TIKUCHAND DURGAJI JOGANI, MUMBAI V. ACIT - 17 (3), MUMBAI

ITA 6799/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8936 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2013-2014
• Appeal Filed On: 29-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMIT PRATAP SINGH
• Assessee Lawyers: ASHOK J PATIL
• Keywords: Set aside
• Section: 271(1)(c); 143(3); 274; 73; 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO.6799/M/2018 ASSESSMENT YEAR: 2013-14 SHRI TIKHUCHAND D. JOGANI, 301, GUNDECHA CHAMBERS, N.M. ROAD, FORT, MUMBAI 400 023 PAN: AAAPJ8019Q VS. ACIT 17-(3), ROOM NO.135-A, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 (APPELLANT) (R ESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI ASHOK J. PATIL, A.R. REVENUE BY : SHRI AMIT PRATAP SINGH, D.R. DATE OF HEARING : 13.11.2019 DATE OF PRONOUNCEMENT : 14.01.2020 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 11.09.2018 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2013-14. 2. THE GROUNDS TAKEN BY THE ASSESSEE ARE AS UNDER: (1) THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL ) ERRED IN LEVYING PENALTY U/S.271(1) ( C ) OF RS.91,271/- ON LONG TERM CAPITA L LOSS ON QUOTED SHARES OF RS.4,43,061/- DISCLOSED BY THE APPELLANT. THE LEARN ED COMMISSIONER OF INCOME TAX(APPEAL) ERRED IN REJECTING APPELLANTS CLAIM THA T THERE IS NO CONCEALMENT OF INCOME & INACCURATE PARTICULARS WERE SUBMITTED AND ERRED IN FORMING THE OPINION THAT THE ASSESSEE HAS CONCEALED INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, CONTRARY TAX EVIDENCE AND MATERIAL ON RECOR DS. ITA NO.6799/M/2018 SHRI TIKHUCHAND D. JOGANI 2 (2) YOUR APPELLANT PRAYS TO CONSIDER THE FACTS AND DROP THE PENALTY U/S.271(1)(C). 3. THE ONLY ISSUE RAISED BY THE ASSESSEE IS AGAINST THE CONFIRMATION OF PENALTY AT RS.91,271/- AS LEVIED BY THE AO UNDER SECTION 271(1)(C) OF THE ACT IN RESPECT OF LO NG TERM CAPITAL LOSS ON QUOTED SHARES. 4. THE FACTS IN BRIEF ARE THAT THE ASSESSMENT WAS F RAMED IN THIS CASE UNDER SECTION 143(3) OF THE ACT ON 28.03. 2016. IN THE SAID ASSESSMENT ORDER THE PENALTY PROCEEDINGS WERE INITIATED UNDER SECTION 271(1)(C) OF THE ACT FOR FILING INACC URATE PARTICULARS OF INCOME AND CONCEALMENT OF INCOME THEREBY INITIAT ING THE PENALTY UNDER BOTH THE LIMBS AND ACCORDINGLY NOTICE UNDER SECTION 274 READ WITH SECTION 271 DATED 28.03.2016 WAS ISSUED. THE ASSESSEE HAD INCURRED LONG TERM CAPITAL LOSS ON SALE OF QUOTED SHARES AMOUNTING TO RS.4,43,061/- AND CARRIE D FORWARD THE SAME TO THE NEXT YEAR. THE AO DURING THE COURS E OF ASSESSMENT PROCEEDINGS REJECTED THE CLAIM OF THE AS SESSEE OF CARRY FORWARD OF LOSS AND COMPUTED THE TOTAL ASSESS ABLE INCOME ACCORDINGLY. THEREAFTER, THE AO IMPOSED PENALTY EQ UAL TO 100% OF THE TAX SOUGHT TO BE EVADED WHICH WORKED OUT TO RS.91,271/- VIDE ORDER DATED 30.09.2016 PASSED UNDER SECTION 27 4 READ WITH SECTION 271(1)(C) OF THE ACT. 5. AGGRIEVED BY THE SAID ORDER OF THE AO, THE ASSES SEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO ALSO DISMISSED THE APPEAL OF THE ASSESSEE BY HOLDING THAT THE ASSESSEE HAS NOT OFFERED ANY EXPLANATION AND THEREFORE CLAUSE (A) OF EXPLANATION 1 ITA NO.6799/M/2018 SHRI TIKHUCHAND D. JOGANI 3 TO SECTION 271(1)(C) OF THE ACT IS APPLICABLE AND T HUS UPHELD THE PENALTY LEVIED BY THE AO. 6. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT IN THIS CASE THE ASSESSEE H AS INCURRED LONG TERM CAPITAL LOSS ON SALE OF QUOTED SHARES OF RS.4,43,061/- AND CLAIMED THE LOSS AS CARRIED FORWARD TO THE NEXT YEAR. AO IN THE ASSESSMENT PROCEEDINGS REJECTED THE CLAIM OF TH E ASSESSEE ON THE GROUND THAT SINCE THE INCOME OF LONG TERM CA PITAL GAIN IS EXEMPT UNDER SECTION 10(38) OF THE ACT AND LIKEWISE ANY LONG TERM CAPITAL LOSS ON SALE OF QUOTED SHARES IS ALSO NOT ALLOWABLE TO BE CARRIED FORWARD FOR FUTURE SET OFF IN THE SUBSEQ UENT YEARS. IN THIS CASE, WE OBSERVE THAT ASSESSEE HAS FULLY DISCL OSED ALL THE FACTS QUA THE CLAIM OF SAID LONG TERM CAPITAL LOSS IN THE RETURN OF INCOME. THERE IS MERIT IN THE CONTENTIONS OF THE AS SESSEE THAT NO PENALTY IS IMPOSABLE WHERE THE ASSESSEE HAS DISCLOS ED THE FULL FACTS QUA THE CLAIM IN THE RETURN OF INCOME. THE A SSESSEES CASE IS SQUARELY COVERED BY THE DECISION OF HONBLE SUPR EME COURT IN THE CASE OF CIT V. RELIANCE PETROPRODUCTS (P.) LTD. [2010] 322 ITR 158 (SC) WHEREIN THE HONBLE SUPREME COURT HAS HELD THAT NO PENALTY IS IMPOSED WHERE THE ASSESSEE HAS FULLY DIS CLOSED THE FACTS QUA THE SAID CLAIM EVEN IF THE SAID CLAIM IS NOT ALLOWABLE UNDER THE ACT. BESIDES, WE FIND THAT IN THIS CASE THE PENALTY IS NOT LEGALLY SUSTAINABLE ON THE GROUND THAT IN THE N OTICE ISSUED DATED 28.03.2016 UNDER SECTION 274 READ WITH SECTIO N 271(1)(C) OF THE ACT HAS BEEN ISSUED IN MECHANICAL MANNER WIT HOUT APPLICATION OF MIND BY THE AO. THE AO HAS NOT STAT ED THE ONE OF THE TWO LIMBS ON WHICH THE PENALTY WAS PROPOSED TO BE LEVIED MEANING THEREBY THAT THERE IS NO APPLICATION OF MIN D ON THE PART ITA NO.6799/M/2018 SHRI TIKHUCHAND D. JOGANI 4 OF THE AO. THE NOTICE HAS BEEN ISSUED IN A STANDARD FORMAT THEREBY DEPRIVING THE ASSESSEE TO RESPOND TO THE CH ARGE ON WHICH THE PENALTY WAS PROPOSED TO BE LEVIED. SIMIL ARLY, IN THE ASSESSMENT ORDER, THE AO HAS STATED THAT PENALTY IS BEING INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND FOR CONCEALMENT OF INCOME AND SIMILARLY THE PENALTY HAS BEEN IMPOSED IN THE PENALTY ORDER PASSED UNDER SECTION 2 71(1)(C) OF THE ACT DATED 30.09.2016. THIS CLEARLY SHOWS THAT THE AO WAS IN A CONFUSED STATE OF MIND AND WAS NOT KNOWING AS TO ON WHICH OF THE TWO LIMBS THE PENALTY WAS TO BE IMPOSED. IN SUCH CIRCUMSTANCES, THE PENALTY AS IMPOSED BY THE AO CAN NOT BE SUSTAINED AS THE INITIATION OF THE PENALTY IS NOT V ALID UNDER LAW. THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE FOLLOWING DECISIONS: A) CIT VS SSAS EMERALD MEADOWS(SC) (2016) 73 TAXMANN.COM 241 KARNATAKA SLP DISMISSED AS REPORTED IN (2016) 73 TAXMANN.COM 248 (SC) B) CIT VS. MANJUNATH COTTON AND GINNING FACTORY (2 013) 359 ITR 565 (KAR.) C) CIT VS. SHRI SAMSON PERINCHERY (2017) 392 ITR 4 (BOM.) D) CIT VS. MRS. PIEDADE PERINCHERY ITXA NO.1310 OF 2014 ORDER DATED 10.01.2017 (BOM. HC) 7. THE HONBLE BOMBAY HIGH COURT IN THE CASE CIT VS SHRI SAMSON PERINCHERY & CIT VS. MRS. PIEDADE PERINCHERY (SUPRA) HAS HELD THAT PENALTY CAN NOT BE LEVIED WHERE THE A O HAS ISSUED NOTICE IN A MACHANICAL MANNER WITHOUT STRIKING OFF THE REDUNDANT LIMB OR WITHOUT MENTIONING THE LIMB ON WH ICH THE PENALTY WAS PROPOSED TO BE LEVIED. IN VIEW OF THE A BOVE DISCUSSION AND IN THE LIGHT OF THE RATIO LAID DOWN BY THE HONBLE ITA NO.6799/M/2018 SHRI TIKHUCHAND D. JOGANI 5 BOMBAY HIGH COURT, WE ARE INCLINED TO SET ASIDE THE ORDER OF LD. CIT(A) AND DIRECT THE AO TO DELETE THE PENALTY. 8. SINCE THE ISSUE HAS BEEN DECIDED ON LEGAL ISSUE IN FAVOUR OF THE ASSESSEE, THE MERIT NEED NOT BE ADJUDICATED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14.01.2020. SD/- SD/- ( RAVISH SOOD) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED:14.01.2020. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASS TT. REGISTRAR, ITAT, MUMBAI.