SHAHZAAD S. DALAL, MUMBAI V. ADDL CIT 13(1), MUMBAI

ITA 6505/MUM/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8984 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2017
• Appeal Filed By: Assessee
• Bench Allotted: E
• Next Hearing Date: 07-04-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 05-11-2013
• Court: TRIBUNAL
• Department Lawyers: VISHWAS MUNDHE
• Assessee Lawyers: MUKARRAM SADIKO
• Section: 143(3); 6; 2

Judgement Text

, , E, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.6505/MUM/2013 ASSESSMENT YEAR: 2008-09 SHA HZAAD S. DALAL, 242 A.R. STREET, MUMBAI-400003 / VS. ACIT 1 3 (1) MUMBAI-20 ( APPELLANT ) (RESPONDENT ) P.A. NO. AEKPD9537P APPELLANT BY SHRI MUKARRAM SADIKO REVENUE BY SHRI VISHWAS MUNDHE (DR) / DATE OF HEARING: 15/12/2016 / DATE OF ORDER: 11/01/2017 / O R D E R PER ASHWANI TANEJA (ACCOUNTANT MEMBER): THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS), MUMBAI -21 (IN SHORT CIT(A)}, DATED 20.08.2013 PASSED AGAINST PE NALTY ORDER U/S 271(1)(C) OF THE ACT, DATED 23.06.2011 FOR ASSE SSMENT YEAR 2008-09 ON THE FOLLOWING GROUNDS: 1)THE LEARNED DCIT HAS ERRED IN LAW AS WELL AS FACT OF THE CASE IN:- A)LEVYING PENALTY U/S 271(1)(C)OF RS. 181492/- 2) THAT THE FINDINGS OF THE LEARNED ACIT ARE ERRONEOUS AND ARE UTTER DISREGARD OF FACT AND MR. SHAHZAAD S. DALAL 2 CIRCUMSTANCES AND MATERIALS PRODUCED AND ON RECORD GIVEN THE DETAIL AND CASE LAWS LEVYING PENAL TY OF RS.181492/-. 3) THAT THE LEARNED DY. C I.T. FAILED TO CONSIDER T HAT THE INCOME ACCRUED CANNOT BE TREATED AS CONCEALMENT OF INCOME FOR TECHNICAL ERROR AND LEVIED PENALTY U/ S 271(1) (C) AS DECIDED IN NUMBER OF CASES ON ACCOUNT OF OBJECT CLAUSE AND ACCEPTED ASSESSMENT U/S 143(3)TO INACCURATE PARTICULAR DOES NOT ARISE AND BESIDE CASE LAW GIVEN ABOVE, WHEREIN TWO VIEW THE ASSESSEE SHALL NOT BE PENALISED FOR A VIEW FAVOURABLE TO HIM IN FILING RETURN. 4) THAT THE LEARNED DCIT OUGHT TO HAVE CONSIDERED ALL FACTS AND CIRCUMSTANCES AND ON PROPER APPRECIATION THEREOF AND EVIDENCE AND MATERIALS ON RECORD AND SUBMISSION AND EXPLANATION GIVEN OUGHT TO HAVE:- A) NOT LEVIED PENALTY U/S 271(1) (C) OF RS. 181492/-. 5. THAT YOUR PETITIONER PRAY ACCORDINGLY AND CRAVES LEAVE TO ADD TO OR TO ALTER OR AMEND THE ABOVE GROUNDS OF APPEAL AS AND WHEN OCCASIONS ARISES. 2. DURING THE COURSE OF HEARING, ARGUMENTS WERE MADE BY SHRI MUKARRAM SADIKO, AUTHORISED REPRESENTATIVES (A R) ON BEHALF OF THE ASSESSEE AND BY SHRI VISHWAS MUNDHE, DEPARTMENTAL REPRESENTATIVE (DR) ON BEHALF OF THE R EVENUE 3. THE SOLITARY ISSUE RAISED IN THIS APPEAL IS WITH R EGARD TO LEVY OF PENALTY OF RS.1,81,492/-, ON THE GROUND THA T THE INTEREST INCOME ACCRUED DURING THE YEAR WAS NOT INC LUDED IN ITS INCOME BY THE ASSESSEE. THE BRIEF BACKGROUND IS THAT THE ASSESSEE IS AN INDIVIDUAL EARNING INCOME FROM SALAR Y, HOUSE PROPERTY AND CAPITAL GAINS ETC. DURING THE COURSE O F ASSESSMENT PROCEEDINGS, IT WAS NOTED BY THE AO THAT THE ASSESSEE HAD FAILED TO INCLUDE THE AMOUNT OF INTERE ST ACCRUED MR. SHAHZAAD S. DALAL 3 ON THE AMOUNT INVESTED IN HDFC BANK AND RBI TAXABLE BONDS. THE ASSESSEE REPLIED THAT THIS INTEREST INCOME WAS NOT ACCRUED OF ON ACCRUAL BASIS SINCE NO AMOUNT OF INTEREST WAS TO BE RECEIVED BEFORE MATURITY PERIOD. INTEREST ALONG WIT H THE PRINCIPAL WAS RECEIVED ON DATE OF MATURITY ONLY. UN DER THE FACTS AND CIRCUMSTANCES OF THIS CASE, INTEREST WOUL D BE TAXABLE ONLY ON THE RECEIPT OF THE SAME. BUT, AO WAS NOT SA TISFIED AND THEREFORE, HE MADE THE ADDITION. SUBSEQUENTLY, THE AO INITIATED PENALTY PROCEEDINGS WHEREIN IT WAS SUBMIT TED BY THE ASSESSEE THAT ASSESSEE DID NOT CONTEST THE ADDITION TO AVOID LITIGATION BUT ASSESSEE HAS CONSISTENTLY FOLLOWED T HIS METHOD OF ACCOUNTING. THE IMPUGNED INTEREST INCOME HAS ALREAD Y BEEN ADDED IN SUBSEQUENT YEAR AS AND WHEN INTEREST WAS R ECEIVED. THUS, THERE WAS NO CONCEALMENT OR FURNISHING OF INA CCURATE PARTICULARS OF INCOME. BUT, THE AO WAS NOT SATISFIE D, THEREFORE, HE LEVIED THE PENALTY OF RS.1,81,482/- ON THE AGGRE GATE AMOUNT OF INTEREST OF RS.5,33,956/-. IN THE APPEAL BEFORE LD. CIT(A) ALSO DETAILED SUBMISSIONS WERE MADE BUT HE D ID NOT ACCEPT SUBMISSIONS OF THE ASSESSEE AND CONFIRMED TH E PENALTY. 3.1. DURING THE COURSE OF HEARING BEFORE US, LD. COUNSE L STATED THAT ACTUALLY THERE IS NO SUPPRESSION OF INC OME. ENTIRE INTEREST AMOUNT HAS BEEN DISCLOSED IN THE RETURNS F ILED BY THE ASSESSEE UP TO A.Y. 2012-13. COPY OF RETURN FILED I N A.Y.2012- 13 WAS PUT BEFORE US IN SUPPORT OF THESE AVERMENTS. UNDER THESE CIRCUMSTANCES, IT WAS REQUESTED THAT IN SUBST ANCE THERE IS NO CONCEALMENT OF INCOME, THEREFORE, NO PENALTY SHOULD HAVE BEEN LEVIED IF FACTS AND CIRCUMSTANCES OF THE CASE WOULD HAVE BEEN CONSIDERED IN TOTALITY BY THE LOWER AUTHO RITIES. MR. SHAHZAAD S. DALAL 4 3.3. PER CONTRA LD. DR RELIED UPON THE ORDERS OF THE LO WER AUTHORITIES. 3.4. WE HAVE GONE THROUGH THE FACTS OF THIS CASE AS WEL L AS ORDER PASSED BY THE LOWER AUTHORITIES AND ALSO RETU RNS FILED BY THE ASSESSEE FOR SUBSEQUENT YEARS. IT IS NOTED BY U S WITH THE ASSISTANCE BY THE PARTIES THAT ENTIRE AMOUNT OF INT EREST STANDS DISCLOSED IN THE RETURN OF SUBSEQUENT YEARS I.E. A. YS. 2006-07 TO 2012-13. FOLLOWING DETAILS WERE SUBMITTED IN SUP PORT OF THE FACTUAL SUBMISSIONS MADE BY THE LD. COUNSEL BEFORE US: INTEREST ON PRINCIPAL OF RS.35 LAKHS OF BOND LEDGER DATE OF INVESTMENT AMOUNT IN RS. PRINCIPAL AMOUNT 18.06.2005 35,00,000/- MATURITY VALUE 18.06.2011 56,03,500/- CUMULATIVE INTEREST 21,03,500/- INTEREST CONSIDERED IN VARIOUS ASSESSMENT YEARS IN THE ASSESSMENT ORDERS. A.Y. 2006-07 ADDED BY AO IN ORDER U/S 143(3) 3,19,071 A.Y:2007-08 ADDED BY AO IN ORDER U/S 143(3) 4,17,276 A.Y.2008-09 ADDED BY AO N ORDER U/S 143(3) 4,17,276 A.Y.2010-11 ADDED BY AO N ORDER U/S 143(3) 4,17,276 A.Y. 2012-13 SHOWN BY ASSESSEE IN RETURN OF INCOME 5,32,601/- MR. SHAHZAAD S. DALAL 5 TOTAL 2,103,500 INTEREST ON PRINCIPAL OF RS.10 LAKHS. BOND LEDGER NUMBER: DATE OF INVESTMENT AMOUNT IN RS. PRINCIPAL AMOUNT 07.01.2006 10,00,000 MATURITY VALUE 07.01.2012 16,01,000 CUMULATIVE INTEREST 6,01,000 INTEREST CONSIDERED IN VARIOUS ASSESSMENT YEARS IN THE ASSESSMENT ORDERS. A.Y:2006-07 ADDED BY AO IN ORDER U/S 143(3) 26,901 A.Y.2008-09 ADDED BY AO IN ORDER U/S 143(3) 1,17,680 A.Y.2008-09 ADDED BY AO IN ORDER U/S 143(3) 1,16,680 A.Y. 2012-13 SHOWN BY ASSESSEE IN RETURN OF INCOME 6,01,000 HENCE, TO STATE, ALL THE INTEREST OF THE BONDS OF R S.10 LAKHS WAS TAKEN FULLY IN THE MATURITY YEAR AGAIN BY THE A SSESSEE. 3.5. IT HAS BEEN EXPLAINED BY THE ASSESSEE RIGHT FROM T HE BEGINNING THAT THE ASSESSEE HAS BEEN FOLLOWING CASH BASIS AND WAS UNDER BONA FIDE BELIEF THAT THE INTEREST WOULD BE TAXED IN THE YEAR OF MATURITY. IT WAS ALSO SUBMITTED THAT AS SESSEE WAS PERSUADED WITH THE FOLLOWING NOTE MENTIONED IN THE BOND PAPERS ATTACHED WITH GOI 8% SAVINGS (TAXABLE) BONDS -2003: C. THE INTEREST ON 8% SAVING (TAXABLE) CUMULATIVE B ONDS IS NEITHER PAID OR CREDITED/PROVIDED FOR, PRIOR TO MAT URITY OF MR. SHAHZAAD S. DALAL 6 THE BONDS AND HENCE TDS IS APPLIED AT THE TIME OF MATURITY. 3.6. THUS, INFLUENCED BY THE AFORESAID NOTE, THE ASSESS EE FORMED THIS BELIEF THAT ENTIRE AMOUNT WILL BE TAXAB LE IN THE YEAR OF MATURITY OF BONDS. THEREFORE, UNDER THESE CIRCUMSTANCES, IMPUGNED INTEREST INCOME WAS NOT OFF ERED TO TAX BY THE ASSESSEE IN ITS RETURNS ON ACCRUAL BASIS . BUT, IN ANY CASE, ENTIRE INTEREST INCOME HAS ALREADY BEEN OFFER ED TO TAX IN SUBSEQUENT YEARS. THUS, TAKING INTO ACCOUNT ALL THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT EXPLANATION OF THE ASSESSEE IS BONA FIDE . THE ASSESSEE CHOSE A PARTICULAR COURSE AND FOLLOWED A PARTICULAR METHOD OF ACCOUNTING, ON CONSISTENT BASIS AND IN BONAFIDE MANNER, UNDER THESE CIRCUMSTA NCES IT IS DIFFICULT FOR US TO HOLD THAT APPROACH FOLLOWED BY THE ASSESSEE WAS AIMED TOWARDS CONCEALMENT OR FURNISHING OF INAC CURATE PARTICULARS OF INCOME. THUS, IN OUR CONSIDERED VIEW KEEPING IN VIEW TOTAL FACTS AND CIRCUMSTANCES OF THIS CASE, IT IS NOT A CASE OF CONCEALMENT OR FURNISHING OF INACCURATE PARTICUL ARS OF INCOME. THEREFORE, PENALTY LEVIED BY THE AO IS DIRE CTED TO BE DELETED. 4 . AS A RESULT, THIS APPEAL FILED BY THE ASSESSEE I S ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH JANUARY, 2017. SD/- (MAHAVIR SINGH ) SD/- (ASHWANI TANEJA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 11/1/2017 CTX? P.S/. .. MR. SHAHZAAD S. DALAL 7 !'#$%&%'# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT, MUMBAI. 4. / CIT(A)- , MUMBAI 5. #$% &' , &' ) , / DR, ITAT, MUMBAI 6. %*+ , / GUARD FILE. / BY ORDER, # //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI