DHAVAL DILIP JHAVERI, MUMBAI V. ITO 19(3)(1), MUMBAI

ITA 8057/MUM/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71414 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 14-10-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 23-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: N M PORWAL
• Section: 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI . . , . ! , ' # BEFORE SHRI I.P. BANSAL, JM AND RAJENDRA, AM ./ I.T.A. NO.8057/MUM/2010 ( $ $ $ $ % % % % / ASSESSMENT YEAR : 2005-06 SHRI DHAVAL DILIP JHAVERI, 13, CONCORD APARTMENT, BULLOCK ROAD, BAND STAND, BANDRA (W), MUMBAI - 50 $ $ $ $ / VS. THE INCOME TAX OFFICER 19(3)(1), MUMBAI. & ' ./ ' ./ PAN/GIR NO. : AACPJ 2832K ( &( / APPELLANT ) .. ( )*&( / RESPONDENT ) &( + / APPELLANT BY: SHRI N.M.PORWAL )*&( , + / RESPONDENT BY : SHRI SANJEEV JAIN $ , -' / DATE OF HEARING : 14/10/2013 ./% , -' / DATE OF PRONOUNCEMENT : 14/10/2013 0 / O R D E R PER I.P.BANSAL,J.M: THIS IS AN APPEAL FILED BY THE ASSESSEE. IT IS DIR ECTED AGAINST THE ORDER PASSED BY LD. CIT(A)-30, MUMBAI DATED 27/08/2010 FOR ASSESS MENT YEAR 2005-06. THE GROUNDS OF APPEAL READ AS UNDER: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN CONFIRMING PENALTY OF RS.162896/- LEVIED UNDER SECTION 271(1)( C) OF T HE ACT. PROVISIONS OF THE ACT OUGHT TO HAVE BEEN PROPERLY CONSTRUED AND REGARD BEING HA D TO FACT OF THE CASE NO SUCH PENALTY UNDER SECTION 271(1)( C) OF THE ACT SHOULD HAVE BEEN LEVIED AND CONFIRMED. REASONS ASSIGNED BY HIM ARE WRONG AND INSUFFICIENT TO JUSTIFY LEVY OF PENALTY OF RS. 162896/- UNDER SECTION 271(1)( C) OF THE ACT. ./ I.T.A. NO.8057/MUM/2010 ( $ $ $ $ % % % % / ASSESSMENT YEAR : 2005-06 2 2 (A) THE LEARNED COMMISSIONER OF INCOME TAX (APPEA LS) ERRED IN ARRIVING AT THE CONCLUSION THAT THE APPELLANT HAS CONCEALED THE INC OME AND THEREBY CONFIRMING PENALTY OF RS. 162896/- UNDER SECTION 271(1)( C) OF THE ACT. PROVISIONS OF THE ACT OUGHT TO HAVE BEEN PROPERLY CONSTRUED AND REGARD BE ING HAD TO FACTS OF THE CASE NO SUCH CONCLUSION SHOULD HAVE BEEN ARRIVED AT AND PEN ALTY OF RS. 162896/- SHOULD NOT HAVE BEEN CONFIRMED. (B) WHILE ARRIVING AT SUCH CONCLUSION AND CONFIRMIN G PENALTY OF RS. 162896/- UNDER SECTION 271(1)( C) OF THE ACT, THE LEARNED COMMISSI ONER OF INCOME TAX (APPEALS) FAILED TO CONSIDER RELEVANT FACTS, SUBMISSIONS, DOC UMENTS, EVIDENCES, PRINCIPALS, WHILE HE WAS OVERWHELMED, INFLUENCED AND PREJUDICED BY IRRELEVANT CONSIDERATION AND FACTORS. 3. (A) THE ORDER MADE UNDER SECTION 271(1)( C) OF T HE ACT LEVYING PENALTY OF RS. 162896/- AND CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS ILLEGAL, BAD-IN-LAW, ULTRA VIRUS, CONTRARY TO THE P ROVISION OF THE ACT IN AS MUCH AS THE LEARNED ASSESSING OFFICER FAILED TO ARRIVE AT ANY S ATISFACTION IN THE ASSESSMENT ORDER MADE UNDER SECTION 143(3) OF THE ACT ABOUT FU RNISHING INACCURATE PARTICULARS OF INCOME BY THE APPELLANT. (B) THE ORDER MADE UNDER SECTION 271(1)( C) OF THE ACT LEVYING PENALTY OF RS. 162896/- AND CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS ILLEGAL, BAD-IN-LAW, ULTRA VIRUS, CONTRARY TO THE P ROVISION OF THE ACT IN AS MUCH AS THE LEARNED ASSESSING OFFICER HAS INITIATED PENALTY PRO CEEDINGS FOR FURNISHED INACCURATE PARTICULARS OF INCOME WHEREAS PENALTY HAS BEEN LEVI ED FOR CONCEALMENT OF INCOME I.E. ON THE GROUND DIFFERENT FROM ON WHICH PENALTY PROCEEDINGS WERE INITIATED. 2. IT WAS SUBMITTED BY LD. AR THAT ASSESSEE IN THE RETURN OF INCOME FILED HAD CLAIMED A SUM OF RS. 2,65,31,775/- TO BE EXEMPTED U NDER SECTION 10(36)/10(38). DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASS ESSEE NOTICED THAT AMOUNT OF RS. 14,51,840/- REPRESENTING SALE OF SHARES OF GLENMARK PHARMACEUTICALS LTD. WERE WRONGLY CLAIMED TO BE EXEMPTED UNDER SECT ION 10(36). THE ASSESSEE FILED A LETTER BEFORE AO FOR ADDITION OF AFOREMEN TIONED AMOUNT AND PAID THE TAXES. HE SUBMITTED THAT ALL THESE FACTS ARE DULY RECORDED IN PARA 4 OF THE ASSESSMENT ORDER. IT WAS SUBMITTED THAT IT IS A B ONAFIDE MISTAKE AND UNDER SIMILAR CIRCUMSTANCES IT HAS BEEN HELD BY HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. M/S. BENNETT COLEMAN & CO. LTD . VIDE ORDER DATED 26/02/2013 IN INCOME TAX APPEAL (LOD) NO.2117 OF 20 12 THAT PENALTY HAS RIGHTLY BEEN DELETED. HE HAS PLACED BEFORE US A C OPY OF THE SAID ORDER AND A COPY WAS ALSO GIVEN TO LD. DR. HOWEVER, LD. DR RE LIED UPON THE ORDER PASSED BY LD. AR AND LD. CIT(A). ./ I.T.A. NO.8057/MUM/2010 ( $ $ $ $ % % % % / ASSESSMENT YEAR : 2005-06 3 3. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTENT IONS HAVE CAREFULLY BEEN CONSIDERED. IT WILL BE RELEVANT TO EXTRACT PARA 4 OF THE ASSESSMENT ORDER IN WHICH ALL THE FACTS ARE STATED BY THE A.O. PARA -4 OF T HE ASSESSMENT ORDER READS AS UNDER: 4. IT IS SEEN FROM THE STATEMENT OF LONG TERM CAPI TAL GAINS ENCLOSED WITH THE RETURN OF INCOME THAT THE ASSESSEE HAS CLAIMED EXEM PTION U/S.10(36) / 10(38) OF RS.2,65,31,774/- WHICH INCLUDES EXEMPTION U/S.10(36) OF RS.14,51,8401- ON SALE OF SHARES OF THE SCRIP GLEN MARK PHARMACEUTICALS LTD.. THE DATE OF PURCHASE OF THE SHARES WAS MENTI ONED AS 31.03.2003. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSEE VIDE LETTER DATED 19.12.2007 SUBMITTED THAT THE EXEMPTION U/S.10(36) OF RS.14,51,840/- HAS BEEN WRONGLY CLAIMED IN RESPECT OF PURCHASE OF THE SHARES OF THE SCRIP GLENMARK PHARMACEUTICALS LTD., AS THESE SHARES WER E PURCHASED PRIOR TO .01.03.2003. THE ASSESSEE HAS SUBMITTED REVISED LON G TERM CAPITAL GAIN STATEMENT WITH CORRECT DATE OF PURCHASES AND HAS S UO MOTU OFFERED THE LONG TERM CAPITAL GAIN OF RS.14,51,840/- TO TAX. CON SIDERING THE ASSESSEES EXPLANATION, THE EXEMPTION CLAIMED ULS.1O(36) IN RE SPECT OF SHARES OF THE SCRIP GLENMARK PHARMACEUTICALS LTD. IS WITHDRAWN AND THE LONG TERM CAPITAL GAIN OF RS.14,51 ,8401- IS BROUGHT TO TAX A CCORDINGLY. PENALTY PROCEEDINGS U/S.271(1)(C) OF THE INCOME-TAX ACT, 19 61 ARE INITIATED SEPARATELY FOR FURNISHING INACCURATE PARTICULARS OF INCOME. 3.1 A PERUSAL OF THE AFOREMENTIONED PARA WILL REVEA L THAT UNDER MISTAKE THE ASSESSEE HAS CLAIMED THE AFOREMENTIONED AMOUNT OF R S. 14,05,840/- UNDER THE PROVISIONS OF SECTION 10(36) AND WHEN IT WAS NOTICE D THE REVISED LONG TERM CAPITAL GAIN STATEMENT ALONG WITH CORRECT DATE OF PURCHASE WAS SUO MOTU SUBMITTED BY THE ASSESSEE ALONG WITH PAYMENT DES CRIPTIONS. IN THIS VIEW OF THE SITUATION WE ARE OF THE OPINION THAT THE CLAIM MA DE BY THE ASSESSEE WAS NOT DELIBERATE.. IT WAS AN INADVERTENT MISTAKE WHICH W AS CORRECTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS ITSELF. THEREFORE, WE AR E OF THE OPINION THAT IT IS NOT A FIT CASE FOR LEVY OF PENALTY. IT WILL ALSO BE RE LEVANT TO REFER TO THE AFOREMENTIONED DECISION OF HONBLE BOMBAY HIGH COURT IN WHICH ON SIMILAR MISTAKE THE ASSESSEE DID NOT SHOW 6% RETURN FROM GOVERNMENT OF INDIA CAPITAL INDEX BONDS, THE INTEREST OF WHICH WAS CONSIDERED TO BE TAX FREE ON THE BONA FIDE BELIEF THAT THE SAME ARE EXEMPT FROM TAX AND ASSESS EE PAID THE TAXES DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE TRIBUNAL FO UND THAT THERE WAS NO DESIRE ./ I.T.A. NO.8057/MUM/2010 ( $ $ $ $ % % % % / ASSESSMENT YEAR : 2005-06 4 ON THE PART OF THE ASSESSEE TO HIDE OR CONCEAL THE INCOME SO AS TO AVOID PAYMENT OF TAX ON INTEREST FREE BONDS AND THE ORDER OF THE TRIBUNAL WAS UPHELD. 3.2 IN VIEW OF THE ABOVE DISCUSSION THE APPEAL FI LED BY THE ASSESSEE IS ALLOWED AND THE PENALTY IS DELETED. 4. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 /10/2013 0 , ./% ' 1 2$3 14 /10//2013 / , 4 SD/- SD/- ! (RAJENDRA) . . (I.P.BANSAL) ' /ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; 2$ DATED 14/10/2013 . $ . .VM , SR. PS 0 0 0 0 , ,, , )-56 )-56 )-56 )-56 7 6%- 7 6%- 7 6%- 7 6%- / COPY OF THE ORDER FORWARDED TO : 1. &( / THE APPELLANT 2. )*&( / THE RESPONDENT. 3. 8 ( ) / THE CIT(A)- 4. 8 / CIT 5. 694 )-$ , , / DR, ITAT, MUMBAI 6. 4: ; / GUARD FILE. 0$ 0$ 0$ 0$ / BY ORDER, *6- )- //TRUE COPY// < << < / = = = = (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI