TRIVENI CONTROL GEARS, MUMBAI V. ASST CIT 14(2), MUMBAI

ITA 1790/MUM/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 101046 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2007-2008
• Appeal Filed On: 14-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MAHAPATRA
• Assessee Lawyers: PRAVIN M SHAH
• Keywords: Cost of acquisition
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI N.K . BILLAIYA, ACCOUNTANT MEMBER AND RAM L AL NEGI, JUDICIAL MEMBER / I .T.A. NO. 1790/MUM/2014 ( / ASSESSMENT YEAR : 2007 - 08 M/S. TRIVENI CONTROL GEARS MASKATI MAHAL, 1 ST FLOOR, 119 LOHAR CHAWL, MUMBAI - 400 002 / VS. THE ACIT 14(2), OLD C.G.O., M.K. ROAD, MUMBAI - 400 020 ./ ./ PAN/GIR NO. : AAAFT 2264R ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI PRAVIN M. SHAH / RESPONDENT BY: SHRI S.K. MAHAPATRA / DATE OF HEARING : 0 3 .0 9 .2015 / DATE OF PRONOUNCEMENT : 0 3 .0 9 .2015 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) - 25 , MUMBAI D ATED . 29.1.2014 PERTAINING TO ASSESSMENT YEAR 200 7 - 0 8 . 2. THE SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE LD. CIT(A) ERRED IN UPHOLDING THE ORDER OF THE AO LEVYING PENALTY U/S. 271(1)(C) OF THE ACT AMOUNTING TO RS. 52,607/ - . ITA. NO. 1790/M/2014 2 3. IN THIS CASE THE ASSESSMENT WAS MADE U/S. 143(3) OF THE ACT VIDE ORDER DATED 18.1 2.2009. THE ASSESSEE IS A TRADER OF ELECTRICAL GOODS AND IS A AUTHORIZED DEALER OF M/S. SIEMENS LTD FOR SWITCHGEARS ITEMS. ON PERUSING THE ASSESSMENT ORDER, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE IS SHOWING CLAIM OF REFUND OF RS. 1,56,287/ - WHIC H HAS NOT BEEN CREDITED TO THE PROFIT AND LOSS ACCOUNT. THE AO ADDED THE SAME AND INITIATED PENAL PROCEEDINGS. 3.1. DURING THE COURSE OF THE PENAL PROCEEDINGS, THE ASSESSEE EXPLAINED WHAT HAS ALREADY MENTIONED DURING THE COURSE OF THE ASSESSMENT PROCEED INGS THAT IT IS FOLLOWING EXCLUSIVE SYSTEM OF METHOD OF ACCOUNTING. IN SO FAR AS VAT IS CONCERNED WHEREBY THE PURCHASE TAX PAID IS NOT PART OF PURCHASE COST THEREFORE MVAT RECEIVABLE SHOULD NOT BE TREATED AS INCOME OF THE ASSESSEE THEREFORE THERE IS NO CA SE FOR THE LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT. 4. THE AO DID NOT ACCEPT THIS CONTENTION OF THE ASSESSEE AND WAS OF THE FIRM BELIEF THAT IN THE BALANCE SHEET, THE ASSESSEE IS SHOWING AN ENTRY OF MVAT RS. 1,56,287/ - AS RECEIVABLE. THE AO WAS CONVI NCED THAT THE ASSESSEE HAS FURNISHED AN INACCURATE PARTICULARS OF INCOME AND HENCE LIABLE FOR PENALTY U/S. 271(1)(C) OF THE ACT. 5. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) BUT WITHOUT ANY SUCCESS. 6. BEFORE US, THE LD. COUNSEL FOR THE ASS ESSEE REITERATED WHAT HAS BEEN STATED DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS AS WELL AS PENAL PROCEEDINGS. ITA. NO. 1790/M/2014 3 7. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE FINDINGS OF THE REVENUE AUTHORITIES. 8. WE HAVE CAREFULLY PERUSED THE OR DERS OF THE AUTHORITIES BELOW. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE IS NEITHER CLAIMING TAX PAID ON LOCAL PURCHASES AS EXPENSES UNDER THE TRADING ACCOUNT BUT THE SAME IS SHOWN UNDER THE HEAD DUTIES AND TAXES IN THE BALANCE SHEET UNDER THE HEAD CU RRENT ASSETS. IN OUR UNDERSTANDING OF THE ACCOUNTING PRINCIPLES, WE FAILED TO UNDERSTAND HOW A DEBIT ENTRY SHOULD BE TREATED AS INCOME OF THE ASSESSEE. BE THAT AS IT MAY, WE ARE NOT IN QUANTUM PROCEEDINGS BUT IN PENAL PROCEEDINGS. AS THE ASSESSEE IS SH OWING THE MVAT PAID UNDER THE HEAD CURRENT ASSETS NOT CHARGING TO THE PROFIT AND LOSS ACCOUNT, WE DO NOT FIND ANY REASON FOR THE LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT WHEN THE SAID MVAT IS REFUNDED TO THE ASSESSEE, BEING TREATED AS CONCEALMENT OF INC OME. WE, THEREFORE, SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE AO TO CANCEL THE PENALTY SO LEVIED U/S. 271(1)(C) OF THE ACT. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON 3 RD SEPTEMBER , 2015 ( RAM L AL NEGI ) (N.K. BILLAIYA) /JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 3 RD SEPTEMBER , 2015 . . ./ RJ , SR. PS ITA. NO. 1790/M/2014 4 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI