THE ITO WD 1(3), THANE v. SHRI KIRTI RADIO & TVE CENTRE, THANE

ITA 4120/MUM/2008 | 2005-2006
Pronouncement Date: 25-11-2011 | Result: Dismissed

Appeal Details

RSA Number 412019914 RSA 2008
Assessee PAN AAEFK2898D
Bench Mumbai
Appeal Number ITA 4120/MUM/2008
Duration Of Justice 3 year(s) 5 month(s) 15 day(s)
Appellant THE ITO WD 1(3), THANE
Respondent SHRI KIRTI RADIO & TVE CENTRE, THANE
Appeal Type Income Tax Appeal
Pronouncement Date 25-11-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 25-11-2011
Date Of Final Hearing 14-11-2011
Next Hearing Date 14-11-2011
Assessment Year 2005-2006
Appeal Filed On 10-06-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A MUMBAI BEFORE SHRI J. SUDHAKAR REDDY A.M. AND SHRI V. DU RGA RAO J.M. ITA NO. 4120/MUM/2008 ASSESSMENT YEAR: 2005-06 INCOME TAX OFFICER WARD 1(3) APPELLANT LOWER GROUND FLOOR VARDAAN BLDG. MIDC WAGLE ESTATE THANE. VS. M/S KIRTI RADIO & TV CENTRE RESPONDENT 2 SHILPAYAN BUILDING SHIVAJI PATH THANE (W). (PAN AAEFK2898D) APPELLANT BY : MR. P.K.B. MENON RESPONDENT BY : MR. SUBODH RATNAPARKHI DATE OF HEARING : 14/11/2011 DATE OF PRONOUNCEMENT: 25/11/2011 ORDER PER V. DURGA RAO J.M.: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF CIT(A)-II THANE PASSED ON 11/03/2008 FOR THE ASSE SSMENT YEAR 2005-06 WHEREIN THE REVENUE HAS RAISED THE FOLLOWIN G GROUNDS OF APPEAL:- 1. WHETHER THE HONBLE CIT(A) WAS RIGHT IN LAW IN D ELETING THE PENALTY LEVIED U/S 271(1)(C) AMOUNTING TO RS. 10 23 532/- WITHOUT APPRECIATING THE FACTS AS NARRATED IN THE P ENALTY ORDER U/S 271(1)(C) WHICH HAS BEEN LEVIED BY THE AO. 2. WHETHER THE HONBLE CIT(A) WAS RIGHT IN DELETING THE PENALTY WITHOUT APPRECIATING THE FACTS THAT HAD THERE BEEN NO SURVEY ACTION AND HAD THE SPECIFIC DEFECTS NOT POINTED OUT DURING THE COURSE OF SURVEY THE ASSESSEE WOULD NOT HAVE COME FORWARD AND FILE REVISED RETURN OF INCOME DECLARING ADDITIONAL INCOME OF RS. 26 97 111/-. ITA NO. 4120/M/2008 M/S KIRTI RADIO & T.V. CENTRE 2 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE HAD FILED ITS RETURN OF INCOME FOR AY 2005-06 ON 29/10/ 2005 DECLARING TOTAL INCOME OF RS. 3 44 760/-. THE AO NOTICED THAT SUNDRY CREDITORS WERE HIGHLY INFLATED A SURVEY ACTION U/S 133A WAS CARRIED OUT IN THE BUSINESS PREMISES OF THE ASSESSEE FIRM ON 07/11/06. DURING THE COURSE OF SURVEY IT WAS FOUND THAT THE ENTRIES DI SCOUNT RECEIVED PERTAINING TO RELEVANT FINANCIAL YEAR WERE PASSED O N THE VERY FIRST DAY OF THE SUBSEQUENT FINANCIAL YEAR. WHEN THIS FACT WA S BROUGHT TO THE NOTICE OF THE PARTNER OF THE ASSESSEE FIRM THE ASS ESSEE FILED A REVISED RETURN OF INCOME ON 15/03/07 ACCEPTING THE INCOME O F RS. 31 41 870/-. THEREAFTER THE AO INITIATED PENALTY P ROCEEDINGS U/S 271(1)(C) OF THE ACT FOR CONCEALING THE PARTICULAR S OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME. NOTICE U/S 274 R.W.S. 271(1)(C) DATED 11/07/07 WAS ISSUED AND DULY SERVED ON THE ASSESSEE AND IN RESPONSE TO THE SAID NOTICE THE ASSESSEE F ILED A LETTER DATED 30/07/07 STATING THAT DURING THE COURSE OF SURVEY N OTHING WAS DETECTED BY THE DEPARTMENT WHICH WAS NOT IN CONSONA NCE WITH THE RETURN OF INCOME FILED BY THE ASSESSEE COMPANY. IT WAS FURTHER STATED THAT METHOD OF ACCOUNTING FOR DISCOUNT PASSED ON TO THE ASSESSEE BY THE ELECTRONIC GOODS MANUFACTURERS WAS NOT ACCURATE AND THIS WAS RESULTING INTO UNDERSTATEMENT OF INCOME TO A CERTAI N EXTENT. IT WAS ALSO STATED THAT THE REVISED RETURN DECLARING THERE IN INCOME OF RS. 31 41 870/- FILED AFTER COLLECTING NECESSARY DATA F ROM ALL OUR SUPPLIERS AND IDENTIFIED THE EXACT COMPONENT OF DIS COUNT WHICH WAS NOT ACCOUNTED FOR IN THE BOOKS OF ACCOUNT. THE AO R EJECTED THE EXPLANATION OFFERED BY THE ASSESSEE AND OBSERVED TH AT IT IS OBVIOUS FROM THE RECORDS THAT THE SURVEY ACTION CARRIED OUT U/S 133A OF THE ACT WAS THE ONLY FACTOR EXCLUSIVELY RESPONSIBLE FOR CONCERNING THE ASSESSEE. HE FURTHER OBSERVED THAT IT WAS ONLY DUE TO SURVEY ACTION THAT MODUS OPERANDI OF ASSESSEE CONCERN WAS DETECTE D. THE AO NOTED THAT THE VERY FACT THAT ASSESSEE HAD PASSED ENTRIES OF DISCOUNT PERTAINING TO RELEVANT FINANCIAL YEAR ON 1 ST APRIL IN THE IMMEDIATELY SUCCEEDING YEARS PROVES THAT THE ASSESSEE WAS VERY MUCH AWARE OF ITA NO. 4120/M/2008 M/S KIRTI RADIO & T.V. CENTRE 3 DISCOUNTS GRANTED TO IT BY SUPPLIER COMPANY. THE AO FURTHER NOTED THAT IT IS CLEARLY A CASE OF CONCEALMENT OF INCOME WITH AN INTENTION TO SUPPRESS THE INCOME OF EACH YEAR AND THE REVISED RE TURN HAD BEEN FILED ONLY AFTER DETECTION BY THE DEPARTMENT. FOLLO WING THE JUDGMENT OF THE BOMBAY HIGH COURT IN THE CASE OF JYOTI LAXMA N KONKAR VS. CIT 292 ITR 163 (BOM.) THE AO LEVIED PENALTY AMOU NTING TO RS. 10 23 532/- U/S 271(1)(C) R.WS. 274 OF THE ACT WHI CH IS EQUAL TO 100% OF THE AMOUNT OF TAX SOUGHT TO BE EVADED. AGGR IEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CI T(A). 3. BEFORE THE CIT(A) THE ASSESSEE SUBMITTED THAT T HE AO HAD LEVIED PENALTY U/S 271(1)(C) FOR THE ONLY REASON THAT THE ASSESSEE HAD FILED THE REVISED RETURN PURSUANT TO SURVEY ACTION U/S 13 3A. IT IS HOWEVER PERTINENT TO NOTE THAT NOTHING WAS FOUND DURING THE COURSE OF SURVEY ACTION U/S 133A CARRIED OUT ON 07/11/06 BUT ON ACCO UNT OF THE ASSESSMENT PROCEEDINGS FOR AY 2004-05. THE ASSESSEE RELIED UPON VARIOUS CASE LAWS IN SUPPORT OF ITS CASE. AFTER CO NSIDERING THE SUBMISSIONS OF THE ASSESSEE THE CIT(A) DELETED THE PENALTY BY OBSERVING AS UNDER:- I HAVE CAREFULLY CONSIDERED BOTH THE ARGUMENTS. IT IS SEEN FROM THE PENALTY ORDER DATED 25/09/2007 LEVIED BY THE LE ARNED AO THAT DURING THE COURSE OF SURVEY DATED 07/11/2006 IT WAS BROUGHT TO THE NOTICE OF THE PARTNER OF THE ASSESSE ES FIRM THAT THE ENTRIES DISCOUNTS PERTAINING TO RELEVANT FINANCIAL YEAR WERE PASSED ON THE VERY FIRST DAY OF THE SUBSEQUENT FINA NCIAL YEAR. HOWEVER IT IS PERTINENT TO NOTE THAT THE MANNER OF BRINGING THIS DEFICIENCY INTO THE KNOWLEDGE OF THE PARTNER OF THE FIRM EITHER A LETTER/STATEMENT ETC. NOT BEEN STATED IN THE PENAL TY ORDER. IT IS SEEN FROM RECORDS THAT DURING THE COURSE OF ASSESSM ENT THE ASSESSEES CLAIM IN THE REVISED RETURN WAS CROSS V ERIFIED WITH THE LEDGER EXTRACTS CALLED FROM VARIOUS PARTIES U/S 133(6) OF THE ACT AS WELL AS DOCUMENTS IMPOUNDED DURING THE COURS E OF SURVEY PROCEEDINGS VIDE ASSESSMENT ORDER DATED 22/03/07 FO R THE AY 2005-06 OF THE APPELLANT. IT IS FURTHER MENTIONED I N THE SAID ORDER THAT ON VERIFICATION OF THE SAME IT WAS SEEN THAT T HE DISCOUNTS RECEIVED HAD BEEN CORRECTLY SHOWN IN THE REVISED RE TURN OF INCOME. INCOME SHOWN IN THE REVISED RETURN OF INCOM E FILED ON 15/03/2007 IS ACCEPTED AS SUCH. THIS FACTS GOES TO PROVE THE POINT RAISED BY THE LEARNED AR THAT THE ASSESSMENT HAD BEEN MADE ON THE REVISED RETURN VOLUNTARILY FILED BY THE ASSESSEE ON ITA NO. 4120/M/2008 M/S KIRTI RADIO & T.V. CENTRE 4 15/03/07 BEFORE THE ISSUANCE OF NOTICE U/S 148/142( 1) OF THE ACT BY THE DEPARTMENT. MOREOVER IT IS FURTHER STA TED IN THE SAID ASSESSMENT ORDER THAT SINCE THE ASSESSEE HAD REVISE D ITS RETURN AS A RESULT OF THE SURVEY ACTION CARRIED OUT ON 07/ 11/06 IT COULD NOT BE HELD THE ASSESSEE HAD REVISED ITS RETURN VOL UNTARILY. HERE AGAIN IT HAS BEEN MENTIONED THAT DURING THE COURSE OF SURVEY THE SAID DEFAULT WAS NOT BROUGHT TO THE NOTICE OF T HE ASSESSEE. IN THE LIGHT OF THE ABOVE THE LEARNED ARS CONTENTION SIGHTING THE DECISIONSIN SUJATHA RUBBERS VS. ITO AND ANR. 194 I TR 355 (A) A.N. SARVARIYA VS. CWT 158 ITR 803 (DELHI) MADHUKA R M. MODI VS. CWT 113 ITR 318 (GUJ.) AND ALSO THE HONBLE SU PREME COURTS DECISION IN THE CASE OF CIT VS. SURESH CHAN DRA MITTAL 251 ITR 9 (SC) IS IN ORDER. IN VIEW OF THE ABOVE P ENALTY LEVIED OF RS. 10 23 532/- U/S 271(1)(C) IS DELETED. 4. AGGRIEVED BY THE ORDER OF THE CIT(A) THE REVENU E IS IN APPEAL BEFORE US. 5. BEFORE US THE LEARNED DR SUBMITTED THAT THE ASS ESSEE HAS NOT DISCLOSED THE DETAILS PROPERLY AND ONLY AFTER CONDU CTING SURVEY IT WAS FOUND THAT THE ENTRIES DISCOUNT RECEIVED PERTAINI NG TO RELEVANT FINANCIAL YEAR WERE PASSED ON THE VERY FIRST DAY OF THE SUBSEQUENT FINANCIAL YEAR. HE CONTENDED THAT WHEN THE SAID DET ECTION BROUGHT TO THE NOTICE OF THE ASSESSEE THE ASSESSEE FILED REVI SED RETURN OF INCOME. THEREFORE THE LEARNED DR SUBMITTED THAT IT IS A FI T CASE TO IMPOSE PENALTY U/S 271(1)(C) OF THE ACT. 6. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE A SESSSEE SUBMITTED THAT DISCOUNT RECEIVED ENTRIES PERTAININ G TO RELEVANT FY WERE PASSED ON THE VERY FIST DAY OF SUBSEQUENT FY. IT IS SUBMITTED THAT THE ASSESSEE HAS NOT FILED ANY QUANTUM APPEAL. IT IS POINTED OUT THAT DURING THE COURSE OF SURVEY NOTHING WAS FOUND AND THE ASSESSEE VOLUNTARILY FILED THE REVISED RETURN OF INCOME AS P ER SECTION 139(5) OF THE ACT WHICH WAS ACCEPTED WITHOUT ANY CHANGES/MOD IFICATION. IN SUPPORT OF ASSESSEES CASE THE LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN THE C ASE CIT VS. SURESH CHANDRA MITTAL 251 ITR 9 (SC). ITA NO. 4120/M/2008 M/S KIRTI RADIO & T.V. CENTRE 5 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS PERUSE D THE RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELO W. THE AO PROCEEDED TO LEVY OF PENALTY U/S 271(1)(C) FOR THE REASON THAT THE ASSESSEE HAD REVISED ITS RETURN OF INCOME AS A RESU LT OF THE SURVEY ACTION. THE SUBMISSION OF THE ASSESSEE IS THAT THE ADDITIONAL INCOME VOLUNTARILY OFFERED TO TAX IN THE REVISED RETURN FI LED WITHIN THE TIME LIMIT GRANTED U/S 139(5) OF THE ACT THEREFORE IT IS NOT A CASE OF CONCEALMENT OF INCOME OR FURNISHING INACCURATE PART ICULARS OF INCOME. HE FURTHER SUBMITTED THAT THE ERROR IN THE ORIGINAL RETURN DID NOT COME TO LIGHT ON ACCOUNT OF SURVEY ACTION U/S 133A CARRIED OUT ON 07/11/06 BUT ON ACCOUNT OF THE ASSESSMENT PROCEEDIN GS FOR AY 2004- 05. THE CIT(A) GAVE A FINDING THAT THE MANNER OF BR INGING THE DEFICIENCY THAT THE ENTRIES DISCOUNTS PERTAINING T O RELEVANT FY WERE PASSED ON THE VERY FIRST DAY OF THE SUBSEQUENT FY INTO THE KNOWLEDGE OF THE PARTNER OF THE FIRM EITHER A LETTER/STATEMEN T ETC HAS NOT BEEN STATED IN THE PENALTY ORDER. HE FURTHER GAVE A FIND ING THAT DURING THE COURSE OF ASSESSMENT THE ASSESSEES CLAIM IN THE R EVISED RETURN WAS CROSS VERIFIED WITH THE LEDGER EXTRACTS CALLED FRO M VARIOUS PARTIES U/S 133(6) OF THE ACT AS WELL AS DOCUMENTS IMPOUNDED DU RING THE COURSE OF SURVEY PROCEEDINGS VIDE ASSESSMENT ORDER DATED 2 2/03/07 FOR THE AY 2005-06 OF THE APPELLANT. IT IS FURTHER MENTIONE D IN THE SAID ORDER THAT ON VERIFICATION OF THE SAME IT WAS SEEN THAT T HE DISCOUNTS RECEIVED HAD BEEN CORRECTLY SHOWN IN THE REVISED RE TURN OF INCOME. INCOME SHOWN IN THE REVISED RETURN OF INCOME FILED ON 15/03/2007 IS ACCEPTED AS SUCH. AFTER CAREFUL CONSIDERATION OF TH E ENTIRE FACTS OF THE CASE WE FIND THAT THE REVENUE HAS FAILED TO DISCHA RGE ITS BURDEN LIES UNDER THE PROVISIONS OF SECTION 271(1)(C) OF THE AC T THAT THE ASSESSEE EITHER CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. NO DOUBT THAT THE ASSESSEE HAS FILED REVISE D RETURN OF INCOME AFTER CONDUCTING THE SURVEY WHICH IS NOT SUFFICIEN T TO INVOKE THE PROVISIONS OF SECTION 271(1)(C). TO INVOKE PENALTY PROCEEDINGS U/S 271(1)(C) THE PRIMARY ONUS OF THE REVENUE IS THAT IT HAS TO BE PROVED ITA NO. 4120/M/2008 M/S KIRTI RADIO & T.V. CENTRE 6 THAT THE ASSESSEE HAS CONCEALED ITS INCOME OR FURNI SHED INACCURATE PARTICULARS OF INCOME. IN THIS CASE THE AO HAS NOT MADE ANY ENQUIRY/INVESTIGATION TO DISCHARGE THE SAID ONUS L INES ON HIM. IN THIS CONNECTION WE REFER TO THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF SURESH CHANDRA MITTAL (SUPRA) ON WHICH RELIANCE PLACED BY THE ASSESSEE AND THE FACTS OF THE SAID CASE ARE EXTRACTED BELOW: THE ASSESSEE HAD ORIGINALLY FILED RETURNS SHOWING M EAGER INCOME. WHEN AFTER ACTION U/S 132 OF THE ACT A NO TICE U/S 148 WAS SERVED ON HIM HE FILED REVISED RETURNS SHOWING HIGHER INCOME. EVENTUALLY ASSESSMENT ORDERS WERE PASSED A ND THE RETURNS SUBMITTED REGULARIZED U/S 148. IN PENALTY P ROCEEDINGS U/S 271 THE ASSESSEE CLAIMED THAT HE HAD OFFERED A DDITIONAL INCOME TO BUY PEACE OF MIND AND AVOID LITIGATION. P ENALTY ORDERS WERE PASSED AND THE CIT(A) CONFIRMED THE ORDERS. AP PELLATE TRIBUNAL HELD THAT THE DEPARTMENT HAD NOT DISCHARGE D ITS BURDEN OF PROVING CONCEALMENT AND HAD SIMPLY RESTED ITS CO NCLUSION ON THE ACT OF VOLUNTARY SURRENDER DONE BY THE ASSESSEE IN GOOD FAITH AND THAT PENALTY COULD NOT BE LEVIED. ON REFERENCE THE HIGH COURT (241 ITR 124) HELD THAT NO PENALTY COULD BE LEVIED FOR CONCEALMENT. THE DEPARTMENT PREFERRED APPEALS TO TH E SUPREME COURT AND THE SUPREME COURT DISMISSED THE APPEALS H OLDING THAT NO INTERFERENCE WITH THE ORDER OF THE HIGH COURT WA S CALLED FOR AND AFFIRMED THE ORDER OF THE HIGH COURT. 8. THE ABOVE JUDGMENT OF THE HONBLE SUPREME COURT SQUARELY APPLIES TO THE CASE OF THE ASSESSEE THEREFORE RES PECTFULLY FOLLOWING THE SAME WE UPHOLD THE ORDER OF THE CIT(A) IN CALC ELLING THE PENALTY OF RS. 10 23 532/- LEVIED BY THE AO U/S 271(1)(C) O F THE ACT. ACCORDINGLY THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 9. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSE D. PRONOUNCED IN THE OPEN COURT ON THIS 25 TH DAY OF NOVEMBER 2011. SD/- SD/- (J. SUDHAKAR REDDY) (V. DU RGA RAO) ACCOUNTANT MEMBER JUDI CIAL MEMBER MUMBAI DATED: 25 TH NOVEMBER 2011 KV ITA NO. 4120/M/2008 M/S KIRTI RADIO & T.V. CENTRE 7 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE A BENCH I.T .A.T. MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR I.T.A.T. MUMBAI.