SULABH CORPORATION, MUMBAI V. ITO WD 12(1)(1), MUMBAI

ITA 2362/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7189 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 24-03-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 13-04-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MOHAMMED USMAN
• Assessee Lawyers: N JAYENNDRAN
• Keywords: Set aside
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 271(1)(c); 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES I: MUMBAI BEFORE SMT P MADHAVI DEVI, JUDICIAL MEMBER AND SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER ITA NO.2362/MUM/2009 ASSESSMENT YEARS 2002-03 M/S SULABH CORPORATION, M/S NATAVARLAL VEPARI & CO, ORICON HOUSE, 4TH FLOOR, 12, K. DUBASH MARG, MUMBAI -400 023 PAN AAAFS 9713 J VS THE INCOME TAX OFFICER WARD 12(1)(1), 1ST FLOOR, AAYAKAR BHAVAN, MAHARSHI KARVE ROAD, MUMBAI-400 020 (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI N JAYENNDRAN FOR RESPONDENT : SHRI MOHAMMED USMAN ORDER PER RAJENDRA SINGH, AM 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 2.2.2009 OF CIT (A) FOR THE ASSESSMENT YEAR 2 002-03. THE DISPUTE RAISED BY THE ASSESSEE IN THE APPEAL IS REG ARDING PENALTY IMPOSED FOR CONCEALMENT OF INCOME U/S 271(1)(C). 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS NOTED THA T THE ASSESSEE HAD NOT UTILIZED THE DEPB LICENSE WORTH RS 2,97,296 /- DURING THE YEAR AND THE GOODS IMPORTED THROUGH THE LICENSE HAD BEEN DEBITED TO THE PROFIT AND LOSS ACCOUNT AFTER CLOSE OF FINANCIAL YE AR IN APRIL 2002. THE ASSESSING OFFICER, ACCORDINGLY, DISALLOWED THE CLAI M OF DEDUCTION OF RS 2,97,296/- ON ACCOUNT OF DEPB LICENSES. THE ADDITI ON MADE HAD BEEN CONFIRMED IN APPEAL. THE ASSESSING OFFICER HAD ALS O INITIATED PENALTY PROCEEDINGS FOR CONCEALMENT OF INCOME IN RESPONSE T O WHICH THE M/S SULABH CORPORATION ITA 2362/M/2009 2 ASSESSEE SUBMITTED THAT IT HAD NEITHER CONCEALED AN Y PARTICULARS OF INCOME NOR FURNISHED ANY INACCURATE OF INCOME AND A DDITION HAD BEEN MADE ONLY BECAUSE OF DISALLOWANCE OF CLAIM FOR WHIC H NO PENALTY COULD BE IMPOSED. THE ASSESSING OFFICER WAS, HOWEVER, NO T SATISFIED AND IMPOSED PENALTY @ 100% OF THE TAX SOUGHT TO BE EVAD ED. THE ASSESSEE DISPUTED THE PENALTY AND SUBMITTED BEFORE CIT (A) THAT THE DEPB LICENSES WORTH RS 2,97,296/- HAD ALREADY BEEN SUBMITTED BY THE ASSESSEE TO THE CUSTOM AUTHORITIES FOR REGISTRATION . HOWEVER, ARRIVAL OF GOODS IMPORTED WERE DELAYED AND GOOD WERE RECEIV ED IN APRIL 2002. IT WAS ONLY A CASE OF CLERICAL ERROR AND ASSESSEE D ID NOT INTEND TO AVOID PAYMENT OF ANY TAXES AS THERE WERE NO DOUBLE DEDUCT ION CLAIMED, CIT (A), HOWEVER, DID NOT ACCEPT THE CONTENTIONS AND OB SERVED THAT PENALTY U/S 271(1)(C) IS ONLY A CIVIL LIABILITY AS HELD BY THE SUPREME COURT IN THE CASE OF DHARMENDRA TEXTILE PROCESSORS LTD (206 ITR 277). HE DID NOT FIND EXPLANATION OF THE ASSESSEE AS BONA FIDE AND ACCORDINGLY CONFIRMED THE PENALTY IMPOSED BY THE AS SESSING OFFICER, AGGRIEVED BY WHICH, THE ASSESSEE IS IN APPEAL BEFOR E THE TRIBUNAL. 3. BEFORE US, THE LEARNED AUTHORIZED REPRESENTATIV E FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE CIT (A) AND ARGUED THAT THE CLAIM HAD BEEN MADE BY A BONA FIDE MISTAKE. THE AMOUNT OF DEDUCTION CLAIMED WAS ALLOWABLE AS A DEDU CTION IF NOT THIS YEAR, IN SUBSEQUENT YEAR. THE ASSESSEE HAD NOT MAD E DOUBLE DEDUCTION. THEREFORE, NO PENALTY SHOULD BE IMPOSED . THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, SUP PORTED THE ORDERS OF AUTHORITIES BELOW AND PLACED RELIANCE ON THE FIN DINGS GIVEN IN THE RESPECTIVE ORDERS. 4. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE RIVAL CONTENTIONS CAREFULLY. THE DISPUTE IS REGARDING LE VIABILITY OF PENALTY U/S 271(1)(C) IN RESPECT OF ADDITION MADE ON ACCOUN T OF UNUTILIZED M/S SULABH CORPORATION ITA 2362/M/2009 3 DEPB LICENSES CLAIMED AS DEDUCTION. THE CASE OF TH E ASSESSEE IS THAT IT HAD ALREADY PLACED ORDERS FOR IMPORT OF GOODS AG AINST DEPB LICENSES BUT THE SHIPMENTS WERE DELAYED AND GOODS WERE RECEI VED IN THE MONTH OF APRIL 2002 AFTER THE CLOSE OF THE YEAR. THE CLA IM WAS MADE DUE TO A BONA FIDE MISTAKE. THE ASSESSEE HAD NOT MADE THE CLAIM IN T HE SUBSEQUENT YEAR AND, THEREFORE, THERE WAS NO AVOIDA NCE OF TAX. THE CASE OF THE REVENUE IS THAT THE ADDITION MADE HAS B EEN CONFIRMED IN APPEAL AND SINCE PENALTY U/S 271(1)(C) IS A CIVIL L IABILITY IS HELD BY HONBLE SUPREME COURT IN THE CASE OF DHARMENDRA TEX TILE PROCESSORS LTD (SUPRA) THE PENALTY HAS TO BE LEVIED. ON CAREF UL CONSIDERATION, WE ARE UNABLE TO ACCEPT THE ARGUMENTS ADVANCED BY THE REVENUE. THE PENALTY U/S 271(1)(C) IS NO DOUBT A CIVIL LIABILITY AND REVENUE IS NOT REQUIRED TO PROVE MENS REA AS HELD BY HONBLE SUPREME COURT IN CASE OF DHARMENDRA TEXTILE PROCESSORS LTD (SUPRA) BUT EA CH AND EVERY ADDITION IN ASSESSMENT CANNOT AUTOMATICALLY LEAD T O PENALTY FOR CONCEALMENT OF INCOME. A CASE FOR CONCEALMENT HAS TO BE EVALUATED IN TERMS OF PROVISIONS OF EXPLANATION 1 TO SECTION 271 (1)(C) AS PER WHICH IF IN RESPECT OF ANY ADDITION MADE IN THE ASSESSMEN T, THE ASSESSEE OFFERED EXPLANATION WHICH IS FOUND TO BE BONA FIDE AND ALL NECESSARY DETAILS HAVE BEEN GIVEN, THE ADDITION MADE CANNOT BE TREATED AS CONCEALMENT. IN THIS CASE, EXPLANATION OF THE ASSE SSEE IS THAT IT HAD ALREADY IMPORTED THE GOODS AGAINST LICENSE BUT THE GOODS WERE RECEIVED AFTER THE CLOSE OF FINANCIAL YEAR DUE TO D ELAY OF SHIPMENT. THE CLAIM MADE WAS DUE TO BONA FIDE MISTAKE. THE CLAIM IS ALLOWABLE AS DEDUCTION IF NOT THIS YEAR, IN THE SUBSEQUENT YEAR. NECESSARY DETAILS HAVE BEEN GIVEN. ON FACTS OF THE CASE, IN OUR VIEW , THE CLAIM OF THE ASSESSEE HAS TO BE ACCEPTED AS BONA FIDE AS THE CLA IM IS ALLOWABLE AND THE ASSESSEE HAS NOT MADE ANY ATTEMPT TO CLAIM DOUB LE DEDUCTION. WE, ACCORDINGLY UNABLE TO SUSTAIN THE ORDER OF CIT (A) CONFIRMING THE PENALTY. THE SAME IS SET ASIDE AND THE PENALTY IMP OSED IS DELETED. M/S SULABH CORPORATION ITA 2362/M/2009 4 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED ON 30TH DAY OF MA RCH 2010. SD/- SD/- (P MADHAVI DEVI) (RAJENDRA SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATE: 30TH MARCH, 2010 . COPY TO :- 1. THE APPELLANT. 2. THE RESPONDENT 4. CIT(A)-XII, MUMBAI. 5. CIT XII, MUMBAI. 6. D R I BENCH, MUMBAI. 7. GUARD FILE. BY ORDER / / TRUE COPY / / ASST. REGISTRAR, ITAT, MUMBAI BENCHES MUMBAI *CHAVAN/- M/S SULABH CORPORATION ITA 2362/M/2009 5 SNO DATE INITIALS 1 DRAFT DICTATED ON 24-03-2010 SR.P.S 2. DRAFT PLACED BEFORE AUTHOR 24-03-2010 SR.P.S 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER V.P. 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER A.M 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.P.S 6. KEPT FOR PRONOUNCEMENT ON SR.P.S 7. FILE SENT TO THE BENCH CLERK SR.P.S 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER