GVK JAIPUR EXPRESSWAY P LTD.,JAIPUR vs. ACIT, JAIPUR

PER SHRI KUL BHARAT, JM.

The appeal by the assessee is directed against the order of ld. CIT (Appeals)-

III, Jaipur dated 15.11.2012 pertaining to assessment year 2007-08. The assessee

has raised the following ground of appeal :-

1.1. That the ld. CIT (A) further erred in ignoring the fact that the assessee company, itself has worked out the amounting capital gains included in dividend income and deposited the taxes thereon being mistake inadvertently taken place, thus the penalty so uphold deserves to be deleted.

1.2. That the ld. CIT (A) has further erred in not accepting the explanation of the assessee who acted in bona fide manner and by sufficient reason explain the circumstances leading to mistake, thus the resultant confirmation of penalty u/ 271(1)(c) at Rs. 24,87,400/- deserves to be deleted.

2 ITA No. 140/JP/2013 M/s. GVK Jaipur Expressway P Ltd.

picked up for scrutiny assessment and the assessment under section 143(3) of the

Income Tax Act, 1961 (hereinafter referred to as the Act) was framed vide order dated 30th December, 2009. While framing the assessment, the AO also initiated

penalty proceedings for concealing the particulars of income. During the course of

assessment proceedings, the assessee filed vide letter dated 23th October, 2009

revised computation thereby the assessee submitted that while filing the return of

income for the year under consideration, the assessee company had claimed an

amount of Rs. 1,72,62,082.58 as dividend income and the same has been claimed

exempt. It was submitted that inadvertently the same has been claimed as exempt

which was offered for taxation. The AO thus computed the income of the assessee

as per the revised computation filed by the assessee. The AO also initiated penalty

proceedings in respect of the income declared during the course of assessment

proceedings. Aggrieved by this, the assessee preferred an appeal before the ld. CIT

(A), who however confirmed the penalty.

written submission. He submitted that the assessee company had declared a sum of

Rs. 1,72,62,082.58 as dividend income and claimed the same as exempt income.

Later on, while preparing a reconciliation statement of investment in mutual fund it

came to the notice of the assessee that out of various investment in mutual fund

some were redeemed and reinvested and the difference between the sale proceeds

of the units of the mutual funds and the amount invested was wrongly considered as

dividend income in place of Short Term Capital Gain. Realizing this mistake, the

3 ITA No. 140/JP/2013 M/s. GVK Jaipur Expressway P Ltd.

assessee during the course of assessment proceedings filed revised details of

investment and transactions made in the Mutual Fund during the year and correct

working of income from short term capital gain and dividends which inadvertently

was claimed as exempt income in the return filed and accordingly the same was suo-

moto offered for taxation by the assessee through revised computation and due tax

was deposited on account of short term capital gain. He submitted that it is

noteworthy that the AO had not made any enquiry or investigation. He submitted

that the assessee company acted in a bona fide manner and submitted sufficient

explanation before the AO regarding the circumstances leading to the bona fide

mistake. He submitted that the assessee had not concealed particulars of income.

There is no information suggesting any deliberate or willful concealment of

income/particulars in the return of income filed. The ld. Counsel submitted that the

Hon’ble Apex Court in the case of Sir Shadi Lal Sugar & General Mills Ltd. vs. CIT,

162 ITR 705 (SC) held “ that from the assessee agreeing to addition to his income it

does not follow that the amount agreed to be added was concealed income. The

assessee has only accepted certain amount to be taxed and he has not accepted

that it has deliberately furnished inaccurate particulars or concealed any income

within the meaning of section 271(1)(c) of I.T. Act. The Hon’ble Delhi High Court in

the case of CIT vs. Escorts Finance Ltd. 328 ITR 44 (Del.) held that in the event of

an inadvertent error the assessee making correction and filing revised return and

offering for taxation during the assessment proceedings, no penalty under section

271(1)(c) of the Act is leviable.

3.1. On the contrary, the ld. D/R supported the orders of the authorities below. He

submitted that it is only during the course of assessment proceedings the assessee

4 ITA No. 140/JP/2013 M/s. GVK Jaipur Expressway P Ltd.

has come with a revised computation and offered the income which was not offered

for taxation in the return of income. Under these facts, he submitted that it cannot

be concluded that the conduct of the assessee was bona fide.

3.2. We have heard rival contentions and perused the material available on

record. It is not disputed that the assessee itself has offered for taxation the income

which was claimed to be exempt in the return of income. It is submitted that it was

because of the error which resulted in claiming the exempt income. Reliance is

placed on the judgment of the Hon’ble Supreme Court in the case of Price

Waterhouse Coopers Pvt. Ltd. vs. CIT, 348 ITR 306 (SC) wherein the Hon’ble

Supreme Court has held that the assessee should have been careful cannot be

doubted, but the absence of due care, in a case such as the present, does not mean

that the assessee is guilty of either furnishing inaccurate particulars or attempting to

conceal its income. The Hon’ble Apex Court was of the opinion that on the peculiar

facts, the imposition of penalty on the assessee is not justified. In the present case

also during the course of assessment proceedings, the assessee realized that out of

various investments in mutual fund some were redeemed and reinvested and the

difference between the sale proceeds of the units of the mutual funds and the

amount invested was wrongly considered as dividend income instead of short term

capital gain. The ld. CIT (A) has rejected the appeal of the assessee by relying on

the judgment of the Hon’ble Kerala High Court in the case of CIT vs. Kerala

Transport Co., 134 Taxman 320 (Ker.). On the contrary, ld. Counsel has relied upon

the judgment of the Hon’ble Delhi High Court in the case of CIT vs. Escorts Finance

Ltd. (supra). It was pointed out by the ld. Counsel for the assessee that in other

years also such mistake occurred and the department has accepted the explanation

5 ITA No. 140/JP/2013 M/s. GVK Jaipur Expressway P Ltd.

given by the assessee and has not imposed the penalty. This fact is not controverted

by the revenue. Therefore, under the peculiarity of the facts in the present case,

relying on the judgment of the Hon’ble Supreme Court (supra) and the judgment of

the Hon’ble Delhi High Court (supra), we are of the view that the ld. CIT (A) ought

not to have sustained the penalty. Therefore, we set aside the order of ld. CIT (A)

and direct the AO to delete the penalty. The ground of the assessee is allowed.

Order pronounced in the open court on 30/01/2017.

Sd/- Sd/- ( dqy Hkkjr) ¼foØe flag ;kno½ (VIKRAM SINGH YADAV) ( KUL BHARAT ) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member Jaipur Dated:- 30/01/2017. Das/ आदेश की प्रतिलिपि अग्रेषित@ब्वचल वf जीम वतकमत वितूंतकमक जवरू

सहायक पंजीकार@ Aेेपेजंदज. त्महपेजतंत

6 ITA No. 140/JP/2013 M/s. GVK Jaipur Expressway P Ltd.