Shri Ajay Kumar Jain, New Delhi v. ACIT, New Delhi

ITA 4834/DEL/2009 | 2006-2007
Pronouncement Date: 26-02-2010 | Result: Allowed

Appeal Details

RSA Number 483420114 RSA 2009
Bench Delhi
Appeal Number ITA 4834/DEL/2009
Duration Of Justice 2 month(s) 3 day(s)
Appellant Shri Ajay Kumar Jain, New Delhi
Respondent ACIT, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 26-02-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 26-02-2010
Date Of Final Hearing 24-02-2010
Next Hearing Date 24-02-2010
Assessment Year 2006-2007
Appeal Filed On 23-12-2009
Judgment Text
I.T.A. NO.4834 /DEL/09 1/5 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A NEW DELHI) BEFORE SHRI R.P. TOLANI JUDICIAL MEMBER AND SHRI A.K. GARODIA ACCOUNTANT MEMBER I.T.A. NO.4834 /DEL/2009 ASSESSMENT YEAR : 2006-07 SHRI AJAY KUMAR JAIN ACIT 54-LAWYERS CHAMBERS CIRCLE-37 (1) SUPREME COURT OF INDIA NEW DELHI. NEW DELHI. V. (APPELLANT) (RESPONDENT) PAN /GIR/NO.AAJPJ-7448-N APPELLANT BY : SHRI GAUTAM JAIN C.A. RESPONDENT BY : MS. PREATIMA KAUSHIK SR. DR. ORDER PER A.K. GARODIA AM: THIS IS AN ASSESSEE'S APPEAL DIRECTED AGAINST THE O RDER OF LD CIT(A)- XXVIII NEW DELHI DATED 28.10.2009 FOR ASSESSMENT Y EAR 2006-07. 2. THE GROUNDS RAISED BY THE ASSESSEE READ AS UNDER :- 1. THAT THE LD CIT(A) XXVIII NEW DELHI HAS ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING THE LEVY OF PENALTY UNDER SECTION 271( 1) (C) OF RS.50 6757/-. 2. THAT THE LD CIT(A) HAS FAILED TO APPRECIATE THAT THE JUDGMENT OFR THE HON'BLE APEX COURT IN THE CASE OF DHARMENRA TEXTILE S V. CIT REPORTED IN 306 ITR 277 HAS NO APPLICATION ON THE FACTS OF THE INSTANT CASE. . I.T.A. NO.4834/DEL/09 2/5 3. THAT THE FINDING RECORDED BY THE LD CIT(A) THAT APPELLANT HAD FAILED TO PROVE THAT HIS EXPLANATION IS BONAFIDE AND THAT ALL THE FACTS RELATINGTO THE SAME AND MATERIAL TO THE COMPUTATION OF TOTAL INCOI ME HAVE BEEN DISCLOSED BY HIM IS FACTUALLY LEGALLY MISPLACED AN D OVERLOOKS THE EVIDENCE PLACED ON RECORD AND EXPLANATION TENDERED BY THE AP PELLANT. 3. BRIEF FACTS OF THE CASE ARE THAT IT IS NOTED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER THAT THE ASSESSEE HAS NOT SHOWN PR OFIT/LOSS ON SALE OF MUTUAL FUNDS IN HIS RETURN OF INCOME. THE ASSESSING OFFICE R ASKED THE ASSESSEE TO EXPLAIN THE SAME. IN REPLY IT WAS SUBMITTED THAT T HE ACCOUNTANT OF THE ASSESSEE WHO WAS MAINTAINING THE BOOKS HAS NOT SEGREGATED TH E SALES AND PURCHASES SEPARATELY AND RUNNING ACCOUNT OF EACH MUTUAL FUND WAS MAINTAINED. UPON WORKING OUT THE DETAILS WHEN THE ASSESSEE WAS INFO RMED FOR THE MISTAKE OF THE ACCOUNTANT THE ASSESSEE HAS IMMEDIATELY DEPOSITED THE DUE TAX WITH INTEREST. AFTER MAKING THIS OBSERVATION THE ASSESSING OFFICE R MADE AN ADDITION ON ACCOUNT OF SHORT TERM CAPITAL GAIN TO THE EXTENT OF RS.5 06 572.51. THE ASSESSING OFFICER HAS INITIATED PENALTY PROCEEDINGS ALSO. IN THE COURSE OF PENALTY PROCEEDINGS IT WAS SUBMITTED BY THE ASSESSEE VIDE LETTER DATED 15.12.2008 THAT IT WAS AN INADVERTENT MISTAKE. IT WAS ALSO SUBMITTE D THAT IN FACT DURING ASSESSMENT PROCEEDINGS WITHOUT DETECTION VOLUNTA RILY FURNISHED THE COMPLETE RECONCILIATION OF SUCH INADVERTENT MISTAKE COMMITTE D BY THE ACCOUNTANT WHILE PREPARING THE ACCOUNTS OF THE ASSESSEE. THE ASSESSI NG OFFICER WAS NOT SATISFIED AND BY FOLLOWING THE JUDGMENT OF HON'BLE APEX COURT RENDERED IN THE CASE OF DHARMENDRA TEXTILES PROCESSORS AS REPORTED IN 306 I TR 377 THE ASSESSING OFFICER DECIDED THE IMPOSE PENALTY. HE IMPOSED A P ENALTY OF RS.50 657/-. BEING AGGRIEVED THE ASSESEE CARRIED THE MATTER IN APPEAL BEFORE LD CIT(A) BUT WITHOUT SUCCESS AND NOW THE ASSESSEE IS IN FURTHER APPEAL B EFORE US. 4. IT WAS SUBMITTED BY THE LD AR OF THE ASSESSEE BE FORE US AND REITERATED THE SAME ARGUMENTS WHICH WERE ADVANCED BY THE ASSES SEE BEFORE THE ASSESSING OFFICER AND IN THE COURSE OF PENALTY PROC EEDINGS AND IT WAS SUBMITTED . I.T.A. NO.4834/DEL/09 3/5 THAT BECAUSE OF INADVERTENT MISTAKE OF THE ACCOUNTA NT OF THE ASSESSEE THERE WAS A MISTAKE IN THE COMPUTATION OF INCOME AND HENCE TH E PENALTY IN SUCH CASES CANNOT BE IMPOSED. RELIANCE WAS PLACED BY HIM ON T HE JUDGMENT DATED 17.8.2009 OF HON'BLE DELHI HIGH COURT RENDERED IN T HE CASE OF M/S DIKSHA HOLDING LTD. IN I.T.A. NO.534/DEL/2006. HE SUBMITTE D THAT THIS JUDGMENT OF HON'BLE DELHI HIGH COURT IS AVAILABLE ON PAGES 39-4 2 OF THE PAPER BOOK. IT IS POINTED OUT THAT IN THAT CASE ALSO AS PER THE FACTS NOTED BY THE HON'BLE DELHI HIGH COURT THAT THE ASSESSEE HAS DECLARED IN THAT CASE L ONG TERM CAPITAL LOSS OF RS.20.48 LAKHS IN RESPECT OF IMPORTED CARS BUT THE PROFIT IN RESPECT OF OTHER SIX CARS HAVE NOT BEEN DECLARED AND SHORT TERM CAPITAL GAINS ON THESE CAR WAS WORKED OUT AT RS.1.47 LAKHS FOR WHICH WAS ADDITION WAS MADE IN THE TAXABLE INCOME OF THE ASSESSEE AND PENALTY WAS ALSO IMPOSED . IN THAT CASE ALSO IT WAS THE CONTENTION OF THE ASSESSEE BEFORE HON'BLE DELHI HIGH COURT THAT CAPITAL GAIN IN RESPECT OF SALE OF SIX CARS WAS NOT INCLUDED BY INADVERTENCE. UNDER THESE FACTS IT IS NOTED BY THETRIBUNAL IN THAT CASE THAT THE ASSESSEE EXPLAINED THAT IT WAS DUE TO GENUINE MISTAKE THAT THE ASSESSEE OMITTE D TO SHOW THE CAPITAL GAINS OF RS.1.47 LAKHS ON THE SALE OF SIX CARS AND THAT A S SOON AS IT WAS POINTED OUT THE SAME WAS ACCEPTED BY THE ASSESSEE. THE TRIBUNAL IN THAT CASE ALSO HELD THAT THE DEPARTMENT HAS NOT DISCHARGED ITS BURDEN OF PROVING THE CONCEALMENT AND SIMPLY RAISED ITS CONCLUSION ON THE ACT OF VOLUNTARILY SUR RENDER DONE BY THE ASSESSEE IN GOOD FAITH AND HENCE THE PENALTY CANNOT BE IMPOSED. IT WAS HELD BY HON'BLE DELHI HIGH COURT THAT NO QUESTION OF LAW ARISES IN THESE CIRCUMSTANCES. IN THE PRESENT CASE ALSO APART FROM ASKING THE ASSESSEE A S TO WHY THE ASSESSEE HAS NOT SHOWN ANY PROFIT/LOSS ON SALE OF MUTUAL FUNDS I N HIS RETURN OF INCOME. THE ASSESSEE HAS ON ITS OWN FIND OUT MISTAKE COMMITTED BY THE ACCOUNTANT OF THE ASSESSEE AND SURRENDERED THE INCOME AND PAID TAX ON THE SAME WITH INTEREST. THIS WAS THE SUBMISSION OF THE ASSESSEE BEFORE THE ASSESSING OFFICER WHICH IS REPRODUCED BY THE ASSESSING OFFICER IN THE ASSESSME NT ORDER ITSELF AND THESE FACTS CLEARLY SHOW THAT IT WAS A MISTAKE COMMITTED BY THE ACCOUNTANT OF THE ASSESSEE. AND AFTER KNOWING THE MISTAKE THE ASSESS EE IMMEDIATELY SURRENDERED THE INCOME AND DEPOSITED THE TAX ALONG WITH THE INT EREST THE QUERY OF THE . I.T.A. NO.4834/DEL/09 4/5 ASSESSING OFFICER WAS SIMPLE AS TO WHY THE ASSESSEE HAS NOT DECLARED ANY PROFIT OR LOSS ON SALE OF MUTUAL FUNDS AND THIS QUERY OF T HE ASSESSING OFFICER DOES NOT SHOW THAT HE WAS AWARE ABOUT THIS INCOME BEFORE THE SAME WAS SURRENDERED BY THE ASSESSEE. REGARDING THE MISTAKE COMMITTED BY TH E ACCOUNTANT OF THE ASSESSEE WE FIND THAT AS PER THE LEDGER ACCOUNT OF HSBC MUTUAL FUNDS APPEARING ON PAGE NO.35-36 OF THE PAPER BOOK AND AC COUNT OF INCOME OF MUTUAL FUNDS APPEARING ON PAGE NO.38 OF THE PAPER BOOK TH E ASSESSEE HAS WORKED OUT THE LOSS ON SALE OF INVESTMENT OF RS. 15 192.79. FR OM THIS WORKING WE FIND THAT THE ACCOUNTANT HAS REDUCED THE ENTIRE REDEMPTION PR OCEEDINGS OF VARIOUS MUTUAL FUNDS FROM THE COST OF MUTUAL FUNDS AND WORKED OUT THE LOSS FROM MUTUAL FUNDS AT RS.15 192.79 WHEREAS AS PER WORKING GIVEN ON PAGE N O.37 OF THE PAPER BOOK SUBSEQUENTLY DONE BY THE ASSESSEE IN THE COURSE OF ASSESSMENT PROCEEDINGS THERE IS LONG TERM CAPITAL GAIN OF RS.2.034 LAKHS A ND SHORT TERM CAPITAL GAIN OF RS.5.06 LAKHS AS AGAINST LOSS OF INVESTMENT WORKED OUT BY THE ACCOUNTANT OF THE ASSESSEE AS PER BOOKS OF ACCOUNTS AT RS.0.15 LAKHS. THE ASSESSEE IS AN ADVOCATE. THE ACCOUNTS OF THE ASSESSEE ARE DULY AUD ITED BY A CHARTERED ACCOUNTANT AND AS PER THE AUDITED ACCOUNTS AVAILABL E IN THE PAPER BOOK AND SUCH AUDIT WAS DONE BY THE C.A. U/S 44AB OF THE INC OME TAX ACT 1961 AND CONSIDERING ALL THESE FACTS WE ARE OF THE CONSIDER ED OPINION THAT IT WAS A CASE OG GENUINE MISTAKE OF THE ACCOUNTANT OF THE ASSESSEE. FOR THE PURPOSE OF LEVY OF PENALTY U/.S 271(1)( C) EXPLANATION-1 TO SECTION 2 71 (1)( C) ISVERY RELEVANT AND AS PER THIS EXPLANATION IF THE ASSESSEE OFFERS AN EXPL ANATION AND IF SUCH EXPLANATION IS FOUND BONA FIDE THEN IT CANNOT BE HELD THAT THE AMOUNT OF ADDITION REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEE N CONCEALED. IN THE PRESENT CASE WE ARE IN AGREEMENT WITH LD AR OF THE ASSESSE E THAT THE EXPLANATION OF THE ASSESSEE IS BONA FIDE CONSIDERING THE FACTS OF THE PRESENT CASE AND HENCE WE ARE OF THE CONSIDERED OPINION THAT PENALTY CANNOT B E LEVIED UNDER THESE FACTS U/S 271(1)( C) OF THE ACT. WE THEREFORE DELETE THE SA ME. 5. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. . I.T.A. NO.4834/DEL/09 5/5 6. ORDER PRONOUNCED IN THE OPEN COURT ON 26TH FEBR UARY 2010. SD/- SD/- (R.P. TOLANI) (A.K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 26.2.2010. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)- NEW DELHI. 5. THE DR ITAT LOKNAYAK BHAWAN KHAN MARKET NEW DELHI. TRUE COPY. BY ORDER (ITAT NEW DELHI).