Mrs. Neha Rathi,, Pune v. ACIT, Range-5,, Pune

ITA 308/PUN/2010 | 2006-2007
Pronouncement Date: 29-07-2011 | Result: Allowed

Appeal Details

RSA Number 30824514 RSA 2010
Assessee PAN AAZPR9287R
Bench Pune
Appeal Number ITA 308/PUN/2010
Duration Of Justice 1 year(s) 5 month(s) 5 day(s)
Appellant Mrs. Neha Rathi,, Pune
Respondent ACIT, Range-5,, Pune
Appeal Type Income Tax Appeal
Pronouncement Date 29-07-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 29-07-2011
Date Of Final Hearing 26-07-2011
Next Hearing Date 26-07-2011
Assessment Year 2006-2007
Appeal Filed On 23-02-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A PUNE BEFORE SHRI I C SUDHIR JUDICIAL MEMBER AND SHRI G.S. PANNU ACCOUNTANT MEMBER S.NO. ITA NO A.Y APPELLANT RESPONDENT 1 308/PN/10 2006-07 MRS NEHA RATHI 1336 SHUKRAWAR PETH PUNE PAN AAZPR9287R ADDL. COMMISSIONER OF I.T. R-5 PUNE 2 309/PN/10 2006-07 MR NITIN RATHI 1336 SHUKRAWAR PETH PUNE PAN AAZPR9199L ADDL. COMMISSIONER OF I.T. R-5 PUNE APPELLANTS BY : SHRI NIKHIL PATHAK RESPONDENT BY : SHRI S.K. AMBASTHA ORDER PER G.S.PANNU A.M: THE CAPTIONED APPEALS RELATE TO ASSESSEES OF THE SAME GRO UP AND INVOLVE A COMMON ISSUE AND THEREFORE THEY WERE HEARD TOGETH ER AND A CONSOLIDATED ORDER IS BEING PASSED FOR THE SAKE OF CONVENIENCE AND BR EVITY. 2. IN ORDER TO APPRECIATE THE FACTS AND CONTROVERSY WE MAY REFER TO ITA NO 308/PN/10 IN THE CASE OF MRS NEHA RATHI. IN THIS CASE THE ISSUE RELATES TO PENALTY OF RS 1 07 735/- IMPOSED UNDER SECTION 271(1)(C) OF THE INCOME-TAX ACT 1961 (IN SHORT THE ACT). BRIEFLY PUT THE FACTS ARE TH AT THE ASSESSEE IS AN INDIVIDUAL DERIVING INCOME FROM SHARE TRADING. FOR T HE ASSESSMENT YEAR UNDER CONSIDERATION SHE FILED A RETURN OF INCOME ON 31 10.2 006 DECLARING A TOTAL INCOME OF RS 5 65 74 696/-. IN THE ASSESSMENT FINALIZED UNDER SECTION 143(3) OF THE ACT THE TOTAL INCOME WAS DETERMINED AT RS 5 71 12 226/- WHICH INTER ALIA INCLUDED AN ADDITION OF UNDER-DISCLOSED CLOSING STOCK OF SHAR ES AMOUNTING TO RS 3 20 067/-. THE ASSESSING OFFICER FOUND ON COMPARISON OF THE SHAREHOLDINGS OF THE ASSESSEE AS REFLECTED IN THE D MAT ACCOUNT VIS--VIS T HE SHAREHOLDING SHOWN IN THE RETURN OF INCOME THAT SHARES WORTH RS 3 20 607/ - OF VARIOUS COMPANIES WERE NOT REFLECTED BY THE ASSESSEE IN THE CLOSING SOCK AS ON 3 1.3.2006. 2 CONSEQUENTLY THE ASSESSING OFFICER HELD THAT THE DIFFER ENCE AMOUNT OF RS 3 20 067/- BETWEEN THE REWORKED CLOSING STOCK AND CLOSING ST OCK DEPICTED AS PER RETURN WAS EXIGIBLE TO PENALTY UNDER SECTION 271(1)(C) THE ACT FOR THE ASSESSEE HAD CONCEALED THE PARTICULARS OF INCOME AS WELL AS FURNI SHED INACCURATE PARTICULARS TO THAT EXTENT. THEREFORE HE LEVIED PENA LTY UNDER SECTION 271(1)(C) OF THE ACT AMOUNTING TO RS 1 07 735/- I.E. 100% OF THE TAX SOUGHT TO BE EVADED ON SUCH ADDITION. THE COMMISSIONER OF INCOME-TAX (APPEALS) H AS SINCE UPHELD THE PENALTY AGAINST WHICH THE ASSESSEE IS IN FURTHER APPEAL B EFORE US. 3. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE VEHEM ENTLY SUBMITTED THAT THE IMPUGNED PENALTY WAS NOT MAINTAINABLE AS IT WAS A BONA FIDE MISTAKE COMMITTED IN VALUATION OF THE CLOSING STOCK SINCE THERE WER E LOT OF SHARES OF VARIOUS COMPANIES WHICH WERE BEING HELD BY THE ASSESSEE A S STOCK-IN-TRADE. IT WAS POINTED OUT THAT THE CLOSING STOCK AS ON 31.3.2006 AMO UNTED TO RS 2 67 36 315/- WHICH WAS ON ACCOUNT OF SHARES OF VARIOUS CO MPANIES HELD BY THE ASSESSEE AND THAT THE AFORESAID MISTAKE WAS A SMALL MISTAKE CONSIDERING THE QUANTUM OF TAXABLE INCOME DECLARED BY THE ASSESSEE. IT WA S ALSO POINTED OUT THAT THERE WAS NO ULTIMATE MONETARY BENEFIT TO THE A SSESSEE SINCE REPORTING OF LOWER CLOSING STOCK IN THIS YEAR REFLECTED LOWER OPENING ST OCK IN THE NEXT YEAR THEREBY REFLECTING A HIGHER INCOME FOR THE SUBSEQUENT Y EAR. IT WAS THEREFORE SUBMITTED THAT FOR SUCH INADVERTENT MISTAKE PENALTY UN DER SECTION 271(1)(C) OF THE ACT IS NOT EXIGIBLE HAVING REGARD TO THE FOLLOWI NG JUDGMENTS: (I) CIT V ASK ENTERPRISES 230 ITR 48 (BOM); (II) CIT V NELLAI TRADING AUTOMOBILE AGENCY 288 ITR 557 (MAD) 4. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REPR ESENTATIVE SUBMITTED THAT THE DISCREPANCY WAS FOUND BY THE ASSESSING OFFICER IN THE COURSE OF ASSESSMENT PROCEEDINGS AND THE SAME WAS ACCEPTED BY THE ASSESSE E AND THEREFORE FURNISHING OF INACCURATE PARTICULARS IN THE R ETURN OF INCOME STANDS ESTABLISHED. IT WAS THEREFORE CONTENDED THAT PENALTY UNDER SECTION 271(1)(C) HAS BEEN RIGHTLY LEVIED BY THE LOWER AUTHORITIES. 3 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. IN THE PRESENT CASE WE FIND THAT THE ADDITION WHICH HAS RESULTED IN LEVY OF PENALTY UNDER SECTION 271(1)(C) IS ON ACCOUNT OF VARIATION IN THE VALUATION O F THE CLOSING STOCK DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME. THE ASSESSEE IS DERI VING INCOME FROM SHARE TRADING AND HER STOCK-IN-TRADE CONSTITUTES OF SHARE S OF VARIOUS COMPANIES. IT WAS FOUND THAT THE SHARES WORTH RS 3 20 067/- WERE NOT DECLARED BY THE ASSESSEE IN THE CLOSING STOCK. THE DISCREPANCY HAS BEEN EXPLAINE D BY THE ASSESSEE AS A BONA FIDE MISTAKE COMMITTED WHILE COMPILING T HE VALUATION OF CLOSING STOCK. IN OUR CONSIDERED OPINION THE QUANTUM OF INCOME DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME DOES NOT LEAD TO AN INFE RENCE THAT IMPUGNED DISCREPANCY WOULD BE A DELIBERATE ATTEMPT SO AS TO CONCEA L INCOME OR TO FURNISH INACCURATE PARTICULARS OF SUCH INCOME. THOUGH THE ADDITION IS WELL-FOUNDED SO HOWEVER IPSO FACTO IT CANNOT BE EXIGIBLE TO PENALTY UNDER SECTION 271(1)(C) OF THE ACT SINCE SOME ELEMENT OF MENS REA IS ALWAYS REQUI RED TO BE ESTABLISHED SO AS TO FASTEN THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. IN THE PRESENT CASE NON-INCLUSION OF CERTAIN SHARES VALUED AT RS 3 20 067/- CAN BE CONSIDERED TO BE AN INADVERTENT AND BONA FIDE MISTAKE SO AS TO MITIGA TE THE ASSESSEE FROM THE RIGOURS OF SECTION 271(1)(C) OF THE ACT. IN A SOMEWHAT SI MILAR SITUATION THE HONBLE BOMBAY HIGH COURT IN THE CASE OF ASK ENTERPRI SES (SUPRA) APPROVED THE DECISION OF THE TRIBUNAL THAT A MISTAKE IN NOT INCLUDIN G VALUE OF A PARTICULAR ITEM IN THE CLOSING STOCK DID NOT LEAD TO ANY CONCEALMENT ON TH E PART OF THE ASSESSEE UNDER SECTION 271(1)(C) OF THE ACT. IN OUR VIEW THE PA RITY OF REASONING APPROVED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF ASK ENTERPRISES (SUPRA) COVERS THE INSTANT CASE AND NO PENALTY DESERVES TO BE IMPOSD IN THIS CASE. IN THE RESULT THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) I S SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO DELETE THE PENALTY IMPOSE D UNDER SECTION 271(1)(C) OF THE ACT AMOUNTING TO RS1 07 735/-. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. 4 7. WE SHALL NOW TAKE UP ITA NO 309/PN/10 IN THE CASE OF MR NITIN RATHI. IN THIS CASE ALSO THE ISSUE RELATES TO PENALTY OF RS 3 23 76 5/-- IMPOSED UNDER SECTION 271(1)(C) OF THE ACT. 8. IT WAS A COMMON POINT BETWEEN THE PARTIES THAT THE FACTS AND CIRCUMSTANCES IN THIS CASE ARE ALSO IDENTICAL TO THAT OF MRS NEHA RATHI IN ITA NO 308/PN/10. THEREFORE OUR DECISION IN THE CASE OF MRS N EHA RATHI IN ITA NO 308/PN/10 APPLIES MUTATIS MUTANDIS IN THIS CASE ALSO. A CCORDINGLY WE SET ASIDE THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) AND THE ASSESSING OFFICER IS DIRECTED TO DELETE THE PENALTY IMPOSED UNDE R SECTION 271(1)(C) OF THE ACT AMOUNTING TO RS3 23 765/-. AS A RESULT THE APPEA L OF THE ASSESSEE IS ALLOWED. 9. RESULTANTLY BOTH THE CAPTIONED APPEALS OF THE ASSESS EES ARE ALLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON THE 29 TH DAY OF JULY 2011. SD/-- SD/- (I.C. SUDHIR) JUDICIAL MEMBER (G.S. PANNU) ACCOUNTANT MEMBER PUNE: DATED: 29 TH JULY 2011 B COPY OF THE ORDER IS FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. THE CIT(A)-III PUNE 4. THE CIT-III PUNE 5. THE D.R A BENCH PUNE 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT PUNE BENCHES PUNE