VIBRANT DE-HYDRO FOODS P.LTD, MUMBAI V. ITO WD 9(3)(3), MUMBAI

ITA 428/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3135 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2016
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Next Hearing Date: 08-09-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 16-01-2015
• Court: TRIBUNAL
• Department Lawyers: SUMIT KUMARDR
• Keywords: Wrong claim
• Section: 143(3); 80IB

Judgement Text

, - , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC, MUMBAI , ! ' , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, ITA NO.428/MUM/2015 ASSESSMENT YEAR: 2010-11 VIBRANT DE-HYDRO FOODS PVT. LTD. SHOP NO.64, RIZVI PARK, S.V. ROAD, SANTACRUZ (WEST), MUMBAI-400054 / VS. INCOME TAX OFFICER WARD-9(3)(3), AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020 / ASSESSEE / REVENUE P.A. NO . AACCV4593J $ % & / ASSESSEE BY NONE $ % & / REVENUE BY SHRI SUMIT KUMAR-DR / DATE OF HEARING 08/09/2016 & / DATE OF ORDER: 08/09/2016 & / O R D E R THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DA TED 25/09/2014 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI. THE ONLY GROUND RAISED BY THE ASSESSEE PERTAINS TO ITA NO.428/MUM/2015 VIBRANT DE-HYDRO FOODS PVT. LTD. 2 CONFIRMING LEVY OF PENALTY U/S 271(1)(C) OF THE INC OME TAX ACT, 1961 (HEREINAFTER THE ACT), AMOUNTING TO RS.12 ,03,030/- AS THE CLAIMED DISALLOWANCE U/S 80IB OF THE ACT WAS NOT ALLOWED. 2. DURING HEARING, NONE WAS PRESENT FOR THE ASSESS EE, AS REGISTERED NOTICES SENT FOR 23/06/2016 AND 01/08 /2016 WERE NEITHER RESPONDED BY THE ASSESSEE NOR ANY ADJO URNMENT WAS SOUGHT. IT SEEMS THAT THE ASSESSEE IS NOT INTE RESTED TO PURSUE ITS APPEAL, THEREFORE, I HAVE NO OPTION BUT TO PROCEED EX-PARTE, QUA THE ASSESSEE AND TEND TO DISPOSE OF T HIS APPEAL ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. ON TH E OTHER HAND, THE LD. DR, SHRI SUMIT KUMAR DEFENDED THE PEN ALTY. 2.1. I HAVE CONSIDERED THE SUBMISSIONS OF LD. DR A ND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE COMPANY CLAIMED DEDUCTION U/S 80IB OF THE ACT AMOUNTING TO RS.38, 93,297/-. THE ASSESSMEN T U/S 143(3) WAS COMPLETED ON 01/01/2013 ASSESSING THE TO TAL INCOME AT RS.39,85,607/- AGAINST THE NIL RETURNED I NCOME AND BOOK PROFIT OF RS.60,14,093/- FOR MAT PURPOSE. THE LD. ASSESSING OFFICER LEVIED PENALTY OF RS.12,03,030/- U/S 271(1)(C) OF THE ACT. ON APPEAL BEFORE THE LD. COMM ISSIONER OF INCOME TAX (APPEAL), THE PENALTY ORDER WAS AFFIR MED. THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. 2.2. IF THE OBSERVATION MADE IN THE ASSESSMENT ORD ER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, PENAL TY ORDER, CONCLUSION DRAWN IN THE IMPUGNED ORDER, MATERIAL AV AILABLE ITA NO.428/MUM/2015 VIBRANT DE-HYDRO FOODS PVT. LTD. 3 ON RECORD, ASSERTIONS MADE BY THE LD. RESPECTIVE CO UNSEL, IF KEPT IN JUXTAPOSITION AND ANALYZED, IT IS NOTICED T HAT THE LD. ASSESSING OFFICER TREATED THE AMOUNT OF RS.38,93,29 7/- AS INCOME FROM OTHER SOURCES AND NOT FROM BUSINESS ACT IVITIES REFERRED U/S 80IB(11A) OF THE ACT, THEREFORE, THE P ENALTY WAS IMPOSED FOR WRONG CLAIM MADE BY THE ASSESSEE. THIS PROPOSITION IS SHELTERED BY THE DECISION FROM HON'B LE APEX COURT IN THE CASE OF RELIANCE PETRO PRODUCTS PVT. L TD. 322 ITR 158 (SC) AND CIT VS AJAIB SINGH & COMPANY 253 ITR 6 30( P &H). WHILE COMING TO THIS CONCLUSION, THE HON'BLE A PEX COURT IN RELIANCE PETRO PRODUCTS PVT. LTD. (SUPRA) OBSERV ED AS UNDER:- A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINAB LE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACC URATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. S UCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO THE INACCURATE PARTICULARS. 2.4. IN THE LIGHT OF THE ABOVE OBSERVATION, I AM REPRODUCING HEREUNDER THE RELEVANT PORTION OF SECTI ON 271(1)(C) OF THE ACT FOR READY REFERENCE AND ANALYS IS:- SECTION 271(1)(C) IS AS UNDER:- '271(1) IF THE ASSESSING OFFICER OR THE COMMISSIONE R (APPEALS) OR THE COMMISSIONER IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT ANY P ERSON- (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME.' ITA NO.428/MUM/2015 VIBRANT DE-HYDRO FOODS PVT. LTD. 4 2.5. A GLANCE AT THIS PROVISION WOULD SUGGEST THAT IN ORDER TO BE COVERED, 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. PRESENT IS NOT THE CASE OF CONCEALMENT OF T HE INCOME. THAT IS NOT THE CASE OF THE REVENUE EITHER. AS PER LAW LEXICON, THE MEANING OF THE WORD 'PARTICULAR' IS A DETAIL OR DETAILS (IN PLURAL SENSE); THE DETAILS OF A CLAIM, OR THE SEPARATE ITEMS OF AN ACCOUNT. THEREFORE, THE WORD 'PARTICULA RS' USED IN THE SECTION 271(1)(C) WOULD EMBRACE THE MEANING OF THE DETAILS OF THE CLAIM MADE. IT IS AN ADMITTED POSITI ON IN THE PRESENT CASE THAT NO INFORMATION GIVEN IN THE RETUR N WAS FOUND TO BE INCORRECT OR INACCURATE. IT IS NOT AS I F ANY STATEMENT MADE OR ANY DETAIL SUPPLIED WAS FOUND TO BE FACTUALLY INCORRECT. HENCE, AT LEAST, PRIMA FACIE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PART ICULARS. THE WORDS ARE PLAIN AND SIMPLE. IN ORDER TO EXPOSE THE ASSESSEE TO THE PENALTY UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVO KED. BY ANY STRETCH OF IMAGINATION, MAKING AN INCORRECT CLA IM IN LAW CANNOT TANTAMOUNT TO FURNISHING INACCURATE PARTICUL ARS. IN COMMISSIONER OF INCOME TAX, DELHI VS. ATUL MOHAN BI NDAL [2009(9) SCC 589], WHERE HON'BLE APEX COURT WAS CONSIDERING THE SAME PROVISION, THE COURT OBSERVED THAT THE ASSESSING OFFICER HAS TO BE SATISFIED THAT A PERSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHE D INACCURATE PARTICULARS OF SUCH INCOME. HON'BLE COUR T REFERRED TO ANOTHER DECISION OF THIS COURT IN UNION OF INDIA VS. ITA NO.428/MUM/2015 VIBRANT DE-HYDRO FOODS PVT. LTD. 5 DHARAMENDRA TEXTILE PROCESSORS [2008(13) SCC 369], AS ALSO, THE DECISION IN UNION OF INDIA VS.RAJASTHAN SPG. & WVG. MILLS [2009(13) SCC 448] AND REITERATED IN PARA 13 THAT:- '13. IT GOES WITHOUT SAYING THAT FOR APPLICABILITY OF SECTION 271(1)(C), CONDITIONS STATED THEREIN MUST E XIST.' THEREFORE, IT IS OBVIOUS THAT IT MUST BE SHOWN THAT THE CONDITIONS UNDER SECTION 271(1)(C) MUST EXIST BEFOR E THE PENALTY IS IMPOSED. THERE CAN BE NO DISPUTE THAT EV ERYTHING WOULD DEPEND UPON THE RETURN FILED BECAUSE THAT IS THE ONLY DOCUMENT, WHERE THE ASSESSEE CAN FURNISH THE PARTIC ULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILITY WOULD ARISE. IN DILIP N. SHROFF VS. JOINT COMMISSIONER OF INCOME TAX, MUMBAI & ANR. [20 07(6) SCC 329], HON'BLE COURT EXPLAINED THE TERMS 'CONCEA LMENT OF INCOME' AND 'FURNISHING INACCURATE PARTICULARS'. TH E COURT WENT ON TO HOLD THEREIN THAT IN ORDER TO ATTRACT TH E PENALTY UNDER SECTION 271(1)(C), MENS REA WAS NECESSARY, AS ACCORDING TO THE COURT, THE WORD 'INACCURATE' SIGNI FIED A DELIBERATE ACT OR OMISSION ON BEHALF OF THE ASSESSE E. IT WENT ON TO HOLD THAT CLAUSE (III) OF SECTION 271(1) PROV IDED FOR A DISCRETIONARY JURISDICTION UPON THE ASSESSING AUTHO RITY, INASMUCH AS THE AMOUNT OF PENALTY COULD NOT BE LESS THAN THE AMOUNT OF TAX SOUGHT TO BE EVADED BY REASON OF SUCH CONCEALMENT OF PARTICULARS OF INCOME, BUT IT MAY NO T EXCEED THREE TIMES THEREOF. IT WAS POINTED OUT THAT THE TE RM 'INACCURATE PARTICULARS' WAS NOT DEFINED ANYWHERE I N THE ACT AND, THEREFORE, IT WAS HELD THAT FURNISHING OF AN A SSESSMENT ITA NO.428/MUM/2015 VIBRANT DE-HYDRO FOODS PVT. LTD. 6 OF THE VALUE OF THE PROPERTY MAY NOT BY ITSELF BE F URNISHING INACCURATE PARTICULARS. IT WAS FURTHER HELD THAT TH E ASSESSEE MUST BE FOUND TO HAVE FAILED TO PROVE THAT HIS EXPL ANATION IS NOT ONLY NOT BONA FIDE BUT ALL THE FACTS RELATING T O THE SAME AND MATERIAL TO THE COMPUTATION OF HIS INCOME WERE NOT DISCLOSED BY HIM. IT WAS THEN HELD THAT THE EXPLANA TION MUST BE PRECEDED BY A FINDING AS TO HOW AND IN WHAT MANN ER, THE ASSESSEE HAD FURNISHED THE PARTICULARS OF HIS INCOM E. THE COURT ULTIMATELY WENT ON TO HOLD THAT THE ELEMENT O F MENS REA WAS ESSENTIAL. IT WAS ONLY ON THE POINT OF MENS REA THAT THE JUDGMENT IN DILIP N. SHROFF VS. JOINT COMMISSIO NER OF INCOME TAX, MUMBAI & ANR. WAS UPSET. IN UNION OF IN DIA VS. DHARAMENDRA TEXTILE PROCESSORS (CITED SUPRA), AFTER QUOTING FROM SECTION 271 EXTENSIVELY AND ALSO CONSIDERING S ECTION 271(1)(C), THE COURT CAME TO THE CONCLUSION THAT SI NCE SECTION 271(1)(C) INDICATED THE ELEMENT OF STRICT LIABILITY ON THE ASSESSEE FOR THE CONCEALMENT OR FOR GIVING INACCURA TE PARTICULARS WHILE FILING RETURN, THERE WAS NO NECES SITY OF MENS REA. THE COURT WENT ON TO HOLD THAT THE OBJECT IVE BEHIND ENACTMENT OF SECTION 271(1)(C) READ WITH EXP LANATIONS INDICATED WITH THE SAID SECTION WAS FOR PROVIDING R EMEDY FOR LOSS OF REVENUE AND SUCH A PENALTY WAS A CIVIL LIAB ILITY AND, THEREFORE, WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDIENT FOR ATTRACTING CIVIL LIABILITY AS WAS THE CASE IN T HE MATTER OF PROSECUTION UNDER SECTION 276-C OF THE ACT. THE BAS IC REASON WHY DECISION IN DILIP N. SHROFF VS. JOINT COMMISSIO NER OF INCOME TAX, MUMBAI & ANR. (CITED SUPRA) WAS OVERRUL ED BY HON'BLE APEX COURT IN UNION OF INDIA VS. DHARAMENDR A ITA NO.428/MUM/2015 VIBRANT DE-HYDRO FOODS PVT. LTD. 7 TEXTILE PROCESSORS (CITED SUPRA), WAS THAT ACCORDIN G TO THE COURT THE EFFECT AND DIFFERENCE BETWEEN SECTION 271 (1)(C) AND SECTION 276-C OF THE ACT WAS LOST SIGHT OF IN CASE OF DILIP N. SHROFF VS. JOINT COMMISSIONER OF INCOME TAX, MUMBAI & ANR. (CITED SUPRA). HOWEVER, IT MUST BE POINTED OUT THAT IN UNION OF INDIA VS. DHARAMENDRA TEXTILE PROCESSORS ( CITED SUPRA), NO FAULT WAS FOUND WITH THE REASONING IN TH E DECISION IN DILIP N. SHROFF VS. JOINT COMMISSIONER OF INCOME TAX, MUMBAI & ANR. (CITED SUPRA), WHERE THE COURT EXPLAI NED THE MEANING OF THE TERMS 'CONCEAL' AND INACCURATE'. IT WAS ONLY THE ULTIMATE INFERENCE IN DILIP N. SHROFF VS. JOINT COMMISSIONER OF INCOME TAX, MUMBAI & ANR. (CITED SU PRA) TO THE EFFECT THAT MENS REA WAS AN ESSENTIAL INGREDIEN T FOR THE PENALTY UNDER SECTION 271(1)(C) THAT THE DECISION I N DILIP N. SHROFF VS. JOINT COMMISSIONER OF INCOME TAX, MUMBAI & ANR. (CITED SUPRA) WAS OVERRULED. I AM NOT CONCERNE D IN THE PRESENT CASE WITH THE MENS REA. HOWEVER, I HAVE TO ONLY SEE AS TO WHETHER IN THIS CASE, AS A MATTER OF FACT, TH E ASSESSEE HAS GIVEN INACCURATE PARTICULARS. IN WEBSTER'S DICT IONARY, THE WORD 'INACCURATE' HAS BEEN DEFINED AS:- 'NOT ACCURATE, NOT EXACT OR CORRECT; NOT ACCORDING TO TRUTH; ERRONEOUS; AS AN INACCURATE STATEMENT, COPY OR TRAN SCRIPT'. I HAVE ALREADY DISCUSSED THE MEANING OF THE WORD 'PARTICULARS' IN THE EARLIER PART OF THIS ORDER. RE ADING THE WORDS IN CONJUNCTION, THEY MUST MEAN THE DETAILS SU PPLIED IN THE RETURN, WHICH ARE NOT ACCURATE, NOT EXACT OR CO RRECT, NOT ACCORDING TO TRUTH OR ERRONEOUS. I MUST HASTEN TO A DD HERE ITA NO.428/MUM/2015 VIBRANT DE-HYDRO FOODS PVT. LTD. 8 THAT IN THIS CASE, THERE IS NO FINDING THAT ANY DET AILS SUPPLIED BY THE ASSESSEE IN ITS RETURN WERE FOUND TO BE INCO RRECT OR ERRONEOUS OR FALSE. SUCH NOT BEING THE CASE, THERE WOULD BE NO QUESTION OF INVITING THE PENALTY UNDER SECTION 2 71(1)(C) OF THE ACT. EVEN IF A WRONG CLAIM IS MADE BY THE ASSES SEE THAT ITSELF DOES NOT TANTAMOUNT TO CONCEALMENT OF INCOME . IN THE LIGHT OF THE FOREGOING DISCUSSION, I AM OF THE CONS IDERED OPINION THAT AT LEAST PENALTY IS NOT LEVIABLE, THER EFORE, THE LD. ASSESSING OFFICER IS DIRECTED TO DELETE THE PENALTY . FINALLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. THIS ORDER WAS PRONOUNCED IN THE OPEN IN THE PRES ENCE OF LD. DR AT THE CONCLUSION OF THE HEARING ON 08/09 /2016. SD/- (JOGINDER SINGH) ! ' / JUDICIAL MEMBER MUMBAI; DATED : 08/09/2016 F{X~{T? P.S / ! & $ )!*+ ,&+-* / COPY OF THE ORDER FORWARDED TO : 1. '#$%& / THE APPELLANT 2. '(%& / THE RESPONDENT. 3. ) ) * / THE CIT, MUMBAI. 4. ) ) * / CIT- , MUMBAI 5. +,- ' , ) '#$ ' / , / DR, ITAT, MUMBAI 6. -0 1$ / GUARD FILE. & / BY ORDER, (+# ' //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI