DCIT 9(1), MUMBAI v. FURNITURE WORLD P.LTD, MUMBAI

ITA 1624/MUM/2010 | 2006-2007
Pronouncement Date: 12-01-2011 | Result: Dismissed

Appeal Details

RSA Number 162419914 RSA 2010
Assessee PAN AAACF5241P
Bench Mumbai
Appeal Number ITA 1624/MUM/2010
Duration Of Justice 10 month(s) 9 day(s)
Appellant DCIT 9(1), MUMBAI
Respondent FURNITURE WORLD P.LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 12-01-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted F
Tribunal Order Date 12-01-2011
Assessment Year 2006-2007
Appeal Filed On 03-03-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F MUMBAI BEFORE SHRI R V EASWAR PRESIDENT AND SHRI P M JAGTAP ACCOUNTANT MEMBER I T A NO: 1624/MUM/2010 (ASSESSMENT YEAR: 2006-07) DEPUTY COMMISSIONER OF INCOME TAX 9(1) APPELLANT MUMBAI VS M/S FURNITURE WORLD PVT. LTD. MUMBAI RESPONDENT (PAN: AAACF5241P) APPELLANT BY: SHRI SUMEET KUMAR RESPONDENT BY: ADJOURNMENT APPLICATION DT. 01.01.20 11 O R D E R R V EASWAR PRESIDENT: THE ASSESSEE HAS APPLIED FOR ADJOURNMENT WHICH RE QUEST IS REJECTED. THE APPEAL WAS HEARD ON THE BASIS OF THE RECORD AND THE ARGUMENTS OF THE LEARNED SENIOR DEPARTMENTAL REPRES ENTATIVE. 2. THE APPEAL IS BY THE DEPARTMENT AND IT RELATES T O THE ASSESSMENT YEAR 2006-07. THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF FURNITURE ITEMS. IT FILED A RETURN OF INCOME ON 30.11.2006 DECLARING LOSS OF ` 1 95 73 094/-. IT WAS FIRST PROCESSED UNDER SECTION 143(1) OF THE ACT BUT LATER NOTICES UNDER SECTION 143(2) AND 142(1) WERE ISSUED AND THE ASSESSEE WAS ASKED TO SUBMIT THE RELEVANT DETAILS. IN THE COURS E OF THE ASSESSMENT PROCEEDINGS ON 13.10.2008 THE ASSESSEE FILED A LETTER DATED 08.10.2008 ENCLOSING A REVISED COMPUTATION OF INCOME IN WHICH THE LOSS WAS REVISED TO ` 33 79 786/-. THE ORIGINAL COMPUTATION OF INCOME WAS ALSO ENCLOSED TO THE LETT ER FOR ITA NO: 1624/MUM/2010 2 COMPARISON PURPOSES. IN THE AFORESAID LETTER THE A SSESSEE SUBMITTED AS FOLLOWS: - WHILE PREPARING DETAILS OF SCRUTINY ASSESSMENTS WE HAVE REALIZED THAT THE COMPUTATION OF INCOME PREPARED CONTAINS CERTAIN ERRORS AND ACCORDINGLY THE TOTAL LOSS AS PER RETURN OF INCOME IS WRONGLY SHOWN AS RS.(1 95 73 094) INSTEAD OF RS.(33 79 786) BECAUSE CERTAIN AMOUNTS SUCH AS INCOME TAX DEFERRED TAX LOSS ON SALE OF ASSETS ETC. AND AS WELL AS DIFFERENCE IN DEPRECIATION ON CHANGE OF METHOD WHICH WERE BY MISTAKE ADDED / SUBTRACTED FROM THE LOSS AS PER PROFIT & LOSS A/C W ERE ACTUALLY NOT REQUIRED TO BE DONE. ALSO INTEREST NO T PAID HAD TO BE DISALLOWED U/S 43B. IN VIEW OF THE SAME HAVING NOW REALIZED THE SAME WE ARE NOW ENCLOSING HEREWITH A REVISED COMPUTATION OF INCOME WHICH NEEDS TO BE CONSIDERED FOR ASSESSMENT PURPOSES. SINCE THERE ARE NO OTHER CHANGES IN THE RETURN OF INCOME EXCEPT TO THE EXTENT AS PER REVISED COMPUTATION OF INCOME THIS REVISED COMPUTATION BEING FILED NOW MAY BE CONSIDERED AS REVISED RETURN FOR AY 2006-07 AND ASSESSMENT DONE ACCORDINGLY. 3. THE ASSESSING OFFICER OBSERVED THAT SINCE THE AS SESSEE REVISED THE FIGURE OF TOTAL LOSS AND REDUCED THE SA ME ONLY AFTER THE CASE WAS SUBJECTED TO SCRUTINY THE DIFFERENCE BETW EEN THE LOSS ORIGINALLY RETURNED AND THE LOSS DECLARED IN THE RE VISED COMPUTATION REPRESENTED THE CONCEALED INCOME OF THE ASSESSEE. HE STARTED THE COMPUTATION OF THE INCOME AS PER THE REVISED COMPUT ATION FILED BY THE ASSESSEE WHEREIN THE LOSS WAS SHOWN AT ` 33 79 786/- AND ALSO ISSUED NOTICE UNDER SECTION 274 READ WITH SECTION 2 71(1)(C) ASKING THE ASSESSEE TO SHOW CAUSE WHY PENALTY SHOULD NOT B E IMPOSED FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND THE REBY CONCEALING THE PARTICULARS OF INCOME. ITA NO: 1624/MUM/2010 3 4. THE ASSESSEE SUBMITTED AN EXPLANATION IN WRITING WHICH IS AS FOLLOWS: - THE ASSESSEE HAS DURING THE COURSE OF ASSESSMENT PROCEEDINGS REALIZED THAT INADVERTENTLY CERTAIN AMOUNTS HAVE BEEN WRONGLY TAKEN WHILE ENTERING IN THE SOFTWARE FOR PREPARING THE COMPUTAT ION OF INCOME. ACCORDINGLY THOUGH THE PROFIT AND LOSS ACCOUNTS SHOWS THE CORRECT LOSS IN THE COMPUTATION OF INCOME BECAUSE OF CERTAIN ADDITIONS AND DEDUCTIONS (SOME OF THEM TAKEN WRONGLY) THE ALLOWABLE LOSS AS FILED IN THE ORIGINAL COMPUTATION AND REVISED COMPUTATION HAVE CHANGED. THE ABOVE MISTAKE WAS POINTED OUT SUO-MOTO BY THE ASSESSEE THEMSELVES BEFORE BEING POINTED OU T BY THE ASSESSING OFFICER AND ACCORDINGLY THE REVISE D COMPUTATION WAS ALSO FILED SUO-MOTO WITH A REQUEST TO TREAT THE SAME AS REVISED RETURN. THE ABOVE ALSO NEEDS TO BE LOOKED MORE SYNTHETICALLY BECAUSE THIS WAS THE FIRST YEAR OF FI LING COMPULSORY E-RETURNS AND OUR STAFF WAS USING THE NEW SOFTWARE FOR PREPARING COMPUTATION OF INCOME AND ALSO OF E-FILING FOR THE FIRST TIME AND THIS MI STAKE WAS NOT INTENTIONAL ON THE PART OF THE ASSESSEE BUT A GENUINE MISTAKE WHICH HAS HAPPENED BY THE HANDS OF THE JUNIOR STAFF. THE UNDERSIGNED WHO HANDLES THEI R TAXATION MATTERS WAS ALSO IN USA AT THE TIME WHEN RETURNS WERE FILED AND HENCE THIS MISTAKE WENT UNDETECTED AND THE UNDERSIGNED REALIZED THIS WHILE PREPARING DETAILS FOR THE ASSESSMENT PROCEEDINGS AN D HENCE THE SUO-MOTO SUBMISSION ON THE PART OF THE ASSESSEE.. .IN VIEW OF THE ABOVE FACTS AS IT CAN BE SEEN THAT SINCE THE ASSESSEE HAS NOT INTENTIONALLY GIVEN ANY INACCURATE DETAILS AND NEITHER THE ASSESS EE HAS CONCEALED ANY INCOME WE REQUEST YOU NOT TO LEVY PENALTY AND DROP THE PENALTY PROCEEDINGS INITIATED U/S 271(1)(C). THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EX PLANATION. HE COULD NOT ACCEPT THAT THE ERROR WAS COMMITTED INADV ERTENTLY. HE ACCORDINGLY TREATED THE DIFFERENCE BETWEEN THE LOSS OF ` 1 95 73 094/- SHOWN IN THE RETURN OF INCOME AND THE LOSS OF ` 33 79 786/- SHOWN IN THE REVISED COMPUTATION OF INC OME WHICH ITA NO: 1624/MUM/2010 4 AMOUNTED TO ` 1 61 93 308/- AS THE CONCEALED INCOME AND IMPOSED A PENALTY OF ` 54 50 667/- BEING THE MINIMUM PENALTY AT 100% OF THE TAX SOUGHT TO BE EVADED. 5. THE ASSESSEE FILED AN APPEAL AND REITERATED ITS EXPLANATION THAT THE LOSS WAS SHOWN AT A HIGHER FIGURE DUE TO M ISTAKE OR INADVERTENT ERROR AND THAT WHEN IT WAS NOTICED THE ASSESSEE FILED SUO MOTU A REVISED COMPUTATION OF INCOME. IT WAS A LSO SUBMITTED THAT THE ASSESSEES EXPLANATION WAS BONA FIDE AND A LL FACTS RELATING TO THE COMPUTATION OF THE INCOME WERE DISCLOSED. I T WAS ALSO SUBMITTED THAT THE COMPUTATION WAS HANDLED BY INEXP ERIENCED STAFF MEMBERS BECAUSE THE CHARTERED ACCOUNTANT WHO WAS HA NDLING THE TAXATION MATTER HAD GONE ABROAD AND COULD NOT PERSO NALLY SUPERVISE THE FILING THE RETURN. IN THIS CONNECTIO N AN AFFIDAVIT WAS FILED TO THE EFFECT THAT THE CHARTERED ACCOUNTANT R ETURNED FROM ABROAD ONLY ON 4 TH DECEMBER 2006 WHEREAS THE RETURN OF INCOME HAD BEEN FILED EARLIER ON 30 TH NOVEMBER 2006. IT WAS ALSO POINTED OUT THAT THE MISTAKE HAD OCCURRED IN THIS MANNER N AMELY THAT THE DISALLOWANCES WHICH OUGHT TO HAVE BEEN REDUCED FROM THE LOSS WERE ACTUALLY ADDED TO THE FIGURE OF LOSS AND THIS WAS A SIMPLE MISTAKE. IT WAS ALSO POINTED OUT TO THE CIT(A) THA T THE DISALLOWABLE ITEMS WERE SHOWN IN THE RETURN ITSELF AND IT WAS NO T AS IF THEY WERE TO BE FOUND OUT AFTER A DEEPER INVESTIGATION INTO T HE ACCOUNTS. IT WAS THUS PLEADED THAT SECTION 271(1)(C) READ WITH I TS EXPLANATIONS WAS NOT APPLICABLE TO THE CASE. 6. THE CIT(A) ACCEPTED THE AFORESAID SUBMISSIONS AN D HELD THAT THE WRONG COMPUTATION OF THE LOSS WAS ON ACCOU NT OF A GENUINE ITA NO: 1624/MUM/2010 5 ERROR AND IT WAS A CASE OF BONA FIDE MISTAKE. HE THEREFORE CANCELLED THE PENALTY. 7. THE REVENUE IS IN APPEAL AND WE HAVE CONSIDERED THE FACTS AND THE SUBMISSIONS OF THE LEARNED SENIOR DEPARTMEN TAL REPRESENTATIVE. IT IS NOT IN DISPUTE THAT THE RELE VANT FACTS AND THE DISALLOWABLE ITEMS WERE SHOWN IN THE RETURN ITSELF. WHAT SEEMS TO HAVE HAPPENED IS THAT INSTEAD OF REDUCING THE LOSS BY THE DISALLOWABLE ITEMS SUCH AS THE DEPRECIATION AND INT EREST TO BE DISALLOWED UNDER SECTION 43B THE ASSESSEE SEEMS TO HAVE ADDED THESE ITEMS TO THE LOSS AS PER THE PROFIT AND LOSS ACCOUNT WHICH RESULTED IN AN INCREASED LOSS OF ` 1 95 73 094/- BEING SHOWN IN THE RETURN FILED ON 30 TH NOVEMBER 2006. THE CIT(A) HAS ACCEPTED THE ASSESSEES PLEA THAT THE RETURN WAS FILED AT A TIME WHEN THE ASSESSEES CHARTERED ACCOUNTANT WAS NOT IN INDIA AN D THEREFORE COULD NOT SUPERVISE THE PREPARATION OF THE RETURN O F INCOME. THE CHARTERED ACCOUNTANT HAS FILED AN AFFIDAVIT THAT HE WAS AWAY AT USA AND RETURNED TO INDIA ONLY ON 4 TH DECEMBER 2006. THE CONTENTS OF THE AFFIDAVIT ARE NOT IN DISPUTE. THE RETURN WAS PREPARED BY STAFF MEMBERS WHO HAD COMMITTED THE INADVERTENT BUT BONA FIDE MISTAKE OF INCREASING THE LOSS INSTEAD OF REDUCING THE LOSS ON ACCOUNT OF THE DISALLOWABLE ITEMS. THE MOMENT THE ASSESSEE BECAME AWARE OF THIS ERROR IN THE COURSE OF THE ASS ESSMENT PROCEEDINGS IT FILED A REVISED COMPUTATION OF INCO ME ON 8 TH OCTOBER 2008 AND THEREIN REDUCED THE LOSS TO ` 33 79 786/-. BOTH THE COMPUTATIONS ARE EXTRACTED IN THE ASSESSMENT ORDER ITSELF. THERE IS ALSO NO DISPUTE THAT THE DISALLOWABLE ITEMS WERE AL SO SHOWN IN THE ITA NO: 1624/MUM/2010 6 ACCOUNTS THEMSELVES AND IT IS NOT AS IF THEY HAD TO BE FOUND OUT AFTER AN INVESTIGATION. THERE IS ALSO NO MATERIAL IN THE ASSESSMENT ORDER OR BEFORE US TO INDICATE THAT THE ASSESSEE WA S CORNERED WITH THE RESULTS OF ANY SUCH INVESTIGATION AND IT WAS ON LY THEN THAT IT CHOSE TO FILE A REVISED COMPUTATION. ON AN OVERALL ASSESSMENT OF THE FACTS AND THE CONDUCT OF THE ASSESSEE IT SEEMS TO US THAT THIS IS NOT A CASE OF CONCEALMENT OF INCOME; IT APPEARS TO US THAT IT IS A CASE OF BONA FIDE ERROR COMMITTED BY THE STAFF OF T HE ASSESSEE WHILE FILING THE RETURN OF INCOME. WE THEREFORE DO NOT SEE ANY INFIRMITY IN THE ORDER OF THE CIT(A) IN WHICH HE HAS ACCEPTED T HE ASSESSEES EXPLANATION AND CANCELLED THE PENALTY. HIS ORDER I S ACCORDINGLY CONFIRMED AND THE APPEAL OF THE REVENUE IS DISMISSE D WITH NO ORDER AS TO COSTS. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH JANUARY 2011. SD/- SD/- (P M JAGTAP) (R V EASWAR) ACCOUNTANT MEMBER PRESIDENT MUMBAI DATED 12 TH JANUARY 2011 SALDANHA COPY TO: 1. M/S FURNITURE WORLD PVT. LTD. 1 ST FLOOR VIKAS CENTRE S V ROAD SANTACRUZ (WEST) MUMBAI 400 054 2. DCIT 9(1) 3. CIT-9 4. CIT(A)-19 5. DR F BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR ITAT MUMBAI