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TMI Blog2011 (11) TMI 496X X X X Extracts X X X X X X X X Extracts X X X X ..... 8,894] out of sale of the building is required to be assessed as short-term capital gains u/s. 50 of the Act. The ld. A.O. observed from the assessment records that the assessee deducted sum of Rs.3,56,72,413/- from business income as the profit on sale of fixed assets for separate consideration without mentioning any capital gains arising out of such disposal of fixed assets in the computation of taxable capital gains. The A.O. reopened the assessment and issued notice u/s. 148 of the Act. In response to notice u/s. 143(2) of the Act, the assessee explained the return and admitted that due to clerical mistake the above income of Rs.4,21,33,856/- was not accounted for. Accordingly, the said sum was added u/s. 50 of the Act in the assessment framed u/s. 147 of the Act. During penalty proceedings, the assessee explained that the inadvertent mistake was recognized by the ld. A.O. as the same was apparent on record from the note appearing in the audit report as well as from computation originally made wherein it was mentioned that an amount of Rs.3,56,72,413/- was deducted from business income as the profit on sale of fixed assets for separate consideration. The sale consideration was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder:- "3.1. I have carefully considered submission of the Ld. A.r. There is no dispute on the facts of the case the year under consideration the assessee has sold certain depreciable fixed assets In the Profit and Loss accounts filed along with the return of income, the sale of fixed assets has been duly disclosed under the head "Other Income" by narration 'Profit/loss on sale of fixed Assets'. The detail of the sale of the buildings along with amounts and the date of sale is also duly mentioned in the Audit report under filed under section 44AB of the Income Tax Act 1961 duly furnished in Form 3CA along with the return of income. However, while Computing the gross total income, the profit on sale of fixed assets were deducted for separate consideration from the head "Profit and Gains from Business and Profession", but it is not added back as deemed Capital gain as per provision of section 50 of the Income Tax Act. The order was passed under section 143(3) of the Act and the A.O also committed the same mistake. He also deducted the 'profit from the sale of fixed asset from the Net Profit shown in the P and L Ale for separate condition but failed to add back as deemed Capit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unts of the assessee This Court therefore observed: "So far as the question of penalty is concerned the items which were not included in the turnover were found incorporated in the appellant's account books. Where certain items which are not included in the turnover are disclosed in the dealer's own accounts book and the assessing authorities include these items in the dealer's turnover disallowing the exemption, penalty cannot be imposed. The penalty levied stands set aside" 3.8. Considering above, it is held that the omission of addition of deemed capital gain on sale of fixed asset in the computation of total income under the head 'Capital Gains' after deducting the same from the head 'Business Income' was an inadvertent error on the part of the assessee. However, since the assessee has not withhe1d any of the relevant particulars relating to the sale of the fixed assets, either in the Profit and Loss Account or in the Audit Report, it could not be held that there was any mala fide intention of the assessee to conceal the income. Accordingly, it is held that this is not a fit case for imposition of penalty under Section 271(1)(c). Hence, the penalty order passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see admitted its inadvertent clerical mistake in this regard during reassessment proceedings. At the same time it was explained by referring to the computation of income filed along with the return of income, which is placed at page-13 of the assessee's paper book, that although the assessee has separately considered the income from house property and profit on sale of investment in the computation of income, but the assessee due to oversight mistake after deducting the amount from the head 'business income', it omitted to add back the income under the head 'capital gains' arising out of sale of fixed assets which has resulted in non-disclosure of the said income in the return of income. We further observe that during scrutiny assessment proceedings u/s. 143(3) of the Act, the said mistake was not noticed by the ld. A.O. and the income out of such sale of fixed assets was not assessed. The assessment wherein the said mistake originally crept in went upto the stage of the Tribunal and the said mistake was neither detected nor pointed out by either of the parties and the Tribunal disposed of the appeal on other issues. It was only when notice u/s. 148 of the Act was issued that the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls v. State of Tamil Nadu [2009] 23 VST 249 as regards the penalty are apposite. In the aforementioned decision which pertained to the penalty proceedings under the Tamil Nadu General Sales Tax Act, the court had found that the authorities below had found that there were some incorrect statements made in the return. However, the said transactions were reflected in the accounts of the assessee. This court, therefore, observed (page 251): "So far as the question of penalty is concerned the items which were not included in the turnover were found incorporated in the appellant's account books. Where certain items which are not included in the turnover are disclosed in the dealer's own account books and the assessing authorities includes these items in the dealer's turnover disallowing the exemption, penalty cannot be imposed. The penalty levied stands set aside." The situation in the present case is still better as no fault has been found with the particulars submitted by the assessee along with its return of income. Considering the totality of the facts and circumstances of the case and respectfully following the ratio of aforesaid decision of Hon'ble Supreme Court, we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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