GLORIOUS REALTY P. LTD, MUMBAI V. ITO 6(3)(1), MUMBAI

ITA 6011/MUM/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49108 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 02-06-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 12-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K NAYAK
• Assessee Lawyers: SANTOSH PARAB
• Section: 271(1)(c); 143(3); 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, G, MUMBAI BEFORE S/SHRI D.K.AGARWAL (JM) AND R.K.PANDA (A.M ) ITA NO.6011/MUM/2009 (ASSESSMENT YEAR: 2004-05) GLORIOUS REALTY PVT.LTD., MAHINDRA TOWERS, DR.G.M.BHOSALE MARG, P.K.KURNE CHOWK, WORLI, MUMBAI-400018 PAN: AAACG2097E INCOME TAX OFFICER WARD 6(3)(1), AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020. APPELLANT V/S RESPONDENT APPELLANT BY : SHRI SANTO SH PARAB RESPONDENT BY : SHRI A.K.NAYA K. O R D E R PER D.K.AGARWAL (JM) THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 20.8.2009 PASSED BY THE LEA RNED COMMISSIONER OF INCOME TAX (A) CONFIRMING THE PENAL TY OF RS.15,34,637/- IMPOSED BY THE AO UNDER SECTION 271 (1)( C ) OF THE INCOME TAX ACT, 1961 (THE ACT). 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE- COMPANY IS ENGAGED IN THE BUSINESS OF CONSTRUCTION , FILED RETURN DECLARING TOTAL INCOME OF RS.1,88,678/-. HO WEVER, THE ASSESSMENT WAS COMPLETED AT AN INCOME OF RS.44,55 ,410/- INCLUDING THE DISALLOWANCE OF INTEREST EXPENSES AND OTHER EXPENSES OF RS.42,77,735/-, VIDE ORDER DATED 30.11 .2005 PASSED UNDER SECTION 143(3) OF THE ACT. THE ABOVE ITA NO.6011/MUM/2009 (ASSESSMENT YEAR: 2004-05) 2 DISALLOWANCE WAS CONFIRMED BY THE LEARNED COMMISSIO NER OF INCOME TAX (A) VIDE ORDER DATED 2.2.2007. WHILE MA KING THE ASSESSMENT, THE AO HAS ALSO INITIATED THE PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. IN RESPONSE, TO THE NOTICE TO SHOW CAUSE AS TO WHY THE PENALTY U NDER SECTION 271(1)( C ) OF THE ACT SHOULD NOT BE IMPO SED, IT WAS INTERALIA SUBMITTED BY THE ASSESSEE THAT THE ASSESS EE HAS FURNISHED ALL THE PARTICULARS ALONG WITH THE RETURN OF INCOME, THE ADDITIONS MADE ARE HIGHLY DEBATABLE AND MERE DISALLOWANCE OF EXPENSES IS NOT CONCLUSIVE EVIDENCE OR A WILLFUL OMISSION ON THE PART OF THE ASSESSEE. THE ASSESSEE AFTER RELYING ON THE CERTAIN DECISIONS SUBMITTED TH AT THERE IS NO CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME TO ATTRACT PENALTY UNDER SECT ION 271(1) (C) OF THE ACT. HOWEVER, THE AO DID NOT ACCEPT T HE ASSESSEES EXPLANATION. HE WAS OF THE VIEW THAT TH E ASSESSEES CASE IS COVERED BY THE EXPLANATION 1 TO SECTION 271(1)(C) OF THE ACT AND ACCORDINGLY, HE IMPOSED TH E PENALTY OF RS.15,34,637/- VIDE ORDER DATED 26.3.2008 PASSED UNDER SECTION 271(1)(C) OF THE ACT. ON APPEAL, THE LEA RNED COMMISSIONER OF INCOME TAX (A) WHILE OBSERVING THAT YEAR AFTER YEAR THE CLAIM WAS DISALLOWED AND PENALTY LEV IED WAS ALSO CONFIRMED, THEREFORE, FOLLOWING THE SAME VIEW HE CONFIRMED THE PENALTY IMPOSED BY THE AO. ITA NO.6011/MUM/2009 (ASSESSMENT YEAR: 2004-05) 3 3. BEING AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (A), THE ASSESSEE IS IN APPEAL BEFORE US CHALLENGING IN THE GROUND OF APPEAL THE S USTENANCE OF PENALTY IMPOSED BY THE AO. 4. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITS THAT ON THE SIMILAR FACTS AND CIRC UMSTANCES OF THE CASE, THE TRIBUNAL IN THE ASSESSEES OWN CA SE IN GLORIOUS REALTY PVT.LTD. V/S INCOME TAX OFFICER IN ITA NO.93/MUM/2008 (AY-2003-04) ORDER DATED 29.1.2009 H AS DELETED THE PENALTY IMPOSED BY THE AO, THEREFORE, FOLLOWING THE SAME, THE PENALTY IMPOSED BY THE AO AND SUSTAI NED BY THE LEANED COMMISSIONER OF INCOME TAX (A) BE DELETE D. 5. ON THE OTHER HAND, THE LEARNED D.R. SUPPORTS T HE ORDER OF THE AO AND THE LEARNED COMMISSIONER OF IN COME TAX (A). 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THERE IS NO DISPUTE THAT THE ABOVE D ISALLOWANCE OF INTEREST EXPENSES AND OTHER EXPENSES AMOUNTING T O RS.42,77,735/- WAS ALSO CONFIRMED BY THE TRIBUNAL IN THE ASSESSEES APPEAL IN M/S GLORIUS REALTY PVT. LTD V /S ITO IN ITA NO.3142/MUM/2007 (AY-2004-05) ORDER DATED 6.5.2 009. HOWEVER, WE FIND THAT THE TRIBUNAL IN THE ASSESSEE S OWN ITA NO.6011/MUM/2009 (ASSESSMENT YEAR: 2004-05) 4 CASE FOR THE ASSESSMENT YEAR 2003-04 (SUPRA) ON TH E SIMILAR DISALLOWANCE OF INTEREST EXPENDITURE OF RS.42.55 LA KHS HAS DELETED THE PENALTY VIDE PARAGRAPH 4.12 OF ITS ORDE R DATED 29.1.2009 WHICH IS REPRODUCED AS UNDER : 4.12 AS STATED ABOVE, THAT PENALTY MATTER U/S 271( 1)(C) IS REQUIRED TO BE SEEN IN THE LIGHT OF THE FACTS OF RESPECTIVE CASES. IN THE CASE UNDER CONSIDERATION, WE FIND THAT THE ASSESSING OFFICER WHILE MAKING ASSES SMENT HAS BEEN CALCULATED THE INCOME AS PER LAW ON THE B ASIS OF PARTICULARS OF INCOME FURNISHED BY THE ASSESSEE. WHEN THE ASSESSEE FURNISHED THE RELEVANT PARTICULAR S OF INCOME, THE ASSESSING OFFICER IS DUTY BOUND TO CAL CULATE THE CORRECT INCOME. IF THE ASSESSING OFFICER DISCHA RGE HIS DUTY IN CALCULATION OF SUCH INCOME ON THE BASI S OF PARTICULARS FILED BY THE ASSESSEE, UNDER THAT CIRCUMSTANCES IT CANNOT BE HELD THAT THE ASSESSEE H AS FURNISHED INACCURATE PARTICULARS OF HIS INCOME OR H AS CONCEALED THE PARTICULARS OF INCOME. THE ASSESSEE HAS FURNISHED NECESSARY EXPLANATION THOUGH NOT BEFORE T HE ASSESSING OFFICER BUT BEFORE THE CIT(A) THAT THE ADDITIONS MADE ARE HIGHLY DEBATABLE LEGALLY. THE ASSESSEE HAS SUBSTANTIATED ITS EXPLANATION FILED BE FORE THE CIT(A) AND HAS PROVED THAT SUCH EXPLANATION IS BONAFIDE AND THAT ALL THE FACTS RELATING TO COMPUTA TION OF TOTAL INCOME HAVE BEEN DISCLOSED BY THE ASSESSEE. THE BONAFIDE EXPLANATION OF THE HAS NOT FOUND FALSE . UNDER THE CIRCUMSTANCES, WE ARE OF THE CONSIDERED VIEW TH AT NEITHER THE ASSESSEE HAS CONCEALED ITS PARTICULARS OF INCOME NOR HAS FURNISHED SUCH INACCURATE PARTICULAR S OF INCOME NOR EXPLANATION TO SECTION 271(1)( C ) IS APPLICABLE TO THE CASE UNDER CONSIDERATION. WE, THEREFORE, FIND THAT THIS IS NOT A FIT CASE FOR LEV Y OF PENALTY U/S 271(1) (C). ACCORDINGLY, THE PENALTY OF RS.15,65,918/- LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C) AND CONFIRMED BY THE CIT(A) IS HEREBY DEL ETED 7. IN A RECENT JUDGMENT OF THE HONBLE APEX COURT I N CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. (2010) 322 ITR 158(SC) THEIR LORDSHIPS, AFTER CONSIDERING VARIOUS DECISION S INCLUDING DILIP N. SHROFF VS. JCIT (2007) 291 ITR 519(SC), UN ION OF ITA NO.6011/MUM/2009 (ASSESSMENT YEAR: 2004-05) 5 INDIA VS. DHARAMENDRA TEXTILE PROCESSORS (2008) 306 ITR 277(SC) AND SREE KRISHNA ELECTRICALS VS. STATE OF T AMIL NADU (2009) 23 VST 249 (SC) HAVE OBSERVED AND HELD (PAGE 158 HEADNOTES) AS UNDER: A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME- TAX ACT, 1961, SUGGESTS THAT IN ORDER TO BE COVERED BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDL Y, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTION 271(1)(C) WOULD EMBRA CE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND TO BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. IN ORDER TO EXP OSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTL Y COVERED BY THE PROVISION, THE PENALTY PROVISION CAN NOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKIN G AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCUR ATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHI NG WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, T HE LIABILITY WOULD ARISE. TO ATTRACT PENALTY, THE DET AILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE, NOT EX ACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS . WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIE D BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORREC T OR ERRONEOUS OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C). A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. 8. IN THE ABSENCE OF ANY DISTINGUISHING FEATURE BRO UGHT ON RECORD BY THE REVENUE WE RESPECTFULLY FOLLOWING T HE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F RELIANCE PETROPRODUCTS PVT. LTD (SUPRA) AND THE OR DER OF THE ITA NO.6011/MUM/2009 (ASSESSMENT YEAR: 2004-05) 6 TRIBUNAL IN ASSESSEES OWN CASE (SUPRA) HOLD THAT SINCE THE ASSESSEE HAS FURNISHED COMPLETE PARTICULARS OF IN COME, THE BONAFIDE EXPLANATION OF THE ASSESSEE WAS NOT FOUN D TO BE FALSE OR UNTRUE AND MERELY BECAUSE THE AO HAS MADE DISALLOWANCE OF INTEREST EXPENSES AND OTHER EXPENSE S THAT BY ITSELF, WOULD NOT ATTRACT THE PENALTY UNDER SECTIO N 271(1)( C ) OF THE ACT AND ACCORDINGLY THE PENALTY OF RS. RS. 15,34,637/- IMPOSED BY THE AO AND SUSTAINED BY THE LEARNED COMMISSIONER OF INCOME TAX (A) IS DELETED. THE GRO UND TAKEN BY THE ASSESSEE IS THEREFORE ALLOWED. 9. IN THE RESULT, THE ASSESSEES APPEAL STANDS ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 8TH JUNE, 201 1. SD SD (R.K.PANDA) ( D.K.AGARWAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 8TH JUNE, 2011 SRL: COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH 6. GUARD FILE. BY ORDER TRUE COPY ASSTT. 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