DCIT CEN CIR 7(3), MUMBAI V. SIMTOOLS P.LTD, MUMBAI

ITA 6608/MUM/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5559 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 10-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Period of limitation; Reasonable cause
• Section: 273B; 69

Judgement Text

IN THE INCOME - TAX APPELLATE TRIBUNAL 'J' BENCH MUMBAI BEFORE SH. RAJENDRA ACCOUNTANT MEMBER AND SH. AMARJIT SINGH , JUDICIAL MEMBER ITA NO.6608/MUM/2016 (ASSESSMENT YEAR 2011 - 1 2 ) DCIT CENTRAL CIRCLE 7(3) 6 TH FLOOR, ROOM NO. 655 , AAYAKAR BHAVAN, M.K. ROAD, CHURCHGATE, MUMBAI - 400020. ----- APPELLANT / REVENUE VERSUS M/S. SIMTOOLS PRIVATE LIMITED 216, SHAH AND NAHAR INDUSTRIAL ROAD OFF. DR. E. MOSESROAD , WORLI , MUMBAI - 400018. . RESPONDENT/ASSESSEE CO. NO. 136/M/2018 (ARISING OUT OF ITA NO.6608/MUM/2016 ) (ASSESSMENT YEAR 2011 - 12 ) SIMTOOLS PRIVATE LIMITED 412, 17G, VARDHMAN CHAMBER, CAWASJEE PATEL STREET, FORT, MUMBAI - 400001. ----- APPELLANT / REVENUE VERSUS DCIT CENTRAL CIRCLE 7(3) 6 TH FLOOR, ROOM NO. 654, AAYAKAR BHAVAN, M.K. ROAD, CHURCHGATE, MUMBAI - 400020 PAN: AAECS1757M ----- RESPONDENT / ASSESSEE REPRESENTED BY SHRI RAJIVHARIT (DR) VIJAY MEHTA CA (AR) DATE OF HEARING : 23 .0 5 .2018 DAT E OF PR ONOUNCEMENT : 09 .07 .2018 ITA NO. 6608 /M/201 6 CO.NO. 136/M/2018 A.Y.2011 - 12 2 PER AMARJIT SINGH , JUDICIAL MEMBER ; 1. T HIS IS AN APPEAL FILED BY REVENUE AND THE CROSS - OBJECTION FILED BY THE ASSESSEE AGAINST THE ORDER DATED 31.08.2016 PASSED BY THE COMMISSIONER OF INCOME TAX (A PPEALS ) - 49 , MUMBAI FOR ASSESSMENT YEAR 201 1 - 1 2 IN WHICH THE PENALTY LEVIED BY THE AO UNDER SECTION 271D HAS BEEN ORDERED TO BE DELETED. 2. THE REVENUE HAS RAISED FOLLOWING GROUND OF APPEAL. (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED COMMISSIONER (A PPEAL S) ERRED IN DELETING PENALTY OF RS.5,03,15,487/ - LEVIED UNDER SECTION 271 D OF THE I NCOME TAX A CT 1961 ON THE GROUND THAT GENUINENESS OF THE TRANSACTION MADE THROUGH JOURNAL ENTRIES IS NOT IN DOUBT. (2) ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE IN LAW, THE LEARNED COMMISSIONER (A PPEAL S) HAVING HELD THAT ASSESSEE HAD CONTRAVENED THE PRO VISION OF SECTION 269SS OF THE INCOME TAX A CT 1961, OUGHT TO HAVE UPHELD THE LEVY OF PENALTY UNDER SECTION 271D AS THE ASSESSEE FAILED TO ESTABLISH THE COMPELLING RE ASON OR GENUINE BUSINESS CONSTRAINT OR REASONABLE CAUSE FOR HAVING CONNECTION IN RESPECT OF EACH AND EVERY JOURNAL ENTRY WITH ITS GROUP CONCERN . 3. THE CROSS OBJECT ION RAISED BY THE ASSESSEE.: - 1. THE LD. CIT(A) OUGHT TO HAVE HELD THAT THE ORDER U/S 271D & 271E OF THE ACT WAS ILLEGAL AND BAD IN LAW AS IT WAS PASSED BEYOND THE PERIOD OF LIMITATION PROVIDED IN CLAUSE (C OF S. 275(1) OF THE I.T. ACT, 1961. 2. THE RESPONDENT CRAVES LEAVE TO ADD TO, ALTER, AMEND OR DELETE ANY OF THE FOREGOING CROSS - OBJECTION 4. THE B RIEF FACTS OF THE CASE ARE THAT A SEARCH AND SEIZURE ACTION U/S 132(1) OF THE I.T. ACT WAS CONDUCTED AT LODHA GROUP BY THE INVESTIGATION WING ON 10.01.2 011. M/S. SIMTOOLS PVT. LTD. IS AN ENTITY WHICH IS CONNECTED TO THE LO DHA ITA NO. 6608 /M/201 6 CO.NO. 136/M/2018 A.Y.2011 - 12 3 GROUP. DURING THE SEARCH, IT WAS FOUND THAT THE LODHA GROUP WAS ENGAGED IN SUPPRESSION OF SALE RECEIPTS BY RECEIVING CAR PARKING RECEIPTS OUTSIDE THE BOOKS OF ACCOUNTS. SIMULTANEOUSL Y, INSTANCES OF RECEIPT OF ON MONEY ALSO SHOWED THAT THE GROUP WAS INDULGING IN RECEIPT OF ON MONEY OVER AND ABOVE THE DISCLOSED RECEIPTS. WHEN CONFRONTED WITH THE EVIDENCES, THE STATEMENT OF SHRI ABINANDAN L O DHA, THE KEY PERSON OF LODHA GROUP WAS RECORDE D ON 12/01/2011 WHO MADE A DECLARATION OF RS.199.80 CRS IN THE HANDS OF VARIOUS ENTITIES OF LODHA GROUP. HE MADE THE VOLUNTARY DISCLOSURE IN THE NAME OF VARIOUS ENTITIES OF LODHA GROUP. H E ALSO MADE THE DISCLOSURE OF ADDITIONAL INCOME IN THE HANDS OF SIMTO OLS P. LTD. FOR VARIOUS ASSESSMENT YEARS AS MENTIONED BELOW : - SR. NO. A.Y. AMOUNT OF DISCLOSURE GROUND ON WHICH DISCLOSURE IS MADE 1 2010 - 11 487 LACS UNDISCLOSED CASH RECEIPT ON SALE OF CAR PARKING 2 2011 - 12 47.52 LACS UNDISCLOSED CASH RECEIPT ON SALE OF CAR PARKING TOTAL 535 LACS ACCORDINGLY NOTICES U/S 153C DATED 27.09.2012 WERE ISSUED AND SERVED UPON THE ASSESSEE REQUIRING ASSESSEE TO FURNISH RETURNS OF INCOME FOR THE VARIOUS ASSESSMENT YEARS INCLUDING A.Y. UNDER CONSIDERATION. IN COMPLIANCE OF NOTICE , THE ASSESSEE FURNISHED THE RETURN OF INCOME ON 29.09.2011 DECLARING TOTAL INCOME TO THE TUNE OF RS.5 , 32 , 73 , 099/ - AFTER CLAIMING THE DEDUCTION UNDER CHAPTER VIA OF RS.59,19,233/ - . THE ITA NO. 6608 /M/201 6 CO.NO. 136/M/2018 A.Y.2011 - 12 4 ASSESSEE ACCEPTED TO REPAY THE LOAN IN CONTRAVE NTION OF PROVISION 269SS/269T OF THE I.T. ACT. THE TOTAL ENTRY WAS FOUND TO THE TUNE OF RS.5 , 03 , 15 , 487/ - . AFTER THE COMPLETION OF THE ASSESSMENT , THE PENALTY U/S 271D OF THE ACT WAS INITIATED AND THE AO LEVIED THE PENALTY TO THE TUNE OF RS.5 , 03 , 15 , 487/ - . AGGRIEVED BY THIS ORDER , THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO DELETED THE PENALTY, THEREFORE, THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US. 5. WE HAVE HEARD THE ARGUMENT ADVANCED BY THE LD. REPRESENTATIVE OF THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. THE LD. REPRESENTATIVE OF THE REVENUE HAS ARGUED THAT THE CIT(A) HAS WRONGLY DELETED THE PENALTY, THEREFORE, THE FINDING OF THE C IT(A) IS WRONG AND AGAINST LAW AND FACTS AND IS LIABLE TO BE SET ASIDE. HOWEVER ON THE OTHER HAND , THE LD. REPRESENTATIVE OF THE ASSESSEE HAS REFUTED THE SAID CONTENTION. AT THE OUTSET , THE LEARNED AR OF THE ASSESSEE SUBMITS THAT THE GROUNDS OF APPEAL RAISED BY REVENUE IS COVERED IN FAVOUR OF ASSESSEE BY THE DECISION OF H ON BLE JURISDICTIONAL HIGH COURT IN ASSESSEES GROUP CASE S IN CIT VS AJINATHHITECH BUILDERS PRIVATE LIMITED & OTHERS IN ITAS NO. 171 , 172, 202, 2.3, 218 AND 219 OF 2015 DATED 0 6TH FEBRUARY 2018 AND FURTHER BY THE DECISION OF CO - ORDINATE BENCH OF T RIBUNAL IN CIT VERSUS AASTHAVINAYAK ESTATE C OMPANY LTD ( ITA NO. 602 / M/ 2017 DATED 31 MAY 20 1 8 AND CIT VS NATIONAL S TANDARD INDIA LTD ( ITA NO. ITA NO. 6608 /M/201 6 CO.NO. 136/M/2018 A.Y.2011 - 12 5 6607 /M / 2016 AND 6609/ M /2016 DATED 6TH JUNE 201 8 , THEREFORE, THE CIT(A) HAS PASSED THE ORDER JUDICIOUSLY AND CORRECTLY WHICH IS NOT LIABLE TO INTE RFERE WITH AT THIS APPELLATE STAGE. THE LEARNED AR OF THE ASSESSEE FURTHER SUBMITS THAT THE JOURNAL ENTRIES WERE MADE PRIOR TO 12 JUNE 2012 AS THE PRESENT APPEAL PERT AINS TO ASSESSMENT YEAR 2012 - 13, T HEREFORE , THE RATIO OF DECISION IN CASE TITLE AS CIT VS TRUMP INTERNATIONAL ( I) LTD DATED 12 JUNE 2012 (345 ITR 270)/ [22 T AXMANN.COM 138(BOM) ] IS NOT APPLICABLE. T HE ACIT LEVIED THE PENALTY UNDER SECTION 271D ON THE OBSERVATION THAT THE ASSESSEE ACCEPTED LOAN/ DEPOSITS FROM SISTER CONCERN THROUGH JOURNAL ENTRI ES I.E. OTHERWISE THEN ACCOUNT PAYEE CHEQUE/DRAFT AND THEREBY VIOLATED THE PROVISIONS OF SECTION 269SS. THE ASSESSEE HAS TAKEN JOURNAL ENTRIES OF RS. 1 0 , 99 , 595/ - FROM DHARAMNATH BUI L DTECH & FARM PVT LTD. THE ASSESSING OFFICER FURTHER HELD THAT THE ASSESSEE HAS NOT MADE OUT ANY CASE OF REASONABLE CAUSE UNDER SECTION 273B BY MAKING THE REFERENCE THE DECISION OF HONORABLE BOMBAY HIGH COURT IN TRUMP INTERNATIONAL FINANCE (I) LTD (SUPRA). BEFORE COMMISSIONER (APPEALS) THE ASSESSEE URGED THAT THE JOURNAL ENTRIES H AVE BEEN MADE WITH THE GROUP CONCERN UNDER THE BON AFIDE BELIE F THAT SUCH TRANSACTION WOULD NOT BE HIT BY THE PROVISIONS OF SECTION 269 SS IN VIEW OF THE VARIOUS JUDICIAL DECISION ON THIS ISSUE, INCLUDING THE DECISION OF DELHI HIGH COURT IN CASE OF NOIDA TOLL BRIDGE ( 262 ITR 260 ) AND SUCH LOAN BY WAY OF JOURNAL ENTRIES TRANSACTION WERE UNDERTAKEN FOR VARIOUS COMMERCIAL RE ASONS LIKE ASSIGNING OR RECEIVABLE FOR ITA NO. 6608 /M/201 6 CO.NO. 136/M/2018 A.Y.2011 - 12 6 OPERATIONAL EFFICIENCY, PAYMENT ON THE GROUP CONCERN FOR SQUARING UP CONNECTION, FOR EASE OF CON SOLIDATION OF ACCOUNTS, RECTIFICATION ENTRIES ET C . THE LEARNED COMMISSIONER (A PPEAL S) AFTER REFERRING THE DECISION OF BOMBAY HIGH COURT IN TRUMP INTERNATIONAL ( SUPRA ) HELD THAT REPAYMENT OF LOAN /DEPOSIT BY WAY OF JOURNAL ENTRIES WAS IN CONTRAVE NTION OF PR OVISION OF SECTION 2 69 SS HAS BEEN GIVEN AFTER THE CLOSE OF FINANCIAL YEAR 2011 - 12 R ELEVANT TO ASSESSMENT YEAR 2012 - 13. THE LEARNED COMMISSIONER (A PPEAL S) CONCLUDED THAT REASONS DISCLOSED BY ASSESSEE CONSTITUTE REASONABLE CAUSE WITHIN THE MEANING OF SECTION 273B OF THE A CT ; PARTICULARLY IN LIGHT OF THE FACT THAT THERE IS NO FINDING THAT SUCH TRANSACTION WAS UNDERTAKEN TO EVADE THE TAX. THE LEARNED COMMISSIONER (A PPEAL S) WHILE CONSIDERING THE CONTENTION OF ASSESSEE ALSO OBSERVED THAT THERE IS NO FINDING THAT TRANSACTION BY WAY OF JOURNAL ENTRIES WERE NOT MADE TO EVADE TAX. THE FINDING OF THE CIT(A) IS BASED UPON THE DECISION OF BOMBAY HIGH COURT IN THE ASSESSEES SISTER CONCERN CASE TITLE AS CIT VS AJINATHHITECH BUILDERS PRIVATE LIMITED& OTHERS IN ITAS NO. 1 71, 172, 202, 2.3, 218 AND 219 OF 2015 DATED 0 6TH FEBRUARY 2018 . THE RATIO OF OTHER JUDGMENTS RELIED BY THE ASSESSEE IS ALSO APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. THE ASSESSEE RELIED UPON THE OTHER JUDGMENTS SUCH AS CIT VERSUS AAS THAVINAYAK ESTATE COMPANY LTD ( ITA NO. 602/M/ 2017 DATED 31 MAY 2018 AND CIT VS NATIONAL STANDARD INDIA LTD ( ITA NO. 6607/M/2016 AND 6609/M/2016 DATED 6TH JUNE 2018 . FURTHER, IT ALSO ITA NO. 6608 /M/201 6 CO.NO. 136/M/2018 A.Y.2011 - 12 7 CAME INTO NOTICED THAT THE CASE OF THE ASSESSEE PERTAINS TO THE A.Y. OF 2012 - 13, THEREFORE, THE RATIO OF DECISION IN CASE TITLE AS CIT VS TRUMP INTERNATIONAL (I) LTD DATED 12 JUNE 2012 (345 ITR 270)/ [22 TAXMANN.COM 138(BOM)] IS NOT APPLICABLE. ACCORDINGLY, WE ARE OF THE VIEW THAT THE CIT(A) HAS DECIDED THE MATTER OF CONTRO VERSY JUDICIOUSLY AND CORRECTLY WHICH IS NOT LIABLE TO BE INTERFERE WITH AT THIS APPELLATE STAGE. RESULTANTLY, THE APPEAL OF THE REVENUE IS HEREBY ORDERED TO BE DISMISSED. 6. CROSS - OBJECTION SINCE THE MATTER OF CONTROVERSY HAS BEEN ADJUDICATED WHILE DECID ING THE APPEAL OF THE REVENUE ABOVE, THEREFORE, IN THE SAID CIRCUMSTANCES, ADJUDICATING THE CROSS - OBJECTION WOULD ONLY BE ACADEMIC IN NATURE. ORDER PRONOUNCED IN THE OPEN COURT ON 09. 07.2 018 . SD/ - SD/ - ( RAJENDRA ) ( AMARJIT SINGH ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; DATED : 09. 07. 2018 . / 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. REGISTRAR) , / ITAT, MUMBAI