ANIL C. KILACHAND, MUMBAI V. ACIT CIR 8(1), MUMBAI

ITA 6377/MUM/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3318 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 01-03-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 16-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M MURLI
• Keywords: Ignorance of law

Judgement Text

, INCOME-TAX APPELLATE TRIBUNAL -ABENCH MUMB AI BEFORE S/SH.RAJENDRA,ACCOUNTANT MEMBER AND AMIT SHUKLA,JUDICIAL MEMBER . / I.T.A. NO.6377/MUM/2011 / ASSESSMENT YEAR: 2004-05 SHRI ANIL C. KILACHAND KILACHAND HOUSE 95, NAPEANSEA ROAD MUMBAI-400 006. PAN:AACPK 3838 J VS. ACIT, CIRCLE-8(1) AAYAKAR BHAVAN MUMBAI-400 006. ( /APPELLANT ) ( / RESPONDENT ) R EVENUE BY: SHRI M. MURLI A SSESSEE BY: SHRI ANIL SATHE / DATE OF HEARING:07.03.2016 / DATE OF PRONOUNCEMENT: 16.03.2016 ,1961 254(1) ! ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) $'% &' PER RAJENDRA, AM - CHALLENGING THE ORDER OF THE CIT (A)-16,MUMBAI,DATE D 22/07/2011,THE ASSESSEE HAS FILED THE PRESENT APPEAL.THE EFFECTIVE GROUND OF APPEAL IS AB OUT CONFIRMING THE ORDER OF LEVYING PENALTY UNDER SECTION 271 (1)(C) OF THE ACT. BRIEF FACTS: 2. IN THIS CASE RETURN OF INCOME WAS FILED ON 31/10/20 04, DECLARING TOTAL INCOME AT RS. 19.87 LACS. THE ASSESSING OFFICER(AO)COMPLETED THE ASSESS MENT U/S.143 (3) OF THE ACT,ON 8/11/ 2006, DETERMINING THE INCOME OF THE ASSESSEE AT RS. 29.22 LAKHS. IN THE ASSESSMENT ORDER, PENALTY PROCEEDINGS WERE INITIATED IN RESPECT OF TH E DISALLOWANCE OF SHORT TERM CAPITAL LOSS OF RS. 19.11 LAKHS.THE ASSESSEE PREFERRED AN APPEAL AG AINST THE DISALLOWANCE BEFORE THE FIRST APPELLATE AUTHORITY(FAA),WHO CONFIRMED THE ORDER OF THE AO. THE ASSESSEE DID NOT PRESS THE GROUND WITH REGARD TO THE SAID DISALLOWANCE,BEFORE THE TRIBUNAL. 3. IN THE MEANWHILE,THE AO ISSUED A SHOW CAUSE NOTICE, ON 15/02/2010 AND ASKED THE ASSESSEE TO SHOW CAUSE AS TO WHY THE PENALTY SHOULD NOT BE L EVIED FOR CONCEALING THE PARTICULARS OF THE INCOME AS WELL AS FOR FILING INACCURATE PARTICULARS .VIDE HIS LETTER, DATED 24/02/2010,THE ASSESSEE SUBMITTED THAT HE HAD FILED HIS RETURN OF INCOME WITHOUT ANY PROFESSIONAL HELP AS HE WAS FROM TECHNICAL BACKGROUND,THAT HE WAS NOT AWARE OF THE PROVISIONS OF SECTION 94 (7),THAT HE HAD DISCLOSED ALL THE FACTS RELATING TO COMPETIT ION OF INCOME,THAT ALL THE NECESSARY DETAILS WITH REGARD TO SHORT TERM CAPITAL LOSS OF RS. 88,00 ,370/-WERE AVAILABLE ON RECORD,THAT THERE WAS A GENUINE MISTAKE IN NOT THIS ALLOWING LOSS UND ER THE PROVISIONS OF SECTION 94. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE,TH E AO HELD THAT PARTICULARS OF INCOME FILED BY THE ASSESSEE WERE INCORRECT. HE REFERRED TO THE CASE OF STANDARD MERCANTILE COMPANY (160 ITR 613) AND OTHER CASES, THAT THE ASSESSEE HAD FAL SELY CLAIM OF DEDUCTION, THAT HE HAD CONCEDED THE PARTICULARS OF INCOME FOR THE YEAR UND ER CONSIDERATION. FINALLY, THE AO IMPOSED A PENALTY OF RS. 6.30 LACS. 6377/M/11-ANILCK 2 4. DURING THE APPELLATE PROCEEDINGS, BEFORE THE (FIRST APPELLATE AUTHORITY )FAA, THE ASSESSEE MADE THE SAME SUBMISSIONS THAT ARE PART OF THE EXPL ANATION FILED BEFORE THE AO AND FURTHER ARGUED THAT HE HAD NOT DISALLOWED LOSS UNDER SECTIO N 94 (7)UNDER A BONA FIDE BELIEF THAT NO SUCH DISALLOWANCE WAS REQUIRED TO BE MADE,THAT THER E WAS NEITHER DELIBERATE CONCEALMENT OF PARTICULAR OF INCOME NOR DELIBERATE FURNISHING OF I NACCURATE PARTICULARS OF INCOME,THAT AT BEST IT COULD BE STATED THAT THERE WAS A GENUINE MISTAKE IN NOT DISALLOWING LOSS UNDER SECTION 94 (7). THE FAA AFTER CONSIDERING THE AVAILABLE MATERIAL, H ELD THAT ASSESSEE HAD FILED INACCURATE PARTICULARS OF INCOME,THAT THE IGNORANCE OF LAW WAS NO EXCUSE AS FAR AS COMPLIANCE OF LAW WAS CONCERNED, THAT HE WAS A REGULAR INCOME TAX FIL ERS AND WAS REPRESENTED BY COMPETENT CHARTERED ACCOUNTANT, THAT ASSESSEE IS NOT FILED AN Y BONA FIDES EXPLANATION, THAT IT WAS A FIT CASE FOR LEVY OF PENALTY. THE FAA CONFIRMED THE ORD ER OF THE AO. 5. BEFORE US, THE AUTHORISED REPRESENTATIVE(AR) STATED THAT IT WAS A CASE OF BONA FIDE MISTAKE AND NOT OF FILING INACCURATE PARTICULARS OR CONCEAL ING THE INCOME,THAT THE FORM PRESCRIBED FOR THE ASSESSMENT YEAR UNDER CONSIDERATION DID NOT CON TAIN ANY COLUMN WHERE TRANSACTION IN DISPUTE COULD BE REPORTED, THAT THE PROVISIONS OF S ECTION 94 (7) WERE INTRODUCED FROM AY.2002-03, THAT FROM THE AY.2006-07 A COLUMN WAS I NTRODUCED IN THE RETURN FOR REPORTING SUCH TRANSACTIONS.HE RELIED UPON THE CASES OF WALTE R SALDANA (44 SOT26),HINDALCO INDUSTRIES (41 SOT 254), CHETAN V MEHROTRA (32 CCH 126 MUM). THE DEPARTMENTAL REPRESENTATIVE(DR)STATED THAT AO HAD CLEARLY ESTABL ISHED THE FACT OF DIVIDEND STRIPPING,THAT THE FAA HAD UPHELD THE DISALLOWANCE AND THE ASSESSE E HAD NOT CHALLENGED THE ORDER OF THE FAA BEFORE THE TRIBUNAL. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT THE PENALTY HAS BEEN LEVIED BECAUSE THE ASSESSEE HAD NO T MADE THE DISALLOWANCE AS PER THE PROVISIONS OF SECTION 94 (7) OF THE ACT. IT IS A FA CT THAT SAID SECTION FOUND PLACE IN THE ACT FOR THE FIRST TIME DURING AY.2002-03, THAT A SPECIFIC C OLUMN WAS INTRODUCED IN THE RETURN WITH REGARD TO TRANSACTIONS COVERED BY SECTION 94 (7) FR OM THE AY.06-07 ONLY, THAT THE ASSESSEE HAD MADE DISCLOSURE ABOUT THE SHORT TERM CAPITAL LO SS WERE DISCLOSED IN HIS RETURN.CONSIDERING THE ABOVE FACTS, WE ARE OF THE OPINION THAT IT WAS A CASE OF BONA FIDES MISTAKE.SECONDLY,MERELY MAKING A CLAIM CANNOT BE EQ UATED WITH CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME.WE F IND THAT IN THE CASE OF CHETAN V MEHROTRA(SUPRA), THE TRIBUNAL HAS SPECIFICALLY DEAL T WITH THE ISSUE I.E. LEVY OF PENALTY FOR CONCEALMENT OF INCOME WITH REGARD TO SECTION 94 (7) OF THE ACT.SIMILAR VIEW WAS TAKEN BY THE TRIBUNAL IN THE CASES OF WALTER SALDANA AND HINDALC O INDUSTRIES LTD (SUPRA). IN THE CASE OF WALTER SALDANA THE TRIBUNAL HAD HELD THAT A MERE MA KING OF CLAIM, WHICH WAS NOT SUSTAINABLE IN LAW BY ITSELF WOULD NOT AMOUNT TO FURNISHING INA CCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE, THAT PENALTY UNDER SECTION 271 (1)(C) COULD NOT BE LEVIED ON THE GROUND THAT THE ASSESSEE VIOLATED THE PROVISIONS OF SECTION 94 (7) BY NOT IGNORING LOSSES WHILE COMPUTING SHORT-TERM CAPITAL GAINS ON TRANSACTIONS RELATED TO THE ABOVE SECTION. RESPECTFULLY FOLLOWING THE ABOVE DECISIONS OF THE T RIBUNAL,WE DECIDE THE EFFECTIVE GROUND OF APPEAL IN FAVOUR OF THE ASSESSEE AND REVERSE THE OR DER OF THE FAA. AS A RESULT, APPEAL FIL ED BY THE ASSESSEE STANDS ALLOWED. . ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH MARCH, 2016. 16 ! , 2016 6377/M/11-ANILCK 3 SD/- SD/- ( / AMIT SHUKLA ) ( / RAJENDRA ) ! / JUDICIAL MEMBER ! / ACCOUNTANT MEMBER MUMBAI, DATE: 16.03.2016 . . . .. . JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR D BENCH, ITAT, MUMBAI / , A , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.