R.J. INFOTECH SERVICES P. LTD, MUMBAI V. ITO WD 7(2)(1), MUMBAI

ITA 1336/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88005 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-01-2015
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 25-11-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 15-02-2013
• Court: TRIBUNAL
• Department Lawyers: JEETENDRA KUMAR
• Assessee Lawyers: VIMAL G JAIN
• Keywords: Unexplained cash credit; Business income; Wrong claim; Corroborative evidences; Tax effect
• Section: 115JB; 68

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI VIJAY PAL RAO , JM AND SHRI N.K. BILLAIYA, AM I.T.A. NO. 1336/MUM/2013 ( ASSESSMENT YEAR : 2007-08) R.J. INFOTECH SERVICES PVT. LTD. 501, FANTASIA, RAHEJA GARDEN, LBS MARG, TEEN HAATH NAKA, THANE (W)-400 601. VS. INCOME TAX OFFICER WARD 7 (2)(1) MUMBAI. ! ' PAN/GIR NO. : AABCR 8963 R ( !# APPELLANT ) .. ( $%!# RESPONDENT ) !#& APPELLANT BY : SHRI VIMAL G. JAIN (AR) $%!# ' & / RESPONDENT BY : SHRI JEETENDRA KU MAR (DR) ()'* DATE OF HEARING : 25/11/2014 +,-. ' * / DATE OF PRONOUNCEMENT : 14/01/2015 / O R D E R PER VIJAY PAL RAO, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 13/12/2012 OF CIT(A) ARISING FROM PENALTY ORDER PAS SED U/S. 271(1)(C) OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEAR 2007-0 8. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS :- 1)THE ASSESSEE COMPANY INCORPORATED WITH THE MAIN O BJECT OF CARRYING BUSINESS OF INFORMATION TECHNOLOGY AND TO MANUFACTURE, ASSEMBLE, BUY, SELL, LEASE, IMPORT, EXPORT OF ALL T YPES OF HARDWARE AND 2 ITA NO.1336/M/13 R.J. INFOTECH SERVICES PVT. LTD. SOFTWARE AND ALSO CONSULTANCY IN INFORMATION TECHNO LOGY, AS PER MEMORANDUM OF ASSOCIATION (MOA) OF THE COMPANY. THE LEARNED ITO HAS ERRED IN HOLDING THAT COMPANY (CO.) HAS NOT EXPORTE D THE SOFTWARE AS PER THE CO'S OBJECT ,DURING THE YEAR, WHEN THE COPY OF MOA WAS ALREADY PROVIDED TO HIM. 2)THE LEARNED ITO WAS ALSO PROVIDED THE INCOME TAX RETURN COPIES, ALONGWITH BALANCE SHEET AND PROFIT & LOSS A/C FOR V ARIOUS PREVIOUS YEARS WHEREIN EXPORT OF SOFTWARE WAS REGULARLY DONE BY THE ASSESSEE CO. AND PREVIOUS ITO HAS ALLOWED THE DEDUCTION U/S 80 HHE ALSO, IN PREVIOUS YEARS, WHICH IS SUFFICIENT PROOF OF EXPORT DONE. 3)THE LEARNED ITO HAS DIFFERRED IN HIS OPINION WITH THE LEARNED AUTHORISED REPRESENTATIVE (LAR) THAT THE EX PORT WAS NEVER MADE BY THE CO. DURING THE YEAR, WHEREAS IT I S THE REGULAR BUSINESS OF THE CO. FOR WHICH SUFFICIENT PROOF HAS BEEN GIVEN. EVEN THE ITEM WHAT IS EXPORTED IS NOT MENTIONED BY THE C O. AS STATED IN THE LEARNED ITO'S ORDER, WHICH IS CLEARLY KNOWN TO HIM. 4) THE LEARNED ITO ERRED IN TAKING BUSINESS INCOME AS INCOME FROM OTHER SOURCES EVEN AFTER ALL THE PROOF OF EXPORT WA S GIVEN INCLUDING CONFIRMATION LETTER FROM THE CLIENT, BANK FIRC (FOR EIGN INWARD REMITTANCE CERTIFICATE) FOR THE AMOUNT RECEIVED IN CONVERTIBLE FOREIGN EXCHANGE FOR EXPORT DONE. 5) THE LEARNED ITO THUS ERRED IN LEVYING PENALTY U/S 2 71 (1 )(C) THAT INAPPROPRIATE DETAILS ARE GIVEN, WHICH IS HIS IMAGINATION ONLY, WHEN 'BUSINESS INCOME' HAS BEEN DECLARED AS 'BUSINE SS INCOME', IS IN NO WAY INAPPROPRIATE, WHICH HAS BEEN ALSO PROVED BY VARIOUS DOCUMENTS. 2. THE ASSESSEE CLAIMED TO HAVE CARRIED OUT BUSINE SS AND DISCLOSED INCOME FROM EXPORTS AND ALSO INCOME FROM OTHER SOURCES. IN THE RETURN OF INCOME THE ASSESSEE DISCLOSED NIL TOTAL INCOME AND PAID TAX ON BOOK PROFIT AMOUNTING TO RS.15,94,865/- U/S. 115JB OF THE INCOME TAX ACT. DU RING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO FOUND THAT THE ASSESS EE CREDITED CONSULTANCY FEE OF RS.16,16,662/-, WHICH WAS NOT VERIFIABLE. TH E AO CONFRONTED THE ASSESSEE AND ASKED TO FURNISH SUPPORTING DETAILS. I N RESPONSE, THE ASSESSEE PRODUCED CERTIFICATE OF FOREIGN INWARD REMITTANCE O N ACCOUNT OF ADVANCE AGAINST EXPORTS. THE AO FURTHER ASKED THE ASSESSEE TO FURNI SH SUPPORTING DETAILS OF EXPORT AND NATURE OF COMMODITY EXPORTED. HOWEVER, T HE ASSESSEE FAILED TO PRODUCE ANY SUPPORTING EVIDENCE. THE AO FURTHER NOT ED THAT THERE WAS NO EMPLOYEE WITH THE ASSESSEE AS WELL AS NO OPENING OR CLOSING STOCK IN THE BOOKS OF THE ASSESSEE COMPANY . ON THE BASIS OF THE FACTS DETECTED DURING THE ENQUIRY IN THE ASSESSMENT PROCEEDINGS THE AO TREATED THE SA ID RECEIPT OF 3 ITA NO.1336/M/13 R.J. INFOTECH SERVICES PVT. LTD. RS.16,16,662/- AS UNEXPLAINED CASH CREDIT U/S. 68 O F THE INCOME TAX ACT AND ASSESSED THE SAME TO TAX UNDER THE HEAD INCOME FRO M OTHER SOURCES. PENALTY PROCEEDINGS U/S.271(1)(C) WERE INITIATED FOR FURNIS HING INACCURATE PARTICULARS OF INCOME AND CONSEQUENTLY PENALTY OF RS.5,44,168/- B EING MINIMUM LEVIABLE PENALTY ON THE TAX EVADED WAS LEVIED VIDE ORDER DA TED 24/05/2010. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE CIT(A) BUT COULD NOT SUCCEED. 3. BEFORE US, THE LD. AR FOR THE ASSESSEE HAS CONTE NDED THAT THE AMOUNT OF RS.16,16,662/- WAS RECEIVED ON EXPORT OF SOFTWARE C ONSULTANCY FROM BRADFORD ADVISORS INC. IN CONVERTIBLE FOREIGN EXCHANGE. THE ASSESSEE PRODUCED DETAILS AND EVIDENCE OF FOREIGN REMITTANCE IN THE BANK ACCO UNT. HE HAS FURTHER CONTENDED THAT IT WAS A REGULAR BUSINESS OF THE ASS ESSEE TO EXPORT SOFTWARE AND REVENUE HAS ACCEPTED THE SAME IN THE ASSESSMENT YEA RS 2003-04 AND 2004-05 AND ALLOWED DEDUCTION U/S. 80HHA FOR EXPORT. FOR T HE YEAR UNDER CONSIDERATION THE DEDUCTION U/S. 80HHA WAS NOT CLAI MED AS IT WAS REMOVED THOUGH THE EXPORT OF RS.16,16,662/- WAS MADE DURING THE YEAR. HE HAS ALSO REFERRED TO THE CONFIRMATION RECEIVED FROM THE PART Y AND SUBMITTED THAT THE PARTY HAS CONFIRMED THE TRANSACTION OF EXPORT AND R EMITTANCE. THOUGH THE ASSESSEE ACCEPTED THE TREATMENT OF EXPORT RECEIVED AS INCOME FROM OTHER SOURCES BECAUSE OF NO TAX EFFECT FOR THE YEAR UNDER CONSIDERATION, HOWEVER, THE SAME DOES NOT LEAD TO THE CONCLUSION THAT THE ASSES SEE FURNISHED INACCURATE PARTICULARS OF INCOME OR CONCEALED PARTICULARS OF INCOME. HE HAS ALSO REFERRED TO THE INVOICE RAISED BY THE ASSESSEE AS WELL AS CE RTIFICATE OF FOREIGN INWARD REMITTANCE. THUS, THE LD. AR HAS SUBMITTED THAT THE ASSESSEE HAS PRODUCED THE RELEVANT RECORDS TO SHOW THAT THE AMOUNT IN QUESTIO N WAS RECEIVED ON ACCOUNT OF EXPORT. IN SUPPORT OF HIS CONTENTION HE HAS RELI ED UPON THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF T. ASHOK PAI VS. CIT (292 ITR 11). 4. ON THE OTHER HAND THE LD. DR HAS SUBMITTED THAT THE AMOUNT IN QUESTION WAS CREDITED IN THE BOOKS OF ACCOUNT AND ALSO IN TH E PROFIT & LOSS ACCOUNT. THE ASSESSEE MADE A BOGUS CLAIM OF THE SAID AMOUNT AS C ONSULTANCY FEE. HOWEVER, THE AO INVESTIGATED THE MATTER AND FOUND THAT SUCH MONEY WAS CREDITED IN THE 4 ITA NO.1336/M/13 R.J. INFOTECH SERVICES PVT. LTD. BOOKS OF ACCOUNT WITHOUT ANY SUPPORTING EVIDENCE. H E HAS RELIED UPON THE ORDERS OF AUTHORITIES BELOW AND SUBMITTED THAT WHEN THE AO HAS GIVEN THE FINDING OF THE FACT THAT ASSESSEE WAS NOT HAVING AN Y EMPLOYEE AS WELL AS ANY OPENING AND CLOSING STOCK THE CLAIM OF THE ASSESSEE IS FOUND TO BE BOGUS. THUS IT IS A CASE OF FURNISHING OF INACCURATE PARTICULAR S OF INCOME, THEREBY THE ASSESSEE SET OFF CARRYFORWARD BUSINESS LOSS AGAINST THE SAID AMOUNT TREATING THE SAME AS BUSINESS INCOME. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND REL EVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSEE HAS SHOWN HIS EXPORT INCOME OF RS.16,16,662/- ON ACCOUNT OF CONSULTANCY, SOFTWARE EXPORT . THE ASSES SEE FILED RETURN OF INCOME SHOWING NIL TOTAL INCOME AFTER CLAIMING SET OFF BRO UGHT FORWARD LOSSES. HOWEVER, TAX WAS PAID ON BOOK PROFIT. THE AO MADE THE ENQUIR Y DURING ASSESSMENT PROCEEDINGS AND CAME TO THE CONCLUSION THAT RECEIPT SHOWN BY THE ASSESSEE ON ACCOUNT OF EXPORT IS NOT TRUE AND ACCORDINGLY TREAT ED THE SAID AMOUNT AS UNEXPLAINED CASH CREDIT U/S. 68 OF THE INCOME TAX A CT. HENCE, THE AO ASSESSED THE SAID INCOME OF RS.16,16,662/- AS INCOME FROM O THER SOURCES. THE AO REACHED TO THE CONCLUSION OF NO EXPORT BY THE ASSES SEE BY CONSIDERING THAT THE ASSESSEE HAD NO EMPLOYEE, NO OPENING STOCK AND NO C LOSING STOCK. FURTHER, THE ALLEGED CONFIRMATION WAS VERY VAGUE NOT SHOWING SAL E CONSIDERATION. WE ALSO FIND THAT THE CONFIRMATION DOES NOT INDICATE ANY DE TAIL OF EXPORT QUANTITY AND SALE CONSIDERATION. THE ASSESSEE ACCEPTED THE ACTI ON OF THE AO IN TREATING THE SAID AMOUNT AS UNEXPLAINED CASH CREDIT AND INCOME FROM OTHER SOURCES. THE EXPORT INCOME OFFERED AND ACCEPTED IN THE EARLIER A SSESSMENT YEARS HAS NO RELEVANCE OR BEARING ON THE CLAIM OF THE ASSESSEE F OR THE YEAR UNDER CONSIDERATION, WHEN, ON AN ENQUIRY IT WAS FOUND THA T THERE WAS NO EXPORT DURING THIS YEAR. ACCEPTING THE ACTION OF AO PROVED THE FACT THAT THE CLAIM OF EXPORT WAS FACTUALLY INCORRECT AND CONSEQUENTLY THE ASSESSEE WAS GUILTY OF FURNISHING INACCURATE PARTICULARS OF INCOME, THEREB Y REDUCING THE TAX LIABILITY BY SHOWING NIL TOTAL INCOME IN THE RETURN OF INCOME AS AGAINST RS.16,16,662/- ASSESSED BY THE AO. THEREFORE, IT IS A CASE OF BOGU S CLAIM OF EXPORT WHICH IS A FACTUAL CONCEALMENT OF PARTICULARS OF INCOME. THE C ASE OF THE ASSESSEE DOES NOT 5 ITA NO.1336/M/13 R.J. INFOTECH SERVICES PVT. LTD. FALL UNDER THE CATEGORY OF BONAFIDE CLAIM WHICH WAS NOT ACCEPTED BY THE AO IN THE ASSESSMENT PROCEEDINGS BUT IT IS FACTUALLY A WR ONG CLAIM AS PER ENQUIRY OF THE AO WHICH ATTAINED FINALITY. ACCORDINGLY IN THE FACTS AND CIRCUMSTANCES OF THE CASE WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE IMPUGNED ORDER OF CIT(A) IN CONFIRMING LEVY OF PENALTY U/S. 271(1)(C). THE DECI SION RELIED UPON BY THE ASSESSEE IN THE CASE OF T. ASHOK PAI VS. CIT (292 ITR 11) (SUPRA), IS NOT APPLICABLE IN THE FACTS OF THE PRESENT CASE, WHEN T HE AO HAS MADE OUT A CASE OF FACTUALLY WRONG CLAIM BY THE ASSESSEE . 6. IN THE RESULT, THE APPEAL OF THE ASSESSE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14/01/201 5. . /'+,-.( 01234 53 6537,' 8) SD/- SD/- (N.K. BILLAIYA) (VIJAY PAL RAO ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER () MUMBAI; 1 DATED 14/01/2015. . . ./ JV, SR. PS COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT. 3. (9 : ; / THE CIT(A)- 4. (9 / CIT 5. <8$*= = . () / DR, ITAT, MUMBAI 6. 8>?@) GUARD FILE. / BY ORDER, %*$* //TRUE COPY// !' !' !' !' (DY./ASSTT. REGISTRAR) '' '' '' '' # # # # () / ITAT, MUMBAI