Smt. Naynaben R.Desai, Surat V. The Income tax Officer, Ward-3(3), Surat

ITA 983/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 8648 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 08-03-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 06-03-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M C
• Assessee Lawyers: R N VEPARI
• Keywords: Business income; Bonafide belief

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : C BENCH : A HMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HONBLE SH RI D.C. AGRAWAL, A.M.) I.T.A. NO. 983/AHD./2007 ASSESSMENT YEAR : 2003-2004 SMT. NAYNABEN R. DESAI, SURAT -VS.- INCOME TAX OFF ICER, WARD-3(3), SURAT (PAN : AAPPD 7097 R) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R.N. VEPARI RESPONDENT BY : SHRI M.C. PANDIT, SR. D.R. O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE O RDER DATED 10.01.2007 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-II, SURAT CANCE LLING THE PENALTY OF RS.26,746/- LEVIED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF TH E INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEAR 2003-04. 2. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE I S AN INDIVIDUAL. FOR THE ASSESSMENT YEAR UNDER APPEAL, THE A.O. FRAMED THE ASSESSMENT, WHERE IN AGGREGATE INCOME OF RS.2,49,583/- WAS ASCERTAINED TREATING THE CAPITAL GAIN INCOME AS BUS INESS INCOME. IN THE ASSESSMENT ORDER, THE A.O. ALSO INITIATED PENALTY PROCEEDINGS FOR CONCEAL MENT OF INCOME TO THE EXTENT OF RS.82,489/-. SUBSEQUENTLY ON CONCEALED INCOME OF RS.82,489/-, TH E A.O. LEVIED THE PENALTY OF RS.26,746/- BEING 100% OF TAX SOUGHT TO BE EVADED ON THE AMOUNT OF INCOME CONCEALED. IN APPEAL, AGAINST THE PENALTY ORDER, IN THE IMPUGNED ORDER, THE LEARN ED COMMISSIONER OF INCOME TAX(APPEALS) CONFIRMED THE ACTION OF A.O. ON THE GROUND THAT IN THE RETURN OF INCOME, THE ASSESSEE MADE A CLAIM WHICH THE ASSESSEE KNEW WAS NOT BONAFIDE AND THE ASSESSEE COULD NOT SUBSTANTIATE HER EXPLANATION BEFORE THE A.O. THE LEARNED COMMISSIONE R OF INCOME TAX(APPEALS) ALSO OBSERVED THAT THE ASSESSEE STRUCTURED ARRANGEMENT TO AVOID P AYMENT OF TAX AT A HIGHER RATE, WHICH AMOUNTED TO CONCEALMENT. AGGRIEVED BY THIS ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS), THE ASSESSEE IS IN APPEAL BEFORE US. 2 ITA NO. 983/AHD/2007 3. AT THE TIME OF HEARING, ON BEHALF OF ASSESSEE SH RI R.N. VEPARI APPEARED AND CONTENDED THAT IN THE RETURN OF INCOME, THE ASSESSEE DECLARED LONG-TERM CAPITAL GAIN AT RS.50,218/- AND SHOWN IT AT RS.20,218/- AFTER DEDUCTION UNDER SECTI ON 54EC OF THE INCOME TAX ACT. THUS THE ASSESSEE HAD DISCLOSED FULL PARTICULARS. THE A.O. H AD TAKEN THE VIEW THAT THE ABOVE INCOME SHOULD BE TREATED AS BUSINESS INCOME. THIS VIEW WAS CONFIRMED BY THE ITAT, D BENCH, AHMEDABAD IN ITA NO. 2503/AHD/2006, ORDER DATED 16. 05.2008. THE TRIBUNAL ACCORDINGLY RESTORED THE MATTER TO THE A.O. THE A.O. THEREAFTER RE-WORKED OUT THE INCOME. THE LD. COUNSEL OF THE ASSESSEE ALSO CONTENDED THAT IN THE CASE OF SHR I JAYPRAKASH R. DESAI (SON OF THE ASSESSEE), ON IDENTICAL FACTS, THE A.O. LEVIED THE PENALTY, WHICH WAS CANCELLED BY THE ITAT, SMC BENCH IN ITA NO. 605/AHD/2006 VIDE ORDER DATED 15.05.2006 FO R THE ASSESSMENT YEAR 2002-03. HE CONTENDED THAT THE FACTS OF ASSESSEES CASE ARE IDE NTICAL WITH THAT OF HER SON NAMELY SHRI JAYPRAKASH R. DESAI. THEREFORE, FOLLOWING THE SAID DECISION, PENALTY OF RS.26,746/- LEVIED BY THE A.O. BE CANCELLED. 4. ON THE OTHER HAND, SHRI M.C. PANDIT, SR. D.R. AP PEARING ON BEHALF OF THE REVENUE VEHEMENTLY OPPOSED THE CONTENTION OF THE LD. COUNSE L OF THE ASSESSEE. THE LD. D.R. SUBMITTED THAT IN THE IMPUGNED ORDER, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) AFTER ANALYZING CLAUSE (B) OF EXPLANATION 1 HELD THAT EXPLANATION O F THE ASSESSEE WAS NOT BONAFIDE AND SHE COULD NOT SUBSTANTIATE HER EXPLANATION BEFORE THE A.O. 5. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT THE ASSESSEE WA S OF THE BONAFIDE BELIEF THAT SHE HAS EARNED LONG- TERM CAPITAL GAIN. HER BONAFIDE IS PROVED BY THE FA CT THAT SHE MADE INVESTMENTS FOR CLAIMING DEDUCTION UNDER SECTION 54EC OF THE INCOME TAX ACT, 1961. THE INVESTMENTS MADE BY THE ASSESSEE UNDER SECTION 54EC CLEARLY INDICATE THAT S HE WAS OF THE BONAFIDE BELIEF THAT SHE HAS EARNED LONG-TERM CAPITAL GAIN AND SHE IS NOT ENGAGE D IN ANY BUSINESS. IT IS A DIFFERENT MATTER THAT THE A.O. ASSESSED THE CAPITAL GAINS AS BUSINESS INC OME AND ALSO DENIED THE EXEMPTION UNDER SECTION 54EC CLAIMED BY HER. ON IDENTICAL FACTS, PE NALTY UNDER SECTION 271(1)(C) OF RS.10,360/- WAS LEVIED IN THE CASE OF THE SON OF THE ASSESSEE N AMELY SHRI JAYPRAKASH R. DESAI. IN THE CASE OF HER SON IN ITA NO. 605/AHD/2006, THE ITAT, SMC BE NCH VIDE ORDER DATED 15.05.2006 (SUPRA) CANCELLED THE PENALTY. SINCE THE FACTS OF T HE ASSESSEES CASE ARE IDENTICAL WITH THAT THE 3 ITA NO. 983/AHD/2007 CASE OF HER SON, WE, THEREFORE, FOLLOWING THE SAID DECISION DATED 15.05.2006 CANCEL THE PENALTY OF RS.26,746/- LEVIED BY THE A.O. UNDER SECTION 271(1) (C) OF THE INCOME TAX ACT, 1961. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 12.03.201 0 SD/- SD/- (D.C. AGRAWAL) (T.K. SHARMA ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 12 / 03 / 2010 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A) CONCERNED, (4) CIT CONCERNED, (5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTRAR, ITAT, AHMEDABAD LAHA/SR.P.S.