ACIT 4(3)(1), MUMBAI V. TAURIAN ENGINEERING P.LTD, MUMBAI

ITA 5158/MUM/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0139 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 02-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Deemed dividend
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH E, MU MBAI BEFORE SH. P.K. BANSAL VICE PRESIDENT AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 5158/MUM/2015 (ASSESSMENT YEAR- 2009-10) ACIT -4 (3)(1 ), R NO. 649, 6 TH FLOOR, AAYAKAR BHAVAN, MUMBAI-400020. VS. M/S TAURIAN ENGINEERING PVT. LTD. 302A POONAM CHAMBERS, 3 RD FLOOR, DR. ANNIE BESANT ROAD, WORLI, MUMBAI -400018 PAN: AABCM8782H (APPELLANT) (RESPONDENT) REVENUE REPRESENTED BY : SHRI KUMAR SANJAY (DR) ASSESSEE REPRESENTED BY : SHRI KRISH DESAI (AR) DATE OF HEARING : 01.08.2017 DATE OF ORDER : 29.08.2017 ORDER UNDER SECTION 254(1) OF INCOME-TAX ACT PER PAWAN SINGH JUDICIAL MEMBER : 1. THIS APPEAL BY REVENUE UNDER SECTION 253 OF INCOME- TAX ACT (ACT) IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER (APP EALS)-9, MUMBAI DATED 28.08.2015 FOR ASSESSMENT YEAR 2009- 10. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE PENALTY OF RS.37,30,40 0/- U/S.271(1)(C) OF THE ACT, 1961 LEVIED BY THE A.O. AS THE ASSESSEE FILED INACCURATE PARTICULARS OF INCOME AGAINST THE DISALLOWANCE OF DEEMED DIVIDEND AMOUNTING TO RS.1,09,75,000/- U/S.2(22)(E) OF THE I.T.ACT,1961.' 2. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE IMPUGNED ORDER OF THE LD.CIT(A) IS CONTRARY TO LAW AND CONSEQUENTLY M ERITS TO BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED.' ITA NO.5158/M/ 2015 M/S TAU RIAN ENGINEERING PVT. LTD. 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE F ILED RETURN OF INCOME FOR RELEVANT AY ON 29.09.2009 DECLARING TOTAL INCOME AT RS. 1,04,61,860/-. THE ASSESSMENT WAS COMPLETED U/S 143(3) ON 29.12.20 11. THE ASSESSING OFFICER (AO) WHILE FRAMING THE ASSESSMENT ORDER MAD E THE ADDITION ON ACCOUNT OF DEEMED DIVIDEND U/S 2(22)(E) OF RS. 1,09 ,75,000/- AND INITIATED THE PENALTY FOR FILING INACCURATE PARTICU LARS. THE AO ISSUED NOTICE U/S 274 R.W.S. 271(1)(C) OF THE ACT DATED 13 .01.2014. THE AO LEVIED THE PENALTY OF RS. 37,30,400/- @ 100% OF TH E AMOUNT ON WHICH TAX SOUGHT TO BE EVADED. ON APPEAL BEFORE THE LD. CIT(A), THE PENALTY WAS DELETED. THUS, AGGRIEVED BY THE ORDER OF LD. CI T(A), THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US. 3. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIVE ( DR) FOR THE REVENUE AND LD. AUTHORIZED REPRESENTATIVE (AR) OF ASSESSEE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. DR FOR THE RE VENUE SUPPORTED THE ORDER OF AO. THE LD. DR FOR THE REVENUE FURTHER ARG UED THAT THE APPEAL FILED BY ASSESSEE IN THE QUANTUM ASSESSMENT WAS DIS MISSED BY LD. CIT(A) AND NO FURTHER APPEAL WAS FILED BY ASSESSEE BEFORE THE HIGHER FORUM. THUS, THE ADDITION MADE ON ACCOUNT OF DEEMED DIVIDE ND U/S 2(22)(E) OF THE ACT ATTAINS FINALITY. THE ASSESSEE FURNISHED IN ACCURATE PARTICULAR OF INCOME. THUS, THE PENALTY ORDER IS LIABLE TO BE UPH ELD. ON THE OTHER HAND, THE LD. AR OF ASSESSEE SUPPORTS THE ORDER OF LD. CI T(A). THE LD. AR OF THE ASSESSEE WOULD ARGUE THAT THE ASSESSEE HAS NEITHER CONCEALED ANY ITA NO.5158/M/ 2015 M/S TAU RIAN ENGINEERING PVT. LTD. 3 PARTICULAR OF INCOME NOR FURNISHED INACCURATE PARTI CULAR. IT WAS FURTHER ARGUED THAT ASSESSEE HAS GIVEN SUFFICIENT EXPLANATI ON AND AS PER EXPLANATION-1 TO SECTION 271(1)(C) OF THE ACT, THE ASSESSEE HAS SUBSTANTIATED AND PROVED THAT EXPLANATION IS BONAFI DE AND THAT ALL THE FACTS RELEVANT AND THE MATERIAL TO THE COMPUTATION OF TOT AL INCOME WAS DISCLOSED IN THE RETURN OF INCOME AND THE AUDITED B ALANCE-SHEET. THE MERE DISALLOWANCE OF CLAIM DOES NOT AUTOMATICALLY ATTRAC T THE PENALTY IN VIEW OF THE DECISION IN CIT VS. RELIANCE PETROPRODUCTS P VT. LTD. (322 ITR 158) (SC). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ASSESS ING OFFICER (AO) WHILE PASSING THE ASSESSMENT ORDER MADE THE ADDITI ON ON ACCOUNT OF DEEMED DIVIDEND U/S 2(22)(E) OF RS. 1,09,75,000/- A ND INITIATED THE PENALTY FOR FILING INACCURATE PARTICULARS. THE AO I SSUED NOTICE U/S 274 R.W.S. 271(1)(C) OF THE ACT DATED 13.01.2014. THE ASSESSEE FILED ITS REPLY VIDE REPLY DATED 17.01.2014. IN THE REPLY, THE ASSE SSEE CONTENDED THAT THE AMOUNT WAS SHOWN AS UNSECURED LOAN IN ITS BALANCE-S HEET, THE ADVANCE WERE RECEIVED FROM THE ASSOCIATE CONCERN FOR SALE O F MACHINERY I.E. ADVANCE FOR BUSINESS TRANSACTION AND IT WAS NOT LOA N OR ADVANCE WHICH IS COVERED BY SECTION 2(22)(E) OF THE ACT. THE ASSESSE E FURTHER CONTENDED THAT THE PENALTY IS LEVIABLE ONLY IN CASE ASSESSEE FAILED TO OFFER ANY EXPLANATION OR THE EXPLANATION GIVEN BY ASSESSEE IS FOUND TO BE FALSE OR ITA NO.5158/M/ 2015 M/S TAU RIAN ENGINEERING PVT. LTD. 4 THE ASSESSEE IS NOT ABLE TO SUBSTANTIATE THE EXPLAN ATION OR THE SAME IS NOT BONAFIDE. THE ASSESSEE FURTHER CONTENDED THAT THEY HAVE FURNISHED ALL THE FACT RELEVANT AND MATERIAL FACT TO THE COMPUTATION OF TOTAL INCOME. THE ASSESSEE HAS DISCLOSED ALL THE DETAILS IN PROFIT & LOSS ACCOUNTS, MERELY THE AO MADE A DIFFERENT VIEW, THE PENALTY CANNOT BE LEVIED. THE ASSESSEE HAS NEITHER CONCEALED THE INCOME NOR FURNISHED THE INACCURATE PARTICULAR. THE CONTENTION OF ASSESSEE WAS NOT ACCEPTED BY AO. THE AO LEVIED THE PENALTY HOLDING THAT THE PENALTY IS LEVIABLE IF THE ASSESSEE FURNISHED INACCURATE PARTICULAR OF INCOME. THE INACCURACY OF THE PARTICULARS CAN BE JUDGED IN ACCORDANCE WITH THE FACTS OF THE CASE. TH E AO FURTHER CONCLUDED THAT THE LD. CIT(A) IN THE QUANTUM APPEAL HAS CONFIRMED THE ADDITION VIDE ORDER DATED 04.02.2013. 5. WE HAVE SEEN THAT IN THE ASSESSMENT ORDER, THE AO I NITIATED THE PENALTY OR FURNISHED INACCURATE PARTICULARS OF INCOME. HOWEVER , WHILE LEVYING THE PENALTY, THE AO LEVIED THE PENALTY FOR CONCEALING O F INCOME. THE HONBLE APEX COURT IN CIT VS. RELIANCE PETROPRODUCTS PVT. L TD. (SUPRA) HELD THAT MERE MAKING OF CLAIM, WHICH IS NOT SUSTAINABLE IN L AW, BY ITSELF, WILL NOT AMOUNT TO FURNISH INACCURATE CLAIM REGARDING THE IN COME OF THE ASSESSEE. THE HONBLE COURT FURTHER HELD THAT THERE HAS TO BE CONCEALMENT OF PARTICULARS OF INCOME OF ASSESSEE AND ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF INCOME. THE HONBLE COURT FURTHER HELD THAT THE WORD INACCURATE AND PARTICULARS IN CONJUNCTION, THEY MUST MEAN THAT ITA NO.5158/M/ 2015 M/S TAU RIAN ENGINEERING PVT. LTD. 5 THE DETAILED SUPPLY IN THE RETURN, WHICH ARE NOT CO RRECT, IN EXACT OR CORRECT OR CORRECT, NOT ACCORDING TO TRUTH OR ERRONEOUS . 6. WE HAVE FURTHER SEEN THAT IN THIS CASE THERE IS NO FINDING OF AO THAT THE PARTICULARS FURNISHED BY ASSESSEE WERE FOUND TO BE INCORRECT OR ERRONEOUS ONLY IN SUCH CASE, THEY WOULD BE NO QUESTION FOR IN ITIATING THE PENALTY U/S 271(1)(C). IT IS SETTLED LAW NOW, THAT MERE MAKING A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO F URNISH INACCURATE PARTICULARS OF INCOME. MERELY THE CLAIM OF THE ASSE SSEE WAS NOT ACCEPTED BY THE REVENUE THAT BY ITSELF WOULD NOT ATTRACT THE PENALTY. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION AND THE EXP LANATION FURNISHED IN REPLY TO THE SHOW-CAUSE NOTICE ISSUED U/S 274 R.W.S . 271(1)(C) OF THE ACT, CONCLUDED THAT THE ASSESSEE-COMPANY HAS BEEN ABLE T O EXPLAIN THE FACT AND DELETED THE PENALTY. WE HAVE FURTHER NOTICED TH AT THE LD. CIT(A) EXAMINED THE FACT AS RECORDED IN PARAGRAPH-3 OF ITS ORDER THAT ASSESSEE- COMPANY SOLD THE MACHINE TO M/S TAUARIAN IRON & STE EL (I) PVT. LTD. IN EARLIER AND SUBSEQUENT ORDER AND THEREFORE, THE AMO UNT WAS RECEIVED BY ASSESSEE-COMPANY IN ADVANCE FOR BUSINESS TRANSACTIO N AND NO LOAN OR ADVANCE AND THIS WAS NOT COVERED BY THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT. THE ADVANCE RECEIVED BY THE ASSESSEE-COMPA NY WERE AGAINST THE BUSINESS TRANSACTION OF THE SALE OF MACHINERY AND T HE SAME WAS NOT LOAN OR ADVANCE WHICH IS COVERED U/S 2(22)(E) OF THE ACT . THUS, IN THE ABOVE ITA NO.5158/M/ 2015 M/S TAU RIAN ENGINEERING PVT. LTD. 6 NARRATED FACTS AND THE LEGAL POSITION DISCUSSED ABO VE, WE DO NOT FIND ANY MERIT IN THE GROUNDS OF APPEAL RAISED BY REVENUE. 7. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH DAY OF AUGUST 2017. SD/- SD/- (P.K. BANSAL) (PAWAN SINGH) VICE-PRESIDENT JUDICIAL MEMBER MUMBAI; DATED 29/08/2017 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITA T, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/