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Income Tax Appellate Tribunal, “A” BENCH: KOLKATA
Before: Shri M. Balaganesh, AM & Shri K. Narasimha Chary, JM]
1 ITA No.173/Kol/2014 Smt. Romi Lahiri, AY 2006-07 IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH: KOLKATA [Before Shri M. Balaganesh, AM & Shri K. Narasimha Chary, JM]
I.T.A No. 173/Kol/2014 Assessment Year: 2006-07
Smt. Romi Lahiri, (PAN: ABBPL5369B) Vs. Deputy Commissioner of Income-tax, Circle-51, Kolkata. (Appellant) (Respondent)
Date of hearing: 26.07.2016 Date of pronouncement: 03.08.2016
For the Appellant: Shri Goutam Banerjee, AR For the Respondent: Shri Sallong Yaden, Addl. CIT
ORDER Per Shri K. Narasimha Chary, JM:
This appeal by assessee is arising out of order of CIT(A)-XXXII, Kolkata vide appeal No. 58/XXXII/11-12/Cir-51/Kol dated 13.08.2013. Assessment was framed by DCIT, Circle-51, Kolkata u/s. 263/144 of the Income tax Act, 1961 (hereinafter referred to as the “Act”) for AY 2006-07 vide his order dated 30.12.2010. Penalty u/s. 271(1)(c) of the Act was imposed by DCIT, Circle-51, Kolkata vide his order dated 24.06.2011.
At the outset, we find that there is a delay of 73 days in filing the appeal before us by the assessee which is supported with condonation petition. In view of the concession given by the ld DR for condonation of delay, we hereby condone the delay and admit the appeal of the assessee for adjudication.
Brief facts of the case are that, the assessee purchased a plot of land on 5.2.2004 for Rs. 3,72,140/- and sold it away on 7.12.2005 for Rs.9,93,700/-, but claimed both long term capital gains as well as benefit under section 54F of the Act. In spite of orders passed under section 263 of the Act, the assessee failed to comply with the direction, as such another order under section 144 r/w sec 263 was passed on
2 ITA No.173/Kol/2014 Smt. Romi Lahiri, AY 2006-07 30.12.2010 treating the capital gains as Short term Capital gains and withdrawing the benefits under section 54F of the Act. Besides this, penalty proceedings were also initiated and levied in the sum of Rs.63,368/- vide order dated 24.06.2011. Appeal to the Commissioner of Income Tax (Appeals) ended up in dismissal confirming the order passed by the AO. Hence, the assessee has preferred an appeal on the following grounds: “1. For that in the facts and circumstances of the case, the levy of penalty u/s. 271(1)(c) of Rs.63,368/- for AY 2006-07 is wrong, erroneous, arbitrary, excessive and deserves to be deleted/cancelled.”
Assessee did not challenge the order dated 21-04-2010 passed under section 263 of the Act. She has also not challenged the order dated 30.12.2010 passed under section 144 r/w 263 of the Act. Only challenge is to the penalty order imposing penalty of Rs 63,368/-. Argument of learned counsel for the assessee is two-fold. Firstly, under mistaken impression of eligibility to claim benefit under Section 54F of the Act, assessee has treated the proceeds of sale as long term capital gain instead of short term capital gain and when the sum of Rs.6,21,260/- was added, the assessee accepted the same and paid the tax due thereon. According to him, this is at best an erroneous claim. He further submitted that the learned AO in his order stated that inaccurate particulars are furnished by the assessee, whereas the learned CIT(A) stated that the assessee concealed the particulars of her taxable income. However, as a matter of fact, according to learned counsel for the assessee, there is neither concealment nor furnishing the inaccurate particulars of income, since all the documents were submitted before the AO and amount was also shown in the return. He further submitted that in the absence of any concealment or active furnishing of inaccurate particulars, an erroneous belief as to the entitlement for the benefit under section 54F of the Act does not form a base to impose penalty.
He placed reliance on a decision reported in Udayan Mukherjee vs Commissioner Of Income-Tax (2007) 291 ITR 318(Cal), wherein it was held as under:
3 ITA No.173/Kol/2014 Smt. Romi Lahiri, AY 2006-07 “7. If we go by section 271(1)(c), then it appears that the said section will apply in a case where the assessee has concealed his income or has furnished wrong particulars. In this case, it appears that all the particulars were furnished and there is no finding that the particulars that were furnished were wrong in any respect. 8. There is nothing to indicate that there was any concealment. The only wrong information that was detected by the Assessing Officer and affirmed by the learned Tribunal disagreeing with the decision taken by the Commissioner of Income-tax (Appeals) was that the calculation made on the basis of the indexation was wrong and that indexation was not correct. Thus, the question boils down to the proposition that it was a wrong calculation on the basis of a mistaken indexation. Now, the question is whether the wrong calculation on the basis of the mistaken indexation could be treated to be an indirect concealment or a wrong furnishing of particulars.”
Reliance is also placed on a decision reported in Price Waterhouse Coopers Pvt. Ltd vs. CIT [2012] 348 ITR 306 (SC) for the principle that the assessee should have been careful but the absence of due care, in a case such as the present, did not mean that the assessee was guilty of either furnishing inaccurate particulars or attempting to conceal its income. Lastly. the decision reported in CIT v. HIRALAL DOSHI [2016] 383 ITR 19 (Bom) to demonstrate that when there is no concealment of income nor furnishing inaccurate particulars, the authorities reaching a conclusion prima facie that the income could be regarded as long term capital gain deleting penalty is a possible view. Arguing thus, learned counsel for the assessee prayed to delete the penalty.
Learned DR, on the other hand, submitted that it is open from the documents that the income was a short term capital gain but not a long term capital gain, but the assessee with mala fide intention shown it as long term capital gain and claimed benefit under section 54F of the Act, and but for detection by the authorities in scrutiny proceedings, it could have gone unnoticed causing prejudice to the revenue. He argued that showing short term capital gain as long term capital gain itself is an act of furnishing inaccurate particulars. He prayed to dismiss the appeal of assessee.
Basing on the above arguments, the point that arises for our consideration is whether the learned Assessing Officer justified in imposing penalty on the assessee?
4 ITA No.173/Kol/2014 Smt. Romi Lahiri, AY 2006-07 8. As could be seen from the record it is an admitted fact that the assessee while filing the return had furnished the copies of all the documents. However, showing the sale proceeds of the building as Long Term Capital Gain instead of Short Term Capital Gain and also claiming benefit u/s. 54F of the Act and on a scrutiny it is found that the assessee wrongly claimed the benefit u/s. 54F of the Act and also that she had wrongly shown the sale proceeds as Long Term Capital Gain instead of Short Term Capital Gain. But for this thing, there is neither any act of concealment of any material fact nor any wilful furnishing of inaccurate particulars. However, the Ld. DR argues that the very act of showing the Long Term Capital Gain as a Short Term Capital Gain in order to claim benefit u/s. 54F of the Act itself amounts to furnishing of inaccurate particulars. However, he does not explain the discrepancy in the order of the AO holding this act as furnishing of inaccurate particulars whereas the Ld. CIT(A) finding it to be concealment of income. These two findings by the authorities cannot be reconciled and there is lot of force in the arguments of the Ld. Counsel for the assessee that the assessee is at loss as to on what ground she has to defend herself. We also find some force in the arguments of the Ld. Counsel for the assessee that certainly in this case both the elements are not present. The authorities below are not clear as to the allegation to be levelled against the assessee - whether it is concealment of income or furnishing of inaccurate particulars. Certainly the situation causes prejudice to the assessee to conduct her defence diligently.
Now coming to the merits of the case, it is a judicially acknowledged fact that the tax laws of this country are complex and complicated and often require for compliance there-with the assistance of tax practitioners specialising in this field and that the legislation in this field undergoes so frequent changes and amendments that it is not possible for even a person specialising in this field, including the tax administrator, to claim that he knows what exactly the law is on a particular given day or period without making references to the history of the enactments. Further, it is also judicially acknowledged fact that there is no presumption in law that every person knows the law and it is also not a correct statement to make that there is a presumption that every person knows the law of the land. In this situation, it would
5 ITA No.173/Kol/2014 Smt. Romi Lahiri, AY 2006-07 be unfair to hold that the assessee knew or ought to have known the correct law and comply therewith. When once the assessee has not concealed any fact while filing the return and as a matter of fact she filed the copies of the document along with the return, merely because the sale proceeds are shown as a long term capital gain instead of short term capital gain, it cannot readily be stated that there is either concealment of income or furnishing of inaccurate particulars. It is also possible that such an erroneous claim could have been made under an erroneous or improper understanding of law. When we look at the things from the angle of the assessee furnishing copies and documents and, showing the sale proceeds in the returns coupled with the facts that she does not challenge the addition of quantum to the tune of Rs.6,21,260/-, there appears some force in the contention of the ld. Counsel for the assessee that the proceedings do not warrant imposition of penalty and it is only a venial breach of law. Besides this, the authorities holding the breach on the part of the assessee as furnishing of inaccurate particulars by AO and concealment of income by CIT(A) strengthens our conclusion that this is not a matter which shall end up in imposition of penalty and as it is held by the Hon’ble Bombay High Court in the case of Hiralal Doshiis case (supra), deleting the penalty is a possible view and the facts and circumstances of the case inspires us to take such a view in the interest of justice. We accordingly do so. The point is answered in the negative holding that the learned Assessing Officer is not justified in imposing penalty on the assessee and the appeal of the assessee is liable to be allowed while quashing the impugned order.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 03.08.2016
Sd/- Sd/- (M. Balaganesh) (K. Narasimha Chary) Accountant Member Judicial Member Dated :3rd August, 2016
Jd.(Sr.P.S.)
6 ITA No.173/Kol/2014 Smt. Romi Lahiri, AY 2006-07 Copy of the order forwarded to:
APPELLANT – Smt. Romi Lahiri, AJ-9, Salt Lake City, Kolkata-91 1. Respondent –DCIT, circle-51, Kolkata. 2 The CIT(A), Kolkata 3. 4. CIT , Kolkata 5. DR, Kolkata Benches, Kolkata /True Copy, By order,
Asstt. Registrar.