NIMESH I SHAH, MUMBAI V. ACIT CIR 4(2), MUMBAI

ITA 8135/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 5124 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 30-04-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 05-12-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Keywords: Tangible material; Wrong claim

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO. 8135/MUM/2011 ASSESSMENT YEAR: 2005-06 NIMESH I. SHAH 11/13, HORNIMAN CIRCLE, 2 ND FLOOR, BOTAWALA BUILDING, ROOM NO. 7, FORT. MUMBAI-. 400 001 PAN :ANQPS 5918 L VS. A.C. OF I.T. CIR. 4(2)/CIT APPEAL 8, AAYAKAR BHAVAN MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI NISHIT GANDHI RESPONDENT BY : SHRI S.S. RANA DATE OF HEARING : 23.10.2013 DATE OF PRONOUNCEMENT : 20.11.2013 O R D E R PER DR. S.T.M. PAVALAN, JM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE LD.CIT(A) -8, MUMBAI DATED 07.10.2011 CONFIRMING TH E PENALTY OF RS.20,310/- LEVIED WITH THE AO UNDER SECTION 271(1)(C) OF THE I NCOME TAX ACT FOR THE ASSESSMENT YEAR 2005-06. 2. BRIEFLY STATED, THE ASSESSEE, AN INDIVIDUAL ENGA GED IN THE BUSINESS OF SHARE AND STOCK BROKING, WHILE FILING THE RETURN OF INCOM E HAD CLAIMED LOSSES OF RS.56,615/- ON ACCOUNT OF DIVIDEND STRIPPING. DURIN G THE ASSESSMENT PROCEEDINGS, THE AO, ON OBSERVING THE SAME, REQUESTED THE ASSESS EE TO EXPLAIN AS TO WHY THE SAID LOSS SHOULD NOT BE DISALLOWED. IN RESPONSE, TH E ASSESSEE HAD SUBMITTED A STATEMENT SHOWING THE SCRIPTS WHICH WERE COVERED BY SECTION 94 (7) OF THE INCOME TAX ACT AND CONVEYED NO OBJECTION FOR MAKING A DISA LLOWANCE OF RS.56,615/- UNDER ITA NO. 8135/MUM/2011 NIMESH I. SHAH ASSESSMENT YEAR: 2005-06 2 THE SAID PROVISION. IN PURSUANCE OF SAID NO OBJECTI ON BY THE ASSESSEE, THE SAID LOSS OF RS.56,615/- WAS DISALLOWED AND THERE BY THE AO A DDED THE SAME TO THE INCOME OF THE ASSESSEE. CONSEQUENTLY IN THE PENALTY PROCEEDIN G, THE AO LEVIED A PENALTY OF RS.20,310/- WHICH IS 100% OF TAX SOUGHT TO BE EVADE D AS THE ASSESSEE HAS CONCEALED THE INCOME BY PROVIDING INACCURATE PARTIC ULARS WITHIN THE MEANING OF SECTION 271(1)(C). ON APPEAL THE LD.CIT(A) CONFIRME D THE LEVY OF PENALTY. AGGRIEVED BY THE IMPUGNED ORDER, THE ASSESSEE IS IN APPEAL BE FORE US. 3. BEFORE US, THE LD.AR OF THE ASSESSEE HAS STATED THAT WHILE CLAIMING THE LOSS ON ACCOUNT OF DIVIDEND STRIPPING, THE ASSESSEE HAS INADVERTENTLY INCLUDED RS.56,615/- WHICH IS OTHERWISE TO BE DISALLOWED U/S 94 (7). HOWEVER, IT HAS BEEN REALISED BY THE ASSESSEE ONLY WHEN THE NOTICE HAS B EEN RECEIVED FROM THE INCOME TAX AUTHORITIES AND ON REALISING THE SAID MISTAKE, THE ASSESSEE HIMSELF HAS VOLUNTARILY OFFERED FOR THE DISALLOWANCE OF THE IMP UGNED AMOUNT. THEREFORE, THERE IS NO CONCEALMENT OF INCOME BY PROVIDING INACCURATE PA RTICULARS WHICH IS EVIDENCED BY THE BONA FIDE ACT OF THE ASSESSEE. HENCE, THE LD.CI T(A) OUGHT NOT TO HAVE CONFIRMED THE PENALTY LEVIED BY THE AO. IN SUPPORT OF THE CLA IM OF THE ASSESSEE, THE LD.AR HAS RELIED ON THE DECISION OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF DIT VS. THE ADMINISTRATOR OF ESTATE OF LATE MR. E.F. DINSHA W REPORTED IN [2013] 35 TAXMAN.COM 95 (BOM). ON THE OTHER HAND THE LD.DR HA S STATED THAT ONLY WHEN THE SCRUTINY ASSESSMENT HAS BEEN STARTED U/S 143(3), TH E ASSESSEE HAS ADMITTED FOR THE DISALLOWANCE OF THE AMOUNT. EVEN IF THE ASSESSEE WO ULD NOT HAVE DISCLOSED/ADMITTED THE SAME, THE AO, WOULD, IN ANY CASE, HAVE MADE THE DISALLOWANCE. THEREFORE, THE CONTENTION OF THE ASSESSEE THAT HE HAS VOLUNTARILY OFFERED THE DISALLOWANCE U/S 94(7) CANNOT ABSOLVE HIM FROM THE CONSEQUENCES OF PENALTY . 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. IT IS NOT DISPUTED THAT THE ASSESSEE HAS WRONGLY INCLUDED A C LAIM OF RS.56,615/- ON ACCOUNT OF DIVIDEND STRIPPING, WHICH IS CLEARLY DISALLOWABL E U/S 94(7) AND THE ASSESSEE HIMSELF HAS OFFERED THE SAID AMOUNT FOR DISALLOWANC E DURING THIS SCRUTINY ANY ASSESSMENT PROCEEDINGS. THE ONLY ISSUE TO BE DECIDE D BY US IS WHETHER THE CLAIM OF THE ASSESSEE IS AN INADVERTENT ERROR ACTUATED BY BO NA FIDE BELIEF OR NOT. IT IS PERTINENT TO MENTION THAT THE ASSESSEE HAS NOT SHOW N ANY TANGIBLE MATERIAL OR BASIS ITA NO. 8135/MUM/2011 NIMESH I. SHAH ASSESSMENT YEAR: 2005-06 3 AS TO WHY THE CLEAR STATUTORY PROVISION WHICH EXCLU DES THE ALLOWABILITY OF THE IMPUGNED CLAIM HAS BEEN INCLUDED BY THE ASSESSEE. I N THE ABSENCE OF WHICH, WE ARE NOT INCLINED TO ACCEPT THE CONTENTION OF THE ASSESS EE THAT THE CLAIM IS OUT OF BONA FIDE ACT OR OMISSION OF THE ASSESSEE. AS REGARDS TH E DECISION OF THE HOINBLE BOMBAY HIGH COURT IN THE CASE OF ADMINISTRATOR OF THE ESTA TE OF LATE MR. E.F. DINSHAW (SUPRA) RELIED ON BY THE ASSESSEE, THE SAME IS DIST INGUISHABLE FROM THE FACTS OF THE PRESENT ASSESSEE IN THE SENSE THAT IN THE SAID DECI SION, THE CLAIM OF THE ASSESSEE RELATES TO THE ADJUSTMENT OF THE DIVIDEND INCOME AG AINST SHORT TERM CAPITAL GAIN IN VIEW OF SECTION 94(7) INVOLVES CERTAIN DEBATABLE IS SUE WHETHER REDEMPTION OF UNITS WOULD MEAN TRANSFER WITHIN THE MEANING OF SECTION 2(47) OF THE ACT. WHEREAS, IN THE PRESENT CASE, THE ASSESSEE HAS NOT BROUGHT ANYT HING ON RECORD TO ESTABLISH THAT THE WRONG CLAIM IN THE RETURN OF INCOME IS ACTUATED BY ANY SUCH BONAFIDE ACT OR ARISES OUT OF DEBATABLE ISSUE. INSTEAD, THE ASSESSE E HAS ONLY STATED THAT HE HAS VOLUNTARILY OFFERED FOR THE DISALLOWANCE OF RS.56,6 15/- DURING THE SCRUTINY PROCEEDINGS. IT IS PERTINENT TO MENTION THAT THE ST ATUTE DOES NOT RECOGNIZE THIS TYPE OF DEFENCE UNDER EXPLANATION 1 TO SECTION 271(1)(C) OF THE ACT. IT IS TRITE LAW THAT THE VOLUNTARY DISCLOSURE DOES NOT RELEASE THE ASSESSEE FROM THE MISCHIEF OF PENAL PROCEEDINGS. THE LAW DOES NOT PROVIDE THAT WHEN AN ASSESSEE MAKES A VOLUNTARY DISCLOSURE OF HIS CONCEALED INCOME, HE HAD TO BE AB SOLVED FROM PENALTY. IN VIEW OF THE AFOREMENTIONED DISCUSSION, WE DO NOT FIND ANY J USTIFIABLE REASON TO INTERFERE WITH THE ORDER OF THE LD.CIT(A) CONFIRMING THE PENALTY L EVIED BY THE AO AND THUS THE SAME IS UPHELD. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 20 TH DAY OF NOVEMBER, 2013. SD/- SD/- (SANJAY ARORA) (DR. S.T.M. PAVALAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 20.11.2013. *SRIVASTAVA ITA NO. 8135/MUM/2011 NIMESH I. SHAH ASSESSMENT YEAR: 2005-06 4 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR B BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.