INTERNATIONAL SYNTHFABS P. LTD, THANE V. ACIT PALGHAR CIR PALGHAR, MUMBAI

ITA 2455/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9088 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 18-12-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 29-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: OM PRAKASH MEEN
• Assessee Lawyers: MITESH N SHAH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH I, MUMBAI BEFORE SHRI I.P.BANSAL,JUDICIAL MEMBER & SHRI D.KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO.2455/MUM/2011(A.Y. 2005-06) M/S. INTERNATIONAL SYNTHFABS PVT. LTD. 86,87,88, DIWAN INDUSTRIAL ESTATE, PALGHAR, DIST. THANE. PAN:AAACI 1686B (APPELLANT) VS. THE ACIT, PALGHAR CIRCLE, PALGHAR. (RESPONDENT) APPELLANT BY : SHRI MITESH N.SHAH RESPONDENT BY : SHRI OM PRAKASH MEEN . DATE OF HEARING : 18/12/2012 DATE OF PRONOUNCEMENT : 18/12/2012 ORDER PER I.P.BANSAL, J.M THIS IS AN APPEAL FILED BY THE ASSESSEE. IT IS DI RECTED AGAINST THE ORDER PASSED BY LD. CIT(A)-II, THANE DATED 29/10/2010 FO R ASSESSMENT YEAR 2005-06. THE GROUNDS OF APPEAL RAISED BY THE REVENUE READ AS UNDER: THE GROUND OR GROUNDS OF APPEAL ARE WITHOUT PREJUD ICE TO ONE ANOTHER. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN CONFIRMING THE PENALTY LEVIED BY THE AO U/ S.271(L)(C) FOR RS.2,81, 128/- . 2. THE ID. CIT(A) FAILED TO APPRECIATED THAT: A) THE APPELLANT HAS NEITHER CONCEALED THE PARTICUL ARS OF ITS INCOME NOR FURNISHED ANY INACCURATE PARTICULARS OF SUCH INCOME ; B) THE ADDITIONS REPRESENT UNINTENDED MISTAKES ON T HE PART OF THE ACCOUNTANT WHICH HAVE BEEN AGREED IN THE ASSESSMENT PROCEEDING ; ITA NO.2455/MUM/2011(A.Y. 2005-06) 2 C) NO PENALTY PROCEEDINGS WERE INITIATED IN RESPECT OF ADDITIONS OTHER THAN ADDITION OF INTEREST. 3. IN REACHING TO THE CONCLUSION AND CONFIRMING THE PENALTY THE LD. CIT(A) OMITTED TO CONSIDER RELEVANT FACTORS, CONSIDERATION S, PRINCIPLES AND EVIDENCES WHILE HE WAS OVERWHELMED, INFLUENCED AND PREJUDICED BY IRRELEVANT CONSIDERATIONS AND FACTORS. 4. THE PENALTY LEVIED BY LD. AO IS CONTRARY TO TH E PROVISIONS OF LAW. 2. FROM THE TDS CERTIFICATE FILED ALONG WITH RETURN THE AO NOTICED THAT THE ASSESSEE DID NOT DECLARE INTEREST INCOME AGGREGATING TO RS.7 ,68,266/-. THE DETAILS ARE AS UNDER: S.NO. NAME OF THE PARTY AMOUNT (RS.) 1. MUNDRA SYNTHETICS 2,486/- 2. SHYAM SYNCOTEX PVT. LTD. 32,000/- 3. KRITYKA MARKETING ASSOCIATES 4,63,169/- 4. KRITYKA MARKETING ASSOCIATES 2,70,611/- TOTAL 7,68,266/- THE ASSESSEE WAS ASKED TO EXPLAIN THE SAME AND IN R ESPONSE THE ASSESSEE ACCEPTED THE MISTAKE OF NOT DISCLOSING THE ABOVE INTEREST IN COME AND AGREED FOR THE ABOVE ADDITION. ON SUCH ADDITION PENALTY UNDER SECTION 2 71(1)(C) OF THE INCOME TAX ACT,1961 (THE ACT) WAS INITIATED. 3. IN RESPONSE TO THE SHOW CAUSE NOTICE ISSUED FOR LEVY OF PENALTY IT WAS SUBMITTED THAT THE AFOREMENTIONED INTEREST INCOME H AD ACCRUED DURING THE PREVIOUS YEAR ON DELAYED PAYMENTS MADE BY THE SUPPL IERS WHICH COULD NOT BE ACCOUNTED IN THE BOOKS OF ACCOUNT SINCE THE SAID IN TEREST INCOME WAS NOT RECEIVED DURING THE PERVIOUS YEAR. HOWEVER, THE ASSESSEE CO MPANY HAS ACCOUNTED FOR SUCH INTEREST INCOME IN PREVIOUS RELEVANT ASSESSMENT YE AR 2006-07 IN WHICH YEAR THE SAID INTEREST WAS ACTUALLY RECEIVED. THUS IT WAS S UBMITTED THAT THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE IN NOT DISCLOSI NG SUCH INTEREST INCOME AND SUCH INTEREST INCOME HAD BEEN DECLARED IN SUBSEQUENT YE AR. THE AO DID NOT AGREE WITH SUCH SUBMISSION OF THE ASSESSEE AND LEVIED CON CEALMENT PENALTY FOR FURNISHING INACCURATE PARTICULARS OF INCOME BY NOT INCLUDING INTEREST INCOME AS PER TDS CERTIFICATE. LD. CIT(A) HAS UPHELD THE ACTION OF AO ON THE GROUND THAT MERE ITA NO.2455/MUM/2011(A.Y. 2005-06) 3 SURRENDERING OF AMOUNT DURING THE ASSESSMENT PROCEE DINGS DOES NOT ABSOLVE THE ASSESSEE FROM LEVY OF PENALTY. 4. AFTER NARRATING THE FACTS IT WAS SUBMITTED BY LD .A.R THAT THE PENALTY HAS WRONGLY BEEN CONFIRMED BY LD. CIT(A). UNDER THE FA CTS AND CIRCUMSTANCES OF THE CASE PENALTY IS LIABLE FOR DELETION. HE SUBMITTED THAT THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY AL L MATERIAL FACTS. THE INTEREST INCOME WAS NOT DISCLOSED FOR THE REASON THAT THE AS SESSEE DID NOT ACTUALLY RECEIVED THAT INTEREST INCOME AND IT WAS DISCLOSED IN THE YE AR IN WHICH THE INTEREST INCOME WAS ACTUALLY RECEIVED. HE SUBMITTED A COPY OF THE ASSESSMENT ORDER FOR A.Y 2006- 07 TO SHOW THAT THE SAID INCOME WAS DECLARED IN THA T YEAR AND THE RETURN WAS FILED ON 27/11/2006 I.E. MUCH PRIOR TO THE ASSESSMENT FRA MED FOR THE IMPUGNED ASSESSMENT YEAR ON 27/12/2007. THUS IT WAS PLEADE D BY LD. AR THAT THE PENALTY SHOULD BE DELETED. 5. ON THE OTHER HAND, LD. DR RELYING UPON THE ORDE RS OF AO AND LD. CIT(A) PLEADED THAT ACCORDING TO MERCANTILE SYSTEM OF ACC OUNTING THE ASSESSEE IS UNDER OBLIGATION TO DECLARE THE INTEREST IRRESPECTIVE OF THE FACT THAT WHETHER OR NOT THE SAID INTEREST IS ACTUALLY RECEIVED. THEREFORE, HE PLEADED THAT THE ASSESSEE HAD FILED INACCURATE PARTICULARS OF ITS INCOME, THEREFORE, T HE PENALTY HAS RIGHTLY BEEN CONFIRMED BY LD. CIT(A). 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS IN THE LIGHT OF MATERIAL PLACED BEFORE US. MUCH BEFORE THE DATE OF FRAMING ASSESSMENT FOR THE IMPUGNED ASSESSMENT YEAR, IT IS THE CASE OF THE ASSESSEE THA T IT HAD DECLARED THE SAID INTEREST INCOME IN A.Y 2006-07. THIS CONTENTION OF THE ASSE SSEE HAS NOT BEEN CONTROVERTED. THE INFORMATION FROM WHERE THE AO HAS COME TO THE C ONCLUSION THAT INTEREST INCOME OUGHT TO HAVE BEEN ASSESSED IN THE IMPUGNED YEAR WAS IN THE SHAPE OF TDS CERTIFICATE WHICH WERE FILED ALONG WITH THE RETURN. THEREFORE, IT CANNOT BE SAID THAT ASSESSEE HAD ANY INTENTION FOR NOT DISCLOSING THE I NTEREST INCOME. RATHER THE ASSESSEE HAD IMMEDIATELY ACCEPTED THE INCLUSION OF THE SAID INTEREST INCOME IN THE ITA NO.2455/MUM/2011(A.Y. 2005-06) 4 YEAR UNDER CONSIDERATION. LOOKING INTO ALL THESE F ACTS, WE ARE OF THE OPINION THAT IT IS NOT A FIT CASE WHERE LEVY OF CONCEALMENT PENALTY CAN BE HELD TO BE JUSTIFIED. THEREFORE, WE DELETE THE PENALTY. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 18 TH DAY OF DEC. 2012 SD/- SD/- ( D.KARUNAKARA RAO ) (I.P.BANSAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 18 TH DEC. 2012 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CITY CONCERNED 4. THE CIT(A)- CONCERNED 5. THE D.R I BENCH. (TRUE COPY) BY ORDER ASST. REGISTRAR, I TAT, MUMBAI BENCHES MUMBAI. VM.