SHREE AMBESHWAR PAPER MILLS LTD, MUMBAI V. DCIT CIR 4(3), MUMBAI

ITA 5274/MUM/2012

• Counselvise Citation: 527419914 RSA 2012
• Duration Of Justice: 1 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 19-08-2013
• Assessment Year: 2003-2004
• Appeal Filed On: 22-08-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: N M PORWAL
• Keywords: Tangible material; Wrong claim; Revenue expenditure
• Section: 43B; 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E , MUMBAI BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO. 5274/MUM/2012 ASSESSMENT YEAR: 2003-04 M/S. SHREE AMBESHWAR PAPER MILLS LTD. C/O. RITAS SHOP NO. 52, 299B, OLD POST OFFICE LANE, MANGALDAS MARKET, MUMBAI- 400 002 PAN :AAACS 6770 N VS. DCIT CIRCLE 4(3) ROOM NO. 649, AAYAKAR BHAVAN, M.K. ROAD MUMBAI. 400 020 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N. M. PORWAL RESPONDENT BY : SHRI SHISHIR SRIVASTAVA DATE OF HEARING : 19.08.2013 DATE OF PRONOUNCEMENT : 09.10.2013 O R D E R PER DR. S.T.M. PAVALAN, JM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD.CIT(A) -8, MUMBAI DATED 14.02.2012 CONFIRMING TH E PENALTY OF RS.25,10,220/- LEVIED BY THE AO U/S 271(1)(C) OF THE INCOME TAX AC T FOR THE ASSESSMENT YEAR 2003-04. 2. BRIEFLY STATED, THE ASSESSEE, A COMPANY WHILE DE CLARING A TOTAL LOSS OF RS.15,59,35,410/- DURING THE YEAR UNDER CONSIDERATI ON HAD CLAIMED A DEDUCTION OF RS. 32.65 LAKHS ON ACCOUNT OF GRATUITY AND A MISCEL LANEOUS EXPENSES OF RS. 65.90 LAKHS. THE ASSESSEE HAD FURTHER DEBITED AN AMOUNT O F RS.24,71,425/- ON ACCOUNT OF LOSS IN REVALUATION OF SHARES. HOWEVER, IN THE ASSE SSMENT FRAMED U/S 143(3) R.W.S. 254 OF THE ACT, THE AO FOUND THAT OUT OF RS. 32.65 DEDUCTION CLAIMED BY THE ASSESSEE, ONLY AN AMOUNT OF RS.5,88,521/- HAD BEEN PAID BY THE ASSESSEE AND THE ITA NO. 5274/MUM/2012 M/S. SHREE AMBESHWAR PAPER MILLS LTD. ASSESSMENT YEAR: 2003-04 2 REST OF THE AMOUNT SHOWN AS PROVISION ON ACCOUNT OF GRATUITY. AS SECTION 43B PERMITS THE DEDUCTION OF ONLY THE ACTUAL PAYMENT OF GRATUITY IF THE SAME IS PAID IN THE PREVIOUS YEAR OR BEFORE THE FILING RETURN, THE AO DISALLOWED AN AMOUNT OF RS.26,76,501/- WHICH THE ASSESEE HAD CLAIMED ON THE BASIS OF PROVISION MADE. ON THE MISCELLANEOUS EXPENSES OF RS. 65.90 LAKHS CLAIM ED BY THE ASSESSEE, THE AO FOUND THAT THE ASSESSEE HAD CLAIMED RS.16,82,606/- ON THE BASIS OF PROVISION MADE AND NOT ACTUAL PAYMENT AND HELD THAT THE SAME CANNO T BE ALLOWED AS REVENUE EXPENDITURE. FURTHER, AN AMOUNT OF RS24,71,425/- C LAIMED BY THE ASSESSEE ON ACCOUNT OF LOSS IN REVALUATION OF SHARES HAD BEEN D ISALLOWED BY THE AO AS THIS AMOUNT CANNOT BE ALLOWED AS REVENUE EXPENDITURE AND THEREBY MADE THE SAID ADDITIONS OF RS.26,76,501/- AND RS.41,54,031/- TO T HE TOTAL INCOME OF THE ASSESSEE. IN THAT PROCESS, THE AO DETERMINED THE ASSESSED LOS S AT RS.14,91,04,878/-. THE ASSESSEE ACCEPTED THE QUANTUM ADDITION AND HAD NOT PREFERRED ANY APPEAL. CONSEQUENTLY, IN THE PENALTY PROCEEDINGS U/S 271(1) (C), THE AO IMPOSED A PENALTY OF RS.25,10,220/- BEING 100% OF THE TAX SOUGHT TO BE E VADED BY THE ASSESSEE FOR PROVIDING INACCURATE PARTICULARS IN THE COMPUTATION OF INCOME. ON APPEAL, THE LD.CIT(A) CONFIRMED THE ACTION OF THE AO LEVYING PE NALTY. AGGRIEVED BY THE IMPUGNED ORDER THE ASSESSEE IS IN APPEAL BEFORE US. 3. BEFORE US, THE LD.AR FOR THE ASSESSEE HAS STATED THAT ALL THE DETAILS IN RESPECT OF THE CLAIM FOR DEDUCTION PERTAINING TO GRATUITY A ND MISCELLANEOUS EXPENDITURE HAVE BEEN FILED ALONG WITH THE RETURN OF INCOME AND THE ASSESSEE HAS NEITHER CONCEALED ANY INCOME NOR PROVIDED INACCURATE PARTICULARS. THE LD.AR HAS DRAWN OUR ATTENTION TO THE P & L ACCOUNT AND THE ANNUAL REPORT FILED AL ONG WITH THE RETURN OF INCOME WITH SPECIFIC REFERENCE TO PAGES 15, 21 AND 23 OF T HE PAPER BOOK TO SUBSTANTIATE THE CLAIM THAT THE DETAILS HAVE BEEN PROVIDED /SUPPLIED BY THE ASSESSEE TO THE DEPARTMENT. FURTHER, THE LD. AR HAS RELIED ON THE J UDGMENT OF THE APEX COURT IN THE CASE OF RELIANCE PETRO PRODUCTS [2010] 322 ITR 158 (SC) TO SUBSTANTIATE HIS CLAIM THAT THE PENALTY TO BE DELETED. ON THE OTHER HAND T HE LD.DR HAS ARGUED THAT THE DECISION OF THE APEX COURT IN RELIANCE PETRO PRODUC TS CASE IS NOT APPLICABLE IN THE CASE OF THE ASSESSEE AND RELIED ON THE DECISION OF THE DELHI HIGH COURT IN THE CASE OF ITA NO. 5274/MUM/2012 M/S. SHREE AMBESHWAR PAPER MILLS LTD. ASSESSMENT YEAR: 2003-04 3 CIT VS. HCIL KALINDEE ARSSPL DATED 10.08.2013 TO TH E EFFECT THAT THE LEVY OF PENALTY BY THE AO AND THE CONFIRMATION THEREON BY T HE CIT (A) ARE JUSTIFIED. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. FIRSTLY, ON THE ISSUE OF LEVY OF PENALTY ON THE DISALLOWANCE /ADDITION IN RESPECT OF UNPAID AMOUNT OF GRATUITY, IT IS PERTINENT TO MENTION THAT SECTION 43B OF THE ACT IS UNAMBIGUOUS WHICH CLEARLY STATES THAT THE EXPENDITU RE ON ACCOUNT OF GRATUITY CAN BE ALLOWED ONLY IF IT IS ACTUALLY PAID. IN SPITE OF TH E CLEAR PROVISION, THE ASSESSEE COMPANY HAS NOT ADDED BACK THE UNPAID AMOUNT OF GRA TUITY IN THE COMPUTATION OF INCOME. THE ASSESSEES CONTENTION THAT THE DETAILS PROVIDED ALONG WITH THE COMPUTATION MENTIONING IT IN THE P &L ACCOUNT CANNO T BE A DEFENSE TO RESCUE THE ASSESSEE FROM THE PENALTY LEVIED FOR PROVIDING INAC CURATE PARTICULARS/CONCEALMENT OF INCOME. SECONDLY, AS REGARDS THE LEVY OF PENALTY ON THE DISALLOWANCE OF MISCELLANEOUS EXPENSES IN RESPECT OF STAMP DUTY, AG AIN THE ASSESSEE HAS NOT MADE THE CLAIM ON ACTUAL PAYMENT BUT HAS CLAIMED ONLY ON PROVISION MADE WHICH IS NOT ALLOWABLE UNDER LAW. THIRDLY, REGARDING THE LEVY OF PENALTY ON ACCOUNT OF THE CLAIM OF DEDUCTION IN RESPECT OF LOSS IN REVALUATION OF SHAR ES, WE DO NOT FIND MERIT IN THE CONTENTION OF THE ASSESSEE THAT IT HAS NOT CONSCIOU SLY MADE CONCEALMENT OR FURNISHED INACCURATE PARTICULARS OF INCOME. ALL THE MORE, THE VERY CONTENTION OF THE ASSESSEE THAT ALL THE PARTICULARS HAVE BEEN FILED A LONG WITH THE RETURN OF INCOME MAY BE A GOOD DEFENCE IN THE CASES WHERE REOPENING OF T HE ASSESSMENT OR REVISIONAL PROCEEDINGS UNDER SECTION 263 IS IN QUESTION/CHALLE NGED BEFORE THE APPELLATE AUTHORITIES BUT NOT IN THE CASE OF LEVY OF PENALTY AS IN THE CASE OF PRESENT ASSESSEE WHERE THE ASSESSEE HAS PROVIDED INACCURATE PARTICUL ARS IN THE COMPUTATION INCOME WHEREBY MADE A WRONG CLAIM. ALSO, WE FIND MERIT IN THE CONTENTION OF THE LD.DR RELYING ON THE JUDGMENT OF THE DELHI HIGH COURT IN THE CASE OF HCIL KALINDEE ARSSPL (SUPRA) WHEREIN IT HAS BEEN HELD THAT MERELY BECAUS E THE ASSESSEE COMPLIES WITH THE STATUTORY PROCEDURAL REQUIREMENT OF FILING THE PRESCRIBED FORM AND CERTIFICATE OF THE CHARTERED ACCOUNTANT CANNOT ABSOLVE THE ASSESSE E OF ITS LIABILITY IF THE ACT OR ATTEMPT IN CLAIMING THE DEDUCTION IS NOT BONA FIDE. IT IS RELEVANT TO NOTE THAT WHILE DECIDING THE SAID CASE, THE HIGH COURT OF DELHI HAS DISCUSSED THE RATIO OF THE APEX COURT IN THE CASE OF RELIANCE PETRO PRODUCTS LTD. ( SUPRA) WHICH IS DISTINGUISHABLE IN ITA NO. 5274/MUM/2012 M/S. SHREE AMBESHWAR PAPER MILLS LTD. ASSESSMENT YEAR: 2003-04 4 THE SENSE THAT THE ASSESSEE IN THE CASE OF RELIANCE PETRO PRODUCTS HAS MADE A BONA FIDE CLAIM THOUGH THE SAME IS A WRONG CLAIM. HOWEVE R, IN THE PRESENT CASE OF THE ASSESSEE BEFORE US, THE ASSESSEE HAS NOT SHOWN ANY TANGIBLE MATERIAL OR BASIS AS TO WHY A CLEAR STATUTORY PROVISION WHICH EXCLUDES THE ALLOWABILITY OF THE IMPUGNED CLAIMS HAS BEEN IGNORED BY THE ASSESSEE. IN VIEW OF THE AFOREMENTIONED DISCUSSION, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD .CIT(A) CONFIRMING THE PENALTY LEVIED BY THE AO U/S 271 (1)(C) AND THE SAME IS UPH ELD. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 9 TH DAY OF OCTOBER, 2013. SD/- SD/- (P.M. JAGTAP) (DR. S.T.M. PAVALAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 09.10.2013. *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR E BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.