ITO, WARD-2(1), THANE V. BHAVNA HARISH HADVANI, BHAYANDAR(W)

ITA 379/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7575 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-01-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 28-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHTAR HANSARI
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, A CCOUNTANT M EMBER ITA NO. 379 /MUM/201 9 ( ASSESSMENT YEAR: 2010 - 11 ) I.T.O . WARD 2(1 ), THANE, R.NO. 25 , B - WING, 6 TH FLOOR, ASHAR IT PARK, WAGLE INDUSTRIAL ESTATE, ROAD NO. 16Z , THANE - 400604. VS. BHAVNA HARISH HADVANI, PROP. OF M/S J.B. PATEL SURGICAL, AT 502, SADMA TOWER PRAKASH MARKET ROAD, BHAYANDER (W) - 401101 PAN/GIR NO. AJTPP 1509 R (APPELLANT ) .. (RESPONDENT ) REVENUE BY SHRI AKHTAR H ANSARI ( DR) ASSESSEE BY NONE DATE OF HEARING 2 3 /01/2020 DATE OF PRONOUNCEMENT 27 / 01 /20 20 / O R D E R PER: R.C. SHARMA, A.M. THIS IS THE APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A) - 01 , THANE DATED 19 /11/ 2018 FOR THE A.Y. 2010 - 11 IN THE MATTER OF DELETION OF PENALTY IMPOSED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT). 2. I HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND THAT THE A.O. HAS IMPOSED PENALTY FOR DISALLOWANCE OF PURCHASES. BY THE IMPUGNED ORDER, THE LD. CIT(A) HAS DELETED THE PENALTY AFTER OBSERVING AS UNDER: ITA NO. 379 /MUM/2019 ITO VS BHAVNA HARISH HADVANI 2 5. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, FINDINGS OF THE AO, SUBMISSION OF THE AR AND MATERIAL PLACED ON RECORD. IT IS OBSERVED THAT THERE IS A NORMAL TENDENCY TO SUBJECT AN ASSE SSEE TO PENALTY U/S 271(1)(C) IN ALL CASES WHERE THE ASSESSEE REFRAINS TO FILE AN APPEAL PURSUANT TO AN ASSESSMENT ORDER, WITH A HOPE TO END THE NIGHTMARE WHICH BEGAN WITH SELECTION OF CASE FOR SCRUTINY BY ACCEPTING THE GENERAL ADDITIONS IN ASSESSMENT ORDE R. PENALTY IS STRAIGHTAWAY LEVIED MERELY BECAUSE NO APPEAL HAS BEEN FILED AGAINST THE QUANTUM ORDER. THE HON'BLE SUPREME COURT IN THE CASE OF SIR SHADILAL SUGAR MILLS (168 ITR 7051) HELD THAT THERE MAY BE A HUNDRED AND ONE REASONS FOR NOT PROTESTING AND AG REEING TO AN ADDITION BUT THAT DOES NOT FOLLOW TO THE CONCLUSION THAT THE AMOUNT AGREED TO BE ADDED WAS CONCEALED INCOME. THE HON'BLE KARNATAKA HIGH COURT IN CASE OF CIT V. MANJUNATHA COTTON & GINNING FACTORY (2013 35 TAXM ANN.COM 250) CATEGORICALLY HELD THAT: - '....THE VERY FACT THAT THE ASSESSEE AGREED TO PAY TAX AND DID NOT CHALLENGE THE ASSESSMENT ORDER, CANNOT BE CONSTRUED AS MALA FIDE.' 6. FOLLOWING JUDICIAL PRONOUNCEMENTS CAN ALSO BE RELIED ON IN SUPPORT OF THE PROPO SITION THAT VOLUNTARY SURRENDER OF INCOME DOES NOT ATTRACT PENALTY U/S 271(1)(C) OF THE ACT: - * CIT VS JAYARAJ TALKIES (1999) 239 ITR 914 (MAD HC): - MERE AGREEMENT TO ADDITION OF INCOME OR SURRENDER OF INCOME DID NOT COMPLY CONCEALMENT OF INCOME. * CIT V/S M GEORGE & BROTHERS (1987) 59 CTR (KERALA HC) 298: - WHERE THE ASSESSEE FOR ONE REASON OR OTHER AGREES OR SURRENDERS CERTAIN AMOUNTS FOR ASSESSMENT, THE IMPOSITION OF PENALTY SOLELY ON THE BASIS OF ASSESSEE'S SURRENDER WILL NOT BE WELL FOUNDED. * CIT V/ S SURAJBHAN (2007) 294 ITR 481 (P&H HC): - PENALTY CANNOT BE IMPOSED MERELY ON ACCOUNT OF HIGHER INCOME HAVING BEEN SUBSEQUENTLY DECLARED. ITA NO. 379 /MUM/2019 ITO VS BHAVNA HARISH HADVANI 3 7. THE SUPREME COURT HAS RECENTLY REITERATED THE LAW IN CASE OF DILIP N. SHROFF V. JT. CIT [2007] 291 ITR 519 BY HOLDI NG IN PARA 62 THAT FINDING IN ASSESSMENT PROCEEDINGS CANNOT AUTOMATICALLY ADOPTED IN PENALTY PROCEEDINGS AND THE AUTHORITIES HAVE TO CONSIDER THE MATTER AFRESH FROM DIFFERENT ANGLE. 8. IN THE CASE OF CIT V. RELIANCE PETRO PRODUCTS (P) LTD. (2010) 322 ITR 1 58 (SC) IT WAS HELD AS UNDER: 'WE DO NOT AGREE, AS THE ASSESSEE HAD FURNISHED ALL THE DETAILS OF ITS EXPENDITURE AS WELL AS INCOME IN ITS RETURN, WHICH DETAILS, IN THEMSELVES, WERE NOT FOUND TO BE INACCURATE NOR COULD BE VIEWED AS THE CONCEALMENT OF INCOME ON ITS PART. IT WAS UP TO THE AUTHORITIES TO ACCEPT ITS CLAIM IN THE RETURN OR NOT. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT, IN OUR OPINION, ATTRA CT THE PENALTY UNDER SECTION 271(1)(C). IF WE ACCEPT THE CONTENTION OF THE REVENUE THEN IN CASE OF EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTED BY ASSESSING OFFICER FOR ANY REASON, THE ASSESSEE WILL INVITE PENALTY UNDER SECTION 271(1)(C). THAT IS CLEA RLY NOT THE INTENDMENT OF THE LEGISLATURE'. 9. THE LEVY OF PENALTY IS MERELY ON DISALLOWANCE OF PURCHASES AND NOT FINDING OF CONCEALMENT OF ANY PARTICULAR OR MALA - FIDE INTENTION TO REDUCE TAXABLE INCOME. ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF PURCHASE S AS BOGUS AUTOMATICALLY CANNOT JUSTIFY THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. ACCORDINGLY, THE PENALTY OF RS. 20,730 / - IMPOSED U/S 271(1)(C) OF THE I.T. ACT BY THE A.O., IS HEREBY DELETED AND THE GROUNDS OF APPEAL, RAISED AS ABOVE, IS ALLOWED. 3 . I T IS CLEAR FROM THE RECORD THAT THE PENALTY HAS BEEN LEVIED BY DISALLOWING SOME OF THE PURCHASES. THE LD CIT(A) AFTER APPLYING VARIOUS JUDICIAL PRONOUNCEMENTS INCLUDING THE DECISIONS OF THE HONBLE SUPREME COURT IN THE CASE OF DILIP N SHROFF VS JT.CIT (SUP RA) AND CIT VS. RELIANCE PETRO PRODUCTS (P) LTD. (SUPRA) HAS HELD THAT MERE DISALLOWANCE OF ITA NO. 379 /MUM/2019 ITO VS BHAVNA HARISH HADVANI 4 PURCHASES WITHOUT FINDING ANY CONCEALMENT OF ANY PARTICULAR OR MALAFIDE INTENTION TO REDUCE TAXABLE INCOME CANNOT BE MADE A REASON FOR IMPOSING OF PENALTY U/S 271(1 )(C) OF THE ACT. THE DETAILED FINDING SO RECORDED BY THE LD. CIT(A) HAS NOT BEEN CONTROVERTED BY THE LD DR. ACCORDINGLY, I DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF THE LD. CIT(A) AND UPHOLD THE SAME. 4 . IN THE RESULT, APPEAL OF THE REVENUE IS DI SMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH JANUARY, 2020 . SD/ - (R.C.SHARMA) ACCOUNTANT MEMBER MUMBAI; DATED 27 / 0 1 /20 20 *RANJAN COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//