M/S. COSMIC MOTORS PVT. LTD., Nagpur V. THE ACIT, CIRCLE- 2, Nagpur

ITA 26/NAG/2015

• Counselvise Citation: [2014] 117 COUNSELVISE.COM (IT) 8864 (ITAT-NAGPUR)
• Appeal Type: Income Tax (Transfer Pricing) Appeal
• Pronouncement Date: 23-10-2014
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 07-06-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 28-01-2015
• Court: TRIBUNAL
• Department Lawyers: A R NINAWE
• Keywords: Wrong claim; Set aside
• Section: 271(1)(c); 143(3); 154; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NO.26/NAG./2015 (ASSESSMENT YEAR : 200809 ) COSMIC MOTORS PVT. LTD. CIVIL LINES, NAGPUR 440 001 PAN AAACC7465L . APPELLANT V/S ADDL. COMMISSIONER OF INCOME TAX CIRCLE2, NAGPUR. . RESPONDENT ASSESSEE BY : SHRI K.P. DEWANI REVENUE BY : SHRI A.R. NINAWE DATE OF HEARING 27.03.2017 DATE OF ORDER 31.03 .2017 O R D E R PER RAM LAL NEGI, J.M. THE PRESENT APPEAL PREFERRED BY THE ASSESSEE IS DIR ECTED AGAINST THE IMPUGNED ORDER DATED 14 TH NOVEMBER 2014, PASSED BY THE LEARNED COMMISSIONER (APPEALS)I, NAGPUR, CONFIRMING PENALT Y OF ` 8,10,000, IMPOSED UNDER SECTION 271(1)(C) OF THE INCOME TAX A CT, 1961 (FOR SHORT THE ACT ) BY THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 200809. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE A P RIVATE LIMITED COMPANY FILED ITS RETURN OF INCOME ON 31 ST SEPTEMBER 2008, DECLARING TOTAL LOSS OF ` 2,23,26,296. HOWEVER, THE ASSESSING OFFICER COMPLE TED ASSESSMENT UNDER SECTION 143(3) OF THE ACT DETERMIN ING TOTAL LOSS OF ` 2,01,20,290. THEREAFTER, THE ASSESSING OFFICER PASS ED ORDER U/S 154 OF 2 COSMIC MOTORS PVT. LTD. THE ACT, DETERMINING LOSS OF ` 1,99,50,276 BY MAKING FOLLOWING DISALLOWANCES AND REDUCING THE LOSS RETURNED BY THE ASSESSEE: 1. FBT CLAIMED ON EXPENDITURE ` 2,60,014 2. EXCESS INTEREST CLAIMED ` 4,09,500 3. COMMISSION FROM BANK ` 17,06,506 2. SO FAR AS FBT CLAIMED ON EXPENDITURE IS CONCERNED, ACCORDING TO AO WHEN THE ASSESSEE WAS ASKED TO EXPLANATION AS TO WHY THE CLAIM SHOULD NOT BE DISALLOWED, THE ASSESSEE AGREED THAT THE SAID CLAIM SHOULD NOT HAVE BEEN CLAIMED. THUS, THE AMOUNT OF ` 2,60,014 WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 3. REGARDING INTEREST CLAIMED, THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED BEFORE THE ASSESSING OFFIC ER THAT THE ACCOUNTANT HAD INADVERTENTLY CLAIMED THE INTEREST P AID TO FIVE PARTIES TWICE. THE ASSESSING OFFICER, REJECTING THE SUBMISS IONS OF THE ASSESSEE, ADDED ` 4,09,500 TO THE TOTAL INCOME OF THE ASSESSEE. 4. REGARDING COMMISSION FROM BANK OF ` 17,06,506, THE ASSESSING OFFICER STATED THAT ASSESSEE HAD NOT SHOWN ` 17,06,506 AS COMMISSION RECEIVED FROM THE HDFC BANK. HENCE, THE SAID AMOUNT OF ` 17,06,506 WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 5. IN VIEW OF THE ABOVE, THE ASSESSING OFFICER DISALLO WED ALL THE ABOVE THREE CLAIMS AND CONSEQUENTLY, IMPOSED PENALT Y ` 8,10,000, UNDER SECTION 271(1)(C) IN RESPECT OF THE ABOVE DIS ALLOWANCES. 6. BEING AGGRIEVED BY THE PENALTY ORDER SO PASSED BY TH E ASSESSING OFFICER, THE ASSESSEE WENT IN APPEAL BEFORE THE FIR ST APPELLATE AUTHORITY BUT WITHOUT ANY SUCCESS. THE ASSESSEE, REITERATING THE STAND TAKEN 3 COSMIC MOTORS PVT. LTD. BEFORE THE ASSESSING OFFICER, CONTENDED THAT PENALT Y HAS WRONGLY BEEN LEVIED. THE LEARNED COMMISSIONER (APPEALS), HOWEVER , RELYING UPON VARIOUS CASE LAWS REJECTED THE SUBMISSIONS OF THE A SSESSEE AND CONFIRMED THE PENALTY STATING THAT THE ASSESSEE HAS WILLFULLY FURNISHED INACCURATE PARTICULARS OF INCOME AND CONCEALED ITS INCOME. BEING AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 7. BEFORE US, THE LEARNED COUNSEL FOR ASSESSEE SUBMITTE D THAT THE ASSESSEE HAS NEITHER CONCEALED INCOME NOR FURNISHED ANY INACCURATE PARTICULARS OF INCOME LEADING IMPOSITION OF PENALTY UNDER SECTION 271(1)(C). THE LEARNED COUNSEL SUBMITTED THAT ONLY BECAUSE IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE CLAIM MADE BY THE ASSESSEE WAS REJECTED BY THE ASSESSING OFFICER THAT WILL NOT LEAD TO THE CONCLUSION THAT ASSESSEE HAS CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME AS PRESC RIBED UNDER SECTION 271(1)(C) OF THE ACT. LEARNED COUNSEL FOR ASSESSEE FURTHER SUBMITTED THAT THE DELHI BENCH OF THE TRIBUNAL IN BAKERS CIRCLE INDIA PVT. LTD. V/S DCIT, [2012] 34 CCH 448 (DEL.) HAS DECIDED THE IDENTICAL ISSUE HOLDING THAT IF DUE TO AN ADVERTENT MISTAKE ON THE PART OF THE ASSESSEE AND WHERE ASSESSEES CONDUCT IS NOT CONTUMACIOUS, P ENALTY UNDER SECTION 271(1)(C) CANNOT BE IMPOSED. IN SUPPORT OF HIS CONTENTIONS, THE LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON VA RIOUS CASE LAWS INCLUDING CIT VS RELIANCE PETROPRODUCT PVT. LTD. 322 ITR 158 (SC) AND PRAYED FOR QUASHING THE PENALTY ORDER PASSED BY THE ASSESSING OFFICER AND CONFIRMED BY THE LEARNED COMMISSIONER (APPEALS) . 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHE R HAND SUBMITTED THAT THE DEDUCTION CLAIMED BY THE ASSESSE E ON ACCOUNT OF FBT AND INTEREST EXPENDITURE TO THE TUNE OF ` 2,60,014 AND ` 4,09,500 ARE ADMITTEDLY THE WRONG CLAIMS MADE BY THE ASSESSE E FOR 4 COSMIC MOTORS PVT. LTD. ENHANCEMENT OF LOSSES TO BE CARRIED FORWARD TO NEXT YEAR FOR THE PURPOSE OF SET OFF AGAINST THE TAXABLE PROFIT. LEAR NED DEPARTMENTAL REPRESENTATIVE FURTHER SUBMITTED THAT NONDISCLOSUR E OF COMMISSION INCOME FROM THE HDFC AND OTHER BANK TO THE TUNE OF ` 17,06,506 IS CHARGEABLE TO TAX WHICH THE ASSESSEE COMPANY FAILED TO OFFER FOR TAXATION IN ITS RETURN OF INCOME. THE LEARNED DEPAR TMENTAL REPRESENTATIVE THUS SUBMITTED THAT THE LEARNED COMM ISSIONER (APPEALS) HAS RIGHTLY CONFIRMED THE PENALTY ORDER. 9. HAVING HEARD THE RIVAL CONTENTIONS AND ON PERUSA L OF THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE RETURN OF INC OME DECLARING LOSS WAS FILED ON 10 TH OCTOBER 2008, AFTER THE DUE DATE OF FILING THE RET URN OF INCOME ON 30 TH SEPTEMBER 2008, AS SUBMITTED BY THE LEARNED COUNSEL NEITHER BENEFIT OF LOSS WAS AVAILABLE TO TH E ASSESSEE NOR IT WAS ELIGIBLE FOR CARRIED FORWARD OF LOSS TO BE ADJUSTED IN ANY MANNER. IN OUR VIEW, IT WAS NOTHING BUT A BONA FIDE MISTAKE AND PE NALTY DOES NOT ATTRACT. THE ASSESSEE HAS EVEN MADE PAYMENT OF TAX WHICH INCLUDES FBT WHICH IS A MATTER OF RECORD AND INADVERTENT CLAI M CANNOT TANTAMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. WE ALSO FIND THAT THE ADDITI ON ON ACCOUNT OF INTEREST AND COMMISSION WAS VOLUNTARILY OFFERED FOR TAXATION IN THE ASSESSMENT PROCEEDINGS AND THE TRANSACTIONS WERE RE CORDED IN REGULAR BOOKS OF ACCOUNT. IN BAKERS CIRCLE INDIA PVT. LTD. CASE (SUPRA) THE DELHI BENCH OF THE TRIBUNAL HAS DECIDED THE SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE HOLDING AS UNDER: 9. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AN D PERUSED THE RECORDS. WE FIND THAT SECTION 271 (1)(C ) POSTULATES IMPOSITION OF PENALTY FOR FURNISHING OF INACCURATE PARTICULARS AND CONCEALMENT OF INCOME. WE FIND THAT IN THIS CASE PENALTY HAS BEEN IMPOSED FOR DISALLOWANCE ON A CCOUNT OF ROC FEE AND DISALLOWANCE OF LOSS OF SALE OF ASSE TS. 5 COSMIC MOTORS PVT. LTD. ASSESSEES SUBMISSION IN THIS REGARD IS THAT THE SA ME HAPPENED BECAUSE A BONA FIDES DAVE ON THE PART OF T HE ASSESSEE. THERE WAS NO INTENTION OF CONCEALMENT OF INCOME. IT HAS BEEN CLAIMED THAT THE ASSESSEE DID NOT STAND TO GAIN ANYTHING BY NOT DISCLOSING THE AFORESAID ITEMS. WE FIND THAT THE ASSESSEE WAS HAVING DEEP LOSS FOR THE YEAR UNDE R CONSIDERATION AND THE RETURN FILED WAS AT A LOSS OF RS.31619027/-. AFTER THE IMPUGNED DISALLOWANCE THE LOSS WAS REDUCED TO RS. 29825260/-. THUS, IT IS CLEAR TH AT THE ASSESSEE CANNOT BE BENEFITED BY CLAIMING THESE EXPE NSES. MOREOVER, ANOTHER COGENT PLEA OF THE ASSESSEE IS TH AT THE ASSESSEE HAS RELIED UPON THE ADVICE OF THE EXPERT T AX AUDITOR AND THESE ITEMS WERE NOT REPORTED BY THE TA X AUDITORS IN THE TAX AUDITOR REPORT. WE FURTHER FIND THAT ASSESSEE WAS ENTITLED TO EXEMPTION U/S 80 IC FOR TH E PERIOD OF 10 YEARS FROM A.Y.2008-09. HENCE, EVEN IF THE ASSESSEE HAS TAXABLE INCOME THE SAME WOULD HAVE BEEN EXEMPTED U/S 80 IC. IN VIEW OF THE AFORESAID DISCUSSION, WE ARE IN AGREEMENT WITH THE CONTENTION OF THE ASSESSEE THAT THERE WAS NO CONTUM ACIOUS CONDUCT ON THE PART OF THE ASSESSEE, RATHER THE DIS ALLOWANCES WERE RESULT OF INADVERTENT MISTAKE. LD. COUNSEL OF THE ASSESSEE FURTHER SUBMITTED THAT ASSESSEE COULD NOT TO REVISE THE RETURN OF THE YEAR UNDER CONSIDERATION AS THE T IME FOR REVISION OF INCOME HAS PASSED, BUT CONSIDERING THE SAME FOR THE NEXT ASSESSMENT YEAR, ASSESSEE HAS REVISED THE RETURN. IN THE BACKGROUND OF OUR DISCUSSION, WE FIND THAT A SSESSEE SHOULD NOT BE VISITED WITH PENALTY U/S 271 (1)(C). 11. THE HONBLE SUPREME COURT IN CIT V/S RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA) HAS HELD THAT A CLAIM MADE BY THE ASSESSEE IN THE RETURN OF INCOME IF DISALLOWED BY THE ASSESSING OFFICER IN COURSE OF ASSESSMENT PROCEEDING WILL AUTOMATICALLY NOT LEAD T O CONCLUSION THAT ASSESSEE HAS EITHER FURNISHED INACCURATE PARTICULAR S OF INCOME OR CONCEALED THE PARTICULARS OF INCOME. THE PRINCIPLE LAID DOWN IN THE AFORESAID CASE APPLIES TO THE FACTS OF THE PRESENT CASE. 6 COSMIC MOTORS PVT. LTD. 12. IN VIEW OF THE DECISION RENDERED BY THE DELHI BE NCH OF THE TRIBUNAL IN BAKERS CIRCLE INDIA PVT. LTD. CASE (SUPRA) AND LAW LAID DOWN BY THE HONBLE SUPREME COURT IN CIT V/S RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA), WE ARE OF THE CONSIDERED VIEW THAT THE INA DVERTENT MISTAKES COMMITTED BY THE ASSESSEE ARE BONA FIDE THEREFORE, THE LEARNED COMMISSIONER (APPEALS) WAS NOT JUSTIFIED IN UPHOLDI NG PENALTY ORDER PASSED BY THE AO UNDER SECTION 271(1)(C) OF THE ACT . WE ACCORDINGLY SET ASIDE THE IMPUGNED ORDER PASSED BY THE LEARNED COMMISSIONER (APPEALS) AND DELETE THE PENALTY. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31.03.2017 SD/ - SHAMIM YAHYA ACCOUNTANT MEMBER SD/ - RAM LAL NEGI JUDICIAL MEMBER NAGPUR, DATED: 31.03.2017 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, NAGPUR CITY CONCERNED; (5) THE DR, ITAT, NAGPUR; (6) GUARD FILE. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (DY./ASSTT. REGISTRAR) ITAT, NAGPUR