M/s. MV Logistics Pvt. Ltd., Ghaziabad V. ITO, New Delhi

ITA 2663/DEL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4778 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 01-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T VASANTHAN
• Keywords: Bonafide mistake
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES SMC : DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA.NO.2662 & 2663/DEL./2017 ASSESSMENT YEARS 2009-2010 & 2011-2012 M/S. M.V. LOGISTICS PVT. LTD., NEW DELHI. PAN AAECM0288M C/O. SHRI AKHILESH KUMAR, ADVOCATE, CHAMBER NO.206- 207, ANSAL SATYAM, RDC RAJ NAGAR, GHAZIABAD. VS. THE INCOME TAX OFFICER, WARD-16(1) NEW DELHI. (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI AKHILESH KUMAR, ADVOCATE FOR REVENUE : SHRI T. VASANTHAN, SR. D.R. DATE OF HEARING : 0 6 .09.2017 DATE OF PRONOUNCEMENT : 13 .09.2017 ORDER BOTH THE APPEALS OF ASSESSEE ARE DIRECTED AGAINST THE DIFFERENT ORDERS OF THE LD. CIT(A)-6, DELHI, DATED 14 TH FEBRUARY, 2017 FOR THE A.Y. 2009-2010, CHALLENGING THE LEVY OF PEN ALTY UNDER SECTION 271(1)(C) OF THE I.T. ACT, 1961 AND ORDER OF LD. CI T(A)-39, NEW DELHI, DATED 27 TH DECEMBER, 2016, FOR THE A.Y. 2011-2012, CHALLENGIN G THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE I.T. ACT, 1961. 2 ITA.NOS.2662 & 2663/DEL./2017 M.V. LOGISTICS PVT. LTD., NEW DELHI. 2. I HAVE HEARD THE LD. REPRESENTATIVES OF BOTH TH E PARTIES AND PERUSED THE MATERIAL ON RECORD. THE LD. REPRESE NTATIVES OF BOTH THE PARTIES ARGUED IN A.Y. 2009-2010 AND HAVE SUBMI TTED THAT ISSUES ARE SAME IN THE REMAINING APPEAL FOR THE A.Y. 2011- 2012. THE APPEAL FOR A.Y. 2009-2010 IS DECIDED AS UNDER. ITA.NO.2662/DEL./2017 A.Y. 2009-2010 : 3. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSE SSEE FILED ITS RETURN OF INCOME ON 30.09.2009 DECLARING INCOME OF RS.4,70,490. DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR SUB SEQUENT A.Y. 2010-2011 IN THE CASE OF THE ASSESSEE, IT WAS OBSER VED THAT ASSESSEE IS CONTINUOUSLY CLAIMING INTEREST EXPENSES ON LOAN TAKEN FROM VARIOUS FINANCIAL INSTITUTIONS, BUT, WHILE PAYING T HE INTEREST, ASSESSEE WAS NOT DEDUCTING TDS. HENCE, THE CASE OF THE ASSES SEE WAS REOPENED BY ISSUING NOTICE UNDER SECTION 148 OF THE ACT ON 3 0.04.2013, AFTER RECORDING THE REASONS. THE ASSESSEE FILED LETTER DA TED 13 TH MAY, 2014 AND INTIMATED THAT IT HAS FILED THE RETURN IN RESPO NSE TO NOTICE UNDER SECTION 148. THE ASSESSEE REVISED THE RETURN BY DEC LARING INCOME OF RS.36,58,583 ON 13 TH MAY, 2014. IN THE RETURN NOW FILED, ASSESSEE HAS ADDED BACK INTEREST ON LOAN OF RS.31,88,093 (RS .18,29,533 + 3 ITA.NOS.2662 & 2663/DEL./2017 M.V. LOGISTICS PVT. LTD., NEW DELHI. RS.13,58,560). THE ASSESSEE REQUESTED FOR COPY OF T HE REASONS RECORDED WHICH WERE SUPPLIED BY THE A.O. ASSESSEE W HILE FILING THE RETURN OF INCOME UNDER SECTION 148 HAS ADMITTED THE ADDITIONAL INCOME BY WAY OF DISALLOWING THE INTEREST. THE A.O. HOWEVER, NOTED THAT THE DISALLOWANCE OF INTEREST IS NOT VOLUNTARY BUT AFTER THE ACT OF THE DEPARTMENT ONLY. THEREFORE, FRESH DISCLOSURE OF THE INCOME WAS NOT VOLUNTARY AND ASSESSEE IS LIABLE FOR PENALTY UN DER SECTION 271(1)(C) OF THE ACT. IT WAS ALSO FOUND THAT ASSESS EE HAS HUGE CASH IN HAND OF RS.24,77,631 AND IN THE ABSENCE OF PROPER J USTIFICATION, THE A.O. DISALLOWED 10% OUT OF CASH IN HAND AND MADE AD DITION OF RS.2,47,763. THE A.O. COMPUTED THE TOTAL INCOME OF ASSESSEE AT RS.39,06,346. THE A.O. INITIATED THE PENALTY PROCEE DINGS UNDER SECTION 271(1)(C) OF THE ACT, FOR FURNISHING INACCU RATE PARTICULARS OF INCOME THEREBY CONCEALING ITS INCOME, FOR THE REASO NS RECORDED IN THE RE-ASSESSMENT ORDER. 3.1. THE A.O. IN THE PENALTY ORDER NOTED THE SAME FACTS AND ALSO NOTED THAT ASSESSEE DECLARED ADDITIONAL INCOME OF RS.31,88,093 IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE ACT. THE ASSESSEE HAS DECLARED THE ADDITIONAL INCOME WHEN SAME INCOME WAS UNEARTHED BY 4 ITA.NOS.2662 & 2663/DEL./2017 M.V. LOGISTICS PVT. LTD., NEW DELHI. THE DEPARTMENT. THE A.O. ACCORDINGLY, LEVIED THE PE NALTY ON THIS ADDITION. THE ASSESSEE CHALLENGED THE PENALTY ORDER BEFORE THE LD. CIT(A). THE LD. CIT(A) DISMISSED THE APPEAL OF ASSE SSEE FOR NON- PROSECUTION AS WELL AS ON MERIT AS WELL. 4. I HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PA RTIES. LEARNED COUNSEL FOR THE ASSESSEE REFERRED TO PB-34 WHICH IS THE SHOW CAUSE NOTICE ISSUED PRIOR TO LEVY OF PENALTY DATED 30 TH DECEMBER, 2014 IN WHICH THE A.O. HAS MENTIONED THAT HAVE CON CEALED THE PARTICULARS OF YOUR INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, IN TERMS OF EXPLANATION-1, 2, 3, 4 AND 5. LEARNED COUNSEL FOR THE ASSESSEE, THEREFORE, SUBMITTED THAT A.O. HAS NOT SPECIFIED UNDER WHICH LIMB OF SECTION 271(1)(C) OF THE I.T. ACT, PENALTY HAVE BEEN INITIATED AGAINST THE ASSESSEE. THEREFORE , PENALTY IS LIABLE TO BE CANCELLED ON THIS GROUND ITSELF. HE HAS RELIE D UPON THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNATHA COTTON & GINNING FACTORY (2013) 359 ITR 565 (KAR.). 5. THE LD. D.R. ON THE OTHER HAND, RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 5 ITA.NOS.2662 & 2663/DEL./2017 M.V. LOGISTICS PVT. LTD., NEW DELHI. 6. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. IT IS NOT IN DISPUTE THAT A.O. IN THE SHOW CAUSE NOTICE DATED 30 TH DECEMBER, 2014, HAS NOT RECORDED AS TO UNDER WHICH LIMB OF SECTION 271( 1)(C) OF THE ACT, PENALTY HAVE BEEN INITIATED AGAINST THE ASSESSEE. E VEN THE A.O. IN THE ASSESSMENT ORDER HAS MENTIONED THAT PENALTY UNDER S ECTION 271(1)(C) OF THE ACT, ARE INITIATED SEPARATELY FOR FURNISHING INACCURATE PARTICULARS OF SUCH INCOME, THEREBY, CONCEALING ITS INCOME FOR THE REASONS RECORDED IN THE ASSESSMENT ORDER. THE HONB LE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. M/S. SSAS EMERAL D MEADOWS ITA.NO.380 OF 2015 VIDE JUDGMENT DATED 23 RD NOVEMBER, 2015, CONFIRMED THE ORDER OF THE TRIBUNAL, IN WHICH THE T RIBUNAL HAS ALLOWED THE APPEAL FILED BY ASSESSEE HOLDING THAT NOTICE ISSUED BY A.O. UNDER SECTION 274 READ WITH SECTION 271(1)(C) OF TH E ACT, TO BE BAD IN LAW AS IT DID NOT SPECIFY UNDER WHICH LIMB OF SECTI ON 271(1)(C) OF THE ACT, THE PENALTY HAD BEEN INITIATED I.E., WHETHER F OR CONCEALMENT OF THE PARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF SUCH INCOME. THE TRIBUNAL RELIED UPON THE DECISION OF THE HONB LE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNA THA COTTON & GINNING FACTORY (SUPRA) . THE DEPARTMENTAL APPEAL WAS ACCORDINGLY, 6 ITA.NOS.2662 & 2663/DEL./2017 M.V. LOGISTICS PVT. LTD., NEW DELHI. DISMISSED. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. M /S. SSAS EMERALD MEADOWS IN SLP (CC) NO.11485 OF 2016 VIDE JUDGMENT DATED 5 TH AUGUST, 2016, DISMISSED THE DEPARTMENTAL SLP. IN V IEW OF THE ABOVE, I SET ASIDE THE ORDERS OF THE AUTHORITIE S BELOW AND CANCEL THE PENALTY. 7. THE LEARNED COUNSEL FOR THE ASSESSEE ON MERIT A LSO SUBMITTED THAT A.O. RECORDED THE REASONS FOR REOPEN ING OF THE ASSESSMENT VIDE REASONS DATED 30 TH APRIL, 2013, COPY OF WHICH IS FILED AT PAGE-32 OF THE PAPER BOOK IN WHICH THE A.O. RECO RDED INTEREST PAYMENT OF RS.61,063, ON WHICH, INTEREST IS TO BE D ISALLOWED. HE HAS SUBMITTED THAT ASSESSEE FILED THE RETURN OF INCOME IN RESPONSE TO NOTICE UNDER SECTION 148 ON 13 TH MAY, 2014, DECLARING THEREIN THE ADDITIONAL INCOME OF RS.31,88,093 ON ACCOUNT OF DIS ALLOWANCE OF INTEREST WHICH WAS EVEN NOT WITHIN THE KNOWLEDGE OF THE REVENUE DEPARTMENT. THEREFORE, NOTHING HAS BEEN DETECTED AG AINST THE ASSESSEE FOR LEVY OF THE PENALTY. HE HAS SUBMITTED THAT LATER ON, A.O. SUPPLIED THE COPY OF THE REASONS RECORDED UNDER SEC TION 148 BUT PRIOR TO THAT ASSESSEE HAD ALREADY DECLARED THE ADDITIONA L INCOME BY DISALLOWING THE INTEREST. HE HAS RELIED UPON SEVERA L JUDGMENTS IN 7 ITA.NOS.2662 & 2663/DEL./2017 M.V. LOGISTICS PVT. LTD., NEW DELHI. SUPPORT OF HIS CONTENTION INCLUDING THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCT S PVT. LTD., 322 ITR 158 IN WHICH IT WAS HELD THAT MERELY BECAUSE ASSESSEE HAS CLAIMED EXPENDITURE WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF, WOULD NOT ATTRACT PENA LTY UNDER SECTION 271(1)(C) OF THE I.T. ACT, 1961. HE HAS ALSO SUBMITTED THAT ASSESSEE DECLARED COMPLETE PARTICULARS IN THE RETURN OF INCO ME. THEREFORE, THE DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE I.T. AC T BEING A DEBATABLE ISSUE, NO PENALTY IS LEVIABLE. HE HAS SUBMITTED THA T NO AMOUNT HAVE BEEN MENTIONED IN THE REASONS FOR REOPENING OF THE ASSESSMENT. 8. THE LD. D.R. ON THE OTHER HAND, RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 9. SINCE, I HAVE ALREADY SET ASIDE THE ORDERS OF T HE AUTHORITIES BELOW ON THE REASONS NOTED ABOVE BY FOLLOWING THE D ECISION OF HONBLE KARNATAKA HIGH COURT, THEREFORE, THERE IS NOTHING T O DISCUSS ON THIS ISSUE IN DETAIL ON MERITS. HOWEVER, IT IS A FACT TH AT IN THE REASONS FOR REOPENING OF THE ASSESSMENT, A.O. HAS MENTIONED A V ERY SMALL AMOUNT OF INTEREST OF RS.61,063. THEREFORE, EVEN TH E A.O. WAS NOT AWARE OF THE EXACT AMOUNT TO THE EXTENT OF WHICH IN COME HAS ESCAPED 8 ITA.NOS.2662 & 2663/DEL./2017 M.V. LOGISTICS PVT. LTD., NEW DELHI. ASSESSMENT. THE A.O. MERELY ON VAGUE AND INACCURATE FIGURE REOPENED THE ASSESSMENT. THEREFORE, NOTHING COULD B E DETECTED AGAINST THE ASSESSEE SPECIFICALLY AT THE STAGE OF R EOPENING OF THE ASSESSMENT. THE ASSESSEE WHEN RECEIVED NOTICE UNDER SECTION 148, DECLARED ADDITIONAL INCOME OF RS.31,88,093 ON ACCOU NT OF DISALLOWANCE OF INTEREST ON LOANS. THEREFORE, THE A SSESSEE MADE FULL DISCLOSURE WITHOUT THERE BEING ANYTHING DETECTED AG AINST THE ASSESSEE AND AS SUCH, IT MAY BE A BONAFIDE MISTAKE OF THE ASSESSEE IN NOT DECLARING THE TOTAL DISALLOWANCE OF INTEREST IN THE ORIGINAL RETURN OF INCOME. THEREFORE, ON SUCH FACTS, PENALTY CANNOT BE LEVIABLE AGAINST THE ASSESSEE. MERELY BECAUSE ASSESSEE HAD C LAIMED EXPENDITURE, WHICH IT WAS NOT ACCEPTABLE TO THE REV ENUE, THAT BY ITSELF WOULD NOT ATTRACT LEVY OF PENALTY UNDER SECT ION 271(1)(C) OF THE I.T. ACT. CONSIDERING THE ABOVE DISCUSSION, I AM OF THE VIEW THAT NO PENALTY IS LEVIABLE ON THE FACTS AND CIRCUMSTANCES OF THE CASE. THE PENALTY IS ACCORDINGLY CANCELLED. 10. IN THE RESULT, ITA.NO.2662/DEL./2017 FOR THE A .Y. 2009- 2010 IS ALLOWED. 9 ITA.NOS.2662 & 2663/DEL./2017 M.V. LOGISTICS PVT. LTD., NEW DELHI. ITA.NO.2663/DEL./2017 A.Y. 2011-2012 : 11. THE ISSUE IS SAME AS IS CONSIDERED IN A.Y. 2009-2010 ABOVE. FOLLOWING THE REASONS FOR DECISION FOR A.Y. 2009-20 10, I SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND CANCEL THE PENA LTY. 12. IN THE RESULT, ITA.NO.2663/DEL./2017 FOR THE A.Y. 2011- 2012 OF THE ASSESSEE IS ALLOWED. 13. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSE E ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DELHI, DATED 13 TH SEPTEMBER, 2017 VBP/- COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A) CONCERNED 4. CIT CONCERNED 5. D.R. ITAT SMC BENCH, DELHI 6. GUARD FILE. // BY ORDER // ASST. REGISTRAR : ITAT DELHI BENCHES DELHI.