AGRANI INFRASTRUCTURE WORKS PRIVATE LIMITED (EARLIER KNOWN AS AGRANI TELECOM LTD), MUMBAI V. ITO RANGE 12(1)(1), MUMBAI

ITA 5849/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8540 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 10-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MICHAEL JERALD
• Keywords: Question of law; Revised return
• Section: 271(1)(c); 14A; 139(5); 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A , BENCH MUMBAI BEFORE SHRI MAHAVIR SINGH , JM & SHRI M.BALAGANESH, AM ITA NO. 5849 /MUM/201 8 ( ASSESSMENT YEAR : 2013 - 14 ) M/S. AGRANI INFRASTRUCTURE WORKS PRIVATE LIMITED (EARLIER KNOWN AS AGRANI TELECOM LIMIT ED) B - 10, ESSEL HOUSE LAWRENCE ROAD INDUSTRIAL AREA, NEW DELHI VS. INCOME TAX OFFICER, RANGE 12(1)(1) AAYAKAR BHAVAN MUMBAI 400 020 PAN/GIR NO. AAACE9714A (APPELLANT ) .. (RESPONDENT ) ASSESSEE BY SHRI NIRAJ SHETH & SHRI JAY BHANSALI REVENUE BY SHRI MICHAEL JERALD DATE OF HEARING 07 / 01 /2020 DATE OF PRONOUNCEMENT 15 / 01 /2020 / O R D E R PER M. BALAGANESH (A.M) : THIS APPEAL IN ITA NO. 5849/MUM/2018 FOR A.Y. 2013 - 14 ARISES OUT OF THE ORDER BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 20, MUMBAI IN APPEAL NO. CIT(A) - 20/IT - 10352/2016 - 17 DATED 04/07/2018 (LD. CIT(A) IN SHORT) IN THE MATTER OF IMPOSITION OF PENALTY U/S.271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE CT). 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN UPHOLDING THE LEVY OF PENALTY U/S.271(1)(C) OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE. ITA NO .5849/MUM/2018 M/S. AGRANI INFRASTRUCTURE WORKS PVT. LTD. ( EARLIER KNOWN AS AGRANI TELECOM LIMITED) 2 3. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE IS A LIMITED COMPANY ENGAGED IN THE BUSINESS OF PROVIDING TELE - COMMUNICATION SERVICES AND TRADING IN TELECOM AND RELATED SECURITY EQUIPMENTS. THE RETURN OF INCOME IN THE A.Y.2013 - 14 WAS FILED ON 26/09/2013 DECLARING TOTAL LOSS OF RS.25,71,342/ - . THIS RETURN WAS SELECTED FOR SCRUTINY BY ISSUE OF NOTICE U/S.143(2) OF THE ACT ON 01/09/2014. THE ASSESSEE LATER FILED REVISED RETURN OF INCOME ON 31/03/2015 WHEREIN THE LOSS AS PER ORIGINAL RETURN OF INCOME WAS CONVERTED INTO GROSS TOTAL I NCOME OF RS.1,30,97,359/ - . IN THE REVISED RETURN, THE ASSESSEE HAD OFFERED THE FOLLOWING AMOUNTS TO TAX: - 1 . DISALLOWANCE OF EXCHANGE DIFFERENCE - RS. 28,65,653/ - 2 . CREDITORS NO LONGER PAYABLE WRITTEN BACK - RS.1,28,03,048/ - 3.1. WE FIND THAT THE ASS ESSEE HAD BROUGHT FORWARD LOSSES TO THE TUNE OF RS.14,02,81,817/ - FROM A.YRS. 2006 - 07 TO 2013 - 14 WHICH WAS ALSO DULY DISCLOSED IN THE RETURN OF INCOME ITSELF. HENCE , IT COULD BE SAFELY CONCLUDED THAT ASSESSEE HAD NO INTENTION TO CONCEAL ANY PARTICULARS OF INCOME OR FURNISH ANY INACCURATE PARTICULARS OF INCOME IN VIEW OF THE FACT THAT EVEN AFTER THE OFFER OF THE AFORESAID TWO INCOMES IN THE REVISED RETURN I.E. DISALLOWANCE OF EXCHANGE DIFFERENCE AND CREDITORS NO LONGER PAYABLE WRITTEN BACK, THE RESULTANT TAX ABLE INCOME WOULD ONLY BE NIL IN VIEW OF BROUGHT FORWARD LOSSES AVAILABLE WITH THE ASSESSEE. IT IS PERTINENT TO NOTE THAT THE REVISED RETURN FILED ON 31/03/2015 BY THE ASSESSEE WAS A STATUTORILY VALID RETURN AS THE SAME WAS FILED WITHIN THE TIME LIMIT PRES CRIBED U/S.139(5) OF THE ACT. WE ALSO FIND THAT ASSESSEE VIDE LETTER ITA NO .5849/MUM/2018 M/S. AGRANI INFRASTRUCTURE WORKS PVT. LTD. ( EARLIER KNOWN AS AGRANI TELECOM LIMITED) 3 DATED 20/07/2015 HAD DULY BROUGHT TO THE NOTICE OF THE LD. AO, THE REASONS FOR FILING REVISED RETURN. WE FIND FROM THE PAPER BOOK THAT FIRST NOTICE U/S.142(1) OF THE ACT WAS ISSUED BY THE LD. AO ON 15/10/2015 WHEREIN VARIOUS DETAILS WERE CALLED FOR BY THE LD. AO WHICH ADMITTEDLY INCLUDE D CONFIRMATION S IN RESPECT OF CREDITORS. BEFORE THE ISSUANCE OF THIS NOTICE U/S.142(1) OF THE ACT DATED 15/10/2015, THE ASSESSEE HAD ALREADY REVISED ITS RET URN OF INCOME ON 31/03/2015 WHICH PROVES THE BONAFIDE INTENTION OF THE ASSESSEE BEYOND DOUBT. HENCE, THE ARGUMENT OF THE LD. DR THAT BUT FOR THE CASE BEING SELECTED FOR SCRUTINY, THE ASSESSEE WOULD NOT HAVE COME FORWARD TO FILE THE REVISE D RETURN OFFERING ADDITIONAL INCOME IS DEVOID O F MERITS. AT THE COST OF REPETITION, WE WOULD LIKE TO STATE THAT IN ANY CASE, THE ASSESSEE IS HAVING SUFFICIENT BROUGHT FORWARD LOSSES FROM EARLIER YEARS. HENCE, THERE CANNOT BE ANY MALAFIDE INTENTION THAT COULD BE ATTRIBUTED T O THE ASSESSEE FOR CONCEALING THE PARTICULARS OF INCOME. 3.2. FROM THE AFORESAID OBSERVATIONS, IT COULD BE SAFELY CONCLUDED THAT THE REVISED RETURN HAS BEEN FILED BY THE ASSESSEE BEFORE DETECTION WAS MADE BY THE LD. AO. THE ISSUANCE OF NOTICE U/S 143(2) O F THE ACT IS ONLY A GENERAL NOTICE INFORMING THE ASSESSEE THAT HIS RETURN HAS BEEN SELECTED FOR SCRUTINY. NO SPECIFIC QUERIES WHATSOEVER WERE RAISED BY THE LD AO AT THAT STAGE. HENCE, THERE CANNOT BE ANY LEVY OF PENALTY U/S.271(1)(C) OF THE ACT ON THE ASS ESSEE IN THE FACTS OF THE INSTANT CASE. IN THIS REGARD, WE FIND THAT THE LD. AR RIGHTLY PLACED RELIANCE ON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF PCIT VS. STERLITE OPPORTUNITIES AND VENTURES LTD., IN INCOME TAX APPEAL NO.894 O F 2015 DT 21/02/2018 WHEREIN THE QUESTION RAISED BEFORE THE HONBLE HIGH COURT WAS AS UNDER: - (A) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE AND IN LAW, THE TRIBUNAL IS RIGHT IN HOLDING THAT PENALTY UNDER SECTIONS 271(1)(C) ITA NO .5849/MUM/2018 M/S. AGRANI INFRASTRUCTURE WORKS PVT. LTD. ( EARLIER KNOWN AS AGRANI TELECOM LIMITED) 4 CANNOT BE LEVIE D ON INCOME DECLARED IN THE REVISED RETURN OF INCOME FILED U/S. 139(5) OF THE I. T. ACT, 1961? 3.3. THE ORDER OF THE HONBLE HIGH COURT DISPOSING OFF THIS QUESTION BY NARRATING THE FACTS ARE REPRODUCED HEREUNDER FOR THE SAKE OF CONVENIENCE: - 3 THE RESPO NDENT ORIGINALLY FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2005 - 06, DECLARING A LOSS OF RS.20.64 CRORES. ON RECEIPT OF SCRUTINY NOTICE UNDER SECTION 143(2) OF THE ACT, THE RESPONDENT FILED REVISED RETURN OF INCOME, REDUCING ITS INCOME TO 'NIL'. THIS B Y ADDING A SUM OF RS.20.64 CRORES UNDER SECTION 14A OF THE ACT. THEREAFTER, ASSESSMENT WAS COMPLETED AT NIL INCOME, AS DECLARED BY THE RESPONDENT ASSES S EE IN ITS REVISED RETURN OF INCOME. 4 THEREAFTER, THE PRESENT PENALTY PROCEEDINGS WERE INITIATED BY THE ASSESSING OFFICER ON THE GROUND THAT THE REVISED RETURN BY THE RESPONDENT - ASSES S EE WAS NOT FILED VOLUNTARILY BUT ONLY AFTER ISSUING A SCRUTINY NOTICE UNDER SECTION 143(2) OF THE ACT. THIS ON THE GROUND OF HAVING FILED INACCURATE PARTICULARS OF INCOME AND IMPOSED PENALTY OF RS.7.40 CRORES. 5 BEING AGGRIEVED, RESPONDENT CARRIED THE ISSUE IN APPEAL TO THE COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)]. BY ORDER DATED 21ST JULY, 2011, THE CIT(A) DELETED THE PENALTY. THIS AFTER HAVING RECORDED A FINDING OF FAC T BY PLACING RELIANCE UPON THE ORDER OF THE TRIBUNAL DATED 27TH MAY, 2011 IN QUANTUM PROCEEDINGS. IN THE QUANTUM PROCEEDINGS, THE TRIBUNAL HAS HELD THAT THERE IS NOTHING EITHER IN THE ORDER OF THE ASSESSING OFFICER OR IN THE ORDER OF THE CIT(A) TO SHOW THA T THE REVISED RETURN OF INCOME WAS FILED ONLY AFTER THE DETECTION OF THE REVENUE THAT THE ORIGINAL RETURN CONTAINED INACCURATE PARTICULARS. IT FURTHER RECORDS THAT THE TRIBUNAL IN ITS ORDER DATED 27TH MAY, 2011 HAS RECORDED THE FACT THAT EVEN AT THE HEARIN G, THE DEPARTMENTAL REPRESENTATIVE WAS UNABLE TO SHOW THAT REVISED RETURN WAS FILED ONLY AFTER THE ASSESSING OFFICER HAD DETECTED INACCURATE PARTICULARS OF INCOME IN THE ORIGINAL RETURN OF INCOME. THUS, THE CIT(A) COMES TO A FINDING OF FACT THAT THE FILING OF THE REVISED INCOME WAS VOLUNTARILY DONE BY THE RESPONDENT SUO MOTU AND NOT BECAUSE OF DETECTION BY THE REVENUE. 6 BEING AGGRIEVED BY THE ORDER DATED 21ST JULY, 2011 OF THE CIT(A), DELETING THE PENALTY, THE REVENUE FILED AN APPEAL TO THE TRIBUNAL. THE TRIBUNAL BY THE IMPUGNED ORDER HAS ALSO WHILE COMING TO FINDING OF FACT, REITERATES THE FINDING IN ITS EARLIER ORDER DATED 27TH MAY, 2011 IN QUANTUM PROCEEDINGS ITA NO .5849/MUM/2018 M/S. AGRANI INFRASTRUCTURE WORKS PVT. LTD. ( EARLIER KNOWN AS AGRANI TELECOM LIMITED) 5 VIZ: THE REVISED RETURN FILED UNDER SECTION 139(5) OF THE ACT, WAS VALID RETURN OF INCOME FILE D BY THE RESPONDENT ON ITS OWN AND NOT ON THE BASIS OF ANY INVESTIGATION/ DISCOVERY DONE BY THE DEPARTMENT OF INACCURATE PARTICULARS IN THE ORIGINAL RETURN OF INCOME. THUS, HOLDING THAT THERE IS NO BASIS FOR INVOKING SECTION 271(1)(C) OF THE ACT . 7 MR. T EJVEER SINGH, LEARNED COUNSEL FOR THE REVENUE STATES THAT THE REVISED RETURN WAS FILED ONLY AFTER THE SCRUTINY NOTICE WAS ISSUED TO THE RESPONDENT. THEREFORE, THE PENALTY IMPOSED UPON THE RESPONDENT IS JUSTIFIED. ON THE OTHER HAND, MR. PAREKH REITERATES TH E FINDING IN THE ORDERS OF CIT(A) AND THE TRIBUNAL. 8 WE FIND THAT BOTH THE CIT(A) AS WELL AS TRIBUNAL HAVE RECORDED A CONCURRENT FINDING OF FACT THAT REVISED RETURN OF INCOME UNDER SECTION 139(5) OF THE ACT WAS FILED BY THE RESPONDENT - ASSESSEE ON ITS OWN AND NOT ON ACCOUNT OF ANY DETECTION OF INACCURATE PARTICULARS OF INCOME BEING FILED BY THE RESPONDENT IN ITS ORIGINAL RETURN OF INCOME. THE FINDING OF FACT RENDERED BOTH BY THE CIT(A) AND THE TRIBUNAL THAT THE REVISED RETURN OF INCOME WAS FILED BY THE RES PONDENT SUO MOTU AND NOT CONSEQUENT TO DETECTION OF INACCURATE PARTICULARS OF INCOME BY THE ASSESSING OFFICER, IS NOT SHOWN TO BE PERVERSE. ADMITTEDLY, THERE IS NO ALLEGATION THAT THE REVISED RETURN OF INCOME FILED BY THE RESPONDENT - ASSESSEE, CONTAINS ANY INACCURATE PARTICULARS OF INCOME. 9 IN THESE CIRCUMSTANCE, PARTICULARLY THE FINDING OF FACT RENDERED BOTH BY THE CIT(A) AND THE TRIBUNAL, THE QUESTION AS PROPOSED DOES NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW. 10 ACCORDINGLY, APPEAL DISMISSED. N O ORDER AS TO COSTS. 3.4. IN VIEW OF THE AFORESAID FACTUAL OBSERVATIONS AND RESPECTFULLY FOLLOWING THE AFORESAID JUDICIAL PRECEDENT, WE HAVE NO HESITATION IN CANCELLING THE LEVY OF PENALTY U/S.271(1)(C) OF THE ACT. SINCE THE ISSUE OF LEVY OF PENALTY HAS BEEN DIRECTED TO BE DELETED ON MERITS, THE OTHER TECHNICAL ARGUMENT MADE BY THE LD. AR THAT PENALTY WOULD NOT SURVIVE AS THE NOTICE ISSUED THEREON AS THE RELEVANT PART OF THE PENALTY NOTICE WAS NOT STRUCK OFF BY THE LD. AO NEED NOT BE ADJUDICATED UPON AND THE SAME IS HEREBY LEFT OPEN. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. ITA NO .5849/MUM/2018 M/S. AGRANI INFRASTRUCTURE WORKS PVT. LTD. ( EARLIER KNOWN AS AGRANI TELECOM LIMITED) 6 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 15 / 01 /2020 SD/ - ( MAHAVIR SINGH ) SD/ - (M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 15 / 01 / 2020 KARUNA , SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//