DCIT, Trivandrum V. M/s.Parthas, Trivandrum

ITA 367/COCH/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64932 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 16-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUSAN GEORGE VARGHESE
• Assessee Lawyers: R KRISHNAN
• Keywords: Business income; Search and seizure
• Section: 132

Judgement Text

1 ITA NO.367 & 368/COCH/2011 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKA RAN(AM) I.T.A NO. 367 & 368/COCH/2011 (ASSESSMENT YEAR 2008-09) THE DY.CIT, CENT.CIR.2 VS M/S PARTHAS TRIVANDRUM POWER HOUSE ROAD TRIVANDRUM PAN : AADFP2932R (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. SUSAN GEORGE VARGHESE RESPONDENT BY : SHRI R KRISHNAN DATE OF HEARING : 09-10-2012 DATE OF PRONOUNCEMENT : 16-11-2012 O R D E R PER N.R.S. GANESAN (JM) BOTH THE APPEALS OF THE REVENUE ARE DIRECTED AGAIN ST THE TWO INDEPENDENT ORDERS OF COMMISSIONER OF INCOME-TAX(A) -I, TRIVANDRUM DATED 03-02-2011 DELETING THE PENALTY LEVIED BY THE ASSES SING OFFICER U/S 271AAA AND 271(1)(D) OF THE ACT. 2. SMT. SUSAN GEORGE VARGHESE, THE LD.DR SUBMITTED THAT THERE WAS A SEARCH AND SEIZURE OPERATION U/S 132 OF THE ACT ON 11-10-2007. THE 2 ITA NO.367 & 368/COCH/2011 TAXPAYER HAS FILED E-RETURN DISCLOSING A TOTAL INCO ME OF RS.8,39,77,210. HOWEVER, THE ASSESSING OFFICER DETERMINED THE TOTAL INCOME AT RS.8,41,37,212. THE LD.DR FURTHER SUBMITTED THAT T HE MANAGING DIRECTOR OF THE TAXPAYER HAS ADMITTED AT THE TIME OF SEARCH TO OFFER RS.2 CRORES OVER AND ABOVE THE INCOME RETURNED REGULARLY FOR THE ASS ESSMENT YEAR 2007-08. HOWEVER, WHILE FILING THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008- 09, THE TAXPAYER HAS DISCLOSED ONLY RS.1.21 CRORES AS ADDITIONAL INCOME UNDER THE HEAD BUSINESS INCOME. ACCORDING TO THE LD.DR, THE TAXPAYER HAS NOT SUBSTANTIATED THE MANNER IN WHICH THE INCOME OF RS.1.21 CRORES WAS OFFERED AS ADDITIONAL INCOME FOR THE YEAR UNDER CON SIDERATION. APART FROM THAT THE TAXPAYER FAILED TO DISCLOSE THE ENTIRE INC OME OF RS.2 CRORES AS ADMITTED DURING THE ENQUIRY AT THE TIME OF SEARCH. THEREFORE, THE ASSESSING OFFICER LEVIED PENALTY U/S 271AAA OF THE ACT. 3. ON THE CONTRARY, SHRI R KRISHNAN, THE LD.REPRESE NTATIVE FOR THE TAXPAYER SUBMITTED THAT THE TAXPAYER HAS ADMITTEDLY DISCLOSED AN INCOME OF RS.8,39,77,210. HOWEVER, THE ASSESSING OFFICER ASSESSED THE INCOME AT RS.8,41,37,212. THE DIFFERENCE IS RS.1,60,002. AC CORDING TO THE LD.REPRESENTATIVE, THE ONLY OBJECTION OF THE DEPARTM ENT IS THAT THE TAXPAYER COULD NOT SUBSTANTIATE THE MANNER IN WHICH THE INCO ME WAS DERIVED. IN THE STATEMENT U/S 132(4) THE TAXPAYER HAS CLEARLY STATE D THAT FOR THE ASSESSMENT YEAR 2008-09 THE INCOME WOULD BE OF MORE THAN RS.2 CRORES. THEREFORE, OBVIOUSLY THE INCOME IS FROM BUSINESS AN D NOT FROM ANY OTHER SOURCE. ACCORDING TO THE LD.REPRESENTATIVE, THE EN TIRE INCOME WAS OFFERED AS PER BOOKS OF ACCOUNT MAINTAINED BY THE TAXPAYER AND NO INCOME WAS 3 ITA NO.367 & 368/COCH/2011 OFFERED OUTSIDE THE BOOKS. THEREFORE, ACCORDING TO THE LD.REPRESENTATIVE, THE COMMISSIONER OF INCOME-TAX(A) HAS RIGHTLY FOUND THAT THE TAXPAYER HAS OFFERED RS.1.21 CRORES AS ADDITIONAL INCOME TO COVE R ANY POSSIBLE OMISSION OR COMMISSIONS. REFERRING TO SECTION 271AAA OF THE ACT, THE LD.REPRESENTATIVE SUBMITTED THAT SECTION 271AAA(2) CLEARLY SAYS THAT WHEN THE TAXPAYER ADMITTED THE ADDITIONAL INCOME AND SUB STANTIATED THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED, THERE CANNOT BE ANY PENALTY U/S 271AAA OF THE ACT. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ALS O PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THERE WA S SEARCH IN THE PREMISES OF THE TAXPAYER AND THE TAXPAYER HAS OFFERED RS.2 C RORES OVER AND ABOVE WHAT WAS RETURNED FOR THE EARLIER ASSESSMENT YEARS. HOWEVER, WHILE FILING THE RETURN, THE TAXPAYER HAS RETURNED ONLY A SUM O F RS.1.2 CRORES OVER AND ABOVE WHAT WAS RETURNED IN EARLIER YEARS. THE ASSE SSING OFFICER COMPUTED THE INCOME ONLY AT RS.8,41,37,212 AND THE DIFFERENC E BETWEEN THE RETURNED INCOME AND THE ASSESSED INCOME IS VERY MEAGER. AS RIGHTLY SUBMITTED BY THE LD.REPRESENTATIVE FOR THE TAXPAYER WHEN THE TAX PAYER SUBSTANTIATED THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED, THERE CANNOT BE ANY PENALTY. IN THIS CASE, THE TAXPAYER HAS NO OTHER S OURCE OF INCOME THAN WHAT WAS DISCLOSED TO THE DEPARTMENT. THE TAXPAYER IS I N THE RETAIL BUSINESS OF TEXTILES AND THE INCOME THAT WAS OFFERED WAS GENERA TED IN THE COURSE OF THE BUSINESS ACTIVITY. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE COMMISSIONER OF INCOME-TAX(A) HAS RIGHTLY DELET ED THE PENALTY LEVIED 4 ITA NO.367 & 368/COCH/2011 BY THE ASSESSING OFFICER. WE DO NOT FIND ANY INFIR MITY IN THE ORDER OF THE COMMISSIONER OF INCOME-TAX(A). ACCORDINGLY THE SAM E IS CONFIRMED. 5. NOW COMING TO PENALTY LEVIED U/S 271(1)(D) OF TH E ACT, THE LD.DR SUBMITTED THAT THE TAXPAYER HAS FILED THE FRINGE BE NEFIT RETURN ELECTRONICALLY DISCLOSING NIL FRINGE BENEFIT. HOWEVER, THE FRINGE BENEFIT WAS ASSESSED AT RS.12,06,976. ACCORDING TO THE LD.DR, THE VALUE OF THE FRINGE BENEFIT OFFICIALLY ADOPTED IS RS.12,06,976 AFTER EXCLUDING DISALLOWANCE MADE ON ACCOUNT OF PERSONAL USE OF THE CARS AND TELEPHONES. THE TAXPAYER HAS NOT DISPUTED THE ASSESSMENT OF FRINGE BENEFIT. THEREFO RE, THE ASSESSING AUTHORITY HAS LEVIED THE PENALTY U/S 271D OF THE AC T. 6. ON THE CONTRARY, SHRI R KRISHNAN, THE LD.REPRESE NTATIVE FOR THE TAXPAYER SUBMITTED THAT SECTION 271(1)(D) ENABLES T HE TAXING AUTHORITY TO LEVY PENALTY WHEN THE TAXPAYER CONCEALS THE PARTICU LARS OF FRINGE BENEFIT OR FURNISHING INACCURATE PARTICULARS. ACCORDING TO TH E LD.REPRESENTATIVE, THE TAXPAYER HAS NOT CONCEALED ANY PARTICULARS OF FRING E BENEFIT. THE ASSESSING OFFICER COMPUTED THE FRINGE BENEFIT ON THE BASIS OF THE PARTICULARS FURNISHED BY THE TAXPAYER. ACCORDING TO THE LD.REPRESENTATIV E, THE TAXPAYER HAS CLAIMED THAT THE EXPENDITURE INCURRED IS NOT LIABLE FOR FRINGE BENEFIT TAX. THEREFORE, IT CLAIMED EXEMPTION. HOWEVER, THE ASSE SSING OFFICER REJECTED THE CLAIM OF THE TAXPAYER AND ASSESSED THE FRINGE B ENEFIT TAX. IN ORDER TO AVOID LITIGATION, THE TAXPAYER DID NOT AGITATE THE ISSUE. ONCE A CLAIM WAS MADE LEGALLY, MERE DISALLOWANCE OF THE CLAIM WOULD NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS. ACCORDING TO THE LD.REPRESENTATIVE, THE 5 ITA NO.367 & 368/COCH/2011 JUDGMENT OF THE APEX COURT IN THE CASE OF COMMISSION ER OF INCOME-TAX VS RELIANCE PETROPRODUCTS 322 ITR 158 (SC) WOULD BE SQ UARELY APPLICABLE TO THE FACTS OF THE CASE. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. SECTION 271(1)(D) ENABLES THE TAXING AUTHORITY TO LEVY PENALTY WHERE THE TAXPAYER HAS CONCEALED THE PARTICULARS OF FRINGE BENEFITS OR HAS FURNISHED INA CCURATE PARTICULARS OF SUCH FRINGE BENEFITS. IN THE CASE BEFORE US, THE TAXPAY ER HAS FURNISHED ALL THE DETAILS REGARDING EXPENDITURE AND CONTENDED THAT TH E EXPENSES RELATING TO USE OF CARS AND TELEPHONE BY THE PARTNERS DID NOT F ALL WITHIN THE PURVIEW OF FRINGE BENEFIT TAX. THIS CONTENTION WAS REJECTED BY THE TAXING AUTHORITY. THE QUESTION ARISES FOR CONSIDERATION IS WHEN THE T AXPAYER HAS FURNISHED ALL THE PARTICULARS AND HAS CLAIMED DEDUCTION SAYING TH AT IT IS NOT TAXABLE AND SUCH A CLAIM WAS REJECTED BY TAXING AUTHORITY CAN W E SAY THAT THERE WAS FURNISHING OF INACCURATE PARTICULARS. THIS ISSUE W AS ELABORATELY CONSIDERED BY THE APEX COURT IN THE CASE OF RELIANCE PETROPROD UCTS (SUPRA) 322 ITR 158 (SC) AND FOUND THAT IN SUCH A CASE THERE CANNOT BE A CASE OF FURNISHING OF INACCURATE PARTICULARS. IT IS NOT IN DISPUTE THAT THE FRINGE BENEFIT TAXED WAS COMPUTED ON THE BASIS OF THE INFORMATION FURNISHED BY THE TAXPAYER. THEREFORE, THERE IS NO QUESTION OF FURNISHING ANY I NACCURATE PARTICULARS. A MERE CLAIM OF NON TAXABILITY WITH REGARD TO CERTAIN EXPENDITURE CANNOT BE CONSIDERED AS FURNISHING OF INACCURATE PARTICULARS. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE COMMISSIONER OF INCOME- TAX(A) HAS RIGHTLY DELETED THE PENALTY LEVIED BY THE ASSESSING AUTHORI TY. WE DO NOT FIND ANY 6 ITA NO.367 & 368/COCH/2011 INFIRMITY IN THE ORDER OF THE COMMISSIONER OF INCOM E-TAX(A). ACCORDINGLY, THE SAME IS CONFIRMED. 8. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE S TAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 16 TH NOVEMBER, 2012. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 16 TH NOVEMBER, 2012 PK/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE COMMISSIONER OF INCOME-TAX 4. THE COMMISSIONER OF INCOME-TAX(A) 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH