SHREEJI CONSTRUCTION, MUMBAI V. ITO 24(3)(3), MUMBAI

ITA 6621/MUM/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7524 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2003-2004
• Appeal Filed On: 14-11-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M KHARE
• Assessee Lawyers: VIJAY KOTHARI
• Keywords: Business income
• Section: 271(1)(c)

Judgement Text

ITA NO.6621/MUM/2008 A.Y.: 2003-2004 1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI BEFORE P.M. JAGTAP (A.M.) AND SHRI N.V. VASUDEVAN ( J.M.) ITA NO.6621/MUM/2008 ASSESSMENT YEAR : 2003-2004 SHREEJI CONSTRUCTION 7/16, GAJANAN COLONY, GOREGAON (W), MUMBAI 400 062 PAN AAAFS8032J VS. ITO 24(3)(3) ADDL. CIT 24(3), C-11, 7 TH FLR., PRATYAKSH KAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI 400 051. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VIJAY KOTHARI RESPONDENT BY : SHRI M. KHARE O R D E R PER P.M. JAGTAP, A.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT (A) XXIV, MUMBAI DATED 30.09.2008 WHE REBY HE CONFIRMED THE PENALTY OF RS.3,50,000/- IMPOSED BY THE ASSESSING O FFICER U/S.271(1)(C) OF THE I.T. ACT. 2. THE ASSESSEE IN THE PRESENT CASE IS A PARTNERSHI P FIRM. A SURVEY U/S.133A WAS CARRIED OUT IN ITS CASE ON 31.01.2003 AND 01.02.2003. A STATEMENT OF ONE OF THE PARTNERS OF THE ASSESSEE FI RM NAMELY PRAKASH J. BAROT WAS RECORDED DURING THE COURSE OF THE SURVEY. IN THE SAID STATEMENT, HE SURRENDERED ADDITIONAL INCOME OF RS.10 LACS OVER AND ABOVE THE NORMAL TAXABLE INCOME OF THE ASSESSEE FIRM. IN THE RETU RN OF INCOME FILED IN THE YEAR UNDER CONSIDERATION ON 30.09.2003, THE SAID AD DITIONAL INCOME OF RS.10 LACS SURRENDERED DURING THE COURSE OF SURVEY WAS DECLARED BY THE ASSESSEE FIRM UNDER THE HEAD PROFIT AND GAIN OF BUS INESS OR PROFESSION AND THE SAME WAS PARTLY SET OFF AGAINST THE BROUGHT FOR WARD LOSS OF THE EARLIER YEARS. IN THE ASSESSMENT COMPLETED U/S.143(3) VI DE ORDER DATED ITA NO.6621/MUM/2008 A.Y.: 2003-2004 2 21.12.2005, THE ADDITIONAL INCOME OF RS.10 LACS SUR RENDERED DURING THE COURSE OF SURVEY WAS BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE FIRM BY THE ASSESSING OFFICER UNDER THE HEAD INCOME FROM OTHER SOURCES AND CONSEQUENTLY THE CLAIM BY THE ASSESSEE AGAINST THE BROUGHT FORWARD LOSSES WAS DISALLOWED BY HIM. THE LEARNED CIT (A) UPHEL D THE ORDER OF THE ASSESSING OFFICER ON THIS ISSUE DISMISSING THE APPE AL FILED BY THE ASSESSEE IN THE QUANTUM PROCEEDING. THEREAFTER A SHOW CAUSE NOTICE WAS ISSUED BY THE ASSESSING OFFICER U/S.271(1)(C) AND SINCE THE E XPLANATION OFFERED BY THE ASSESSEE IN RESPONSE TO THE SAID NOTICE WAS NOT FOU ND ACCEPTABLE BY HIM, THE ASSESSING OFFICER PROCEEDED TO IMPOSE THE PENALTY O F RS.3,50,000/- U/S. 271(1)(C) BEING 100% OF THE TAX SOUGHT TO BE EVADED BY THE ASSESSEE ON THE AMOUNT OF RS.10 LACS SURRENDERED DURING THE COURSE OF SURVEY TREATING THE SAME AS THE CONCEALED INCOME OF THE ASSESSEE. 3. THE PENALTY IMPOSED BY THE ASSESSING OFFICER U/S .271(1)(C) WAS CHALLENGED BY THE ASSESSEE IN THE APPEAL FILED BEFO RE THE LEARNED CIT (A). MEANWHILE THE APPEAL FILED AGAINST THE ORDER OF THE LEARNED CIT (A) PASSED IN THE QUANTUM PROCEEDING WAS ALLOWED BY THE TRIBUNAL VIDE ITS ORDER DATED 22.11.2007 PASSED IN ITA NO.2532/MUM/07 ALLOWING TH E CLAIM OF THE ASSESSEE THAT THE AMOUNT OF RS.10 LACS SURRENDERED DURING THE COURSE OF SURVEY WAS ITS BUSINESS INCOME AND IT WAS UNTITLED TO SET OFF THE BROUGHT FORWARD BUSINESS LOSS AGAINST THE SAID INCOME. T HE SAID DECISION OF THE TRIBUNAL IN THE QUANTUM PROCEEDING WAS BROUGHT BY T HE ASSESSEE TO THE NOTICE OF THE LEARNED CIT (A). IT WAS CONTENDED THAT IN VIEW OF THE SAID DECISION OF THE TRIBUNAL ACCEPTING THE ASSESSEES C LAIM AS MADE IN THE RETURN OF INCOME, THERE WAS NO CONCEALED INCOME AND NO QUESTION OF IMPOSITION OF PENALTY U/S.271(1)(C). THE LEARNED CIT (A) HOWEVER DID NOT FIND MERIT IN THIS CONTENTION RAISED ON BEHALF OF T HE ASSESSEE. HE HELD THAT THE AMOUNT OF RS.10 LACS SURRENDERED BY THE ASSESSE E DURING THE COURSE OF SURVEY ON THE BASIS OF ADVERSE FINDINGS REPRESENTED HIS CONCEALED INCOME AND THE PENALTY IMPOSED BY THE ASSESSING OFFICER U/ S.271(1)(C) THEREFORE, WAS FULLY JUSTIFIED DESPITE THE DECISION OF TRIBUNA L IN THE QUANTUM ITA NO.6621/MUM/2008 A.Y.: 2003-2004 3 PROCEEDING WHEREIN THE ISSUE ONLY RELATING TO HEAD OF INCOME UNDER WHICH AMOUNT OF RS.10 LACS WAS CHARGEABLE TO TAX IN THE H ANDS OF THE ASSESSEE WAS DECIDED. HE, THEREFORE, CONFIRMED THE PENALTY IM POSED BY THE ASSESSING OFFICER U/S.271(1)(C) BY HIS APPELLATE ORDER DATED 30.09.2008 WHICH IS IMPUGNED BY THE ASSESSEE IN THE PRESENT APPEAL FILE D BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT T HE AMOUNT OF RS.10 LACS SURRENDERED BY THE ASSESSEE AS ITS ADDITIONAL INCOM E DURING THE COURSE OF SURVEY WAS DULY DECLARED BY IT IN THE RETURN OF INC OME FILED BY THE YEAR UNDER CONSIDERATION AND THERE IS NO DISPUTE ABOUT T HE SAME. ALTHOUGH THE HEAD OF INCOME UNDER WHICH THE SAID AMOUNT WAS OFFE RED BY THE ASSESSEE WAS NOT ACCEPTED BY THE ASSESSING OFFICER AND EVEN CLAIM OF THE ASSESSEE FOR SET OF THE BROUGHT FORWARD LOSSES AGAINST THE SAID INCOME WAS ALSO DISALLOWED BY HIM, THE FACT WHICH REMAINS UNDISPUTE D IS THAT THE AMOUNT OF RS.10 LACS SURRENDERED DURING THE COURSE OF SURVEY AS ITS ADDITIONAL INCOME WAS DULY OFFERED BY THE ASSESSEE IN ITS RETURN OF I NCOME FILED FOR THE YEAR UNDER CONSIDERATION. MOREOVER THE CLAIM BY THE AS SESSEE OF THE SAID AMOUNT BEING ITS BUSINESS INCOME WAS FINALLY ACCEPT ED BY THE TRIBUNAL IN THE QUANTUM PROCEEDING AND THE ASSESSING OFFICER WA S ALSO DIRECTED BY THE TRIBUNAL TO ALLOW THE CLAIM OF THE ASSESSEE FOR SET OFF OF THE CARRIED FORWARD BUSINESS LOSS AGAINST THE SAID INCOME. IT IS WELL SETTLED THAT CONCEALMENT AS ENVISAGED IN SECTION 271(1)(C) IS TO BE INFERRED FROM THE RETURN OF INCOME FILED BY THE ASSESSEE FOR THE RELEVANT YEAR AND THE INCOME WHICH THE ASSESSEE HAS ALREADY OFFERED IN THE RETURN CAN NOT BE REGARDED AS ITS CONCEALED INCOME FOR THE PURPOSE OF IMPOSING PENALT Y U/S.271(1)(C). IN THE PRESENT CASE, THE AMOUNT OF RS.10 LACS SURRENDE RED DURING THE COURSE OF SURVEY AS ITS ADDITIONAL INCOME WAS DULY DECLARED B Y THE ASSESSEE FIRM IN ITS RETURN OF INCOME FILED FOR THE YEAR UNDER CONSIDERA TION AND THIS BEING THE DISPUTED POSITION, WE ARE OF THE VIEW THAT THE SAID AMOUNT CANNOT BE TREATED AS CONCEALED INCOME OF THE ASSESSEE FOR THE PURPOSE OF IMPOSING PENALTY U/S.271(1)(C). WE, THEREFORE, CANCEL THE PENALTY IMPOSED BY THE ASSESSING ITA NO.6621/MUM/2008 A.Y.: 2003-2004 4 OFFICER AND CONFIRMED BY THE LEARNED CIT (A) AND AL LOW THIS APPEAL OF THE ASSESSEE. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED ON THIS 26 TH DAY OF FEBRUARY, 2010. SD/- (N.V. VASUDEVAN) (JUDICAIL MEMBER) SD/- (P.M. JAGTAP) (ACCOUNTANT MEMBER) MUMBAI, DATED 26 TH FEBRUARY, 2010. JANHAVI COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)- XXIV, MUM BAI 4. COMMISSIONER OF INCOME TAX, CITY- XXIV, MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH E, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI ITA NO.6621/MUM/2008 A.Y.: 2003-2004 5 DATE INITIALS 1. DRAFT DICTATED ON 12-11-09 PS 2. DRAFT PLACED BEFORE AUTHOR 13-11-09 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER AM/JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/J M 5. APPROVED DRAFT COMES TO THE SR. PS PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER