ASIAN ELECTRONICS LTD, MUMBAI V. DCIT 3(1), MUMBAI

ITA 3330/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0117 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 14-06-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 02-06-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: POOJA SWAROOP
• Keywords: Retrospective amendment
• Section: 133(6); 27

Judgement Text

1 ITA 3330/MUM/2019 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F, MUMBAI BEFORE SHRI D.T. GARASIA (JUDICIAL MEMBER) AND SHRI G MANJUNATHA (ACCOUNTANT MEMBER) ITA NO.3330/MUM /2015 (ASSESSMENT YEAR 2008-09 ) ASIAN ELECTRONICS LTD PARAMGHAR, MALVIYA ROAD OPP VILE PARLE POST OFFICE VILE PARLE (E), MUMBAI-57 PAN : AABCA0832C VS DY. CIT 3(1), MUMBAI APPELLANT RESPONDENT APPELLANT BY NONE RESPONDENT BY MS. POOJA SWAROOP DATE OF HEARING 14-06-2017 DATE OF PRONOUNCEMENT 06-2017 O R D E R PER G MANJUNATHA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -8, MUMBAI DAT ED 18/06/2013 AND IT PERTAINS TO THE ASST. YEAR 2008-09. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY FILED ITS RETURN OF INCOME FOR THE A.Y. 2008-09, DECLARING TOTAL INCOME OF RS. NIL. THE ASSESSMENT WAS COMPLETED U/S 143(3), ON 31-03-2010 DETERMINING THE TOTAL INCOME AT RS. 35,58,90,700/-. DURING THE COURSE OF ASSESSMENT, TH E A.O. HAD ISSUED NOTICES U/S 133(6) TO 24 PARTIES ON TEST CHECK BASIS TO FURNISH DETAILS OF SALES MADE TO THE ASSESSEE. IN RESPONSE, 21 PARTIES HAVE FURNISHED DE TAILS AND THREE PARTIES DID NOT FURNISH ANY DETAILS. THE A.O. ASKED THE ASSESSEE TO RECONCILE THE DETAILS FILED BY THE SUPPLIERS WITH ITS BOOKS AND ALSO FILE CONFIRMATION FROM 3 PARTIES FROM WHOM 2 ITA 3330/MUM/2019 INFORMATION WAS NOT RECEIVED. THE A.O., AFTER RECON CILIATION OF CONFIRMATIONS RECEIVED FROM PARTIES, ARRIVED AT A DIFFERENCE IN PURCHASES DUE TO DISCREPANCIES IN CERTAIN PARTIES ACCOUNT. SINCE, THE ASSESSEE FAILED TO EXPL AIN DIFFERENCE IN PURCHASES, MADE ADDITIONS OF RS. 3,91,84,975/- AS UNEXPLAINED EXPEN DITURE. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). THE CIT(A), VID E HIS ORDER DATED 14-7-2011, BASED ON THE REMAND REPORT RESTRICTED ADDITIONS TO RS. 1,80,58,998/-. THEREAFTER, THE A.O. INITIATED PENALTY PROCEEDINGS U/S 271(1)(C ) FOR CONCEALMENT OF PARTICULARS OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INC OME. IN THE PENALTY PROCEEDINGS, THE A.O. OBSERVED THAT THE ASSESSEE HAS FURNISHED I NACCURATE PARTICULARS WHICH RESULTS IN TO CONCEALMENT OF INCOME ON ACCOUNT OF D ISCREPANCIES IN PURCHASES. THEREFORE, HE OPINED THAT IT IS FIT CASE FOR LEVY O F PENALTY AND HENCE, LEVIED PENALTY OF RS. 61,38,253/- WHICH IS 100% OF TAX SOUGHT TO B E EVADED U/S 271(1)(C) OF THE ACT. 3. AGGRIEVED BY THE ORDER OF THE A.O. IMPOSING PENA LTY, THE ASSESSEE HAS PREFERRED APPEAL BEFORE THE CIT(A). BEFORE THE CIT( A), THE ASSESSEE HAS FILED WRITTEN SUBMISSIONS TO CONTEST IMPOSITION OF PENALTY U/S 27 1(1)(C) BY STATING THAT THERE IS NO CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME, AS THE DIFFERENCE IN PURCHASES IN FEW PARTIES ACCOU NT IS ON ACCOUNT OF TIMING DIFFERENCE IN ACCOUNTING PURCHASES WHICH IS NATURAL PART OF ACCOUNTING, MORE PARTICULARLY, WHEN INVOICES ARE ISSUED AT THE FAG E ND OF ACCOUNTING PERIOD. THE ASSESSEE FURTHER SUBMITTED THAT IN CASE OF RAJDEEP, THE INVOICES ARE ISSUED IN THE MONTH OF FEBRUARY AND MARCH 2007, WHEREAS AS IN THE BOOKS OF THE ASSESSEE, THE SAME WERE ACCOUNTED IN NEXT FINANCIAL YEAR. SIMILAR LY IN THE CASE OF S K STEEL CORP WHERE THE BILL WAS RAISED BY THE PARTY IN FEB 2007 AND IT WAS ACCOUNTED IN APRIL 2007. THESE DISCREPANCIES WERE EXPLAINED WITH NECES SARY EVIDENCES OF INVOICES AND DELIVERY CHALLAN. THE A.O. IGNORED ALL DETAILS AND CONCLUDED THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS AND CONCEALED PART ICULARS OF INCOME. THE CIT(A), AFTER CONSIDERING RELEVANT EXPLANATION OF THE ASSES SEE AND ALSO RELIED UPON CERTAIN JUDICIAL PRECEDENTS OBSERVED THAT THE ASSESSEE HAS FAILED TO EXPLAIN THE DIFFERENCE IN PURCHASES WITH EVIDENCES. THE CIT(A) FURTHER OBSERV ED THAT THERE IS DIFFERENCE OF RS. 179,35,208/- WHICH INCLUDE SALES SHOWN IN SUPPL IERS BOOKS WHICH WERE LESS THAN 3 ITA 3330/MUM/2019 PURCHASE REFLECTED IN THE ASSESSEE BOOKS AND RS. 1, 23,790/- REPRESENTS PURCHASES SHOWN IN ASSESSEES BOOKS WHICH IS LOWER THAN THE S ALES ACCOUNTED IN SUPPLIERS BOOKS. IN VIEW OF ABOVE CLEAR FACTS, THE ASSESSEE H AS FURNISHED INACCURATE PARTICULARS AND CONCEALED PARTICULARS OF INCOME IN TERMS OF EXPLANATION 1 TO SECTION 271(1)(C) WHICH ATTRACTS PENALTY, THEREFORE, THE A. O. WAS RIGHTLY IMPOSED PENALTY OF RS. 61,38,253/-. AGGRIEVED BY THE ORDER OF THE CIT( A), THE ASSESSEE IN IN APPEAL BEFORE US. 4. NONE APPEARED FOR THE ASSESSEE. WE HAVE HEARD LD . D.R. AND PERUSED MATERIALS AVAILABLE ON RECORD. THE FACTS WITH REGAR D TO DISCREPANCIES IN TWO SUPPLIERS ACCOUNT TO THE EXTENT OF RS. 1,80,58,998/- IS NOT D ISPUTED. THE ASSESSEE CLAIMS TO HAVE EXPLAINED THE REASONS FOR DIFFERENCE IN PURCHA SES. ACCORDING TO THE ASSESSEE, TIMING DIFFERENCE IN ACCOUNTING IS THE MAIN REASON FOR DISCREPANCIES NOTICED BY THE A.O., WHICH HAS BEEN EXPLAINED WITH INVOICES AND DE LIVERY CHALLANS. THE ASSESSEE FURTHER EXPLAINED THAT IN THE CASE OF RAJDEEP, THE PARTY HAS RAISED INVOICE IN THE MONTH OF FEBRUARY AND MARCH 2007, WHEREAS IT WAS AC COUNTED IN APRIL 2007. SIMILAR IS IN THE CASE OF S.K. STEEL CORP, WHERE THE PARTY HAS RAISED INVOICE IN THE MONTH OF FEBRUARY 2007, WHEREAS IT WAS ACCOUNTED IN THE MONT H OF APRIL 2007. THESE FACTS HAVE BEEN CLEARLY EXPLAINED TO THE A.O. WITH NECESS ARY EVIDENCES. 5. WE DO NOT FIND ANY MERITS IN THE SUBMISSION OF T HE ASSESSEE. THE LOWER AUTHORITIES BROUGHT OUT CLEAR FACTS TO THE EFFECT T HAT THERE IS DIFFERENCE IN PURCHASES FROM TWO PARTIES, WHICH WAS NOT EXPLAINED BY THE AS SESSEE WITH NECESSARY EVIDENCES. THOUGH, ASSESSEE CLAIMS TO HAVE EXPLAINE D THE DIFFERENCE AND WHICH IS ON ACCOUNT OF TIMING DIFFERENCE IN ACCOUNTING OF PURCH ASE BILLS, FAILS TO PROVE ITS CLAIM WITH SUPPORTING DOCUMENTS. ON THE CONTRARY, THE A.O . AS WELL AS THE CIT(A), HAD GIVEN CATEGORICAL FINDING THAT THE ASSESSEE FAILED TO EXPLAIN THE DIFFERENCE IN PURCHASES. THE PROVISIONS OF EXPLANATION 1 TO SECTI ON 271(1)(C) OF THE ACT, IS VERY CLEAR. ONCE, THERE IS DIFFERENCE IN RETURNED INCOME AND ASSESSED INCOME AND THE ASSESSEE FAILS TO EXPLAIN DIFFERENCE TO THE SATISFA CTION OF THE A.O. OR THE CIT(A), OR OFFERS AN EXPLANATION WHICH IS FOUND TO BE FALSE BY THE A.O. OR CIT(A), OR SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS NOT ABLE T O SUBSTANTIATE AND ALSO FAILS TO PROVE THAT SUCH EXPLANATION IS BONAFIDE, THEN, THE AMOUNT ADDED OR DISALLOWED IN 4 ITA 3330/MUM/2019 COMPUTING THE TOTAL INCOME OF SUCH PERSON, AS A RES ULT THEREOF SHALL, FOR THE PURPOSE OF CLAUSE (C) OF THIS SUB SECTION BE DEEMED TO REPR ESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. IN THIS CASE , NO DOUBT THERE IS DIFFERENCE IN PURCHASES. THE ASSESSEE FAILS TO OFFER AN EXPLANATI ON TO THE SATISFACTION OF THE A.O. THE CIT(A), AFTER CONSIDERING EXPLANATION OF THE AS SESSEE AND ALSO ANALYSIS OF CERTAIN JUDICIAL PRECEDENTS INCLUDING THE DECISION OF HONBLE SUPREME COURT, IN THE CASE OF UNION OF INDIA VS. DHARMENDRA TEXTILES PROC ESSORS (2008) 13 SCC 369, CONFIRMED PENALTY LEVIED U/S 271(1)(C) BY OBSERVING AS UNDER:- 5.GROUND NO. 1, 2 & 3 THE ABOVE GROUNDS ARE TAKEN TOGETHER AS THEY ADDRES S A COMMON ISSUE. I FIND FROM THE RECORD THAT THE AO DURING TH E COURSE OF ASSESSMENT PROCEEDINGS HAD ISSUED NOTICES U/S. 133(6) TO 24 PA RTIES ON TEST- CHECK BASIS. HE HAD PROVIDED COPIES OF REPLIES RECE IVED FROM THE SUPPLIERS TO THE ASSESSEE. HE HAD REQUESTED THE ASS ESSEE TO RECONCILE THE SALES SHOWN BY SUCH SUPPLIERS TO THE ASSESSEE WITH THE PURCHASES IN ITS BOOKS OF ACCOUNTS. ALSO, IN RESPEC T OF PARTIES FROM WHOM NO REPLY WAS RECEIVED, THE ASSESSEE WAS ASKED TO PR OVE THE GENUINENESS OF PURCHASES BY OBTAINING THE CONFIRMATIONS AND OTH ER NECESSARY EVIDENCE. THE CONFIRMATIONS WERE RECEIVED IN RESPEC T OF 21 PARTIES AND NO CONFIRMATIONS WERE RECEIVED IN RESPECT OF BA LANCE 3 PARTIES. HAVING CONSIDERED THE ABOVE, DUE TO DISCRE PANCIES, THE AO MADE AN ADDITION OF RS. 3,91,84,975/-. IN APPEAL , THE CIT(A) RESTRICTED THE ABOVE DISALLOWANCE TO RS. 1,80,58,998/-. IT COM PRISES OF RS. 1,79,35,208/- WHICH INCLUDE THE SALES SHOWN IN SUPP LIERS BOOKS WHICH ARE LESS THAN THE PURCHASES REFLECTED IN THE ASSESSEE'S BOOKS AND RS. 1,23,790/- IN RESPECT OF PURCHASES SHOWN IN THE ASSESSEE'S BOOKS WHICH ARE LOWER THAN THE SALES REFLECTED IN SUPPLIE R'S BOOKS. IN VIEW OF THE ABOVE IT IS CLEAR THAT IN TERMS OF E XPLANATION 1 TO SECTION 271(1)(C), THE APPELLANT COMPANY HAS FURNISHED INAC CURATE PARTICULARS OF INCOME AND CONCEALED ITS INCOME TO T HE EXTENT OF RS. 1,80,58,998/-. THE HON'BLE SUPREME COURT IN A CASE REPORTED IN UNI ON OF INDIA V. DHARAMENDRA TEXTILE PROCESSORS [2007] 15 SCC 109, H ELD THAT THE BASIC SCHEME FOR IMPOSITION OF PENALTY U/S.271( 1)(C) OF THE I.T. ACT, SECTION 1 1AC OF THE CENTRAL EXCISE ACT, 1944, AND RULE 96ZQ(5) OF THE CENTRAL EXCISE RULES, 1944 IS COMMON. THE HON'B LE SUPREME COURT NOTED THE CONFLICT OF OPINION BETWEEN THE TWO JUDGM ENTS REPORTED IN DILIP N. SHROFF V, JT.CIT [2007] 291 ITR 519 (SC) O N THE ONE HAND AND ON THE OTHER HAND, CHAIRMAN, SEBI V. SHRIRAM MUTUAL FUND . \ ) I I.. 5 ITA 3330/MUM/2019 REPORTED IN [2006] 5 SCC 361. AFTER CONSIDERING THE SE TWO CASES AND EXPLANATION GIVEN IN SECTION 271(1)(C) OF THE I .T. ACT, THE HON'BLE SUPREME COURT REFERRED THE MATTER TO THE HON'BLE CH IEF JUSTICE TO BE ADJUDICATED BY A LARGER BENCH. IT HAS BEEN HELD THA T THE OBJECT BEHIND THE SECTION READ WITH EXPLANATION INDICATES THAT IT HAS BEEN ENACTED TO PROVIDE FOR A REMEDY FOR LOSS OF REVENUE. THE PENAL TY UNDER THE SECTION IS CIVIL LIABILITY. WILFUL CONCEALMENT IS NOT AN ESSEN TIAL INGREDIENT FOR ATTRACTING THE CIVIL LIABILITY AS IS THE CASE IN TH E MATTER OF PROSECUTION U/S.276C OF THE ACT WHAT HAS TO BE SEEN AS TO WHETHER THE OFFICER HAS RECORDED A FINDING WITH REGARD TO C ONCEALMENT. IN A THREE-JUDGE BENCH OF THE HON'BLE SUPREME COURT , UNION OF INDIA V. DHARAMENDRA TEXTILE PROCESSORS [2008] 13 SCC 369 (W HILE ADJUDICATING REFERENCE), HELD THAT THE EXPLANATIONS ADDED TO SEC TION 271(1)(C) IN ENTIRETY ALSO INDICATE THE ELEMENT OF STRICT LIABIL ITY ON THE ASSESSEE FOR CONCEALMENT OR FOR GIVING INACCURATE PARTICULARS WH ILE FILING RETURNS. IN CIT V. ATUL MOHAN BINDAL [2009] 317 ITR 1 (SC), THEIR LORDSHIPS HELD THAT MENS REA IS NOT NECESSARY FOR IMPOSING PE NALTY U/S.271 (1)(C) OF THE ACT SINCE IT IS A CIVIL LIABILITY. TH E PROVISION IMPOSES STRICT LIABILITY ON THE ASSESSEE FOR CONCEALMENT OF INCOME . IT HAS FURTHER BEEN HELD THAT IF THE AO IS SATISFIED THAT THE PERSON HA S CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE P ARTICULARS OF SUCH INCOME, SUCH PERSON MAY BE DIRECTED TO PAY PEN ALTY. A PENALTY ORDER SHOULD CONTAIN REASONS FOR ITS CONC LUSION. THAT DOES NOT MEAN, THAT THERE SHOULD BE NEW EVIDENCE, WHICH WAS NOT PART OF REGULAR ASSESSMENT. WHERE THE ASSESSMENT ORDER ITSE LF CONTAINS FACTS, WHICH JUSTIFIES AN INFERENCE OF CONCEALMENT, THE PENALTY ORDER IS SUSTAINABLE. IT WAS SO DECIDED IN RAJ KUMAR CHAURAS IA V. CIT (2007) 288 ITR 329 (ALL). THE AMENDMENT TO EXPLANATION 4 TO SECTION 271(1)(C) W.E.F. 1ST APRIL, 1976 CAME UP BEFORE THE SUPREME COURT AS TO WHETHER IT WOULD BE TREATED AS CLARIFICATORY, SO AS TO HAVE RETROSPECTI VE EFFECT. IT WAS DECIDED THAT IT HAS TO BE CONSTRUED AS CLARIFICATOR Y, SO AS TO MAKE THE PROVISION APPLICABLE EVEN WHERE THERE IS NO POSITIV E INCOME AND THAT IT SHOULD HAVE RETROSPECTIVE EFFECT. IT HAS BEEN HE LD SO IN THE CASE OF CIT VS GOLD COIN HEALTH FOOD (P) LTD. (2008) 304 JT R 308 (SC). IN VIEW OF THE ABOVE FACTUAL SCENARIO AND POSITION OF LAW, THE MINIMUM PENALTY OF RS. 61,38,253/- LEVIED BY THE AO U/S. 27 1(1)(C) IS CONFIRMED. 6 ITA 3330/MUM/2019 6. IN THIS VIEW OF THE MATTER, WE ARE OF THE VIEW T HAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS AND CONCEALED PARTICULARS OF INCOME WHICH ATTRACTS PENALTY U/S 271(1)(C) OF THE ACT. THE CIT(A) HAS RIGHTLY CONFIR MED PENALTY LEVIED BY THE A.O. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE CIT(A) ORDER. HENCE, WE ARE INCLINED TO UPHOLD THE CIT(A)S ORDER AND DISMISS APPEAL FILED BY THE ASSESSEE. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD JUNE, 2017. SD/- SD/- (D.T. GARASIA) (G MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 23 RD JUNE, 2017 COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI