DCIT CIR 13(2), MUMBAI V. JAY TRANSPORT, MUMBAI

ITA 4194/MUM/2009

• Counselvise Citation: 419419914 RSA 2009
• Duration Of Justice: 2 year(s) 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 01-12-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 08-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D S SUNDER SINGH
• Keywords: Bonafide belief

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, J, MUMBAI BEFORE S/SHRI D.K.AGARWAL (JM) AND B.RAMAKOTAIAH(A. M ) ITA NO.4194/MUM/2009 (ASSESSMENT YEAR: 2005-06) ASSISTANT COMMISSIONER OF INCOME TAX 13(2), ROOM NO.421, 4 TH FLOOR, AAYAKAR BHAVAN, MUMBAI-400020 M/S JAY TRANSPORT, SUGAR HOUSE, 93/95, KAZI SAYED STREET, MASJID BUNDER, MUMBAI-400009 PAN:AAAFJ2832R APPELLANT V/S RESPONDENT DATE OF HEARING : 1.12.2011 DATE OF PRONOUNCEMENT : 9.12.2011 APPELLANT BY : SHRI D.S.SUNDER SIN GH RESPONDENT BY : NONE O R D E R PER D.K.AGARWAL (JM) THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 16.4.2009 PASSED BY THE LD.CIT(A) FOR THE ASSESSMENT YEAR 2005-06. 2. IN THIS CASE, THE NOTICE OF HEARING WAS SENT TO THE ASSESSEE FIXING THE DATE OF HEARING ON VARIOUS OCCASIONS AND FINALLY THE NOTICE OF HEARING PLACED ON NOTICE BOARD FIXING THE DATE OF HEARING ON 1.12.201 1. ON 1.12.2011, AT THE TIME OF HEARING, NONE WAS PRESENT ON BEHALF OF THE ASSESSEE NOR FILED ANY APPLICATION FOR ADJOURNMENT OF THE CASE. THEREFORE, IT ITA NO.4194/MUM/2009 (ASSESSMENT YEAR: 2005-06) 2 WAS DECIDED TO DISPOSE OF THE APPEAL EX-PARTE, QUA THE ASSESSEE, ON MERITS AFTER HEARING THE LEARNED D.R. 3. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE FIRM IS ENGAGED IN CARRYING OUT THE ACTIVI TY OF OBTAINING EXCISE DUTY REBATES ON THE EXPORTS OF COP PER MADE BY M/S HINDALCO INDUSTRIES LTD. AT DAHEJ, BHARUCH AND KANDESHWAR (NAVI MUMBAI). THE ASSESSEE FILED RETURN OF INCOME DECLARING AN INCOME OF RS.11,73,548/-. THE ONLY INCOME DECLARED BY THE ASSESSEE WAS COMMISSION FROM M/S HINDALCO INDUSTRIE S LTD. FOR OBTAINING EXCISE DUTY REBATE FROM MARITIME COMMISSIONERS OFFICE (CENTRAL EXCISE) ON EXPORT OF COPPER MADE BY M/S HINDALCO INDUSTRIES LIMITED WHIC H EXPORTED AROUND 1000 CONTAINERS OF COPPER PER MONTH AGAINST WHICH THEY WERE ENTITLED TO EXCISE DUTY REB ATE BY THE MARITIME COMMISSIONERS OFFICE AT KHANDESHWAR. THE A.O. HAS MENTIONED IN THE ASSESSMENT ORDER THAT THE ASSESSEES ROLE WAS TO COLLECT THE DOCUMENTS SUCH AS FORM-C, COPY OF BILL OF LADING, REMOVAL OF DEFICIENCIES, IF ANY, AND TO CO- ORDINATE WITH THE AUTHORITIES FOR EARLY PROCESSING OF THE CLAMS. FOR SUCH SERVICES RENDERED BY THE ASSESS EE ITA NO.4194/MUM/2009 (ASSESSMENT YEAR: 2005-06) 3 TO M/S HINDALCO INDUSTRIES LTD., THE ASSESSEE EARNE D COMMISSION OF RS.84,79,750/- FROM M/S HINDALCO INDUSTRIES LTD.. AGAINST RECEIPT OF COMMISSION, THE ASSESSEE DEBITED RS.10,56,426/- TOWARDS SERVICE CHARGES PAID TO VARIOUS PERSONS. DURING ASSESSMENT PROCEEDINGS THE ASSESSEE PRODUCED CASH VOUCHERS SIGNED BY VARIOUS PERSONS EACH RANGING FROM RS.500/ - TO RS. 950/- IN SUPPORT OF ITS CLAIM. AS THE ENTIRE EXPENSES WERE INCURRED IN CASH, THE AO RECORDED TH E STATEMENT OF ONE OF THE PARTNERS. THE PARTNER SHRI B.P. KOTAK STATED THAT THE DOCUMENTS OF EXPORTS WER E RECEIVED FROM M/S HINDALCO INDUSTRIES LTD. AND SUBMITTED TO MARITIME COMMISSIONERS OFFICE AT KHANDESHWAR EXCISE OFFICE. COMPETENT PROFESSIONALS WERE STATED TO HAVE BEEN APPOINTED FOR PRESENTING T HE ISSUE OF REBATE CLAIM BEFORE CENTRAL EXCISE AUTHORI TIES. ABOUT 100 PROFESSIONALS WERE STATED TO HAVE BEEN ENGAGED IN CARRYING OUT THE TASK OF FILING THE REBA TE CLAIMS ON CASE TO CASE BASIS. HOWEVER, THE PARTNER SHRI B.P.KOTAK EXPRESSED HIS INABILITY TO PRODUCE NAMES AND ADDRESSES OF THE PROFESSIONALS TO WHOM THE SERVICE CHARGES WERE PAID. HE WAS ALSO UNABLE T O PRODUCE THE PROFESSIONALS BEFORE THE A.O. THE PARTN ER ITA NO.4194/MUM/2009 (ASSESSMENT YEAR: 2005-06) 4 STATED THAT THE PROFESSIONALS HAILED FROM FAR OFF STATES AND THEY DID NOT HAVE FULL FLEDGED OFFICE AND IT WAS DIFFICULT TO TRACE THEIR WHEREABOUTS. THE AO WA S NOT SATISFIED WITH THE ASSESSEES EXPLANATION. THE AO NOTICED SOME CONTRADICTIONS IN THE STATEMENT OF PARTNER SHRI B.P.KOTAK AND HELD THAT IT WAS NOT POSSIBLE TO BELIEVE THE CLAIM OF THE ASSESSEE TO O BTAIN PROFESSIONALS TO PROCESS EXCISE DUTY REBATES. THE A O INTENDED TO DISALLOW THE ASSESSEES CLAIM OF PAYMEN T OF SERVICE CHARGES OF RS.10,56,426/-. IN RESPONSE, THE ASSESSEE FILED LETTER DATED 28.11.2007 REITERATING THE EARLIER EXPLANATION. THE ASSESSEE ALSO FILED THE RE VISED STATEMENT OF COMPUTATION OF INCOME TAKING THE ENTIR E EXPENSES OF SERVICE CHARGES AS INCOME. THE AO TREATED THIS CLAIM OF THE SERVICE CHARGES OF RS.10,56,426/- AS INCOME OF THE ASSESSEE AND ALSO INITIATED PENALTY PROCEEDINGS IN THE ASSESSMENT ORD ER. DURING PENALTY PROCEEDINGS, THE ASSESSEE EXPLAINED THAT THE SERVICE PROFESSIONALS HAD NO PERMANENT ADDRESS, HOWEVER, THEIR SIGNATURES WERE OBTAINED WHILE MAKING PAYMENT OF SERVICE CHARGES. ALTHOUGH THE EXPENDITURE WAS GENUINE BUT AS THE ADDRESSES OF THE PROFESSIONAL WERE NOT AVAILABLE, THE ASSESSEE ITA NO.4194/MUM/2009 (ASSESSMENT YEAR: 2005-06) 5 VOLUNTARILY REVISED THE COMPUTATION DISALLOWING SER VICE CHARGES CLAIM OF RS.10,56,426/-. DURING PENALTY PROCEEDINGS THE ASSESSEE ALSO RELIED ON CERTAIN DECISIONS OF RAJASTHAN HIGH COURT IN CASE OF SHIV L AL TAK 251 TR 373, SIR SHADI LAL SUGAR & GENERAL MILLS LTD. 168 ITR, CIT VS. SURESH CHANDER MITTAL 251 ITR 9 AND OTHER CASE LAWS. THE AO WAS NOT SATISFIED WITH THE ASSESSEES EXPLANATION AND HELD THAT THE ASSESSEE CLAIMED THE SERVICE CHARGES TO THE EXTENT OF RS.10,56,426/- TO REDUCE THE INCOME CHARGEABLE TO TAX. THE EXPENSES COULD NOT BE PROVED TO THE SATISFACTION OF AO THAT SUCH EXPENSES WERE INCURRED WHOLLY AND EXCURSIVELY FOR THE PURPOSE OF BUSINESS. THE AO ALSO HELD THAT SUCH EXPENSES WERE CLAIMED IN ORDER TO CONCEAL THE TRUE INCOME. THE AO LEVIED PENALTY OF RS.3,86,573/- U/S 271(1)(C ) OF THE INCO ME TAX ACT, 1961 (IN SHORT THE ACT). 4. ON APPEAL BEFORE THE LD. CIT(A), THE ASSESSEE WHILE REITERATING THE SAME SUBMISSIONS, INTERALIA SUBMITTED THAT IT HAD A STRONG BELIEF THAT THOUGH THE EXPENDITURE INCURRED ON SUCH PEOPLE WERE GENUINE AN D WHOLLY AND EXCLUSIVELY INCURRED FOR THE PURPOSE OF BUSINESS BUT IT MAY BE DIFFICULT TO PRODUCE THOSE ITA NO.4194/MUM/2009 (ASSESSMENT YEAR: 2005-06) 6 PEOPLE BEFORE THE AO AS THEY MAY NOT BE AVAILABLE A T THAT TIME AFTER MORE THAN TWO AND HALF YEARS. MOREOVER, NO PAYMENT WAS DUE TO BE MADE SO THAT THEY MAY NOT CO-OPERATE WHICH MAY LEAD TO LONG TER M LITIGATION AND MAY SUFFER BUSINESS. UNDER THESE CIRCUMSTANCES, THE ASSESSEE VOLUNTARILY OFFERED SUC H PAYMENT FOR TAX IN ORDER TO HAVE PEACE OF MIND AND TO AVOID LITIGATION. THEREFORE, IT WAS REQUESTED THAT THE PENALTY LEVIED MAY BE DELETED. THE LD. CIT(A) WH ILE CONSIDERING THE NATURE OF ASSESSEES BUSINESS INTER ALIA OBSERVED THAT THE APPELLANTS CLAIM APPEARS TO BE CORRECT THAT THE SERVICES OF OUTSIDE PROFESSIONALS WERE OBTAINED BY THE APPELLANT FOR THE PURPOSE OF DOING THE ENTIRE PROCESS AND PROCEDURE FOR OBTAINING NECESSA RY REBATES. FROM THE WORKFORCE OF 3 EMPLOYEES, THE APPELLANT COULD NOT HAVE EARNED COMMISSION INCOME O F RS.84,79,750/- DURING THE YEAR. THE APPELLANT COULD NOT HAVE SETTLED ABOUT 3000 CLAIMS OF M/S HINDALCO INDUSTRIES LTD. WITH THE MARITIME COMMISSIONERS OFFICE. ALL THOSE PERSONS WERE TEMPORARILY ENGAGED FOR THIS SPECIFIC PURPOSE AND THEIR SIGNATURES WERE OBTAINED ON THE CASH VOUCHERS. UNDER THESE CIRCUMSTANCES, HE HELD THAT THE EXPENDITURES INCURR ED ITA NO.4194/MUM/2009 (ASSESSMENT YEAR: 2005-06) 7 BY THE APPELLANT APPEARS TO BE GENUINE THOUGH THE APPELLANT COULD NOT PROVE THE SAME DURING THE ASSESSMENT PROCEEDINGS BY PRODUCING THE PERSONS BEFORE THE AO. ACCORDING TO THE LD. CIT(A) SUCH CIRCUMSTANCES WERE BEYOND THE CONTROL OF THE APPELLANT. THE LD. CIT(A) AFTER CONSIDERING THE VA RIOUS DECISIONS HELD THAT THERE IS NO CONCEALMENT OF INCO ME OR FILING OF INACCURATE PARTICULARS OF INCOME ON TH E PART OF THE APPELLANT AND ACCORDINGLY, HE DELETED T HE PENALTY IMPOSED BY THE AO. 5. AT THE TIME OF HEARING, THE LD. DR SUPPORTS THE ORDER OF THE AO. 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE LD. DR AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE FACTS ARE NOT IN DISPUTE INASMUCH AS IT IS ALSO NOT IN DISPUTE THAT THE ASS ESSEE GOT SETTLED ABOUT 3000 CLAIMS OF REBATE WITH THE HELP OF PERSONS TEMPORALLY ENGAGED FOR SPECIFIC PURPOSE. IN SUPPORT THE ASSESSEE HAS FILED CASH VOUCHERS SIG NED BY RECIPIENTS EACH RANGING FROM RS.500/- TO RS.950 /-. THE PARTNER SHRI B.P.KOTAK IN HIS STATEMENT HAS ALS O CONFIRMED THE SAME. HOWEVER, THEY COULD NOT BE ITA NO.4194/MUM/2009 (ASSESSMENT YEAR: 2005-06) 8 PRODUCED BECAUSE IT WAS VERY DIFFICULT FOR THE ASSE SSEE TO PURSUE THEM FOR ATTENDING THE OFFICE OF THE AO SPECIFICALLY WHEN THERE WERE NO DUES OUTSTANDING AN D ALSO DUE TO TIME GAP. IT IS NOT THE CASE OF THE REVENUE THAT NO SUCH EVIDENCE WAS PRODUCED BY THE ASSESSEE OR THERE IS DENIAL BY THE RECIPIENTS OR NO SUCH PAYMENT IS REQUIRED TO BE MADE IN THIS LINE OF BUSINESS. 7. IN ORDER TO APPLY THE PROVISIONS OF SECTION 271(1)(C) THERE HAS TO BE CONCEALMENT OF PARTICULAR S OF INCOME, SECONDLY THE ASSESSEE MUST HAVE FURNISHE D INACCURATE PARTICULARS OF INCOME. 8. IN THE RECENT JUDGMENT OF THE HONBLE APEX COURT IN CIT V/S RELIANCE PETROPRODUCTS PVT. LTD. (2010) 322 ITR 158(SC) THEIR LORDSHIPS, AFTER CONSIDERING VARIOUS DECISIONS INCLUDING DILIP N. SH ROFF VS. JCIT (2007) 291 ITR 519(SC), UNION OF INDIA V/S 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: ITA NO.4194/MUM/2009 (ASSESSMENT YEAR: 2005-06) 9 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, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTION 271(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND TO BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. IN ORDER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILITY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE, 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 FALSE 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 NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. 9. RESPECTFULLY FOLLOWING THE RATIO OF THE ABOVE DECISIONS AND KEEPING IN VIEW THAT IT IS NOT THE CA SE OF THE REVENUE THAT THE CLAIM MADE BY THE ASSESSEE WAS FOUND TO BE FALSE OR UNTRUE BASED ON NO MATER IAL ITA NO.4194/MUM/2009 (ASSESSMENT YEAR: 2005-06) 10 OR BONAFIDE BELIEF WE ARE OF THE VIEW THAT THERE IS NO CONCEALMENT ON THE PART OF THE ASSESSEE WHICH MAY CALL FOR LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. ACCORDINGLY, WE ARE INCLINED TO UPHOLD THE ORDER OF THE LD. CIT(A) IN DELETING THE PENALTY IMPOSED BY THE A O. THE GROUNDS TAKEN BY THE REVENUE ARE, THEREFORE, REJECTED. 10. IN THE RESULT, THE REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 9TH DEC.,2011 . SD SD (B. RAMAKOTAIAH ) (D.K.AGARWAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 9TH DECEMBER, 2011 SRL: COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH 6. GUARD FILE. BY ORDER TRUE COPY ASSTT. REGISTRAR, ITAT, MUMBAI