HERANBA INDUSTRIES LTD, MUMBAI V. DCIT 9(2), MUMBAI

ITA 6409/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3792 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2016
• Appeal Filed By: Assessee
• Bench Allotted: H
• Assessment Year: 2010-2011
• Appeal Filed On: 17-10-2014
• Court: TRIBUNAL
• Department Lawyers: SIDDARTH B S MEENA
• Assessee Lawyers: RASHMIKANT C MOD I; KETKI RAJESHIRKE
• Keywords: Bogus Share capital; Wrong claim; Corroborative evidences; Accommodation entries
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE S/SHRI B.R. BASKARAN (AM) & RAMLAL NEGI (JM) I.T.A. NO. 6409 /MUM/ 2014 (ASSESSMENT YEAR 2010 - 11 ) HERANBA INDUSTRIES LTD. 101/102, KANCHANGANGA FACTORY LANE NEAR M.K. HIGH SCHOOL BORIVALI (WE ST) MUMBAI - 400 092. VS. DCIT 9(2) MUMBAI. ( APPELLANT ) ( RESPONDENT ) PAN NO. AAACH3787Q ASSESSEE BY SHRI RASHMIKANT C. MODI & MS. KETKI RAJESHIRKE DEPARTMENT BY SHRI SIDDARTH B. S. MEENA DATE OF HEARING 11 . 5 . 201 6 DATE OF PRONOUNCEMENT 11 . 5 . 201 6 O R D E R PER B.R. BASKARAN, A M : - THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 28.7.2014 PASSED BY LEARNED CIT(A) - 20, MUMBAI AND IT RELATES TO A.Y. 2010 - 11 . 2. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LEARNED CIT( A) IN CONFIRMING THE PENALTY OF RS. 11.72 LAKHS LEVIED BY THE ASSESSING OFFICER U/S. 271(1)(C) OF THE ACT. 3. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ASKED FOR EVIDENCE S SUPPORTI NG THE RECEIPT OF SHARE APPLICATION MONEY OF RS. 34.50 LAKHS. THE ASSESSEE OFFERED THE SAME AS INCOME WITH THE EXPLANATION THAT IT WAS NOT IN A POSITION TO PROVIDE NECESSARY SUPPORTING EVIDENCE S . IT WAS ALSO STATED THAT SURRENDER IS BEING MADE IN ORDER TO BUY PEACE AND ACCORDINGLY PRAYED THAT A LENIENT VIEW MAY BE TAKEN ON THE PENALTY MATTER . THE ASSESSING OFFICER ACCEPTED THE HERANBA INDUSTRIES LTD. 2 SURRENDER AND ACCORDINGLY COMPLETED THE ASSESSMENT. THE ASSESSING OFFICER ALSO INITIATED PENALTY PROCEEDINGS. THE ASSESSEE SUBMITTED BEFORE THE ASSESSING OFFICER THAT OFFER WAS MADE SUO - MOTO BEFORE ANY INQUIRY WAS INITIATED BY THE ASSESSING OFFICER. IT WAS SUBMITTED THAT THE ASSESSEE HAD ALREADY PLEADED THAT THE ASSESSING OFFICER SHOULD TAKE A LENIENT VIEW IN THE MATTER OF LEVYING THE PENALTY U/S. 271(1)(C) OF THE ACT. THE ASSESSING OFFICER, HOWEVER, HELD THAT THE ASSESSEE HAS MADE FALSE CLAIM AND HENCE IT HAS COMMITTED A DEFAULT WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT BY FURNISHING INACCURATE PARTICULARS OF INCOME. IN THIS REGARD, THE ASSESSING OFFICER PLACED RELIANCE ON THE FOLLOWING DECISIONS: - CIT VS. ZOOM COMMUNICATION (P) LTD. (191 TAXMAN 179 (DEL) CIT VS. DHARMENDRA PRCESSORS (306 ITR 277) ACIT VS. SHRI GOBIND AMBADY ( ITA NO. 3765/DEL/2011) ACCORDINGLY HE LEVIED PENA LTY COMPUTED AT 100% OF TAX SOUGHT TO BE EVADED. 4. BEFORE LEARNED CIT(A) , THE ASSESSEE PLEADED THAT IT HAS NOT CONCEALED INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. IT WAS FURTHER PLEADED THAT IT HAS OFFERED SHARE APPLICATION MONEY AMOUNTING TO RS. 37.50 LAKHS IN ORDER TO BUY PEACE FROM THE DEPARTMENT, SINCE IT COULD NOT COLLECT AND PROVIDE DETAILS THAT WERE CALLED FOR BY THE ASSESSING OFFICER. THE ASSESSEE ALSO SUBMITTED THAT IT HAS OFFERED SUO - MOTO AMOUNT BEFORE THE ASSESSING OFFICER INITIATED ANY INQUIRY. THE ASSESSEE ALSO PLACED RELIANCE ON H OST OF CASE LAWS AND PLEADED FOR DELETION OF PENALTY. 5. LEARNED CIT(A), HOWEVER, TOOK THE VIEW THAT THE ASSESSEE WAS PERSUADED TO OFFER SHARE APPLICATION MONEY AS INCOME ONLY DUE TO NOTICE ISSUED U/S. 143(2) OF THE ACT FOR TAKING UP THE CASE FOR SCRUTINY. FURTHER LEARNED CIT(A) DISCUSSED VARIOUS CASE LAWS TO UNDERSTAND THE MEANING OF THE TERM CONCEAL. FURTHER BY P L ACING RELIANCE ON THE DECISION RENDERED BY HON'BLE SUPREME COURT IN THE CASE OF MAK DAT A P. LTD. (CIVIL APPEAL NO. 9772/2013 DATED 30.10.2013), THE LD CIT(A) HELD THAT VOLUNTARY DISCLOSER OF CONCEALED INCOME HERANBA INDUSTRIES LTD. 3 DOES NOT ABSOLVE THE ASSESSEE OF LIABILITY OF PENALTY. ACCORDINGLY HE CONFIRMED THE PENALTY LEVIED BY THE ASSESSING OFFICER. 6. LEARNE D AR PLEADED THAT THE ASSESSEE WAS CONSTRAINED TO OFFER SHARE APPLICATION MONEY AS INCOME , SINCE THE ASSESSEE HAD OBTAINED SHARE APPLICATION MONEY FROM MAHASAGAR SECURITIES GROUP AND THEY WERE RUNNING IN A TROUBLE . H ENCE THE ASSESSEE TOOK THE VIEW THAT IT MAY NOT BE POSSIBLE TO COLLECT REQUIRED DETAILS AS MAY BE REQUIRED BY THE ASSESSING OFFICER AND HENCE THE ASSESSEE SUO - MOTO OFFERED THE AMOUNT AS INCOME. LEARNED AR FURTHER SUBMITTED THAT THE ASSESSEE HAS NOT CONCEALED ANY INCOME OR FURNISHED INACCURATE PA RTICULARS OF INCOME AND SURRENDER WAS MADE DUE TO PECULIAR CIRCUMSTANCES EXPLAINED EARLIER. LEARNED AR FURTHER SUBMITTED THAT AN IDENTICAL ISSUE WAS CONSIDERED BY THE COORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE RELATING TO A.Y. 2009 - 10 IN ITA N O. 2292/MUM/2013 AND THE TRIBUNAL, VIDE ITS ORDER DATED 8.4.2015 , HAS DELETED THE PENALTY LEVIED ON IDENTICAL CIRCUMSTANCES. 7. ON THE CONTRARY, LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAS AVAILED SHARE APPLICATION MONEY FROM M/S. MAHASAGAR SECURITIES GROUP. DURING THE COURSE OF SEARCH CONDUCTED IN THE HANDS OF MAHASAGAR SECURITIES GROUP, THEY HAVE ADMITTED THAT THEY WERE PROVIDING ONLY ACCOMMODATION ENTRIES. ACCORDINGLY, LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSE SSEE WAS CONSTRAINED TO SURRENDER THE SHARE APPLICATION MONEY AS ITS INCOME ON THE APPREHENSION THAT IT MAY BE CAUGHT, SINCE THE RETURN OF INCOME WAS TAKING UP FOR SCRUTINY. LEARNED DEPARTMENTAL REPRESENTATIVE FURTHER SUBMITTED THAT THE ASSESSEE WOULD NOT HAVE OFFERED THIS AMOUNT AS ITS INCOME IF THE CASE WAS NOT SELECTED FOR SCRUTINY , EVEN THOUGH IT WAS AWARE THAT THE SHARE APPLICATION MONEY CANNOT BE PROVED IN TERMS OF SEC. 68 OF THE ACT . ACCORDINGLY, HE SUBMITTED THAT LEARNED CIT(A) WAS JUSTIFIED IN CONF IRMING THE PENALTY LEVIED U/S. 271(1)(C) OF THE ACT. HERANBA INDUSTRIES LTD. 4 8. IN THE REJOINDER, LEARNED AR SUBMITTED THAT THE ASSESSEE WAS CONSTRAINED TO SURRENDER THIS AMOUNT SINCE IT FELT THAT IT MAY NOT BE IN A POSITION TO COLLECT NECESSARY DETAILS UPTO THE SATISFACTION OF THE AO FROM M/S. MAHASAGAR SECURITIES GROUP , AS THEY WERE IN TROUBLE. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AN D PERUSED THE RECORD. WE NOTICE THAT THE ASSESSING OFFICER HAD LEVIED PENALTY U/S. 271(1)(C) OF THE ACT IN THE IMMEDIATELY PRECEDING YEAR ALSO FOR IDENTICAL REASONS, I.E., IN RESPECT OF INCOME OFFERED BY SURRENDERING THE SHARE APPLICATION MONEY OF RS. 89.50 LAKHS RECEIVED IN THAT YEAR. WE NOTICE THAT THE COORDINATE BENCH OF THE TRIBUNAL HAS CONSIDERED THE MATTER AND HELD THAT SURRENDER WAS MADE B Y THE ASSESSEE VOLUNTARILY. THE TRIBUNAL HAS ALSO NOTICED THAT THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY EVIDENCE TO SUPPORT THE ADDITION MADE BY HIM EXCEPT BY PLACING RELIANCE ON THE SURRENDER MADE BY THE ASSESSEE . ACCORDINGLY, THE TRIBUNAL, BY PLACING RELIANCE ON THE DECISION OF HON'BLE SUPREME COURT RENDERED IN THE CASE OF CIT VS. SURESH CHANDRA MITTAL (251 ITR 9) AND ALSO ON DECISION RENDERED BY HON'BLE P&H HIGH COURT IN THE CASE OF CAREER EDUCATION & INFOTECH (P) LTD. (336 ITR 257) HELD THAT SURRENDER WAS VOLUNTARY AND BEFORE DETECTION BY THE ASSESSING OFFICER. ACCORDINGLY THE TRIBUNAL HELD THAT THE PENALTY U/S.271(1)(C) LEVIED UPON THE ASSESSEE IS NOT JUSTIFIED. 10. IN T HE INSTANT YEAR ALSO, WE NOTICE THAT THE ADDITION OF SHARE APPLICATION MONEY WAS MADE BY THE ASSESSING OFFICER ON THE BASIS OF SURRENDER MADE BY THE ASSESSEE. WE NOTICE THAT THE ASSESSEE HAS OFFERED AN EXPLANATION AS TO WHY IT WAS CONSTRAINED TO SURRENDER THE SHARE APPLICATION MONEY AS ITS INCOME. WE NOTICE THAT THE ASSESSIN G OFFICER HAS NOT FOUND THE EXPLANATION SO GIVEN BY THE ASSESSEE TO BE FALSE. WE ALSO NOTICE THAT THE SURRENDER WAS MADE BEFORE THE ASSESSING OFFICER INITIATED ANY INQUIRY WITH REGARD TO SHARE APPLICATION MONEY . UNDER IDENTICAL SET OF FACTS, THE COORDINATE BENCH OF THE TRIBUNAL HAS HELD THAT THE SURRENDER SO MADE BY THE ASSESSEE WAS VOLUNTARY AND BEFORE DETECTION BY THE ASSESSING OFFICER. BY FOLLOWING THE SAME, WE ALSO HOLD THAT THE SURRENDER MADE BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION WAS HERANBA INDUSTRIES LTD. 5 VOLU NTARY AND BEFORE DETECTION BY THE ASSESSING OFFICER. FURTHER THE ASSESSEE HAS ALSO OFFERED AN EXPLANATION WITH REGARD TO ADDITION MADE BY THE ASSESSING OFFICER , T HUS DISCHARGING THE BURDEN PLACED ON IT UNDER EXPLANATION (1) TO SECTION 271(1)(C) OF THE ACT . WE NOTICE THAT THE AO HAS LEVIED THE PENALTY FOR FURNISHING INACCURATE PARTICULARS OF INCOME, WHERE AS THE LD CIT(A) HAS MADE ELABORATE DISCUSSION ABOUT CONCEALMENT OF INCOME. 11. IN VIEW OF THE ABOVE, WE FIND NO JUSTIFICATION ON THE PART OF THE LEARN ED CIT(A) IN CONFIRMING THE PENALTY LEVIED U/S. 271(1)(C) OF THE ACT. ACCORDINGLY, WE SET ASIDE THE ORDER OF LEARNED CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY LEVIED U/S. 271(1)(C) OF THE ACT FOR THE YEAR UNDER CONSIDERATION. 12. IN TH E RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER HAS BEEN PRONOU NCED IN THE OPEN COURT ON 11 .5 .2016 . SD/ - SD/ - (RAMLAL NEGI ) (B.R.BASKARAN ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 11 / 5 /20 1 6 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( DY./ASSTT. REGIS TRAR) ITAT, MUMBAI PS