Ramesh Nanji Thakkar, Mumbai vs Department Of Income Tax

आयकर अपील य अ धकरण, 'जे' खंडपीठ मुंबई INCOME TAX APPELLATE TRIBUNAL,MUMBAI - J -BENCH सव ी डी. म मोहन, उपा य एवं राजे , लेखा सद य Before S/Sh. D. Manmohan,Vice President & Rajendra,Accountant Member आयकर अपील सं/.ITA No.1698/Mum/2011, नधारण वष/Assessment Year-2005-06 DCIT-1(1) Shri Ramesh Nanji Thakkar Room No.579 Vs Dhiraj Chambers, 9, Hazarimal Aayakar Bhavan Somani Marg,Mumbai-400 001.

Mumbai-400 020. PAN:AACPT 3666 R (अपीलाथ /Assessee) ( यथ / Respondent) नधा रती ओर से/Assessee by :Shri Haresh Purushottamdas Shah - (AR) राज व क ओर से/ Revenue by :Shri S.D. Srivastava सुनवाई क तार ख/ Date of Hearing :27- 04 -2015 घोषणा क तार ख / Date of Pronouncement :27-04-2015 आयकर अ ध नयम,1961 क धारा 254(1)के अ तगत आदे श Order u/s.254(1)of the Income-tax Act,1961(Act) लेखा सद य राजे के अनुसार PER RAJENDRA, AM:

Challenging the order dt.29/10/2010 of the CIT(A)-1 Mumbai, Assessing Officer(AO)has raised following Grounds of Appeal:

"Whether on the facts and circumstances of the case and in law, the CiT(A) erred in deleting penalty u/s. 271(1)(c) of Rs. 4,66,113/-.

The CIT(A) further erred in overlooking the fact that the assessee is advised by a reputed Tax Advisor/CA and if the case was not taken up for scrutiny, the revenue loss would have gone unchecked.

The appellant craves leave to add to, amend or withdraw the aforesaid ground of appeal."

2.Assessee,an individual filed his return of income 31.10.2005,declaring total income at Rs. 87.02 lacs.The AO completed the assessement u/s.143(3) of the Act,on 31.12.2007.During the assessment proceedings,the AO made certain additions to the income of the assessee. He also initiated penalty proceedings with regard to two additions i.e. addition of Rs.20.57 lacs on account of long term capital gain and addition of Rs.14,770 on account of excess income from house property.With regard to the first addition it is found that during the assessment proceedings,the AO had directed the assessee to file documentary evidence in respect of the property sold by the assessee jointly with his brothers. In the assessment proceedings itself, the assessee filed detailed submission and accepted that inadvertently he assumed that the property in question was purchased in the year 1980 i.e., prior to 1 st April 1981. It was admitted that actually the property was purchased in Aug.1981. Therefore, the market value as on 01.04.1981 was substituted while working out the Long Term Capital Gains(LTCG). Before the AO,the assessee contended that the process of acquiring the property had started long back and the letter of allotment was issued only in Aug. 1981. The assessee agreed before the AO to revise the calculation of LTCG. Accordingly, LTCG was computed at Rs.1.03 crores as against Rs.83.23 lacs,as shown originally by him.In addition to it the AO found that there was difference of rental income of Rs.21,000/-.He found that as per the TDS certificate,issued by Crest Communication Ltd./Crest Animation Studios Ltd.the assessee had received Rs.6.64 lacs.However,in his return of income the assessee offered the sum of Rs.6,60,000/- only for taxation. He also found that as per TDS certificate issued by Konark Builders and Development Pvt. Ltd.,the assessee had received rental income of Rs.1.36 lacs,but in his return he had offered a sum of Rs1.07 lacs only.Considering the above facts, the AO,vide his order,dt. 30.6.2008,levied a penalty of Rs.4,66,113/-.

2 ITA No.1698/M/2011 Ramesh Nanji Thakkar- 3.Aggrieved by the order of the AO,the assessee preferred an appeal before the First Appellate Authority(FAA).Before him, the assessee argued that due to old age he claimed an inadvertent exemption,that the claim made about the date of acquisition of property was factually wrong, that the negotiation for purchasing the property took quite a long time, that it was finally acquired in Aug. 1981,that he was under the impression that the property was acquired before April 1981,that it was an inadvertent error, that he assumed cost of acquisition at Rs.8.00 lacs(app.)and the year of acquisition 1980,that factually the cost of acquisition was Rs.7,52,900/- and the date of acquisition was 24/8/1981, that it was an honest and bonafide mistake in computation of LTCG,that he had not concealed any particulars of income or gave inaccurate particulars of income. It was further argued that that income from house property was not computed properly,that monthly rent receivable from Crest Communication(CC)was Rs.50,000 only as per the agreement,that CC had deducted tax at source u/s. 194-I of the Act, that assessee had received Rs.50,000 only form CC,that he did not receive Rs.4700/-, that from Konark Builders and Development Pvt. Ltd. the assessee had received 1.20 lacs and not Rs.1.36 lacs., that the TDS amount on Rs.16,400 had been calculated @ 2% instead of 20.5% as done for all other earlier payments, that there were mistakes in the TDS certificates issued by the parties. That merely on the basis of assessee's own submission additions were made.He relied upon the cases of Devidas Sukhani(101TTJ551),Tekchand Pannalal Shah(14TTJ571),Lotus Leaving Pvt.Ltd.(7SOT

540),Gudiwada Ramchandra Rao(37ITD443),Jenabai Mohd.(2TTJ777). After considering the submission of the assessee and the assessment order, the FAA held that the assessee had accepted the mistake occurred inadvertently in the assessment proceedings itself,that he had furnished all the necessary information,that the AO had mentioned those facts in the assessment order.Finally,the FAA deleted the penalty imposed by the AO.

5.Before us,Departmental Representative(DR)relied upon the order of the AO.Authorised Representative(AR)stated that there was inadvertent mistake on part of the assessee,that addition made in quantum proceedings should not result in automatic levy of penalty,that explanation offered by the assessee was not negated by the AO.

6.We have heard the rival submissions and perused the material before us.We find that the AO had made addition on account of LTCG and income from House Property,that the assessee himself during the assessment proceedings admitted that due to inadvertent mistake he took base year 1981 for calculating LTCG thought the property was purchased in August, 1981.In our opinion,assessment and penalty proceedings are separate and decision taken by the AO during the assessment proceedings cannot and should not result in imposing concealment penalty in a mechanical way.The most important thing to be considered in penalty matter is the explanation filed by the assessee and to see as to whether same falls under the category of plausible explanation or not.In our opinion,the difference of a few month in calculating the LTCG is possible especially when the transaction had taken place in the year 1981.We hold that the claim made by the assessee was in nature of an inadvertent mistake.As far as the second addition is concerned,we find that there are glaring inconsistencies in the TDS certificates like rate of TDS.Secondly,the AO has not given any finding about the claim made by the assessee about not receiving the disputed amounts from both the parties.Considering the peculiar facts and circumstances of the case,we are of the opinion that assessee had not furnished inaccurate particulars or had concealed his income.Cases relied upon by the assessee during appellate proceedings support the stand taken by the FAA.Therefore,confirming his order,we decide the effective ground of appeal in favour of the assessee.

As a result, appeal filed by the AO stands dismissed.

फलतः नधा रती अ धकार वारा दा खल क गई अपील नामंजूर क जाती है .

3 ITA No.1698/M/2011 Ramesh Nanji Thakkar- Order pronounced in the open court on 27th,April, 2015.

आदे श क घोषणा खल ु े यायालय म दनांक 27 अ ैल ,2015 को क गई ।

Sd/- Sd/- (डी. म मोहन /D. Manmohan) (राजे / RAJENDRA) उपा य / Vice President लेखा सद य / ACCOUNTANT MEMBER मब ुं ई/Mumbai, दनांक/Date: 27 .04.2015 JV. आदे श क त ल प अ े षत/Copy of the Order forwarded to : 1.Appellant /अपीलाथ 2. Respondent / यथ

3.The concerned CIT(A)/संब ध अपील य आयकर आयु त, 4.The concerned CIT /संब ध आयकर आयु त

5.DR "A" Bench, ITAT, Mumbai / वभागीय त न ध, खंडपीठ,आ.अ. याया.मब ंु ई

6.Guard File/गाड फाईल स या पत त //True Copy// आदे शानस ु ार/ BY ORDER, उप/सहायक पंजीकार Dy./Asst. Registrar आयकर अपील य अ धकरण, मब ुं ई /ITAT, Mumbai.