BRILLIANT GEMS, MUMBAI V. ITO WD 15(2)(3), MUMBAI

ITA 5610/MUM/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2923 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 14-10-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 05-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MAURYA PRATAPDR

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.5610/MUM/2012 ASSESSMENT YEAR 2006-07 M/S BRILLIANT GEMS, 4/301, 1 ST FLOOR, SONAWALA ESTATE, I B PATEL ROAD, GOREGAON (EAST), MUMBAI-400063 / VS. ITO, WARD 15(2)(3), 121, 1 ST FLOOR, MATRU MANDIR, MUMBAI ( ! ' # /ASSESSEE) ( $ / REVENUE) PAN. NO. AA GFB2219L !' # / ASSESSEE BY SHRI KIRAN MEHTA $ / REVENUE BY SHRI MAURYA PRATAP-DR $% & # ' / DATE OF HEARING : 14/10/2015 & # ' / DATE OF ORDER: 14/10/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DA TED 04/05/2012 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI, SUSTAINING PENALTY OF RS.70,292/-, IMPOSED U/S 271( 1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT). M/S BRILLIANT GEMS ITA NO.5610/MUM/2012 2 2. DURING HEARING OF THIS APPEAL, THE LD. COUNSEL FOR THE ASSESSEE, SHRI KIRAN MEHTA, ADVANCED HIS ARGUME NTS WHICH ARE IDENTICAL TO THE GROUND RAISED BY CONTEND ING THAT FOREIGN TRAVELLING EXPENSES, WHICH RELATES TO THE B USINESS OF THE ASSESSEE, WERE DISALLOWED BY THE ASSESSING OFFI CER, ON THE BASIS OF WHICH, PENALTY WAS IMPOSED/SUSTAINED, WHIC H WAS WRONGLY IMPOSED. ON THE OTHER HAND, THE LD. DR, SH RI MAURYA PRATAP, DEFENDED THE LEVY AS WELL AS SUSTENA NCE OF PENALTY BY CONTENDING THAT THE ASSESSEE MADE A WRON G CLAIM AND THUS FURNISHED INACCURATE PARTICULARS OF CLAIME D INCOME. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACT S, IN BRIEF, ARE THAT THE ASSESSEE FIRM IS ENGAGED IN THE BUSINE SS OF JOB WORK IN DIAMONDS, DECLARED TOTAL INCOME OF RS.3,08, 102/- IN ITS RETURN FILED ON 17/10/2006. THE RETURN WAS ACC OMPANIED WITH TAX AUDIT REPORT U/S 44AB, AUDITED PROFIT AND LOSS ACCOUNT, BALANCE SHEET, PARTNERS CAPITAL ACCOUNT A ND OTHER ANNEXURE FORMING PART THEREIN. THE ASSESSEE DEBITED AN AMOUNT OF RS.2,58,015/- ON ACCOUNT OF TRAVELLING AN D CONVENIENCE EXPENSES. THE ASSESSING OFFICER NOTED T HAT OUT OF THE TOTAL EXPENSES OF RS.2,34,392/- AN AMOUNT OF RS.2,08,829/- REPRESENTS FOREIGN TRAVELLING EXPENSE S BY THE PARTNERS. THE ASSESSING OFFICER DISALLOWED THE TRAV ELLING EXPENSES ON THE GROUND THAT SINCE THE ASSESSEE WAS ONLY DOING JOB WORK, THEREFORE, THERE WAS NO NEED TO TRA VEL ABROAD. THE CONTENTION OF THE ASSESSEE WAS THAT THE PARTNER OF THE ASSESSEE FIRM VISITED ABROAD TO EXPLORE BUSINESS M/S BRILLIANT GEMS ITA NO.5610/MUM/2012 3 OPPORTUNITIES IN AFRICAN COUNTRIES, FROM WHERE ROUG H DIAMONDS WERE IMPORTED. THE EXPLANATION OF THE ASS ESSEE WAS THAT EXPENSES WERE INCURRED FOR BUSINESS EXIGEN CIES. HOWEVER, THE LD. ASSESSING OFFICER DISALLOWED THE C LAIMED FOREIGN TRAVELLING EXPENSES, WHICH WERE EVEN CONFIR MED UP TO THE TRIBUNAL LEVEL. NOW, QUESTION ARISES, WHEN QUA NTUM ADDITION IS CONFIRMED, STILL PENALTY CAN BE SUSTAIN ED? BROADLY, WE ARE IN AGREEMENT WITH THE PROPOSITION C ONVEY TO US BY THE LD.DR BUT UNDER THE FACTS NARRATED BEFORE US, IT CAN BE SAID THAT QUANTUM AND PENALTY PROCEEDINGS ARE AL L TOGETHER DIFFERENT HAS TO BE WEIGHED ON THE TOUCH S TONE OF THE FACTS AND THE JUDICIAL PRONOUNCEMENTS. INCURRING O F EXPENSE HAS NOT BEEN DISPUTED EVEN BY THE LD. ASSESSING OFF ICER. SO FAR AS, BUSINESS EXIGENCIES ARE CONCERNED, IT HAS T O BE EXPLORED BY THE ASSESSEE. UNDISPUTEDLY, ROUGH DIAM ONDS ARE ALSO IMPORTED FROM VARIOUS COUNTRIES INCLUDING AFRI CAN COUNTRIES AND SINCE THE ASSESSEE IS DOING RELATED J OB WORK IN DIAMONDS, IN ALL POSSIBILITIES, THE ASSESSEE MIGHT HAVE BEEN LURED TO DO HIS OWN WORK INCLUDING IMPORT, THEREFOR E, IT CANNOT BE SAID THAT THE EXPENSES WERE NOT INCURRED FOR BUSINESS PURPOSES. IT IS NOT THE CASE THAT THE ASSE SSEE WENT ABROAD FOR PLEASURE TRIP. IT IS THE RIGHT OF EVERY PERSON TO EXPAND HIS BUSINESS AND TO EXPLORE THE POSSIBILITIE S. HOWEVER, SINCE THE ADDITION WAS SUSTAINED EVEN BY T HE TRIBUNAL, THEREFORE, WE REFRAIN OURSELVES TO COMMEN T UPON THE MERITS OF THE QUANTUM ADDITION. SINCE THE ISSUE BEFORE US PERTAINS TO CONFIRMATION OF PENALTY, THEREFORE, WE ARE OF THE VIEW, THAT THE DISALLOWANCE OF EXPENSES WILL NOT PE R SE DOES M/S BRILLIANT GEMS ITA NO.5610/MUM/2012 4 NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS OF INCOME. OUR VIEW IS FORTIFIED BY THE DECISION FROM HONBLE APEX COURT IN RELIANCE PETRO PRODUCTS LTD. 322 ITR 158 (SC), W HEREIN, IT WAS CLEARLY HELD THAT MERE MAKING OF CLAIM, WHICH I S NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO F URNISHING INACCURATE PARTICULARS REGARDING INCOME OF THE ASSE SSEE. LIKEWISE, THE HONBLE APEX COURT IN NORTH LAND DEVE LOPMENT AND HOTEL CORPORATION 210 TAXMAN 249 (SC) AND CIT V S SKYLINE AUTO PRODUCTS LTD. 271 ITR 335 (MP), IT WAS HELD THAT WHEN MISTAKE IS BONA FIDE, PENALTY IS NOT IMPOSABLE U/S 271(1)(C) OF THE ACT. IN VIEW OF THE UNDISPUTED FAC T, AVAILABLE ON RECORD AND THE JUDICIAL PRONOUNCEMENTS DISCUSSED HEREINABOVE, WE FIND MERIT IN THE CONTENTION OF THE LD. AR., THEREFORE, WE DIRECT THE ASSESSING OFFICER TO DELET E THE PENALTY. FINALLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 14/10/2015. SD/- SD/- ( RAJESH KUMAR ) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER % MUMBAI; ( DATED : 14/10/2015 F{X~{T? P.S/. . . %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. *+,- / THE APPELLANT 2. ./,- / THE RESPONDENT. M/S BRILLIANT GEMS ITA NO.5610/MUM/2012 5 3. 0 0 1# ( *+ ) / THE CIT, MUMBAI. 4. 0 0 1# / CIT(A)- , MUMBAI 5. 3$4 .# , 0 *+' * 5 , % / DR, ITAT, MUMBAI 6. 6! 7% / GUARD FILE. / BY ORDER, /3+# .# //TRUE COPY// / (DY./ASSTT. REGISTRAR) , % / ITAT, MUMBAI.