AMIT NAVINCHANDRA VORA, MUMBAI V. DCIT 17(2), MUMBAI

ITA 6852/MUM/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59881 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 01-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARTHASARTHI NAIK
• Assessee Lawyers: REEPAL G TRALSHAWALA
• Keywords: Period of limitation; Revised return
• Section: 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI BEFORE SHRI. D.K. AGARWAL (JM) AND SHRI. N.K. BILLA IYA (AM) ITA NO.6852/MUM/2010 ASSESSMENT YEAR: 2006-07 SHRI AMIT NAVINCHANDRA VORA, 303, SHIV INDUSTRIAL ESTATE, K.V. BALMUKUND MARG, CINCHPOKLI, MUMBAI 400 012. PAN: AAAPV6940Q VS. DCIT-17(2), 4 TH FLOOR, PIRAMAL CHAMBERS, LALBAUG, MUMBAI 400 012. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI. REEPAL G. TRALSHAWALA RESPONDENT BY : SHRI. PARTHASARTHI NAIK DATE OF HEARING: 13.3.2012 DATE OF PRONOUNCEMENT: 16-3-2012 O R D E R PER N.K. BILLAIYA, A.M: THE PRESENT APPEAL IS PREFERRED BY THE ASSESSEE AGA INST THE ORDER OF THE LD. CIT (A)-29, MUMBAI DATED 22.7.2010 FOR THE ASSESSMENT Y EAR 2006-07. 2. THE APPELLANT HAS RAISED THREE GROUNDS OF APPEAL . RELEVANT GROUNDS ARE GROUND NO. 1 & 2 BY WHICH THE APPELLANT HAS SHOWN HIS GRIE VANCE AGAINST THE ORDER OF THE LD. CIT (A) WHO HAS CONFIRMED THE PENALTY ORDER LEVIED U/S 271(1)(C) OF THE ACT TO THE TUNE OF RS. 48,581/-. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE IS AN INDIVIDUAL FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE DECLARED TOTAL INCOME OF RS. 10,46,976/-. THE RETURN WAS SELECTED FOR SCRUTINY ASSESSMENT AND ACCORDINGLY NOTICES U/S 143 (2) AND U/S 142(1) WERE ISSUED AND SERVED ON THE ASSESSEE ON 10.7.2007, 29.7.2008, 18.1.2008 AND 29.7.2008 RESPECTIVELY. ITA NO.6852/MUM/2010 2 4. ASSESSEE IS ENGAGED IN DOING DATA ENTRY WORK AS WELL AS PICK UP SERVICE, COLLECTION AND FOLLOW UP WORK FOR CREDIT CARD AND O THER CORPORATE CLIENTS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFI CER FOUND THAT THE INCOME & EXPENDITURE ACCOUNT OF 31.3.2006 WHICH WAS FILED AL ONG WITH THE RETURN OF INCOME , SHOWED CREDIT OF THE FOLLOWING INCOME. BANK INTEREST (SB) - RS. 147.41 BOND INTEREST - RS. 17,700.00 POST OFFICE MONTHLY INCOME PLAN INTEREST - RS. 1,26,480.00 TOTAL: - RS. 1,44,327.41 5. THE LEARNED AO ASKED THE ASSESSEE TO STATE THE R EASONS FOR OMITTING TO DISCLOSE THE AFORE SAID INCOME. THE ASSESSEE STATED THAT RE TURN OF INCOME WAS PREPARED AT THE FAG END OF THE TIME LIMIT FOR FURNISHING THE RETURN AND THE OFFICE OF THE CHARTERED ACCOUNTANT HAD COMMITTED A MISTAKE OF NOT CONSIDERI NG THE ABOVE INCOME FOR THE PURPOSE OF COMPUTATION. THE LEARNED AO WENT ON TO ADD RS. 1,44,327/- AS INCOME OF THE ASSESSEE UNDER THE HEAD INCOME FROM OTHER SOUR CES. AND AT THE SAME TIME LD AO RECORDED HIS SATISFACTION FOR INITIATING PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT FOR FILING INACCURATE PARTICULARS OF INCOME. 6. THE LEARNED AO SUBSEQUENTLY INITIATED PENALTY PR OCEEDINGS AND NOTICE U/S 274 OF THE ACT WAS SERVED UPON THE ASSESSEE. THE LEARN ED AO ASKED THE ASSESSEE WHY PENALTY SHOULD NOT BE LEVIED FOR FILING INACCURATE PARTICULARS BY NOT INCLUDING INCOME FROM OTHER SOURCES TO THE TUNE OF RS. 1,44,327.41/- . 7. IN RESPONSE TO THE AFORESAID NOTICE THE ASSESSEE S COUNSEL FILED A LETTER DATED 2.12.2008, BY WHICH THE LEARNED AR MENTIONED THAT T HE : ITA NO.6852/MUM/2010 3 ASSESSEE HAS DISCLOSED FULL AND TRUE INCOME IN HIS CAPITAL ACCOUNT AND PROFIT & LOSS ACCOUNT ATTACHED WITH THE RETURN OF INCOME I.E., IN COME FROM PROPRIETARY BUSINESS AT RS. 11.56 LACS AND INVESTMENT / INTEREST INCOME OF RS. 1.44 LACS WAS SHOWN IN HIS PERSONAL CAPITAL ACCOUNT BUT ERRONEOUSLY IT REMAINE D TO BE INCLUDED IN THE COMPUTATION OF INCOME IN OUR OFFICE THAT TO DUE TO PRESSURE OF WORK IN THE MONTH OF OCTOBER, 2006. THE LEARNED COUNSEL FURTHER STATED THAT THERE WAS N EITHER MALA-FIDE INTENTION NOR GUILTY MIND IN NOT INCLUDING THE SAID INTEREST INCO ME OF RS. 1.44 LACS IN THE STATEMENT OF INCOME. IT IS JUST A CLERICAL ERROR. 8. THE SUBMISSION OF THE ASSESSEE DID NOT FIND ANY FAVOUR WITH THE AO. THE AO CONCLUDED THAT WHEN THE ASSESSEE COULD ENCLOSE CERT IFICATE OF TDS ON INTEREST INCOME, IT IS NOT ACCEPTABLE HOW THE ASSESSEE OMITTED TO DE CLARE THE CORRESPONDING INCOME. THE LEARNED AO FURTHER OBSERVED THAT WHEN THE ASSES SEE HAS BEEN ADVISED AND ASSISTED BY THE PROFESSIONAL, THE ASSESSEES SUBMIS SION THAT THE INTEREST INCOME WAS COMPLETELY OVERLOOKED WHILE PREPARING THE COMPUTATI ON OF TOTAL INCOME WAS ALSO NOT ACCEPTABLE. THE LEARNED AO FINALLY CONCLUDED THAT THE CONDUCT SHOWS THAT THE FAILURE TO INCLUDE THE INTEREST INCOME IN THE COMPUTATION O F INCOME WAS DELIBERATE AND MALA- FIDE AND LEVIED PENALTY OF RS. 48,581/- U/S 271(1)( C) OF THE ACT. 9. AGGRIEVED BY THIS ORDER OF THE LEARNED AO , ASS ESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT (A). BEFORE THE LD. CIT (A) THE ASSESSEE REITERATED HIS STAND THAT THERE WAS NO WILLFUL ACT TO CONCEAL ANY PART OF HIS INCOME BECAUSE HE HIMSELF HAS SHOWN THE INTEREST FROM BANK, INTEREST FROM BOND AN D INCOME FROM POST OFFICE IN THE INCOME AND EXPENDITURE ACCOUNT FILED WITH THE RETUR N OF INCOME. 10. THE LD. CIT (A) IN HIS APPELLATE ORDER AT PAGE NO.2, PARA NO.5 HAS GIVEN HIS FINDING THAT OMISSION ON THE PART OF THE APPELLANT SHOULD HAVE BEEN RECTIFIED BY FILING A ITA NO.6852/MUM/2010 4 REVISED RETURN. THE LD. CIT (A) WAS CONVINCED THAT IT IS ONLY DURING THE PROCESS OF SCRUTINY ASSESSMENT THE PARTICULARS OF UNDISCLOSED INCOME HAVE BEEN DISCOVERED THEREFORE THE CONTENTION THAT MISTAKE WAS INADVERTE NT IS NOT ACCEPTABLE. THE LD. CIT (A) FURTHER WENT ON TO EXPLANATION-1 OF SEC. 271(1) (C) AND CONCLUDED THAT THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF UN ION OF INDIA VS. DHARMENDRA TEXTILE PROCESSORS (2007) 166 TAXMAN 65 (SC) APPLIE S AND FINALLY CONCLUDED THAT SINCE THE ASSESSEE HAS NOT DISCLOSED PARTICULARS OF INCOM E AMOUNTING TO RS. 1,44,327/- THE ASSESSING OFFICER HAS CORRECTLY LEVIED THE PENALTY AND ACCORDINGLY CONFIRMED THE PENALTY. 11. AGGRIEVED BY THIS THE ASSESSEE IS IN APPEAL BEF ORE US. 12. THE LEARNED AR REITERATED THE FACTS OF THE CASE AS THEY WERE BEFORE THE LOWER AUTHORITIES AND EMPHASIZED THAT THERE WAS NO MALA-F IDE INTENTION OR WILLFUL ATTEMPT TO CONCEAL THE INCOME FROM INTEREST TO THE TUNE OF RS. 1,44,327/-. THE LEARNED AR FURTHER SUBMITTED THAT FACTS OF THE CASE CLEARLY SHOW THAT IT WAS THE ASSESSEE WHO HAS DISCLOSED ALL THESE INCOME IN HIS INCOME AND EXPEND ITURE ACCOUNT AS ON 31.3.2006 WHICH WAS BEFORE THE ASSESSING OFFICER. THE LEARNE D AR WENT ON TO CONCLUDE THAT ASSESSEE HAS NOT CLAIMED TDS ON INTEREST RECEIVED O N BONDS, IN THE COMPUTATION OF INCOME FOR THE YEAR UNDER CONSIDERATION THE ASSESSE E WAS ENTITLED FOR A REFUND OF RS. 7,27,161/- WHICH SHOWS THAT THE ASSESSEE HAD NO INT ENTION TO CONCEAL THE AFORESAID INCOME. THE OMISSION WAS IN-ADVERTENT AND DUE TO R USH OF WORK AT THE FAG END OF THE PERIOD OF LIMITATION FOR FILING THE RETURN OF INCOM E AT THE END OF HIS CHARTERED ACCOUNTANTS OFFICE. THE LEARNED AR ACCORDINGLY PL EADED THAT PENALTY SHOULD BE CANCELLED. ITA NO.6852/MUM/2010 5 13. THE LEARNED DR RELYING ON THE ORDER OF THE LD. CIT (A) SUBMITTED THAT THERE IS NO ERROR IN THE ORDER OF THE LD. CIT (A) AND THEREF ORE THE ORDER OF THE LD. CIT (A) DESERVES TO BE CONFIRMED. 14. WE HAVE HEARD BOTH THE PARTIES. WE HAVE ALSO P ERUSED THE ORDER OF THE LOWER AUTHORITIES AND ALSO THE ASSESSMENT ORDER FOR THE Y EAR UNDER CONSIDERATION, SUBMISSIONS BEFORE THE ASSESSING OFFICER, COMPUTATI ON OF INCOME FOR THE YEAR UNDER CONSIDERATION, BALANCE SHEET, INCOME AND EXPENDITUR E ACCOUNT WHICH WERE BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT P ROCEEDINGS. 15. IT IS NOT IN DISPUTE THAT IN THE INCOME AND EXP ENDITURE ACCOUNT FILED WITH THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION T HE ASSESSEE HAS SHOWN INTEREST FROM BANK, BONDS AND POST OFFICE. IT IS ALSO SEEN THAT ASSESSEES COUNSEL IN HIS LETTER DATED 20.11.2008 IN CLAUSE 5 HAS VERY SPECIFICALLY STATED THAT ERRONEOUSLY WHILE PREPARING THE RETURN IN OUR OFFICE AT THE FAG END T HE INCOME CREDITED TO PERSONAL CAPITAL A/C AT RS. 147/- BANK INTEREST, 17 ,700/- BOND INTEREST, P.O. MIP INTEREST 1,26,480/- TOTALING TO RS. 1,44,3 27/- REMAINED TO BE CONSIDERED IN THE RETURN OF INCOME. HENCE WE REQUE ST YOU TO ADD RS. 1,44,327/- IN THE RETURNED INCOME OF RS. 10,48,976/ -. IN CASE YOU WANT TO FILE US REVISED RETURN OF INCOME, PLEASE LET US KNO W. 16. IT HAS ALSO BEEN FOUND THAT IN THE IMMEDIATE PR ECEDING YEAR THE ASSESSEE HAS SHOWN ALL THESE INTEREST INCOME UNDER THE HEAD INC OME FROM OTHER SOURCES. 17. AFTER CONSIDERING THE ABOVE, FOLLOWING FACTS EMERGE : 1. INTEREST INCOME TO THE TUNE OF RS. 1,44,327/- WAS S HOWN IN THE INCOME AND EXPENDITURE ACCOUNT FOR THE YEAR UNDER CONSIDERATIO N. ITA NO.6852/MUM/2010 6 2. APPELLANTS CHARTERED ACCOUNTANT HIMSELF HAS ACKNOW LEDGED THE ERROR IN PREPARING THE COMPUTATION OF INCOME AS EVIDENCE FRO M HIS LETTER DATED 20.11.2008. 3. APPELLANTS CHARTERED ACCOUNTANT HAS ALSO OFFERED T O REVISE THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. 18. AFTER CONSIDERING ALL THE FACTS AND THE RIVAL S UBMISSIONS WE FIND THAT THE EXPLANATION OFFERED BY THE ASSESSEE FOR THE OMISSIO N OF THE INTEREST INCOME TO THE TUNE OF RS. 1,44,327/- APPEARS TO BE JUSTIFIED . THE FA ULT , IF ANY , WAS WITH HIS TAX COUNSEL AND EVEN THE SAID TAX COUNSEL CANNOT BE SAID TO HAV E ACTED IN A MALA-FIDE MANNER IN PREPARING RETURN OF INCOME OF THE ASSESSEE WRONGLY. THE BONAFIDES OF THE ASSESSEE ARE PROVED BY THE FACTS AND CIRCUMSTANCES OF THE CA SE. 19. THE LD. CIT (A) HAS NOT APPRECIATED THE FACTS A ND CIRCUMSTANCES OF THE CASE. WE ARE OF THE VIEW THAT ON FACTS THE PENALTY LEVIED DESERVES TO BE CANCELLED. ACCORDINGLY ORDER OF THE LD. CIT (A) IS REVERSED, P ENALTY LEVIED U/S 271(1)(C) IS CANCELLED. 20. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 16 TH DAY OF MARCH, 2012. SD/- SD/- (D.K. AGARWAL) (N.K. BIL LAIYA) JUDICIAL MEMBER ACCOUNTANT MEMB ER DATE : 16-3-2012 AT :MUMBAI OKK COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A), MUMBAI CONCERNED 4. THE CIT, MUMBAI CITY CONCERNED 5. THE DR A BENCH, ITAT, MUMBAI // TRUE COPY/ BY ORDER ASST. REGISTRAR, ITAT, MUMBAI.