FOOD PHARMA INDIA PRIVATE LIMITED, MUMBAI V. INCOME TAX OFFICER 15(1)(2), MUMBAI

ITA 4494/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3764 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2008-2009
• Appeal Filed On: 19-06-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJEEV GUBGOTRA
• Section: 271(1)(c); 143(3); 37(1)

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE HONBLE SH. SANDEEP GOSAIN, JM & HONBLE SH. G. MANJUNATHA, AM ./ I.T.A. NO . 4494/MUM/2017 ( / ASSESSMENT YEAR: 2008 - 09 ) FOOD PHARMA INDIA PVT. LTD. A - 200, 1 ST FLOOR, TTC INDUSTRIAL LTD, MIDC, KHAIRANCE MUMBAI 400 710 / VS. ITO - 15(1)(2 ) , MUMBAI , PIN - ./ ./ PAN NO. A A AC F4694A ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : NONE / RESPONDENTBY : SHRI RAJEEV GUBGOTRA , D R / DATE OF HEARING : 19 .12 .2018 / DATE OF PRONOUNCEMENT : 12.02.2019 / O R D E R PER SANDEEP GOSAIN, J UDICIAL MEMBER : THE P RESENT APPE AL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF LD. CIT (APPEAL) 24 , MUMBAI DATED 23.03.2017 F OR AY 2008 - 09 ON THE GROUNDS MENTIONED HEREIN BELOW: - 2 I.T.A. NO. 4494 /MUM/201 7 FOOD PHARMA INDIA PVT. LTD. 1) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 24, MUMBAI ERRED IN UPHOLDING ASSESSING OFFICER'S VIEW OF LEVYING PENALTY @100% OF TAX SOUGHT TO BE EVADED I.E RS.6,66,178/ - BY ALLEGEDLY CONSIDERING EXPENSES U/S 37(1) OF RS. 13,83,914 AND UNSECURED LO ANS/SHARE APPLICATION MONEY OF RS.7,72,001/ - DISALLOWED BY THE ASSESSING OFFICER AS CONCEALED INCOME IGNORING THE EXPLANATIONS AND DETAILS SUBMITTED BY THE ASSESSEE. 2) THE APPELLANT CRAVES, LEAVE TO ADD, AMEND, MODIFY OR AFTER ALL OR ANY OF THE ABOVE GROU NDS OF APPEAL. RELIEF PRAYED FOR; IN THE CIRCUMSTANCES THE APPLICANT, THEREFORE PRAY THAT: 1) THE ASSESSING OFFICER MAY BE DIRECTED TO DELETE THE DEMAND RAISED OF RS.6,66,178/ - , ON ACCOUNT OF PENALTY U/S 271(L)(C) ON EXPENSES U/S 37(1) OF RS. 13,83,914 AND UNSECURED LOANS/SHARE APPLICATION MONEY OF RS.7,72,001/ - ALLEGEDLY DISALLOWED. 2. AT THE VERY OUTSET, IT IS NOTICED THAT NONE HAS APPEARED ON BEHALF OF ASSESSEE IN SPITE OF CALLS AND EVEN NO APPLICATION FOR ADJOURNMENT WAS MOVED. FROM THE ORDERSHEET , WE NOTICED THAT NONE WAS APPEARING ON BEHALF OF THE ASSESSEE AND NOTICES THROUGH 3 I.T.A. NO. 4494 /MUM/201 7 FOOD PHARMA INDIA PVT. LTD. RPAD WAS ALSO ISSUED ON THE ADDRESSES SUPPLIED BY THE ASSESSEE, BUT NONE HAS APPEARED. ON THE OTHER HAND L D. DR IS PRESENT IN THE COURT AND IS READY WITH ARGUMENTS. THEREFOR E WE HAVE DECIDED TO PROCEED WITH THE HEARING OF THE CASE EX - PA RTE WITH THE ASSISTANCE OF THE L D. DR AND THE MATERIAL PLACED ON RECORD. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE RETURN OF INCOME, DECLARING TOTAL INCOME OF RS. NIL WAS FILED ON 02.10.08. THE ASSESSMENT WAS COMPLETED BY AO U/S 143(3) ON 30.12.2010 MAKING ADDITIONS ON VARIOUS COUNTS AND THE TOTAL INCOME WAS DETERMINED AT RS. 29,47,889/ - . CONSEQUENT TO THIS ORDER, AO HAD ALSO LEVIED PENALTY U/S 271(1)(C) OF THE ACT. AGGRIEVED BY THE ORDER O F AO, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) AND LD. CIT(A) AFTER CONSIDERING THE CASE OF BOTH THE PARTIES, DISMISSED THE APPEAL OF THE ASSESS EE . NOW BEFORE US, THE ASSESSEE HAS PREFERRED THE PRESENT APP EAL BY RAISING THE ABOVE GROUND . 4 I.T.A. NO. 4494 /MUM/201 7 FOOD PHARMA INDIA PVT. LTD. 4 . THE SOLITARY GROUND S RAISED BY THE ASSESSEE RELATES TO CHA LLENGING THE ORDER OF LD. CIT(A) IN UPHOLDING THE AOS VIEW OF LEVYING PENALTY @100% OF TAX SOUGHT TO BE EVADED I.E RS.6,66,178/ - BY ALLEGEDLY CONSIDERING EXPENSES U/S 37(1) OF RS. 13,83,914 AND UNS ECURED LOANS/SHARE APPLICATION MONEY OF RS.7,72,001/ - DISALLOWED BY THE A O A S CONCEALED INCOME IGNORING THE EXPLANATIONS AND DETAILS SUBMITTED BY THE ASSESSEE. 5 . WE HAVE HEARD LD. DR AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS THE ORDERS PASSED BY REVENUE AUTHORITIES. BEFORE WE DECIDE THE MERITS OF THE CASE, IT IS NECESSARY TO EVALUATE THE ORDERS PASSED BY LD. CIT(A). THE LD. CIT(A) HAS DEALT WITH THE ABOVE GROUND RAISED BY THE ASSESSEE IN PARA NO. 2.4 TO 2.5 OF ITS O RDER AND THE SAME IS REPRODUCED BELOW: - 2.4. I HAVE GIVEN MY CAREFUL CONSIDERATION TO THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED THE FACTUAL MATRIX OF THE CASE AS ALSO THE APPLICABLE LEGAL POSITION. 5 I.T.A. NO. 4494 /MUM/201 7 FOOD PHARMA INDIA PVT. LTD. 2.4.1 THE ONLY GRO UND RAISED BY THE APPELLANT IS AGAINST THE PENALTY LEVIED U/S 271(1)(C)OF THE ACT OF RS. 6,67,178/ - . 2.4.2 THE GROUNDS OF APPEAL DEALS WITH THE AO LEVYING PENALTY U/S 271 (1)(C) OF THE ACT AMOUNTING TO RS.6,66,178. THE CIT (A) CONFIRMED THE ADDITIONS / DISALLOWANCES MADE IN THE ASSESSMENT TOWARDS SEVERAL EXPENSES. AO CALLED FOR THE EXPLANATION OF THE APPELLANT AND NO EXPLANATION OFFERED BY THE I APPELLANT FOR THE OPPORTUNITY GIVEN AND IN VIEW OF THE SAME AO CAME TO THE CONCLUSION THAT THE APPELLANT CONSC IOUSLY CLAIMED THE AMOUNTS IN RESPECT OF THE SAID EXPENSES KNOWING FULLY WELL THAT THE SAME ARE NOT ALLOWABLE AND LEVIED A PENALTY OF RS.6,66,178/ - U/S 271 (1) (C) OF THE ACT. 2.4.3 CONSIDERED THE GROUNDS ON WHICH PENALTY IS LEVIED BY THE AO AND THE ARGUM ENTS PUT FORTH BY THE APPELLANT FOR RELIEF, IT IS OBSERVED THAT THE APPELLANT DID NOT FURNISH ANY EXPLANATION BEFORE THE AO DURING THE PENALTY PROCEEDINGS FOR THE INELIGIBLE CLAIMS MADE IN THE RETURN OF INCOME. CIT (A), HAS ALSO DULY CONFIRMED THE FINDINGS OF THE ASSESSING OFFICER IN THE ASSESSMENT. UNDER THESE CIRCUMSTANCES, WHETHER THE LEVY OF PENALTY IS JUSTIFIABLE OR NOT IS THE ISSUE NEEDS TO BE LOOKED INTO. 6 I.T.A. NO. 4494 /MUM/201 7 FOOD PHARMA INDIA PVT. LTD. 2.4.4 THE CLAIM OF THE APPELLANT IS EXAMINED IN THE LIGHT OF THE PROVISIONS OF SEC. 271(1)(C) AND EXPLANATIONS THERETO. SECTION 271(1)(C) VISUALIZES IMPOSITION OF PENALTY WHEN THE ASSESSEE HAS CONCEALED INCOME OR WHEN THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME. IN ADDITION TO THESE TWO SITUATIONS, PENALTY CAN ALSO BE IMPOSED, INT ER ALIA, WHEN ASSESSEE IS DEEMED TO HAVE CONCEALED PARTICULARS OF INCOME UNDER EXPLANATIONS TO SEC. 271(1) OF THE ACT THE APPELLANT CLAIMS THAT IT HAS FURNISHED ALL THE PARTICULARS AT THE TIME OF ASSESSMENT PROCEEDINGS. WITH REGARD TO THE CONTENTION, AO PO INTED OUT THAT THE ISSUE IN THE PRESENT CASE IS NOT REGARDING FULL DISCLOSURE OF THE FACTS BUT REGARDING FURNISHING OF INACCURATE PARTICULARS BY CLAIMING A DEDUCTION WHICH IS NOT ELIGIBLE AS PER THE PROVISIONS. THE FACTS HIGHLIGHTED IN THE ASSESSMENT ORDER AS WELL AS THE APPELLATE ORDER CLEARLY INDICATE THAT THE APPELLANT DELIBERATELY FURNISHED INACCURATE PARTICULARS OF INCOME IN THE RETURN FILED THERE BY WANTS TO AVOID TAX LIABILITY. IN SUCH A SITUATION, THE CASE OF THE APPELLANT IS CLEARLY COVERED UNDER T HE MAIN PROVISIONS OF SEC. 271(1)(C) AS THE APPELLANT FURNISHED INACCURATE PARTICULARS OF INCOME. NOW THE CASE OF THE APPELLANT IS EXAMINED UNDER THE DEEMING PROVISIONS OF EXPLANATION 1 TO SECTION 271(1)(C). THIS DEEMING FICTION, COMES INTO PLAY WHERE IN R ESPECT OF ANY FACTS MATERIAL TO THE 7 I.T.A. NO. 4494 /MUM/201 7 FOOD PHARMA INDIA PVT. LTD. COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT ( I) WHEN THE ASSESSEE FAILS TO PROVIDE AN EXPLANATION, (II) WHEN THE ASSESSEE PROVIDES AN EXPLANATION WHICH IS FOUND TO BE FALSE, AND (III) WHEN THE ASSESSEE P ROVIDES AN EXPLANATION WHICH HE FAILS TO SUBSTANTIATE AND HE FAILS TO PROVE THAT THE EXPLANATION WAS BONA FIDE AND THAT ALL THE FACTS NECESSARY FOR THE SAME AND MATERIAL FOR COMPUTATION OF INCOME HAVE BEEN DULY DISCLOSED BY THE ASSESSEE. IN THE PRESENT CAS E THE APPELLANT CHOSE NOT PROVIDE ANY EXPLANATION DURING THE PENALTY PROCEEDINGS. THUS, EXPLANATION 1 TO SEC. 271(1)(C) IS ALSO APPLICABLE TO THE FACTS OF THE PRESENT CASE AND THE APPELLANT IS DEEMED TO HAVE CONCEALED PARTICULARS OF INCOME. 2.4.5 THE A PPELLANT RELIED ON THE FOLLOWING CASES IN SUPPORT OF HIS CASE IN THE PRESENT PROCEEDINGS. I) RELIANCE PETRO PRODUCTS P LTD 322 ITR (SC) II) SSA EMERALD MEADOWS (SC) 2.4.6 PERUSED THE CASE LAWS AND IT IS FOUND THAT IN THE FIRST CASE THE HON'BLE SUPREME COURT HELD THAT MAKING AN INCORRECT CLAIM IN LAW COULD NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS. IN THE PRESENT CASE THE APPELLANT COULD NOT PROVE THAT HIS INTENTIONS ARE BONAFIDE BY OFFERING EXPLANATIONS DURING THE APPELLATE PROCEEDINGS . FOR THE SHOWCAUSE NOTICE 8 I.T.A. NO. 4494 /MUM/201 7 FOOD PHARMA INDIA PVT. LTD. ISSUED, THE APPELLANT SIMPLY KEPT QUIET NOT ATTENDING THE HEARING AND ALSO NOT FURNISHING ANY EXPLANATION. IN SUCH CIRCUMSTANCES THE PRINCIPLES LAID DOWN BY THE HON'BLE COURT ARE NOT APPLICABLE TO THE PRESENT CASE. IN THIS CASE T O KNOW WHETHER THE ACT IS DELIBERATE ACT OF OMISSION FOR THE PURPOSE OF CONCEALMENT COULD NOT BE VERIFIED BY THE AO BECAUSE THE APPELLANT HAS NOT APPEARED AND FILED HIS EXPLANATION AT THE TIME OF APPELLATE PROCEEDINGS. IN VIEW OF THE SAME THE CASE LAW ALSO WOULD NOT COME TO THE RESCUE OF THE APPELLANT. IN THIS CASE THE AO ESTABLISHED THAT THE APPELLANT CLAIMED CERTAIN AMOUNTS WHICH ARE NOT ALLOWABLE AND HOW THE SAME TANTAMOUNT TO CONCEALMENT AND FURNISHING INACCURATE PARTICULARS OF INCOME REFERRING TO DELIB ERATE ACT OF THE PARTY. IN VIEW OF THE SAME THERE IS CLEAR CUT CONCEALMENT ON THE PART OF THE APPELLANT TO AVOID TAX LIABILITY BY MAKING A WRONG DEDUCTION WHICH IS OTHERWISE NOT ALLOWABLE AND FOR THIS REASON ONLY HE HAS NOT FURNISHED ANY EXPLANATION DURING THE PENALTY PROCEEDINGS. WHERE THE PROVISIONS OF THE ACT RULES APPLY, IT IS ONLY THOSE P ROVISIONS WHICH MUST BE APPLIED AND FOLLOWED . IN THIS REGARD, IT MAY BE RELEVANT TO REFER TO THE DECISION OF HON'BLE SUPREME COURT IN CIT V SHIV PRAKSH JANAK RAJ & CO. PVT. LTD 222 ITR 583 WHERE THE APEX COURT HAD AN OCCASION TO EXAMINE THE CONCEPT OF REAL INCOME AND HELD AS UNDER: 9 I.T.A. NO. 4494 /MUM/201 7 FOOD PHARMA INDIA PVT. LTD. 8. , ,,,,,, THE CONCEPT OF REAL INCOME CANNOT BE EMPLOYED SO AS TO DEFEAT THE PROVISIONS OF THE ACT AND THE RULES. WHERE THE PROVISIONS OF THE AET AND THE RULES APPLY, IT IS ONLY THOSE PROVISIONS WHICH MUST BE APPLIED AND FOLLOWED. THERE IS NO ROOM - NOR WO ULD BE PERMISSIBLE FOR THE COURT - TO IMPORT THE CONCEPT OF REAL INCOME SO AS TO WHITTLE DOWN, QUALIFY OR DEFEAT THE PROVISIONS OF THE ACT AND THE RULES. 2.4.7 THUS, THE SUPREME COURT OBSERVED THAT THE CONCEPT OF REAL INCOME SHOULD NOT BE SO READ AS TO DEFEAT THE PROVISIONS OF THE ACT AND TO MAKE THE DEDUCTIONS NOT SO ALLOWABLE ALSO BE GIVEN CREDIT TO AND AVOID THE TAX LIABILITY AND THEREBY THE PENAL PROVISIONS OF THE ACT. THE APEX COURT ALSO HELD THAT THE CONCEPT OF REAL INCOME MUST BE APPLIED WITH EXTR EME CAUTION AND THAT IT SHOULD NOT BE EXTENDED TO THE AREAS WHERE IT HAS NO APPLICATION. 2.4.8 FOR THE FOREGOING REASONS, I AM OF THE CONSIDERED OPINION THAT THIS IS A FIT CASE FOR LEVY OF PENALTY UNDER SEC. 271(1)(C) OF THE ACT AND THE ASSESSING OFFICE R IS JUSTIFIED IN LEVYING THE PENALTY OF RSW.6,66.178/ - FOR FURNISHING INACCURATE PARTICULARS OF INCOME BY THE APPELLANT. 2.5 IN THE RESULT, THE APPEAL IS DISMISSED, 10 I.T.A. NO. 4494 /MUM/201 7 FOOD PHARMA INDIA PVT. LTD. 6. AFTER HAVING GONE THROUGH THE ORDERS PASSED BY REVENUE AUTHORITIES AND CONSIDERING THE FACTS AS DISCUSSED ABOVE, WE FIND THAT LD. CIT(A) AFTER APPREC IATING THE FACTS OF THE CASE HAD RIGHTLY UPHELD THE PENALTY LEVIED BY THE AO BY CONCLUDING THAT ASSESSEE HAD MADE INELIGIBLE CLAIMS IN THE RETURN OF INCOME WHICH WERE CONFIRMED BY LD. CIT(A) WHILE PASSING ORDER IN THE QUANTUM APPEAL. SINCE THE ASSESSEE IN THE PRESENT CASE HAD NOT PROVIDED ANY EXPLANATION, THUS EXPLANATION - 1 TO SECTION 271(1)(C) CAME INTO APPLICATION AND IN THAT VIEW OF THE MATTER, PENALTY WAS RIGHTLY UPHELD. 7. EVEN BEFORE US, N O NEW FACTS O R CONTRARY JUDGMENTS HAVE BEEN BROUGHT ON RECORD BEFORE US I N ORDER TO CONTROVERT OR REBUT THE FINDINGS SO RECORDED BY LD. CIT(A). THEREFORE, THERE ARE NO REASON S FOR US TO INTERFERE INTO OR DEVIATE FROM THE FINDINGS SO RECORDED BY THE LD.CIT(A). HENCE , WE ARE OF THE CONSIDERED VIEW THAT THE FINDINGS SO RECORDED BY THE LD. CIT (A) ARE 11 I.T.A. NO. 4494 /MUM/201 7 FOOD PHARMA INDIA PVT. LTD. JUDICIOUS AND ARE WE LL REASONED. RESULTANTLY, THESE GROUND RAISED BY THE ASSESSEE STANDS DISMISSED . 8 . IN THE NET RESULT , THE APPEAL FILED BY THE ASSESSEE STANDS DISMISSED WITH NO ORDER AS TO COST. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH FEB , 2019. SD/ - SD/ - ( G. MANJUNATHA ) (SANDEEP GOSAIN) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 12 . 02 .201 9 SR.PS . DHANANJAY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F I LE / BY ORDER, . / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI