ITO 2(1)(1), MUMBAI V. QUICKJET CARGO AIRLINES P.LTD, MUMBAI

ITA 7461/MUM/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3359 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-04-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 19-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H N SINGH
• Assessee Lawyers: NITESH JOHI
• Keywords: Depreciation; Business expenditure; Corroborative evidences; Revenue expenditure
• Section: 271(1)(c); 143(3)

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D, MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER AND ITA NO.7461/MUM/2016 ASSESSMENT YEAR-2009-10 ITO - 2(1)(1), 543, AAYAKAR BHAVAN, 5 TH FLOOR, M. K. ROAD, MUMBAI-400020 / VS. M/S QUICKEJT CARGO AIRLINE PVT. LTD. 7 TH FLOOR, LOKBHARATI COMPLEX, AFL HOUSE, MAROL MAROSHI ROAD, ANDERI (EAST), MUMBAI-400059 PAN NO. AAACA3497L ( / REVENUE) ( / ASSESSEE) / REVENUE BY SHRI H. N. SINGH CIT-DR / ASSESSEE BY SHRI NITESH JOHI / DATE OF HEARING : 05/02/2019 / DATE OF ORDER: 23/04/2019 / O R D E R PER SHAM IM YAHYA (ACCOUNTANT MEMBER) THIS APPEAL BY REVENUE IS DIRECTED AGAINST ORDER OF THE LD. CIT(A)-4, MUMBAI, DATED 06/09/2016 AND PERT AINS ITA NO.7461/MUM/2016 M/S QUICKJET CARGO AIRLINES PVT. LTD. 2 TO ASSESSMENT YEAR 2009-10. THE GROUND OF APPEAL RA ISED BY THE REVENUE IS AS UNDER:- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE PENALT Y WITHOUT APPRECIATING THAT THE ASSESSEE MADE AN INADMISSIBLE CLAIM OF EXPENSES INCURRED PRIOR TO SETTING UP OF BUSINESS A ND IS THEREFORE LIABLE FOR PENALTY U/S 271(1)(C) FOR FURNISHING UNA CCEPTABLE EXPLANATION AND ALSO FILING INACCURATE PARTICULARS OF INCOME. 2. THE BRIEF, FACTS OF THE CASE ARE THAT THE AO HAS LEVIED PENALTY ON THE GROUND THAT DURING THE COURSE OF ASS ESSMENT PROCEEDINGS, IT WAS FOUND THAT BUSINESS WAS NOT STA RTED BY THE ASSESSEE, BUT, VARIOUS EXPENSES WERE CLAIMED, W HICH WERE NOT ALLOWABLE. THE ASSESSEE IS SAID TO BE ENGA GED IN THE BUSINESS OF AIR TRANSPORT CARGO. THE COMPANY HA S OBTAINED NOC FROM THE MINISTRY OF CIVIL AVIATION ON 1 ST JANUARY, 2008 AND THEREAFTER, THE 2ND NOC WAS RECEI VED ON 24/04/2008. ACCORDING TO THE AO, THE CLAIM OF TH E ASSESSEE THAT ON 1 ST JANUARY, 2008 BUSINESS WAS SET UP, WAS NOT ACCEPTED BY THE AO ON THE GROUND THAT THE A IRCRAFT FOR CARGO AVIATION WAS ARRIVED IN INDIA ONLY ON 28/ 06/2008, HENCE, BUSINESS WAS SET UP ONLY ON THIS DATE, AND N OT BEFORE THAT DATE. THUS, BEFORE 28/06/2008, WHATEVER EXPENDITURE WERE THERE, THE AO HAS NOT ALLOWED EXPE NSES. THESE EXPENSES WERE OF EMPLOYEES' REMUNERATION AND ITA NO.7461/MUM/2016 M/S QUICKJET CARGO AIRLINES PVT. LTD. 3 BENEFITS, ADMINISTRATIVE EXPENSES, DEPRECIATION AND DIRECT OVERHEADS. ACCORDING TO THE ASSESSEE, THE EXPENSES THAT PRE-SET UP PERIOD WAS OF RS. 10,29,69,056/- WHEREAS POST SET UP EXPENSES WAS OF RS. 42,49,58,077/-. ACCORDIN G TO THE AO, THE ASSESSEE HAS NOT CARRIED OUT ANY BUSINE SS ACTIVITIES, BUT HAS RECEIVED INCOME FROM VARIOUS INVESTMENTS SHOWN IN PROFIT ARID LOSS ACCOUNT, HENC E, THE AC HAS DISALLOWED THE TOTAL EXPENSES OF RS. 10,29,6 9,056/- BEING PRE SET LIP EXPENSE AS THESE EXPENSES ARE INC URRED BEFORE THE CARGO ARRIVED IN INDIA. 3. AGAINST THE ASSESSMENT ORDER U/S. 143(3) DATED 23/12/2011 THE ASSESSEE HAS FILED THE APPEAL BEFORE THE C!T(A). HOWEVER, AFTER FILING OF APPEAL, THE ASSESS EE HAS WITHDRAWN THE APPEAL ON THE GROUND THAT BECAUSE OF CHANGE OF SHARE HOLDING PATTERN OF THE COMPANY, THE RE WAS NO BENEFIT OF CARRY FORWARD LOSSES. SINCE THE ASSES SEE HAS WITHDRAWN THE APPEAL, THE CIT(A) BY ORDER DATED 05/12/2012 HAS ALLOWED THE WITHDRAWAL AND FOR STATI STICAL PURPOSE, HAS DISMISSED THE APPEAL. THEREAFTER, NOTI CE WAS ISSUED BY AO FOR LEVY OF PENALTY. IN RESPONSE TO TH E NOTICE, THE ASSESSEE HAS SUBMITTED ITS REPLY BY LETTER DATE D ITA NO.7461/MUM/2016 M/S QUICKJET CARGO AIRLINES PVT. LTD. 4 25/01/2014. THE REPLY OF THE ASSESSEE HAS NOT BEEN ACCEPTED BY THE AO. ACCORDING TO THE AO, PRE SET UP OF BUSINESS EXPENSES COULD NOT BE ALLOWED. THE CLAIM O F THE ASSESSEE THAT BUSINESS WAS SET UP OR STARTED WITHOU T OBTAINING AIRCRAFT IS NOT ACCEPTABLE. FURTHER, THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS PVT. LTD. IS DISTINGUISHABLE. ACCORDING TO THE AO, WITHOUT CARGO AIRCRAFT, NO BUSINESS OF CARGO OPERAT ION COULD BE STARTED. ALTHOUGH THE ASSESSEE COMPANY HAD INITI ATED TO START SETTING UP OF THE CARGO AIRLINE BUSINESS, BUT THEIR OWN ADMISSION DUE TO RECESSIONARY TRENDS IN THE YEARS 2 008-09 AND 2009-10 THE LAUNCH OF BUSINESS WAS POSTPONED. S INCE THE BUSINESS WAS NOT STARTED AND AIR CARGO WAS TO B E RETURNED TO THE LESSER, RELATED EXPENDITURE AND DEP RECIATION OF AIRCRAFT EQUIPMENTS WAS WRONGLY CLAIMED BY THE ASSESSEE, HENCE, ACCORDING TO THE AO, THE ASSESSEE HAS WRONGLY CLAIMED THE EXPENDITURE, HENCE, LIABLE FOR PENALTY U/S. 271(1)(C) OF THE I.T. ACT. FURTHER, THE AO HAS DISCUSSED THE PROVISION OF LAW U/S. 271(1)(C) AND THEREAFTER, MAKING GENERAL REMARKS AND GENERAL ARGUMENTS, THE AO HAS L EVIED ITA NO.7461/MUM/2016 M/S QUICKJET CARGO AIRLINES PVT. LTD. 5 THE PENALTY OF RS. 3,50,00,000/- BY ORDER DATED 18/03/2014 U/S. 271(1) OF THE I.T. ACT, 1961. 4. UPON ASSESSEES APPEAL, LD. CIT(A) NOTED THAT TH E ASSESSEES SUBMISSION AS UNDER:- AGAINST THE LEVY OF PENALTY, THE APPELLANT HAS FIL ED THIS APPEAL. IT IS CONTENDED THAT THE LD. A0 HAS LEVIED THE PENALTY WITHOUT APPRECIATING THE FACTS OF THE CASE AND WITHOUT APPRECIATI9G THE LEGAL PROPOSITIONS OVER SUCH ISSUE . THE ASSESSEE COMPANY WAS INCORPORATED ON 16/05/1978. AFTER FEW YEARS, THE AP PELLANT HAS CARRIED CONSULTANCY IN CIVIL AVIATION FIELD. SUBSEQUENTLY ON 12.02.2007, HAS APP LIED TO THE MINISTRY OF CIVIL AVIATION FOR GRANTING NOC TO OPERATE NON-SCHEDULE AIR TRANSPORT SERVICES (CARGO), DOMESTIC AND INTERNATIONAL. NOC WAS GRANTED ON 1ST JANUARY, 2008 FOR AIR TRANSPORT CARGO OPERATION. EFFECTIVELY FROM THIS DATE ONWARDS, THE APPELLANT H AS THE RIGHT TOO OPERATE AS A CARGO TRANSPORTER. FOR THIS BUSINESS, APPELLANT WAS TO HA VE ITS OWN AIRCRAFT. FOR DOING SUCH BUSINESS, APPELLANT HAS RECRUITED THE EMPLOYEES AND HAS PARTED WITH TRAINING IN AVIATION. FURTHER, MATTER RELATED TO FINALISATION OF MAINTEN ANCE AGREEMENT, PREPARATION FOR APPROVALS OF MANUALS AND OTHER MANAGERIAL WORKS WERE DONE AND , ACCORDINGLY, ALL THE RELEVANT EXPENSES WERE CLAIMED IN F.Y. 2008-09 AS REGULAR EX PENSES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS OR DETAILED SUBMISSION WITH SUPPORTING EVIDENCES WERE GIVEN TO THE ASO ON 23/11/2011. FURTHER, COMPLIANCE WAS MADE BY LETTER DATED 10/12/2011. THE CONTENTION OF THE LD. A0 THAT BUSINESS WAS STARTED ONLY AFTER ARRIVAL OF AIRCRAFT IS WRONG. BUSINESS WAS STARTED MUCH EARLIER THAN ARRIVAL OF A IRCRAFT, HOWEVER, ALTERNATE ARGUMENTS WERE ALSO SUBMITTED TO THE AO THAT IF PRE - ARRIVAL OF AIRCRAFT, EXPENSES ARE TO BE DISALLOWED; THEN, INCOME PERTAINING TO THE SAME PERIOD SHOULD G O TO REDUCE THE COST OF SETTING UP OF BUSINESS. A DETAILED WORKING WAS GIVEN TO THE AO BU T, THE AO HAS NOT CONSIDERED THE SAME. IT IS FURTHER ARGUED BY THE AR THAT THE ISD.A 0 HAS ACCEPTED THE GENUINENESS OF THE EXPENDITURE, BUT, HAS DISALLOWED ONLY ON THE GROUND THAT THESE EXPENSES WERE INCURRED PRIOR TO ARRIVAL OF CARGO, THUS, THE ID.A0 HAS ACCE PTED THE FACT THAT THERE IS NO CONCEALMENT OF ANY INCOME OR FURNISHING OF INACCURATE PARTICULA RS OF INCOME. THUS, IT IS ARGUED THAT NO PENALTY CAN BE LEVIED MERELY FOR DISALLOWANCE OF SO ME EXPENDITURE, WHICH IS NOT FOUND INGENUINE ONE. 3.3 IN SUPPORT OF ITS CONTENTION, THE AR HAS RELIED UPON THE FOLLOWING CASE LAWS:- 1) WESTERN INDIA VEGETABLE PRODUCTS LTD. V. CIT 26 ITR 151 (BORN). 2) CI T V.ESPN SOFTWARE INDIA (P) LTD. 301 ITR 368 DELHI HIGH COURT . 3) CIT V. RELIANCE PETROPRODUCTS PVT. LTD. 322 ITR 158 4) CIT V. NALIN P. SHAH ITA NO. 48 3013 (BORN) FURTHER IN PAPER BOOK TWO, THE ASSESSEE HAS SUBMITT ED THE STATEMENT OF PROFILE OF TECHNICAL STAFF, DETAILS OF PILOT TRAINING EXPENSES AND TRAIN ING OF ITS STAFF MEMBERS. THUS, IT IS ARGUED THAT THE ID.A0 HAS WRONGLY LEVIED PENALTY WITHOUT A NY VALID REASON. THE WITHDRAWAL OF APPEAL CANNOT BE A GROUND FOR LEVY OF PENALTY AS THE ASSES SEE HAS NOT FURNISHED INACCURATE ITA NO.7461/MUM/2016 M/S QUICKJET CARGO AIRLINES PVT. LTD. 6 PARTICULARS OF INCOME. THEREFORE, IT IS REQUESTED T HAT PENALTY SO LEVIED OF RS. 3.50.00,000/- MAY BE DELETED. 5. THE LD. CIT(A) ACCEPTED THE ASSESSEES SUBMISSIO NS AND DELETED THE PENALTY HOLDING AS UNDER:- 3.4. I HAVE CIRCUMSPECTED THE SPECTRUM OF FACTS AN D CIRCUMSTANCES OF THE CASE AND HAVE CAREFULLY CONSIDERED THE FINDING IN THE ASSESS MENT ORDER, PENALTY ORDER AND RIVAL SUBMISSION OF THE APPELLANT. I FIND THAT THE ID. AO HAS LEVIED THE PENALTY MERELY ON THE GROUND THAT EXPENDITURE INCURRED PRIOR TO ARRIVAL O F AIR CARGO HAS NOT BEEN ALLOWED BY THE AO WHO HAS PASSED THE ASSESSMENT ORDER, AND THE ASS ESSEE HAS WITHDRAWN THE APPEAL FILED AGAINST THE ASSESSMENT ORDER. THUS, IT IS VER Y OBVIOUS THAT THE AO HAS NOT LEVIED THE PENALTY FOR CONCEALMENT OF ANY TAXABLE INCOME O R FOR FURNISHING INACCURATE INCOME. THE LD. A0 HAS LEVIED THE PENALTY MERELY FOR DISAL LOWANCE OF EXPENDITURE CLAIMED TO BE BEFORE ARRIVAL OF AIR CARGO. IT IS VERY EVIDENT THE LD. A0 HAS LEVIED THE PENALTY MERELY FOR DISALLOWANCE OF EXPENDITURE. THE APPROACH OF THE AC FOR LEVY OF PENALTY IS NOT WORTH APPROVABLE. IT CAN BE SEEN FROM THE FACTS OF THE CA SE THAT THE COMPANY WAS INCORPORATED IN 1978 AND A FEW YEARS BACK IT HAS CARRIED OUT CON SULTANCY IN THE AVIATION FIELD. IT HAS MADE APPLICATION DATED 12.02.2007 TO THE MINISTRY O F CIVIL AVIATION FOR NON SCHEDULE AIR TRANSPORT CARGO OPERATION. IT MEANS ON OR BEFORE 1S T JANUARY, 2005, THE ASSESSEE WAS IN THE PROCESS OF DOING BUSINESS OF AIR CARGO OPERATIO N, HENCE, SUCH EXPENSES PRIOR TO ARRIVAL OF AIR CARGO CAN DEFINITELY BE RELATED TO T HE BUSINESS EXPENDITURE. IF SUCH EXPENDITURE IS NOT TO BE ALLOWED ON THE GROUND THAT OPERATION WAS NOT STARTED TILL ARRIVAL OF AIR CARGO, IN THAT SITUATION, SUCH EXPENSES COUL D BE CAPITALISED. BUT, THAT DOES NOT MEAN THAT THERE IS A FURNISHING OF INACCURATE PARTI CULARS OF INCOME. THUS, COMMENCEMENT OF BUSINESS IN THIS YEAR IS VERY MUCH VISIBLE AND WHEN BUSINESS IS COMMENCED, EXPENDITURE IS ALLOWABLE, IF SAME ARE GE NUINE ONE VIDE: WESTERN INDIA VEGETABLE PRODUCTS LTD. VS. CIT 1954 26 ITR 151 (BO M). IF BUSINESS RELATED PROCESS IS STARTED, IT CANNOT BE SAID THAT THE BUSINESS HAS BE EN COMMENCED LATER ON WHEN CEMENT PLANT IS ESTABLISHED AS HELD IN THE CASE OF CIT VS. SAURASHTRA CEMENT AND CHEMICAL INDUSTRIES LTD. 91 ITR ITO (GUJ). HERE IN THIS CASE, IT IS VERY EVIDENT FROM THE FACT S ON RECORD THAT THE ASSESSEE HAS SHOWN DIRECT OVERHEAD EXPENSES, EMPLOYEES' REMUNERATION A ND BENEFIT EXPENSES, ADMINISTRATIVE EXPENSES AND DEPRECIATION AND AMORTI SATION TOTALLING TO RS. 52,79,27,122!-. THE GENUINENESS OF THE EXPENDITURE HAS NOT BEEN DOUBTED BY THE AO. FURTHER, THE APPELLANT HAS FILED STATEMENT OF PROFI LE OF TECHNICAL STAFF EMPLOYED AND DETAILS OF TRAINING EXPENSES OF PILOTS AND STAFF. T HE AO HAS ACCEPTED THE GENUINENESS OF THE EXPENDITURE BUT, HAS DISALLOWED MERELY ON THE G ROUND THAT THESE EXPENSES WERE INCURRED PRIOR TO ARRIVAL OF AIR CARGO. OBVIOUSLY, BEFORE ARRIVAL OF AIR CARGO, THE ASSESSEE HAS TO INCUR SO MANY EXPENSES, WHICH WAS NECESSARY FOR OPERATION OF THE BUSINESS, WHICH IS NORMAL REQUIREMENT OF BUSINESS. HENCE, MER ELY FOR DISALLOWANCE OF SUCH EXPENSES, NO PENALTY COULD BE LEVIED. THE APPELLANT HAS DISCLOSED ALL THE MATERIAL FACTS AND NONE OF THE EXPENSES HAS BEEN FOUND INGENUINE, FALSE OR BOGUS ONE, HENCE, NO ITA NO.7461/MUM/2016 M/S QUICKJET CARGO AIRLINES PVT. LTD. 7 PENALTY COULD BE LEVIED AS HELD BY THE HON'BLE BOMB AY HIGH COURT IN THE CASE OF CIT-14, MUMBAI VS. NAHIN P. SHAH, HUF ITA NO. 51 OF 2013 DA TED 04.03.2013. RELIANCE MAY ALSO BE PLACED IN THE CASE OF CIT VAS. RELIANCE PET ROPRODUCTS PVT. LTD. (2010) 322 ITR 158 (SC). THE NECESSARY ELEMENT'S FOR ATTRACTING EX PLANATION 1 TO SEC. 271(1)(C) ARE THERE-FOLD: (A) THE PERSON FAILS TO OFFER THE EXPLA NATION: OR (B) HE OFFERS THE EXPLANATION WHICH IS FOUND BY THE AUTHORITIES TO BE FALSE, OR ( C) THE PERSON OFFERS EXPLANATION WHICH HE IS NOT ABLE TO SUBSTANTIATE AND FAILS TO PROVE T HAT SUCH EXPLANATION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME HAVE BEEN D ISCLOSED BY HIM. ASSTT.CIT V. VIP INDUSTRIES LTD. (2009) 122 TTJ (MUM) 289, 295. IN T HIS CASE, NONE OF THE ABOVE ELEMENT IS VISIBLE, HENCE, SUCH PENALTY IS NOT LEVIABLE. TH E AO IS, THEREFORE, DIRECTED TO DELETE THE PENALTY OF RS, 3,50,00000/- LEVIED U/S. 271(1)(C) O F THE I.T. ACT. 6. AGAINST THE ABOVE ORDER, THE REVENUE IS IN APPEA L BEFORE US. 7. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. THE LD. DR SUBMITTED THAT THE ASSESSEE HAS CLAIMED REVENUE EXPENDITURE WITHOUT COMMENCEMENT OF ANY BUSINESS. HENCE, HE SUBMITTED THAT ASSESSEE HAS BEEN GUILTY OF CONCEALMENT AND FURNISHING OF INACCURATE PARTICULARS OF INCOME. HE CLAIMED THAT WITHOUT OBTA INING ANY AIRCRAFT, THE ASSESSEE IS CLAIMING THE COMMENCE MENT OF BUSINESS OF AIR CARGO. HENCE, THE LD. DR PLEADED TH AT THE AO HAS CORRECTLY LEVIED PENALTY U/S 271(1)(C) OF TH E ACT. IN THIS REGARD, HE PLACED RELIANCE UPON THE ORDER OF T HE ASSESSING OFFICER. 8. PER CONTRA, LD. COUNSEL FOR THE ASSESSEE SUBMITT ED THAT ASSESSEE HAS REGARDED THAT BUSINESS HAS BEEN S ET UPON ON 1 ST JANUARY, 2008 PURSUANT TO THE GOVERNMENT OF ITA NO.7461/MUM/2016 M/S QUICKJET CARGO AIRLINES PVT. LTD. 8 INDIA APPROVAL OF THIS PROPOSAL FOR GRANT OF INITIA L NOC TO OPERATE SCHEDULED AIR TRANSPORT CARGO SERVICE. THE LD. COUNSEL FOR THE ASSESSEE STATED THAT PURSUANT TO TH IS APPROVAL FROM THE GOVERNMENT, THE ASSESSEE HAS PROC EEDED TO COMMENCE ITS BUSINESS. FOR THIS PURPOSE, IT EMPL OYED TECHNICAL AND ADMINISTRATIVE STAFFS. IT WAS ALSO OP EN TO THE ASSESSEE TO CARRY ON THE BUSINESS BY LEASING AIRCRA FT FROM OTHER CONCERNS. HE SUBMITTED THAT IT WAS DURING THE COURSE OF BUSINESS THAT THE ASSESSEE HAS OPTED TO PURCHASE AIRCRAFT SUBSEQUENTLY. HE SUBMITTED THAT IT CANNOT BE SAID THAT ASSESSEE HAS COMMENCED BUSINESS ONLY AFTER PURC HASE OF AIRCRAFT. LD. COUNSEL, IN THIS REGARD, PLACED RE LIANCE UPON CASE LAWS FROM WESTERN INDIA VEGETABLE PRODUCTS LTD . VS CIT (26 ITR 151)(BOM.) AND CIT VS SAURASHTRA CEMEN T AND CHEMICAL INDUSTRIES LTD. (GUJ.) FOR THE PROPOSITION THAT ASSESSEES CONSIDERATION OF COMMENCEMENT OF BUSINES S AFTER OBTAINING APPROVAL FROM THE GOVERNMENT IS BON A-FIDE. IN THIS REGARD, THE LD. COUNSEL HAS FURTHER REFER T O DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS E SPN SOFTWARE INDIA (PVT.) LTD. 301 ITR 368 (DEL.) FOR T HE PROPOSITION THAT OBTAINING OF LICENSE TO CARRY ON B USINESS ITA NO.7461/MUM/2016 M/S QUICKJET CARGO AIRLINES PVT. LTD. 9 MAY BE TAKEN AS DATE OF SET UP OF BUSINESS. THE LD . COUNSEL SUBMITTED THAT THE ASSESSEE CONDUCT WAS BON A- FIDE. THERE IS NO CASE OF BOOKING OF ANY BOGUS EXP ENDITURE OR ANY CONCEALMENT OF INCOME. HE RELIED UPON THE DE CISION OF HONBLE SUPREME COURT IN THE CASE OF RELIANCE PE TRO PRODUCTS. ACCORDINGLY, HE PLEADED THAT ORDER OF THE LD. CIT(A) SHOULD BE UPHELD. 9. UPON CAREFUL CONSIDERATION, WE FIND THAT THE ISSUE IN THE INCOME TAX APPEAL IS THE DATE OF COMMENCEMENT OF BUSINESS AND AS A CONSEQUENCE THE BOOKING OF EXPENDITURE IN CAPITAL OR REVENUE. AS PE R ASSESSEE, FOR THE SET UP OR COMMENCEMENT OF BUSINES S, OBTAINING NOC TO ITS APPLICATION FROM THE MINISTRY OF CIVIL AVIATION IS TO BE CONSIDERED AS DATE OF COMMENCEMEN T OF BUSINESS. HENCE, IT IS ASSESSEES CLAIM THAT EXPEN DITURE SUBSEQUENT TO THE DATE IS REVENUE EXPENDITURE. ASSE SSEE CLAIMED THAT PURSUANT TO THIS APPROVAL, IT HAS PROC EEDED TO CARRY ON VARIOUS ACTIVITIES FOR ITS BUSINESS WHICH INCLUDED EMPLOYING TECHNICAL AND ADMINISTRATIVE STAFF. IT IS ALSO CLAIMED THAT ASSESSEE COULD ALSO HAVE LEASED AIRCRA FT BUT IT OPTED TO PURCHASE AIRCRAFT SUBSEQUENTLY. HENCE, IT IS THE ITA NO.7461/MUM/2016 M/S QUICKJET CARGO AIRLINES PVT. LTD. 10 ASSESSEES CLAIM THAT DATE OF PURCHASE OF AIRCRAFT CANNOT BE TREATED AS DATE OF COMMENCEMENT OF BUSINESS. IN THI S REGARD, WE NOTE THAT LD. COUNSEL FOR THE ASSESSEE H AS REFERRED TO SEVERAL CASE LAWS FOR THE PROPOSITION T HAT ASSESSEE CONDUCT OF CONSIDERING THE APPROVAL BY THE MINISTRY OF CIVIL AVIATION OF ITS APPLICATION TO BE THE DATE OF COMMENCEMENT OF BUSINESS CANNOT BE SAID TO BE NOT B ONA- FIDE. WE FURTHER NOTE THAT IT IS NOT THE CASE THAT THE EXPENDITURE HAVE BEEN FOUND TO BE BOGUS, THE ONLY D ISPUTE IS THE DATE OF COMMENCEMENT OF BUSINESS. ADMITTEDL Y, ON THE TOUCH STONE OF FACTS OF THE CASE AND THE CASE L AWS CITED ABOVE, IT CANNOT BE SAID THAT ASSESSEES CONDUCT WA S NOT BONA-FIDE. HENCE, IN OUR CONSIDERED OPINION THAT AS SESSEE SHOULD NOT BE VISITED WITH THE RIGOROUS OF PENALTY U/S 271(1)(C) OF THE ACT. 10. IN THIS REGARD, WE FIND THAT RELIANCE PLACED U PON HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCT IS QUITE GERMANE ON THE FACTS OF THE CASE. IN THE SAID DECISION, IT WAS HELD THAT JUST BECAUSE CLAIM OF THE ASSESSEE IS DISALLOWED, IT CANNOT AUTOMATICALLY LEA D TO LEVY OF PENALTY FOR CONCEALMENT OF INCOME OR FURNISHING OF ITA NO.7461/MUM/2016 M/S QUICKJET CARGO AIRLINES PVT. LTD. 11 INACCURATE PARTICULARS OF INCOME. IN THE PRESENT CA SE, IN OUR CONSIDERED OPINION, ON THE FACTS AND CIRCUMSTAN CES OF THE CASE, THE LD. CIT(A) HAS PASSED A REASONABLE OR DER AND IT DOES NOT NEED INTERFERENCE BY ANY OF OUR PART. ACCORDINGLY, WE UPHOLD THE SAME. 11. IN THE RESULT, REVENUES APPEAL STANDS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 23/04/2019. SD/- SD/- (AMARJIT SINGH) (SHAMIM YAHYA) ! / JUDICIAL MEMBER ! / ACCOUNTANT MEMBER MUMBAI; DATED : 23/04/2019 F{X~{T? P.S/. .. # $%&'&($ / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT (RESPECTIVE ASSESSEE) 2. '#$ ! / THE RESPONDENT. 3. %$ %$ & ( ) / THE CIT, MUMBAI. 4. %$ %$ & / CIT(A)- , MUMBAI, 5. )*+$ ' , , %$ $ , . , / DR, ITAT, MUMBAI 6. + / / GUARD FILE. / BY ORDER, #$) ' //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI