OMPRAKASH T. MEHTA, MUMBAI v. ITO 21(3)(4), MUMBAI

ITA 251/MUM/2010 | 2005-2006
Pronouncement Date: 31-05-2010 | Result: Dismissed

Appeal Details

RSA Number 25119914 RSA 2010
Bench Mumbai
Appeal Number ITA 251/MUM/2010
Duration Of Justice 4 month(s) 20 day(s)
Appellant OMPRAKASH T. MEHTA, MUMBAI
Respondent ITO 21(3)(4), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 31-05-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 31-05-2010
Date Of Final Hearing 30-03-2010
Next Hearing Date 30-03-2010
Assessment Year 2005-2006
Appeal Filed On 11-01-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C MUMBAI BEFORE SHRI D.MANMOHAN VICE PRESIDENT & SHRI R.K.PANDA AM I.T.A. NO. 251/MUM/2010 (ASSESSMENT YEAR 2005-06) SHRI OMPRAKASH T. MEHTA 8-A MEHTA ESTATE KURLA ANDHERI ROAD SAKINAKA MUMBAI-400 072 PAN:AADPM0852H VS. I.T.O. 21(3)(4) MUMBAI APPELLANT RESPONDENT APPELLANT BY : SHRI M.M. PORWAL RESPONDENT BY : SHRI S.M. KESH KAMAT ORDER DATE OF HEARING: 30.03.2010 DATE OF ORDER: 31.05.2010 PER R.K.PANDA AM THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER DATED 27.11.2009 OF THE CIT(A)-32 MUMBAI RELATING TO ASSESSMENT YEAR 2005-06. 2. THE ASSESSEE IN HIS GROUNDS OF APPEAL HAS CHALLENGE D THE ORDER OF THE CIT(A) IN CONFIRMING THE LEVY OF PENAL TY OF RS.11 23 906 U/S. 271(1)(C) OF THE INCOME-TAX ACT 1961 (THE ACT ). 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSMEN T IN THE INSTANT CASE WAS COMPLETED U/S. 143(3) R.W.S. 147 O F THE ACT ON 26.11.2008 DETERMINING THE INCOME AT RS.55 13 070 A S AGAINST THE RETURNED INCOME OF RS.5 04 570. THE ADDITION OF RS .50 08 496 WAS MADE ON ACCOUNT OF CAPITAL GAIN ON SALE OF A PLOT O F LAND AT VASAI WHICH WAS NOT OFFERED FOR TAXATION. THE ASSESSEE D ID NOT PREFER ANY APPEAL. THE ASSESSING OFFICER THEREAFTER INITIATED PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT. ITA NO. 251/MUM/2010 SHRI OMPRAKASH T. MEHTA ====================== 2 4. BEFORE THE ASSESSING OFFICER IT WAS ARGUED THAT CAP ITAL GAIN ON SALE OF VASAI LAND WAS DECLARED IN ORIGINAL RETU RN FOR A.Y. 2005-06 TO A.Y. 2007-08 BECAUSE PAYMENTS WERE RECEIVED IN T HOSE ASSESSMENT YEARS. IT WAS SUBMITTED THAT TILL DATE THE CONVEYANCE HAS NOT BEEN DONE BECAUSE THE ASSESSEE ALONG WITH OTHER CO-OWNERS HAS NOT YET RECEIVED THE BALANCE AMOUNT OF RS.4 91 453. THE SALE AGREEMENT WAS MADE ON 7 TH DECEMBER 2004. THE ASSESSEE HAS DULY DECLARED HIS SHARE OF RECEIPT AMOUNTING TO RS.51 56 548 RECEIVED BEFORE 31 ST MARCH 2005 IN THE RETURN FILED FOR A.Y. 2005-06 W HICH WAS DECLARED AS LONG TERM CAPITAL GAIN. SIMILARLY DURING A.Y. 2006- 07 THE ASSESSEE HAS RECEIVED AN AMOUNT OF RS.63 96 000 AND DURING A.Y. 2007-08 THE ASSESSEE HAS RECEIVED RS.7 38 000 AND THESE AMOUNTS WERE DULY DECLARED AS LONG TERM CAPITAL GAI N. IT WAS ACCORDINGLY SUBMITTED THAT THERE WAS NO CONCEALMENT . 4.1 HOWEVER THE ASSESSING OFFICER WAS NOT SATISFIE D WITH THE ARGUMENTS ADVANCED BY THE ASSESSEE. HE OBSERVED TH AT THE ASSESSEE HAS FILED RETURN OF INCOME AND DECLARED NIL CAPIT AL GAIN WHEREAS THE ASSESSEE HAS DONE A VERY BIG TRANSACTION OF SALE WO RTH RS.2.6 CRORES. THEREFORE HE SHOULD HAVE KNOWN THE PROVISIONS OF L AW AS PER THE INCOME-TAX ACT OR SOUGHT PROFESSIONAL ADVICE FOR SU CH BIG TRANSACTION. HE OBSERVED THAT SINCE IGNORANCE OF L AW IS NOT AN EXCUSE AND THE ASSESSEE HAS DELIBERATELY TRIED TO E VADE THE TAX AND DECLARED THE CAPITAL GAIN OVER A PERIOD OF THREE YE ARS ON RECEIPT BASIS WHICH IS NOT PERMISSIBLE UNDER THE LAW THERE FORE IT IS A FIT CASE FOR LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT. HE ACCORDINGLY LEVIED PENALTY OF RS.11 23 906 BEING 100% OF THE TA X SOUGHT TO BE EVADED. 5. BEFORE CIT(A) THE ASSESSEE REITERATED THE SAME ARG UMENTS AS MADE BEFORE THE ASSESSING OFFICER. A COUPLE OF DEC ISIONS WERE ALSO CITED TO SUBSTANTIATE THAT THERE WAS NO CONCEALMENT OF INCOME FOR ATTRACTING LEVY OF PENALTY. HOWEVER THE CIT(A) WA S NOT SATISFIED ITA NO. 251/MUM/2010 SHRI OMPRAKASH T. MEHTA ====================== 3 WITH THE ARGUMENTS ADVANCED BY THE ASSESSEE AND UPH ELD THE PENALTY LEVIED BY THE ASSESSING OFFICER. WHILE DOI NG SO HE OBSERVED THAT THE RETURN OF INCOME SHOWING NIL CAPITAL GAIN INCOME WAS FILED WHEREAS THE ENTIRE GAIN SHOULD HAVE BEEN OFFERED TO TAX DURING THE YEAR IN QUESTION. HE REFERRED TO THE NOTE GIVEN BY THE ASSESSEE IN ITS ORIGINAL RETURN OF INCOME AND CAME TO THE CONCLUSIO N THAT THE ASSESSEE HAS NO INTENTION OF DISCLOSING THE ENTIRE CAPITAL GAIN. THERE WAS NO CONFUSION IN RESPECT OF THE YEAR OF ACCRUAL OF CAPITAL GAIN AND THERE IS NO AMBIGUITY IN THE ACT IN RESPECT OF COMP UTATION OF SUCH CAPITAL GAIN. SINCE THE CAPITAL GAIN WAS NOT PROPE RLY REFLECTED BY THE ASSESSEE HE HELD THAT TO THIS EXTENT THE PARTICULA RS OF INCOME WERE CONCEALED. HE ALSO DISTINGUISHED THE VARIOUS DECIS IONS RELIED ON BY THE ASSESSEE AND UPHELD THE PENALTY LEVIED BY THE A SSESSING OFFICER. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESS EE IS IN APPEAL BEFORE US. 6. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SAME SUBMISSIONS AS MADE BEFORE THE ASSESSING OFFICER AN D THE CIT(A). HE SUBMITTED THAT THE ASSESSEE UNDER MISTAKEN BONAF IDE BELIEF HAS OFFERED THE AMOUNT OF CAPITAL GAIN ON RECEIPT BASIS AS AGAINST DECLARING THE ENTIRE CAPITAL GAIN DURING THE A.Y. 2 005-06. REFERRING TO THE ORIGINAL ASSESSMENT ORDER FOR THE A.Y. 2005- 06 A COPY OF WHICH IS PLACED AT PAPER BOOK PAGES 3 TO 5 HE SUBM ITTED THAT THE ASSESSING OFFICER AT PARA 4 OF THE ORDER HAS MENTIO NED THAT THE ASSESSEE HAS SOLD A PLOT OF LAND AT VASAI IN WHICH HE HAD 49.2% SHARE. HE HAS ALSO MENTIONED THAT THE TOTAL LONG T ERM CAPITAL GAIN FOR THE ASSESSEE WAS RS.51 66 548 AND THE ASSESSEE HAS INVESTED THE ABOVE AMOUNT IN NABARD CAPITAL GAIN BONDS AND CLAIM ED EXEMPTION U/S. 54EC. HE SUBMITTED THAT IT IS QUITE POSSIBLE THAT THE ASSESSING OFFICER HAS GONE THROUGH THE DETAILS AND ACCEPTED T HE METHOD OF COMPUTATION FILED BY THE ASSESSEE DECLARING THE CAP ITAL GAIN ON RECEIPT BASIS. HE SUBMITTED THAT IT IS NOT A CASE OF CONCEALMENT BUT ONLY SHIFTING OF INCOME FROM ONE YEAR TO THE OTHER YEAR. HE REFERRED ITA NO. 251/MUM/2010 SHRI OMPRAKASH T. MEHTA ====================== 4 TO THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF D.M. DAHANUKAR VS. CIT REPORTED IN 65 ITR 280 THE DECIS ION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF BTX CHEMI CALS LTD. VS. CIT REPORTED IN 288 ITR 196 THE DECISION OF HONBLE MA DRAS HIGH COURT IN THE CASE OF CIT VS. SHRI SARADHA TEXTILES PVT. L TD. REPORTED IN 286 ITR 499 AND THE DECISION OF THE PUNJAB & HARYANA HI GH COURT IN THE CASE OF CIT VS. JAGJIT ENGINEERING WORKS PVT. LTD. REPORTED IN 275 ITR 239 AND SUBMITTED THAT IN VIEW OF THE RATIO LAID DO WN IN THE ABOVE DECISIONS THERE IS NO CONCEALMENT OF INCOME AND THE CLAIM WAS MADE UNDER MISTAKEN BONAFIDE BELIEF AND THEREFORE NO PENALTY IS LEVIABLE. 7. THE LEARNED DR ON THE OTHER HAND WHILE SUPPORTING THE ORDER OF THE CIT(A) SUBMITTED THAT THE ASSESSEE HAS GIVEN THE NOTE IN AN AMBIGUOUS MANNER WHICH SHOWS THAT HE HAD NO INTE NTION OF DECLARING THE TRUE CAPITAL GAIN AND INSTEAD HAS SPR EAD OVER THE CAPITAL GAIN OVER A PERIOD OF THREE YEARS ON RECEIP T BASIS WHICH IS NOT PERMISSIBLE. HE SUBMITTED THAT IT IS A CLEAR CUT C ASE OF CONCEALMENT OF PARTICULARS OF INCOME AND FURNISHING OF INACCURA TE PARTICULARS AND THE PENALTY WAS RIGHTLY LEVIED BY THE ASSESSING OFF ICER AND UPHELD BY THE CIT(A). 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS MADE BY BO TH THE SIDES PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS RELIED ON BY THE L D. AR. THERE IS NO DISPUTE TO THE FACT THAT THE SALE AGREEMENT WAS MAD E ON 7.12.2004. THERE IS ALSO NO DISPUTE TO THE FACT THAT THE ASSES SEE HAS DECLARED THE CAPITAL GAIN ON ACCOUNT OF HIS SHARE ON SALE OF LAND AT VASAI ON RECEIPT BASIS AND OFFERED THE CAPITAL GAIN TO TAX D URING A.Y. 2005-06 TO A.Y. 2007-08 INSTEAD OF DECLARING THE ENTIRE CAP ITAL GAIN IN THE IMPUGNED ASSESSMENT YEAR. THERE IS ALSO NO DISPUTE TO THE FACT THAT THE ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT OR DER PASSED U/S. 143(3) OF THE ACT FOR THE A.Y. 2005-06 HAS ACCEPTED SUCH CAPITAL GAIN ITA NO. 251/MUM/2010 SHRI OMPRAKASH T. MEHTA ====================== 5 DECLARED BY THE ASSESSEE AND ALLOWED THE CLAIM OF E XEMPTION U/S. 54EC OF THE ACT. THERE IS ALSO NO DISPUTE TO THE F ACT THAT THE ASSESSING OFFICER DETECTED SUCH MISTAKE ON THE PART OF THE ASSESSEE DURING THE SCRUTINY ASSESSMENT FOR THE A.Y. 2007-08 AND ACCORDINGLY ADOPTED THE RECOURSE OF RE-ASSESSMENT PROCEEDINGS A ND BROUGHT TO TAX THE ENTIRE CAPITAL GAIN DURING A.Y. 2005-06. I T IS THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT SINCE THE ASSESSEE UNDER MISTAKEN BONAFIDE BELIEF HAS OFFERED THE ENTIRE CAP ITAL GAIN TO TAX IN DIFFERENT YEARS ON RECEIPT BASIS AND THERE BEING NO CONCEALMENT OF ANY PARTICULARS OF INCOME THEREFORE NO PENALTY IS LEVIABLE. HOWEVER ACCORDING TO THE REVENUE THE ASSESSEE INST EAD OF DECLARING THE ENTIRE CAPITAL GAIN DURING THE A.Y. 2005-06 HAS DECLARED THE SAME ON RECEIPT BASIS AND THEREFORE HAS CONCEALED HIS PARTICULARS OF INCOME FOR WHICH PENALTY IS LEVIABLE. 9. WE FIND THE PROVISIONS OF SECTION 271(1)(C) AND EXP LANATION (1) THERETO READ AS UNDER: 271. (1) IF THE [ASSESSING] OFFICER OR THE [***] [COMMISSIONER (APPEALS)] [OR THE COMMISSIONER] IN T HE COURSE OF ANY PROCEEDINGS UNDER THIS ACT IS SATISF IED THAT ANY PERSON (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR [* * *] FURNISHED INACCURATE PARTICULARS OF [SUCH INCO ME OR] [EXPLANATION 1.WHERE IN RESPECT OF ANY FACTS MATE RIAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSO N UNDER THIS ACT (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION WHICH IS FOUND BY THE [ASSESSING] OFFICER OR THE [***] [COMMISSIONER (APPEALS)] [OR THE COMMISSIONER] TO BE FALSE OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE [AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM] THEN THE AMOUNT ADDED OR DISALLOWED IN COMPUTING T HE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHA LL FOR THE PURPOSES OF CLAUSE (C) OF THIS SUB-SECTION BE DEEMED ITA NO. 251/MUM/2010 SHRI OMPRAKASH T. MEHTA ====================== 6 TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICU LARS HAVE BEEN CONCEALED. 10. WE FIND THE ASSESSEE DURING THE COURSE OF PENALTY PROCEEDINGS HAS OFFERED AN EXPLANATION AND WE HAVE TO SEE WHETHER SUCH EXPLANATION IS A BONAFIDE ONE OR NOT. WE FIND FROM THE COMPUTATION OF STATEMENT OF INCOME FILED ALONG WITH THE ORIGINAL RETURN OF INCOME A COPY OF WHICH IS PLACED AT PAPE R BOOK PAGES 20 TO 22 THAT THE ASSESSEE IN HIS NOTE HAS MERELY MEN TIONED AS UNDER: NOTE : VASAI LAND HAS BEEN SOLD ON 07.12.04 AND AS PER AGREEMENT OF SALE RECEIVED RS.1 05 01 111 OUT OF T HIS SHRI O.T. MEHTAS SHARE OF SALE CONSIDERATION IS RS.51 66 548. NAME SHARE % AMT. SHRI O.T. MEHTA 49.2 51 66 548 SMT. SHAKUNTALA CHAWLA 32.8 34 44 364 SHRI SOHANLAL CHAWLA 4.0 4 20 044 SHRI DINANATH SUKIJA 4.0 4 20 044 SHRI TAKURDAS DUDEJA 10.0 10 50 111 TOTAL 100.0 1 05 01 111 LESS: COST TAKEN AS NIL 51 66 548 LESS: INVESTED IN NABARD BOND 51 66 548 CAPITAL GAIN RS. NIL 11. WE FIND FROM THE ABOVE THAT NOWHERE IN THE SAID NOT E THE ASSESSEE HAS MENTIONED THAT IT IS OFFERING THE CAPI TAL GAIN ON RECEIPT BASIS. THEREFORE THE SUBMISSION OF THE LEARNED CO UNSEL FOR THE ASSESSEE THAT IT IS QUITE POSSIBLE THAT THE ASSESSI NG OFFICER HAS GONE THROUGH THE DETAILS AND ACCEPTED THE METHOD OF COMP UTATION FILED BY THE ASSESSEE DECLARING THE CAPITAL GAIN ON RECEIPT BASIS IS RATHER MISLEADING SINCE THE ASSESSEE HAS NOT MENTIONED AS TO WHAT IS THE METHOD OF ACCOUNTING OF CAPITAL GAIN ADOPTED BY HIM . SIMILARLY WE FIND FROM THE COPY OF THE REVISED RETURN OF INCOME FOR THE SAID ASSESSMENT YEAR A COPY OF WHICH IS PLACED AT PAPER BOOK PAGES 23 TO 29 THAT THE ASSESSEE HAS NOT AT ALL GIVEN ANY DE TAIL REGARDING COMPUTATION OF CAPITAL GAIN OUT OF SALE OF VASAI LA ND. IT IS ONLY AFTER THE MISTAKE WAS DETECTED BY THE ASSESSING OFFICER D URING THE A.Y. ITA NO. 251/MUM/2010 SHRI OMPRAKASH T. MEHTA ====================== 7 1997-98 AND IN RESPONSE TO NOTICE U/S. 148 OF THE A CT THAT THE ASSESSEE FILED THE RETURN DECLARING THE LONG TERM C APITAL GAIN ON SALE OF VASAI LAND AT RS.1 26 38 496 AND AFTER CLAIMING EXEMPTION DECLARED CAPITAL GAIN OF RS.50 08 496 AND PAID THE TAX THEREON. THEREFORE IT CANNOT BE SAID THAT THE ASSESSEE ACTE D IN A BONAFIDE MANNER SINCE BEFORE DETECTION OF THE SAME BY THE AS SESSING OFFICER DURING THE A.Y. 2007-08 THE ASSESSEE NEVER CAME VOL UNTARILY BEFORE THE ASSESSING OFFICER WITH A REQUEST TO TAX THE LON G TERM CAPITAL GAIN DURING THE A.Y. 2005-06. 12. THE VARIOUS DECISIONS RELIED ON BY THE LEARNED COUN SEL FOR THE ASSESSEE ARE DISTINGUISHABLE AND NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. IN THE CASE OF D.M. DAHANUKAR (SUPRA ) TILL THE A.Y. 1954-55 THE ASSESSEE WAS INCLUDING HIS INCOME FROM DIVIDEND IN THE RETURN FOR THE ACCOUNT YEAR IN WHICH THEY WERE RECEIVED AND HIS ASSESSMENTS WERE COMPLETED ACCORDINGLY. SUBSEQUENT LY AFTER THE ASSESSMENT FOR 1954-55 WAS COMPLETED HE REALISED TH AT DIVIDENDS SHOULD BE RETURNED IN THE YEAR IN WHICH THEY WERE DECLARED AND FILED A REVISED RETURN FOR THE A.Y. 1954-55 INCLUDI NG THE DIVIDEND DECLARED IN THAT YEAR. AS THE ORIGINAL ASSESSMENT FOR THAT YEAR HAD ALREADY BEEN COMPLETED THE DIVIDEND RETURNED WAS AS SESSED U/S. 34 IN THAT YEAR. THEREAFTER PENALTY PROCEEDINGS WERE INITIATED AND PENALTY WAS LEVIED. IT WAS UNDER THESE CIRCUMSTANC ES THE JURISDICTIONAL HIGH COURT HELD THAT THE ASSESSEE HA S NEITHER CONCEALED NOR DELIBERATELY FURNISHED INACCURATE PAR TICULARS AND THEREFORE THE LEVY OF PENALTY WAS HELD TO BE NOT J USTIFIED. HOWEVER IN THE PRESENT CASE THE ASSESSEE HAS NOT FILED ANY REVISED RETURN NOR DISCLOSED THE FULL DETAILS IN THE NOTE WHILE COMPUT ING THE CAPITAL GAIN IN THE ORIGINAL RETURN. THEREFORE THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF D.M. DAHANUKAR IS NOT APP LICABLE TO THE FACTS OF THE PRESENT CASE. 13. SIMILARLY IN THE CASE OF SHRI SARADHA TEXTILE PROCE SSORS PVT. LTD. (SUPRA) THE ASSESSEE COMPANY FOR THE A.Y. 199 0-91 HAD CLAIMED ITA NO. 251/MUM/2010 SHRI OMPRAKASH T. MEHTA ====================== 8 DEPRECIATION AND INVESTMENT ALLOWANCE ON THE MACHIN ERY WHICH WAS RECEIVED ON APRIL 4 1990 I.E. AFTER THE PREVIOUS YEAR ENDED 31 ST MARCH 1990. WHEN THIS WAS POINTED OUT BY THE ASSE SSING OFFICER THE ASSESSEE WITHDREW THE CLAIM. WHEN THE PENALTY WAS LEVIED U/S. 271(1)(C) OF THE ACT IT WAS DELETED BY THE CIT(A) A ND THE APPEAL FILED BY THE REVENUE BEFORE THE TRIBUNAL WAS DISMISSED. ON FURTHER APPEAL BY THE REVENUE BEFORE THE HIGH COURT THE HO NBLE HIGH COURT DISMISSED THE APPEAL FILED BY THE REVENUE HOL DING THAT WHEN THE MISTAKE WAS POINTED OUT THE ASSESSEE WITHDREW I TS CLAIM FOR DEPRECIATION AND INVESTMENT ALLOWANCE AND FILED A R EVISED RETURN AND THIS ACTION OF THE ASSESSEE SHOWED ITS BONAFIDE S. HOWEVER IN THE INSTANT CASE THE ASSESSEE DID NOT FILE ANY REVI SED RETURN NOR OFFERED FOR TAXATION OF THE SAME IN THE A.Y. 2005-0 6 WHEN THE ASSESSING OFFICER DETECTED THE MISTAKE DURING THE C OURSE OF ASSESSMENT PROCEEDINGS FOR THE A.Y. 2007-08. THERE FORE THIS DECISION IS ALSO NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. 14. IN THE CASE OF B.T.X. CHEMICAL PVT. LTD. (SUPRA) A S RELIED ON BY THE LEARNED COUNSEL FOR THE ASSESSEE THE ASSESSEE W AS A PRIVATE LIMITED COMPANY CARRYING ON THE BUSINESS OF MANUFAC TURING AND SELLING OF CHEMICALS. A FIRE BROKE OUT IN THE ASSE SSEES FACTORY A FEW DAYS BEFORE THE CLOSE OF ITS ACCOUNT PERIOD RESULTI NG IN DESTRUCTION OF AND/OR SUBSTANTIAL DAMAGE TO ITS BUILDING PLANT AN D MACHINERY AND FINISHED OR SEMI FINISHED GOODS ALL INSURED. THE ASSESSEE CLAIMED FROM THE INSURANCE COMPANY (I) A SUM OF RS.1 83 492 ON ACCOUNT OF LOSS AND DAMAGE TO ITS PLANT AND MACHINERY ON REPLA CEMENT COST BASIS AND (II) A SUM OF RS.1 00 112 ON ACCOUNT OF L OSS OF ITS FINISHED OR SEMI FINISHED GOODS. THE ASSESSEE COMPANY WAS P AID A SUM OF RS.84 462 IN THE MONTH OF NOVEMBER/DECEMBER 1979 I N RESPECT OF THE FORMER CLAIM AND A SUM OF RS.56 173 IN RESPECT OF THE LATTER. THE ASSESSEE HAD CLAIMED AN AMOUNT OF RS.1 00 112 ON AC COUNT OF LOSS OF STOCK DUE TO FIRE. THE ITO NOTED THAT THE ASSESSEE HAD CLAIMED DOUBLE DEDUCTION OF THIS AMOUNT OF RS.1 00 112 SINC E IT WAS DEBITED ITA NO. 251/MUM/2010 SHRI OMPRAKASH T. MEHTA ====================== 9 TO THE CONSUMPTION OF RAW MATERIAL ACCOUNT AND SUBS EQUENTLY THE SAME AMOUNT WAS ALSO DEBITED TO THE PROFIT AND LOSS A/C. UNDER THE HEAD GOODS LOST IN FIRE. WHEN PENALTY WAS LEVIED THE TRIBUNAL CANCELLED THE PENALTY ON THE GROUND THAT THE DOUBLE CLAIM FOR THAT AMOUNT HAD BEEN MADE DUE TO A BONAFIDE MISTAKE ON T HE PART OF THE ASSESSEE COMPANY. WHEN THE REVENUE CHALLENGED THE DECISION OF THE TRIBUNAL THE HONBLE GUJARAT HIGH COURT HELD AS UNDER: (II) THAT THE TRIBUNAL AS A MATTER OF FACT FOUND THAT THE DOUBLE CLAIM FOR AN AMOUNT OF RS.1 00 112 WAS MADE DUE TO A BONA FIDE MISTAKE ON THE PART OF THE ASSESSEE. NO SOONER WAS AN ENTRY MADE IN THE TRADI NG ACCOUNT OF THIS YEAR THAN WOULD IT TO AFFECT THE O PENING STOCK IN THE NEXT YEAR AND HENCE IT COULD HAVE BEE N EASILY FOUND OUT AND WOULD NOT HAVE RESULTED IN ANY ADVANTAGE TO THE ASSESSEE. THE PENALTY RELATABLE T O THE DISALLOWANCE OF LOSS OF RS.1 00 112 WAS RIGHTLY DEL ETED BY THE TRIBUNAL. THUS IN THE ABOVE CASE THERE WAS NO BENEFIT ACCRUIN G TO THE ASSESSEE BY CLAIMING THE DEDUCTION UNDER BONA-FIDE MISTAKE. HOWEVER IN THE INSTANT CASE THE ASSESSEES CONDUCT CANNOT BE SAID TO BE BONA-FIDE. THEREFORE THIS DECISION IS ALSO NOT APPLICABLE. 15. SIMILARLY IN THE CASE OF JAGJIT ENGINEERING WORKS P VT. LTD. (SUPRA) WE FIND DURING THE COURSE OF ASSESSMENT PR OCEEDINGS RELATING TO THE ASSESSMENT YEAR 1979-80 THE ASSESS ING OFFICER FOUND THAT CERTAIN GOODS WERE REJECTED BY THE H AND WERE SENT BACK TO THE ASSESSEE. SINCE THE SAME HAD BEEN REJECTED P RIOR TO THE EXPIRY OF THE FINANCIAL YEAR RELATING TO THE ASSESSMENT YE AR 1979-80 THE VALUE OF THE REJECTED GOODS WAS REQUIRED TO BE INCL UDED IN THE CLOSING STOCK AS ON MARCH 31 1979. ON BEING CONFRO NTED THE ASSESSEE CONCEDED THAT IT WAS ITS BONA FIDE MISTAKE IN NOT INCLUDING THE SAID AMOUNT IN THE CLOSING STOCK AS ON MARCH 31 1979. IT WAS HOWEVER EXPLAINED THAT THE VALUE OF REJECTED GOODS HAD DULY BEEN ENTERED IN THE BOOK ON SEPTEMBER 17 1979. ACCORDIN GLY THE ASSESSEE OFFERED A SUM OF RS. 42 234 BEING THE VAL UE OF THE REJECTED GOODS FOR ADDITION TO ITS TOTAL INCOME. THE INCOME -TAX OFFICER NOT ITA NO. 251/MUM/2010 SHRI OMPRAKASH T. MEHTA ====================== 10 ONLY MADE THE ADDITION BUT ALSO LEVIED PENALTY FOR CONCEALMENT OF INCOME. THE APPELLATE ASSISTANT COMMISSIONER ACCEPT ED THE EXPLANATION OF THE ASSESSEE AND DELETED THE PENALTY . ON FURTHER APPEAL BY THE REVENUE THE TRIBUNAL UPHELD HIS FIND INGS. ON FURTHER REFERENCE IT WAS HELD THAT IT WAS CLEAR THAT THE T RIBUNAL HAD ACCEPTED THE EXPLANATION OF THE ASSESSEE THAT IT WA S ONLY BECAUSE OF BONA-FIDE MISTAKE THAT THE VALUE OF THE REJECTED GO ODS WAS NOT SHOWN IN THE CLOSING STOCK AS ON MARCH 31 1979. T HE FINDINGS RECORDED BY THE TRIBUNAL WERE ESSENTIALLY FINDINGS OF FACT WHICH HAD NOT BEEN SHOWN TO BE ERRONEOUS AND PERVERSE. IN VI EW OF THESE UN- CONTROVERTED FACTS THE CONCLUSION OF THE TRIBUNAL HAD BEEN UPHELD. HOWEVER IN THE INSTANT CASE THE ASSESSEE NEITHER DISCLOSED THE FULL FACTS IN HIS COMPUTATION OF INCOME NOR FILED A REVI SED RETURN IMMEDIATELY AFTER THE ASSESSING OFFICER DETECTED TH E MISTAKE DURING A.Y. 1997-98. THEREFORE THE DECISION RELIED ON BY THE LEARNED COUNSEL FOR THE ASSESSEE IS NOT APPLICABLE TO THE F ACTS OF THE IMPUGNED CASE. 16. IN THIS VIEW OF THE MATTER AND IN VIEW OF THE DETAI LED ORDER PASSED BY THE CIT(A) WE ARE SATISFIED THAT THE ASS ESSEE HAD CONCEALED HIS PARTICULARS OF INCOME AND FURNISHED I NACCURATE PARTICULARS OF INCOME FOR WHICH PENALTY U/S. 271(1) (C) OF THE ACT IS LEVIABLE. WE ACCORDINGLY UPHOLD THE ORDER OF THE C IT(A) AND THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. 17. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. PRONOUNCED ON 31 ST MAY 2010 SD/- (D. MANMOHAN) VICE PRESIDENT SD/- (R.K. PANDA) ACCOUNTANT MEMBER MUMBAI DATED 31 ST MAY 2010 ITA NO. 251/MUM/2010 SHRI OMPRAKASH T. MEHTA ====================== 11 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)-32 MUMBAI 4. THE CIT CITY-21 MUMBAI 5. THE DR C BENCH. //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI TPRAO