ITA No. 361/Del/2014 IN INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: NEW DELHI BEFORE SHRI G. D. AGRAWAL, VICE PRESIDENT AND SMT SUCHITRA KAMBLE, JUDICIAL MEMBER I.T.A .No.-361/DEL/2014 (ASSESSMENT YEAR 2008-09) Ajeet Singh vs DCIT Prop. Boutique Global Circle-22(1) B-33, Pumposh Enclave New Delhi New Delhi (RESPONDENT) AAZPS4257J (APPELLANT) Appellant by Sh. Rakesh Jain, Adv Respondent by Sh. S. K. Jain, SR. DR Date of Hearing 09.08.2016 Date of Pronouncement 20.10.2016 ORDER PER SUCHITRA KAMBLE, JM This appeal is filed by assessee against order dated 28/10/2013 passed by CIT(A)-XXIII, New Delhi. 2. grounds of appeal are as follows:- 1. Because action is under challenge on facts and law for levy of penalty amounting to Rs.6,07,320/-which is unsustainable on true and correct interpretation of facts, documents, evidences, pleadings, provision of act and various propositions of law. 2. Because action is under challenge on facts and law since affidavits filed by assessee and accountant 2 ITA No. 361/Del/2014 of assessee have not been considered in its true sense & spirits. 3. Assessee is individual and enaged in business of manufacturing of exports and readymade garments under name and style of Boutique Global as proprietorship firm, which has been established on 30.06.2010. During course of assessment proceedings, it was observed by Assessing Officer that assessee has not declared capital gain arises on 12.07.2007 on sale of Shares of M/s. Boutique International Pvt. Ltd. and M/s. Boutique Clothing Pvt. Ltd. in tune of 21,35,400/- and Rs. 18,75,000/- respectively. Notice u/s. 142(1) of Income Tax Act, 1961 was issued on 15.04.2010, therein vide attached detailed questionnaire has asked to furnish computation of long term/short term capital gain/ loss with evidences of investment / sale etc. assessee filed reply on 06.12.2010. Assessee submitted that after separation from Partnership Business w.e.f. 30.06.2007 date coming within impugned assessment year ending on 31.3.2008, individual commenced its operation on and after 30.06.2007 onwards as submitted during case proceeding dt. 02/11/2010. assessee filed its first return of income in Individual Capacity on dt. 16.09.2008 in accordance with Audited Financial Statements dt. 02.09.2008 at amount of Rs.1,31,64,170/- whereby books of account and supporting vouchers with necessary details have been maintained and assessee is following 'Mercantile System Of Accounting . said details in accordance with notice dated 15/04/2010 were submitted on 3 ITA No. 361/Del/2014 06.05.2010. assessment was completed on 30/12/2010 and penalty order was passed thereafter. 4. Aggrieved by penalty order assessee went in appeal before CIT(A). CIT(A) dismissed appeal of assessee. Stating therein that A.O has mentioned in penalty order u/s 271(1)(c) that appellant was issued questionnaire along with notice u/s 142(1) of Act on 15/4/2010 wherein he was asked to furnish computation of long term/short term capital gain/loss with evidence of investment of sale etc. 7. Ld. AR submitted that assessee has already paid almost 45 lacks as his tax and there is affidavit from assessee as well as from his account and that. Due to inadvertent circumstances and there was reshuffling in partnership firm said short term capital gain was not included in income but when mistake was found out by assessee after seeing question in law immediately assessee disclosed same with letter dated 6/12/2010 of which Assessing Officer has also taken cognizance while finalizing penalty. Ld. AR submitted that before initiation of any specific query based questionnaire and or order sheet entry, assessee voluntarily realized mistake on dt. 06.12.2010 whereby amount for capital gain was being requisitioned as question No.VII, IX of Questionnaire issued along with notice u/s 142(1) dated 15.04.2010 was not case specific, but 'General Questionnaire . This is solitary questionnaire issued before voluntarily revising return of 4 ITA No. 361/Del/2014 income by assesse on dt. 06.12.2010. While preparing individual Statement of Affairs as on 31.3.2008 it was found that assessee has received Rs.21,35,400/- on 12.7.2007 from Boutique International Pvt. Ltd. and Rs.18,75,000/- on 12.7.2007 from Boutique Clothing Pvt. Ltd, which were received from sale of shares of above said companies. capital gain on sale of above mentioned shares had not been shown due to inadvertent mistake nevertheless amounts already accounted, recoded ,disclosed & declared in bank account no.10003717 and attributable to unintentional and inadvertent mistake of counsel. Hence omitted facts thereof and assessee too signed return likewise which came to notice while there was commencement of proceedings (general enquiry {supra}) and reappraisal & re- examination of complete records undertaken individually at hands of asseessee before having received any notice/order sheet entry on said capital gain. Additionally reason for declaration through 'revised return of income' for capital gain is due to two reasons 1) there was partition in business of assessee with his partners and assessee started new proprietorship concern in name and style of Boutique Global from 30.06.2007. Due to partition, records relating to companies were with assessee's partner and same were not assessable to accountant at time of filing of return {affidavit of assesse as well as accountant of assessee} 2) assessee was not required to submit any personal statement of affairs as on 31.03.2007 and 31.03.2008 as return for AY 2007-08 was submitted in 5 ITA No. 361/Del/2014 Form No.ITR-3. While during AY 2008-09 assessee filed Income Tax return in Form No.ITR-4. As per new Income Tax Return Rules, assessee is not required to file Personal Statement of Affairs along with Income Tax Return. However while preparing personal Balance Sheet for scrutiny proceedings, assessee found that above said capital gain on shares was pending disclosure 'without any intention to conceal' income as assessee has already filed return showing income of Rs.1,32,24,171/- and 'paid tax amounting to Rs.45,69,390/-. Return Acknowledgement, Computation of Income Audit Report u/s 44AB and Audited Balance Sheet as on 31/3/2008. Ld. AR further submitted that assessee had given all particulars of his income and had disclosed all facts to AO during assessment proceedings. It is not case set up by AO that in reply to query from assessee and/or some new material were discovered or some information which was not furnished by assessee. In such circumstances, humble prayer is to vacate levy of penalty u/s 271(l)(c). Reliance is being placed upon CIT Vs. Suresh Chandra Mittal (2001) 251 ITR 9 (SC) wherein it is held that though assessee surrendered additional income by way of revised returns after persistent queries by AO once revised returns have been regularized by Revenue explanation of assessee that he has declared additional income to buy peace and to come out of vexed litigation could be treated as bona fide and penalty under Section 271(1)(c) was not leviable. Unintentional and Inadvertent Mistake for transactions having gone to omit 6 ITA No. 361/Del/2014 sight of accountant too is evident from records resulting same was made to pay demands of tax due on dt. 03.12.2010 with HDFC Bank, BSR Code 0510308 SI. No.50211 being Material on Record and with greatest respect being prayed that levy be vacated under aforesaid facts &circumstances of case as explained. Since, said was available with assessing officer and assessment has been completed u/s 143(3) on dt 30.12.2010 at amount of Rs.1,50,52,122 notwithstanding bonafide and unintentional and inadvertent mistake order dt. 30.12.2010 was not contested in Appellate Proceedings and it cannot be construed as confession calling for mechanical levy on true and correct interpretation and appreciation of Sec. 271(l)(c) Explanation 5(2). Financial Statements having been extracted from 'Material Particulars' and 'Material On Record' by professional and there being appreciation and examination of same by AO once having recorded Finding Of Fact (30.12.2010) qua calling of replies, having been submitted them regularly, along with production of books of accounts and supporting material would go to sufficiently show Intention being for making complete details availability to AO since in totality there are merely Non Business Usage disallowances for expenses and by any stretch of imagination on Prima Facie Examination of totality of case it is evident that all effort has been towards correct compilation, preparation, filing and presenting of case and rendering all assistance in interest of fair proceedings more so pleading is not focused towards 7 ITA No. 361/Del/2014 ignorance of law rather stress is on compilation of records as partial records were received from other partner and accountant preparing return whose affidavit realizing unintentional and inadvertent mistake is appended. 8. Ld. DR relied on order of CIT(A) and penalty order. 9. We have heard both parties and perused all materials available on record. After going through record it can be seen that assessee has filed return of income for almost Rs.1,31,64,117/-and for which almost 45,69,387/- tax was paid. If assessee wanted to conceal income or filed inaccurate particulars then he would have not filed letter dated 6/12/2010 before Assessing Officer and immediately paid amount taxable on income which inadvertently not place before authorities at relevant time. This was mentioned in affidavit produced before CIT(A). As per Hon'ble Supreme Court in case of CIT Vs. Suresh Chandra Mittal (2001) 251 ITR 9 (SC) wherein it is held that though assessee surrendered additional income by way of revised returns after persistent queries by AO once revised returns have been regularized by Revenue explanation of assessee that he has declared additional income to buy peace and to come out of vexed litigation could be treated as bona fide and penalty under Section 271(1)(c) was not leviable. Thus, act of assessee cannot be termed as inaccurate furnishing of income or concealment of income. Therefore, 8 ITA No. 361/Del/2014 CIT(A) as well as Assessing Officer should have taken this aspect into consideration. This was totally ignored by both authorities. 10. In result, appeal of assessee is allowed. order is pronounced in open court 20th of October, 2016. Sd/- Sd/- (G. D. AGRAWAL) (SUCHITRA KAMBLE) VICE PRESIDENT JUDICIAL MEMBER Dated: 20/10/2016 R. Naheed * Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI Date 1. Draft dictated on 09.08.2016 PS 2. Draft placed before author 10.08.2016 PS 3. Draft proposed & placed before .2016 JM/AM second member 4. Draft discussed/approved by JM/AM Second Member. 5. Approved Draft comes to 20.10.2016 PS/PS Sr.PS/PS 9 ITA No. 361/Del/2014 6. Kept for pronouncement on PS 7. File sent to Bench Clerk 20.10.2016 PS 8. Date on which file goes to AR 9. Date on which file goes to Head Clerk. 10. Date of dispatch of Order. Ajeet Singh v. DCIT, Circle-22(1), New Delhi