SUBHKAM VENTURES (I) P.LTD ( FORMERLY SUBHKAM CAPITAL INVESTMENTS P.LTD), MUMBAI V. DCIT 3(3), MUMBAI

ITA 1665/MUM/2012

• Counselvise Citation: 166519914 RSA 2012
• Duration Of Justice: 3 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 09-07-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 09-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Assessee Lawyers: SANJAY R PARIKH
• Keywords: Depreciation; Wrong claim; Avoidance of tax; Unabsorbed depreciation; Revenue expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E, MUMBAI BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ITA NO.1665/M/2012 ASSESSMENT YEAR: 2007-08 M/S. SUBHKAM VENTURES (I) PVTT. LTD. (FORMERLY SUBHKAM CAPITAL INVESTMENT P. LTD.), THE INTERNATIONAL HOUSE, 4 TH FLOOR, 16. M.K. ROAD, CHURCHGATE, MUMBAI 400 020 PAN: AAACW 1624M VS. DCIT, CIRCLE 3(3) AAYAKAR BHAVAN, MUMBAI - 400020 (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI SANJAY R. PARIKH, A.R. REVENUE BY : SHRI NEIL PHILIP. D.R. DATE OF HEARING : 09.07.2015 DATE OF PRONOUNCEMENT : 09.07.2015 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-8, MUMB AI (CIT(A) FOR SHORT) DATED 24.10.2011, IN THE MATTER OF PENALTY IMPOSED U/S.271(1)(C) OF THE ACT. 2. THE BRIEF FACTS OF THE CASE ARE THAT IN THIS CAS E, THE LEARNED ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE AO) HAD LEV IED THE PENALTY U/S 271(1)(C)IN RESPECT OF EXPENSES CLAIMED AS REVENUE EXPENDITURE ON ACCOUNT OF INCREASE IN SHARE CAPITAL, LOSS CLAIMED IN RESPECT OF DIVIDEND STRIPPING AS PROVIDED U/S.94(7) AND WRONGFUL SET OFF OF LOSSES. THE ASSESSEE ADMITTED THE SAID ADDITIONS DURING THE ASSESSMENT PROCEEDINGS AND DID NOT FILE ANY APPEAL AGAINST THE ORDER OF TH E AO. THE AO, HOWEVER ITA NO.1665/M/2012 M/S. SUBHKAM VENTURES (I) PVTT. LTD. 2 INITIATED PENALTY PROCEEDINGS AGAINST THE ASSESSEE FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME U/S 271(1)(C) OF THE ACT. DURING THE PENALTY PROCEEDINGS, THE ASSESSEE SUBMI TTED BEFORE THE AO THAT THE ASSESSEE HAD FURNISHED FULL PARTICULARS IN RESPECT OF EVERY ITEM IN RESPECT OF WHICH THE DISALLOWANCES WERE MADE BY THE AO. IT WAS FURTHER STATED THAT THE DETAIL OF UNABSORBED DEPRECIATION WAS WRONGLY FILED BEING A TYPOGRAPHIC MISTAKE. IT WAS FURTHER SUBMITTED THAT BECAUSE OF N UMEROUS TRANSACTIONS, THE DETAILS OF DIVIDEND STRIPPING COULD NOT BE FURNISHE D ALONG WITH THE RETURN. THE A.O. WAS REQUESTED TO ADD THE SAME AND TO INCREASE THE SHORT TERM CAPITAL GAIN BY RS.86,223/-. THE ASSESSEE FURTHER RELIED ON THE DECISION OF RELIANCE PETRO PRODUCTS REPORTED IN 322 ITR PAGE 158. 3. THE A.O., HOWEVER, FOUND THAT THE ASSESSEE COULD NOT FURNISH COGENT REASONS FOR CLAIM OF THESE EXPENSES/ LOSSES IN THE SAID ASSESSMENT YEAR, HE THEREFORE LEVIED THE PENALTY UNDER SECTION 271(1)(C ) OF THE ACT. 4. THE ASSESSEE CONTESTED THE APPEAL BEFORE THE CIT (A). THE LD. CIT(A) CONFIRMED THE ORDER OF THE AO OBSERVING THAT THE A SSESSEE HAD CLAIMED EXCESSIVE EXPENDITURE WHICH FALLS WITHIN THE DEEMIN G PROVISIONS OF CONCEALMENT AS PROVIDED BY THE EXPLANATION APPENDED TO SECTION 271(1)(C). HAD THE CASE OF THE ASSESSEE NOT BEEN SELECTED FOR SCRUTINY, THEN PROBABLY THE WRONG CLAIMS MADE BY THE ASSESSEE WOULD HAVE REMAIN ED UNDETECTED AND THE ASSESSEE COULD HAVE GONE THROUGH WITHOUT PAYING ANY TAXES THEREUPON. HE, THEREFORE, HELD THAT THE ASSESSEE HAD FAILED TO DIS CLOSE TRULY AND FULLY THE FACTS AND MATERIAL NECESSARY FOR MAKING THE ASSESSMENT AN D IT WAS THROUGH THE DUE DILIGENCE OF THE LEARNED A.O. THAT THE ASSESSEE NOT ONLY ADMITTED ITS MISTAKE BUT ALSO REQUESTED THE A.O. TO MAKE THE ADDITION. HE, THEREFORE, UPHELD THE PENALTY SO LEVIED BY THE AO. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE HAS COME IN APPEAL BEFORE US. RIVAL CONTEN TIONS HAVE BEEN HEARD AND RECORD PERUSED. ITA NO.1665/M/2012 M/S. SUBHKAM VENTURES (I) PVTT. LTD. 3 5. THE LD. A.R. OF THE ASSESSEE HAS SUBMITTED THAT THE NECESSARY DETAILS OF DIVIDEND STRIPPING WERE DULY FURNISHED. HOWEVER, I N COMPUTATION OF INCOME, BY OVERSIGHT, DIVIDEND STRIPPING U/S.94(7) WAS NOT DISALLOWED. THE SAME WAS OFFERED FOR TAXATION DURING ASSESSMENT PROCEEDINGS AND NO APPEAL WAS FILED. THE EXCESSIVE FIGURE OF BROUGHT FORWARDED LOSSES ON ACCOUNT OF UNABSORBED DEPRECIATION WAS DUE TO TYPOGRAPHICAL MISTAKE. IN T HE ASSESSMENT YEAR 2004- 05, SET OFF OF UNABSORBED DEPRECIATION OF RS.5,11,1 72/- WAS CLAIMED INADVERTENTLY AGAINST THE ACTUAL CLAIM OF RS.51,172 /-. THE SAME FIGURE WAS REPEATED IN SUBSEQUENT YEARS ALSO. HOWEVER THE MOME NT, THE MISTAKE CAME INTO THE NOTICE OF THE ASSESSEE, THE SAME WAS RECTIFIED. THE LEARNED AR FURTHER SUBMITTED THAT THE ROC FILING FEES INCLUDED RS. 4,5 2,000/- PAID TOWARDS INCREASE IN AUTHORIZED CAPITAL WHICH WAS INADVERTEN TLY CLAIMED AS DEDUCTION UNDER SECTION 35D. THE SAME WAS NOT ADMISSIBLE TO T HE ASSESSEE AS THE ASSESSEE WAS NOT A MANUFACTURING COMPANY. THE ASSESSEE ITSEL F REQUESTED THE AO TO DISALLOW THE SAME. THE LD. AR HAS THEREFORE SUBMIT TED THAT ONLY DUE TO INADVERTENT MISTAKE, THE ABOVE CLAIMS WERE MADE. THE ASSESSEE HAD NOT FURNISHED ANY INACCURATE PARTICULARS OF INCOME FOR THE PURPOSE OF CONCEALMENT OF ANY INCOME. IT WAS FURTHER SUBMITTED THAT THE A. O. DID NOT DETECT ANY CONCEALMENT OF INCOME. THE DETAILS RELATING TO THE DISALLOWANCES WERE SOUGHT BY THE A.O. IN ORDINARY COURSE OF HEARING AND WHEN THE ASSESSEE REALIZED HIS BONA FIDE ERROR, HE IMMEDIATELY BROUGHT THE SAID ER ROR INTO THE NOTICE OF THE A.O. AND VOLUNTARILY OFFERED THE SAID DISALLOWANCE FOR TAXATION, THEREFORE, PENALTY U/S.271(1)(C) WAS NOT IMPOSABLE. FOR THIS P URPOSE, THE LD. AR PLACED RELIANCE ON THE FOLLOWING DECISIONS :- I) MUMBAI BENCH IN ITA NO.1625/MUM/2012, ACIT VS. M R. RAMESH D. DAMANI; II) 348 ITR 306 (SC) PRICE WATERHOUSE COOPERS PVT. LTD. VS. CIT; III) 259 CTR 383 (BOM) CIT VS BENNETT COLEMAN & CO. LTD.; IV) 352 ITR 592 CIT(BOM) VS. SOMANY EVERGREE KNITS LTD., V) 348 ITR 339 (DEL) CIT VS. BRAHMAPUTRA CONSORTIUM LTD.; AND VI) 44 SOT 26 (MUM-TRIB) WALTER SALDHANA VS. DC. IT A NO.249/13 6. ON THE OTHER HAND, LEARNED DR RELIED ON THE ORDE RS OF LOWER AUTHORITIES. ITA NO.1665/M/2012 M/S. SUBHKAM VENTURES (I) PVTT. LTD. 4 6. WE HAVE CONSIDERED RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW AND ALSO DELIBERATED ON THE JU DICIAL PRONOUNCEMENTS CITED AT BAR. WE FIND FORCE IN THE SUBMISSIONS OF THE LD. AR. THE LD. AR HAS DULY EXPLAINED THAT THE CLAIM RELATING TO WHICH DISALLO WANCES HAVE BEEN MADE BY THE AO WERE NOT MADE FOR THE PURPOSE OF CONCEALMENT OF INCOME OR FOR AVOIDANCE OF TAX BUT DUE TO BONAFIDE ERROR AS NARRA TED ABOVE. THE ASSESSEE DULY ACCEPTED ITS MISTAKE AT THE FIRST INSTANCE AND REQU ESTED THE AO TO MAKE ADDITIONS IN RELATION TO THE ABOVE STATED CLAIMS. A FTER CONSIDERING THE OVERALL CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT PENALTY U/S 271(1)(C) OF THE ACT IS NOT WARRANTED IN THIS CASE AND THE SAME IS A CCORDINGLY ORDERED TO BE DELETED. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS HERE BY ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 09.07.201 5. SD/- SD/- (R.C. SHARMA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 27.10.2015. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.