The Commissioner Of Income Tax, Karnal v. Sh. Amar Nath

I.T.A. No. 57 of 2008 IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH I.T.A. No. 57 of 2008 Date of decision: 11.04.2008 The Commissioner of Income Tax, Karnal ..... Appellant-revenue Versus Sh. Amar Nath c/o M/s Shiv Shankar Rice Mills, Kaithal ..... Respondent-assessee CORAM: HON'BLE MR. JUSTICE SATISH KUMAR MITTALHON'BLE MR. JUSTICE RAKESH KUMAR GARG Present:-Mr. Yogesh Putney, Advocate for the appellant-revenue. RAKESH KUMAR GARG, J. The revenue has filed the present appeal underSection 260-A of the Income-Tax Act, 1961 ( hereinafterreferred to as the “I.T. Act” ) against the order dated05.04.2007 passed by the Income-Tax Appellate Tribunal,Chandigarh, Bench-'B' ( hereinafter called the Tribunal ) inI.T.A. No. 592/Chandi/2006 for the assessment year 2004-05,raising the following substantial question of law:- “Whether on the facts and in the circumstances of thecase, the Ld. ITAT was right in upholding the order ofthe CIT(A), against imposition of penalty u/s 271(1)(c)of the Income Tax Act, 1961, without deliberatingupon, discussing and analysing the reasons, as spelt outand discussed in para 4 of the penalty order and relyingon the after thought considered by the Ld. CIT (A),while deleting the penalty imposed under Section 271(1)(c) of the Income Tax Act.” The return declaring an income of Rs.16,720/- wasfiled by the assessee on 31.10.2004, which was processed underSection 143(1) of the I.T. Act. The case was picked up forscrutiny and it was found that the assessee had claimed profit onsale of shares, which was purchased by him on 06.09.2002, forexemption under Section 10(36) of the I.T. Act. The assessee wasasked to explain why he claimed profit exempted under Section10(36) of the IT Act when he had purchased shares before 1[st]March, 2003. In the reply filed by the assessee, it was stated thathe was under the bona fide belief that profit on the sale of theseshares was exempt under Section 10(36) of the I.T. Act andnothing in this regard has been concealed by him and this bonafide belief was based on the advice of his counsel. However, the I.T.A. No. 57 of 2008 Assessing Officer did not accept the contention of the assesseeand held that a wrong claim was made by the assessee byfurnishing inaccurate particulars of his income as the profit onsale of shares was not exempt under Section 10(36) of the I.T.Act. Vide order dated 29.07.2005 additions were made on thisaccount and penalty proceedings were initiated separately againstthe assessee. A penalty of Rs.3,10,716/- was imposed upon theassessee, under Section 271(1)(c) of the I.T. Act, by AssistantCommissioner of Income-tax, Circle, Kurukshetra (hereinafterreferred to as 'CIT(A)'), vide order dated 30.01.2006. Aggrieved against the said order, assessee filed an appealbefore the Commissioner of Income Tax ( Appeals ) Karnal, whovide its order dated 25.05.2006, partly allowed the appeal andreduced the penalty to Rs.2,87,133/-. Not feeling satisfied with the order of CIT(A), the revenuefiled an appeal before the Tribunal on the ground that the assesseehad wrongly claimed exemption under Section 10(36) of the I.T.Act as the said provisions were not applicable to the facts of theaccessee's case and therefore, he had concealed his income byfurnishing inaccurate particulars and therefore, the assessee isliable for imposition of penalty. The Tribunal, vide its order dated30.03.2007 dismissed the appeal of the revenue-department. Still dissatisfied with the order of Tribunal, therevenue has filed the present appeal. We have heard learned counsel for the appellant-revenue and perused the record. Not feeling satisfied with the order of CIT(A), the revenuefiled an appeal before the Tribunal on the ground that the assesseehad wrongly claimed exemption under Section 10(36) of the I.T.Act as the said provisions were not applicable to the facts of theaccessee's case and therefore, he had concealed his income byfurnishing inaccurate particulars and therefore, the assessee isliable for imposition of penalty. The Tribunal, vide its order dated30.03.2007 dismissed the appeal of the revenue-department. Still dissatisfied with the order of Tribunal, therevenue has filed the present appeal. We have heard learned counsel for the appellant-revenue and perused the record. In the present appeal, it is noticed that the assesseehad claimed wrong deduction on the advice of his counsel and inthis regard, an affidavit of counsel for the assessee was also filedbefore the CIT(A). The then counsel of the assessee hadcategorically admitted that he had advised the assessee to claimdeduction under Section 10(36) of the IT Act in respect of theshares sold during the financial year 2003-04. However therevenue has not rebutted the said affidavit at any stage. Thus, theassessee acted upon the advice of his counsel. In the case ofManoj Ahuja and another v. Inspecting ACI, 150 ITR 696(P&H)wherein this Court has held that no litigant shouldordinarily suffer for the mistake of his counsel. It is also to benoticed that since the assessee had furnished all the detailsrelating to the capital gains along with return of income, so itcannot be said that the assessee had concealed anything from therevenue. Therefore, this may be a good case for making additionagainst the assessee since he had made a wrong claim. However,this addition in itself is not sufficient for levying the penalty under Section 271(1)(c) of the IT Act. In view of the fact that theassessee had claimed the said deduction under a bonafide beliefthat he is entitled to the said deduction on the basis of legaladvice given by his counsel and that he had furnished all thedetails relating to the capital gains along with return of income, itcannot be held that there was any mala fide intention of theassessee to conceal the income. Considering the totality of the case and in the light ofthe above discussion, we are of the view that there is no error inthe impugned order of the Tribunal. No question of law is arisingfor determination of this Court in this appeal and the same ishereby dismissed. ( RAKESH KUMAR GARG )JUDGE ( SATISH KUMAR MITTAL )JUDGE