DCIT, CIRCLE - 6(3)(1), MUMBAI V. FORUM HOMES PVT. LTD., MUMBAI

ITA 5804/MUM/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5335 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2015-2016
• Appeal Filed On: 08-10-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 271(1)(c); 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER ITA NO. 5804 / MUM . /2018 ( ASSESSMENT YEAR : 20 08 09 ) ACE INSURANCE CONSULTANTS IIFL CENTRE, KAMALA CITY OFF SENAPATI BAPAT MARG LOWER PAREL (W), MUMBAI 400 013 PAN AAKFA4572D . APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 31(1), MUMBAI . RESPONDENT ASSESSEE BY : SHRI PRITESH MEHTA REVENUE BY : SHRI S.K. JAIN DATE OF HEARING 11.04.2019 DATE OF ORDER 29.05.2019 O R D E R PER SAKTIJIT DEY. J.M. A FORESAID APPEAL HA S BEEN FILED BY THE ASSESSEE CHALLENGING THE ORDER DATED 1 ST MAY 2017, PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 42 , MUMBAI, CONFIRMING PENALTY OF ` 25,80,510, IMPOSED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ) FOR THE ASSESSMENT YEAR 20 08 09. 2 ACE INSURANCE CONSULTANTS 2 . B RIEF FACTS ARE, THE ASSESSEE , A PARTNERSHIP FIRM , FILED ITS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 27 TH SEPTEMBER 2008, DECLARING TOTAL INCOME OF ` 1,52,99,500. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICING THAT T HE ASSESSEE HAD DEBITED VARIOUS EXPENDITURE S TO THE PROFIT & LOSS ACCOUNT CALLED UPON THE ASSESSEE TO FURNISH THE DETAILS OF EXPENDITURE AND ALSO JUSTIFIED THE ALLOWABILITY OF SUCH EXPENDITURE. IN RESPONSE, THOUGH , ASSESSEE FILED NECESSARY DETAILS AND CLAIMED THAT THE EXPENDITURE INCURRED WAS FOR THE PURPOS E OF ITS BUSINESS, HOWEVER, THE ASSESSING OFFICER WAS NOT CONVINCED WITH THE SUBMISSIONS OF THE ASSESSEE AND WAS OF THE VIEW THAT THE EXPENDITURE S CLAIMED BY THE ASSESSEE ARE NOT FULLY VERIFIABLE. ACCORDINGLY, HE DISALLOWED 25% OUT OF THE TOTAL EXPENDITURE CLAIMED ON AD HOC BASIS WHICH WORKED OUT TO ` 75,91,967. THE ASSESSEE CHALLENGED THE AFORESAID DISALLOWANCE BEFORE THE FIRST APPELLATE AUTHORITY. 3 . L EARNED COMMISSIONER (APPEALS) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DELETED THE DISALLOWANCE M ADE BY THE ASSESSING OFFICER. HOWEVER, WHILE DISPOSING OFF THE APPEAL FILED BY THE REVENUE AGAINST THE AFORESAID ORDER OF LEARNED COMMISSIONER (APPEALS), THE TRIBUNAL , IN ITA NO.6124/MUM./2011, DATED 23 RD JULY 2014, UPHELD THE DISALLOWANCE MADE BY THE ASSE SSING OFFICER. BE THAT AS IT MAY, ON THE BASIS OF DISALLOWANCE OF EXPENDITURE MADE THE 3 ACE INSURANCE CONSULTANTS ASSESSING OFFICER INITIATED PROCEEDING FOR IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT ALLEGING FURNISHING OF INACCURATE PARTICULARS OF INCOME AND ULTIMATEL Y PASSED AN ORDER ON 18 TH MARCH 2015, IMPOSING PENALTY OF ` 25,80,510 UNDER SECTION 271(1)(C) OF THE ACT. THE ASSESSEE CHALLENGED THE PENALTY ORDER SO PASSED BEFORE THE FIRST APPELLATE AUTHORITY WITHOUT ANY SUCCESS. 4 . T HE LEARNED AUTHORISED REPRESENTATIVE S UBMITTED , A PART OF THE EXPENDITURE CLAIMED BY THE ASSESSEE WAS DISALLOWED ON AD HOC BASIS ON THE ALLEGATION THAT THE EXPENDITURE CLAIMED ARE NOT FULLY VERIFIABLE. THUS, HE SUBMITTED , THERE IS NO DOUBT ABOUT THE GENUINENESS OF THE EXPENDITURE CLAIMED . THUS , HE SUBMITTED , THE CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME IS NOT MADE OUT. THEREFORE , HE SUBMITTED , THE PENALTY IMPOSED SHOULD BE DELETED. 5 . THE LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY RELIED UPON THE OBSERVATIONS OF THE ASSESSING OFFICER AND LEARNED COMMISSIONER (APPEALS). 6 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. AS COULD BE SEEN FROM THE FACTS ON RECORD, IN THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE HAD JUSTIFIED THE EXPENDITURE CLAIMED OF ` 3,03,67,868, BY STATING THAT SUCH EXP ENDITURE WAS ALLOCATED BY INDIA INFOLINE LTD. TOWARDS SHARED SERVICES. IT WAS ALSO 4 ACE INSURANCE CONSULTANTS BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER THAT SUCH EXPENDITURE WAS NOT CLAIMED AS DEDUCTION BY INDIAN INFOLINE LTD. IT IS RELEVA NT TO OBSERVE , THERE CANNOT BE ANY DOUBT ABOUT THE GENUINENESS OF EXPENDITURE CLAIMED AS THE ASSESSING OFFICER HIMSELF HAS ALLOWED 75% OF THE TOTAL EXPENDITURE CLAIMED. THE DISALLOWANCE OF 25% IS PURELY ON AD HOC / ESTIMATE BASIS ON THE ALLEGATION THAT SUC H EXPENDITURES ARE NOT FULLY VERIFIABLE. THERE IS NOTHING ON RECORD TO SUGGEST THAT THE ASSESSEE DID NOT FURNISH FULL PARTICULARS OF EXPENDITURE CLAIMED OR THERE WAS ANY ACT OF OMISSION OR COMMISSION ON THE PART OF THE ASSESSEE IN FURNISHING THE PARTICULAR S OF EXPENDITURES. PART DISALLOWANCE OF EXPENDITURE CLAIMED IS PURELY ON ESTIMATE BASIS. IN THE AFORESAID CIRCUMSTANCES, THE ASSESSEE CANNOT BE ACCUSED OF FURNISHING INACCURATE PARTICULARS OF INCOME. MORE SO, WHE N THE FIRST APPELLATE AUTHORITY BEING CONVIN CED WITH THE SUBMISSIONS OF THE ASSESSEE HAD DELETED THE DISALLOWANCE , THOUGH OF COURSE , SUCH DISALLOWANCE WAS RESTORED BY THE TRIBUNAL. IN VIEW OF THE ABOVE , WE ARE INCLINED TO DELETE THE PENALTY IMPOSED U /S 271(1)(C) OF THE ACT. 7 . IN THE RESULT, APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN C OURT ON 29.05.2019 SD/ - MANOJ KUMAR AGGARWAL ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 29.05.2019 5 ACE INSURANCE CONSULTANTS COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI