TMI Blog2010 (3) TMI 803X X X X Extracts X X X X X X X X Extracts X X X X ..... Moreover, as already observed by us. even all the particulars relating to the said claim were not fully furnished by the assessee in the return of income originally filed. - Penalty confirmed - decided against the assessee. - 2005 AND 2006 (MUM.) OF 2009 - - - Dated:- 26-3-2010 - P.M. JAGTAP, V. DURGA RAO, JJ. K. Gopal, Jitendra Singh and Satendra Pandey for the Applicant. Keshave Saxena for the Respondent. ORDER P.M. Jagtap, Accountant Member. These two appeals filed by the two assessees are directed against two separate orders passed by the Learned CIT(A)-Central VI, Mumbai both dated 27-1-2009 whereby he confirmed the penalties imposed by the Assessing Officer under section 271(1)(c) of the Income-tax Act. 2. First, we shall take up the appeal filed by the assessee namely, Shri Ravindranath S. Doddi in his individual capacity. 3. The relevant facts of the case giving rise to this appeal are that the return of income for the year under consideration was filed by the assessee on 31-10-2006 declaring total income of Rs. 79,23,200. In the said return, Long Term Capital Gain on sale of shares of M/s. Maruti Comforts and Inn Pvt. Ltd. was declared by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Rs. 2,27,21,351 as against Rs. 34,97,437 originally offered. The income so revised by the assessee was adopted by the Assessing Officer for the purpose of making assessment and after making addition of Rs. 2,15,603 and Rs. 20,02,019 on account of disallowance of interest and disallowance of security transaction tax respectively, the total income of the assessee was assessed by the Assessing Officer at Rs. 2,64,31,870 in the assessment completed under section 143(3) vide an order dated 27-12-2007. 5. The Assessing Officer also initiated penalty proceedings under section 271(1)(c) on the ground that the assessee had understated the Long Term Capital Gain arising from sale of shares in his original return of income and had also claimed expenses on account of interest and security transaction tax wrongly. According to the Assessing Officer, assessee thus had furnished inaccurate particulars of income to that extent and was liable for penalty under section 271(1)(c). In response to the notice issued by the Assessing Officer under section 274 read with section 271(1)(c) during the course of the penalty proceedings, it was submitted on behalf of the assessee that even though revised s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting the same basis, the total amount of Rs. 8.61 crores invested by the assessee while purchasing of shares was taken in to consideration for working out the cost of acquisition of 4,10,000 shares at Rs. 210 each. It was contended that even though the said amount of Rs. 8.61 crores was bifurcated in Rs. 1.67 crores towards 4,10,000 equity shares and Rs. 6.97 crores towards discharging various liabilities, the total amount invested by the assessee for acquisition of 4,10,000 shares was Rs. 8.61 crores and the same was taken into consideration for determining the cost of acquisition per share. It was contended that when this inadvertent mistake was pointed out by the Assessing Officer during the course of assessment proceedings, a revised statement of total income was filed by the assessee offering the enhanced capital gain. It was contended that such inadvertent mistake committed by the assessee under bona fide belief could not be treated as furnishing of inaccurate particulars of his income as envisaged in section 271(1)(c) to attract levy of penalty under the said provision. 8. The ld. CIT(A) did not find merit in the submissions made on behalf of the assessee before him and he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stance. The claim of carry forward of short term capital loss on sale of shares during the year under consideration and the claim of 'indexed cost' of shares while working out the capital gains in the return for the assessment year 2007-08 clearly indicate the availability of professional help to the appellant in taxation matters. 7.4 It is further noted that the revised statement of income was filed by the appellant only after questions were raised by the Assessing Officer with reference to certain entries shown as unsecured loans from M/s. Royal Orchid Hotels. Thus there is no merit in the submissions of the AR that the statement of income was revised on their own." 9. Aggrieved by the order of the learned CIT(A) confirming the penalty imposed by the Assessing Officer under section 271(1)(c), the assessee has preferred this appeal before the Tribunal. 10. The learned Counsel for the assessee reiterated before us the submissions made before the authorities below. He submitted that the basis for taking cost of acquisition of shares at Rs. 210 each was duly explained by the assessee and the said explanation was also substantiated by the assessee. He also submitted that there w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee in the company had nothing to do with the cost of acquisition of shares and there was no reason whatsoever for the assessee to consider the same for working out the cost of acquisition of shares. He contended that the cost of acquisition of shares thus was wrongly claimed by the assessee in order to under-state the LTCG there being no basis whatsoever for adopting the cost of acquisition as done by the assessee, it cannot be said that it was a bona fide mistake committed by him. He contended that the legal position on this issue is very clear and the claim of the assessee is not being based on any possible view, the assessee cannot take a plea now that the said claim made by him was bona fide. 12. The ld. DR also invited our attention to the documents filed by the assessee along with his return of income, copies of which are placed in the paper book of the assessee and pointed out that neither any details nor any basis was specifically given by the assessee in respect of the cost of acquisition of shares adopted by him originally. He submitted that it was only because of the verification of the working of LTCG made by the Assessing Officer during the course of scr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Officer and filed a revised computation of total income offering Long Term Capital Gain at Rs. 2,27,21,351. In the assessment completed under section 143(3), the LTCG so offered by the assessee in the revised computation of total income was adopted by the Assessing Officer. He also imposed penalty under section 271(1)(c) in respect of understatement of capital gains by the assessee as declared in the original return holding that there was furnishing of inaccurate particulars of his income by the assessee as a result of higher cost of acquisition of shares wrongly claimed in the working of LTCG. The submissions made in this regard on behalf of the assessee before the authorities below, which have been reiterated by the ld. Counsel for the assessee at the time of hearing before us, are two-fold. 14. The first contention raised by the ld. Counsel for the assessee is that the mistake committed by the assessee in taking cost of acquisition of shares at Rs. 210 each was a bona fide mistake and the same having been rectified by the assessee by filing a revised computation of total income immediately after it was pointed out by the Assessing Officer, it is not a fit case to impose pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee in this regard is that the total amount of Rs. 861 lacs was invested by the assessee originally in the year 2003 for acquisition of 4.1 lacs equity shares and on the basis of the said total amount invested, the cost of purchase of shares was taken at Rs. 210 per share. A perusal of the relevant Memorandum of Agreement, a copy of which is placed in the paper book of the assessee, however, reveals that out of this amount of 861 lacs, a sum of Rs. 164 lacs only was paid by the assessee against the cost of 4.1 lacs equity shares and balance amount of Rs. 697 lacs was paid in the form of loans and deposits to meet the various liabilities/obligations of the said company. At the time of hearing before us, the ld. Counsel for the assessee in reply to the query raised by the Bench has stated that the said amount of Rs. 697 lacs was reflected in the Balance Sheet of both parties as loans and deposits which makes it clear that there was no confusion whatsoever of the break-up of total amount of Rs. 861 lacs invested by the assessee in the company, Rs. 164 lacs being cost of purchase of shares and Rs. 697 lacs being loans and deposits. The factual position on this point thus was clear and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und to be bona fide in the facts of the said case. In the present case, the factual position however is entirely different in as much as the explanation offered by the assessee was not bona fide as found by us having regard to the facts and circumstances of the case. It is also pertinent to note that in the case of Suresh Chandra Mittal (supra), the revised return filed by the assessee surrendering the additional income was regularized by the Assessing Officer whereas in the present case, the revised statement of total income filed by the assessee offering the higher LTCG was merely adopted by the Assessing Officer for the purpose of assessment. It is also relevant to note here that in the case of Man Mohan Gupta v. Asstt. CIT [2005] 274 ITR 179 (Raj.), the revised return was filed by the assessee offering the amounts which were subject matter of enquiry by the Assessing Officer and when the matter relating to imposition of penalty under section 271(1)(c) in respect of the said amounts offered in the revised return came up for consideration before the Hon'ble Rajasthan High Court, reliance was sought to be placed on behalf of the assessee on the decision of the Hon'ble Supreme Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 271(1)(c) in respect of LTCG offered by the assessee as a result of detection. The issues involved in this case as well as the material facts relevant thereto thus are materially similar to that of the case of Mr. Ravindranath S. Doddi (Individual) and this being so, we follow our conclusion drawn in the case of Mr. Ravindranath S. Doddi (Individual) and uphold the impugned order of the ld. CIT(A) confirming the penalty imposed by the Assessing Officer under section 271(1)(c) of the Act. We are, however, of the opinion that the said penalty to the extent it is attributable to the LTCG arising from sale of shares declared by the assessee in the immediately succeeding year i.e., assessment year 2007-08 cannot be sustained since the LTCG to that extent was already declared by the assessee voluntarily in that year without there being any detection by the Assessing Officer and the dispute in this context was only about the exact assessment year in which the LTCG was actually chargeable to tax. Accordingly Assessing Officer is directed to recompute and restrict the penalty under section 271(1)(c). 19. In the result, the appeal of the Assessee being ITA No. 2005/Mum/09 is party allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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