Income Tax Appellate Tribunal - Kolkata
Dcit, Cir-12, Kolkata, Kolkata vs M/S Deeplok Builders Pvt. Ltd., Kolkata on 15 February, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL "C" BENCH: KOLKATA
[Before Shri N. V. Vasudevan, JM & Dr. A. L. Saini, AM]
I.T.A No.750/Kol/2014
Assessment Year: 2009-10
Deputy Commissioner of Income-tax, Vs. M/s. Deeplok Builders Pvt. Ltd.
Circle-12, Kolkata. (PAN: AAACD9407D)
(Appellant) (Respondent)
&
C.O. No. 10/Kol/2017
InI.T.A No.750/Kol/2014
Assessment Year: 2009-10
M/s. Deeplok Builders Pvt. Ltd. Vs. Deputy Commissioner of Income-tax,
Circle-12, Kolkata.
(Cross Objector) (Respondent)
Date of hearing: 06.02.2017
Date of pronouncement: 15.02.2017
For the Revenue :N o n e
For the Assessee: S/Shri S. L. Kochar& Anil Kochar, ARs
ORDER
Per Dr. A. L. Saini, AM:
The captioned appeal filed by the Revenue and the Cross Objection filed by the assesseepertaining to Assessment Year 2009-10, aredirected against the order passed by the Ld. CIT(A)-XII, Kolkata in appeal No. 42/XII/Cir-12/12-13 dated 09.01.2014, which in turn arises out of penalty order passed by the DCIT, Circle-12, Kolkata u/s.271(1)(c) of the Income-tax Act, 1961 (hereinafter referred to as the "Act") for AY 2009-10, dated 27.04.2012.
2. The brief facts of the case qua the assesseeare that the assessee has filed original return on 23-09-2009 showing total income of Rs.22679792/- and claimed deduction of Rs.50 lacs u/s 54EC of the Act. The computation sheet for the same was filed. It filed revised return of income with total income of Rs.22508835/-. Assessee claimed deduction of Rs.50 lacs u/s 54EC of the Act, in the revised return of income also. The computation sheet for the same was filed. Thus,assessee has claimed the deduction u/s 54EC of the Act in the original as well as revised return of income.The claim was not by mistake. It was 2 ITA No.750/Kol/2014 CO No.10/Kol/2017 Deeplok Builders Pvt. Ltd., AY. 2009-10 claimed with the full knowledge that the investment in bond has to be made before such claim u/s 54EC of the Act,can be made. The basis of exemption was asked in notice u/s 142(1) of the Act dated 08-07-2011.Thereafter, assessee admitted that no such investment was made in the said Financial Year. The question is that whether the same amounts to concealment of income and furnishing inaccurate particulars of income. There is no dispute that the assessee has given the wrong informationthat there is investment in bonds which qualifies for deduction u/s 54EC of the Act. Infact there was no such investment which qualifies for deduction u/s 54EC of the Act. The submission of assessee also does not contend the fact that there was concealment of income and furnishing of inaccurate particulars of income. Now it remains to be seen that whether there exists a reasonable cause for claiming this inaccurate deduction u/s 54EC of the Act. Assessee submitted a reply on 24-04-2012 in response to penalty notice u/s 271 (1)(c).The reason given by assessee is that the investment was made on 31-07-2007 .i.e., in FY 2007-08 (AY 2008-09) in the books of company M/s.JMB Properties P Limited. This company was merged with assessee company by order of Hon'ble Kolkata High Court on and from 01-04-2007 but the order was received in April 2008. Thus this bond got reflected in the balance sheet of assessee company for FY 2008-09 when the merger order was being effected. Assessee states that the staff has taken the investment appearing in balance sheet as investment made in FY 2008-09 and claimed the deduction. However this reason cannot be a reasonable explanation for claiming the deduction u/s 54EC of the Act.The assessee knew the date of investment of the bond which is 31-07-2007 .i.e., in FY 2007-08. The assessee must have known by the cash book that there has been no cash outflow for such investment. Also it must be clear from the bank book that there has been no such investment. This was in knowledge of assessee that there has been no such investment. Further the amount of Rs.50 lacs is not small that the investment of this magnitude and claim u/s 54EC will miss the notice of the assessee or the accountant. Thus the assessee explanation is not accepted and hence theprovision of section u/s 271 (1 )(c) of Income Tax arc squarely attracted in this case. Considering the facts mentioned above, the AO satisfied that it is a fit case for imposition of penalty u/s. 271 (1 )(c) of the Act and he imposed penalty of Rs.15,45,000/-.
3 ITA No.750/Kol/2014 CO No.10/Kol/2017Deeplok Builders Pvt. Ltd., AY. 2009-10
3. Aggrieved against the said order passed u/s. 271(1)(c) of the Act by the AO, the assessee filed an appeal before the Ld. CIT(A), who has deleted the penalty u/s. 271(1)(c) of the Act by observing the following:
"5.1.4. I have carefully considered the submissions of the appellant & the impugned penalty order and I have also gone through the facts of the case as apparent from the records. I have also taken note of judicial pronouncements relied upon by the Ld. AR. In the case of the appellant, it is observed that since the appellant had not made any investments to claim deduction u/s. 54EC, the AO treated the entire Long Term Capital Gains assessable to tax. This order of the AO has not been challenged by the appellant for the very cogent reason that there was mistake on the part of the staff while computing long term capital gains when deduction of Rs.50,00,000/- was claimed u/s 54EC, which was mistakenly claimed on the basis of the relevant entry in the audited accounts which was in fact not relatable to the year of assessment under appeal.
It is revealed from the records that the appellant has duly credited the sale proceeds in its accounts. It is only the claim of deduction u/s 54EC that due to the error committed in making out computation of income that claim was made for deduction 54EC of the Act mistakenly on the basis of entry in the Balance Sheet of the appellant pertaining to Rs. 50,00,000/- which was taken as investment made during the year for which deduction was claimed.
All the judicial pronouncement which have been referred to by the AR established the paramount proposition that penalty u/s 271(1)( c ) is not leviable as the mistake was committed due to an error which is evident from the accounts itself. It is observed that the appellant had got merged with another company by the order of the Honorable High Court of Calcutta is a fact and that in the Balance Sheet which formed part of the assets and liabilities of the merged company did show an entry of Rs. 50,00,000/- being the amount deposited u/s 54EC. Such a mistake committed in claiming deduction against the long term capital gain is in fact very much on record and cannot be taken as concealment of income or furnishing of inaccurate particulars of income.
In the light of the above discussion & findings, perusing the entire facts of the case and respectfully following the judgments as cited above, I am of the considered view that levy of penalty as made out by the A.O. u/s 271(1)( c ) of the Act is not called for. Accordingly the appeal is allowed."
4.Aggrieved from the order of the Ld. CIT(A) the Revenue is in appeal before us andAssessee is also raised cross objection, before us.
The Revenue has taken following grounds of appeal:
"1. That is the facts and in law of the case the Ld. CIT(A) erred in deleting the penalty u/s. 271(1)(c) amounting to Rs.15,45,000/-.4 ITA No.750/Kol/2014 CO No.10/Kol/2017
Deeplok Builders Pvt. Ltd., AY. 2009-10
2. That is the facts and in law of the case, the Ld. CIT(A) erred in deleting the penalty since the assessee deliberately made a wrong claim.
3. That the appellant craves for leave to add, delete of modify any of the grounds of appeal before or all the time of hearing."
The Assessee has raised the following grounds of cross objections:
1.For that the assumption of jurisdiction by the A.O. U/s 274/271 of the Income Tax Act, 1961 was wrong and invaid and as such the levy of penalty U/s 271(1) (c ) amounting to Rs. 15,39,040/- was wrong & uncalled for.
2.For that further grounds of appeal may kindly be allowed to be taken at the time of hearing of the appeal.
3.For that there has been delay in submission of the Cross Objection which may kindly be condoned in the circumstances as submitted in the enclosed declaration.
5. The Ld. AR for the assessee has submitted that first of all the notice issued by the AO for levying penalty u/s. 271(1)(c) of the Act is defective. The AO while issuing notice/show cause notice did not tick the relevant point for which the assessee is being prosecuted. Ld. AR for the assessee, therefore, relied on the judgment of Karnataka High Court in the case of CIT Vs. Manjunatha Cotton & Ginning Factory (2013) 359 ITR 565 (Kar). The Hon'ble Karnataka High Court in the case of CIT &Anr. v. Manjunatha Cotton and Ginning Factory, 359 ITR 565 (Karn), has held that notice u/s. 274 of the Act should specifically state as to whether penalty is being proposed to be imposed for concealment of particulars of income or for furnishing inaccurate particulars of income. The Hon'ble High court has further laid down that certain printed form where all the grounds given in section 271 are given would not satisfy the requirement of law. The Court has also held that initiating penalty proceedings on one limb and find the assessee guilty in another limb is bad in law. It was submitted that in the present case, the aforesaid decision will squarely apply and all the orders imposing penalty have to be held as bad in law and liable to be quashed.
6. Ld. DR for the revenue has primarily relied on the order made by the AO which we have already noted in our earlier para and is not repeated again for the sake of brevity.
7. Having heard the rival submissions and perused the material available on record, we are of the view that there is merit on the submission of the assessee, as the proposition 5 ITA No.750/Kol/2014 CO No.10/Kol/2017 Deeplok Builders Pvt. Ltd., AY. 2009-10 canvassed by the Ld. AR for the assessee are supported by the facts narrated by him.As the Ld. AR for the assessee pointed out that the AO has not ticked the relevant point of the show cause notice for penalty u/s. 271(1)(c) of the Act and the assessee does not know for what purpose he is being prosecuted. The assessee's case under consideration is fully covered by the Hon'ble Karnataka High Court judgment in Manjunatha Cotton & Ginning Factory, supra. Therefore, we are of the view that the penalty levied by AO u/s. 271(1)(c) of the Act has no legs to stand on. Accordingly, we delete the penalty levied u/s. 271(1)(c) of the Act.
8. The Cross Objection filed by assessee is in support of the order of Ld. CIT(A). There is a delay in filing the cross objections by 944 days. Since we upheld the order of CIT(A) in deleting the penalty levied u/s. 271(1)(c) of the Act and the Cross Objection filed by assessee is in support of the order of CIT(A), is dismissed by us being infructuous.
9. In the result, the appeal filed by theRevenue and the Cross Objection raised by the assessee , are dismissed.
Order pronounced in the open court on 15.02.2017
Sd/- Sd/-
(N. V. Vasudevan) (Dr. A. L. Saini)
Judicial Member Accountant Member
Dated : 15th February, 2017
Jd. Sr. P.S
Copy of the order forwarded to:
1. Appellant - DCIT, Circle-12, Kolkata.
2. Respondent - M/s. Deeplok Builders Pvt. Ltd., Ideal Plaza, 11/1, Sarat Bose Road, South Block, 2nd floor, Kolkata-700 020.
3. CIT(A), Kolkata
4. CIT, Kolkata
5. DR, Kolkata Benches, Kolkata /True Copy, By order, Asstt. Registrar.