VIP CLOTHING LIMITED,THANE vs. DCIT, CIRCLE- 1, KALYAN

The assessee has filed the present appeal against the order dated 24.01.2017 passed by the Commissioner of Income Tax (Appeals)-2 Aurangabad [hereinafter referred to as the “CIT(A)”] relevant to the AY. 2012-13 in which the penalty levied by the AO has been ordered to be confirm.

The assessee has raised the following grounds: -

The brief facts of the case are that the assessee filed its return of income on 28.09.2012 declaring total income to the tune of Rs.5,67,82,628/-. The assessee showed the income from textile business during the year under consideration. Thereafter, assessment was completed u/s 143(3) of the Act on 30.12.2014 assessing total income to the tune of Rs.6,56,70,810/-. The assessee was involved in manufacturing and selling in hosiery, cotton yarn, garment products and related process activities. One of its unit located at Erode known as Gobi Unit which was sold during the year. The sale transaction took place by way of a slump sale. The working of net worth of the unit sold was called for to determine whether the norms of Section 50B was satisfied or not. Accountant certificate was also called for. There was huge difference between the figure adopted in the computation as long term capital gain arising out of the result of the sale of Gobi Unit and the figure showed by CA certificate. The notice was given. The CA certificate shows the LTCG to the tune of Rs.6,74,89,924/- whereas the assessee showed the same to the tune of Rs.5,87,21,364/- thus, there was a difference to the tune of Rs.87,68,560/-. The finding no proper reply of the assessee, the said amount was added to the income of the ITA. No.2889/M/17 A.Y.2012-13 assessee and taxed as LTCG. Thereafter, the penalty proceeding was initiated and after the reply of the assessee, the penalty to the tune of Rs.18,03,830/- was imposed. Feeling aggrieved, the assessee has filed the present appeal before the CIT(A) who confirmed the order of the AO, therefore, the assessee has filed the present appeal before us.

We have heard the arguments advanced by the Ld. Representative of the parties and perused the record. The contention of the assessee is that the assessee has wrongly considered the book value of his sold unit for working of net worth of the unit in the place of written down value as required for the purpose section 50B of the Act, therefore, it is not a case to levy the penalty. It is also contended that after the realizing of the error, the assessee filed the revised computation of income and corrected the difference of capital gain of Rs.87,68,560/- and offered to tax before completion of the assessment. It is also argued that after the acceptance of revised computation of income, it is not a case of concealment of particulars of income nor furnishing the inaccurate particulars of income, therefore, in the said circumstances, no penalty is leviable in view of the law settled in Price Waterhouse Coopers (P) Ltd. Vs. CIT (2012) 348 ITR 306 (SC), CIT Vs. Nalin P. Shah (HUF) (2013) 40 taxmann.com 86 (Bom), CIT Vs. Somany Evergreen Knits in of 2011 & CIT Vs. Bennett Coleman & CO.Ltd. (2013) 259 CTR 383 (Bom). It is also argued that the disallowance of claim if any raised before the AO nowhere attract the penalty. In view of the law settled in Reliance Petroproducts (supra). However, on the other hand, the Ld. Representative of the Department has refuted the said contention and ITA. No.2889/M/17 A.Y.2012-13 strongly relied upon the order passed by the CIT(A) in question. Keeping in view of argument advanced by the Ld. Representative of the parties and perused the record, we noticed that after the sale of the Gobi unit by the assessee, the assessee has shown the book value for the purpose of calculating the LTCG whereas the assessee should claim written down value of the unit for the purpose of assessing the LTCG. Undoubtedly, as per the Section 50B of the Act, the written down value is required for the purpose of assessing the long term capital gain on account of sale of Gobi unit. The assessee has shown the book value of asset and has also shown the written down value required as per the purpose of section 50B of the Act. The claim of the assessee was not allowable. There was a bonafide mistake on the part of the assessee for calculating the LTCG. Moreover, the assessee has filed the revised return of income which has been accepted by the Department. In view of the revised return of income, we nowhere find any concealment of income or furnishing the inaccurate particulars of income. Taking into account, all the facts and circumstances and in view of the law settled in Price Waterhouse Coopers (P) Ltd. Vs. CIT (2012) 348 ITR 306 (SC), CIT Vs. Nalin P. Shah (HUF) (2013) 40 taxmann.com 86 (Bom), CIT Vs. Somany Evergreen Knits in of 2011 & CIT Vs. Bennett Coleman & CO.Ltd. (2013) 259 CTR 383 (Bom). We are of the view that the finding of the CIT(A) is not justifiable, therefore, we set aside the finding of the CIT(A) and delete the penalty.