ACIT,Circle-2, Kolkata, Kolkata V. M/s Convergence Contact Centre Pvt. Ltd., Kolkata

ITA 568/KOL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 91955 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 1 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2015
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 11-04-2012
• Court: TRIBUNAL
• Department Lawyers: K L KANAK
• Assessee Lawyers: AMITAVA BOSE
• Keywords: Condonation of delay
• Section: 143(3); 14A; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOLKATA [BEFORE SHRI P. K. BANSAL, AM & SHRI MAHAVIR SINGH, JM ] I.T.A NO. 5 68 /KOL/201 2 ASSESSMENT YEAR : 200 3 - 0 4 ASSISTANT COMMISSIONER OF INCOME - TAX, VS. M/S. CONVERGENCE CONTACT CENTRE PVT. LTD. CIRCLE - 2, KOLKATA. (PAN: AABCC7082N) ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 1 9 .0 5 .2015 DATE OF PRONOUNCEMENT: 22 . 0 5 . 2015 FOR THE APPELLANT: SHRI K. L. KANAK, SR. DR FOR THE RESPONDENT: S HRI A MITAVA BOSE, ADVOCATE ORDER PER SHRI MAHAVIR SINGH, JM: THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER PASSED BY CIT (A) - 1, KOLKATA VIDE APPEAL NO. 26/CIT(A) - 1/C - 2/08 - 09 DATED 06 . 0 1 .201 2 . ASSESSMENT WAS FRAMED BY ACIT, CIRCLE - 2, KOLKATA U/S. 147/ 14 3(3) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) FOR ASSESSMENT YEAR 200 3 - 0 4 VIDE HIS ORDER DATED 27 . 09 .20 07 . 2. THIS APPEAL BY REVENUE IS FILED BELATEDLY BY EIGHT DAYS AND REVENUE HAS FILED CONDONATION PETITION STATING THE REASONS. LD. COUNSEL FOR THE ASSES SEE HAS NOT OBJECTED TO THE CONDONATION OF DELAY AND HE HAS CONCEDED THE POSITION. IN VIEW OF THE ABOVE AND REASONS STATED IN THE CONDONATION PETITION, WE CONDONE THE DELAY AND ADMIT THE APPEAL. 3. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAINST THE ORDER OF CIT(A) DELETING THE LEVY OF PENALTY BY AO U/S. 271(1)(C) OF THE ACT. FOR THIS, REVENUE HAS RAISED FOLLOWING GROUND NO.1: 1. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED BOTH ON THE FACTS AND IN LAW IN ADJUDICATING AGAINST THE ORDER OF THE AO, TREATING ASSESSEE S ACT AS BONAFIDE AND UPHOLDING THE FACT THAT THE ASSESSEE HAS NOT FURNISHED INACCURATE PARTICULARS OF INCOME THOUGH THE ASSESSEE ITSELF HAS ADDED THE SUM OF RS.23,17,445/ - DISALLOWING DEDUCTION U/S. 35D IN THE RETURN FILED IN RESPONSE TO NOTICE U/S. 148. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME IN RESPONSE TO NOTICE U/S. 148 OF THE ACT DISCL OSING TOTAL LOSS AT RS.2,80,47,460/ - . THE AO WHILE COMPLETING ASSESSMENT U/S. 143(3) R.W.S. 147 OF THE ACT MADE ADDITION OF 2 ITA NO. 568 /K/201 2 CONVERGENCE CONTACT CENTRE PVT . LTD. AY 200 3 - 0 4 RS.23,17,445/ - BEING PRE - OPERATIVE EXPENSES. THE AO INITIATED PENALTY PROCEEDINGS AND IMPOSED PENALTY U/S. 271(1)(C) OF THE ACT TH AT CLAIM U/S. 35D OF THE ACT IN RESPECT TO DEDUCTION OF PRE OPERATIVE EXPENSES OF RS.23,17,445/ - IS WITHOUT ANY BASIS. ACCORDING TO ASSESSEE, IT WAS ADVISED BY THE AUDITOR THAT THE CLAIM OF DEDUCTION U/S. 35D OF THE ACT IN RESPECT TO PRE OPERATIVE EXPENSE S IS ALLOWABLE AND IT WAS CLAIMED IN THE ORIGINAL RETURN. THE ASSESSEE CONTENDED THAT IT IS ALL ALONG BONA FIDE AND NOT GUILTY OF ANY DISHONEST AND CONTUMACIOUS CONDUCT OR WILLFUL DISREGARD TO ANY STATUTORY PROVISION. IT WAS CONTENDED THAT THE ENTIRE SIT UATION AROSE BECAUSE ASSESSEE WAS UNDER BONA FIDE BELIEF AND WAS ADVISED ACCORDINGLY BY THE AUDITOR. IT WAS ALSO CLAIMED THAT THE ASSESSEE DISCLOSED ALL MATERIAL FACTS RELATING TO PRE OPERATIVE EXPENSES AND THESE WERE DISCLOSED IN THE AUDITED ACCOUNTS. THE AO HAS NOT AGREED TO THE CONTENTION OF THE ASSESSEE AND LEVIED THE PENALTY. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO RELYING ON THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO - PRODUCT LTD. (2010) 322 ITR 158 (SC ) DELETED THE PENALTY. AGGRIEVED, ASSESSEE CAME IN APPEAL BEFORE US. 5. WE FIND THAT ASSESSEE HAS FILED COMPLETE DETAILS AND PARTICULARS RELATING TO PRE OPERATIVE EXPENSES AND HAS CLAIMED DEDUCTION U/S. 35 OF THE ACT FOR AN AMOUNT OF RS.23,17,445/ - . WE FIND THAT ALL ALONG THE CLAIM WAS MADE ON THE ADVICE OF AUDITOR, WHO UNDER BONA FIDE BELIEF CLAIMED THAT THE SAME IS ALLOWABLE. THE ASSESSEE DISCLOSED ALL FACTS ITSELF TO THE DEPARTMENT AND THE AO ADDED AFTER FINDING ROM THE RETURN OF INCOME I.E. THE AUDI TED ACCOUNTS THAT THIS CLAM IS NOT ALLOWABLE . WE FIND THAT THE HON BLE SUPREME COURT IN THE CASE OF RELIANCE PETRO - PRODUCTS LTD., SUPRA HAS CONSIDERED THE INCORRECT CLAIM OR THE CLAIM OF INACCURATE PARTICULARS BY OBSERVING AS UNDER: WE ARE NOT CONCERNED I N THE PRESENT CASE WITH THE MENS REA. HOWEVER, WE HAVE TO ONLY SEE AS TO WHETHER IN THIS CASE, AS A MATTER OF FACT, THE ASSESSEE HAS GIVEN INACCURATE PARTICULARS. IN WEBSTER S DICTIONARY, THE WORD INACCURATE HAS BEEN DEFINED AS : NOT ACCURATE, NOT EXAC T OR CORRECT ; NOT ACCORDING TO TRUTH ; ERRONEOUS ; AS AN INACCURATE STATEMENT, COPY OR TRANSCRIPT. WE HAVE ALREADY SEEN THE MEANING OF THE WORD PARTICULARS IN THE EARLIER PART OF THIS JUDGMENT. READING THE WORDS IN CONJUNCTION, THEY MUST MEAN THE DETA ILS SUPPLIED IN THE RETURN, WHICH ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TRUTH OR ERRONEOUS. WE MUST HASTEN TO ADD HERE THAT IN THIS CASE, THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN WERE FOUND TO BE INCORR ECT OR ERRONEOUS OR FALSE. SUCH NOT 3 ITA NO. 568 /K/201 2 CONVERGENCE CONTACT CENTRE PVT . LTD. AY 200 3 - 0 4 BEING THE CASE, THERE WOULD BE NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PART ICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO THE INACCURATE PARTICULARS. IT WAS TRIED TO BE SUGGESTED THAT SECTION 14A OF THE ACT SPECIFICALLY EXCLUDED THE DEDUCTIONS IN RESPECT OF THE EXPENDITURE INCURRED BY THE ASSESSEE IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE ACT. IT WAS FURTHER POINTED OUT THAT THE DIVIDENDS FROM THE SHARES DID NOT FORM THE PART OF THE TOTAL INCOME. IT WAS, THEREFORE, REITERATED BEFORE US THAT THE ASSE SSING OFFICER HAD CORRECTLY REACHED THE CONCLUSION THAT SINCE THE ASSESSEE HAD CLAIMED EXCESSIVE DEDUCTIONS KNOWING THAT THEY ARE INCORRECT ; IT AMOUNTED TO CONCEALMENT OF INCOME. IT WAS TRIED TO BE ARGUED THAT THE FALSEHOOD IN ACCOUNTS CAN TAKE EITHER OF THE TWO FORMS ; AN ITEM OF RECEIPT 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 PA RTICULARS OF ONE S INCOME AS WELL 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 INACC URATE NOR COULD BE VIEWED AS THE 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 RE VENUE, THAT BY ITSELF WOULD NOT, 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 THE ASSESSING OFFICER FOR ANY REASON, THE ASSESSEE WILL INVITE PENALTY UNDER SECTION 271(1)(C). THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE. IN THIS BEHALF THE OBSERVATIONS OF THIS COURT MADE IN SREE KRISHNA ELECTRICALS V. STATE OF TAMIL NADU [2009] 23 VST 249 AS REGARDS THE PENALTY ARE APPOSIT E. IN THE AFOREMENTIONED DECISION WHICH PERTAINED TO THE PENALTY PROCEEDINGS UNDER THE TAMIL NADU GENERAL SALES TAX ACT, THE COURT HAD FOUND THAT THE AUTHORITIES BELOW HAD FOUND THAT THERE WERE SOME INCORRECT STATEMENTS MADE IN THE RETURN. HOWEVER, THE SAI D TRANSACTIONS WERE REFLECTED IN THE ACCOUNTS OF THE ASSESSEE. THIS COURT, THEREFORE, OBSERVED (PAGE 251) : SO FAR AS THE QUESTION OF PENALTY IS CONCERNED THE ITEMS WHICH WERE NOT INCLUDED IN THE TURNOVER WERE FOUND INCORPORATED IN THE APPELLANT S ACCOU NT BOOKS. WHERE CERTAIN ITEMS WHICH ARE NOT INCLUDED IN THE TURNOVER ARE DISCLOSED IN THE DEALER S OWN ACCOUNT BOOKS AND THE ASSESSING AUTHORITIES INCLUDES THESE ITEMS IN THE DEALER S TURNOVER DISALLOWING THE EXEMPTION, PENALTY CANNOT BE IMPOSED. THE PENAL TY LEVIED STANDS SET ASIDE. THE SITUATION IN THE PRESENT CASE IS STILL BETTER AS NO FAULT HAS BEEN FOUND WITH THE PARTICULARS SUBMITTED BY THE ASSESSEE IN ITS RETURN. THE TRIBUNAL, AS WELL AS, THE COMMISSIONER OF INCOME - TAX (APPEALS) AND THE HIGH COURT HAVE CORRECTLY REACHED THIS CONCLUSION AND, THEREFORE, THE APPEAL FILED BY THE REVENUE HAS NO MERITS AND IS DISMISSED. 4 ITA NO. 568 /K/201 2 CONVERGENCE CONTACT CENTRE PVT . LTD. AY 200 3 - 0 4 IN VIEW OF THE ABOVE DECISION OF HON BLE SUPREME COURT AND IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE CIT(A) HAS RIGHTLY DELETED THE PENALTY AND WE CONFIRM THE SAME. APPEAL OF REVENUE IS DISMISSED. 6 . IN THE RESULT, APPEAL OF REVE NUE IS DISMISSED. 7 . ORDER IS PRONOUNCED IN THE OPEN COURT ON 22.05.2015 SD/ - SD/ - ( P. K. BANSAL ) (MAHAVIR SINGH) ACCOUNTANT MEMBER J UDICIAL MEMBER DATED : 22ND MAY , 201 5 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . A PPELLANT ACIT, CIRCLE - 2, KOLKATA . 2 RESPONDENT M/S. CONVERGENCE CONTACT CENTRE PVT. LTD., J - 3, BLOCK - GP, SECTOR - V, SALT LAKE, KOL - 91 3 . THE CIT (A), KOLKATA 4. 5. CIT, KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .