The DCIT, Circle-7, Ahmedabad V. M/s. Shree Laxmi Investment, Ahmedabad

ITA 895/AHD/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5600 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 16-07-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 25-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D S CHAUDHRY
• Assessee Lawyers: MANISH M RAJVAIDYA
• Keywords: Bonafide mistake
• Section: 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI N.S.SAINI, ACCOUNTANT MEMBER DATE OF HEARING :16-7-10 DRAFTED ON: 16-7-10. ITA NO.895 /AHD/2010 ASSESSMENT YEAR : 206-07 DEPUTY COMMISSIONER OF INCOME TAX, CIR-7, NAVJIVAN TRUST BLDG., OFF ASHRAM ROAD, AHMEDABAD. VS. M/S. SHREE LAXMI INVESTMENT, 344,VIJAY NAGAR,NARANPURA, AHMEDABAD. PAN/GIR NO. : AAUFS 1051 M (APPELLANT) .. (RESPONDENT) DEPARTMENT BY : SHRI D.S. CHAUDHRY, D.R. ASSESSEE BY : SHRI MANISH M.RAJVAIDYA. O R D E R PER N.S.SAINI , ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-XI , A HMEDABAD DATED 13-01-2010. 2. THE SOLE GROUND OF APPEAL RAISED BY THE REVENUE READS AS UNDER :- THE LD.CIT(A)XI, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING PENALTY OF RS.3,73,000/- LEVIED UNDER S ECTION 271(1)(C). - 2 - 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGAGED IN THE BUSINESS OF INVESTMENT AND TRADING IN SHARES. IN THE RETURN OF INCOME FILED FOR ASSESSMENT YEAR 2006-07 THE ASSESS EE CLAIMED DEDUCTION OF RS.11,07,402/- ON ACCOUNT OF SECURITY TRANSACTION TAX. THE LEARNED ASSESSING OFFICER ISSUED NOTICE TO THE ASSESSEE UNDER SECTION 142(1) OF THE ACT ON 19-9-2008 AND AS PER P OINT NO.11 OF THE SAID NOTICE REQUIRED THE ASSESSEE TO FILE COPY OF D EMAT ACCOUNT AND EVIDENCES OF SECURITY TRANSACTION TAX PAID AND QUAN TITY OF OPENING AND CLOSING STOCK OF SHARES OF BONDS ETC. THE ASSESSEE VIDE ITS REPLY DATED 20-11-2008 SUBMITTED BEFORE THE LEARNED ASSESSING O FFICER THAT HIS CONSULTANT HAD NOT DISALLOWED SECURITY TRANSACTION TAX OF RS. 11,07,402/- IN THE RETURN OF INCOME BY BONAFIDE MIS TAKE. IN ORDER TO PEACE AND TO CO-OPERATE WITH THE DEPARTMENT THE ASS ESSEE WAS READY TO PAY TAX ON THE AMOUNT OF SECURITY TRANSACTION TA X AND ALSO REQUESTED THE LEARNED ASSESSING OFFICER NOT TO LEVY PENALTY UNDER SECTION 271(1)(C) OF THE ACT. IN THE ASSESSMENT MA DE THE LEARNED ASSESSING OFFICER DISALLOWED THE DEDUCTION CLAIMED BY THE ASSESSEE OBSERVING THAT THE SAME WAS NOT ALLOWABLE DEDUCTION TO THE ASSESSEE UNDER SECTION 40(A)(IB) OF THE ACT. 4. THEREAFTER, THE LEARNED ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 271(1)(C) OF THE ACT AND LEVIED PENALTY OF RS.3,73,000/- ON THE ASSESSEE ON THE GROUND THAT THE ASSESSEE HAD NO T VOLUNTARILY OR SUO MOTO ADDED BACK THE SECURITY TRANSACTION TAX TO THE BUSINESS PROFIT IN THE RETURN OF INCOME WHEN THE ENTIRE FACTS WERE WIT HIN THE KNOWLEDGE OF THE ASSESSEE AS ASSESSEE HAS CLAIMED CREDIT FROM FINAL TAX PAYABLE UNDER SECTION 88E OF THE ACT FOR THE SECURITY TRAN SACTION TAX. THEREFORE, THE LEARNED ASSESSING OFFICER HELD THAT THE ASSESSEE HAS - 3 - INTENTIONALLY AND WILLFULLY AVOIDED TO PAY TAX ON T HIS AMOUNT. THEREFORE, HE LEVIED PENALTY ON ACCOUNT OF FURNISHI NG OF INACCURATE PARTICULARS BY THE ASSESSEE. 5. IN APPEAL, THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) DELETED THE PENALTY BY OBSERVING AS UNDER :- 2.3 THERE IS NO DISPUTING THE FACT THAT THE APPEL LANT DEBITED AN AMOUNT OF RS.24,71,815/- UNDER THE HEAD TAXES A ND OTHER CHARGES TO THE PROFIT AND LOSS ACCOUNT, WHICH INCL UDED THE SECURITY TRANSACTION ACT. FURTHER AS STATED BY THE LEARNED ASSESSING OFFICER HIMSELF THE APPELLANT CLAIMED CRE DIT FOR THE SECURITY TRANSACTION TAX UNDER SECTION 88E IN THE C OMPUTATION OF INCOME AND RETURN OF INCOME. FURTHER THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE OF THE AP PELLANT ACCEPTED THE MISTAKE TO BE ATTRIBUTABLE TO HIM (IN THE COURSE OF ASSESSMENT AS WELL AS APPELLATE PROCEEDINGS) AND ST ATED THAT IT WAS ON ACCOUNT OF OVERSIGHT DUE TO HEAVY WORK LOAD OF TAX AUDIT IN DECEMBER, 2006. APPELLANT PAID THE TAXES T HEREON, ACCEPTING THE DISALLOWANCE. SINCE THE SAID AMOUNT O F SECURITY TRANSACTION TAX WAS DEBITED UNDER THE HEAD TAXES A ND OTHER CHARGES TO THE PROFIT AND LOSS ACCOUNT AND SINCE C REDIT FOR SECURITY TRANSACTION TAX WAS CLAIMED IN THE RETURN OF INCOME, I HOLD THAT THE MISTAKE OF NOT ADDING BACK THE SAID A MOUNT IN THE COMPUTATION OF INCOME IS A BONAFIDE MISTAKE (WHICH WAS ACCEPTED BY THE LEARNED AUTHORISED REPRESENTATIVE O F THE ASSESSEE TO BE ATTRIBUTABLE TO HIM). IN THESE CIRCU MSTANCES, I AM OF THE CONSIDERED OPINION THAT THE APPELLANT CANNOT BE SAID TO HAVE FURNISHED INACCURATE PARTICULARS OF INCOME OR CONCEALED INCOME. ACCORDINGLY, I HOLD THAT NO PENALTY IS LEVI ABLE IN THE INSTANT CASE. RELIANCE IN THIS REGARD IS PLACED ON THE CASE OF T.ASHOK PAI VS.CIT (292 ITR 11) (S.C.). PENALTY ORD ER STANDS CANCELLED. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTE D THE ORDER OF THE LEARNED ASSESSING OFFICER WHEREAS THE LEARNE D AUTHORISED - 4 - REPRESENTATIVE OF THE ASSESSEE SUPPORTED THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSE SSEE IN THE RETURN OF INCOME FILED CLAIMED DEDUCTION FOR SECURITY TRANSAC TION TAX OF RS.11,07,402/- BY DEBITING THE SAME IN THE PROFIT A ND LOSS ACCOUNT AND SIMULTANEOUSLY CLAIMED CREDIT FOR THE SECURITY TRANSACTION TAX OF RS.11,07,402/- FROM THE FINAL TAX PAYABLE. THEREF ORE, LEARNED ASSESSING OFFICER DISALLOWED DEDUCTION FOR SECURITY TRANSACTION TAX OF RS.11,07,402/- UNDER SECTION 40(A)(IB) OF THE ACT. HE ALSO LEVIED PENALTY OF RS.3,73,000/- UNDER SECTION 271(1)(C) F OR FILING INACCURATE PARTICULARS OF INCOME. THE CONTENTION OF THE ASSESS EE IS THAT THE ASSESSEE CAME TO KNOW OF THIS MISTAKE WHEN NOTICE U NDER SECTION 142(1) OF THE ACT WAS ISSUED TO IT BY THE LEARNED A SSESSING OFFICER ON 9-9-2008 FOR FURNISHING THE DETAILS FOR SECURITY TRANSACTION TAX PAID. THE ASSESSEE IMMEDIATELY VIDE LETTER DT. 20-1 1-2008 ACCEPTED THE MISTAKE AS BONAFIDE MISTAKE OF THE CHARTERED AC COUNTANT AND AGREED TO PAY TAX ON THE SAID AMOUNT AND REQUESTED THE LEARNED ASSESSING OFFICER NOT TO LEVY PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE LEARNED ASSESSING OFFICER OBSERVED THAT TH E FACTS WERE WITHIN THE KNOWLEDGE OF THE ASSESSEE WHO HAD NOT AD DED BACK THE AMOUNT OF SECURITY TRANSACTION TAX TO THE INCOME OF THE ASSESSEE VOLUNTARILY TO AVOID PAYMENT OF TAX ON THIS AMOUNT AS THE ASSESSEE HAD CLAIMED CREDIT FOR SECURITY TRANSACTION TAX OF RS.11,07,402/- UNDER SECTION 88E FROM THE FINAL TAX LIABILITY OF THE ASSESSEE. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS DE LETED THE PENALTY BY ACCEPTING THE CONTENTION OF THE ASSESSEE THAT IT WAS A - 5 - BONAFIDE MISTAKE ON THE PART OF THE CHARTERED ACCOU NTANT WHO DUE TO HEAVY WORK LOAD OF TAX AUDIT IN DECEMBER, 2006 DUE TO OVERSIGHT DID NOT ADD THE AMOUNT OF SECURITY TRANSACTION TAX TO T HE INCOME WHILE FILING THE RETURN OF INCOME. IT IS OBSERVED THAT TH E AMOUNT OF SECURITY TRANSACTION TAX DEBITED BY THE ASSESSEE IN THE PROF IT AND LOSS ACCOUNT WAS NOT FOUND TO BE NON GENUINE OR BOGUS. IT IS ALS O NOT THE CASE OF THE REVENUE THAT SUCH SECURITY TRANSACTION TAX PAYM ENT COULD NOT HAVE BEEN DEBITED IN THE PROFIT AND LOSS ACCOUNT. THE CONTENTION OF THE REVENUE IS THAT WHILE COMPUTING THE TOTAL INCOM E WHICH IS TAXABLE AS PER THE PROVISIONS OF INCOME TAX ACT THE ASSESSEE SHOULD HAVE ADDED BACK THE AMOUNT OF SECURITY TRANSACTION TAX WITH THE NET PROFIT AS PER PROFIT AND LOSS ACCOUNT IN VIEW OF TH E PROVISION OF SECTION 40(A)(IB) OF THE ACT. THE EXPLANATION OF T HE ASSESSEE THAT THE OMISSION TO ADD BACK THE ABOVE AMOUNT IN VIEW OF TH E LEARNED ASSESSING OFFICER CANNOT BE ACCEPTED AS BONAFIDE OM ISSION BECAUSE THE ASSESSEE HAS CLAIMED REBATE FOR THE SECURITY TR ANSACTION TAX PAYMENTS AS PER THE PROVISIONS OF SECTION 88E OF TH E ACT ON THE OTHER HAND THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS ) HAS OPINED THAT THE OMISSION TO ADD BACK THE AMOUNT WAS NOT WI LLFUL BUT WAS BONAFIDE MISTAKE AS THE CHARTERED ACCOUNTANT OF THE ASSESSEE WAS UNDER PRESSURE FOR FILING THE RETURNS. WE FIND THAT IN THE INSTANT CASE IT WAS NOT FOUND BY THE DEPARTMENT THAT THE ASSESSEE H AS FAILED TO DISCLOSE FULLY AND TRULY ALL THE MATERIAL FACT RELA TING TO THE PARTICULARS OF INCOME. THE ONLY MISTAKE WAS COMMITTED BY THE AS SESSEE WHILE COMPUTING THE TOTAL INCOME AND AN AMOUNT WHICH SHOU LD HAVE BEEN DISALLOWED DUE TO PROVISIONS OF SECTION40(A)(IB) OF THE ACT WAS NOT DISALLOWED OR ADDED BACK BY THE ASSESSEE. THUS, IN THE INSTANT CASE THE DISPUTE WAS ONLY WITH REGARD TO THE COMPUTATION OF TOTAL INCOME - 6 - AND NO DISCREPANCY WAS FOUND IN THE DISCLOSURE OF P RIMARY FACT WHICH WERE RELEVANT FOR COMPUTING THE TOTAL INCOME OF THE ASSESSEE. FURTHER, IT IS ALSO OBSERVED THAT THE ASSESSEE DURI NG THE COURSE OF HEARING ADMITTED BEFORE THE LEARNED ASSESSING OFFIC ER OF ITS OMISSION TO ADD BACK THE SECURITY TRANSACTION TAX W HILE COMPUTING THE TOTAL INCOME AND THE LEARNED ASSESSING OFFICER HAD NOT BROUGHT ANY MATERIAL TO SHOW THAT THE ASSESSEE EVEN DURING THE COURSE OF ASSESSMENT HEARING TRIED TO HIDE OR CONCEAL THE PAR TICULARS OF INCOME TO EVADE PAYMENT OF DUE TAX. I N OUR CONSIDERED OPI NION FOR INFERRING CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME NOT ONLY THE RETURN OF INCOME BUT ALSO THE C ONDUCT OF THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS ARE RELE VANT AND SHOULD BE TAKEN INTO CONSIDERATION IN THE ABOVE CIRCUMSTAN CES, WE FIND NO GOOD REASON TO INTERFERE WITH THE ORDER OF THE LEAR NED COMMISSIONER OF INCOME TAX (APPEALS). IT IS CONFIRMED AND THE AP PEAL OF THE REVENUE IS DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 23RD DAY OF JULY, 2010. SD/- SD/- (BHAVNESH SAINI) ( N.S. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; ON THIS 23RD DAY OF JULY, 2010 PATKI - 7 - COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)- 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD DATE INITIALS 1. DRAFT DICTATED ON 16-7-10 2. DRAFT PLACED BEFORE AUTHORITY 16-7-10 3. DRAFT PROPOSED & PLACED 16-7-10 JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED --------------- ----- -------------- JM/AM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S ---------------- -- ------------------ 6. KEPT FOR PRONOUNCEMENT ON ---------------- --- ----------------- 7. FILE SENT TO THE BENCH CLERK ---------------- -------------------- 8. DATE ON WHICH FILE GOES TO THE ---------------- -------------------- 9. DATE OF DISPATCH OF ORDER ---------------- --- ------------------