SUJATA RESOURCES P.LTD, MUMBAI V. ASST CIT 1(3), MUMBAI

ITA 5602/MUM/2015

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 4718 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 11-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Assessee Lawyers: H P JA MSHEDJI
• Keywords: Set aside
• Section: 271(1)(c); 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E , MUMBAI BEFORE S HRI G.S. PANNU (VP ) AND SHRI RAM LAL NEGI (JM) ITA NO. 5602 /MUM/20 1 5 ASSESSMENT YEAR: 2011 - 12 M/S SUJATA RESOURCES PVT. LTD., C/O KALYANIWALLA & MISTRY, ARMY & NAVY BUILDING, 3 RD FLO OR, 148, M.G. ROAD, FORT, MUMBAI - 400001 PAN: AALCS4877M VS. THE ASSISTANT COMMISSIONER OF INCOME TAX - 1(3), ROOM NO. 564, 5 TH FLOOR, AAYKAR BHAVAN, M.K. MARG, MUMBAI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI M.M. GOLVALA (AR ) & SHRI H.P. JA MSHEDJI REVENUE BY : SHRI V. JUSTIN (DR) & SUHAS KULKARNI DATE OF HEARING: 30/11 /201 8 DATE OF PRONOUNCEMENT: 22 / 02 /201 9 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN FILED BY THE AS SESSEE AGAINST ORDER DATED 10/09/2015 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 3 , MUMBAI , FOR THE A S S ESSMENT YEAR 2011 - 12 , WHEREBY THE LD. CIT (A) HAS DISMISSED THE APPEAL FILED BY THE ASSESSEE AGAINST THE PENALTY ORDER PASSED U/S 271 (1) (C) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT). 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE A MINING CONTRACTOR FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION DECLARING THE TOTAL INCOME OF RS. 3,36,70,236/ - . THE ASSESSMENT WAS COMPLETED AFTER MAKING DISALLOWANCE OF RS. 1,05,000/ - MADE IN RESPECT OF MINING EXPENSES. PENALTY PROCEEDINGS WERE ACCORDINGLY INITIATED AND THE AO LEVIED PENALTY OF RS. 32,455/ - U/S 271 (1) (C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF 2 ITA NO. 5602/MUM/2015 ASSESSMENT YEAR: 2011 - 1 2 INCO ME. IN THE FIRST APPEAL, THE LD. CIT (A) CONFIRMED THE PENALTY LEVIED BY THE AO. THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST THE IMPUGNED ORDER PASSED BY THE LD. CIT (A). 3 . T HE ASSESSEE HAS PREFERRED THIS APPEAL BY RAISING THE FOLLOWING EFFEC TIVE GROUNDS: - 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE LEVY OF PENALTY U/S 271 (1)(C) AMOUNTING TO RS. 32,445/ - . 2. BOTH THE LOWER AUTHORITIES ERRED IN HOLDING THAT THE APPELLANT HAD COMMITTED A DEFAULT WITHIN THE MEANING OF SECTION 271 (1)(C) . 3. THE APPELLANT SUBMITS THAT IN THE INSTANT CASE, THERE IS NO FINDINGS OF CONCEALMENT OF INCOME NOR FURNISHING OF INACCURATE PARTICULARS. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO CONSIDER THAT THE NOTICE ISSUED BY THE ASSESSING OFFICER U/S 271(1)(C) WAS VAGUE AND DID NOT SPECIFY THE NATURE OF DEFAULT. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO CONSIDER THAT THE ASSESSING OFFICER HAD LEVIED PENALTY U/S 271(1)(C), FOR A REASON WHICH WAS DIFFERENT FROM TH E BASIS FOR INITIATING PENALTY PROCEEDINGS. 6. HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE PROVISIONS OF LAW, THE APPELLANT SUBMITS THAT THE PENALTY LEVIED U/S 271(1)(C) BE CANCELLED. 4. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SU BMITTED THAT THE ORDER PASSED BY THE LD. CIT(A) IS BAD IN LAW AS THE ADDITION MADE BY THE AO IS NOT BASED ON EVIDENCE ON RECORD. THE LD. COUNSEL FURTHER SUBMITTED THAT AO HAS DISALLOWED EXPENSES OF RS. 1,05,000/ - CLAIMED AS MINING EXPENSES FOR THE REASON T HAT THE ASSESSEE WAS NOT LIABLE TO PAY COMPENSATION TO THE LAND OWNERS OF THE ADJOINING LANDS FOR CAUSING DAMAGE TO TREES. THE CONCLUSION OF THE AO IS 3 ITA NO. 5602/MUM/2015 ASSESSMENT YEAR: 2011 - 1 2 BASED ON THE DISCUSSIONS WITH THIRD PARTY AND NO EXPLANATION WAS SOUGHT FROM THE ASSESSEE IN THIS REGARD. T HE FACT THAT THE PAYMENTS WERE MADE THROUGH ACCOUNT PAYEE CHEQUES TO THE CONCERNED PERSONS IS NOT DENIED BY THE DEPARTMENT. THE LD. COUNSEL FURTHER SUBMITTED THAT SINCE THE AO HAS DISALLOWED AN AMOUNT OF RS. 1,05,000/ - CLAIMED BY THE ASSESSEE ON THE ESTI MATION BASIS WITHOUT POINTING OUT ANY COGENT EVIDENCE , THE LD. CIT (A) OUGHT TO HAVE DELETED THE PENALTY LEVIED BY THE AO. RELYING ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS LTD. 322 ITR 158 (SC), THE LD. COU NSEL SUBMITTED THAT MERELY BECAUSE A CLAIMED WAS NOT ACCEPTED BY THE ASSESSING OFFICER THAT ITSELF CANNOT ATTRACT THE PENALTY U/S 271 (1) (C) OF THE ACT. THEREFORE, THE FINDINGS OF THE LD. CIT (A) ARE ERRONEOUS AND THE IMPUGNED ORDER IS LIABLE TO BE SET AS IDE. 5. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE (DR) RELYING ON THE CONCURRENT FINDINGS OF THE AUTHORITIES BELOW SUBMITTED THAT SINCE THE ASSESSEE HAS FURNISHED THE INACCURATE PARTICULARS OF ITS INCOME, THE LD. CIT (A) HAS RIGHTLY CONFIRMED THE PENALTY LEVIED U/S 271 (1) (C) OF THE ACT ON THE BASIS OF ADDITION MADE TO THE INCOME OF THE ASSESSEE . 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PERUSED THE MATERIAL ON RECORD. WE NOTICE THAT THE LD.CIT (A) HAS DISMISSED THE APPEAL OF THE ASSE SSEE AND CONFIRMED THE PENALTY ON THE GROUND THAT THE PLEA O F THE ASSESSEE IS CONTRADICTORY. T HE ASSESSEE HAS TAKEN THE PLEA BEFORE THE AO THAT IT HAD PAID THE AMOUNT IN QUESTION TO VARIOUS PARTIES TOWARDS DAMAGES CAUSE TO THE TRE E S OF CERTAIN LAND OWNERS. HOWEVER, THE AO REJECTED THE CONTENTION OF THE ASSESSEE HOLDING THAT THE ASSESSEE WAS NOT REQUIRED TO PAY ANY COMPENSATION TO THE OWNERS OF THE LAND. ADMITTEDLY, THE PAYMENTS WERE MADE THROUGH ACCOUNTS PAYEE CHEQUES. BUT THE AO HAS NOT POINTED OUT ANY COG ENT REASON FOR NOT ACCEPTING THE PLEA OF THE ASSESSEE. SINCE, THE AO HAS ACCEPTED THAT THE 4 ITA NO. 5602/MUM/2015 ASSESSMENT YEAR: 2011 - 1 2 ASSESSEE HAD MADE PAYMENTS TO THE PARTIES, IT CANNOT BE INFERRED THAT THE ASSESSEE HAS FURNISHED THE INACCURATE PARTICULARS OF ITS INCOME. ASSESSMENT AND PENALTY PRO CEEDINGS ARE TWO DIFFERENT AND INDEPENDENT PROCEEDINGS AND THE STANDARD OF PROOF REQUIRED IN BOTH THE PROCEEDINGS ARE DIFFERENT. A DDITION OF SOME AMOUNT TO THE INCOME DURING THE ASSESSMENT PROCEEDINGS DOES NOT IPSO FACTO MAKE THE ASSESSEE LIABLE FOR PENALT Y U/S 271(1)(C) OF THE ACT. IN THE PRESENT CASE S INCE THE ASSESSEE HAS MADE PAYMENT OF RS. 1,05,000/ - , HE CLAIMED THE SAME HOWEVER, THE SAME WAS REJECTED BY THE AO . IN RELIANCE PETROPRODUCTS (SUPRA) HONBLE SUPREME COURT HAS HELD THAT MERE MAKING OF CLAI M BY THE ASSESSEE DOES NOT ATTRACT THE SECTION 271 (1) ( C) OF THE ACT. THE RELEVANT PARA OF THE JUDGMENT OF HONBLE SUPR E ME COURT READS AS UNDER: - IT WAS TRIED TO BE ARGUED THAT THE FALSEHOOD IN ACCOUNTS CAN TAKE EITHER OF THE TWO FORMS: (I) AN ITEM OF R ECEIPT MAY BE SUPPRESSED FRAUDULENTLY, (II) AN ITEM OF EXPENDITURE MAY BE FALSELY (OR IN AN EXAGGERATED AMOUNT) CLAIMED, AND BOTH TYPES ATTEMPT TO REDUCE THE TAXABLE INCOME AND THEREFORE, BOTH TYPES AMOUNT TO CONCEALMENT OF PARTICULARS OF ONES INCOME AS W ELL AS FURNISHING OF INACCURATE PARTICULARS OF INCOME. WE DO NOT AGREE, AS THE ASSESSEE HAD FURNISHED ALL THE DETAILS OF ITS EXPENDITURE AS WELL AS INCOME IN ITS RETURN, WHICH DETAILS, IN THEMSELVES, WERE NOT FOUND TO BE INACCURATE NOR COULD BE VIEWED AS T HE CONCEALMENT OF INCOME ON ITS PART. IT WAS UP TO THE AUTHORITIES TO ACCEPT ITS CLAIM IN THE RETURN OR NOT. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NO T, IN OUR OPINION, ATTRACT THE PENALTY UNDER SECTION 271 (1) (C). IF WE ACCEPT THE CONTENTION OF THE REVENUE THEN IN CASE OF EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTED BY ASSESSING OFFICER FOR ANY REASON, THE ASSESSEE WILL INVITE PENALTY UNDER SECTI ON 271 (1) (C). THAT IS CLEARLY NOT THE INDEPENDENT OF THE LEGISLATURE. 7. PENALTY UNDER SECTION 271(1)(C) OF THE ACT CAN BE LEVIED IF IT IS ESTABLISHED THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED 5 ITA NO. 5602/MUM/2015 ASSESSMENT YEAR: 2011 - 1 2 INACCURATE PARTICULARS OF SUCH INCOME. IN THE PRESENT CASE THE AO HAS MENTIONED IN THE ORDER THAT THE ASSESSEE HAS CONCEALED/FURNISHED INACCURATE PARTICULARS OF INCOME AMOUNTING TO THE TUNE OF RS. 1,05,000/ - , WHICH SHOWS THAT THE AO HAS LEVIED THE PENALTY IN A MECHANICAL MANN ER WITHOUT ASCERTAINING AND DETERMINING AS TO WHETHER THE ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF HIS INCOME OR HAS RENDERED HIMSELF LIABLE ON BOTH THE COUNTS. WE ARE THEREFORE, OF THE CONSIDERED VIEW THA T THE LD. CIT(A) HAS WRONGLY CONFIRMED THE PENALTY LEVIED BY THE AO. 8. HENCE, KEEPING IN VIEW THE FACT AND THE CIRCUMSTANCES OF THE CASE AND EVIDENCE ON RECORD , WE RESPECTFULLY APPLYING THE PRINCIPLE LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS (SUPRA) , ALLOW THE SOLE GROUND OF APPEAL OF THE ASSESSEE AND SET ASIDE THE IMPUGNED ORDER PASSED BY THE LD. CIT(A). ACCORDINGLY, WE D IRECT TH E AO TO DELETE THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. IN THE RESULT, APPEAL FILED BY THE ASSESSEE FOR A SSESSMENT YEAR 2011 - 201 2 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND FEBRUARY, 2019 . SD/ - SD/ - ( G.S. PANNU ) ( RAM LAL NEGI ) VICE PRESIDENT JUDICIAL MEMBER MUMBAI ; DATED: 22 / 02/2019 ALINDRA, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 6 ITA NO. 5602/MUM/2015 ASSESSMENT YEAR: 2011 - 1 2 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI