Smt Sheelu Lalwani, New Delhi v. DCIT, New Delhi

CO 145/DEL/2010 | 2006-2007
Pronouncement Date: 28-01-2011 | Result: Dismissed

Appeal Details

RSA Number 14520123 RSA 2010
Assessee PAN AAEPL6027K
Bench Delhi
Appeal Number CO 145/DEL/2010
Duration Of Justice 7 month(s) 19 day(s)
Appellant Smt Sheelu Lalwani, New Delhi
Respondent DCIT, New Delhi
Appeal Type Cross Objection
Pronouncement Date 28-01-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 28-01-2011
Date Of Final Hearing 05-01-2011
Next Hearing Date 05-01-2011
Assessment Year 2006-2007
Appeal Filed On 09-06-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D DELHI BEFORE SHRI C.L. SETHI AND SHRI K.G. BANSAL ITA NO. 1442(DEL)/2010 ASSESSMENT YEAR: 2006-07 DEPUTY COMMISSIONER OF SHRI LE KH RAJ LALWANI INCOME-TAX CIRCLE 33(1) VS. R-649 NEW RAJINDER NAGAR NEW DELHI. NEW DELHI. PAN: AAEPL6027K C.O. NO. 144(DEL)/2010 (ARISING OUT OF ITA NO. 1442(DEL)/2010) ASSESSMENT YEAR: 2006-07 SHRI LEKH RAJ LALWANI D EPUTY COMMISSIONER OF R-649 NEW RAJINDER NAGAR VS. INCOME-T AX CIRCLE 33(1) NEW DELHI. NEW DELHI. ITA NO. 1443(DEL)/2010 ASSESSMENT YEAR: 2006-07 DEPUTY COMMISSIONER OF SMT. SH EELU LALWANI INCOME-TAX CIRCLE 33(1) VS. R-649 NEW RAJINDER NAGAR NEW DELHI. NEW DELHI. PAN: ACBPL3749R C.O. NO. 145(DEL)/2010 (ARISING OUT OF ITA NO. 1443(DEL)/2010) ASSESSMENT YEAR: 2006-07 SMT. SHEELU LALWANI D EPUTY COMMISSIONER OF R-649 NEW RAJINDER NAGAR VS. INCOME-T AX CIRCLE 33(1) NEW DELHI. NEW DELHI. ITA NOS. 1442 TO 1448(DEL)/2010& C.O.NOS. 144 TO 150(DEL)/2010 2 ITA NO. 1444(DEL)/2010 ASSESSMENT YEAR: 2006-07 DEPUTY COMMISSIONER OF MS. MAD HU RAJ LALWANI INCOME-TAX CIRCLE 33(1) VS. R-649 NEW RAJINDER NAGAR NEW DELHI. NEW DELHI. PAN: AAEPL5473E C.O. NO. 146(DEL)/2010 (ARISING OUT OF ITA NO. 1444(DEL)/2010) ASSESSMENT YEAR: 2006-07 MS. MADHU RAJ LALWANI DEPU TY COMMISSIONER OF R-649 NEW RAJINDER NAGAR VS. INCOME-T AX CIRCLE 33(1) NEW DELHI. NEW DELHI. ITA NO. 1445(DEL)/2010 ASSESSMENT YEAR: 2006-07 DEPUTY COMMISSIONER OF MS. KAN TA LALWANI INCOME-TAX CIRCLE 33(1) VS. R-649 NEW RAJINDER NAGAR NEW DELHI. NEW DELHI. PAN: AAFPL5470H C.O. NO. 147(DEL)/2010 (ARISING OUT OF ITA NO. 1445(DEL)/2010) ASSESSMENT YEAR: 2006-07 MS. KANTA LALWANI DEPUTY COMMISSIONER OF R-649 NEW RAJINDER NAGAR VS. INCOME-T AX CIRCLE 33(1) NEW DELHI. NEW DELHI. ITA NO. 1446(DEL)/2010 ASSESSMENT YEAR: 2006-07 DEPUTY COMMISSIONER OF MS. MEE RA LALWANI INCOME-TAX CIRCLE 33(1) VS. R-649 NEW RAJINDER NAGAR NEW DELHI. NEW DELHI. PAN: AAFPL6033R ITA NOS. 1442 TO 1448(DEL)/2010& C.O.NOS. 144 TO 150(DEL)/2010 3 C.O. NO. 148(DEL)/2010 (ARISING OUT OF ITA NO. 1446(DEL)/2010) ASSESSMENT YEAR: 2006-07 MS. MEERA LALWANI DEPU TY COMMISSIONER OF R-649 NEW RAJINDER NAGAR VS. INCOME-T AX CIRCLE 33(1) NEW DELHI. NEW DELHI. ITA NO. 1447(DEL)/2010 ASSESSMENT YEAR: 2006-07 DEPUTY COMMISSIONER OF MS. REK HA LALWANI INCOME-TAX CIRCLE 33(1) VS. R-649 NEW RAJINDER NAGAR NEW DELHI. NEW DELHI. PAN: AAFPL6034J C.O. NO. 19(DEL)/2010 (ARISING OUT OF ITA NO. 1447(DEL)/2010) ASSESSMENT YEAR: 2006-07 MS. REKHA LALWANI DEPUTY COMMISSIONER OF R-649 NEW RAJINDER NAGAR VS. INCOME-T AX CIRCLE 33(1) NEW DELHI. NEW DELHI. ITA NO. 1448(DEL)/2010 ASSESSMENT YEAR: 2006-07 DEPUTY COMMISSIONER OF MS. RAJ NI LALWANI INCOME-TAX CIRCLE 33(1) VS. R-649 NEW RAJINDER NAGAR NEW DELHI. NEW DELHI. PAN: AAEPL5471G AND ITA NOS. 1442 TO 1448(DEL)/2010& C.O.NOS. 144 TO 150(DEL)/2010 4 C.O. NO. 150(DEL)/2010 (ARISING OUT OF ITA NO. 1448(DEL)/2010) ASSESSMENT YEAR: 2006-07 MS. RAJNI LALWANI DEPUTY COMMISSIONER OF R-649 NEW RAJINDER NAGAR VS. INCOME-T AX CIRCLE 33(1) NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI K RAVI RAMACHANDARAN SR. DR ASSESSEE BY : SHRI RAJESH JAIN C.A ORDER PER BENCH THESE APPEALS AND THE CROSS OBJECTIONS PERTAIN ING TO MEMBERS OF A FAMILY INVOLVE COMMON GROUNDS. THEREFORE THE SE APPEALS WERE ARGUED IN A CONSOLIDATED MANNER BY THE LD. DR AND THE LD. COUNSEL FOR THE ASSESSEE. ACCORDINGLY A CONSOLIDATED ORDER IS PASSED. 1.1 THE APPEALS AND THE OBJECTIONS WERE ARGUED W ITH REFERENCE TO THE FACTS OF THE CASE OF MS. MADHU LALWANI. THEREF ORE WHILE PASSING THE ORDER THE FACTS OF THIS CASE ARE NARRATED IN DETAIL. IT IS THE COMMON GROUND OF BOTH THE PARTIES THAT FACTS OF ALL THE CASES ARE IDENTICAL. 2. THE FACTS ARE THAT THE ASSESSEE FILED HER RETURN ON 14.8.2006 DECLARING TOTAL INCOME OF RS. 1 11 52 993/-. THE RETURN WAS PROCESSED U/S ITA NOS. 1442 TO 1448(DEL)/2010& C.O.NOS. 144 TO 150(DEL)/2010 5 143(1) ACCEPTING THE RETURN OF INCOME AND REFU ND OF RS. 3 87 960/- WAS GRANTED TO HER ON 8.5.2007. THEREAFTER THE CA SE WAS SELECTED FOR SCRUTINY BY ISSUING A NOTICE U/S 143(2). 2.1 THE POINT IN DISPUTE IS REGARDING THE TAXABI LITY OF CAPITAL GAINS ARISING ON SALE OF 2 50 000 SHARES OF INDOCARE PHARMACEUTICALS LTD. PURCHASED BY THE ASSESSEE ON 25.2.2004 AND SOL D ON 21.10.2005. THE SHARES WERE PURCHASED FOR A SUM OF RS. 16 65 2 27/- AND SOLD FOR RS. 50.00 LAKH. IN THE STATEMENT OF INCOME THE ASS ESSEE CLAIMED THE CAPITAL GAINS OF RS. 33 34 973/- TO BE EXEMPT U/S 10(3 8) OF THE INCOME-TAX ACT 1961. SHE WAS REQUIRED TO FURNISH THE PURCHASE A ND SALE AGREEMENTS. THE SALE BILL WAS SUBMITTED ON 6.8.2008 VIDE LETTE R OF THE SAME DATE IN WHICH INFORMATION ON TWO OTHER POINTS WAS ALSO SUBM ITTED. THE PURCHASE BILL WAS SUBMITTED ON 11.8.2008 VIDE LETTER OF THE SAME DATE IN WHICH INFORMATION REGARDING ONE MORE POINT WAS FURNIS HED. THEREAFTER THE ASSESSEE SUBMITTED A LETTER DATED 29.8.2008 IN WHICH IT IS STATED THAT THE SALE AGREEMENT WAS ON SPOT BASIS. THE SHARE WAS LISTED ON AHMEDABAD STOCK EXCHANGE. SHE HELD THE SHARES IN DEMAT FORM WITH A DEPOSITORY. IN THE RELEVANT PERIOD THE AHMEDA BAD STOCK EXCHANGE (ASE) WAS NOT IN OPERATION FOR MORE THAN A YEA R AND THEREFORE THE ITA NOS. 1442 TO 1448(DEL)/2010& C.O.NOS. 144 TO 150(DEL)/2010 6 SHARES WERE SOLD ON SPOT BASIS. THE ACCOUNT ANT BY MISTAKE HAS TREATED THE GAINS TO BE EXEMPT U/S 10(38) A T THE TIME OF PREPARING INCOME-TAX RETURN WITHOUT PAYING TO THE ATTENT ION TO THE EFFECT THAT THE SECURITIES TRANSACTION TAX (THE STT) HAD NOT B EEN PAID ON THE SALE- TRANSACTION AND THE SHARES WERE NOT SOLD ON THE EXCHANGE. THE GAINS ATTRACTED TAX @ 10%. THE AO COMPLETED ASSESSM ENT ON 2.12.2008 IN WHICH IT IS INTER-ALIA MENTIONED THAT IN VIE W OF EARLIER DISCUSSION THE AMOUNT OF RS. 33 34 973/-IS TREATED AS INCOME OF THE ASSESSEE FROM CAPITAL GAINS ARISING OUT OF THE TRANSACTION OF LISTED SECURITIES AS MENTIONED IN PROVISO TO SECTION 112 OF THE ACT. IT IS FURTHER MENTIONED THAT PENALTY U/S 271(1)(C) HAS BEEN INITIATED O N THIS POINT SEPARATELY. 2.2 THE PENALTY PROCEEDINGS WERE COMPLETED ON 24.6.2009 AND MINIMUM PENALTY OF RS. 3 74 184/- WAS LEVIED. IN THE PENALTY PROCEEDINGS IT WAS INTER-ALIA SUBMITTED THAT IN THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE CAME TO KNOW THAT THE CLAIM OF EXEMPTION U/S 10(38) WAS A MISTAKE AS THE SHARES WERE NOT S OLD THROUGH THE ASE AS IT HAD STOPPED FUNCTIONING. THEREFORE THE GAINS WERE OFFERED FOR TAXATION. IT WAS FURTHER SUBMITTED THAT LOOKING TO THE CONDUCT OF THE ASSESSEE WHO IS NOT AWARE OF THE TECHNICAL PROVISIONS O F THE LAW THE PENALTY MAY ITA NOS. 1442 TO 1448(DEL)/2010& C.O.NOS. 144 TO 150(DEL)/2010 7 NOT BE LEVIED. IT WAS ALSO SUBMITTED THAT PENA LTY PROCEEDINGS ARE QUASI- CRIMINAL IN NATURE. THEREFORE IT IS IMPERATIVE TO PROVE THAT THE ASSESSEE HAS CONCEALED INCOME. SUCH IS NOT THE CASE HERE . THE MOMENT THE ASSESSEE CAME TO KNOW ABOUT THE MISTAKE ALL FA CTS WERE FURNISHED AND EXPLANATION WAS ALSO TENDERED. THE TAX DUE ON ASSESSED INCOME HAS ALSO BEEN PAID. FURTHER SUBMISSIONS WERE MADE TO THE EFFECT THAT THE TOTAL INCOME OF THE ASSESSEE AS PER RETURN WAS RS. 1 11 52 993/- AND TAX OF RS. 35 49 541/- WAS PAYABLE. SUCH AN ASSESSEE WILL NOT FURNISH INACCURATE PARTICULARS OF INCOME FOR SAVING TAX OF RS. 3 35 000/- ONLY. THE MISTAKE WAS COMMITTED BY THE ACCOUNTANT WHO CLAIMED THE G AINS TO BE EXEMPT WITHOUT UNDERSTANDING THE PROVISIONS OF THE ACT. THEREFORE NO CONSCIOUS EFFORT CAN BE ATTRIBUTED TO THE ASSESSEE TO EVADE TAX AND IT IS ONLY A CASE OF BONA FIDE ERROR. THE AO DID NOT ACCEPT THIS EXPLANATION. IT IS MENTIONED THAT THE ASSESSEE CAME FORWARD WITH DOCUMENTARY EVIDENCE OF PURCHASE AND SALE ONLY WHEN SHE WAS REQUIRED TO DO SO BY THE AO. IF THE CASE WAS NOT SELECTED FOR SCRUTINY OR THE EVIDENCE NOT CALLED FOR IN SUPPORT OF EXEMPTION U/S 10(38) THE ASSESSEE WOULD HAVE GOTTEN AWAY WITHOUT PAYING TAX ON CAPITAL GAINS. THE PL EA REGARDING LACK OF KNOWLEDGE OF IGNORANCE OF LAW WAS NOT ACCEPTED ON THE GROUND THAT SHE IS BEING ASSISTED BY PROFESSIONAL ACCOUNTANTS. COMI NG TO THE MENS REA ITA NOS. 1442 TO 1448(DEL)/2010& C.O.NOS. 144 TO 150(DEL)/2010 8 RELIANCE WAS PLACED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF UNION OF INDIA VS. DHARMENDRA TEXTILE PRO CESSORS (2008) 306 ITR 277. A PART OF THE JUDGMENT AS INDICATED BE LOW WAS REPRODUCED IN THE ORDER: .EXPLANATION APPENDED TO SECTION 271(1)(C) OF TH E I.T.ACT ENTIRELY INDICATES THE ELEMENT OF STRICT LIABI LITY ON THE ASSESSEE FOR CONCEALMENT FOR GIVING INACCURATE PARTICULARS WHILE FILING RETURN. THE JUDGMENT IN DILIP SHROF F CASE (SUPRA) HAS NOT CONSIDERED THE AFFECT AND RELEVANCE OF SECTION 276C OF THE IT ACT. OBJECT BEHIND ENACTMENT OF SECTIO N 271(1)(C) READ WITH EXPLANATION INDICATES THAT THE SAID S ECTION HAS BEEN ENACTED TO PROVIDE FOR A REMEDY FOR LOSS OF RE VENUE. PENALTY UNDER THAT PROVISION IS A CIVIL LIABILITY WILL FUL CONCEALMENT IS NOT AN ESSENTIAL INGREDIENT FOR ATTRACTING CIVIL LIABILITY AS IS THE CASE MATTER OF PROSECUTION U/S 276. 2.3 THUS AS MENTIONED EARLIER MINIMUM PENALT Y OF RS. 3 74 184/- WAS LEVIED. 3. AGGRIEVED BY THIS ORDER THE ASSESSEE MOVED AN APPEAL BEFORE THE CIT(APPEALS)-XXVI NEW DELHI. HE DISPOSED OFF T HE APPEAL ON 27.1.2010 IN APPEAL NO. 53/09-10 IN WHICH THE LEVY OF THE PENALTY WAS DELETED. THE FINDING OF THE LD. CIT(A) IS THAT THE ASSESSEE POINTED OUT THE MISTAKE SUO MOTU IN LETTER DATED 29.8.2008. SHE HAS ALSO PAID TAX. THE EXPLANATION IS THAT THE ACCOUNTANT OF THE A SSESSEE WHO IS COMMON TO ITA NOS. 1442 TO 1448(DEL)/2010& C.O.NOS. 144 TO 150(DEL)/2010 9 ALL FAMILY MEMBERS HAD INADVERTENTLY AND WITHO UT KNOWING THE IMPLICATIONS THEREOF FAILED TO INFORM THE CHA RTERED ACCOUNTANT ABOUT THE FACTS OF SPOT SALE AND NON-PAYMENT STT. H E FOUND THIS EXPLANATION TO BE PLAUSIBLE. PARAGRAPH NO. 5 OF HIS ORDER CONTAINING THE AFORESAID FINDINGS IS REPRODUCED BELOW:- I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND THE JUDICIAL PRECEDENTS RELIED UPON BY THE COUNSEL . I FIND THAT THE FACTS OF THE CASE ARE UNDISPUTED. THE L D. AO IN THE ASSESSMENT ORDER HAS MENTIONED THAT DURING THE ASSESSMENT PROCEEDINGS HE HAD ASKED THE APPELLANT TO FURNIS H THE DETAILS VIDE LETTER DATED 29.8.2008 THE APPELLANT S UO MOTO HAD POINTED OUT THE MISTAKE WHICH CREPT IN WHILE FILING THE RETURN AND OFFERED THE IMPUGNED LONG TERM CAPITA L GAINS FOR TAXATION WHICH WAS CLAIMED AS EXEMPT IN THE RETURN IN VIEW OF PROVISO TO SECTION 112 OF THE IT ACT. THE APPELLANT HAS COME FORWARD TO INDICATE THE ERROR AND HAD PAID TAXES THEREON EVEN BEFORE THE MISTAKE COULD BE DETECT ED BY THE DEPARTMENT. THE EXPLANATION BEHIND OCCURRENCE OF THIS ERROR GIVEN WAS THAT THE ACCOUNTANT OF THE APPELLA NT WHO IS COMMON TO ALL FAMILY MEMBERS HAD INADVERTENTLY A ND WITHOUT KNOWING THE IMPLICATIONS THEREOF FAI LED TO INFORM THE CHARTERED ACCOUNTANT OF THE APPELLANT ABOUT THE FACT OF NON-PAYMENT OF STT. I FIND THIS EXPLANATION AS PLAUSIBLE ONE AS SAME MISTAKE WAS COMMITTED IN RESPECT OF ALL FAMILY MEMBERS 7 IN NUMBER WHICH COULD BE POSSIBLE DUE TO THE FACT THAT THEY HAD ONE COMMON ACCOUNTANT WHO WAS NOT AWARE OF THE IMPLICATIONS OF PAYMENT OR NOT OF STT ON THE TAX LIABILITY OF THE APPELLANT AND OTHER FAMILY MEMBERS IN VIEW OF PROVISIONS OF PROVISO TO SECTION 112 OF THE IT ACT 1961. THEREFORE IN VIEW OF THE DECISION OF THE GUJARAT HIGH COURT IN THE CASE OF CIT VS. WEST INN LIMITED DATED 25.11.2009 THE MISTAKE ON THE PART OF THE APP ELLANT IS HELD AS BONA FIDE AS APPELLANT MAY NOT HAVE BEEN W ELL VERSE ON ITA NOS. 1442 TO 1448(DEL)/2010& C.O.NOS. 144 TO 150(DEL)/2010 10 ABOUT THE COMPLEX PROVISIONS OF THE PROVISO TO SECTION 112 OF THE IT ACT 1961 AND HAD RELIED ON THE ADVICE RENDERED BY THE ACCOUNTANT WHO HIMSELF WAS NOT AWARE OF THESE PROVISIONS. 4. BEFORE US THE LD. DR SUBMITTED THAT A NOTICE AND A QUESTIONNAIRE WERE ISSUED TO THE ASSESSEE. THE AO REQUESTED T HE ASSESSEE TO FURNISH BROKER NOTES REGARDING PURCHASE AND SALE OF SHARES AND UNIQUE ID OF THE ASSESSEE. IN RESPONSE TO THIS QUESTIONNAIR E THE ASSESSEE FILED THE BILL OF SALE ON 6.8.2008 AND BILL OF PURCHASE ON 11.8.2008. SOME DISCUSSION TOOK PLACE ON 11.8.2008. THEREAFT ER THE ASSESSEE SURRENDERED CAPITAL GAIN FOR TAXATION ON 29.8 .2008. THEREFORE IT WAS ARGUED THAT THE SURRENDER OF INCOME FOR TAXATION WAS NOT VOLUNTARY. ONCE PURCHASE AND SALE BILLS HAD BEEN REQUISITIONED B Y THE AO THE ASSESSEE HAD NO ALTERNATIVE BUT TO OFFER CAPITAL GAINS FO R TAXATION. HOWEVER THIS WAS DONE ON THIRD HEARING AND NOT IMMEDIATELY ON RECEIPT OF THE QUESTIONNAIRE. IN SUCH CIRCUMSTANCES THE SURREND ER CANNOT BE CONSIDERED TO BE VOLUNTARY AT ALL. 4.1 COMING TO THE NATURE OF PENALTY PROCEEDINGS RELIANCE HAS BEEN PLACED ON THE DECISION OF HONBLE SUPREME COURT I N THE CASE OF DHARMENDRA TEXTILE PROCESSORS (SUPRA) IN WHICH IT HAS BEEN HELD THAT THE ITA NOS. 1442 TO 1448(DEL)/2010& C.O.NOS. 144 TO 150(DEL)/2010 11 PROCEEDINGS ARE CIVIL IN NATURE AND THE LEVY IS TO COMPENSATE THE REVENUE FOR THE DEFAULT OF THE ASSESSEES. FURTHER RELI ANCE HAS BEEN PLACED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CAS E OF CIT VS. ZOOM COMMUNICATION P. LTD. (2010) 327 ITR 510 IN WHICH IT HAS BEEN HELD THAT THE PLEA OF INADVERTENCE CANNOT BE ACCEPTE D UNLESS IT IS EXPLAINED AS TO WHO COMMITTED THE MISTAKE AND WHAT WERE T HE CIRCUMSTANCES IN WHICH THE MISTAKE WAS COMMITTED. IT IS ALSO MEN TIONED IN THE JUDGMENT THAT A LARGE NUMBER OF RETURNS ARE ACCEPTED U /S 143(1) AND ONLY A FEW CASES ARE SELECTED FOR SCRUTINY. IN SUCH A SC ENARIO ACCEPTANCE OF PLEA OF OVERSIGHT WOULD EXONERATE A LARGE NUMBER OF ASSESSEES FROM PAYMENT OF LEGITIMATE TAX EVEN WHEN THE CLAIM WAS AC TUATED BY A MALA FIDE INTENTION. RELIANCE HAS ALSO BEEN PLACED ON T HE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ESCORTS F INANCE LTD. (2010) 328 ITR 44. IN THIS CASE THE ASSESSEE CLAIMED DEDUCTION U/S 35D ON THE BASIS OF REPRESENTATION MADE IN THE PROSPECTUS. HOWEVER IN THE CASE OF ASSESSMENT SUCH A CLAIM WAS FOUND TO BE UNTE NABLE AS A FINANCE COMPANY IS NOT ENTITLED TO THE AFORESAID DEDUCTI ON AT ALL. THE HONBLE COURT MENTIONED ABOUT THE DECISION IN THE CASE O F DHARMENDRA TEXTILE PROCESSOR (SUPRA) REGARDING NATURE OF PENALTY PRO CEEDINGS. IT IS FURTHER MENTIONED THAT DEDUCTION U/S 35D WAS NOT AT A LL APPLICABLE TO THE CASE OF ITA NOS. 1442 TO 1448(DEL)/2010& C.O.NOS. 144 TO 150(DEL)/2010 12 THE ASSESSEE. THE ASSESSEE HAD OBTAINED TECHNIC AL ASSISTANCE FROM CHARTERED ACCOUNTANT AT THE TIME OF FILING THE RETURN. THEREFORE IT WAS HELD THAT IT IS NOT A CASE OF BONA FIDE ERROR ON THE PART OF THE ASSESSEE. 5. IN REPLY THE LD. COUNSEL SUBMITTED THAT THIS IS A CASE OF BONA FIDE ERROR WHICH WAS RECTIFIED BEFORE THE AO BY FIL ING LETTER DATED 29.8.2008 IN WHICH CIRCUMSTANCES LEADING TO THE ERROR HA VE BEEN MENTIONED. ON A QUERY FROM THE BENCH IT WAS SUBMITTED THAT THE TAX ON CAPITAL GAINS WAS PAID ON 30.1.2009 AFTER RECEIPT OF THE ASSESSMEN T ORDER. THE ASSESSEE HAD NOT FILED ANY REVISED RETURN TO RECTIFY TH E ERROR BUT OFFERED THE INCOME FOR TAXATION THROUGH THE AFORESAID LET TER. IN THESE CIRCUMSTANCES IT IS ARGUED THAT PENALTY CANNOT BE LEVIED ON TH E ASSESSEE. 5.1 IN ORDER TO SUPPORT THE AFORESAID CONTENTION RELIANCE HAS BEEN PLACED ON THE DECISION OF HONBLE SUPREME COURT I N THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS P. LTD. (2010) 322 ITR 158. IN THIS CASE A SUM OF RS. 28 77 242/- WAS DISALLOWED UNDER THE PROVISIONS OF SECTION 14A. THE ADMITTED POSITION WAS THAT ALL FACTS REGARDING THE ISSUE WERE AVAILABLE IN THE RETURN OF INCOME. THE HONBLE CO URT REFERRED TO THE MEANING OF THE WORD INACCURATE IN WEBSTERS DIC TIONARY TO MEAN NOT ITA NOS. 1442 TO 1448(DEL)/2010& C.O.NOS. 144 TO 150(DEL)/2010 13 ACCURATE NOT EXACT OR CORRECT; NOT ACCORDING TO TRUTH; ERRONEOUS; AS A INACCURATE STATEMENT COPY OF TRANSCRIPT. IT W AS MENTIONED THAT SINCE ALL THE DETAILS FURNISHED IN THE RETURN OF INCOME WERE FOUND TO BE CORRECT THE ASSESSEE CANNOT BE CHARGED FOR FURNISHING INACCURATE PARTICULARS OF INCOME. MERELY BECAUSE THE ASSESSEE HAD CLAIME D THE EXPENDITURE WHICH WAS NOT FOUND TO BE ACCEPTABLE THAT BY ITS ELF WOULD NOT ATTRACT THE PENALTY PROVISION. 5.2 THE LEARNED COUNSEL RAISED ONE MORE ISSUE REG ARDING NON-RECORDING OF SATISFACTION IN THE ASSESSMENT ORDER FOR INITI ATING PENALTY PROCEEDINGS. IN THIS CONNECTION RELIANCE HAS BEEN PLACED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF MS. MADHUSHREE GU PTA VS. UNION OF INDIA & ANOTHER (2009) 317 ITR 107. THE COURT CAME TO THE CONCLUSION THAT THE PROVISION CONTAINED IN SECTION 271(1B) IS NOT ULTRA-VIRES ARTICLE 14 OF THE CONSTITUTION. THE POSITION OF LAW IN PRE AND POST AMENDED PERIOD IS SIMILAR THAT THE AO WILL HAVE TO A RRIVE AT A PRIMA FACIE SATISFACTION IN THE ASSESSMENT THAT THE ASSESSEE HAS CONCEALED INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THE PRIMA FACIE SATISFACTION SHOULD BE DISCERNIBLE FROM THE ORDER ALTHOUGH P ENALTY CAN BE LEVIED ONLY AFTER HEARING THE ASSESSEE. THE INITIATIO N OF PENALTY PROCEEDINGS ITA NOS. 1442 TO 1448(DEL)/2010& C.O.NOS. 144 TO 150(DEL)/2010 14 CANNOT BE SET ASIDE ONLY ON THE GROUND THAT TH E ASSESSMENT ORDER STATES PENALTY PROCEEDINGS ARE INITIATED SEPARATELY AS OTHERWISE IT CONFORMS TO PARA-METERS SET OUT ABOVE. 5.3 IN REJOINDER THE LD. DR SUBMITTED THAT THE AFORESAID DECISION SUPPORTS THE CASE OF REVENUE. HE ALSO RELIED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ECS LTD. (2010) 194 TAXMAN 311. IN THIS CASE THE CLAIM REGARDING DEDUCT ION U/S 80O WAS UNDER DISPUTE. THE AO DISCUSSED THE LEGAL POSITION AN D HELD THAT THE EXPENSES INCURRED HAD TO BE DEDUCTED FROM THE INCOME EARN ED IN FOREIGN EXCHANGE. ACCORDING TO HIM THE ASSESSEE NOT ONLY INTERPR ETED THE LAW WRONGLY BUT ALSO DID NOT FURNISH DETAILS OF EXPENDITURE AT TRIBUTABLE TO EARNING INCOME IN FOREIGN EXCHANGE. THEREFORE HE CALCULATED T HE DEDUCTION ADMISSIBLE UNDER THE PROVISION AND OBSERVED THAT PENALT Y U/S 271(1)(C) HAS BEEN INITIATED. THE PENALTY WAS ALSO LEVIED. THE HONBLE COURT MENTIONED THAT THE AO HAD BEEN INFLUENCED BY THE CONSIDER ATION THAT NOT ONLY THE ASSESSEE HAD INTERPRETED THE LAW WRONGLY BUT ALSO DID NOT FURNISH THE DETAILS OF EXPENDITURE ATTRIBUTABLE TO EARNING I N FOREIGN EXCHANGE BECAUSE OF WHICH PENALTY PROCEEDINGS WERE INITIATED. THU S HIS PRIMA FACIE SATISFACTION ABOUT NON-FURNISHING OF PARTICULARS WAS CLEARLY DISCERNIBLE. ITA NOS. 1442 TO 1448(DEL)/2010& C.O.NOS. 144 TO 150(DEL)/2010 15 6. WE HAVE CONSIDERED THE FACTS OF THE CASE A ND SUBMISSIONS MADE BEFORE US. WE MAY DEAL WITH THE PRELIMINARY I SSUE AT THE OUTSET. THE DECISION IN THE CASE OF MS. MADHUSHREE GUPTA AND ECS LTD. IS THAT THE PRIMA FACIE SATISFACTION OF THE AO SHOULD BE DISC ERNIBLE FROM THE ASSESSMENT ORDER. THE INITIATION CANNOT BE CANC ELLED MERELY BECAUSE THE AO HAS USED THE WORD PENALTY PROCEEDINGS AR E INITIATED SEPARATELY. COMING TO THE FACTS OF THIS CASE THE AO GAV E A FINDING THAT THE ASSESSEE WAS ASKED TO SUBMIT PROOF OF PURCHASE AND SALE OF SHARES IN RESPONSE TO WHICH PURCHASE NOTE AND SALE NOTES WERE FILED. THEREAFTER THE ASSESSEE OFFERED CAPITAL GAINS FOR TAXATION O N 29.8.2008 BY FILING A LETTER TO THAT EFFECT. IN THE CONCLUDING PARAGRA PH FOLLOWING OBSERVATIONS ARE MADE:- IN VIEW OF THE ABOVE DISCUSSION THE AMOUNT OF RS . 33 34 973/- IS TREATED AS THE INCOME OF THE ASSES SEE FROM CAPITAL GAINS ARISING OUT OF TRANSACTION OF LIS TED SECURITIES AS MENTIONED IN THE PROVISO TO SECTION 112 OF THE IN COME-TAX ACT 1961. PENALTY U/S 271(1)(C) HAS BEEN INITIATED ON THIS POINT SEPARATELY. 6.1 THUS IT TRANSPIRES THAT THE CLAIM OF THE AS SESSEE HAS BEEN REJECTED BY TREATING THE AMOUNT OF RS. 33 34 973/- AS INCOM E LIABLE TO BE TAXED UNDER THE HEAD CAPITAL GAINS AND PENALTY PROCE EDINGS HAVE BEEN ITA NOS. 1442 TO 1448(DEL)/2010& C.O.NOS. 144 TO 150(DEL)/2010 16 INITIATED ON THIS ISSUE. ACCORDING TO OUR HUMBLE OPINION THIS AMOUNTS TO RECORDING A PRIMA FACIE SATISFACTION THAT THE ASSESSEE FURNISHED INACCURATE PARTICULARS OF INCOME. SINCE WE ARE BASING OUR DECISION ON THE DECISION OF JURISDICTIONAL HIGH COURT IN TWO CASES RENDERED AFTER THE AMENDMENT WE DO NOT FIND IT NECESSARY TO DEAL WITH PRE AND POST AMENDMENT ORDERS OF THE TRIBUNAL ON WHICH THE AS SESSEE HAS RELIED UPON. 7. COMING TO THE MERITS OF THE CASE THE FACTS ARE THAT THE ASSESSEE CLAIMED CAPITAL GAINS OF RS. 33 34 973/- TO BE EX EMPT FROM TAXATION U/S 10(38) OF THE ACT. THE AO REQUESTED THE ASSESSEE TO FURNISH PURCHASE AND SALE BILLS TO VERIFY THE CONTENTION. THE SALE B ILL WAS FILED ON 6.8.2008 AND THE PURCHASE BILL WAS FILED ON 11.8.2008. T HE CAPITAL GAIN WAS SURRENDERED FOR TAXATION ON 29.8.2008. NO REV ISED RETURN WAS FILED. TAX HAS BEEN PAID AFTER RECEIPT OF THE ASSESSMEN T ORDER. THE EXPLANATION OF THE ASSESSEE IS THAT THE ERROR OCCURRED DUE T O THE ACCOUNTANT WHO DID NOT PROPERLY INTERPRET THE RELEVANT PROVISION OF THE ACT. NO AFFIDAVIT HAS BEEN FILED FROM THE ACCOUNTANT IN SUPPORT OF THIS EXPLANATION. 7.1 IN THE CASE OF RELIANCE PETRO PRODUCTS (SUP RA) THE DECISION IS THAT IF ALL FACTS HAVE BEEN FURNISHED CORRECTLY IN T HE RETURN OF INCOME ON THE ITA NOS. 1442 TO 1448(DEL)/2010& C.O.NOS. 144 TO 150(DEL)/2010 17 BASIS OF WHICH A CLAIM IS MADE THEN MERE REJ ECTION OF THE CLAIM DOES NOT LEAD TO INFERENCE OF PENALTY. THE FACTS OF TH IS CASE ARE DISTINGUISHABLE BECAUSE ALL THE FACTS HAVE NOT BEEN SHOWN IN THE RETURN OF INCOME I.E. IT IS NO WHERE MENTIONED THAT THE TRANSACTIONS WERE SPOT TRANSACTIONS. IT MAY BE MENTIONED THAT THERE IS A GAP OF ABO UT 19 MONTHS BETWEEN PURCHASE AND SALE OF 2 50 000 SHARES AND BOTH THE TRANSACTIONS INVOLVE SIGNIFICANT AMOUNTS. THE BILLS SHOW THAT THE ST T WAS NOT PAID ON EITHER OCCASION. THE DETAILS WERE ALSO FURNISHED IN TW O DIFFERENT LETTERS AND SURRENDER WAS MADE ON THE THIRD OCCASION. THE DECISION IN THE CASE OF ZOOM COMMUNICATION P. LTD. (SUPRA) SUPPORTS THE CASE OF THE REVENUE. IN THIS CASE ALSO THE PLEA OF INADVERTENCE WAS TAKEN BUT IT WAS NOT EXPLAINED WHO COMMITTED THE INADVERTENCE AND WHAT W ERE THE CIRCUMSTANCES IN WHICH THE INADVERTENCE WAS COMMI TTED. THE COURT GAVE A FINDING THAT ACCEPTANCE OF SUCH A PLEA WILL LEAD TO LEAKAGE OF SUBSTANTIAL REVENUE WHERE THE CLAIMS ARE MADE EVEN MALA-FIDELY BUT THE CASES ARE NOT PICKED UP FOR SCRUTINY. IN BOT H THE CASES PATENTLY FALSE CLAIMS HAVE BEEN MADE. THE ASSESSEE HAS FURNI SHED SOME EXPLANATION WHICH IS NOT FOUND TO BE BONA FIDE BY US. THE CASE OF THE REVENUE ALSO FINDS SUPPORT FROM THE DECISION IN THE CA SE OF ESCORTS FINANCE LTD. IN THIS CASE THE CLAIM WAS MADE ON THE BASIS OF CHARTERED ACCOUNTANTS ITA NOS. 1442 TO 1448(DEL)/2010& C.O.NOS. 144 TO 150(DEL)/2010 18 CERTIFICATE FURNISHED IN THE PROSPECTUS. YET THE COURT FOUND THAT SINCE THE CLAIM WAS PRIMA FACIE INADMISSIBLE THE EXPLA NATION OF THE ASSESSEE IS NOT BONA FIDE. IN THIS CASE THE CLAIM IS NOT SUPPORTED BY ANY EVIDENCE. THE EXPLANATION IS ALSO NOT BASED ON ANY AFFIDAVI T OR DECLARATION FROM THE ACCOUNTANT. THE CASE OF ECS LTD. (SUPRA) ALSO SUPPORTS THE CASE OF THE REVENUE. IN THIS CASE WRONG CLAIM WAS MADE U /S 80O AND THE PARTICULARS OF EXPENSES WERE NOT FURNISHED. WE HAVE HELD THAT THAT A FALSE CLAIM HAS BEEN MADE. THE CLAIM IS NOT SUPPOR TED BY ANY MATERIAL ON RECORD AND EXPLANATION IS ALSO NOT SUPPORTED BY ANY MATERIAL ON RECORD EXCEPT A BLAND ARGUMENT. IN SUCH CIRCUMSTANCES WE ARE NOT ABLE TO PERSUADE OURSELVES TO AGREE WITH THE FINDINGS O F THE LD. CIT(APPEALS) THAT THE SURRENDER WAS MADE PRIOR TO DETECTION BY THE DEPARTMENT AND THE EXPLANATION IS BONA FIDE. 8. THE CROSS OBJECTIONS OF THE ASSESSEE IS IN RE SPECT OF NON-RECORDING OF THE SATISFACTION WHICH HAS BEEN DISPOSED OFF B Y US ALREADY AGAINST THE ASSESSEE AND IN FAVOUR OF THE REVENUE. ITA NOS. 1442 TO 1448(DEL)/2010& C.O.NOS. 144 TO 150(DEL)/2010 19 9. ADMITTEDLY FACTS OF ALL OTHER CASES ARE SIMIL AR TO THE FACTS OF THIS CASE. ACCORDINGLY THE ORDER IS MADE APPLICABLE T O ALL THE APPEALS AND THE CROSS OBJECTIONS. 10. IN THE RESULT ALL THE APPEALS ARE ALLOWED AND THE ALL CROSS OBJECTIONS ARE DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 28 JANUARY 2011. SD/- SD/- (C.L. SETHI) (K.G.BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE OF ORDER: 28 JANUARY 2011. SP SATIA COPY OF THE ORDER FORWARDED TO: ASSESSEES: SH. LEKH RAJ LALWANI ETC. ALL RESIDENT OF R-649 NEW RAJINDER NAGAR NEW DELHI. DY. CIT CIRCLE 33(1) NEW DELHI. CIT(A) CIT THE DR ITAT NEW DELHI. ASSISTANT REGISTRAR.