ITO 15(2)(1), MUMBAI V. MEHULKUMAR Y SHAH, MUMBAI

ITA 6628/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1767 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 19-02-2013
• Assessment Year: 2002-2003
• Appeal Filed On: 03-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Proportionate interest; Wrong claim; Difference of opinion; Corroborative evidences
• Section: 44AD; 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B MUMBAI . . , / BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER /AND , SHRI RAJENDRA, ACCOUNTANT MEMBER . / ITA NO. 6628/MUM/2011 / ASSESSMENT YEAR 2002-03 I.T.O. 15(2)(1), MUMBAI. VS. MR. MEHULKUMAR Y. SHAH, 401/A, PRATIKSHA TOWERS, R.S. NIMKAR MARG, MUMBAI 400 008. PAN: AAQPS 0244 D ( !' / APPELLANT ) ( #$!' / RESPONDENT ) REVENUE BY : SHRI MOHIT JAIN ASSESSEE BY : NONE % &' / DATE OF HEARING : 19-02-2013 () % &' / DATE OF PRONOUNCEMENT : 22-02-2013 * / O R D E R PER RAJENDRA, A.M. THE SOLITARY EFFECTIVE GROUND OF APPEAL FILED BY TH E ASSESSING OFFICER (AO), CHALLENGING THE ORDER DT. 26-07-2011 OF CIT(A)-26, MUMBAI READS AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY OF RS. 3,60,220/- LEVIED BY TH E ASSESSING OFFICER U/S. 271(1)(C) OF THE IT ACT, 1961 ON THE ASSESSEE FOR F ILING INACCURATE PARTICULARS OF INCOME AND CONCEALMENT OF INCOME. 2. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, TO AME ND AND TO MODIFY ANY OF THE ABOVE GROUND OF APPEAL. 2. ASSESSEE, AN INDIVIDUAL, FILED HIS RETURN OF INCOME ON 26-03-2003 DECLARING TOTAL INCOME RS. 1.47 LAKHS. ASSESSMENT WAS FINALI SED U/S. 143(3) OF THE INCOME-TAX ITA NO. 6628/MUM/2011 2 ACT, 1961(ACT) BY THE ASSESSING OFFICER (AO) ON 29- 03-2005 DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS. 5.75 LAKHS. 3. DURING THE ASSESSMENT PROCEEDINGS, AO ALLOWED INTER EST AMOUNTING TO RS. 1.26 LAKHS OUT OF THE TOTAL INTEREST OF RS. 8.76 LA KHS. HE HELD THAT ASSESSEE, AS A CIVIL CONTRACTOR, SHOULD HAVE DECLARED GP @ 8% ON JOB EXE CUTION INCOME OF RS. 5.72 LAKHS. ASSESSEE HAD SHOWN INCOME OF RS. 11,234/-; BUT SAME WAS ENHANCED TO RS. 45,836/-. AO FURTHER DISALLOWED COMMISSION AMOUNTI NG TO RS. 1.56 LAKHS IN ABSENCE OF ANY SUPPORTING EVIDENCE. ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPEL LATE AUTHORITY (FAA). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, HE UPHELD THE ADDITION OF RS. 1.56 LAKHS MADE BY THE AO ON ACCOUN T OF INTEREST DIS-ALLOWANCE. HE FURTHER ENHANCED DIS-ALLOWANCE OF INTEREST TO RS. 8 .76 LAKHS. APPEAL FILED BY THE ASSESSEE BEFORE THE ITAT WAS DISMISSED VIDE ORDER D T. 18-09-2008 (ITA NO. 449/MUM/06 AY. 2002-03). 3.1 MEANWHILE, PENALTY PROCEEDINGS U/S. 271(1)(C) WERE INITIATED BY THE AO AGAINST THE AO FOR CONCEALING THE PARTICULARS OF IN COME. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE FILED IN RESPONSE TO SH OW CAUSE NOTICE ISSUED BY THE AO, HE HELD THAT THE ASSESSEE HAD DELIBERATELY AND WILL FULLY FILED BOGUS CLAIM OF COMMISSION, THAT ASSESSEE WAS NOT LEGITIMATELY ENTI TLED TO COMMISSION, THAT THE INTEREST EXPENDITURE RELATED TO CIVIL CONTRACT BUSI NESS WAS CLAIMED WITHOUT OBSERVING THE PROVISIONS OF SEC. 44AD OF THE ACT, THAT THE AS SESSEE WAS GUILTY OF CONCEALING PARTICULARS OF INCOME AND WILLFULLY FURNISHING INAC CURATE PARTICULARS. ACCORDINGLY, PENALTY AMOUNTING TO RS. 3.6 LAKHS WAS LEVIED ON TH E APPELLANT U/S. 271(1)(C) OF THE ACT. 4. ASSESSEE PREFERRED AN APPEAL BEFORE THE FAA. AFTE R CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE PENALTY ORDER O F THE AO, HE HELD THAT THERE WAS DISPUTE IN THE CASE OF APPELLANT WITH REGARD TO APP LICABILITY OF SEC. 44AD, THAT THE APPELLANT WAS DISPUTING THE APPLICABILITY OF SAID S ECTION FROM THE VERY BEGINNING, THAT ASSESSEE WAS INSISTING THAT HIS WORK DID NOT FALL I N AMBIT OF CIVIL CONTRACT, THAT THERE WAS DIFFERENCE OF OPINION BETWEEN THE AO AND THE FA A REGARDING THE QUANTUM OF DIS- ALLOWANCE OF INTEREST, THAT ON MERITS OF THE CASE, AO HAD DIS-ALLOWED ONLY PROPORTIONATE INTEREST ON 1.26 LAKHS BY APPLYING TH E PROVISIONS OF SEC. 44AD, THAT DIS-ALLOWANCE OF COMMISSION BY THE AO WAS NOT RESUL T OF ANY DIRECT ENQUIRY BY HIM. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMST ANCES, HE HELD THAT THE CASE UNDER CONSIDERATION WAS OF REJECTION OF CERTAIN CLAIMS OF EXPENSES OF THE APPELLANT WHICH WERE NOT ACCEPTED BY THE AO, THAT THIS FACT IN ITSE LF DID NOT LEAD TO INFER THAT PARTICULARS OF ANY INCOME WERE EITHER CONCEALED OR INACCURATE PARTICULARS OF INCOME WERE FURNISHED BY THE APPELLANT. RELYING UPON THE ORDER OF THE RELIANCE PETROPRODUCTS (P) LTD., [322 ITR 158], DELIVERED BY THE HONBLE SUPREME COURT, HE CANCELLED THE PENALTY LEVIED BY THE AO. 5. BEFORE US, DEPARTMENTAL REPRESENTATIVE (DR) SUBMIT TED THAT ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME, THAT ASSESSEE DID NOT GOT HIS BOOKS OF ACCOUNTS AUDITED THOUGH HE WAS SUPPOSED TO AUDIT THEM, CLAIM S MADE BY THE ASSESSEE WERE DIS- ALLOWED BY THE FAA AND THE TRIBUNAL. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PUT BEFORE US. THE UN-DISPUTED FACT IS THAT ASSESSEE HAD NOT GOT H IS BOOKS OF ACCOUNTS AUDITED AS ENVISAGED BY SEC. 44AD OF THE ACT. ACTION TAKEN BY THE AO IN THIS REGARD WAS ITA NO. 6628/MUM/2011 3 CONFIRMED BY THE FAA AND THE ITAT. BUT IN OUR OPIN ION, NOT GETTING THE BOOKS OF ACCOUNTS AUDITED CANNOT BE EQUATED WITH CONCEALING THE PARTICULARS OF INCOME/FURNISHING INACCURATE PARTICULARS OF INCOME. THERE ARE SEPARATE PENAL PROVISIONS IN CHAPTER-XXI OF THE ACT FOR NOT GETTIN G THE BOOKS AUDITED AS PER THE PROVISIONS OF SEC. 44AD. BUT, FOR VIOLATION OF THO SE PROVISIONS, ASSESSEE CANNOT BE PENALISED U/S. 271(1)(C) OF THE ACT. THIS SECTION IS MEANT FOR PENALISING THE ASSESSEES, WHO CONCEAL THEIR INCOME OR FURNISHING INACCURATE P ARTICULARS OF INCOME. AS PER THE ESTABLISHED RULE OF TAXATION JURISPRUDENCE, MERE DI S-ALLOWANCE OF ANY EXPENDITURE CANNOT BE HELD CONCEALMENT OF INCOME. IN THE CASE UNDER CONSIDERATION, WE FIND THAT CLAIMS MADE BY THE ASSESSEE WERE PARTLY/FULLY REJEC TED BY THE AO/FAA/ITAT. AS FAR AS THE ADDITION TO THE INCOME OF THE ASSESSEE IS CO NCERNED, ACTION OF THE AO/FAA WAS JUSTIFIED. BUT, ON THE SAME FACTS, PENALTY CANNOT BE LEVIED UNLESS THE AO PROVES THAT INACCURATE PARTICULARS WERE FILED/PARTICULARS OF IN COME WERE CONCEALED. WE FIND THAT FAA HAS ALLOWED THE APPEAL OF THE ASSESSEE ON SOUND FOOTING AND THEREFORE HIS ORDER NEEDS NO INTERFERENCE FROM OUR SIDE. CONFIRMING THE ORDER OF THE FAA, WE DECIDE GROUND N OS. 1 AND 2 AGAINST AO. AS A RESULT, APPEAL FILED BY THE AO STANDS DISMISSE D. + , -' . /0 % 1 23 % & 45. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND FEBRUARY, 2013. * % () 7 89 22 :' , 2013 ) % 1 ; SD/- SD/- ( . . / I.P. BANSAL ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / MUMBAI, 8 / DATE: 22 ND FEBRUARY, 2013 TNMM * * * * % %% % #&< #&< #&< #&< =< & =< & =< & =< & / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. THE CONCERNED CIT (A) 4. THE CONCERNED CIT 5. DR B BENCH, ITAT, MUMBAI 6. GUARD FILE $<& #& //TRUE COPY// * * * * / BY ORDER, > >> > / 4 4 4 4 DY./ASST. REGISTRAR , / ITAT, MUMBAI