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Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD
Before: MS. SUCHITRA KAMBLE & SHRI MAKARAND V. MAHADEOKAR
आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, अहमदाबाद "यायपीठ आयकर अपीलीय अिधकरण अहमदाबाद "यायपीठ अहमदाबाद "यायपीठ “ए“, अहमदाबाद अहमदाबाद "यायपीठ अहमदाबाद अहमदाबाद । अहमदाबाद IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD सु"ी सु"च"ा का"बले, "या"यक सद"य एवं "ी मकरंद वसंत महादेवकर, लेखा सद"य के सम"। ] ] BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI MAKARAND V. MAHADEOKAR, ACCOUNTANT MEMBER आयकर अपील सं / "नधा"रण वष" /Assessment Year : 2013-14 Smt. Maya K. Dharwani The Income Tax Officer Block No.88, B Ward बनाम/ Ward-7(2)(3) Opp. Railway Station Ahmedabad v/s. Kuber Nagar Ahmedabad - 382 340 "थायी लेखा सं./PAN: AEFPD 1506 D अपीलाथ"/ (Appellant) ….. "" यथ"/ (Respondent) Assessee by : Shri S.N. Divatia, AR Revenue by : Shri V.K. Mangla, Sr.DR सुनवाई क" तार"ख/Date of Hearing : 12/08/2024 घोषणा क" तार"ख /Date of Pronouncement: 23/08/2024 आदेश/O R D E R PER MAKARAND V. MAHADEOKAR, AM:
Earlier, this appeal was decided vide Tribunal (ITAT “A” Bench Ahmedabad) order dated 31/10/2022. The assessee filed a miscellaneous application No.2/Ahd/2023, thereby the Tribunal vide order dated 27/06/2024 recalled the Tribunal order dated 31/10/2022 and this appeal was fixed before us. Smt. Maya K.Dharwani vs. ITO Asst. Year : 2013-14 2 2. This appeal is filed by the Assessee as against the order dated 25/07/2018 passed by the Commissioner of Income Tax (Appeals)-7, Ahmedabad [hereinafter referred to as “the Ld.CIT(A)” in short] arising out of the penalty order dated 17/08/2017 passed by the ITO, Ward-7(2)(3), Ahmedabad (AO) under section 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as "the Act") relevant to the Assessment Year (AY) 2013-14. Facts of the case:
The assessee is an individual having interest on loans and income from house property as main source of income. The assessee filed her return of income for the A.Y. 2013-14 on 14-03-2014 declaring total income of Rs.8,63,230/-. The case was selected for the scrutiny and the assessment was completed u/s.143(3) of the Act, after disallowing deduction u/s.54EC of the Act of Rs. 41,00,000/- and deduction u/s.54F of the Act of Rs.20,00,000/-. The AO also initiated penalty proceedings u/s.271(1)(c) of the Act for furnishing inaccurate particulars.
The assessee filed an appeal with the Ld.CIT(A) and the Tribunal relating to disallowing the deductions. The Tribunal vide its order dated 11-10-2018 in (for AY 2013-14) restricted the deduction of Rs.54F of the Act to Rs.30,00,000/- 4.1. During the penalty proceedings, the AO concluded that the assessee had made an attempt to show less long-term capital gains by making claim u/s.54EC of the Act without making any investment and this attempt was Smt. Maya K.Dharwani vs. ITO Asst. Year : 2013-14 only to avoid tax liability. The AO also concluded that the assessee had invested only Rs.2,00,000/- in Capital Gain Account Saving Scheme with SBI but had claimed deduction of Rs.20,00,000/- u/s. 54F of the Act in her original return of income. The AO further noted that there was no claim of Rs.45,00,000/- u/s.54F of the Act in respect of property purchased in the original return of income with the said claim was an afterthought. The AO calculated the amount of concealed amount of Long Term Capital Gain (LTCG) by furnishing inaccurate particulars as Rs.62,00,000/- and imposed a penalty of Rs.12,77,200/- to the extent of 100% of tax sought to be evaded.
4.2. The assessee filed an appeal before the Ld.CIT(A) against the penalty order of the AO and the Ld.CIT(A) confirmed the penalty by dismissing the appeal of the assessee. The assessee filed an appeal before tribunal which confirmed the penalty vide order dated 31-10-2022 ( AY 2013-14) concluding that the assessee has consciously and continuously mis-represented the facts and furnished inaccurate particulars of her income. The assessee filed Miscellaneous Application (MA) in the said ITA No.2094/Ahd/2018. The Tribunal as per order dated 27-06-2024 passed in MA No.2/Ahd/2023 decided to recall the Tribunal’s order dated 31/10/2022. 4.3. Now, therefore, the assessee is in appeal before us in the recalled matter with the following grounds:
1.1. The order passed u/s.250 on 25.07.2018 for A.Y.2013-14 by CIT(A)-7, Abad upholding the penalty of Rs.12,77,200/- imposed u/s.271(1)(c) in respect of disallowance of exemption u/s. 54F and 54EC made by AO is wholly illegal, unlawful and against the principles of natural justice. Smt. Maya K.Dharwani vs. ITO Asst. Year : 2013-14 4 1.2. The Ld. CIT(A) has grievously erred in law and or on facts in not considering fully and properly the submissions made and evidence produced by the appellant with regard to the impugned additions. 2.1. The Ld.CIT(A) has grievously erred in law and on facts in confirming the penalty of Rs.12,77,200/- imposed u/s.271(1)c) in respect of disallowance of exemption u/s. 54F and 54EC made by AO. 2.2. That in the facts and circumstances of the case as well as in law, the Ld. CIT(A) ought not to have upheld the penalty of Rs.12,77,200/-imposed u/s.271(1)(c) in respect of disallowance of exemption u/s. 54F and 54EC made by AO. It is, therefore, prayed that the penalty of Rs.12,77,200/- imposed u/s.271(1)c) upheld by the CIT(A) may kindly be deleted.
5. Before us, the Ld.Authorised Representative (AR) of the assessee explained the matter and stated that in the quantum appeal before the Co-ordinate Bench the deduction u/s.54F of the Act is restricted to Rs.30,00,000/- and therefore the penalty should not levied considering the facts and circumstances. He further argued that at least the relief should be granted in penalty.
The Ld.Departmental Representative (DR), on the other hand, relied on the order of the Ld.CIT(A) and stated that while confirming the penalty, the Ld.CIT(A) has concluded that assessee has made patently wrong claims of deduction under sections 54F and 54EC of the Act.
We have heard the parties and perused the material available on record. We have noted the contents of decision of Co-ordinate Bench in quantum appeal as per dated 11-10-2018, where the deduction u/s.54F of the Act was restricted to Rs.30,00,000/-. We also noted that the deduction u/s 54EC of the Act was not a ground for appeal in the said appeal before the Co-ordinate Bench. We further noted the Smt. Maya K.Dharwani vs. ITO Asst. Year : 2013-14 contents of MA order which recalled the present appeal. The relevant part is reproduced for the sake of clarity:
“14. It is clearly evident from the above that during the course of hearing, which took place before the ITAT on various occasions, the assessee in the first instance itself had placed copy of the order of the ITAT in quantum proceedings demonstrating the fact that of having been granted relief to the extent of Rs.30 lakhs, which was even taken note of by the Bench, when the appeal was first heard on 21.2.2020. Therefore, it cannot be denied that order of the ITAT in the quantum proceedings was very much part of the records and non-consideration of the same, while dealing with the appeal of the assessee, in penalty proceedings, does tantamount to a mistake apparent from record. Even if the assessee did not refer to the same when the appeal was finally heard the fact remains that the order was very much part of the record before us and non-consideration of the same tantamounted to error in the order of the ITAT.
Even otherwise, we may state that even if the assessee had failed to place on record the order passed by the ITAT in the quantum proceedings granting relief to the assessee to the extent of Rs.30 lakhs, the said order being a public document, non-consideration of the effect of the same in penalty proceedings would still tantamount to mistake apparent from the record. The fact remains that in the quantum proceedings, the assessee has been granted relief to the tune of Rs.30 lacs allowing exemption u/s. 54F of the Act to the said extent against capital gains returned and confirming penalty on this addition which stands deleted by the ITAT, is clearly impermissible in law. There cannot be any case for penalizing the assessee for an offence which has been found to have not been committed at all, and therefore, the confirmation of penalty on this aspect i.e. on the addition which stood deleted by the ITAT, was in any case a mistake which was eligible for rectification under section 254(2) of the Act. It is a clear and apparent mistake, and the MA filed by the assessee needs to be allowed, which we hold so.
We, therefore, of the view that present MA needs to be allowed. Accordingly, we allow the MA filed by the assessee. The order passed in 31/10/22 is recalled and the Registry is directed to list the above appeal of the assessee in the ordinary course of hearing.”
7.1. So far as the claim under Section 54EC of the Act to the tune of Rs.41,00,000/- is concerned, it is observed that the assessee herself admitted that the claim is incorrect and by filing revised statement of income on 19- Smt. Maya K.Dharwani vs. ITO Asst. Year : 2013-14 6 10-2015 withdrew the claim u/s 54EC of the Act, which clearly is an act of furnishing inaccurate particulars. Therefore, in our considered opinion, the Revenue rightly imposed the penalty for intentionally furnishing inaccurate particulars of income within the meaning of section 271(1)(c) of the Act relating to quantum of incorrect deduction under section 54EC of the Act.
7.2. So far as the quantum of penalty relating to deduction of 54F of the Act is concerned, we are of the opinion that, during the course of assessment proceedings, the assessee repeatedly misrepresented the facts. Therefore, the AO disallowed the deduction, which was confirmed by the Ld.CIT(A), and the Tribunal granted relief to the extent of Rs.30,00,000/-. There is no doubt that the assessee had claimed wrong deduction u/s.54F of the Act and, therefore, the AO levied the penalty which was confirmed by the Tribunal. However, it is observed that the assessee's claim under section 54F of the Act, though partially disallowed, was not found to be entirely devoid of merit, as evidenced by the partial allowance in the quantum proceedings, therefore the penalty levied on the allowed portion should be reconsidered.
7.3. The assessee admitted to an incorrect claim and withdrew the claim under section 54EC of the Act. Therefore, we upheld the penalty related to the incorrect deduction under section 54EC of the Act as the act of furnishing inaccurate particulars of income.
7.4. Considering the facts and circumstances, we direct the AO to re-compute the quantum of penalty. Relief of Rs.30,00,000/- should be Smt. Maya K.Dharwani vs. ITO Asst. Year : 2013-14 granted in the penalty computation, reducing the penalty amount accordingly.