MPS MERCHANDISERS P.LTD, MUMBAI V. ITO 5(2)(3), MUMBAI

ITA 3085/MUM/2012

• Counselvise Citation: 308519914 RSA 2012
• Duration Of Justice: 2 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 06-01-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 04-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIVEK BATRA

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE S/SHRI I.P. BANSAL, (JM) AND B.R.BASKARAN (AM) . . , . . , ./ I.T.A. NO.3085/MUM/2012 ( / ASSESSMENT YEAR : 2006-07) MPS MERCHANDISERS PVT LTD., PATEL BUILDING, GROUND FLOOR, 266, RAJA RAMMOHAN ROY ROAD, CHARNI ROAD, MUMBI- 400004 / VS. INCOME TAX OFFICER 5(2)(3), AAYAKAR BHAVAN, M K ROAD, MUMBAI-400020. ( / APPELLANT) .. ( / RESPONDENT) ./ !' ./PAN/GIR NO. :AAACM6103D # / ASSESSEE BY: NONE $ # / REVENUE BY:: SHRI VIVEK BATRA % & $ ' ( / DATE OF HEARING :6.1.2015 )* $ ' ( / DATE OF PRONOUNCEMENT : 18.2.2015 / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE PENALTY OF RS.1,31,643/- LEVIED BY THE AO UNDER SECTION 271 (1 )(C) OF THE INCOME TAX ACT, 1961. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE AND HENC E WE PROCEED TO DISPOSE OF THE APPEAL EX-PARTE, WITHOUT PRESENCE OF THE ASSESSEE. 3. WE HAVE HEARD THE LD DR AND PERUSED THE RECORD. WE NOTICE THAT THE AO HAS LEVIED PENALTY IN RESPECT OF THE FOLLOWI NG FOUR ADDITIONS MADE BY HIM: ITA NO.3085/M/12 2 A) INTEREST DISALLOWED RS.67,008/- B) LOSS ON SHARE TRADING-INVOKING EXPLANATION TO SECTION 73 RS.2,96,051; C) DIFFERENCE IN VALUATION OF CLOSING STOCK RS.3,23 8/-; AND D) PAYMENT OF STT IN CASH RS.9,825. 4. THE FIRST DISALLOWANCE RELATES TO INTEREST E XPENDITURE CLAIMED BY THE ASSESSEE. THE AO NOTICED THAT THE ASSESSEE HAS RECE IVED FUNDS FROM SHASHI KHANDELWAL (HUF) AND ALSO PAID FUNDS TO IT. THE NET EFFECT OF THE TRANSACTIONS SHOWED THAT THE ASSESSEE HAS TO RECEIV E A SUM OF RS.5 LAKHS FROM SHASHI KHANDELWAL (HUF). HOWEVER, THE ASSESSE E HAD CLAIMED A SUM OF RS.67,008/- AS INTEREST PAYMENT TO SHASHI KHANDE LWAL (HUF). HENCE, THE AO TOOK THE VIEW THAT THE ASSESSEE WAS NOT RIGH T IN CLAIMING INTEREST EXPENDITURE OF RS.67,008/- AND ACCORDINGLY DISALLOW ED THE SAME. WE NOTICE THAT THE ASSESSEE HAS SUBMITTED BEFORE THE A O THAT THE NETTING OF INTEREST MADE BY AO WAS NOT CORRECT, SINCE THE AMOU NT RECEIVED BACK FROM SHASHI KHANDELWAL-HUF PERTAINS TO A SEPARATE TRANSA CTION. THUS, WE NOTICE THAT THE ASSESSEE HAS OFFERED AN EXPLANATION FOR CLAIMING THE INTEREST AND THE AO HAS REJECTED THE SAME ON SOME P RESUMPTIONS WITHOUT ACTUALLY EXAMINING THE EXPLANATION. IN VIEW OF THIS , WE ARE OF THE VIEW THAT THE AO IS NOT JUSTIFIED IN LEVYING PENALTY ON THE I NTEREST DISALLOWANCE OF RS.67,008/- AND THE LD CIT(A) WAS ALSO NOT CORRECT IN CONFIRMING THE SAME. 5. THE NEXT ISSUE RELATES TO LOSS CLAIMED ON SHARE TRADING. THE LOSS CLAIMED BY THE ASSESSEE WAS DISALLOWED BY THE AO BY INVOKING EXPLANATION ITA NO.3085/M/12 3 TO SECTION 73 OF THE ACT. IT IS WELL SETTLED LAW T HAT THE CLAIM MADE BY THE ASSESSEE, WHICH IS NOT SUSTAINABLE IN LAW, WILL NOT GIVE RISE TO THE CHARGE OF FURNISHING INACCURATE PARTICULARS OF INCOME. IN TH IS REGARD, A GAINFUL REFERENCE MAY BE MADE TO THE DECISION OF HONBLE AP EX COURT IN THE CASE OF CIT V/S RELIANCE PETROPRODUCT PVT LTD (322 IT R 158) (SC). ACCORDINGLY, WE ARE OF THE VIEW THAT THE AO WAS NOT JUSTIFIED IN LEVYING THE PENALTY ON THIS DISALLOWANCE AND THE LD CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE SAME. 6. THE OTHER TWO ADDITIONS RELATE TO DIFFERENCE IN VALUATION OF STOCK AND PAYMENT OF STT IN CASH. WE NOTICE THAT THE DIFFEREN CE IN VALUATION OF CLOSING STOCK HAS OCCURRED DUE TO SOME CLERICAL MIS TAKE. SIMILARLY THE AMOUNT OF RS.9,825/- DISALLOWED OUT OF SECURITY TR ANSACTION TAX PERTAINS TO THE EXPENDITURE WHICH WAS WRONGLY DEBITED TO THE SE CURITY TRANSACTION TAX ACCOUNT DUE TO CLERICAL MISTAKE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS ACCEPTED BOTH THE ADD ITIONS AND HAS ALSO EXPLAINED THE SAME TO BE A CLERICAL MISTAKE. IN OUR VIEW THE SAID EXPLANATION APPEARS TO BE BONAFIDE ONE AND HENCE TH E PENALTY LEVIED U/S 271(1)(C) SHALL NOT LIE ON THESE ADDITIONS. IN THI S VIEW OF THE MATTER, WE HOLD THAT THE AO WAS NOT JUSTIFIED IN LEVYING THE P ENALTY IN RESPECT OF ABOVE SAID TWO ADDITIONS AND THE LD CIT(A) WAS ALSO NOT JUSTIFIED IN CONFIRMING THE SAME. 7. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD. CIT(A) AND DIRECT THE AO TO DELETE THE PENALTY LEVIED U/S 271(1)(C) OF THE A CT. ITA NO.3085/M/12 4 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 18 TH FEB, 2015. )* % + , - 18TH FEB, 2015 * $ .& / SD SD ( . . /I.P. BANSAL ) ( . . ,/ B.R. BASKARAN ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER % & MUMBAI:18TH FEB,2015. . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. % 2' ( ) / THE CIT(A)- CONCERNED 4. % 2' / CIT CONCERNED 5. 6. 34 . '5 , ( 5 , % & / DR, ITAT, MUMBAI CONCERNED . 6 7 & / GUARD FILE. 8 % / BY ORDER, TRUE COPY 9 ! (ASSTT. REGISTRAR) ( 5 , % & /ITAT, MUMBAI