ITO WD 9(3)(4), MUMBAI V. RAJ PARASHAR CONSTRUCTION P. LTD, MUMBAI

ITA 6633/MUM/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62324 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 26-04-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 14-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K P KAPADIA
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D , MUMBAI BEFORE : SHRI P. M. JA GTAP, ACCOUNTANT MEMBER & SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA NO.6633 /MUM/2010 ASSESSMENT YEAR: 2003-2004 ITO WD 9(3)(4), MUMBAI- 400 020. RAJ PARASHAR CONSTRUCTION P. LTD., SIDHI GR. FLOOR, PLOT NO.14 13 TH RD, KHAR (W), MUMBAI-52. PAN NO.AAACR2126F APPELLANT VS. RESPONDENT APPELLANT BY : MR. SANDEEP GOEL RESPONDENT BY : MR. K.P.KAPADIA DATE OF HEARING : 26 TH APRIL 2012 DATE OF PRONOUNCEMENT : 11 TH MAY 2012 O R D E R PER AMIT SHUKLA (J.M.) : THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER DATED 13-7-2010, PASSED BY THE CIT(A)-20, MUMBAI IN RELATION TO PENALTY PROCEEDING UNDER SECTION 271(1)(C) FOR THE ASSESSMENT YEAR 2003-2004 ON THE FOLLOWING GROUNDS :- I. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN CANCELLING THE PENALTY OF ` .3,00,000/- IMPOSED U/S.271(1)(C) OF THE ACT, 1961 IGNORING THE EVIDENCE ON RECORD WHICH INDICATES THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME IN SO FAR AS INTEREST INCOME EARNED BY DEPLOYING SURPLUS FUNDS RECEIVED BY WAY OF SHARE CAPITAL SUBSCRIPTION WAS CLAIMED TO INCOME FROM BUSINESS CONTRARY TO THE RATIO OF ITA NO : 6633/MUM/2010 2 THE SUPREME COURT DECISION IN THE CASE OF M/S.TUTICORIN ALKALI CHEMICALS AND FERTILIZERS LTD. (1997-227) TO THE EFFECT THAT IT CONSTITUTES INCOME FROM OTHER SOURCES.. 2. THE SUBJECT MATTER OF PENALTY HEREIN THIS CASE IS ADDITION OF ` .7,83,150/- ON ACCOUNT OF TREATMENT OF INTEREST INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES, WHIC H WAS OFFERED AS BUSINESS INCOME BY THE ASSESSEE. THE SAID ADDITION ALSO GOT CONFIRMED BY THE CIT(A) VIDE ORDER DATED 15-11-2007. AGGRIEVED BY THE SAID ORDER, THE ASSESSEE FILED SECOND APPEAL BEFORE THE ITAT. IN THE MEANTIME, THE ASSESSING OFFICER LEVIED THE PENALTY FOR A SUM OF ` .3,00,000./- VIDE ORDER DATED 25-3-2009. 3. IN THE FIRST APPEAL, THE CIT(A) DELETED THE PENALTY ON MERITS AFTER OBSERVING AND HOLDING AS UNDER :- 4. I HAVE CONSIDERED THE ISSUE. IN C.I.T. V ATUL MOHAN BINDAL, 317 I.T.R. 1 (S.C.), THE APEX COURT HELD THAT FOR APPLICABILITY OF SECTION 271(1)(C) THE CONDITIONS STATED THEREIN MUST EXISTS. THE CONDITIONS ARE THAT THE ASSESSEE SHOULD HAVE CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME BEFORE THE PENALTY U/S 271(1)(C) COULD BE LEVIED. THIS HAS BEEN REITERATED IN A RECENT DECISION OF THE APEX COURT N C.I.T. V RELIANCE PETRO PRODUCTS P. LTD. 322 I.T.R. 158, WHEREIN HONBLE APEX COURT INTERPRETED THE MEANING OF THE EXPRESSIONS, CONCEALMENT, INACCURATE., AND PARTICULARS USED IN CLAUSE (C) OF SECTION 271 (1) AND HELD THAT EVERYTHING WOULD DEPEND UPON THE RETURN OF INCOME FILED BECAUSE THAT WAS THE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF INCOME. THE APEX COURT HELD THAT WHEN SUCH PARTICULARS ARE FOUND TO BE ITA NO : 6633/MUM/2010 3 INACCURATE THE LIABILITY OF PENALTY WOULD ARISE. READING THE WORDS PARTICULARS IN CONJUNCTION WITH THE WORD INACCURATE, THE APEX COURT HELD THAT THEY ONLY MEAN T HAT THE DETAILS SUPPLIED IN THE RETURN WHICH WERE NOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TRUTH OF ERRONEOUS, AND UNLESS THERE IS A FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESS EE IN THE RETURN WERE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE, THERE WOULD NO QUESTION OF INVITING THE PENALTY U/S 271(1)(C). THE APEX COURT FURTHER HELD THAT MERE MAKING OF THE CLAIM WHIC H IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO FURNISHI NG INACCURATE PARTICULARS OF INCOME OF THE ASSESSEE, AND SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO INACCURATE PART ICULARS. THE APEX COURT HELD THAT IF THE ASSESSEE HAS FURNISHED ALL THE DETAILS OF ITS EXPENDITURE AS WELL AS INCOME IN ITS RETURN, WHICH DETAILS, IN THEMSELVES, WERE NOT FOUND TO BE INACCURATE NOR COULD BE VIEWED AS THE CONCEALMENT OF INCOME ON ITS PART, IT WAS UP TO THE AUTHORITIES TO ACCEPT ITS CLAIM IN THE RETURN OR NOT. HONBLE COURT HELD THAT MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT ATTRACT THE PENALTY U/S 271(1)(C). THE APEX COUR T WENT ON TO HOLD THAT IF THE CONTENTION OF THE REVENUE IS A CCEPTED THEN IN CASE OF EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTABLE BY THE AO FOR ANY REASON, THE ASSESSEE WILL INVITE PENALTY U/S.271(1)(C). 5. IN THE INSTANT CASE THE ADDITIONS WERE MADE BASED ON THE PARTICULARS OF INCOME FILED IN THE RETURN OF INCOME. NOW NEW INCOME HAS BEEN ADDED. THE APPELLANT FURNISHED DETAILS OF ITS INCOME WHICH DETAILS WERE NOT F OUND TO BE INACCURATE NOR WERE THEY VIEWED AS THE CONCEALMENT OF INCOME ON ITS PART. MERELY BECAUSE THE APPELLANT HAD OFFERED CERTAIN INCOME UNDER A DIFFERENT HEAD OF INCOME AND ADJUSTED CERTAIN EXPENDITURE AGAINST THAT WHICH WAS NOT ACC EPTED OR WAS NOT ACCEPTABLE TO THE AO, THAT BY ITSELF WOULD NOT ATTRACT THE PENALTY U/S.271(1)(C). THE CONDITIONS PRESCRIBED IN SE CTION 271(1)(C) DOE NOT EXIST IN ITA NO : 6633/MUM/2010 4 THIS CASE. I, THEREFORE, CANCEL THE PENALTY IMPOSED OF RS.3,00,000/-. 1 4. LEARNED AR ON BEHALF OF THE ASSESSEE AT THE VERY OUTSET SUBMITTED THAT THE ADDITION ON ACCOUNT OF INTEREST INCOME FOR A SUM OF ` 7,83,150/- AS INCOME FROM OTHER S OURCES, WHICH IS THE SUBJECT MATTER OF THE PENALTY HERE IN THIS APPEAL, HAS BEEN SET ASIDE BY THE HONBLE ITAT TO THE FILE OF THE ASSESSI NG OFFICER VIDE ORDER DATED 21-1-2011. THEREFORE, THE PENALTY LEVIED DES ERVES TO BE CANCELLED. 5. LEARNED SENIOR DR, IN ALL HIS FAIRNESS ADMITTED THAT THE MATTER HAS BEEN RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER BY THE ITAT IN THE QUANTUM PROCEEDINGS. 6 . AFTER PERUSING THE ORDER OF THE ITAT PASSED IN THE QUANTUM PROCEEDINGS IN ITA NO.1044/MUM/2008 , THE ITAT HAS DISAGREED WITH THE FINDING OF THE CIT(A) AND SET AS IDE THE MATTER BACK TO THE FILE OF ASSESSING OFFICER AFTER OBSERVING AND HOLDING AS UNDER :- 9. WE HAVE CONSIDERED THE RIVA L SUBMISSIONS CAREFULLY. WE FIND THAT AO HAS NOT DISCUSSED THE ISSUE IN DETAIL. THE QUESTION IS NOT WHETHER ASSESSEE HAS COMMENCED HIS BUSINESS OR NOT, BECAUSE ASSESSEE WAS ALREADY IN BUILDING LINE. IT HAS ALSO NOT BEEN DISCUSSED WHETHER THE FUNDS, WHICH WERE DEPOSITED IN THE BANKS ETC., WERE SURPLUS FUNDS OR NOT. THEREFORE, IN THE INTERESTS OF JUSTICE, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF THE AO.. ITA NO : 6633/MUM/2010 5 7. THUS, THE BASIS ON WHICH T HE PENALTY WAS LEVIED BY THE ASSESSING OFFICER VIDE ORDER DATED 25-3-2009 HAS NOW BEEN SET ASIDE AND THE MATTER HAS BEEN RESTORED BACK TO THE ASSESSING OFFICER WITH CERTAIN DIRECTIONS, AND, THEREFORE, THE PENALTY LEVIED BY THE ASSESSING OFFICER DOES NOT STAND. ON THIS PRELIMINARY GROUND, WE DISMISS THE GROUND RAISED BY THE DEPARTMENT. HOWEVER, IT IS MADE CLEAR THAT WE HAVE NOT GIVEN ANY FINDING ON ME RIT OF THE ISSUE INVOLVED. 8. IN THE RESULT, APPEAL FILED BY T HE DEPARTMENT IS HEREBY DISMISSED ORDER PRONOUNCED ON THIS 11 TH DAY OF MAY, 2012. SD/- SD/- ( P.M.JAGTAP ) ( AMIT SHUKLA ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DT: 11 TH MAY, 2012 COPY FORWARDED TO : 1. THE APPELLANT, 2. THE RESPONDENT, 3. THE C.I.T. 4. CIT (A) 5. THE DR, B - BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI PKM