MR.VERSHI CHHEDA, MUMBAI V. INCOME TAX OFFICER 25(1)(4), MUMBAI

ITA 356/MUM/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8209 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2012-2013
• Appeal Filed On: 15-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJIV GUBGOTRA
• Keywords: Initiation of penalty proceedings
• Section: 271(1)(c); 143(3)

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE HONBLE SH. G. S. PANNU, VP & HONBLE SH. SANDEEP GOSAIN, JM ./ I.T.A. NO . 356 /MUM/201 8 ( / ASSESSMENT YEAR: 2012 - 13 ) MR. VERSHI CHHEDA, A - 206, DEEP TOWER, D. N. NAGAR, JAIN DERASER LANE, ANDHERI WEST, MUMBAI - 400 053 / VS. ITO 2 5 (1 ) (4) R. NO. 308, PRATYAKSHKAR BHAVAN, C - 10, BKC, 3 RD FLOOR, BANDRA, MUMBAI - 400 051 ./ ./ PAN NO. A ABPC8001A ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI SURJI D. CHHEDA, A R / RESPONDENTBY : SHRI RAJIV GUBGOTRA , DR / DATE OF HEARING : 28 .01 .201 9 / DATE OF PRONOUNCEMENT : 01.04.2019 / O R D E R PER SANDEEP GOSAIN, J UDICIAL MEMBER : THE P RESENT APPE AL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF LD. CIT (APPEAL) 3 7, MUMBAI DATED 03.10 .17 F OR AY 20 012 - 13 . 2 I.T.A. NO. 356 /MUM/201 8 MR. VERSHI CHHEDA, 2. THE B RIEF FACTS OF THE CASE ARE THAT THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE I.T. ACT DETERMINING THE TOTAL INCOME OF THE APPELLANT AT RS.7,66,950/ - AS AGAINST THE RETURNED INCOME OF RS. 6,91,300/ - AFTER MAKING ADDITION OF RS. 75,653/ - BEING 15% OF TOTAL EXPENSES OF PACKING, REPAIRS AND MAINTENANCE, PRINTING & STATIONARY AND GE NERAL EXPENSES IN THE ABSENCE OF VOUCHERS. THE AO STATED THAT ASSESSEE WAS OFFERED ADEQUATE OPPORTUNITIES DURING THE ASSESSMENT PROCEEDINGS TO SUBSTANTIATE THEIR CLAIM OF EXPENSES DEBITED IN THE PROFIT AND LOSS ACCOUNT, BUT T HE ASSESSEE HAD NEITHER PRODUCE D ANY EVIDENCE NOR OFFERED ANY SATISFACTORY EXPLANATION. HENCE IN THE ABSENCE OF FURNISHING FULL DETAILS OF EXPENSES INCURRED BY THE ASSESSEE, PENALTY PROCEEDING WERE INITIATED U/S 271(L)(C) OF THE ACT AND LEVIED PENALTY OF RS. 15,584/ - ON THE ASSESSEE . A GGRIE VED BY THE ORDER OF AO, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) AND LD. CIT(A) AFTER CONSIDERING THE CASE OF BOTH THE PARTIES , DISMISSED THE APPEAL OF THE ASSESSEE . NOW BEFORE US, THE ASSESSEE HAS PREFERRED THE PRESENT APPEAL BY RAISING THE ABOVE GROUNDS. 3 I.T.A. NO. 356 /MUM/201 8 MR. VERSHI CHHEDA, GROUND NO. 1 TO 3 3. THE SE GROUND RAISED BY THE ASSESSEE ARE INTER CONNECTED AND INTER RELATED AND RELATES TO CHALLENGING THE ORDER OF LD. CIT(A) IN CONFIRMING THE ACTION OF AO IN LEVYING OF PE NALTY U/S 271(1)(C) OF THE ACT, THEREFORE WE THOUGHT IT FIT TO DISPOSE OF THE SAME BY THIS COMMON ORDER. 4 . LD. AR OF THE ASSESSEE REITERATED THE SAME ARGUMENTS AS WERE R AISED BY HIM BEFORE LD. CIT(A) AND ALSO RELIED UPON THE WRITTEN SUBMISSION, WHICH ARE CONTAINED IN PARA N O. 4 OF THE ORDER OF LD. CIT(A). IT WAS SUBMITTED THAT THERE WAS NO SATISFACTION RECORDED FOR INITIATION OF PENALTY PROCEEDINGS IN THE ASSESSMENT ORDER AND THE ADDITIONS WERE MADE ON ESTIMATION BASIS . SINCE THE AMOUNT WAS SMALL, THE REFORE NO APPEAL WAS FILED BY THE ASSESSEE. IT WAS FURTHER SUBMITTED THAT THERE WAS NO SPECIFIC CHARGES IN THE ASSESSMENT ORDER AND PENALTY ORDER WITH RESPECT TO EITHER FURNISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. AS THE ADDITIONS IN THE PRESENT CASE WERE BASED ON ESTIMATION, THEREFORE THEN IN THAT EVENTUALITY, THE PENALTY EVEN OTHERWISE COULD NOT HAVE BEEN LEVIED BY THE AO. 4 I.T.A. NO. 356 /MUM/201 8 MR. VERSHI CHHEDA, HENCE, IT WAS REQUESTED THAT THE PENALTY LEVIED UPON THE ASSESSEE BE WITHDRAW. 5. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDERS PASSED BY THE REVENUE AUTHORITIES. 6 . WE HAVE HEARD THE COUNSELS FOR BOTH THE PARTIES AT LENGTH AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD, JUDGMENT CITED BY THE PARTIES AS WELL AS THE ORDE RS PASSED BY REVENUE AUTHORITIES. WE FIND FROM THE RECORDS THAT THE ASSESSMENT ORDER U/S 143(3) OF THE ACT WAS COMPLETED THEREBY DETERMINING THE TOTAL INCOME AT RS. 7,66,950/ - AS AGAINST THE RETURNED INCOME OF RS. 6,91,300/ - AND IN THIS WAY, ADDITION S OF R S. 75,653/ - BEING 15% OF THE TOTAL EXPENSES OF PACKING, REPAIRS AND MAINTENANCE, PRINTING & STATIONARY AND GENERAL EXPENSES IN THE ABSENCE OF VOUCHERS WERE MADE . IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAD NOT FILED ANY APPEAL AGAINST THE ORDER OF ASSES SMENT BECAUSE OF THE SMALLNESS OF THE AMOUNT. WE ALSO NOTICE D FROM THE ORDER OF ASSESSMENT THAT THE AO HAD NOT RECORDED ANY SATISFACTION FOR INITIATION OF PENALTY PROCEEDINGS. ONLY IN THE LAST LINE OF THE 5 I.T.A. NO. 356 /MUM/201 8 MR. VERSHI CHHEDA, ASSESSMENT ORDER, IT IS STATED BY THE AO THAT INTEREST BE CHARGED AS PER LAW ALONGWITH PENALTY NOTICE U/S 271(1)(C), THEREFORE FROM THE ABOVE FACTUAL SITUATION , WE ARE SATISFIED THAT THE ASSESSMENT ORDER DOES NOT CONTAIN SATISFACTION OF THE AO FOR SPECIFIC ALLY INITIATION OF PENALTY PROCEEDINGS. IN THE CASE OF CIT VRS. ATUL MOHAN BINDAL (2009) 317 ITR 1/183 TAXMAN 444 (SC), WHERE HONBLE SUPREME COURT WAS CONSIDERING THE SAME PROVISION, IT OBSERVED THAT THE AO HAS TO BE SATISFIED THAT A PERSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. THUS THE SATISFACTION OF THE AO ABOUT THE CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME IS ESSENTIAL BEFORE LEVYING ANY PENALTY U/S 271(1)(C) OF THE ACT. THE AO AS IS APPARENT FROM THE PENALTY ORDER HAS NOT SATISFIED ABOUT THE CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME ON THE PART OF THE ASSESSEE. 7. EVEN AS PER THE FACTS OF THE PRESENT CASE AS IS APPARENT FROM THE ORDER OF ASSESSMENT, THE AO HAD NOT RECORDED SATISFACTION ABOUT INITITATION OF PENALTY EITHER ABOUT THE 6 I.T.A. NO. 356 /MUM/201 8 MR. VERSHI CHHEDA, CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME ON THE PART OF THE ASSESSEE. 8. AS PER THE ASSES SMENT ORDER, THE ADDITIONS WERE MADE @ 15% OF THE TOTAL EXPENSES IN THE ABSENCE OF ASSESSEE PRODUCING THE VOUCHRES OF EXPENSES. IN THIS WAY, THE ADDITIONS MADE WERE PURELY ON ESTIMATION BASIS AND IT IS A SETTLED LAW THAT PENALTY CANNOT BE LEVIED ON ADDITIO NS MADE ON ESTIMATION BASIS . IN THIS RESPECT, WE RELY UPON TH E JUDGMENT OF HONBLE HIGH COURT IN THE CASE OF CIT VRS. MAHINDRA SINGH KHEDIA (2012) 71 DTR 189/252 CTR 453 (RAJ HC) AND CIT VRS. VIJAY KUMAR JAIN (2010) 325 ITR 288 (CHATTISGARH HC) AND CIT VRS. AERO TRADERS PVT. LT.D (2010) 322 ITR 316 (DEL HC), CIT VRS. RELIANCE PETROPRODUCTS PVT. LTD. (2011) 322 ITR 158 (SC), WHEREIN THE LEVY OF PENALTY ON THE BASIS OF ESTIMATION WAS HELD TO BE NOT JUSTIFIED. 9 . CONSIDERING THE ABOVE PROPOSITIONS, WE ARE ALSO OF THE VIEW THAT SINCE IN THE PRESENT, THE ADDITIONS WERE MADE ON ESTIMATION, THEREFORE IN VIEW OF THE PRINCIPLES LAID IN THE ABOVE 7 I.T.A. NO. 356 /MUM/201 8 MR. VERSHI CHHEDA, JUDGMENTS, THE PENALTY IS NOT LEVIABLE. HENCE, WE DELETE THE PENALTY. RESULTANTLY, THESE GROUND RAISED BY THE ASSESSE E IARE ALLOWED. GROUND NO. 4 10. THIS GROUND RAISED BY THE REVENUE IS GENERAL IN NATURE, THUS REQUIRES NO SPECIFIC ADJUDICATION. 11 . IN THE NET RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED WITH NO ORDER AS TO COST. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST APRIL 2019. SD/ - SD/ - ( G. S. PANNU ) (SANDEEP GOSAIN) VICE PRESIDENT JUDICIAL MEMBER MUMBAI ; DATED : 01 . 04 .201 9 SR.PS . DHANANJAY 8 I.T.A. NO. 356 /MUM/201 8 MR. VERSHI CHHEDA, / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F I LE / BY ORDER, . / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI