MENNEN FINANCIAL SERVICES LTD, MUMBAI V. ITO 9(2)(3), MUMBAI

ITA 5691/MUM/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88646 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 03-09-2014
• Assessment Year: 2002-2003
• Appeal Filed On: 13-07-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JEETENDRA KUMAR
• Assessee Lawyers: BEHARILAL
• Keywords: Depreciation; Wrong claim; Revised return
• Section: 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BE NCH, MUMBAI , ! '#$ , % & BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ./I .T.A. NO. 5691/MUM/2010 ( ' ' ' ' / ASSESSMENT YEAR :2002-03 M/S. MENNEN FINANCIAL SERVICES LTD., 501, ACME INDUSTRIAL PARK, WESTERN EXPRESS HIGHWAY, GOREGAON (W), MUMBAI-400 063 / VS. THE ITO, 9(2)(3), MUMBAI ( % ./ ) ./ PAN/GIR NO. :AAACM 3164A ( (* / APPELLANT ) .. ( +,(* / RESPONDENT ) (* - / APPELLANT BY: SHRI BEHARILAL +,(* . - / RESPONDENT BY: SHRI JEETENDRA KUMAR . /0% / DATE OF HEARING :16.03.2015 12' . /0% / DATE OF PRONOUNCEMENT :18.03.2015 3 / O R D E R PER N.K. BILLAIYA, AM: THIS IS AN APPEAL BY THE ASSESSEE PREFERRED AGAINS T THE ORDER OF THE LD. CIT(A)-20, MUMBAI DT. 20.5.2010 PERTAINING TO A SSESSMENT YEAR 2002-03. 2. THE SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE L D. CIT(A) ERRED IN CONFIRMING THE PENALTY LEVIED U/S. 271(1)(C) OF TH E ACT AMOUNTING TO RS. 6,09,332/-. ITA. NO. 5691/M/2010 2 3. THE ROOTS FOR THE LEVY OF PENALTY LIE IN THE ASS ESSMENT ORDER DT. 29.12.2004 MADE U/S. 143(3) OF THE ACT WHEREIN INT ER ALIA, THE ASSESSING OFFICER HAS MADE ADDITIONS ON ACCOUNT OF BOGUS CLAI M OF DEPRECIATION - RS. 3,78,974/-, BOGUS CLAIM OF EXPENSES-RS. 10,08,8 32/- AND SUPPRESSION OF SALES RS. 6,26,598/-. WHEN THE DISALLOWANCES W ERE CONTESTED BEFORE THE LD. CIT(A), THE LD. CIT(A) ALLOWED RS. 41,181/- OUT OF BOGUS CLAIM OF DEPRECIATION , RS. 4,72,061/- OUT OF BOGUS CLAIM OF EXPENSES AND RS. 4,60,732/- OUT OF SUPPRESSION OF SALE. THE AO PROC EEDED TO LEVY PENALTY U/S. 271(1)(C) OF THE ACT IN RESPECT OF THE ADDITIO NS SUSTAINED BY THE LD. CIT(A). 4. THE ASSESSEE WAS ASKED TO EXPLAIN WHY PENALTY SH OULD NOT BE LEVIED U/S. 271(1)(C) OF THE ACT. IT WAS CLAIMED T HAT THE VARIATION IN THE RETURNED INCOME AND THE ASSESSED INCOME IS DUE TO T HE DISALLOWANCES OF GENUINE EXPENSES MADE BY THE AO. IT WAS STRONGLY C ONTENDED THAT THERE WAS NO MALAFIDE INTENTION OR ANY DELIBERATE ATTEMPT ON THE PART OF THE ASSESSEE TO CONCEAL THE INCOME. THE EXPLANATIONS M ADE BY THE ASSESSEE DID NOT FIND ANY FAVOUR FROM THE AO WHO WAS OF THE STRONG BELIEF THAT THE ASSESSEE HAS DELIBERATELY INFLATED ITS EXPENDITURE THEREBY FILING INACCURATE PARTICULARS OF INCOME. THE AO PROCEEDED BY LEVYING PENALTY U/S. 271(1)(C) OF THE ACT AT RS. 6,09,332/-. 5. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A) BUT WITHOUT ANY SUCCESS. 6. AGGRIEVED, THE ASSESSEE IS BEFORE US. 7. THE LD. COUNSEL FOR THE ASSESSEE REITERATED WHAT HAS BEEN SUBMITTED BEFORE THE LOWER AUTHORITIES. IT IS THE SAY OF THE LD. COUNSEL THAT THE ADDITIONS ON ACCOUNT OF SUPPRESSION OF SAL E IS FOR THE SALES MADE ITA. NO. 5691/M/2010 3 IN EARLIER YEARS AND HAS BEEN SHOWN AS SALES RETURN ED DURING THE YEAR UNDER CONSIDERATION WHICH HAS NOT BEEN PROPERLY APP RECIATED BY THE AO. IN SO FAR AS THE DISALLOWANCE ON THE CLAIM OF DEPRE CIATION IS CONCERNED, THE LD. COUNSEL STATED THAT THE CLAIM WAS REDUCED B Y FILING A REVISED RETURN WHICH HAS BEEN ACCEPTED BY THE AO. 8. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 9. WE HAVE CAREFULLY PERUSED THE ASSESSMENT ORDER A ND THE ORDER OF THE FIRST APPELLATE AUTHORITY. IN SO FAR AS THE LE VY OF PENALTY ON THE CLAIM OF EXCESS DEPRECIATION IS CONCERNED, WE FIND THAT D URING THE COURSE OF THE ASSESSMENT PROCEEDINGS ITSELF THE ASSESSEE HAS REVI SED THE CLAIM OF DEPRECIATION AND THE SAID REVISED RETURN HAS BEEN D ULY ACCEPTED BY THE AO. WE, THEREFORE DO NOT FIND ANY MERIT IN LEVYING PENALTY U/S. 271(1)(C) OF THE ACT ON THIS COUNT. 9.1. IN SO FAR AS THE SUPPRESSION OF SALE IS CONCER NED, WE FIND THAT IN THE QUANTUM APPEAL WHILE RECONCILING THE DIFFERENCE IN THE SALES FIGURE, THE ASSESSEE ITSELF HAS ACCEPTED THAT SALES UPTO RS. 1, 82,056/- STANDS UNRECONCILED. THE CLAIM OF THE ASSESSEE THAT THE S ALES WERE OF EARLIER YEARS AND SHOWN AS SALES RETURNED. THE LD. CIT(A) HAS CONSIDERED THIS SUBMISSION AND HAS DELETED THE ADDITION OF RS. 4,60 ,732/-, THEREFORE THE SUBMISSIONS MADE BY THE LD. COUNSEL ON THIS ISSUE D OES NOT HOLD ANY WATER. THE PENALTY HAS BEEN LEVIED ON THE UNRECONC ILED AND ACCEPTED ADDITION ON ACCOUNT OF SUPPRESSION OF SALE. THEREF ORE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDINGS OF THE LD. CI T(A) ON THIS ISSUE. 9.2. IN SO FAR AS THE DISALLOWANCE ON ACCOUNT OF BO GUS CLAIM OF EXPENDITURE IS CONCERNED, WE FIND THAT IN THE QUANT UM ADDITION, THE LD. CIT(A) HAS GIVEN A SUBSTANTIAL RELIEF TO THE ASSESS EE. FOR THE BALANCE OF ITA. NO. 5691/M/2010 4 THE CLAIM, THE ASSESSEE COULD NOT ADDUCE ANY SATISF ACTORY REPLY NEITHER IN THE QUANTUM PROCEEDINGS NOR IN THE PENAL PROCEEDING S. WE, THEREFORE, CONFIRM THE FINDINGS OF THE LD. CIT(A) ON THIS ISSU E ALSO. 10. TO SUM UP, THE AO IS DIRECTED TO DELETE THE PEN ALTY ON THE ADDITIONS MADE ON ACCOUNT OF DEPRECIATION AND RECOMPUTE THE LEVY AS PER OUR FINDINGS GIVEN IN RESPECT OF OTHER DISALLOWANCES. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH MARCH, 2015. SD/- SD/- (VIJAY PAL RAO ) (N.K. BILLAIYA) /JUDICIAL MEMBER % / ACCOUNTANT MEMBER MUMBAI; 4 DATED : 18 TH MARCH, 2015 . . ./ RJ , SR. PS 3 3 3 3 . .. . +/ +/ +/ +/ 5 '/ 5 '/ 5 '/ 5 '/ / COPY OF THE ORDER FORWARDED TO : 1. (* / THE APPELLANT 2. +,(* / THE RESPONDENT. 3. 6 ( ) / THE CIT(A)- 4. 6 / CIT 5. 78 +/ , , / DR, ITAT, MUMBAI 6. 89 : / GUARD FILE. 3 3 3 3 / BY ORDER, ,/ +/ //TRUE COPY// ; ;; ; / < < < < (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI