SYNERGY FASHIONS, MUMBAI V. ACIT CIR 17(2), MUMBAI

ITA 1580/MUM/2010

• Counselvise Citation: 158019914 RSA 2010
• Duration Of Justice: 1 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2003-2004
• Appeal Filed On: 02-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JI TENDRA YADAV
• Assessee Lawyers: MRUGAKSHI K JOSHI
• Section: 80HHC; 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'D' BENCH, MUMBAI BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. 1580/MUM/2010 (ASSESSMENT YEAR: 2003-04) M/S. SYNERGY FASHIONS ACIT - 17(2) C-31, 3RD FLOOR, SHRIRAM INDL. ROOM NO. 217, 2ND FL OOR ESTATE, 13, G.D. AMBEDKAR MARG VS. PIRAMAL CHAMBERS, LALBAUG MUMBAI 400031 MUMBAI 400012 PAN - AACFS 3083 R APPELLANT RESPONDENT APPELLANT BY: MS. MRUGAKSHI K. JOSHI RESPONDENT BY: SHRI JITENDRA YADAV O R D E R PER B. RAMAKOTAIAH, A.M. THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER OF THE CIT(A)- XXIX, MUMBAI DATED 04.01.2010 CONFIRMING THE PENALTY OF ` 1,04,993/- LEVIED BY THE A.O. UNDER SECTION 271(1)(C) OF I.T. ACT. 2. BRIEFLY STATED, THERE WAS A SURVEY ACTION UNDER SEC TION 133A AND ON THE BASIS OF CERTAIN PAPERS ASSESSEE ANSWERED QUEST IONS ABOUT VARIOUS TRANSACTIONS. IN THE COURSE OF SURVEY THE A.O. ENQU IRED ABOUT THE RECEIPT OF DISCOUNT OF ` 1.32 CRORES AND ASSESSEE ADMITTED THE SAME AS INCOM E. HOWEVER, AT THE TIME OF ASSESSMENT THE A.O. WAS OF THE OPINION THAT THE TOTAL DISCLOSURE WHICH SHOULD HAVE BEEN MADE BY THE ASSES SEE WAS ` 1.35 CRORES WHEREAS THE RETURN WAS FILED ADMITTING ONLY ` 1.32 CRORES. AFTER EXAMINATION THE A.O. MADE AN ADDITION OF ` 2,99,980/-. FOR THIS DIFFERENCE IN AMOUNT BEING TAXED, PROCEEDINGS UNDER SECTION 271(1)(C) WA S INITIATED. ASSESSEE SUBMITTED THAT THERE WAS A DIFFERENCE OF ` 2,99,980/- WHICH HAPPENED DUE TO INADVERTENCE AS THE QUESTION WAS ASKED BY THE AO WH ICH WAS ON THAT AMOUNT DISCLOSED AND RETURN WAS FILED ACCORDINGLY. THE MISTAKE WAS NOT NOTICED AS THE XEROX COPIES OF THE LOOSE SHEETS OBT AINED WERE NOT LEGIBLE. THEREFORE THE ASSESSEE ADMITTED ` 1.32 CRORES AS DECLARED IN COURSE OF ITA NO. 1580/MUM/2010 M/S. SYNERGY FASHIONS 2 SURVEY. BUT THE ADDITION WAS MADE ON THE DIFFERENCE AMOUNT IN THE COURSE OF ASSESSMENT WHICH THE ASSESSEE HAS ACCEPTED. FURTHER IT WAS SUBMITTED THAT ASSESSEE COULD HAVE BEEN ELIGIBLE FOR DEDUCTION UND ER SECTION 80HHC. THEREFORE, THERE IS NO NEED FOR LEVY OF PENALTY ON THE ENTIRE AMOUNT. HOWEVER, THE A.O. LEVIED PENALTY AND THE CIT(A) CON FIRMED THE SAME STATING THAT THE QUANTUM WAS CONFIRMED BY THE CIT(A) AND TH EREFORE PENALTY IS ALSO WARRANTED. 3. THE LEARNED COUNSEL SUBMITTED THAT THERE WAS A MIST AKE IN TAKING THE AMOUNT AND REFERRED TO THE STATEMENT GIVEN IN THE C OURSE OF SURVEY UNDER SECTION 133A WHERE THE TOTAL BUSINESS PROFITS FOR A.Y. 2003-04 WERE ESTIMATED TO BE AT ` 5.25 CRORES APPROXIMATELY WHICH INCLUDES ` 1.32 CRORES DECLARED DURING THE SURVEY UNDER SECTION 133A. IT W AS FURTHER CLARIFIED THAT DEDUCTION UNDER SECTION 80HHC AT 50% WOULD BE CLAIM ED. SHE THEN REFERRED TO EXHIBIT A & B, WHICH WERE DOCUMENTS IMPOUNDED DU RING THE SURVEY. IT WAS SUBMITTED THAT THE TOTAL ON PAGE NO. 1 IN EXHIB IT A WAS ` 1,32,48,156/- WHICH WAS THE AMOUNT ADMITTED BY THE ASSESSEE AS DI SCOUNT RECEIVED IN EXPORT BUSINESS NOT ACCOUNTED FOR AND PG. 2 REFERS TO THE TRANSACTIONS WITH HARISH BHAI WHICH TOTAL TO ` 1,35,48,156/-. THUS SHE REFERRED TO THE BIFURCATION OF THE AMOUNTS, OUT OF WHICH ONLY ` 1,28,91,600/- PERTAINS TO THE HEAD OFFICE ACCOUNT AND THE BALANCE ARE VARIOUS TRA NSACTIONS OF DD COMMISSION PAYABLE TO VARIOUS PERSONS. EVENTHOUGH T HE ENTIRE AMOUNT OF ` 1,35,48,156/- WAS ADMITTED IN ASSESSMENT, THE A.O. ENQUIRED ABOUT ` 1,32,48,156/- IN THE COURSE OF SURVEY AND ON THE BA SIS OF PAGE 1 OF EXHIBIT A ASSESSEE DISCLOSED THE SAME AMOUNT AT THE TIME OF FILING THE RETURN. THIS WAS AN INADVERTENT MISTAKE WHICH SHOULD NOT LEAD TO PENALTY UNDER SECTION 271(1)(C). 4. THE LEARNED D.R., HOWEVER, SUBMITTED THAT THE DETAI LS ARE AVAILABLE WITH THE ASSESSEE AND ASSESSEE HAS RECEIVED LOT OF DISCOUNTS ON THE GOODS PURCHASED AND EXPORTED TO THE TUNE OF ` 1.35 CRORES AND CONSEQUENT TO THE SURVEY THE DISCLOSURE WAS MADE AND THUS ASSESSEE HA S NOT INDICATED THE TOTAL FIGURE OF ` 1,35,48,156/- WHICH SHOULD HAVE BEEN ADMITTED AS AG AINST ` 1,32,48,156/-. THEREFORE LEVY OF PENALTY ON THIS WA S WARRANTED. ITA NO. 1580/MUM/2010 M/S. SYNERGY FASHIONS 3 5. WE HAVE CONSIDERED THE ISSUE. AS SEEN FROM THE FACT S OF THE CASE THERE WAS A SURVEY ON 25.10.2002 AND IN THE COURSE OF STA TEMENT ASSESSEES PARTNER ADMITTED ` 1.32 CRORES AS ADDITIONAL INCOME FOR A.Y. 2003-04. THERE IS NO DISPUTE TO THE QUESTION ASKED AND THE INCOME OFFERED REFERS TO ONLY ` 1.32 CRORES. ASSESSEE ALSO FILED RETURN ADMITTING T HE AMOUNT OF ` 1.32 CRORES ON THE BASIS OF THE DISCLOSURE. HOWEVER, IN THE COU RSE OF ASSESSMENT THE A.O. NOTED THAT THERE IS ONE AMOUNT OF ` 3,00,000/- IN PAGE NO. 2 MAKING THE TOTAL TO ` 1,35,48,156/-. WITHOUT ASKING FOR ANY CLARIFICATION OR RECONCILIATION OF THE AMOUNT, THE A.O. ENQUIRED WHY THE FIGURE OF 1.35 CRORES MENTIONED IN THE STATEMENT AT PAGE 2 SHOULD NOT BE ADDED. ASSESS EE, HOWEVER, TO BUY PEACE ACCEPTED FOR THE SAME. FURTHER ASSESSEE CLAIM ED BENEFIT OF 80HHC DEDUCTION. A.O. MADE AN ADDITION OF ` 2,99,980/- AND COMPUTED THE TOTAL INCOME ACCORDINGLY. HE ALSO ALLOWED DEDUCTION UNDER SECTION 80HHC AT ` 2,83,77,397/- WHICH IS ROUGHLY ABOUT 50% OF THE TO TAL GROSS INCOME OF THE ASSESSEE INCLUDING THE AMOUNT ADDED IN ASSESSMENT. WHEN THE A.O. HAS MADE AN ADDITION OF APPROXIMATELY ` 3,00,000/- AND ALSO ALLOWED 80HHC DEDUCTION AT 50% THEREON, IT IS NOT CORRECT TO LEVY PENALTY ON THE ENTIRE AMOUNT. BE THAT AS IT MAY, AS SEEN FROM THE SEQUENC E OF EVENTS AND THE DOCUMENTS ON RECORD, THE A.O. IN THE COURSE OF SURV EY ENQUIRED ABOUT PG. 1 OF EXHIBIT A WHICH INDICATED ONLY ` 1,32,48,156/- WHICH THE ASSESSEE IMMEDIATELY ADMITTED AS INCOME AND ACCORDINGLY PAID TAX. IF THERE WAS ANY MISTAKE IN TAKING THE FIGURE, IT AROSE ON THE BASIS OF THE ACTION OF THE A.O. AT THE TIME OF SURVEY WHO CONSIDERED ONLY AN AMOUNT OF ` 1.32 CRORES AS INCOME OF THE ASSESSEE OUTSIDE THE BOOKS OF ACCOUNT. IN TH E COURSE OF ASSESSMENT, HOWEVER, THE FIGURE WAS REVISED. WITHOUT EXAMINING THE NATURE OF THE AMOUNT OR MAKING ANY DISCUSSION ABOUT WHY HIGHER FI GURE IS TO BE CONSIDERED, THE A.O. SIMPLY ADDED THE SAME WHICH TH E ASSESSEE ALSO ACCEPTED AS IT HAS GOT THE BENEFIT UNDER SECTION 80 HHC AND THE AMOUNT BEING SMALL. IN VIEW OF THIS, ON THE FACTS OF THE C ASE WE ARE OF THE OPINION THAT THERE WAS A GENUINE MISTAKE OCCURRED DURING TH E COURSE OF SURVEY, MAY BE BY THE A.O. INITIALLY, FOLLOWED BY THE ASSESSEE. HAD THE AO QUESTIONED THE AMOUNT IN PAGE 2 ASSESSEE COULD HAVE ADMITTED OR CL ARIFIED THE ISSUE. IN THE CIRCUMSTANCES WE ARE OF THE OPINION THAT PENALTY IS NOT WARRANTED ON THE ITA NO. 1580/MUM/2010 M/S. SYNERGY FASHIONS 4 SMALL AMOUNT OF DISCREPANCY WHEN THE ASSESSEE VOLUN TARILY ACCEPTED HIGHER INCOME TO THE EXTENT OF ` 1.32 CRORES. THE EXPLANATION GIVEN BY THE ASSESSEE SEEMS TO BE BONAFIDE. THEREFORE, THE PENALTY LEVIED IS CANCELLED. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH APRIL 2011. SD/- SD/- (R.S. PADVEKAR) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 27 TH APRIL 2011 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) XXIX, MUMBAI 4. THE CIT XVII, MUMBAI CITY 5. THE DR, D BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.