DHUNJI FRAMROZE TITINA,MUMBAI vs. ITO 5 (1)(1), MUMBAI

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ITA 2879/MUM/2018Status: DisposedITAT Mumbai26 October 2020AY 2009-104 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that merely making a claim not sustainable in law does not amount to furnishing inaccurate particulars. Since the assessee had withdrawn the claim of carry forward of STCL, no case for levying penalty under section 271(1)(c) was made out.

What were the facts?

The assessee claimed carry forward of Short Term Capital Loss (STCL) in the original return, which was accepted. Subsequently, the assessment was re-opened, and a penalty under section 271(1)(c) was levied for this claim, even though the claim was withdrawn in subsequent assessment years. The assessee argued it was an inadvertent bonafide mistake with no impact on tax payable.

What were the issues?

Whether penalty under section 271(1)(c) is leviable for an inadvertently claimed carry forward of loss which was subsequently withdrawn, without impacting the tax payable.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 143(3),Section 147,Section 148

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

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Income Tax Appellate Tribunal, MUMBAI BENCH “D”, MUMBAI

Before: SHRI VIKAS AWASTHY & SHRI RAJESH KUMARShri Dhunji Framroze Titina

For Respondent: Shri Vijay Jaiswal (DR)
Hearing: 20/10/2020Pronounced: 26/10/2020

आदेश/ ORDER

PER VIKAS AWASTHY, JM:

This appeal by the assessee is directed against the order of Commissioner of Income-Tax (Appeals)-10, Mumbai [in short ‘the CIT(A)’] dated 21.12.2017 for the Assessment Year 2009-10, confirming levy of penalty under section 271(1)(c) of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’].

2. Shri Girish Dave appearing on behalf of the assessee submitted, that in regular assessment proceedings under section 143(3), the income returned by assessee was accepted without any addition vide order dated 14.11.2011. The assessee in return of income had claimed Short Term Capital Loss (STCL) which was accepted by the Assessing Officer. Subsequently, the assessment was re- opened under section 147 r.w.sec. 148 to disallow assessee’s claim of carry forward of STCL to following Assessment Years. Penalty under section 271(1)(c) of the Act was initiated for claiming carry forward of STCL. The ld. AR pointed that even in the re-assessment proceedings, the returned income was accepted without making any addition/disallowance vide order dated 03.09.2014. The Assessing Officer vide order dated 12.03.2015 levied penalty under section 271(1)(c) in respect of assessee’s claim of carry forward of loss in the original return of income. The ld. AR pointed that though in the return of income the assessee has claimed carry forward of loss, however, in the subsequent Assessment Years the claim was withdrawn. This fact was pointed to the assessee in re-assessment proceedings and even in the penalty proceedings. The ld. AR submitted that the assessee is a NRI. In reply to show-cause notice, the assessee has submitted that inadvertently claim of carry forward of losses was not corrected in the return. In any case there was no affect on the income declared as the taxes were paid on the declared income. Even in subsequent 2

ITA 2879 Mum 2018-Shri Dhunji Framroze Titina Assessment Year the assessee had made no claim of carry forward of losses. The mistake of claiming carry forward of loss in the return for the impugned Assessment Year was an inadvertent bonafide mistake and hence, no penalty should have been levied for making such claim. The ld. AR in support of his submissions placed reliance on the following decisions:

1.

Price Waterhouse Coopers (P.) Ltd. Vs. CIT [348 ITR 306 (SC)]

2.

CIT vs. Reliance Petro Products Pvt. Ltd. [322 ITR 158(SC)]

3.

CIT vs. Makino Asia Pvt. Ltd. (40 taxmann.com 169 (Kar.)

The ld. AR submitted that the assessee filed appeal against the order levying penalty, however, the CIT(A) without appreciating the facts and the law laid down by Hon’ble Apex Court dismissed the appeal of assessee.

3. On the other hand, Shri Vijay Jaiswal representing the department vehemently defended the impugned order and prayed for dismissing the appeal of assessee.

4.

We have heard the submission made by rival sides and examined the orders of the authorities below. We have also considered the decisions on which the ld. AR has placed reliance. The penalty under section 271(1)(c) has been levied in respect of assessee’s claim of carry forward of STCL. The contention of the assessee is that the claim has been inadvertently made. In any case, there was no affect on computation of tax as in the subsequent AY the claim was withdrawn. In the case of CIT vs. Reliance Petro Products Pvt. Ltd. (supra), the Hon’ble Apex Court held that mere making of a claim which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars and hence, no penalty can be levied.

ITA 2879 Mum 2018-Shri Dhunji Framroze Titina

5.

We find merit in the submissions of ld. AR. Since, the assessee had already withdrawn the claim of carry forward of STCL in re-assessment proceedings, no case for levy of penalty under section 271(1)(c) is made out. The impugned order is set-aside and appeal of the assessee is allowed.

11.

In the result, appeal of the assessee is allowed.

Order pronounced in open Court on Monday the 26th day of October, 2020.

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