ACIT 16(1), MUMBAI V. AMIT H. JHAVERI, MUMBAI

ITA 1347/MUM/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59759 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 07-09-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 27-02-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K B MENON

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: MUMBAI BEFORE SHRI G.E. VEERABHADRAPPA, PRESIDENT AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NOS.1347 AND 1348/MUM/2009 (ASSESSMENT YEARS: 2004-05 AND 2005-06) ACIT-16(1), MUMBAI MUMBAI -400 006 ...... APPELLANT VS SHRI AMIT H. JHAVERI, 241, PATLI NIWAS, WALKESHWAR ROAD, MUMBAI -400 006 ..... RESPONDENT PAN: AACPJ 3117 F APPELLANT BY: SHRI P.K. B. MENON RESPONDENT BY: SHRI BHUPENDRA SHAH DATE OF HEARING: 29.11.2011 DATE OF PRONOUNCEMENT: 25.01.2012 O R D E R PER R.S. PADVEKAR, JM : IN THESE TWO ARE APPEALS FILED BY THE REVENUE CHALL ENGING THE TWO SEPARATE IMPUGNED ORDERS OF THE LD. CIT (A) -16, MU MBAI PASSED ON SAME DATE I.E. DATED 25.11.2008 FOR THE A.YS. 2004- 05 AND 2005-06 DELETING THE PENALTY LEVIED BY THE A.O. U/S.271(1) (C) OF THE ACT. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS WHICH ARE V ERBATIM IN BOTH THE ASSESSMENT YEARS ARE AS UNDER:- THE LD. CIT (A) HAS ERRED IN FACT AND LAW IN DELET ING THE PENALTY SINCE THE ACTION OF PENALTY BEING CONSEQUENTIAL IN NATURE TO THE ORIGINAL ASSESSMENT ORDER U/S.144 PASSED BY AO AND WHICH HAVE BEEN CONFIRMED BY THE CIT (A). THE LD. CIT (A) ERRED IN FACT AND LAW IN IGNORING T HE FACT THAT THE ASSESSEE HAS GIVEN THE INACCURATE PARTICULARS REGAR DING METHOD ITAS 1348 AND 1349 /M/2009 SHRI AMIT H. JHAVERI 2 OF ACCOUNTING ADOPTED BY HIM AND ALSO HAS FAILED TO SUPPORT HIS CLAIM BY ANY DOCUMENTARY EVIDENCES. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GR OUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 2. THE FACTS WHICH REVEALED FROM THE RECORD ARE AS UNDER. IN BOTH THE ASSESSMENT YEARS, THE A.O. PASSED THE ASSESSMEN T ORDER U/S.144 AS THE ASSESSEE FAILED TO FILE THE RETURNS OF INCOM E IN RESPONSE TO NOTICE U/S.148 OF THE ACT. THE A.O. MADE THE ADDIT ION TOWARDS THE INTEREST ACCRUED ON THE INVESTMENT MADE BY THE FOLL OWING PARTIES AS UNDER:- AMT. IN ` SR. NO. NAME OF THE DEBTOR A.Y.2004-05 A.Y. 2005-06 1 SHRI SUBHASH ARRORA INVESTMENT (P) LTD. 50,50,894 65,64,521 2 SHRI AASHISH GORADIA 7,50,000 7,50,000 3 SHRI HIMMATLAL GORADIA 7,50,000 7,50,000 TOTAL 65,50,894 80,64,521 4. THE A.O. INITIATED THE PENALTY PROCEEDINGS U/S.2 71(1)(C) OF THE ACT AND LEVIED THE PENALTY OF ` 42,40,172/- & ` 46,14,025/- IN THE A.YS. 2004-05 AND 2005-06 RESPECTIVELY. THE LD. CI T (A) DELETED THE PENALTY LEVIED BY THE A.O. IN BOTH THE YEARS BY GIV ING THE FOLLOWING REASONS:- 5. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELL ANT VERY CAREFULLY. THERE IS NO DOUBT THAT THE BUSINESS OF THE APPELLANT IS IN STANDSTILL AND THERE ARE CASES PENDING BEFORE TH E VARIOUS JUDICIAL AUTHORITIES. THE CENTRAL BUREAU OF INVEST IGATION HAS ALSO LAUNCHED PROCEEDINGS AGAINST HIM ON THE BASIS OF CO MPLAINTS FILED BY THE BANK OF BARODA. SO IT IS A MATTER OF FACT T HAT RECOVERABILITY OF THE MONEY GIVEN AS LOAN AND THE INTEREST ACCRUED ON THOSE LOANS ARE NOT CERTAIN. AT THE SAME TIME, THE APPEL LANT HAS NOT GIVEN UP HIS CLAIM OF HIS DEBTS BY WAY OF LOANS ADV ANCED TO VARIOUS PARTIES AND THE INTEREST ACCRUED THEREON. THOUGH THERE ARE CASES PENDING BEFORE VARIOUS COURTS AND THE DEB TORS HAVE DISPUTED THEIR LIABILITY TO THE APPELLANT, STILL NO COURT OF LAW HAS ITAS 1348 AND 1349 /M/2009 SHRI AMIT H. JHAVERI 3 DECIDED THAT THE APPELLANT WOULD NOT GET THE PRINCI PAL AMOUNT ADVANCED OR THE INTEREST ACCRUED THEREON. AS THE A PPELLANT HAD BEEN FOLLOWING ACCRUAL METHOD IN THE EARLIER YEARS, THE ASSESSMENTS HAS BEEN COMPLETED ON THAT BASIS AND IN TEREST ACCRUED ON THE LOANS HAS ALSO BEEN ASSESSED. AT TH E SAME TIME IN VIEW OF THE PECULIAR CIRCUMSTANCES OF THE CASE, IT IS DIFFICULT TO HOLD THAT THE APPELLANT HAD CONCEALED THE PARTICULA RS OF HIS INCOME FURNISHED INACCURATE PARTICULARS OF HIS INCO ME. NOTICE U/S.148 ITSELF WAS ISSUED ONLY ON THE BASIS OF THE APPELLANT FILING A LETTER BEFORE THE TRO ON 12TH JULY, 2007. MOREOV ER, IT DOES NOT APPEAR THAT HE HAS OFFERED AN EXPLANATION WHICH IS NOT BONAFIDE OR THAT HE HAS FAILED TO DISCLOSE FACTS RELATING TO THE COMPUTATION OF INCOME. THE APPELLANT APPEARS TO HAVE BEEN UNDE R A BELIEF THAT THE NEEDS TO FILE RETURN OF INCOME ONLY WHEN H E RECEIVES THE INCOME ULTIMATELY AS HE SAID THAT HE WAS FOLLOWING THE CASH SYSTEM. THERE WAS NO BUSINESS ACTIVITY IN THE RECE NT PAST. THE A.O. BROUGHT THAT INTEREST ACCRUAL TO TAX ONLY ON T HE BASIS OF THE APPELLANT HAVING FOLLOWED THE MERCANTILE SYSTEM IN THE EARLIER YEARS. ON CAREFUL CONSIDERATION OF THE FACTS AND C IRCUMSTANCES OF THE CASE, I COME TO THE CONCLUSION THAT THERE IS NO DELIBERATE ATTEMPT TO CONCEAL THE PARTICULARS OF THE INCOME BY THE APPELLANT OR THAT HE HAS FURNISHED INACCURATE PARTICULARS OF HIS INCOME. I THEREFORE, DELETE THE PENALTY LEVIED U/S.271(1)(C) OF THE INCOME TAX ACT. 5. WHILE DECIDING THE QUANTUM APPEALS WE HAVE ALREA DY DELETED THE ADDITIONS IN RESPECT OF THE ACCRUED INTEREST ON THE PRINCIPAL AMOUNTS RECOVERABLE FROM THE THREE PARTIES AND ADMI TTEDLY, THE ENTIRE AMOUNT, PRINCIPAL AS WELL AS INTEREST IS IN DISPUT E AND IN LITIGATION BEFORE THE COURT OF LAW. MOREOVER, AS WE HAVE DELE TED THE QUANTUM ADDITION, IN OUR OPINION, THE VERY BASIS FOR LEVY O F THE PENALTY DOES NOT SURVIVE AND HENCE, PENALTY CAN BE LEVIED U/S.271(1) (C) OF THE ACT ALSO DOES NOT SURVIVE. WE ACCORDINGLY CONFIRMED ORDERS OF LD. CIT(A) DELETING PENALTY LEVIED BY THE A.O. UNDER SEC. 271( 1)(C) OF THE ACT AND DISMISS GROUNDS IN BOTH THE APPEALS. ITAS 1348 AND 1349 /M/2009 SHRI AMIT H. JHAVERI 4 6. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE A RE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 25TH JANUARY, 2012 SD/- ( G.E. VEERABHADRAPPA ) PRESIDENT SD/- ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI, DATE: 25TH JANUARY, 2012 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A)-XVI, MUMBAI. 4) THE CIT, CITY- XVI, MUMBAI. 5) THE D.R. A BENCH, MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN