SHAKTI HARDWARE COLLECTIONS P.LTD, MUMBAI V. ASST CIT CC 3(3), MUMBAI

ITA 212/MUM/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6935 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 10-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARJU GARODIA
• Keywords: Period of limitation; Revised return
• Section: 143(3); 139(5)

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL J BENCH MU MBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.212/MUM/2017 (ASSESSMENT YEAR 2010 -11 ) SHAKTI HARDWARE COLLECTIONS PVT. LTD. 60/62, KIKA STREET, GULABWADI, MUMBAI-400004. PAN: AAECS6501K VS. DCIT CC -3(3) , MUMBAI. APPELLANT RESPONDEN T APPELLANT BY : SHRI RYAN SALDANHA (AR) RESPONDENT BY : MS. ARJU GARODIA (DR) DATE OF HEARING : 20.06.2018 DATE OF PRONOUNCEMENT : 20.06.2018 ORDER UNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORD ER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-51, MUMBAI [LD. CIT(A)] DAT ED 023.11.2016 FOR ASSESSMENT YEAR 2010-11. THE LD. CIT(A) CONFIRMED T HE PENALTY LEVIED BY ASSESSING OFFICER UNDER SECTION 271(1)(C). THE A SSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) ERRED IN CONFIRMING THE PENALTY OF RS. 13,63,872/- LEVIED BY THE ASSESSING OFFICER IN RESPECT OF VARIATION IN VALUE OF INVENTORIES CONSID ERING THE SAME AS 'INACCURATE PARTICULAR OF INCOME/CONCEALED PARTICULARS OF INCOM E'. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) ERRED IN CONFIRMING THE PENALTY ON VARIATION IN VALUE OF INV ENTORIES WITHOUT APPRECIATING THE FACT THAT THE SAME WAS OFFERED BY THE APPELLANT ON ITS OWN BY WAY OF REVISED RETURN OF INCOME WITHOUT ANYTHING BEING DETECTED BY THE DEPARTMENT. ITA NO. 212/MUM 17 SHAKTI HARDWARE COLLECTIONS PVT. LTD. 2 3. THE APPELLANT PRAYS THAT THE PENALTY LEVIED OF R S. 13,63,872/- MAY BE DELETED. 2. BRIEF FACTS AND OF THE CASE ARE THAT THE ASSESSEE C OMPANY IS ENGAGED IN THE BUSINESS OF HARDWARE GOODS, FILED ITS RETURN OF INC OME FOR ASSESSMENT YEAR 2010-11 ON 29.09.2010 DECLARING TOTAL LOSS OF RS. 43,26,781/-. SUBSEQUENTLY, A REVISED RETURN OF INCOME WAS FILED ON 29.09.2011 REVISING THE TOTAL LOSS TO RS. 3,14,213/-. THE ASSESSMENT WA S COMPLETED ON 24.01.2013 UNDER SECTION 143(3). THE ASSESSING OFFI CER WHILE FRAMING THE ASSESSMENT ORDER MADE THE ADDITION OF RS. 40,12,568 /- ON ACCOUNT OF VARIATION IN ENTRIES IN THE BOOKS OF ACCOUNTS . THE ASSESSING OFFICER INITIATED THE PENALTY UNDER SECTION 271(1)(C) OF TH E ACT. NOTICE UNDER SECTION 274 R.W.S 271(1)(C) WAS ISSUED TO THE ASSE SSEE ON 24.01.2013. THE ASSESSEE FILED ITS REPLY DATED 25.03.2015. IN THE R EPLY THE ASSESSEE CONTENDED THAT DURING THE COURSE OF ASSESSMENT PROC EEDING THE ASSESSEE REALIZED THAT AT THE TIME OF FILING OF ORIGINAL RET URN OF INCOME, THERE WAS ERROR IN VALUATION OF INVENTORIES AND CLOSING INVEN TORIES WERE UNDERVALUED BY RS. 40,12,568/-. THE ASSESSEE OFFERED THE DIFF ERENCE IN VALUATION OF INVENTORIES THROUGH REVISED RETURN, AS THERE WAS T IME FOR FILING REVISED RETURN OF INCOME AS PROVIDED UNDER SECTION 139(5) . THE CONTENTION OF ASSESSEE WAS NOT ACCEPTED BY ASSESSING OFFICER. THE ASSESSING OFFICER TOOK HIS VIEW THAT ASSESSEE WAS SERVED NOTICE UNDER SECTION 143(2) ON 12.09.2011 AND SOON AFTER ON RECEIPT OF NOTICE, THE ASSESSEE FILED ITS ITA NO. 212/MUM 17 SHAKTI HARDWARE COLLECTIONS PVT. LTD. 3 REVISED RETURN AND BRINGING DOWN THE CAPITAL LOSS F ROM RS. 43,26,781/- TO RS. 3,14,213/-. THE ASSESSING OFFICER LEVIED THE PE NALTY @ 100% OF TAX SOUGHT TO BE EVADED. THE ASSESSING OFFICER WORKED O UT THE PENALTY OF RS. 13,63,872/- IN ITS ORDER DATED 30.05.2015. ON APPEA L BEFORE THE LD. CIT(A), THE ACTION OF ASSESSING OFFICER WAS CONFIRMED. THER EFORE, FURTHER AGGRIEVED BY THE ORDER OF LD. CIT(A), THE ASSESSEE HAS FILED THE PRESENT CASE BEFORE US. 3. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVE (AR ) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENU E AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. AR OF THE ASS ESSEE SUBMITS THAT THE ASSESSEE FILED REVISED RETURN OF INCOME. REVISED RE TURN OF INCOME WAS FILED WITHIN THE PERIOD OF LIMITATION PRESCRIBED UNDER SE CTION 139(5). THE ASSESSEE DURING THE ASSESSMENT REALIZED THAT THERE WAS AN ERROR IN VALUATION OF INVENTORIES IN THE BOOKS OF ACCOUNTS. THERE WAS NO CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULAR OF INCOM E. THE ASSESSEE SUO- MOTO OFFERED THE DIFFERENCE IN VALUATION IN INVENTO RIES ON ITS OWN WITHOUT BEING ASKED BY THE ASSESSING OFFICER. IN SUPPORT OF HIS SUBMISSION, THE LD. AR OF THE ASSESSEE BESIDES THE OTHER DECISION HEAVI LY RELIED UPON THE DECISION OF TRIBUNAL IN PREMA GOPAL RAO V DCIT (ITA NO. 8653/MUM/2011 DATED 07.01.2015). THE LD. AR OF THE ASSESSEE FURTHER SUBMITS THAT THE CLOSING STOCK AS ON 31.03.2010 WOU LD HAVE BECOME THE OPENING STOCK FOR NEXT ASSESSMENT YEAR THAT I.E ASS ESSMENT YEAR 2012- ITA NO. 212/MUM 17 SHAKTI HARDWARE COLLECTIONS PVT. LTD. 4 13, EVEN IF LESS PROFIT HAD BEEN SHOWN IN ASSESSME NT YEAR 2010-11, THE HIGHER PROFIT WOULD HAVE BEEN SHOWN IN NEXT ASSESSM ENT YEAR I.E. ASSESSMENT YEAR 2011-12. IN SUPPORT OF HIS SUBMISSI ON, THE LD. AR OF THE ASSESSEE RELIED UPON THE DECISION OF TRIBUNAL IN DC IT VS. JEHANGIR H C JEHANGIR (ITA NO. 1484/MUM/2007), DCIT V OTIS ELEVA TOR CO. (I) LTD. [2014] 61 SOT 26 (MUM TRIB.)] AND PARINEE DEVELOPER S (P.) LTD. V. ACIT [2015] 174 TTJ 137 (MUM)]. 4. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUPPO RTED THE ORDER OF LOWER AUTHORITIES. THE LD. DR FOR THE REVENUE FURTH ER SUBMITS THAT THE ASSESSEE FILED HIS REVISED RETURN OF INCOME ONLY AF TER ISSUING NOTICE UNDER SECTION 143(2). IT WAS FURTHER SUBMITTED THAT THE A SSESSEE HAS NOWHERE EXPLAINED THE MISTAKE DURING THE ASSESSMENT PROCEED ING OR IN PENALTY PROCEEDING. IN SUPPORT OF HER SUBMISSION, THE LD. D R RELIED UPON THE DECISION OF MAK DATA PVT. LTD. VS. CIT. (358 ITR 53 9). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND GONE THROUGH THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) DA TED 24.01.2013, ORDER OF PENALTY UNDER SECTION 271(1)(C) DATED 30.03.201 5, ORDER OF LD. CIT(A) AND THE OTHER MATERIAL PLACED BEFORE US. WE HAVE NO TED THAT INITIALLY THE ASSESSEE FILED RETURN OF INCOME ON 29.09.2010 BY DE CLARING LOSS OF RS. 43,26,781/-. THE NOTICE UNDER SECTION 143(2) DATED 19.08.2010 WAS SERVED ON ASSESSEE ON 12.09.2011. THE ASSESSEE FILED ITS R EVISED RETURN OF INCOME ON 29.09.2011 AND BRINGING DOWN THE LOSS TO RS. 3,1 4,213/- THEREBY THE ITA NO. 212/MUM 17 SHAKTI HARDWARE COLLECTIONS PVT. LTD. 5 ASSESSEE ADDED INCOME OF RS. 40,12,568/-. THE LD. A R OF THE ASSESSEE EXPLAINED DUE TO VARIATION OF INVENTORIES AND CLOSI NG INVENTORIES THE ADDITIONAL INCOME WAS OFFERED, WHICH WAS ACCEPTED B Y ASSESSING OFFICER. WE HAVE FURTHER NOTED THAT THE REVISED RETURN OF IN COME WAS FILED WITHIN PRESCRIBED PERIOD UNDER SECTION 139(5) AND OFFERED THE DIFFERENCE IN VALUATION OF INVENTORIES THROUGH REVISED RETURN OF INCOME. THE REVISED COMPUTATION WAS ACCEPTED BY ASSESSING OFFICER, HOWE VER, THE AO INITIATED THE PENALTY UNDER SECTION 271(1)(C) OF TH E ACT ON THE SAME AMOUNT OF INCOME OFFERED IN THE REVISED COMPUTATION . THE LD. CIT(A) CONFIRMED THE ORDER OF ASSESSING OFFICER ON THE SIM ILAR LINE HELD THAT THE ASSESSEE DELIBERATELY AND WILLFULLY TRIED TO REDUCE ITS PROFIT BY SHOWING LESS INVENTORIES. WE HAVE NOTED THAT NO DISCREPANCY WAS FOUND BY ASSESSING OFFICER IN THE REVISE RETURN OF INCOME. THE ASSESSE E HAS VOLUNTARILY AND SUO-MOTO OFFERED DIFFERENCE IN VALUATION OF INVENTO RIES WITHOUT BEING ASKED BY ASSESSING OFFICER. THE ASSESSING OFFICER N OWHERE IN THE ASSESSMENT ORDER RECORDED THAT ANY DEFICIENCY WAS D ETECTED BY ASSESSING OFFICER IN THE BOOKS OF ACCOUNTS OF ASSESSEE. THE C O-ORDINATE BENCH OF TRIBUNAL IN PREMA GOPAL RAO V DCIT (SUPRA) WHILE CO NSIDERING THE GROUNDS RELATES TO LEVY OF PENALTY ON SIMILAR SET O F FACTS, UNDER SECTION 271(1)(C) HELD THAT WHEN REVISED RETURN OF INCOME W AS FILED WITHIN TIME PRESCRIBED UNDER SECTION 139(5), EVEN THOUGH THE AS SESSEE FILED REVISED RETURN OF INCOME AFTER REPLY OF NOTICE UNDER SECTIO N 143(2), THE FACT ITA NO. 212/MUM 17 SHAKTI HARDWARE COLLECTIONS PVT. LTD. 6 REMAINS THAT ASSESSING OFFICER DID NOT SEEK ANY TYP E OF PARTICULARS IN THAT NOTICE AND THE MISTAKE IN OFFERING INCOME COULD NOT HAVE COME TO THE NOTICE OF ASSESSING OFFICER AT THAT POINT OF TIME. IN SUCH CIRCUMSTANCES, THE RETURN OF INCOME WAS VOLUNTARY AND NO PENALTY C AN BE LEVIED ON ENHANCE INCOME DECLARED IN REVISED RETURN OF INCOME . 6. FURTHER, THE HONBLE DELHI HIGH COURT IN ACIT VS. ASHOK RAJ NATH [2013] 33 TAXMANN.COM 588 (DEL. TRIB.) HELD THAT ME RELY BECAUSE A NOTICE UNDER SECTION 143(2) HAD ALREADY BEEN ISSUED AND AS SESSEE FILED REVISED RETURN THEREAFTER, DISCLOSING ADDITIONAL INCOME TOW ARDS THE CAPITAL GAINS, WHICH WAS NOT CORRECTLY SHOWN IN ORIGINAL RETURN, T HAT DID NOT TANTAMOUNT TO DEDUCTION OF CONCEALMENT OF INCOME UNDER SECTION 271(1)(C). THE ASSESSEE VOLUNTARILY DISCLOSED ADDITIONAL INCOME DU RING THE COURSE OF ASSESSMENT PROCEEDINGS AND PAID TAX THEREON. EVEN T HOUGH THE REVISED RETURN WAS FOUND TO BE INVALID, THE ASSESSING OFFIC ER ACCEPTED THE INCOME AS DECLARED IN THE REVISED RETURN AND COMPUTATION, THE PENALTY UNDER SECTION 271(1)(C) WAS NOT JUSTIFIED. 7. THEREFORE, CONSIDERING THE DECISION OF HONBLE DEL HI HIGH COURT IN ACIT VS ASHOK RAJ NATH (SUPRA) AND DECISION OF CO-ORDIN ATE BENCH WHICH ARE DIRECTLY APPLICABLE ON THE FACT OF THE PRESENT CASE , WE DO NOT FIND ANY JUSTIFIABLE REASON FOR IMPOSING THE PENALTY, WHEN T HE ASSESSEE VOLUNTARILY AND SUO-MOTO OFFERED THE ADDITIONAL INCOME IN REVIS ED RETURN. HENCE, WE ITA NO. 212/MUM 17 SHAKTI HARDWARE COLLECTIONS PVT. LTD. 7 DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY LEVIED UNDER SECTION 271(1)(C). 8. THE CASE LAW RELIED BY LD. DR IN MAK DATA PVT. LTD. (SUPRA) IS NOT APPLICABLE ON THE FACTS OF THE PRESENT CASE. AS THE FACTS IN THE CASE IN HAND IS AT VARIANCE. IN THE PRESENT CASE, THE ASSESSEE H AS VOLUNTARILY AND SUO- MOTO OFFERED INCOME IN REVISED RETURN OF INCOME WIT HOUT BEING DETECTED BY ASSESSING OFFICER AS INACCURATE PARTICULAR OF CO NCEALED INCOME OR INACCURATE PARTICULAR THEREOF. IN MAK DATA PVT. LTD . (SUPRA) THE ASSESSEE ADMITTED CERTAIN INCOME IN COURSE OF SEARCH AND SEI ZURE AND THE ASSESSEE WAS CONFRONTED BEFORE OFFERING THE SAME DURING THE ASSESSMENT, THE ASSESSEE OFFERED INCOME, THEREFORE, THE FACTS OF TH E CASE IN MAK DATA PVT. LTD. ARE NOT APPLICABLE ON THE PRESENT CASE. IN THE RESULT, THE GROUNDS OF APPEAL RAISED BY ASSESSEE ARE ALLOWED. 9. IN THE RESULT, APPEAL FILED BY ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20.06.2018. SD/- SD/- G.S. PANNU PAWAN SINGH ACCOUNTANT MEMBER JUDIC IAL MEMBER MUMBAI, DATE: 20.06.2018 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR J BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI