VIRAJ IMPEX P.LTD, MUMBAI v. ASST CIT 7(3), MUMBAI

ITA 5931/MUM/2012 | 2008-2009
Pronouncement Date: 10-04-2014 | Result: Allowed

Appeal Details

RSA Number 593119914 RSA 2012
Assessee PAN AAACV3656L
Bench Mumbai
Appeal Number ITA 5931/MUM/2012
Duration Of Justice 1 year(s) 6 month(s) 12 day(s)
Appellant VIRAJ IMPEX P.LTD, MUMBAI
Respondent ASST CIT 7(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 10-04-2014
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted F
Tribunal Order Date 10-04-2014
Assessment Year 2008-2009
Appeal Filed On 28-09-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL 'F' BENCH MUMBAI BEFORE SHRI D. MANMOHAN VICE PRESIDENT AND SHRI SANJAY ARORA ACCOUNTANT MEMBER ITA NO. 5931/MUM/2012 (ASSESSMENT YEAR: 2008-09) M/S. VIRAJ IMPEX P. LTD. ASSISTANT COMMISSIONER OF VIRAJ IMPEX HOSUE 5TH FLOOR 47 P'D'MELLO ROAD MASJID (E) MUMBAI 400009 VS. INCOME TAX 7(3) MUMBAI PAN - AAACV3656L APPELLANT RESPONDENT APPELLANT BY: SHRI PITAMBAR DAS RESPONDENT BY: SHRI H.N. MOTIWALA DATE OF HEARING: 10.04.2014 DATE OF PRONOUNCEMENT: 10.04.2014 O R D E R PER D. MANMOHAN V.P. THIS IS AN APPEAL FILED AT THE INSTANCE OF THE ASSE SSEE COMPANY AND IT PERTAINS TO A.Y. 2008-09. 2. PENALTY LEVIED BY THE AO UNDER SECTION 271(1)(C) H AVING BEEN CONFIRMED BY THE CIT(A) ASSESSEE IS IN APPEAL BEFO RE US CONTENDING INTER ALIA THAT THE ASSESSEE HAS FURNISHED ALL THE PARTI CULARS OF INCOME AND THERE IS NO CONCEALMENT OF INCOME IN THE INSTANT CASE AND HENCE IT IS NOT A FIT CASE FOR LEVY OF PENALTY. 3. FACTS NECESSARY FOR DISPOSAL OF THE APPEAL ARE STAT ED IN BRIEF. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF IMPORT AND T RADE IN IRON AND STEEL. UNDER THE CUSTOMS AND CENTRAL EXCISE PROVISIONS THE ASSESSEE HAD TO PAY REDUMPTION FINE OF ` 110 LAKHS. WHEN THE LIABILITY AROSE IN A.Y. 1999-20 00 THE ASSESSEE CLAIMED DEDUCTION THOUGH THE LEVY OF F INE WAS DISPUTED BEFORE THE APPELLATE AUTHORITIES. ON 10.09.2004 THE CESTAT DELETED THE SAID REDUMPTION FINE BUT THE ORDER PASSED BY THE CESTAT WAS CHALLENGED BEFORE THE HON'BLE BOMBAY HIGH COURT BY THE COMMISSIONER O F CUSTOMS. ITA NO. 5931/MUM/2012 M/S. VIRAJ IMPEX P. LTD. 2 4. THOUGH THE ASSESSEE CLAIMED DEDUCTION OF ` 110 LAKHS AS BUSINESS EXPENSES IN A.Y. 1999-2000. THE SAME WAS DISALLOWED BY THE AO BUT THE ITAT MUMBAI BENCHES VIDE ITS ORDER DATED 11 TH AUGUST 2006 ALLOWED THE REDUMPTION FINE AS BUSINESS EXPENDITURE PROBABLY O N THE BASIS THAT THE LIABILITY ACCRUED IN THAT YEAR. 5. IT MAY BE NOTICED THAT THOUGH THE CESTAT PASSED THE ORDER ON 10.09.2004 THE ASSESSEE RECEIVED REFUND IN JUNE 20 07 I.E. IN THE PREVIOUS YEAR RELEVANT TO A.Y. 2008-09 AND THE RECEIPT IS SU BJECT TO THE DECISION TO BE RENDERED BY THE HON'BLE BOMBAY HIGH COURT IN THE AP PEAL FILED BY THE COMMISSIONER OF CUSTOMS. SINCE THE RECEIPT OF THE R EDUMPTION FINE PAID BY THE ASSESSEE IS SUBJECT TO THE OUTCOME OF THE DECIS ION OF THE HON'BLE BOMBAY HIGH COURT THE ASSESSEE DID NOT OFFER THE SUM OF ` 110 LAKHS AS INCOME IN THE PREVIOUS YEAR RELEVANT TO A.Y. 2008-09 WITH THE INTENTION THAT IT MAY BE OFFERED WHEN THE ISSUE ATTAINS FINALITY. HOWEVER S INCE THE AMOUNT WAS RECEIVED IN JUNE 2007 I.E. WITHIN THE FINANCIAL Y EAR 2007-08 IN THE RETURN OF INCOME FILED FOR THE YEAR 2008-09 THE ASSESSEE DECLARED IN THE STATEMENT THAT THOUGH THE REDUMPTION FINE PAID TO THE CUSTOMS DEPARTMENT WAS RECEIVED THE SAME WAS NOT OFFERED TO TAX SINCE IT H AS NOT ATTAINED FINALITY AND HENCE INCOME THEREFROM IS SHOWN AS ZERO IN THE YEAR UNDER CONSIDERATION. 6. AS THE THINGS STAND THUS ON 1 ST FEBRUARY 2010 THE HON'BLE BOMBAY HIGH COURT DISPOSED OF THE CUSTOMS APPEAL NO. 10 OF 2005 WHEREIN THEY HAVE UPHELD THE ORDER PASSED BY CESTAT AND THE SLP FILED BY THE COMMISSIONER OF CUSTOMS WAS ALSO DISMISSED BY THE H ON'BLE SUPREME COURT ON 27.08.2010. AS PER THE ORIGINAL INTENTION OF THE ASSESSEE THE SUM OF ` 110 LAKHS OUGHT TO HAVE BEEN OFFERED TO TAX IN A.Y. 2011-12 BUT BEFORE THE DUE DATE FOR FILING THE RETURN THE AO FOR A.Y . 2008-09 CALLED UPON THE ASSESSEE TO EXPLAIN AS TO WHY THE SAID SUM IS NOT A SSESSABLE TO TAX IN A.Y. 2008-09 SINCE THE REFUND WAS RECEIVED IN THE PREVI OUS YEAR RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION. IN RESPONSE TH ERETO THE COMPANY EXPLAINED VIDE ITS LETTER DATED 14.12.2010 THAT A LL THE PARTICULARS WERE DISCLOSED IN THE RETURN OF INCOME BY MAKING ITS INT ENTION CLEAR ABOUT THE EVENT OF TAXABILITY BUT SINCE THE SLP HAS ALSO BEEN REJECTED IN 2010 THEY ITA NO. 5931/MUM/2012 M/S. VIRAJ IMPEX P. LTD. 3 HAVE AGREED TO OFFER THE SAME TO TAX IN A.Y. 2008-0 9 AND ACCORDINGLY DID NOT OFFER IT TO TAX IN THE LATER YEAR. THE ASSESSMENT W AS COMPLETED ACCORDINGLY. HOWEVER THE AO WAS OF THE VIEW THAT THE ASSESSEE H AVING RECEIVED THE CUSTOMS DUTY REFUND IT OUGHT TO HAVE OFFERED IT TO TAX IN THE SAME YEAR AND NOT OFFERING IT TO TAX WOULD AMOUNT TO CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME AND ACCORDINGLY HE INITIATED PENALTY PROCEEDINGS. THE OBSERVATION OF THE AO IS THAT THE ASSESSEE HAS FURNISHED THE PARTICULARS OF INCOME IN THE RETURN WHICH WERE NOT TRUE AND THEREFORE IT AMOUNTS TO FURNISHING INACCURATE PARTICULAR OF I NCOME RESULTING IN CONCEALMENT OF INCOME. HE ACCORDINGLY LEVIED PENALT Y UNDER SECTION 271(1)(C). 7. BEFORE THE LEARNED CIT(A) THE ASSESSEE CONTENDED TH AT THE ORDER OF CESTAT WAS CHALLENGED BY THE CUSTOMS DEPARTMENT BEF ORE THE HON'BLE BOMBAY HIGH COURT AND IF THE DECISION OF THE HON'BL E HIGH COURT IS IN FAVOUR OF THE CUSTOMS DEPARTMENT THE AMOUNT RECEIVE D BY THE ASSESSEE CANNOT BE TREATED AS INCOME. IN OTHER WORDS IN THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION THE CLAIM OF TH E ASSESSEE WAS INCHOATE AND PRECISELY FOR THIS REASON THE ASSESSEE MADE COM PLETE DISCLOSURE OF FACTS IN HIS RETURN OF INCOME. THEREFORE IT IS NOT A FIT CASE FOR LEVY OF PENALTY SINCE THE ASSESSEE HAS NOT FURNISHED INACCURATE PAR TICULARS OF INCOME. 8. THE LEARNED CIT(A) OBSERVED THAT THE ASSESSEE FOLLO WED MERCANTILE SYSTEM OF ACCOUNTING AND HENCE IN THE LIGHT OF THE DECISION OF THE APEX COURT IN THE CASE OF KEDARNATH JUTE MANUFACTURING C O. LTD. VS. CIT 82 ITR 363 THE STATUTORY LIABILITY OF SALES TAX INCURRED B Y ISSUE OF NOTICE BY THE AUTHORITIES IS DEDUCTIBLE NOTWITHSTANDING THE FACT THAT THE LIABILITY IS DISPUTED BY THE ASSESSEE AND IN THE SAME TOKEN ASSE SSEE WAS BOUND TO RETURN THE IMPUGNED RECEIPT IN A.Y. 2008-09. HE ALS O RELIED UPON SEVERAL CASE LAW TO CONCLUDE THAT FAILURE TO RETURN REDUMPT ION FINE REFUNDED TO THE APPELLANT AMOUNTS TO FURNISHING OF INACCURATE PARTI CULARS OF INCOME. HE ACCORDINGLY CONFIRMED THE ACTION OF THE AO. 9. FURTHER AGGRIEVED ASSESSEE IS IN APPEAL BEFORE US. THE LEARNED COUNSEL FOR THE ASSESSEE STRONGLY RELIED UPON THE D ECISION OF THE HON'BLE ITA NO. 5931/MUM/2012 M/S. VIRAJ IMPEX P. LTD. 4 SUPREME COURT IN THE CASE OF HINDUSTAN HOUSING AND LAND DEVELOPMENT TRUST LTD. VS. CIT 161 ITR 524 IN SUPPORT OF HIS CO NTENTION THAT SO LONG AS AN AMOUNT IS IN DISPUTE MERE RECEIPT OF THE AMOUNT SUBJECT TO OUTCOME OF THE DECISION CANNOT BE BROUGHT TO TAX AS INCOME U NLESS THE ISSUE ATTAINS FINALITY. IN THE OPINION OF THE APEX COURT THERE WA S NO ABSOLUTE RIGHT TO RECEIVE THE AMOUNT AT THAT STAGE. IF THE HON'BLE BO MBAY HIGH COURT ALLOWS THE APPEAL OF THE REVENUE IN ITS ENTIRETY THE DECIS ION WOULD BE ALTOGETHER DIFFERENT. IN THE LIGHT OF THE AFORECITED DECISION THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE VIEW TAKEN BY THE ASSES SEE IS A BONAFIDE VIEW IN THE MATTER WHICH IS FURTHER FORTIFIED BY THE FACT THAT THE ASSESSEE DISCLOSED THE DETAILS IN THE RETURN OF INCOME ALONGWITH A NOT E SO THAT THE REVENUE CAN TEST HIS CLAIM PROPERLY INSTEAD OF VOLUNTARILY OF FERING THE AMOUNT TO TAX WHICH IN THE OPINION OF THE ASSESSEE IS NOT IN ACC ORDANCE WITH LAW. HE THEREFORE SUBMITTED THAT THE DETAILS FURNISHED BY THE ASSESSEE WOULD AMOUNT TO FURNISHING OF PARTICULARS AND HENCE THE T AX AUTHORITIES WERE NOT JUSTIFIED IN HOLDING THAT THE ASSESSEE HAS FURNISHE D INACCURATE PARTICULARS OF INCOME WHICH WOULD AMOUNT TO CONCEALMENT OF INCOME. HE ALSO RELIED UPON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CA SE OF RELIANCE PETROPRODUCTS P. LTD. 322 ITR 158 IN SUPPORT OF HIS CONTENTION THAT MERELY BECAUSE THE ASSESSEE HAD MADE A CLAIM WHICH WAS NOT ACCEPTED IT WOULD NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME AND IN SUCH CASES PENALTY SHOULD NOT BE LEVIED. 10. ON THE OTHER HAND THE LEARNED D.R. STRONGLY RELIED UPON THE ORDERS PASSED BY THE TAX AUTHORITIES. THE CASE OF THE LEAR NED D.R. IS THAT MOST OF THE RETURNS ARE NOT TAKEN UP FOR SCRUTINY BY VIRTUE OF THE PROVISIONS OF SECTION 143(1) OF THE ACT AND IF THE ASSESSEE DOES NOT VOLUNTARILY OFFER TO TAX IT COULD GIVE AN UNDUE BENEFIT AND UNDER SUCH CIRCU MSTANCES IT IS DUTY OF THE ASSESSEE TO DECLARE CORRECT INCOME WITHOUT BEIN G GUIDED BY THE VIEW TAKEN BY IT WHICH IS CONTRARY TO LAW. 11. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. IN THE INSTANT CASE THE ASSESSEE OFFERED AN EXPLANATION ALONGWITH SUPPORTING CASE LAW. IT IS NOT IN DISPUTE THAT SO L ONG AS A MATTER IS PENDING ITA NO. 5931/MUM/2012 M/S. VIRAJ IMPEX P. LTD. 5 BEFORE A COURT AND HAS NOT ATTAINED FINALITY THE R IGHT OF THE ASSESSEE TO RECEIVE A PARTICULAR AMOUNT WOULD BE INCOMPLETE I. E. SUBJECT TO THE FINAL OUTCOME OF THE PROCEEDINGS IT CANNOT BE TREATED AS INCOME IN THE HANDS OF THE ASSESSEE IN THE YEAR OF RECEIPT IN THE LIGHT OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF HINDUSTAN HOUSING AND LAND DEVELOPMENT TRUST LTD. (SUPRA). EVEN OTHERWISE THE ASSESSEE HAS DECLARED THE INCOME IN THE COMPUTATION STATEMENT AND ALSO GIVEN A NOTE WHE REIN SPECIFIC REASONS WERE MENTIONED AS TO WHY IN THE OPINION OF THE ASS ESSEE IT IS NOT TAXABLE IN THE YEAR UNDER CONSIDERATION. UNDER THESE PECULIAR CIRCUMSTANCES IT CANNOT BE SAID THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME. ON A CONSPECTUS OF THE MATTER WE ARE OF THE VIEW T HAT IT IS NOT A FIT CASE FOR LEVY OF PENALTY. WE THEREFORE SET ASIDE THE ORDER S PASSED BY THE AO AS WELL AS THE CIT(A) AND DELETE THE PENALTY LEVIED UNDER S ECTION 271(1)(C) OF THE ACT. 12. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH APRIL 2014. SD/- SD/- (SANJAY ARORA) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI DATED: 10 TH APRIL 2014 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 13 MUMBAI 4. THE CIT 7 MUMBAI CITY 5. THE DR F BENCH ITAT MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI N.P.