KHIMASIA WAREHOUSING, MUMBAI V. ACIT 20(1), MUMBAI

ITA 6501/MUM/2011

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4053 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 07-03-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 26-09-2011
• Court: TRIBUNAL
• Keywords: Business income; Wrong claim; Difference of opinion; Corroborative evidences
• Section: 143(3)

Judgement Text

, INCOME-TAX APPELLATE TRIBUNAL -ABENCH MUMBAI BEFORE S/SH.RAJENDRA,ACCOUNTANT MEMBER AND AMIT SHUKLA,JUDICIAL MEMBER . / I.T.A. NO.6501/MUM/2011 / ASSESSMENT YEAR: 2006-07 M/S. KHIMASIA WAREHOUSING NIGHTINGALE CO-OP. SOCIETY, UNIT NO.201, BLDG.NO.2 HINDUSTAN NAKA,KANDIVALI(W) MUMBAI-400 067. PAN:AAAFK 4025 B VS. ACIT-20(1) PIRAMAL CHAMBERS, LALBAUG MUMBAI-400 006. ( /APPELLANT ) ( / RESPONDENT ) REVENUE BY: SHRI SANDEEP GOEL A SSESSEE BY: NONE / DATE OF HEARING :07.03.2016 / DATE OF PRONOUNCEMENT: 22.04.2016 ,1961 254(1) ! ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) $'% &' PER RAJENDRA, AM - CHALLENGING THE ORDER,DTD.08.07.2011,OF THE CIT(A) -31,MUMBAI,THE ASSESSEE HAS FILED THE PRESENT APPEAL.ASSESSEE-FIRM,ENGAGED IN THE BUSINES S OF SHARE TRADING AND DERIVATIVES,FILED ITS RETURN OF INCOME ON 30.10,2006,DECLARING INCOME OF RS.12.48 LAKHS.THE ASSESSING OFFICER (AO)COMPLETED THE ASSESSMENT U/S. 143(3) OF THE ACT ON 24.11.08, DETERMINING THE TAXABLE INCOME OF THE ASSESSEE AT RS.14.08 LAKHS. 2. ON VERIFICATION OF DETAILS FILED ALONG WITH THE RET URN,HE FOUND THAT THE ASSESSEE HAD SHOWN INCOME FROM SHARE TRADING,RENT FROM HOUSE PROPERTY AND PROFIT FROM SALE OF IMMOVABLE PROPERTY,THAT IT HAD PREPARED TRADING ACCOUNT FOR S HARE TRADING BUSINESS AND RENT ACCOUNT, THAT PROFIT OF BOTH THE ACCOUNT WAS TRANSFERRED TO P&L A CCOUNT WHERE VARIOUS EXPENSES RELATED TO SHARE TRADING ACCOUNT WERE CLAIMED.HE OBSERVED THAT IN COMPUTATION OF INCOME THE ASSESSEE HAD SHOWN RENTAL INCOME UNDER THE HEAD HOUSE PROPER TY INCOME AND HAD CLAIMED EXPENDITURE AS PER SECTION 24 OF THE ACT, THAT IT HAD CLAIMED E XPENDITURE ON ELECTRICITY, GARDENING, AND PROPERTY TAX OF RS.53,800/-,RS.28,000/- AND RS.77,7 46/- RESPECTIVELY, THAT THE ASSESSEE HAD TAKEN DOUBLE DEDUCTION OF PROPERTY TAX RS.77,746/-, THAT IT HAD CLAIMED THE EXPENDITURE UNDER THE HEAD ELECTRICITY AND MAINTENANCE WHICH WERE NOT ALLOWABLE AS PER THE PROVISIONS OF SECTION 24,THAT THE ABOVE EXPENSES AMOUNTING TO RS. 1.59 LAKHS WERE CLAIMED TWICE.HE DISALLOWED THE AMOUNT IN QUESTION AND INITIATED PEN ALTY PROCEEDINGS. IN RESPONSE TO NOTICE ISSUED BY AO,THE ASSESSEE ,VIDE ITS LETTER DATED 25 .5.2009,STATED THAT THAT DOUBLE CLAIM OF EXPENDITURE WAS WITHOUT ANY FRAUDULENT INTENTION, T HAT THERE WAS A CLERICAL ERROR IN COMPUTING THE TAXABLE INCOME,THAT MERE DISALLOWANCE OF EXPENS ES COULD NOT BE CONSIDERED AS CONCEAL - MENT OF INCOME. 2.1. THE AO AFTER TAKING INTO CONSIDERATION THE EXPLANAT ION OF THE ASSESSEE,HELD THAT IT HAD PREPARED SEPARATE P&L ACCOUNT FOR ITS INCOME UNDER THE HEAD SHARE TRADING AND RENTAL INCOME, THAT IN THE COMPUTATION OF INCOME BUSINESS INCOME WAS SEPARATELY WORKED OUT, THAT IT HAD REDUCED THE BUSINESS INCOME IN EXCESS BY AMOUNT OF RS.1.59 LAKHS WHICH WAS ON ACCOUNT OF PROPERTY TAX CLAIMED TWICE AND ELECTRICITY AND G ARDENING EXPENSES, THAT THE DOUBLE CLAIM OF DEDUCTION AND UNALLOWABLE CLAIM OF EXPENDITURE IN R ENTAL INCOME WAS APPARENT FROM THE 6501-KHIMASIA WNCS 2 STATEMENT OF COMPUTATION OF INCOME,THAT THE SEPARAT E P&L ACCOUNT UNDER DIFFERENT HEADS WERE PREPARED IN SUCH A WAY THAT DOUBLE CLAIM AND CLAIM OF UNALLOWABLE EXPENDITURE IN RENTAL INCOME COULD NOT BE DETECTED EASILY.REFERRIN G TO THE CASEOF DHARMENDRA TEXTILES PROCESSORS & OTHERS(306ITR277),THE AO HELD THAT PRO OF OF MENSREA WAS NOT REQUIRED FOR LEVY OF PENALTY, THAT THE ASSESSEE HAD CONCEALED H IS INCOME TO EXTENT OF RS.1.59 LAKHS. FINALLY,HE LEVIED A PENALTY OF RS.51,000 U/S. 271(1 )(C) OF THE ACT. 3. AGGRIEVED BY THE PENALTY ORDER OF THE AO, THE ASSES SEE PREFERRED AN APPEAL BEFORE THE FIRST APPELATE AUTHORITY(FAA).BEFORE HIM,IT WAS ARGUED TH AT ASSESSEE HAD NOT CONCEALED HIS INCOME NOR HAD FURNISHED INACCURATE PARTICULARS OF INCOME,THAT DUE TO OVERSIGHT THE BUSINESS INCOME WAS REDUCED UNDER CERTAIN HEADS, THAT THE MI STAKE COMMITTED BY THE ASSESSEE COULD NOT BE EQUATED WITH CONCEALMENT OF INCOME.AFTER CON SIDERING THE ASSESSMENT ORDER, PENALTY ORDER AND THE SUBMISSIONS OF THE ASSESSEE, THE FAA HELD THAT THE ASSESSEE HAD CLAIMED DEDUCTION TWICE ON ACCOUNT OF PROPERTY TAX PAID, GA RDENING EXPENSES AND ELECTRICITY EXPENSES IN ITS RETURN OF INCOME, THAT CLAIM WAS MADE UNDER THE HEAD INCOME FOR HOUSE PROPERTY AS WELL AS UNDER THE HEAD BUSINESS INCOME, THAT THE ASSESSE E HAD NOT DISPUTED THE FACT OF DOUBLE CLAIM.REFERRING TO THE PROVISIONS OF SECTION 271(1) (C ) EXPLANATION 1 OF THE ACT, HE HELD THAT EXPLANATION OFFERED BY THE ASSESSEE COULD NO T BE HELD AS A BONAFIDE EXPLANATION, THAT A PATENT WRONG CLAIM MADE BY THE ASSESSEE COULD NOT BE HELD AS A SIMPLE CLERICAL ERROR, THAT THE EXPLANATION OFFERED BY THE ASSESSEE WAS NOT SUFFIC IENT OR REASONABLE, HE REFERRED TO THE CASE OF ZOOM COMMUNICATION PVT.LTD. (191TAXMANN179) OF T HE HONBLE DELHI HIGH COURT AND HELD THAT EXPLANATION OFFERED BY THE ASSESSEE WAS PROVED TO BE FALSE,AND IT HAD FAILED TO SUBSTANTIATE THE SAID EXPLANATION BY FURNISHING REL ATED EVIDENCES.FINALLY, HE UPHELD THE ORDER OF THE AO. 4.D URING THE COURSE OF HEARING BEFORE US, NONE APPEAR ED FOR THE ASSESSEE, AS STATED EARLIER,THE DEPARTMENTAL REPRESENTATIVE(DR) SUPPORTED THE ORDER OF THE FAA AND STATED THAT THE ASSESSEE HAD FILED INACCURATE PARTICULARS OF INCOME. 5. WE HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD.TH E UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSESSEE HAD CLAIMED DOUBLE DEDUCTION IN CASE O F PROPERTY TAX PAID, GARDENING EXPENSES AND ELECTRICITY EXPENSES, THAT THE ASSESSEE ITSELF HAD ADMITTED THAT THOSE EXPENSES WERE CLAIMED UNDER THE HEAD BUSINESS INCOME AND INCOME F ROM HOUSE PROPERTY, THAT THE ASSESSEE HAD CLAIMED THAT IT WAS A CLERICAL MISTAKE.IN SHORT THERE WAS A DOUBLE CLAIM OF DEDUCTION AND UNALLOWABLE CLAIM OF EXPENDITURE IN THE RENTAL INCO ME, MADE BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION, WHILE FILING THE RETURN. BEFORE PROCEEDING FURTHER,WE WANT TO MENTION THAT A PERUSAL OF PROVISIONS OF THE SECTION 271 (1)(C),ALONG WITH EXPLANATION1(A) AND (B),MAKES IT CLEAR THAT IF THE AO IN THE COURSE OF ASSESSMENT PROCEEDINGS,IS SATISFIED THAT THE ASSESS EE HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, HE IS EMPOWERED TO LEVY PENALTY SUBJECT TO THE EXPLANATION GIVEN BY THE ASSESSEE FO UND TO BE FALSE OR NOT BONA FIDE. IN SHORT,IF THE EXPLANATION FILED BY THE ASSESSEE IS NOT SUBSTA NTIATED BY IT OR IT FAILS TO PROVE THE BONA FIDE OF THE EXPLANATION PENALTY CAN BE LEVIED BY THE AO U/S.271 (1)(C)OF THE ACT.AS THE FACTS OF EACH CASE ARE DIFFERENT,SO ONE HAS TO SEE THAT WHET HER THE ASSESSEE WAS SUCCESSFUL IN SUBSTANTIATING THE EXPLANATION FILED BY IT OR HAD P ROVED THE BONA FIDE OF THE EXPLANATION.IN THE CASE UNDER CONSIDERATION,THE ASSESSEE WAS FULLY AWA RE OF THE FACT THAT IT HAD CLAIMED DOUBLE DEDUCTION AND HAD MADE A PATENT WRONG CLAIM.THE MOM ENT A DEDUCTION WAS CLAIMED TWICE THE ASSESSEE HAD EXPOSED ITSELF TO THE PENAL PROVIS IONS AS ENVISAGED BY THE ACT.WE FIND THAT THAT THERE WAS NO DIFFERENCE OF OPINION BETWEEN THE AO AND THE ASSESSEE ABOUT THE ALLOWABILITY OF THE CLAIM. BOTH WERE OF THE VIEW TH AT THE CLAIM WAS NOT AS IN ACCORDANCE WITH 6501-KHIMASIA WNCS 3 THE SCHEME OF THE ACT.COURTS ARE UNANIMOUS THAT FOR A DEBATABLE CLAIM ASSESSEE CANNOT BE PENALISED,BUT WHEN IT MAKES A PATENTLY INADMISSIBLE CLAIM LEVY OF PENALTY IS JUSTIFIED. THE ASSESSEE IS NOT AN INDIVIDUAL RESIDING AT A VE RY REMOTE PLACE WHO COULD CLAIM THE IGNORANCE OF THE PROVISIONS OF LAW.THE ASSESSEE FIR M IS ASSISTED BY PROFESSIONALS, IT HAD PREPARED TWO P&L ACCOUNTS FOR THE SHARE TRADING ACT IVITIES AND LETTING OUT OF PROPERTIES ACCOUNT.IT HAD ALSO PREPARED THE COMMON P&L ACCOUNT AFTER CONSIDERING BOTH THE ACCOUNTS.IT CLEARLY SHOWS THAT THE ASSESSEE IS WELL VERSED WIT H THE PROVISIONS OF THE ACT AS WELL AS THE ACCOUNTANCY.IF SUCH A PERSON CLAIMS DOUBLE DEDUCTIO N OR PATENTLY WRONG CLAIM IS MADE,IT CANNOT BE TERMED A CLERICAL MISTAKE OR AN INADVERTE NT ERROR. ASSESSEES ARE EXPECTED, RATHER REQUIRED, NOT ONLY P RODUCE EVIDENCE, BUT TO PRODUCE POSITIVE EVIDENCE IN RESPECT OF A CLAIM MADE. ONUS OF PROVIN G A CLAIM IS ALWAYS ON THE ASSESSEES AND THEY HAVE TO BE DISCHARGE IT FULLY.MERE MAKING OF A CLAIM IS NOT SUFFICIENT.IF ASSESSEE FAILS TO PRODUCE THE CORROBORATIVE EVIDENCES,THEIR CLAIM ALS O FAIL.IN THE CASE UNDER CONSIDERATION, THE ASSESSEE HAS FAILED MISERABLY TO SUBSTANTIATE THE C LAIM THAT IT WAS ENTITLED FOR DOUBLE DEDUCTION.IN NO CIRCUMSTANCES,SUCH A CLAIM CAN BE H ELD TO BE GENUINE. HERE,WE WOULD LIKE TO REPRODUCE THE A PORTION OF TH E JUDGMENT OF MAK DATA(SUPRA)DELIVERED BY THE HONBLE APEX COURT WHEREIN FOLLOWING HAS BEE N HELD: EXPLANATION 1 TO SECTION 271(1)(C) OF THE INCOME-T AX ACT, 1961, RAISES A PRESUMPTION OF CONCEALMENT, WHEN A DIFFERENCE IS NOTICED BY THE AS SESSING OFFICER, BETWEEN THE REPORTED AND ASSESSED INCOME. THE BURDEN IS THEN ON THE ASSESSEE TO SHOW OTHERWISE, BY COGENT AND RELIABLE EVIDENCE. WHEN THE INITIAL ONUS PLACED BY THE EXPLANATION HAS BEEN DISCHARGED BY HIM, THE ONUS SHIFTS TO THE DEPARTMENT TO SHOW THAT THE AMOUNT IN QUESTION CONSTITUTED INCOME AND NOT OTHERWISE. WE FIND THAT THE ASSESSEE HAS NOT PRODUCED COGENT A ND RELIABLE EVIDENCES,AS DESIRED BY THE HONBLE APEX COURT IN THE ABOVE REFERRED PARAGRAPH. AFTER CONSIDERING THE PECULIAR FACTS OF THE PRESENT CASE,WE HOLD THAT THE ORDER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL INFIRMITY.THEREFORE, CONFIRMING HIS ORDER WE DECIDE EFFECTIVE GROUND OF APPEAL AGAINST THE ASSESSEE. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND APRIL, 2016. 22 , 2016 SD/- SD/- ( / AMIT SHUKLA ) ( / RAJENDRA ) ! / JUDICIAL MEMBER ! / ACCOUNTANT MEMBER MUMBAI, DATE: 22 .04.2016 . . . .. . JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR A BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.