ARCHANA SHANTILAL JAIN, PUNE V. DCIT 26(2), MUMBAI

ITA 7494/MUM/2014

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9070 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 02-08-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 16-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAV
• Keywords: Depreciation; Salary income; Wrong claim; Revised return; Bonafide mistake; Revenue expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH A, MUMBAI BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA NO.7494/M/2014 ASSESSMENT YEAR: 2010-11 MS. ARCHANA SHANTILAL JAIN, PLOT NO.61, ST. PATRICKS TOWN SOCIETY, PUNE SOLAPUR ROAD, PUNE 411 013 PAN: AGKPJ 4247N VS. THE DEPUTY COMMISSIONER OF INCOME TAX-26(2), CHARNI ROAD, MUMBAI (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI HARIDAS BHAT, A.R. REVENUE BY : SHRI RAJESH KUMAR YADAV, D.R. DATE OF HEARING : 02.08.2017 DATE OF PRONOUNCEMENT : 13.10.2017 O R D E R PER D.T. GARASIA , JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 31.10.2014 OF THE COMMISSIONER OF I NCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO ASSESSMENT YEAR 2010-11. 2. THE SHORT FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL AND HAD FILED RETURN OF INCOME ON 01.11.2011 SHOWIN G TOTAL INCOME OF RS.9,54,130/-. DURING ASSESSMENT PROCEEDINGS, T HE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE AO) NOTED T HAT THE ASSESSEE ITA NO.7494/M/2014 MS. ARCHANA SHANTILAL JAIN 2 WORKED FOR TWO EMPLOYERS DURING THE YEAR AND HAD RE CEIVED SALARY FROM TWO EMPLOYERS. THE ASSESSEE HAD RECEIVED SALA RY INCOME OF RS.11,20,322/- FROM M/S. AMDOCS DEVELOPMENT CENTRE OF INDIA WHICH WAS SHOWN IN THE RETURN BUT THE SALARY RECEIV ED FROM M/S. SATYAM COMPUTER AMOUNTING TO RS.16,32,697/- WAS NOT SHOWN IN THE RETURN. WHEN ASKED TO EXPLAIN, THE AUTHORISED REPRES ENTATIVE ACCEPTED THE MISTAKE AND OFFERED THE SALARY RECEIVE D FROM M/S. SATYAM COMPUTER TO TAX DURING ASSESSMENT PROCEEDING S. ACCORDINGLY, AN AMOUNT OF RS.16,32,697/- WAS ADDED TO THE TOTAL INCOME RETURNED AND PENALTY PROCEEDINGS INITIATED U /S.271(1)(C). IN REPLY TO SHOW CAUSE NOTICE FOR PENALTY, THE AUTHORI SED REPRESENTATIVE CLAIMED THAT IT WAS A BONAFIDE AND INADVERTENT ERRO R BY THE ASSESSEE BY NOT OFFERING THE SALARY INCOME FROM ONE OF THE E MPLOYERS, IN VIEW OF THE BOMBAY HIGH COURT DECISION IN THE CASE OF CI T VS. SOMANY EVERGREEN KNITS LTD., IT WAS CLAIMED THAT PENALTY F OR TECHNICAL OR VENIAL BREACH SHOULD NOT BE LEVIED. THE EXPLANATION DID NOT FIND FAVOUR WITH THE ASSESSING OFFICER WHO HELD THAT SAL ARY OF RS.16,32,697/- RECEIVED BY THE ASSESSEE FROM M/S. S ATYAM COMPUTER, WAS NOT A SMALL AMOUNT AND NOT SHOWING TH IS IN THE RETURN CANNOT BE CONSIDERED AS A BONAFIDE ERROR. THE CASE LAW DID NOT APPLY TO THE FACTS OF THE CASE. THE ASSESSEE DID NOT VOLU NTARILY OFFER THIS INCOME AND DID NOT PRODUCE ANY VALID EXPLANATION FO R NOT SHOWING THIS INCOME IN THE RETURN. THE ASSESSMENT ORDER PAS SED U/S.143(3) HAS BEEN ACCEPTED AND NO APPEAL FILED AGAINST THE SAME. THE ASSESSING OFFICER, THEREFORE, HELD THAT THE ASSESSEE HAS COMM ITTED A DEFAULT RENDERING HERSELF LIABLE FOR PENALTY U/S.271(L)(C) SPECIALLY IN VIEW OF ITA NO.7494/M/2014 MS. ARCHANA SHANTILAL JAIN 3 EXPLANATION-1. ACCORDINGLY, MINIMUM PENALTY OF RS.5 ,04,500/- BEING 100% OF THE TAX SOUGHT TO BE EVADED WAS LEVIE D. 3. MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CIT (A) HAS DISMISSED THE APPEAL OF THE ASSESSEE. 4. THE LD. A.R. SUBMITTED THAT ASSESSEE HAS CHANGED THE EMPLOYMENT DURING THE YEAR AND FILED THE RETURN OF INCOME FOR A.Y. 2010-11 WITHOUT TAKING INTO CONSIDERATION THE SALAR Y OF FIRST EMPLOYER MR. SATYAM COMPUTER. THIS WAS DUE TO THE APPARENT MISTAKE MADE BY THE TAX CONSULTANT OF THE ASSESSEE. THIS IS EVIDENT FROM THE AFFIDAVIT FILED BEFORE THE AO BY THE TAX C ONSULTANT ACCEPTING HIS MISTAKE IN PREPARING AND FILING THE RETURN. TH E FULL TAX WAS DEDUCTED BY BOTH THE EMPLOYERS AND THUS THERE WAS N O INTENTION TO CONCEAL THE PARTICULARS OF INCOME BY THE ASSESSEE O R TO EVADE THE TAX. THE TAX LIABILITY WAS ONLY DUE TO THE FACT THAT BOT H EMPLOYERS HAVE GIVEN THEIR SLAB RATE BENEFIT. THE ASSESSEE HAD AD MITTED THIS MISTAKE SUO MOTO AND FILED THE REVISED WORKING DURING THE A SSESSMENT PROCEEDING AND PAID THE TAXES DUE. THE LD. A.R. SU BMITTED THAT ASSESSEE HAD NO INTENTION TO EVADE THE TAX. THEREF ORE, AS PER THE DECISION OF MUMBAI TRIBUNAL IN THE CASE OF RICHA DU BEY VS. ITO IN ITA NO.4887/M/2014 REPORTED IN (2016) 158 ITD 541 W HEREIN IT IS HELD THAT IF THE ASSESSEE ITSELF MAKES ANY ATTEMPT TO FILE INCORRECT INCOME AND MAKES AN ATTEMPT TO CLAIM REFUND FROM RE VENUE, EXCEPT IN ASSESSMENT YEAR UNDER APPEAL, WHICH ERRORS HAD A LSO BEEN DULY EXPLAINED BY THE ASSESSEE BY FURNISHING BONA-FIDE E XPLANATION. ITA NO.7494/M/2014 MS. ARCHANA SHANTILAL JAIN 4 THEREFORE, PENALTY CANNOT BE LEVIED UNDER SECTION 2 71(1)(C) OF THE ACT. 5. ON THE OTHER HAND, THE LD. D.R. RELIED UPON THE ORDER OF HONBLE BOMBAY HIGH COURT IN THE CASE OF SAMSON MAR ITIME LTD. VS. CIT IN ITA NO.1718 OF 2014. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE P ARTIES. LOOKING INTO THE FACTS AND CIRCUMSTANCES OF THE CAS E, WE FIND THAT ISSUE IN CONTROVERSY IS COVERED BY THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SOMANY EVERGREE K NITS LTD. (2013) 352 ITR 592 WHEREIN IT IS HELD THAT WHEN THE RE IS A BONAFIDE MISTAKE IN FILING A RETURN OF INCOME BY CA, THEN RE TURN OF INCOME WILL NOT AMOUNT TO FURNISHING OF INACCURATE PARTICU LARS OF INCOME. WE FIND THAT IN THIS CASE THE ASSESSEE HAS NOT TAKE N INTO CONSIDERATION THE INCOME OF SALARY FROM THE FIRST EMPLOYER M/S. S ATYAM COMPUTER AND THIS MISTAKE WAS MADE BY THE TAX CONSULTANT OF THE ASSESSEE. THE AFFIDAVIT WAS FILED BY THE TAX CONSULTANT THAT HE H AS MADE MISTAKE WHILE PREPARING THE RETURN OF INCOME AND WHEN THE T AX CONSULTANT HAS ACCEPTED THIS MISTAKE NO PENALTY CAN BE LEVIED. TH E ASSESSEE HAS ADMITTED THE MISTAKE AND REVISED THE WORKING DURING THE ASSESSMENT PROCEEDING AND IT WAS ACCEPTED BY THE DEPARTMENT. THEREFORE, IN VIEW OF THE DECISION OF HONBLE JURISDICTIONAL BOMB AY HIGH COURT IN THE CASE OF CIT VS. SOMANY EVERGREE KNITS LTD. (SUP RA) WHEREIN THE HIGH COURT HAS HELD AS UNDER: PENALTY U/S 271(1) (C) FURNISHING OF INACCURATE P ARTICULARS BONA FIDE MISTAKE - ASSESSEE SOLD ITS GARMENT MANUFACTURING MACHINE, FO RMING PART OF BLOCK OF ASSETS & CLAIMED LOSS THEREON AS REVENUE EXPENDITURE-IN ASSE SSMENT PROCEEDINGS ITA NO.7494/M/2014 MS. ARCHANA SHANTILAL JAIN 5 ASSESSEE REALIZED ITS MISTAKE & WITHDREW LOSS FROM P&L ACCOUNT-FURTHER, ASSESSEE HAD ALSO CLAIMED EXCESS DEPRECIATIONTHIS HAPPENED DUE TO MISTAKE IN CALCULATION I.E. INSTEAD OF REDUCING AMOUNT OF DEPR ECIATION ON ASSET SOLD, FROM TOTAL DEPRECIATION, SUCH AMOUNT WAS ADDED RESULTING IN EX CESS CLAIMAO DID NOT ACCEPT BOTH MISTAKES & LEVIED PENALTYCIT (A) UPHELD ORDER HELD, BONAFIDE AND INADVERTENT MISTAKE OF A CA WHILE FILING A RETURN O F INCOME WILL NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOMEAS F AR AS LOSS ON SALE OF MACHINERIES WAS CONCERNED, P&L ACCOUNT FILED BY ASS ESSEE ALONG WITH RETURN CLEARLY DESCRIBED LOSS AS LOSS ON SALE OF GARMENT U NIT ASSETSIT WAS THIS LOSS WHICH WAS ADDED TO NET LOSS AS PER P&L ACCOUNT IN COMPUTA TION OF TOTAL INCOME CHARTERED ACCOUNTANT OF ASSESSEE DID NOT ADVISE ASS ESSEE AS TO CORRECT LEGAL POSITION & RETURN WAS FILED ON ABOVE LINESWHEN THI S WAS POINTED OUT IN COURSE OF ASSESSMENT PROCEEDINGS ASSESSEE ACCEPTED ADDITION MADE BY AO IT WAS HELD THAT FIXED ASSETS OF GARMENT DIVISION C LEARLY SHOWED THAT ASSETS SOLD WERE DEPRECIABLE ASSETS, THUS THERE WAS ENOUGH EVID ENCE AVAILABLE IN DOCUMENTS FILED ALONG WITH RETURN TO SHOW THAT CLAI M MADE BY ASSESSEE WERE NOT IN ACCORDANCE WITH LAWTHUS, PLEA OF ASSESSEE THAT CLA IM FOR DEDUCTION WAS MADE ON ACCOUNT OF A BONAFIDE MISTAKE HAD TO BE ACCEPTEDIT WAS HELD THAT WHEN ALL FACTS WERE AVAILABLE ON RECORD IT CANNOT BE SAID THAT ASS ESSEE ATTEMPTED TO FURNISH INACCURATE PARTICULARS OF INCOME PARTICULARSWITH R EGARD TO EXCESS DEPRECIATION, IT WAS HELD THAT IT WAS CLEARLY A MIS TAKE ON PART OF CA OF ASSESSEE WHEN ASSETS COMPRISED IN BLOCK OF ASSETS WERE SOLD SALE VALUE OF ASSETS SOLD HAD TO BE REDUCED FROM BLOCK OF ASSETS AND NO OTHER ADJ USTMENT WAS REQUIREDIN CONTRARY, ASSESSEE WORKED OUT EXCESS DE PRECIATION ON ASSETS OF GARMENT UNIT SOLD DURING PYIT WAS CLEARLY A CAS E OF INCORRECT CLAIMIT WAS HELD THAT BONAFIDE ACT OF ASSESSEE WAS ESTABLISHED FROM FACTS THAT ASSESSEE ACCEPTED MISTAKE AND DID NOT PREFER ANY APPEAL AGAI NST ORDER OF AO NONFURNISHING OF REVISED RETURN DID NOT MEAN THAT BONAFIDE MISTAKE IN MAKING A WRONG CLAIM SHOULD BE VISITED WITH IMPOSIT ION OF PENALTYMOREOVER, TIME FOR FILING A REVISED RETURN HAD ALREADY BEEN E XPIREDPENALTY IMPOSED CANCELLED. 7. RESPECTFULLY FOLLOWING THE SAME, WE ARE OF THE V IEW THAT NO PENALTY CAN BE IMPOSED. HENCE, WE DELETE THE SAME. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 13.10.2017. SD/- SD/- (G. MANJUNATHA) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 13.10.2017. * KISHORE, SR. P.S. ITA NO.7494/M/2014 MS. ARCHANA SHANTILAL JAIN 6 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.