SHRI DEVENDRA GULAB JOSHI, Mumbai V. INCOME TAX OFFICER 25(2)(3), Mumbai

ITA 6566/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3761 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 10-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D G PANSARI
• Assessee Lawyers: PRAMOD KUMAR PARIDHA
• Keywords: Bonafide belief; Revised return
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, AM AND SHRI AMARJIT SINGH, JM ITA NO. 6566 /MUM/ 2017 (ASSESSMENT YEAR: 2012 - 13 ) SHRI DEVENDRA GULAB JOSHI 53, PRABHAT APARTMENT, HANUMAN ROAD, VILE PARLE (E), MUMBAI - 400 057 VS. ITO - 25(2)(3), C - 10, 5 TH FLOOR, PRATISHTHAKAR BHAVAN, BKC, BANDRA (E), MUMBAI - 400 051 PAN/GIR NO. AABPJ 8311 J ( APPELLANT ) : ( RESPONDENT ) APPELLANT BY : SHRI PRAMOD KUMAR PARIDHA RESPONDENT BY : DR. G. PANSARI DATE OF HEARING : 04.02.2019 DATE OF PRONOUNCEMENT : 18.02 . 2019 O R D E R PER SHAMIM YAHYA, A. M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 37, MUMBAI (LD.CIT(A) FOR SHORT) DATED 21.08.2017 AND PERTAINS TO THE ASSESSMENT YEAR (A.Y.) 2012 - 13. 2. THE GROUND OF APPEAL READ AS UNDER: 1. ON FACTS & CIRCUMSTANCES OF THE CASE & LAW ON SUBJECT THE ASSESSING OFFICER ERRED IN LEVYING PENALTY OF RS.1383007/ - U/S. 271(1)(C) OF THE INCOME TAX ACT, 1961. ON FACTS & CIRCUMSTANCES OF THE CASE & LAW ON SUBJECT THE CIT(A) ERRED IN UPHOLDING THE PENALTY OF RS.1383007/ - . ON FACTS & CIRCUMSTANCES OF THE CASE & LAW ON SUBJECT THE PENALTY LEVIED BE DELETED. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE RELEVANT AY ON 28/03/2014 DECLARING A TOTAL INCOME OF RS.19,59,090/ - . THE RETURN WAS SELECTED FOR SCRUTINY UNDER CASS AND THE AO ISSUED STATUTORY NOTICES U/S 143(2) AND 1 42(1) CALLING FOR DETAILS. THE LD. COUNSEL OF THE ASSESSE E ATTENDED THE SCRUTINY PROCEEDINGS AND FILED THE REQUISITE DETAILS. THE AO COMPLETED THE ASSESSMENT DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS.81,19,310/ - AFTER MAKING ADDITIONS ON THE FOLLOWING ISSUES: 2 ITA NO. 6566/MUM/2017 CAPITAL GAIN ON SALE OF PROPERTY RS. 48,95 ,000/ - DISALLOWANCE U/S 57(III) OF ACT RS. 8,20,419/ - INCOME FROM INVESTMENT IN SHARES/MF RS. 3,92,000/ - RS. 61,07,419/ - 4. THE AO RECEIVED AIR INFORMATION THAT THE ASSESSEE HAD SOLD PROPERTY FOR RS.48,95,000/ - DURING THE RELEVANT AY. HOWEVER, NO CAPITAL GAIN WAS OFFERED BY THE ASSESSEE . IN RESPONSE TO SAME, THE AR SUBMITTED REVISED COMPUTATION OF INCOME A ND OFFERED SALE PROCEEDS OF RS. 48,95,000/ - FOR TAXATION. ACCORDINGLY, TH E AO HAS ADDED THE AMOUNT OF RS.48,95,000/ - TO THE TOTAL INCOME OF THE ASSESSEE . 5. REGARDING DISALLOWANCE U/S 57(III) OF ACT, THE AO OBSERVED THAT THE APPELLANT OFFERED INTEREST INCOME OF RS. 5,33,875/ - AND OTHER INCOME OF RS.155,368/ - UNDER THE HEAD 'INC OME FROM OTHER SOURCES'. HOWEVER, APP ELLANT CLAIMED DEDUCTION OF RS. 820,419/ - U/S . 57(I II) AND OFFERED NET LOSS OF RS. 131,176/ - UNDER THE HEAD 'INCOME FROM OTHER SOURCES'. THE ASSESSEE STATED THAT HE HAD TAKEN UNSECURED LOAN FROM UNION BANK OF INDIA D URING THE YEAR AND HAD PAID RS. 801,454/ - TOWARDS INTEREST. THE AMOUNT OF LOAN WAS GIVEN TO HIS DAUGHTER FOR PURCHASE OF FLAT. THE AO HAS STATED THAT THE INTEREST CLAIMED BY THE APPELLANT WAS NOT LAID OUT OR EXPENDED FOR THE PURPOSE OF EARNING ANY INCOME AND SO, WAS NOT ELIGIBLE FOR DEDUCTION AS PER SECTION 57(III) OF THE ACT. THE AO HAS DISALLOWED RS. 820,419/ - AND ADDED IT TO THE TOTAL INCOME OF THE ASSESSEE . 6. THE AO HAS STATED THAT, DURING THE ASSESSMENT PROCEEDING, THE AR OF THE APPELLANT FILED REVISED COMPUTATION OF INCOME AND OFFERED INCOME FROM MUTUAL FUND INVESTMENT OF RS.100,000/ - AND INCOME F ROM INVESTMENT IN SHARES OF RS. 292, 000 / - UNDER THE HEAD 'INCOME FROM OTHER SOURCE' WHICH WERE NOT EARLIER DISCLOSED IN THE RETURN OF INCOME. THE AO HAS ADDED T HESE INCOMES TO THE TOTAL INCOME OF THE ASSESSEE . 3 ITA NO. 6566/MUM/2017 7. THE AO HAS INITIATED PENALTY PROCEEDINGS U/S 271(L)(C) OF THE ACT ON THE ABOVE ADDITIONS FOR CONCEALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME. THE AR, VIDE LETTER DATED 24/06/2015, HAD STATED THAT THE APPELLANT HAD VOLUNTARILY REVISED THE COMPUTATION OF INCOME BEFORE THE ASSESSING AUTHORITY COULD DETECT THE ERROR IN THE RETURN OF INCOME FILED AND SO THE INCOMES SHOULD NOT BE CONSIDERED AS INCOMES ARISING OUT OF CONCEALMENT. BUT THE A O HAS STATED THAT THE CASE OF THE APPELLANT WAS SELECTED FOR SCRUTINY AS THE APPELLANT HAD NOT DISCLOSED ALL MATERIAL FACTS TRULY AND CORRECTLY IN THE RETURN OF INCOME FILED FOR THE YEAR. THE AO HAS REJECTED THE CONTENTION OF THE APPELLAN T AND HAS LEVIED P ENALTY OF RS. 13,83,007 / - U/S 271(L)(C) OF THE ACT. 8. UPON THE ASSESSEES APPEAL, THE LD. CIT(A) REFERRED TO THE PROVISION OF SECTION 271(1)(C) OF THE ACT. HE REFERRED TO THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF DHARMENDRA TEXTILE PROCESSORS [2008] 306 ITR 277 (SC) AND HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. ZOOM C OMMUNICATIONS PVT. LTD .(327 ITR 510)(DEL). HE FURTHER REFERRED TO THE FACTS OF THE CASE AND HELD AS UNDER: IT CAN SAFELY BE HELD THAT WHERE IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THE ACT, SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION WHICH IS FOUND BY THE OFFICERS OF THE INCOME - TAX TO BE FALSE, OR SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, THEN, THE AMOUNT DISALLOWED IN COMPUTING THE TOTAL INCOME OF S UCH PERSON AS A RESULT THEREOF SHALL, FOR THE PURPOSES OF SECTION, BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. 6. THEREFORE AFTER CONSIDERING THE FACTS OF THE CASE, SUBMISSIONS MADE BY THE APPELLANT AND THE JUDICIAL DECISIONS CITED ABOVE, I FIND THAT THE PENALTY LEVIED IS IN ORDER AND THE SAME IS UPHELD. ACCORDINGLY THE GROUNDS RAISED BY THE APPELLANT ARE REJECTED. 9. AGAINST THE ABOVE ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 10. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT IN THIS CASE THE ASSESSEE HAS FILED A REVISED RETURN DURING THE COURSE OF ASSESSMENT. PURSUANT TO WHICH 4 ITA NO. 6566/MUM/2017 ADDITION S HAVE BEEN MADE. EXPLANATION O F THE ASSESSEE IS THAT THE ASSESSEE HAS NOTED CERTAIN MISTAKES IN THE COMPUTATION OF INCOME IN THE RETURN FILED AND SINCE THE RETURN W AS B ELATED ONE, IT C OULD NOT FI LE THE REVISED RETURN. DURING THE COURSE OF ASSESSMENT IN THE FIRST SUBMISSION BEFORE THE DE TECTION BY THE A.O. , THE ASSESSEE SUBMITTED THE REVISED RETURN. THE SE SUBMISSIONS HAVE NOT BEEN DISPUTED BY THE A.O. , R ATHER HE HAS SAID THAT THE ASSESSEE COULD HAVE SUBMITTED THE REVISED RETURN AT THE TAPAL OF THE A.O. WE FIN D THAT THE FACTS OF THE CASE CLEARLY INDICATE THE BONAFIDE OF THE ASSESSEE. IT IS SETTLED THAT UNLESS THE CONDUCT OF THE ASSESSEE IS CONTUMACIOUS, PENALTY CANNOT BE LEVIED. THIS PROPOSITION IS SUPPORTED BY THE HON'BLE APEX COURT DECISION IN THE CASE OF HIN DUSTAN STEEL LTD. VS. STATE OF ORISSA [1972] 83 ITR 26 (SC) . IN THIS CASE IT WAS HELD THAT 'AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF A QUASI - CRIMINAL PROCEEDINGS AND PENALTY WILL NOT ORDINARILY BE IMPOSED UNLESS THE PARTY OBLIGED EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST, OR ACTED IN CONSCIOUS DISREGARD OF ITS OBLIGATION. PENALTY WILL NOT ALSO BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENA LTY SHOULD BE IMPOSED FOR FAILURE TO PERFORM A STATUTORY OBLIGATION IS A MATTER OF DISCRETION OF THE AUTHORITY TO BE EXERCISED JUDICIALLY AND ON A CONSIDERATION OF ALL THE RELEVANT CIRCUMSTANCES. EVEN IF A MINIMUM PENALTY IS PRESCRIBED, THE AUTHORITY COMP ETENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY, WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT, OR WHERE THE BREACH FLOWS FROM A BONAFIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRES CRIBED BY THE STATUTE.' ACCORDINGLY, IN THE BACKGROUND OF THE AFORESAID DISCUSSION AND PRECEDENT, WE DELETE THE PENALTY LEVIED IN THIS CASE. 5 ITA NO. 6566/MUM/2017 11. IN THE RESULT, THIS APPEAL BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 8 . 0 2 . 2 0 1 9 S D / - S D / - ( AMARJIT SINGH ) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 1 8 . 0 2 . 2 0 1 9 ROSHANI , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT - CONCERNED 5. DR, ITAT, MUMBAI 6. GUARD FILE BY ORDER, (DY./ASSTT. REGISTRAR) ITAT, MUMBAI