Lkp finance ltd., Mumbai V. DCIT 3(2)(1), Mumbai

ITA 4712/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3834 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-06-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 12-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJAY PRATAP SINGH
• Keywords: Bonafide mistake; Set aside
• Section: 143(3); 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUM BAI BEFORE SHRI SHAMIM YAHYA, AM AND SHRI PAVAN KUMAR GADALE, JM ITA NO. 4712/MUM/2019 (ASSESSMENT YEAR: 2012-13) LKP FINANCE LIMITED 203, EMBASSY CENTRE, NARIMAN POINT, MUMBAI-400 021 VS. DY. CIT-3(2)(1) ROOM NO. 608, AAYAKAR BHAVAN, MUMBAI-400 020 PAN/GIR NO. AAACL 2401 P ( APPELLANT ) : ( RESPONDENT ) APPELLANT BY : MS. DINKLE HARIYA RESPONDENT BY : SHRI AJAY PRATAP SINGH DATE OF HEARING : 01.04.2021 DATE OF PRONOUNCEMENT : 03.06.2021 O R D E R PER SHAMIM YAHYA, A. M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-9, MUMBAI (LD .CIT(A) FOR SHORT) DATED 18.06.2019 AND PERTAINS TO THE ASSESSMENT YEAR (A.Y .) 2012-13 AND THE ISSUE RAISED IS CONFIRMING THE LEVY OF PENALTY OF RS.9,52,784/-. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FI LED ITS RETURN OF INCOME ON 26.09.2012 DECLARING TOTAL INCOME OF RS.7,11,220/- UNDER THE N ORMAL PROVISIONS OF ACT AND RS.7,45,11,693/- UNDER SECTION 115JB OF THE ACT. TH EREAFTER, THE CASE WAS SELECTED FOR SCRUTINY VIDE NOTICE U/S.143(2) OF THE ACT ON 07.08 .2013. THE ASSESSEE REVISED THE RETURN OF INCOME ON 20.01.2014 TO REVISE THE BOOK PROFIT U /S.115JB TO RS.7,06,49,038/-. ASSESSMENT U/S. 143(3) WAS COMPLETED ON 30.12.2016 BY MAKING ADDITION ON ACCOUNT OF 2 ITA NO. 4712/MUM/2019 LKP FINANCE LIMITED VS. DY. CIT PROVISION FOR STANDARD ASSET OF RS.31,75,949/- WHIC H WAS CLAIMED AS EXPENDITURE BUT WAS NOT ADDED BACK IN THE BOOK PROFIT FOR COMPUTATION O F INCOME U/S.115JB. THE A.O. INITIATED PENALTY PROCEEDINGS FOR FURNISHING OF INA CCURATE PARTICULARS OF INCOME. 3. DURING THE PENALTY PROCEEDINGS, THE A.O. NOTED T HAT THE ASSESSEE FAILED TO ADD BACK THE EXPENDITURE ON ACCOUNT OF PROVISION OF STANDARD ASSETS WHICH WAS NOT AN ALLOWABLE EXPENDITURE. THE ASSESSEE ARGUED THAT THE COMPUTATI ON OF INCOME WAS REVISED BY THE ASSESSEE ON ITS OWN DURING THE ASSESSMENT PROCEEDIN GS AND THE MISTAKE OF NOT ADDING BACK THE PROVISION FOR STANDARD ASSET WAS INADVERTE NT AND BONAFIDE MISTAKE WHICH WAS CORRECTED BY IT ON ITS OWN. THE A.O. IN RESPONSE C OMMENTED THAT THE REVISION OF THE COMPUTATION OF INCOME WAS ONLY AFTER THE INITIATION OF SCRUTINY PROCEEDINGS AND THEREFORE NOT PURELY SUO MOTTO AND BONAFIDE. AS PER THE A.O., THE REVISION OF COMPUTATION OF INCOME BY THE ASSESSEE WAS A RESULT OF SCRUTINY ASS ESSMENT. THEREFORE, THE A.O. LEVIED PENALTY OF RS.9,52,784/- U/S.271(1)(C) OF THE ACT F OR FILING OF INACCURATE PARTICULARS OF INCOME. 4. THE LD. CIT(A) ALSO CONFIRMED THE PENALTY ORDER AGREEING WITH THE VIEW TAKEN BY THE A.O. HE HELD THAT THE ASSESSEES CLAIM OF BONAF IDE MISTAKE IS NOT SUSTAINABLE. HE ALSO REJECTED THE SUBMISSION THAT THERE WAS NO CONCEALME NT BY OBSERVING THAT ASSESSEE HAS NOT MADE THE DISCLOSURE OF PROVISION FOR STANDARD ASSET S IN ANY OF THE ENCLOSURES WITH THE COMPUTATION OF INCOME. 5. AGAINST THIS ORDER, THE ASSESSEE IS IN APPEAL BE FORE US. 6. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE R ECORDS. AS IT IS EVIDENT FROM THE FACTS OF THE CASE, THE ASSESSEE IN THE COMPUTATION OF INCOME HAS NOT ADDED BACK THE 3 ITA NO. 4712/MUM/2019 LKP FINANCE LIMITED VS. DY. CIT PROVISION FOR SUBSTANDARD ASSET FOR THE PURPOSE OF SEC 115JB OF THE INCOME TAX ACT. WHEN THE MATTER WAS TAKEN UP FOR SCRUTINY, AFTER 8 MONTHS INTO THE SCRUTINY PROCEEDINGS THE ASSESSEE REVISED COMPUTATION OF INCOME, ADDING THE PROVISION FOR SUBSTANDARD ASSET. THE CLAIM OF THE ASSESSEE WAS THAT THE ASSESSEE HAS SUO MOTO REVISED THE COMPUTATION. THIS HAS BEEN REJECTED BY THE AUTHORITIES. IN THIS REGARD, WE NOTE THAT AFTER THE COMMENCEMENT OF SCRUTINY PROCEEDINGS FOR 8 MONTHS, THERE IS NO WHISPER THAT THE A.O. HAS POINTED OUT THIS ISSUE. HENCE, THE ASSESSEES C LAIM OF SUO MOTO REVISION IS NOT UNBELIEVABLE. FURTHERMORE, NOT ADDING THE PROVISION FOR STANDARD ASSET IS ONLY RELEVANT TO THE COMPUTATION OF INCOME FOR BOOK PROFIT. IN THE P ROFIT AND LOSS ACCOUNT IN THE FINANCIAL RECORDS, THERE IS REQUIREMENT THAT THE SAID AMOUNT IS TO BE REDUCED FROM THE PROFIT AND LOSS ACCOUNT. HENCE, THERE IS NO CASE THAT THE PROFIT AN D LOSS ACCOUNT PREPARED IS NOT AS PER LAW. MOREOVER, THE PROVISION FOR STANDARD ASSET IS DULY REFLECTED IN THE PROFIT AND LOSS ACCOUNT. IT CANNOT BE SAID THAT IT WAS NOT A MISTAK E OF THE ASSESSEE NOT TO ADD BACK THE SAME UNDER SECTION 115JB. ONCE HAVING DISCLOSED THE PROVISION FOR SUBSTANDARD ASSET WHICH IS A NORMAL FEATURE IN THE PREPARATION OF PRO FIT AND LOSS ACCOUNT, IT WILL CERTAINLY BE A MISTAKE NOT TO ADD THE SAME UNDER THE 115JB COMPU TATION OF INCOME. THE LD. CIT(A) HAS COMPLETELY ERRED IN OBSERVING THAT THE PROVISIO N FOR SUBSTANDARD ASSET WAS NOT DISCLOSED IN ANY OF THE ENCLOSURES OF COMPUTATION O F INCOME. WE FIND THAT THE LD. CIT(A) HAS MISLED HIMSELF. THE ASSESSEES CLAIM THAT IT WA S A GENUINE MISTAKE AND THE ASSESSEE HAS SUO MOTO REVISED THE SAME DURING THE ASSESSMENT PROCEEDINGS IS COGENT. THE AUTHORITIES BELOW HAVE NOT BEEN ABLE TO COGENTLY RE BUT THE SUBMISSION OF THE ASSESSEE. ACCORDINGLY, IN THE BACKGROUND OF THE AFORESAID DIS CUSSION, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE PENALTY. 4 ITA NO. 4712/MUM/2019 LKP FINANCE LIMITED VS. DY. CIT 7. IN THE RESULT, THIS APPEAL BY THE ASSESSEE STAND S ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 03.06.2021 SD/- SD/- (PAVAN KUMAR GADALE) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED : 03.06.2021 ROSHANI , SR. PS 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 FILE BY ORDER, (DY./ASSTT. REGISTRAR) ITAT, MUMBAI