SUASHISH DIAMONDS LTD, MUMBAI V. ASST CIT RG 5(3), MUMBAI

ITA 1846/MUM/2013

• Counselvise Citation: 184619914 RSA 2013
• Duration Of Justice: 2 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 17-06-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 07-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ADAGIRI
• Assessee Lawyers: DR K SHIVARAM; RAHUL R SARDA
• Keywords: Period of limitation; Wrong claim; Time period of passing order; Revised return; Revenue expenditure
• Section: 133A

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.1846/M/2013 ASSESSMENT YEAR: 2006-07 M/S. SUASHISH DIAMONDS LTD., MEHTA MAHAL, 11 TH FLOOR, 15 MATHEW ROAD, OPERA HOUSE, MUMBAI 400 04. PAN: AAACS 8246H VS. ASST. COMMISSIONER OF INCOME TAX, RANGE 5(3), ROOM NO.521, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : DR. K. SHIVARAM, A.R. & SHRI RAHUL R. SARDA, A.R. REVENUE BY : SHRI B. YADAGIRI, D.R. DATE OF HEARING : 17.06.2015 DATE OF PRONOUNCEMENT : 17.06.2015 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 18.12.2012 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT Y EAR 2006-07. 2. THE MAIN GROUND OF APPEAL RAISED BY THE ASSESSEE IS AGAINST THE CONFIRMATION OF PENALTY OF RS.18,92,667/- BY THE LD . CIT(A) UNDER SECTION 271(1)(C) OF THE ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E HAS BEEN ENGAGED IN THE BUSINESS OF EXPORT OF CUT AND POLISHED DIAMONDS AND DIAMOND STUDDED GOLD JEWELLERY. THE ASSESSEE, DURING THE YEAR UNDER CON SIDERATION FILED ITS ORIGINAL RETURN OF INCOME DECLARING ITS TOTAL INCOME OF RS.1 6,18,90,502/- WHICH WAS ITA NO.1846/M/2013 M/S. SUASHISH DIAMONDS LTD. 2 ACCEPTED UNDER SECTION 143(1) OF THE ACT. SUBSEQUE NTLY, A SURVEY ACTION WAS CARRIED OUT BY THE INVESTIGATION WING OF THE DEPART MENT UNDER SECTION 133A OF THE ACT IN THE BUSINESS PREMISES OF THE ASSESSEE. DURING THE SURVEY ACTION, THE CONCERNED OFFICERS CONFRONTED THE MANAGING DIRECTOR OF THE ASSESSEE COMPANY ON CERTAIN LEGAL AND PROFESSIONAL CHARGES DEBITED B Y THE ASSESSEE IN ITS PROFIT & LOSS ACCOUNT AS REVENUE EXPENDITURE. THE OFFICERS WERE OF THE VIEW THAT THE SAID EXPENDITURE WAS CAPITAL IN NATURE. ON PURSUAN CE OF THE OFFICIALS, THE MANAGING DIRECTOR OF THE ASSESSEE COMPANY OFFERED T HE AMOUNT OF RS.56,22,897/- ON ACCOUNT OF LEGAL AND PROFESSIONAL CHARGES FOR TAXATION. THE ASSESSEE ACCORDINGLY FILED ITS REVISED RETURN OF IN COME AND OFFERED THE SAID AMOUNT FOR TAXATION WHICH WAS ACCEPTED BY THE ASSES SING OFFICER (HEREINAFTER REFERRED TO AS THE AO). THE AO, HOWEVER, INITIATED PENALTY PROCEEDINGS OBSERVING THAT HAD THE SURVEY ACTION BEEN NOT CARRI ED OUT IN THE PREMISES OF THE ASSESSEE, THE ASSESSEE WOULD NOT HAVE OFFERED THE S AID AMOUNT FOR TAXATION. HE ACCORDINGLY LEVIED THE IMPUGNED PENALTY UNDER SECTI ON 271(1)(C) OF THE ACT HOLDING THAT THE ASSESSEE HAD CONCEALED THE PARTICU LARS OF INCOME AND FURNISHED INACCURATE PARTICULARS OF INCOME. THE LD. CIT(A) U PHELD THE PENALTY SO LEVIED BY THE AO. THE ASSESSEE HAS, THUS, COME IN APPEAL BEFORE US. 4. BEFORE US, THE LD. A.R. OF THE ASSESSEE HAS SUBM ITTED THAT THE ASSESSEE NEITHER HAD CONCEALED ITS INCOME NOR FURNISHED INAC CURATE PARTICULARS OF INCOME. THE ABOVE STATED LEGAL AND PROFESSIONAL FE E PAID TO PROFESSIONALS OVERSEAS WAS DULY DISCLOSED IN THE RETURN OF INCOME . THE ASSESSEE NEVER ADMITTED DURING THE SURVEY ACTION THAT IT HAD MADE A WRONG CLAIM. HOWEVER, TO AVOID PROTRACTED LITIGATION AND TO BUY PEACE OF MIN D THE ASSESSEE VOLUNTARILY DISCLOSED MORE INCOME IN THE REVISED RETURN. MOREO VER, DURING THE SURVEY ACTION NO INCRIMINATING MATERIAL WAS FOUND. THE OF FICERS OF THE DEPARTMENT WERE OF THE VIEW THAT THE EXPENDITURE INCURRED BY T HE ASSESSEE WAS OF CAPITAL IN ITA NO.1846/M/2013 M/S. SUASHISH DIAMONDS LTD. 3 NATURE WHEREAS THE ASSESSEE HAD CLAIMED THE SAME AS REVENUE IN NATURE. HOWEVER, ON PERSISTENT PRESSURE OF THE OFFICIALS TH E ASSESSEE DISCLOSED THE SAME AS CAPITAL IN NATURE IN THE REVISED RETURN AND OFFE RED THE AMOUNT FOR TAXATION. THE LD. D.R. ON THE OTHER HAND, HAS RELIED UPON TH E FINDINGS OF THE LOWER AUTHORITIES. 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS. THE L D. A.R. OF THE ASSESSEE HAS RELIED UPON THE DECISION OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. CAREERS EDUCATION AND INFOTECH P. LTD. (2011) 336 ITR 257 (P & H) WHEREIN UNDER SOMEWHAT SIMILAR CIRCUMST ANCES, THE HONBLE HIGH COURT HAS OBSERVED THE CONTENTION THAT IN EVERY CAS E WHERE SURRENDER IS MADE, INFERENCE OF CONCEALMENT OF INCOME MUST BE DRAWN UN DER SECTION 58 OF THE EVIDENCE ACT CANNOT BE ACCEPTED. THE HONBLE SUPRE ME COURT IN THE CASE OF CIT VS. SURESH CHANDRA MITTAL (2001) 251 ITR 9 (S C) HAS OBSERVED THAT WHERE THE ASSESSEE HAS FILED A REVISED RETURN SHOWI NG HIGHER INCOME AND THE ASSESSEE HAS SURRENDERED THE INCOME AFTER PERSISTEN T QUERIES BY THE AO AND WHERE THE REVISED RETURN HAS BEEN REGULARIZED BY TH E REVENUE THE EXPLANATION OF THE ASSESSEE THAT HE HAS DECLARED THE ADDITIONAL INCOME TO BUY PEACE OF MIND AND TO COME OUT OF VEXED LITIGATION COULD BE TREATE D AS BONAFIDE AND UNDER SUCH CIRCUMSTANCES THE LEVY OF PENALTY UNDER SECTION 271 (1)(C) WAS HELD TO BE NOT JUSTIFIED. IN THE INSTANT CASE BEFORE US, THE REVE NUE HAS NOT DISCOVERED ANY INCRIMINATING MATERIAL OR ANY ADDITIONAL INCOME OF THE ASSESSEE. DURING THE SURVEY ACTION, THE OFFICERS WERE OF THE VIEW THAT T HE EXPENDITURE CLAIMED BY THE ASSESSEE WAS OF CAPITAL IN NATURE. THE ASSESSEE IN STEAD OF LITIGATING ABOUT THE SAID EXPENDITURE OFFERED THE SAME IN THE REVISED RE TURN. IT IS NOT A CASE OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME. MERELY BECAUSE, THE ASSESSEE HAS ACCEDED TO THE REQ UEST OF THE REVENUE OFFICIALS TO DECLARE EXTRA INCOME AND ESPECIALLY WH EN THE AO HAS NOT ITA NO.1846/M/2013 M/S. SUASHISH DIAMONDS LTD. 4 DISCOVERED ANY CONCEALED INCOME OF THE ASSESSEE AND THE REVISED RETURN WAS FILED BY THE ASSESSEE WITHIN THE LIMITATION PERIOD WHICH WAS ACCEPTED BY THE AO, THE LEVY OF PENALTY CANNOT BE HELD TO BE JUSTIF IED IN THIS CASE. WE ACCORDINGLY, SET ASIDE THE PENALTY LEVIED BY THE LO WER AUTHORITIES ON THE ASSESSEE UNDER SECTION 271(1)(C) OF THE ACT. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS HER EBY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17.06.2015. SD/- SD/- (R.C. SHARMA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 09.10.2015. * 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.