PRAMODA HARSHAD SHAH, MUMBAI V. ACIT 22(1), NAVI MUMBAI

ITA 6337/MUM/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3949 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 24-09-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 29-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RADHA KATYAL
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI , , BEFORE SHRI AMIT SHUKLA , JM AND SHRI RAJESH KUMA R , AM ./ I.T.A. NO. 6337/MUM/2013 ( / ASSESSMENT YEAR : 200 8 - 09 ) PRAMODA HARSHAD SHAH, 401/402, SILVER SOLITARIS, TILAK ROAD, OPP. AXIS BANK, GHATKOPAR (E) MUMBAI 400 077. / VS. A SSTT .COMMISSIONER OF INCOME TAX - 22(1), 3 RD FLOOR, TOWER NO. 6, VASHI RAILWAY STATION COMPLEX, NAVI MUMBAI 400 703. ./ PAN : ABIPS0034R ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI DEVENDRA JAIN / RESPO NDENT BY : SHRI RADHA KATYAL / DATE OF HEARING : 7.1. 2016 / DATE OF PRONOUNCEMENT : 26. 2. 2016 / O R D E R PER RAJESH KUMAR , AM : THIS APPEAL BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER DATED 02/08/2013 OF COMMISSIONER OF INCOME TAX (APPEALS) - 33, MUMBAI (HEREINAFTER CALLED AS THE CIT(A)) FOR ASSESSMENT YEAR 2008 - 09. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN RETAINING THE PENALTY OF RS. 1,69,270/ - LEVIES BY THE LD. AO U/S. 271(1)(C) OF THE INCOME TAX ACT, 1961 ON ADDITION ON ACCOUNT OF UNDISCLOSED SHORT TERM CAPITAL GAIN. ITA NO. 6337 / MUM/20 1 3 2 2. THE ISSUE RAISED IN THE FIRST GROUND OF APPEAL IS AGAINST THE CONFIRMATION OF PENALTY U/S 271(1)(C) OF THE ACT BY THE CIT(A).THE FACTS IN BRIEF ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME ON 30.03.2009 DECLARING AN INCOME OF RS. 20,24,070/ - CONSISTING OF , I NTERALIA , OF SHORT TERM CAPITAL GAIN ON SHAR ES OF RS. 3,00,209/ - . AS MENTIONED IN PARA 5 OF THE ASSESSMENT ORDER THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS SUBMITTED THE DETAILS BEFORE THE AO OF SHORT TERM CAPITAL GAIN WHICH WORKED OUT TO RS.34,66,731/ - AND SHORT TERM LOSS AT RS. 17, 74,023/ - THEREBY NET STCG CAME TO RS, 16,92,709/ - AS AGAINST THE AMOUNT OF STCG DISCLOSED IN THE RETURN OF INCOME OF RS. 3,00,209/ - . THE AO BROUGHT THE SAME TO TAX VIDE ASSESSMENT FARMED U/S 143(3) OF THE ACT AT RS. 36,65,221/ - VIDE ORDER DATED 29.12.201 0 BY MAKING VARIOUS ADDITIONS INCLUDING OF STCG AND THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT WERE ALSO INITIATED. 3. THE AO AFTER GIVING SHOW CAUSE NOTICE TO THE ASSESSEE, IMPOSED A PENALTY OF RS.1,69,270/ - @ 100% OF THE TAX SOUGHT TO BE EVADED B Y REJECTING THE PLEA OF THE ASSESSEE THAT THE SAME HAD HAPPENED DUE TO INADVERTENT MISTAKE ON THE PART OF THE ACCOUNTANT WHO WRONGLY CLASSIFIED THE SHORT TERM CAPITAL GAIN AS LONG TERM CAPITAL GAIN DUE TO NEW SOFTWARE. 4. T HE LD CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE BY REJECTING THE CONTENTION OF THE ASSESSEE THAT THE MISTAKE HAD OCCURRED INADVERTENTLY ON THE PART OF THE ACCOUNTANT. WHILE DISMISSING THE APPEAL THE CIT(A) OBSERVED AS UNDER: - IN VIEW OF THE DECISION IN RELIANCE PETROPRODUCT P. LTD., IT IS WITHOUT DOUBT CLEAR THAT THE DETAILS SUPPLIED IN THE RETURN WERE NOR ACCURATE NOR EXACTLY CORRECT, NOT ACCORDING TO THE TRUTH. IN THE CASE OF ZOOM COMMUNICATION LTD. 327 ITR 510, THE HONBLE DELHI HIGH COURT HAS AFTER CONSIDERING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCT PVT. LTD. HELD AS FOLLOWS: ITA NO. 6337 / MUM/20 1 3 3 THE COURT CANNOT OVERLOOK THE FACT THAT ONLY A SMALL PERCENTAGE OF THE IT RETURNS ARE PICKED UP FOR SCRUTINY. IF THE ASSESSEE MAKES A CLAIM WHICH IS NOT ONLY IN CORRECT IN LAW BUT IT IS ALSO WHOLLY WITHOUT ANY BASIS AND EXPLANATION FURNISHED BY HIM FOR MAKING SUCH A CLAIM IS NOT FOUND TO BE BONAFIDE, IT WOULD BE DIFFICULT TO SAY THAT HE WOULD STILL NOT BE LIABLE TO PENALTY U/S. 271(1)(C). IF ONE TAKES THE VIEW THA T A CLAIM WHICH IS WHOLLY UNTENABLE IN LAW AND HAS ABSOLUTELY NO FOUNDATION ON WHICH IT COULD BE MADE, THE ASSESSEE WOULD NOT BE LIABLE TO IMPOSITION OF PENALTY, EVEN IF HE WAS NOT ACTING BONAFIDE WHILE MAKING A CLAIM OF THIS NATURE, THAT WOULD GIVE A LIC ENSE TO UNSCRUPULOUS ASSESSEE TO MAKE WHOLLY UNTENABLE AND UNSUSTAINABLE CLAIMS WITHOUT THERE BEING ANY BASIS FOR MAKING THEM, IN THE HOPE THAT THEIR RETURN WOULD NOT BE PICKED UP FOR SCRUTINY AND THEY WOULD BE ASSESSED ON THE BASIS OF SELF ASSESSMENT U/S. 143(1) AND EVEN IF THEIR CASE IS SELECTED FOR SCRUTINY, THEY CAN GET AWAY MERELY BY PAYMENT THE TAX, WHICH IN ANY CASE, WAS PAYABLE BY THEM. THE CONSEQUENCE WOULD BE THAT THE PERSON WHO MADE CLAIMS OF THIS NATURE, ACTUATED BY A MALAFIDE INTENTION TO EVADE TAX OTHERWISE PAYABLE BY THEM WOULD GET AWAY WITHOUT PAYING THE TAX LEGALLY PAYABLE BY THEM, IF THEIR CASES ARE NOT PICKED UP FOR SCRUTINY. THIS WOULD TAKE AWAY THE DETERRENT EFFECT, WHICH THESE PENALTY PROVISIONS IN THE ACT HAVE,' IT, THEREFORE, BECOME S CLEAR FROM THE ABOVE, THAT THE CONDITION U/S. 271(1)(C) EXISTED BEFORE THE PENALTY WAS LEVIED. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BECAUSE THAT IS ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF ITS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILITY WOULD ARISE. HENCE, THE A.O. FOUND THE APPELLANTS EXPLANATION, WAS NOT BONAFIDE SINCE THE DETAILS SUPPLIED IN THE RETURN WERE NOT ACCURATE, NOT EXACTLY CORRECT, NOT ACCORDING TO THE T RUTH. I, AM, THEREFORE, OF THE CONSIDERED OPINION THAT THE A.O. HAS RIGHTLY LEVIED A PENALTY U/S. 271(1)(C) OF THE I.T.ACT, 1961. I UPHOLD THE ORDER OF THE A.O. APPEAL IS DISMISSED. 5. THE LD A R SUBMITTED BEFORE US THAT THE ASSESSEE FILED HER RETURN OF I NCOME THROUGH AN ACCOUNTANT AND DUE TO AN INADVERTENT MISTAKE THE ITA NO. 6337 / MUM/20 1 3 4 SHORT TERM CAPITAL OF RS.16,92,709/ - WAS SHOWN AS RS.3,00,209/ - AND MISTAKE HAD OCCURRED DUE TO NEW SOFTWARE IN WHICH THE INFORMATION WAS WRONGLY PUNCHED WHICH RESULTED INTO SHOWING OF STC G AT RS. 3,00,209/ - IN PLACE OF RS. 16,92,709/ - . THE LD AR ALSO ARGUED THAT THE FACT OF SHORT TERM CAPITAL BEING SHOW LESS WAS NOT DISCOVERED BY THE AO BUT DURING THE COURSE OF SCRUTINY PROCEEDINGS THE ASSESSEE SUO MOTTO FILED WORKING OF THE SAID SHORT TER M GAIN. THE LD COUNSEL DREW OUR ATTENTION TO THE PARA NO 5 OF ASSESSMENT ORDER WHICH STATED THAT FROM THE WORKING FILED BY THE ASSESSEE THE SHORT TERM CAPITAL WORKED OUT TO RS. 16,92,709/ - AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. THE LD COUNSEL F URTHER SUBMITTED THAT THE AO WITHOUT GIVING ANY FURTHER FINDING INITIATED THE PENALTY PROCEEDINGS FOR CONCEALING THE PARTICULARS OF INCOME WHERE AS THE PENALTY WAS LEVIED FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THUS THE PENALTY WHICH IS PROPOSED TO BE IN ITIATED ONE GROUND COULD NOT BE IMPOSED ON ANOTHER. THE LD COUNSEL FINALLY PRAYED FOR THE DELETING THE PENALTY BY PACING RELIANCE ON THE FOLLOWING DECISIONS NAMELY : A) SOMANY EVERG R EEN KNITS LTD V/S DCIT ITA NO.1783/MUM/2009; B) CIT V/S SOMANY EVER G R EEN KNITS LTD - 352 ITR 592 (BOM); C) PRICE WATERHOUSE COOPERS (P) LTD V CIT (2012) 348 ITR 306(SC); AND D) CIT V/S SANIA MIRZA (HYD) ITAT - ITA NO.526 OF 2011 6. THE LD DR PER CONTRA RELIED ON THE ORDERS OF THE AUTHORIT IES BELOW. 7. WE HAVE C ONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS ON RECORDS AND FIND THAT THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS FUR N ISHED DETAILS OF SHORT TERM CAPITAL GAIN WHICH WORKED OUT TO RS. 16,92,709/ - WHEREAS THE SAME WAS SHOWN AT RS. 3 ,00,209/ - IN THE RETURN OF INCOME. THIS WAS STATED TO HAVE OCCURRED DUE TO INADVERTENT MISTAKE OF ACCOUNTANT DUE TO NEW SOFTWARE. THE LD COUNSEL ALSO FILED THE DETAILED WORKINGS OF THE SHORT TERM CAPITAL GAIN BEFORE US IN THE PAPER ITA NO. 6337 / MUM/20 1 3 5 BOOK AND EXPLAINED AS TO HOW THE MISTAKE HAD HAPPENED. WE ALSO NOTE THAT THE AO DID NOT RECORD HIS SATISFACTION FOR INITIATING PENALTY PROCEEDINGS AND THE PENALTY WAS INITIATED FOR CONCEALING THE PARTICULARS OF INCOME BY THE ASSESSEE WHEREAS SAME WAS LEVIED FOR FILING INACCURATE PARTICULARS OF INCOME WHICH IS ALSO NOT CORRECT . THE LD CIT(A) SUSTAINED THE PENALTY BY HOLDING THAT THE CLAIM OF THE ASSESSEE WAS NOT BONAFIDE WHICH IS ALSO NOT CORRECT AS THE ASSESSEE FILED ALL THE NECESSARY DETAILS OF CAPITAL GAIN DURING THE COURSE OF ASSESSMENT PROCEEDINGS SUO MOTTO. WE ARE THEREFORE OF CONSIDERED VIEW THAT THE PENALTY UNDER THE PRESENT CIRCUMSTANCES IS WRONGLY LEVIED ON TWO GROUNDS FIRSTLY IT WAS INITIATED FOR CONCEALING THE PARTICULARS OF INCOME AND LEVIED ON FOR FILING INACCURATE P ARTICULARS OF INCOME; SECONDLY THE SHOWING OF SHORT TERM CAPITAL GAIN AT A LESSER AMOUNT WAS A BONAFIDE AND INADVERTENT MISTAKE ON THE PART OF THE ASSESSEE AND THEREFORE IS ACCORDINGLY DELETED. THE AO DIRECTED ACCORDINGLY. 8. IN THE RESULT, THE ASSESSEE S APPEAL IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 26TH FEB, 2016 . FEB, 2016 SD SD ( AMIT SHUKLA ) ( RAJESH KUMAR ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 26/ 02/2016 . . ./ SRL , SR. PS ITA NO. 6337 / MUM/20 1 3 6 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, TRUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI