIES AND OFFERED TO TAX. THEREFORE, THE SAME CANNOT BE HELD AS ACT OF FURNISHING INACCURATE PARTICULARS ON PART OF THE ASSESSEE. THUS, THE ORDER OF CIT(A) IS SET ASIDE AND APPEAL OF THE ASSE SSEE IS ALLOWED. 9. IN RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 07 TH JUNE, 2018 . SD/- SD/- (G. D. AGRAWAL) (SUCHITRA KAMBLE) PRESIDENT JUDICIAL MEMB ER DATED: 07/06/2018 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 6 ITA NO. 5196/DEL/2016 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 05/06/2018 PS 2. DRAFT PLACED BEFORE AUTHOR 05/06/2018 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2018 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 7.06.2018 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 7 .06.2018 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.