Brakewel Automotive Components (India) Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 6133/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 91483 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 8 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-06-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 14-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MANJIT SINGH SAHNI
• Keywords: Notional interest; Revised return

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A, NEW DELHI BEFORE SH. N. K. SAINI, AM AND SH. GEORGE GEORGE K, JM ITA NO. 6133/DEL/2013 : ASSTT. YEAR : 2009-10 BRAKEWEL AUTOMOTIVE COMPONENTS (INDIA) PVT. LTD., A-99, 2 ND FLOOR, RIGHT PORTION, INDERPURI NEW DELHI VS DCIT, CIRCLE 3(1) NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. AAACB0165C ASSESSEE BY : SH. MANJIT SINGH SAHNI, CA REVENUE BY : SH. AMIT JAIN, SR. DR DATE OF HEARING : 10.06.2015 DATE OF PRONOUNCEMENT : 27 .07.2015 ORDER PER N. K. SAINI, AM: THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 20.09.2013 OF LD. CIT(A)-VI, NEW DELHI. 2. THE ONLY GRIEVANCE OF THE ASSESSEE IN THIS APPEA L RELATES TO THE CONFIRMATION OF PENALTY OF RS. 2,78,629/- LE VIED BY THE AO U/S 271(1)(C) OF THE I.T. ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME ON 24.9.2009 DECLARING AN INCOME O F RS. 5,49,99,660/- INCLUDING LONG TERM CAPITAL GAIN OF R S. ITA NO. 6133/DEL/ 2013 BRAKEWEL AUTOMOTIVE COMPONENTS (INDIA) PVT. LTD. 2 3,94,34,220/-. THE SAID RETURN WAS PROCESSED U/S 14 3(1) OF THE ACT. LATER ON THE CASE WAS SELECTED FOR SCRUTI NY. 4. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDIN G NOTICED THAT THE ASSESSEE HAD SOLD PLOT NOS. 46-51, SECTOR-4, IIT, PANTNAGAR, UTTARAKHAND FOR A CONSIDERATION OF 6,30,00,000/- AND THE BUILDING CONSTRUCTED THEREON FOR A CONSIDERATION OF RS. 2,70,00,000/-. THE ASSESSEE EA RNED LONG TERM CAPITAL GAIN ON SALE OF THE AFORESAID PLOTS AM OUNTING TO RS. 3,94,34,222/- AND SHORT TERM CAPITAL GAIN ON TH E SALE OF BUILDING TO THE TUNE OF RS. 1,14,05,855/-. THE AO A SKED THE ASSESSEE TO FILE THE DETAILS OF CAPITAL GAIN. IN R ESPONSE THE ASSESSEE SUBMITTED AS UNDER: WHILE COMPUTING THE LONG TERM CAPITAL GAIN ON THE SALE OF LAND, DUE TO AN INADVERTENT ERROR, THE ASSESSEE OMITTED TO INCLUDE A SUM OF RS. 1336498/- OVER AND ABOVE THE SALE CONSIDERATION OF LAND AMOUNTING TO RS. 63000000/- RECEIVED FROM THE VENDEE M/S RANE TRW STEERING SYSTEMS LIMITED ON ACCOUNT OF GETTING ALL THE NECESSARY APPROVALS AND COMPLETION OF ALL PROCEDURAL FORMALITIES WITH THE STATE INDUSTRIAL DEVELOPMENT CORPORATION OF UTTARANCHAL LIMITED AND OTHER GOVERNMENT AGENCIES FOR THE TRANSFER OF LEASE OF LAND IN FAVOUR OF THE VENDEE. AS A MATTER OF FACT, THE SUM OF RS. 1336498 /- IS INCLUDED IN THE FIGURE OF RS. 59710986.02 APPEARING IN THE P&L ACCOUNT UNDER THE HEAD PROFIT ON SALE OF LAND & BUILDING. THIS ACCIDENTAL MISTAK E ITA NO. 6133/DEL/ 2013 BRAKEWEL AUTOMOTIVE COMPONENTS (INDIA) PVT. LTD. 3 COULD NOT BE DISCOVERED AT THE TIME OF FILING THE RETURN OF INCOME SINCE THE CONSIDERATION SETTLED BETWEEN THE ASSESSEE AND THE VENDEE FOR THE SALE OF LAND AND BUILDING WAS RS. 63000000/- AND RS. 27000000/- RESPECTIVELY WHICH IS ALSO BORNE OUT AND CORROBORATED BY THE DOCUMENTS OF SALE. THE ERROR ON THE PART OF THE ASSESSEE IS BONAFIDE AND NO ADVERSE INFERENCE SHOULD BE DRAWN AGAINST THE ASSESSEE. IT IS ALSO PERTINENT TO MENTION HERE THAT THE ASSESSEE ALSO PAID A SUM OF RS. 416171/- AS TAX AND INTEREST WORKED OUT. THE ASSESSEE ALSO DISTINGUISH ITS CASE FROM THE CASE OF GOETZE INDIA LIMITED. 5. THE AO OBSERVED THAT THE ASSESSEE SURRENDERED TH E CLAIM ONLY WHEN NOTICE TO SHOW CAUSE WAS ISSUED. HE THERE FORE, DISALLOWED SHORT DECLARED LONG TERM CAPITAL GAIN OF RS. 1352568/- AND ADDED BACK THE SAME TO THE INCOME OF THE ASSESSEE. THE AO ALSO ADDED RS. 54194/- ON ACCOUNT OF NOTIONAL INTEREST NOT CHARGED FROM THE TWO PARTIES TO WHOM UNSECURED LOAN WERE GIVEN. THE AO INITIATED THE PEN ALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT ON THE AFORESA ID ADDITIONS. THE ASSESSEE OPPOSED THE IMPOSITION OF P ENALTY, BUT THE AO DID NOT FIND MERIT IN THE SUBMISSIONS OF THE ASSESSEE BY OBSERVING THAT THE CIRCUMSTANCES UNDER WHICH THE ASSESSEE CAME FORWARD TO OFFER THE AMOUNT AS INCOME WAS ONLY IN A SITUATION WHEN THE ASSESSMENT WAS TAKEN O N SCRUTINY. THEREFORE, IT CANNOT BE PRESUMED TO BE A SITUATION OF VOLUNTARILY DISCLOSURE BY THE ASSESSEE WHICH CLEARL Y ATTRACTED ITA NO. 6133/DEL/ 2013 BRAKEWEL AUTOMOTIVE COMPONENTS (INDIA) PVT. LTD. 4 THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT. ACC ORDINGLY, THE PENALTY OF RS. 2,78,629/- WAS LEVIED. 6. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTE R TO THE LD. CIT(A) AND FURNISHED THE WRITTEN SUBMISSIONS WHICH HAVE BEEN INCORPORATED BY THE LD. CIT(A) IN PARAS 2.1 TO 2.7 OF THE IMPUGNED ORDER, FOR THE COST OF REPETITION, THE SAM E ARE NOT REPRODUCED HEREIN. IT WAS ALSO SUBMITTED THAT IN VI EW OF THE PRINCIPLES GOVERNING IMPOSITION OF PENALTY U/S 271( 1)(C) READ WITH EXPLANATION THERETO AND THE JUDICIAL PRONOUNCE MENT, THE MATTER DID NOT WARRANT THE CALL FOR INVOKING THE PR OVISIONS OF SECTION 271(1)(C) OF THE ACT. 7. THE LD. CIT (A) AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE OBSERVED THAT THERE WAS NO VOLUNTARY DISCL OSURE OR SUO MOTU SUBMISSION ON THE PART OF THE ASSESSEE AS REGARDS DECLARATION OF RS. 13,53,568/- AS ADDITIONAL LONG T ERM CAPITAL GAIN AND THE CIRCUMSTANCES UNDER WHICH THE ASSESSEE CAME FORWARD TO OFFER THE AMOUNT AS INCOME WAS ONLY IN T HE SITUATION WHEN THE ASSESSMENT WAS TAKEN UP ON FOR S CRUTINY AND IN THE CIRCUMSTANCES THE ASSESSEE WAS LEFT NO C HOICE BUT TO OFFER THE AMOUNT AS INCOME. RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: ITA NO. 6133/DEL/ 2013 BRAKEWEL AUTOMOTIVE COMPONENTS (INDIA) PVT. LTD. 5 K.P. MADHUSUDHANAN VS. CIT(2001) 251 ITR 99, (SC) CIT VS. ONKAR SARAN & SONS (1992) 195 ITR 1 (SC) HENNY ISIDORE VS. CIT (1996) 222 ITR 496 (MAD.) 8. THE LD. CIT(A) FURTHER OBSERVED THAT THE ASSESSE E HAD FAILED TO DISCHARGE ITS STRICT LABIALITY TO FURNISH TRUE AND CORRECT PARTICULARS OF INCOME WHILE FILING ITS RETU RN OF INCOME AND THAT IT WAS CASE WHERE EXPLANATION TO SECTION 2 71 OF THE ACT CAME INTO CLAIM AS HAD BEEN RIGHTLY OBSERVED BY THE AO. ACCORDINGLY THE PENALTY LEVIED BY THE AO WAS CONFIR MED. NOW THE ASSESSEE IS IN APPEAL. 9. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND F URTHER SUBMITTED THAT WHILE COMPUTING THE LONG TERM CAPITA L GAIN ON SALE OF LAND, DUE TO AN INADVERTENT ERROR, THE ASSE SSEE OMITTED TO INCLUDE A SUM OF RS. 13,36,498/- OVER AND ABOVE THE SALES CONSIDERATION OF LAND AMOUNTING TO RS. 6,30,00,000/ - RECEIVED FROM THE VENDEE M/S RANE TRW STEERING SYSTEMS LTD. , THE SAID AMOUNT WAS RECEIVED ON ACCOUNT OF GETTING ALL THE NECESSARY APPROVALS AND COMPLETION OF ALL PROCEDURA L FORMALITIES WITH THE STATE INDUSTRIAL DEVELOPMENT C ORPORATION OF UTTARANCHAL LTD. AND OTHER GOVERNMENT AGENCIES F OR THE TRANSFER OF LEASE OF LAND IN FAVOUR OF THE VENDEE. IT WAS FURTHER STATED THAT THE SUM OF RS. 13,36,498/- WAS INCLUDED IN ITA NO. 6133/DEL/ 2013 BRAKEWEL AUTOMOTIVE COMPONENTS (INDIA) PVT. LTD. 6 THE FIGURE OF RS. 5,97,10,986.02 APPEARING IN THE P ROFIT & LOSS ACCOUNT UNDER THE HEAD PROFIT ON SALE OF LAND & BUILDING BUT THIS ACCIDENTAL MISTAKE COULD NOT BE DISCOVERED AT THE TIME OF FILING THE RETURN OF INCOME, HOWEVER , THE ERROR WAS BONAFIDE AND THE ASSESSEE ON REALIZING THE MIST AKE COMMITTED, FILED A REVISED STATEMENT OF ASSESSABLE INCOME BY RECOMPUTING THE LONG TERM CAPITAL GAIN AND ALSO PAID THE TAX ALONG WITH INTEREST ON THE BASIS OF REVISED COM PUTATION. IT WAS STATED THAT THE MISTAKE ON THE PART OF THE ASSE SSEE WAS THROUGH SHEER OVERSIGHT AND THERE WAS NO WILLFUL OR DELIBERATE ATTEMPT TO AVOID PAYMENT OF TAX. IT WAS FURTHER SUB MITTED THAT THE AO MADE THE ADDITION OF RS. 13,52,568/- WHICH W AS THE AMOUNT DISCLOSED BY THE ASSESSEE IN THE REVISED STA TEMENT OF ASSESSABLE INCOME. IT WAS FURTHER SUBMITTED THAT TH E ASSESSEE RELIED ON THE VARIOUS JUDGMENTS BUT THOSE WERE NOT CONSIDERED BY THE AO AND THE LD. CIT(A), THEREFORE THE PENALTY LEVIED BY THE AO AND SUSTAINED BY THE LD. CIT(A) WAS NOT JUST IFIED. RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: GOETZE (INDIA) LTD. VS. CIT 284 ITR 323 (SC) CIT, DELHI-IV VS. ESCORTS FINANCE LTD. 328 ITR 44 (DEL.) CIT VS. BRAHMAPUTRA CONSORTIUM LTD. ITA NO. 1582 OF 2010, 12 TAXMANN. COM 486 (DEL.) CIT, JALANDHAR-I VS. RAMCO INTERNATIONAL 332 ITR 306 (P & H) ITA NO. 6133/DEL/ 2013 BRAKEWEL AUTOMOTIVE COMPONENTS (INDIA) PVT. LTD. 7 SIR SHADI LAL SUGAR & GENERAL MILLS LTD. & ANOTHER VS. CIT 168 ITR 705 (SC) CIT VS. AGGARWAL PIPE CO. 240 ITR 880 (DELHI) CIT VS. ASHOK TAKER 170 TAXMAN 471 (DELHI) GIRDHARILAL SONI VS. CIT 46 TAXMAN 180 (CAL.) CIT-I, INDORE VS. H SECHERON ELECTRODES LTD. 157 TAXMAN 463 (MP) HARNAM SINGH BISHAN SINGH JEWELLERS (P.) LTD. VS. ACIT 69 TTJ 14 (DEL.) CIT VS. M. GEORGE & BROS. 160 ITR 511 (KER.) CELEBRITY STORES VS. ITO, 33 ITD 41 (DELHI) (TM) NINTH INCOME TAX OFFICER VS. V.R. BENDRE & CO. 34 ITD 480 (BOMBAY) KISHAN GUPTA VS. ITO, 31 ITD 449 (DELHI) HINDUSTAN STEEL LTD. VS. STATE OF ORISSA, 83 ITR 26 (SC) CEMENT MARKETING CO. OF INDIA LTD. VS. ASST. COMMISSIONER OF SALES TAX, 124 ITR 15 (SC) UNION OF INDIA VS. RAJASTHAN SPG. & WVG. MILLS 224 CTR 1 (SC) CIT, AHD. VS. RELIANCE PETROPRODUCTS (P) LTD. 322 ITR 158 (SC) 10. IN HIS RIVAL SUBMISSIONS THE LD. DR STRONGLY SU PPORTED THE ORDERS OF THE AUTHORITIES BELOW AND FURTHER SUB MITTED THAT THE ASSESSEE CONCEALED THE INCOME AND FURNISHED INA CCURATE PARTICULARS OF INCOME, THEREFORE, THE PENALTY U/S 2 71(1)(C) RIGHTLY SHIFTED BY THE AO AND THE LD. CIT WERE JUST IFIED IN CONFIRMING THE SAME. ITA NO. 6133/DEL/ 2013 BRAKEWEL AUTOMOTIVE COMPONENTS (INDIA) PVT. LTD. 8 11. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE O N THE RECORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT THE ASSESSEE DISCLOSED THE LONG TERM CAPITAL GAIN OF RS . 13,36,498/- ON ACCOUNT OF PROFIT ON SALE OF LAND AN D BUILDING WHICH WAS SHOWN IN THE PROFIT & LOSS ACCOUNT AND IN CLUDED IN THE FIGURE OF RS. 5,97,10,986.02/-. THE SAID AMO UNT WAS PAID BY THE VENDEE TO THE ASSESSEE AS PER MUTUAL UNDERSTANDING FOR THE EFFORTS PUT IN BY THE ASSESSE E IN OBTAINING THE REQUISITE APPROVALS/SANCTIONS FOR THE TRANSFER OF LEASE OF LAND IN THE RECORDS OF THE CONCERNED AUTHO RITIES, HOWEVER, THE ASSESSEE INADVERTENTLY HAD SHOWN THE S ALE CONSIDERATION OF RS. 6.30 CRORE RECEIVED FROM THE V ENDEE M/S RANE TRW STEERING SYSTEMS LTD. BUT LATER ON WHEN TH E MISTAKE CAME TO ITS KNOWLEDGE THE REVISED STATEMENT OF ASSESSABLE INCOME WAS FILED BY THE ASSESSEE (COPY O F WHICH IS PLACED AT PAGE NO. 26 AND 27 OF THE ASSESSEES PAPE R BOOK) IN THE SAID REVISED STATEMENT A SUM OF RS. 13,36,498/- WAS ADDED TO THE INCOME AND DUE TAX WAS PAID ON THE SAID AMOU NT. ON A SIMILAR ISSUE THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS ESCORTS FINANCE LTD. 328 ITR 44 CONF IRMED THE ORDER OF THE ITAT FOR DELETING THE PENALTY U/S 271(1)(C) OF THE ACT AND HAS HELD AS UNDER: ITA NO. 6133/DEL/ 2013 BRAKEWEL AUTOMOTIVE COMPONENTS (INDIA) PVT. LTD. 9 (III) THAT AS FAR AS THE CLAIM OF CAPITAL LOSS WAS CONCERNED, THE ASSESSEE WAS ABSOLVED BY THE AUTHORITIES BELOW ON THE GROUND THAT IT WAS AN INADVERTENT ERROR WHICH WAS CORRECTED BY THE ASSESS EE ITSELF BY FILING A REVISED RETURN AND OFFERING THE SAME DURING THE ASSESSMENT PROCEEDINGS. SINCE A FINDING OF FACT REGARDING INADVERTENT ERRORWAS RECORDED BY T HE TWO AUTHORITIES BELOW, AND WHILE IMPOSING THE PENAL TY THE ASSESSING OFFICER HAD NOWHERE CONTRADICTED THAT THE ERROR WAS NOT INADVERTENT, THE MATTER NEED NOT BE INTERFERED WITH. 12. IN THE PRESENT CASE ALSO DUE TO INADVERTENT MI STAKE, THE ASSESSEE DID NOT INCLUDE A SUM OF RS. 13,36,498/- I N THE AMOUNT RECEIVED FROM THE VENDEE ON ACCOUNT OF SALE PRICE OF LAND. HOWEVER, THE SAID FIGURE WAS INCLUDED IN THE FIGURE OF RS. 5,97,10,986.02 APPEARING IN THE PROFIT & LOSS A CCOUNT UNDER THE HEAD PROFIT ON SALE OF LAND AND BUILDIN G, WHEN THE ERROR COMMITTED CAME TO THE KNOWLEDGE OF THE AS SESSEE, A REVISED STATEMENT OF TAXABLE INCOME WAS FURNISHED A ND THE DUE TAX WAS ALSO PAID, THEREFORE, IN VIEW OF THE RA TIO LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT IN TH E AFORESAID REFERRED TO CASE, THE PENALTY U/S 271(1) (C) WAS NOT LEVIABLE IN THE PRESENT CASE. 13. WE, THEREFORE, CONSIDERING THE TOTALITY OF THE FACTS AS DISCUSSED HEREINABOVE, DELETE THE PENALTY U/S 271(1 )(C) OF THE ACT LEVIED BY THE AO AND SUSTAINED BY THE LD. CIT(A ). ITA NO. 6133/DEL/ 2013 BRAKEWEL AUTOMOTIVE COMPONENTS (INDIA) PVT. LTD. 10 14. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWE D. (ORDER PRONOUNCED IN THE COURT ON 27/07/2015) SD/- SD/- (GEORGE GEORGE K) (N. K. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 27 /07/2015 *BINITA* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITA NO. 6133/DEL/ 2013 BRAKEWEL AUTOMOTIVE COMPONENTS (INDIA) PVT. LTD. 11 DATE INITIAL 1. DRAFT DICTATED ON 06/ 07/2015 2. DRAFT PLACED BEFORE AUTHOR 06/07/2013 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 5. APPROVED DRAFT COMES TO THE SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 7. FILE SENT TO THE BENCH CLERK 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.