CHARUTA PRAVIN KULKARNI, MUMBAI V. DCIT 22(2), MUMBAI

ITA 710/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1656 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 02-02-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Gift; Salary income; Wrong claim

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH C , MUMBAI BEFORE SHRI B.R.BASKARAN, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.710/MUM/2015 FOR (ASSESSMENT YEAR : 2008-09) MRS. CHARUTA PRAVIN KULKARNI C/O D.C. JAIN & CO., 75, BOMBAY MUTUAL BUILDING, 293, DR. D.N. ROAD, FORT, MUMBAI-400001. PAN: ABAPK3754A VS. THE DY.CIT-22(2), TOWER NO.6, 3 RD FLOOR, VASHI RAILWAY STATION, MUMBAI-400703. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI D.C. JAIN (AR ) REVENUE BY : MS. BHARTI SINGH ( DR) DATE OF HEARING : 27.10.2016 DATE OF PRONOUNCEMENT : 30.11.2016 O R D E RU/S 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JM: 1. THIS APPEAL U/S 253 OF THE INCOME-TAX ACT (ACT) IS DIRECTED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS) [ CIT(A)]-33, MUMBAI DATED 03.11.2014 FOR ASSESSMENT YEAR (AY) 2008-09. THE AS SESSEE HAS RAISE FOLLOWING GROUNDS OF APPEAL: I. THE LD AO WAS WRONG IN IMPOSING THE PENALTY ON THE ASSESSEE U/S 271(1) (C) OF THE ACT, BECAUSE THE ASSESSEE NEITHER CONCEALED THE PARTICULARS OF HIS INCOME, NOR FURNISHED INACCURATE PARTICULARS OF HIS INCOME AND LD CIT (A) ERRED IN CONFIRMING THE SAME. II. THE LD CIT(A) ERRED IN CONFIRMING THE LEVY OF PENAL TY OF RS.12,37,680/ - U/S 271(1) (C ) OF THE ACT, ON THE GROUND THAT THE APPE LLANT HAS PURCHASED GOODS FROM THE NON-GENUINE DEALERS WHICH WERE ENGAGED IN ISSUING THE FALSE INVOICES ONLY AND THERE WERE NO ACTUAL TRANSACTION OF PURCHASES AND SALE AMONG THE PARTIES. WHEREAS NEITHER THIS GROUND, WA S BEFORE AO DURING THE ASSESSMENT PROCEEDINGS NOR PENALTY PROCEEDINGS THER EFORE THE IMPUGNED ORDER OF CIT(A) TAKING A FRESH / DIFFERENT GROUND WITHOUT FOLLOWING THE PROCEDURE U/S 251(2) OF THE ACT, IS BAD IN LAW. 2 ITA NO. 710 /M/2015 MRS. CHARU TA PRAVIN KULKARNI 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL DERIVING INCOME FROM SALARY, LECTURE, AND CONSULTANCY AND PROMOTIONAL AC TIVITY. FOR THE YEAR UNDER CONSIDERATION RETURN OF INCOME WAS FILED ON 01.07.2 009 DECLARING TOTAL INCOME OF RS. 10,75,810/-. THE ASSESSING OFFICER (AO) MADE THE DI SALLOWANCE OF RS. 40,57,028/- ON ACCOUNT OF COST OF GIFTS AND PRESENTATION ARTICL ES. ON APPEAL THE ADDITION WAS UPHELD BY LD. CIT(A) AND IN SECOND APPEAL BY TRIBU NAL.. THE AO INITIATED THE PENALTY BY ISSUING NOTICE U/S 274 RWS 271(1) (C) DA TED 24.01.2013. THE AO AFTER GIVING AN OPPORTUNITY OF HEARING TO THE ASSESSEE LE VIED THE PENALTY OF RS. 12,37,608/- BEING 100% ON THE TAX SOUGHT TO BE EVADED ON ACCOUN T OF FURNISHING INACCURATE PARTICULAR OF INCOME. ON APPEAL BEFORE CIT(A) THE PENALTY WAS CONFIRMED. FURTHER AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE FILED TH E SECOND APPEAL BEFORE US. THOUGH THE ASSESSEE HAS RAISED TWO GROUNDS OF APPEA L, HOWEVER AS PER OUR CONSIDERED OPINION THE ONLY SUBSTANTIAL GROUND OF A PPEAL IS; WHETHER THE LD CIT(A) ERRED IN CONFIRMING THE ORDER OF PENALTY U/S 271(1) (C ) OF THE ACT. REST OF THE PART OF GROUNDS OF APPEAL IS ARGUMENTATIVE IN N ATURE. 3. WE HAVE HEARD LD. AUTHORIZED REPRESENTATIVE (AR) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR REVENUE AND PE RUSED THE MATERIAL AVAILABLE ON RECORD. THE LD AR FOR ASSESSEE ARGUED THAT NO PE NALTY IS LEVIABLE ON MERE DISALLOWANCE OF CLAIM. THE LD AR FOR THE ASSESSEE RELIED UPON THE DECISION OF ITAT, CHANDIGARH IN H.P. STATE FOREST CORPORATION LTD. VS . DCIT REPORTED VIDE [2005] 93 ITD 442 (CHD.) AND ON THE DECISION OF AHMEDABAD TRI BUNAL IN GOYAL INDUSTRIES LTD. VS. DCIT [2010] 40 SOT 336 (AHD.) ON THE OTHER HAND, THE LD. DR FOR REVENUE SUPPORTED THE ORDER OF AUTHORITIES BELOW. I T WAS ARGUED BY LD. DR FOR REVENUE THAT ASSESSEE MADE A BOGUS CLAIM IN THE RET URN OF INCOME. THE ASSESSEE HAS FAILED TO SUBSTANTIATE THE BOGUS CLAIM. THE ASSESSE E HAS SHOWN THE ALLEGED PURCHASES AT FAG END IN THE MONTH OF MARCH. THE LD. DR FOR R EVENUE FURTHER ARGUED THAT HAS THE ASSESSMENT NOT SELECTED FOR SCRUTINY; THE REVEN UE TO THE EXCHEQUER WOULD HAVE GONE. THE APPEAL FILED BY THE ASSESSEE IN THE QUANT UM ASSESSMENT, CHALLENGING THE ADDITION WAS DISMISSED BY LD CIT(A) AS WELL AS BY T HIS TRIBUNAL. 4. WE HAVE CONSIDERED THE RIVAL CONTENTION OF THE PAR TIES AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE HAVE NOTICED THAT DURING T HE ASSESSMENT PROCEEDINGS THE ASSESSEE CLAIMED THE PURCHASES OF GIFT ARTICLES WOR TH RS.40,75,028/- FROM SACHI 3 ITA NO. 710 /M/2015 MRS. CHARU TA PRAVIN KULKARNI MERCANTILE PRIVATE LIMITED, GINNI MERCANTILE PRIVAT E LIMITED AND KRC TRADING COMPANY AND THE SAME WAS SHOWN IN THE LIST OF CREDI TORS IN THE BALANCE SHEET. THE ASSESSEE FAILED TO SUBSTANTIATE THE CLAIM, THEREFOR E, THE AO MADE THE DISALLOWANCE OF RS. 40,57,028/- THE ADDITION MADE BY AO WAS CONFIRM ED BY COMMISSIONER (APPEALS). THE LD CIT(A) NOT ONLY CONFIRMED THE DI SALLOWANCE ALSO CHANGED THE HEAD OF INCOME FROM INCOME FROM BUSINESS AND PROF ESSION TO INCOME TO THE HEAD OF INCOME FROM OTHER SOURCES. THUS, THE INCOME W AS ENHANCED BY THE LD CIT(A). ON FURTHER APPEAL BEFORE TRIBUNAL THE ENHANCEMENT W AS SET-ASIDE. HOWEVER, AFTER CONSIDERING THE CONTENTION OF ASSESSEE THE TRIBUNAL OBSERVED THAT AS PER INVOICES RELATING TO M/S KRC TRADING CO WOULD FALL IN ASSESS MENT YEAR 2009-10 AND NOT IN AY 2008-09. THUS, THE EXPENSES OF RS. 26,00,000/- WAS HELD THAT NOT TO BELONG TO CURRENT ASSESSMENT YEAR. THOUGH THE TRIBUNAL SUSTAI NED THE ENTIRE DISALLOWANCE. THEREFORE, NO PENALTY IS LEVY ABLE ON RS 26,00,000/ -. SO FAR AS PENALTY ON DISALLOWANCE ON REMAINING RS. 728,514/- (EACH) RELA TED WITH SACHI MERCANTILE PVT LIMITED AND GINNI MERCANTILE PVT LIMITED ARE CONCER NED THE AO PASSED THE PENALTY ORDER AFTER PROVIDING THE OPPORTUNITY OF HEARING. D URING THE PENALTY PROCEEDING THE AO CONCLUDED THAT THE ASSESSEE HAS NOT GIVEN ANY FR ESH ARGUMENT OR SUBMISSION EXCEPT MADE BEFORE LD CIT(A), WHICH WAS DULLY CONSI DERED ( IN QUANTUM APPEAL) BEFORE DISMISSING THE PLEAS. THE LD CIT(A) WHILE C ONSIDERING THE CONTENTION OF THE ASSESSEE CONCLUDED THAT THE ASSESSEE AT ALL STAGES FAIL TO PROVIDE THE COMPLETE DETAILS OF EXPENSES CLAIMED, NOR GAVE REASONABLE EXPLANATIO N AS TO HOW THESE EXPENSES WERE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF HIS BUSINESS. IT WAS ALSO OBSERVED THAT HIS PREDECESSOR HAS ALREADY NOTED THAT THERE I S NO CORRELATION WITH THE INCOME EARNED AND THE EXPENSES INCURRED. WE HAVE NOTED THA T THE LD AR FOR ASSESSEE HAS NOT EXPLAINED BEFORE US AS TO HOW THE EXPENSES ALLEGEDL Y INCURRED BY THE ASSESSEE HAS ANY CORRELATION WITH THE INCOME EARNED DURING THE Y EAR. THEREFORE, THE CASE OF ASSESSEE IS COVERED BY EXPLANATION (1) B OF SECTION 271(1) (C ) OF THE ACT. WE ARE CONSCIOUS THAT PENALTY PROCEEDINGS ARE SEPARATE AND INDEPENDENT FROM THE ASSESSMENT PROCEEDINGS. THE LD AR FOR THE ASSESSEE MADE ONLY SUBMISSION THAT MARE DISALLOWANCE WOULD NOT ATTRACT THE PENALTY U/S 271( 1) (C). THE DECISION RELIED BY THE LD AR FOR THE ASSESSEE ARE NOT APPLICABLE ON THE FA CTS OF THE PRESENT CASE. THUS, WE SUSTAIN THE PENALTY @ 100% OF THE AMOUNT OF TAX SOU GHT TO BE EVADED, ON 4 ITA NO. 710 /M/2015 MRS. CHARU TA PRAVIN KULKARNI DISALLOWANCE ON RS. 7,28,514/- PURCHASE EXPENSES OF M/S SACHI MERCANTILE PVT LIMITED AND RS. 7,28,514/- PURCHASE EXPENSES OF M/S GINNI MERCANTILE PVT LIMITED. THEREFORE, THE AO IS DIRECTED TO CALCULATE THE PENA LTY ACCORDINGLY. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 30 TH DAY OF NOVEMBER 2016. SD/- SD/- (B.R.BASKARAN) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 30/11/2016 COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/