ACIT - 16(2), MUMBAI V. INDUBEN DEVENDRA KOTHARI, MUMBAI

ITA 7122/MUM/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0697 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: I
• Assessment Year: 2004-2005
• Appeal Filed On: 05-12-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SACCHIDANAND DUBEY
• Assessee Lawyers: PANKAJ TOPRANI
• Keywords: Salary income; Question of law; Initiation of penalty proceedings

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI I BENCH , , BEFORE S/SH. I P BANSAL,JUDICIAL MEMBE R & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO. 7122 /MUM/2013, / ASSESSMENT YEAR - 200 4 - 05 ACIT - 16(2) 2 ND FLOOR, MATRU MANDIR TARDEO ROAD, MUMBAI - 400 007. VS SMT. INDUBEN DEVENDRA KOTHARI B - 4, SEA FACE PARK CHS LTD. 50, BHULABHAI DESAI ROAD MUMBAI - 400 026. PAN: ASSESSEE PK 8345 A ( / APPELLANT ) ( / RESPONDENT ) /ASSESSEE BY : SHRI PANKAJ TOPRANI / REVENUE BY :SHRI SACCHIDANAND DUBEY - DR / DATE OF HEARING : 28 - 05 - 2015 / DATE OF PRONOUNCEMENT : 28 - 05 - 2015 , 1961 254 ( 1 ) ORDER U/S.254(1)OF THE INCOME - TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER DATED 02 .09. 20 13 OF THE CIT(A) - 28 , MUMBAI ,THE ASSESSING OFFICER(AO) HAS RAISED FOLLOWI NG GROUNDS OF APPEAL: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY LEVIED U/S 271 (1 )(C) AT RS.3,74,431/ - BASED ON THE FACT THAT, SIMILAR ISSUE IS PENDING BEFORE HON'BLE JURISDICT IONAL HIGH COURT OF BOMBAY IN THE CASE OF ASSESSEE'S SPOUSE NAMELY SHRI DEVENDRA MOTILAL KOTHARI(LNDIVIDUAL) BEARING NO. IT(APPEAL) NO. 2394 OF 2011? 2. THE ID. CIT(A) HAS FAILED TO APPRECIATE THE FACT THAT THE ISSUE FOR LEVY OF PENALTY WAS AGAINST F EES PAID BY THE ASSESSEE TO THE PORTFOLIO MANAGEMENT CONSULTANTS(PMS FEES) AND SAME WAS UPHELD BY FIRST APPELLATE AUTHORITY(FAA) AND HON. ITAT, MUMBAI IN CASE OF ASSESSEE'S SPOUSE ALSO. 3. THE ID. CIT(A) HAS FAILED TO APPRECIATE THE FACT THAT THE PENDING OF APPEAL BEFORE HON'BLE JURISDICTIONAL HIGH COURT OF BOMBAY AND ADMISSION OF SUBSTANTIAL QUESTION OF LAW CANNOT BE BASIS FOR DELETION OF PENALTY. 4. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. ASSESSEE,AN INDIVIDUAL, IS DERIVING INCOME FROM SALARY, HOUSE PROPERTY, CAPITAL GAINS AND INCOME FROM OTHER SOURCES. SHE FILED THE RETURN OF INCOME ON 18.10.2004 DECLARING TOTAL INCOME OF RS. 40.61 LACS. THE AO COMPLETED THE ASSESSMENT ON 31.10.2006 DETERM INING HE R INCOME AT RS. 56.00 LACS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO FOUND THAT THE ASSESSEE HAS INCREASED PURCHASE PRICE OF SHARES BY RS. 15.39 LACS ON A/C. OF FEES AND OTHER EXPENSES CHARGED BY THE PORTFOLIO MANAGEMENT SERVICES MANAGER. T HE AO DID NOT ALLOW THE EXPENSES INVOKING THE PROVISIONS OF S.48 OF THE ACT. THE DISALLOWANCE INCLUDED PMS CHARGES ( RS. 9.32 LACS) AND INCOME FROM CAPITAL GAINS ( RS. 6.07 LACS). THE AO INITIATED PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT FOR FURNISHING INAC CURATE PARTICULARS OF INCOME. MEANWHILE THE FIRST APPELLATE AUTHORITY ( FAA ) CONFIRMED THE ADDITION MADE BY THE AO HIS VIDE ORDER DT.12.10.2009. IN REPLY TO THE PENALTY ITA NO. 7 122 /MUM/2013,AY. 0 4 - 05 - INDUBEN 2 NOTICE, THE ASSESSEE FILED REPLY BEFORE THE AO. AFTER CONSIDERING THE SUBMISSION OF THE AS SESSEE , THE AO HELD THAT THE ASSESSEE DID NOT OFFER ANY SATISFACTORY EXPLANATION THAT COULD BE TREATED BONAFIDE . FINALLY , THE AO IMPOSED PENALTY OF RS. 3.74 LACS U/S. 271(1)(C) OF THE ACT FOR FILING INACCURATE PARTICULAR OF INCOME AND THUS CONCEALING THE INCO ME. 3. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PREFERRED AN APPEAL BEFORE THE FAA. BEFORE HIM IT WAS ARGUED THAT IN THE CASE OF DEVENDRA KOTHARI, HUSBAND OF THE ASSESSEE , IDENTICAL DISALLOW - ANCE WAS MADE BY THE AO, THAT THE DISALLOWANCE WAS CONFIRMED BY THE FAA AND THE TRIBUNAL, THAT HE HAD PREFERRED AN APPEAL BEFORE THE H ONBLE B OMBAY H IGH C OURT , THAT THE HONBLE COURT HAD ADMITTED HIS APPEAL. THAT THE ASSESSEE HAD NOT FURNISHED INACCURATE PARTICULARS OR HAD NOT CONCEALED PARTICULARS OF INCOME, THAT MERE REJECTION OF CLAIM DID NOT WARRANT INITIATION OF PENALTY PROCEEDINGS. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE , PENALTY ORDER AND THE ASSESSMENT ORDER THE FAA HELD THAT THE H ONBLE B OMBAY H IGH C OURT HAD ADMITTED THE APPEAL IN CASE OF DEVENDRA M. KOTHARI VIDE ITS ORDER 21.3.2013, THAT THE ISSUE HAD TO BE TREATED AS DEBATABLE BECAUSE IN CASE OF HUSBAND OF THE ASSESSEE IDENTICAL QUESTION HAD ARISEN AND THE HONBLE COURT HAD ADMITTED AN APPEAL, THAT NO PENALTY COULD BE LEVIED ON A DEBATABLE ISSUE. FINALLY,HE DIRECTED THE AO TO DELETE THE PENALTY. 4. B EFORE US, DEPARTMENTAL REPRESENTATIVE(DR) CONTENDED THAT ADMISSION OF AN APPEAL BY THE HONBLE COURT DID NOT MAKE A QUESTION DEBATABLE, THAT THE EXPLANATION FILED BY THE ASSESSEE WAS NOT BONAFIDE, THAT TH E ASSESSEE HAD MADE A CLAIM OF EXPENDITURE AGAINST THE PROVISIONS OF THE ACT. THE AR SUPPORTED THE ORDER OF THE FAA. ON A SPECIFIC QUERY BY THE BENCH HE STATED THAT THE ASSESSEE HAD NOT FILED ANY SECOND APPEAL, THAT THE MATTER OF HER HUSBAND WAS PENDING BE FORE THE H ONBLE J URISDICTIONAL H IGH C OURT . 5. WE FIND THAT THE FAA HAS REFERRED TO THE CASE OF THE HUSBAND OF THE ASSESSEE AND HAS MENTIONED THAT AN APPEAL HAS BEEN ADMITTED BY THE HONBLE HIGH COURT IN THAT MATTER.IT HAS BEEN FURTHER MENTIONED THAT ONCE A QUESTION IS ADMITTED BY THE HONBLE COURT IT HAD TO BE TREATED A DEBATABLE ISSUE AND NO PENALTY COULD BE LEVIED U/S.271(1)OF THE ACT.IN OUR OPINION,THE STAND TAKEN BY THE FAA IS NOT IN ACCORDANCE WITH THE LAW AS NOWHERE IT IS STIPULATE D THAT ADMISSION OF AN APPEAL BY THE HONBLE COURT IN THE CASE OF OTHER PERSON SHOULD RESULT IN DROPPING OF PENALTY PROCEEDINGS. T HE AR HAD ADMITTED THAT THE ASSESSEE HAD NOT FILED APPEAL BEFORE THE TRIBUNAL AGAINST THE ORDER OF THE FAA.THUS,THE ORDER OF THE FAA HAD BECOME FIN AL AS FAR AS THE ASSESSEE IS CONCERNED.WE ARE OF THE OPINION THAT THE ARGUMENT OF ADMISSION OF AN APPEAL IN ANY OTHER CASE CANNOT BE STRETCHED TO THIS EXTENT.THE PENALTY ORDER PASSED BY THE AO SHOULD HAVE BEEN ADJUDICATED BY THE FAA ON MERITS RATHER THAN R EFERRING TO THE CASE OF THE HUSBAND OF THE ASSESSEE.SO,PARTLY REVERSING HIS ORDER,WE ARE REMITTING BACK THE MATTER TO THE FILE OF THE FAA FOR FRESH ADJUDICATION WHO WILL DECIDE THE ISSUE AFTER HEARING BOTH THE PARTIES.EFFECTIVE GROUND OF APPEAL IS DECIDED IN FAVOUR OF THE AO,IN PART. AS A RESULT,APPEAL FILED BY THE AO STANDS PARTLY ALLOWED. . ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH ,MAY,2015. 28 , 2015 ITA NO. 7 122 /MUM/2013,AY. 0 4 - 05 - INDUBEN 3 SD/ - SD/ - ( /I . P . BANSAL) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / MUMBAI, /DATE: 28.05.. 2015 . . . JV . SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR A BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , / ITAT, MUMBAI.