DEEP GUPTA, MUMBAI V. DCIT CENT. CIR. 13, MUMBAI

ITA 5066/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1031 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 09-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: JIGER MEHTA
• Keywords: Principle of natural justice
• Section: 132; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH I, MU MBAI BEFORE SHRI B.R.BASKARAN, ACCOUNTANT MEMBER AND SHR I PAWAN SINGH, JUDICIAL MEMBER ITA NO. 5066/MUM/2016 (ASSESSMENT YEAR-2012-13) SHRI DEEP GUPTA SUSHILA SADAN, MANCHUBAI ROAD, MALAD (EAST), MUMBAI- 400097. PAN: AABPG6915D VS. DCIT, CC-13, OLD CGO BUILDING, PRATISHTHA BHAVAN, MUMBAI-400020 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI JIGER MEHTA (AR REVENUE BY : SHRI SAURABH KUMAR RAI (DR) DATE OF HEARING : 02.01.2018 DATE OF PRONOUNCEMENT : 02.01.2018 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. THIS APPEAL BY ASSESSEE UNDER SECTION 253 OF THE IN COME-TAX ACT (THE ACT) IS DIRECTED AGAINST THE ORDER LD. CIT(A)-48, MUMBAI DATED 30.06.2016 FOR ASSESSMENT YEAR (AY) 2011-12, WHICH IN TURN ARI SES FROM THE ORDER OF PENALTY LEVIED UNDER SECTION 271(1)(C) BY THE ASSE SSING OFFICER. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THE ORDER PASSED IN HASTE BY THE LD. CIT(A) IN C ONFIRMING THE PENALTY OF RS. 85,229/- IMPOSED BY THE LD. ASSESSING OFFICER U/S 2 71(L)(C) IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE AND THEREFORE BAD IN LAW. 2. (A) THE ID. CTT(A) ERRED IN FACTS AND LAW IN SUB STANTIATING THE PENALTY U/S. 271(1)(C) AMOUNTING TO RS. 85,229/- ON ACCOUNT OF D ISALLOWANCE OF INTEREST EXPENSE OF RS. 2,75,823/- CLAIMED U/S. 57 WITHOUT A PPRECIATING THE BONAFIDES AND INADVERTENCE OF THE APPELLANT AND THAT THE SAME WAS EVEN WITHDRAWN SUO MOTO, DURING THE COURSE OF ASSESSMENT PROCEEDINGS. ITA NO. 5066/M/2016- SHRI DEEP GUPTA 2 (B) THE LD. CIT(A) ALSO FAILED TO APPRECIATE THAT M AJOR PART OF THE INTEREST EXPENSES OF RS. 2,75,823 OUT OF CLAIM OF RS. 20,04, 177/- WAS ALLOWED U/S 57 OF THE ACT. 2. BRIEF FACTS OF THE CASE ARE THAT A SEARCH AND SEIZU RE ACTION UNDER SECTION 132 WAS CARRIED OUT AT THE RESIDENCE OF DIRECTORS OF PR OVOGUE INDIA LTD. THE ASSESSEE IS ONE OF THE DIRECTOR OF PROVOGUE INDIA LTD AND ALSO PARTNER IN OTHER CONCERN. AFTER SEARCH, THE ASSESSEE FILED REG ULAR RETURN OF INCOME UNDER SECTION 139(1) OF THE ACT ON 28.07.2012 DECLA RING TOTAL INCOME OF RS.77,21,600/-. THE ASSESSEE CLAIMED INTEREST EXPEN SES OF RS. 22,80,000/- AGAINST INTEREST INCOME OF RS. 22,80,000/- UNDER SE CTION 57 OF THE ACT. THE AO DISALLOWED RS. 2,75,823/- AND INITIATED PENALTY FOR FURNISHING OF INACCURATE PARTICULAR OF INCOME. NOTICE UNDER SECTI ON 274 DATED 09.01.2014 WAS SERVED UPON THE ASSESSEE. THE ASSESSEE FILED HI S REPLY DATED 21.07.2014. THE REPLY OF ASSESSEE WAS NOT ACCEPTED BY AO. THE A O LEVIED THE PENALTY @ 100% OF TAX SOUGHT TO BE EVADED. THE AO WORKED OU T THE PENALTY OF RS.85,229/- VIDE ITS ORDER DATED 25.07.2014 PASSED UNDER SECTION 271(1)( C) OF THE ACT. THE AO LEVIED THE PENALTY FOR CONCEALIN G PARTICULAR OF INCOME. ON APPEAL BEFORE THE LD. CIT(A) THE PENALTY ORDER W AS UPHELD. FURTHER, AGGRIEVED BY THE ORDER OF LD. CIT(A), THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. 3. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVE (AR ) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENU E AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. AR OF THE ASS ESSEE ARGUED THAT THE ITA NO. 5066/M/2016- SHRI DEEP GUPTA 3 ASSESSEE HAS NEITHER FURNISHED THE INACCURATE PARTI CULAR OF INCOME NOR CONCEALED ANY INCOME. THE ASSESSEE DURING THE ASSES SMENT PROCEEDING INADVERTENTLY CLAIMED THE INTEREST OF RS. 2,75,823/ - AS A DEDUCTION UNDER SECTION 57. THE ASSESSEE SUO MOTO OFFERED THE SAME FOR INCOME WHEN IT WAS CAME TO THE NOTICE OF ASSESSEE. IT WAS ARGUED THAT WHILE PASSING THE ASSESSMENT ORDER, THE AO INITIATED THE PENALTY FOR FURNISHING INACCURATE PARTICULAR OF INCOME. HOWEVER, WHILE LEVYING THE PE NALTY, THE AO LEVIED THE PENALTY FOR CONCEALING THE PARTICULARS OF INCOME. I N SUPPORT OF HIS SUBMISSION, THE LD. AR OF THE ASSESSEE RELIED UPON THE DECISION OF HONBLE KARNATAKA HIGH COURT IN CASE OF CIT VS. MANJUNATH C OTTON AND GINNING FACTORY [359 ITR 565 (SC)] AND THE DECISION OF JURI SDICTIONAL HIGH COURT IN CASE OF CIT VS. SHRI SAMSON PERINCHERY (ITA NO. 115 4, 953, 1097 & 1226 OF 2014 DATED 05.01.2017. ON THE OTHER HAND, THE LD . DR FOR THE REVENUE SUPPORTED THE ORDER OF AUTHORITIES BELOW. IT WAS AR GUED THAT THE PENALTY WAS INITIATED FOR FURNISHING INACCURATE PARTICULAR OF I NCOME. THE PENALTY WAS LEVIED FOR FURNISHING INACCURATE PARTICULAR OF INCO ME THE WORD CONCEALMENT IS A TYPOGRAPHICAL MISTAKE IN THE ORD ER. THE ENTIRE ORDER PASSED BY AO DEALS WITH FURNISHING INACCURATE PARTI CULARS OF INCOME. IN SUPPORT OF HIS SUBMISSION, THE LD. DR FOR THE REVEN UE RELIED UPON THE DECISION OF NAGPUR BENCH OF HONBLE BOMBAY HIGH COU RT IN CASE OF M/S MAHARAJ GARAGE & COMPANY VS. CIT IN I.T.R NO. 21 OF 2008 DATED 22.08.2017. ITA NO. 5066/M/2016- SHRI DEEP GUPTA 4 4. WE HAVE CONSIDERED THE SUBMISSION OF BOTH THE PARTI ES AND PERUSED THE ORDERS OF AUTHORITIES BELOW. WE HAVE NOTED THAT ASS ESSEE CLAIMED THE INTEREST EXPENSES OF RS. 22,80,000/- AGAINST INTEREST INCOME OF RS. 22,80,000/-. THE ASSESSEE WAS ASKED TO JUSTIFY THE DEDUCTION UNDER S ECTION 57 OF THE ACT. THE ASSESSEE FURNISHED HIS EXPLANATION/ REPLY. IN HIS S UBMISSION, THE ASSESSEE CONTENDED THAT THE INTEREST PAID ON OTHER LOAN FOR RS. 2,75,823/- CLAIMED AS DEDUCTION UNDER SECTION 57 OF THE ACT TO DEEP GUPTA HUF WAS INADVERTENTLY CLAIMED. THE ASSESSEE FURTHER CONTEND ED THAT HE HAS SUO-MOTO OFFERED THE SAME AND PRAYED NOT TO INITIATE PENALTY PROCEEDING. THUS, THE AO OUT OF TOTAL INTEREST EXPENSES OF RS. 22,80,000/ - ALLOWED RS. 20,04,177/- AS DEDUCTION UNDER SECTION 57 AND DISALLOWED RS. 2, 75,823/-. THE AO INITIATED THE PENALTY FOR FURNISHING INACCURATE PARTICULAR OF INCOME. FURTHER, THE AO SERVED NOTICE UNDER SECTION 274 DAT ED 09.01.2014 ON THE ASSESSEE. THE ASSESSEE FURNISHED HIS REPLY ON 21.07 .2014, IN THE REPLY THE ASSESSEE CONTENDED THAT ASSESSEE HAS NOT CONCEALED HIS INCOME NOR FURNISHED ANY INACCURATE PARTICULAR OF HIS INCOME. DURING THE COURSE OF ASSESSMENT, THE ASSESSEE WAS ASKED TO PROVE THE DEDUCTION AGAIN ST INTEREST INCOME EARNED. THE ASSESSEE SUBMITTED THAT INTEREST OF RS. 2,75,823/- WAS CLAIMED INADVERTENTLY AND SUO-MOTO OFFERED TO TAX. THE ASSE SSEE FURTHER CONTENDED THAT HE HAS DECLARED INCOME OF RS. 77,21,600/- AND PAID A TAX OF RS. 19,84,643/- BY WAY OF TDS AND ADVANCE TAX AND AS SU CH THERE IS NO ILL MOTIVE ATTACHED TO NOT OFFERING THE AMOUNT OF DISAL LOWANCE UNDER ITA NO. 5066/M/2016- SHRI DEEP GUPTA 5 CONSIDERATION WHICH IS MINISCULE. THE ASSESSEE PRAY ED TO DROP THE PENALTY PROCEEDING. THE REPLY OF THE ASSESSEE WAS NOT FOUND SUITABLE BY THE AO. THE AO LEVIED THE PENALTY FOR CONCEALING THE PARTICULA R OF INCOME. THE HONBLE APEX COURT IN CASE OF T. ASHOK PAI VS. CIT [292 ITR 11 (SC)] HELD THAT CONCEALING OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME IN SECTION 271(1)(C), CARRY DIFFERENT MEA NINGS/CONNOTATIONS. THE AO WHILE PASSING THE ASSESSMENT ORDER INITIATED THE PENALTY FOR FURNISHING INACCURATE PARTICULARS OF INCOME, HOWEVER WHILE LE VYING THE PENALTY IT WAS LEVIED FOR CONCEALING THE INCOME. THE HONBLE JUR ISDICTIONAL HIGH COURT IN CASE OF CIT VS. SAMSON PERINCHERY (SUPRA) HELD THAT PENALTY ORDER CAN BE MADE ONLY ON THE GROUND ON WHICH IT HAS BEEN INITIA TED AND CANNOT BE ON FRESH GROUND ON WHICH ASSESSEE HAS NO NOTICE. THE C ASE LAW IN M/S MAHARAJ GARAGE & COMPANY VS. CIT (SUPRA) RELIED BY LD. DR F OR THE REVENUE IS NOT APPLICABLE ON THE FACTS OF HIS CASE. THE SAID DEAL S WITH THE RATIO AS TO WHETHER THE ASSESSEE WAS HAVING SUFFICIENT NOTICE B EFORE IMPOSING THE PENALTY OR NOT. HOWEVER, THE FACTS OF THE PRESENT C ASE IS DIFFERENT, HERE THE PENALTY WAS INITIATED FOR FURNISHING INACCURATE PAR TICULARS AND WAS LEVIED FOR CONCEALING THE INCOME. THUS, THE RATIO IN CASE OF S AMSON PERINCHARY (SUPRA) IS SQUARELY APPLICABLE. 5. WE HAVE NOTED THAT THE PENALTY WAS INITIATED FOR FU RNISHING INACCURATE PARTICULAR; HOWEVER, THE PENALTY WAS LEVIED FOR CON CEALING THE INCOME. THUS, RESPECTFULLY FOLLOWING THE DECISION OF HONBLE SUPR EME COURT IN CASE OF T. ITA NO. 5066/M/2016- SHRI DEEP GUPTA 6 ASHOK PAI (SUPRA) AND JURISDICTIONAL HIGH COURT IN CASE OF SAMSON PERINCHERY (SUPRA), THE GROUNDS OF APPEAL RAISED BY ASSESSEE IS ALLOWED. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 ND DAY OF JANUARY 2018. SD/- SD/- (B.R.BASKARAN) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 02/01/2018 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/