SHAREKHAN LTD, MUMBAI V. ACIT CC 3(3), MUMBAI

ITA 214/MUM/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 5737 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2019
• 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: CHAUDHARY ARUN KUMAR SINGH
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI N.K. PRADHAN , ACCOUNTANT MEMBER ITA NO. 214 / MUM . /201 7 ( ASSESSMENT YEAR : 2010 11 ) SHAREKHAN LTD. 10 TH FLOOR, BETA BUILDING LODHA I THINK, TECHNO PARK OPP. KANJURMARG STATION MUMBAI 400 042 PAN AAECS5096H . APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 3(3), MUMBAI . RESPONDENT ASSESSEE BY : SHRI HIRO RAI REVENUE BY : SHRI CHAUDHARY ARUNKUMAR SINGH DATE OF HEARING 29.07.2019 DATE OF ORDER 07.08.2019 O R D E R PER SAKTIJIT DEY. J.M. CAPTIONED APPEAL BY THE ASSESSEE IS AGAINST ORDER DATED 23 RD NOVEMBER 2016, PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 51, MUMBAI, CONFIRMING PENALTY IMPOSED OF ` 50,13,313, UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ) PERTAINING TO THE ASSESSMENT YEAR 2010 11. 2 SHAREKHAN LTD. 2 . BRIEF FACTS ARE, THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF STOC K BROKING , DEPOSITO RY PARTICIPANT, PORTFOLIO MANAGEMENT SERVICE, ARBITRAGE IN FUTURE AND CASH SEGMENT AND OTHER RELATED ACTIVITIES. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE FILED ITS RETURN OF INCOME ON 6 TH OCTOBER 2010, DECLARING TOTAL INCOME O F ` 150,44,42,269. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE THROUGH LETTER DATED 2 ND NOVEMBER 2012, CLAIMED DEDUCTION OF EDUCATION LESS PAID ON INCOME TAX AMOUNTING TO ` 1,48,93,978. IN SUPPORT OF SUCH CLAIM OF DEDUCTION, THE ASSESSEE ALSO MADE ELABORATE SUBMISSIONS. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE ASSESSING OFFICER OBSERVED THAT THE CLAIM MADE BY THE ASSESSEE IN COURSE OF ASSESSMENT PROCEEDINGS THROUGH A LETTER CANNOT BE ENTERTAINED IN VIEW OF THE D ECISION OF THE HON'BLE SUPREME COURT IN GOETZ INDIA LTD. V/S CIT, [2006] 284 ITR 323 (SC). FURTHER, HE OBSERVED , EDUCATION CESS BEING A PART OF INCOME TAX CANNOT BE ALLOWED AS DEDUCTION. ACCORDINGLY, HE ADDED BACK THE AMOUNT OF ` 1,48,93,978, TO THE INCOME OF THE ASSESSEE. ON THE BASIS OF SUCH ADDITION, THE ASSESSING OFFICER INITIATED PROCEEDINGS FOR IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT ALLEGING FURNISHING OF INACCURATE PARTICULARS OF INCOME. AGAINST THE AFORESAID ADDITION MADE BY THE AS SESSING OFFICER, THE ASSESSEE PREFERRED APPEAL BEFORE LEARNED COMMISSIONER (APPEALS) AND THEREAFTER BEFORE THE TRIBUNAL. DURING THE 3 SHAREKHAN LTD. PENDENCY OF ASSESSEES APPEAL BEFORE THE TRIBUNAL, THE ASSESSING OFFICER ISSUED SHOW CAUSE NOTICE UNDER SECTION 271(1)(C) R/ W SECTION 274 OF THE ACT REQUIRING THE ASSESSEE TO EXPLAIN WHY PENALTY UNDER SECTION 271(1)(C) OF THE ACT SHOULD NOT BE IMPOSED. THOUGH, THE ASSESSEE OBJECTED TO IMPOSITION OF PENALTY, HOWEVER, THE ASSESSING OFFICER REJECTING THE EXPLANATION OF THE ASSESSE E IMPOSED PENALTY OF ` 50,13,313, UNDER SECTION 271(1)(C) OF THE ACT. WHILE DECIDING ASSESSEES APPEAL AGAINST THE AFORESAID PENALTY ORDER, LEARNED COMMISSIONER (APPEALS) CONFIRMED THE IMPOSITION OF PENALTY. 3 . SHRI HIRO RAI, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED , THE ASSESSEE HAD NEITHER CLAIMED DEDUCTION OF EDUCATION CESS IN THE RETURN OF INCOME NOR IT WAS ALLOWED. HE SUBMITTED , IN COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FILED A LETTER BEFORE THE ASSESSING OFFICER CLAIMING THE AFORESAID DEDUCTIO N WHICH WAS NOT ONLY DISALLOWED BY THE ASSESSING OFFICER BUT HE ADDED BACK THE AMOUNT OF ` 1,48,93,978, IN SPITE OF THE FACT THAT THE ASSESSEE HAD NOT CLAIMED IT AS DEDUCTION IN THE RETURN OF INCOME. HE SUBMITTED , WHILE DECIDING ASSESSEES APPEAL, THE TRIB UNAL IN ITA NO.2729/MUM./2014, DATED 24 TH MARCH 2014, HAS DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. THUS, HE SUBMITTED , THERE IS NO JUSTIFICATION FOR IMPOSING PENALTY UNDER SECTION 271(1)(C) OF THE ACT ALLEGING FURNISHING OF INACCURATE PARTICULAR S OF INCOME. WITHOUT PREJUDICE, THE LEARNED COUNSEL FOR THE ASSESSEE 4 SHAREKHAN LTD. SUBMITTED THAT IN THE SHOW CAUSE NOTICE ISSUED UNDER SECTION 274 OF THE ACT, THE ASSESSING OFFICER HAS NOT SPECIFIED WHETHER HE INTENDS TO IMPOSE PENALTY UNDER SECTION 271(1)(C) OF THE AC T FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. FURTHER, HE SUBMITTED, ASSESSEE HAS A STRONG CASE ON MERITS ALSO, AS, NOW IT HAS BEEN HELD IN JUDICIAL PRECEDENTS THAT EDUCATION CESS IS ALLOWABLE AS DEDUCTION. THEREFORE, HE SU BMITTED, IMPOSITION OF PENALTY IS INVALID. 4 . THE LEARNED DEPARTMENTAL REPRESENTATIVE FILED A WRITTEN SUBMISSION STRONGLY RELYING UPON THE OBSERVATIONS OF LEARNED COMMISSIONER (APPEALS) AND THE ASSESSING OFFICER. IN THE SAID WRITTEN SUBMISSION, HE HAS ALSO R ELIED UPON VARIOUS JUDICIAL PRECEDENTS. 5 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. UNDISPUTEDLY, IN THE RETURN OF INCOME FILED FOR THE IMPUGNED ASSESSMENT YEAR, THE ASSESSEE HAD NOT CLAIMED DEDUCTION OF ` 1,48,93,978, PAID TOWARDS EDUCATION CESS. ONLY , IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD FURNISHED A LETTER CLAIMING THE AFORESAID DEDUCTION WHICH WAS DISALLOWED BY THE ASSESSING OFFICER. SURPRISINGLY, EVEN THOUGH THE ASSESSEE HAD NOT CLA IMED THE DEDUCTION OF EDUCATION CESS IN THE RETURN OF INCOME, THE ASSESSING OFFICER ADDED BACK THE AMOUNT TO THE INCOME OF THE ASSESSEE WHICH WAS ULTIMATELY DELETED BY THE TRIBUNAL WHILE DECIDING ASSESSEES APPEAL IN ITA 5 SHAREKHAN LTD. NO.3027/MUM./2014, DATED 24 TH MARCH 2017. IN THE AFORESAID FACTS AND CIRCUMSTANCES, WE FAIL TO UNDERSTAND HOW A CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME , AS PROVIDED UNDER SECTION 271(1)(C) OF THE ACT , COULD BE MADE OUT AGAINST THE ASSESSEE . EVEN , IN THE WORST CASE, IF ASSESSE ES CASE W OULD NOT HAVE BEEN SELECTED FOR SCRUTINY, THERE WAS NO CHANCE OF ALLOWING ASSESSEES CLAIM OF DEDUCTION OF EDUCATION CESS AS IT WAS NOT CLAIMED IN THE RETURN OF INCOME FILED FOR THE YEAR UNDER CONSIDERATION. FURTHER, THE ADDITION MADE ON ACCOUNT OF EDUCATION CESS WAS ULTIMATELY DELETED BY THE TRIBUNAL WHILE DECIDING ASSESSEES APPEAL IN THE ORDER CITED SUPRA. IN VIEW OF THE AFORESAID, THERE IS NO CASE FOR IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT, AS THE ASSESSEE CANNOT BE ACCUSED O F FURNISHING INACCURATE PARTICULARS OF INCOME. IN THE AFORESAID VIEW OF THE MATTER, WE HAVE NO HESITATION IN DELETING THE PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT. INSOFAR AS THE DECISION S RELIED UPON BY THE LEARNED DEPARTMENTAL REPRESENTATIVE, O N A CAREFUL CONSIDERATION, WE FIND THE M TO BE FACTUALLY DISTINGUISHABLE, HENCE, COULD NOT BE APPLI ED TO THE FACTS OF THE PRESENT CASE. ACCORDINGLY, PENALTY IMPOSED IS DELETED. 6 . IN VIEW OF OUR AFORESAID DECISION, THE LEGAL ISSUE RAISED BY THE ASSESSEE CHALL ENGING THE VALIDITY OF PENALTY ORDER HAS BECOME REDUNDANT, HENCE, THERE IS NO NEED FOR ADJUDICATION. 6 SHAREKHAN LTD. 7 . IN THE RESULT, ASSESSEES APPEAL IS ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN C OURT ON 07.08.2019 SD/ - N.K. PRADHAN ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 07.08.2019 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI