ACIT CEN CIR 1(2), MUMBAI V. ABG INTERNATIONAL P.LTD, MUMBAI

ITA 1081/MUM/2016

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 7843 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 03-03-2016
• Court: TRIBUNAL

Judgement Text

P A G E | 1 ITA NO. 1081/MUM/2016 A.Y. 2007 - 08 ACIT, CC - 1(2) VS. M/S ABG INTERNATIONAL PVT. LTD. IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO. 1081/MUM/2016 (ASSESSMENT YEAR: 2007 - 08 ) ACIT, CENTRAL CIRCL - 1(2) ROOM NO. 906, PRATISTHA BHAVAN, 10 TH FLOOR, OLD CGO BUILDING ANNEXE, MUMBAI - 400 020 VS. M/S ABG INTERNATIONAL PVT. LTD, 5 TH FLOOR, BHUPATI CHAMBERS, 13, MATHEW ROAD MUMBAI - 400 004 PAN AABCA2890G ( APPELLANT ) ( RESPONDENT ) APPELLANT BY: SHRI SATISH CHANDRA RAJORE, D.R RESPONDENT BY: NONE DATE OF HEARING: 24 .12.2018 DATE OF PRONOUNCEMENT: 2 8 .12.2018 O R D E R PER RAVISH SOOD, JM THE PRESENT APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) - 47, MUMBAI DATED 22.12.2015, WHICH IN TURN ARISES FROM THE ORDER PASSED BY THE A.O UNDER 271(1)(C), DATED 28.03.2014 OF THE INCOME TAX, 1961 (FOR SHORT I.T. ACT). THE REVENUE ASSAILING THE ORDER OF THE CIT(A) HAS RAISED BEFORE US THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN HOLDI NG THAT PENALTY OF RS.46,61,270/ - LEVIED U/S.271(1)(C) ON ACCOUNT OF INTEREST FROM NABARD BOND CLAIMED AS TAX FREE IN ORIGINAL RETURN OF INCOME AND OFFERED TO TAX IN RETURN OF INCOME FILED U/S. 153A CANNOT BE SUSTAINED, WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE IS DEEMED TO HAVE CONCEALED INCOME WITHIN MEAN ING OF EXPLANATION 5A TO SECTION 271(1)(C) OF THE INCOME TAX 1961. 2. BRIEFLY STATED, SEARCH AND SEIZURE PROCEEDINGS UNDER SEC. 132 OF THE I.T ACT WERE CONDUCTED IN THE CASE OF M/S ABG SHIPYARD LIMITED AND ITS P A G E | 2 ITA NO. 1081/MUM/2016 A.Y. 2007 - 08 ACIT, CC - 1(2) VS. M/S ABG INTERNATIONAL PVT. LTD. GROUP CONCERN S ON 07.10.2009 . AS A RESULT THE REOF, SEARCH PROCEEDINGS UNDER SEC.132 WAS ALSO CARRIED OUT IN THE CASE OF THE ASSESSEE. 3. IN THE COURSE OF THE ASSESSMENT PROCEEDINGS IT WAS OBSERVED BY THE A.O THAT THE ASSESSEE HAD IN ITS O RIGINAL RETURN OF INCOME FILED UNDER SEC.139(1) ON 28.02.2008 CLAIMED THE INTEREST INCOME FROM NABARD B OND S OF RS.1,38,48,100/ - AS EXEMPT. THEREAFTER , THE ASSESSEE IN ITS RETURN OF INCOME FILED IN RESPONSE TO NOTICE ISSUED UNDER SEC. 153A HAD SHOWN THE INTEREST INCOME FROM NABARD B OND S AS TAXABLE. THE A.O WHILE FRAMING THE ASSESSMENT UNDER SEC. 153A R.W.S 143(3) OBSERVED THAT THE ASSESSEE WHICH HAD EARLIER CLAIMED THE INTEREST INCOME FROM NABARD BONDS AS EXEMPT IN ITS ORIGINAL RETURN OF INCOME, HAD THEREAFTR SHOWN THE SAME AS TAXABLE IN ITS RETUR N OF INCOME FILED UNDER SEC. 153A, THEREFORE, ON THE SAID COUNT INITIATED PENALTY PROCEEDINGS UNDER SEC.271(1)(C) . 4. SUBSEQUENTLY, THE A.O CALLED UPON THE ASSESSEE TO SHOW CAUSE AS TO WHY PENALTY UNDER SEC. 271(1)(C) MAY NOT BE IMPOSED ON IT IN RESPECT OF THE INTEREST INCOME FROM NABARD BONDS THAT WAS SHOWN AS TAXABLE IN THE RETURN FILED UNDER SEC. 153A, AS IN CONTRADICTION OF ITS EARLIER CLAIM RAISED IN THE RETURN OF INCOME FILED UNDER SEC.139(1) THAT THE SAME WAS EXEMPT. IN REPLY, IT WAS SUBMITTED BY THE ASSESSEE THAT AS THE AFORESAID INTEREST ON NABARD BONDS WAS VOLUNTARILY SHOWN AS ITS INCOME IN THE RETURN FILED IN RESPONSE TO NOTICE ISSUED UNDER SEC. 153A , THEREFORE, NO PENALTY WAS LIABLE TO BE IMPOSED. HOWEVER, THE A.O DID NOT FIND FAVOUR WITH THE AFO RESAID CLAIM AND OBSERVED THAT AS THE ASSESSEE HAD WRONGLY CLAIMED THE INTEREST INCOME ON NABARD BONDS AS EXEMPT IN ITS ORIGINAL RETURN OF INCOME AND HAD OFFERED THE SAME TO TAX ONLY PURSUANT TO A NOTICE ISSUED UNDER SEC.153A, THEREFORE, IT STOOD CONCLUSIVELY PROVED THAT IT HAD FURNISHED INACCURATE PARTICULARS OF INCOME. ON THE BASIS OF HIS AFORESAID OBSERVATIONS THE A.O IMPOSED A PENALTY OF RS. 46,61,270/ - UNDER SEC.271(1)(C) . 5. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT( A). THE CIT(A) AFTER DELIBERATING ON THE FACTS OF THE CASE OBSERVED THAT THOUGH THE ASSESSEE HAD RAISED AN INCORRECT CLAIM IN ITS RETURN OF INCOME FILED P A G E | 3 ITA NO. 1081/MUM/2016 A.Y. 2007 - 08 ACIT, CC - 1(2) VS. M/S ABG INTERNATIONAL PVT. LTD. UNDER SEC.139(1), HOWEVER, THE SAME WAS SUBSEQUENTLY CORRECTED IN THE RETURN OF INCOME FILED UNDER SEC. 153A. IT WAS OBSERVED BY THE CIT(A) THAT DURING THE COURSE OF THE ORIGINAL SCRUTINY PROCEEDINGS NEITHER THE ASSESSEE NOR THE REVENUE HAD GATHER ED THAT THE INTEREST INCOME ON NABARD BONDS HAD REMAINED OMITTED FROM BEING OFFERED TO TAX, EVEN THOUGH PARTICULA R S AS REGARDS THE SAME WERE DULY DISCLOSED BY THE ASSESSEE IN ITS ORIGINAL RETURN OF INCOME. THE CIT(A) WAS OF THE VIEW THAT IT WAS A CASE WHERE AN INCORRECT CLAIM WAS MADE BY THE ASSESSEE IN THE RETURN OF INCOME FILED UNDER SEC.139(1), WHICH HOWEVER WAS S UBSEQUENTLY CORRECTED IN THE RETURN FILED UNDER SEC.153A. IT WAS NOTICED BY THE CIT(A) THAT IT WAS NOT DISCERNIBLE FROM THE ASSESSMENT ORDER PASSED UNDER SEC.153A R.W.S. 143(3) THAT THE ASSESSEE HAD CAME FORTH WITH THE INCLUSION OF THE INTEREST INCOME IN I TS RETURN FILED IN RESPONSE TO NOTICE ISSUED UNDER SEC.153A ON ACCOUNT CERTAIN FACTS THAT HAD EMERGED IN THE COURSE OF THE SEARCH PROCEEDINGS. ON THE BASIS OF THE AFORESAID DELIBERATIONS THE CIT(A) WAS OF THE VIEW THAT THE CLASSIFICATION OF THE INTEREST IN COME AS EXEMPT FROM TAX WAS ON ACCOUNT OF A BONAFIDE ERROR ON THE PART OF THE ASSESSEE. FURTHER, IT WAS OBSERVED BY THE CIT(A) THAT THE FACTS OF THE CASE WERE SIMILAR TO THOSE AS WERE THERE BEFORE THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. BE NNET COLEMAN & CO. LTD. [ITA NO. 2117 OF 2012, DATED 26.02.2013] . IN THE BACKDROP OF THE AFORESAID OBSERVATIONS THE CIT(A ) DELETE D THE PENALTY OF RS.46,61,270/ - IMPOSED BY THE A.O UNDER SEC.271(1)(C) OF THE I.T ACT. 6. THE REVENUE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAS CARRIED THE MATTER IN APPEAL BEFORE US. THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R) AT THE VERY OUTSET OF THE HEARING OF THE APPEAL SUBMITTED THAT AS THE ASSESSEE HAD EARLIER RAISED A F ALSE CLAIM IN RESPECT OF THE INTEREST INCOME FROM NABARD BONDS , THEREFORE, THE A.O HAD RIGHTLY IMPOSED PENALTY UNDER SEC.271(1)(C). IT WAS SUBMITTED BY THE LD. D.R THAT THE ASSESSEE HAD SHOWN THE INTEREST INCOME ON NABARD BONDS ONLY IN ITS RETURN FILED IN COMPLIANCE TO NOTICE ISSUED UNDER SEC.153A. IN SUPPORT OF ITS CONTENTION THAT WHERE AN ASSESSEE HAD RAISED A WRONG CLAIM , AND ITS EXPLANATION IN RESPECT OF THE MISTAKE LEADING TO RAISING OF SUCH CLAIM IS NOT FOUND TO BE SATISFACTORY THEN P A G E | 4 ITA NO. 1081/MUM/2016 A.Y. 2007 - 08 ACIT, CC - 1(2) VS. M/S ABG INTERNATIONAL PVT. LTD. PENALTY IS LIABLE TO BE IMPOSED UNDER SEC.271(1)(C) , THE LD. D.R RELIED ON THE JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF SAMSON M A RITIME LTD. VS. CIT - 7 (2007) 393 ITR 102 (BOM) . PER CONTRA, THE LD. AUTHORISED REPRESENTATIVE (FOR SHORT A .R) FOR THE ASSESSEE RELIED ON THE ORDER OF THE CIT(A). IT WAS SUBMITTED BY THE LD. A.R THAT THE ASSESSEE WHO ON ACCOUNT OF AN INADVERTENT MISTAKE HA D SHOWN THE INTEREST INCOME ON NABARD BONDS AS EXEMPT, HAD THEREAFTER VOLUNTAR IL Y CORRECTED THE SAID MISTAKE IN ITS RETURN OF INCOME FILED UNDER SEC.153A OF THE I.T. ACT. 7. WE HAVE HEARD THE AUTHORIZED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THE ASSESSEE HAD IN ITS RETURN OF INCOME FILED UNDER SEC.139(1) WRONGLY CLAIMED THE INTEREST INCOME OF RS.1,38,48,100/ - FROM THE NABARD B OND S AS EXEMPT . AS OBSERVED BY THE CIT(A), THE SAID MISTAKE WAS NEITHER DISCOVER ED BY THE REVENUE N OR BY THE ASSESSEE DURING THE COURSE OF THE ORIGIN AL SCRUTINY ASSESSMENT, EVEN THOUGH PARTICULARS RELATING THERETO WERE DULY DISCLOSED IN THE RETURN OF INCOME. ON A PERUSAL OF THE ORDERS OF THE LOWER AUTHORITIES, IT EMERGES THAT THE SAID MISTAKE WAS SUBSEQUENTLY VOLUNTARILY CORRECTED IN THE RETURN OF INCO ME THAT WAS FILED BY THE ASSESSEE IN COMPLIANCE TO THE NOTICE ISSUED UNDER SEC. 153A AND THE AFORESAID INTEREST INCOME OF RS.1,38,48,100/ - FROM NABARD B ONDS WAS SHOWN AS PART OF THE TAXABLE INCOME . THE OBSERVATIONS OF THE CIT(A) THAT THERE IS NOTHING DISCE RNIBLE FROM THE ASSESSMENT ORDER PASSED UNDER SEC. 153A R.W.S. 143(3) THAT THE INCLUSION OF THE INTEREST INCOME BY THE ASSESSEE IN ITS RETURN OF INCOME FILED UNDER SEC.153A WAS PROMPTED BY ANY MATERIAL THAT HAD SURFACED IN THE C OURSE OF THE SEARCH PROCEEDI NGS HAD NOT BEEN REBUTTED BY THE LD. D.R. BEFORE US. IN SUM AND SUBSTANCE , IN OUR CONSIDERED VIEW IT IS A CASE WHERE THE ASSESSEE BY WAY OF A BONAFIDE MISTAKE HAD CLAIMED THE INTEREST INCOME FROM NABARD BONDS AS EXEMPT IN ITS ORIGINAL RETURN OF INCOME FILED UNDER SEC. 139(1), WHICH MISTAKE WAS HOWEVER NEITHER DETECTED BY THE ASSESSEE N OR BY THE REVENUE IN THE COURSE OF THE ORIGINAL ASSESSMENT PROCEEDINGS . HOWEVER, PURSUANT TO SEARCH AND SEIZURE PROCEEDINGS CON DUCTED ON THE ASSESSEE THE SAID INTEREST INCOME WAS VOLUNTARILY OFFERED P A G E | 5 ITA NO. 1081/MUM/2016 A.Y. 2007 - 08 ACIT, CC - 1(2) VS. M/S ABG INTERNATIONAL PVT. LTD. BY IT FOR TAX IN THE RETURN OF INCOME FILED IN COMPLIANCE TO NOTICE ISSUED UNDER SEC.153A . WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FACTS OF THE CASE AND ARE OF THE CONSIDERED V IEW THAT THE RAISING OF THE AFOREMENTIONED INCORRECT CLAIM BY THE ASSESSEE IN ITS ORIGINAL RETURN OF INCOME WAS CLEARLY A MISTAKE, WHICH THEREAFTER WAS VOLUNTARILY CORRECTED BY THE ASSESSEE IN THE RETURN OF INCOME FILED UNDER SEC.153A. APART THEREFROM, W E ARE ALSO OF THE CONSIDERED VIEW THAT A MERE RAISING OF AN INCORRECT CLAIM BY AN ASSESSEE CANNOT LEAD TO LEVY OF PENALTY UNDER SEC. 271(1)(C). OUR AFORESAID VIEW THAT PENALTY UNDER SEC. 271(1)(C) CANNOT BE IMPOSED ON ACCOUNT OF AN INADVERTENT MISTAKE ON THE PART OF AN ASSESSEE WHICH THEREIN HAD LED TO CLAIM OF TAXABLE INTEREST INCOME AS EXEMPT IN THE RETURN OF INCOME, IS FORTIFIED BY THE JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. BENNET COLEMAN & CO. LTD. [ITA NO. 2117 OF 2012, DATE D 26.02.2013] . STILL FURTHER, THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO P RODUCT S (P) LTD. (2010) 322 ITR 158 (SC) ALSO SUPPORTS THE CASE OF ASSESSEE. IN THE SAID JUDGMENT, IT WAS OBSERVED BY THE HONBLE APEX COURT THAT MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. INSOFAR, THE JUDGMENT RELIED UPON BY THE LD. D.R, THE SAME IN OUR CONSIDERED VIEW IS FOUND TO BE DISTINGUISHABLE ON FACTS. WE FIND THAT IN THE CASE OF SAMSON MARITIME LTD. VS. CIT - 7 (2007) 393 ITR 102 (BOM) , THE HONBLE HIGH COURT HAD OBSERVED THAT IT WAS ONLY AFTER THE ASSESSING OFFICER HAD ISSUED NOTICES UNDER SECTION 142 (1) AND 143(2) OF THE I.T ACT AND HAD SOUGHT DETAILS OF EXPENSES DEBITED BY THE ASSESSEE IN ITS PROFIT AND LOSS ACCOUNT ALONGWITH THE DETAILS OF THE FOREIGN EXCHANGE EXPENSES, THAT IT WAS ONLY THEN THAT THE ASSESSEE BY WAY OF THE S O CALLED VOLUNTARY DISCLOSURE HAD CAME FORTH WITH THE DETAILS, THEREIN CLAIMING THAT IT HAD COMMITTED A MISTAKE IN DEBITING FOREIGN EXCHANGE LOSS TO DETERMINE ITS NON - TONNAGE INCOME, WHEN IN FACT, NO FOREIGN EXCHANGE LOSS WAS INVOLVED IN RESPECT OF ITS NON - TONNAGE BUSINESS. IT WAS IN THE BACKDROP OF THE AFORE SAID FACTS, THAT THE HONBLE HIGH COURT HAD OBSERVED THAT AS THE SO CALLED MISTAKE AS CLAIMED BY THE ASSESSEE, WAS ADMITTED BY IT ONLY AFTER NOTICES WERE ISSUED UNDER SECTIONS 142 (1) AND 143 (2) SEEKING SPECIFIC P A G E | 6 ITA NO. 1081/MUM/2016 A.Y. 2007 - 08 ACIT, CC - 1(2) VS. M/S ABG INTERNATIONAL PVT. LTD. DETAILS ON THE ISSUE UNDER CONSIDERATION, THEREFORE, THE SAME WAS ONLY AN ATTEMPT TO PREEMPT THE R EVENUE F ROM FINDING OUT THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS , AND THUS THE SAME COULD NOT BE HELD AS HAVING BEEN MADE VOLUNTARILY . INSOFAR, THE PRESENT CASE BEFORE US IS CONCERNED, AS THE ASSESSEE HAD VOLUNTARILY CORRECTED ITS MISTAKE AND SHOWN T HE INTEREST INCOME FROM NABARD BONDS AS PART OF ITS TAXABLE INCOME IN ITS RETURN OF INCOME FILED UNDER SEC.153A , THEREFORE, THE FACTS OF TH IS CASE CAN SAFELY BE HELD TO BE DISTINGUISHABLE AS AGAINST THOSE AS WERE THERE BEFORE THE HONBLE HIGH COURT IN THE CASE OF SAMSON MARITIME LTD. (SUPRA). WE THUS FIND ING OUR SELVES TO BE IN AGREEMENT WITH THE VIEW TAKEN BY THE CIT(A) THAT IN THE TOTALITY OF THE FACTS OF THE CASE NO PENALTY UNDER SEC.271(1)(C) WAS CALLED FOR IN THE HANDS OF THE ASSESSEE, THEREFORE, UPHOL D HIS ORDER AND SUSTAIN THE DELETION OF THE PENALTY OF RS. 46,61,270/ - BY HIM. 8. THE APPEAL FILED BY REVENUE IS DISMISSED ORDER PRO NOUNCED IN THE OPEN COURT ON 2 8 . 12.2018 S D / - S D / - ( SHAMIM YAHYA ) (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; 28.12.2018 PS. ROHIT / 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 . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI P A G E | 7 ITA NO. 1081/MUM/2016 A.Y. 2007 - 08 ACIT, CC - 1(2) VS. M/S ABG INTERNATIONAL PVT. LTD.