EASTERN PERIPHERAL P.LTD, MUMBAI V. DCIT 8(1), MUMBAI

ITA 744/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75332 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 13-01-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 03-02-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: K SHIVARAM IZRFKHZ DH LS
• Keywords: Wrong claim; Bonafide mistake
• Section: 143(3)

Judgement Text

- 1 - VK;DJ VIHYH; VF/KDJ.K BZ U;K;IHB EQACBZ ESAA IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUM BAI JH VKJ JH VKJ JH VKJ JH VKJ- -- - LH LHLH LH- -- - 'KEKZ] YS[KK LNL; ,OA 'KEKZ] YS[KK LNL; ,OA 'KEKZ] YS[KK LNL; ,OA 'KEKZ] YS[KK LNL; ,OA MK0 ,L MK0 ,L MK0 ,L MK0 ,L- -- - VH VHVH VH- -- - ,E ,E,E ,E- -- - IOYU IOYU IOYU IOYU] U;KF;D ] U;KF;D ] U;KF;D ] U;KF;D LNL; DS LE{K LNL; DS LE{K LNL; DS LE{K LNL; DS LE{K BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND DR. S.T. M PAVALAN, JUDICIAL MEMBER VK;DJ VIHY LA[;K /ITA NO.744/MUM/2012 FU/KKZJ.K O'KZ @ ASSESSMENT YEAR 2008-09 EASTERN PERIPHERAL PVT. LTD. C-1 UDYOG SADAN NO.3, MIDC ANDHERI (EAT), MUMBAI 93 CUKE@ VS. DEPUTY COMMISSIONER OF INCOME TAX, RANGE 8(1), MUMBAI, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. PAN:- AAACE1007C VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VIHYKFKHZ DH VKSJ LS @ ASSESSEE BY SHRI K. SHIVARAM IZR;FKHZ DH VKSJ LS @ REVENUE BY MS. SONIA KUMAR VKNS'K@ VKNS'K@ VKNS'K@ VKNS'K@ ORDER PER R.C. SHARMA, AM. THIS IS AN APPEAL, FILED BY THE ASSESSEE AGAINST TH E ORDER OF CIT(A) DATED 16.12.2011 FOR A.Y. 2008-09, IN THE MATTER OF IMPOSITION OF PENALTY U/S 271 (1) (C) OF THE INCOME TAX ACT. I N THIS APPEAL THE ASSESSEE IS AGGRIEVED FOR THE ACTION OF CIT(A) FOR UPHOLDING THE PENALTY OF RS. 11,98,181/- IMPOSED BY THE AO U/S 271(1)(C) OF THE INCOME TAX ACT. LQUOKBZ DH RKJH[K@ DATE OF HEARING 13 - 01 - 2014 ?KKS'K.KK DH RKJH[K@ DATE OF PRONOUNCEMENT 22 - 01 - 2014 - 2 - 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. THE FACTS IN BRIEF ARE THAT SCRUTINY ASSESSMENT U/S 143(3) WAS C OMPLETED ON 29.12.2010 ASSESSING THE TOTAL INCOME AT RS. 55,39 ,810/-. IN ASSESSMENT, THE LD. AO HAS DISALLOWED SECURITY TRANSACTION TAX OF RS. 35,25,096/- AND PENALTY PROCEEDINGS WERE INITIATED U/S 271(1)(C) FO R WRONG CLAIM OF DEDUCTION. DURING THE COURSE OF PENALTY PROCEEDING S, THE APPELLANT SUBMITTED THAT IN VIEW OF THE TRU AND CORRECT DISCL OSURE OF FACTS OF REPORTING OF STT PAID IN THE PROFIT & LOSS ACCOUNT IT CANNOT BE ALLEGED THAT THERE WAS A CONCEALMENT OF PARTICLUARS OF INC OME. THE LD. AO HELD THAT AS PER THE PROVISIONS OF 40(A)(IB) OF THE ACT, ANY SUM PAID ON ACCOUNT OF SECURITIES TRANSACT UNDER CHAPTER VII OF THE FIN ANCE (NO. 2) ACT, 2004 IS NOT AN ALLOWABLE EXPENDITURE. THE LD. AO FURTHER HE LD THAT MERELY FOR THE REASON THT THE APPELLANT HAS OFFERED THE AMOUNT OF DISALLOWANCE DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THERE CANNOT BE ANY IMMUNITY IN RESPECT OF PENALTY PROCEEDINGS. ACCORDINGLY PENALTY OF RS. 11,98,181/- WAS IMPOSED BY AO WITH RESPECT TO SUCH DISALLOWANCE . 3. BY THE IMPUGNED ORDER CIT(A) UPHELD THE PENALTY AFTER HAVING THE FOLLOWING OBSERVATIONS:- IN THE INSTANT CASE THE APPELLANT MADE A CLAIM O F SECURITY TRANSACTION OF RS. 35,25,096/- KNOWING FULLY WELL THAT IT IS NOT A LLOWABLE AS IN THE EARLIER YEAR THE APPELLANT ITSELF HAD NOT CLAIMED THE SAME. THEREFORE, THE CLAIM WAS WHOLLY UNTENABLE IN LAW AND HAS ABSOLUTELY NO FOUND ATION ON WHICH IT COULD BE MADE, HOWEVER APPELLANT MADE A TRY IN THE HOPE T HAT IT RETURN WOULD NOT BE PICKED UP FOR SCRUTINY AND IT WOULD BE ASSESSED ON THE BASIS OF SELF ASSESSMENT UNDER SECTION 143(1) AND EVEN IF IT CASE IS SELECTED FOR SCRUTINY, IT - 3 - CAN GET AWAY MERELY BY PAYING THE TAX, WHICH IN ANY CASE, WAS PAYABLE BY IT. THAT IS EXACTLY WHAT THE APPELLANT HAS DONE, IN VIE W OF THE FOREGOING THE CASE LAW RELIED UPON BY THE APPELLANT ARE INAPPLICA BLE TO THE FACTS OF THE APPELLANT CASE AS IN THE CASE RELIANCE PETRO PRODUC T THE CLAIM WAS OF AN EXPENDITURE WHICH WAS ALLOWABLE UNDER THE NORMAL PR OVISIONS OF THE ACT BUT HERE IS A CASE WHERE THE CLAIM IS NOT SUSTAINABLE I N LAW IN VIEW OF SPECIFIC PROVISIONS OF 40(A)(IB) OF THE ACT. FURTHER IT IS A LSO A MATTER OF RECORD THAT THE APPELLANT HAS OFFERED THE AMOUNT OF DISALLOWANC E DURING THE COURSE OF ASSESSMENT PROCEEDINGS, SOLELY ON THIS GROUND THAT CANNOT BE ANY IMMUNITY IN RESPECT OF PENALTY PROCEEDINGS. IN VIEW OF THIS PENALTY LEVIED BY THE LD. AO IS ACCORDINGLY UPHELD AND APPEAL ON THIS GROUND IS DISMISSED. 4. AGAINST THE ABOVE ORDER OF CIT(A) THE ASSESSEE I S IN FURTHER APPEAL BEFORE THE TRIBUNAL. 5. WE HAVE CONSIDERED RIVAL CONTENTIONS AND HAVE CA REFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE HAVE AL SO DELIBERATED ON THE CASE LAWS AND JUDICIAL PRONOUNCEMENTS CITED BY LD. AR AND DR IN THE CONTEXT OF FACTUAL MATRIX OF THE INSTANT CASE. FROM THE RECORD WE FOUND THAT AO HAS LEVIED PENALTY WITH REFERENCT TO DISALL OWANCE OF SECURITY TRANSACTION TAX (STT) PAID BY THE ASSESSEE. WE FOUN D THAT ASSESSEE WAS ENGAGED IN THE BUSINESS OF TRADING IN SECURITY AND INVESTMENT IN PMS SCHEME. WITH RESPECT TO TURNOVER IN SECURITIES, THE ASSESSEE HAS PAID STT OF RS. 35,25,096/- WHICH WAS ALSO DEBITED IN THE P &L ACCOUNT. ASSESSEE HAD ALSO SEPARATELY DISCLOSED THE AMOUNT OF RS. 35 ,25,096 IN SCHEDULE 15 OF THE P&L ACCOUNT. THUS ASSESSEE HAS DISCLOSED TRU LY AND FULLY ALL MATERIAL FACTS WITH REGARD TO PAYMENT OF STT. DURI NG THE COURSE OF SCRUTINY ASSESSMENT, THE AO ASKED THE ASSESSEE TO E XPLAIN THE LIABILITY OF THESE EXPENSES. IN REPLY DATED 27.12.2010 I.E. ON T HE VERY FIRST OCCASION, - 4 - THE ASSESSEE HAD SATATED AND ACCEPTED THAT THROUGH OVERSIGHT THE STT WAS NOT ADDED BACK IN THE COMPUTATION OF INCOME, TH E MISTAKE OCCURRED BECAUSE THE STT WAS ALLOWABLE BY FINANCE ACT 2008, WHILE PREPARING RETURN OF INCOME. THE ASSESSEE WAS UNDER BONAFIDE B ELIEF THAT STT IS ALLOWABLE AND HENCE THE ASSESSEE HAD NOT DISALLOWED THE SAME WHILE COMPUTING TOTAL INCOME. THIS WAS A BONAFIDE ERROR A S STT IS ALLOWABLE FROM 1.04.2009 U/S 36. HOWEVER WHILE COMPLETING AS SESSMENT U/S 143(3) WHICH WAS COMPLETED ON 29.12.2011, THE AO DISALLOWE D THE STT OF RS. 35,25,096/- AND ALSO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C). AMENDMET BROUGHT IN THE PROVISIONS FOR NOT ALLOWING STT WAS APPROVED BY THE PRESIDENT ON 10 TH MAY 2008. THUS THERE WAS AN INADVERTENT MISTAKE WHICH WAS BONAFIDE IN VIEW OF THE AMNEDMENT BROUGHT ON THE STATUTE. BONAFIDE MISTAKE OF THE ASSESSEE IS HOWEVE R FORTIFIED BY THE FACT THAT ASSESSEE HAS DISALLOWED STT IN THE EARLIER YEA R. EXPENDITURE INCURRED ON ACCOUNT OF STT IS NOT IN DISPUTE, EVEN THE AO H AS NOT HELD THE SAME TO BE BOGUS. IN TERMS OF PROPOSITION LAID DOWN BY HON BLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS LTD. (322 ITR 1 58), INCORRECT CLAIMS DOES NOT AMOUNT TO FURNISHING OF INACCURATE PARTICU LARS OF INCOME. BY THE FIANCE ACT 2008, REBATE ON STT U/S 88E WAS WITHDRAW N FROM 1.04.2008. HOWEVER STT WAS ALLOWABLE AS DEDUCTION U/S 36 FROM 01.04.2009. THUS THE AMENDMENT TO SECTION 36 WAS MADE ON 01.04.2009. OTHERWISE THERE WAS NO REASON TO JUSTIFY THE ALLOWABILITY OF STT FR OM 01.04.2009. IN VIEW OF THESE AMENDMENT ALSO IT CAN BE INFERED THAT ALLO WANCE OF STT AS DEDUCTION IN ASSESSMENT YEAR 2008-09 WAS A DEBATABL E ISSUE WHICH DOES NOT WARRANT ANY PENALTY. - 5 - 6. IN VIEW OF ABOVE DISCUSSION, IT IS NOT A FIT CAS E FOR LEVY OF PENALTY PROCEEDINGS U/S 271 (1) (C). WE ORDER ACCORDINGLY. 7. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 22/01/2014 SD/- SD/- ( DR. S.T.M. PAVALAN ) (R.C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED 22 /01/2014 SKS SR. P.S COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, E BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI