ACIT 10(1), MUMBAI v. IVF HOLDINGS P. LTD, MUMBAI

ITA 4960/MUM/2010 | 2006-2007
Pronouncement Date: 22-07-2011 | Result: Dismissed

Appeal Details

RSA Number 496019914 RSA 2010
Assessee PAN AABCI4095B
Bench Mumbai
Appeal Number ITA 4960/MUM/2010
Duration Of Justice 1 year(s) 1 month(s) 7 day(s)
Appellant ACIT 10(1), MUMBAI
Respondent IVF HOLDINGS P. LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 22-07-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted I
Tribunal Order Date 22-07-2011
Assessment Year 2006-2007
Appeal Filed On 15-06-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI I BENCH BEFORE SHRI R.V.EASWAR PRESIDENT & SHRI T.R.SOOD ACCOUNTANT MEMBER I.T.A.NO.4960/MUM/2010 A.Y 2006-07 DY. COMMISSIONER OF I.T. RANGE 10(1) MUMBAI. VS. M/S. IVF HOLDINGS PVT. LTD. SUIT F9C GRAND HYATT PLAZA SANTACRUZ [EAST] MUMBAI 400 055. PAN: AABCI 4095 B (APPELLANT) (RESPONDENT) APPELLANT BY : MR. BALAKRISHNA MENON. RESPONDENT BY : MR. KANCHUN KAUSHAL. O R D E R PER T.R.SOOD AM: IN THIS APPEAL REVENUE HAS RAISED THE FOLLOWING G ROUND: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW THE LEARNED CIT(A) HAS ERRED IN DELETING THE PENALT Y OF RS.39 26 914/- LEVIED U/S.271(1) OF THE ACT HOLDING THAT THE RETU RN WAS VOLUNTARILY REVISED WITHOUT APPRECIATING THAT THE REVISED RETUR N WAS FILED BY THE ASSESSEE GIVING UP THE CLAIM OF EXPENSES AND LOSS O NLY AFTER SELECTION OF THE CASE OF SCRUTINY ON BEING SURE THAT THE CLAI M WAS BOUND TO BE DISALLOWED. 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A C OMPANY CARRYING ON BUSINESS OF INVESTMENTS. IN THE PROFIT & LOSS AC COUNT A SUM OF RS.1 01 644/- WAS CREDITED ON ACCOUNT OF INTEREST F ROM BANK DEPOSITS AGAINST WHICH OPERATING EXPENSES AMOUNTING TO RS.36 11 967/- AND INTEREST EXPENDITURE OF RS.82 61 642/- WERE DEBITED . ACCORDINGLY RETURN DECLARING A LOSS OF RS.1 15 64 770/- WAS FIL ED ON 20-11-2006. THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE U/S.1 43[2] WAS ISSUED BY THE ITO WARD 15 (3)(2) MUMBAI ON 17-10-2007. THE REAFTER A FURTHER NOTICE U/S/142 OF THE ACT ALONG WITH THE QUESTIONNA IRE DATED 24-01- ITA NO.4960/M/10 2 2008 WAS ISSUED. THEREAFTER ASSESSEE FILED A REVIS ED RETURN ON 28-3- 2008 DECLARING TOTAL INCOME OF RS.1 01 644/-. A FUR THER NOTICE U/S.143(2)/142(1) ALONG WITH QUESTIONNAIRE DATED 7- 8-2008 WAS ISSUED BY ACIT 10(1) MUMBAI. IT SEEMS THERE WAS SOME CHAN GE IN THE JURISDICTION BECAUSE THIS WAS THE FIRST YEAR OF OPE RATION AND NEW ASSESSEES WERE UNDER THE JURISDICTION OF ACIT 10(1 ). DURING THE SCRUTINY PROCEEDINGS VIDE LETTER DATED 21-10-2008 I T WAS EXPLAINED THAT EXPENSES DEBITED TO PROFIT & LOSS ACCOUNT PERTAINED TO CAPITAL ASSETS AND THEREFORE SAME WERE CAPITAL EXPENDITURE AND T HAT IS WHY THE RETURN HAS BEEN REVISED. HOWEVER AO WAS OF THE VIE W THAT AS PER SEC.139[5] RETURN COULD BE REVISED ONLY IF ASSESSEE DISCOVERS AN OMISSION OR ANY WRONG STATEMENT IN SUCH RETURN. HE WAS OF THE FURTHER VIEW THAT IN FACT RETURN HAS BEEN REVISED ONLY AF TER THE ISSUE OF NOTICE U/S.143[2] AND SINCE THERE WAS NO OMISSION IN THE O RIGINAL RETURN ACCORDINGLY PROCEEDINGS U/S.271(1) WERE INITIATED . 3. DURING THE PENALTY PROCEEDINGS IN RESPONSE TO S HOW CAUSE NOTICE IT WAS CONTENDED THAT INADVERTENTLY IN THE ORIGINAL RETURN THE CAPITAL EXPENDITURE WAS TREATED AS BUSINESS LOSS SI NCE COMPANY WAS ENGAGED IN THE BUSINESS OF INVESTMENT HOLDINGS AND THEREFORE ADMINISTRATIVE EXPENSES WERE INCURRED AND INTEREST COULD NOT BE CLAIMED AS BUSINESS EXPENDITURE AND THE RETURN WAS REVISED TO CORRECT THIS POSITION. DETAILED EXPLANATIONS WERE ALSO FILE D AS TO WHY RETURN WAS BEING REVISED AND THEREFORE IT WAS NOT A CASE OF CONCEALMENT. IT WAS ALSO CLAIMED THAT RETURN WAS REVISED BEFORE REC EIVING THE NOTICE FROM THE ITO HAVING CORRECT JURISDICTION AND THER EFORE IT IS WRONG TO ITA NO.4960/M/10 3 SAY THAT ASSESSEE REVISED THE RETURN ONLY AFTER BEI NG CORNERED BY WAY OF SCRUTINY OF THE RETURN. IT WAS CLAIMED THAT FULL DISCLOSURE HAD BEEN MADE IN THE PROFIT & LOSS ACCOUNT AND THEREFORE T HERE CANNOT BE ANY QUESTION OF CONCEALMENT. ON EXAMINATION OF THESE CO NTENTIONS AO WAS NOT SATISFIED AND HE REITERATED THAT THE RETURN WAS REVISED ONLY AFTER ISSUE OF NOTICE U/S.143[2]. THE RETURN WAS NOT REVI SED VOLUNTARILY AND THEREFORE IT WAS NOT A CASE OF BONA FIDE INADVERTE NT MISTAKE. CONSEQUENTLY HE LEVIED PENALTY U/S.271(1). 4. BEFORE THE LD. CIT(A) THE SUBMISSIONS MADE BEFOR E THE AO WERE REITERATED AND IT WAS EMPHASIZED THAT THERE WAS NO DELIBERATE OR OTHERWISE ANY ATTEMPT TO CONCEAL THE PARTICULARS OF INCOME. RELIANCE WAS ALSO PLACED ON CERTAIN CASE LAWS. THE LD. CIT(A ) AFTER EXAMINING THE SUBMISSIONS OBSERVED THAT PERUSAL OF THE QUESTI ONNAIRES DATED 24- 1-08 AND 7-8-08 SHOWS THAT THE QUESTIONNAIRES WERE GENERAL IN NATURE AND NO SPECIFIC QUESTION WAS ASKED IN RESPECT OF CL AIM OF ADMINISTRATION EXPENSES AND INTEREST COST AS BUSINE SS EXPENSES AND THEREFORE IT COULD NOT BE SAID THAT AO EXPRESSED A NY DOUBT IN RESPECT OF SUCH CLAIM. FURTHER ASSESSEE HAD ALREADY FILED A REVISED RETURN BEFORE THE ISSUE OF QUESTIONNAIRE DATED 7-8-08 AS R EVISED RETURN WAS FILED ON 28-3-08 THEREFORE IT CANNOT BE SAID THAT ASSESSEE WAS FORCED TO REVISE THE RETURN IN VIEW OF NOTICE U/S.143[2] A ND THE QUESTIONNAIRES ISSUED BY THE AO. HE ALSO OBSERVED THAT THE OBSERVA TION OF THE AO THAT NO ERROR OR OMISSION WAS DISCOVERED IN THE ORIGINAL RETURN IS NOT CORRECT BECAUSE ASSESSEE ACTUALLY DISCOVERED THAT OPERATING EXPENSES AND INTEREST EXPENSES WERE OF DISPUTABLE NATURE AND THA T IS WHY RETURN WAS ITA NO.4960/M/10 4 REVISED U/S.139[5]. HE ALSO OBSERVED THAT IN VIEW O F THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF GOETZ (INDIA) LTD. VS. CIT [284 ITR 323] ANY FRESH CLAIM OR DEDUCTION WAS ALLOWABLE ONLY IF ASSESSEE FILED A REVISED RETURN. HE ALSO OBSERVED THAT AO HA S HIMSELF OBSERVED THAT ASSESSEE WAS ENGAGED IN THE BUSINESS OF INVEST MENT HOLDINGS AND ASSESSEE HAD IN FACT MADE CERTAIN INVESTMENTS IN EQUITY SHARES OF SUBSIDIARY COMPANIES THEREFORE IT COULD NOT BE DE NIED THAT ASSESSEE WAS NOT IN THE BUSINESS OF INVESTMENTS AND ACCOR DINGLY POSSIBLY THE INTEREST AND OTHER EXPENSES COULD HAVE BEEN EVEN AL LOWABLE AS REVENUE EXPENDITURE. CONSEQUENTLY THE ISSUE WHETHER ASSESSEE WAS IN BUSINESS OF INVESTMENT HOLDINGS OR NOT WAS DEBATABL E AND THEREFORE IT COULD BE SAID THAT IT WAS A CASE OF BONA FIDE CLAIM . IN THE LIGHT OF THIS DISCUSSION THE LD. CIT(A) FOLLOWED THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCT S PVT. LTD. [322 ITR 158] AND DELETED THE PENALTY. 5. BEFORE US LD. DR SUBMITTED THAT ORIGINAL RETURN WAS FILED BY THE ASSESSEE ON 21-11-06 DECLARING LOSS OF RS.1 15 64 7 70/-. THEREAFTER NOTICE U/S.143[2] WAS ISSUED ON 17-10-07. HE SUBMIT TED THAT A FURTHER NOTICE U/S.142[1] ALONG WITH A QUESTIONNAIRE WAS IS SUED ON 24-1-08. BECAUSE OF THESE NOTICES ASSESSEE BECAME WISER AND WITHDREW THE CLAIM OF LOSS. HE ARGUED THAT ASSESSEE WAS IN THE B USINESS OF MAKING INVESTMENT AND THEREFORE ADMINISTRATIVE EXPENSES AS WELL AS INTEREST INCURRED FOR ACQUIRING SUCH INVESTMENT COULD NOT PO SSIBLY HAVE BEEN CLAIMED AS REVENUE EXPENDITURE. THE ASSESSEE HAD MA DE A WRONG CLAIM AND WHEN THE RETURN WAS PUT UNDER SCRUTINY AN D NOTICE WAS ITA NO.4960/M/10 5 ISSUED HE BECAME WISER AND REVISED THE RETURN BY WI THDRAWING THE CLAIM. HE ARGUED THAT PENALTY IS LEVIABLE EVEN IF S UCH CLAIM IS WITHDRAWN AND RELIED ON THE DECISION OF HON'BLE SUP REME COURT IN THE CASE OF IN THE CASE OF K. P. MADHUSUDAN VS. CIT [25 1 ITR 99] AND RAGHUVEER SONI VS. ACIT [258 ITR 239] (RAJ). 6. ON THE OTHER HAND LD. COUNSEL OF THE ASSESSEE R EITERATED THE SUBMISSIONS MADE BEFORE THE CIT(A). HE EMPHASIZED T HAT IT IS WRONG TO SAY THAT ASSESSEE BECAME WISER ONLY AFTER THE IS SUE OF NOTICE. THE NOTICE WAS ISSUED ON 17-10-07 AND SAME WAS A SIMPLE NOTICE AND IT WAS ISSUED BY ITO WARD 15(3)-2 WHO HAD IN FACT NO JURISDICTION OVER THE ASSESSEE AND ACTUALLY THE PROPER NOTICE WAS ISS UED ONLY LATER ON BY AO WARD 9(2) ON 24-1-08. HOWEVER THE RETURN OF TH E NEXT YEAR I.E. A.Y 2007-08 WAS FILED ON 31-10-07 COPY OF WHICH IS PLACED AT PAGES 62 TO 87 OF THE PAPER BOOK THROUGH WHICH CLAIM FOR CARRY FORWARD OF LOSSES WAS WITHDRAWN. THIS ITSELF SHOWS THAT ASSESS EE COULD NOT HAVE TAKEN BENEFIT OF THE CARRY FORWARD OF LOSSES. HE TH EN CARRIED US THROUGH NOTICE DATED 24-1-08 ALONG WITH THE QUESTIONNAIRE W HICH IS PLACED AT PAGES 88 TO 91 OF THE PAPER BOOK AND POINTED OUT TH AT NO QUERY WAS RAISED IN THE DETAILED QUESTIONNAIRE REGARDING CLAI M OF LOSS ON ACCOUNT OF ADMINISTRATIVE EXPENSES AS WELL AS INTEREST. THI S CLEARLY SHOWS THAT RETURN WAS REVISED BY THE ASSESSEE WITHOUT BEING CO RNERED. EVEN IN THE NOTICE WHICH WAS ISSUED ON 7-8-08 [COPY OF WHICH IS PLACED AT PAGES 111 TO 116 OF THE PAPER BOOK] NO QUERY IN THIS REGA RD WAS MADE. THESE FACTS CLEARLY SHOW THAT ASSESSEE HAD BASICALL Y VOLUNTARILY REVISED THE RETURN. ITA NO.4960/M/10 6 7. HE SUBMITTED THAT ASSESSEE WAS IN THE BUSINESS O F INVESTMENT HOLDING COMPANY AND THIS FACT HAS BEEN RECORDED BY THE AO IN THE FIRST PAGE OF ASSESSMENT ORDER ITSELF. IT WAS POSSIBLE TO ARGUE THAT EVEN WHEN ASSESSEE IS DOING BUSINESS OF INVESTMENT SAME WOULD CONSTITUTE A BUSINESS ONLY AND THERE ARE MANY DECISIONS SUPPOR TING THIS ARGUMENT. THEREFORE EVEN WHEN THE ASSESSEE CLAIMED THE ADMINISTRATIVE EXPENSES AND INTEREST IT WAS POSSIBL Y TO RAISE SUCH CLAIM AND MERE DENIAL OF SUCH CLAIM WOULD ONLY BE A CASE OF DENYING A BONA FIDE CLAIM WHICH CANNOT LED TO PENAL CONSEQUENCES IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. [SUPRA]. IN ANY CASE THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. ATTAR MOHD. DAWOOD AND BROS. [267 ITR 436] WHEREIN A PENALTY U/S.271(1) WAS LEVIED BECA USE THERE WAS A SEARCH IN THE PREMISES OF THE ASSESSEE BUT SUCH PEN ALTY WAS DELETED BY OBSERVING THAT RETURN WAS REVISED BY THE ASSESSE E AND SINCE NO DISCREPANCY WAS FOUND DURING THE SEARCH IN RESPECT OF TRANSACTION RECORDED OR NOT RECORDED AND THEREFORE PENALTY WA S NOT LEVIABLE. HE ALSO REFERRED TO THE DECISION OF THIRD MEMBER IN TH E CASE OF ITO VS. PATEL AUTOMOBILE [91 ITD 1] WHERE AGAIN PENALTY WAS LEVIED ON ADDITIONAL INCOME AFTER TWO REVISED RETURNS AND ON DIFFERENCE OF OPINION ON LEVY OF PENALTY IT WAS OBSERVED BY THE THIRD MEMBER THAT ON THE FACTS THERE WAS NOTHING TO SHOW THAT AO HAD MADE SUCH DETAILED ENQUIRIES IN THE COURSE OF ASSESSMENT PROC EEDINGS WHICH LED TO REVISION OF RETURN AND ULTIMATELY PENALTY WAS DE LETED. THE CASE OF ITA NO.4960/M/10 7 THE ASSESSEE WAS ALMOST SIMILAR WITH THIS CASE AND ACCORDINGLY PENALTY IS NOT JUSTIFIED. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY AND FIND FORCE IN THE SUBMISSIONS OF THE LD. COUNSEL OF THE ASSESSEE. WE FIND THAT AFTER THE RETURN DECLARING LOSS WAS FILED A FI RST NOTICE ISSUED U/S.143[2] WAS DATED 17-10-07 AND IT IS A NOTICE SI MPLICITER AND NO QUESTIONNAIRE BAS BEEN ATTACHED. MOREOVER IT SEEMS THERE WAS CONFUSION REGARDING THE JURISDICTION BECAUSE THIS N OTICE HAD BEEN ISSUED BY ITO WARD 15(3)-2 WHEREAS THE JURISDICTI ON LIED WITH ACIT CIRCLE 10(1) BECAUSE ASSESSEE HAS FILED THE RETURN FOR THE FIRST TIME AND THE JURISDICTION WAS WITH THE ASSESSING AUTHORITY O F NEW CASES. THEREAFTER BEFORE ANY OTHER NOTICE WAS ISSUED ASS ESSEE FILED RETURN FOR A.Y 2007-08 ON 31-10-07. IN THIS RETURN NO CLAI M WAS MADE FOR BROUGHT FORWARD LOSSES WHICH IS EVIDENT FROM THE C OPY OF THE RETURN FOR A.Y 2007-08 PLACED AT PAGES 62 TO 88 OF THE PAP ER BOOK. THIS CLEARLY SHOWS THAT THERE WAS NO INTENTION TO CLAIM THE LOSS. EVEN IF LOSS WAS DECLARED IN A.Y 2006-07 AND THE SAME WAS NOT BE ING CLAIMED FOR SET OFF THEN CLEARLY THERE IS NO INTENTION TO TAKE BENEFIT OF THIS LOSS. IN ANY CASE IN THE LATEST NOTICES DATED 24-1-08 AND 7 -8-08 DETAILED QUESTIONNAIRES WERE ALSO ISSUED. WE HAVE CAREFULLY PERUSED THESE QUESTIONNAIRES AND THERE IS NO QUESTION REGARDING C LAIM OF ADMINISTRATIVE EXPENSES AND INTEREST COST CAUSING T HE LOSS TO THE ASSESSEE WHICH WAS CLAIMED IN THE ORIGINAL RETURN. THESE FACTS CLEARLY SHOW THAT IT CANNOT BE SAID THAT ASSESSEE WAS CORNE RED OR BECAME WISER ONLY AFTER THE ENQUIRIES CONDUCTED BY THE DEP ARTMENT. IT SEEMS ITA NO.4960/M/10 8 TO BE MERELY SIMPLE CASE OF REVISION OF RETURN. IN SUCH A CASE AS HELD BY THE THIRD MEMBER IN THE CASE OF ITO VS. PATEL AU TOMOBILES [SUPRA] LEVY OF PENALTY IS NOT JUSTIFIED. FURTHER THE HON' BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. ATTAR MOHD. DAWOOD AND BROS. [SUPRA] WAS CONCERNED WITH A CASE WHERE RETURN HAD BEEN REVISED AND PENALTY HAD BEEN LEVIED ON ADDITIONAL INCOME. IT WAS HELD BY TH E HON'BLE HIGH COURT THAT SINCE UNDISCLOSED INCOME WHICH WAS DISCL OSED IN THE REVISED RETURN WAS NOT NOTICED DURING SEARCH OPERATION THE REFORE PENALTY COULD NOT BE LEVIED. SIMILARLY IN THE CASE BEFORE US SINCE NO ENQUIRY WAS MADE REGARDING THE LOSS RETURNED BY THE ASSESSE E IN THE ORIGINAL RETURN IT CANNOT BE SAID THAT IT IS NOT A CASE OF FILING OF REVISED RETURN VOLUNTARILY. THEREFORE IN OUR VIEW ASSESSEE HAS S IMPLY REVISED THE RETURN WITHDRAWING THE CLAIM OF LOSS AND THE SAME W OULD NOT ATTRACT PENALTY. ACCORDINGLY WE CONFIRM THE ORDER OF THE L D. CIT(A). 9. IN THE RESULT REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 2 2/7/2011. SD/- SD/- (R.V.EASWAR) (T.R.SOOD) PRESIDENT ACCOUNTANT MEMBER MUMBAI: 22/7/2011. P/-* ITA NO.4960/M/10 9