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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
This appeal by the Revenue is arising out of the order of Commissioner of Income Tax (Appeals)-49, Mumbai, [in short CIT(A)] in appeal No. CIT(A)-49/IT-784/2013-14 dated 20-03-2016. The Assessment was framed by the Deputy Commissioner of Income Tax, CC-40, Mumbai (in short DCIT) for the assessment year 2006-07 vide order dated 30-03- 2013 under section 143(3) of the Income Tax Act, 1961(hereinafter ‘the Act’). The penalty was levied by DCIT under section 271(1)(c) of the Act vide order dated 30.09.2013.
2. The only issue in this appeal of assessee is against the order of CIT(A) confirming the levy of penalty under section 271(1)(c) of the Act on the issue of claim of set off of brought forward loss against brought forward capital loss of AY 2002-03. For this assessee has raised following two grounds: -
“1. The honorable CIT (A)-49 erred in confirming the action of the Ld. DCIT - Central Circle 40, in upholding that the claim of set off of brought forward loss aggregating to Rs. 19,43,560/- against brought forward capital loss of A. Y. 2002-2003 that was based on completed assessment u/s 143 (3) of the Income Tax Act, 1961 and the inadvertent error that had occurred which was rectified suo moto during the course of assessment by filing Revised Computation of Income and having paid taxes due along with interest; as deliberately making false claim and thereby confirming levy of penalty u/s 271 (1) (c) of the Income Tax Act, 1961, in the absence of incriminating material found during the course of search, pertaining to Assessment year 2006-07 and therefore the penalty levied be deleted.
The honorable CIT (A)-49 erred in confirming the action of the Ld. DOT - Central Circle 40, in treating the appellant's reliance on assessment completed u/s 143 (3) of the Income Tax Act, 1961 in respect of brought forward losses aggregating to Rs. 19,43,560/- which was withdrawn by filing Revised Computation of Income and by paying taxes due along with interest; due to inadvertent error by treating it as wrong claim and by treating the explanation appellant for inadvertent error as not bona fide, in the absence of indiscriminating material found during the search, pertaining to assessment year 2006-07 and therefore penalty u/s 271(1)(c) levied on Rs.19,43,560 be deleted.”
Brief facts are that the assessee is an individual having income from house property, short term capital gain and long term capital gain from shares, units and portfolio management services and also income from other sources. A search and seizure was conducted by the department under section 132 of the Act on the office and residential premises of Bliss GVS Pharmaceuticals Group, the assessee being one of the associate members who was also covered. Subsequently, the AO during the course of assessment proceedings under section 153A read with section 143(3) of the Act, for verification of details notice that for AY 2003-04, there was positive income under the head of capital gain after adjusting long term capital loss against short term capital gain earned during the year. As long term capital gain incurred by assessee was already adjusted against short term capital gain earned for AY 2003-04, there was no carried forward capital loss. According to AO, the assessee has set off of entire long term capital gain of ₹ 19,43,560/- against the brought forward of long term capital loss for AY 2002-03. When this was pointed out by the AO, the assessee itself revised its return of income for setting off of long term capital gain of ₹ 2,71,381/- against carried forward loss of assessment year 2003-04 and therefore charge the entire amount of long term capital gain of ₹ 19,43,560/- under long term capital gain tax and added to the total income of the assessee. The AO initiated the penalty proceedings on this item and levied the penalty for furnishing of inaccurate particulars of income under section 271(1)(c) of the Act. The CIT(A) also confirming confirmed the action of the Assessing Officer. Aggrieved now, assessee is in second appeal before Tribunal.
At the outset, the learned Counsel for the assessee file copy of Tribunal order in Assessee’s own case in for AY 2005-06 vide order dated 15-12-2017, wherein the Tribunal exactly on same issue deleted the penalty vide Para 3 as under: -
“3. All the issues are in connection with the confirmation of penalty by the CIT(A) levied by the AO. We have heard the arguments advanced by the Ld. Representative of the parties and perused the record. In brief, the Assessing Officer levied the penalty on account of three additions in which the assessee has set-off capital gain of Rs.30,34,904/- which includes short term capital gain of Rs.28,66,992/- earned till 30.09.2004 and long term capital gain of Rs.1,68,216/- taxable @ of 30% against the brought forward long term capital loss for A.Y. 2003-04. Since the earlier return was not filed well in time, therefore, the long/short term capital gain was not set-off and the addition was raised to the tune of Rs.30,34,908/-. It is to be seen whether the said addition raised penalty proceeding u/s 271(1)(c) of the Act or not. The assessee claimed the set-off on brought forward loss of Rs.30,34,908/- against STCG of Rs.28,66,992/- and LTCG of Rs.1,68,216/-. The loss pertains to the year of 2002-03. The loss was further carried out to the A.Y. 2003-04. The said set-off was disallowed on the basis of this facts that the return was not filed well in time however, subsequently revised return was filed in which the said facts have been disclosed. It is argued that raising the claim of set- off before filing the return on due date and after filing the return after the due date is the debatable issue, therefore, no penalty is leviable in view of the law settled in Peerless General Finance & Investment Co. Ltd Vs. Jt. CIT(003) 85 ITD 215 (Kol)(Trib) dated 07.03.2003, ITO Vs. M/s. Uma Developers IT. No. 7718/M/2014 for the A.Y. 2012-13 dated
10.08.2016 Mumbai Tribunal and CIT Vs. Alok Enterprises (2004) 266 ITR 399 (SC). On the other hand the Ld. Representative of department has refuted the said contentions. After giving carefully thought advance Ld. Representative of the parties and perused the record carefully, we noticed that there is difference of opinion in connection with raising the claim of set-off by filing the return earlier to the due date in view of the provision u/s 139(1) and after the due date in view of provision u/s 139(4) of the Act in the case of Peerless General Finance & Investment Co. Ltd Vs. Jt. CIT(003) 85 ITD 215 (Kol)(Trib) dated 07.03.2003, there was a difference of opinion in the judicial and accountant member. In view of accountant member was in favour of revenue whereas the view of judicial member was in favour of assessee. The matter was referred to third member who supported the view of accountant member. Thereafter, the matter controversy came before the Supreme Court in the case of CIT Vs. Alok Enterprises (2004) 266 ITR 399 (SC) in which the Hon’ble Supreme Court remanded the issue before the Hon’ble High Court. In the said circumstances, when the return of loss filed beyond prescribed time so in such a situation whether the assessee was entitled to carry forward of losses for set-off or not is a debatable question. We find support of law settled by Hon’ble jurisdictional High court vide order dated 08/07/2014 in the case of CIT vs M/s Nayan Builders & Developers (ITA No.415/2012) wherein it was held that no penalty is imposable u/s 271(1)(c) of the Act . No doubt, in the said circumstances the penalty is not leviable on account of disallowance of brought forward loss of Rs.30,34,908/- .”
When this Tribunal order for AY 2005-06 was confronted to the learned Sr. Departmental Representative, he fairly stated that the issue is exactly identical and there is no difference in facts. As the issue is squarely covered, respectfully following the Tribunal order in earlier year i.e. AY 2005-06 in the given facts, we delete the penalty for this year also. Accordingly, the appeal of the assessee is allowed.
In the result, the appeal assessee is allowed.
Order pronounced in the open court on 24-01-2018.