RAJENDRA J PATEL V. ASSTT. CIT (OSD)

TAXAP/427/2013

AI Insights

The case involves Rajendra J Patel, the appellant, who was aggrieved by the penalty imposed under section 271(1)(c) of the Income Tax Act for filing inaccurate particulars of income. The penalty was initially imposed by the Assessing Officer (AO) due to a mistake by the appellant's tax consultant, which was later upheld by the CIT(A) and the ITAT. The appellant contested that the mistake was bona fide and due to oversight, and subsequently provided an affidavit from the tax consultant admitting the mistake. The High Court, considering the new evidence, decided to remit the case back to the ITAT for a fresh evaluation.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 670583 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 11-11-2013
• Assessment Year: misc
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: MAUNA BHATT
• Assessee Lawyers: S N DIVATIA
• Keywords: Inaccurate particulars of income; Penalty; Tax consultant mistake; Carry forward business loss
• Section: 143(3); 271(1)(c)

Judgement Text

"O/TAXAP/427/2013 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 427 of 2013 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE M.R. SHAH Sd/- and HONOURABLE MR.JUSTICE R.P.DHOLARIA Sd/- ================================================================ 1 Whether Reporters of Local Papers may be allowed to see the judgment ? NO 2 To be referred to the Reporter or not ? NO 3 Whether their Lordships wish to see the fair copy of the judgment ? NO 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ? NO 5 Whether it is to be circulated to the civil judge ? NO ================================================================ RAJENDRA J PATEL....Appellant(s) Versus ASSTT. CIT (OSD)....Opponent(s) ================================================================ Appearance: MR SN DIVATIA, ADVOCATE for the Appellant(s) No. 1 MRS MAUNA M BHATT, ADVOCATE for the Opponent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE M.R. SHAH and HONOURABLE MR.JUSTICE R.P.DHOLARIA Date : 11/11/2013 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE M.R. SHAH) Page 1 of 6 O/TAXAP/427/2013 JUDGMENT 1.00. Being aggrieved by and dissatisfied with the impugned Judgement and Order dtd. 4/1/2013 passed by the Income Tax Appellate Tribunal (hereinafter referred to as “the ITAT) in ITA No.2308/Ahd/2012 with respect to AY 2008-09, the assessee has preferred the present Tax Appeal with the following proposed question of law : (A) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in confirming the penalty of Rs.3,91,041/- levied u/s. 271(1)(c) of the Income Tax Act? (B) Whether on the facts and in the circumstances of the case, Income Tax Appellate Tribunal could have reached to the conclusion that the appellant had furnished inaccurate particulars of income merely because any certificate or affidavit from the Tax Consultant was not placed on record? 2.00. That the assessee filed return of income for the AY 2008-09. Subsequently, assessment under section 143(3) of the Income Tax Act was made, thereby disallowance of set off of carry forward business loss of Rs.11,50,459/- was made by the AO and the penalty proceedings were also initiated. That thereafter, penalty proceedings under section 271(1)(c) of the Income Tax Act came to be initiated. It was the case on behalf of the assessee that due to mistake by the Tax Consultant of Page 2 of 6 O/TAXAP/427/2013 JUDGMENT the assessee, the claim of set off of carry forward business loss was made against the income from other source during the year under consideration, which was not admissible. It was submitted that mistake was due to oversight of the Tax Consultant and subsequently a revised working of total income was also furnished. Therefore, it was requested not to levy penalty under section 271(1)(c) of the Income Tax Act. The AO did not accept the above submission in absence of any supporting Affidavit of the Tax Consultant. The AO imposed penalty of Rs.3,91,041/- on account of filing of inaccurate particular of income. The assessee, being aggrieved by and dissatisfied with the same, preferred an appeal before the CIT(A) and the CIT(A) dismissed the said appeal preferred by the assessee. Being aggrieved by and dissatisfied with the order passed by the CIT(A) in confirming the penalty under section 271(1)(c) of the Income Tax Act, the assessee preferred appeal before the ITAT and by the impugned Judgement and Order the learned tribunal has dismissed the said appeal confirming penalty under section 271(1)(c) of the Income Tax Act mainly on the ground that the assessee has not produced any supporting evidence / document / Affidavit of the Tax Consultant, to substantiate his case that there was bonafide mistake on the part of the Tax Consultant. Being aggrieved by and dissatisfied with the Judgement and Order passed by the ITAT, the assessee has preferred the present Tax Appeal with the aforesaid proposed substantial question of law. 3.00. Heard Mr.Divatia, learned counsel appearing on behalf of the appellant and Mr.Manish Bhatt, learned counsel appearing on behalf of the respondent – revenue. Page 3 of 6 O/TAXAP/427/2013 JUDGMENT 4.00. Before us, the assessee has placed on record Affidavit of one Mr.Vinod H. Desai, practicing Chartered Accountant submitting that it was his bonafide mistake of claiming the set off of carry forward business loss made against the income from other source during the year under consideration. In view of the aforesaid, it is requested to allow the present appeal and quash and set aside the order of penalty passed under section 271(1)(c) of the Income Tax Act. 5.00. Mr.Manish Bhatt, learned counsel appearing on behalf of the respondent – revenue has submitted that the Affidavit of the Chartered Accountant, which is now relied upon by the assessee, was not placed before the ITAT for its consideration and therefore, it is submitted that the same may not be considered at this stage. In the alternative it is submitted that if the aforesaid Affidavit is to be considered, in that case, the matter may be remitted to the ITAT to consider the appeal afresh in accordance with law and on merits. 6.00. Mr.Divatia, learned counsel appearing on behalf of the appellant has stated at the bar that he has no objection if the matter is remitted to the ITAT and granting permission to the appellant here to place on record of the ITAT Affidavit of the Chartered Accountant, which is placed on record before this Court. 7.00. Having heard Mr.Divatia, learned counsel appearing on behalf of the appellant and Mr.Manish Bhatt, learned counsel appearing on behalf of the revenue and considering the impugned orders passed by the CIT(A) as well as learned Page 4 of 6 O/TAXAP/427/2013 JUDGMENT ITAT, it appears that from the very beginning it was the case on behalf of the assessee that due to bonafide mistake of the Tax Consultant of the assessee, the claim of set off of carry forward business loss was made against the income from other source during the year under consideration, which was not admissible and therefore, immediately when it was brought to the notice of the assessee, a revised working of the total income was furnished. However, in absence of any supporting Affidavit of the Chartered Accountant that it was his bonafide mistake, both the learned CIT(A) as well as ITAT have not considered the aforesaid submission. 8.00. Now, the assessee has placed on record Affidavit of the Chartered Accountant submitting that it was his bonafide mistake. It is true that the Affidavit of the Chartered Accountant, which is now relied upon, was never before the learned ITAT. Under the circumstances, Mr.Bhatt, learned counsel appearing on behalf of the revenue is justified in making alternative submission that in that case the matter may be remitted to the ITAT, to which Mr.Divatia, learned counsel appearing on behalf of the appellant has no objection. 9.00. In view of the above, present Tax Appeal succeeds. The impugned Judgement and Order dtd. 4/1/2013 passed by the Income Tax Appellate Tribunal in ITA No.2308/Ahd/2012 is hereby quashed and set aside and the matter is remitted to the learned ITAT to consider the appeal afresh in accordance with law and on merits, after permitting the appellant to place on record affidavit of Mr.Vinod H. Desai, Chartered Accountant, which is placed on record in the present Tax Appeal and thereafter to pass appropriate order in the appeal afresh in Page 5 of 6 O/TAXAP/427/2013 JUDGMENT accordance with law and on merits. However, it is made clear that this Court has not expressed anything on merits in favour of either of the parties and it is ultimately for the ITAT to pass appropriate order afresh in accordance with law and on merits. Present Tax Appeal is allowed to the aforesaid extent. Sd/- (M.R.SHAH, J.) Sd/- (R.P.DHOLARIA,J.) Rafik Page 6 of 6 "