ITO 9(2)(4), MUMBAI v. PARIKH INVESTMENTS & DEVELOPMENTS P. LTD, MUMBAI

ITA 4760/MUM/2009 | 2005-2006
Pronouncement Date: 07-05-2010 | Result: Dismissed

Appeal Details

RSA Number 476019914 RSA 2009
Assessee PAN AAACP2060J
Bench Mumbai
Appeal Number ITA 4760/MUM/2009
Duration Of Justice 8 month(s) 25 day(s)
Appellant ITO 9(2)(4), MUMBAI
Respondent PARIKH INVESTMENTS & DEVELOPMENTS P. LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 07-05-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 07-05-2010
Assessment Year 2005-2006
Appeal Filed On 13-08-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C : MUMBAI BEFORE SHRI D.K. AGARWAL (JM) AND SHRI T.R. SOOD (AM) ITA NO.4760/MUM/2009 ASSESSMENT YEAR : 2005-06 INCOME TAX OFFICER WARD 9(2)(4) 255 AAYAKAR BHAVAN M.K. ROAD MUMBAI-400 020. ..( APPELLANT ) VS. M/S. PARIKH INVESTMENT & DEVELOPMENTS P. LTD. 303 VIKAS CHAMBER MITH CHOWKY LINK ROAD MALAD(W) MUMBAI-400 064. ..( RESPONDENT ) P.A. NO. (AAACP 2060 J) APPELLANT BY : SHRI SUMEET KUMAR RESPONDENT BY : SHRI R.C . JAIN O R D E R PER D.K. AGARWAL (JM). THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER DATED 11.6.2009 PASSED BY THE LD. CIT(A) FOR TH E ASSESSMENT YEAR 2005-06. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE COM PANY IS ENGAGED IN THE BUSINESS OF DEVELOPMENT AND CONSTRUCTION. IT FILED RETURN DECLARING TOTAL INCOME OF RS.8 36 510/- AFTER CL AIMING DEDUCTION U/S.80IB (10) OF THE INCOME TAX 1961 (THE ACT) RS.57 6 7 289/-. ITA NO.4760/M/09 A.Y:05-06 2 DURING THE COURSE OF ASSESSMENT PROCEEDING IT WAS INTERALIA OBSERVED BY THE AO THAT THERE IS NET MISCELLANEOUS INCOME AMOUNTI NG TO RS.7 31 419/- BEING INCOME FROM OTHER THAN HOUSING DE VELOPMENT ACTIVITIES DOES NOT QUALIFY FOR THE DEDUCTION U/S.80I B(10) AND ACCORDINGLY THE AO AFTER DISALLOWING THE DEDUCTION TO T HE EXTENT OF RS.7 31 419/- COMPLETED THE ASSESSMENT AT AN INCOME OF RS.15 67 930/- VIDE ORDER DATED 30.11.2007 PASSED U/S.1 43(3) OF THE ACT. THE AO WHILE COMPLETING THE ASSESSMENT ALSO INITIAT ED PENALTY PROCEEDING U/S. 271(1)(C) OF THE ACT. IN RESPONSE TO NOTI CE TO SHOW CAUSE AS TO WHY PENALTY U/S. 271(1)(C) SHOULD NOT BE IMP OSED IT WAS SUBMITTED THAT THE PENALTY PROCEEDINGS HAVE BEEN INIT IATED BECAUSE OF DISALLOWANCE OF CLAIM U/S.80IB . IT WAS FURTHER SUBMITTE D THAT THE ASSESSEE NEITHER CONCEALED ANY INCOME NOT FURNISHED ANY IN CORRECT PARTICULARS SO AS TO WARRANT THE LEVY OF PENALTY U/S. 2 71(1)(C) OF THE ACT. THE ASSESSEE AFTER RELYING ON VARIOUS DECISIONS MENTIO NED IN THE IMPUGNED PENALTY ORDER DATED 26.5.2008 REQUESTED TO DROP THE PENALTY. HOWEVER THE AO WHILE OBSERVING THAT IT WAS ONLY THROUGH SCRUTINY PROCEEDINGS THAT IT CAME OUT THAT THE ASSESSEE HAS CL AIMED EXCESS DEDUCTION U/S. 80IB(10) OF THE ACT RELIED ON CERTA IN DECISIONS WAS OF THE VIEW THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF SEC.271(1)(C) OF THE A CT AND ACCORDINGLY IMPOSED PENALTY OF RS.2 67 644/- VIDE ORDE R DATED ITA NO.4760/M/09 A.Y:05-06 3 26.5.2008 PASSED U/S.271(1)(C) OF THE ACT. ON APPEAL THE LD. CIT(A) WHILE OBSERVING THAT THE ASSESSEE COMPANY WAS UNDER A BONAFIDE IMPRESSION THAT THE INCOME IN QUESTION WAS ELIGIBLE FOR DEDUCTION U/S.80IB HENCE THERE IS NO CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF HIS INCOME HELD THAT THE AO WAS NOT CORRE CT IN LEVYING PENALTY U/S. 271(1)(C) AND ACCORDINGLY DELETED THE P ENALTY IMPOSED BY THE AO. 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE REVENUE IS IN APPEAL BEFORE US TAKING FOLLOWING EFFECTIVE GROUND OF APPEAL: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED HOLDING THAT THE A SSESSING OFFICER WAS NOT CORRECT IN LEVYING PENALTY U/S.271( 1)(C) OF THE INCOME-TAX ACT 1961 ON DEDUCTION CLAIMED BY ASSESSEE U/S.80IB(10) OF THE INCOME TAX ACT 1961 O N MISCELLANEOUS INCOME AMOUNTING TO RS.7 31 419/- WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE FUR NISHED INACCURATE PARTICULARS OF INCOME BY CLAIMING WRONG DEDUCTION U/S.80IB(10) AND IT FAILED TO SUBSTANTIAT E ITS EXPLANATION AND ALSO FAILED TO PROVE THAT EXPLANATI ON OFFERED BEFORE THE ASSESSING OFFICER WAS BONAFIDE. 4. AT THE TIME OF HEARING THE LD. DR SUBMITS THAT FOR THE REASONS AS DISCUSSED IN THE ASSESSMENT ORDER PENALTY ORDER AND THE DE CISIONS RELIED ON BY THE AO IN THE PENALTY ORDER THE LD. C IT(A) WAS NOT JUSTIFIED IN DELETING THE PENALTY IMPOSED BY THE AO. THE RELIANCE WAS ALSO PLACED ON THE DECISION IN UNION OF INDIA VS. DHARAM ENDRA TEXTILE PROCESSORS (2008) 306 ITR 277 (SC). ITA NO.4760/M/09 A.Y:05-06 4 5. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSESSEE WH ILE REITERATING THE SAME SUBMISSIONS AS SUBMITTED BEFORE TH E AO AND THE LD. CIT(A) FURTHER SUBMITS THAT THE ASSESSEE HAS FILED COMP LETE DETAILS OF HIS INCOME AND THE ASSESSEE WAS UNDER THE BONAFIDE BELIEF THAT THE DEDUCTION CLAIMED BY THE ASSESSEE IS FULLY ALLOWABLE. HE FURTHER SUBMITS THAT THERE WAS NO MALAFIDE INTENTION OF THE ASSESSEE TO CONCEAL ITS INCOME OR TO FURNISH INACCURATE PARTICULARS OF I NCOME. THE LD. COUNSEL FOR THE ASSESSEE WHILE RELYING ON THE ORDER OF THE LD. CIT(A) ALSO RELIED ON THE RECENT DECISION OF THE HONBLE SUPREM E COURT IN CIT VS. RELIANCE PETROPRODUCTS WHEREIN IT HAS BEEN HELD THAT A MERE MAKING OF THE CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING T HE INCOME OF THE ASSESSEE. HE THEREFORE SUBMITS THAT THE ORDER PASSED B Y THE LD. CIT(A) IN DELETING THE PENALTY IMPOSED BY THE AO BE UPHELD. 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RI VAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE FACTS ARE NOT IN DISPUTE INASMUCH AS IT IS ALSO NOT IN DISPUTE THAT THE AO HAS IMPOSED PENALTY ON THE DISALLOWANCE OF DEDUCTION U/S. 80 IB(10) OF THE ACT ON THE AMOUNT OF MISCELLANEOUS INCOME RS.7 31 491/- AS THE SAME IS NOT ELIGIBLE FOR THE SAID DEDUCTION. HOWEVER THE LD. CIT(A) DELETED THE PENALTY ON THE GROUND THAT THE ASSESSEE WAS UNDER TH E BONAFIDE ITA NO.4760/M/09 A.Y:05-06 5 IMPRESSION THAT THE INCOME IN QUESTION WAS ELIGIBLE FOR DEDUCTION U/S.80IB(10) HENCE THERE IS NO CONCEALMENT OR FURNISHIN G OF INACCURATE PARTICULARS OF INCOME. 7. IT IS SETTLED LAW THAT PENALTY UNDER SECTION 271(1)( C) IS A CIVIL LIABILITY AND THE REVENUE IS NOT REQUIRED TO PROVE W ILLFUL CONCEALMENT AS HELD BY THE HONBLE SUPREME COURT IN CASE THE OF UNION OF INDIA VS. DHARAMENDRA TEXTILES AND PROCESSORS (2008) 306 ITR 277(S C). HOWEVER EACH AND EVERY ADDITION MADE IN THE ASSESSMENT CA NNOT AUTOMATICALLY LEAD TO LEVY OF PENALTY FOR CONCEALMENT OF INCOME. A CASE FOR IMPOSITION OF PENALTY HAS TO BE EXAMINED IN TE RMS OF THE PROVISIONS OF EXPLANATION 1 TO SECTION 271(1)(C). SECON DLY IT IS ALSO A SETTLED LEGAL POSITION THAT PENALTY PROCEEDINGS ARE DI FFERENT FROM ASSESSMENT PROCEEDINGS. THE FINDING GIVEN IN THE ASSESSMENT THOUGH IS A GOOD EVIDENCE BUT THE SAME IS NOT CONCLUSIVE IN PENAL TY PROCEEDINGS. 8. IN ORDER TO APPLY THE PROVISIONS OF SECTION 271(1)(C) THERE HAS TO BE CONCEALMENT OF PARTICULARS OF THE INCOME OF THE ASSE SSEE. SECONDLY THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICU LARS OF HIS INCOME. IN THE PRESENT CASE IT IS NOT THE CASE OF THE AO THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOME. THE AO HAS ITA NO.4760/M/09 A.Y:05-06 6 IMPOSED PENALTY ON THE GROUND THAT THE ASSESSEE HAS FURNI SHED INACCURATE PARTICULARS OF HIS INCOME. 9. IN A RECENT JUDGMENT OF THE HONBLE APEX COURT IN CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. (2010) 322 ITR 158(SC ) IT HAS BEEN OBSERVED AS UNDER ( PAGE 164 OF THE REPORT): .....IN ORDER TO EXPOSE THE ASSESSEE TO THE PENAL TY UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISIO N THE PENALTY PROVISION CANNOT BE INVOKED. BY ANY STRETC H OF IMAGINATION MAKING AN INCORRECT CLAIM IN LAW CANNO T TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. I N COMMISSIONER OF INCOME TAX DELHI VS. ATUL MOHAN BI NDAL [2009] 9 SCC 589 WHERE THIS COURT WAS CONSIDERING THE SAME PROVISION THE COURT OBSERVED THAT THE ASSESS ING OFFICER HAS TO BE SATISFIED THAT A PERSON HAS CONCE ALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. THIS COURT REFERRED T O ANOTHER DECISION OF THIS COURT IN UNION OF INDIA VS . DHARAMENDRA TEXTILE PROCESSORS [2008] 13 SCC 369 A S ALSO THE DECISION IN UNION OF INDIA VS. RAJASTHAN SPG. & WVG. MILLS [2009] 13 SCC 448 AND REITERATED IN PARA 13 THAT (PAGE 13 OF 317 ITR ): 13. IT GOES WITHOUT SAYING THAT FOR APPLICABILITY OF SECTION 271(1)(C) CONDITIONS STATED THEREIN MUS T EXIST. THEIR LORDSHIPS AFTER CONSIDERING VARIOUS DECISIONS INCLUD ING DILIP N. SHROFF VS. JCIT (2007) 291 ITR 519(SC) AND UNION OF INDIA VS. DHARAMENDRA TEXTILE PROCESSORS (2008) 306 ITR 277(SC) H AVE OBSERVED AND HELD (PAGE 158 HEADNOTES) AS UNDER : A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) O F THE INCOME- TAX ACT 1961 SUGGESTS THAT IN ORDER T O BE COVERED BY IT THERE HAS TO BE CONCEALMENT OF THE ITA NO.4760/M/09 A.Y:05-06 7 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 EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS F OUND TO BE INCORRECT OR INACCURATE THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. IN OR DER TO EXPOSE THE ASSESSEE TO PENALTY UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION THE PENALTY PROVISION CAN NOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING A N INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE 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 ASSESSE E CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUC H PARTICULARS ARE FOUND TO BE INACCURATE THE LIABILI TY WOULD ARISE. TO ATTRACT PENALTY THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE NOT EXACT OR CORRECT NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLI ED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCOR RECT 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 REGARDI NG THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE R ETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF HONBLE APE X COURT AND KEEPING IN VIEW THAT IT IS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE HAS NOT FILED COMPLETE PARTICULARS OF HIS INCOME OR IT IS NOT THE CASE OF BONAFIDE BELIEF OR THE EXPLANATION OFFERED BY THE ASSESSEE WAS F OUND TO BE FALSE OR UNTRUE WE ARE OF THE VIEW THAT MAKIN G A WRONG CLAIM IS NOT AT PAR WITH CONCEALMENT OR GIVING OF INACCURATE INF ORMATION WHICH MAY CALL FOR LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT. THIS VIEW ALSO FINDS SUPPORT FROM THE RECENT DECISIONS IN CIT VS. SIDHART HA ENTERPRISES (2010) 322 ITR 80 (P&H) AND CIT VS. SHAHABA D CO-OP. ITA NO.4760/M/09 A.Y:05-06 8 SUGAR MILLS LTD. (2010) 322 ITR 73(P&H). ACCORDINGLY W E ARE INCLINED TO UPHOLD THE ORDER OF THE LD. CIT(A) IN DELETING T HE PENALTY IMPOSED BY THE AO. THE GROUND TAKEN BY THE REVENUE IS THERE FORE REJECTED. 10. IN THE RESULT REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 7.5.2010. SD/- SD/- (T.R. SOOD) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED: 7.5.2010. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT CONCERNED MUMBAI THE CIT(A) CONCERNED MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT.REGISTRAR ITAT MUMBAI. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 27.4.10 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 28.4.10 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 7.5.10 SR.PS/PS 7. FILE SENT TO THE BENCH CLERK 11.5.10 SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER