ASST CIT 2(3), MUMBAI V. SHIVGOPAL TRADING COMPANY P.LTD, MUMBAI

ITA 7375/MUM/2013

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6020 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 16-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset
• Section: 143(3); 115JB; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BEN CH, MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER , AND SHRI RAMLAL NEGI, JUDICIAL MEMBER ./I.T.A. NO.3067/MUM/2016 ( / ASSESSMENT YEAR : 2009-10) THE INCOME TAX OFFICER 2(3)(2), ROOM NO.581A, AAYAKAR BHAVAN, MUMBAI-400 020. / VS. M/S.SHIV GOPAL TRADING COMPANY PVT.LTD. 706. KAILAS CORPORATE LOUNGE OPP. KAILAS COMPLEX, HIRANANDANI VIKHROLI LINK ROAD, MUMBAI-400 079. ./PAN :AACCS 2167 F ( /APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI VIMAL PUNAMIYA / RESPONDENT BY : SHRI V. JUSTIN-DR /DATE OF HEARING : 24/04/2018 / DATE OF PRONOUNCEMENT : 12/07/2018 / O R D E R PER SHAMIM YAHYA, ACCOUNTANT MEMBER: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX(APPEALS) DATED 20/09/2013 AND PERTAINS TO ASSESSMENT YEAR 20 09-10, WHEREIN THE CIT(A) HAS DELETED THE PENALTY OF RS.20,12,481/- UNDER SECTION 271(1)(C ). THE GRO UNDS OF APPEAL READ AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) HAS ERRED IN ALLOWING RELIEF TO THE ASSESSEE TO THE EXTENT IMPUG NED IN THE GROUNDS ENUMERATED BELOW: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING T HE PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 L EVIED BY THE ASSESSING OFFICER ON ACCOUNT OF NOT COMPUTING BOOK PROFIT U/S 115JB OF THE IT ACT AND P AYMENT OF TAX THEREON, WITHOUT APPRECIATING THAT BY NOT COMPUTING TAX LIABILITY U/S 115JB OF THE ACT , THE ASSESSEE WILLFULLY CONCEALED THE PARTICULARS OF INCOME BY FILING INACCURATE PARTICULARS OF INCOME. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING T HE PENALTY U/S 271(1)(C) OF THE IT ACT BY THE ASSESSIN G OFFICER ON THE ACCOUNT OF NON COMPUTING BOOK PROFIT U/S 115JB OF THE IT ACT AND PAYMENT OF TAX T HEREON, WITHOUT APPRECIATING THAT IF NO SCRUTINY PROCEEDINGS HAD TAKEN PLACE, THE TAX ON BOOK PROFIT WOULD NOT HAVE BEEN PAID BY THE ASSESSEE. FURTHER, THE ASSESSEE THOUGH LIABLE FOR TAX ON BOOK PROFIT DID NOT PAY THE SAME VOLUNTARILY WITHOUT TH E INTERVENTION OF DEPARTMENT THROUGH SCRUTINY PROCEED INGS. 3. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, THE DECISION OF THE CIT(A) MAY BE SET ASIDE AND THAT OF THE AO RESTORED. ITA NO.7375/MUM/2013 M/S.SHIV GOPAL TRADING COMPANY PVT.LTD. 2 THE BRIEF FACTS OF THE CASE ARE AS UNDER:- 2. THE ASSESSEE COMPANY E-FILED ITS RETURN OF INCOME O N 31/10/2009 DECLARING TOTAL INCOME OF RS. 3,060/- AND BOOK PROFIT AT RS.92,51,412/-. DURING THE YEAR UNDE R CONSIDERATION, THE APPELLANT SOLD A CAPITAL ASSET I.E. A FLAT AT MAKER TOWER 'J' CUFFE PARADE, MUMBAI. THE ASSESSEE COMPUTED ITS TAX LIABILITY AS PER THE PROVISIONS O F SECTION 115JB OF THE ACT AT RS.9,52,895/-, WHICH WAS HIGHER THAN THE TAX CALCULATED AS PER NORMAL PROVISIONS O F THE ACT. THE TAX LIABILITY WAS ACCORDINGLY DISCHARGED BY WAY OF ADVANCE TAX PAID BEFORE MARCH 15, 2009. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) ON 20 /09/2011 DETERMINING TOTAL INCOME AS PER NORMAL PROVISIONS OF THE ACT AND THE BOOK PROFIT AS PER TH E PROVISIONS OF SECTION 115JB WAS DETERMINED AT RS.2,61,72,780/-. SINCE, THE TAX PAYABLE UNDER SECT ION 115JB WAS HIGHER THAN THE TAX PAYABLE AS PER NO RMAL PROVISIONS OF THE ACT, THE AO CHARGED THE TAX AS PE R SECTION 115JB AND INITIATED PENALTY PROCEEDINGS U NDER SECTION 271 (1)(C) OF THE ACT. 3. UNDER THE NORMAL PROVISIONS OF THE ACT, THE ASSESS EE CLAIMED DEDUCTION U/S 54 AT RS.1,69,21,367/- IN RESPECT OF PURCHASE OF A NEW RESIDENTIAL PROPERTY AND U/S 5 4EC OF THE ACT BY INVESTING RS.1,00,00,000/- (RS.50 ,00,000/- BEFORE 31/03/2009 AND RS.50,00,000/- AFTER 31/03/20 09) IN THE PRESCRIBED BONDS. THE AO ASSESSED THE TO TAL INCOME OF THE APPELLANT AT RS.92,85,932/-, WHILE DI SALLOWING THE FILING FEES OF RS.37,120/- AND THE DE DUCTION U/S 54EC IN RESPECT OF THE INVESTMENT OF RS.1,00,00,000 /- IN PRESCRIBED BONDS. 4. UNDER SECTION 115JB, THE AO COMPUTED THE BOOK PROF IT OF THE APPELLANT BY MAKING ADDITION OF RS.1,69,21,367/- IN RESPECT OF THE PURCHASE OF NEW HOUSE, WHICH WAS WRONGLY CLAIMED BY THE ASSESSEE AN D DETERMINED THE BOOK PROFIT AT RS.2,61,72,780/-(RS.9 2,51,412/- + RS.1,69,21,367/-). CONSEQUENT TAX LIAB ILITY WAS DETERMINED AT RS.26,12,532/-. SINCE THE ASSESSEE DI D NOT SUCCEED ON THE ISSUE OF DETERMINATION OF BOOK PROFIT, PENALTY U/S. 271(1) (C ) WAS LEVIED BY THE AO BY C ONCLUDING AS UNDER :- '4.8 THE ASSESSEE HAD CREDITED LESS AMOUNT OF CAPIT AL GAIN TO PROFIT AND LOSS ACCOUNT I.E. RS.92,47,75 2/- WHICH WAS LESS BY THE COST OF NEW ASSET OF RS.1,69, 21,367/- WHICH RESULTED INTO LESSER AMOUNT CARRIED FORWARD TO RESERVE & SURPLUS WHICH REFLECT TO LIABI LITY SIDE OF THE BALANCE SHEET. BY DOING THIS, THE ASSESSEE'S NEW ASSET IS NOT REFLECTED ON THE ASSETS SIDE OF THE BALANCE SHEET. THIS GOES TO PROVE THAT ASSESSEE HAS INTENTIONALLY AND DELIBERATELY MANIPUL ATED ITS PROFIT AND LOSS ACCOUNT AND BALANCE SHEET. THIS ACT OF THE ASSESSEE CLEARLY REVEALS ITS MALA F IDE INTENTION TO REDUCE TAX LIABILITY ON BOOK PROFI T U/S 115JB ON RETURNED INCOME. 4.9 FURTHER, HAD THIS CASE NOT BEEN SELECTED FOR SC RUTINY, THIS FACT WOULD HAVE GONE UNNOTICED AND THE ASSESSEE WOULD HAVE GONE SCOT-FREE WHICH WOULD HAVE RESULTED IN LOSS OF EXCHEQUER AS THE TAX PAID BY T HE ASSESSEE AS PER ITS COMPUTATION OF INCOME IS MUCH L ESSER THAN THE ACTUAL TAX REQUIRED TO BE PAID BY TH E ASSESSEE AS PER TAX PAY ABLE ON BOOK PROFIT U/S 115 JB. 5. IN VIEW OF THE ABOVE AND AFTER CONSIDERING ALL T HE FACTS AND CIRCUMSTANCES OF THE CASE, AS DISCUSSE D ABOVE, I AM OF THE OPINION THAT THE ASSESSEE HAS CO NCEALED THE PARTICULARS OF ITS INCOME FOR THE YEAR UNDER CONSIDERATION WITHIN THE MEANING OF SECTION 271(L)( C) READ WITH EXPLANATION-1 THERETO, OF THE INCOME-T AX ITA NO.7375/MUM/2013 M/S.SHIV GOPAL TRADING COMPANY PVT.LTD. 3 ACT, 1961 AND ALSO FURNISHED INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF THE SAID SECTION, AND HENCE, THEREBY, RENDERED ITSELF LIABLE FOR PENALTY UNDER SECTION 271(L)(C) OF THE INCOME-TAX ACT.' 5. UPON ASSESSEE'S APPEAL LEARNED CIT(A) ELABORATELY CONSIDERED THE SUBMISSIONS OF THE ASSESSEE. HE FOUND THAT THE ASSESSEE HAS DISCLOSED ALL THE PARTI CULARS. THAT THERE WAS NO CASE OF CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS. LEARNED CIT(A ) INTER-ALIA RELIED UPON THE DECISION OF HONBLE APEX COURT IN THE CASE OF RELIANCE PETRO PRODUCTS. 5.1. WE MAY GAINFULLY REFER TO THE DECISION OF LEARNED CIT(A) IN THIS REGARD AS UNDER: 8. THE ONLY MISTAKE OF THE APPELLANT WAS THAT IT HAD CLAIMED A WRONG DEDUCTION IN ITS PROFIT AND LOSS ACCOUNT WHICH WAS NOT AVAILABLE TO IT FOR THE PURPOSES OF COMPUTATION OF BOOK PROFIT U/S 115JB OF THE ACT. THE DEDUCTION OF RS.1,69,21,3677-, WHICH HAS BEEN DISALLOWED FOR THE PURPOSE OF COMPUTATION OF BOOK PROFIT U/S 115JB OF THE ACT, WAS ALREADY DISCL OSED BY THE APPELLANT FOR THE PURPOSES OF COMPUTATI ON OF ITS INCOME UNDER THE NORMAL PROVISIONS OF THE AC T AND THE SAME WAS ALSO ALLOWED BY THE AO UNDER THE NORMAL PROVISIONS. 9. IN THE BACKGROUND OF ABOVE FACTS, THEREFORE, IT IS EVIDENT THAT THE APPELLANT'S CASE IS NOT A CASE WHERE PARTICULARS OF INCOME HAVE BEEN CONCEALED OR INACCU RATE PARTICULARS OF SUCH INCOME HAVE BEEN FURNISHED , FROM THE DETAILS AND RECORDS FURNISHED BY THE APPEL LANT ALONG WITH THE RETURN OF INCOME AS WELL AS DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS VERY M UCH POSSIBLE FOR THE AO TO COMPUTE THE CORRECT INCOME OF THE APPELLANT, BOTH UNDER THE NORMAL PROV ISIONS OF THE ACT AS WELL AS UNDER SECTION 115JB OF THE ACT. THE AO HAS NOT BROUGHT ON RECORD ANY EXTRA MATERIAL ON THE BASIS OF WHICH THE SAID DISALLOWAN CE HAS BEEN MADE BY HIM. 10. SO FAR AS THE CASE LAWS CITED BY THE APPELLANT ARE CONCERNED, IT IS SEEN THAT THE DECISION OF HON' BLE SUPREME COURT IN THE CASE OF NALWA SONS INVESTMENT LTD (SUPRA) IS ON A DIFFERENT ISSUE WHERE ADDITIONS WERE MADE UNDER THE NORMAL PROVISIONS OF THE ACT, B UT THE INCOME OF THE ASSESSEE WAS TAXED UNDER SECTI ON 115JB OF THE ACT AND THERE WAS NO DISALLOWANCE/ADDI TION MADE UNDER SECTION 115JB OF THE ACT. SOME OTHER CASES CITED BY THE APPELLANT ARE ALSO ON THE SAME ISSUE AND HENCE, THESE ARE NOT APPLICABLE TO T HE CASE OF THE APPELLANT. 11. HOWEVER, THE APPELLANT HAS ALSO CITED A NUMBER OF OTHER DECISIONS WHERE IT HAS BEEN HELD THAT NO CONCEALMENT PENALTY CAN BE LEVIED IN A CASE WHERE A CLAIM IS MADE WHICH IS NOT SUSTAINABLE IN LAW [CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD, 189 TAXMAN 32 2 (SC); [CIT VS. SSP LTD, 328 ITR 643 (P & H)]. IN OTHER DECISIONS, IT HAS ALSO BEEN HELD THAT WHERE A N ASSESSEE HAS FURNISHED ALL PARTICULARS OF INCOME, IMPOSITION OF PENALTY IS NOT AUTOMATIC [DILIP N. SH ROFF, 291 ITR 519 (SC); TWIN STAR JUPITER COOPERATI VE HOUSING SOCIETY LTD, 31 SOT 474 (MUMBAI); ENPAKE MO TORS PVT. LTD, ITA NO. 9147MUM/2008]. IT HAS ALSO BEEN HELD THAT WHERE A LEGAL ISSUE UNDER CONSI DERATION IS DEBATABLE AND THE ASSESSEE MAKES A CLAI M WHICH IS NOT ACCEPTABLE, PENALTY CANNOT BE LEVIED [ DEVSONS PVT.LTD. 329 ITR 483(DEL.)]. 6. THEREAFTER LEARNED CIT(A) ELABORATELY QUOTED FROM THE DECISION OF HON'BLE APEX COURT IN THE CASE OF RELIANCE PETRO PRODUCTS .LD. CIT(A) CONCLUDED AS UNDER:- 13. THEREFORE, IN VIEW OF THESE DECISIONS AND IN THE BACKGROUND OF THE FACTS OF THE CASE OF THE APPE LLANT AS DISCUSSED ABOVE, THE PENALTY LEVIED BY THE AO IN THE CASE OF THE APPELLANT IS NOT JUSTIFIED. ALL TH E PARTICULARS AND FACTS RELEVANT FOR THE PURPOSE OF C OMPUTATION OF TOTAL INCOME OF THE APPELLANT WERE ON ITA NO.7375/MUM/2013 M/S.SHIV GOPAL TRADING COMPANY PVT.LTD. 4 RECORD AND THE APPELLANT HAD NOT DECLARED ANY THE W RONG FIGURES IN ITS RETURN OF INCOME AND HENCE ANY INACCURATE PARTICULARS OF ITS INCOME WERE NOT FURNI SHED. THE AO HAS ALSO NOT BROUGHT ON RECORD ANY EXT RA MATERIAL ON THE BASIS OF WHICH, THE SAID DISALLOWAN CE HAS BEEN MADE BY HIM. THE DISALLOWANCE HAS BEEN MADE ONLY ON THE BASIS OF FACTS AND MATERIAL ALREAD Y AVAILABLE ON RECORD AND SUCH FACTS AND FIGURES WE RE NOT FOUND TO BE INACCURATE. THE PENALTY LEVIED BY T HE AO IS THEREFORE, DELETED. 7. AGAINST ABOVE ORDER, REVENUE IS IN APPEAL BEFORE U S. 8. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE REC ORDS. WE FIND THAT ON THE FACTS AND CIRCUMSTANCES OF THIS CASE, THE ASSESSEE CANNOT BE VISITED WITH THE RIGOURS OF PENALTY U/S.271(1)(C ). THE ASSESSEE HAS DISCLOSED ALL THE NECESSARY PARTIC ULARS. THERE IS NO CASE OF CONCEALMENT OR FURNISHIN G OF INACCURATE PARTICULARS OF INCOME. THE ASSESSEES CLAIM OF REDUCTION IN THE PROFIT AND LOSS ACCOUNT FOR THE COMPUTATION OF BOOK PROFIT U/S. 115 JB HAS BEEN REJECTED. THIS HAS LED TO THE LEVY OF PENALTY. AS RIGHTLY NOTED BY THE LD. CIT(A) ALL THE PARTICULARS AND FACTS WERE ALREADY DISCLOSED BY THE ASSESSEE F OR THE PURPOSE OF COMPUTATION OF INCOME UNDER THE NOR MAL PROVISIONS OF THE ACT, AND THE SAME WAS ALSO ALLOWED BY THE AO UNDER NORMAL PROVISIONS. IN THESE CIRCUMSTANCES, IN OUR CONSIDERED OPINION RATIO FROM THE HON'BLE APEX COURT DECISION IN THE CASE OF RELIANCE PETRO PRODUCTS (SUPRA), APPLIES SQUARELY. IN THE SAID CASE IT WAS EXPOUNDED THAT THE DISALLOW ANCE OF A CLAIM BY THE ASSESSEE CANNOT IPSO FACTO T HE REASON FOR LEVY OF PENALTY U/S. 271 (1)(C ). 8.1. ACCORDINGLY IN THE BACKGROUND OF AFORESAID DISCUSS ION AND PRECEDENT WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT(A). ACCORDINGLY WE UPHOLD T HE SAME. IN THE RESULT, THIS APPEAL BY THE REVENUE STANDS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH JULY, 2018. SD/- SD/- ( RAMLAL NEGI ) ( SHAMIM YAHYA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER ,MUMBAI, DATED: 12 /07 /2018 JV, SR. PS. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- ITA NO.7375/MUM/2013 M/S.SHIV GOPAL TRADING COMPANY PVT.LTD. 5 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI