Applied Software Pvt.Ltd.,, Ahmedabad v. The Income tax Officer,Ward-1(2),, Ahmedabad

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH AHMEDABAD BENCH AHMEDABAD BENCH AHMEDABAD BENCH C CC C BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI T.K.SHARMA T.K.SHARMA T.K.SHARMA T.K.SHARMA JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER AND AND AND AND SHRI N.S. SAINI ACCOUNTANT MEMBER SHRI N.S. SAINI ACCOUNTANT MEMBER SHRI N.S. SAINI ACCOUNTANT MEMBER SHRI N.S. SAINI ACCOUNTANT MEMBER DATE OF HEARING: 23-2-2011 DRAFTED ON:23- 2-2011 ITA NO. 1830 /AHD/ 2009 ASSESSMENT YEAR : 1996-97 APPLIED SOFTWARE PRIVATE LTD. 42 TAPOVAN SOCIETY ABOVE BANK OF BARODA AMBAWADI AHMEDABAD. VS. INCOME TAX OFFICER WARD 1(2) JITENDRA CHAMBERS ASHRAM ROAD AHMEDABAD. PAN/GIR NO. :AAACA 9710 A (A PPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI S.H.TALATI. RESPONDENT BY: SHRI SAMIR TEKRIWAL SR.D.R. O R D E R O R D E R O R D E R O R D E R PER N.S.SAINI ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-VI AHMEDABAD DATED 16-2-2009. 2. THE SOLE GROUND OF APPEAL TAKEN BY THE ASSESSEE IS THAT LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN BOTH IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER LEVY ING PENALTY OF `.52 787/- UNDER SECTION 271(1)(C ) OF THE INCOME TAX ACT. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. IN THE INSTANT CASE PENALTY UNDER SECTION 271(1)(C) WAS LEVIED ON THE G ROUND OF FURNISHING OF INACCURATE PARTICULARS OF INCOME OF `.1 09 266/- RE LATING TO EXCHANGE FLUCTUATION GAIN AND `.5 489/- RELATING TO DEDUCTIO N CLAIMED UNDER SECTION 80M. PENALTY OF `.52 787/- WAS LEVIED ON ACCOUNT OF ABOVE TWO INCOMES. 4. IN RESPECT OF INCOME OF `.1 09 266/- ON ACCOUNT OF EXCHANGE FLUCTUATION GAIN THE LEARNED AUTHORISED REPRESENTAT IVE OF THE ASSESSEE - 2 - SUBMITTED BEFORE US THAT THE EXCHANGE FLUCTUATION G AIN WAS DULY ACCOUNTED FOR IN THE BOOKS OF ACCOUNT BY CREDITING THE SAME I N THE EXCHANGE FLUCTUATION RESERVE ACCOUNT AND THE SAME WAS NOT OF FERED TO TAX IN THE YEAR UNDER CONSIDERATION IN VIEW OF THE CONSISTENT SYSTE M IN THIS RESPECT FOLLOWED BY THE ASSESSEE. HE SUBMITTED THAT SIMILAR EXCHANGE FLUCTUATION IN EARLIER YEARS WAS NOT ASSESSED AS INCOME BY THE DEPARTMENT NOR LOSS ON THIS ACCOUNT WAS ALLOWED AS DEDUCTION TO THE ASSESSEE. A S THE DEPARTMENT ACCEPTED THIS PRACTICE OF THE ASSESSEE IN PAST THE ASSESSEE FOLLOWING THE SAME WAS OF THE BONAFIDE VIEW THAT THE SAID AMOUNT WAS NOT TAXABLE IN THE YEAR UNDER CONSIDERATION. TO FORTIFY THE BONAFIDES OF THE ASSESSEE THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE S UBMITTED THAT THE EXCHANGE FLUCTUATION INCOME WAS OFFERED TO TAX IN T HE SUBSEQUENT YEAR ON RECEIPT BASIS. WHEN THE BENCH WANTED THE LEARNED AU THORISED REPRESENTATIVE OF THE ASSESSEE TO SUBMIT EVIDENCE O F HIS ABOVE SUBMISSION HE SUBMITTED THAT THE EVIDENCES WERE NOT READILY AV AILABLE WITH HIM AND CAN BE SUBMITTED AT A LATER DATE. 5. IN OUR CONSIDERED VIEW IF THE RELEVANT EXCHANGE GAIN WAS OFFERED TO TAX BY THE ASSESSEE IN A LATER YEAR THEN THE ASSESS EE CANNOT BE HELD GUILTY SO AS TO BE LIABLE FOR PENALTY UNDER SECTION 271(1) (C)OF THE ACT. FURTHER IF THE ASSESSEES CONSISTENTLY SYSTEM WAS NOT TO OFFER TO TAX OR CLAIM DEDUCTION IN RESPECT OF EXCHANGE FLUCTUATION GAIN O R LOSS AS THE CASE MAY BE ON MERCANTILE BASIS AND IF THIS SYSTEM WAS ACCEP TED BY THE DEPARTMENT IN THE PAST IN THE CASE OF THE ASSESSEE THEN FOR FO LLOWING THE SAME SYSTEM IN THE YEAR UNDER CONSIDERATION THE ASSESSEE CANNOT BE VISITED WITH PENALTY UNDER SECTION 271(1)(C ) OF THE ACT. 6. HOWEVER AS THE ASSESSEE COULD NOT PRODUCE RELEV ANT EVIDENCES AT THE TIME OF THE HEARING IN OUR CONSIDERED OPINION IT SH ALL BE IN THE INTEREST OF THE JUSTICE TO RESTORE THIS PART OF THE ISSUE BACK TO T HE FILE OF THE LEARNED ASSESSING OFFICER FOR ADJUDICATION AFRESH IN LIGHT OF THE OBSERVATIONS MADE HEREINABOVE AND AFTER VERIFYING THE MATERIALS OR EV IDENCES WHICH THE ASSESSEE MAY PRODUCE BEFORE HIM WHEN CALLED UPON HI M TO DO SO. THE - 3 - LEARNED ASSESSING OFFICER SHALL ALLOW REASONABLE OP PORTUNITY OF HEARING TO THE ASSESSEE BEFORE ADJUDICATING THE ISSUE AFRESH. 7. FURTHER IN RESPECT OF LEVY OF PENALTY UNDER SEC TION 271(1)(C ) IN RESPECT OF ADDITION OF `.5 489/-UNDER SECTION 80M W E FIND THAT NO SUBMISSION WAS MADE BY THE LEARNED AUTHORISED REPRESENTATIVE O F THE ASSESSEE BEFORE US OR BEFORE ANY OF THE LOWER AUTHORITIES. THEREFO RE THIS PART OF THE GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED FOR LACK OF PROSECUTION. 8. THUS THE APPEAL OF THE ASSESSEE IS PARTLY ALLOW ED FOR STATISTICAL PURPOSES. ORDER SIGNED DATED AND PRONOUNCED IN THE COURT ON 25 TH DAY OF FEBRUARY 2011. SD/- SD/- ( T.K. SHARMA ) ( T.K. SHARMA ) ( T.K. SHARMA ) ( T.K. SHARMA ) ( N.S. SAINI ) ( N.S. SAINI ) ( N.S. SAINI ) ( N.S. SAINI ) JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATED: AHMEDABAD 25 TH DAY OF FEBRUARY 2011. COMPILED AND COMPARED BY : PATKI COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS)-VI AHMEDABAD 5. THE DR AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSTT.REGISTRAR) ITAT AHMEDABAD - 4 - DATE INITIALS 1. DRAFT DICTATED ON 23-2-2011 --------------- ---- 2. DRAFT PLACED BEFORE AUTHORITY 23-2-2011 ------ ------------- 3. DRAFT PROPOSED & PLACED 23-2-2011 ----------- -------- JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED --------------- ---- --------------- JM/AM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S ---------------- -- ------------------ 6. KEPT FOR PRONOUNCEMENT ON ---------------- -- ------------------ 7. FILE SENT TO THE BENCH CLERK ---------------- -------------------- 8. DATE ON WHICH FILE GOES TO THE ---------------- -------------------- 9. DATE OF DISPATCH OF ORDER ---------------- -- -------------------