DCIT 2(1)(1), MUMBAI V. A.T.C (CLEARING & SHIPPING) P.LTD, MUMBAI

ITA 4351/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0121 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 21-06-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 23-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B S BISTDR
• Keywords: Business expenditure
• Section: 143(3); 133A

Judgement Text

, INCOME-TAX APPELLATE TRIBUNAL -GBENCH MUMBAI , . . , BEFORE S/SH.RAJENDRA,ACCOUNTANT MEMBER AND C. N. PRASAD,JUDICIAL MEMBER ./I.T.A./4351 /MUM/2016, /ASSESSMENT YEAR: 2008-09 DY. CIT-2(1)(1) ROOM NO.561, 5TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD MUMBAI-400 020. VS. M/S/ A.T.C. (CLEARING & SHIPPING) P. LTD. 901, PENINSULA TOWERS, PENINSULA CORPORATE PARK, GANPATRAO KADAM MARG, OFF SENAPATI BAPAT MARG, LOWER PAREL (W), MUMBAI-400 013. PAN:AAACA 3307 K ( /APPELLANT) ( / RESPONDENT) ./I.T.A./4192 /MUM/2016, /ASSESSMENT YEAR: 2008-09 M/S/ A.T.C. GLOBAL LOGISTICS PVT.LTD. (FORMERLY KNOWN AS M/S. A.T.C. CLEARING & SHIPPING P. LTD.) 901, PENINSULA TOWERS, LOWER PAREL MUMBAI-400 013. VS. DY. CIT-2(1)(1) MUMBAI-400 020. ( /APPELLANT) ( / RESPONDENT) / REVENUE BY: SHRI B.S. BIST-DR /ASSESSEE BY: SHRI PRAKASH PANDIT / DATE OF HEARING: 21/06/2017 / DATE OF PRONOUNCEMENT: 23/06/2017 , / PER RAJENDRA A.M. - CHALLENGING THE ORDER DATED 22.03.2016 OF CIT(A)-4 , MUMBAI THE ASSESSING OFFICER (AO.) AND THE ASSESSEE HAVE FILED CROSS APPEAL FOR THE A BOVE MENTIONED ASSESSMENT YEAR.ASSESSEE - COMPANY, A CLEARING HOUSE AGENT,FILED ITS RETURN OF INCOME ON 30/09/2008 DECLARING TOTAL INCOME AT RS.7.34 CRORES.THE AO COMPLETED THE ASSES SMENT U/S. 143(3) ON 27.12.2010, DETERMINING ITS INCOME AT RS.8.11 CRORES. 2. EFFECTIVE GROUND OF APPEAL,RAISED BY THE AO,IS ABOU T RESTRICTING THE PENALTY FROM 300% TO 100% OF THE TAX SOUGHT TO BE EVADED.IN THE APPEAL, FILED BY THE ASSESSEE,IT HAS CHALLENGED THE PENALTY CONFIRMED BY THE CIT (A). 3. BEFORE PROCEEDING FURTHER,WE WOULD LIKE TO BRIEFLY NARRATE THE FACTS OF THE CASE.A SURVEY ACTION U/S. 133A WAS CARRIED OUT AT THE BUSINESS PR EMISES OF THE ASSESSEE ON 17.12.2007. IN HIS REPORT,THE ADIT MENTIONED THAT THE ASSESSEE WO ULD BE PAYING SPEED MONEY OF RS.250/- PER CONTAINER ON AN AVERAGE TO THE CUSTOM OFFICIALS ,THAT ON THE BASIS OF IMPORT AND EXPORT OF THE CONTAINERS THE SPEED MONEY WOULD WORK OUT TO RS .67.50 LAKHS (APPROX.) THE AO, DURING THE ASSESSMENT PROCEEDING FOUND THAT THE ASSESSEE H AD INCURRED EXPENDITURE TO THE TUNE OF RS.3.53 CRORES IN CASH. HE OBSERVED THAT IT HAD FAI LED TO JUSTIFY THE CASH EXPENSES ALONG WITH 4351&4192/M/16(08-09)ATC 2 COMPLETE DETAILS.ACCORDINGLY, 20% OF TOTAL CASH EXP ENDITURE, AMOUNTING TO RS.70.72 LAKHS WAS DISALLOWED.VIDE NOTICE DT.17.12.2010,THE AO INI TIATED PENALTY U/S.271(1)(C) R.W.S. EXPL. 1 OF THE ACT FOR FILING INACCURATE PARTICULARS OF I NCOME.THE MATTER TRAVELLED UP TO THE TRIBUNAL IN QUANTUM PROCEEDINGS. 4. IN THE MEANWHILE THE AO ISSUED FURTHER NOTICE AS TO WHY PENALTY SHOULD NOT BE LEVIED. AS PER THE AO,THE ASSESSEE DID NOT SUBMIT ANY EXPLANA TION IN THAT REGARD. REFERING TO EXPLN. 1 TO SECTION 271(1)(C)AND RELYING UPON THE CASES OF S RINIVASA PAI (242ITR29); WESTERN AUTOMOBILES (INDIA) (112ITR1048); DHARMENDRA PROCES SORS (306ITR277),HE HELD THAT THE ASSESSEE HAD DELIBERATELY FILED INACCURATE PARTICUL ARS OF INCOME AND SOUGHT TO EVADE TAX ON RS.70,72,053/-.ACCORDINGLY,HE LEVIED PENALTY OF RS. 72 LAKHS (@ 300%) VIDE HIS ORDER DT. 25/3/2013. 5. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PR EFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA). THE ASSESSEE MADE ELABOR ATE SUBMISSIONS BEFORE HIM. HE REFERRED TO ORDER OF THE FAA WHO HAD DECIDED THE QUANTUM APP EAL AND HELD THAT EXPENDITURE INCURRED IN CASH HAD NOT BEEN APPROVED BY THE APPELLATE AUTH ORITY,THAT THE EXPENDITURE WAS NOT GENUINE, THAT IN THE APPELLATE PROCEEDINGS DISALLOW ANCE OF RS.70.72 LAKHS WAS UPHELD, THAT PROPER TAXABLE INCOME HAD NOT BEEN SHOWN BY THE ASS ESSEE IN THE RETURN,THAT THE LEVY OF PENALTY WAS JUSTIFIED, THAT EXPENSES HAD BEEN CLAIM ED ON THE BASIS OF SELF CREATED VOUCHERS.FINALLY,HE RESTRICTED THE LEVY OF PENALTY TO 100% OF THE TAX SOUGHT TO BE EVADED. 6. DURING THE COURSE OF HEARING BEFORE US,DEPARTMENTA L REPRESENTATIVE (DR) RELIED UPON THE ORDER OF THE AO AND SAID THAT HE HAD RIGHTLY LEVIED PENALTY AT 300%.THE AUTHORISED REPRESENTATIVE(AR) STATED THAT THE TRIBUNAL,WHILE D ECIDING THE QUANTUM APPEAL UNDER CONSIDERATION,HAD REDUCED THE ADDITION SUBSTANTIALL Y, THAT THE TRIBUNAL AT PG-12, PARA -12 OF ORDER (ITA/1083/MUM/2012 6917/MUM/ 12 DT.6/5/16) HA D DIRECTED AO TO DISALLOW ONLY 5% OF CASH EXPENSES, THAT ON ESTIMATE, DISALLOWANCE PE NALTY UNDER SECTION 271(1)(C ) COULD NOT BE IMPOSED,THAT THE AO HAD NOT STRUCK OFF THE APPLICAB LE FAILURE OF THE ASSESSEE IN THE SHOW CAUSE NOTICE OF THE ASSESSEE.HE RELIED UPON THE CAS ES OF SSP LTD (328ITR643); NOKIA INDIA PVT.(343ITR434); AND RAKESH KUMAR DUDANI (45CCH-20) . 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE AO HAD MADE DISALLOWANCE @20% OF TOTAL CASH EXPENSE S,THAT THE TRIBUNAL HAD UPHELD DISALLOWANCE AT 5%.IT IS A CASE OF ESTIMATED DISALL OWANCE FROM THE VERY BEGINNING.IN SUCH CASES ADDITIONS CAN BE MADE AND BE UPHELD IN QUANTU M PROCEEDINGS.BUT,SUCH CASES WOULD NOT 4351&4192/M/16(08-09)ATC 3 FALL UNDER THE CATEGORY OF CASES WHERE INACCURATE P ARTICULARS HAVE BEEN FILED OR WHERE THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME.AD DITION IN QUANTUM PROCEEDINGS CANNOT AND SHOULD NOT LEAD TO AUTOMATIC LEVY OF CONCEALMEN T PENALTY.THOUGH,THERE IS NO NEED TO QUOTE ANY AUTHORITY TO HOLD THAT WHERE AD HOC OR ES TIMATED ADDITIONS ARE MADE PENALTY FOR CONCEALMENT CANNOT BE LEVIED,YET WE WOULD LIKE TO R ELY UPON THE CASE OF SSP LTD.(SUPRA).IN THAT MATTER THE AO HAD MADE ADDITIONS ON ACCOUNT OF DISALLOWANCE OF CERTAIN EXPENSES UNDER THE HEAD OFFICE EXPENDITURE AND DISALLOWANCE OF THE PROVIDENT FUND AND EMPLOYEES STATE INSURANCE PAYMENTS MADE BEYOND THE DUE DATE UNDER T HE RESPECTIVE ACTS AND ALSO LEVIED PENALTY U/S.271(1)(C) OF THE ACT.THE FAA DELETED TH E PENALTY HOLDING THAT MERE DISALLOWANCE WAS NOT A GROUND FOR LEVYING PENALTY IN THE ABSENCE OF ANY CONCEALMENT OR GIVING OF INACCURATE PARTICULARS.THIS VIEW WAS UPHELD BY THE TRIBUNAL OBSERVING THAT IN THE ASSESSMENT ORDER THE ASSESSEE HAD SPECIFICALLY EXPLAINED THAT THE EXPENSES WERE BUSINESS EXPENDITURE AND THEY HAD BEEN INCURRED TO ENTERTAIN CLIENTS AND BUS INESS RELATED PERSONS AND THE ORIGINAL BILLS OF EXPENDITURE COULD ALSO BE VERIFIED. IT WAS FURTH ER NOTICED THAT THIS EXPENDITURE HAD BEEN DISALLOWED ON AN ESTIMATE BASIS WITHOUT POINTING OU T ANY SPECIFIC DEFECT IN THE EXPLANATION OF THE ASSESSEE.DISMISSING THE APPEAL,FILED BY THE DEP ARTMENT,THE HONBLE P & H HIGH COURT HELD THE TRIBUNAL HAD DELETED THE PENALTY ON FINDIN G THAT DISALLOWANCE WAS MADE ON AN ESTIMATE BASIS WITHOUT POINTING OUT ANY SPECIFIC DE FECT IN EXPLANATION OF ASSESSEE AND THEREFORE THE ORDER OF THE TRIBUNAL HAD TO BE CONFI RMED. 8. CONSIDERING THE ABOVE WE ARE OF THE OPINION THAT NO PENALTY WAS LEVIABLE IN THE PRESENT CASE.THEFORE,WE REVERSE THE ORDER OF THE FAA WHEREI N HE HAD RESTRICTED PENALTY TO 100% OF THE TAX SOUGHT TO BE EVADED.IT IS A CASE WHERE NO P ENALTY SHOULD HAVE BEEN LEVIED.EVEN ON JURISDICTIONAL ISSUE THE PENALTY ORDER WILL NOT STA ND.THE AO HAD NOT STRUCK OFF THE PORTION IN THE PENALTY SHOW CAUSE NOTICE TO INDICATE THE OMISS ION/COMMISSION FOR WHICH PENALTY WAS BEING LEVIED.THEREFORE,ALLOWING THE APPEAL FILED BY THE ASSESSEE,WE DISMISS THE APPEAL OF THE AO. AS A RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWE D AND THE APPEAL OF THE AO STANDS DISMISSED. . 4351&4192/M/16(08-09)ATC 4 ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD JUNE , 2017. 23 , 2017 SD /- SD/- . . / C.N.PRASAD ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; /DATED : 23 .06 .2017. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR G BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.