Omni Lens Pvt.Ltd.,, Ahmedabad v. The DCIT, Circle-3(1)(2),, Ahmedabad

ITA 1682/AHD/2018 | 2013-2014
Pronouncement Date: 19-11-2019 | Result: Partly Allowed

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Appeal Details

RSA Number 168220514 RSA 2018
Assessee PAN AAACO1725F
Bench Ahmedabad
Appeal Number ITA 1682/AHD/2018
Duration Of Justice 1 year(s) 4 month(s)
Appellant Omni Lens Pvt.Ltd.,, Ahmedabad
Respondent The DCIT, Circle-3(1)(2),, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 19-11-2019
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 19-11-2019
Last Hearing Date 18-11-2019
First Hearing Date 18-11-2019
Assessment Year 2013-2014
Appeal Filed On 19-07-2018
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH AHMEDABAD BEFORE SHRI RAJPAL YADAV HONBLE JUDICIAL MEMBER AND SHRI WASEEM AHMED HONBLE ACCOUNTANT MEMBER ITA.NO.1682/AHD/2018 / ASSTT.YEAR : 2013-14 M/S.OMNI LENS P.LTD. 5 SAMRUDDHI OPP: SAKAR-III NR.SATTAR TALUKA SOCIETY NAVJIVAN AHMEDABAD 380015 PAN : AAACO 1725 F VS DCIT CIR.3(1)(2) AHMEDABAD. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : M/S.MEHTA SHETH & ASSOCIATES REVENUE BY : SHRI VIDHUT TRIVEDI SR.DR / DATE OF HEARING : 18/11/2019 / DATE OF PRONOUNCEMENT: 19/11/2019 !'/ O R D E R PER RAJPAL YADAV JUDICIAL MEMBER ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST O RDER OF THE LD.CIT(A)-9 AHMEDABAD DATED 10.5.2018. 2. SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE LD.CI T(A) HAS ERRED IN CONFIRMING PENALTY OF RS.1 87 730/- WHICH WAS IMPOS ED BY THE AO UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT 1961. ITA NO.1682/AHD/2018 2 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED ITS RETURN OF INCOME ON 30.9.2013 DECLARING TOTAL INCOME AT RS.12 56 35 840/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND A SSESSMENT WAS MADE UNDER SECTION 143(3) ON 6.11.2015. THE LD.AO HAS MADE TH REE ADDITIONS TO THE INCOME OF THE ASSESSEE WHICH ARE AS UNDER: A) DISALLOWANCE OF RS51 000/- ON ACCOUNT OF AWARD RECE IVED FROM AIMA B) ADDITION OF RS.11 319/- MADE ON ACCOUNT OF CAPITAL GAIN C) DISALLOWANCE OF RS.4 90 000/- UNDER SECTION 35D 4. THE LD.AO HAS INITIATED PENALTY PROCEEDINGS UNDE R SECTION 271(1)(C) AND ISSUED NOTICE UNDER SECTION 274 INVITING EXPLAN ATION OF THE ASSESSEE AS TO WHY PENALTY BE NOT IMPOSED UPON THE ASSESSEE. AFTE R HEARING THE ASSESSEE HE IMPOSED PENALTY OF RS.1 87 730/-. APPEAL TO THE CI T(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 5. THE AO HAS WORKED OUT CONCEALED INCOME OF RS.5 5 2 319/- WHICH WAS CONSIDERED FOR VISITING THE ASSESSEE WITH PENALTY U NDER SECTION 271(1)(C) OF THE ACT. SO FAR AS PENALTY IMPOSED ON THE DISALLOW ANCES OF RS.51 000/- AND RS.11 319/- IS CONCERNED THE LD.COUNSEL FOR THE AS SESSEE DID NOT PRESS THE PRAYER FOR DELETION OF PENALTY ON ACCOUNT OF SMALLN ESS OF DISALLOWANCE MADE BY THE AO. HE CONTENDED THAT THE ASSESSEE-COMPANY HAS FILED RETURN OF INCOME FOR MORE THAN RS.12.54 CRORES. IF SMALL ADD ITION WAS MADE AND IF PENALTY IS ALSO COMPUTED ON THAT AMOUNT IT WILL NO T AFFECT MATERIALY TO THE ASSESSEE. EVEN FOR THIS SMALL AMOUNT DEPARTMENT W ILL NOT LODGE PROSECUTION. CONSIDERING THIS PRAYER OF THE ASSESSEE PENALTY QUA RS.51 000/- AND RS.11 319/- IS CONFIRMED. ITA NO.1682/AHD/2018 3 6. MAJOR AMOUNT ON WHICH PENALTY HAS BEEN IMPOSED I S DISALLOWANCE OF RS.4 90 000/- WHICH WAS MADE WITH AID OF SECTION 35 D OF THE ACT. THE LD.COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET SUBM ITTED THAT THE ASSESSEE HAS DISCLOSED COMPLETE DETAILS AND ON THE STRENGTH OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. MULTI-METALS LTD. 188 ITR 151 (RAJ) WHICH HAS BEEN APPROVED BY THE HONBLE SUPREME COURT ALSO TH IS IS AN ALLOWABLE CLAIM. THE ASSESSEE HAS NEITHER CONCEALED NOR FURNISHED IN ACCURATE PARTICULARS OF INCOME. THE DISALLOWANCE HAS BEEN MADE ON THE BAS IS OF DIFFERENCE OF OPINION BETWEEN THE ASSESSEE VIS--VIS THE AO ON TH IS ISSUE. HE TOOK US THROUGH THE DECISION OF HONBLE RAJASTHAN HIGH COUR T IN THE CASE OF MULTI METALS LTD. (SUPRA) AND PLACED ON PAGE NO.11 OF THE PAPER BOOK. 7. ON THE OTHER HAND THE LD.DR SUBMITTED THAT DECI SION OF HONBLE SUPREME COURT IS ALREADY AVAILABLE IN THE CASE OF B ROOKE BONDS INDIA VS. CIT 225 ITR 798 WHICH HAS LAID DOWN THAT EXPENDIT URE FOR INCREASE IN AUTHORIZED SHARE CAPITAL IS TO BE TREATED AS CAPITA L EXPENDITURE HENCE THERE WAS NO DEBATE ON THE ISSUE AND THE ASSESSEE HAS ER RONEOUSLY CLAIMED THE DEDUCTION. HE ALSO SUBMITTED THAT THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S.VARELI TEXTILE LTD. 284 I TR 238 (GUJ) WAS ALSO AGAINST THE ASSESSEE. 8. WE HAVE DULY CONSIDERED RIVAL SUBMISSIONS AND GO NE THROUGH THE RECORD CAREFULLY. SECTION 271(1)(C) OF THE INCOME TAX ACT 1961 HAS DIRECT BEARING ON THE CONTROVERSY. THEREFORE IT IS PERTI NENT TO TAKE NOTE OF THE SECTION. '271. FAILURE TO FURNISH RETURNS COMPLY WITH NOTIC ES CONCEALMENT OF INCOME ETC. (1) THE ASSESSING OFFICER OR THE COMMISSIONER (APPE ALS) OR THE CIT IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT IS SATISFIED THAT ANY PERSON ITA NO.1682/AHD/2018 4 (A) AND (B)** ** ** (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY. (I)AND (INCOME-TAX OFFICER )** ** ** (III) IN THE CASES REFERRED TO IN CLAUSE (C) OR CL AUSE (D) IN ADDITION TO TAX IF ANY PAYABLE BY HIM A SUM WHICH SHALL NOT BE LESS THAN BUT WHICH SHALL NOT EXCEED THREE TIMES THE AMOUNT OF T AX SOUGHT TO BE EVADED BY REASON OF THE CONCEALMENT OF PARTICULARS OF HIS INCOME OR FRINGE BENEFIT THE FURNISHING OF INACCURATE PARTICU LARS OF SUCH INCOME OR FRINGE BENEFITS: EXPLANATION 1- WHERE IN RESPECT OF ANY FACTS MATERI AL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR O FFERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) OR THE CIT TO BE FALSE OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS N OT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATI ON IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIA L TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM THE N THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME O R SUCH PERSON AS A RESULT THEREOF SHALL FOR THE PURPOSES OF CLAUSE (C) OF THIS SUB- SECTION BE DEEMED TO REPRESENT THE INCOME IN RESPE CT OF WHICH PARTICULARS HAVE BEEN CONCEALED. 9. A BARE PERUSAL OF THIS SECTION WOULD REVEAL THA T FOR VISITING ANY ASSESSEE WITH THE PENALTY THE ASSESSING OFFICER OR THE LEARNED CIT(APPEALS) DURING THE COURSE OF ANY PROCEEDINGS BEFORE THEM SH OULD BE SATISFIED THAT THE ASSESSEE HAS; (I) CONCEALED HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. AS FAR AS THE QUANTIFICATION OF THE PENALTY IS CONCERNED THE PENALTY IMPOSED UNDER THIS SECTION CAN RANGE IN BETWEEN 100 % TO 300% OF THE TAX SOUGHT TO BE EVADED BY THE ASSESSEE AS A RESULT OF SUCH CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS. THE OT HER MOST IMPORTANT FEATURES OF THIS SECTION IS DEEMING PROVISIONS REGARDING CON CEALMENT OF INCOME. THE SECTION NOT ONLY COVERED THE SITUATION IN WHICH THE ASSESSEE HAS CONCEALED THE INCOME OR FURNISHED INACCURATE PARTICULARS IN CERT AIN SITUATION EVEN WITHOUT THERE BEING ANYTHING TO INDICATE SO STATUTORY DEEM ING FICTION FOR CONCEALMENT ITA NO.1682/AHD/2018 5 OF INCOME COMES INTO PLAY. THIS DEEMING FICTION BY WAY OF EXPLANATION I TO SECTION 271(1)(C) POSTULATES TWO SITUATIONS; (A) FI RST WHETHER IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF THE TOTAL INCO ME UNDER THE PROVISIONS OF THE ACT THE ASSESSEE FAILS TO OFFER AN EXPLANATION OR THE EXPLANATION OFFERED BY THE ASSESSEE IS FOUND TO BE FALSE BY THE ASSESSING OFFICER OR LEARNED CIT(APPEAL); AND (B) WHERE IN RESPECT OF ANY FACT MATERIAL TO THE COMPUTATION OF TOTAL INCOME UNDER THE PROVISIONS OF THE ACT THE ASSESSEE IS NOT ABLE TO SUBSTANTIATE THE EXPLANATION AND THE AS SESSEE FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT THE ASSESSEE HAD DISCLOSED ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATIO N OF THE TOTAL INCOME. UNDER FIRST SITUATION THE DEEMING FICTION WOULD CO ME TO PLAY IF THE ASSESSEE FAILED TO GIVE ANY EXPLANATION WITH RESPECT TO ANY FACT MATERIAL TO THE COMPUTATION OF TOTAL INCOME OR BY ACTION OF THE ASS ESSING OFFICER OR THE LEARNED CIT(APPEALS) BY GIVING A CATEGORICAL FINDIN G TO THE EFFECT THAT EXPLANATION GIVEN BY THE ASSESSEE IS FALSE. IN THE SECOND SITUATION THE DEEMING FICTION WOULD COME TO PLAY BY THE FAILURE O F THE ASSESSEE TO SUBSTANTIATE HIS EXPLANATION IN RESPECT OF ANY FACT MATERIAL TO THE COMPUTATION OF TOTAL INCOME AND IN ADDITION TO THIS THE ASSESSE E IS NOT ABLE TO PROVE THAT SUCH EXPLANATION WAS GIVEN BONA FIDE AND ALL THE FA CTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME HAV E BEEN DISCLOSED BY THE ASSESSEE. THESE TWO SITUATIONS PROVIDED IN EXPLANAT ION 1 APPENDED TO SECTION 271(1)(C) MAKES IT CLEAR THAT THAT WHEN THIS DEEMIN G FICTION COMES INTO PLAY IN THE ABOVE TWO SITUATIONS THEN THE RELATED ADDITION OR DISALLOWANCE IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE FOR THE PURPOSE OF SECTION 271(1)(C) WOULD BE DEEMED TO BE REPRESENTING THE I NCOME IN RESPECT OF WHICH INACCURATE PARTICULARS HAVE BEEN FURNISHED. ITA NO.1682/AHD/2018 6 10. IN THE LIGHT OF THE ABOVE LET US CONSIDER THE FACTS OF THE PRESENT CASE. QUESTION FORMED BY HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. MULTI METALS (SUPRA) ARE AS UNDER: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE TRIBUNAL WAS RIGHT IN HOLDING THAT THE FEES PAID TO THE REGISTRAR OF COMPANIES FOR RAISING THE AUTHORIZED CAPITAL OF THE ASSESSEE-COMPANY WAS ALLOWABLE AS REVENUE EXPENDITURE ? 11. THIS QUESTION HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE. NO DOUBT DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F BROOKE BOND INDIA IS ALSO AVAILABLE BUT CAN IT BE CONSIDERED THAT THE ASSESSEE HAS INTENTIONALLY CLAIMED THIS AMOUNT ? IN ORDER TO EVALUATE THIS AS PECT WE HAVE TO BEAR IN MIND THAT THE ASSESSEE HAS DECLARED AN INCOME OF RS .12.54 CRORES. THERE COULD NOT BE ANY MALA-FIDE INTENTION AT THE END OF THE ASSESSEE TO MAKE AN ERRONEOUS CLAIM OF RS.4 90 000/- ONLY WHEN IT HAS F ILED RETURN OF INCOME AT SUCH A HUGE FIGURE. IT HARDLY MAKES ANY DIFFERENCE IN TAXABILITY FOR SUCH AN ORGANIZATION. IT MUST BE UNDER SOME HUMAN ERROR ON THE BASIS OF HONBLE RAJASTHAN HIGH COURTS DECISION. IT HAS DISCLOSED A LL THE FACTS AND DID NOT CHALLENGE THE ADDITION AFTER THE DECISION OF THE LD .CIT(A). CONSIDERING THE ABOVE ASPECTS WE ALLOW THIS APPEAL PARTLY AND DELE TE PENALTY REQUIRED TO BE CALCULATED ON THE ADDITION OF RS.4 90 000/- . IN O THER WORDS THE AO WILL EXCLUDE PENALTY COMPUTED ON THE DISALLOWANCE OF RS. 4 90 000/- MADE UNDER SECTION 35D AND CONFIRM REST OF THE PENALTY QUA ADDITIONS OF RS.51 000/- AND RS.11 319/-/ 12. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 19 TH NOVEMBER 2019 AT AHMEDABAD. SD/- SD/- (WASEEM AHMED ) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 19/11/2019