DCIT 3(3)(1), MUMBAI V. SHAPOORJI PALONJI ENERGY (GUJARAT) P.LTD, MUMBAI

ITA 1029/MUM/2017

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8779 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-12-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 14-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAUDHARY ARUN KUMAR SINGH
• Assessee Lawyers: C S ANANTHAN
• Keywords: Business income; Revised return; Revenue expenditure
• Section: 271(1)(c); 143(3); 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G MUMBAI BEFORE SHRI PAWAN SINGH (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 1029/MUM/2017 ASSESSMENT YEAR: 2012 - 1 3 DY. COMMISSIONER OF INCOME TAX - 3(3)(1), MUMBAI. VS. M/S SHAPOORJI PALLONJI ENERGY (GUJARAT) PVT. LTD. 41/44, S.P. CENTRE, MINOO DESAI MARG, COLABA, MUMBAI - 400005 PAN NO. AAMCS7570C APPELLANT RESPONDENT REVENUE BY : MR. CHAUDHARY ARUN KUMAR SINGH, DR ASSESSEE BY : MR. C.S. ANANTHAN , AR DATE OF HEARING : 19 / 11 /2018 DATE OF PRONOUNCEMENT : 27/12/2018 ORDER PER N.K. PRADHAN, AM THIS IS AN APPEAL FILED BY THE R EVENUE . THE RELEVANT ASSESSMENT YEAR IS 201 2 - 1 3 . THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 8 , MUMBAI [IN SHORT CIT(A)] AND ARISES OUT OF THE PENALTY LEVIED U/S 271(1)(C) OF THE INCOME TAX ACT 1961, (THE ACT). 2. THE GROUNDS OF APPEAL READ AS UNDER: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES AND IN LAW, THE LD. CIT(A) WAS RIGHT IN DELETING THE PENALTY OF RS.22,22,685/ - LEVIED U/S.271(1)(C) OF THE ACT M/S SHAPOORJI PALLONJI ITA NO. 1029/MUM/2017 2 WITHOUT APPRECIATING THE FACT THAT THE SAME WAS IMPOSED ON INADMISSIBLE CLAIM WHICH WERE DISALLOWED AND HENCE, A CLEAR CASE OF FILING OF INACCURATE PARTICULARS OF INCOME. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES AND IN LAW, THE LD. CIT(A) WAS RIGHT IN DELETING THE PENALTY OF RS.22,22,685/ - LEVIED U/S.271(1)(C) OF THE ACT WITHOUT APPRECIATING THE FACT THAT THE ASSESSES HAS FAILED TO DECLARE ITS TRUE INCOME AND THE CLAIM MADE IS NOT ONLY INCORRECT IN LAW BUT IS ALSO WHOLLY WITHOUT ANY BASIS AND THE EXPLANATION FURNISHED BY HIM FOR MAKING SUCH A CLAIM IS NOT FOUND TO BE BONA FIDE; TRIGGERING EXPLANATION 1 TO SECTION 271(1) (C) OF THE I.T. ACT, 1961 AS HELD BY HON'BLE SUPREME COURT IN THE CASE OF MAK DATA PVT. LTD, VS. CIT (2013) 358 ITR 593 (SC) AND HON'BLE DELHI HIGH COURT IN THE CASE OF ZOOM COMMUNICATIONS PVT. LTD., 40 DT R 249 (2010). 3. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE - COMPANY FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR (AY) 2012 - 13 ON 18.09.2012 DECLARING TOTAL LOSS AT RS.64,98,323/ - UNDER NORMAL PROVISIONS AND BOOK PROFIT AT RS.1,37,89,912/ - U/S 115JB O F THE ACT. THEREAFTER, THE ASSESSEE FILED REVISED RETURN OF INCOME ON 26.09.2012 DECLARING CURRENT YEARS LOSS OF RS.64,05,326/ - UNDER NORMAL PROVISIONS OF THE ACT. IN THE ASSESSMENT MADE U/S 143(3) DATED 14.03.2015, THE ASSESSING OFFICER (AO) MADE AN ADDI TION OF PRE - OPERATIVE EXPENSES OF RS.64,05,326/ - . HE ALSO BROUGHT TO TAX RS.7,80,281/ - AS INCOME FROM OTHER SOURCES AND RS.7,551/ - AS INTEREST INCOME. THE AO THUS ARRIVED AT A TOTAL INCOME OF RS.7,87,830/ - . THEREAFTER, THE AO INITIATED PENALTY PROCEEDING S U/S 271(1)(C) ON THE DISALLOWANCE OF PRE - OPERATIVE EXPENSES OF RS.64,05,326/ - AND M/S SHAPOORJI PALLONJI ITA NO. 1029/MUM/2017 3 INTEREST INCOME OF RS.7,87,832/ - . IN RESPONSE TO THE SHOW CAUSE NOTICE ISSUED BY THE AO, THE ASSESSEE SUBMITTED THAT THE ADDITION MADE WAS O N ACCOUNT OF INTEREST INCOME OF RS.7,80,281/ - AS INCOME FROM OTHER SOURCES, WHICH THE ASSESSEE HAD SHOWN UNDER THE HEAD BUSINESS LOSS. THIS ADDITION WAS MADE ON ESTIMATE BASIS AND NOT ON ANY CONCEALMENT OR INACCURATE DETAILS. THE ASSESSEE FURTHER SUBMITTED BEFORE THE AO THAT IT HAD DECLA RED TRUE AND CORRECT RETURN AND HAD NOT CONCEALED THE INCOME NOR GIVEN INACCURATE PARTICULARS OF INCOME FOR THE AY 2012 - 13. HOWEVER, THE AO WAS NOT CONVINCED WITH THE ABOVE EXPLANATION OF THE ASSESSEE ON THE REASON THAT NOTHING WAS PRODUCED TO SUBSTANTIAT E THE CLAIM OF PRE - OPERATIVE EXPENDITURE AS REVENUE EXPENDITURE AND THE CLAIM OF INTEREST INCOME AS BUSINESS INCOME. THEREFORE, THE AO LEVIED A MINIMUM PENALTY OF RS.22,22,685/ - U/S 271(1)(C) ON THE AMOUNT OF INCOME OF RS.71,93,158/ - (RS.64,05,326/ - + RS.7,87,332/ - ). 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A), RELYING ON THE DECISION IN CIT V. RELIANCE PETROPRODUCTS (P.) LTD . 322 ITR 158 (SC), SESA RESOURCES LTD. V. ACIT 219 TAXMAN 92 (BOM), D IT V. ADMINISTRATOR OF THE STATE OF LATE MR. E.F. DINSHAW 219 TAXMAN 125 (BOM) AND CIT V. M/S ADITYA BIRLA NOVA LTD. (ITA NO. 3899 OF 2010) (BOM), DELETED THE PENALTY OF RS.22,22,685/ - . 5. BEFORE US, THE LD. DR SUPPORTS THE ORDER PASSED BY THE AO AND SUBMITS THAT THE PENALTY HAS BEEN LEVIED IN THE INSTANT CASE ON INADMISSIBLE CLAIM MADE BY THE ASSESSEE AND HENCE IT IS A CLEAR CASE OF FILING OF INACCURATE PARTICULARS OF INCOME. THE LD. DR REI TERATES THE M/S SHAPOORJI PALLONJI ITA NO. 1029/MUM/2017 4 GROUNDS OF APPEAL AND SUBMITS THAT THE PENALTY LEVIED BY THE AO BE CONFIRMED. 6. ON THE OTHER HAND, THE LD. COUNSEL OF THE ASSESSEE RELIES ON THE DECISIONS REFERRED BY THE CIT(A) IN APPELLATE ORDER DATED 29.11.2016 AND SUBMITS THAT THE ORDER P ASSED BY THE CIT(A) BE CONFIRMED. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. A PERUSAL OF THE ASSESSMENT ORDER DATED 14.03.2015 PASSED BY THE AO CLEARLY INDICATES THAT THE ASSESSEE WAS IN RECEIPT OF OTHER INCOME C ONSISTING OF (I) SALE OF TENDER DOCUMENTS OF RS.7,00,000/ - AND (II) INTEREST ON BANK DEPOSITS OF RS.80,281/ - . THUS THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION HAS SHOWN TOTAL RECEIPTS OF RS.7,80,281/ - UNDER THE HEAD OTHER SOURCES. THE ABOVE FACTS SHOWN BY THE ASSESSEE HAS BEEN MENTIONED BY THE AO AT PARA 5.1 OF THE ASSESSMENT ORDER. THE AO HAS ALSO MENTIONED AT PARA 5.2 , 5.3 & 5.4 OF THE SAID ASSESSMENT ORDER THAT AGAINST THE OTHER INCOME, THE ASSESSEE HAS CLAIMED A TOTAL EXPENDITURE OF RS.1,45,70,193 / - UNDER THE VARIOUS HEADS AND ACCORDINGLY SHOWN LOSS OF RS.1,37,89,912/ - . WHILE COMPUTING ITS TOTAL INCOME, THE ASSESSEE HAS CONSIDERED THE OTHER INCOME AS BUSINESS INCOME AND CLAIMED THE AFORESAID EXPENSES AGAINST SUCH INCOME AND ACCORDINGLY DISCLOSED LO SS FROM BUSINESS OF RS.64,05,326/ - . THE AO OBSERVED THAT THE ASSESSEE HAS CLAIMED LOSS OF RS.64,05,326/ - DESPITE THE FACT THAT IT HAS OTHER INCOME. M/S SHAPOORJI PALLONJI ITA NO. 1029/MUM/2017 5 IN THE ASSESSMENT ORDER DATED 14.03.2015, THE AO DISALLOWED THE LOSS OF RS.64,05,326/ - CLAIMED BY THE ASSE SSEE AND TREATED IT AS PRE - OPERATIVE EXPENDITURE. THE AO ALSO BROUGHT TO TAX INTEREST INCOME OF RS.7,80,281/ - AS INCOME FROM OTHER SOURCES. 7.1 IN THE CASE OF RELIANCE PETROPRODUCTS (P.) LTD . (SUPRA), IT IS HELD BY THE HONBLE SUPREME COURT THAT MERELY BECAUSE THE ASSESSEE HAD CLAIMED EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO REVENUE, THAT BY ITSELF WOULD NOT ATTRACT PENALTY UNDER SECTION 271(1)(C) OF THE ACT. IN THE INSTANT CASE, AS MENTIONED EARLIER AT PRA 7, THE ASSESSEE HAS DISCLOSED THE FACTS. THERE IS NO DISPUTE ABOUT IT. IT HAS BEEN DELINEATED BY THE AO IN PARA 5.1, 5.2, 5.3 AND 5.4 IN THE ASSESSMENT ORDER DATED 14.03.2015. THE ONLY ISSUE IS THE TREATMENT GIVEN BY THE AO TO THE CLAIM OF THE ASSESSEE. WE ARE OF THE CONSI DERED VIEW THAT THE RATIO LAID DOWN IN RELIANCE PETROPRODUCTS (P.) LTD. (SUPRA) SQUARELY APPLIES TO THE PRESENT CASE. FOLLOWING THE ABOVE DECISION, WE UPHOLD THE ORDER OF THE LD. CIT(A). 8. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OP EN COURT ON 27/12/2018 . SD/ - SD/ - ( PAWAN SINGH ) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 2 7/12/2018 RAHUL SHARMA, SR. P.S. M/S SHAPOORJI PALLONJI ITA NO. 1029/MUM/2017 6 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (SR. PRIVATE SECRETARY) ITAT, MUMBAI