I.M.P POWERS LTD, MUMBAI V. DCIT 3(2), MUMBAI

ITA 1614/MUM/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70681 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2008-2009
• Appeal Filed On: 27-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJAY
• Assessee Lawyers: V K TULSIAN
• Keywords: Proportionate interest; Wrong claim; Revised return; Bonafide mistake

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH I, MUMBAI BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO. 1614/MUM/2013 ASSESSMENT YEAR: 2008-09 IMP POWERS LTD. 35/C, POPULAR PRESS BLG. 2 ND FLOOR, PT M.M. MALVIYA ROAD, TARDEO MUMBAI-34 PAN: AAACI 0999 M VS. DY. CIT- 3(2) MUMBAI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI V. K. TULSIAN REVENUE BY : SHRI AJAY DATE OF HEARING : 04.07.2013 DATE OF PRONOUNCEMENT : 23.08.2013 O R D E R PER DR. S.T.M. PAVALAN, JM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE LD.CIT(A) -4, MUMBAI DATED 31.01.2013 CONFIRMING THE PENALTY LEV IED BY THE AO U/S 271(1)(C) OF THE INCOME TAX ACT FOR THE ASSESSMENT YEAR 2008-09. 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS: 1. WHETHER THE LD.CIT(A) WAS JUSTIFIED BY UPHOLDIN G THAT THERE IS NO REQUIREMENT TO MENTION THE PERMISSION U/S 274(2) ON THE ORDER SUPP LIED. 2. WHETHER THE LD.CIT(A) WAS JUSTIFIED BY NOT SAYIN G/ ADJUDICATING ADMITTED ADDITIONAL GROUND NO. 1 W.R.T. INITIATION OF PENALTY PROCEEDIN GS ON WRONG CLAIM WHILE PENALTY IMPOSED ON FILING OF INACCURATE PARTICULARS. 3. WHETHER THE LD.CIT(A) WAS JUSTIFIED BY UPHOLDIN G THE 300% PENALTY ORDER PASSED U/S 271 (1) (C) BY AO, WITHOUT APPRECIATING ALL THE WRITTEN SUBMISSION/ARGUMENT AND VARIOUS PRECEDENTS RELIED UPON, MAINLY ON THE FOLLO WING OBSERVATIONS:- IT IS NOT A SILLY/INADVERTENT MISTAKES NO NEED OF INDEPENDENT FINDING IN THE PENALTY PROCE EDING EXCESS/WRONG CLAIM FIRST DETECTED BY AO INSTEAD OF SUO MOTU VOLUNTARY DISCLOSER BY APPELLANT ADMITTEDLY, DURING THE PROCEEDING A REVISED COMPUTA TION OF INCOME TO THE EFFECT WAS FILED AND NEITHER ANY MISTAKE IN AUDITED FINANCIAL STATEMENTS NOR IN THE BOOKS OF ACCOUNT. THE MISTAKE IS NOT A BONA FIDE MISTAKE ADMITTEDLY NO SEPARATE ADDITION/DISALLOWANCE REQUIR ED WHILE COMPUTING TOTAL TAXABLE INCOME ITA NO. 1614/MUM/2013 IMP POWERS LTD. ASSESSMENT YEAR: 2008-09 2 3. BRIEFLY STATED, THE RELEVANT FACTS ARE THAT THE ASSESSEE, A COMPANY ENGAGED IN THE BUSINESS OF TRADING, MANUFACTURE FOR REPAIR OF TRAN SFORMERS AND METERS, DURING THE YEAR UNDER CONSIDERATION HAD FILED THE E-RETURN OF INCOM E DECLARING A TOTAL INCOME OF RS.5,10,48,630/-. THEREAFTER A REVISED RETURN WAS F ILED ON 25.09.2009 DECLARING A TOTAL INCOME OF RS.8,54,54,694/-. IN THE COMPUTATION OF I NCOME FILED WITH THE ORIGINAL AND REVISED RETURN OF INCOME, THE ASSESSEE HAD CLAIMED DEDUCTIO N U/S 40(A) ON ACCOUNT OF AMOUNTS DISALLOWED IN PREVIOUS YEAR AND ALLOWABLE FOR YEAR UNDER CONSIDERATION ON ACCOUNT OF PAYMENT OF TDS. THE TOTAL AMOUNT CLAIMED BY THE ASS ESSEE ON THIS COUNT WAS RS.2,86,38,220/-. DURING THE ASSESSMENT FRAMED U/S 143(3), WHEN THE ASSESSEE WAS REQUESTED TO FURNISH THE PROOF OF PAYMENT OF TDS, T HE ASSESSEE VIDE REPLY DATED 29.11.2010 SUBMITTED THAT IT CLAIMED A SUM OF RS.2,86,38,220/- AS ADMISSIBLE DEDUCTION ON THE BASIS OF EARLIER YEAR DISALLOWANCES U/S 40 (C), HOWEVER, SIN CE A SUM OF RS.1,83,09,456/- HAD ALREADY BEEN ALLOWED IN FRAMING THE ASSESSMENT FOR 05-06, 0 6-07 AND 07-08, THE ASSESSEE REQUESTED THE AO TO CONSIDER ONLY A CLAIM FOR A SUM OF RS.1,0 2,11,342/-. ACCORDINGLY, THE INCOME OF THE ASSESSEE WAS REVISED. CONSEQUENT UPON THE ASSES SMENT PROCEEDINGS, A PENALTY OF RS.1,87,89,885/- HAD BEEN LEVIED U/S 271(1) (C) OF THE ACT, BEING 300% ON TAX SOUGHT TO BE EVADED BEING 62,63,295/- ON FILING INACCURATE PARTI CULARS OF RS.1,84,26,878/-, AS THE ASSESSEE HAS FILED INACCURATE PARTICULARS OF ITS IN COME BY WAY OF CLAIMING THE FULL AMOUNT INCLUDING A SUM OF RS. 1.84 CRORES WHICH HAD ALREAD Y BEEN ALLOWED IN THE PREVIOUS YEARS. ON APPEAL, THE LD.CIT(A) CONFIRMED THE ACTION OF THE A O LEVYING OF THE PENALTY. AGGRIEVED BY THE IMPUGNED ORDER, THE ASSESSEE IS IN APPEAL BEFOR E US. SINCE ALL THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE RELATED TO THE SAME ISSU E OF LEVY OF PENALTY U/S 271 (1) (C), THE ADJUDICATION OF ALL THE GROUNDS ARE TAKEN TOGETHER. 4. BEFORE US, THE LD. AR OF THE ASSESSEE HAS STATED THAT THE CASE OF THE ASSESSEE HAS BEEN SELECTED FOR SCRUTINY ON A USUAL AND REGULAR B ASIS AND DURING THE ASSESSMENT PROCEEDINGS, A QUESTIONNAIRE DT. 30.08.2010 HAS BEE N ISSUED TO THE ASSESSEE. THE ASSESSEE HAS COMPLIED WITH THE REQUIREMENTS FROM TIME TO TIM E BY FILING DETAILS AND EXPLANATIONS. SUBSEQUENTLY, AS PER THE ORDER SHEET DT. 19.11.10, WHEN THE DETAILS OF ADVANCE TAX PAID, CHALLANS AND OTHERS HAVE BEEN ASKED FOR WITH COPY OF THE CHALLANS OF ALL TAXES PAID, PROVIDED AND UNPAID, PAID IN THE NEXT FY, THE ASSESSEE WHILE COMPILING THE TAX CHALLANS HAS NOTICED THAT DUE TO OVERLOOKING/OVERSIGHT OF THE RECORD AT THE TIME OF FILING ITR, DEDUCTIONS, CLAIMED U/S 40 (A) (IA) AND ALLOWED IN THE PRECEEDING AYS O N THE BASIS OF EXPENSES ALLOWABLE ONLY AFTER COMPLYING WITH THE PROVISIONS OF TDS HAVE WRO NGLY CLAIMED U/S 40(A) (IA) IN THE ITA NO. 1614/MUM/2013 IMP POWERS LTD. ASSESSMENT YEAR: 2008-09 3 COMPUTATION OF INCOME. THEREAFTER, IMMEDIATELY ON T HE NEXT DAY, LETTER DT. 29.11.10 HAS FILED FOR WITHDRAWAL OF WRONG CLAIM OF DEDUCTION IN COMPU TATION OF INCOME SUO MOTO SUPPORTED BY A CALCULATION CHART BY THE ASSESSEE ACTING WITH BON A FIDE INTENTION. WHEN A WRONG CLAIM HAS BEEN MADE ON THE BASIS OF A BONAFIDE MISTAKE AND TH E REVISION IS DONE ON VOLUNTARY DISCLOSURE OF THE ASSESSEE, THE LOWER AUTHORITIES A RE NOT JUSTIFIED IN LEVYING/CONFIRMING THE LEVY OF PENALTY. ON THE OTHER HAND, THE LD.DR HAS P LACED HIS ARGUMENTS ON THE BASIS OF THE REASONING PROVIDED BY THE AO AND THE LD.CIT(A) IN T HEIR RESPECTIVE ASSESSMENT AND APPELLATE ORDERS. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. THE CORE ISSUE TO BE DECIDED BY US IN THIS APPEAL IS WHETHER THE WRON G CLAIM OF THE ASSESSEE IS DUE TO THE BONA FIDE MISTAKE OF THE ASSESSEE OR NOT. TO FIND O UT WHETHER THE WRONG CLAIM IS OUT OF BONA FIDE MISTAKE OR NOT, IT IS NECESSARY TO ANALYS E THE EVENTS HAPPENED FROM THE DATE OF FILING THE ORIGINAL/REVISED RETURNS PREFERRING A WR ONG CLAIM TO TILL THE TIME OF REQUESTING THE AO TO REVISE THE WRONG CLAIM. IT IS UNDISPUTED FACT THAT THE ASSESSEE HAS MADE A WRONG CLAIM WHEN THE RETURN OF INCOME AND THE REVISED RET URN WERE FILED RESPECTIVELY ON 23.09.2008 AND 25.09.2009. IT IS PERTINENT TO NOTE THAT DURING THE ASSESSMENT PROCEEDINGS A QUESTIONNAIRE DATED 30.08.2010 HAS BEEN GIVEN TO TH E ASSESSEE FOR ITS RESPONSE WHICH IS AVAILABLE AT PAGE 37 OF THE PAPER BOOK. THE PERUSAL OF THE QUESTIONNAIRE INDICATES THAT THE ASSESSEE HAS NOT BEEN REQUESTED FOR ANY RESPONSE AS TO THE WRONG CLAIM MADE IN THE REVISED RETURN. ALSO, THE PERUSAL OF THE ORDER SHEE T AVAILABLE AT PAGE NO. 51 & 52 OF THE PAPER BOOK REVEALS THAT ONLY ON 19.11.2010, THE ASS ESSEE HAS BEEN REQUESTED TO SUBMIT THE EXPLANATION ON PAYMENT OF ADVANCE TAX AND OTHER TAX ES FROM OUT OF OLD A/C AND PROPORTIONATE INTEREST PAID ON SAME AND ELIGIBILITY OF CLAIM OF THE EXPENDITURE. THE PERUSAL OF THE ENTIRE ENTRIES IN THE ORDER SHEET SUGGESTS THAT THE WRONG CLAIM OF THE ASSESSEE IS NOT KNOWN TO THE AO DURING THE ASSESSMENT PROCEEDINGS T ILL THE SAME HAS BEEN BROUGHT TO THE KNOWLEDGE OF THE AO WHEN THE ASSESSEE HAS INFORMED THE SAME VIDE LETTER DATED 29.11.2010. THIS SUGGESTS THAT THE AO HAS NOT RAISE D ANY SPECIFIC QUERY AS TO THE ISSUE OF THE WRONG CLAIM EITHER VIDE QUESTIONNAIRE OR ORDER SHEET WHICH RESULTS IN THE PRESUMPTION THAT JUST RELYING ON THE ASSESSEES LETTER DATED 29 .11.10, THE AO HAS OSTENSIBLY MADE THE ADDITION/REVISED THE COMPUTATION IN THE ASSESSMENT ORDER. THE CLAIM OF THE REVENUE THAT THE ASSESSEE HAS NOT MADE THE DISCLOSURE IN ANY OF THE HEARINGS TILL THE ASSESSEE HAS BEEN ASKED VERBALLY BY THE AO TO SUBMIT COPIES OF TDS CHALLANS IN VIEW OF THE CLAIM MADE IN COMPUTATION IS CONTRARY TO THE ENTRIES CONTAINED IN THE ORDER SHEET AND THIS ALLEGED STAND OF ITA NO. 1614/MUM/2013 IMP POWERS LTD. ASSESSMENT YEAR: 2008-09 4 THE REVENUE IS NOT BORNE OUT OF FACTS. THEREFORE, I T IS VERY CLEAR THAT THE ASSESSEE, DURING THE ASSESSMENT PROCEEDINGS HAS VOLUNTARILY SUBMITTE D TO THE AO THAT THERE HAS BEEN A WRONG CLAIM AND REQUESTED FOR THE REVISION OF THE W RONG CLAIM. THE AFOREMENTIONED FACTS PROVIDES THAT THERE ARE SUFFICIENT REASONS TO BELIE VE THAT THE ASSESSEE HAS NOTICED THE WRONG CLAIM ONLY WHEN COMPILING THE TAX CHALLANS BY THE A SSESSEE IN RESPONSE TO THE AOS REQUEST FOR FILING THE SAME ON 19.11.2010. ALSO, THERE ARE REASONS TO BELIEVE THE CONTENTION OF THE ASSESSEE THAT SUCH A CONFUSION HAS OCCURRED DUE TO THE SCRUTINY ASSESSMENT OF THE EARLIER YEARS IN WHICH A PART OF THE CLAIM HAS BEEN INCLUDE D. THE FACTS, CIRCUMSTANCES AND THE CONDUCT OF THE ASSESSEE IN TOTO LEAD TO THE CONCLUS ION THAT A WRONG CLAIM HAS BEEN MADE OUT OF BONAFIDE MISTAKE WHICH THE ASSESSEE HAS NOTICED WHILE COMPILING THE CHALLANS AND THE SAME HAS BEEN REVISED IN THE ASSESSMENT ORDER THROU GH VOLUNTARY DISCLOSURE OF THE MISTAKE AND THE REQUEST BY THE ASSESSEE TO RECTIFY THE SAME . WHEN THE FACTS BEING SO, WE ARE OF THE CONSIDERED OPINION THAT THE PROVISIONS OF SECTION 2 71(1) (C) FOR THE PURPOSE OF LEVY OF PENALTY ON THE GROUND OF FURNISHING INACCURATE PART ICULARS ARE NOT ATTRACTED IN THIS PRESENT CASE. RESULTANTLY, WE DELETE THE IMPUGNED PENALTY L EVIED BY THE AO WHICH HAS BEEN CONFIRMED BY THE LD.CIT(A). SINCE THE ISSUE OF LEVY PENALTY HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE ON THE BASIS OF FACTS, WE DO NOT FEEL THAT IT IS REQUIRED TO ADJUDICATE THE GROUNDS SEPARATELY, ESPECIALLY THE OTHER HYPER TECHNICAL GR OUNDS RAISED IN THE APPEAL. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 23 RD DAY OF AUGUST, 2013. SD/- SD/- (P.M. JAGTAP) (DR. S.T.M. PAVALA N) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 23.08.2013. *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR I BENCH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.