Commissioner of Income Tax, Karnal Versus Deepak Kumar
Crux of the Judgment: Bonafide mistake or belief is more or less a question of fact. No litigant should suffer on account of the mistake committed by the councel because the advise tendered by the councel is accepted by the litigant, which is based on bonafide belief of being correct.
Brief Facts of the case: The assessee-respondent disclosed all the particulars in his return filed under Section 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 under Section 10(36) of the Act.
The Assessing Officer completed the assessment under Section 143(3) of the Act and it was held that the assessee-respondent had wrongly claimed the profit on sale of shares under Section 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 under Section 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. Thus relying on the Judgment of P&H High Court in a case namely CIT v. Ajaib Singh and Co., 253 ITR 630 (P&H), CIT accepted appeal and held in favour of assessee.
Tribunal also upheld the order of CIT. on further appeal to High Court it was held as under:
Verdict of High Court: 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 under Section 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.
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Crux of the Judgment: Bonafide mistake or belief is more or less a question of fact. No litigant should suffer on account of the mistake committed by the councel because the advise tendered by the councel is accepted by the litigant, which is based on bonafide belief of being correct.
Brief Facts of the case: The assessee-respondent disclosed all the particulars in his return filed under Section 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 under Section 10(36) of the Act.
The Assessing Officer completed the assessment under Section 143(3) of the Act and it was held that the assessee-respondent had wrongly claimed the profit on sale of shares under Section 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 under Section 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. Thus relying on the Judgment of P&H High Court in a case namely CIT v. Ajaib Singh and Co., 253 ITR 630 (P&H), CIT accepted appeal and held in favour of assessee.
Tribunal also upheld the order of CIT. on further appeal to High Court it was held as under:
Verdict of High Court: 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 under Section 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.
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