ASHTAVINAYAKA CONSTRUCTION, NAVI MUMBAI V. ACIT CIR 22(3), MUMBAI

ITA 6715/MUM/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2298 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 29-10-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 19-11-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R A DYANI
• Section: 143(3)

Judgement Text

1 ITA NO. 67 15/MUM/2013 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH:A MUMBAI BEFORE SHRI RAJENDRA, ACCOUNTANT MEMBER & SMT. BEENA PILLAI, JUDICIAL MEMBER I.T.A .NO. 6715/MU M /2013 (ASSESSMENT YEAR-2009- 10) ASHTAVINAYAKA CONSTRUCTION, PLOT NO. R-478, TTC INDL. AREA, MIDC RABALE, NAVI MUMBAI. AADFA1724G VS ACIT, CIRCLE 22(3), MUMBAI. APPELLANT BY SHRI DEVENDRA JAIN RESPONDENT BY SHRI R.A. DYANI ORDER PER BEENA PILLAI, JUDICIAL MEMBER : THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE F OR A.Y. 2009-10 AGAINST THE ORDER PASSED BY THE CIT(A)-33, MUMBAI, VIDE ORDER DATED 13 TH AUGUST, 2013 ON THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFF ICER OF LEVYING PENALTY OF RS. 20,95,224/- U/S 271(1)(C). THE SAID PENALTY WAS LEVIED FOR OFFERING AN AMOUNT OF RS. 61,64,239/- AS REMISSION OF LIABILITY U/S 41(1). THE SAME MAY PLEASE BE DELETE D. DATE OF HEARING 29.10.2015 DATE OF PRONOUNCEMENT 04.12.2015 2 ITA NO. 67 15/MUM/2013 2. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, SUPPLEMEN T, ALTER AND/OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. 2. BRIEF FACTS OF THE CASE AS RECORDED BY THE AUTHO RITIES BELOW ARE AS UNDER: THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE REL EVANT ASSESSMENT YEAR ON 13/09/2009 DECLARING THE TOTAL INCOME OF RS . 1,29,48,900/- THEREAFTER, THE ASSESSMENT WAS COMPLE TED U/S 143(3) ON 26/12/2011 DETERMINING THE TOTAL INCOME AT RS. 1 ,91,13,140/-. THE ONLY ADDITION MADE BY THE LD. ASSESSING OFFICER WAS OF RS. 61,64,239/- ON ACCOUNT OF REMISSION OF LIABILITY U/ S 41(1) OF THE I.T. ACT, 1961 ON WHICH THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT FOR FILING WRO NG PARTICULARS OF INCOME. 3. THE LD. ASSESSING OFFICER SUBSEQUENTLY ISSUED SH OW CAUSE NOTICE TO THE ASSESSEE, AS TO WHY PENALTY SHOULD NO T BE LEVIED. THE ASSESSEE FILED ITS REPLY, VIDE LETTER DATED 20/01/2 012, STATING THAT THEY WERE NOT LIKELY TO PAY TO THE SUPPLIERS OF GOO DS (CREDITORS), AS ISSUES REGARDING THE QUALITY AND DELIVERY OF GOODS WAS NOT RESOLVED. THE ASSESSEE SUBMITTED THAT THE AMOUNT OF RS. 61,64 ,239/- WAS OFFERED AS REMISSION OF LIABILITY U/S 41(1) IN ORDE R TO BUY PEACE AND TO AVOID ANY PUNITIVE ACTION UNDER THE I.T. ACT. T HE LD. ASSESSING OFFICER AFTER CONSIDERING THE REPLY STATED THAT IN COURSE OF THE ASSESSMENT PROCEEDINGS WHEN THE APPELLANT WAS ASKED TO FURNISH THE CONFIRMATION LETTERS FROM ITS CREDITORS AS THE AMOUNT HAS BEEN OUTSTANDING FOR THE PAST FEW YEARS, ONLY THEN THE A PPELLANT SUBMITTED THAT IT WAS NOT LIKELY TO PAY THEN AS CER TAIN ISSUES WERE NOT YET RESOLVED. THE ASSESSING OFFICER WAS, THEREF ORE, OF THE OPINION 3 ITA NO. 67 15/MUM/2013 THAT THE APPELLANT DID NOT DISCLOSE OUR OFFER ITS I NCOME VOLUNTARY. THE LD. ASSESSING OFFICER AFTER SATISFYING HIMSELF THAT THE APPELLANT HAD FILED INACCURATE PARTICULARS OF INCOME PROCEEDE D TO LEVY MINIMUM PENALTY OF RS. 20,95,225/- U/S 271(1)(C) OF THE I.T. ACT, 1961. 4. AGGRIEVED BY THE ORDER OF THE LD. ASSESSING OFFI CER THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A). BEFORE THE LD. CIT(A) THE ASSESSEE FILED THE WRITTEN SUBMISSION ASKING FOR DE LETING THE PENALTY WHICH IN HIS VIEW WAS NOT LIVABLE IN THE PRESENT CA SE. THE ASSESSEE CONTENDED BEFORE LD.CIT(A) THAT, THE PENALTY PROCEE DINGS HAVE BEEN WRONGLY INITIATED, EVEN THOUGH THE INCOME WAS SURRE NDERED TO BUY PEACE. THE LD. CIT(A) HAS REPRODUCED THE SUBMISSION S MADE BY THE ASSESSEE IN PARA 4 OF HIS ORDER. THE LD. CIT(A) RE CORDED THAT, THE ASSESSEE COULD NOT SUBSTANTIATE ITS STAND, IN AS MU CH AS THE PLEA BEFORE THE LD. AO, ABOUT OFFERING OF ADDITIONAL INC OME VOLUNTARILY. IT WAS ONLY ON SCRUTINY OF ASSESSMENT AND QUERY FROM T HE LD.AO THAT THE ASSESSEE HAS COME FORWARD TO OFFER THE INCOME. THE PLEA TAKEN BY THE ASSESSEE THAT THE ADDITIONS WERE MADE U/S 41 (1) OF THE ACT COULD NOT BE CONSIDERED AS BAD IN LAW, AS THE APPEL LANT DID NOT SUBSTANTIATE ANY NECESSARY EVIDENCE OR MATERIALS, W ITH REGARDS TO THE NATURE OF TRANSACTIONS, THE IDENTITIES OF CREDI TORS, TO WHOM THE ASSESSEE WAS LIABLE TO PAY. THE LD. CIT(A) RECORDE D THAT, IN THE INSTANT CASE, ON THE FACTS, IT CAN BE SAID THAT, TH E APPELLANT HAD FURNISHED INACCURATE PARTICULARS, EITHER DELIBERATE LY, OR AS A RESULT OF GROSS NEGLIGENCE, WHICH WAS NOT CAPABLE OF BEING RECORDED AS AN INNOCENT ACT. THE LD. CIT(A) ALSO RECORDED THAT TH E ASSESSEE HAD 4 ITA NO. 67 15/MUM/2013 VOLUNTARILY DISCLOSED THE AMOUNT BEFORE THE LD. AO, SINCE IT COULD NOT SUBSTANTIATE OR ESTABLISHED THE EXISTENCE OF TH E LIABILITY WITH SUPPORTIVE EVIDENCES OR MATERIAL. THE LD. CIT(A) F URTHER RECORDS THAT THE EXPLANATION OFFERED BY THE ASSESSEE WAS FO UND TO BE UNSUSTAINABLE AND NOT BONAFIDE BY THE LD. AO. THE ASSESSEE COULD NOT EVEN FILE CONFIRMATIONS FROM THE CREDITORS FOR THE AMOUNTS FOR WHICH THE ADDITION U/S 41(1) WAS MADE BY THE LD. AO . THE LD. CIT(A), THEREFORE, UPHELD THE LEVY OF PENALTY U/S 2 71(1)(C) OF THE ACT. 5. AGGRIEVED BY THE ORDER OF THE LD. CIT(A) THE ASS ESSEE IS IN APPEAL BEFORE US NOW. 6. IT HAS BEEN SUBMITTED BY THE LD.AR THAT THERE IS A DELAY OF 15 DAYS IN FILING THE APPEAL BEFORE THE TRIBUNAL. THE ASSESSEE HAS MADE APPLICATION FOR CONDONATION OF THE DELAY ALONG WITH AFFIDAVIT OF SHRI.MILIND DESHMUKH, PARTNER OF THE ASSESSEE. WE H AVE PERUSED THE AFFIDAVIT. THE ASESSEE HAS MADE OUT SUFFICIENT CAUSE FOR NOT ABLE TO FILE THE APPEAL IN TIME. WE ARE THEREFORE INCLIN ED TO CONDONE THE DELAY. 7. ON MERITS, THE LD. AR SUBMITTED THAT THERE IS AN ACKNOWLEDGEMENT OF LIABILITY I.E. EXISTING AS ON 31 /03/2009. THEREFORE, SECTION 41(1) COULD NOT BE APPLIED TO TH E FACTS OF THE PRESENT CASE. THE LD. AR ALSO SUBMITTED THAT THE A SSESSEE WAS NOT IN A POSITION TO DECIDE UPON WHETHER THE DISPUTED A MOUNT COULD BE REGARDED AS A REMISSION OF LIABILITY, AS ON THE END OF THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR. THEREFORE, NO ACCURATE PARTICULARS COULD BE FILED. 5 ITA NO. 67 15/MUM/2013 8. ON THE CONTRARY, THE LD. DR SUBMITTED THAT THE A SSESSEE HAD AGREED TO CONSIDER THIS AMOUNT AS A REMISSION U/S 4 1(1) OF THE ACT ONLY DURING THE ASSESSMENT PROCEEDINGS. IT WAS SUB MITTED BY THE LD.DR THAT IT WAS VERY MUCH WITHIN THE KNOWLEDGE OF THE ASSESSEE, ABOUT THE AMOUNT NOT GOING TO BE PAID TO THE CREDIT ORS, BECAUSE OF CERTAIN UNSETTLED DISPUTE. THE LD.DR SUBMITTED THA T, THE ASSESSEE IN HIS SUBMISSION BEFORE THE AUTHORITIES BELOW HAS AGREED THAT HE HAD OFFERED THIS AMOUNT AT THE TIME OF ASSESSMENT O NLY TO BUY PEACE AND TO GET AWAY WITH THE PUNITIVE ACTION UNDE R THE I.T. ACT. THE LD.DR RELIES UPON THE JUDGMENT OF THE HONBLE S UPREME COURT IN THE CASE OF MAK DATA PVT. LTD. VS. CIT II REPOR TED IN (2014) 1 SCC 674. 9. WE HAVE HEARD COUNSEL ON EITHER SIDE AND PERUSE D THE JUDGMENTS RELIED UPON BY THEM. THE SCOPE OF EXPLANATION 1 TO SECTION 271(1)(C) OF THE ACT, WHICH READS AS FOLLOWS:- EXPLANATION 1 WHERE IN RESPECT OF ANY FACTS MAT ERIAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT, -- (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR O FFERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE COMMISSIONER (APPEALS) OR THE COMMISSIONER TO BE FA LSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATI ON IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MAT ERIAL TO THE 6 ITA NO. 67 15/MUM/2013 COMPUTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM, THEN THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOT AL INCOME OF SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE PURP OSES OF CLAUSE (C) OF THIS SUB-SECTION, BE DEEMED TO REPRESENT THE INC OME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. THE QUESTION IS WHETHER THE ASSESSEE HAS OFFERED AN Y EXPLANATION FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISH ING INACCURATE PARTICULARS OF INCOME. EXPLANATION TO SECTION 271(1 ) RAISES A PRESUMPTION OF CONCEALMENT, WHEN A DIFFERENCE IS NO TICED BY THE AO, BETWEEN REPORTED AND ASSESSED INCOME. THE BURDE N IS THEN ON THE ASSESSEE TO SHOW OTHERWISE, BY COGENT AND RELIA BLE EVIDENCE. WHEN THE INITIAL ONUS PLACED BY THE EXPLANATION, HA S BEEN DISCHARGED BY HIM, THE ONUS SHIFTS ON THE REVENUE T O SHOW THAT THE AMOUNT IN QUESTION CONSTITUTED THE INCOME AND NOT O THERWISE. 8. ASSESSEE HAS ONLY STATED THAT HE HAD SURRENDERED THE ADDITIONAL SUM OF RS.61,64,231/- WITH A VIEW TO BUY PEACE AND TO AVOID PUNITIVE ACTION. STATUTE DOES NOT RECOGNIZE THOSE T YPES OF DEFENCES UNDER THE EXPLANATION 1 TO SECTION 271(1)(C) OF THE ACT. IT IS TRITE LAW THAT THE VOLUNTARY DISCLOSURE DOES NOT RELEASE THE ASSESSEE FROM THE MISCHIEF OF PENAL PROCEEDINGS. THE LAW DOES NOT PRO VIDE THAT WHEN AN ASSESSEE MAKES A VOLUNTARY DISCLOSURE OF HIS CON CEALED INCOME, HE HAD TO BE ABSOLVED FROM PENALTY. WE ARE OF THE VIEW THAT, AS THE ASSESSEE HAS ADMITT ED IN ITS WRITTEN SUBMISSIONS BEFORE THE AUTHORITIES BELOW THAT, THER E WAS NO LIKELY HOOD OF THESE PAYMENTS BEING MADE TO THE SUPPLIERS( CREDITORS). THE 7 ITA NO. 67 15/MUM/2013 ASSESSEE THEREFORE, HAS SURRENDERED, IN VIEW OF DET ECTION MADE BY THE LD.AO. HAD IT BEEN THE INTENTION OF THE ASSESSE E TO MAKE FULL AND TRUE DISCLOSURE OF ITS INCOME, IT WOULD HAVE FI LED THE RETURN DECLARING AN INCOME INCLUSIVE OF THE AMOUNT, WHICH WAS SURRENDERED LATER DURING THE COURSE OF THE ASSESSME NT PROCEEDINGS. CONSEQUENTLY, IT IS CLEAR THAT THE ASSESSEE HAD NO INTENTION TO DECLARE ITS TRUE INCOME. THE AO, IN OUR VIEW, HAS R ECORDED A CATEGORICAL FINDING THAT HE WAS SATISFIED THAT THE ASSESSEE HAD CONCEALED TRUE PARTICULARS OF INCOME AND IS LIABLE FOR PENALTY PROCEEDINGS UNDER SECTION 271(1) (C ). WE THEREFORE FOLLOWING THE RATIO LAID DOWN BY THE H ONBLE SUPREME COURT IN THE CASE OF MAK DATA PVT. LTD. (SUPRA), U PHOLD THE VIEW OF THE LD.CIT(A) THAT, IN THE ABSENCE OF ANY EXPLANATI ON IN RESPECT OF THE SURRENDERED INCOME, THE FIRST PART OF CLAUSE (A ) OF EXPLANATION 1 IS ATTRACTED. WE THEREFORE DISMISS THE APPEAL FILED BY THE ASSESS EE. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 04 TH DECEMBER, 2015. SD/- SD/- (RAJENDRA) (BEENA PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 04.12.2015 *KAVITA, P.S. COPY FORWARDED TO: 1. APPELLANT 8 ITA NO. 67 15/MUM/2013 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI