Jivitesh Commercial (P) Ltd., Kolkata V. ITO, Ward-6(2), Kolkata, Kolkata

ITA 732/KOL/2012

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8086 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2012
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 08-05-2012
• Court: TRIBUNAL
• Department Lawyers: A K DEY
• Assessee Lawyers: S SURANA
• Keywords: Business income; Bonafide belief
• Section: 143(3); 27

Judgement Text

, A , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE , /AND , . . !' ) [BEFORE SHRI MAHAVIR SINGH, JM & SHRI C. D. RAO, AM ] # # # # / I.T.A NO. 732/KOL/2012 $% &' $% &' $% &' $% &'/ // / ASSESSMENT YEAR: 2005-06 JIVITESH COMMERCIAL (P) LTD. VS. INCOME-TAX OFF ICER, WD-6(2), KOLKATA (PAN:AAACJ6667P) ()* /APPELLANT ) (+,)*/ RESPONDENT ) DATE OF HEARING: 09.10.2012 DATE OF PRONOUNCEMENT: 25.10.2012 FOR THE APPELLANT: SHRI S. SURANA FOR THE RESPONDENT: SHRI A. K. DEY !- / ORDER PER MAHAVIR SINGH, JM ( , , , , ) THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A)-VI, KOLKATA IN APPEAL. NO. 697/CIT(A)VI/CIR-6/09-10/KOL DATED 06.03.2012. ASSE SSMENT WAS FRAMED BY ITO, WD-6(2), KOLKATA U/S. 143(3) OF THE INCOME-TAX ACT, 1961 (HE REINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2005-06 VIDE HIS ORDER DATED 29.11. 2007. PENALTY IN DISPUTE WAS IMPOSED BY ITO, WD-6(2), KOLKATA VIDE HIS ORDER DATED 01.06.20 09. 2. THE ONLY ISSUE IN THIS APPEAL OF ASSESSEE IS AGA INST THE ORDER OF CIT(A) CONFIRMING THE LEVY OF PENALTY BY AO U/S. 271(1)(C) OF THE ACT. F OR THIS ASSESSEE HAS RAISED FOLLOWING GROUND NO.1: 1. FOR THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. ITO ERRED IN IMPOSING PENALTY OF A SUM OF RS.4,05,149/- U/S. 271(1)(C) OF THE INCOME-TAX ACT, 1961. 3. BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE THAT THE ASSESSEE IS CARRYING ON THE BUSINESS OF INVESTMENT, GRANTING OF LOANS AND ADVANCES AND FINA NCING. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE COMPA NY HAS DEBITED A SUM OF RS.7,34,810/- ON ACCOUNT OF LOSS IN SALE OF MUTUAL FUNDS IN THE P&L ACCOUNT. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS REQUIRED THE ASSESSEE TO FIL E THE DETAILS OF LOSS ON SALE OF QUOTED SHARES AND LOSS ON SALE OF MUTUAL FUNDS WHICH WERE ADJUSTE D WITH THE GAINS OF SALE OF MUTUAL FUNDS. THE AO NOTICED THAT THE SHORT TERM CAPITAL GAINS OF RS.7,34,810/- WAS ADJUSTED AGAINST LONG TERM CAPITAL GAINS AND ACCORDING TO AO THIS ADJUSTM ENT WAS NOT ALLOWABLE AND ALSO 2 ITA 732/K/2012 JIVITESH COMMERCIAL (P) LTD. A.Y. 05-06 RS.13,03,332/- ADDED WITH THE SHORT TERM CAPITAL GA IN OF THE ASSESSEE BY RECORDING THE FINDING AS UNDER: THIS SORT OF ADJUSTMENT IS NOT ALLOWABLE. BOLD FI GURE (LONG TERM CAPITAL LOSS) IS NOT ADJUSTABLE AS DISCUSSED EARLIER. HENCE ACTUAL ADJ USTMENT WILL BE LIKE THAT SHORT TERM CAPITAL GAIN RS.30,54,589/- LESS: SHORT TERM CAPITAL LOSS RS.17,51,257/- RS.13,03,332/- 7. IN VIEW OF THE FOREGOING DISCUSSION RS.7,34,810 /- IS DISALLOWED INSTEAD RS.13,03,332/- IS ADDED WITH THE SHORT TERM CAPITAL GAIN OF THE AS SESSEE COMPANY. 8. AS THE ASSESSEE COMPANY HAS CONSCIOUSLY AND DEL IBERATELY FURNISHED INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF SEC. 27 1(1)(C) READ WITH SEC. 274, IN RELATION TO THE LONG TERM CAPITAL LOSS OF RS.20,38, 144/- AND ADJUSTED THE SAME WITH THE SHORT TERM CAPITAL LOSS WITH A VIEW TO REDUCE THE T AX LIABILITY. PENALTY NOTICE U/S. 271(1)(C) READ WITH SEC. 274 IS ISSUED SEPARATELY. 4. THEREFORE, THE AO DISALLOWED THE SHORT TERM CAPI TAL LOSS OF RS.7,34,810/-. WHEN A QUERY WAS MADE TO THE LD. COUNSEL SHRI S. SURANA, H E FAIRLY CONCEDED THAT THIS MATTER WAS NOT CARRIED IN APPEAL BEFORE ANY OF THE HIGHER FORUM. THE AO INITIATED PENALTY PROCEEDINGS AND LEVIED THE PENALTY ON THE FOLLOWING: 6.B. BY DOING THE ABOVE ADJUSTMENT THE ASSESSEE CO MPANY PAID 10% LESS TAX (EXCLUDING SURCHARGE AND EDUCATION CESS) ON RS.13,0 3,332/- (BEING ADJUSTED WITH SHORT TERM CAPITAL GAIN) AND BALANCE AMOUNT I.E. RS .7,34,812/- (RS.20,38,144 RS.13,03,332/-) WITH BUSINESS INCOME. THEREFORE, T HE ASSESSEE COMPANY ALSO PAID 35% (EXCLUDING SURCHARGE AND EDUCATION CESS) ON RS.7,34 ,812/-. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO ALSO CONFIRMED THE ACTION OF AO. AGGRIEVED, NOW ASSESSEE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSEE COMPANY WAS HOLDING QUOTE D SHARES AS INVESTMENT IN THE BALANCE SHEET FOR THE YEAR ENDING 31.03.2004 AND THOSE SHAR ES WERE TRANSFERRED TO FORTIES SECURITIES LTD. DURING FY 2004-05 RELEVANT TO ASSESSMENT YEAR 2005-06. THE ASSESSEE COMPANY ON TRANSFER OF THESE SHARES, INCURRED NET LOSS AMOUNTI NG TO RS.16,86,011/-, WHICH IS A SHORT TERM CAPITAL LOSS BUT ASSESSEE IN ITS COMPUTATION OF TOT AL INCOME ADJUSTED SHORT TERM CAPITAL GAIN AND NET LOSS WITH THE BUSINESS INCOME. THE ASSESSEE AL SO SUBMITTED THESE DOCUMENTS ALONG WITH THE RETURN OF INCOME. THE AO FOUND THAT THE ASSESSEE CO MPANY INCURRED LOSS ON SALE OF GSSIF-DIV. AND GSSIF MUTUAL FUND DURING FY 2004-05 RELEVANT TO AY 2005-06 AND ON SALE OF THESE MUTUAL FUND, IT INCURRED LOSS TO THE TUNE OF RS.20, 05,226/- AND RS.98,164/-. FROM THE PURCHASE AND SALE IT IS CLEAR THAT LOSSES ARE PERTAINING TO LONG TERM CAPITAL LOSS BUT ASSESSEE HAS CLAIMED TO BE ADJUSTED AGAINST THE SHORT TERM CAPITAL GAINS DE RIVED FROM KOTAK FLOATERS AND KOTAK GLOBAL 3 ITA 732/K/2012 JIVITESH COMMERCIAL (P) LTD. A.Y. 05-06 MUTUAL FUNDS WHICH IS NOT ADMISSIBLE. THIS FACT HA S NOT BEEN DENIED BY ASSESSEE, ONLY THE RECTIFICATION REQUIRED BY ASSESSEE WAS THAT SHORT T ERM CAPITAL GAIN TAKEN BY AO AT RS.13,03,332/- IS AT RS.12,84,768/-. BUT THE ASSES SEE BEFORE AO CONCEDED THE POSITION DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND EVEN PENAL TY PROCEEDINGS THAT IT UNDER WRONG AND BONAFIDE BELIEF, MADE THIS ADJUSTMENT BY BELIEVING THAT THIS IS ADMISSIBLE DEDUCTION. BUT ASSESSEES CONTENTION BEFORE THE LOWER AUTHORITIES WAS THAT SUBSEQUENT CONDUCTS HAVE ESTABLISHED THE FACT THAT THERE WAS NO DELIBERATE I NTENTION ON ITS PART TO CONCEAL THE INCOME. LD. COUNSEL FOR THE ASSESSEE RELIED ON THE CASE LAW OF HONBLE SUPREME COURT IN THE CASE OF HINDUSTHAN STEELS LTD. (1972) 83 ITR 26 (SC) AND AL SO THE CASE LAW OF HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LTD. (20 10) 322 ITR 158 (SC). LD. COUNSEL FOR THE ASSESSEE ALSO REFERRED TO THE DECISION OF HONBLE S UPREME COURT IN THE CASE OF PRICE WATERHOUSE COOPERS PVT. LTD. VS. CIT IN CIVIL APPEA L NO.6924 OF 2012, ARISING OUT OF SLP(C) NO.10700 OF 2009 ON 25.09.2012. 6. WE HAVE GONE THROUGH THE FACTS IN ENTIRETY AND F IND THAT THE ASSESSEE HIMSELF ADMITTED THE FACT THAT IT HAS ADJUSTED SHORT TERM CAPITAL LO SS ARISING FROM MUTUAL FUNDS AGAINST LONG TERM CAPITAL GAINS OF SHARES. HE FAIRLY ADMITTED THAT T HIS IS NOT ADMISSIBLE AND DUE TO BONAFIDE BELIEF IT WAS CLAIMED THAT THIS IS ALLOWABLE DEDUCTION. T HE ASSESSEE HAS FILED COMPLETE PARTICULARS IN RESPECT TO LOSS ON SALE OF QUOTED SHARES, LOSS ON S ALE OF MUTUAL FUNDS, GAIN ON SALE OF MUTUAL FUNDS AS WELL AS SALE OF SHARES. THE ASSESSEE HAS NOT CONCEALED THE PARTICULARS OF INCOME AS IT HAS FILED COMPLETE DETAILS ALONG WITH THE RETURN OF INCOME AND NOTHING WAS CONCEALED FROM THE REVENUE. WE ARE OF THE VIEW THAT WHERE THE DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN OF INCOME ARE NOT FOUND TO BE INACCURATE OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT. A MERE MAKING O F CLAIM WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, IT WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME, AS THE CASE MAY BE, REGARDING THE CLAIM. WE FIND THAT THE HONBLE SUPREME COURT IN THE CASE OF PRICE WATERHOUSE COOPERS PVT. LTD. (SUP RA) HAS LAID DOWN THE RATIO AS UNDER: 19. THE CONTENTS OF THE TAX AUDIT REPORT SUGGEST T HAT THERE IS NO QUESTION OF THE ASSESSEE CONCEALING ITS INCOME. THERE IS ALSO NO Q UESTION OF THE ASSESSEE FURNISHING ANY INACCURATE PARTICULARS. IT APPEARS TO US THAT ALL THAT HAS HAPPENED IN THE PRESENT CASE IS THAT THROUGH A BONA FIDE AND INADVERTENT ERROR, THE ASSESSEE WHILE SUBMITTING ITS RETURN, FAILED TO ADD THE PROVISION FOR GRATUITY TO ITS TOT AL INCOME. THIS CAN ONLY BE DESCRIBED AS A HUMAN ERROR WHICH WE ARE ALL PRONE TO MAKE. THE CALIBER AND EXPERTISE OF THE ASSESSEE HAS LITTLE OR NOTHING TO DO WITH THE INADVERTENT ER ROR. THAT THE ASSESSEE SHOULD HAVE BEEN CAREFUL CANNOT BE DOUBTED, BUT THE ABSENCE OF DUE C ARE, IN A CASE SUCH AS THE PRESENT, DOES NOT MEAN THAT THE ASSESSEE IS GUILTY OF EITHER FURNISHING IN ACCURATE PARTICULARS OR ATTEMPTING TO CONCEAL ITS INCOME. 20. WE ARE OF THE OPINION, GIVEN THE PECULIAR FACT S OF THIS CASE, THAT THE IMPOSITION OF PENALTY ON THE ASSESSEE IS NOT JUSTIFIED. WE ARE S ATISFIED THAT THE ASSESSEE HAD COMMITTED 4 ITA 732/K/2012 JIVITESH COMMERCIAL (P) LTD. A.Y. 05-06 AN INADVERTENT AND BONA FIDE ERROR AND HAD NOT INTE NDED TO OR ATTEMPTED TO EITHER CONCEAL ITS INCOME OR FURNISH INACCURATE PARTICULARS. RESPECTFULLY FOLLOWING THE SAME, WE DELETE THE PENA LTY SO IMPOSED BY AO AND CONFIRMED BY CIT(A). APPEAL OF ASSESSEE IS ALLOWED. 7. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED . 8. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH OCT., 2012. SD/- SD/- . . !' , (C. D. RAO) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( ' ' ' ') )) ) DATED : 25TH OCTOBER, 2012 ./ $01 2 JD.(SR.P.S.) 5 ITA 732/K/2012 JIVITESH COMMERCIAL (P) LTD. A.Y. 05-06 !- 3 +4 5!4&6- COPY OF THE ORDER FORWARDED TO: 1 . )* / APPELLANT JIVITESH COMMERCIAL (P) LTD., C/O SRI R. P. SHARMA, ADVOCATE, 19-D, MUKTARAM BABU STREET, KOLKA TA-700 007.. . 2 +,)* / RESPONDENT ITO, WARD-6(2), KOLKATA. 3 . -$ ( )/ THE CIT(A), KOLKATA 4. 5. -$ / CIT KOLKATA 4<= +$ / DR, KOLKATA BENCHES, KOLKATA ,4 +/ TRUE COPY, !-$>/ BY ORDER, 1 /ASSTT. REGISTRAR .