JAYDEV MUKUND MODY, MUMBAI V. ITO 5(2)(3), MUMBAI

ITA 2678/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2303 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Next Hearing Date: 27-07-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 08-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAKASH PATHADE
• Keywords: Unexplained expenditure; Opportunity of being heard; Revised return
• Section: 69C; 27

Judgement Text

, TS TSTS TS INCOME TAX APPELLATE TRIBUNAL,MUMBAI - J BENCH , IOU FLAG IOU FLAG IOU FLAG IOU FLAG BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBER & PAWAN SINGH,JUDICIAL MEMBER /.ITA NO.2678/MUM/2013, /ASSESSMENT YEAR-2009-10 JAYDEV MUKUND MODY, BARRY VILLA, 2 ND TEJPAL ROAD, KRISHNA SANGHI PATH, GAMDEVI, MUMBAI-400007. PAN:AEJPM7431F VS ITO-5(2)(3), MUMBAI. ( / APPELLANT) ( / RESPONDENT) /ASSESSEE BY : SHRI YOGESH THAR (AR) / REVENUE BY : SHRI PRAKASH PATHADE (DR) ' / DATE OF HEARING : 20- 06 -2016 / DATE OF PRONOUNCEMENT : 27-07-2016 ORDER/ % & IOU FLAG IOU FLAG IOU FLAG IOU FLAG PER PAWAN SINGH, JM 1. THE PRESENT APPEAL IS FILED BY ASSESSEE AGAINST OF CIT(A)-9, MUMBAI DATED 19.02.2013, WHEREIN THE PENALTY ORDER U/S 271(1) (C) WAS CONFIR MED. THE ASSESSEE VIDE HIS APPLICATION DATED 30.05.2016 FILED ONE MORE ADDITIO NAL GROUND OF APPEAL, CHALLENGING THE NOTICE U/S 274 R.W.S 271(1)(C) ISSUED BY AO. TH AT THE NOTICE WAS ISSUED IN A MECHANICAL MANNER WITHOUT SATISFYING HIMSELF, INASM UCH AS FROM THE NOTICE, IT IS NOT DESCRINABLE AS TO WHETHER THE PENALTY PROCEEDING A RE INITIATED FOR FURNISHING INACCURATE PARTICULAR OR CONCEALMENT OF INCOME, WHICH VITIATE THE ENTIRE PENALTY PROCEEDINGS. 2. IN NUTSHELL, THE FACTS OF THE CASE AS GATHERED FROM THE RECORD ARE THAT THE ASSESSEE FILED RETURN OF INCOME FOR RELEVANT AY ON 31.03.2009. IN THE RETURN OF INCOME, THE ASSESSEE DISCLOSED HIS INCOME UNDER THE HEAD BUSINESS, CAP ITAL GAIN AND INCOME FROM OTHER SOURCES DECLARING TOTAL INCOME OF RS. 1,26,970/-. RETURN OF INCOME WAS REVISED ON 29.09.2010 DECLARING TOTAL INCOME OF RS. 9,72,050/- . THE ASSESSMENT WAS COMPLETED ON 26.12.2011 DETERMINING THE TOTAL INCOME OF ASSESSEE AT RS. 10,70,130/-. WHILE THE ASSESSING THE INCOME OF ASSESSEE, THE AO MADE THE A DDITION OF UNEXPLAINED EXPENDITURE OF RS. 98,083/- U/S 96C OF THE ACT AND STCG OF RS. 11,66,354/-. NO APPEAL WAS FILED BY ASSESSEE AGAINST THE QUANTUM ASSESSMENT. THE AO INI TIATED THE PENALTY PROCEEDING AND SERVED A NOTICE DATED 26.12.2011 U/S 274 R.W.S. 271 (1)(C) OF THE ACT. THE ASSESSEE 2 ITA NO. 2678/M/13- JAYDEV MUKUND MODY CONTESTED THE NOTICE OF PENALTY AND FILED HIS REPLY DATED 23.02.2012. IN THE REPLY, THE ASSESSEE IN SUM AND SUBSTANCE SUBMITTED THAT THE AD DITION MADE IN THE QUANTUM ASSESSMENT WOULD NOT AUTOMATICALLY JUSTIFY THE IMPO SITION OF PENALTY. THERE WAS NO CONSCIOUS OR DELIBERATE ACT ON THE PART OF ASSESSEE . IT WAS FURTHER CONTENDED THAT A SMALL DIFFERENCE OF RS. 98,083/- ARE REMAINED UN-RECONCIL ED WITH REGARD TO THE INFORMATION OF AIR TO MATCH LINE BY LINE. IN RESPECT OF ADDITION OF STCG, IT WAS CONTENDED THAT ASSESSEE WRONGLY CLASSIFIED STCG AS LTCG WHILE FILI NG RETURN OF INCOME, IN ABSENCE OF COMPLETE DETAILS THE RELIANCE PORTFOLIO MANAGEMENT SERVICES. SINCE THE MISTAKE WAS REALIZED THE ASSESSEE VOLUNTARILY FURNISHED THE DET AILS TO AO BY SUBMITTING THE COMPUTATION OF INCOME BY RE-WORKING OF STCG AND LTC G ON 19.12.2011. THE CONTENTION OF ASSESSEE WAS NOT ACCEPTED BY AO AND A O LEVIED THE PENALTY OF THE DISALLOWANCE/ADDITION OF RS. 12,64,437/- AT 100% WH ICH WAS CALCULATED AT RS. 2,51,811/-. AGGRIEVED BY THE ORDER OF AO, THE ASSES SEE FILED APPEAL BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS, HENCE, THE PRESENT APPEAL IS FILED BEFORE US. 3. WE HAVE HEARD THE AUTHORISED REPRESENTATIVE (AR) OF ASSESSEE AND DEPARTMENTAL REPRESENTATIVE (DR) FOR REVENUE AND PERUSED THE MAT ERIAL AVAILABLE ON RECORD. THE ASSESSEE FILED ADDITIONAL GROUND OF APPEAL VIDE APP LICATION DATED 11.05.2006 RAISING THE GROUNDS THAT IN THE NOTICE ISSUED U/S 274 R.W.S. 27 1(1)(C) OF THE ACT WAS NOT VALID AS NO SPECIFIC CHARGE WAS INFORMED IN THE NOTICE TO THE A SSESSEE. THE AO HAS NOT MENTIONED AS TO WHETHER THE PENALTY PROCEEDING ARE INITIATED FOR INACCURATE PARTICULAR OR CONCEALMENT OF INCOME. LD. AR OF THE ASSESSEE ARGUE D THAT THE ASSESSEE WAS NOT GIVEN SPECIFIC CHARGE TO DEFEND THE CHARGES AS THE NOTICE OF INITIATION OF PENALTY DOES NOT SPECIFY THE SPECIFIC REASON AND RELIED ON THE DECIS ION OF KARNATAKA HIGH COURT IN CIT VS. MANJUNATH COTTON AND GINNING FACTORY-359 ITR 56 5. DR FOR REVENUE ARGUED THAT THE PENALTY WAS INITIATED FOR BOTH THE COUNTS BY TH E AO AND STRONGLY SUPPORTED THE ORDER AUTHORITIES BELOW. 4. WE HAVE CONSIDERED THE RIVAL CONTENTION OF THE PART IES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE HONBLE JURISDICTIONAL HIG H COURT IN CIT VS. SMT. KAUSHALYA REPORTED VIDE 75 TAXMANN 549 (BOM) WHILE DEALING WI TH THE IDENTICAL GROUNDS HELD AS UNDER: THE ISSUANCE OF NOTICE IS AN ADMINISTRATIVE DEVISE FOR INFORMING THE ASSESSEE ABOUT PROPOSAL OF LEVY OF PENALTY IN ORDER TO ENABLE HIM TO EXPLAIN AS TO WHY IT SHOULD NOT BE DONE. MERE MISTAKE IN THE LANGUAGE USED FOR MERE NO N-STRIKING OR INACCURATE PORTION CANNOT BY ITSELF INVALIDATE THE NOTICE. ENTIRE FAC TUAL BACKGROUND WOULD FALL FOR CONSIDERATION IN THE MATTER AND NO ONE ESTABLISHES WOULD BE DECISIVE. 3 ITA NO. 2678/M/13- JAYDEV MUKUND MODY FURTHER, THE HONBLE PATNA HIGH COURT IN CASE OF CI T VS. MITHILA MOTORS PVT. LTD - 149 ITR 751(PATNA) WHILE DEALING WITH IDENTICAL GRO UNDS HELD AS UNDER: U/S 274 OF I.T. ACT, ALL THAT IS REQUIRED IS THAT ASSESSEE SHOULD BE GIVEN AN OPPORTUNITY TO SHOW CAUSE. NO STATUTORY NOTICE HAS BEEN PRESCRI BED IN THIS BEHALF. HENCE, IT IS SUFFICIENT IF THE ASSESSEE WAS AWARE OF THE CHARGES HE HAD TO MEET AND WAS GIVEN AN OPPORTUNITY OF BEING HEARD. MISTAKE IN THE NOTICE W OULD NOT INVALIDATE THE PENALTY PROCEEDING. WE HAVE SEEN THAT ASSESSEE HAS DULY CONTESTED THE P ENALTY PROCEEDING BEFORE THE AO AND CIT(A) NO SUCH PLEA WAS RAISED BEFORE THE AUTHO RITIES BELOW. THE ASSESSEE HAS NOT GIVEN ANY REASON, IF HE SUFFERED ANY PREJUDICE BY N OT SPECIFYING THE SPECIFIC CHARGE FOR INITIATION OF PENALTY. WE FURTHER NOTICED THAT IN T HE ACT, NO FORMAT OF NOTICE U/S274 IS PRESCRIBED FOR ISSUING SHOW CAUSE NOTICE FOR INITIA TING THE PENALTY. HENCE, THE NOTICE ISSUED BY THE AO WAS A NON-STATUTORY NOTICE. THUS, RESPECTFULLY FOLLOWING THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN CIT VS. KAU SHALYA (SUPRA), AND THE DECISION OF PATNA HIGH COURT IN MITHILA MOTORS(SUPRA) WE DO NO T FIND ANY MERIT IN THIS GROUND RAISED BY THE ASSESSEE AT THE BELATED STAGE. THUS, THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IS DISMISSED. 5. ON THE MERIT OF THE CASE, AR OF THE ASSESSEE ARGUED THAT ASSESSEE HAS NOT CONCEALED ANY INCOME NOR FILED ANY INACCURATE PARTICULARS WHILE F ILING OF RETURN. AR OF ASSESSEE FURTHER ARGUED THAT THE PENALTY WAS INITIATED ON TWO ADDITI ONS (1) DISALLOWANCE OF RS. 98,083/- BEING ADDITION U/S 69C AND STCG OF RS. 11,66,354/-. THE ADDITION U/S 69C WAS MADE ON ACCOUNT OF DIFFERENCE ON THE CREDIT DETAILS OBTA INED UNDER AIR BY AO, THE TOTAL AMOUNT WAS APPROXIMATELY RS. 30,00,000/- AND THERE WAS ONLY A SMALL DIFFERENCE OF RS. 98,083/- WHICH REMAINED UN-RECONCILED, THERE WAS NO DELIBERATE ACT ON THE PART OF ASSESSEE AND NO PENALTY WAS LEVIABLE. SO FAR AS THE ADDITION OF STCG IS CONCERNED, THE ASSESSEE DUE TO MISTAKE CLASSIFIED STCG AS LTCG IN ABSENCE OF COMPLETE DETAILS FROM RELIANCE PORTFOLIO MANAGEMENT SERVICES WHILE FILING RETURN OF INCOME. THE ASSESSEE REALIZE THE MISTAKE AND ON HIS OWN WILL AND VOLUNTA RILY FURNISHED THE DETAILS TO AO BY SUBMITTING THE COMPUTATION OF INCOME BY RE-WORKING OF STCG AND LTCG ON 19.12.2011 AND PRAYED THAT THE ASSESSEE HAS SUFFICI ENTLY EXPLAINED IN THE REPLY OF NOTICE THAT NO PENALTY IS LEVIABLE AGAINST THE ASSESSEE. D R FOR REVENUE STRONGLY SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 6. WE HAVE CONSIDERED THE CONTENTIONS OF THE PARTIES. WE HAVE SEEN THAT AO INITIATED THE PENALTY VIDE NOTICE DATED 26.12.2011. THE ASSESSEE SUBMITTED HIS REPLY. IN REPLY, ASSESSEE EXPLAINED THAT THE ADDITION MADE U/S 69C O F THE ACT AND ADDITION OF STCG, NO 4 ITA NO. 2678/M/13- JAYDEV MUKUND MODY PENALTY IS LEVIABLE, HOWEVER, THE AO CONCLUDED THAT AS PER EXPLANATION 1 TO SECTION 271(1)(C) CREATE A LEGAL FICTIONS IN CERTAIN CIRCUM STANCES, WHEREIN THE ASSESSEE IS DEEMED TO HAVE BEEN CONCEALED THE PARTICULAR OF INC OME OR FURNISHED INACCURATE PARTICULAR AND ONUS IS UPON THE ASSESSEE TO REBUT T HE PRESUMPTION. LD. CIT(A) WHILE CONSIDERING THE CONTENTION OF THE ASSESSEE CONCLUDE D THAT THE ASSESSEE CONCEALED THE PARTICULAR OF STCG OF RS. 11,66,354/- IN HIS ORIGIN AL RETURN OF INCOME AS WELL AS IN HIS REVISED RETURN OF INCOME. THE ASSESSEE ALSO FURNISH ED INACCURATE PARTICULAR IN RESPECT OF HIS CREDIT CARD EXPENSES WHICH WERE NOT MATCHING WI TH THE DETAILS WITH THE I.T. DEPARTMENT. AND FINALLY SUCH CONCEALMENT OF INCOME OF FURNISHING AN INACCURATE PARTICULAR HAS BEEN ACCEPTED BY THE ASSESSEE AS NO APPEAL FILED AGAINST THE QUANTUM ASSESSMENT AND CONFIRMED THE ORDER OF AO. WE HAVE S EEN THAT THE DISALLOWANCE U/S 69C OF THE ACT WAS MADE AS ASSESSEE FAILED TO RECONCILE THE DETAILS OF CREDIT CARD EXPENSES OBTAINED THROUGH AIR BY THE REVENUE. ANOTHER ADDITI ON WAS ON ACCOUNT OF ADDITION MADE UNDER STCG WHICH WAS CLASSIFIED AS LTCG. THE A SSESSEE HIMSELF FILED REVISED RETURN OF INCOME FOR STCG. IN CASE OF ZOOM COMMUNIC ATION PVT. LTD. (2010) 191 TAXMAN 179 (DEL) WHEREIN IT WAS HELD BY HONBLE DEL HI HIGH COURT THAT THE CLAIM WHICH IS INCORRECT IN LAW WOULD NOT AMOUNT TO GIVE INACCURATE PARTICULAR OF INCOME. FURTHER, THE HONBLE APEX COURT IN CIT VS. RELIANCE PETROPRODUCTS (P.) LTD. (2010) 322 ITR 158 HELD THAT MERE DISALLOWANCE OF CLAIM WOULD NOT AUTOMATICALLY ATTRACT THE PENALTY. THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN BSEL INFRASTRUCTURE REALTY LTD. VS. ACIT (2012) 22 TAXMANN.COM 155 (MUM) HELD AS UNDER: THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS (P.) LTD. (SUPRA) SQUARELY APPLIES IN THE APPELLANT'S CASE, W HEREIN THEIR LORDSHIPS AFTER CONSIDERING THE JUDGMENT OF DHARMENDRA TEXTILES PROCESSORS (SUP RA) HAS OBSERVED AND HELD AS UNDER:- 'A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961, SUGGESTS THAT IN ORDER TO BE COVERED BY IT, THERE H AS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY , THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE MEANING O F THE WORD 'PARTICULARS' USED IN SECTION 271(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND TO BE INCO RRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PART ICULARS. IN ORDER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY CO VERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGI NATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULA RS. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY TH E ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PA RTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LI ABILITY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NO T BE ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. 5 ITA NO. 2678/M/13- JAYDEV MUKUND MODY WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE I S NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271 (L)( C). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING IN ACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RE TURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS.' 7. NOW COMING TO THE FACT OF THE PRESENT CASE, THE AO MADE AN ADDITION OF RS. 98,083/- U/S 69C OF THE ACT AND FURTHER ADDITION OF STCG OF RS. 11,66,354/-. THE FIRST ADDITION OF RS. 98,083/- WAS MADE, AS THE ASSESSEE WAS UNABLE T O RECONCILE THE DETAIL OF CREDIT CARD EXPENSES AND THE ADDITION OF STCG WAS ADDED AFTER E XTRACTING THE DETAILED FROM CLAIM OF LTCG, THUS BOTH THE ADDITION/DISALLOWANCE WAS MA DE FROM THE PARTICULARS OF INCOME FURNISHED BY THE ASSESSEE AT THE TIME OF FILING OF RETURN OF INCOME. THE ASSESSEE SUBMITTED HIS REPLY IN THE REPLY OF SHOW-CAUSE NOTI CE, WHEREIN THE ASSESSEE SUBSTANTIATED BOTH THE ADDITION MADE BY AO. IN OUR CONSIDERED OPI NION, THE REPLY FURNISHED BY THE ASSESSEE WAS THE SUFFICIENT COMPLIANCE AS PER EXPLA NATION 1 OF SECTION 271(1)(C) OF THE ACT AND WE ARE OF THE CONSIDERED VIEW THAT IN THE F ACTS OF THE PRESENT CASE, NO PENALTY WAS LEVIABLE BY AO, THUS WITH THE ABOVE OBSERVATION S, THE PENALTY LEVIED BY THE AO IS DELETED. HENCE, THIS GROUND OF APPEAL WHICH WAS RAI SED BY THE ASSESSEE INITIALLY AT THE TIME OF FILING OF APPEAL IS ALLOWED. 8. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON JULY, 201 6. # $ %& '() 27 T TT TQ QQ QYKBZ YKBZ YKBZ YKBZ ,20 16 -. / SD/- SD/- ( /RAJENDRA) ( IOU FLAG IOU FLAG IOU FLAG IOU FLAG / PAWAN SINGH) & / ACCOUNTANT MEMBER / JUDICIAL MEMBER % $ ). /MUMBAI, '() /DATE: 27.07.2016 SK ' '() *) / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ )12 $ 3 , 4. THE CONCERNED CIT / )12 $ 3 5. DR J BENCH, ITAT, MUMBAI / 45- (62 , TS TSTS TS ) , . . . % $ ). 6. GUARD FILE/ - . 4 //TRUE COPY// #( $ / BY ORDER, / ) DY./ASST. REGISTRAR 62 , % $ ). /ITAT, MUMBAI.