RISK DESIGN & ADVERTISING LTD, MUMBAI V. DCIT CEN CIR 38, MUMBAI

ITA 4197/MUM/2010

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8536 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2017
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 10-02-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 24-05-2010
• Court: TRIBUNAL
• Department Lawyers: B S BIST
• Keywords: Opportunity of being heard; Revised return
• Section: 133A; 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) & SHRI PAWAN SINGH (JM) I.T.A. NO. 4197 /MUM/20 10 (ASSESSMENT YEAR 20 06 - 07 ) I.T.A. NO. 1031/MUM/2011 (ASSESSMENT YEAR 2007 - 08) M/S. RISK DESIGN & ADVERTISING LIMITED NO. 8, SHAH INDUSTRIAL ESTATE, OFF VIRA DESAI ROAD, ANDHERI WEST MUMBAI - 400 053. VS. D EPUTY CIT CC - 38 AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400020. ( APPELLANT ) ( RESPONDENT ) PAN NO . AACCD0946R ASSESSEE BY NONE DEPARTMENT BY S HRI B.S. BIST DATE OF HEARING 9 . 2 . 201 7 DATE OF PRONOUNCEMENT 9 .2 . 201 7 O R D E R PER B.R. BASKARAN (AM) : - BOTH THE APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST SEPARATE ORDERS PASSED BY THE LEARNED CIT(A) - 41, MUMBAI AND THEY RELATE TO A.Y. 2006 - 07 & 2007 - 08. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE EVEN THOUGH THESE APPEALS WERE ADJOURNED ON SEVERAL OCCASIONS AT THE REQUEST OF THE ASSESSEE. HENCE, WE PROCEED TO DISPOSE OF THE APPEAL EX - PARE, WITHOUT PRESENCE OF THE ASSESSEE. 3. WE SHALL FIRST TAKE UP THE A PPEAL FILED FOR A.Y. 2006 - 07. WE NOTICED THAT THE GROUNDS OF APPEAL ARE NOT AVAILABLE ON RECORD. HOWEVER, WE NOTICE THAT T HE ASSESSEE HAS FILED THE APPEAL AGAINST THE ORDER PASSED BY THE LEARNED CIT(A) CONFIRMING THE PENALTY LEVIED U/S. 271(1)(C) OF THE ACT. HENCE, IT APPEARS THAT M/S. RISK DESIGN & ADVERTISING LIMITED 2 THE ASSESSEE IS AGGRIEVED BY THE DECISION OF THE LEARNED CIT(A) IN CONFIRMING THE PENALTY. 4. WE HAVE HEARD LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE RECORD. THE ASSESSEE HAS FILED ITS RETURN OF INCOME FOR A.Y. 2006 - 0 7 ON 29.11.2006 DECLARING TOTAL INCOME OF ` 23,16,790/ - . THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF PRINTING AND DESIGNING PROMOTIONAL MATERIAL FOR FILM INDUSTRY AND IS ALSO ENGAGED IN PRODUCTION AND DISTRIBUTION OF FILMS. A SURVEY U/S. 133A OF THE ACT WAS CONDUCTED ON 12.9.2007 AT THE BUSINESS PREMISES OF THE ASSESSEE. DURING THE COURSE OF SURVEY, A SWORN STATEMENT U/S. 131 OF THE ACT WAS RECORDED FROM THE DIRECTOR OF THE COMPANY NAME D MOHD. AZAM KHAN. THE ASSESSEE HAD RECEIVED SHARE APPLICATION M ONEY DURING T HE YEAR AND IN THE SWORN STATEM E N T THE ASSESSEE AGREED TO OFFER SHARE APPLICATION MONEY OF ` 2.40 CRORES RECEIVED FROM M/S. RGV FILMS PVT. LTD. AND ` 20 LAKHS RECEIVED FROM M/S. SINGNORA FINANCE PVT. LTD. , BOTH AGGREGATING TO ` 2.60 CRORES A S INCOME OF THE ASSESSEE . ACCORDING TO THE SURRENDER SO MADE, THE ASSESSEE FILED REVISED RETURN OF INCOME ON 29 - 08 - 2009 DECLARING ABOVE SAID AMOUNT OF ` 2.60 CRORES . THE ASSESSING OFFICER ACCEPTED THE REVISED RETURN OF INCOME . THEREAFTER INITIATED PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT ON THE ABOVE SAID DISCLOSURE OF ` 2.60 CRORES AND LEVIED PENALTY OF ` 87,51,600/ - EQUIVALENT TO 100% OF THE TAX SOUGHT TO BE EVADED. 5. BEFORE THE LEARNED CIT(A), THE ASSESSEE TOOK THE PLEA THAT THE ABOVE SAID SUM OF ` 2.60 CRORES WAS OFFERED VOLUNTARILY TO BUY PEACE AND AVOID PROTRACTED LITIGATION. ACCORDINGLY IT WAS CONTENDED THAT PENALTY SHOULD NOT HAVE BEEN LEVIED BY THE ASSESSING OFFICER. HOWEVER, THE ASSESSING OFFICER TOOK THE VIEW THAT IT IS THE RESPONSIBILITY OF THE ASSESSEE TO OFFER EXPLANATION S IN TERMS OF EXPLANATION 1 TO SECTION 271(1)(C) OF THE ACT AND HENCE MERE SURRENDER INCOME DURING THE COURSE OF SURVEY PROCEEDINGS WOULD NOT RELIEVE THE ASSESSEE FROM THE LIABILITY OF PENALTY U/S. 271(1)(C) OF THE ACT . A CCORDINGLY HE CONFIRMED THE PENALTY LEVIED BY THE ASSESSING OFFICER. AGGRIEVED, THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. M/S. RISK DESIGN & ADVERTISING LIMITED 3 6. WE HAVE HEARD LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE RECORD. WE NOTICE THAT THE ASSESSEE HAS FILED A DETAILED SUBMISSION ON 11 - 06 - 2009 BEFORE THE AO IN RESPONSE TO THE PENALTY NOTICE RECEIVED BY IT. IT IS STATED IN PARAGRAPH 3.9 THEREIN THAT THE ASSESSEE HAS FURNISHED ALL THE DETAILS AND ALSO PRODUCED CONFIRMATION LETTERS. IT IS STATED IN PARAGRAPH 5 THAT THE DEC LARATION OF RS.2.60 CRORES HAS BEEN MADE WITHOUT PERUSAL OF SEIZED PAPERS. IT IS FURTHER STATED THAT THE ABOVE SAID VOLUNTARY SURRENDER HAS BEEN MADE IN ORDER TO BUY PEACE AND TO AVOID PROTRACTED LITIGATION, SINCE THE ASSESSEE MAY NOT BE ABLE TO PRODUCE A ND PROVE THE GENUINENESS/CREDITWORTHINESS OF THE CREDITS. 7. WE NOTICE THAT THE TAX AUTHORITIES HAVE NOT REFERRED TO ANY OF THE INCRIMINATING MATERIAL TO SHOW THAT THE SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE WAS BOGUS. ON THE CONTRARY, THE A SSESSEE HAS CONTENDED THAT IT HAS VOLUNTARILY SURRENDERED THE AMOUNT FOR THE REASONS DISCUSSED ABOVE. IT IS A WELL SETTLED PROPOSITION THAT THE PENALTY PROCEEDINGS ARE INDEPENDENT OF ASSESSMENT PROCEEDINGS AND HENCE THE ENTIRE ISSUE HAS TO BE EXAMINED AFR ESH FROM THE ANGLE OF PENAL PROVISIONS. THE FINDINGS GIVEN IN THE ASSESSMENT PROCEEDINGS CAN BE TAKEN AS A GUIDE, BUT THE SAME IS NOT CONCLUSIVE. WE NOTICE THAT THE LD CIT(A) HAS NOT GONE INTO THE FACTUAL DETAILS AND SUBMISSIONS MADE BY THE ASSESSEE AND HE HAS PROCEEDED TO ADJUDICATE THE APPEAL BY DISTINGUISHING VARIOUS CASE LAWS RELIED UPON BY THE ASSESSEE. IN OUR CONSIDERED VIEW, THE FACTS PREVAILING IN THE PRESENT CASE SHOULD HAVE BEEN EXAMINED BY THE LD CIT(A) AND THEN HE SHOULD HAVE ADJUDICATED THE APPEAL BY PLACING RELIANCE ON VARIOUS CASE LAWS. UNDER THESE SET OF FACTS, WE ARE OF THE VIEW THAT THIS ISSUE REQUIRES FRESH EXAMINATION AT THE END OF LD CIT(A). ACCORDINGLY WE SET ASIDE THE ORDER PASSED BY LD CIT(A) AND RESTORE ALL THE ISSUES TO HIS FIL E FOR ADJUDICATING THEM AFRESH. 8 . WE SHALL NOT TAKE UP THE APPEAL FILED FOR A.Y. 2007 - 08, WHEREIN THE ASSESSEE IS CONTESTING THE DECISION OF THE LEARNED CIT(A) IN CONFIRMING THE DISALLOWANCE OF INTEREST EXPENDITURE AND DISALLOWANCE OF PRODUCTION EXP E NSES . M/S. RISK DESIGN & ADVERTISING LIMITED 4 9 . WE HAVE HEARD LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE RECORD. THE ASSESSING OFFICER NO T ICED THAT THE ASSESSEE HAS BORROWED MONEY FROM TWO PERSONS AND HAS PAID INTEREST OF ` 51.48 LAKHS TO THEM. THE ASSESSING OFFICER FURTHER NOTICED THAT TH E ASSESSEE HAS GIVEN SHARE APPLICATION MONEY OF ` 4.33 CRORES TO ITS ASSOCIATE CONCERNS AND INTEREST FREE ADVANCE OF ` 3.02 CRORES. HENCE, THE ASSESSING OFFICER DISALLOWED THE PROPORTIONATE AMOUNT OF INTEREST EXPENDITURE, WHICH WORKED OUT TO ` 44.55 LAKHS. THE ASSESSING OFFICER FURTHER NOTICED THAT THE ASSESSEE HAS CLAIMED DEDUCTION OF ` 94.74 LAKHS AS PRODUCTION EXPENSES. HOWEVER, IN THE BOOKS OF ACCOUNT, THE ASSESSEE HAD CAPITALIZED THE SAME. HENCE, THE ASSESSING OFFICER DISALLOWED THE ABOVE CLAIM UNDER THE HEAD PRODUCTION EXPENSES. THE LEARNED CIT(A) CONFIRMED BOTH THE ADDITIONS AND HENCE THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. 10 . WE NOTICED FROM THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE LEARNED CIT(A) THAT THE ASSESSEE HAS RECEIVED INTER EST INCOME OF ` 35.90 LAKHS FROM VARIOUS PARTIES. FURTHER THE ASSESSEE HAS ALSO TAKEN A STAND THAT INTEREST FREE ADVANCE HAVE BEEN GIVEN FOR BUSINESS PURPOSE S ONLY. WE NOTICED THAT BOTH THE CONTENTIONS OF THE ASSESSEE HAVE NOT BEEN CONSIDERED BY THE LEARNE D CIT(A). WITH REGARD TO THE DISALLOWANCE OF PRODUCTION EXPENSES, THE ASSESSEE HAS SUBMITTED THAT IT HAS BEEN CONSISTENTLY FOLLOWING THE SAME METHOD FOR CLAIMING EXPENSES AND THIS FACT HAS ALSO BEEN OVERLOOKED BY THE LEARNED CIT(A). IT IS WELL SETTLED PROP OSITION OF LAW THAT THE ENTRIES MADE IN THE BOOKS OF ACCOUNT CANNOT BE CONSIDERED AS DETERMINATIVE FACTOR AND DEDUCTION CLAIMED BY THE ASSESSEE SHOULD BE EXAMINED IN ACCORDANCE WITH INCOME TAX PROVISIONS. 11 . IN VIEW OF THE ABOVE DISCUSSION, WE ARE OF THE VIEW THAT BOTH THE ISSUES REQUIRE FRESH CONSIDERATION AT THE END OF THE LEARNED CIT(A). ACCORDINGLY, WE SET ASIDE THE ORDER PASSED BY THE LEARNED CIT(A) ON BOTH THE ISSUES AND RESTORE THE SAME TO HIS FILE WITH THE DIRECTION TO EXAMINE THEM AFRESH AFTER AF FORDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. M/S. RISK DESIGN & ADVERTISING LIMITED 5 12 . IN THE RESULT, BOTH THE APPEAL S ARE TREATED AS ALLOWED FOR STATISTICA L PURP O S ES. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 9 . 2 .201 7. SD/ - SD/ - (PAWAN SINGH ) (B .R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 9 / 2 / 20 1 7 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( DY./ASSTT. REGISTRAR) PS ITAT, MUMBAI