VISHESH CARBON P.LTD, MUMBAI V. ITO WD 7(3)(1), MUMBAI

ITA 5872/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79020 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2007-2008
• Appeal Filed On: 26-09-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PITAMBAR DAS
• Assessee Lawyers: R C JAIN
• Keywords: Onus to prove

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUM BAI , BEFORE SHRI D. MANMOHAN, VP AND SHRI SANJAY ARORA, AM I.T.A. NO. 5872/MUM/2012 ( / ASSESSMENT YEAR: 2007-08) VISHESH CARBON PVT. LTD. 77/83, J. K. CHAMBERS, NAGDEVI STREET, MASJID, MUMBAI-400 003 VS. INCOME TAX OFFICER, WARD 7(3)(1), ROOM NO. 616, 6 TH FLOOR, AAYKAR BHAWAN, MUMBAI-400 020 ! ' ./PAN/GIR NO. AAACV 9557 C ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) !#&' / APPELLANT BY : SHRI R. C. JAIN $%!#&' / RESPONDENT BY : SHRI PITAMBAR DAS ( )*&+, / DATE OF HEARING : 08.04.2014 -./&+, / DATE OF PRONOUNCEMENT : 28.05.2014 0 O R D E R PER SANJAY ARORA, A. M.: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-13, MUMBAI (CIT(A) FOR SH ORT) DATED 15.07.2012, CONFIRMING THE LEVY OF PENALTY U/S.271(1)(C) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) IN ITS CASE FOR THE ASSESSMENT YEAR (A.Y.) 2007-08 VID E ORDER DATED 14.06.2010. 2 ITA NO. 5872/MUM/2012 (A.Y. 2007-08) VISHESH CARBON PVT. LTD. VS. ITO 2. THE BACKGROUND FACTS OF THE CASE ARE THAT THE AS SESSMENT WAS COMPLETED BY DISALLOWING THE EXPENDITURE ON FOREIGN TRAVEL, INCU RRED AND CLAIMED IN THE SUM OF RS.95,023/-. THE SAME WAS DISALLOWED FOR THE REASON THAT THE ASSESSEE FAILED TO FURNISH THE PRIMARY EVIDENCES IN RELATION TO THE EXPENDITUR E, MUCH LESS ESTABLISH THE BUSINESS PURPOSE OF THE VISIT TO USA, TOWARD WHICH THE EXPEN DITURE WAS OSTENSIBLY INCURRED. THE ASSESSEE FAILING TO SUBSTANTIATE ITS CLAIM IN ANY M ANNER, PENALTY STOOD LEVIED AS ALSO CONFIRMED. RELIANCE STANDS PLACED BY THE REVENUE ON A NUMBER OF DECISIONS, VIZ. CIT VS. MOHD. MOHTRAM FAROOQUI [2003] 259 ITR 132 (RAJ); CIT VS. SREE KRISHNA TRADING CO. [2002] 253 ITR 645 (KER); CIT VS. VIDYAGAURI NATVERLAL [1999] 238 ITR 91 (GUJ); CIT VS. GATES FOAM & RUBBER COMPANY [1973] 91 ITR 467 (KER); AND NAGIN CHAND SHIV SAHAI VS. CIT [1938] 6 ITR 534 (LAH). AGGRIEVED, THE ASSESSEE IS IN SECOND APPEAL. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD, GIVING OUR CAREFUL CONSIDERATION TO THE MATTER. 3.1 THE EXPENDITURE STANDS DISALLOWED IN THE ABSENC E OF THE ASSESSEE BEING ABLE TO PROVE THE EXPENDITURE, AS ALSO OF IT HAVING BEEN IN CURRED FOR THE PURPOSE OF BUSINESS. NO DOUBT, THE BURDEN OF PROOF IN THE PENALTY PROCEEDIN GS IS LOWER, BUT THE SAME NEVERTHELESS IS ONLY ON THE ASSESSEE, WHO IS BY LAW REQUIRED TO SUBSTANTIATE ITS EXPLANATION. WHY WAS THE EXPENDITURE INCURRED, SPECIFYING THE EXACT PURP OSE OF THE VISIT; THE NATURE OF WORK CARRIED OUT THEREAT, WITH WHOM WAS THE BUSINESS TRA NSACTED; ETC. WOULD NEED TO BE SPECIFIED. FURTHER, NORMALLY VISITS ARE PLANNED UPO N DOING GROUND WORK FOR THE SAME, I.E., QUA THE ACTIVITY IN RELATION TO WHICH THE TRAVEL IS UND ERTAKEN. WE IN FACT FIND THE ASSESSEES CASE TO BE SANS ANY EXPLANATION, AND LIMITED TO A BALD STATEMENT OF HAVING INCURRED THE EXPENDITURE FOR BUSINESS PURPOSE, WHIC H IT HAS ABYSMALLY FAILED TO SUBSTANTIATE IN ANY MANNER, LEADING TO A DISALLOWAN CE IN THE FIRST PLACE, FOLLOWED BY A CONFIRMATION OF THE PENALTY. 3.2 THE LAW IN THE MATTER IS TRITE AND WELL SETTLED , AND TOWARD WHICH WE MAY CITE A NUMBER OF DECISIONS BY THE APEX COURT AS UNDER, I.E ., A PLAUSIBLE EXPLANATION, THE ONUS TO FURNISH AND SUBSTANTIATE IT IS ON THE ASSESSEE, SAV ES PENALTY; EXPOUNDED OVER A SERIES OF 3 ITA NO. 5872/MUM/2012 (A.Y. 2007-08) VISHESH CARBON PVT. LTD. VS. ITO DECISIONS, VIZ. CIT V. ATUL MOHAN BINDAL [ 2009] 317 ITR 1 (SC); UNION OF INDIA V. DHARMENDRA TEXTILE PROCESSORS [2008] 306 ITR 277 (SC); GULJAG INDUSTRIES V. CTO [2007] 293 ITR 584 (SC); K.P. MADHUSUDHANAN VS. CIT [2001] 251 ITR 99 (SC); B.A. BALASUBRAMANIAM AND BROS V. CIT (1999) 236 ITR 977 (SC); ADDL. CIT VS. JEEVAN LAL SHAH [1994] 205 ITR 244 (SC); CIT VS. K. R. SADAYAPPAN [1990] 185 ITR 49 (SC); AND CIT VS. MUSSADILAL RAM BHAROSE [1987] 165 ITR 14 (SC). THE LAW OBTAINS POST THE DECISION BY THE APEX COURT IN THE CASE OF RELIANCE PETRO PRODUCTS PVT. LTD . [2010] 322 ITR 158 (SC), WHICH STANDS EXPLAINED B Y THE HONBLE COURTS IN VARIOUS DECISIONS, AS IN THE CASE OF CIT VS. ZOOM COMMUNICATION (P.) LTD . [2010] 327 ITR 510 (DEL.); CIT VS. USHA INTERNATIONAL LIMITED [2013] 214 TAXMANN.COM 519 (DEL); AND CIT VS. ESCORTS FINANCE LTD . [2010] 328 ITR 44 (DEL), REITERATING THE SETTLED POSITION. THE RECENT DECISION BY THE APEX C OURT IN MAK DATA (P.) LTD. VS. CIT [2013] 358 ITR 593 (SC) IS ALSO ALONG THE SAME LINE S. 3.3 THE ASSESSEE HAS PLACED RELIANCE ON THE ORDER B Y THE TRIBUNAL IN THE CASE OF GOYAL INDUSTRIES LTD. VS. DY. CIT (IN ITA NO. 702/AHD(B)/2008 DATED 28.05.2010). HOW EVER, AS A READING OF THE ORDER WOULD SHOW (PARAS 9 TO 11), THAT IS PRECISELY WHAT THE TRIBUNAL HAS SAID, EXPLAINING THE SCOPE OF THE EXPLANATION 1(B), AND WITH SPECIFIC REFERENCE TO THE WORD SUBSTANTIATE OCCURRING THEREIN, CONFIRMING, AS A RESULT, THE PENALTY ON AN ADDITION OF RS.7 LACS WHERE THE ASSESSEE WAS FOUND UNABLE TO SUBSTANTIATE ITS EXPLANATION. THE SAID ORDER, THUS, CONFIRMS BOTH THE POSITION OF THE LAW IN THE MATTER AS WELL AS THE FACT THAT THE MATTER IS PRINCIPALLY FACTUAL, TO BE DECIDED ON AN APPRECIATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, I.E., WHETHER THE ASSESS EE HAS BEEN ABLE TO SUBSTANTIATE ITS EXPLANATION AS WELL AS IT BONA FIDES IN THE MATTER. WE ARE AS SUCH UNABLE TO SEE AS TO HOW THE SAID ORDER ASSISTS THE ASSESSEES CASE. ON THE CONTRARY, WE HAVING FOUND ON FACTS THE ASSESSEE TO HAVE NOT FURNISHED ANY EXPLANATION NOR EVEN THE PRIMARY DETAILS IN SUPPORT OF ITS CLAIM, HAVE THEREFORE NO HESITATION IN CONFIRMI NG THE PENALTY, LEVIED @ 100% OF THE TAX SOUGHT TO BE EVADED. WE DECIDE ACCORDINGLY. 4 ITA NO. 5872/MUM/2012 (A.Y. 2007-08) VISHESH CARBON PVT. LTD. VS. ITO 4. IN THE RESULT, THE ASSESSEES APPEAL IS DISMISSE D. 1/+23451+& 1&+6 ORDER PRONOUNCED IN THE OPEN COURT ON MAY 28, 2014 SD/- SD/- (D. MANMOHAN) (SANJAY ARORA) / VICE PRESIDENT / ACCOUNTANT MEMBER ( 7* MUMBAI; 8 DATED : 28.05.2014 )3 ROSHANI , SR. PS !' # $%&' (!'% COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT 3. ( 9+ : ; / THE CIT(A) 4. ( 9+ / CIT - CONCERNED 5. <)=>$3+ 3?4 ,?4/ ( 7* / DR, ITAT, MUMBAI 6. >5@* GUARD FILE !' ) / BY ORDER, */)+ , (DY./ASSTT. REGISTRAR) , ( 7* / ITAT, MUMBAI