DCIT,CC -3(4),CR-3, MUMBAI V. SUPREME INFRASTRUCTURE (I) LTD., MUMBAI

ITA 2852/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8979 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 18-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAM TIWARI
• Assessee Lawyers: RISHABH S HAH
• Keywords: Search and seizure; Wrong claim
• Section: 143(3); 153A; 27; 132

Judgement Text

1 ITA NO.2852 & 2853/MUM/2016 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E, MUMBAI BEFORE SHRI MAHAVIR SINGH (JUDICIAL MEMBER) AND SHRI G MANJUNATHA (ACCOUNTANT MEMBER) I.T.A NO.2852 & 2853/MUM/2016 (ASSESSMENT YEARS 2009-10 & 2010-11) DY. CIT, CC 3(4), MUMBAI VS M/S SUPREME INFRASTRUCTURE (I) LTD 8, BHAVANI SERVICE INDL ESTATE, 3 RD FLOOR OPP. IIT MAIN GATE, POWAI, MUMBAI-76 PAN : AAACS7320J APPELLANT RESPONDEDNT APPELLANT BY SHRI RAM TIWARI RESPONDENT BY SHRI RISHABH SHAH DATE OF HEARING 24-10-2017 DATE OF PRONOUNCEMENT 27-10-2017 O R D E R PER G MANJUNATHA, AM : THESE TWO APPEALS FILED BY THE ASSESSEE ARE DIREC TED AGAINST SEPARATE BUT IDENTICAL ORDERS OF CIT(A)-51, MUMBAI DATED 07-01-2 016 FOR THE ASSESSMENT YEARS 2009-10 AND 2010-11. SINCE, COMMON FACTS ARE INVOLVED AND ISSUES ARE IDENTICAL, THESE APPEALS WERE HEARD TOGETHER AND AR E DISPOSED OF BY THIS COMMON ORDER, FOR THE SAKE OF CONVENIENCE. 2. THE REVENUE HAS RAISED COMMON GROUNDS OF APPEAL FOR BOTH THE YEARS. FOR THE SAKE OF BREVITY, GROUNDS OF APPEAL RAISED F OR THE ASSESSMENT YEAR 2009- 2 ITA NO.2852 & 2853/MUM/2016 10 ARE REPRODUCED BELOW:_ (I) 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN DELETING THE PENALTY LEVIED U/S 271(1)(C) OF THE IT ACT WITHOUT APPRECIATING THE FACT THAT THE ISSUE OF QUANTUM DISALLOWANCES U/S 801A HAS NOT BEEN ATTAINED FINALI TY AND THE DEPARTMENT HAS FILED FURTHER APPEAL BEFORE THE HON' BLE BOMBAY HIGH COURT. (II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE CIT(A) ERRED IN DELETING THE PENALTY LEVIED U/S 271(1)(C) OF THE IT ACT WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 801A AND CLAIM OF DEDUCTION U/S 35 O ACT BASED ON THE SEIZED MATERIAL UNEARTHED DURING THE COURSE OF SEARCH ACTION' 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A DOMESTIC COMPANY ENGAGED IN THE BUSINESS OF DEVELOPING, OPER ATING, MAINTAINING AND CONSTRUCTING VARIOUS INFRASTRUCTURE FACILITIES SUCH AS ROADS, BRIDGES, AIRPORT, ETC. THE ASSESSEE HAS FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEARS 2009-10 AND 2010-11 DECLARING TOTA L INCOME AT RS.24,50,14,680 AND RS.28,30,92,548 RESPECTIVELY. A SEARCH AND SEIZURE ACTION U/S 132 OF THE INCOME-TAX ACT, 1961 WAS COND UCTED ON 24-09-2009 AND THEREAFTER, THE AO PASSED ASSESSMENT ORDERS U/S 143(3) R.W.S. 153A OF THE INCOME-TAX ACT, 1961 ON 29-12-2011 DETERMINI NG THE TOTAL INCOME AT RS.67,07,20,910 AND RS. 53,82,90,820, FOR THE AS SESSMENT YEARS 2009- 10 & 2010-11, RESPECTIVELY. THE ASSESSEE PREFERRED APPEALS BEFORE THE FIRST APPELLATE AUTHORITY AGAINST THE ASSESSMENT OR DERS. THE CIT(A) 3 ITA NO.2852 & 2853/MUM/2016 GRANTED RELIEF ON THE ISSUE OF CAPITALIZATION OF EX PENSES WHEREAS THE ASSESSEE DID NOT CONTEST ADDITIONS MADE U/S 35D OF THE INCOME-TAX ACT, 1961. THE CIT(A) ALSO CONFIRMED DISALLOWANCE OF DE DUCTION CLAIMED U/S 80IA FOR BOTH THE ASSESSMENT YEARS. THE PENALTY PR OCEEDINGS U/S 271(1)(C) INITIATED DURING ASSESSMENT PROCEEDINGS W ERE FINALISED AFTER GIVING EFFECT TO ORDER OF CIT(A) BY LEVYING PENALTY OF RS.1,38,13,480 AND RS.5,06,06,826 FOR THE ASSESSMENT YEARS 2009-10 & 2 010-11, RESPECTIVELY. THEREAFTER, THE ASSESSEE HAS PREFERR ED FURTHER APPEAL BEFORE ITAT, AGAINST ORDER OF THE CIT(A) CONFIRMING DISALL OWANCE OF DEDUCTION CLAIMED U/S 80IA OF THE INCOME-TAX ACT, 1961. THE ITAT, DELETED THE ADDITIONS MADE BY THE AO TOWARDS DISALLOWANCE U/S 8 0IA FOR BOTH THE ASSESSMENT YEARS VIDE ORDER DATED 09-04-2014 IN ITA NOS 4996 & 4997/MUM/2012. 4. THE ASSESSEE PREFERRED APPEAL AGAINST THE AOS ORDE R LEVYING PENALTY U/S 271(1)(C) OF THE ACT. THE CIT(A) DELETED PENAL TY LEVIED BY THE AO ON THE GROUND THAT ONCE ADDITION MADE ON ACCOUNT OF DE DUCTION CLAIMED U/S 80IA STANDS DELETED BY THE ITAT, THE PENALTY LEVIED ON THIS ISSUE NO MORE SURVIVES. AS REGARDS PENALTY LEVIED ON DISALLOWANC E OF IPO EXPENSES U/S 35D, THE CIT(A) OBSERVED THAT THE AO MADE DISALLOWA NCE ON ACCOUNT OF WRONG CLAIM MADE BY THE ASSESSEE. THE ASSESSEE HAS DISCLOSED ALL RELEVANT FACTS RELATING TO THE CLAIM OF DEDUCTION U /S 35D. THERE IS NEITHER CONCEALMENT NOR FURNISHING OF INACCURATE PARTICULAR S OF ITS INCOME ON ACCOUNT OF WRONG CLAIM MADE U/S 35D OF THE ACT. TH EREFORE, THE CIT(A) DIRECTED THE AO TO CANCEL PENALTY LEVIED ON THE ISS UE OF DISALLOWANCE U/S 4 ITA NO.2852 & 2853/MUM/2016 35D. THE RELEVANT PORTION OF THE ORDER OF CIT(A) I S EXTRACTED BELOW:- 5. WITH REGARDS TO ADDITION U/S 80-IA, HON'BLE ITA T DELETED THE ADDITION VIDE ORDER IN ITA NO 4996/M/2012 DATED 09. 04.2014. THUS, THE PENALTY LEVIED ON THIS ISSUE NO MORE SURV IVES. COMING TO THE ISSUE OF DISALLOWANCE U/S 35D, THE FACTS ARE TH AT THE ASSESSEE RAISED CAPITAL BY IPO FOR WHICH TOTAL EXPENSES OF R S 4,15,71,500/- WERE INCURRED. AS PER THE PROVISIONS OF SECTION 35D , 20% OF TOTAL EXPENSES I.E. RS 83,14,300/- ARE ALLOWABLE DURING T HE YEAR AS AGAINST THE CLAIM OF RS 1,10,85,733/-. THE DIFFEREN CE OF RS 27,71,455/- WAS THUS DISALLOWED AND IT IS ON THIS A MOUNT THE PENALTY U/S 271(1)(C) WAS LEVIED. DURING THE COURSE OF PENALTY PROCEEDINGS THE ASSESSEE SUBMITTED THAT IT HAD ACCE PTED THE DISALLOWANCE U/S 35D AND THAT THIS WAS ONLY A BONAF IDE CALCULATION ERROR AND HENCE, NO PENALTY IS LEVIABLE. HOWEVER, T HE CONTENTION OF THE ASSESSEE WAS NOT ACCEPTED BY THE AO AND PENALTY WAS LEVIED. DURING THE COURSE OF APPELLATE PROCEEDINGS ALSO THE ASSESSEE REITERATED ITS CONTENTION AND SUBMITTED THAT ALL TH E MATERIAL FACTS HAD BEEN DISCLOSED BEFORE THE AO. THEREFORE, IT IS CLAIMED THAT THERE IS NEITHER FURNISHING OF INACCURATE PARTICULA RS NOR CONCEALMENT OF INCOME. ASSESSEE IN SUPPORT OF ITS ARGUMENT RELI ED ON VARIOUS JUDICIAL PRONOUNCEMENTS AS UNDER: (A) PRICE WATERHOUSE COOPERS (P) LTD 348 ITR 306, V/S RURAL ELECTRICAL CO-OP SOCIETY LTD [2006) 152 TAXRNAN 237 (C) PANDIT GOUIND PRASAD MISHRA V/S CIT [1999] 238 ITR 338 (D) BHARAT RICE MILL V/S CIT [2005] 278 ITR 599 (E) CIT V/S JKA SUBRAMANIAN CHETTIAR [56012009] (F) CIT V/S HARSHAVARDHAN CHEMICALS & MINERALS LTD [2003] 259 ITR 212 (G) CIT V/S RELIANCE PETROPRODUCTS P LTD [2010] 322 ITR 158 (H) KC BUILDERS V/SACIT [2004] 135 TAXMAN 461 (I) CEMENT MARKETING CO OF INDIA V/S ACIT [1980] 124 5 ITA NO.2852 & 2853/MUM/2016 ITR 15 6. I HAVE CONSIDERED THE SUBMISSIONS OF THE ASSESSE E AND HAVE GONE THROUGH THE PENALTY ORDER. AS CONTENDED B Y THE ASSESSEE THERE IS ONLY A WRONG CLAIM MADE. ASSESSEE DISCLOSED ALL RELEVANT FACTS RELATING TO THE CLAIM U/S 35D. ASSES SEE'S EXPLANATION THAT IT IS ONLY A CALCULATION MISTAKE WHICH RESULTE D IN EXCESS CLAIM IS BONAFIDE. THEREFORE, I HOLD THAT THERE IS NEITHER C ONCEALMENT NOR FURNISHING OF INACCURATE PARTICULARS OF ITS INCOME ON THE PART OF THE ASSESSEE. IN VIEW OF THE SAME, THE AO IS DIRECT ED TO CANCEL THE PENALTY LEVIED ON THE ISSUE OF DISALLOWANCE U/S 35D. IN VIEW OF THE ABOVE, AO IS DIRECTED TO DELETE THE PENALTY LEVIED OF RS 1,38,13,480/-. AGGRIEVED BY THE ORDER OF CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD BOTH THE PARTIES, PERUSED MATERIALS A VAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE AO LEVIED PENALTY U/S 271(1)(C) ON TWO ISSUES, VIZ. (I) DISALLOWANCE OF D EDUCTION CLAIMED U/S 80IA AND DISALLOWANCE OF CLAIM MADE U/S 35D OF THE INCOME-T AX ACT, 1961. THE DISALLOWANCE OF DEDUCTION CLAIMED U/S 80IA OF THE A CT, HAS BEEN DELETED BY THE ITAT, IN QUANTUM APPELLATE PROCEEDINGS IN ITA NOS 4 996 & 4997/MUM/2012 DATED 09-04-2014. THEREFORE, WE ARE OF THE VIEW TH AT ONCE THE ADDITION ON WHICH PENALTY HAS BEEN LEVIED IS DELETED BY THE ITA T, PENALTY LEVIED U/S 271(1)(C) CANNOT SURVIVE IN THE EYES OF LAW. AS RE GARDS PENALTY LEVIED ON DISALLOWANCE OF EXPENSES U/S 35D, THE CIT(A) GAVE A CATEGORICAL FINDING THAT THE ASSESSEE HAS DISCLOSED ALL RELEVANT FACTS RELATING TO THE CLAIM, BUT THE AO HAS DISALLOWED EXPENDITURE BECAUSE OF WRONG CALCULATION S MADE BY THE ASSESSEE. 6 ITA NO.2852 & 2853/MUM/2016 THEREFORE, WE ARE OF THE VIEW THAT A MERE DISALLOWA NCE OF EXPENDITURE CANNOT BE CONSIDERED FOR CONCEALMENT OF PARTICULARS OF INC OME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE CIT(A), AFTE R CONSIDERING RELEVANT FACTS HAS RIGHTLY DELETED PENALTY LEVIED BY THE AO U/S 27 1(1)(C) ON BOTH THE ISSUES. WE DO NOT FIND ANY ERROR OR INFIRMITY IN THE ORDERS OF CIT(A). HENCE, WE ARE INCLINED TO UPHOLD THE ORDERS OF THE CITA) AND DISM ISS THE APPEALS FILED BY THE REVENUE FOR ASSESSMENT YEARS 2009-10 AND 2010-11. 6. IN THE RESULT, APPEALS FILED BY THE REVENUE ARE DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH OCTOBER, 2017. SD/- SD/- (MAHAVIR SINGH) (G MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 27 TH OCTOBER, 2017 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI