SUBRAMANI RAMCHANDRAN, MUMBAI V. ASST CIT 10(1), MUMBAI

ITA 8521/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9242 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 06-12-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 15-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V KRISHNAMOORTHY
• Assessee Lawyers: P R TOPRANI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E, MUMBAI BEFORE SHRI I.P.BANSAL,JUDICIAL MEMBER & SHRI SANJAY ARORA, ACCOUNTANT MEMBER ITA NO.8521/MUM/2011(A.Y. 2008-09) SHRI SUBRAMANI RAMACHANDRAN, 1102, GLEN HEIGHTS, HIRANANDANI GARDENS, POWAI, MUMBAI - 400 076. PAN:ABTPM 6917C (APPELLANT) VS. THE ACIT 10(1), AAYKAR BHAVAN, MK ROAD, MUMBAI - 20. (RESPONDENT) APPELLANT BY : SHRI P.R.TOPRANI RESPONDENT BY : SHRI V.KRISHNAMOORTHY DATE OF HEARING : 06/12/2012 DATE OF PRONOUNCEMENT : 1 9/12/2012 ORDER PER I.P.BANSAL, J.M THIS IS AN APPEAL FILED BY THE ASSESSEE. IT IS DI RECTED AGAINST THE ORDER PASSED BY LD. CIT(A)-21, MUMBAI DATED 23/9/2011 FOR THE ASSESSMENT YEAR 2008- 09. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE READ AS UNDER: 1. THE LD. CIT (A) ERRED IN LAW AND ON FACTS IN UP HOLDING THE ORDER OF THE ASSESSING OFFICER IN LEVYING PENALTY AT RS.2,69,591 /- UNDER SECTION 271(1)(C) OF THE ACT. 2. THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN IGNO RING THE FACT THAT THE APPELLANT HIMSELF AGREED FOR THE DISALLOWANCE OF RS .7,93,15O/ IN RESPECT OF LONG TERM CAPITAL GAINS MADE ON FT DYNAMIC FOF WHIC H WAS ERRONEOUSLY CONSIDERED BY THE APPELLANT AS EXEMPT LIKE OTHER LO NG TERM CAPITAL GAINS IN THE COMPUTATION OF INCOME. 3. THE LD. CIT(A) OUGHT TO HAVE CONSIDERED THE FACT THAT EVEN THOUGH THE APPELLANT HIMSELF AGREED FOR THE DISALLOWANCE, THE A.O WRONGLY HELD THAT THE APPELLANT HAS FILED INACCURATE PARTICULARS OF INCOM E FOR LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT. ITA NO.8521/MUM/2011(A.Y. 2008-09) 2 4. THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THE DEC ISION RELIED UPON BY THE APPELLANT OF THE APEX COURT IN THE CASE OF RELIANCE PETRO PRODUCTS P.LTD (322 ITR 158) HOLDING THAT MAKING AN INCORRECT CLAIM DOE S NOT AMOUNT TO CONCEALMENT OF PARTICULARS OF INCOME AND PENALTY UN DER SECTION 271(1) (C) IS NOT LEVIABLE IN RESPECT OF THE SAME. 2. THE ASSESSEE IN THE PRESENT APPEAL IS AGGRIEVED WITH THE LEVY OF CONCEALMENT PENALTY AMOUNTING TO RS.2,69,591/-, WHI CH HAS BEEN SUSTAINED BY THE LD. CIT(A). THE ASSESSEE IS AN INDIVIDUAL AND I S A DIRECTOR IN A COMPANY NAMELY M/S. TECHNOVA IMAGING SYSTEMS PVT. LTD. AND MAIN IN COME RETURNED BY THE ASSESSEE WAS REMUNERATION FROM THE SAID COMPANY. A PART FROM THAT AN INCOME OF RS.2,23,191/- WAS SHOWN AS INCOME FROM OTHER SOURCE S. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, GOING THROUGH THE DETAILS R EGARDING LONG TERM CAPITAL GAIN CLAIMED BY THE ASSESSEE TO BE EXEMPTED, THE AO NOTI CED THAT A SUM OF RS.7,93,150/- EARNED AS LONG TERM CAPITAL GAIN BY T HE ASSESSEE ON FT DYNAMIC FOF WAS NOT ELIGIBLE FOR EXEMPTION. THE SAME WAS A DDED TO THE INCOME OF THE ASSESSEE. TO MORE ELABORATE, THE ASSESSEE HAD PURC HASED CERTAIN UNITS OF MUTUAL FUNDS WHICH WERE SOLD AND ON WHICH SECURITY TRANS ACTIONS TAX(STT) WAS PAID. THE DETAILS OF SUCH TRANSACTIONS AS GIVEN BY THE AS SESSEE ARE AS UNDER: NAME OF THE FUND AMOUNT RS. INVESTED DATED INVESTED AMOUNT RS. REDEEMED DATE REDEEMED LONG TERM CAPITAL GAINS STT DEDUCTED BY FUND HOU DSP BR BALANCED FUND 293,044 3-MAY-04 471391 24-JUL-07 178,347 FT BLUECHIP FUND 280,000 6-OCT-03 915111 11-MAY -07 635,111 FT BLUECHIP FUND 120,000 6-OCT-03 539887 7-FEB- 08 419,887 FT DYNAMIC FOF 210,000 31-OCT-03 495852 20-APR- 07 285,852 FT DYNAMIC FOF 100,000 31-OCT-03 388482 11-OCT- 07 288,482 FT DYNAMIC FOF 90,000 31-OCT-03 308816 7-FEB- 08 218,816 FT PRIMA FUND 200,000 30-MAY-05 272493 7-FEB-08 72,493 FT FLEXICAP FUND 200,000 2-MAR-05 215109 13-JUN -07 15,109 FIDELITY SPECIAL SITUATIONS FUND 100,000 22-MAY-06 124792 20-APR-07 24,792 HDFC CAPITAL BUILDER 150,000 27-OCT-04 323340 2 0-APR-07 173,340 HDFC CAPITAL BUILDER 150,000 27-OCT-04 466958 14-FEB-08 316,958 HDFC EQUITY FUND 410,000 18-MAR-06 903555 20-AP R-07 493,555 HDFC EQUITY FUND 400,000 19-SEP-06 996320 10-OC T-07 596,320 HDFC LONGTERM GROWTH 500,000 10-FEB-06 789000 7-JAN-08 289,000 HDFC PRUDENCE FUND 600,000 4-MAR-06 774325 24-J UL-07 174,325 HDFC TOP200 GROWTH 100,000 13-AUG-03 446688 11- MAY-07 346,688 HDFC TOP200 GROWTH 100,000 13-AUG-03 510224 14- FEB-08 410,224 ITA NO.8521/MUM/2011(A.Y. 2008-09) 3 FUND ICICI PRUDISCOVERY FUND 220,000 5-APR-05 317329 18-SEP-07 97,329 ICICI PRUDISCOVERY FUND 300,000 19-SEPT-06 414948 21-SEP-07 114,948 ICICI EDF WEALTH OPTIMIZER FUND 400,000 30-DEC-06 451833 14-FEB-08 51,833 ICICI PRU REGULAR GROWTH FUND 130,000 5-AUG-03 488550 19-JUN-07 358,550 ICICI PRU REGULAR GROWTH FUND 100,000 29-AUG-03 369810 10-OC-07 269,810 ICICI PRU POWER GROWTH FUND 100,000 5-AUG-03 438250 19-JUN-07 338,250 ICICI PRU POWER GROWTH FUND 100,000 29-SEP-03 517800 10-OCT-07 417,800 FT EQUITY INCOME FUND 400,000 19-JUN-06 557863 7-FEB-08 157,863 HDFC EQUITY FUND 110,000 2001-02 536141 13-JUN- 07 426,141 RELIANCE VISION FUND 115,000 17-JUN-03 755353 1 3-JUN-07 640,353 TOTAL LONG TERM CAPITAL GAIN 7812176 2.1 IT CAN BE SEEN FROM THE ABOVE LIST THAT TOTAL L ONG TERM CAPITAL GAIN EARNED BY THE ASSESSEE ON MUTUAL FUNDS WAS A SUM OF RS.78,12, 176/-, OUT OF WHICH GAIN ARISING TO THE ASSESSEE IN RESPECT OF FT DYNAMIC FOF WAS A SUM OF RS.7,93,150/- ON QUERY BY THE AO THE ASSESSEE SUBMITTED THAT THE SAME MAY BE ADDED TO THE INCOME AND HE IS READY TO PAY THE TAX FOR THE SAME . THE ASSESSEE ALSO DID NOT AGITATE THIS ADDITION IN ANY FURTHER APPEAL. 3. ON THESE FACTS IT IS THE CASE OF THE LD. AR THA T THE CLAIM OF THE ASSESSEE WAS ON BONA-FIDE BELIEF THAT THE ITEMS ON WHICH SECURIT Y TRANSACTION TAX PAID ARE EXEMPTED FROM THE LONG TERM CAPITAL GAIN AND WHEN AO ASKED HIM THAT ON THESE FUNDS ASSESSEE WILL NOT BE ENTITLED TO CLAIM EXEMP TION, THE ASSESSEE IMMEDIATELY SURRENDER THE SAID AMOUNT AND EXPRESSED HIS CONSENT TO BEAR THE TAX FOR THAT AMOUNT. TO SUPPORT SUCH CONTENTION LD. AR RELIED UPON THE PROVISIONS OF SECTION 10(38) OF THE ACT, WHEREIN IT HAS BEEN STATED THAT ANY INCOME ARISING TO AN ASSESSEE FROM TRANSFER OF LONG TERM CAPITAL GAIN, B EING AN EQUITY SHARE IN THE COMPANY OR A UNIT OF EQUITY ORIENTED FUND VALUE WIL L NOT BE LIABLE FOR TAX, IF SUCH TRANSACTION IS CHARGEABLE TO STT. LD. AR SUBMITTED THAT WHERE THE ASSESSEE HAS ACTED BONAFIDELY , THE PENALTY CANNOT BE LEVIED IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUC TS P. LTD. (322 ITR 158). ITA NO.8521/MUM/2011(A.Y. 2008-09) 4 4. ON THE OTHER HAND, IT IS THE CASE OF LD. D.R THA T ASSESSEE DELIBERATELY TO AVOID THE INCIDENCE OF TAXATION DID NOT DISCLOSE T HE TRANSACTION WHICH WERE LIABLE TO TAX. HE SUBMITTED THAT ASSESSEE EVEN DID NOT D ISPUTE THE LEVY OF TAX THEREON BUT THAT DOES NOT EXONERATE THE ASSESSEE FROM LEVY OF PENALTY WHICH HAS RIGHTLY BEEN UPHELD BY LD. CIT(A) AND ORDER OF LD. CIT(A) S HOULD BE UPHELD. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS IN THE LIGHT OF THE MATERIAL PLACED BEFORE US. ACCORDING TO THE FACTS OF THE CASE, WE FIND THAT A BONA- FIDE BELIEF COULD BE FORMED BY THE ASSESSEE ON THE GROUND THAT TRANSACTIONS LIABLE FOR STT ARE EXEMPT FROM LEVY OF LONG TERM CAPITAL G AIN TAX. IMMEDIATELY WHEN THE ASSESSEE CAME TO KNOW THAT SUCH TRANSACTIONS ARE LI ABLE FOR TAX, THE ASSESSEE HAS SUBMITTED TO AO THAT TAX MAY BE CHARGED ON THESE TR ANSACTIONS AND ASSESSEE DID NOT CARRY THIS ISSUE IN APPEAL. THE ASSESSEE IS A DIRECTOR OF COMPANY MAINLY DERIVING ITS INCOME AS REMUNERATION FROM THE COMPA NY. HE MAY NOT BE WELL CONVERSANT WITH THE TECHNICALITIES OF LAW ACCORDIN G TO WHICH SUCH TRANSACTIONS ARE LIABLE FOR LONG TERM CAPITAL GAIN TAX. THE CASE L AW RELIED UPON BY THE LD. AR SUPPORTS THE CASE OF THE ASSESSEE AS FACTS AND CIRC UMSTANCES OF EACH CASE HAVE TO BE TAKEN INTO CONSIDERATION WHILE DECIDING THE ISSU E RELATING TO LEVY OF CONCEALMENT PENALTY. KEEPING IN VIEW THE FACTS OF THE PRESENT CASE, WE ARE OF THE OPINION THAT IT IS NOT A FIT CASE WHERE LEVY OF P ENALTY CAN BE HELD TO BE JUSTIFIED. THEREFORE, WE DELETE THE PENALTY AND ALLOW THE APPE AL FILED BY THE ASSESSEE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 19 TH DAY OF DEC. 2012 SD/- SD/- (SANJAY ARORA ) (I.P.BANSAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 19 TH DEC. 2012 ITA NO.8521/MUM/2011(A.Y. 2008-09) 5 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CITY CONCERNED 4. THE CIT(A)- CONCERNED 5. THE D.R E BENCH. (TRUE COPY) BY ORDER ASST. REGISTRAR, I TAT, MUMBAI BENCHES MUMBAI. VM.