ITO, New Delhi V. M/s. Techno Innovators (P) Ltd., New Delhi

ITA 623/DEL/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61813 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 14-05-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 10-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Cost of acquisition; Onus to prove; Revised return
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `H NEW DELHI BEFORE SHRI A.N. PAHUJA, ACCOUNTANT MEMBER AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER I.T.A.NO.623/DEL/2010 ASSESSMENT YEAR : 2006-07 INCOME TAX OFFICER, VS TECH NO INNOVATORS (P) LTD., WARD 16(2), ROOM NO. 224, 40/184, BASEMENT CHITTARANJAN PARK, C.R. BUILDING, I.P. ESTATE, N EW DELHI-110019 NEW DELHI. (PAN AAACT0839R) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI PRADEEP KUMAR , SR. DR RESPONDENT BY : NONE O R D E R PER CHANDRA MOHAN GARG, JUDICIAL MEMBER THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAI NST THE ORDER OF CIT(A)-XIX, NEW DELHI DATED 2.12.2009 BY WHICH THE LD. CIT(A) DELETED THE PENALTY AS IMPOSED BY THE AO U/S 271(1)(C) OF T HE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR A.Y. 2006- 07. 2. THE ONLY GROUND RAISED IN THIS APPEAL READS AS U NDER: (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY AM OUNTING TO RS. 3,30,000/- IMPOSED U/S 271(1)(C) IGNORING TH E FACT THAT THE ASSESSEE HAD INTENTIONALLY CONCEALED INCOM E BY INFLATING THE COST OF ACQUISITION OF HOUSE PROPERTY IN RESPECT OF WHICH LONG TERM CAPITAL GAIN AS DECLARED AT RS.1,40,176/- AS AGAINST LONG TERM CAPITAL GAIN OF ITA NO.623/DEL/2010 ASSTT. YEAR 2006-07 2 RS.16,06,200/- COMPUTED, TAKING THE COST OF ACQUISI TION OF HOUSE PROPERTY AS PER BOOKS OF ACCOUNTS. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE COMPANY RETURNED CAPITAL GAIN ON SALE OF FLAT SITUATED ON 2 ND FLOOR PORTION OF 140/184, CHITTARANJAN PARK, NEW DELHI AMOUNTING TO RS.1,40,1 76. THE COST OF ACQUISITION WAS TAKEN AT RS.8,81,691/- AND THE BASE YEAR FOR INDEXATION WAS TAKEN AS 1992-93. ACCORDINGLY, THE INDEXED COST WA S CLAIMED AT RS.19,65,024/- AND RS.94,800/- WAS ALSO CLAIMED AS DEDUCTION ON ACCOUNT OF BROKERAGE. AFTER ADJUSTMENT OF INDEXED COST AND BR OKERAGE FROM THE SALE CONSIDERATION OF RS.22 LAKH, THE ASSESSEE COMPANY R ETURNED LONG TERM CAPITAL GAIN OF RS.1,40,176/-. THE AO COMPUTED THE ASSESSM ENT U/S 143(3) OF THE ACT PASSING THE ORDER DATED 27.11.08 WHEREIN LONG T ERM CAPITAL GAIN WAS ASSESSED AT RS.16,06,200 AND PENALTY PROCEEDINGS WE RE INITIATED. 4. THE AO FINALIZED THE PENALTY PROCEEDINGS THROUGH ORDER DATED 27.05.09 LEVYING A PENALTY OF RS.3,30,000 WHICH WAS DELETED BY THE LD.CIT(A) BY THE IMPUGNED ORDER. HENCE, THIS APPEA L BY THE REVENUE BEFORE THIS TRIBUNAL. 5. DESPITE DUE KNOWLEDGE OF DATE OF HEARING, NEITHE R THE ASSESSEE NOR HIS REPRESENTATIVE APPEARED BEFORE US DURING HEARING AN D LOOKING INTO THE ISSUE IN DISPUTE, WE FIND IT APPROPRIATE TO DECIDE THE AP PEAL AFTER HEARING LD. DR. THEREFORE, WE PROCEED TO ADJUDICATE THIS APPEAL EX PARTE. THE LD. DR ITA NO.623/DEL/2010 ASSTT. YEAR 2006-07 3 SUBMITTED THAT THE CLAIM FOR LONG TERM CAPITAL GAIN AS RETURNED BY THE ASSESSEE WAS INCORRECT AND BASELESS IN THE LIGHT OF THE FACT THAT THE ASSESSEE WAS SPECIALLY ASKED TO SUBMIT COMPUTATION OF CAPITA L GAIN WITH RELEVANT DOCUMENTARY EVIDENCE BUT DESPITE SEVERAL HEARINGS, THE ASSESSEE DID NOT SUBMIT EVEN A SINGLE DETAIL IN RESPECT OF COMPUTATI ON OF CAPITAL GAIN. THE ASSESSEE FILED COMPUTATION ON 27.11.08, A FEW DAYS BEFORE THE ASSESSMENT PROCEEDINGS WERE GOING TO BE TIME BARRED AND THIS C ONDUCT OF THE ASSESSEE REVEALS THAT THE ASSESSEE HAD THE KNOWLEDGE OF THE MANIPULATION RIGHT FROM DAY ONE BUT HE FURNISHED INCORRECT AND BASELESS INF ORMATION. LD. DR ALSO SUBMITTED THAT EVERYTHING WAS VERY CLEAR FROM THE B OOKS OF ACCOUNTS REGARDING COST OF POTION OF PROPERTY SOLD AND THE A SSESSEE ALSO FAILED TO SUBMIT EVIDENCE REGARDING AMOUNT OF BROKERAGE OF RS .94,800/-. THEREFORE, THE AO RIGHTLY HELD THAT THE ASSESSEE IS LIABLE TO BE PENALIZED FOR INTENTIONALLY CONCEALING INFORMATION REGARDING CAPI TAL GAINS ON THE BASIS OF MANIPULATED FIGURES OF COST OF PROPERTY SOLD. THER EFORE, THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE PENALTY IMPOSED ON TH E ASSESSEE COMPANY. 6. ON CAREFUL PERUSAL OF IMPUGNED ORDER, WE OBSERVE THAT THE ITAT PUNE BENCH IN THE CASE OF KANBAY SOFTWARE INDIA (P) LTD. VS DCIT (2009) 31 SOT 153 (PUNE) AFTER CONSIDERING THE CASE LAW HAS OBSERVED AS UNDER:- ITA NO.623/DEL/2010 ASSTT. YEAR 2006-07 4 I) BY NO STRETCH OF LOGIC OR RATIONALE IT CAN BE SAID THAT IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) HAS A CAUSE AND EFFECT RELATIONSHIP WITH ADDITION BEING MADE TO RETURNED INCOME PER SE. II) JUST BECAUSE PENALTY UNDER SECTION 271(1)(C) IS A C IVIL LIABILITY IT MUST MEAN PENALTY CAN AUTOMATICALLY BE LEVIED ON BASIS OF ANY ADDITION TO INCOME, IS NOT CORRECT. III) EVEN EXPLANATION 1 TO SECTION 271(1)(C) RAISES A REBUTTABLE PRESUMPTION AND SHIFTS ONUS ON ASSESSEE TO ESTABLISH BONA FIDES OF CLAIM. IV) JUDGEMENT IN THE CASE OF UOI VS DHARMENDRA TEXTILE PROCESSOR DOES NOT MAKE A RADICAL CHANGE IN SCHEME OF SECTION 271(1)(C) BUT IT RE-EMPHASIZES PARADIGM SHIFT ON BURDEN OF PROOF AS BROUGHT ABOUT BY EXPLANATION TO SECTION 271(1)(C). V) ADMISSION OR REJECTION OF A CLAIM IS A SUBJECTIVE EXERCISE; WHETHER A CLAIM IS ACCEPTED OR REJECTED H AS NOTHING TO DO WITH FURNISHING OF INACCURATE PARTICU LARS OF INCOME. VI) RAISING A LEGAL CLAIM, EVEN IF IT IS ULTIMATELY FOU ND TO BE LEGALLY UNACCEPTABLE, CANNOT AMOUNT TO FURNISHIN G OF INACCURATE PARTICULARS OF INCOME. 7. ON BARE READING OF THE IMPUGNED ORDER, WE OBSERV E THAT THE LD. CIT(A) EXAMINED THE CASE OF THE ASSESSEE AND CONSID ERED THE EXPLANATION OFFERED BY THE ASSESSEE IN THE LEGAL BACKDROP OF TH E FACTS AND CIRCUMSTANCES OF THE CASE WHETHER THE MISTAKE HAS TAKEN PLACE WIT H REGARD TO COMPUTATION OF CAPITAL GAINS. FIRST OF ALL, THE LD. CIT(A) OBS ERVED THAT THE AO HAD NOT ITA NO.623/DEL/2010 ASSTT. YEAR 2006-07 5 ISSUED ANY SHOW CAUSE NOTICE POINTING OUT THE MISTA KE AND NO POSITIVE MATERIAL WAS BROUGHT ON RECORD TO PROVE THAT THE AS SESSEE HAD INFLATED THE EXPENDITURE AND DEFLATED THE RECEIPTS TO REDUCE THE TAXABLE INCOME PERTAINING TO LONG TERM CAPITAL GAIN. THE LD. CIT(A) ALSO HEL D THAT THE EXPENDITURE FURNISHED BY THE ASSESSEE WAS A BONA FIDE ONE WITH SUFFICIENT REASONS AND THE SAME WAS NEITHER FOUND FALSE NOR UNREASONABLE BY TH E AO. THEREFORE, HE CANCELLED THE PENALTY ALLOWING THE APPEAL OF THE AS SESSEE. 8. IN THE CASE OF UNION OF INDIA VS DHARMENDRA TEXTILE PROCESSORS REPORTED AS (2008) 166 TAXMAN 65 (SC), THE HONBLE SUPREME COURT HELD THAT THE PENALTY U/S 271(1)(C) OF THE ACT IS A CIVIL LIABILITY AND FOR ATTRACTING SUCH CIVIL LIABILITY, WILLFUL CONCEALMEN T IS NOT AN ESSENTIAL INGREDIENT AS IS THE CASE IN THE MATTER OF PROSECUT ION U/S 276 OF THE ACT. 9. LD. CIT(A) CONSIDERED FOLLOWING SUBMISSIONS OF T HE ASSESSEE COMPANY WHICH ARE BEING REPRODUCED BELOW:- THE RETURN OF INCOME FOR THE SAID YEAR WAS FILED ALONG WITH AUDIT REPORT ON 29.10.2006, DECLARING NE T ASSESSABLE INCOME OF RS.142351/-. THE CASE WAS SELECTED FOR SCRUTINY AND STATUTORY NOTICES WERE IS SUED UNDER SECTION 143(2), WHICH WERE DULY COMPLIED WITH . DURING THE COURSE OF ASSESSMENT PROCEEDING ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOUND A N OVERSIGHT MISTAKE OF THE ACCOUNTANT RESULTING INTO LONG TERM CAPITAL GAIN ON HOUSE PROPERTY FOR RS.1606200/ - INSTEAD OF RS.140176/-. IT IS PURELY AN INADVERTEN T CLERICAL MISTAKE ON THE PART OF THE ACCOUNTANT AND AN AFFIDAVIT TO THIS EFFECT ALREADY FILED BEFORE THE L D. AO ITA NO.623/DEL/2010 ASSTT. YEAR 2006-07 6 (MARKED AS ANNEXURE A) AND PLACED ON RECORD. YOU R HONOR WILL ALSO APPRECIATE THE FACT THAT THE ASSESS EE HAS DISCOVERED THE SAID ERROR ON ITS OWN WITHOUT POINTI NG OUT BY THE LD. AO DURING THE COURSE OF ENTIRE ASSES SMENT PROCEEDINGS. THE ASSESSEE IMMEDIATELY FILED A REVI SED COMPUTATION OF INCOME BONAFIDELY ALONG WITH THE CHALLAN OF DUE TAX DEPOSITED WHICH IS IN TURN WAS D ULY ACCEPTED BY THE LD. AO AS CLEARLY MENTIONED AND SEL F- EXPLANATORY IN THE BODY OF ASSESSMENT ORDER ITSELF. LD. AO FRAMED THE ASSESSMENT ORDER U/S 143(3) OF THE INCOME TAX ACT 1961 ON 27.11.2008. ON THE BASIS OF REVISED COMPUTATION OF INCOME AS EVIDENT F ROM THE ASSESSMENT ORDER, HOWEVER, LD. AO ALSO INITIATE D THE PENALTY PROCEEDING U/S 271(1)( C). THE SAID IMPUGNED PENALTY ORDER U/S 271(1)( C) IS PASSED ON 27.5.2009. IN THAT SAID IMPUGNED PENALTY ORDER, LD. AO FAILS TO APPRECIATE THE BONAFIDE DISC LOSURE OF THE ASSESSEE AND THE RELEVANT RULINGS OF THE APE X COURT ON THE IDEAL SITUATIONS REGARDING LEVY OF PEN ALTY UNDER THE COMMON FACTS AND CIRCUMSTANCES. ASSESSEE IS RELYING UPON THE JUDGEMENT OF HONBLE SUPREME COURT IN THE MATTER OF SUDERSHAN SI LK & SAREES VS CIT (300 ITR 205) MARKED ANNEXURE B I N THIS MATTER APEX COURT HAS JUSTIFIED THE ORDER OF H BLE CIT(A) AND HBLE TRIBUNAL TO GIVE RELIEF TO THE ASS ESSEE ON A/C OF REVISED RETURN FILED BY THE ASSESSEE AFTE R ENHANCING THE INCOME BEFORE THE ORDER PASSED BY THE LD. AO. ALSO RELYING UPON THE JUDGMENT OF HBLE SUPREME COURT IN THE MATTER OF T. ASHOK PAI VS CIT (292 ITR 11) MARKED AS ANNEXURE C, IN THIS MATTER APEX COURT H AS CONFIRMED THE OPINION OF HBLE TRIBUNAL WHICH IS REPRODUCED BELOW: THE INCOME TAX APPELLATE TRIBUNAL, HOWEVER, CONSIDERED THE ENTIRE MATERIALS BROUGHT ON RECORD A ND INTER ALIA OPINED: ITA NO.623/DEL/2010 ASSTT. YEAR 2006-07 7 (1) WHEN ON DISCOVERY, SOME OMISSION OR SOME WRONG STATEMENT IN THE ORIGINAL RETURN IS FOUND, A PENALT Y PROCEEDING FOR CONCEALMENT OF ANY PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF SUCH INCOME AS CONTEMPLATED UNDER SECTION 271(1)(C) OF T HE INCOME TAX ACT MAY NOT BE ATTRACTED. (2) THE REVISED RETURN HAVING BEEN ACCEPTED BY THE DEPARTMENT AND THE PENALTY HAVING NOT BEEN IMPOSED WITH REFERENCE TO THE ORIGINAL RETURN FILED BY THE ASSESSEE, HE CANNOT BE CONSIDERED TO BE GUILTY OF CONCEALMENT OF INCOME. (3) THE FAULT, IF ANY, WAS WITH HIS TAX COUNSEL AND EVE N THE SAID TAX COUNSEL, VIZ. THE SYNDICATE BANK, CANN OT BE SAID TO HAVE ACTED IN A MALAFIDE MANNER IN PREPARIN G THE RETURN OF INCOME OF THE ASSESSEE WRONGLY. THE BONA FIDES OF THE ASSESSEE ARE PROVED BY THE FACTS AND CIRCUMSTANCES OF THE CASE. 10. AFTER CAREFUL CONSIDERATION OF THE SUBMISSIONS OF THE PARTIES IN THE LIGHT OF FACTS AND CIRCUMSTANCES OF THE CASE, WE OB SERVE THAT ADMITTEDLY, THERE WAS A MISTAKE IN THE COMPUTATION OF LONG TERM CAPITAL GAIN BY THE ASSESSEE AND THE ASSESSEE COMPANY FURNISHED REVISED COMPUTATION BEFORE THE AO AND ALSO OFFERED EXPLANATION FOR THE MISTAKE. T HIS MISTAKE CANNOT BE CONSIDERED AS CONCEALMENT OF INCOME BY THE ASSESSEE COMPANY. ON BARE READING OF IMPUGNED ORDER, WE OBSERVE THAT THE LD. CIT(A) ALSO CONSIDERED THE EXPLANATION OFFERED BY THE ASSESSEE COMPANY AND FOUND THE SAME AS BONA FIDE AND ACCORDINGLY WE HOLD THAT THESE FINDINGS AR E BASED ON JUSTIFIED AND ITA NO.623/DEL/2010 ASSTT. YEAR 2006-07 8 REASONABLE GROUNDS AND WE ARE UNABLE TO SEE ANY PER VERSITY OR INFIRMITY IN THE IMPUGNED ORDER. 11. IN VIEW OF ABOVE, WE FINALLY HOLD THAT WE HAVE NO REASON TO INTERFERE IN THE IMPUGNED ORDER. ACCORDINGLY, THIS APPEAL IS DEVOID OF MERITS AND DESERVES TO BE DISMISSED AND WE DISMISS THE SAME. 12. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27.7.2012. SD/- SD/- ( A.N. PAHUJA ) (CHANDRA MOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 27TH JULY, 2012 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER DEPUTY REGISTRAR