HANNOVER MILAND FAIRS INDIA P.LTD, MUMBAI V. DCIT RG 3(1), MUMBAI

ITA 1496/MUM/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2612 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2009-2010
• Appeal Filed On: 04-03-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K MOHANDA S
• Assessee Lawyers: AMIT KHATIWALE
• Keywords: Difference of opinion; Bonafide mistake
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI , , BEFORE SHRI SHAILENDRA KUMAR YADAV, JM AND SHRI RAMIT KOCHAR , AM ./ ITA NO. 1496/MUM/2014 ( / ASSESSMENT YEAR: 2009 - 10 ) HANNOVER MILANO FAIRS INDIA P. LTD. / VS. DCIT, CIRCLE 3(1) VATIKA BUSINESS CENTRE WING B, 7TH FLOOR, SUPREME BUSINESS PARK, HIRANANDANI GARDENS, POWARI MUMBAI 400076 6TH FLOOR, AYAKAR BHAVAN MUMBAI 400020 ./ PAN - AABCH8291G / APPELLANT / RESPONDENT / APPELLANT BY : SHRI JITENDRA SANGHVI & SHRI AMIT KHATIWALE / RESPONDENT BY : SHRI K. MOHANDAS / DATE OF HEARING : 14.10. 2015 / DATE OF PRONOUNCEMENT : 30 .10.2015 / O R D E R PER SHAILENDRA KUMAR YADAV, JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 30.09.2013 PASSED BY THE CIT(A) 5, MUMBAI AND IT PERTAINS TO A.Y. 2009 - 10. 2. FOLLOWING GROUNDS WERE RAISED BY THE ASSESSEE: - 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 5, MUMBAI [CIT(A)] ERRED IN CONFIRMING THE ORDER OF THE LEARNED DCIT, RANGE 3(1), MUMBAI (ASSESSING OFFICER) LEVYING PENALTY U/S. 271(1)(C) OF THE ACT. 2 ITA NO. 1496/MUM/2014 HANNOVER MILANO FAIRS INDIA P. LTD. YOUR APPELLANT SUBMITS THAT THE ORDER U/S. 271(1)(C) IS ILLEGAL, BAD - IN - LAW AND THE SAME OUGHT TO BE CANCELLED. 2. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER LEVYING PENALTY U/S. 271(1)(C) OF THE ACT AMOUNTING TO RS.8,48,499 IN RESPECT OF ADDITION OF RS.24,96,318 MADE TO THE TOTAL INCOME ON ACCOUNT OF D ISALLOWANCE OF EXHIBITOR PROMOTION EXPENSES. THE APPELLANT SUBMITS THAT THE PENALTY OF RS.8,48,499 IS WRONGLY LEVIED AND THE SAME OUGHT TO BE CANCELLED. 3. ASSESSEE FILED ITS RETURN OF INCOME ON 30.09.2009 DECLARING TOTAL INCOME OF ` 53,09,700/ - . ASSESSMENT WAS MADE ON A TOTAL INCOME OF ` 1,03,52,020/ - VIDE ORDER UNDER SECTION 143(3) DATED 23.11.2011. ONE OF THE ADDITIONS WAS ON ACCOUNT OF DISALLOWANCE OF ` 24,96,318/ - ON WHICH THE ASSESSING OFFICER IMPOSED PENALTY UNDER THE PROVISIONS OF SECTION 271(1)(C) VIDE ORDER DATED 30.05.2012. 4. THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY WHEREIN VARIOUS CONTENTIONS WERE RAISED ON BEHALF OF THE ASSESSEE AND AFTER CONSIDERING THE SAME THE CIT(A) UPHELD THE PENALTY IN QUESTION. 5. THE LEARNED A.R. FOR THE ASSESSEE, BEFORE US, SUBMITTED THAT THE CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER WHO LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE ORDER OF THE ASSESSING OFF ICER LEVYING PENALTY UNDER SECTION 271(1)(C) AMOUNTING TO ` 8,48,499/ - IN RESPECT OF ADDITION OF ` 24,96,318/ - MADE TO THE TOTAL INCOME ON ACCOUNT OF DISALLOWANCE OF EXHIBITOR PROMOTION 3 ITA NO. 1496/MUM/2014 HANNOVER MILANO FAIRS INDIA P. LTD. EXPENSES IS NOT JUSTIFIED. ACCORDINGLY THE PENALTY LEVIED BY THE ASSESSI NG OFFICER AND CONFIRMED BY THE CIT(A) SHOULD BE SET ASIDE. ON THE OTHER HAND, THE LEARNED D.R. SUPPORTED THE ORDER OF THE CIT(A). 6. AFTER GOING THROUGH RIVAL SUBMISSIONS AND THE RECORD WE FIND THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF ORGAN IZING, ARRANGING AND PROMOTING TRADE FAIRS, EXHIBITIONS, CONFERENCES AND CONVENTIONS. FOR A.Y. 2009 - 10 ASSESSEES CASE WAS SELECTED FOR SCRUTINY BY THE CONCERNED ASSESSING OFFICER WHO PASSED AN ORDER UNDER SECTION 143(3) DISALLOWANCE THE EXPENDITURE IN REL ATION TO EXHIBITOR PROMOTION EXPENSES AND THE ASSESSING OFFICER HAS LEVIED PENALTY ON ACCOUNT OF THE SAID ADDITION TO THE TOTAL INCOME AS DISCUSSED ABOVE . DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS CLAIMED TO HAVE INCURRED EXPENDITURE OF ` 1,68,26 ,530/ - ON ACCOUNT OF EXHIBITOR PROMOTION EXPENSES. THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAS CLAIMED EXPENDITURE RELATING TO EXHIBITIONS HELD IN CHINA WHICH IS NOT RELATED TO THE BUSINESS OPERATIONS OF THE ASSESSEE IN INDIA. ACCORDINGLY HE DISALLOWE D ` 24,96,318/ - ON THIS ACCOUNT AND LEVIED PENALTY UNDER SECTION 271(1)(C) OF THE ACT AMOUNTING TO ` 8,48,499/ - FOR THE SAME. DURING THE RELEVANT FINANCIAL YEAR CERTAIN EXHIBITOR PROMOTION EXPENSES WERE INCURRED BY DEUTSCHE 4 ITA NO. 1496/MUM/2014 HANNOVER MILANO FAIRS INDIA P. LTD. MESSE AG (DMAG), THE PARENT COMPAN Y OF THE ASSESSEE, FOR FAIRS ORGANIZED IN INDIA AND CHINA. FOUR FARES WERE ORGANIZED IN INDIA AND CHINA FOR WHICH THE PARENT COMPANY HAD INCURRED CERTAIN EXPENSES. THE PARENT COMPANY APPORTIONED THE EXPENDITURE BETWEEN THE ASSESSEE AND THE COMPANY IN CHINA EQUALLY. THE ASSESSING OFFICER CALLED FOR DETAILS OF THESE EXPENSES DURING THE COURSE ASSESSMENT PROCEEDINGS. THE SAME WERE PROVIDED. ON THE BASIS OF THE DETAILED FILED DURING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER CONCLUDED THAT OUT OF THE TOTA L INVOICES AMOUNTING TO EURO 246641.38 ONLY A SUM OF EURO 209647. 94 COULD BE RELATED TO T RADE FAIRS HELD IN INDIA. AS PER THE ASSESSING OFFICER THE BALANCE SUM OF EURO36993.44 RELATES TO CHINESE FAIRS AND HENCE NOT RELATED TO INDIAN ACTIVITIES. ASSESSING O FFICER HAS TAKEN THE EXCHANGE RATE OF EURO AS ON 31.03.2009, I.E. 1 EURO IS EQUIVALENT TO INR 67.48 AND DISALLOWANCE AND ADDED BACK ` 24,96,318/ - TO THE TOTAL INCOME OF THE ASSESSEE. LEARNED A.R. FOR THE ASSESSEE HAS FAIRLY ADMITTED THAT ASSESSEE ACCEPT THE QUANTUM ADDITION BUT SIMULTANEOUSLY PENALTY UNDER SECTION 271(1)(C) AMOUNTING TO ` 8.48,499/ - WAS LEVIED FOR THE AFORESAID ADDITION. THE STAND OF THE ASSESSEE HAS BEEN THAT ALL THE DETAILS CALLED FOR BY ASSESSING OFFICER WERE SUBMITTED WITH RESP ECT OF EXHIBITOR PROMOTION EXPENSES INCLUDING ALL INVOICES, LEDGER ACCOUNTS, ETC. ASSESSING OFFICER DISALLOWED CERTAIN EXPENDITURE BY REJECTING THE 5 ITA NO. 1496/MUM/2014 HANNOVER MILANO FAIRS INDIA P. LTD. BASIS OF APPORTIONMENT BETWEEN VARIOUS REGIONS AND CONCLUDING THAT THERE IS EXCESS EXPENDITURE AMOUNTING TO ` 24,96,318/ - DEBITED TO THE PROFIT & LOSS ACCOUNT OF THE ASSESSEE. AS PER EXPLANATION 1 OF SECTION 271(1)(C) AN ASSESSEE IS SAID TO HAVE CONCEALED PARTICULARS OF ITS INCOME IN RESPECT OF ANY EXPENSE CLAIMED IN RETURN OF INCOME. IN THIS REGARD THE STAND OF THE ASSESSEE HAS BEEN THAT THE ASSESSEE HAS CLAIMED CERTAIN EXPENDITURE WHICH COULD NOT BE ACCEPTED BY ASSESSING OFFICER . 6.1 T HE PROVISIONS OF SECTION 271(1)(C) OF THE ACT TOGETHER WITH EXPLANATION - 1 THERE UNDER, NO PRINCIPLES OF MENSEREA IS REQUIRED FOR LEVY OF SUCH CIVIL PENALTY. LEVYING PENALTY MAY NOT BE JUSTIFIED IN CASES OF EXPLANATION GIVEN IS FOUND BONAFIDE AND ALL THE FA CTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY ASSESSEE . THE DISCLOSURE SHOU LD BE FULL SO THAT NATURE OF CLAIM COULD BE INFERRED FROM THE FINANCIAL STATEMENTS AND AND/OR THE NOTES ON ACCOUNT, AUDIT ENCLO SED WITH THE RETURN ITSELF. THERE SHOULD BE BONAFIDE CLAIM BY ASSESSEE . MERELY BECAUSE SOME ADDITION HAS BEEN MADE AND SUCH ADDITION HAS BECOME FINAL, IT DOES NOT NECESSARILY FOLLOW THAT PENALTY IS LEVIABLE. THEREFORE WHERE INADMISSIBLE CLAIM IS MADE DUE T O INADVERTENT AND BONAFIDE MISTAKES PENALTY IS HELD TO BE NOT WARRANTED. THE ASSESSING OFFICER IS EXPECTED TO EXERCISE THEIR DISCRETION BASED ON THE FACTS OF THE CASE. MERE CLAIM OF THE ASSESSEE 6 ITA NO. 1496/MUM/2014 HANNOVER MILANO FAIRS INDIA P. LTD. THAT ISSUE WAS DEBATABLE AND OR TWO VIEWS WERE POSSIBLE IN LA W AND FACTS IS ALSO NOT ENOUGH. THE BURDEN TO SUBSTANTIATE THE CLAIM IS UPON THE ASSESSEE. IF THE EXPLANATION GIVEN IS FOUND NOT TO BE BONAFIDE THEN LEVY OF PENALTY WOULD BE JUSTIFIED. IN THE CASE BEFORE US THE ASSESSING OFFICER HAD GIVEN A SPECIFIC SHOW C AUSE NOTICE AND EXAMINED THE RELEVANT INVOICES FOR EXHIBIT PROMOTION EXPENSES AND THEREAFTER FOUND THAT INVOICES FOR EURO 36993.45 WERE ACTUALLY MEANT FOR CHINESE EXHIBITIONS AND AS SUCH WERE NOT RELATED TO THE EXHIBITION/FAIRS ORGANIZED BY THE ASSESSEE. T HE DISALLOWANCE WAS ACCORDINGLY MADE TO THE EQUIVALENT AMOUNT IN RUPEES AMOUNTING TO ` 24,96,318/ - . THIS IS NOT A CASE WHERE DISALLOWANCE ORIGINATED DUE TO DIFFERENCE OF OPINION AS TRIED TO BE CONVINCE D BY THE ASSESSEE. THE EXPLANATION OF THE ASSESSEE WAS THAT BY MISTAKE INVOICE TO THAT EXTENT RELATING TO EXHIBITION IN INDIA WERE SENT BY THE PARENT COMPANY TO CHINA AND THAT WAY TIRED TO EXPLAIN THAT THE EXPENSES DEBITED IN THE PROFIT & LOSS ACCOUNT WERE ACTUALLY INCURRED AND THERE WAS NO CONCEALMENT AND ASSESSEE HAD NOT FURNISHED ANY INCORRECT PARTICULARS OF INCOME. IF THAT WAS SO, THEN THE ASSESSEE HAD AMPLE OPPORTUNITY TO GET THOSE INVOICES FROM ITS COUNTERPART AND/OR COULD HAVE OBTAINED COPY THEREOF FR OM THE PARENT COMPANY ITSELF AND SUBMITTED TO THE ASSESSING OFFICER AT LEAST DURING THE PENALTY PROCEEDINGS. UNFORTUNATELY, NO SUCH EVIDENCE WAS FILED NEITHER BEFORE THE ASSESSING OFFICER NOR EVEN BEFORE THE CIT(A) IN THE APPELLATE 7 ITA NO. 1496/MUM/2014 HANNOVER MILANO FAIRS INDIA P. LTD. PROCEEDINGS. IN VIEW OF THE ABOVE THE CIT(A) WAS JUSTIFIED IN UPHOLDING THE ORDER OF THE ASSESSING OFFICER WHEREIN HE HAS HELD THAT THE ASSESSEE HAS CONCEALED ITS INCOME BY FILING INACCURATE PARTICULARS. THEREFORE HE RIGHTLY IMPOSED PENALTY UNDER SECTION 271(1)(C). THIS REASONED FACTUAL FINDINGS BY CIT(A) NEED NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH OCTOBER, 2015. 3 0.10.2015 SD/ - SD/ - ( RAMIT KOCHAR ) ( SHAILENDRA KUMAR YADAV ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI , DATED 30 TH OCTOBER, 2015 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) - 5 , MUMBAI 4. / THE CIT - 3 , MUMBAI 5. , , / DR, H BENCH ITAT, MUMBAI 6. / GUARD FILE . / B Y O RDER //TRUE COPY// /ASSTT. REGISTRAR) , /ITAT, MUMBAI