JASREEN INTERIORS, MUMBAI V. ITO 20(1)(3), MUMBAI

ITA 4812/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3875 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Assessment Year: 2006-2007
• Appeal Filed On: 18-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJAY

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL J BE NCH, MUMBAI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER / I .TA NO. 4812/MUM/2014 ( / ASSESSMENT YEAR:2006-07 M/S. JASREEN INTERIORS, 11, MAGNUM CHS LTD., LOKHANDWALA COMPLEX, ANDHERI (W), MUMBAI-400 053 / VS. THE ITO - 20(1)(3), MUMBAI ./ ./ PAN/GIR NO. AACFJ 3942Q ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI CHINMAY NAGAWAT SHRI VINAY BALDOTA / RESPONDENT BY: SHRI AJAY / DATE OF HEARING :22.02.2016 ! / DATE OF PRONOUNCEMENT :27.04.2016 / O R D E R PER C.N. PRASAD, JM: THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF THE LD. CIT(A)-31 , MUMBAI DATED 13.5.2014 PERTAINING TO A SSESSMENT YEAR 2006-07 CHALLENGING THE ORDER OF THE LD. CIT(A) IN LEVYING PENALTY U/S. 271(1)(C) OF THE ACT. ITA NO. 4812/M/2014 2 2. BRIEF FACTS ARE THAT THE ASSESSEE FIRM IS ENGAGE D IN THE BUSINESS OF INTERIOR DECORATORS AND FURNITURE MANUFACTURERS. THE ASSESSEE FILED ITS RETURN OF INCOME ON 27.10.2006 DECLARING INCOME OF RS. 4,53,500/-. THE ASSESSMENT WAS COMPLETED U/S. 143( 3) ON 14.11.2008 DETERMINING THE INCOME OF THE ASSESSEE A T RS. 1,02,39,390/-. THE ASSESSING OFFICER WHILE COMPLET ING THE ASSESSMENT MADE ADDITION OF RS. 97,86,392/- BEING T HE INCOME RECEIVED FROM M/S. WIPRO LTD., AND M/S. RALLIS INDI A LTD., FOR THE REASON THAT ASSESSEE HAS NOT REPORTED THIS INCOME A S ITS TURNOVER THOUGH CREDIT FOR TDS ON SUCH INCOME WAS CLAIMED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2006-07 WHICH IS UNDER CONS IDERATION. THE CONTENTION OF THE ASSESSEE BEFORE THE ASSESSING OFF ICER WAS THAT IT HAD RECEIVED ONLY ADVANCE FROM BOTH THESE PARTIES F OR THE SUB- CONTRACTS WORK UNDERTAKEN BY THE ASSESSEE AND THERE FORE THESE ADVANCES CANNOT BE BROUGHT TO TAX FOR THIS ASSESSME NT YEAR UNLESS WORK IS COMPLETED. HOWEVER, REJECTING THE CONTENTI ON OF THE ASSESSEE, THE ASSESSING OFFICER BROUGHT TO TAX THE INCOME OF RS. 97,86,392/- RECEIVED FROM BOTH THESE PARTIES FOR TH E ASSESSMENT YEAR 2006-07. THE ASSESSEE PREFERRED AN APPEAL BEFORE TH E LD. CIT(A) AND THE LD. CIT(A) CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. PENALTY PROCEEDINGS U/S. 271(1)(C) WERE IN ITIATED AND AN ORDER WAS PASSED ON 20.3.2012 LEVYING PENALTY OF RS . 3,98, 576/- HOLDING THAT ASSESSEE CONCEALED THE TRUE PARTICULAR S OF ITS INCOME AND HAS NO BONAFIDE EXPLANATION TO OFFER. ON APPEAL , THE LD. CIT(A) SUSTAINED THE PENALTY LEVIED BY THE ASSESSING OFFIC ER. 3. THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT AS SESSEE HAS NOT CONCEALED ANY PARTICULARS OF INCOME. THE LD. COUNS EL FURTHER SUBMITS ITA NO. 4812/M/2014 3 THAT INCOME WAS SPREAD OVER FOR THE ASSESSMENT YEAR S 2006-07 AND 2007-08 AND THERE IS NO REVENUE LEAK. THE REASON FOR SPREADING OVER IS THAT IN THE ASSESSMENT YEAR 2006-07, THE ASSESSE E HAS RECEIVED ADVANCE FROM BOTH THESE PARTIES AND SINCE THE CONTR ACT WAS CONCLUDED IN ASSESSMENT YEAR 2007-08, INCOME WAS SH OWN IN BOTH ASSESSMENT YEARS 2006-07 AND 2007-08. 4. THE LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY S UPPORTS THE ORDERS OF THE LOWER AUTHORITIES IN LEVYING PENALTY FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME. 5. HEARD BOTH PARTIES AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. THE ASSESSEE BEFORE THE LOWER AUTHORI TIES CONTENDED THAT IT HAD RECEIVED ONLY AN ADVANCE FROM M/S. WIPR O LTD., AND M/S. RALLIS INDIA LTD., AND SINCE THE CONTRACT WORK WAS CONCLUDED IN BOTH THE FINANCIAL YEARS 2005-06 & 2006-07, THE INCOME W AS SHOWN IN THE ASSESSMENT YEARS 2006-07 AND 2007-08. IT IS THE CO NTENTION OF THE ASSESSEE THAT THERE IS NO CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME. IT IS ALSO THE CONTENTION OF THE ASSESSEE THAT THE LD. CIT(A) IN THE QUANTUM APPEAL ESTIMATED THE INCOME AT 10% OF THE CONTRACT RECEIPTS FOR THE ASSE SSMENT YEAR 2006- 07 BUT SUSTAINED THE PENALTY HOLDING THAT THE ASSES SEE ISSUED PRO- FORMA INVOICE AGAINST WHICH PAYMENTS WERE MADE AND THEREFORE THERE IS CONCEALMENT OF INCOME OR FURNISHING OF IN ACCURATE PARTICULARS OF INCOME BY THE ASSESSEE FOR THE ASSES SMENT YEAR 2006- 07. ITA NO. 4812/M/2014 4 6. WE ARE NOT IN AGREEMENT WITH THE CONTENTION OF T HE LOWER AUTHORITIES THAT THERE IS CONCEALMENT OF INCOME BY THE ASSESSEE. THE FACT THAT THE ASSESSEE CONCLUDED THE CONTRACTS IN T HE FINANCIAL YEAR 2006-07 RELEVANT TO ASSESSMENT YEAR 2007-08 IS NOT IN DISPUTE. THE ASSESSEE WAS UNDER THE BONAFIDE IMPRESSION THAT THE INCOME HAS TO BE REPORTED ON COMPLETION OF THE CONTRACT REPORTED THE INCOME IN THE ASSESSMENT YEAR 2007-08 ON CONCLUSION OF CONTRACT.. WE ALSO FIND THAT THE ASSESSEE HAD INFACT SHOWN THE INCOME IN B OTH ASSESSMENT YEARS I.E. A.Y. 2006-07 AND 2007-08 DEPENDING UPON THE EXECUTION OF CONTRACT AS RIGHTLY CONTENDED BY THE ASSESSEE THAT THERE IS NO REVENUE LEAK SINCE THE ENTIRE INCOME HAS BEEN REPOR TED BY THE ASSESSEE. IN THE QUANTUM PROCEEDINGS, THE ENTIRE C ONTRACT RECEIPTS WERE ASSESSED DURING THE ASSESSMENT YEAR 2006-07 BY ESTIMATING INCOME AT 10%. THE HONBLE SUPREME COURT IN THE CA SE OF HINDUSTAN STEEL LTD., VS CIT (83 ITR 26) AND IN THE CASE OF K.C. BUILDERS VS ACIT (265 ITR 562) HAS HELD THAT CONDUCT OF ASSESSEE MUS T BE CONSCIOUS AND MERE OMISSION FROM THE RETURN OF INCOME OF ANY ITEM OF RECEIPT DOES NOT AMOUNT TO CONCEALMENT NOR DELIBERATE FURNI SHING OF INACCURATE PARTICULARS OF INCOME UNLESS AND UNTIL THERE IS SOME EVIDENCE TO SHOW OR SOME CIRCUMSTANCES FOUND FROM WHICH IT CAN BE GATHERED THAT THE OMISSION WAS ATTRIBUTABLE TO AN I NTENTION OR DESIRE ON THE PART OF THE ASSESSEE TO HIDE OR CONCEAL THE INCOME SO AS TO AVOID THE IMPOSITION OF TAX. IN THIS CASE, WE DO N OT FIND ANY DELIBERATE CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME BY THE ASSESSEE. THE ASSESSEE WAS FOLL OWING MERCANTILE SYSTEM OF ACCOUNTING AND ACCOUNTED FOR THE INCOME B ASED ON THE COMPLETION OF CONTRACT METHOD IN BOTH THE ASSESSMEN T YEAR 2006-07 AND 2007-08. THUS, WE HOLD THAT THERE IS NO CONCEA LMENT OR ITA NO. 4812/M/2014 5 FURNISHING OF INACCURATE PARTICULARS OF INCOME BY T HE ASSESSEE. THEREFORE, WE DIRECT THE ASSESSING OFFICER TO DELET E THE PENALTY LEVIED U/S. 271(1)(C) OF THE ACT. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH APRIL, 2016. SD/- SD/- (ASHWANI TANEJA) (C.N. PRASAD ) / ACCOUNTANT MEMBER $ % /JUDICIAL MEMBER MUMBAI; ( DATED : 27 TH APRIL, 2016 . % . ./ RJ , SR. PS !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ) ( ) / THE CIT(A)- 4. ) / CIT 5. *+ ,%%-. , -.! , / DR, ITAT, MUMBAI 6. , /01 / GUARD FILE. / BY ORDER, *% //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI