PRAFUL J. VITHLANI, MUMBAI V. ITO 13(3)(1),

ITA 6080/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88623 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2005-2006
• Appeal Filed On: 18-10-2013
• Court: TRIBUNAL
• Keywords: Wrong claim; Revised return
• Section: 143(3); 27; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI VK;DJ VIHYH; VF/KDJ.K] LH U;K;IHB EQACBZ BEFORE SHRI VIJAY PAL RAO , JUDICIAL MEMBER AND SHRI RAJENDRA, ACCOUNTANT MEMBER JH FOT; IKY JKO] U;KF;D LNL; ,OA JH JKTSUNZ] YS[KK LNL; DS LE{K ITA NO. 6080 /MUM/201 3 ASSESSMENT YEAR: - 2005 - 06 MR. PRAFUL J. VITHLANI 56, 4 TH FLOOR, GAYA BUILDING, 109, YUSUF MOHAMEDALI ROAD, MUMBAI 400 003. VS.` INCOME TAX OFFICER 13(3)(1), AAYKAR BHAVAN, 4 TH FLOOR, M.K. ROAD, MUMBAI 400 020. APPELLANT / VIHYKFKHZ RESPONDENT / IZR;FKHZ ORDER PER VIJAY PAL RAO, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 19.8.2013 AGAINST THE ORDER DATED 19.8.2013 OF CIT(A) ARISING FROM PENALTY ORDER PASSED U/S 271(1)(C) OF THE INCOME TAX ACT FOR A.Y. 2005 - 06. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS IN T HIS APPEAL: - 1. THE LD. CIT(A) ERRED ON FACTS AND IN LAW IN CONFIRMING PENALTY LEVIED, UNDER S. 271(1)(C) OF THE INCOME TAX ACT, 1961, VIDE PENALTY ORDER DATED 15 TH MAY 2012. THE ASSESSING OFFICER BE DIRECTED TO CANCEL THE PENALTY. 2. THE LD. CIT(A) ER RED ON FACTS AND IN LAW IN NOT APPRECIATING THAT ONCE A RETURN IS FILED IN RESPONSE TO NOTICE UNDER 148 OF THE ACT, THE ORIGINAL RETURNS ABATES AND NO VALID ACTION CAN BE TAKEN ON THE BASIS OF THE ORIGINAL RETURN OF INCOME. ASSESSEE BY / FU/KKZFJRH FD VKSJ LS MR. KIRIT S. SANGHVI REVENUE BY / JKTLP DH VKSJ LS SHRI PREMANAND J. DATE OF HEARING 05 .03.2015 DATE OF PRONOUNCEMENT 18 .03.2015 ITA NO.6080/MUM/2013 ASSESSMENT YEAR: - 2005 - 06 2 | P A G E 3. THE LD. CIT(A) ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT THE CAUSE OF PENALTY SHOULD ARISE FROM THE RETURN OF INCOME FORMING THE BASIS OF ASSESSMENT. 4. THE LD. CIT(A) ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THE FACT THAT THE DIFFERENCE BETWEEN THE REASSESSED INCO ME AND THE INCOME RETURNED IN RESPONSE TO NOTICE UNDER S. 148 OF THE ACT WAS ONLY RS. 15,541/ - WHEREAS THE LD. ASSESSING OFFICER HAS WORKED OUT THE AMOUNT OF PENALTY ON THE BASIS OF THE TAX SOUGHT TO BE EVADED CALCULATED WITH REFERENCE TO RS. 5,38,299/ - . 2. THE ASSESSEE FILED ITS RETURN OF INCOME ON 22.08.2008 DECLARING TOTAL INCOME OF RS. 4,09,342/ - . THE RETURN OF INCOME WAS PROCESSED U/S 143(1) OF THE INCOME TAX ACT AND SUBSEQUENTLY ON RECEIPT OF INFORMATION THAT THE ASSESSEE HAD ENTERED INTO PURCHASE A ND SALE TRANSACTIONS WITH TWO COMPANIES WHICH WERE INVOLVED IN THE BUSINESS OF PROVIDING BOGUS SALE AND PURCHASE OF SHARES BILLS. THE ASSESSING OFFICER REOPENED THE ASSESSMENT BY ISSUING THE NOTICE U/S 148. THE ASSESSEE FILED THE RETURN OF INCOME IN RESPON SE TO THE NOTICE U/S 148 SHOWING AN ADDITIONAL INCOME OF RS. 98,599/ - AS LONG TERM CAPITAL GAIN AND RS. 4,24,073/ - AS SPECULATION INCOME. THE ASSESSMENT WAS COMPLETED U/S 143(3) R.W.S 147 OF THE INCOME TAX ACT ON 18.11.2011 , WHEREIN A FURTHER ADDITION OF RS. 15,627/ - ON ACCOUNT OF COMMISSION IN ADDITION TO INCOME RETURNED U/S 147 WAS ALSO MADE. THE ASSESSING OFFICER INITIATED THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT AND LEVIED A PENALTY OF RS. 1,69,867/ - BEING 100% OF TAX SOUGHT TO BE EVADED ON THE ADDITIONAL INCOME DISCLOSED BY THE ASSESSEE IN THE RETURN FILED IN RESPONSE TO NOTICE U/S 148 ALONG WITH ADDITION OF RS. 15,674/ - TOTAL AMOUNTING TO RS. 5,38,2 99/ - . 3. THE ASSESSEE CHALLENGED THE ACTION OF ASSESSING OFFICER BEFORE CIT(A) BUT COULD NOT SUCCEED. THE CIT(A) HAS CONFIRMED THE LEVY OF PENALTY. ITA NO.6080/MUM/2013 ASSESSMENT YEAR: - 2005 - 06 3 | P A G E 4. BEFORE US, THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE HAS SUBMITTED THAT THE RETURN INCOME AND T OTAL INCOME ASSESSED BY THE ASSESSING OFFICER IS ALMOST SAME EXCEPT THE ADDITION OF RS. 15,627/ - , THEREFORE, TO THE EXTENT OF RETURN INCOME ASSESSED BY THE ASSESSING OFFICER WHILE FRAMING THE ASSESSMENT U/S 143(3) R.W.S 147, NO PENALTY IS CALLED FOR U/S 27 1(1)(C) . HE HAS FURTHER SUBMITTED THAT IN THE ORIGINAL RETURN, THE ASSESSEE CLAIMED A LOSS OF RS. 4,24,072.93 ON ACCOUNT OF THE PAYMENT MADE TO M/S MAHASAGAR SECURITIES PVT. LTD. FOR PURCHASE OF SHARES BUT T HE ASSESSEE DID NOT RECEIVED ANY SHARE IN THE DEM AT ACCOUNT NOR RECEIVED ANY BROKER NOTE FOR CONFIRMATION FOR PURCHASE OF SHARES. SINCE THE AMOUNT PAID WAS FOUND IRRECOVERABLE THE SAME WAS WRITTEN OFF IN THE BOOKS. THUS IN THE ORIGINAL RETURN, THE ASSESSEE CLAIMED THE LOSS ON ACCOUNT OF THE SAID AMOUNT PAID TO THE BROKER BECOME IRRECOVERABLE. THE LD. AUTHORIZED REPRESENTATIVE HAS SUBMITTED THAT AT THE TIME OF FILING THE RETURN IN RESPONSE TO THE NOTICE U/S 148, THE ASSESSEE REALIZED THAT THE SAID LOSS IS NOT AN ALLOWABLE CLAIM AND, THEREFORE, THE ASSESS EE HAS WITHDRAWN THE SAID CLAIM AND ACCORDINGLY OFFERED THE SAID AMOUNT TO TAX. THUS THE LD. AUTHORIZED REPRESENTATIVE HAS SUBMITTED THAT THERE IS NO CONCEALMENT ON THE PART OF THE ASSESSEE WHEN THE ASSESSEE HAS SHOWN SAID AMOUNT IN THE ORIGINAL RETURN OF INCOME AND ALSO PRODUCED THE RELEVANT RECORD INCLUDING COPY OF BANK STATEMENT TO SHOW THAT THE PAYMENT WAS MADE TO MAHASAGAR SECURITIES PVT. LTD FOR PURCHASE OF SHARES. THE LD. AUTHORIZED REPRESENTATIVE HAS SUBMITTED THAT THE CLAIM MADE IN THE ORIGINAL RET URN WAS A BONAFIDE CLAIM OF THE ASSESSEE AND SUBSEQUENTLY WHEN THE ASSESSEE REALIZED THAT THE CLAIM WAS NOT ALLOWABLE, THE ASSESSEE HAS WITHDRAWN THE SAME IN THE RETURN FILED IN RESPONSE TO SECTION 148 NOTICE. THUS THE LD. ITA NO.6080/MUM/2013 ASSESSMENT YEAR: - 2005 - 06 4 | P A G E AUTHORIZED REPRESENTATIVE HAS PL EADED THAT THE PENALTY U/S 271(1)(C) IS NOT JUSTIFIED AND MAY BE CANCELLED. 5. ON THE OTHER HAND, THE LD. DR SUBMITTED THAT THE ASSESSMENT WAS REOPENED BY THE ASSESSING OFFICER WHEN THE INFORMATION WAS RECEIVED THAT THE BROKER M/S MAHASAGAR SECURITIES PVT . LTD WAS INDULGED IN PROVIDING BOGUS BILLS FOR PURCHASE AND SALE OF SHARES AND ACCORDINGLY A NOTICE U/S 148 WAS ISSUED TO THE ASSESSEE. THE ASSESSEE MADE A FALSE CLAIM IN THE ORIGINAL RETURN OF INCOME WHICH WAS WITHDRAWN IN THE RETURN FILED IN RESPONSE TO NOTICE U/S 148. THEREFORE, IT IS A CLEAR CASE OF CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME IN THE ORIGINAL RETURN OF INCOME. HE HAS RELIED UPON THE ORDERS OF AUTHORITIES BELOW. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. WE DO NOT AGREE WITH THE CONTENTION OF THE LD. AUTHORIZED REPRESENTATIVE THAT PENALTY IS NOT WARRANTED WHEN THE ASSESSING OFFICER HAS ASSESSED THE TOTAL INCOME AS WAS DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME F I LED IN RESPONSE TO NOTICE U/S 148 AND THERE IS NO ADDITION IN THE RETURN INCOME OF THE ASSESSEE BY THE ASSESSING OFFICER. IT IS PERTINENT TO NOTE THAT THE RETURN FILED IN RESPONSE TO NOTICE U/S 148 IS NOT A REVISED RETURN TO SUBSTITUTE THE ORIGINAL RETUR N FILED BY THE ASSESSEE U/S 139 BUT THE RETURN FILED U/S 148 IS A SEPARATE RETURN AND, THEREFORE, THE ASSESSMENT MADE BY THE ASSESSING OFFICER U/S 143(3) R.W.S 147 IS ON A HIGHER TOTAL INCOME THAN THE INCOME DECLARED BY THE ASSESSEE IN THE ORIGINAL RETURN OF INCOME . THUS MERELY BECAUSE THE ASSESSEE HAS OFFERED THE ADDITIONAL INCOME IN THE RETURN FILED U/S 148 WOULD NOT ABSOLVE THE ASSESSEE FROM THE PENAL PROVISIONS OF SECTION 271(1 ) (C) O NCE IT IS ESTABLISHED ON THE RECORD THAT THE ASSESSEE MADE A WRONG CLAIM IN THE ITA NO.6080/MUM/2013 ASSESSMENT YEAR: - 2005 - 06 5 | P A G E ORIGINAL RETURN OF INCOME. THIS IS AN ADMITTED FACT THAT IN THE ORIGINAL RETURN OF INCOME T HE ASSESSEE MADE A WRONG CLAIM REGARDING THE LOSS ON ACCOUNT OF PAYMENT OF RS. 4,24,073/ - TO THE BROKER FOR PURCHASE OF SHARES AS IRRECOVERABLE. THE FINDING OF THE ASSESSING OFFICER HAS ATTAINED THE FINALITY A ND THE ASSESSEE HIMSELF H AS ADMITTED THAT THE CLAIM MADE IN THE ORIGINAL RETURN WAS NOT AN ALLOWABLE CLAIM. THEREFORE, IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE ORDERS OF AUTHORITIES BELOW. 7 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED . ORDER PRONOUCNED IN THE OPEN COURT ON THIS 18 TH DAY OF MARCH 2015 VKNS'K DH ?KKS'K.KK [KQYS U;K;KY; ES FNUKAD 18 EKPZ 2015 DKS DH XBZA SD/ - SD/ - ( RAJENDRA ) (VIJAY PAL RAO) ( ACCOUNTANT MEMBER / YS[KK LNL; ) (JUDICIAL MEMBER/ U;KF;D LNL; ) MUMBAI DATED 18 .03.2015 SKS SR. P.S, COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, C BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI