NIMISH K. SONAWAL,, MUMBAI v. ACIT-19(2),, MUMBAI

ITA 991/MUM/2019 | 2012-2013
Pronouncement Date: 29-02-2020 | Result: Allowed

Appeal Details

RSA Number 99119914 RSA 2019
Assessee PAN AACPS5500P
Bench Mumbai
Appeal Number ITA 991/MUM/2019
Duration Of Justice 1 year(s) 7 day(s)
Appellant NIMISH K. SONAWAL,, MUMBAI
Respondent ACIT-19(2),, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 29-02-2020
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 29-02-2020
Last Hearing Date 29-01-2020
First Hearing Date 29-01-2020
Assessment Year 2012-2013
Appeal Filed On 21-02-2019
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B MUMBAI BEFORE SHRI MAHAVIR SINGH VICE PRESIDENT AND SHRI MANOJ KUMAR AGGARWAL ACCOUNTANT MEMBER ITA NO S . 991 & 992 /MUM/201 9 : A.Y S : 20 12 - 13 & 2013 - 14 NIMISH K. SONAWALA 1 ST FLOOR MANISHA BUILDING 69/A L. JAGMOHANDAS MARG NAPEANSEA ROAD MUMBAI 400 006. PAN : A ACPS5500P (APPELLANT) VS. AC IT 19 ( 2 ) MUMBAI. (RESPONDENT) APPELLANT BY : MS. AARTI VISSANJI RESPONDENT BY : MS. KAVITA P. KAUSHIK DATE OF HEARING : 29/01/2020 DATE OF PRONOUNCEMENT : 29 /01/2020 O R D E R PER MAHAVIR SINGH VICE PRESIDENT TH E S E APPEAL S ARE FILED BY THE ASSESSEE AGAINST THE SEPARATE ORDER S OF CIT(A) - 18 MUMBAI DATED 27 . 12 .201 8 FOR ASSESSMENT YEAR S 2012 - 13 AND 20 13 - 1 4 RESPECTIVELY WHICH IN TURN HA VE ARISEN FROM SEPARATE ORDER S OF ASSESSING OFFICER PASSED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT 1961 (IN SHORT THE ACT) BOTH DATED 29 . 06 .201 7 . 2. THE ONLY COMMON ISSUE IN THESE TWO APPEALS OF ASSESSEE IS AGAINST THE ORDER OF CIT(A) UPHOLDING TH E ACTION OF ASSESSING OFFICER LEVYING PENALTY UNDER 2 ITA NOS. 991 & 992/MUM/2019 NIMISH K. SONAWALA SECTION 271(1)(C) OF THE INCOME TAX ACT 1961 (IN SHORT THE ACT) ON THE ISSUE OF DISALLOWANCE OF DONATION MADE TO ONE NAVJEEVAN CHARITABLE TRUST REGISTERED UNDER SECTION 35AC OF THE ACT HOLDING THE DONA TION AS NON - GENUINE. THE FACTS AND CIRCUMSTANCES IN BOTH THE YEARS ARE IDENTICAL HENCE WE WILL TAKE THE FACTS AND GROUNDS FROM ASSESSMENT YEAR 2012 - 13 IN ITA NO. 991/MUM/2019 AND DECIDE THE ISSUE . THE RELEVANT GROUNDS READ AS UNDER : - 1) THE LEARNED C OMMISSIONER OF INCOME TAX (A) ERRED IN UPHOLDING ACTION OF THE ASSESSING OFFICER WHO LEVIED A PENALTY OF RS.1 21 562/ - U/S 271(1)(C) OF THE INCOME TAX ACT 1961. YOUR APPELLANT SUBMITS THAT LOOKING AT THE FACTS AND CIRCUMSTANCES OF THE APPELLANT AND IN LA W THE APPELLANT HAS NEITHER CONCEALED ANY INCOME NOR FURNISHED ANY INACCURATE PARTICULARS OF INCOME HENCE THE PROVISIONS OF SECTION 271(1)(C) ARE NOT APPLICABLE TO THE APPELLANT AND THEREFORE THE ASSESSING OFFICER BE DIRECTED TO DELETE THE SAID PENALTY O F RS.1 21 562/ - . 2) THE LEARNED COMMISSIONER OF INCOME TAX (A) ERRED IN NOT CONSIDERING THE SECOND GROUND OF APPEAL FILED BEFORE HIM BY THE APPELLANT. YOUR APPELLANT SUBMITS THAT THE LEARNED COMMISSIONER OF INCOME TAX (A) HAS FAILED TO ADJUDICATE THE SEC OND GROUND OF APPEAL FILED BEFORE HIM. LOOKING AT THE FACTS AND CIRCUMSTANCES OF THE APPELLANT AND IN LAW THE APPELLANT SUBMITS THAT THE LEARNED AO ERRED IN ISSUING NOTICE U/S 271(1)(C) WITHOUT MENTIONING UNDER WHICH LIMB OF THE SECTION I.E. CONCEALMEN T OF INCOME OR FURNISHING OF INACCURATE PARTICULARS PENALTY HAS BEEN LEVIED. THUS THE NOTICE ISSUED U/S 274 R.W.S. 271(1)(C) OF THE INCOME TAX ACT 1961 IS BAD IN LAW AND THE SAME IS OUGHT TO BE QUASHED. 3. THE BRIEF FACTS ARE THAT THE ASSESSEE IS AN I NDIVID UAL HAVING INCOME FROM BUSINESS CAPITAL GAINS AND INCOME FROM OTHER SOURCES. THE ASSESSMENT WAS COMPLETED ORIGINALLY UNDER SECTION 143(3) OF THE ACT VIDE ORDER DATED 02.01.2015 BY ACIT - 19(2) MUMBAI. SUBSEQUENTLY A NOTICE UNDER SECTION 148 OF THE ACT DATED 14.01.2016 WAS ISSUED WHEREIN THE REASON FOR REOPENING WAS RECORDED THAT DURING THE SEARCH BY THE DEPARTMENT O N NAVJEEVAN CHARITABLE 3 ITA NOS. 991 & 992/MUM/2019 NIMISH K. SONAWALA TRUST ON 27.10.2014 UNDER SECTION 132 OF THE ACT IT WAS NOTICED THAT EXPENSES OF THE TRUST WERE MERE BOOK ENTRI ES AND NO GENUINE EXPENSES WERE MADE BY THE TRUST FOR THE PURPOSE OF SECTION 35AC OF THE ACT. IT WAS BASED ON ONE OF THE TRUSTEE GIVING STATEMENT THAT ALL THE EXPENSES WERE BOGUS AND DONATIONS RECEIVED IN CHEQUE WERE RETURNED IN CASH TO ALL THE DONORS AFT ER DEDUCTING NOMINAL COMMISSION. THE ASSESSEE HAS CLAIMED DEDUCTION OF RS.4 00 000/ - UNDER SECTION 35AC /80GGA OF THE ACT IN THE RELEVANT ASSESSMENT YEAR 2012 - 13 ON THE GROUND THAT THE SAID AMOUNT WAS GIVEN AS DONATION TO NAVJEEVAN CHARITABLE TRUST. DURING THE REASSESSMENT PROCEEDINGS ASSESSEE SUBMITTED THAT HE HAS NOT RECEIVED ANY CASH IN RETURN FOR THE DONATIONS MADE AND CONTESTED THE REOPENING ON MERITS VIDE LETTER DATED 04.10.2016. HOWEVER THE ASSESSEE DURING THE REASSESSME NT PROCEEDINGS ACCEPTED THE ADDITION OF DISALLOWANCE OF DONATION AS ASSESSEE WANTED TO AVOID LINGERING LITIGATION. THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT FOR CONCEALMENT OF INCOME AS ACCORDING TO HIM ASSE SSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME. THE ASSESSING OFFICER AFTER CONSIDERING THE FACTS NOTED THAT NO DOUBT ASSESSEE HAS SUBMITTED RECEIPT FROM NAVJEEVAN CHARITABLE TRUST AND DETAILS OF CHEQUE PAYMENT TO CLAIM THAT THE DONATION IS GENUINE . HOWEVER THE ASSESSING OFFICER NOTED THAT SINCE THE MODUS OPERANDI IS TO ENSURE THAT BASI C PAPER WORK IS COMPLETE THIS COULD NOT BE A REASON TO BELIEVE THE ASSESSEES CLAIM AND HE LEVIED PENALTY BY HOLDING THAT THE DONATION MADE BY ASSESSEE TO NAVJEEVA N CHARITABLE TRUST WAS A BOGUS DONATION AS ASSESSEE WAS UNABLE TO BRING ANY EVIDENCE ON FILE TO THE CONTRARY DESPI TE BEING GIVEN AMPLE OPPORTUNITIES. IT WAS NOTED THAT HAD THE CASE NOT BEEN SELECTED FOR S CRUTINY BY REOPENING ASSESSEE W OULD HAVE NEVER WIT HDRAWN HER BOGUS CLAIM UNDER SECTION 35AC OF THE ACT AMOUNTING TO RS. 4 00 000/ - . HENCE THE ASSESSING OFFICER LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT FOR 4 ITA NOS. 991 & 992/MUM/2019 NIMISH K. SONAWALA CONCEALMENT OF PARTICULARS OF INCOME. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE THE CIT (A) WHO ALSO CONFIRMED THE ACTION OF THE ASSESSING OFFICER ON THE BASIS OF STATEMENT OF MAIN TRUSTEE SHRI SUBHASH KADAM RECORDED UNDER SECTION 133 OF THE ACT ON 10.11.2014 WHEREIN HE ACCEPTED THAT ALL DONATIONS WERE RETURNED BACK TO THE DONORS IN CASH. ANOTHER FACET FOR WHICH THE CIT(A) CONFIRMED THE ACTION OF ASSESSING OFFICER IS THAT THE ASSESSEE ACCEPTED THE FACT THAT THE CLAIM OF DONATION IS BOGUS AS NO APPEAL HAS BEEN FILED BY THE ASSESSEE . AGGRIEVED ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE D THAT THE GOVERNMENT OF INDIA VIDE NOTIFICATION NO. 11/2011 [F.NO. V - 27015/1/2011 - SO(NAT.COM)]/S.O.852(3) DATED 27.4.2011 HAS GRANTED REGISTRATION UNDE R SECTION 35AC READ WITH EXPLANATION (B) THERETO OF THE INCOME TAX ACT 1961 FOR ELIGIBLE PROJECTS OR SCHEMES EXPENDITURE ON - N OTIFIED ELIGIBLE PROJECTS OR SCHEMES . NAVJEEVAN CHARITABLE TRUST S VOCATIONAL TRAINING PROGRAMME MEDICAL CAMPS AND GOODS AND CLOTH DISTRIBUTION IS NOTIFIED AS ELIGIBLE SCHEME OR PROJECT UNDER SECTION 35AC OF THE ACT. THE CENTRAL GOVERNMENT ISSUED NOTIFICATION ON THE RECOMMENDATION OF NATIONAL COMMITTEE FOR PROMOTION OF SOCIAL AND ECONOMIC WELFARE AND THIS TRUST HAS BEEN APPROVED BY THE NATIONAL COMMITTEE VIDE NOTIFICATION NO. 81/2011[F.NO.V.27015/3/2011 - SO(NAT.COM)/S.O. 1860(E) DATED 11.08.2011 . THIS NOTIFICATION WAS SUBSEQUENTLY WITHDRAWN VIDE NOTIFICATION NO. SO 3592 (E) [NO.67/2016 (F.NO.V.27015/5/2016 - SO(NAT.COM)] DATED 30.11.2016 . THE ASSESSEE MADE DONATIONS IN FINANCIAL YEAR 2011 - 12 RELEVANT TO ASSESSMENT YEAR 2012 - 13 AND SEARCH WAS CONDUCTED BY THE DEPARTMENT ON 27.10.2014. THE ASSESSEE HAS MADE ALL THE PAYMENTS BY ACCOUNT PAYEE CHEQUES AND SUBMITTED RECEIPTS FROM NAVJEEVAN CHARITABLE 5 ITA NOS. 991 & 992/MUM/2019 NIMISH K. SONAWALA TRUST. EVEN THE SUMMONS ISSUED BY THE ASSESSING OFFICER UNDER SECTION 131 OF THE ACT TO THE TRUSTEE NAMELY SHRI SUBHASH KADAM OF NAVJEEVAN CHARITABLE TRUST ON 03.10.2016 TO AFF ORD ASSESSEE AN OPPORTUNITY TO CROSS EXAMINE THE TRUSTEE RETURNED UN - SERVED AND ASSESSEE WAS NEVER ALLOWED OPPORTUNITY TO CROSS EXAMINE THE TRUSTEE. IT IS NOT ESTABLISHED THAT ASSESSEES CLAIM IS BOGUS FOR THE PURPOSE OF LEVYING PENALTY UNDER SECTION 271 (1)(C) OF THE ACT. SIMPLY BECAUSE ASSESSEE ACCEPTED THE ASSESSMENT THIS CANNOT BE A GROUND FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. WE NOTED THAT THE ASSESSING OFFICER COULD NOT PROVE THE FACTUM OF CONCEALMENT THAT THE ASSESSEE HAS FURNIS HED INACCURATE PARTICULARS OF INCOME AND THEREBY CONCEALED THE INCOME. EVEN THOUGH IT IS A FACT THAT THE A SSESSEE HAS CONTESTED AND FILED ALL EVIDENCES BEFORE THE ASSESSING OFFICER DURING PENALTY PROCEEDINGS WE ARE OF THE VIEW THAT PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON THE ABOVE REASON CANNOT BE SUSTAINED. HENCE WE DELETE THE PENALTY. 5. SIMILAR ARE THE FACTS IN ASSESSMENT YEAR 2013 - 14 HENCE TAKING A CONSISTENT VIEW THE PENALTY IN THIS ASSESSMENT YEAR ALSO STANDS DELETED. 6. IN THE RESULT APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JANUARY 2020. SD/ - SD/ - ( MANOJ KUMAR AGGARWAL ) ACCOUNTANT MEMBER (MAHAVIR SINGH) VICE PRESIDENT MUMBAI DATE : 29 TH JANUARY 2020 *SSL* 6 ITA NOS. 991 & 992/MUM/2019 NIMISH K. SONAWALA COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R B BENCH MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T MUMBAI