JHAVERI FLEXI LAMINATE P. LTD, MUMBAI v. ACIT 5(2), MUMBAI

ITA 7295/MUM/2008 | 2001-2002
Pronouncement Date: 16-11-2011 | Result: Dismissed

Appeal Details

RSA Number 729519914 RSA 2008
Assessee PAN AAACJ2378K
Bench Mumbai
Appeal Number ITA 7295/MUM/2008
Duration Of Justice 2 year(s) 10 month(s) 21 day(s)
Appellant JHAVERI FLEXI LAMINATE P. LTD, MUMBAI
Respondent ACIT 5(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 16-11-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted J
Tribunal Order Date 16-11-2011
Date Of Final Hearing 20-10-2011
Next Hearing Date 20-10-2011
Assessment Year 2001-2002
Appeal Filed On 26-12-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J : MUMBAI BEFORE SHRI R.S. PADVEKAR ( JUDICIAL MEMBER) AND SHRI RAJENDRA SINGH (ACCOUNTANT MEMBER) ITA NO.7295/MUM/2008 ASSESSMENT YEAR : 2001-02 M/S. JHAVERI FLEXI LAMINATE PVT. LTD. 636/637 PANCHRATNA BUILDING MAMA PARMANAND MARG OPERA HOUSE MUMBAI-400 004. ..( APPELLANT ) P.A. NO. (AAACJ 2378 K) VS. ASSTT. COMMISSIONER OF INCOME TAX -5(2) AAYAKAR BHAVAN M.K. ROAD MUMBAI-400 020. ..( RESPONDENT ) APPELLANT BY : SHRI ASHOK RAO & MS. TASNEEM YRARAWALA RESPONDENT BY : SHRI D. S. SUNDER SINGH DATE OF HEARING : 20.10.2011. DATE OF PRONOUNCEMENT : 16 TH NOVEMBER 2011 O R D E R PER RAJENDRA SINGH (AM). THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER D ATED 21.11.2008 OF CIT(A) FOR THE ASSESSMENT YEAR 2001-02. THE ONLY DISPUTE RAISED IN THIS APPEAL IS REGARDING LEVY OF PEN ALTY UNDER SECTION 271(1)(C). 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE FOR THE ASSESSMENT YEAR 2001-02 HAD DECLARED NIL INCOME THE RETUR N FILED ON ITA NO.7295/M/08 A.Y:01-02 2 12.10.2001 HAVING CLAIMED DEDUCTION UNDER SECTION 80I B. THE CLAIM OF THE ASSESSEE WAS ALLOWED IN THE ASSESSMENT UNDER SECTION 1 43(3) DATED 29.8.2003 IN WHICH ALSO INCOME WAS ASSESSED AT NIL. SUBSEQUENTLY CIT ON EXAMINATION OF RECORDS NOTED THAT THE ASSESSEE HAD BOOK PROFIT OF RS.5 14 53 450/- UNDER SECTION 115J B AS WHILE COMPUTING BOOK PROFIT DEDUCTION UNDER SECTION 80IB WAS N OT ALLOWABLE. CIT THEREFORE AFTER HEARING THE ASSESSEE SET ASIDE THE A SSESSMENT ORDER WITH A DIRECTION TO PASS FRESH ASSESSMENT ORDER AFTE R ALLOWING OPPORTUNITY OF HEARING TO THE ASSESSEE. IN THE FRESH ASSE SSMENT DATED 29.9.2006 UNDER SECTION 143(3)/263 THE AO DETERMINED BOOK PROFIT AT RS.5 14 53 450/- AND LEVIED TAX @ 7.5%. THE AO ALSO INITIATED PENALTY PROCEEDINGS UNDER SECTION 271 (1)(C). 2.1 IN RESPONSE TO PENALTY NOTICE THE ASSESSEE SUBMITTED TH AT UP TO ASSESSMENT YEAR 2000-01 80IB DEDUCTION WAS ALLOWABLE WHI LE COMPUTING BOOK PROFIT AND LAW CHANGED ONLY FROM 2001- 02 WHEN THE 80IB DEDUCTION WAS NOT ELIGIBLE FOR DEDUCTION FROM THE BOOK PROFIT. THEREFORE NOT OFFERING THE BOOK PROFIT WAS ONLY AN INADVERTENT MISTAKE. IT WAS ALSO SUBMITTED THAT DURING THE FRESH ASSESSM ENT PROCEEDINGS THE ASSESSEE ITSELF HAD GIVEN COMPUTATION OF BOOK PROFIT AND OFFERED TAX ON THE SAME. IT WAS POINTED OUT THAT EVEN THE AO IN THE ORIGINAL ASSESSMENT HAD OMITTED TO TAX THE BOOK PR OFIT AND ITA NO.7295/M/08 A.Y:01-02 3 THEREFORE THE MISTAKE MADE BY THE ASSESSEE SHOULD BE CONSI DERED AS BONAFIDE. IT WAS ALSO SUBMITTED THAT THE AO WAS NOT JU STIFIED IN INITIATING THE PENALTY PROCEEDINGS IN THE FRESH ASSESSMENT PROCEEDINGS. AO WAS HOWEVER NOT SATISFIED BY THE EXPLANATION GIVEN. HE DID NOT ACCEPT THE CONTENTION THAT THE AO COULD NOT INITIATE PE NALTY PROCEEDINGS IN THE FRESH ASSESSMENT PROCEEDINGS. THE AO ALSO DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE THAT NOT OFFERING BOOK PROFIT WAS A BONAFIDE MISTAKE. IT WAS OBSERVED BY HIM THAT THE ASSESSEE HAD NOT FILED AUDIT REPORT UNDER SECTION 115JB. THE AO THEREFORE LEVIED PENALTY @ 100% OF TAX SOUGHT TO BE EVADED AMO UNTING TO RS.43 60 680/-. 2.2 IN APPEAL THE CIT(A) AFTER HEARING THE ASSESSEE OB SERVED THAT IN SCHEDULE-H OF PART-2 OF RETURN OF INCOME THERE WAS COLUMN REGARDING COMPUTATION OF BOOK PROFIT WHICH WAS NOT FILLED UP BY THE ASSESSEE. THE ASSESSEE HAD ALSO NOT ENCLOSED STATUTORY REPORT OF AUDI TORS FOR COMPUTATION OF BOOK PROFIT SECTION 115 JB. THESE FACTS SH OWED THAT IT WAS A DELIBERATE ACT ON THE PART OF THE ASSESSEE NOT TO PAY TAX ON THE BASIS OF BOOK PROFIT. CIT(A) NOTED THAT AT THE TIME O F 263 PROCEEDINGS ALSO ASSESSEE NEVER ADMITTED THAT THERE WAS ANY BONAFID E MISTAKE AND SUBMITTED THAT THERE WAS NO ERROR IN THE ORDER OF AO. FURTHER THE ASSESSEE HAD ALSO FILED APPEAL AGAINST THE ORDER OF CIT A GAINST THE 263 ORDER. IT IS THUS CLEAR THAT IT WAS A CASE OF DELIBERAT E CLAIM. CIT(A) ITA NO.7295/M/08 A.Y:01-02 4 ALSO REFERRED TO THE JUDGMENT OF HON'BLE SUPREME COUR T IN THE CASE OF DHARMENDRA TEXTILES PROCESSORS (306 ITR 277) IN WHICH IT HAS BEEN HELD THAT PENALTY UNDER SECTION 271(1)(C) IS ONLY A CIV IL LIABILITY AND WILLFUL DEFAULT IS NOT REQUIRED TO BE PROVED BY THE REVENUE. CIT(A) ACCORDINGLY UPHELD THE PENALTY LEVIED AGGRIEVED BY WH ICH THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. BEFORE US THE LD. AUTHORISED REPRESENTATIVE FOR T HE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHO RITIES THAT NOT PAYING TAX ON BASIS OF BOOK PROFIT WAS ONLY A BONAFI DE MISTAKE WHICH EVEN AO OMITTED TO DETECT IN THE ORIGINAL ASSESSMENT ORD ER. IT WAS ALSO ARGUED THAT CIT WAS NOT COMPETENT TO EXERCISE JURISD ICTION UNDER 263 FOR NON INITIATION OF PENALTY PROCEEDINGS BY AO A ND THEREFORE IN THE SET ASIDE ASSESSMENT THE AO COULD NOT INITIATE PENA LTY PROCEEDINGS. LD. AUTHORISED REPRESENTATIVE FURTHER AR GUED THAT THE ASSESSEE HAD GIVEN FULL DETAILS WHICH WERE AVAILABLE ON RECORD AND THEREFORE LEVY OF PENALTY WAS NOT JUSTIFIED. THE A SSESSEE HAD NOT FILED ANY INACCURATE PARTICULARS OF INCOME. IT WAS ACCORDINGLY UR GED THAT THE PENALTY LEVIED SHOULD BE DELETED. LD. AR PLACED RELI ANCE ON THE FOLLOWING JUDGMENTS. I) 212 ITR 11 (SC) IN THE CASE OF T. ASHOK PAI VS. CIT II) 322 ITR 158 (SC) IN THE CASE OF CIT VS. RELIANCE PE TROPRODUCTS PVT. LTD. AND III) 133 ITR 7 (DEL.) IN THE CASE OF ADDL.CIT VS. J.K. DA GOSTA ITA NO.7295/M/08 A.Y:01-02 5 3.1 THE LD. DR ON THE OTHER HAND SUPPORTED THE ORDE R OF CIT(A). IT WAS SUBMITTED THAT ASSESSEE HAD NOT FILLED IN THE COLUMN R ELATING TO BOOK PROFIT AND ALSO DID NOT SUBMIT THE STATUTORY AUD IT REPORT FOR COMPUTATION OF BOOK PROFIT UNDER SECTION 115 JB. THE ASSESSEE HAD SIGNED THE VERIFICATION IN THE RETURN OF INCOME AND TH EREFORE ASSESSEE COULD NOT CLAIM THAT NOT FILLING THE RELEVANT COLUMN I N THE RETURN AND NOT FILING THE AUDIT REPORT WAS A BONAFIDE MISTAKE. IT WAS ALSO SUBMITTED THAT THERE WAS NO BAR ON AO TO INITIATE PEN ALTY PROCEEDINGS DURING FRESH ASSESSMENT PROCEEDINGS. IT WAS ACCORDINGLY URGED THAT PENALTY LEVIED SHOULD BE UPHELD. 4. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE RIVAL CONTENTIONS CAREFULLY. THE DISPUTE IS REGARDING LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT. THE ASSESSEE FOR THE RELEVANT YEAR HAD DECLARED TOTAL INCOME AT NIL AFTER CLAIMING D EDUCTION UNDER SECTION 80IB. UNDER THE PROVISIONS OF SECTION 115JB APP LICABLE FOR THAT YEAR THE DEDUCTION ON ACCOUNT OF 80IB CLAIM WAS NOT AVA ILABLE WHILE COMPUTING BOOK PROFIT. THERE WAS THUS BOOK PROFIT OF RS.5 14 53 450/- ON WHICH TAX @ 7.5% WAS LEVIABLE. THE ASSESSEE HOWEVER DID NOT DECLARE ANY BOOK PROFIT FOR THE PURPOSE OF LEVY OF TA X. THE EXPLANATION OF THE ASSESSEE IS THAT IT WAS THE FIRST YEAR WHEN THE PRO VISION OF NON DEDUCTION OF 80IB CLAIM WHILE COMPUTING BOOK PROFIT WA S INTRODUCED ITA NO.7295/M/08 A.Y:01-02 6 AND THE ASSESSEE HAD OMITTED TO CONSIDER THE SAME. IT HA S ALSO BEEN POINTED OUT THAT EVEN THE AO HAD OMITTED TO APPLY T HE PROVISIONS OF SEC.115JB AT THE TIME OF ORIGINAL ASSESSMENT. IT HAS BEE N FURTHER SUBMITTED THAT THE ASSESSEE HAD FILED RETURN AS PER COMPUT ATION OF INCOME MADE BY THE TAX CONSULTANT AND THEREFORE IT SH OULD NOT BE PENALIZED FOR THE MISTAKE COMMITTED BY THE TAX CONSULTA NT. 4.1 WE HAVE CONSIDERED THE VARIOUS ASPECTS OF THE MATTER. THE PENALTY UNDER SECTION 271(1)(C) IS ONLY A CIVIL LIABILIT Y AND WILLFUL DEFAULT BY THE ASSESSEE IS NOT REQUIRED TO BE PROVED BY THE REVENUE AS HELD BY HON'BLE SUPREME COURT IN CASE OF DHARMENDRA T EXTILE PROCESSORS (SUPRA) IN WHICH IT HAS ALSO BEEN HELD THAT THE PENALTY IS ONLY A REMEDY FOR LOSS OF REVENUE. HOWEVER EACH AND EV ERY ADDITION IN THE ASSESSMENT CANNOT AUTOMATICALLY LEAD TO CONCEALMENT PENALTY. A CASE FOR PENALTY HAS TO BE EVALUATED IN TERMS OF PROV ISIONS OF EXPLANATION-1 TO SECTION 271(1)(C) AS PER WHICH IN CASE OF ANY ADDITION TO TOTAL INCOME IF THE ASSESSEE OFFERS NO EXPLANATION OR EXPLANATION OFFERED BY THE ASSESSEE IS FOUND TO BE FALSE OR THE ASSESSEE IS NOT ABLE TO SUBSTANTIATE THE EXPLANATION AND IS NOT ABLE TO PRO VE THAT THE EXPLANATION IS BONAFIDE AND ALL NECESSARY DETAILS IN REL ATION TO COMPUTATION OF INCOME HAVE NOT BEEN GIVEN IT WILL B E A CASE OF DEEMED CONCEALMENT OF PARTICULARS OF INCOME. WE HAVE T HEREFORE TO ITA NO.7295/M/08 A.Y:01-02 7 SEE WHETHER ON THE FACTS OF THE CASE EXPLANATION OF THE ASSESSEE CAN BE CONSIDERED AS BONAFIDE. 4.2 IT IS PERTINENT TO NOTE HERE THAT THERE IS A SPECI FIC SCHEDULE-H IN PART-2 OF THE RETURN OF INCOME WHICH REQUIRES THE ASSESSEE TO GIVE COMPUTATION OF THE BOOK PROFIT WHICH THE ASSESSEE HAS NOT FILLED UP. ONCE THE PROVISION IS MADE IN THE RETURN REGARDING COMP UTATION OF THE BOOK PROFIT WHICH THE ASSESSEE IS REQUIRED TO SIGN AFTER NECESSARY VERIFICATION IT CANNOT BE SAID THAT THERE WAS BONAFIDE OMISSION TO CONSIDER THE SAID PROVISIONS. FURTHER HAD IT BEEN A CASE OF BONAFIDE OMISSION THE ASSESSEE AFTER RECEIPT OF NOTICE UNDER SECTION 263 FROM CIT WOULD HAVE IMMEDIATELY ADMITTED THE MISTAKE AND OFFERED THE TAX ON THE SAME. HOWEVER THE ASSESSEE CHALLENGED THE NOTICE I SSUED BY CIT STATING THAT THE ORDER OF ASSESSMENT WAS NOT ERRONEO US AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE ASSESSE E HAD ALSO CHALLENGED THE ORDER OF CIT BEFORE THE TRIBUNAL WHICH WAS DISMISSED. THE ASSESSEE HAD NOT ENCLOSED ANY WORKING OF COMPUTATION O F BOOK PROFIT IN THE RETURN OF INCOME AND THEREFORE IT CANN OT BE SAID THAT THE ASSESSEE HAD GIVEN FULL DETAILS RELATING TO COMPUTATION O F INCOME FOR THE RELEVANT YEAR. IN OUR VIEW NO NORMAL PERSON WO RKING IN NORMAL CIRCUMSTANCES DESPITE THERE BEING CHECKS IN THE RETURN OF INCOME AS WELL AS REQUIREMENT OF FURNISHING OF AUDIT REPORT CAN OMIT TO CONSIDER ITA NO.7295/M/08 A.Y:01-02 8 THE APPLICABILITY OF SECTION 115JB AND THEREFORE IT I S NOT A CASE OF BONAFIDE MISTAKE. 4.3 IT CAN ALSO NOT BE ACCEPTED AS A BONAFIDE CLAIM ON T HE BASIS OF LEGAL ADVISE. SUCH CLAIMS CAN BE ACCEPTED HAD THE CLAIM BE EN MADE ON THE BASIS OF AUDIT REPORT AS STATUTORILY REQUIRED. THE ASSESSEE HAD NOT EVEN OBTAINED THE AUDIT REPORT. THE JUDGMENT O F HON'BLE SUPREME COURT IN CASE OF T. ASHOK PAI VS. CIT (SUPRA) WOULD BE OF NO HELP TO THE ASSESSEE. THE LAW LAID DOWN IN THAT CASE THAT FOR LE VYING PENALTY UNDER SECTION 271(1)(C) THERE HAS TO BE DELIBERATE ACT OF CONCEALMENT HAS NOT BEEN UPHELD BY THE HON'BLE SUPREME COURT IN THE CASE OF DHARMENDRA TEXTILES AND PROCESSORS (SUPRA). FURTHE R DESPITE THERE BEING SPECIFIC SCHEDULE IN THE RETURN FOR COMPUTAT ION OF BOOK PROFIT THE ASSESSEE NEITHER OBTAINED THE STATUTORY AUD IT REPORT NOR ANY SPECIFIC LEGAL ADVISE WAS SOUGHT. IT HAS BEEN SUBMITTED T HAT THE COMPUTATION OF INCOME HAD BEEN MADE ON THE LETTER HEA D OF THE CA. THE COMPUTATION SHEET PLACED AT PAGE-8 OF THE PAPER B OOK CONTAINS ONLY THE COMPUTATION OF INCOME UNDER THE NORMAL PROVI SIONS OF THE ACT. NEITHER IT IS SIGNED BY THE CA NOR THERE IS ANY N OTE SUGGESTING THAT PROVISIONS OF BOOK PROFIT WERE NOT APPLICABLE. I T CAN NOT THEREFORE BE SAID THAT NON DECLARATION OF BOOK PROFIT WAS ON THE ADVISE OF THE CA. FURTHER NEGLIGENCE OF THE AO TO NOT APPLY THE PROVISIONS OF BOOK PROFIT CANNOT BE THE GROUND TO HOLD THAT NOT PAYING TAX ON THE BASIS OF ITA NO.7295/M/08 A.Y:01-02 9 BOOK PROFIT BY THE ASSESSEE WAS A BONAFIDE MISTAKE. CONSI DERING THE ENTIRETY OF FACTS AND CIRCUMSTANCES WE ARE OF THE VIEW THAT EXPLANATION OF THE ASSESSEE FOR NOT PAYING TAX ON THE B ASIS OF BOOK PROFIT CANNOT BE CONSIDERED AS BONADIDE. 4.3 JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF R ELIANCE PETRO CHEMICALS (SUPRA) WILL ALSO BE OF NO HELP TO THE ASSESSEE AS THE SAID JUDGMENT WAS ONLY IN RELATION TO FURNISHING OF INACCU RATE PARTICULARS OF INCOME AND IT WAS HELD THAT MAKING WRONG CLAIM DID NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS OF INCOME. DEEMED CONCE ALMENT OF PARTICULARS OF INCOME AS PER EXPLANATION-I WAS NOT UNDER CONSIDERATION OF THE HON'BLE SUPREME COURT. PENALTY CAN BE LEVIED BOTH FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND FOR CONCEA LMENT OF PARTICULARS OF INCOME. IN THIS CASE THE AO HAD INITIATED PENALTY PROCEEDINGS U/S. 271 (1)(C) WHICH COVERS BOTH THE ASPECTS. IT MAY NOT BE THE CASE OF FURNISHING INACCURATE PARTICULARS OF INCOME BUT DEFINITELY IT IS DEEMED CONCEALMENT OF PARTICULARS OF INCOME AS PER EXPLANATION-1 TO SECTION 271(1)(C) AS PER WHICH IN RESPECT OF ANY ADDI TION TO TOTAL INCOME IF THE EXPLANATION OF THE ASSESSEE IS NOT FOUND B ONAFIDE IT WILL BE CASE OF DEEMED CONCEALMENT OF PARTICULARS OF INCOME. I N OUR VIEW FOR THE REASONS GIVEN EARLIER EXPLANATION OF THE ASSESSEE HAS TO BE REJECTED AS BEING NOT BONAFIDE. ITA NO.7295/M/08 A.Y:01-02 10 4.4 THE ARGUMENT OF THE LD. AR THAT DURING THE FRESH ASSESSMENT PROCEEDINGS THE AO COULD NOT INITIATE PENALTY PROCEED INGS UNDER SECTION 271(1)(C) CAN ALSO NOT BE ACCEPTED. THE SECTION 2 71(1)(C) CLEARLY PROVIDES THAT PENALTY FOR CONCEALMENT OF PARTICU LARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME CAN B E INITIATED IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT AND THEREFO RE DURING THE FRESH ASSESSMENT PROCEEDINGS ALSO AO IS EMPOWERED TO INITIA TE PENALTY PROCEEDINGS. NO JUDGMENT OF ANY HIGH COURT OR APEX COURT HAS BEEN BROUGHT TO THE NOTICE AS PER WHICH PENALTY UND ER SECTION 271(1)(C) CAN NOT BE INITIATED DURING FRESH ASSESSMENT PRO CEEDINGS SUBSEQUENT TO THE ORDER UNDER SECTION 263 OR TO ANY APP ELLATE ORDER. THE LD. AR HAS REFERRED TO THE JUDGMENT OF HONBLE HIG H COURT OF DELHI IN CASE OF ADDL. CIT VS. J.K. DA COSTA (SUPRA) WHICH IS DI STINGUISHABLE. IN THAT CASE IT HAS BEEN HELD THAT JURISDICTION UNDE R SECTION 263 CANNOT BE INVOKED FOR FAILURE OF AO TO INITIATE PENA LTY PROCEEDINGS IN THE ASSESSMENT ORDER BECAUSE FAILURE TO INITIATE PENALTY PROCEEDINGS IN THE ASSESSMENT DOES NOT VITIATE THE ASSESSMENT ORDER. THE SAI D CASE IS THEREFORE NOT APPLICABLE TO THE FACTS OF THE PRESENT CA SE. 5. IN VIEW OF THE FOREGOING DISCUSSION AND FOR THE REA SONS GIVEN EARLIER WE SEE NO INFIRMITY IN ORDER OF CIT(A) CONFI RMING THE PENALTY. THE SAME IS THEREFORE UPHELD. ITA NO.7295/M/08 A.Y:01-02 11 6. IN THE RESULT APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16.11.2011. SD/- SD/- (R.S. PADVEKAR) (RAJENDRA SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED: 16.11.2011. 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.