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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI B.R. BASKARAN, AM & SHRI SANDEEP GOSAIN, JM
आदेश / O R D E R Per Sandeep Gosain, J. M.: The Present Appeal has been filed by the assessee against the order of Commissioner of Income Tax (Appeals)- I, dated 13/05/2011 for A.Y. 2004-05 whereby CIT(A) has partly allowed the appeal filed by the assessee against the order of AO dated 29.11.2005 on the grounds of appeal mentioned herein below.
(A.Y. 2004-05) M/s. Ravi M. Arabatti Vs. ITO 1. “The Commissioner of Income Tax (Appeals) has erred in confirming the order of penalty of Rs.89,057/- levied u/s 271(1)(c) of the Income-tax Act,
1961 by the Assessing Officer. 2. The Commissioner of Income Tax (Appeals) has erred in taking into account the facts of the case which are not relevant to the matter of levy of penalty u/s 271(1)(c) of the Income-tax Act, 1961. 3. The appellants crave leave to add, to or alter or amend the grounds in appeal at the time of the hearing of the appeal or at any time prior thereto.”
It is noticed that there was delay of 103 days in filing the appeal before the Tribunal. An application dated 9.1.2012 for condonation of delay was filed supported with an affidavit. We have duly considered the submissions contained in the application for seeking condonation of delay of 103 days in filing the appeal and after examining the same, we are of the considered opinion that the explanation mentioned in the application discloses ‘sufficient cause’ for not filing the appeal with in time and therefore considering the aforementioned facts which are supported by the affidavit, we condone the delay. Even otherwise Hon’ble Supreme Court in the case of Collector, Land Acquisition Vs. Mst. Katji (167 ITR 471) had already laid down the principle for condonation of delay, wherein it has been specifically mentioned when substantial justice and technical consideration
(A.Y. 2004-05) M/s. Ravi M. Arabatti Vs. ITO are pitted, against each other then cause of substantial justice deserves to be preferred, for the other side cannot claim to have a vested right in injustice being done because of non-deliberate delay. By respectfully following the Judgemnet of Hon’ble Supreme Court and considering the interest of justice, we condone the delay and admit the appeal for deciding on merits.
Now, coming to the merits of the case, the brief facts of the case are that the appellant had not got his accounts audited u/s 44AB of the IT Act, even though, the turnover had exceeded the threshold limit of Rs.40lacs. further finding of the AO was that, the appellant was into the business of trading in shares and the turnover during the year relevant to the AY was of the order of Rs.1,08,19,605/-. The explanation advanced to the AO for not having got the books audited is that, he was under the impression that, the books of speculation loss was not required to be audited and hence no auditing was done. The AO rejected the contention and proceeded to levy the penalty. On appeal, the CIT(A), Thane dismissed the appeal holding that, the appeal was filed belatedly, the assessee then carried the matter to the Hon’ble ITAT, vide order dated 09/04/08 (4613/M/07)have set aside the appeal to the file of the CIT(A). And ultimately CIT(A) after hearing both the parties had dismissed the appeal vide order dated 13/05/2011.
(A.Y. 2004-05) M/s. Ravi M. Arabatti Vs. ITO 3.1 Aggrieved by the order of the CIT(A) the assessee filed the present appeal before us on the grounds mentioned herein above.
Ground No. 1& 2 Since both the ground are inter related and interconnected therefore we thought it fit to dispose off the same to the present common order.
4.1 The ld. AR representing the assessee has drawn our attention to the writeen submission made by him before the CIT(A) and further stated that the AO who initiated similar proceeding in respect of A.Y. 2003-04, had accepted the explanation of the assessee and dropped the penalty proceeding but the AO who passed the order in respect of the year under consideration is a different officer, who had not accepted the same explanation and this is due to change of opinion that the present order of penalty has been passed. Although the facts of both the years were identical, therefore the AO should have dropped the penalty in this respect the assessee relied upon the cased titled “Wadiwala & Co Vs. CIT” (2002)
120 taxman 125 (Mangalore) and “ITO vs. Bindra Ban Bouri” 191 (2001) 78 ITD 228 (Asr.). In addition the appellant also placed reliance on the decision of the Hon’ble ITAT, Kolkata’s decision rendered in the case in 44 ITD 669 (1993). It was also submitted by the ld. AR that the AO as well as the CIT(A) ought to have (A.Y. 2004-05) M/s. Ravi M. Arabatti Vs. ITO exercised discretion judiciously in view of the decision of Supreme Court rendered in the case of M/s Hindustan Steel Ltd. 4.2 Ld. AR submitted that he has already disclosed income from salary and other sources and income from shares business. The AO treated income from share business as speculation on the basis of material furnished by the assessee himself.
The AO has not gathered any material from outside sources. As such therefore, it cannot be said that assessee had concealed particulars of income or furnished inaccurate particulars thereof. In addition our attention was also drawn in para 7.1 of penalty order passed by AO wherein it has been categorically mentioned that the assesse has wrongly set off speculation loss of Rs.2,81,872/- against salary income and has, thus, furnished inaccurate particulars of his income. In this respect it was submitted that the AO himself has admitted that there was a mistake in claiming speculation loss against other income which was not deliberate and as such the assessee cannot be penalized for genuine mistake.
On the other hand, ld. DR representing the revenue relied upon the orders passed by the revenue authorities and requested for dismissing the appeal.
(A.Y. 2004-05) M/s. Ravi M. Arabatti Vs. ITO 6. We have heard the counsels for both the parties and we have also perused the material on record as well as the orders passed by the revenue authorities. It is undisputed fact that similar proceeding for initiating penalty in respect of assessment year 2003-04 were also initiated and the explanation submitted by the appellant for the year under consideration was also similar for assessment year 2003-04 but the AO had accepted the explanation of the assessee for assessment year 2003-04 and drop the penalty proceeding. In this respect, we have also perused the orders passed by the AO wherein it has been categorically mentioned by the AO that the penalty proceedings for assessment year 2003-04 has been dropped. We have also noticed that the assessee had disclosed entire income from salary, income from other sources and income from business however, the AO treated income from share business as speculation on the basis of material furnished by the assessee himself. The A.O. has not gathered any material from outside sources. As such it cannot be held that assessee has concealed particulars of income or furnished inaccurate particulars. In the case of “Sir Shadilal Sugar Mills” it has been held by Hon’ble apex court that there can be hundred one reasons for offering income for taxation but it will not automatically lead to levy of penalty and subsequently in another landmark judgement of M/s Hindustan Steel Ltd. the Hon’ble Supreme Court has also held on the same points. Beside all the above facts we are of the firm view that in a case where there are two
(A.Y. 2004-05) M/s. Ravi M. Arabatti Vs. ITO interpretations which are possible than the interpretation which is favourable to the assessee will prevail. Therefore from the totality of the facts we are of the considered view that the assessee has not ‘concealed’ any income or ‘furnished inaccurate particulars’. Moreover, we have also noticed that there is no material to prove ‘deliberate concealment’ on the part of the assessee which is a pre-requisite for initiating proceedings against the appellant. We rely upon the judgement rendered by the Hon’ble Orissa High Court in the case of CIT vs. Ex-Chief Minister Biju Patnaik (112 ITR 555), Bakshi Mohd Yusuf & bakshi Mohd Shafi vs. CIT 93 ITR (J& K) and Addl CIT vs. Sadiq Ali and Bros 92 ITR 276 (J&K).
Therefore considering the principles of equity, natural justice, it will be fair and reasonable in the circumstances of the present case to drop the penalty levied u/s 271(1)(c) of I.T. Act, 1961. This ground of appeal is allowed.
8. Ground no. 3 is general in nature and needs no separate adjudication in view of the decision on above grounds.
In the result, the assessee’s appeal is allowed.
(A.Y. 2004-05) M/s. Ravi M. Arabatti Vs. ITO Order pronounced in the open court on 4th March, 2016
Sd/- Sd/- (B.R. Baskaran) (Sandeep Gosain) लेखा सद�य / Accountant Member �या�यक सद�य / Judicial Member मुंबई Mumbai; �दनांक Dated :04.03.2016 Ps. Ashwini आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent 3. आयकर आयु�त(अपील) / The CIT(A) 4. आयकर आयु�त / CIT - concerned 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, मुंबई / DR, ITAT, Mumbai 6. गाड� फाईल / Guard File