GLORIOUS REALTY P.LTD, MUMBAI V. ITO 6(3)(1), MUMBAI

ITA 380/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3410 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 19-03-2013
• Assessment Year: 1999-2000
• Appeal Filed On: 17-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K SINHA
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G, MUMBAI BEFORE SHRI H L KARWA, PRESIDENT & SHRI N K BILLAIYA, ACCOUNTANT MEMBER ITA NOS.380, 381 & 382/MUM/2012 ASST. YEARS : 1999-2000, 2000-01 & 2005-06 GLORIOUS REALITY PVT. LTD., MAHINDRA TOWERS, DR. G.M.BHOSALE MARG, P.K.KURNE CHOWK, WORLI, MUMBAI- 400 018 PAN : AAACG2097E VS. THE ITO 6(3)(1) , MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAJESH ATHAVALE RESPONDENT BY : SHRI D.K.SINHA DATE OF HEARING : 19.06.2013 DATE OF PRONOUNCE MENT : 19.06.2013 O R D E R PER N.K.BILLAIYA (AM) : THESE THREE SET OF APPEALS BY THE ASSESSEE ARE PREF ERRED AGAINST THREE SEPARATE ORDERS OF THE CIT(A)-12, MUMBAI, PERTAINING TO AYS 1999-20 00, 2000-01 AND 2005-06. AS COMMON ISSUES ARE INVOLVED IN ALL THESE THREE APPEA LS, THEY WERE HEARD TOGETHER AND ARE DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 2. THE ONLY GRIEVANCE OF THE ASSESSEE IN ALL THESE THREE APPEALS RELATES TO THE LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT. 2 ITA NO.380, 381 & 382/MUM/2012 AYS: 1999-2000, 2000-01 & 2005-06 3. FIRST WE WILL TAKE UP ITA 380/MUM/2012 FOR A.Y. 1999-2000. THE ROOTS FOR THE LEVY OF PENALTY LIE IN THE ASSES SMENT ORDER DATED 06.10.2006 PASSED U/S. 143(3) R.W.S. 147 OF THE ACT. THE ASSE SSEE IS IN THE BUSINESS OF BUILDERS, ENGINEERS, DEVELOPERS ETC. DURING THE COURSE OF SC RUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS NOT DONE ANY BUSINESS AND YET CLAIMED EXPENDITURE TO THE TUNE OF RS.103.42 LACS. THE ASS ESSING OFFICER DISALLOWED THE ENTIRE EXPENDITURE CLAIMED BY THE ASSESSEE AND INITIATED P ENALTY PROCEEDINGS FOR FURNISHING INACCURATE PARTICULARS. THE ASSESSEE LOST IN QUANT UM APPEAL, THE ADDITIONS WERE CONFIRMED. THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT AND SHOW CAUSED THE ASSESSEE WHY PENALTY SHOULD NOT BE LEVIED ON THE DISALLOWANCE OF EXPENSES TO THE TUNE OF RS.103.42 LACS. THE ASSESS EE FILED DETAILED REPLY VIDE LETTER DATED 12.03.2010 AND EXPLAINED WHY PENALTY SHOULD N OT BE LEVIED. THE SUBMISSIONS OF THE ASSESSEE WERE REJECTED BY THE ASSESSING OFFICER , WHO WAS OF THE FIRM BELIEF THAT BY CLAIMING EXPENDITURE TO THE TUNE OF RS.103.42 LACS THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS AND WENT ON TO LEVY PENALTY OF RS.36,19,713/- . THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A) BUT WITHOUT AN Y SUCCESS. 4. BEFORE US THE COUNSEL FOR THE ASSESSEE STRONGLY SUBMITTED THAT THIS IS NOT A FIT CASE FOR PENALTY U/S. 271(1)(C) OF THE ACT BECAUSE THE ASSESSEE HAS FURNISHED ALL THE DETAILS ALONG WITH THE RETURN OF INCOME AND MERELY BECAUSE THE EXPENSES HAVE BEEN DISALLOWED BY THE ASSESSING OFFICER WOULD NOT IPSO FACTO LEAD TO THE CONCLUSION THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS. THE COUNSEL FURTHER SUBMITTED THAT ON IDENTICAL FACTS THE TRIBUNAL IN A.Y. 2003-04 IN ITA NO.93/MUM/2008 AND IN A.Y. 2004-05 IN ITA NO. 6011/MUM/2009 HAS CANCELLED THE LEVY OF PENALTY. THE ORDERS OF THE TRIBUNAL WERE SUPPLIED AND PLACED ON RECORD. ON TH E OTHER HAND, THE LEARNED DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE RE IS NOT DISPUTE THAT THE DISALLOWANCE OF EXPENSES TO THE TUNE OF RS.103.42 LACS WAS CONFI RMED IN THE QUANTUM PROCEEDINGS. 3 ITA NO.380, 381 & 382/MUM/2012 AYS: 1999-2000, 2000-01 & 2005-06 HOWEVER, WE FIND THAT THE TRIBUNAL IN THE ASSESSEE S OWN CASE FOR A.Y. 2003-04 (SUPRA) AND A.Y. 2004-05 (SUPRA), ON THE SIMILAR DISALLOWAN CE HAS DELETED THE PENALTY. WHILE DECIDING THE APPEAL, THE TRIBUNAL IN ITA NO. 6011/M UM/2009 HAS FOLLOWED THE FINDINGS OF THE TRIBUNAL IN ITA NO. 93/MUM/2008. THE FINDIN GS ARE REPRODUCED AS UNDER: 4.12 AS STATED ABOVE, THAT PENALTY MATTER U/S. 271 (1)(C) IS REQUIRED TO BE SEEN IN THE LIGHT OF THE FACTS OF RESPECTIVE CAS ES. IN THE CASE UNDER CONSIDERATION, WE FIND THAT THE ASSESSING OFFICER W HILE MAKING ASSESSMENT HAS BEEN CALCULATED THE INCOME AS PER LAW ON THE BA SIS OF PARTICULARS OF INCOME FURNISHED BY THE ASSESSEE. WHEN THE ASSESSE E FURNISHED THE RELEVANT PARTICULARS OF INCOME, THE ASSESSING OFFIC ER IS DUTY BOUND TO CALCULATE THE CORRECT INCOME. IF THE ASSESSING OFF ICER DISCHARGE HIS DUTY IN CALCULATION OF SUCH INCOME ON THE BASIS OF PARTICUL ARS FILED BY THE ASSESSEE, UNDER THAT CIRCUMSTANCES IT CANNOT BE HEL D THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF HIS INCOME OR HAS CONCEALED THE PARTICULARS OF INCOME. THE ASSESSEE HAS FURNISHED NECESSARY EXPLANATION THOUGH NOT BEFORE THE ASSESSING OFFICER BUT BEFORE THE CIT(A) THAT THE ADDITIONS MADE ARE HIGHLY DEBATABLE LEGALLY. THE A SSESSEE HAS SUBSTANTIATED ITS EXPLANATION FILED BEFORE THE CIT( A) AND HAS PROVED THAT SUCH EXPLANATION IS BONAFIDE AND THAT ALL THE FACTS RELATING TO COMPUTATION OF TOTAL INCOME HAVE BEEN DISCLOSED BY THE ASSESSEE . THE BONAFIDE EXPLANATION OF THE HAS NOT FOUND FALSE. UNDER THE CIRCUMSTANCES, WE ARE OF THE CONSIDERED VIEW THAT NEITHER THE ASSESSEE HA S CONCEALED ITS PARTICULARS OF INCOME NOR HAS FURNISHED INACCURATE PARTICULARS OF INCOME NOR EXPLANATION TO SECTION 271(1)(C) IS APPLICABLE TO THE CASE UNDER CONSIDERATION. WE, THEREFORE, FIND THAT THIS IS NO T A FIT CASE FOR LEVY OF PENALTY U/S. 271(1)(C). ACCORDINGLY, THE PENALTY O F RS.15,65,918/- LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C) AND CONFIRME D BY THE CIT(A) IS HEREBY DELETED. IN A RECENT JUDGMENT OF THE HONBLE APEX COURT IN C IT VS RELIANCE PETROPRODUCTS PVT. LTD. (2010) 322 ITR 158 (SC) THEIR LORDSHIPS, AFTER CONSIDERING VARIOUS DECISIONS INCLUDING DILIP N. SHROFF VS. JCIT (2007) 291 ITR 5 19 (SC), UNION OF INDIA VS. DHARAMENDRA TEXTILE PROCESSORS (2008) 306 ITR 277 ( SC) AND SREE KRISHNA ELECTRICALS VS. STATE OF TAMIL NADU (2009) 23 VST 249 (SC) HAVE OBSERVED AND HELD (PAGE 158 HEADNOTES) AS UNDER: A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961 SUGGESTS THAT IN ORDER TO BE COVERED BY IT, TH ERE HAS TO BE 4 ITA NO.380, 381 & 382/MUM/2012 AYS: 1999-2000, 2000-01 & 2005-06 CONCEALMENT OF PARTICULARS OF THE INCOME OF THE ASS ESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTION 2 71(1)(C) WOULD EMBRACE THE DETAIL OF THE CLAIM MADE. WHERE NO INF ORMATION GIVEN IN THE RETURN IS FOUND TO BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. IN OR DER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY CO VERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STR ETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEN D UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS THE ONLY DOC UMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILITY WOULD ARI SE. TO ATTRACT PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCU RATE, NOT EXACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FA LSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NO T AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INAC CURATE PARTICULARS. IN THE ABSENCE OF ANY DISTINGUISHING FEATURE BROUGH T ON RECORD BY THE REVENUE WE RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA) AND THE ORDER OF TH E TRIBUNAL IN ASSESSEES OWN CASE (SUPRA) HOLD THAT SINCE THE ASSESSEE HAS FURNISHED COMPLETE PARTICULARS OF INCOME, THE BONAFIDE EXPLANATION OF THE ASSESSEE WAS NOT FOUND TO BE FALSE OR UNTRUE AND MERELY BECAUSE THE ASSESSING OFFICER HAS MADE DISALLOWANCE OF INTEREST EXPENSES AND OTHER EXPENSES THAT BY ITSELF, WOULD NOT ATTRACT THE PENA LTY UNDER SECTION 271(1)(C) OF THE ACT AND ACCORDINGLY THE PENALTY OF RS.36,19,713/- IMPOS ED BY THE ASSESSING OFFICER AND SUSTAINED BY THE LEARNED CIT(A) IS DELETED. THE GR OUND TAKEN BY THE ASSESSEE IS THEREFORE ALLOWED. 6. IN THE RESULT THE ASSESSEES APPEAL STANDS ALLOW ED. 5 ITA NO.380, 381 & 382/MUM/2012 AYS: 1999-2000, 2000-01 & 2005-06 7. ITA NO. 381/MUM/2012 FOR A.Y. 2000-01 THE GRIEVANCE OF THE ASSESSEE IS SIMILAR TO THAT R AISED IN ITA NO. 380/MUM/2012 THOUGH QUANTUM OF PENALTY MAY DIFFER. ON SIMILAR FA CTS AND FOR SIMILAR REASONS THE APPEAL OF THE ASSESSEE IS ALLOWED. 8. ITA NO. 382/MUM/2012 FOR A.Y. 2005-06 THE GRIEVANCE OF THE ASSESSEE IS SIMILAR TO THAT R AISED IN ITA NO. 380 & 381/MUM/2012 THOUGH QUANTUM OF PENALTY MAY DIFFER. ON SIMILAR FACTS AND FOR SIMILAR REASONS THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH JUNE 2013. SD/- SD/- (H L KARWA) (N.K.BILLAIYA) PRESIDENT ACCOUNTANT MEMBER MUMBAI, DT : 19 TH JUNE, 2013 SA COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE C.I.T , MUMBAI 4. THE CIT (A), MUMBAI 5. THE DR, G- BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI