J.K. HELENE CURTIS LTD, THANE V. ASST CIT 2(2), MUMBAI

ITA 657/MUM/2014

• Counselvise Citation: 65719914 RSA 2014
• Duration Of Justice: 1 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Assessment Year: 2007-2008
• Appeal Filed On: 28-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHILENDRA YADAV
• Assessee Lawyers: Y P TRIVEDI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH J , MUMBAI BEFORE SHRI G.S. PANNU , ACCOUNTANT MEMBER AND SHRI SANJAY GARG , JUDICIAL MEMBER ITA NO. 657/ M /2014 ASSESSMENT YEAR: 2007 - 08 M/S. J.K. HELENE CURTIS LTD., POKHRAN ROAD NO.1, JAKEGRAM, THANE 400 606 PAN: AAACJ 2511 L VS. ASSTT. COMMISSIONER OF INCOME TAX 2(2), MUMBAI (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI Y.P. TRIVEDI, A.R. REVENUE BY : SHRI AKHILENDRA YADAV, D. R. DATE OF HEARING : 04.08 .201 5 DATE OF PRONOUNCEMENT : 04.08. 2015 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THIS APPEAL HAS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF T HE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT (A)] DATED 15.11.2013 WHER E BY CONFIRMING THE PENALTY LEVIED BY THE ASSESSING OFFICER (AO) U/S 271(1)(C) OF THE I.T. ACT. 2. THE BRIEF FACTS IN THIS CASE ARE THAT THE ASSESSEE COMPANY IS A TRADER IN COSMETICS AND TOILETRIES UNDER ITS OWN BRAND NAME. THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME OF RS.3, 2 9,92,000/ - ON 29.10.07 FOR THE ASSESSMENT YEAR 2007 - 08. THE RETURN WAS ACCOMPANIED BY TAX AUDIT REPORT AND AUDIT ACCOUNTS. THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE AO) VIDE HIS ORDER DATED 09.09.09 UNDER SECTION 143 (3) OF THE ACT, DETERMINED THE SAME AT RS. 3,43,91,998/ - AFTER DISALLOWING THE PROVISION FOR EXPENSES OF RS.14 LAKH. THE AO IN THIS REGARD OBSERVED IN HIS ORDER THAT THE ITA NO.657/M/2014 M/S. J.K. HELENE CURTIS LTD. 2 ASSESSEE UNDER THE HEAD REPA IRS AND MAINTENANCE HAD DEBITED AN AMOUNT OF RS.14 LAKH WHICH WAS DESCRIBED AS PROVISION FOR EXPENSES. THE ASSESSEE COMPANY HAD BEEN CONSISTENTLY FOLLOWING A SYSTEM OF ACCOUNTING FOR EXPENSES BASED ON RECEIPT OF BILL. THE AO OBSERVED THAT ANY PAYMENT MA DE IN RESPECT OF UNFINISHED WORK BEFORE RECEIPT OF FINAL BILL HAD TO BE CONSTITUTED AS ONLY AN ADVANCE AND THAT AS THE LIABILITY HAD NOT ACCRUED, THE AMOUNT OF RS.14 LAKH DEBITED TO P & L ACCOUNT AND INCLUDED UNDER THE HEAD REPAIRS AND MAINTENANCE WAS LI ABLE TO BE DISALLOWED. ON THIS DISALLOWANCE, THE AO ALSO INITIATED THE PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. 3. T HE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT (A)] VIDE HIS ORDER DATED 06.04.2010 IN APPEAL NO. IT - 514/09 - 10 CONFIRMED THE ADDITION. FOLLOWING THAT, THE AO IMPOSED PENALTY OF RS.4,20,000/ - UNDER SECTION 271(1)(C) OF THE ACT. T HE LD. CIT(A) CONFIRMED THE PENALTY SO LEVIED BY THE AO. THE ASSESSEE IS , THUS , I N APPEAL BEFORE US ON THIS ISSUE. 4 . IT IS THE CASE OF THE ASSESSEE THAT THE AO HAS ERRED IN INVOKING OF SECTION 271(1)(C) OF TH E ACT SINCE NEITHER THERE WAS ANY CONCEALMENT OF INCOME NO R FURNISHING OF ANY INACCURATE PARTICULARS OF INCOME ON THE PART OF THE ASSESSEE. THE LD. AR HAS FUR THER STATED THAT THE ASSESSEE HAD PROVIDED DURING THE COURSE OF ASSESSMENT PROCEEDINGS ALL DETAILS OF SALE, PURCHASE EXPENSES ETC. THAT THE PROVISION FOR EXPENSES UNDER THE HEAD REPAIRS AND MAINTENANCE WAS DESCRIBED AS SUCH AND WAS CLAIMED AS DEDUCTIBLE EXPENDITURE U/S.37(1) O F THE INCOME TAX ACT, 1961 . THE LD. AR HAS FURTHER RELIED ON THE DECISION IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. 323 ITR 158 (SC) . 4. WE HAVE CONSIDERED THE RIVAL CONTENTIONS. THE LD. CIT(A) HAS ADMITTED IN HIS ORDER THAT THE BILLS WERE RECEIVED NEXT YEAR, THE PAYMENTS THEREON WERE ALSO MADE LATER ON. T HE HONBLE SUPREME COURT IN THE CASE OF CIT VS. ITA NO.657/M/2014 M/S. J.K. HELENE CURTIS LTD. 3 RELIANCE PETRO PRODUCTS PVT. LTD. (SUPRA) HAS HELD THAT IN ORDER TO PENALIZE AN ASSESSEE UNDER THE PROVISIONS O F THE INCOME TAX ACT , THE GROUNDS SPECIFICAL LY MENTIONED IN THE STATUTE, HAVE TO BE COMPLIED WITH I.E. THE ASSESSEE SHOULD EITHER FURNISH INACCURATE PARTICULARS OF INCOME OR HE SHOULD HAVE CONCEALED INCOME, THEN ONLY PENALTY UNDER SECTION 271(1)(C) IS APPL ICABLE. THAT MERELY BECAUSE CERTAIN CLAIM OF THE EXPENDITURE WAS DISALLOWED BY THE AO, THAT ITSELF CANNOT BE THE GROUND OF LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT. HERE IS THE CASE WHERE THE ASSESSEE HAS FURNISHED ALL DETAILS, BOOKS OF ACCOUNT AT THE TIME OF HEARING BEFORE THE AO . THE LD. CIT(A) ALSO HAS OBSERVED THAT THE BILLS WERE RECEIVED NEXT YEAR ONLY AND THE PAYMENTS WERE ALSO MADE LATER ON. UNDER SUCH CIRCUMSTANCES, IT CAN NOT BE SAID THAT THE CLAIM OF PROVISION FOR EXPENSES WAS NOT BON AFIDE. IN OUR VIEW, IT IS NOT A CASE OF CONCEALMENT OF INCOME OR OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. HENCE, THE APPEAL OF THE ASSESSEE IS ALLOWED AND THE PENALTY LEVIED BY THE LOWER AUTHORITIES IS ORDERED TO BE DELETED. ORDER PRONOUN CED IN THE OPEN COURT ON 04.08. 201 5 . SD / SD/ ( G.S. PANNU ) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 04.08.2015 . * KISHORE , SR. P.S. COPY TO: THE APPELLANT THE RE SPONDENT THE CIT, CONCERNED, MUMBAI THE CIT ( A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [