RENU S. MURARKA, MUMBAI V. ACIT CIR 20(2), MUMBAI

ITA 5930/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9430 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 08-11-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 24-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A B KOLI
• Keywords: Business expenditure

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI . . , . , . . , ! ' BEFORE S/SHRI B.R. MITTAL JUDICIAL MEMBER AND P.M. JAGTAP ACCOUNTANT MEMBER ./I.T.A. NO.5930/MUM/2011 ( # # # # $ $ $ $ / ASSESSMENT YEAR :2003-2004 SMT. RENU S. MURARKA, C-303, REMI BIZ COURT, SHAH INDUSTRIAL ESTATE, VEERA DESAI ROAD, ANDHERI(W), MUMBAI-400 053 # # # # / VS. THE ACIT, CIRCLE 20(2), AAYAKAR BHAVAN, MUMBAI-400 020 % ! ./ & ./PAN/GIR NO. :AAHPM 1011A ( %' /APPELLANT ) .. ( ()%' / RESPONDENT ) %' * / APPELLANT BY: SHRI SAMEER DALAL ()%' + * / RESPONDENT BY : SHRI A.B. KOLI # + ,! / DATE OF HEARING : 08.11.2012 -.$ + ,! / DATE OF PRONOUNCEMENT : 21.11.2012 / / O R D E R PER P.M. JAGTAP, AM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. CIT(A)-31, MUMBAI DT.01.07.2011 WHEREBY HE CONF IRMED THE PENALTY OF RS. 61,176/- IMPOSED BY THE AO U/S. 271(1)(C) OF TH E ACT. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L WHO IS ENGAGED IN THE BUSINESS OF EXPORT OF DYES AND CHEMICALS UNDER THE NAME AND STYLE OF PROPRIETARY CONCERN M/S. RESEARCH DYE CHEM INDUSTRI ES. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED B Y HER ON 27.11.2003 DECLARING TOTAL INCOME AT RS. 21,62,750/-. ALONGWI TH THE SAID RETURN, THE ITA NO.5930/M/2011 2 ASSESSEE HAD FILED TWO SEPARATE PROFIT AND LOSS ACC OUNTS, ONE IN RESPECT OF HER PROPRIETARY CONCERN AND THE OTHER RELATED TO HER IN DIVIDUAL AFFAIRS. IN THE PROFIT AND LOSS ACCOUNT RELATING TO HER INDIVIDUAL AFFAIRS, THE ASSESSEE HAD CLAIMED EXPENSES AMOUNTING TO RS. 1,95,211/- UNDER THE VARIOUS HEADS SUCH AS ELECTRICITY, REPAIRS AND MAINTENANCE, ENTERTAINM ENT, TRAVELLING ETC. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE STAND TAKEN BY THE ASSESSEE WAS THAT THE SAID EXPENSES WERE ALSO RELATED TO HER PROPRIETARY BUSINESS AND SINCE THE SAME WERE INADVERTENTLY NOT DEBITED IN TH E BOOKS OF THE PROPRIETARY CONCERN, THEY WERE CLAIMED IN THE INDIVIDUAL PROFIT AND LOSS ACCOUNT. THE STAND OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE BY T HE AO. ACCORDING TO HIM, THE BOOKS OF ACCOUNT OF THE PROPRIETARY CONCERN OF THE ASSESSEE WERE DULY AUDITED AND SINCE THE EXPENSES IN QUESTION WERE NOT DEBITED IN THE SAID BOOKS OF ACCOUNT, THE SAME COULD NOT BE CONSIDERED AS INCURRED FOR THE PURPOSE OF THE BUSINESS OF THE ASSESSEE. HE THEREF ORE DISALLOWED THE SAID EXPENSES AND ALSO INITIATED PENALTY PROCEEDINGS U/S . 271(1)(C) OF THE ACT. 3. IN RESPONSE TO THE SHOW CAUSE NOTICE ISSUED BY TH E AO DURING THE COURSE OF THE PENALTY PROCEEDINGS, THE ASSESSEE REI TERATED THAT THE EXPENSES IN QUESTION WERE CLAIMED IN THE INDIVIDUAL PROFIT A ND LOSS ACCOUNT AS THE SAME REMAINED INADVERTENTLY TO BE RECORDED IN THE BOOKS OF ACCOUNT OF THE PROPRIETARY CONCERN. IT WAS SUBMITTED THAT VOUCHERS FOR THE SAID EXPENSES WERE PRODUCED BEFORE THE AO FOR VERIFICATION DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS AND NO DEFECT THEREIN WAS PO INTED OUT BY HIM. IT WAS CONTENDED THAT THERE WAS THUS NO CASE OF FURNIS HING OF ANY INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE JUSTIFYING LE VY OF PENALTY U/S. 271(1)(C) OF THE ACT. THIS CONTENTION OF THE ASSESSEE WAS NO T ACCEPTED BY THE AO. HE HELD THAT BY NOT RECORDING THE RELEVANT EXPENSES IN THE BOOKS OF ACCOUNT OF THE PROPRIETARY CONCERN, THE ASSESSEE WAS GUILTY OF NOT FOLLOWING THE BASIC PRINCIPLES OF ACCOUNTING AND IT WAS A CLEAR CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE TO THE EXTENT OF EXPENSES CLAIMED IN THE PROFIT AND LOSS ACCOUNT. ACCORDINGLY, PENALTY OF R S. 61,176/- WAS IMPOSED BY ITA NO.5930/M/2011 3 HIM U/S. 271(1)(C) BEING 100% OF THE TAX SOUGHT TO BE EVADED IN RESPECT OF THE ADDITION MADE BY DISALLOWANCE OF THE SAID EXPEN SES. 4. ON APPEAL, THE LD. CIT(A) CONFIRMED THE PENALTY IMPOSED BY THE AO OBSERVING THAT THE BUSINESS EXPENSES ALREADY HAVING CLAIMED BY THE ASSESSEE IN FULL IN THE PROFIT AND LOSS ACCOUNT OF HER PROPR IETARY CONCERN, THERE WAS NO QUESTION OF ANY OTHER EXPENSES BEING TREATED AS THE BUSINESS EXPENSES. 5. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE AS SESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 6. AT THE TIME OF HEARING BEFORE US, THE LD. COUNSE L FOR THE ASSESSEE HAS REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORIT IES BELOW WHEREAS THE LD. DEPARTMENTAL REPRESENTATIVE HAS STRONGLY RELIED ON THE ORDERS OF THE AUTHORITIES BELOW IN SUPPORT OF THE REVENUES CASE. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ALS O PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT TH E EXPENSES IN QUESTION AGGREGATING TO RS. 1,94,211/- WERE DISALLOWED MEREL Y ON THE GROUND THAT THE SAME WERE CLAIMED BY THE ASSESSEE IN HER INDIVIDUAL PROFIT AND LOSS ACCOUNT AND NOT IN THE BOOKS OF ACCOUNT MAINTAINED FOR HER PROPRIETARY CONCERN. AS EXPLAINED BY THE ASSESSEE, THE SAID EXPENSES HOWEVE R WERE RELATED TO THE BUSINESS OF HER PROPRIETARY CONCERN, WHICH HAD REMA INED TO BE CLAIMED IN THE BOOKS OF ACCOUNT OF THE SAID CONCERN. THIS EXPLANA TION OF THE ASSESSEE WAS SUPPORTED BY THE DOCUMENTARY EVIDENCES IN THE FORM OF VOUCHERS PRODUCED BEFORE THE AO SHOWING THAT THE EXPENSES IN QUESTION WERE ALSO INCURRED FOR THE PURPOSE OF HER BUSINESS. AS SUBMITTED ON BEHAL F OF THE ASSESSEE BEFORE THE AUTHORITIES BELOW AS WELL AS BEFORE US, NO DEFE CT IN THE SAID VOUCHERS WHATSOEVER WAS POINTED OUT BY THE AO. THERE IS AL SO NOTHING IN THE ORDERS OF THE AUTHORITIES BELOW TO SHOW THAT THE EXPENSES IN QUESTION CLAIMED BY THE ASSESSEE WERE NOT INCURRED FOR THE PURPOSE OF THE B USINESS CARRIED ON UNDER THE NAME AND STYLE OF HER PROPRIETARY CONCERN. HAV ING REGARD TO ALL THESE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT ALTHOUGH THE ITA NO.5930/M/2011 4 DISALLOWANCE OF EXPENSES MADE BY THE AO WAS FINALLY ACCEPTED BY THE ASSESSEE, IT IS NOT A CASE WHERE THE ASSESSEE CAN B E SAID TO HAVE FURNISHED INACCURATE PARTICULARS OF HER INCOME JUSTIFYING LEV Y OF PENALTY U/S. 271(1)(C) OF THE ACT. IN THAT VIEW OF THE MATTER, WE CANCEL THE PENALTY IMPOSED BY THE AO U/S. 271(1)(C) OF THE ACT AND CONFIRMED BY THE LD. CIT(A) AND ALLOW THE APPEAL OF THE ASSESSEE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLO WED. 0 1 #0 + 2 3 + 45 ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST NOVEMBER, 2012 . / + .$ ! 2 6#1 21.11.2012 . + SD/- SD/- (B.R. MITTAL) (P.M. JAGTAP) / JUDICIAL MEMBER ! / ACCOUNTANT MEMBER MUMBAI; 6# DATED 21.11.2012 . # . ./ RJ , SR. PS / / / / + ++ + (7 (7 (7 (7 8 7$ 8 7$ 8 7$ 8 7$ / COPY OF THE ORDER FORWARDED TO : 1. %' / THE APPELLANT 2. ()%' / THE RESPONDENT. 3. 9 ( ) / THE CIT(A)- 4. 9 / CIT 5. 7: (# , , / DR, ITAT, MUMBAI 6. ; < / GUARD FILE. /# /# /# /# / BY ORDER, )7 ( //TRUE COPY// = == = / 4 4 4 4 (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI ITA NO.5930/M/2011 5 DATE INITIALS 1. DRAFT DICTATED ON: 16.11.2012 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 19.11.2012 SR. PS/PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER: JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER: JM/AM 5. APPROVED DRAFT COMES TO THE SR. PS/PS: SR. PS/PS 6. ORDER PRONOUNCED ON: SR. PS/PS 7. FILE SENT TO THE BENCH CLERK: 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK: SR. PS/PS 9. DATE ON WHICH FILE GOES TO AR 10. DATE OF DISPATCH OF ORDER: