DCIT 3(1), MUMBAI v. EXCEL APPARELS EXPORTS P.LTD, MUMBAI

ITA 2059/MUM/2012 | 2004-2005
Pronouncement Date: 11-10-2013 | Result: Dismissed

Appeal Details

RSA Number 205919914 RSA 2012
Assessee PAN AAACE0314Q
Bench Mumbai
Appeal Number ITA 2059/MUM/2012
Duration Of Justice 1 year(s) 6 month(s) 14 day(s)
Appellant DCIT 3(1), MUMBAI
Respondent EXCEL APPARELS EXPORTS P.LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 11-10-2013
Appeal Filed By Department
Order Result Dismissed
Bench Allotted E
Tribunal Order Date 11-10-2013
Date Of Final Hearing 30-09-2013
Next Hearing Date 30-09-2013
Assessment Year 2004-2005
Appeal Filed On 28-03-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH MUMBAI BEFORE SHRI P.M. JAGTAP ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA JUDICIAL MEMB ER / ITA NO. 2059 / MUM./ 2012 ( / ASSESSMENT YEAR : 20 0 4 05 ) DY. COMMISSIONER OF INCOME TAX CIRCLE 3(1) AAYAKAR BHAVAN 101 M.K. ROAD MUMBAI 400 020 .. / APPELLANT V/S EXCEL APPARELS EXPORTS PVT. LTD. 111/113 DR. NARIMAN ROAD NEAR BENGAL CHEMICALS MUMBAI 400 025 .... / RESPONDENT PERMANENT ACCOUNT NUMBER AAACE0314Q / C.O. NO. 68/MUM./2013 ( 2059 /MUM./201 2 ) ( A RISING OUT OF ITA NO. 2059 /MUM./201 2 ( / ASSESSMENT YEAR : 20 04 05 ) EXCEL APPARELS EXPORTS PVT. LTD. 111/113 DR. NARIMAN ROAD NEAR BENGAL CHEMICALS MUMBAI 400 025 .. CROSS OBJECTOR V/S DY. COMMISSIONER OF INCOME TAX CIRCLE 3(1) AAYAKAR BHAVAN 101 M.K. ROAD MUMBAI 400 020 .... / RESPONDENT PERMANENT ACCOUNT NUMBER AAACE0314Q / ASSESSEE BY : MR. A.M. SHAH / REVENUE BY : MRS. JOTHILAKSHMI NAYAK EXCEL APPARELS EXPORTS PVT. LTD. 2 / DATE OF HEARING 30.09.2013 / DATE OF ORDER 11 - 10 - 2013 / ORDER / PER AMIT SHUKLA J.M. THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVENU E AND THE CROSS OBJECTION BY THE ASSESSEE CHALLENGING THE IMPUGNED ORDER DATED 21 ST DECEMBER 2011 PASSED BY THE LEARNED COMMISSIONER (APPEALS) V I MUMBAI FOR THE ASSESSMENT YEAR 200 4 05 IN THE MATTER OF LEVY OF PENALTY UNDER SECTION 271(1)(C) IMPOSED B Y THE ASSESSING OFFICER AND CONFIRMED BY THE LEARNED COMMISSIONER (APPEALS) ON ACCOUNT OF PRIOR PERIOD EXPENSES OF RS. 4 04 202 AND DISALLOWANCE OF STITCHING CHARGES OF RS.10 09 568/ - . 2. IT IS SEEN FROM THE ASSESSMENT ORDER THAT THE ASSESSEE IN THE TAX AUDI T REPORT HAS DISCLOSED PRIOR PERIOD EXPENSES UNDER VARIOUS HEADS SUCH AS TESTING CHARGES COMMISSION ON SALES COURIER CHARGES SECURITY CHARGES AND PROFESSIONAL FEES. IN RESPONSE TO THE SHOW CAUSE NOTICE NO PROPER JUSTIFICATION WAS FILED BEFORE THE ASSESS ING OFFICER AND HENCE ADDITION WAS MADE IN THE ASSESSMENT ORDER . THIS ADDITION ALSO STOOD CONFIRMED FROM THE STAGE OF LEARNED COMMISSIONER (APPEALS). ON THIS BACKGROUND THE ASSESSING OFFICER HAS LEVIED PENALTY ON THIS DISALLOWANCE. SIMILARLY WITH REGARD TO THE CLAIM OF STITCHING CHARGES THE ASSESSING OFFICER IN THE ASSESSMENT ORDER NOTED THAT THE ASSESSEE HAS CLAIMED STITCHING CHARGES PAID TO VARIOUS PARTIES AT RS. 1 00 30 180. IN ORDER TO VERIFY THE GENUINENESS OF THE PAYMENT HE EXCEL APPARELS EXPORTS PVT. LTD. 3 ISSUED NOTICES UNDER S ECTION 133(6) TO VARIOUS PERSONS. OUT OF 85 PERSONS TO WHOM NOTICES WERE ISSUED ONLY IN THE CASE OF 12 PERSONS THE PROPER CONFIRMATION OR REPLY COULD NOT BE RECEIVED OR THE SUMMONS COULD NOT BE SERVED. THE LIST OF SUCH PERSONS HAS BEEN ELABORATED AT PARA 3 OF THE ASSESSMENT ORDER AGAINST WHOM THE PAYMENT MADE AGGREGATED TO RS. 16 09 568. SIMPLY O N THIS GROUND THE DISALLOWANCE WAS MADE. THIS HAS ALSO BEEN CONFIRMED BY THE LEARNED COMMISSIONER (APPEALS). T HE PENALTY HAS BEEN LEVIED BY THE ASSESSING OFFIC ER ON THIS BACKGROUND. 3. BEFORE THE LEARNED COMMISSIONER (APPEALS) IT WAS SUBMITTED THAT THE ASSESSEE HAS SUBMITTED THE DETAILS OF PRIOR PERIOD OF EXPENDITURE IN THE FORM 3CD AT ANNEXURE C CLAUSE 22(B) WHICH CONTAINS THE VOUCHER NUMBER AMOUNT CREDITED O R DEBITED IN THE PROFIT & LOSS ACCOUNT. THIS PRIOR PERIOD EXPENSES RELATED TO PROFESSIONAL FEES TESTING CHARGES ETC. FOR WHICH BILLS WERE RECEIVED AFTER THE CLOSING OF THE ACCOUNTING YEAR AND THEREFORE THE SAME WERE TREATED AS PRIOR PERIOD EXPENSES. S INCE ALL THE PARTICULARS AND DETAILS HAVE BEEN FURNISHED THEREFORE NO PENALTY CAN BE LEVIED UNDER SECTION 271(1)(C). SIMILARLY REGARDING STITCHING CHARGES IT WAS SUBMITTED THAT OUT OF S UM OF RS. 1 00 30 180 THE PAYMENT AGGREGATING TO RS. 85 LAKHS STOO D CONFIRMED. IT WAS ONLY WITH RESPECT TO 12 PARTIES THAT THEY DID NOT RESPOND DUE TO FEAR OF INCOME TAX AUTHORITIES. HOWEVER THESE PAYMENTS ARE DULY SUPPORTED BY THE BILLS COPIES OF BANK ACCOUNT SHOWING CHEQUE PAYMENTS AND FORM NO. 16A SHOWING DEDUCTION OF TDS ON SUCH PAYMENT S AND PERMANENT ACCOUNT NUMBER OF THE PARTIES ETC. THE APPEAL WAS NOT FILED EXCEL APPARELS EXPORTS PVT. LTD. 4 BEFORE THE TRIBUNAL AS THERE WAS NO ULTIMATE TAX AFFECT ON ANY OF THE DISALLOWANCE. THE LEARNED COMMISSIONER (APPEALS) AFTER APPRECIATING THESE FACTS HAS D ELETED THE PENALTY. 4. BEFORE US THE LEARNED DEPARTMENTAL REPRESENTATIVE RELYING ON THE PENALTY ORDER SUBMITTED THAT JUST BECAUSE THE ASSESSEE HAS CLAIMED PRIOR PERIOD EXPENSES IT DOES NOT MAKE SUCH EXPENSES ALLOWABLE IN THIS YEAR UNLESS THERE IS SOME PRO PER EVIDENCE ON RECORD. IT APPEARS THAT ASSESSEE HAS NOT PROVED THIS CLAIM BEFORE THE A.O. IN THE CASE OF STITCHING CHARGES ALSO NO CONFIRMATION WHATSOEVER HAS BEEN RECEIVED IN CASE OF 12 PERSONS THEREFORE PENALTY HAS RIGHTLY BEEN LEVIED ON ACCOUNT OF TH ESE DISALLOWANCE S . 5. ON THE OTHER HAND THE LEARNED COUNSEL SUBMITTED THAT INSOFAR AS THE PRIOR PERIOD EXPENSES ARE CONCERNED THESE RELATE TO TESTING CHARGES PROFESSIONAL FEES SECURITY CHARGES AND COMMISSION ON SALES WHEREIN THE BILLS WERE RECEIVED AFTE R THE CLOSING OF ACCOUNTING PERIOD AND THE EXPENSES RELATED TO FINANCIAL YEAR 2003 04 AND B ILLS WERE RECEIVED MOSTLY AFTER 1 ST APRIL 2004. ALL THESE DETAILS WERE DULY FURNISHED IN THE TAX AUDIT REPORT ALONG WITH THE VOUCHER NUMBER AND THE AMOUNT. THUS IT CANNOT BE SAID THAT IT IS A CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN CASE OF STITCHING CHARGES THE ASSESSEE HAS FURNISHED THE COPY OF ACCOUNT OF THESE PARTIES GIVING ALL THE DETAILS. IN CASE OF A LL THESE PARTIES THE BILLS RAISED BY THEM WERE FURNISHED ALONG WITH THE DETAILS OF PAYMENTS MADE THROUGH ACCOUNT PAYEE CHEQUE S AND RELEVANT ENTRY IN THE BANK STATEMENT TO THIS EFFECT AND LASTLY THE TDS WERE DEDUCTED ON EACH AND EVERY PAYMENT. THUS ON THESE EXCEL APPARELS EXPORTS PVT. LTD. 5 FACTS STITCHING CHARGES CANNOT BE HEL D TO BE BOGUS OR NON GENUINE AND THEREFORE PENALTY CANNOT BE LEVIED ON THIS SCORE ALSO. 6. WE HAVE HEARD THE RIVAL CONTENTION PERUSED THE RELEVANT FINDINGS OF THE AUTHORITIES BELOW AND THE MATERIAL AVAILABLE ON RECORD. INSOFAR AS THE CLAIM OF PRIOR PERIOD EXPENSES IT IS EVIDENT FROM THE DETAILS GIVEN IN THE AUDIT REPORT IN FORM NO.3CD THAT ALL THE PARTICULARS ALONG WITH THE VOUCHER NUMBERS OF THESE EXPENSES WERE GIVEN WHICH PERTAIN TO THE FINANCIAL YEAR 2003 04 I.E. THE ASSESSMENT YEAR 2004 05 HOWEVER THE BILLS WERE RECEIVED AFTER 1 ST APRIL 2004. THUS ON THIS BASIS THE ASSESSEE HAD MADE A CLAIM OF PRIOR PERIOD EXPENSES IN THE RETURN OF INCOME. NO MATERIAL HAS BEEN BROUGHT ON RECORD THAT THESE DETAILS ARE NOT CORREC T O R THE EXPENSES DO NOT PERTAIN TO THE RELEVANT FINANCIAL YEAR. IN SUCH A SITUATION IT CANNOT BE HELD THAT THE ASSESSEE HAS FURNISHED ANY INACCURATE PARTICULARS OF INCOME AND THEREFORE THE LEARNED COMMISSIONER (APPEALS) HAS RIGHTLY DELETED THE PENALTY ON SUCH A DISALLOWANCE AS ALL THE MA TERIAL FACTS HAVE BEEN DULY DISCLOSED. IN CASE OF STITCHING CHARGES ALSO MOST OF THE EXPENSES GOT VERIFIED FROM 3 RD PARTY ENQUIRY AT THE ASSESSMENT STAGE. IT WAS ONLY IN RESPECT OF PART AMOUNT OF RS. 16 09 568 OUT OF 1 00 30 180 THAT THE PARTIES DID NOT R ESPOND AT THE ASSESSMENT STAGE. HOWEVER IN ORDER TO ESTABLISH ITS CLAIM OF PAYMENT THE ASSESSEE HAS FURNISHED COPIES OF BILLS DETAILS OF ACCOUNT PAYEE CHEQUE COPY OF BANK STATEMENT REFLECTING SUCH PAYMENTS FORM 16A SHOWING TDS DEDUCTED ON SUCH PAYMENT S AND ALSO THE DETAILS OF PERMANENT ACCOUNT NUMBER OF SUCH PARTIES. BEYOND THIS THE ASSESSEE COULD NOT BE EXCEL APPARELS EXPORTS PVT. LTD. 6 EXPECTED TO FURNISH MORE EVIDENCE IN SUPPORT OF THE CLAIM. O N THESE FACTS IT CANNOT BE HELD THAT THE ASSESSEE IS GUILTY OF FURNISHING OF ANY INACCUR ATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. THE FINDINGS OF THE LEARNED COMMISSIONER (APPEALS) WHICH IS BASED ON APPRECIATION OF FACTS CANNOT BE DEVIATED AND ACCORDINGLY THE SAME IS UPHELD. THUS THE GROUND RAISED BY THE REVENUE IS TREATED AS DIS MISSED. 7. 8. IN THE RESULT REVENUES APPEAL IS TREATED AS DISMISSED. 9. THE ASSESSEE HAS FILED CROSS OBJECTION NO. 68/MUM./2013 WHICH IS ARISING OUT OF THE ABOVE APPEAL PREFERRED BY THE REVENUE. 10. SINCE THE CROSS OBJ ECTION PREFERRED BY THE ASSESSEE IS IN SUPPORT OF THE APPEAL FILED BY THE REVENUE AND THE APPEAL OF THE REVENUE IS DISMISSED VIDE OUR CONCLUSION DRAWN IN PARA 6 ABOVE THE ASSESSEES CROSS OBJECTION BECOMES INFRUCTUOUS. ACCORDINGLY THE GROUND RAISED IN TH E CROSS OBJECTION IS TREATED AS DISMISSED. 11. 10. IN THE RESULT ASSESSEES CROSS OBJECTION IS TREATED AS DISMISSED. 12. 1 2 . TO SUM UP REVENUES APPEAL AND CROSS OBJECTORS CROSS APPEAL ARE TREATED AS DISMISSED. 11 - 10 - 2013 ORDER PRONOUNCED IN THE OPEN COURT ON 11 - 10 - 2013. EXCEL APPARELS EXPORTS PVT. LTD. 7 SD/ - SD/ - SD / - P.M. JAGTAP ACCOUNTANT MEMBER SD / - AMIT SHUKLA JUDICIAL MEMBER MUMBAI DATED : 11 - 10 - 2013 / COPY OF THE ORDER FORWARDED TO : (1) / THE ASSESSEE ; (2) / THE REVENUE; (3) / THE CIT(A ) ; (4) / THE CIT MUMBAI CITY CONCERNED ; (5) / THE DR ITAT MUMBAI ; (6) / GUARD FILE . / TRUE COPY / BY ORDER / PRADEEP J. CHOWDHURY / SR. PRIVATE SECRETARY / / (DY./ASSTT. REGISTRAR) / ITAT MUMBAI