ROCHEM SEPARATION SYSTEMS (I) P.LTD, MUMBAI V. ACIT CEN CIR 10, MUMBAI

ITA 1662/MUM/2012

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9071 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 9 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2017
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 31-03-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 09-03-2012
• Court: TRIBUNAL
• Assessee Lawyers: S C GUPTA
• Keywords: Business expenditure; Bonafide belief

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) & SHRI RAVISH SOOD (JM) I.T.A. NO. 1662 /MUM/20 12 (ASSESSMENT YEAR 20 05 - 06 ) M/S. ROCHEM SEPARATION SYSTEMS (I) PVT. LTD. 101, HDIL TOWER ANANT KANEKAR MARG BANDRA EAST MUMBAI - 400 050. VS. ACIT CENTRAL CIRCLE - 10 8 TH FLOOR CGO BUILDING ANNEXE M.K. ROAD MUMBAI - 400 020. ( APPELLANT ) ( RESPONDENT ) PAN NO . AABCR1955P ASSESSEE BY SHRI S.C. GUPTA & SHRI GAURAV BANSAL DEPARTMENT BY S HRI PURUSHOTTAM KUMAR DATE OF HEARING 4 .1 . 201 7 DATE OF PRONOUNCEMENT 4 . 1 . 201 7 O R D E R PER B.R. BASKARAN (AM) : - THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 1.12.2011 PASSED BY THE LEARNED CIT(A) - 37, MUMBAI CONFIRMING THE PENALTY LEVIED U/S. 271(1 )(C) OF THE I.T. ACT FOR A.Y. 2005 - 06 ON THE FOLLOWING DISALLOWANCES : - A) DISALLOWANCE OF EXPENSES CLAIMED TOWARDS OPERATION AND MAINTENANCE. B) DISALLOWANCE OF BUSINESS PROMOTION EXPENSES. 2. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE C L A IMED A SUM OF ` 87,12,863/ - AS OPERATION AND MAINTENANCE EXPENSES IN THE STATEMENT OF TOTAL INCOME I.E. WITHOUT RECORDING EXPENSES IN THE BOOKS OF ACCOUNT. THE ASSESSING OFFICER DISALLOWED THE SAID CLAIM ON THE GROUND THAT THE ASSESSEE DID NOT SUBSTANTIA TE THE SAME WITH EVIDENCES. T HE SA ID DISALLOWANCE WAS ALSO CONFIRMED BY THE APPELLATE AUTHORIT IES . THE ASSESSEE M/S. ROCHEM SEPA RATION SYSTEMS (I) PVT. LTD. 2 HAS ALSO CLAIMED A SUM OF ` 5,99,985/ - , BEING HOTEL EXPENSES INCURRED AT GRANT HYATT HOTEL. THE ASSESSEE CLAIMED THE SAME AS EXPENSES INCURRED TOWARDS THE BUSINESS PARTY CONDUCTED FOR BUSINESS ASSOCIATES. THE ASSESSING OFFICER NOTICED THAT THE MARRIAGE OF SON OF ONE OF THE DIRECTORS HAD TAKEN PLACE AND THE ABOVE SAID PARTY WAS GIVEN IN THAT CONNECTION. ACCORDINGLY, HE DISALLOWED THE CLAIM AND TH E SAME WAS ALSO CONFIRMED BY THE APPELLATE AUTHORIT IES . THE ASSESSING OFFICER LEVIED PENALTY U/S. 271(1)(C) OF THE ACT ON BOTH THE DISALLOWANCES AND THE SAME WAS ALSO CONFIRMED BY THE LEARNED CIT(A). 3. WE HEARD THE PARTIES AND PERUSED THE RECORD. WITH R EGARD TO DISALLOWANCE OF OPERATION AND MAINTENANCE EXPENSES, WE NOTICED THAT THE ASSESSEE HAD NOT ACCOUNTED FOR THE SAME IN THE BOOKS OF ACCOUNT AND CLAIMED THE SAME ONLY IN THE STATEMENT OF TOTAL INCOME ON THE BASIS OF INFORMATION RECEIVED FROM VARIOUS SI TES. LEARNED AR SUBMITTED THAT THESE EXPENSES WERE INCURRED PRIOR TO 31.3.2005, BUT CONCERNED STAFF FAILED TO REPORT THE SAME TO THE HEAD OFFICE PRIOR TO FINALIZATION OF THE ACCOUNT. ACCORDINGLY, HE SUBMITTED THAT THE ASSESSEE HAD MADE CLAIM IN THE STATEME NT OF TOTAL INCOME WITH BONAFIDE INTENTION BUT THE SAME WOULD BE ALLOWED BY THE ASSESSING OFFICER . HE SUBMITTED THAT THE ABOVE SAID CLAIM WAS NOT ACCEPTED EVEN THOUGH THE ASSESSEE FURNISHED AFFIDAVIT FROM ONE OF ITS SENIOR EMPLOYEES. HE SUBMITTED THAT MER E DISALLOWANCE OF THE CLAIM MADE BY THE ASSESSEE WOULD NOT GIVE RISE TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. 4. ON THE CONTRARY, LEARNED DEPARTMENTAL REPRESENTATIVE PLACED RELIANCE ON THE ORDER PASSED BY THE LEARNED CIT(A) ON THIS ISSUE. 5. H AVING HEARD THE RIVAL CONTENTIONS ON THIS ISSUE , WE FIND MERIT IN THE SUBMISSION MADE BY LEARNED AR . IN THE INSTANT CASE, THE ASSESSEE HAS MADE THE CLAIM ONLY IN THE STATEMENT OF TOTAL INCOME, SINCE THE DETAILS THEREOF WERE RECEIVED AFTER FINALIZATION OF A CCOUNTS. THE STATEMENT OF TOTAL INCOME ALSO CLEARLY MENTIONS THIS FACT. THE ASSESSING OFFICER HAS MADE DISALLOWANCE FOR WANT OF DOCUMENTARY EVIDENCES EVEN THOUGH THE ASSESSEE FILED AN AFFIDAVIT M/S. ROCHEM SEPA RATION SYSTEMS (I) PVT. LTD. 3 OBTAINED FROM ONE OF THE SENIOR EMPLOYEES. THUS, WE NOTICE THAT THE ASSESSEE HAS MADE THE IMPUGNED CLAIM WITH BONAFIDE BELIEF IN THE STATEMENT OF TOTAL INCOME ONLY. HENCE, WE ARE OF THE VIEW THAT THE DISALLOWANCE OF THE CLAIM SO MADE BY THE ASSESSEE WOULD NOT GIVE RISE TO FURNISHING OF INACCURATE PARTICULARS OF I NCOME. ACCORDINGLY, WE SET ASIDE THE ORDER PASSED BY THE LEARNED CIT(A) ON THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY LEVIED ON THE ABOVE SAID EXPENSES. 6. WITH REGARD TO DISALLOWANCE OF BUSINESS PROMOTION EXPENSES, WE NOTICED THAT THE ASSESSEE COULD NOT CONCLUSIVELY PROVE THAT THE SAME WAS NOT INCURRED IN CONNECTION WITH THE MARRIAGE OF MR. PRERAK GOEL, SON OF MR. K. K. GOEL, DIRECTOR OF THE ASSESSEE COMPANY. T HE TAX AUTHORITIES HAVE DISALLOW ED THE CLAIM BY HOLDING TH E SAME AS NON - BUSINESS EXPENSES, WHICH, IN OUR VIEW, WOULD LEAD TO A CASE OF FURNISHING INACCURATE PARTICULARS OF INCOME. ACCORDINGLY, WE CONFIRM THE ORDER PASSED BY THE LEARNED CIT(A) ON THIS ADDITION. 7. THE LD A.R ALSO RAISED CONTENTIONS ON CERTAIN LEGAL ISSUES, BUT DID NOT PURSUE THE SAME WHEN THE BENCH EXPRESSED ITS VIEW ON THE ABOVE SAID LINES. HENCE WE DO NOT FIND IT NECESSARY TO DEAL WITH THE LEGAL CONTENTIONS. 8 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 4 . 1 .201 7. SD/ - SD/ - (RAVISH SOOD ) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 4 / 1 / 20 1 7 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI M/S. ROCHEM SEPA RATION SYSTEMS (I) PVT. LTD. 4 6. GUARD FILE. BY ORDER, //TRUE COPY// ( DY./ASSTT. REGISTRAR) PS ITAT, MUMBAI