BROWN KRAFT INDUSTRIES LTD, MUMBAI V. ASST CIT (OSD) 8(3), MUMBAI

ITA 300/MUM/2012

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7867 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-12-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 12-01-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T A KHAN
• Keywords: Business expenditure; Search and seizure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA NO.300/M/2012 ASSESSMENT YEAR: 2007-08 M/S. BROWN KRAFT INDUSTRIES LIMITED, 1 ST FLOOR, SILVER LINE, S.B. MARG, J.B. NAGAR, ANDHERI (EAST), MUMBAI 400 059 PAN: AABCB 1588Q VS. ASST. COMMISSIONER OF INCOME TAX (OSD), RANGE 8(3), ROOM NO.204, 2 ND FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : NONE REVENUE BY : SHRI T.A. KHAN, D.R. DATE OF HEARING : 05.12.2017 DATE OF PRONOUNCEMENT : 27.12.2017 O R D E R PER D.T. GARASIA , JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 19.10.2011 OF THE COMMISSIONER OF I NCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO ASSESSMENT YEAR 2007-08. 2. THE ONLY EFFECTIVE GROUND IS IN RELATION TO CONF IRMATION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THE SH ORT FACTS OF THE CASE ARE AS UNDER: ITA NO.300/M/2012 M/S. BROWN KRAFT INDUSTRIES LIMITED 2 IN THIS CASE, SCRUTINY ASSESSMENT U/S. 143(3) WAS COMPLETED ON 08.12.2009 DETERMINING THE TOTAL LOSS OF RS.34,25,0 03/-. IN THE ASSESSMENT ORDER, PENALTY PROCEEDINGS U/S. 271(L)(C ) OF THE I.T. ACT,1961 WERE ALSO INITIATED IN RESPECT OF THE ADDI TIONS INTER ALIA MADE ON THE ISSUE OF DISALLOWANCE OF RS.11,40,298/- ON ACCOUNT OF DISCOUNTING OF' SALES TAX. DURING THE COURSE OF PEN ALTY PROCEEDINGS, THE ASSESSEE SUBMITTED, THAT THE ASSESSEE COMPANY I S SICK COMPANY DECLARED BY BIFR. THE COMPANYS PRODUCTION ACTIVITY ALSO HAS BEEN CEASED W.E.F. 1ST OCTOBER, 2007. CONSEQUENCE OF TH IS ALL THE EMPLOYEES OF THE COMPANY HAD LEFT THE COMPANY. THE RETURN HAS BEEN FILED BY THE TAX CONSULTANT OF THE COMPANY. THE COM PANY RELIED ON THE RETURN FILED BY ITS TAX CONSULTANT. THE ASSESSE E FURTHER RELIED ON THE DECISION OF HON'BLE ITAT IN THE CASE OF KANBAY SOFTWARE INDIA P. LTD VS. DCIT AND HON'BLE SUPREME COURT IN THE CA SE OF CIT VS. RELIANCE PETROPRODUCTS. THE ASSESSING OFFICER (HER EINAFTER REFERRED TO AS THE AO) HELD THAT DURING THE COURSE OF ASSESS MENT PROCEEDINGS, THE AO HAS EXAMINED THE ISSUE AND IN THE ASSESSMENT ORDER U/S. 143(3) DATED 08.12.2009 HAS DISCUSSED THE ISSUE IN DETAILS. THE ASSESSEE HAD CLAIMED 'DISCOUNTING OF SALES TAX LIAB ILITY' OF RS.11,40,298/-. THE ASSESSEE HAS NOT GIVEN ANY REPL Y TO THE SHOW CAUSE AS TO WHY THE DISCOUNTING OF SALES LAX LIABIL ITY SHOULD NOT BE DISALLOWED. HENCE, DISCOUNTING OF SALES LIABILITY W AS DISALLOWED, NOT BEING BUSINESS EXPENDITURE BY THE AO DURING THE COU RSE OF ASSESSMENT PROCEEDINGS. THE AO FURTHER HELD THE PAR TICULARS OF INCOME FILED BY THE ASSESSEE WAS NOT CORRECT OR TO PUT IN THE LANGUAGE ITA NO.300/M/2012 M/S. BROWN KRAFT INDUSTRIES LIMITED 3 OF THE ACT, THE ASSESSEE HAD FILED INACCURATE PARTI CULARS OF ITS INCOME THEREBY CONCEALED ITS INCOME TO THE EXTENT OF RS.11 ,40,298/-. THE AO FURTHER PLACING RELIANCE ON VARIOUS DECISION LEVIED A PENALTY OF 3,55,910/- ON THE ASSESSEE. 3. MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CIT (A) HAS CONFIRMED THE SAME. 4. NONE APPEARED ON BEHALF OF THE ASSESSEE. ASSESS EE DID NOT GIVE ANY DOCUMENTARY EVIDENCE BEFORE US AS TO WHY DISCOU NTING SALES OF DISALLOWANCE SHOULD NOT BE DISALLOWED AND AS TO WHY IT IS NOT BUSINESS EXPENDITURE AND NO EXPLANATION WAS GIVEN B EFORE US. THEREFORE, WE ARE OF THE VIEW THAT LD. CIT(A) HAS R IGHTLY DECIDED THE APPEAL IN HIS ORDER AT PARA 2.3.1 WHICH READS AS UN DER: 2.3.1 I HAVE CAREFULLY CONSIDERED THE CONTENTION O F THE APPELLANT COMPANY AS WELL AS CAREFULLY GONE THROUGH THE AVAILABLE DOCUMENTS ON RECORD. I FIND THAT THE APPELLANT'S MAIN CONTENT ION IS THAT MERE MAKING A CLAIM WHICH IS NOT SUSTAINABLE IN LAW, DOES NOT MAKE THE APPELLANT LIABLE FOR A PENALTY THE SAID CLAIM OF THE APPELLANT CAN BE ACCE PTED IN SITUATION WHERE THE CLAIM AB-INITIO IS BONA-FIDE AND IS SUPPORTED BY SO ME MATERIAL FACTS. IN THE INSTANT CASE, THE APPELLANT DID NOT GIVE ANY DETAIL OF THE CLAIM SO MADE. SECONDLY, IT WAS ALSO NOT EXPLAINED AS TO WHAT IS THE NATURE OF DISCOUNTING OF SALES TAX LIABILITY. THE APPELLANT IS TRYING TO GET SUPPORT FROM THE SEV ERAL CASE LAWS. HOWEVER, THE APPELLANT IS NOT EXPLAINING THE CIRCUMSTANCES A ND REASON FOR MAKING SUCH A CLAIM. UNDER THE CIRCUMSTANCES, I AM AFRAID THE CONTENTION OF THE APPELLANT CANNOT HE TAKEN ON FACE VALUE. THE CONDUC T OF THE APPELLANT IN CLAIMING PATENTLY ILLEGAL EXPENDITURE AND THE EXPEN DITURE WHICH IS NOT ADMISSIBLE UNDER THE LAW, THE LEVY OF PENALTY IS CL EARLY INVITED. FOR THE CASE OF APPELLANT WILL FAIL UNDER THE CATEGORY OF DELIBE RATELY CONCEALING THE PARTICULARS OF INCOME AS WELL AS FILING INACCURATE PARTICULARS OF INCOME. UNDER BOTH CIRCUMSTANCES, THE PENALTY IS LEVIABLE. THE APPELLANT CANNOT GET REFUGE IN JARGON OF THE CASE LAWS WITHOUT EXPLAININ G THE FACTS OF THE CASE. IN MY VIEW THE PENALTY LEVIED BY THE LD. AO IS SUSTAIN ABLE AND IS ACCORDINGLY UPHELD. ITA NO.300/M/2012 M/S. BROWN KRAFT INDUSTRIES LIMITED 4 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 27.12.2017. SD/- SD/- (G. MANJUNATHA) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 27.12.2017. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.