Commercial Automobiles Pvt. Ltd., Kanpur V. Dy. Commissioner Of Income Tax, Kanpur

ITA 935/LKW/2014

• Counselvise Citation: 93523714 RSA 2014
• Duration Of Justice: 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 19-08-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 30-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Cost of acquisition; Bonafide mistake

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.935/LKW/2014 ASSESSMENT YEAR:2008 - 09 M/S COMMERCIAL AUTOMOBILES PVT. LTD. , 84/105 G. T. ROAD, KANPUR. VS. DY.C.I.T., RANGE - 6, KANPUR. (APPELLANT) (RESPONDENT) APPELLANT BY SHRI RAKESH GARG, ADVOCATE RESPONDENT BY SHRI AMIT NIGAM, D. R. DATE OF HEARING 19/08/2015 DATE OF PRONOUNCEMENT 2 3 /09/2015 O R D E R PER A. K. GARODIA, A.M. THIS IS ASSESSEES APPEAL DIRECTED AGAINST THE ORDER OF LEARNED CIT(A) - II, KANPUR DATED 08/09/2014 FOR THE ASSESSMENT YEAR 2008 - 09. 2. IN THIS APPEAL , THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. BECAUSE THE CIT(A) - II, KANPUR HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE PENALTY U/S 271(1)(C) OF THE ACT OF RS.30,30,500/ - LEVIED VIDE ORDER DATED 28/03/2013 BY THE ASSESSING OFFICER WITHOUT APPRECIATING THE EXPLANATION OF THE APPELLANT, FACTS AND LAWS ON THE SUBJECT MATTER. 2. BEC AUSE THE PENALTY IMPOSED IS BAD IN LAW AND ON FACTS WITHOUT APPRECIATING THAT THE MISTAKE IN THE COMPUTATION OF INCOME WAS BONAFIDE AND BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER SUO MOTTO BY THE APPELLANT. 3. IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT THE FINDING OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER REGARDING THE DISPUTED ISSUE IN RESPECT OF CLAIM OF THE ASSESSEE REGARDING LONG TERM CAPITAL LOSS OF RS.1,33,73,400.77 ON 2 ACCOUNT OF SALE OF SHARE OF COMMERCIAL ENGINEERS & BODY BUI LDERS COMPANY LIMITED (CEBBCO) CAN BE SEEN IN THE ASSESSMENT ORDER AVAILABLE IN THE PAPER BOOK AND IN THE SAME PARA, IT IS NOTED BY THE ASSESSING OFFICER THAT THE ASSESSEE THROUGH ITS REPLY HAS IGNORED THE CLAIM OF THIS LOSS. HE ALSO SUBMITTED THAT THIS I S ALSO NOTED BY THE ASSESSING OFFICER IN THE SAME PARA OF THE ASSESSMENT ORDER THAT THE ASSESSEE HAS SHOWN SALE CONSIDERATION AT RS.95 LAC AND CLAIMED INDEXED COST OF ACQUISITION AT RS.2,28,73,400/ - WHEREAS THE COST OF ACQUISITION SHOULD HAVE BEEN RS.95 LA C. IN THIS REGARD, HE SUBMITTED THAT THE COMPUTATION OF INCOME IS AVAILABLE ON PAGES 19 TO 21 OF THE PAPER BOOK. HE ALSO SUBMITTED THAT THIS WAS BONAFIDE AND INADVERTENT MISTAKE AND FOR SUCH BONAFIDE MISTAKE, PENALTY IS NOT JUSTIFIED. IN SUPPORT OF THIS CONTENTION, HE PLACED RELIANCE ON THE TRIBUNAL DECISION IN THE CASE OF SOMANY EVERGREEN KNITS LIMITED VS. DCIT IN I.T.A. NO.1783/MUM/2009 DATED 22/09/2010 AND ALSO THE JUDGMENT OF HON'BLE BOMBAY HIGH COURT IN THE SAME CASE IN INCOME TAX APPEAL NO.1332 OF 2011 DATED 21/03/2013. HE SUBMITTED COPY OF THESE JUDGMENTS. 4. LEARNED D. R. OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THIS IS THE EXPLANATION OF THE ASSESSEE THAT THE SHAR ES IN QUESTION OF CEBBCO WERE PURCHASED IN THE MONTH OF DECEMBER 2006 AND SOLD IN THE MONTH OF MAY 2007 AND THEREFORE, THE HOLDING PERIOD WAS LESS THAN 12 MONTHS. IT WAS ALSO EXPLAINED THAT THESE SHARES WERE PURCHASED FOR RS.95 LAC S AND WERE SOLD ALSO FOR RS.95 LAC S AND THERE WAS NO GAIN/LOSS IN THIS TRANSACTION BUT IT WAS ACTUALLY A TYPING AND INADVERTENT ERROR WHICH OCCURRED AT THE TIME OF PREPARATION OF COMPUTATION OF INCOME, WHICH IS AVAILABLE ON PAGES 19 TO 21 OF THE PAPER BOOK WHEREIN THE ASSESSEE HA S SHOWN THE SA L E CONSIDERATION OF THESE SHARES CORRECTLY AT RS.95 LAC S BUT INSTEAD OF REDUCING THE ACTUAL COST OF ACQUISITION OF RS.95 LAC S AND DECLARING NIL INCOME/LOSS, THE ASSESSEE HAS SHOWN COST OF PURCHASE AT RS.215.45 LAC AND WORKED OUT INDEXED COST OF ACQUISITION AT RS.2,28,73,400.77 AND IN THIS MANNER , THE ASSESSEE COMPUTED LONG 3 TERM CAPITAL LOSS OF RS.1,33,72,400.77. CONSIDERING THE FACTS OF THE CASE AS PER WHICH THE SHARES WERE SOLD WITHIN A PERIOD OF LESS THAN 12 MONTHS AND THE PURCHASE CONSIDERATION AND SALE CONSIDERATION WERE SAME A T RS.95 LAC, THIS CLAIM OF THE ASSESSEE OF LONG TERM CAPITAL LOSS APPEARS TO BE A CLAIM BY MISTAKE. THIS IS FURTHER SUPPORTED BY THIS FACT THAT THIS LOSS IS NOWHERE CLAIMED BY THE ASSESSEE AS SET OFF AGAINST LONG TERM CAPITAL GAIN IN THE PRESENT YEAR OR IN SUBSEQUENT YEAR S BECAUSE THE ASSESSEE DID NOT HAVE ANY LONG TERM CAPITAL GAIN FOR CLAIMING SUCH S ET OFF BECAUSE EVEN AFTER EXCLUDING THIS MISTAKEN LOSS , THE ASSESSING OFFICER HAS WORKED OUT LONG TERM CAPITAL LOSS OF RS.24,74,156/ - AS PER THE ASSESSMENT ORDER FOR THE PRESENT YEAR. THE ASSESSMENT ORDERS FOR SUBSEQUENT YEARS I.E. ASSESSMENT YEAR 2009 - 10, 2010 - 11 AND 2011 - 12 ARE ALSO AVAILABLE IN THE PAPER BOOK AND IT IS S EEN THAT IN NONE OF THESE YEARS , THERE WAS ANY LONG TERM CAPITAL GAIN AGAINST WHICH THE ASSESSEE COULD CLAIM SET OFF OF LONG TERM CAPITAL LOSS WRONGLY CLAIMED IN THE PRESENT YEAR. CONSI DERING ALL THESE FACTS OF THE CASE, WE FIND FORCE IN THIS CLAIM OF THE LEARNED A R OF THE ASSESSEE THAT THIS WAS A BONAFIDE AND UNINTENTIONAL MISTAKE ON THE PART OF THE ASSESSEE IN CLAIMING SUCH NON EXISTENT LONG TERM CAPITAL LOSS BECAUSE IN SPITE OF HOLDIN G PERIOD BEING LESS THAN 12 MONTHS, THE CLAIM WAS FOR LONG TERM CAPITAL LOSS WITH INDEXATION BENEFIT WITHOUT ANY SET OFF IN THE PRESENT YEAR OR SUCCEEDING THREE YEARS . IF IT WOULD HAVE BEEN NOT ON ACCOUNT OF INADVERTENT MISTAKE, THE ASSESSEE WOULD HAVE CLA IMED SHORT TERM CAPITAL LOSS BECAUSE OF HOLDING PERIOD OF LESS THAN 12 MONTHS RESULTING INTO POSSIBLE SET OFF AGAINST SHORT TERM CAPITAL GAIN LIABLE TO TAX AT FULL RATE AS COMPARED TO CONCESSIONAL RATE OF TAX ON LONG TERM CAPITAL GAIN IN THE PRESENT YEAR O R IN SUCCEEDING YEARS. BUT THE ASSESSEE HAS CLAIMED LONG TERM CAPITAL LOSS AND IT SUPPORTS THE CONTENTION THAT THIS CLAIM WAS ON ACCOUNT OF A BONAFIDE AND INADVERTENT MISTAKE. IN THE LIGHT OF THESE FACTS, WE NOW EXAMINE THE APPLICABILITY OF JUDICIAL PRONOU NCEMENT S CITED BY LEARNED A.R. OF THE ASSESSEE. 6. AS PER THE TRIBUNAL ORDER IN THE CASE OF SOMANY EVERGREEN KNITS LIMITED (SUPRA), IT WAS HELD THAT ON ACCOUNT OF MAKING OF INCORRECT CLAIM WHERE THE BONAFIDE 4 OF THE ASSESSEE IS ESTABLISHED , PENALTY IS NOT JUSTIFIED. THIS TRIBUNAL ORDER WAS CARRIED INTO APPEAL BY THE REVENUE BEFORE HON'BLE BOMBAY HIGH COURT AND HON'BLE BOMBAY HIGH COURT HAS APPROVED THIS TRIBUNAL ORDER. HENCE, IN THE LIGHT OF THE FACTS OF THE PRESENT CASE, AS PER ABOVE DIS CUSSION AND BY RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL, WHICH WAS APPROVED BY HON'BLE BOMBAY HIGH COURT, WE HOLD THAT IN THE FACTS OF THE PRESENT CASE, PENALTY IS NOT JUSTIFIED IN RESPECT OF INCORRECT CLAIM ON ACCOUNT OF INADVERTENT MISTAKE . WE, THEREFORE, DELETE THE PENALTY. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SU NIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 3 /09/2015 * SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR