ASST CIT CIR 6(1)(2), MUMBAI V. BOOKER INDIA P.LTD, MUMBAI

ITA 535/MUM/2017

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5273 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 24-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Business expenditure; Set aside
• Section: 271(1)(c); 143(3); 37(1); 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI G. S. PANNU , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO. 535 / MUM/ 201 7 ( / ASSESSMENT YEAR: 20 09 - 10 ) ACIT (CIR) - 6(1)(2) R.NO. 563, 5 TH FLOOR, AAYAKAR BHA VAN, M.K. ROAD, CHURCHGATE, MUMBAI - 400051 . / VS. M/S. BOOKER INDIA PVT. LTD. NO. 607, TRADE CENTRE, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI - 400051. ./ ./ PAN/GIR NO. : AADCB 3571 B ( / APPELLANT ) .. ( / RESPONDE NT ) / DATE OF HEARING : 14 . 0 8 .201 8 / DATE OF PRONOUNCEMENT : 12. 10. 201 8 / O R D E R PER AMARJIT SINGH, J M: THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 02 . 11 .2016 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 12 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 20 09 - 10 IN WHI CH THE PENALTY LEVIED BY THE AO HAS BEEN ORDERED TO BE DELETED. 2 . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: - ' 1. 'WHETHER ON (HE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN TAW, THE ID CIT(A) WAS RIGHT IN DELETING THE PENALTY LEVIED U/S 271(1)(C) OF RS.98,05,079/ - AND FAILED T O APPRECIATE THAT PENALTY HAS BEEN LEVIED ON ACCOUNT OF THE REVENUE BY : SHRI CHAITANYA ANJARIA (DR) ASSESSEE BY: SHRI ALIASGER RAMPURAWLA & SHRI RAVI SAWANA ITA NO. 535 M/2017 A.Y.20 09 - 10 2 FACT THAT THE ASSESSES HAS CLAIMED BUSINESS EXPENSES AGAINST INCOME FROM OTHER SOURCES, I.E INTEREST INCOME'. 2 ''WHETHER ON THE FACTS AND IN TH E CI RCUMSTANCES OF THE CASE AND IN L AW, THE LD. CI T(A) HAS FAILED TO APPRECIATE THAT THE ASSESSES HAS CLAIMED PERSONAL COST OF RS.1,41,12,470/ - AND ADMINISTRATIVE AND OTHER EXPENSES OF RS.1,47,34,480 / - AGAINST THE INCOME FROM OTHER SOURCES AND NO BUSINESS ACTIVITIES HAVE BEEN CONDUCTED BY THE ASSESSES ON ACCOUNT OF WHICH ASSESSEE LIABLE TO PENALTY U/S27L(1)(C) OF THE ACT'. 3. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT (APPEALS) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE AO BE RESTORED. 4 THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR T O SUBMIT ADDITIONAL NEW GROUND, WHICH MAY BE NECESSARY. ' 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 29.09.2009 DECLARING TOTAL INCOME AT LOSS TO TH E TUNE OF RS. ( - )2,62,99,925 / - . THEREAFTER, THE ASSESSMENT U/S 143(3) OF THE ACT WAS COMPLETED ON 07.12.2011 DETERMINING TOTAL INCOME TO THE TUNE OF RS.09,16,130/ - AFTER DISALLOWANCE U/S 37A OF THE ACT TO THE TUNE OF RS.2,88,46,950/ - . IN THE YEAR, UNDER CON SIDERATION, THE ASSESSEE SHOWED THE INTEREST INCOME OF RS.9,16,125/ - . IN THE RETURN OF INCOME , ASSESSEE OFFERED THE SAME UNDER THE HEAD INCOME FROM OTHER SOURCES AND AGAINST THE INTEREST INCOME, THE ASSESSEE CLAIMED PERSONAL COST OF RS.1,47,34,480/ - , ADMIN ISTRATIVE AND OTHER EXPENSES OF RS.1,47,34,480/ - AND DEPRECIATION OF RS.80,881/ - . THE NOTICE WAS GIVEN AND FINDING NO JUSTIFIABLE REPLY, THE AO DISALLOWED THE EXPENSES TO THE TUNE OF RS.2,88,46,950/ - U/S 37A OF THE ACT. THEREAFTER, THE PENALTY PROCEEDING W AS INITIATED AND AFTER THE REPLY OF THE ASSESSEE, THE PENALTY TO THE TUNE OF RS.98,05,079/ - WAS LEVIED. THEREAFTER, THE ASSESSEE FILED AN APPE AL BEFORE THE CIT(A) WHO DELETED THE PENALTY HENCE , THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US. ITA NO. 535 M/2017 A.Y.20 09 - 10 3 4. WE HAVE HEARD THE ARGUMENT ADVANCED BY THE LD. REPRESENTATIVE OF THE PARTIES AND PERUSED THE RECORD. BEFORE GOING FURTHER, WE DEEMED IT NECESSARY TO ADVERT THE FINDING OF THE CIT(A) ON RECORD.: - 6. GROUND OF APPEAL NO. L TO 3 ARE DISPOSED OF' AS UNDER : - 1 HAVE CAREFULLY PERUSED THE ASSESSMENT ORDER, THE PENALTY ORDER AND THE APPELLANT'S WRITTEN SUBMISSION. IT IS MENTIONED IT HE PENALTY ORDER AT PARA 9 PAGE 3 THAT THE CIT(A) VIDE ORDER NO. CIT(A) - 14/ ACIT 6(1) /IT/ 159/2011 - 12 DTD 15.9.20L3 HAS UPHELD T HE QUANTUM ORDER OF THE A.O. WHERE HAS UPHELD THE QUANTUM ORDER OF THE AO WHEREIN A O HAS DISALLOWED THE EXPENSES OF RS.2,88 ,46,950/ - U/S 37(1) BY BASIS OF DECISION ON THE HONBLE ITAT DELHI ORDER IN THE CASE OF CAREFOUR WC AND C INDIA (P) LTD. (ITA. NO.2 8 35/DEL/2012) DT. 16.08.2013. THE RELEVANT EXTRACT OF THE ORDER PASSED BY HONBLE CIT(A) IS REPRODUCED BELOW FOR READY REFERENCE: - '3.3. 2 THE HONBLE ITAT HAS CONSIDERED BOTH THE DECISIONS ON WHICH THE ASSESSE HAS RELIED I.E. CIT VS. ESPN SOFTWARE INDIA , P. ) LIMITED CI T VS. WHIRLPOOL OF INDIA LTD. (SUPRA) AND HAS STATED THAT BOTH THE DECISIONS TIRE NOT APPLICABLE IN THE CASE OF MA CARREFOUR WE & C PVT, LTD' AS THE BUSINESS OF THE ASSESS WAS TRADING IN GOODS. LIKE THE APPLIED M/S CARREFOUR WC & C WAS INCORPOR ATED TO CARRY ON TRADING TIES WHICH PRIMARILY INCLUDED WHOLESALE CASH AND CARRY OF ALL KINDS U/ CONSUMER GOODS, DURABLES, ARTICLES AND PRODUCTS. THE TRIBUNAL HAS CATEGORICALLY HELD THAT FOR TRADING IN GOODS IT IS NECESSARY TO AT LEAST DEMONSTRATE THAT PURC HASES HAS BEEN AFFECTED AS ONLY THEN THE TRADER CAN SELL TILE GOODS FROM SHOP/OUTLET ETC. THEREFORE, THE FACTS REMAINING THE SAME THE RATIO OF THE DECISION OF HON'BLE ITAT (DEL) CITED SUPRA IS SQUARE APPLICABLE IN THE APPELLANT'S CASE. ACCORDINGLY, THE ACT ION OF THE AC IS UPHELD. THE CLAIM OF THE APPELLANT IS DISMISSED.' HOWEVER, DURING THE COURSE OF APPELLATE HEA RING, ATTENTION WAS INVITED TO THE F ACT THAT THE ABOVE MENTIONED DECISION OF HON'BLE DELHI ITAT ON WHICH THE CII(A) UPON DISMISS THE APPELLANT'S Q UANTUM APPEAL HAS BEEN REVERSED BY THE HONBLE DELHI HIGH COURT VIDE ORDER DT.22.09.2014 IN (2015) 53 TAXMAN.COM 289 IN ITA NO. 535 M/2017 A.Y.20 09 - 10 4 THE CASE OF CAREFOUR WC AND C INDIA (P) LTD VS. DCIT (DELHI). THUS, IT IS SEEN THAT THE BASIS ON WHICH THE QUANTUM APPEAL WAS DISMISSED BY CIT(A) IS ITSELF REJECTED BY THE QUANTUM APPEAL WAS DISMISSED BY CIT(A) IS ITSELF REJECTED BY THE REVERSED BY HON'BLE DELHI HIGH IS LEVIED ON THE ISSUE 3 WHICH HAD BEEN CLAIMED BY THE APPELLANT COMPANY. HOWEVE R, IT IS SEEN THE APPELLANT COMPANY HAS NEIT HER CONCEALED ITS INCOME NOR INACCURATE PARTICULARS AS THE WHICH HAD BEEN DISALLOWED WERE BY IT TO ITS PROFIT AND LOSS 1 TO SECTION 271(1) CONSISTS OF 1 CLAUSE. CLAUSE (A) PROVIDES THAT THE ASSESSEE FAILS TO OFFER AN EXPLANATION OR OFFER; AN EXPLANATION WH ICH IS FOUND TO BONAFIDE. CLAUSE (B) PROVIDES FOR A SITUATION WHERE ASSESSEE IS NOT ABLE TO SUBSTANTIATE THE EXPLANATION AND FAILS TO PROVE THAT THE EXPLANATION IS BONAFIDE. IN THE SITUATIONS ENVISAGED BY THE AFORESAID CLAUSES, DEEMING FACT ON WOULD COME T O PLAY AND THE AMOUNT ADDED TO THE TOTAL INCOME WOULD BE DEEMED TO REPRESENT INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. IF IS ASSESSES IS ABLE TO FURNISH A BONAFIDE AND PLAUSIBLE EXPLANATION IN RESPECT OF IS MATERIAL FACTS, THE BURDEN CAST BY THE EXPLANATION WOULD BE DISCHARGED AND T E CASE WOULD NOT BE HIT BY THE MISCHIEF OF THE SAID EXPLANATION. FURTHER, MERELY BECAUSE; THE EXPLANATION FURNISHED BY THE ASSESSES IS CONSIDERED UNSATISFACTORY OR UNREASONABLE, IT WOULD NOT IPSO FACTO JUSTIFY INVOCATION OF CLAUSE (A) TO LEVY PENALTY U/ 27L(L)(C). IN THE CASE OF ROSHAN LAL MADAN VS ACIT (67 I TD 33} THE TRIBUNAL HAS INCURRED WITH THIS VIEW. MERE DISALLOWANCE OF PART OF THE EXPENSES W ILL NOT ALTER THE BONA - FIDE CLAIM OF THE APPELLANT, THEREFORE N O PENALTY U/S 271(1 (C) IS TO BE IMPOSED FOR SUCH DISALLOWANCE. HON'BLE SUPREME COURT IN THE CASE F RELIANCE PETRO PRODUCTS (P) LTD, 322 ITR 158 WHILE CONFIRMING THE ORDER OF HON'BLE HIGH COURT DELETING THE PENALTY IMPOSED U/S 271(L)(C) FOR DENIAL OF ASSES SOR'S CLAIM OF DEDUCTION OF INTEREST EXPENDITURE, HAS CATEGORICALLY OBSERVED THAT 'BY STRETCH OF IMAGINATION, MAKING AN INCORRECT CLAIM IN LAW CANNOT TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS'. ACCORDINGLY, IT WAS HELD THAT DECLINE OF ASSESSES CLAIM OF EXPENSE WILL NOT AMOUNT FURNISHING OF INACCURATE PARTICULARS SO AS TO AT FACT PENALTY U/S 271(L}(C) OF THE ACT. HON'BLE SUPREME COURT, AFTER CONSIDERING THE PROPOSITION OF LAW LAID DOWN IN T ILT CASE OF DILIP N, SHROFF - 29L I TR 519 (SC) AND DHARMENDER T EXTILE PROCESSORS - 306 ITR 277 (SC), HELD AS UNDER: - 'A MERE MAKING OF THE CLAIM, WHICH IS AT CUSTOMABLE IN LAW BY ITSELF, WILL NOT TO FAMISHING INACCURATE PARTICULARS ITA NO. 535 M/2017 A.Y.20 09 - 10 5 REGARDING THE INCOME OF ASSESSES. SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT; THE INACC URATE PARTICULARS. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE T , WHICH CLAIM NOT ACCEPTED OR ITS NOT ACCEPTABLE TO THE REVENUE, BY ITSELF WOULD NOT, ATTRACT THE PENALTY UNDER SECTION 271(L)(C). IF WE ACCEPT THE CONTENTION OF THE REVENUE THEN I N CASE OF EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTED BY AO FOR ANY REASON, THE ASSESSEE WILL INVITE PENALTY UNDER SECTION 27L(L)(C). THAT IS CLEARLY NOT THE INTENDMENT OF THE 'LEGISLATURE' THEREFORE, THE ABOVE JUDGEMENT MAKES, IT ABUNDANTLY CLEAR TH AT MAKING A CLAIM OF DEDUCTION EVEN IF RIOT SUSTAINABLE IN LAW, DOTS NOT ATTRACT PENALTY. HENCE, IT CAN BE SEEN THAT THE CASE OF THE APPELLANT 13 SQUARELY COVERED BY THE ABOVE JUDGEMENT BEFORE PENALTY CAN BE IMPOSED THE ENTIRELY OF THE CIRCUMSTANCES MUST R EASONABLY POINT TO THE CONCLUSION THAT THE DEPUTED AMOUNT REPRESENTED INCOME AND THAT THE APPELLANT HAD CONSCIOUSLY CONCERNED THE PARTICULARS OF HIS INCOME OR HAD DELIBERATELY FURNISHED INACCURATE PARTICULARS. IN THE APPELLANT'S CASE, THERE WAS NO CONSCIOU S CONCEALMENT OF THE PARTICULAR OF INCOME OF APPELLANT DID NOT DELIBERATELY FURNISH INACCURATE PARTICULARS AND BEFORE THE QUESTION OF PENALTY DOES NOT ARISE. RELIANCE IS ALSO PLACED BY ME IN THE CASE OF P V RAMMANNA REDDY VS ITO (ITAT HYDERABAD), IN THE CA SE OF CIT VS SIDDDHARTH ENTERPRISES (184 TAXMANN 460) (PUNJAB & HARYANA HIGH COURT) AND LTD VS ECS LTD (336) 1TR 162) (DELHI HIGH COURT). THUS IN THE LIGHT OF THE ABOVE DISCUSSING IT IS HELD THAT THE APPELLANT IS NOT LIABLE FOR PENALTY U/ S 271(L)(C) AND S O 1 ALLOW T ESE GROUNDS OF APPEAL. 5 . ON APPRAISAL OF THE ABOVE SAID FINDING, WE NOTICED THAT THE ADDITION BY THE AO IN SUM OF RS. 2,88,46,950/ - U/S 37A OF THE ACT WAS CONFIRMED BY THE CIT(A) ON THE BASIS OF THE DECISION OF THE HONBLE ITAT DELHI IN THE CA SE OF CAREFOUR WC & C INDIA (P.) LTD. (ITA. NO. 2835/DEL/2012 DATED 16.08.2013. THE FINDING HAS BEEN GIVEN ABOVE WHILE REPRODUCING THE FINDING OF THE CIT(A). THE SAID ORDER HAS BEEN REVERSE D BY THE DELHI HIGH COURT BY VIRTUE OF ORDER DATED 22.09.2014 (2015 ) 53 TAXMAN.COM 289. THE ITA NO. 535 M/2017 A.Y.20 09 - 10 6 BASIS ON WHICH THE QUANTUM APPEAL WAS DISMISSED BY THE CIT(A) BY ITSELF REVENUE BY HONBLE DELHI HIGH COURT. THE PENALTY HAS BEEN LEVIED ON ACCOUNT OF DISALLOWANCE OF EXPENSES WHICH WAS CLAIMED BY THE APPELLANT COMPANY. THE COMPANY NOWHERE CONCEALED ITS INCOME NOR FURNISHED INACCURATE PARTICULARS . O N ACCOUNT OF DISALLOWANCE AND EXPENSES NO PENALTY IS LEVIABLE U/S 271(1)(C) OF THE ACT. THE CIT(A) HAS ALSO RELIED UPON THE JUDGMENT PASSED BY THE HONBLE SUPREME COURT IN THE CASE OF REL IANCE PETROPRODUCTS (P) LTD. 322 ITR 158 (SC). MAKING THE CLAIM OF DEDUCTION EVEN IF N O T SUSTAINABLE BY LAW NOWHERE ATTRACT THE PENALTY. TAKING INTO ACCOUNT , ALL THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE CIT(A) HAS DECIDED THE MA TTER OF CONTROVERSY JUDICIOUSLY AND CORRECTLY WHICH IS NOT LIABLE TO BE INTERFERE WITH AT THIS APPELLATE STAGE. ACCORDINGLY, ALL THE ISSUES ARE DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. 6 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS HE REBY ORDERED TO BE D ISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 12. 10 . 2018 . SD/ - SD/ - ( G. S. PANNU ) (AMARJIT SING H) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; DATED : 12. 10 . 2018 . V IJAY ITA NO. 535 M/2017 A.Y.20 09 - 10 7 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDEN T. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI