METRO EXPORTERS P. LTD, MUMBAI V. ACIT CIR 6(3), MUMBAI

ITA 2982/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55068 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 09-08-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 15-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHANTAM BOSE
• Keywords: Retrospective amendment
• Section: 143(3); 28; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F, MUMBAI BEFORE SHRI T.R. SOOD, A.M. AND SHRI V. DURGA RAO, J.M. ITA NO. 2982/MUM/2010 ASSESSMENT YEAR : 2003-04 METRO EXPORTERS PVT. LTD., APPELLANT KAKAD CHAMBERS, 132, DR. A.B. ROAD, WORLI, MUMBAI 400 018. (PAN AABCM0349J) VS. ASSTT. COMMISSIONER OF INCOME-TAX, RESPONDEN T CIRCLE 6(3), AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. APPELLANT BY : MR. SAMEER DALAL RESPONDENT BY : MR. SHANTAM BOSE DATE OF HEARING : 10/08/2011 DATE OF PRONOUNCEMENT : 30/08 /2011 ORDER PER V. DURGA RAO, J.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER OF CIT(A)-12, MUMBAI, PASSED ON 11/12/2009 FOR THE ASSESSMENT YEAR 2003-04. 2. THE GROUND RAISED BY THE ASSESSEE IN THIS APPEAL IS IN RESPECT OF LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE FILED ITS RETURN OF INCOME ON 28/11/2003 DECLARING TOTAL INCO ME AT RS. 2,60,36,750/-, WHICH WAS PROCESSED U/S 143(3) BY TH E AO DETERMINING THE TOTAL INCOME AT RS. 6,28,75,230/- A FTER MAKING ADDITIONS OF RS. 4,09,063/- BEING PRIOR PERIOD EXPE NSES AND DEDUCTION ITA NO. 2982/MUM/2010 METRO EXPORTERS PVT. LTD. 2 U/S 80 HHC OF THE ACT WAS REDUCED TO RS. 1,65,29,81 7/- AS AGAINST RS. 5,29,59,416/- CLAIMED BY THE ASSESSEE IN ITS RE TURN OF INCOME. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) UPHELD TH E ACTION OF THE AO ON THE FOLLOWING ISSUES: 1) PRIOR PERIOD EXPENSES OF RS. 5,04,607/- 2) REDUCING RS. 5,00,154/- FROM EXPORT TURNOVER ON ACCOUNT OF DELAYED RECEIPT OF FOREIGN EXCHANGE. 3) EXCLUDED THE PROFIT ON SALE OF DEPB/DFRC AND PRO VISIONS THEREOF FROM THE PROFIT OF BUSINESS AND CONSIDERED THE SAME IN VIEW OF AMENDMENT BROUGHT INTO SECTION 80 HHC AND S ECTION 28 BY TAXATION LAWS(AMENDMENT) ACT, 2005. 4) EXCLUDING FOREIGN EXCHANGE GAIN OF RS. 69,01,350 /- ON FORWARD CONTRACT FROM THE EXPORT TURNOVER, TOTAL TU RNOVER AND PROFIT OF THE BUSINESS. 5) EXCLUDING 90% OF OTHER INCOME I.E. MISCELLANEOUS INCOME AND INSURANCE RECEIPTS AND SUNDRY BALANCE WRITTEN BACK. 6) ASSESSEE HAS CHOSEN NOT TO CONSIDER THE NEGATIVE PROFIT (LOSS) ARISING OUT OF TRADING EXPORT, WHICH WAS CONSIDERED BY THE AO BY RELYING ON RETROSPECTIVE AMENDMENT IN THE ACT. 4. THE AO, THEREFORE, INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) AND SERVED A NOTICE U/S 274 R.W.S 271. IN RESPONSE, THE ASSESSEE HAD FILED ITS SUBMISSIONS REQUESTING TO DROP PENALTY PR OCEEDINGS AS THE ENTIRE ADDITION WAS REGARDING THE QUANTUM OF DEDUCT ION U/S 80 HHC, WHICH IS CONTENTIOUS ISSUE AND PART OF THE SAME IS BASED ON THE RETROSPECTIVE AMENDMENT, AND IN VIEW OF CIRCULAR 2/ 2006. HE FURTHER SUBMITTED THAT THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL, THEREFORE, THE PENALTY PROCEEDINGS SHOULD BE KEPT I N ABEYANCE TILL THE DISPOSAL BY THE TRIBUNAL. AFTER CONSIDERING THE SUB MISSIONS OF THE ASSESSEE, THE AO WAS VIEW OF THE THAT THE ASSESSEE HAS NOT BROUGHT ANYTHING SUBSTANTIAL ON RECORD TO PROVE THAT THERE WAS NO CONCEALMENT OF INCOME OR FURNISHING INACCURATE PART ICULARS OF INCOME. THEREFORE, HE LEVIED PENALTY ON THE AFORESAID ISSUE S OF RS. 88,07,764/- ITA NO. 2982/MUM/2010 METRO EXPORTERS PVT. LTD. 3 BEING 100% ON INCOME SOUGHT TO BE EVADED. AGGRIEVED , THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A), WHO CONFIRMED THE PENALTY LEVIED BY THE AO. STILL AGGRIEVED, THE ASSE SSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE HAS CANVASSED THAT IN THE QUANTUM APPEAL THE ITAT IN ITA NO. 10/M /2007 VIDE ORDER DATED 19/11/2010 RESTORED THE ISSUES PERTAINING TO PRIOR PERIOD EXPENSES OF RS. 5,04,607/-, EXCLUSION OF EXPORT PRO CEEDS OF RS. 5,00,154/-, TREATMENT OF INCOME OF RS. 66,640/- ON ACCOUNT OF INSURANCE CLAIM AND RS. 7,80,471/- ON ACCOUNT OF MI SCELLANEOUS INCOME, BACK TO THE FILE OF THE AO AND ALLOWED TH E DENIAL OF DEDUCTION U/S 80 HHC IN RELATION TO EXCHANGE RATE G AIN ON FORWARD CONTRACTS OF RS. 69,01,350/-. THE ONLY ISSUE CONFI RMED BY THE ITAT IS PERTAINING TO ALLOWABILITY OF DEDUCTION U/S 80 HHC IN RELATION TO DEPB/DFRC INCOME. THE LEARNED COUNSEL FOR THE ASSES SEE CONTENDED THAT THE ASSESSEE HAS DISCLOSED ALL THE PARTICULARS OF ITS INCOME AND, THEREFORE, NEITHER CONCEALED ITS INCOME NOR FURNIS HED ANY INACCURATE PARTICULARS OF ITS INCOME. 6. ON THE OTHER HAND, THE LEARNED DR HAS RELIED UPO N THE ORDERS OF THE AUTHORITIES BELOW. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE RECORD AS WELL AS GONE THROUGH THE ORDERS OF THE AU THORITIES BELOW. WE FIND THAT IN THE QUANTUM APPEAL (SUPRA) THE ITAT DE CIDED MOST OF THE ISSUES BY RESTORING SOME OF THE ISSUES AND ALLOWED ONE ISSUE EXCEPT CONFIRMING THE ONE ISSUE PERTAINING TO ALLOWABILITY OF DEDUCTION U/S 80 HHC IN RELATION TO DEPB/DFRC INCOME (SUPRA). WE ARE OF THE VIEW THAT LEVYING PENALTY ON SUCH NON-EXISTING ADDITIONS /DISALLOWANCES U/S 271(1)(C) DOES NOT HAVE LEGS TO STAND. IN THIS CONNECTION, WE REFER TO THE JUDGEMENT OF THE HONBLE SUPREME COURT IN TH E CASE OF CIT VS. ITA NO. 2982/MUM/2010 METRO EXPORTERS PVT. LTD. 4 RELIANCE PETROPRODUCTS PVT. LTD., [2010] 322 ITR 15 8 (SC) WHEREIN THE APEX COURT HAS LAID DOWN THE LAW AS UND ER:- 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 HAS TO BE CONCEALMENT OF THE PARTICULA RS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTION 271(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO INF ORMATION GIVEN IN THE RETURN IS FOUND TO BE INCORRECT OR INA CCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCU RATE PARTICULARS. IN ORDER TO EXPOSE THE ASSESSEE TO PEN ALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISIO N, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUN T TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE T HE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LI ABILITY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLI ED IN THE RETURN MUST NOT BE ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. 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 IS NO QUESTION OF INVITING THE PENAL TY UNDER SECTION 271(1)(C). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO F URNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FU RNISHING INACCURATE PARTICULARS. 8. IN VIEW OF THE RATIO LAID DOWN BY THE HONBLE S UPREME COURT IN THE SAID CASE, WE FIND THAT IN THE CASE UNDER CONSI DERATION THE ASSESSEE HAS NEITHER CONCEALED ITS INCOME NOR FURNI SHED ANY INACCURATE PARTICULARS OF ITS INCOME, THEREFORE, TH E CASE OF THE ASSESSEE IS NOT A FIT CASE TO LEVY PENALTY U/S 271( 1)(C) OF THE ACT. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE CIT(A) A ND CANCEL THE PENALTY LEVIED BY THE AO U/S 271(1)(C) OF THE ACT. ITA NO. 2982/MUM/2010 METRO EXPORTERS PVT. LTD. 5 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF AUGUST, 2011. SD/- SD/- (T.R. SOOD) (V. DURGA RAO) ACCOUNTANT MEMBER JUDI CIAL MEMBER MUMBAI, DATED: 30 TH AUGUST, 2011 KV COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, F BENCH, I.T .A.T., MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI.