Sh. Ajay Kumar, Ahmedgarh. V. ITO, Malerkotla

ITA 913/CHANDI/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8410 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: misc
• Appeal Filed On: 17-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Assessee Lawyers: N K GARG
• Keywords: Business income; Bonafide belief; Speculation loss
• Section: 143(3); 142(1); 154

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, SMC, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA NO. 913/CHD/2016 ASSESSMENT YEAR: 2009-10 SH. AJAY KUMAR, VS. THE ITO, WARD IV(3), C/O M/S PARKASH CHAND KEDAR NATH, MALERKOTLA AHMEDGARH PAN NO. ADFPK8317A (APPELLANT) (RESPONDENT) APPELLANT BY : SH. N.K. GARG RESPONDENT BY : SH. S.K. MITTAL DATE OF HEARING : 23.12.2016 DATE OF PRONOUNCEMENT ` : 03.01.2017 ORDER THIS APPEAL BY THE ASSESSEE HAS BEEN DIRECTED AGAI NST THE ORDER OF LD. CIT(A)-2, LUDHIANA DATED 17.5.2016 FOR ASSESSMENT Y EAR 2009-10 CHALLENGING THE LEVY OF PENALTY U/S 271(1)(C) OF TH E ACT. 2. BRIEF FACTS IN THIS CASE ARE THAT ASSESSEE FILED ITS RETURN OF INCOME ON 14.12.2009 BY DECLARING INCOME OF RS. 1,90,400/- . THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 30.12.2011 AT AN ASSESSED INCOME OF RS. 5,76,124/- AND LONG TERM CAPITAL GAIN OF RS. 3,10,236/- AFTER MAKING ADDITION OF RS. 6,95,965/ -. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE CONTENDED T HAT HE HAD 2 VOLUNTARILY SURRENDERED THE AMOUNT OF RS. 3,11,250/ - AS OTHER INCOME (PETTY CASH DEPOSITED IN CATHOLIC SYRIAN BANK LTD) AND RS. 3,10,236/- ON LONG TERM CAPITAL GAIN NOT DECLARED IN THE RETU RN OF INCOME, BOTH WAS REJECTED BY THE ASSESSING OFFICER. FURTHER, ASS ESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT ON ADDITION OF RS. 3,11,250/- ON OTHER INCOME AND RS. 3,10,236/- O N LONG TERM CAPITAL GAIN NOT DECLARED IN THE RETURN OF INCOME. THE ASSESSING OFFICER VIDE SEPARATE ORDER LEVIED PENALTY U/S 271( 1)(C) OF THE I.T. ACT ON BOTH THESE ADDITIONS AND IMPOSED PENALTY OF RS. 1,32,249/- @ 100% OF THE TAX SOUGHT TO BE EVADED. 3. THE PENALTY ORDER WAS CHALLENGED BEFORE THE LD. CIT(A) AND WRITTEN SUBMISSIONS OF THE ASSESSEE IS REPRODUCED IN THE IMPUGNED ORDER IN WHICH ASSESSEE BRIEFLY EXPLAINED THAT AT THE INITIAL STAGE OF THE PROCEEDINGS, THE ASSESSEE HAS SUBMITTED A REVI SED COMPUTATION OF INCOME IN WHICH LONG TERM CAPITAL GAIN OF RS. 3,10 ,236/-, INCOME FROM OTHER SOURCES RS. 3,11,250/- AND LOSS OF RS. 8,00,305/- IN SHARE MARKET TRANSACTION IN THE NATURE OF DERIVATIVE / FU TURE / OPTIONS AND INTRADAY TRADING HAVE BEEN DECLARED. THE ASSESSMENT HAS BEEN COMPLETED VIDE ORDER DATED 30.12.2011 ON THE BASIS OF REVISED COMPUTATION OF INCOME AND AFTER MAKING CERTAIN DISA LLOWANCE OF THE EXPENSES. THE LOSS OF RS. 8,00,305/- HAS NOT BEEN C ARRIED FORWARD BECAUSE RETURN WAS NOT FILED WITHIN TIME. THE LOSS IS NOT SPECULATIVE LOSS IN VIEW OF THE DEFINITION U/S 43. THEREFORE, THE LOSS BEING 3 BUSINESS LOSS IS ADJUSTABLE AGAINST INCOME OF THE CURRENT YEAR U/S 70/71 OF THE I.T. ACT. 4. THE ASSESSEE MOVED APPLICATION U/S 154 OF THE I.T. ACT IN THIS REGARD. THE ASSESSING OFFICER LEVIED PENALTY ON BOT H THE ADDITIONS IGNORING THE EXPLANATION OF THE ASSESSEE. THE ASSES SEE HAD EXPLAINED THAT THERE IS NEITHER CONCEALMENT OF INCOME NOR ANY FURNISHING IF INACCURATE PARTICULARS OF INCOME. THE ASSESSEE VOLU NTARILY DISCLOSED THE INCOME AS WELL LOSS IN REVISED COMPUTATION AND NOT DUE TO THE ANY DETECTION MADE BY THE ASSESSING OFFICER. IT IS CLEA R FROM THE ASSESSMENT PROCEEDINGS THAT ASSESSING OFFICER NEITH ER DETECTED THE CONCEALMENT NOR ANY INVESTIGATION WAS MADE RESULTIN G INTO FINDING OF CONCEALED INCOME. THE INCOME IS ASSESSED ON THE BAS IS OF DECLARATION MADE BY THE ASSESSEE. IT WAS FURTHER EXPLAINED THAT NO DISCLOSURE OF THE INCOME IN THE RETURN FILED EARLIER WAS DUE TO T HE REASON THAT ASSESSEE UNDER BONAFIDE BELIEF HAS BEEN TREATING T HE SAID INCOME AND TRANSACTION BELONGING TO HIS HUF BECAUSE INITIAL IN VESTMENT WERE MADE OUT OF THE FUNDS RECEIVED FROM THE FATHER. THE ASSESSEE VOLUNTARILY DISCLOSED THE AMOUNT IN QUESTION SO, NO PENALTY IS LEVIABLE. THE ASSESSEE DISCLOSED BOTH AMOUNTS AND LOSS AND , THEREFORE, NET RESULT WAS LOSS, THEREFORE, THERE WAS NO WILLFUL INTENTION OF THE ASSESSEE TO EVADE TAX BECAUSE THERE WERE NO TAX DUE RATHER INCO ME DECLARED IN THE RETURN WOULD BE FURTHER REDUCED. THERE IS NO CASE O F CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME. THE ASSESSEE RELIED UPON SEVERAL DECISIONS IN SUPPORT OF HIS CON TENTION. THE LD. CIT(A) , HOWEVER, DID NOT ACCEPT THE EXPLANATION O F THE ASSESSEE AND 4 DISMISSED THE APPEAL OF THE ASSESSEE. THE LD. CI T(A) NOTED THAT THE ASSESSING OFFICER REJECTED THE EXPLANATION OF THE ASSESSEE REGARDING WILLFUL DISCLOSURE OF BOTH THE ABOVE AMOUNTS AND TH AT ASSESSEE REVISED ITS INCOME ONLY AFTER RECEIVING THE NOTICES U/S 14 3(2) / 142(1) OF THE I.T. ACT. THE APPEAL OF THE ASSESSEE AS ACCORDINGL Y DISMISSED. 5. I HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PA RTIES. THE LD. COUNSEL REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FILED COPY OF THE ORDER SHEET OF THE ASSESSING OFFICER AND QUESTIONNAIRE DATED 30.5.2011 ISSUED BY THE ASSESSI NG OFFICER, COPIES OF WHICH ARE FILED AT PAGES 1 TO 5 OF THE PAPER BOO K AND SUBMITTED THAT ASSESSING OFFICER DID NOT RAISE ANY QUERY WITH REGA RD TO THE OTHER INCOME AND LONG TERM CAPITAL GAIN DECLARED BY THE ASSESSEE IN THE REVISED COMPUTATION. PB-6 IS REPLY OF THE ASSESSEE DATED 6.9.2011 FILED BEFORE THE ASSESSING OFFICER IN WHICH ASSESSEE HI MSELF HAS ENCLOSED THE COMPUTATION SHOWING INCOME FROM BUSINESS OF M/S GARG ENTERPRISES AND LONG TERM CAPITAL GAIN, OTHER INCO ME ETC. IN THE NAME OF THE ASSESSEE AND IT WAS EXPLAINED THAT THE SAME INCOME NOW ADDED AS THE SAME WAS OMITTED EARLIER UNDER THE BEL IEF THAT THE SAME BELONG TO HUF. THE REVISED COMPUTATION IS FILED IN THE PAPER BOOK, IN WHICH ASSESSEE DECLARED LOSS OF RS.8,00,305/-, INCO ME FROM CAPITAL GAINS AS RS. 3,10,236/- AND OTHER INCOME OF RS. 3 ,11,250/-. HE HAS, THEREFORE, SUBMITTED THAT NOTHING WAS DETECTED BY THE ASSESSING OFFICER AT ASSESSMENT STAGE AND ASSESSEE SUO MOTO DECLARED THIS INCOME ALONG WITH LOSS, THEREFORE, THERE IS NO CO NCEALMENT OF INCOME 5 OR FILING OF INACCURATE PARTICULARS. THE LD. COUNSE L FOR THE ASSESSEE FURTHER SUBMITTED THAT ASSESSEE FILED APPLICATION U/S 154 OF THE I.T. ACT BEFORE THE ASSESSING OFFICER WHICH IS DECIDED VIDE ORDER DATED 9.9.2015 AND AFTER ALLOWING CARRY FORWARD OF THE LO SS OF RS. 8,00,305/-, THE BUSINESS INCOME WAS IN LOOSES AND ULTIMATELY DEMAND HAS ARISEN FOR A SUM OF RS. 33,109/- ONLY AND AS SESSING OFFICER DIRECTED TO REFUND THE EXCESS TAX PAID BY THE ASSES SEE. HE HAS SUBMITTED THAT ON THE BASIS OF THE 154 ORDER (SUPRA ), THE ASSESSING OFFICER ALSO VIDE ORDER DATED 14.9.2016 U/S 154 OF THE I.T. ACT REDUCED THE PENALTY TO RS. 33,109/-, COPY OF THESE ORDERS ARE FILED ON RECORD. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASS ESSEE HAS FILED REVISED GROUND OF APPEAL ON QUANTUM OF PENALTY WH ICH HAS BEEN REVISED FROM RS. 1,32,249/- TO RS. 33,109/-. THE LD. COUNSEL FOR THE ASSESSEE THEREFORE, RESTRICTED THE CLAIM TO THE REDUCED AMOUNT OF APPEAL I.E. RS. 33,109/-. 6. THE LD. DR RELIED ON THE ORDER OF THE AUTHORITIE S BELOW AND SUBMITTED THAT ASSESSEE SURRENDERED THE AMOUNT IN QUESTION ONLY AFTER ISSUE OF NOTICE U/S 142(1) OF THE I.T. ACT AFTER R AISING THE QUERY BY THE ASSESSING OFFICER. 7. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERU SED THE MATERIAL IN RECORD. THE ASSESSING OFFICER IN THE ASSESSMENT ORDER DATED 30.12.2011 U/S 143(3) OF THE ACT HAS NOTED THAT DUR ING THE YEAR THE ASSESSEE HAS SHOWN LONG TERM CAPITAL GAIN ON ACCOUN T OF SALE OF 6 PROPERTY AND OTHER INCOME IN HIS OWN NAME. THE ASSE SSING OFFICER ALSO MADE ADDITION OF BOTH THESE AMOUNTS OF RS.3,11,250/ - AND RS. 3,10,236/- AS WAS SHOWN IN THE REVISED COMPUTATION SHEET. THE ASSESSING OFFICER DID NOT DISCUSS ANYTHING IN THE A SSESSMENT ORDER ON THIS ISSUE WHILE MAKING THE ADDITION. IT IS THEREFO RE, CLEAR THAT WHEN ASSESSEE DECLARED BOTH THE AMOUNTS FOR THE PURPOSE OF TAXATION IN THE REVISED COMPUTATION OF INCOME, THE ASSESSING OFFICE R ACCEPTED THE EXPLANATION OF THE ASSESSEE AND MADE THE ADDITION. THE ASSESSING OFFICER ALSO INITIATED PENALTY PROCEEDINGS FOR CONC EALING THE PARTICULARS OF INCOME. THE ASSESSING OFFICER THERE AFTER PASSED THE ORDER U/S 154 DATED 9.9.2015 AND CARRY FORWARD OF T HE LOSS OF RS. 8,00,305/- WAS CONSIDERED AS MISTAKE APPARENT FROM THE RECORD AND BUSINESS LOSS WAS COMPUTED IN A SUM OF RS. (-)2,99 ,674/- AND TAX LIABILITY WAS DETERMINED IN A SUM OF RS. 33,109/- AND EXCESS TAX PAID BY THE ASSESSEE WAS HELD TO BE REFUNDABLE. THE ASS ESSING OFFICER LEVIED THE PENALTY ON ADDITION OF RS. 6,21,486/- ON BOTH THE ADDITIONS IN A SUM OF RS. 1,32,249/- AND PENALTY WAS ALSO R EDUCED ACCORDINGLY VIDE ORDER DATED 14.9.2016 AND PENALTY WAS REDUCED TO RS. 33,109/-. IN THE BACKGROUND OF THESE FACTS, IT IS CLEAR FROM THE ORDER SHEET OF THE ASSESSING OFFICER THAT QUESTIONNAIRE ISSUED ON 30.5 .2011 SEEKING EXPLANATION ON VARIOUS ITEMS BUT NO SPECIFIC QUERY WAS RAISED ON LONG TERM CAPITAL GAIN OR OTHER INCOME DECLARED BY THE ASSESSEE. THE ASSESSEE FILED THE REPLY DATED 6.9.2011 AND HAS DE CALED BOTH THESE INCOMES IN REVISED COMPUTATION OF THE INCOME AND EXPLAINED THAT THE SAME ARE ADDED NOW AS THE SAME WERE OMITTED EARLIER UNDER THE BELIEF 7 THAT THE SAME BELONG TO HUF. THEREFORE, NOTHING IS DETECTED AT THE ASSESSMENT STAGE AGAINST THE ASSESSEE REGARDING B OTH THESE ADDITIONS ON WHICH PENALTY WAS LEVIED. THEREFORE, THE ASSESSE E VOLUNTARILY FILED REVISED COMPUTATION OF INCOME AND NOT DUE TO DETEC TION BY THE ASSESSING OFFICER. THE EXPLANATION OF THE ASSESSEE WAS THAT HE WAS UNDER BONAFIDE BELIEF THAT THE SAME INCOME BELONG T O HUF. AFTER LOSS OF RS. 8,00,305/- WAS CARRY FORWARD, THERE WAS NET LOSS, THEREFORE, THERE COULD NOT BE ANY ATTEMPT ON THE PART OF THE ASSESSEE TO EVADE TAX BECAUSE THERE WAS NO TAX DUE RATHER INCOME COMP UTED BY THE ASSESSING OFFICER WAS REDUCED. IT IS, THEREFORE, C LEAR THAT ASSESSEE COMMITTED MISTAKE IN NOT DECLARING BOTH INCOMES AS ASSESSEE WAS UNDER THE BELIEF THAT THE SAME BELONG TO HUF. WHEN ASSESSEE DETECTED THE MISTAKE AT ASSESSMENT STAGE, ASSESSEE SUE MOTO DECLARED THE SAME AS INCOME IN REVISED COMPUTATION OF INCOME. THE EXP LANATION OF THE ASSESSEE WAS, THEREFORE BONAFIDE. NOTHING HAS BEE N BROUGHT ON RECORD BY THE REVENUE TO SUGGEST THAT THE EXPLANATION OF ASSESSEE WAS NOT BONAFIDE OR INCORRECT IN ANY MANNER WHATSOEVER. T HE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS UNION EL ECTRIC CORPORATION [2006] 281 ITR 266 (GUJARAT) HELD AS UNDER:- IN VIEW OF UNDISPUTED FINDING OF FACT RECORDED BY THE TRIBUNAL THAT THE ASSESSEE ITSELF HAD OFFERED T HE WRONGFUL CLAIM FOR DISALLOWANCE DURING THE COURSE OF ASSESSMENT PROCEEDINGS BEFORE THE ASSESSING OFFICER HAD DETECTED THE SAME AND THAT THE BONA FIDES OF THE ASSESSEE WERE EVIDENT, ASSESSEE WAS N OT LIABLE FOR PENALTY UNDER S. 271(1)(C). 8 8. CONSIDERING THE ABOVE DISCUSSION, IT IS CLEAR TH AT THE ASSESSEE HIMSELF HAD OFFERED THE ABOVE ADDITIONS AND CARRY F ORWARD OF THE LOSS DURING THE COURSE OF ASSESSMENT PROCEEDINGS BEFOR E THE ASSESSING OFFICER COULD DETECTED THE SAME AND THAT THE BONAF IDE OF THE ASSESSEE WERE EVIDENT, THEREFORE, NO PENALTY IS LEVIABLE AG AINST THE ASSESSEE. THE ASSESSING OFFICER IN THE ASSESSMENT ORDER DID N OT HOLD THAT EXPLANATION OF THE ASSESSEE WAS FALSE OR THAT IT WA S NOT BONAFIDE EXPLANATION OF THE ASSESSEE. THE ASSESSING OFFICER SIMPLY WITHOUT DISCUSSING BOTH THE ISSUES IN THE ASSESSMENT ORDER HAS ACCEPTED THE INCOME AS IS SHOWN IN THE REVISED COMPUTATION SHEET . IT IS WELL SETTLED LAW THAT LEVY OF THE PENALTY IS NOT AUTOMATIC IN EA CH AND EVERY CASE BECAUSE IT DEPENDS UPON THE FACTS AND CIRCUMSTANCES OF THE CASE. THE FACTS AND CIRCUMSTANCES OF THE CASE AS DISCUSSED AN D CONSIDERED ABOVE CLEARLY SHOWN THAT IT IS NOT A FIT CASE OF LEVY OF PENALTY. THEREFORE, I SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND C ANCEL THE PENALTY. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DATED : 3 RD JANUARY, 2017 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR 9