PURU INVESTMENT & CONSULTANTS P.LTD, MUMBAI v. ACIT (OSD) CIR 2(2), MUMBAI

ITA 2298/MUM/2010 | 2006-2007
Pronouncement Date: 08-07-2011 | Result: Allowed

Appeal Details

RSA Number 229819914 RSA 2010
Assessee PAN AAACP6204E
Bench Mumbai
Appeal Number ITA 2298/MUM/2010
Duration Of Justice 1 year(s) 3 month(s) 15 day(s)
Appellant PURU INVESTMENT & CONSULTANTS P.LTD, MUMBAI
Respondent ACIT (OSD) CIR 2(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 08-07-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 08-07-2011
Date Of Final Hearing 05-07-2011
Next Hearing Date 05-07-2011
Assessment Year 2006-2007
Appeal Filed On 23-03-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C MUMBAI BEFORE S/SHRI D.K.AGARWAL (JM) AND R.K.PANDA (A.M ) ITA NO.2298/MUM/2010 (ASSESSMENT YEAR:2006-07) M/S PURU INVESTMENT & CONSULTANTS P.LTD. 723/724 ARUN CHAMBERS TARDEO ROAD MUMBAI-400034. PAN: AAACP6204E ASSISTANT COMMISSIONER OF INCOME TAX (OSD) CIRCLE 2(2) AAYAKAR BHAVAN M.K.ROAD MUMBAI-400020 APPELLANT V/S RESPONDENT APPELLANT BY : SHRI JAYE SH DADIA RESPONDENT BY : SHRI ALEXAND ER CHANDY O R D E R PER D.K.AGARWAL (JM) THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 15.3.2010 PASSED BY THE LEA RNED COMMISSIONER OF INCOME TAX (A) FOR THE ASSESSMENT YEAR 2006-07. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT ASSESS EE COMPANY IS AN INVESTMENT NON-BANKING FINANCIAL CO MPANY. IT FILED RETURN DECLARING TOTAL INCOME OF RS.16 15 812/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS INTERALIA OBSERVED BY THE AO THAT THE ASSESSEE-COM PANY SOLD ONE OFFICE PREMISES FOR WHICH THE DEPRECIATIO N WAS CLAIMED EARLIER. THE SALE CONSIDERATION WAS RS.2 7 00 000/- ITA NO.2298/MUM/2010 (ASSESSMENT YEAR:2006-07) 2 AND THE WRITTEN DOWN VALUE WAS RS.14 39 724/-. TH E AO COMPUTED THE SHORT TERM CAPITAL GAIN UNDER SECTION 50 OF THE INCOME TAX ACT 1961( IN SHORT THE ACT) AT RS.12 06 276/- (SALE CONSIDERATION RS.27 00 000/- (-) COST OF SALE PROCEEDINGS RS.54 000/- (-) WDV RS.14 39 724/-) AS AGAINST RS.11 48 702/- SHOWN BY THE ASSESSEE. THE AR OF TH E ASSESSEE AGREED TO THE ADDITION COMPUTED BY THE AO. THE AO FURTHER OBSERVED THAT IN THE INCOME TAX RETURN A N AMOUNT OF RS.2 30 000/- WAS SHOWN AS DISALLOWABLE UNDER S ECTION 43B OF THE ACT. HOWEVER AT THE TIME OF HEARING TH E AR OF THE ASSESSEE STATED THAT THE DISALLOWANCE UNDER SEC TION 43B WOULD BE RS.3 18 538/- (-) RS.1 78 000/- (ACTUAL PAYMENT) = RS.1 40 538/-. HE FURTHER STATED THAT THIS AMOU NT WAS OMITTED TO BE TAKEN INTO ACCOUNT IN COMPUTATION OF INCOME OF THE ASSESSEE. ACCORDINGLY THE AO ADDED THE SAME T O THE TOTAL INCOME OF THE ASSESSEE. THE AO AFTER MAKING SOME OTHER DISALLOWANCES I.E.OUT OF BROKERAGE OF RS.54 000/- COMPLETED THE ASSESSMENT AT AN INCOME OF RS.20 15 720/- VIDE ORDER DATED 26.11.2008 PASSED UNDER SECTION 1 43(3) OF THE ACT. WHILE MAKING THE ASSESSMENT THE AO ALSO INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)( C ) OF TH E ACT. IN RESPONSE TO SHOW CAUSE AS TO WHY THE PENALTY UNDER SECTION 271(1)(C ) SHOULD NOT BE IMPOSED IT WAS SUBMITTED BY THE ASSESSEE AS UNDER : ITA NO.2298/MUM/2010 (ASSESSMENT YEAR:2006-07) 3 (I) SUNDRY ADVANCES RS.1 47 800/-:- IT WAS SUBMITTED THAT THE ASSESSEE COMPANY MADE A CLAIM OF THE ABOVE BY DEBITING THE SAME IN THE P AN D L ACCOUNT AND AS SUCH THE COMPANY HAS NOT CONCEALED A NY FACTS REGARDING THE CLAIM OF SUNDRY ADVANCES WRITTE N OFF. FURTHER THE ASSESSEE COMPANY DURING ASSESSMENT PROCEEDING FILED DETAILS OF SUNDRY ADVANCES WRITTEN OFF AND AS SUCH THERE WAS NO FILING OF INACCURATE PARTI CULARS. SIMPLY THE CLAIM IS NOT ALLOWABLE UNDER THE ACT WHI LE COMPUTING THE TOTAL INCOME AND WHICH THE ASSESSEE COMPANY HAS ACCEPTED IT CANNOT BE CONCLUDED THAT THERE IS CONCEALMENT OF INCOME ON THE PART OF THE COMPANY. (II) DISALLOWANCE U/S 43B OF THE ACT-RS.1 40 538/- :- IT IS SUBMITTED THAT THE ASSESSEE COMPANY HAD GIVE N THE INFORMATION ABOUT DISALLOWANCE U/S 43B IN THE NEW F ORM OF RETURN ITR-6. SINCE THE ITR-6 IS IN ELECTRONIC FORM AND WHICH WAS INTRODUCED FOR THE FIRST TIME IN THIS ASSESSMENT YEAR A MISTAKE HAD TAKEN PLACE IN COMPUTING THE TAXABLE INCOME. THE ASSESSEE COMPANY DURING THE COURSE OF ASSESSMENT PROCEEDINGS ADMITTE D THE MISTAKE AND EXPLAINED THAT THE CLAIM OF RS.2 30 000/- SHOWN IN THE RETURN WAS NOT CORRECT BUT WAS EXCESSI VE YOUR GOODSELF ACCEPTED THE ASSESSEE COMPANYS ARGUMENTS AND DISALLOWED RS.1 40.538/- AS AGAINST THE AMOUNT SHOWN IN THE ITR-6 AT RS.2 30 000/-. (III) INCREASE IN AMOUNT OF SHORT TERM CAPITAL GAIN :- THE ASSESSEE HAD SHOWN SHORT TERM CAPITAL GAIN AT RS.11 48 702/- THOUGH YOU HAVE WORKED OUT AT RS.12 06 276/-. SUCH DIFFERENCE OF RS.57 574/- IN T HE WORKING OF SHORT TERM CAPITAL GAIN CANNOT LEAD TO IMPOSITION OF CONCEALMENT PENALTY. 3. IN THE LIGHT OF THE ABOVE IT WAS CONCLUDED THAT THERE WAS NO CONCEALMENT NOR FILING OF ANY INACCUR ATE PARTICULARS AND WAS REQUESTED NOT TO LEVY PENALTY U/S 271(1)(C) OF THE ACT. ITA NO.2298/MUM/2010 (ASSESSMENT YEAR:2006-07) 4 3. HOWEVER THE AO DID NOT ACCEPT THE ASSESSEES EXPLANATION. HE OBSERVED THAT THE ASSESSEE HAD FUR NISHED INACCURATE PARTICULARS OF ITS INCOME. THE AO AFTER RELYING ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CA SE OF UNION OF INDIA V/S DHARAMENDRA TEXTILE PROCESSORS ( 2008) 306 ITR 277(SC) HELD THAT IT IS A FIT CASE TO LEVY PENALTY UNDER SECTION 271(1)( C ) OF THE ACT AND ACCORDING LY HE IMPOSED THE PENALTY OF RS.1 16 434/- VIDE ORDER D ATED 24.4.2009 PASSED UNDER SECTION 271(1)( C ) OF THE ACT. 4. ON APPEAL THE LEARNED COMMISSIONER OF INCOME TA X (A) WHILE OBSERVING THAT IT WAS ONLY AFTER THE SAME WERE NOTICED BY THE AO THAT THE APPELLANT ADMITTED SUCH MISTAKE WHICH CANNOT BE CONSIDERED BONAFIDE IN ANY MANNER AS THE APPELLANT WAS FULLY AWARE OF THE EXACT AMOUNT OF DE DUCTION ALLOWABLE AS PER THE ACT DIRECTED THE AO TO EXCLU DE THE AMOUNT OF PENALTY ON THE DISALLOWANCE OF BAD DEBTS AND CONFIRMED THE PENALTY ON THE OTHER TWO ADDITIONS IM POSED BY THE AO AND ACCORDINGLY PARTLY ALLOWED THE APPEAL. 5. BEING AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (A) THE ASSESSEE IS IN APPEAL BEFORE US TAKING THE FOLLOWING GROUNDS OF APPEAL : 1. THE CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING PENALTY LEVIED BY AO ON DISALLOWANCE OF EXPENSES UNDER SECTION 43B AND ON ADDITIONAL AMOUNT OF CAPITAL GAINS DURING ASSESSMEN T PROCEEDINGS. ITA NO.2298/MUM/2010 (ASSESSMENT YEAR:2006-07) 5 WITHOUT PREJUDICE TO THE ABOVE THE PENALTY LEVIED I S EXCESSIVE. 6. AT THE TIME OF HEARING THE LEARNED COUNSEL FOR THE ASSESSEE WHILE REITERATING THE SAME SUBMISSIONS AS SUBMITTED BEFORE THE AO AND THE LEARNED COMMISSION ER OF INCOME TAX (A) FURTHER SUBMITS THAT THE ASSESSEE H AS DISCLOSED COMPLETE FACTS IN THE RETURN OF INCOME IT SELF THEREFORE NEITHER THERE IS CONCEALMENT NOR FILING OF ANY INACCURATE PARTICULARS AND THEREFORE THE PENALTY SUSTAINED BY THE LEARNED COMMISSIONER OF INCOME TAX (A) BE DE LETED. 7. ON THE OTHER HAND THE LEARNED D.R. SUPPORTS TH E ORDER OF THE AO AND THE LEARNED COMMISSIONER OF INCOME TA X (A). 8. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THERE IS NO DISPUTE THAT THE ASSESSE E WHILE FILING THE RETURN HAS DISCLOSED ALL THE RELEVANT FACTS AND PARTICULARS I.E. SHORT TERM CAPITAL GAIN ON SALE O F OFFICE PREMISES AND DISALLOWANCE UNDER SECTION 43B OF THE ACT. WE FURTHER FIND THAT THE AO IN THE ASSESSMENT ORDE R HIMSELF ACCEPTED THAT THE ASSESSEE HAS SHOWN THE SHORT TERM CAPITAL GAIN OF RS.11 48 702/- AND HAS ALSO SHOWN IN THE I NCOME TAX RETURN FORM UNDER CLAUSE 17 AN AMOUNT OF RS.2 30 0 00/- DISALLOWED UNDER SECTION 43B OF THE ACT. HOWEVER AT THE TIME OF ASSESSMENT THE AO HAS COMPUTED THE INCOME FROM ITA NO.2298/MUM/2010 (ASSESSMENT YEAR:2006-07) 6 SHORT TERM CAPITAL GAIN AT RS.12 06 276/- AS AGAINS T RS.11 48 702/- OFFERED BY THE ASSESSEE AND SIMILARL Y THE AO HAS MADE DISALLOWANCE UNDER SECTION 43B AT RS.1 40 538/- AS AGAINST RS.2 30 000/- DISALLOWED B Y THE ASSESSEE IN THE RETURN OF INCOME FILED. THUS IT C ANNOT BE SAID THAT IT IS A CASE OF FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME AS HELD BY THE AO. 9. IN ORDER TO APPLY THE PROVISIONS OF SECTION 271 (1)(C) THERE HAS TO BE CONCEALMENT OF PARTICULARS OF INCOM E SECONDLY THE ASSESSEE MUST HAVE FURNISHED INACCURAT E PARTICULARS OF INCOME. 10. IN A RECENT JUDGMENT OF THE HONBLE APEX COURT IN CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. (2010) 322 ITR 158(SC) THEIR LORDSHIPS AFTER CONSIDERING VARIOUS DECISION S INCLUDING DILIP N. SHROFF VS. JCIT (2007) 291 ITR 519(SC) UN ION OF INDIA VS. DHARAMENDRA TEXTILE PROCESSORS (2008) 306 ITR 277(SC) AND SREE KRISHNA ELECTRICALS VS. STATE OF T AMIL NADU (2009) 23 VST 249 (SC) HAVE OBSERVED AND HELD (PAGE 158 HEADNOTES) AS UNDER: A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME- TAX ACT 1961 SUGGESTS THAT IN ORDER TO BE COVERED BY IT THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDL Y THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTION 271(1)(C) WOULD EMBRA CE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND TO BE INCORRECT OR ITA NO.2298/MUM/2010 (ASSESSMENT YEAR:2006-07) 7 INACCURATE THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. IN ORDER TO EXP OSE THE ASSESSEE TO PENALTY UNLESS THE CASE IS STRICTL Y COVERED BY THE PROVISION THE PENALTY PROVISION CAN NOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKIN G AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCUR ATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHI NG WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE T HE LIABILITY WOULD ARISE. TO ATTRACT PENALTY THE DET AILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE NOT EX ACT OR CORRECT NOT ACCORDING TO THE TRUTH OR ERRONEOUS . WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIE D BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORREC T OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C). A MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. 11. RESPECTFULLY FOLLOWING THE ABOVE DECISION AND K EEPING IN VIEW THAT IT IS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE HAS NOT FILED THE COMPLETE PARTICULARS OF ITS INCOME OR THE CLAIM MADE BY THE ASSESSEE WAS FOUND TO BE F ALSE OR UNTRUE BASED ON NO MATERIAL OR BONAFIDE BELIEF WE ARE OF THE VIEW THAT THERE IS NO CONCEALMENT ON THE PART OF TH E ASSESSEE WHICH MAY CALL FOR LEVY OF PENALTY UNDER SECTION 2 71(1)(C ) OF THE ACT. ACCORDINGLY THE PENALTY UNDER SECTION 2 71(1)(C ) IMPOSED BY THE AO AND SUSTAINED BY THE LEARNED COMMISSIONER OF INCOME TAX (A) IS DELETED. THE GRO UNDS TAKEN BY THE ASESEEE ARE THEREFORE ALLOWED. ITA NO.2298/MUM/2010 (ASSESSMENT YEAR:2006-07) 8 12. IN THE RESULT THE ASSESSEES APPEAL STANDS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 8TH JULY 20 11. SD SD (R.K.PANDA) (D.K.AGARWAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED 8TH JULY 2011 SRL: COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH 6. GUARD FILE. BY ORDER TRUE COPY ASSTT. REGISTRAR ITAT MUMBAI