Sri Kanchan Kamal Mukhopadhyay, Kolkata V. ITO, Wd-20(2), Kolkata, Kolkata

ITA 587/KOL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1521 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 30-05-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 02-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Cost of acquisition; Reassessment proceedings
• Section: 143(3); 147; 148; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KOLKATA [BEFORE HONBLE SRI N.V.VASUDEVAN, JM & DR.ARJUN LAL SAINI, AM] I.T.A NOS. 587 & 588/ KOL/2014 ASSESSMENT YEAR : 2008-0 9 SHRI KANCHAN KAMAL MUKHOPADHYAY -VS.- I.T .O., WARD-20(2) KOLKATA KOLKATA. [PAN : AANPM 2997 B] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI RIP DAS , FCA FOR THE RESPONDENT : NONE DATE OF HEARING : 10.07.2017. DATE OF PRONOUNCEMENT : 14.07.2017. ORDER PER N.V.VASUDEVAN, JM ITA NO.587/KOL/2014 IS AN APPEAL BY THE ASSESSEE A GAINST THE ORDER DATED 31.01.2014 OF CIT(A)-XXIV, KOLKATA RELATING TO A.Y .2008-09. THIS APPEAL IS AGAINST AN ORDER PASSED BY CIT(A) WHEREBY THE CIT(A) CONFIR MED THE ORDER OF AO DISMISSING THE APPLICATION OF THE ASSESSEE U/S 154 OF THE INCO ME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) ITA NO.588/KOL/2014 IS AN APPEAL BY THE ASSESSEE A GAINST THE ORDER DATED 31.01.2014 OF CIT(A)-XXIV, KOLKATA RELATING TO A.Y .2008-09. IN THIS APPEAL THE ASSESSEE HAS CHALLENGED THE ORDER OF CIT(A) CONFIRM ING THE ORDER OF THE AO IMPOSING PENALTY ON THE ASSESSEE U/S 271(1)(C) OF THE ACT. 2. THE FACTS AND CIRCUMSTANCES UNDER WHICH THE SE APPEALS ARISE ARE AS FOLLOWS : THE ASSESSEE IS AN INDIVIDUAL. FOR A.Y.2008-09 THE ASSESSEE FILED RETURN OF INCOME ON 31.07.2008 DECLARING A TOTAL INCOME OF RS.2,12,5902 /-. THE RETURN WAS PROCESSED U/S 143(1) ON 16.12.2009. LATER ON A NOTICE U/S 148 OF THE ACT WAS ISSUED ON 05.04.2010 FOR MAKING AN ASSESSMENT U/S 147 OF THE ACT (INCOME ESCAPING ASSESSMENT). IN THE REASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE AS SESSEE HAD NOT DISCLOSED INTEREST ON 2 ITA NO.587&588/KOL/2014 SRI KANCHAN KAMAL MUKHOPADHYAY A.YR.2008-09 2 SAVINGS BANK ACCOUNT TO THE EXTENT OF RS.2,224.34. THE ASSESSEE AGREED TO THE ACTION OF THE AO IN BRINGING TO TAX THE AFORESAID INTEREST IN COME AFTER GIVING CREDIT TO TDS. THE AO FURTHER NOTICED THAT THE ASSESSEE HAD EARNED SHO RT TERM CAPITAL GAIN OF RS.96,434.42 ON REDEMPTION OF UNITS OF MUTUAL FUND AND THAT HAD NOT BEEN DECLARED IN THE RETURN OF INCOME. THE PLEA OF THE ASSESSEE BEFORE THE AO WAS THAT THE SHORT TERM CAPITAL GAIN IN QUESTION AROSE OUT OF SWITCHING OVER BY THE ASSESSE E BY REDEMPTION FROM ONE MUTUAL FUND INVESTMENT TO ANOTHER MUTUAL FUND INVESTMENT A ND THAT NO GAIN WAS ACTUALLY EARNED (RECEIVED) BY THE ASSESSEE. THIS ARGUMENT DI D NOT FIND FAVOUR WITH THE AO AND THE AO HELD THAT NOTWITHSTANDING THE FACT OF REINVE STMENT OF THE PROCEEDS OF REDEMPTION BY SWITCHING OVER FROM ONE FUND TO ANOTH ER FUND, THE RESULTANT GAIN ON REDEMPTION IS LIABLE TO BE TAXED AS SHORT TERM CAPI TAL GAIN. ACCORDINGLY THE INCOME OF THE ASSESSEE WAS DETERMINED BY THE AO IN AN ORDER P ASSED U/S 147 R.W.S. 143(3) OF THE ACT DATED 27.12.2011 BY ADDING THE AFORESAID INCOME OF SHORT TERM CAPITAL GAIN TO THE TOTAL INCOME OF THE ASSESEE. 3. IN RESPECT OF THE AFORESAID ADDITION MADE IN THE COURSE OF ASSESSMENT PROCEEDINGS THE AO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT AND IMPOSED PENALTY ON THE ASSESSEE FOR CONCEALING PARTICULARS OF INCOME. THE PLEA OF THE ASSESSEE BEFORE THE AO WAS THAT IT WAS A BON FIDE BELIEF THAT WHEN UNIT S OF MUTUAL FUND ARE REDEEMED FOR THE PURPOSE OF SWITCHING OVER FROM ONE MUTUAL FUND SCHEME TO ANOTHER MUTUAL FUND SCHEME THE RESULTANT GAIN NEED NOT BE OFFERED TO TA X AS CAPITAL GAIN. IN RESPECT OF INTEREST INCOME NOT DISCLOSED IN THE RETURN OF INCO ME THE PLEA OF THE ASSESSEE WAS THAT IT WAS NOT DELIBERATE AND THAT IT WAS PURELY DUE TO IN ADVERTENCE. THE PLEA OF THE ASSESSEE DID NOT FIND FAVOUR WITH THE AO AND HE IMPOSED PENA LTY FOR FURNISHING INACCURATE PARTICULARS AND FOR CONCEALMENT OF PARTICULARS OF I NCOME. THE ORDER OF AO WAS CONFIRMED BY CIT(A). HENCE ITA NO.588/KOL/2014 BY T HE ASSESSEE BEFORE THE TRIBUNAL. 3 ITA NO.587&588/KOL/2014 SRI KANCHAN KAMAL MUKHOPADHYAY A.YR.2008-09 3 4. WE HAVE HEARD THE SUBMISSIONS OF THE LD. COU NSEL FOR THE ASSESSEE. NONE APPEARED ON BEHALF OF THE DEPARTMENT. WE ARE OF THE VIEW THA T IMPOSITION OF PENALTY IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE WAS NOT JUSTI FIED. ADMITTEDLY IN THE ASSESSMENT PROCEEDINGS WHEN THE AO BROUGHT THE FACTS OF NON DI SCLOSURE OF INTEREST INCOME AND SHORT TERM CAPITAL GAIN TO THE NOTICE OF THE ASSESS EE, THE ASSESSEE ACCEPTED THAT NON DISCLOSURE OF INTEREST INCOME WAS INADVERTENT AND T HE SAME MAY BE BROUGHT TO TAX. AS FAR AS THE SHORT TERM CAPITAL GAIN IS CONCERNED THE ASSESSEE EXPLAINED BEFORE THE AO THAT HE WAS UNDER A BONA FIDE BELIEF THAT WHEN THE UNITS OF MUTUAL FUND ARE REDEEMED BY SWITCHING OVER FROM ONE MUTUAL FUND TO ANOTHER MUTU AL FUND SCHEME, CAPITAL GAIN DOES NOT ARISE. IN OUR VIEW THE EXPLANATION AS GIVEN BY THE ASSESSEE WAS A BONA FIDE EXPLANATION AND IN THE GIVEN FACTS AND CIRCUMSTANCE S OF THE CASE THE AO OUGHT TO HAVE EXERCISED HIS DISCRETION NOT TO IMPOSE PENALTY ON T HE ASSESSEE. WE ACCORDINGLY CANCEL THE ORDER OF AO IMPOSING PENALTY ON THE ASSESSEE US / 271(1)(C) OF THE ACT. WE ACCORDINGLY ALLOW ITA NO.588/KOL/2014. 5. AS FAR AS ITA NO.587/KOL/2014 IS CONCERNED T HE SAME ARISES OUT OF AN ORDER OF ASSESSMENT PASSED U/S 147 R.W.S.143(3) (SECOND REA SSESSMENT ORDER) DATED 27.01.2014. WE HAVE ALREADY SEEN THAT ORDER OF ASSESSMENT U/S 1 47 R.W.S.143(3) OF THE ACT DATED 27.12.2011 WAS PASSED BY THE AO IN WHICH HE ADDED I NTEREST INCOME AND SHORT TERM CAPITAL GAIN TO THE TOTAL INCOME DECLARED BY THE AS SESSEE AND BY DOING SO THE TOTAL INCOME OF THE ASSESSEE WAS DETERMINED AT A SUM OF R S.3,11,160/-. SUBSEQUENTLY THE ASSESSEE FILED A LETTER DATED 18.01.2012 IN WHICH H E CLAIMED CREDIT FOR TDS OF RS.4,104. THE TDS CERTIFICATE BASED ON WHICH CREDIT FOR TDS W AS CLAIMED WAS ISSUED BY STATE BANK OF INDIA SALES TAX BUILDING (MUNSHIBAZAR)BRANC H IN RESPECT OF PAYMENT OF INCOME OF RS.39,832/- TO THE ASSESSEE. THIS SUM OF RS.39,832/- HAD NOT BEEN OFFERED TO TAX BY THE ASSESSEE IN THE RETURN OF INCOME FILED E ARLIER AND THEREFORE THE SECOND REASSESSMENT PROCEEDINGS U/S 147 R.W.S. 143(3) OF T HE ACT WAS INITIATED BY THE AO AND 4 ITA NO.587&588/KOL/2014 SRI KANCHAN KAMAL MUKHOPADHYAY A.YR.2008-09 4 HE BY AN ORDER DATED 27.01.2014 BROUGHT TO TAX A SU M OF RS.39,832/- BEING INCOME NOT DISCLOSED. 6. THE ASSESSEE FILED AN APPLICATION U/S 154 OF THE ACT IN WHICH THE ASSESSEE POINTED OUT THAT IN THE ASSESSMENT ORDER DATED 27.12.2011 ( FIRST RE-ASSESSMENT ORDER U/S 147), THE AO HAD BROUGHT TO TAX THE SHORT TERM CAPITAL GA IN OF RS.96,434.42. THE ASSESSEE ALSO POINTED OUT THAT THE ASSESSEE HAD INCURRED SHO RT TERM CAPITAL LOSS OF RS.38,625/- AND RS.9,890/- ON REDEMPTION OF CERTAIN ITEMS OF MU TUAL FUND. THE DETAILS OF WHICH WERE AS FOLLOWS :- STATEMENT OF SHORT TERM CAPITAL LOSS ON REDEMPTION OF MUTUAL FUND NAME OF THE MUTUAL F UND DATE OF PURCHASE COST OF PRICE REDEMPTION DATE REDEMPTION PRICE STCG(LOSS) BNP PARIBAS MID CAP DIVIDEND FUND 02.05.06 280,000.00 18.04.07 273,491.00 (6,509.00) SUNDARAM SELECT FOCUS MUTUAL FUND 28.11.06 71,018.49 18.04.07 690,797.00 (1,221.49) ING OPTIMIX ASSET MUTUAL FUND 30.11.06 250,000.00 18.04.07 222,677.26 (27,322.74) SBI BLUE CHIP FUND- DIVIDEND 21.11.06 46,404.00 18.04.07 44,974.29 (1,429.71) SBI BLUE CHIP FUND- DIVIDEND 21.11.06 69,606.00 18.04.07 67,461.94 (2,144.06) TOTAL 717,028.49 678,401.49 (38,627.00) 5 ITA NO.587&588/KOL/2014 SRI KANCHAN KAMAL MUKHOPADHYAY A.YR.2008-09 5 STATEMENT OF LONG TERM CAPITAL LOSS ON REDEMPTION O F MUTUAL FUND NAME OF THE MUTUAL FUND DATE OF PURCHASE COST OF PRICE REDEMPTION DATE REDEMPTION PRICE LTCG(LOSS) SUNDARAM MUTUAL FUND 09.01.06 50,000.00 18.04.07 40,110.00 (9,890.00) TOTAL 50,000.00 40,110.00 (9,890.00) THE ASSESSEE SUBMITTED THAT REDEMPTION OF UNITS OF MUTUAL FUND FOR THE PURPOSE OF SWITCHING OVER FROM ONE FUND TO ANOTHER FUND WILL N OT GIVE RISE TO CAPITAL GAIN AND THEREFORE STCG OUGHT NOT TO HAVE BEEN BROUGHT TO TA X. ALTERNATIVELY, THE ASSESSEE CLAIMED THAT THE STC LOSS OUGHT TO HAVE BEEN SET OF F AGAINST THE STCG AND ONLY THE NET STCG OUGHT TO HAVE BEEN BROUGHT TO TAX. THE AO ON SCRUTINY OF THE AFORESAID APPLICATION U/S 154 OF THE ACT WAS OF THE VIEW THAT THE CONTENTION PUT FORTH BY THE ASSESSEE CANNOT BE ACCEPTED AND HE ACCORDINGLY DISM ISSED THE APPLICATION U/S 154 OF THE ACT. THE CIT(A) CONFIRMED THE ACTION OF THE AO. HEN CE THIS APPEAL BY THE ASSESSEE BEFORE THE TRIBUNAL. 7. WE HAVE HEARD THE SUBMISSIONS OF THE LD. COUN SEL FOR THE ASSESSEE. NONE APPEARED ON BEHALF OF THE DEPARTMENT. WE ARE OF THE VIEW THA T THE PLEA OF THE ASSESSEE FOR NON TAXABILITY OF STCG SHORT TERM CAPITAL GAIN WAS RIGH TLY REJECTED BY THE REVENUE AUTHORITIES. BUT SO FAR AS THE COMPUTATION OF SHORT TERM CAPITAL GAIN IS CONCERNED WE ARE OF THE VIEW THAT ANY SHORT CAPITAL LOSS SHOULD BE A DJUSTED AGAINST THE SHORT TERM CAPITAL GAIN AND ONLY THE RESULTANT SHORT TERM CAPITAL GAIN , IF ANY, SHOULD BE BROUGHT TO TAX. SUCH SET OFF IS A RIGHT OF THE ASSESSEE IN TERMS OF SECTION 70(2) OF THE ACT. THE ASSESSEE HAD GIVEN THE DETAILS OF THE LOSS AND THE SAME IS A T PAGE 5 OF THE ASSESSEES PAPER BOOK WHICH HAD BEEN FILED BEFORE THE REVENUE AUTHORITIES . THE AO IS ACCORDINGLY DIRECTED TO VERIFY THE AFORESAID LOSS AND ALLOW THE CLAIM OF TH E ASSESSEE IF FOUND TO BE CORRECT. WITH 6 ITA NO.587&588/KOL/2014 SRI KANCHAN KAMAL MUKHOPADHYAY A.YR.2008-09 6 THIS OBSERVATIONS THE APPEAL OF THE ASSESSEE IN ITA NO.587/KOL/2014 IS TREATED AS ALLOWED. 8. IN THE RESULT BOTH THE APPEALS OF THE ASSESS EE ARE ALLOWED. ORDER PRONOUNCED IN THE COURT ON 14.07.2017. SD/- SD/- [DR.A.L.SAINI] [ N.V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 14.07.2017. [RG PS] COPY OF THE ORDER FORWARDED TO: 1. SRI KANCHAN KAMAL MUKHOPADHYAY, BLOCK-AF, FLAT N O.S/4, BANASREE ABASAN, SECTOR-1, SALT LAKE, KOLKATA-700064. 2. I.T.O., WARD-20(2), KOLKATA. 3. CIT(A)-XXIV, KOLKATA 4. C.I.T.-VIII, KOLKA TA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SR.PRIVATE SECRETARY HEAD OF OFFICE/ D.D.O. ITAT KOLKATA 7 ITA NO.587&588/KOL/2014 SRI KANCHAN KAMAL MUKHOPADHYAY A.YR.2008-09 7