Commissioner of Income Tax vs Deepak Kumar

M.M. Kumar, J.—The revenue is in appeal u/s 260A of the Income Tax Act, 1961 (for brevity, ''the Act'') against order dated 30.3.2007 (A-6), passed by the Income Tax Appellate Tribunal, Chandigarh Bench ''B'', Chandigarh (for brevity, ''the Tribunal''), in ITA No. 594/Chandi/2006, in respect of the assessment year 2004-05. The Tribunal has affirmed the order of the Commissioner of Income Tax (Appeals), Karnal, passed on 24.5.2006.

It is common case of both the parties that facts of the instant appeal were identical to the facts in the case of ACIT v. Amar Nath, ITA No. 592/Chandi/2006 (for the assessment year 2004-05). The Tribunal recorded the finding holding that the facts are identical and the contention raised by the parties were also similar. It is appropriate to mention that the assessee-respondent disclosed all the particulars in his return filed u/s 143(1) of the Act. He had disclosed purchasing of 1,15,000 shares of UBI for an amount of Rs. 18,40,000/- on 6.9.2002. He sold these shares on 8.9.2003 for a sum of Rs. 50,81,565/-. In another transaction he had purchased 2100 shares of Maruti for an amount of Rs. 2,62,500/- on 4.7.2003. Out of those shares, he sold 1950 shares on 5.9.2003 for an amount of Rs. 5,16,153/-. In the first transaction there was long term capital gain and in the second transaction there was short term capital gain. In the return filed by the assessee-respondent, he claimed that the profit on the sale of shares was exempt u/s 10(36) of the Act. The Assessing Officer completed the assessment u/s 143(3) of the Act and it was held that the assessee-respondent had wrongly claimed the profit on sale of shares u/s 10(36) of the Act. The allegation was that he had concealed income to the extent of Rs. 35,21,650/-. While finalising the assessment, penalty proceedings u/s 271(1)(c) of the Act were also initiated and penalty @ 100%, amounting to Rs. 4,10,440/- was imposed.

On appeal, the CIT(A) came to the conclusion that the provisions of Section 271(1)(c) of the Act would not be attracted to the facts of the present case. The reason given for the aforesaid finding by the CIT (A) is that the return was filed by the assessee-respondent on the advise tendered by his counsel. In any case, all detailed facts along with the dates were disclosed in the order of the CIT (A). In support of the aforesaid view, the CIT (A) placed reliance on the view taken by this Court in the case of Commissioner of Income Tax Vs. Ajaib Singh and Co., , and similar view taken by the Bombay and Madhya Pradesh High Court. It was found that the counsel for the assessee-respondent had admitted his mistake in advising the assessee and the affidavit by the learned Counsel was accepted by the CIT (A). Accordingly, it has been held that no litigant should suffer on account of the mistake committed by the counsel because the advise tendered by the counsel is accepted by the litigant, which is based on bona fide belief of being correct.

On further appeal before the Tribunal, the view taken by the CIT (A) was upheld when, in fact, reliance was placed on the order passed by the Tribunal in Amar Nath''s case (supra). It has been found as a fact that furnishing of particulars of income has been accurately disclosed which are relevant to long term capital gain along with the return of income. The income was claimed as exempt u/s 10(36) of the Act and the provisions were to apply for the first time to the assessment year under consideration i.e. with effect from 1.4.2004 relevant to the assessment year 2004-05. The assessee-respondent had acted upon the advise of his counsel, who was dealing with his tax matters for the last many years.

Having heard learned Counsel, we are of the view that the question concerning bona fide mistake or belief is more or less a question of fact, which has been decided by the CIT (A) on the basis of the affidavit filed by the counsel. There is no finding of intentional and motivated mistake which might have been resorted to by the assessee-respondent.

We are not impressed with the argument of Mr. Sukant Gupta, learned Counsel for the appellant-revenue, that the issue of bona fide belief based on the advise of the counsel should have been raised before the Assessing Officer and there was no scope for raising such an issue before the CIT (A) because it is an after thought. However, we do not find any merit in the aforesaid submission. It is not unknown that income tax returns are filed through the experts in the Income Tax laws and, therefore, the advise given by the learned Counsel can be acted upon with bona fide belief to be correct. There is no rule of law that the aforesaid issue should have been pressed only before the Assessing Officer or there was any bar on the assessee-respondent not to raise this issue before the Appellate Authority. The affidavit filed by the counsel of the assessee, has been readily accepted by the CIT (A) as well as by the Tribunal. It is well settled that if on the evidence adduced before the Assessing Officer or the Appellate Forum, a possible view has been taken then u/s 260A of the Act, no substantive question of law could be framed merely because another view is possible. The appeal is, thus, without merit and accordingly the same is dismissed.