STEELFAB BLDG SYSTEM, MUMBAI V. ACIT 31 (3), MUMBAI

ITA 6509/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3324 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 14-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R KAVITHA
• Assessee Lawyers: DHAVAL SHAH ARS
• Section: 271(1)(c); 244A; 43; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC, BENCH M UMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBE R ITA NO.6509/MUM/2018 ( ASSESSMENT YEAR: 2012-13 ) STEELFAB BUILDING SYSTEM 101-A, POONAM CHAMBERS B DR. ANNIE BESANT ROAD, WORLI MUMBAI-400 018 VS. ACIT-31(3) 1 ST FLOOR, C-13 BUILDING 7 TH FLOOR, AAYKAR BHAWAN BKC, BANDRA(E) MUMBAI-400 051 PAN/GIR NO. AA XFS5995B ( APPELLANT ) .. RESPONDENT ) REVENUE BY MS. R.KAVITHA, DR ASSESSEE BY SHRI DHARMESH SHAH & SHRI DHAVAL SHAH, ARS DATE OF HEARING 20 /02 /2020 DATE OF PRONOUNCEME NT 04 /03 /20 20 / O R D E R PER G.MANJUNATHA (A.M) : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-42, MU MBAI, DATED 13/07/2018 AND IT PERTAINS TO THE A.Y 2012-13. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- GROUNDS OF APPEAL NO.1 THE COMMISSIONER OF INCOME TAX (APPEALS) - 42 HEREI NAFTER REFERRED TO AS THE CIT ERRED IN CONFIRMING THE PENALTY OF RS.3, 03,756/-- IMPOSED BY THE ASSESSING OFFICER UNDER THE PROVISIONS OF SECTI ON 271 (1)(C) OF THE INCOME TAX ACT, 1961. YOUR APPELLANT SUBMITS [HAT THEY HAVE RECEIVED INTE REST OF RS. 491,513/- ON THE INCOME TAX REFUND LI'S 244A AND THE ACCOUNTA NT OF THE FIRM CREDITED THE SAME IN THE BOOKS OF ACCOUNT TO INCOME [AX ACCOUNT AND SINCE THE AMOUNT OF INTEREST WAS NOT APPEARING SEPA RATELY IT WAS CLUBBED IN THE INCOME TAX REFUND FIGURE AND THEREFORE BY MI STAKE WAS CREDITED TO ITA NO.6509/MUM/2018 STEELFAB BUILDING SYSTEM 2 THE INCOME TAX ACCOUNT AND THUS LEFT OUT TO BE CRED ITED TO PROFIT AND LOSS ACCOUNT AND THUS LEFT TO BE CLUBBED IN TAXABLE INCO ME. FURTHER THE ACTUAL INCOME TAX REFUND TOGETHER WITH INTEREST WAS RECEIVED IN THE SUBSEQUENT ASSESSMENT YEAR 2013-14 AND THE S AME AMOUNT WAS CREDITED TO INTEREST INCOME AND ADDED TO TAXABLE IN COME AND YOU APPELLANT HAS PAID THE TAX ON THIS INTEREST AMOUNT. YOUR APPELLANT FURTHER SUBMITS THAT THE REFUND OR P AYMENT OF GOVERNMENT DUES LIKE INCOME TAX, VAT, EXCISE WAS ACCOUNTED IN THE YEAR OF RECEIPT OR PAYMENT OF DEMAND. UNDER THE GIVEN CIRCUMSTANCES THERE IS NO CONCEALME NT OF INCOME NOR THERE HAS BEEN ANY FIFING OF INACCURATE PARTICULARS OF INCOME AND THEREFORE THE ISSUE DOES NOT FALL WITHIN THE MISCHI EF OF THE PROVISIONS OF SECTION 271(L)(C) OF THE INCOME TAX ACT, 1961 AND T HEREFORE THE ASSESSING OFFICER BE DIRECTED TO DELETE THE PENALTY . GROUNDS OF APPEAL NO. 2 YOUR APPELLANTS FURTHER SUBMITS THAT THE ADDITION O F INTEREST IN THE A.Y. 2012-13 AND THE SAME AMOUNT OF INCOME HAS BEEN OFFE RED IN [HE SUBSEQUENT YEAR A.Y. 20I3-I4 AMOUNTS TO DOUBLE ADDI TION AND THEREFORE IT IS AGAINST THE PROVISIONS OF INCOME TAX AS (HE SAME INCOME CANNOT BE TAXED TWICE AND AS THE SAME CAN EITHER BE TAXED ON EITHER OF THE YEARS BUT NOT BOTH AND THEREFORE THE ASSESSING OFFICER BE DIRECTED TO DELETE THE PENALTY. AS REGARDS THE DOUBLE ADDITION THE ASSESSES IS TAKI NG UP THE MATTER IN RECTIFICATION WITH THE A.O 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSMENT FOR THE IMPUGNED ASSESSMENT YEAR HAS BEEN COMPLETED U/S 14 3(3) OF THE I.T.ACT, 1961 ON 24/03/2015, DETERMINING THE TOTAL INCOME AT RS.43,06,401/-, AS AGAINST THE TOTAL INCOME DECLAR ED FOR RS.38,14,887/-. THE LD. AO HAS DETERMINED TOTAL INC OME OF RS.43,06,401/- BY MAKING ADDITIONS TOWARDS INCOME F ROM OTHER SOURCES BEING INTEREST RECEIVED ON INCOME TAX REFUN D U/S 244A AMOUNTING TO RS. 4,91,513/-. THEREAFTER, PENALTY PR OCEEDINGS U/S 271(1)(C) OF THE I.T.ACT, 1961 WAS INITIATED FOR FU RNISHING INACCURATE PARTICULARS OF INCOME. DURING THE COURSE OF PENALTY PROCEEDINGS, THE ASSESEE VIDE LETTER DATED 14/08/2015 HAS FILED DETA ILED SUBMISSIONS ITA NO.6509/MUM/2018 STEELFAB BUILDING SYSTEM 3 AND ARGUED THAT IT IS HAS NEITHER CONCEALED PARTIC ULARS OF INCOME, NOR FURNISHED INACCURATE PARTICULARS OF INCOME, WH ICH WARRANTS LEVY OF CONCEALMENT PENALTY U/S 271(1)(C) OF THE I.T.AC T, 1961. THE LD. AO DID NOT CONVINCE WITH ARGUMENTS OF THE ASSESSEE AND BY TAKING NOTE OF VARIOUS FACTS, INCLUDING BY FOLLOWING CERTA IN JUDICIAL PRECEDENTS, OPINED THAT THE ASSESSEE HAS DELIBERAT ELY CONCEALED PARTICULARS OF INCOME BY NOT DISCLOSING INTEREST RE CEIVED ON INCOME TAX REFUND, EVEN THOUGH IT HAS RECEIVED INTEREST ON INCOME TAX REFUND DURING THE RELEVANT PERIOD AND ACCORDINGLY, LEVIED PENALTY OF RS.3,03,756/-, WHICH IS EQUIVALENT TO 200% OF TAX SOUGHT TO BE EVADED. 4. AGGRIEVED BY THE PENALTY ORDER, THE ASSESEE PREF ERRED AN APPEAL BEFORE THE LD.CIT(A). BEFORE THE LD.CIT(A), THE ASSESSEE CONTENDED THAT THE LD. AO WAS ERRED IN LEVYING PEN ALTY U/S 271(1)(C) OF THE I.T.ACT, 1961, IN RESPECT OF ADDI TIONS MADE TOWARDS INTEREST RECEIVED ON INCOME TAX REFUND, WITHOUT A PPRECIATING THE FACT THAT ALTHOUGH, THE DEPARTMENT HAS GENERATED IN COME TAX REFUND, BUT THE AMOUNT OF REFUND HAS BEEN RECEIVED BY THE A SSESEE DURING AY 2013-14 AND THE SAME HAS BEEN OFFERED TO TAX. TH E LD.CIT(A) AFTER CONSIDERING THE RELEVANT SUBMISSIONS OF THE ASSESSEE AND ALSO BY RELIED UPON VARIOUS JUDICIAL PRECEDENTS, IN CLUDING THE DECISION OF HONBLE DELHI HIGH COURT, IN THE CASE O F CIT VS ZOOM COMMUNICATION PVT.LTD (2010) 327 ITR 510, CONFIRMED PENALTY LEVIED BY THE LD. AO U/S 271(1)(C) OF THE I.T.ACT, 1961, ON THE GROUND THAT THE ASSESEE HAS FAILED TO EXPLAIN THE ACCOUNTI NG OF INTEREST ON REFUND ON RECEIPT BASIS, WHEN THE DETAILS OF REFUN D ISSUED WERE AVAILABLE TO IT AND WHEN, IT WAS FOLLOWING MERCANTI LE SYSTEM OF ITA NO.6509/MUM/2018 STEELFAB BUILDING SYSTEM 4 ACCOUNTING. AGGRIEVED BY THE LD.CIT(A) ORDER, THE A SSESSEE IS IN APPEAL BEFORE US. 5. THE LD. AR FOR THE ASSESEE SUBMITTED THAT THE LD .CIT(A) HAS ERRED IN CONFIRMING PENALTY LEVIED BY THE LD. AO U/ S 271(1)(C) OF THE I.T.ACT, 1961,WITHOUT APPRECIATING THE FACT THAT TH E ASSESSEE HAS OFFERED INTEREST RECEIVED OF INCOME TAX REFUND U/S 244A OF THE ACT, IN THE SUBSEQUENT AY 2013-14, WHEN THE ACTUAL REFUND W AS CREDITED TO THE ACCOUNT OF THE ASSESSEE. THE LD. AR, FURTHER SU BMITTED THAT THE LD. AO, AS WELL AS THE LD.CIT(A) WERE ERRED IN COMI NG TO THE CONCLUSION THAT THE ASSESSE HAS MADE DELIBERATE AT TEMPT TO EVADE TAX ON INTEREST INCOME, IGNORING THE FACT THAT INT EREST ON INCOME TAX REFUND WAS VERY MUCH AVAILABLE WITH THE DEPARTMENT IN FORM NO. 26AS AND THERE IS NO POSSIBILITY OF NON DISCLOSURE OF SAID INTEREST INCOME FOR TAXATION. THE ASSESSEE HAS NOT OFFERED I NTEREST INCOME FOR THE YEAR UNDER CONSIDERATION, BECAUSE THE MAJOR PORTION OF INTEREST WAS CREDITED TO ASSESSEE ACCOUNT IN SUBSEQ UENT FINANCIAL YEAR AND ALSO FACT THAT WHEN, REFUND ADVISE WAS ISS UED TO THE ASSESSEE, THERE IS NO BREAKUP, IN RESPECT OF REFUN D OF TAXES AND INTEREST. IN THIS REGARD, HE RELIED UPON BY THE DEC ISION OF HONBLE PUNJAB & HARYANA HIGH COURT, IN THE CASE OF CIT VS SSP PVT.LTD. 302 ITR 43 6. THE LD. DR, ON THE OTHER HAND, STRONGLY SUPPORTI NG ORDER OF THE LD.CIT(A) SUBMITTED THAT THE ASSESEE HAS DELIBERAT ELY CONCEALED PARTICULARS OF INCOME, IN RESPECT OF INTEREST RECE IVED ON INCOME TAX REFUND AND HENCE, THE LD. AO, AS WELL AS THE LD.CIT (A) WERE RIGHT IN LEVYING PENALTY U/S 271(1)(C) OF THE I.T.ACT, 1961 ITA NO.6509/MUM/2018 STEELFAB BUILDING SYSTEM 5 7. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIAL AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIE S BELOW. THE FACT WITH REGARD TO RECEIPT OF INTEREST ON INCOME TAX RE FUND U/S 244A OF THE ACT, 1961 WAS NOT DISPUTED BY THE ASSESEE. BUT, THE DISPUTE IS ONLY WITH REGARD TO TIMING OF RECEIPT OF INTEREST INCOME AND TAXABILITY OF SUCH INTEREST IN THE YEAR UNDER CONSIDERATION. A LTHOUGH, THE REFUND FOR AY 2009-10 WAS ENCASHED ON 24/12/2011,BUT THE S AME HAS BEEN ADJUSTED TO REFUND VOUCHER ISSUED FOR AY 2007 -08, DATED 30/03/2012. INSOFAR AS, REFUND ISSUED FOR AY 2010-1 1, THE SAME HAS BEEN DIRECTLY ENCHASED BY THE ASSESEE ON 05/04/2011 . THE ASSESEE HAS NOT OFFERED INTEREST ON INCOME TAX REFUND AMOUN TING TO RS.4,91,513/- FOR THE IMPUGNED ASSESSMENT YEAR, BE CAUSE IT WAS NOT HAVING SPECIFIC DETAILS WITH REGARD TO INTEREST RECEIVED ON INCOME TAX REFUND, ALTHOUGH THE REFUND VOUCHERS W AS GENERATED BY THE DEPARTMENT. FURTHER, REFUND GENERATED FOR AY 20 09-10 WAS ADJUSTED TO TAX PAYABLE FOR AY 2007-08 AND WAS FIN ALLY REFUND WAS ISSUED ON 30/03/2012. THIS INFORMATION WAS AVAILABL E TO THE ASSESEE ON 23/05/2012. THEREFORE, THE ASSESSE CLAIMED THAT IT HAS NOT CONSIDERED INTEREST INCOME FOR THE IMPUGNED ASSESSM ENT YEAR, HOWEVER FACT REMAINS THAT SAID INTEREST INCOME HAS BEEN OFFERED TO TAX FOR THE AY 2013-14 AND THIS FACT HAS NOT BEEN D ISPUTED BY THE LOWER AUTHORITIES. BUT, THE LD. AO HAS LEVIED PENAL TY ONLY ON THE GROUND THAT ALTHOUGH, THE ASSESEE IS FOLLOWING MERC ANTILE SYSTEM OF ACCOUNTING, IT HAS NOT OFFERED INTEREST INCOME FOR TAX FOR THE YEAR UNDER CONSIDERATION. OTHERWISE, THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT SAID INTEREST INCOME HAS BEEN OFFERED TO TAX IN SUBSEQUENT FINANCIAL YEAR. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT ONCE, THE FACT WITH REGARD TO TAXABILITY OF IN TEREST INCOME IN AY 2013-14 WAS NOT DISPUTED BY THE LD. AO, THEN HE IS ERRED IN LEVYING ITA NO.6509/MUM/2018 STEELFAB BUILDING SYSTEM 6 PENALTY U/S 271(1)(C) OF THE ACT, 1961 FOR NOT OFFE RING INTEREST INCOME TO TAX FOR THE YEAR UNDER CONSIDERATION, MORE PARTI CULARLY WHEN, THE ASSESSEE HAS EXPLAINED THE REASONS FOR NOT ACCOUNTI NG AND CONSIDERING INTEREST INCOME TO TAX FOR THE YEAR UND ER CONSIDERATION. WHEN, THE ASSESSEE HAS OFFERED TO TAX INTEREST INCO ME IN SUBSEQUENT FINANCIAL YEAR, THERE IS NO REASON FOR T HE LD. AO TO LEVY PENALTY ON THE SAME INCOME FOR THE YEAR UNDER CONSI DERATION FOR NOT OFFERING TO TAX SAID INCOME, BECAUSE THE TIMING DIF FERENCE IN OFFERING INCOME TO TAXES CANNOT BE CONSIDERED AS CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF I NCOME. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE LD. AO, AS W ELL AS THE LD.CIT(A) WERE ERRED IN LEVYING PENALTY U/S 271(1)( C) OF THE I.T.ACT, 1961 IN RESPECT OF ADDITIONS TOWARDS INTEREST ON IN COME TAX REFUND. HENCE, WE DIRECT THE LD. AO TO DELETE PENALTY LEVIE D U/S 271(1)(C) OF THE I.T.ACT, 1961. 8. IN THE RESULT, APPEAL FILED BY THE ASSESEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 04 /03/2 020 SD/- ( VIKAS AWASTHY ) SD/- ( G. MANJUNATHA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 04/03/2020 THIRUMALESH SR.PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. ITA NO.6509/MUM/2018 STEELFAB BUILDING SYSTEM 7 BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI //TRUE COPY//