ANCHOR ELECTRICALS P. LTD, MUMBAI v. ACIT CEN CIR-41, MUMBAI

ITA 7133/MUM/2008 | 2005-2006
Pronouncement Date: 14-05-2010 | Result: Allowed

Appeal Details

RSA Number 713319914 RSA 2008
Assessee PAN AAECA2190C
Bench Mumbai
Appeal Number ITA 7133/MUM/2008
Duration Of Justice 1 year(s) 4 month(s) 28 day(s)
Appellant ANCHOR ELECTRICALS P. LTD, MUMBAI
Respondent ACIT CEN CIR-41, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 14-05-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 14-05-2010
Assessment Year 2005-2006
Appeal Filed On 16-12-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A MUMBAI. BEFORE SHRI J. SUDHAKAR REDDY ACCOUNTANT MEMBER AND SHRI V.D. RAO JUDICIAL MEMBER. I.T.A. 7133 /MUM/2008. ASSESSMENT YEAR : 2005-06.. ANCHOR ELECTRICALS P. LTD. ASSTT. COMMISSIONER OF C WING 1 ST FLOOR VS. INCOME TAX MAAAARATHON INNOVA CENTRAL CIRCLE-41 G.K. MARG LOWER PAREL(WEST) MUMBAI. MUMBAI 400 013. PAN AAECA2190C APPELLANT RESPONDENT APPELLANT BY : SHRI P.J. PARDIWALLA. RESPONDENT BY : SHRI VIKRAM GAUR. O R D E R PER J. SUDHAKAR REDDY A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE CIT(APPEALS) CENTRAL-III MUMBAI DATE D 07-10-2008 FOR THE ASSESSMENT YEAR 2005-06 WHEREIN THE FIRST APPELLATE AUTHORITY CONFIRMED THE PENALTY LEVIED U/S 271(1)(C) OF THE I.T. ACT. 2. THE FACTS OF THE CASE ARE BROUGHT OUT AT PARA 3 OF THE CIT(APPEALS) ORDER WHICH ARE EXTRACTED BELOW FOR READY REFERENCE : THE APPELLANT IS A PRIVATE LIMITED COMPANY ENGAGE D IN THE BUSINESS OF FINANCE AND INVESTMENT ACTIVITIES. DURI NG THE SUBJECT YEAR THE ASSESSEE HAD SOLD TWO FLATS AT PARASRAMP URIA TOWERS. THE AO NOTICED THAT THE APPELLANT HAD SHOWN SALE VALUE LESS THAN THE VALUE FOR THE PURPOSES OF STAMP DUTY. ACCORDINGLY T HE AO 2 CALCULATED THE LONG TERM CAPITAL LOSS IN VIEW OF PR OVISIONS OF SECTION 50C OF THE I.T. ACT THUS THE LONG TERM CAP ITAL LOSS ON SALE OF FLAT WAS DETERMINED AT RS.1 35 189/- AS AGAINST RS.10 18 127/- SHOWN BY THE ASSESSEE. SIMILARLY IN RESPECT OF THE SALE OF SHED BUILDING WHICH WAS A DEPRECIABLE ASSET THE CAPITAL GAIN WORKED OUT BY THE AO U/S 50 OF THE I T ACT RESULTED INTO SHORT TERM CAPITAL GAIN AT RS.32 229/- INSTEAD OF RS.7 10 369/- SHOWN AS LO NG TERM CAPITAL LOSS BY THE APPELLANT. THE AO INITIATED PENALTY PRO CEEDINGS U/S 271(1)(C). THE ARS CONTENTION THAT THERE WAS NO IN CREASE IN THE RETURNED INCOME OF RS.58 52 160/- AND THEREFORE THE RE WAS NO QUESTION OF PENALTY U/S 271(1)(C) WAS NOT ACCEPTED BY THE AO WHO WAS OF THE VIEW THAT THE CLAUSE (A) OF EXPLANATION 4 TO SECTION 271(1)(C) WAS APPLICABLE IN THE CASE AS THE AMOUNT OF INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED H AD THE EFFECT OF REDUCING THE LOSS DECLARED IN THE RETURN OR CONVERT ING THAT LOSS INTO INCOME. ACCORDINGLY THE AO LEVIED PENALTY @ 100% O F THE OF THE TAX SOUGHT TO BE EVADED WITH REGARD TO THE AMOUNT O F DIFFERENCE AT RS.10 35 036/-. 3. THE FIRST APPELLATE AUTHORITY CONFIRMED THE PEN ALTY. AGGRIEVED THE ASSESSEE IS BEFORE US ON THE FOLLOWI NG GROUNDS : 1. THE LEARNED CIT(APPEALS) ERRED IN CONFIRMING PENALT Y LEVIED U/S 271(1)(C) AMOUNTING TO RS.3 45 012/-. 2. THE LEARNED CIT(APPEALS) ERRED IN HOLDING THAT THE APPELLANTS HAVE FURNISHED INACCURATE PARTICULARS OF INCOME/LOS S BY NOT TAKING INTO CONSIDERATION THE PROVISIONS OF SECTION 50C. 3. THE LEARNED CIT(APPEALS) ERRED IN HOLDING THAT THE APPELLANT HAVE FURNISHED INACCURATE PARTICULARS OF INCOME/LOS S BY NOT TAKING INTO CONSIDERATION THE PROVISIONS OF SECTION 50. 4. MR. P.J. PARDIWALLA THE LEARNED SENIOR ADVOCAT E APPEARING FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD C OMMITTED TWO MISTAKES IN HIS RETURN OF INCOME WHICH RESULTING THE AO LEVY ING A PENALTY U/S 271(1)(C). THE FIRST BEING THE ASSESSEE LOST SIGHT OF SECTION 50C OF THE ACT AND THE SECOND BEING THE INCOME FROM SALE OF DE PRECIABLE ASSET WAS SHOWN AS LONG TERM CAPITAL GAIN INSTEAD OF APPLYIN G SECTION 50 OF THE I.T. ACT AND SHOWING THE SAME AS SHORT TERM CAPITAL GAIN . HE SUBMITTED THAT 3 THE ASSESSEE HAS LOST SIGHT OF SECTION 50C AND THE LONG TERM CAPITAL LOSS ON THE SALE OF FLAT WAS TAKEN AT RS.1 35 189/- INS TEAD OF RS.5 44 043/- DUE TO SECTION 50C. HE SUBMITTED THAT THERE IS NO C HANGE IN ASSESSED INCOME AND ALL THAT HAS HAPPENED THAT THE CAPITAL L OSS HAS COME DOWN. HE SUBMITTED THAT THIS IS A BONAFIDE MISTAKE. ON A SEC OND ISSUE HE SUBMITTED THAT SECTION 50 WAS NOT APPLIED BY OVERSIGHT AND TH AT THIS MISTAKE HAS ALSO NOT RESULTED IN ANY CHANGE IN THE TAXABLE INCOME. H E FURTHER POINTED OUT THAT IN THE IMMEDIATELY SUCCEEDING ASSESSMENT YEAR THERE IS A CHANGE IN SHARE HOLDING PATTERN AND HENCE THE ASSESSEE WILL N OT ALSO GET THE CARRY FORWARD BENEFIT IN CASE WHERE THE CAPITAL LOSS OR BUSINESS LOSS HAS INCREASED. HE CONTENDED THAT THIS IS A MISTAKE COMM ITTED BY THE CHARTERED ACCOUNTANT OF THE ASSESSEE AND SUCH OMISS ION IS NOT WILFUL AND IS ONLY A BONAFIDE MISTAKE. HE PRAYED FOR RELIEF. 5. SHRI VIKRAM GAUR THE LEARNED DR SUBMITTED THA T BOTH THE SECTIONS ARE VERY MUCH IN THE ENACTMENT AND THE ASS ESSEE BY NOT FOLLOWING THE LAW HAD NOT ONLY FURNISHED INACCURAT E PARTICULARS OF INCOME BUT HAS ALSO TRIED TO CONCEAL THE INCOME. HE RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF UNION O F INDIA AND OTHERS VS. DHARMENDRA TEXTILE AND PROCESSORS AND OTHERS 29 5 ITR 244 FOR THE PROPOSITION THAT MENS REA IS NOT REQUIRED FOR PURPO SES OF IMPOSING PENALTY U/S 271(1)(C). HE ALSO RELIED ON THE DECISION OF HO NBLE SUPREME COURT IN THE CASE OF K.P. MADHUSUDAN REPORTED IN 251 ITR 99 (SC). 6. RIVAL CONTENTIONS HEARD. ON A CAREFUL CONSIDERA TION OF THE FACTS AND CIRCUMSTANCE OF THE CASE A PERUSAL OF TH E PAPERS ON RECORD AND THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE CASE LAWS CITED WE HOLD AS FOLLOWS. 4 7. IN OUR CONSIDERED OPINION THE MISTAKES COMMITT ED IN THE COMPUTATION OF INCOME BY THE ASSESSEES COUNSEL OR CHARTERED ACCOUNTANT CANNOT BE CONSIDERED AS A MALAFIDE ACT. NOT TAKING INTO ACCOUNT THE PROVISIONS OF SECTION 50C AS WELL AS TH E IMPLICATIONS OF SECTION 50 IS A BONAFIDE MISTAKE. THE ASSESSEE HAS NOT DERIVED ANY ENDURING BENEFIT OR GAIN BY NOT APPLYING THIS SECT ION. THE SHARE HOLDING PATTERN OF THE ASSESSEE COMPANY HAS CHANGED AND THE LOSS THAT HAS BEEN QUANTIFIED BY THE ASSESSEE DURING THE YEAR CANNOT BE CARRIED FORWARD AND SET OFF AGAINST FUTURE PROFITS. THERE IS NO INCREAS E IN THE RETURNED INCOME NOR WAS THERE ANY TAX SAVING FOR THE ASSESSEE EITHE R IN THIS YEAR OR IN THE FUTURE. UNDER THESE CIRCUMSTANCES WE ARE OF THE CO NSIDERED OPINION THAT THE EXPLANATION GIVEN BY THE ASSESSEE ON 23-01-2008 IS A POSSIBLE EXPLANATION AND IS NOT HELD TO BE AS A FALSE EXPLAN ATION BY THE AO. THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F DHARMENDRA TEXTILE PROCESSORS (SUPRA) HAS BEEN CONSIDERED BY THE HONB LE SUPREME COURT IN MANY OTHER CASES. IN A RECENT JUDGMENT IN THE CASE OF CIT VS. RELIANCE PETROCHEMICALS P. LTD. 322 ITR 158 IT IS HELD AS FOLLOWS: A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) O F THE INCOME-TAX ACT 1961 SUGGESTS THAT IN ORDER TO BE COVERED BY IT THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF T HE INCOME OF THE ASSESSEE. SECONDLY THE ASSESSEE MUST HAVE FURNISHE D INACCURATE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTION 271(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS F OUND TO BE INCORRECT OR INACCURATE THE ASSESSEE CANNOT BE HEL D GUILTY OF FURNISHING INACCURATE PARTICULARS IN ORDER TO EXPOS E THE ASSESSEE TO PENALTY UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISH ING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHIN G WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICU LARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACC URATE THE LIABILITY WOULD ARISE. TO ATTRACT PENALTY THE DETA ILS SUPPLIED IN THE 5 RETURN MUST NOT BE ACCURATE NOT EXACT OR CORRECT NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHEN THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C). A MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE I N LAW BY ITSELF WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULAR S REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RE TURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. 8. APPLYING THE PROPOSITIONS LAID DOWN IN THIS JUD GMENT TO THE FACTS OF THIS CASE WE ALLOW THE APPEAL OF THE ASSE SSEE BY HOLDING THAT THE PENALTY U/S 271(1) (C) CANNOT BE LEVIED ON THE PECU LIAR FACTS AND CIRCUMSTANCES OF THE CASE. 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED ON THIS 14 TH DAY OF MAY 2010. SD/- SD/- (V.D. RAO) (J. SUDHAKAR REDDY) JUDICIAL MEMBER. ACCOUNTANT MEMBER. MUMBAI DATED : 14 TH MAY 2010. WAKODE COPY FORWARDED TO : 1. APPELLANT. 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR A-BENCH. (TRUE COPY) BY ORDER ASSTT. REGISTRAR ITAT MUMBAI BENCHES MUMBAI.