ACIT 25(3), MUMBAI V. R.J. ELECTRICALS, MUMBAI

ITA 5025/MUM/2013

• Counselvise Citation: 502519914 RSA 2013
• Duration Of Justice: 1 year(s) 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2007-2008
• Appeal Filed On: 03-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Assessee Lawyers: MRS MAMTA A DHANUKA
• Keywords: Bad and doubtful debts; Revised return
• Section: 139(5)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE HONBLE S/SHRI H.L. KARWA, PRESIDENT AND B. R.BASKARAN (AM) . . , . . , ./I.T.A. NO.5025/MUM/2013 ( / ASSESSMENT YEAR :2007-08) ASSTT. COMMISSIONER OF INCOME TAX 25(3), 308, C-11, PRATYAKSHAKAR BHAVAN, BANDRA-KURLA COMPLEX, BANDRA (E), MUMBAI-400051. / VS. M/S R.J.ELECTRICALS, SHOP NO.7, LAXMI TOWER-B, M G CROSS ROAD NO.4, KANDIVALI (W), MUMBAI-400067 ( / APPELLANT) .. ( !' / RESPONDENT) ./ $% ./ PAN/GIRNO.:AABFR1333A & / APPELLANT BY : SHRI NEIL PHILIP !' ' & /RESPONDENT BY : MRS.MAMTA A DHANUKA ( ) ' * + / DATE OF HEARING : 28.10.2014 ,- ' * + /DATE OF PRONOUNCEMENT : 29.10.2014 / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 26.4.2013 PASSED BY LD CIT(A)-35, MUMBAI AND IT REL ATES TO THE ASSESSMENT YEAR 2007-08. THE REVENUE IS AGGRIEVED BY THE DECI SION OF LD CIT(A) IN DELETING THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. 2. THE FACTS THAT LED TO THE LEVY OF PENALTY Y/S 27 1(1)(C) OF THE ACT ARE STATED IN BRIEF. THE ASSESSEE IS A PARTNERSHIP FIRM AND I T FILED ITS RETURN OF INCOME ON 31- 10-2007 DECLARING A TOTAL INCOME OF RS.10,63,720/-. SUBSEQUENTLY, IT FILED A REVISED RETURN OF INCOME ON 31-10-2008, I.E., WITHI N THE TIME PRESCRIBED U/S 139(5) OF THE ACT, DECLARING A TOTAL INCOME OF RS.1 6,38,510/-. IN THE MEAN TIME, THE AO HAD ISSUED NOTICE U/S 143(2) OF THE ACT FOR SCRUTINIZING THE RETURN FILED ON 31-10-2007. THE ASSESSING OFFICER COMPLETED THE ASS ESSMENT THEREAFTER DETERMINING THE TOTAL INCOME AT RS.41,62,010/-. THE ASSESSEE PREFERRED APPEAL I.T.A. NO.5025/MUM/2013 2 BEFORE LD CIT(A) CHALLENGING THE ASSESSMENT AND GOT PARTIAL RELIEF. AFTER RECEIPT OF THE ORDER PASSED BY THE FIRST APPELLATE AUTHORIT Y, THE AO PASSED PENALTY ORDER LEVYING PENALY ON THE FOLLOWING ITEMS:- OTHER INCOME 5,55,665 LOWER EXPENSES 34,09,565 STAFF WELFARE 10,000 DONATION 13,250 REPAIRS AND MAINTENANCE 25,000 BAD DEBT 14,79,865 ----------------- 54.93,345 ========== 3. THE ASSESSEE CHALLENGED THE PENALTY ORDER BY FI LING APPEAL BEFORE LD CIT(A). IN THE MEAN TIME, THE ASSESSEE HAD ALSO CH ALLENGED THE ORDER PASSED BY THE FIRST APPELLATE AUTHORITY IN QUANTUM ASSESSMENT PROCEEDINGS BY FILING APPEAL BEFORE THE TRIBUNAL AND THE TRIBUNAL HAD DELETED TH E ADDITION OF RS.14,79,865/- RELATING TO BAD DEBTS, VIDE ITS ORDER DATED 14.9.20 12. HENCE, THE LD CIT(A) DELETED PENALTY LEVIED ON THE BAD DEBTS CLAIM OF RS .14,79,865/-. THE LD CIT(A) FURTHER NOTICED THAT THE OTHER INCOME OF RS.5,55,6 65/- AND LOWER EXPENSES OF RS.34,09,565/- REPRESENTED THE DIFFERENCE BETWEEN THE ORIGINAL RETURN OF INCOME AND THE REVISED RETURN OF INCOME FILED BY THE ASSES SEE, I.E., THE AO HAD TAKEN THE VIEW THAT THE ASSESSEE WAS CONSTRAINED TO FILE REVI SED RETURN OF INCOME UPON RECEIPT OF NOTICE U/S 143(2) OF THE ACT ONLY, IN OR DER TO AVOID DETECTION OF OMISSION / MISTAKES BY THE ASSESSING OFFICER. ACCORDINGLY, THE AO HAD TAKEN THE VIEW THAT THE DIFFERENCE BETWEEN THE ITEMS OF INCOME/EXPENDIT URE DECLARED IN ORIGINAL RETURN AND REVISED RETURN WOULD AMOUNT TO CONCEALME NT OF INCOME. HOWEVER, THE LD CIT(A) DID NOT AGREE WITH THE VIEW TAKEN BY THE AO AND ACCORDINGLY DELETED THE PENALTY LEVIED IN RESPECT OF THE ABOVE SAID TWO ITEMS. EVEN THOUGH, THERE IS NO DISCUSSION ABOUT OTHER ITEMS OF ADDITIONS, THE L D CIT(A) ALLOWED THE APPEAL FILED BY THE ASSESSEE. AGGRIEVED, THE REVENUE HAS FILED THIS APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED THE RECORD. WE NOTICE THAT THE LD CIT(A) HAD PLACED RELIANCE ON THE FOLLO WING CASE LAWS TO DECIDE THE APPEAL IN FAVOUR OF THE ASSESSEE:- (A) ACIT VS. ASHOK RAJ NATH ITA NO.2970/DEL/2012 (B) MANJOOR AHMED VS. ITO (141 TTJ 646)(JODH) (C) CIT VS. HARNARAIN ITA NO.2072/2010 (DEL) (D) QAMMAR UDDIN & SONS VS. CIT (129 ITR 703)(DEL ) I.T.A. NO.5025/MUM/2013 3 (E) DCIT VS. DR. SATISH B GUPTA (42 SOT 48)(AHD) (F) CHEAP CYCLE STORE VS. CIT (154 TAXMAN 284)(AL L) (G) RAJESH C GANDHI VS. ITO (38 SOT 537)(MUM) (H) JAYSUKH PARMAR VS. ACIT ITA NO.72/AHD/2012 IN THE CASE OF RAJESH C GANDHI (SUPRA), THE MUMBAI BENCH OF TRIBUNAL HAD CONSIDERED AN IDENTICAL ISSUE, I.E., THE ASSESSEE T HEREIN SURRENDERED ADDITIONAL INCOME BY FILING REVISED RETURN OF INCOME AFTER THE RECEIPT OF NOTICE U/S 143(2) OF THE ACT. THE TRIBUNAL NOTICED THAT THE AO DID NOT ASK FOR ANY SPECIFIC INFORMATION OR RAISED ANY QUERY REGARDING ADDITIONAL INCOME SUR RENDERED BY THE ASSESSEE IN THE QUERY LETTER SENT ALONG WITH THE NOTICE U/S 143 (2) OF THE ACT. THEREAFTER, THE AO ACCEPTED THE INCOME SURRENDERED IN THE REVISED R ETURN OF INCOME. IT WAS HELD THAT THE ASSESSEE HAD SURRENDERED THE INCOME DURING THE ASSESSMENT PROCEEDINGS BEFORE ANY SATISFACTION WAS RECORDED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAD CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME AND ACCORDINGLY THE PENALTY W AS DELETED. 5. IN THE INSTANT CASE, THE AO HAD ISSUED ONLY NOTICE U/S 143(2) OF THE ACT AND NO QUERY WAS RAISED THEREIN. THE ASSESSEE THEREAFT ER HAS FILED REVISED RETURN OF INCOME DECLARING ADDITIONAL INCOME, WHICH HAS ALSO BEEN ACCEPTED. HENCE, THE ASSESSEE IN THE PRESENT CASE STANDS ON A BETTER FOO TING. ACCORDINGLY, WE ARE OF THE VIEW THAT THE ASSESSEE GETS SUPPORT FROM THE OR DER PASSED BY THE TRIBUNAL IN THE CASE OF RAJESH C GANDHI (SUPRA). ACCORDINGLY, WE CONFIRM THE ORDER OF LD CIT(A) PASSED IN RESPECT OF PENALTY LEVIED ON OTHER INCOME AND LOWERING OF EXPENSES. WITH REGARD TO THE PENALTY LEVIED ON DIS ALLOWANCE OF STAFF WELFARE, DONATION AND REPAIRS AND MAINTENANCE, WE NOTICE THA T THE DISALLOWANCE MADE FROM STAFF WELFARE EXPENSES AND REPAIRS & MAINTENAN CE EXPENSES HAVE BEEN MADE ON ESTIMATED BASIS. HENCE, IN OUR VIEW, THE P ENALTY COULD NOT BE LEVIED ON SUCH KIND OF ESTIMATED DISALLOWANCES. THE CLAIM OF DONATION EXPENSES COULD NOT BE LEGALLY SUSTAINABLE IN LAW AND HENCE THE SAME CO ULD NOT LEAD TO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS O F INCOME. 6. IN VIEW OF THE FOREGOING DISCUSSIONS, WE DO NO T FIND ANY NECESSITY TO INTERFERE WITH THE DECISION TAKEN BY LD CIT(A). I.T.A. NO.5025/MUM/2013 4 7. IN THE RESULT, THE APPEAL FILED BY THE REVEN UE IS DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 29TH OCT, 2014 . ,- ( . /0 1 2 29TH OCT, 2014 - ' 3) 4 SD SD ( . . / H.L. KARWA) ( . . , / B.R. BASKARAN ) / PRESIDENT / ACCOUNTANT MEMBER / ( ) MUMBAI: OCT,2014. . . ./ SRL , SR. PS ! ' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT. 3. ( 9* ( ) / THE CIT(A)- CONCERNED 4. ( 9* / CIT CONCERNED 5. 6. :; 3 !*< , + < , / ( ) / DR, ITAT, MUMBAI CONCERNED 3 = ) / GUARD FILE. > ( / BY ORDER, TRUE COPY ? $ (ASSTT. REGISTRAR) + < , / ( ) /ITAT, MUMBAI