DCIT, Kanpur V. M/s. Mirza International Ltd., Kanpur

ITA 702/LKW/2010

• Counselvise Citation: 70223714 RSA 2010
• Duration Of Justice: 3 year(s) 8 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 10-07-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 29-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALOK MITRA
• Keywords: Cost of acquisition; Reasonable cause; Bonafide mistake
• Section: 14A

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.702/LKW/2010 ASSESSMENT YEAR:2005 - 06 DY.C.I.T. - 6, KANPUR. VS. M/S MIRZA INTERNATIONAL LTD., 14/6, CIVIL LINES, KANPUR. PAN:AABFM2644R (APPELLANT) (RESPONDENT) APPELLANT BY SHRI ALOK MITRA, D. R. RESPONDENT BY SHRI SWARAN SINGH, C.A. DATE OF HEARING 10/07/2014 DATE OF PRONOUNCEMENT 07 /08/2014 O R D E R PER A. K. GARODIA, A.M. THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORDER PASSED BY LEARNED CIT (A) - II, KANPUR DATED 15/09/2010 FOR ASSESSMENT YEAR 2005 - 2006. 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: 1. THAT THE LD. .COMMISSIONER OF INCOME TAX(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE PENALTY OF RS.9,75,000/ - WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE THOUGH HE WAS ALSO OF THE VIEW THAT THE ASSESSEE HAS FILED WRONG AND INACCURATE PARTICULARS OF INCOME. 2. THAT THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - II, KANPUR BEING ERRONEOUS, UNJUST AND BAD IN LAW AND ON FACTS DESERVES TO BE VACATED AND THAT THE ORDER OF THE ASSESSING OFFICER BE RESTORED; AND 3. THAT THE APPELLANT CRA VES LEAVE TO MODIFY ANY OF THE GROUNDS OF APPEAL GIVEN ABOVE AND/OR ADD ANY FRESH GROUND AS AND WHEN IT IS CONSIDERED NECESSARY TO DO SO. 2 3. LEARNED D.R. OF THE REVENUE SUPPORTED THE PENALTY ORDER WHEREAS LEARNED A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF CIT(A). HE ALSO PLACED RELIANCE ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS: ( I ) CIT VS. GEM GRANITES (KARNATAKA) [2014] 42 TAXMANN.COM 493 (MADRAS) ( II ) I.T.A.T., DELHI BENCH ORDER IN THE CASE OF HINDUSTAN COCA - COLA MARKETING COMPANY PRIVATE LTD. VS. DY.CIT, I.T.A. NO.3256/DEL/2013, ORDER DATED 13/12/2013 ( III ) HON'BLE BOMBAY HIGH COURT DECISION IN THE CASE OF CIT VS. BENNETT COLEMAN & CO. LTD., INCOME TAX APPEAL (LOD) NO. 2117 OF 2012 ( IV ) HON'BLE ANDHRA PRADESH HIGH COURT DECISION IN THE CASE OF CIT VS. MERILYN SHIPPIN G & TRANSPORTS . SANIA MIRZA IN ITTA NO.526 OF 2011 ( V ) CIT VS. ASK ENTERPRISES [1998] 230 ITR 48 (BOM) 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND THE JUDGMENT S CITED BY LEARNED A.R. OF THE ASSESSEE. WE FIND THAT THE PENALTY WAS IMPOSED BY THE ASSESSING OFFICER IN RESPECT OF TWO ADDITIONS. THE FIRST ADDITION FOR WHICH PENALTY HAS BEEN IMPOSED BY THE ASSESSING OFFICER IS OF RS.2,17,211/ - U/S 14A READ WITH RULE 8D. IN THIS REGARD , IT WAS HELD BY CIT(A) THAT IN VIEW OF THE DECISION OF APEX COURT RENDERED IN THE CASE OF RELIANCE PETROCHEMICALS LTD. 36 DTR 44, THERE IS NO CASE OF LEVY OF PENALTY ON THIS AMOUNT AS THERE IS NEITHER ANY CONCEALMENT NOR FILING OF ANY I NACCURATE PARTICULARS. CONSIDERING THESE FACTS, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A) ON THIS ISSUE. 4.1 THE SECOND ADDITION FOR WHICH PENALTY HAS BEEN IMPOSED BY THE ASSESSING OFFICER IS REGARDING ADDITION MADE BY THE ASSESSING O FFICER BY REDUCING THE AMOUNT OF LONG TERM CAPITAL LOSS TO BE CARRIED FORWARD FROM RS.51,23,136/ - AS HAS BEEN CLAIMED BY THE ASSESSEE TO RS.14,82,075/ - . ON THIS ISSUE , THE PENALTY HAS BEEN DELET ED BY THE CIT(A) AS PER PARA 5.2 OF HIS ORDER WHICH IS REPROD UCED BELOW FOR THE SAKE OF READY REFERENCE: 3 5.2 DECISION I HAVE CONSIDERED THE FACTS OF THE CASE AND ALSO THE SUBMISSIONS MADE BY THE LEARNED AR. THERE IS NO DOUBT THAT THE QUANTUM OF THE LONG TERM CAPITAL LOSS, AS COMPUTED BY THE APPELLANT WAS MUCH HIGHER. THE APPELLANT HAS EXPLAINED THAT THIS WAS BE CAUSE OF GENUINE CLERICAL MISTAKE WHEREIN THE ACQUISITION COST WAS TAKEN AT THE ORIGINAL C OST OF ACQUISITION RATHER THAN THE OPENING VALUE ( BOTH THE VALUES ARE DIFFERENT SINCE THE APPELLANT HAD SOLD PART OF THE LAND IN EARLIER YEARS. THE MISTAKE APPEARS TO BE BONA - FIDE SINCE IT IS A USUAL PRACTICE (IN COMPUTING CAPITAL GAINS) TO REFER TO THE ORIGINAL COST OF THE LAND BEING TRANSFERRED. SECONDLY, THE ASSESSEE IS AN OLD TAX PAYER AND HAS BEEN MAKING HUGE TAX PAYMENTS YEAR AFTER YEAR. THIRDLY, THE APPELLANT WAS NOT GETTING ANY TAX ADVANTAGE DURING THE YEAR SINCE THE LOSS WAS BEING CARRIED FORWARD. UNDER THESE FACTS AND CIRCUMSTANCES OF THE CASE, THE BONA - FIDES OF TH E APPELLANT CANNOT BE DOUBTED. THEREFORE, THE PENALTY IMPOSED ON THIS ISSUE IS ALSO DELETED. 4.2 WE ALSO FIND THAT THIS LAND WAS PARTLY SOLD IN EARLIER YEAR AND THEREFORE, THE COST OF LAND IN THE BOOKS WAS REDUCED TO RS.1,18,44,194/ - FROM THE TOTAL COS T OF RS.1,39,75,732/ - . THE REMAINING PORTION WAS SOLD IN THE PRESENT YEAR AND FOR WORKING THE CAPITAL GAIN, THE ASSESSEE WORKED OUT THE INDEXED COST OF ACQUISITION, THE ASSESSEE STARTED WITH COST AT RS. 1,39,75,732/ - INSTEAD OF CORRECT FIGURE OF RS.1,18,44 ,194/ - AND IN THIS MANNER , THE ASSESSEE WORKED OUT THE INDEXED COST AT RS.2,38, 73, 136/ - AS AGAINST CORRECT FIGURE OF RS.2,02,32,075/ - . IT WAS THE CLAIM OF THE ASSESSEE THAT THIS HAS RESULTED BECAUSE OF GENUINE CLERICAL MISTAKE. THIS FINDING IS GIVEN BY C IT(A) THAT THIS EXPLANATION APPEARS TO BE BONAFIDE SINCE IT IS A USUAL PRACTICE (IN COMPUTING CAPITAL GAINS) TO REFER TO THE ORIGINAL COST OF THE LAND BEING TRANSFERRED. IN OUR CONSIDERED OPINION ALSO, THERE IS FORCE IN THIS ARGUMENT OF THE ASSESSEE THAT IT IS A BONAFIDE MISTAKE AND AS PER THE PROVISIONS OF SECTION 273B, NO PENALTY SHALL BE IMPOSABLE ON THE ASSESSEE IF IT IS FOUND THAT THERE WAS REASONABLE CAUSE FOR THE FAILURE OF THE ASSESSEE IN REPORTING CORRECT INCOME. IN THE FACTS OF THE PRESENT CASE, WE ARE OF THE CONSIDERED OPINION THAT THE CLAIM OF THE 4 ASSESSEE THAT EXCESS COST OF ACQUISITION WAS CONSIDERED BECAUSE OF GENUINE CLERICAL MISTAKE, DESERVES TO BE ACCEPTED CONSIDERING THE FACTS OF THE PRESENT CASE A ND THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A). VARIOUS JUDGMENTS CITED BY LEARNED A.R. OF THE ASSESSEE ALSO SUPPORT THIS VIEW TAKEN BY US. IN THE CASE OF CIT VS. GEM GRANITES (KARNATAKA), IT WAS HELD THAT IT WAS OBSERVED BY THE TRIBUNAL IN THAT CASE THAT POSSIBILI TY OF WRONG ENTRY COULD NOT BE RULED OUT AND THE DEPARTMENT HAD FAILED TO PROVE CONCEALMENT WITHOUT ANY DOUBT. IN THE PRESENT CASE ALSO, IN OUR CONSIDERED OPINION, CONSIDERING THE FIGURE OF ORIGINAL COST OF ACQUISITION IN PLACE OF CORRECT REDUCED COST OF ACQUISITION FOR REMAINING LAND BY WAY OF CLERICAL MISTAKE CANNOT BE RULED OUT. THEREFORE, ALLEGATION OF CONCEALMENT IS NOT ESTABLISHED IN THE PRESENT CASE AND HENCE, PENALTY IS NOT JUSTIFIED. 5. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DIS MISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 07 /08/2014. *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR