FARHAD KHURSHED WADIA, MUMBAI V. ACIT ,CIR16(1), MUMBAI

ITA 877/MUM/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9820 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 22-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Assessee Lawyers: KISHOR PATEL
• Keywords: Bonafide belief; Revised return; Bonafide mistake
• Section: 143(3); 142(1)

Judgement Text

ITA 877/MUM/2016 - MR. FARHAD KHURSHEED WADIA 1 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI G.S PANNU , AM AND SHRI RAVISH SOOD, JM ./ I.T.A. NO . 877 /MUM/2016 ( / ASSESSMENT YEAR: 20 11 - 12 ) MR. FARHAD KHURSHED WADIA C/O. S.R CHITALIA & CO.,C.A 252/258, EKTA CHS LTD., ROOM NO. 12, 1 ST FLOOR, KRANTI NAGAR, J.S.S ROAD, GIGAUM, MUMBAI - 400 004. / VS. ASST. CIT , CIRCLE - 16(1), MUMBAI . ./ ./ PAN/GIR NO. AAEPW8463B ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI. KISHOR PATEL / RESPONDENT BY : SHRI. V. JUSTIN , D.R / DATE OF HEARING : 0 5 .0 7 .2017 / DATE OF PRONOUNCEMENT : 26 .0 7 .2017 / O R D E R PER RAVISH SOOD, J UDICIAL MEMBER : THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A) - 30, MUMBAI, FOR A.Y. 20 11 - 12 , DATED 14 . 12 .201 5 , WHICH IN ITSELF ARISES FROM THE ORDER PASSED BY THE A.O UNDER SEC. 271(1)(C) OF THE INCOME - TAX ACT, 1961 (FOR SHORT ACT), DATED. 23.06.2014 . T HE ASSESSEE ASSAILING THE ORDER OF THE CIT(A) HAD RAISED THE FOLLOWING GROUNDS OF APPEAL: - ITA 877/MUM/2016 - MR. FARHAD KHURSHEED WADIA 2 1. THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING THE PENALTY OF RS. 6,21,100/ - LEVIED U/S 271(1)(C) OF THE INCOME - TAX ACT, 1961. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE PENALTY U/S 271(10 IMPOSED ON THE APPELLANT OUGHT TO BE DELETED. 2. APPELLANT CRAVES LEAVE TO ADD, ALTER, MODIFY, AMEND, DELETE AND/OR WITHDRAW THE GROUND OF APPEAL. 3. APPELLANT PRAYS FOR APPROPRIATE RELIEF . 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE WHO WAS EMPLOYED WITH E - 18 DIVISION OF NETWORK 18 MEDIA & INVESTMENTS LIMITED AND HAVING SALARY AS HIS MAIN SOURCE OF INCOME, HAD FILED HIS RETURN OF INCOME ON 20.07.2011 , DECLARING TOTAL INCOME OF RS. 68,02,888/ - , WHICH WAS PROCESSED AS SUCH U/S 143(1) OF THE ACT. THAT THE CASE OF THE ASSESSEE WAS TAKEN UP FOR SCRUTINY ASSESSMENT AND A NOTICE U/S 143(2) DATED. 08.09.2012 WAS ISSUED TO THE ASSESSEE, THE ASSESSEE IN RESPONSE TO THE AFORESAID NOTICE U/S 143(2), THEREIN FILED A LETTER DATED. 17.09.2012 WITH THE A.O . THAT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS FOR THE IMMEDIATE PRECEDING YEAR, VIZ. A.Y. 2010 - 11 , WHICH TOO WAS PENDING AT THE RELEVANT POINT OF TIME, THE CHARTERED ACCOUNTANT OF THE ASSESSEE WHILE RECONCILING THE INCOME AND TDS WITH FORM 26AS, THEREIN REA LIZED THAT CERTAIN INTEREST INCOME PERTAINING TO A.Y. 2010 - 11 AND A.Y. 2011 - 12 HAD REMAINED OMITTED TO BE OFFERED FOR TAX, AS WELL AS NO CLAIM OF CREDIT OF THE TDS CORRESPONDING TO SUCH INTEREST INCOME WAS RAISED IN THE RETURNS OF INCOME FOR BOTH OF THE SAID RESPECTIVE YEARS . THE ASSESSEE THUS IN ORDER TO UNDO THE AFORESAID MISTAKE, THUS COMP I LED THE REVISED COMPUTATIONS OF INCOME FOR BOTH OF THE RESPECTIVE YEARS, VIZ. A.Y 2010 - 11 AND A.Y. 2011 - 12 , WHICH AFTER DEPOSITING THE DEFICIT/SHORTFALL TOWARDS TAX AND INTEREST U/SS. 234B/234C, AS APPLICABLE, IN RESPECT ITA 877/MUM/2016 - MR. FARHAD KHURSHEED WADIA 3 OF THE RESPECTIVE INTEREST INCOME WERE FILED WITH THE A.O. THAT THE SAID FILING OF THE REVISED COMPUTATIONS OF INCOME FOR A.Y(S). 2010 - 11 AND 2011 - 12, IN THE BACKDROP OF THE SEQUENCE OF EVENTS IN A CHRONOLOGICAL MANNER, AS GA THERED FROM THE RECORDS, ARE TABULATED AS UNDER: - PARTICULARS A.Y. 2011 - 12 A.Y. 2010 - 11 ORIGINAL RETURN OF INCOME FILED 20.07.2011 26.07.2010 NOTICE U/S 143(2) ISSUED SELECTING THE CASE FOR SCRUTINY ASSESSMENT. 08.09.2012 25.08.2011 REPLY TO THE NOTICE ISSUED U/S 143(2). 17.09.2012 05.09.2011 REVISED COMPUTATION OF INCOME FILED WITH THE A.O. 22.11.2012 08.11.2012 ADDITIONAL INCOME OFFERED FOR TAX IN REVISED COMPUTATION OF INCOME. RS. 24,03,420/ - RS.12 , 88,273/ - NOTICE U/S 142(1) ALONGWITH QUESTIONNAIRE ISSUED. 06.08.2013 05.10.2012 ASSESSMENT FRAMED U/S 143(3). 24.12.2013 22.02.2013 3. THAT THE BIFURCATED DETAILS OF THE INTEREST INCOME WHICH HAD REMAINED OMITTED TO BE OFFERED FOR TAX BY THE ASSESSEE IN HIS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION, WAS AS UNDER: - S.NO. NAME OF PARTY INTEREST INCOME (RS.) 1. NET 4 INDIA LTD. 4,87,987/ - 2. DARSHAW K.D.B MEHTA 5,84,109/ - 3. SHAPOORJEE CHANDHBHOY FINVEST PVT. LTD. 1,42,489/ - ITA 877/MUM/2016 - MR. FARHAD KHURSHEED WADIA 4 4. BAMAN K.D.B MEHTA 7,63,835/ - SUB - TOTAL 19,78,420/ - 5 . ICICI BANK LTD. 31,302/ - TOTAL 20,09,722/ - THE ASSESSEE AFTER SUO MOTTO DEPOSITING THE DEFICIT TAX ALONGWITH INTERESTS U/SS. 234B/234C AGGREGATING TO RS. 6,60,910/ - (AFTER CLAIMING CREDIT OF TDS CORRESPONDING TO SUCH INTEREST INCOME) FOR THE YEAR UNDER CONSIDERATION, VIZ. A.Y. 2011 - 12, THEREIN AS ON 23.11.2012, FILED WIT H THE A.O THE REVISED COMPUTATION OF INCOME, WHEREIN AFTER INCLUDING THE AFORESAID INTEREST INCOME OF RS. 20,09,722/ - (FORMING PART OF ADDITIONAL INCOME OF RS. 24,03,420/ - ), THE TOTAL REVISED INCOME STOOD REFLECTED AT RS. 92,37,010/ - . 4. THE A.O AFTER T AKING COGNIZANCE OF THE REVISED COMPUTATION OF INCOME FILED BY THE ASSESSEE, THEREIN ACCEPTED THE SAME AND VIDE HIS ORDER PASSED UNDER SEC. 143(3), DATED. 24.12.2013, ASSESSED THE TOTAL INCOME OF THE ASSESSEE AT THE AMOUNT SHOWN BY THE ASSESSEE IN HIS REVISED COMPUTATION OF INCOME, VIZ. RS. 92,37,010/ - (SUPRA). HOWEVER, T HE A.O NOT FINDING FAVOR WITH THE SUBMISSIONS OF THE ASSESSEE THAT AS NEITHER THE DETAILS OF THE INTEREST INCOME PERTAINING TO THE ADVANCES/LOANS TO THE RESPECTIVE PARTIES, VIZ. (I) . NET 4 INDIA LTD. (F.D); (II). DARSHAW K.D.B MEHTA MEHTA; (III). SHAPOORJEE CHANDBHOY FIN. PVT. LTD; AND (IV). BARMAN K D B MEHTA, WERE AVAILABLE WITH THE ASSESSEE AT THE TIME OF FILING OF THE RETURN OF INCOME, THEREFORE THE SAME ALONGWITH THE CORRESPON DING TDS HAD THEREIN REMAINED OMITTED TO BE REFLECTED IN THE RETURN OF INCOME , THUS REJECTED THE SAID EXPLANATION OF THE ASSESSEE. THE A.O ALSO DID NOT FIND HIMSELF TO BE IN AGREEMENT WITH THE C ONTENTION OF THE ASSESSEE THAT AS THE BANK STATEMENT OF ICICI BANK ACCOUNT WHICH WAS OPERATED BY HIM THROUGH NET BANKING WAS NOT AVAILABLE WITH HIM AT THE TIME OF FILING OF THE ITA 877/MUM/2016 - MR. FARHAD KHURSHEED WADIA 5 RETURN OF INCOME, THEREFORE , INADVERTENTLY THE INTEREST INCOME AS REGARDS THE SAME HAD REMAINED OMITTED TO B E INCLUDED IN THE RETURNED INCOME, THEREIN HELD A CONVICTION THAT THE AS SESSEE HAD CONCEALED HIS INCOME, THEREFORE INITIATED PENALTY PROCEEDINGS UNDER SEC. 271(1)(C) IN THE HANDS OF THE ASSESSEE. THAT THE ASSESSEE ACCEPTED THE ASSESSMENT ORDER AND DID NOT ASSAIL THE SAME BEFORE THE CIT(A). 5. THE A.O AFTER CULMINATING THE ASSESSMENT PROCEEDINGS, THEREIN INITIATED PENALTY PROCEEDINGS UNDER SEC. 271(1)(C) IN THE HANDS OF THE ASSESSEE. THE A.O NOT FINDING FAVOR WITH THE SUBMISSIONS OF THE ASSESSEE, AND RATHER BEING OF THE VIEW THAT THE ASSESSEE HAD DELIBERATELY NOT DISCLOSED THE INTEREST INCOME AGGREGATING TO RS. 20,09,722/ - (RS. 19,78,420/ - (+) RS. 31,302/ - ) , THUS VIDE HIS ORDER DATED. 23.06.2 014 IMPOSED A PENALTY OF RS. 6,21,100/ - FOR CONCEALMENT OF INCOME UNDER SEC. 271(1)(C) IN THE HANDS OF THE ASSESSEE. 6 . THE ASSESSEE BEING AGGRIEVED WITH THE ORDER PASSED BY THE A.O IMPOSING PENALTY OF RS. 6,21,100 / - UNDER SEC. 271(1)(C), THEREIN ASSAILED THE SAME BEFORE THE CIT(A). THE CIT(A) AFTER DELIBERATING ON THE CONTENTIONS OF THE ASSESSEE, THEREIN CONCLUDED THAT THE EXPLANATION OF THE ASSESSEE AS REGARDS NOT REFLECTING THE INTEREST INCOME AGGREGATING TO RS. 20,09,722/ - (SUPRA) IN HIS RETURN OF INCOME , WAS NEITHER FOUND TO BE BONAFIDE , NOR COULD BE SUBSTANTIATED BY THE ASSESSEE, THEREFORE , IT COULD SAFELY BE CONCLUDED THAT THE CASE OF THE ASSESSEE WAS COVERED BY THE DEEMING PROVISIONS OF EXPLANATION 1 OF SEC. 271(1)(C). THE CIT(A) THUS HOLDING A CONVICTION THAT THE ASSESSEE BEING GUIDED BY A MALAFIDE INTENTION HAD THUS INTENTIONALLY NOT OFFERED THE INTEREST INCOME OF RS. 20,09,722/ - (SUPRA) FOR TAX IN HIS RETURN OF INCOME, THUS UPHELD ITA 877/MUM/2016 - MR. FARHAD KHURSHEED WADIA 6 THE ORDER OF THE A.O IM POSING PENALTY UNDER SEC. 271(1)(C) AND DISMISSED THE APPEAL OF THE ASSESSEE. 7. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) UPHOLDING THE PENALTY IMPOSED BY THE A.O UNDER SEC. 271(1)(C), HAD THEREIN CARRIED THE MATTER IN APPEAL BEFORE US. THAT AT THE VERY OUTSET OF THE HEARING OF THE APPEAL IT WAS AVERRED BY THE LD. AUTHORI Z ED REPRESENTATIVE (FOR SHORT A.R) FOR THE ASSESSEE, THAT AS THE ASSESSEE HAD ON SUO MOTTO BASIS OFFERED THE INTEREST INCOME OF RS. 20,09,722/ - (SUPRA) FOR TAX IN THE REVISED COMPUTATION OF INCOME WHICH WAS FILED WITH THE A.O, AND HAD BEEN ACCEPTED BY THE LATTER IN TOTO , AS SUCH, THEREFORE THE ASSESSEE COULD NOT BE VISITED WITH PENALTY PROCEEDINGS UNDER SEC. 271(1)(C) IN RESPECT OF SUCH ADDITIONAL INCO ME WHICH THOUGH HAD INADVERTE N TLY REMAINED OMITTED TO BE OFFERED FOR TAX IN THE RETURN OF INCOME, BUT THEREAFTER HAD V O LUNTARILY BEEN OFFERED FOR TAX BY THE ASSESSEE. THE LD. A.R IN ORDER TO DRIVE HOME HIS CONTENTION THAT ADDITIONAL INCOME DISCLOSED BY T HE ASSESSEE ON SUO MOTTO BASIS, THOUGH AFTER ISSUANCE OF A NOTICE UNDER SEC. 143(2), CANNOT SOLELY ON THE SAID COUNT LEAD TO LEVY OF PENALTY UNDER SEC. 271(1)(C), THEREIN RELIED ON THE ORDER OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. AS HOK RAJ NATH (ITA NO. 2970/DEL/2012; DATED. 31.08.2012) AS WELL AS THE ORDER OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF MS. PREMA GOPAL RAO VS. DCIT (ITA NO. 8653/MUM/2011; DATED. 07.01.2015). THE LD. A.R FURTHER SUBMITTED THAT THE AFORESAID INAD VERTENT OMISSION OF THE INTEREST INCOME CAME TO THE NOTICE OF THE CHARTERED ACCOUNTANT OF THE ASSESSEE, WHILE THE LATTER DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS IN THE CASE OF THE ASSESSEE FOR THE IMMEDIATELY PRECEDING YEAR, VIZ. A.Y. 2010 - 11 WAS RECONCILING THE INTEREST INCOME SHOWN IN THE RETURN OF INCOME, AS AGAINST THAT AS STOOD REFLECTED IN FORM 26AS. ITA 877/MUM/2016 - MR. FARHAD KHURSHEED WADIA 7 THE LD. A.R IN THE BACKDROP OF THE AFORESAID FACTUAL MATRIX THEREIN AVERRED THAT THE ASSESSEE ON LEARNING OF HIS INADVERTENT MISTAKE, WHERE IN THE INTEREST INCOME ALONGWITH THE CLAIM TOWARDS CREDIT OF THE CORRESPONDING TDS HAD REMAINED OMITTED TO BE SHOWN BY THE ASSESSEE ,BOTH IN THE RETURN O F INCOME FOR A.Y. 2010 - 11 AND A.Y. 2011 - 12, THEREFORE IN ORDER TO UNDO THE SAID BONAFIDE MISTAKES, HA D FILED THE RESPECTIVE REVISED COMPUTATIONS OF INCOME FOR BOTH OF THE AFOREMENTIONED YEARS, THEREIN OFFERING FOR TAX THE INTEREST INCOME OF RS. 12,88,273/ - AND RS. 20,09,722/ - , RESPECTIVELY. THE LD. A.R IN ORDER TO FORTIFY HIS AFORESAID CONTENTION, THE REIN DREW OUR ATTENTION TO THE ASSESSMENT ORDER FOR A.Y. 2010 - 11 PASSED BY THE A.O U/S 143(3), DATED 22.02.2013, PLACED AT PAGE 39 - 40 OF HIS PAPER BOOK (FOR SHORT APB), WHEREIN THE SAID CLAIM OF THE LD. A.R STOOD CORROBORATED. THE LD. A.R IN THE BACKDR OP OF THE AFORESAID FACTS THEREIN SUBMITTED THAT THOUGH THE A.O HAD NOT INITIATED ANY PENALTY PROCEEDINGS UNDER SEC. 271(1)(C) IN RESPECT OF SIMILAR INTEREST INCOME OF RS. 12,88,273/ - (SUPRA) WHICH WAS OFFERED FOR TAX BY WAY OF REVISED COMPUTATION OF INC OME WHILE FRAMING THE ASSESSMENT UNDER SEC. 143(3) IN THE CASE OF THE ASSESSEE FOR THE IMMEDIATE PRECEDING YEAR, VIZ. A.Y. 2010 - 11 , SPECIFICALLY WHEN IT WAS IN THE COURSE OF THE PROCEEDINGS FOR THE SAID YEAR THAT THE SAID INADVERTENT MISTAKE HAD CAME TO THE NOTICE OF THE ASSESSEE, BUT HOWEVER HAD ACTED IN A WHIMSICAL MANNER AND IMPOSED PENALTY U/S 271(1)(C) IN RESPECT OF SIMILAR INTER EST INCOME OF RS. 20,09,722/ - (SUPRA) WHICH WAS OFFERED FOR TAX BY THE ASSESSEE BY WAY OF REVISED COMPUTATION OF INCOME DURING THE YEAR UNDER CONSIDERATION , VIZ. A.Y. 2011 - 12. THE LD. A.R IN ORDER TO TAKE SUPPORT OF HIS AFORESAID CONTENTION, THEREIN RELIE D ON THE ORDER OF THE COORDINATE BENCHES OF THE TRIBUNAL, VIZ. ORIENT PRESS LTD VS. JCIT (2006) 99 TTJ 1091 (MUM) AND SHRI C.P MOHANDAS VS. DCIT, CENTRAL CIRCLE - 1(1), PUNE (ITA NO. 957/PN/2011); DATED. ITA 877/MUM/2016 - MR. FARHAD KHURSHEED WADIA 8 29.05.2015. PER CONTRA, THE LD. DEPARTMENTAL REPRES ENTATIVE (FOR SHORT D.R) RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. IT WAS SUBMITTED BY THE LD. D.R THAT THE CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY FOR THE VERY REASON THAT THERE WAS A MISMATCH BETWEEN THE INTEREST INCOME REFLECTED BY THE ASSESSEE IN HIS RETURN OF INCOME, AS AGAINST THAT AS STOOD REFLECTED IN HIS FORM 26AS. THE LD. D.R THUS IN THE BACKDROP OF THE AFORESAID FACTS THEREIN AVERRED THAT AS THE ASSESSEE WAS WELL AWARE THAT HIS CASE HAD BEEN TAKEN UP FOR SCRUTINY PROCEEDINGS FOR THE AFORESAID REASON, HE THEREFORE O N FINDING HIMSELF CORNERED, THEREFORE , HAD CAME FORTH WITH THE AFORESAID REVISED COMPUTATION OF INCOME. IT WAS FURTHER SUBMITTED BY THE LD. D.R THAT THE REVISED COMPUTATION OF INCOME HAD NO EXISTENCE IN THE EYES OF LAW, AND THUS THE SAME CANNOT BE PLACED AT PAR WITH A REVISED RETURN OF INCOME. THE LD. D.R THUS IN THE BACKDROP OF HIS AFORESAID AVERMENTS, THEREIN SUBMITTED THAT THE A.O HAD RIGHTLY IMPOSED PENALTY UNDER SEC. 271(1)(C) IN THE HANDS OF THE ASSESSEE, WHICH AFTE R THOROUGH DELIBERATIONS HAD BEEN UPHELD BY THE CIT(A). THE LD. D.R THUS SUBMITTED THAT THE APPEAL OF THE ASSESSEE WAS DEVOID OF ANY FORCE AND WAS THUS LIABLE TO BE DISMISSED. 8. WE HAVE HEARD THE AUTHORIZED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED T HE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL PLACED ON RECORD. WE FIND THAT THE ASSESSEE HAD VOLUNTARILY AS ON 23.11.2012, THOUGH AFTER RECEIVING THE NOTICE UNDER SEC. 143(2) ON 17.09.2012, BUT PRIOR TO RAISING OF ANY QUERIES BY THE A.O IN RESPECT OF THE INTEREST INCOME RECEIVED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION, VIZ. A.Y. 2011 - 12, THEREI N REALIZING HIS INADVERTENT MISTAKE OF HAVING OMITTED TO REFLECT THE INTEREST INCOME AGGREGATING TO RS. 20,09,722/ - (SUPRA), THEREIN FILED A REVISED COMPUTATION OF INCOME WITH THE A.O, WHEREIN THE AFORESAID INTEREST INCOME STOOD DULY REFLECTED. WE FIND ITA 877/MUM/2016 - MR. FARHAD KHURSHEED WADIA 9 T HAT THE A.O HAD ACCEPTED THE REVISED COMPUTATION OF INCOME FILED BY THE ASSESSEE WITH HIM, AND THEREIN ASSESSED THE LATTERS RETURNED INCOME AT THE SAME AMOUNT. WE ARE OF THE CONSIDERED VIEW THAT THOUGH TECHNICALLY THE ASSESSEE ON REALIZING HIS BONAFIDE M ISTAKE OF HAVING OMITTED TO HAVE REFLECTED THE INTEREST INCOME OF RS. 20,09,722/ - (SUPRA), THUS IN ORDER TO UNDO THE SAME, TH OUGH OUGHT TO HAVE FILED A REVISED RETURN OF INCOME AS CONTEMPLATED UNDER SEC. 139(5), HAD HOWEVER FILED A REVISED COMPUTATION OF INCOME, REMAINING UNDER A BONAFIDE BELIEF THAT THE SAME WOULD SERVE THE PURPOSE. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FACTS OF THE CASE AND ARE OF THE CONSIDERED VIEW THAT AS PENALTY PROCEEDINGS ARE QUASI CRIMINAL PROCEEDINGS, THEREFORE MERELY FOR TECHNICAL LAPSES AN ASSESSEE CANNOT BE VISITED WITH LEVY OF PENALTY. THE HONBLE SUPREME COURT IN THE CASE OF HINDUSTAN STEEL LIMITED VS. STATE OF ORISSA (1972) 83 ITR 26 (SC) WHILE DEALING WITH THE SCOPE AND GAMUT OF PENALTY PROCEEDINGS, AND CATEGO RIZING THE SAME AS QUASI CRIMINAL PROCEEDINGS, HAD HELD AS UNDER: - AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF A QUASI - CRIMINAL PROCEEDING, AND PENALTY WILL NOT ORDINARILY BE IMPOSED UNLESS THE PARTY OBLIGED , EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST, OR ACTED IN CONSCIOUS DISREGARD OF ITS OBLIGATION. PENALTY WILL NOT ALSO BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IMPOSED F OR FAILURE TO PERFORM A STATUTORY OBLIGATION IS A MATTER OF DISCRETION OF THE AUTHORITY TO BE EXERCISED JUDICIALLY AND ON A CONSIDERATION OF ALL THE RELEVANT CIRCUMSTANCES. EVEN IF A MINIMUM PENALTY IS PRESCRIBED, THE AUTHORITY COMPETENT TO IMPOSE THE PENA LTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY, WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT OR WHERE THE BREACH FLOWS FROM A BONA FIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE. WE FIND THAT IN THE BACKDROP OF THE AFORESAID JUDGMENT OF THE HONBLE APEX COURT , IT CAN SAFELY BE CONCLUDED THAT NOW WHEN THE ASSESSEE THOUGH AFTER ISSUANCE OF A NOTICE UNDER SEC. 143(2) , BUT PRIOR TO ITA 877/MUM/2016 - MR. FARHAD KHURSHEED WADIA 10 RAISING OF ANY QUERIES BY THE A.O, HAD VOLUNTARILY F ILED A REVISED COMPUTATION OF INCOME THEREIN REFLECTING THE INTEREST INCOME AND CLAIMING CREDIT OF THE TDS RELATABLE TO THE SAME, AS WELL AS ON HIS OWN HAD PAID THE TAX AND INTERESTS U/SS. 234B/234C RELATABLE TO SUCH INCOME , THEREFORE , TO THE EXTEN T ADJUDICATION OF THE ISSUE OF LEVY OF PENALTY UNDER SEC. 271(1)(C) IN THE HANDS OF THE ASSESSEE IS CONCERNED , WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE CANNOT BE VISITED WITH SUCH PENALTY ON ACCOUNT OF TECHNICAL AND VENIAL LAPSES ON HIS PART. WE FUR THER FIND OURSELVES TO BE IN AGREEMENT WITH THE LD. A.R THAT MERELY BECAUSE THE ASSESSEE HAD CAME UP WITH A REVISED RETURN OF INCOME AFTER RECEIPT OF NOTICE UNDER SEC. 143(2), THE SAME ON THE SAID COUNT ITSELF CANNOT BE CATEGORIZED AS THE CONCEALED INCO ME OF THE ASSESSEE. WE FIND THAT THE RELIANCE PLACED BY THE LD. A.R ON THE ORDER OF THE COORDINATE BENCH OF THE TRIBUNAL, VIZ. INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI, IN THE CASE OF MS. PREMA GOPAL RAO VS. DCIT (ITA NO. 8653/MUM/2011; DATED. 07 .01.2015) IN SUPPORT OF HIS AFORESAID CONTENTION TO BE WELL PLACED. 9 . WE FURTHER FIND SUBSTANTIAL FORCE IN THE CONTENTION OF THE LD. A.R THAT NOW WHEN A SIMILAR INTEREST INCOME OF RS. 12,88,273/ - (SUPRA) OFFERED FOR TAX BY THE ASSESSEE BY WAY OF A RE VISED COMPUTATION OF INCOME IN THE IMMEDIATE PRECEDING YEAR, VIZ. A.Y. 2010 - 11 , HAD BEEN ACCEPTED BY THE A.O WHILE FRAMING THE ASSESSMENT UNDER SEC. 143(3) , AND NO PENALTY PROCEEDINGS UNDER SEC. 271(1)(C) HAD BEEN INITIATED IN RESPECT OF SUCH INTEREST INCOME IN THE SAID YEAR, THEREFORE , IT WAS NOT PERMISSIBLE FOR THE A.O TO HAVE ADOPTED A WHIMSICAL APPROACH AND IMPOSED PENALTY U/S 271(1)(C) IN RESPECT OF S IMILAR INTEREST INCOME OF RS. 20,09,722/ - (SUPRA) WHICH WAS OFFERED FOR TAX BY THE ASSESSEE BY WAY OF REVISED COMPUTATION OF INCOME DURING THE YEAR UNDER CONSIDERATION , VIZ. A.Y. 2011 - 12. WE FIND THAT THE ISSUE UNDER ITA 877/MUM/2016 - MR. FARHAD KHURSHEED WADIA 11 CONSIDERATION IS SQUARELY COVERED BY THE COORDINATE BENCH OF THE TRIBUNAL, VIZ. ORIENT PRESS LTD VS. JCIT (2006) 99 TTJ 1091 (MUM) , WHEREIN IT WAS HELD AS UNDER: - 4. IT IS DIFFICULT TO UNDERSTAND AS TO HOW CAN REVENUE DEFEND IMPOSITION OF PENALTIES FOR ASST. YRS. 1993 - 94 AND 1994 - 95, WHEN, ON THE MATERIALLY SIMILAR SET OF FACTS, NO PENALTY IS IMPOSED FOR THE ASST. YR. 1995 - 96. THE DROPPING OF PENALTY PROCEEDINGS FOR THE ASST. YR. 1995 - 96 IS A CONSCIOUS ACT BY THE AO AS EVIDENT FROM THE SPECIFIC ORDER DROPPING THE PENALTY PROCEEDINGS FO R THAT YEAR. DURING THE COURSE OF HEARING BEFORE US, WE DID ASK THE DEPARTMENTAL REPRESENTATIVE TO EXPLAIN THIS CONTRADICTION IN THE STAND BUT HE WAS NOT ABLE TO EXPLAIN THE SAME AND HE MADE A VAGUE STATEMENT TO THE EFFECT THAT THE FACTS OF THAT YEAR MAY B E DIFFERENT. THIS IS UNACCEPTABLE. IN ANY CASE, THE MATERIAL FACTS, AS EVIDENT FROM THE DOCUMENTS BEFORE US, WERE CLEARLY THE SAME SO FAR AS THE QUESTION OF DECLARATION WAS CONCERNED. ON ONE SET OF FACTS, IN ONE YEAR, THE PENALTY IS DROPPED, AND FOR THE RE MAINING YEARS, THE PENALTIES ARE IMPOSED. ONCE THIS HAPPENS AND NO DISTINGUISHING FEATURES, FOR THE YEARS FOR WHICH PENALTIES ARE IMPOSED, ARE POINTED OUT, FOR THIS REASON ALONE, PENALTIES IMPOSED ARE NOT SUSTAINABLE IN LAW . WE FURTHER FIND THAT A SIMI LAR VIEW HAD BEEN ARRIVED AT BY THE ITAT, PUNE IN THE CASE OF: SHRI C.P MOHANDAS VS. DCIT, CENTRAL CIRCLE - 1(1), PUNE (ITA NO. 957/PN/2011); DATED. 29.05.2015. THE TRIBUNAL IN THE AFORESAID CASE HAD OBSERVED AS UNDER: - THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF DYNAMIC LOGISTICS PVT. LTD. (SUPRA) FOLLOWING THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ORIENT PRESS LTD., REPORTED IN 99 TTJ 1091 HAS HELD THAT UNDER IDENTICAL FACTS WHEN THE A.O HAD NOT LEVI ED PENALTY U/S 271(1)(C) OF THE I.T ACT IN THE PRECEDING YEAR, THEREFORE , IT IS NOT OPEN TO THE A.O TO IMPOSE PENALTY ON THE ADMITTEDLY IDENTICAL FACTS FOR THE IMPUGNED ASSESSMENT YEAR.' WE FIND OURSELVES TO BE IN AGREEMENT WITH THE AFORESAID VIEW AR RIVED AT BY THE COORDINATE BENCHES OF THE TRIBUNAL. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FACTS OF THE CASE AND ARE OF THE CONSIDERED VIEW THAT NOW WHEN NO PENALTY HAD BEEN IMPOSED IN THE HANDS OF THE ASSESSEE IN RESPECT OF SIMILAR INTEREST INCO ME OF RS. 12,88,273/ - (SUPRA) WHICH WAS OFFERED FOR TAX BY THE ASSESSEE BY WAY OF A REVISED ITA 877/MUM/2016 - MR. FARHAD KHURSHEED WADIA 12 COMPUTATION OF INCOME IN THE COURSE OF THE ASSESSMENT PROCEEDINGS IN HIS CASE FOR A.Y. 2010 - 11, THEREFORE , AN INCONSISTENT AND WHIMSICAL APPROACH ON THE PART OF THE A.O, THEREIN LEADING TO LEVY OF PENALTY UNDER SEC. 271(1)(C) IN RESPECT OF SIMILAR INTEREST INCOME WHICH TOO WAS OFFERED FOR TAX BY THE ASSESSEE BY WAY OF REVISED COMPUTATION OF INCOME, CANNOT BE SUSTAINED IN THE EYES OF LAW. 10. WE FURTHER FI ND THAT THE BONAFIDES OF THE ASSESSEE THAT THE AFORESAID INTEREST INCOME HAD INADVERTENTLY REMAINED OMITTED TO BE REFLECTED IN HIS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION, VIZ. A.Y. 2011 - 12, FURTHER STANDS FORTIFIED FROM THE VERY FACT THAT TH E ASSESSEE HAD DULY REFLECTED THE INTEREST INCOME RELATABLE TO THE SAID ADVANCES/DEPOSITS IN HIS RETURN OF INCOME FOR A.Y. 2012 - 13, WHICH WAS E - FILED ON 30.08.2012. THAT AS THE AFORESAID RETURN OF INCOME FOR A.Y. 2012 - 13 WAS FILED BY THE ASSESSEE BEF ORE THE ISSUE OF NOTICE U/S 143(2) FOR A.Y. 2011 - 12 ON 08.09.2012, THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT IT CAN FAIRLY BE CONCLUDED THAT SUCH REFLECTION OF INTEREST INCOME IN THE RETURN OF INCOME FOR A.Y. 2012 - 13 CLEARLY REFLECTS THE BONAFIDE MISTAKE OF THE ASSESSEE IN FAILING TO HAVE REFLECTED THE INTEREST INCOME DURING THE YEAR UNDER CONSIDERATION, VIZ. A.Y. 2011 - 12, WHICH ON COMING TO THE NOTICE OF THE ASSESSEE, WAS THUS VOLUNTARILY OFFERED FOR TAX BY THE ASSESSEE. 11. WE THUS IN TER MS OF OUR AFORESAID OBSERVATIONS SET ASIDE THE ORDER OF THE CIT(A) AND QUASH THE PENALTY OF RS. 6,21,100/ - (SUPRA) IMPOSED BY THE A.O UNDER SEC. 271(1)(C). ITA 877/MUM/2016 - MR. FARHAD KHURSHEED WADIA 13 1 2 . THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRO NOUNCED IN THE OPEN COURT ON 26 /07/2017 SD/ - SD/ - (G.S PANNU) (RAVISH SOOD) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 26 .07 .2017 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) - 30, MUMBAI. 4. / CIT - CONCERNED 5. , , / D.R, ITAT, MUMBAI 6. / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI