M/s. DSP FINPRINT LTD., Bhopal V. The DCIT 1(1), Bhopal

ITA 564/IND/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6080 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 31-03-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 25-08-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJKUMAR BHATIYA
• Assessee Lawyers: N D PATWA S
• Keywords: Question of law; Wrong claim

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI B.C.MEENA, ACCOUNTANT MEMBER I.T.A.NO.564/IND/2014 A.Y. : 2008-09 M/S.DSP FINPRINT LIMITED, DY. CIT, CIRCLE 1(1), BHOPAL. VS BHOPAL APPELLANT RESPONDENT PAN NO. AAACE3352J APPELLANTS BY : SHRI ASHISH GOYAL AND SHRI N. D. PATWA, ADVOCATES RESPONDENT BY : SHRI RAJKUMAR BHATIYA, DR O R D E R PER D.T.GARASIA, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A)-I, BHOPAL, DATED 23.06.2014 FOR THE ASSE SSMENT YEAR 2008-09. DATE OF HEARING : 31 . 0 3 .2016 DATE OF PRONOUNCEMENT : 20. 0 5 .2016 M/S.DSP FINPRINT LIMITED, BHOPAL VS. DY. CIT, 1(1), BHOPAL I.T.A.NO. 564/IND/2014 A.Y. 2008-09 2 2 2. THE SHORT FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF ADVERTISEMENT AND ALSO SHOWN RENTAL INCOME AND INTEREST ON DEPOSITS. THE AS SESSEE HAD FURNISHED ITS ORIGINAL RETURN OF INCOME FOR ASS ESSMENT YEAR 2008-09 ON 04.10.2008 DECLARING A LOSS OF RS. 20,46,050/-. THE CASE WAS SELECTED FOR SCRUTINY BY ISSUING NOTICE U/S 143(20 AND ASSESSMENT U/S 143(30 WAS COMP LETED ON 30.12.2010 DETERMINING TOTAL INCOME AT RS. 1,71, 53,950/-. 3. DURING THE ASSESSMENT PROCEEDINGS, IT WAS GATHERED BY THE AO THAT THE ASSESSEE HAD RECEIVED BROKERAGE INCOME OF RS. 1,92,00,000/- IN ACCORDANCE WITH THE AGREEMENT E NTERED BETWEEN THE ASSESSEE AND MR. SHOKAT MOHD. KHAN AND OTHERS FOR THE SALE OF LAND MEASURING 10.96 ACRES SITUATED AT KHASRA NO.74/2/1, PREMPURA GRAM, BHOPAL OWNED BY THEM. AS P ER AGREEMENT, IT WAS AGREED THAT THE ASSESSEE COMPANY B RING BROKER WOULD FIND A GENUINE PURCHASER TO BUY THE SAI D PROPERTY AND WOULD CARRY OUT ALL SORT OF NEGOTIATIO NS WITH THE PROSPECTIVE BUYERS ON BEHALF OF THE SELLER PARTIES. EACH OF THE FIVE OWNERS AGREED TO PAY RS. 38.40 LAKS EACH AS BRO KERAGE TO THE ASSESSEE. THE TRANSACTION OF SALE ,OF THE SAID PROPERTY WAS M/S.DSP FINPRINT LIMITED, BHOPAL VS. DY. CIT, 1(1), BHOPAL I.T.A.NO. 564/IND/2014 A.Y. 2008-09 3 3 COMPLETED/MATERIALIZED. THE ASSESSEE HAD RECEIVED B ROKERAGE OF RS. 1,92,00,000/- BUT HAD NOT SHOWN THIS INCOME F OR TAXATION. WHEN THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE RECEIPT OF BROKERAGE/COMMISSION WAS NOT OFFERED FOR TAX, IT WAS SUBMITTED BEFORE THE AO THAT THE ASSESSEE HAD DO NE THE WORK ON BEHALF OF ITS SISTER CONCERN M/S. SANDHYA PR AKASH LIMITED AS PER THE MOU SIGNED BETWEEN BOTH THE PART IES. IT WAS STATED THAT THE ASSESSEE COMPANY M/S. DSP FINPRI NT LIMITED HAD THE REQUIRED MANPOWER AND EXPERIENCE IN SUCH TYPE OF BROKERAGE BUSINESS AND STATED THAT THE WORK WAS ACTUALLY DONE BY THE ASSESSEE ON BEHALF OF ITS SIST ER-CONCERN AND THE BROKERAGE RECEIVED WAS FULLY PASSED ON TO M/ S. SANDHYA PRAKASH LIMITED. THE AO DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE BECAUSE THE ASSESSEE CO MPANY HAD DONE ALL THE WORK/RENDERED SERVICES AND EARNED BROKERAGE/COMMISSION OF RS. 1,92,00,000/-. BY MERE SIGNING AN MOU WITH THE SISTER-CONCERN WOULD NOT SAVE THE AS SESSEE FROM TAXATION OF BROKERAGE/COMMISSION EARNED BY IT ON THE SALE OF LAND BELONGING TO MR. SHOKAT MOHD. KHAN & O THERS. THE AO STATED THAT THE EXPLANATION OF THE ASSESSEE WAS AN M/S.DSP FINPRINT LIMITED, BHOPAL VS. DY. CIT, 1(1), BHOPAL I.T.A.NO. 564/IND/2014 A.Y. 2008-09 4 4 AFTERTHOUGHT AND UNBELIEVABLE WHICH WAS MADE TO EVADE TAX ON THE INCOME. ACCORDINGLY, THE AO TREATED THE AMOU NT OF BROKERAGE/COMMISSION OF RS. 1,92,00,000/- EARNED BY THE ASSESSEE AS INCOME FROM OTHER SOURCES AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. THE AO ALSO INITI ATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE INCOME-TAX ACT, 19 61. 4. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CIT(A) HAS DISMISSED THE APPEAL. 5. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS FILED THE WRITTEN SUBMISSION, WHICH READS AS UNDER :- THE ASSESSEE SUBMITS THAT ALL THE FACTS FOR MAKING THE CLAIM WERE ALREADY ON RECORD. NO EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE DEPARTMENT TO HOLD THAT I NCOME WAS CONCEALED. THE WORD CONCEAL IS DERIVED FROM THE LATIN CONCLEARE WHICH IMPLIES CON + CELARE TO HIDE. IT MEANS HIDE OR WITHDRAW FROM OBSERVATION; TO COVER OR KE EP FROM SIGHT; TO PREVENT THE DISCOVERY OF; TO WITHHOLD KNO WLEDGE OF'. THE OFFENCE OF CONCEALMENT IS THUS A DIRECT AT TEMPT TO HIDE AN ITEM OF INCOME OR A PORTION THEREOF FROM TH E KNOWLEDGE OF THE INCOME TAX AUTHORITIES. (WEBSTER N EW M/S.DSP FINPRINT LIMITED, BHOPAL VS. DY. CIT, 1(1), BHOPAL I.T.A.NO. 564/IND/2014 A.Y. 2008-09 5 5 INTERNATIONAL DICTIONARY) - EXTRACT FROM P RAMNATHA AIYAR THE MAJOR LAW LEXICON, 4TH EDITION, PG. 1353. IN CIT VS INDIAN METAL & F ERRO ALLOYS LTD. 211ITR 35 (ORR.), IT WAS HELD - THE EXPRESSIONS 'HAS CONCEALED THE PARTICULARS OF INCOME' AND 'HAS FURNISHED INACCURATE PARTICULARS OF INCOME ' HAVE NOT BEEN DEFINED EITHER IN SECTION 271(1)(C) OR ELS EWHERE IN THE ACT. ONE THING IS CERTAIN THAT THESE TWO CIRCUM STANCES ARE NOT IDENTICAL IN DETAIL ALTHOUGH THEY MAY LEAD TO THE SAME EFFECT, NAMELY, KEEPING OFF A CERTAIN PORTION OF INCOME. THE FORMER IS DIRECT AND THE LETTER MAY BE INDIRECT IN ITS EXECUTION. THE OFFENCE OF CONCEALMENT IS A D IRECT ATTEMPT TO HIDE AN ITEM OF INCOME OR A PORTION THER EOF FROM THE KNOWLEDGE OF THE INCOME-TAX AUTHORITIES. IN FUR NISHING ITS RETURN OF INCOME, AN ASSESSEE IS REQUIRED TO FURNISH PARTICULARS AND ACCOUNTS ON WHICH SUCH RETURN INCOM E HAS BEEN ARRIVED AT. THESE MAY BE PARTICULARS AS PER IT S BOOKS OF ACCOUNT, IF IT HAS MAINTAINED THEM, OR ANY OTHER BASIS UPON WHICH IT HAD ARRIVED AT THE RETURNED FIGURE OF INCOME. ANY INACCURACY MADE IN SUCH BOOKS OF ACCOUNT OR M/S.DSP FINPRINT LIMITED, BHOPAL VS. DY. CIT, 1(1), BHOPAL I.T.A.NO. 564/IND/2014 A.Y. 2008-09 6 6 OTHERWISE WHICH RESULTED IN KEEPING OFF OR HIDING A PORTION OF ITS INCOME IS PUNISHABLE AS FURNISHING INACCURAT E PARTICULARS OF ITS INCOME. WHETHER THE BURDEN OF PR OOF IN A GIVEN CASE HAS BEEN DISCHARGED ON A SET OF FACTS IS A QUESTION OF FACT. A FINDING OF FACT ARRIVED AT BY T HE TRIBUNAL WILL NOT BE DISTURBED UNLESS IT IS BASED ON NO MATE RIAL OR IS PERVERSE OR IS BASED ON IRRELEVANT, EXTRANEOUS OR INADMISSIBLE CONSIDERATIONS OR IS ARRIVED AT BY THE APPLICATION OF WRONG PRINCIPLES OF LAW. CHANGE OF PERSPECTIVE IN VIEWING A THING DOES NOT TRANSFORM A QUESTION OF FACT INTO A QUESTION OF LAW. WHETHER TH ERE WAS CONCEALMENT OR NOT IS, ORDINARILY, A QUESTION OF FA CT. WHERE A FACT-FINDING BODY BEARING IN MIND THE CORRECT PRI NCIPLES COMES TO THE CONCLUSION THAT THE ASSESSEE HAS DISCH ARGED THE ONUS, IT BECOMES A CONCLUSION OF FACT. SIMILARL Y, WHETHER THE EXPLANATION OFFERED BY THE ASSESSEE WAS BONA FIDE OR NOT IS A QUESTION OF FACT. ' IN THE PRESENT CASE, ALL THE FACTS WERE ON RECORD. NOTHING WAS HIDDEN. NO FINDING WAS EVER RECORDED THAT ANY EVIDENCE WAS HIDDEN; NO SUCH EVIDENCE WAS BROUGHT O N M/S.DSP FINPRINT LIMITED, BHOPAL VS. DY. CIT, 1(1), BHOPAL I.T.A.NO. 564/IND/2014 A.Y. 2008-09 7 7 RECORD. THERE IS NO EVIDENCE OF 'DELIBERATE' ACT OF CONCEALMENT. THUS, THERE CANNOT BE A 'CONCEALMENT' OF INCOME. THE APPELLANT HAS CHALLENGED THE ADDITION B EFORE THE HON'BLE HIGH COURT. THE ISSUE IS AS TO WHO IS T HE REAL OWNER OF INCOME. THIS ISSUE IS DEBATABLE. ASSESSEE HAS GIVEN EVIDENCES TO JUSTIFY THAT THE INCOME BELONGED TO SPL. THE MONEY HAS PASSED ON TO SPL. THIS MONEY HAS NEVE R RETURNED BACK TO THE APPELLANT. IT CANNOT BE SAID T HAT THE TRANSACTION WAS A CAMOUFLAGED TRANSACTION. THERE WA S NO FRAUD ESTABLISHED BY THE DEPARTMENT. THE REAL OWNER OF INCOME WAS SPL. SPL HAS OFFERED THE INCOME. SAME HA S NOT BEEN DOUBTED. DEPARTMENT, ITSELF HAS NOT DELETE D THE ADDITION IN HANDS OF SPL. THUS, THE DEPARTMENT IS FOLLOWING DOUBLE STANDARDS BY ADDING THE AMOUNT IN HANDS OF APPELLANT, BUT ADDITION WAS NOT DIRECTED T O BE DELETED IN HANDS OF SPL. THUS, THE DEPARTMENT IS TA KING INCONSISTENT VIEW, AND IS NOT CLEAR ABOUT THE TAXAT ION OF SAME. PENALTY IS NOT LEVIABLE. THE APPELLANT PLACES RELIANCE ON THE LATEST JUDGMENT OF ALLAHABAD HIGH C OURT IN CIT VS HONGO INDIA PVT LTD. 60 TAXMANN.COM 478, WHE RE M/S.DSP FINPRINT LIMITED, BHOPAL VS. DY. CIT, 1(1), BHOPAL I.T.A.NO. 564/IND/2014 A.Y. 2008-09 8 8 IT WAS HELD THAT A WRONG CLAIM SHALL BE DISTINGUISH ED FROM 'CONCEALMENT', AND IF THE CLAIM IS FOUND TO BE WRON G, MERELY FOR THAT REASON PENALTY CANNOT BE LEVIED. 6. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON TH E ORDERS OF THE AUTHORITIES BELOW. 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. THE ADMITTED FACTS INVOLVED IN THIS CASE ARE THAT THE ASSESSEE-COMPANY ENTERED INTO AN AGREEMENT ON 06.07 .2007 WITH FIVE PERSONS, NAMELY, MR. SERWAR MOHD. KHAN, MR. ZAFAR - MOHD. KHAN, MR. SHOKAT MOHD. KHAN, MR. TAJWAR MOHD. KHAN & MR. MUZAFFAR MOHD. KHAN, WHO WERE OWNERS OF THE LAND MEASURING 2.192 ACRES EACH SITUATED AT KHASRA NO. 7 4/211, PREMPURA GRAM, BHOPAL. AS PER THIS AGREEMENT, THESE FIVE SELLERS AGREED TO SELL THEIR LAND THROUGH THE ASSES SEE-COMPANY AS A BROKER AND THE ASSESSEE-COMPANY AGREED TO FIND A GENUINE PURCHASER TO BUY THE SAID PROPERTY AND TO C ARRY OUT ALL SORT OF NEGOTIATIONS WITH THE PROSPECTIVE BUYERS ON BEHALF OF THE SELLERS' PARTY. THE ASSESSEE-COMPANY WAS HAVING THE REQUIRED MANPOWER AND WAS CONVERSANT WITH THE BROKERAG E M/S.DSP FINPRINT LIMITED, BHOPAL VS. DY. CIT, 1(1), BHOPAL I.T.A.NO. 564/IND/2014 A.Y. 2008-09 9 9 BUSINESS. THE ASSESSEE-COMPANY HAD PERFORMED THE JO B AND RENDERED THE SERVICES TO THESE FIVE PERSONS FOR MAT ERIALIZING THE SAID TRANSACTION. THE ASSESSEE RECEIVED BROKERA GE OF RS.L,92,00,000/- I.E. RS.38,40,000/- BY CHEQUE ON 1 4.08.2011 FROM EACH OF THE SELLER AND THE AMOUNT WAS CREDITED IN THE BANK ACCOUNT OF THE ASSESSEE. THUS, THE ASSESSEE HA S ACTUALLY RENDERED THE SERVICES AND FOR RENDERING THOSE SERVI CES, THE ASSESSEE HAD EARNED BROKERAGE/COMMISSION OF RS. L,92,00,000/-. HENCE, IT WAS AN INCOME OF THE ASSESS EE EARNED BY IT DURING THE PREVIOUS YEAR RELEVANT TO A.Y. 200 8-09. AS OBSERVED BY THE HON'BLE ITAT, MERE ENTERING OF MOU BETWEEN THE ASSESSEE AND ITS SISTER-CONCERN M/S SANDHYA PRA KASH LTD. WOULD NOT ALLOW THE ASSESSEE TO DIVERT ITS LIABILITY OF TAX FOR ITS INCOME TO ITS SISTER-CONCERN. MERELY BECAUSE THIS I NCOME WAS OFFERED BY M/S SANDHYA PRAKASH LTD. IN ITS RETURN WO ULD NOT EXONERATE THE ASSESSEE FROM DECLARING SUCH INCOME I N ITS RETURN , WHICH WAS EARNED AND RECEIVED BY IT FOR THE SERVICES RENDERED BY IT TO THE SELLERS FOR SALE OF THEIR LAND. TRANSFERRING OF MONEY TO ITS SISTER CONCERN M/S. SANDHYA PRAKASH LTD. AT THE MOST CAN BE SAID TO BE AN APPLICATION OF INCOME . THUS, IT M/S.DSP FINPRINT LIMITED, BHOPAL VS. DY. CIT, 1(1), BHOPAL I.T.A.NO. 564/IND/2014 A.Y. 2008-09 10 10 WAS AN INCOME OF THE ASSESSEE EARNED BY IT FOR A.Y. 2008-09 CHARGEABLE TO TAX. BUT THE ASSESSEE HAD CONCEALED T HE PARTICULARS OF THIS INCOME BY NOT OFFERING FOR TAX THE AMOUNT OF INCOME OF RS.1,92,00,000/- EARNED BY IT IN ITS RETURN OF INCOME. THEREFORE, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND LEGAL POSITION ON THE ISSUE, WE ARE IN FULL AGR EEMENT WITH THE A.O. THAT THE ASSESSEE HAD CONCEALED PARTICULAR S OF INCOME OF RS. 1,92,00,000/- ON ACCOUNT OF BROKERAGE EARNED AND RECEIVED BY IT BY NOT OFFERING THE SAME AS ITS TAXA BLE INCOME IN THE RETURN OF INCOME FURNISHED FOR A.Y. 2008-09. TH EREFORE, THE ASSESSEE WAS LIABLE FOR PENALTY U/S 271(L)(C) OF THE ACT FOR CONCEALMENT OF ITS INCOME TO THE TUNE OF RS.1,92,00,000/- AS BROKERAGE INCOME. HENCE, THE A.O. WAS JUSTIFIED IN L EVYING PENALTY U/S 271(L)(C) OF RS. 58,00,000/- FOR A.Y. 2008-09. THUS, THE PENALTY U/S 271(L)(C) OF THE ACT FOR A.Y. 2008-09, LEVIED BY THE A.O. AT RS.58,00,000/- VIDE ORDER DATED 28.03.2013 IS CONFIRMED. M/S.DSP FINPRINT LIMITED, BHOPAL VS. DY. CIT, 1(1), BHOPAL I.T.A.NO. 564/IND/2014 A.Y. 2008-09 11 11 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 20 TH MAY, 2016. SD/- (B.C.MEENA) ACCOUNTANT MEMBER SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 20 TH MAY, 2016. CPU*