RAMNIKLAL RATILAL MEHTA,MUMBAI vs. ACIT 13(1), MUMBAI

During the course of hearing, arguments were made by Shri Hiro Rai, , Authorised Representative (AR) on behalf of the Assessee and by Shri B.S. Bist, Departmental Representative (Sr. DR) on behalf of the Revenue.

The solitary issue in this appeal is with regard to examining the validity of levy of penalty of Rs. 7,92,000/- levied by the AO on account of denial by him of set off of brought forward long term capital loss for assessment year 2001-02 amounting to Rs.33,19,672/-. 3.1. During the course of hearing Ld. Counsel of the assessee submitted that the long term capital loss of A.Y. 2001-02 for the aforesaid amount and of assessment year 2002-03 for 3 Ramniklal Ratilal Mehta Rs.1,92,35,939/- were claimed by the assessee in the return of income filed by him. During the course of assessment proceedings, the assessee had submitted copies of previous year’s computation sheet and returns to justify the claim of these losses. But, copy of acknowledgment of return of A.Y. 2001-02 could not be filed to substantiate the claim therefore, though the set off of loss of A.Y. 2002-03 was allowed, but, the claim of loss of assessment year 2001-02 was denied on this ground itself. 3.2. It was further submitted that acknowledgment of return for AY 2001-02 was part of very old records and therefore it could not be traced. But, acknowledgement of return and computation sheet of A.Y. 2002-03 as well as assessment order for A.Y. 2007-08 were made available to AO from where loss brought forward of AY 2001-02 was cross verifiable. It was thus evident that loss of A.Y. 2001-02 was genuine loss. Denial of claim by the AO was not contested in the quantum appeal because of nil tax effect. But, that itself does not prove any concealment or filing of inaccurate particulars of income. All these record were available before the Department. Thus, even if assessee could not submit acknowledgment of return of A.Y. 2001-02, but, computation sheet of 2001-02 as well as returns and assessment order passed by the AO of subsequent years were submitted before the AO from which requisite information was duly verifiable. It was also submitted without prejudice that in any case denial of set off of brought forward loss does not amount to concealment or furnishing of inaccurate particulars of income. Reliance was placed in this 4 Ramniklal Ratilal Mehta regard upon the judgment of Hon’ble Karnataka High Court in the case of CIT v. Makino Asia(P) Ltd. 264 CTR 172 (Kar) and of Hon’ble Delhi High Court in the case of CIT v. Udaipur Hotels Ltd. 35 taxmann.com 207 (Delhi). 3.3. Per contra, Ld. DR relied upon the orders of the lower authorities. 3.4. We have gone through the orders passed by the lower authorities, details and evidences furnished and submissions made by both the sides as well as copies of judgments placed before us. The brief background of the issue is that in the return of income filed by him, the assessee made claim of set off of brought forward long term capital loss for A.Ys. 2001-02 and 2002-03 for the amounts as mentioned above. The AO allowed the loss of A.Y. 2002-03 but denied set off of brought forward loss of A.Y. 2001-02 on the ground that assessee could not submit copy of return for A.Y. 2001-02. The assessee did not contest the matter in quantum proceedings to avoid any litigation. Subsequently, penalty proceedings were initiated during which the assessee reiterated that revised return was filed in A.Y. 2001-02 wherein carry forward of the impugned long term loss was claimed and though the acknowledgment of revised return of A.Y. 2001-02 was not available but other supporting evidences were made available. The AO was not satisfied with submissions of assessee and therefore he levied the penalty. 3.5. Being aggrieved, the assessee contested the matter before the Ld. CIT(A) but he did not find favour with the explanation

In the result, the appeal of the Assessee is allowed.