TELENT INFOWAY LTD, MUMBAI V. DCIT CC 46, MUMBAI

ITA 7478/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0436 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 25-04-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 15-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T A KHAN
• Keywords: Document seized; Accommodation entries; Documents seized
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC, MUMBAI BEFORE SHRI B R BASKARAN, ACCOUNTANT MEMBER ITA NOS.7477 & 7478/MUM/2014 ASSESSMENT YEARS : 2007-08 & 2008-09 TA LENT INFOWAY LTD BLOCK H, SHRI SADASHIV CHS LTD., 6 TH ROAD, SANTACRUZ (E) MUMBAI 400 055 PAN AACCT9444L VS. DCIT CC 46 MUMBAI (APPELLANT) RESPONDENT) APPELLANT BY : SHRI MUKESH CHOKSHI RESPONDENT BY : SHRI T A KHAN DATE OF HEARING : 19 .0 6 .201 7 DATE OF PRONOUNCEMENT : 19 .0 6 . 201 7 O R D E R THESE APPEALS FILED BY THE ASSESSEE ARE DIRECTED A GAINST THE ORDERS DATED 31.10.2014 PASSED BY THE CIT(A)- 38, MUMBAI, AND TH EY RELATE TO ASSESSMENT YEARS 2007-08 AND 2008-09. PENALTY LEVIED BY THE ASSESSI NG OFFICER U/S. 271(1)(C) OF THE ACT, HAVING BEEN CONFIRMED BY THE CIT(A), THE ASSES SEE HAS FILED THESE APPEALS BEFORE THIS TRIBUNAL. 2. AT THE TIME OF HEARING, THE LEARNED AR SUBMITTED THAT PENALTY APPEAL RELATING TO A.Y. 2007-08 HAS ALREADY BEEN DISPOSED OF BY THE CO-ORDINATE BENCH OF THIS TRIBUNAL. HE SUBMITTED THAT THE PRESENT APPEAL NO. 7477/MUM/2014 MIGHT HAVE BEEN FILED FOR THE SECOND TIME. ACCORDINGLY, HE SO UGHT PERMISSION OF THE BENCH TO WITHDRAW THE SAME. HE ALSO MADE NECESSARY ENDORSEME NT IN THE ORDER SHEET TO THIS EFFECT. ITA NO7477 & 7478./MUM/2014 TALENT INFOWAY LTD. 2 3. THE LEARNED DR DID NOT OBJECT TO THE REQUEST OF THE AR. IN VIEW OF THE SAME, I ALLOW THE ASSESSEE TO WITHDRAW ITS APPEAL. 4. NOW I SHALL TAKE UP THE APPEAL FILED BY THE ASSE SSEE FOR A.Y. 2008-09. THE ASSESSEE HAS CONTESTED THE DECISION OF THE LEARNED CIT(A) IN CONFIRMING THE PENALTY OF ` .15,21,000/- LEVIED BY THE ASSESSING OFFICER U/S. 2 71(1)(C) OF THE ACT. 5. I HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE WAS SUBJECTED TO SEARCH OPERATIONS AND IT WAS FOUND THAT IT IS INVOL VED IN THE BUSINESS OF LAUNDERING OF BLACK MONEY FOR CONVERTING THE SAME INTO WHITE B Y PROVIDING BOGUS SHARE TRADING ENTRIES. THE ASSESSING OFFICER ESTIMATED THE INCOM E OF THE ASSESSEE @2% OF THE TURNOVER AND, THEREAFTER, LEVIED A PENALTY THEREON. 6. THE ASSESSEE CHALLENGED THE ADDITION MADE BY THE ASSESSING OFFICER IN THE QUANTUM PROCEEDINGS BY FILING APPEAL BEFORE THE CIT (A) AND LATER BEFORE THE ITAT. THE TRIBUNAL REDUCED THE RATE OF COMMISSION TO 0.15 %. ACCORDINGLY, IN THE APPEAL FILED BEFORE THE LEARNED CIT(A) AGAINST THE PENALTY ORDER, THE ASSESSEE CONTENDED THAT NO PENALTY IS LEVIABLE, SINCE THE INCOME OF T HE ASSESSEE HAS BEEN ESTIMATED. THE LEARNED CIT(A) DID NOT AGREE WITH THE CONTENTIO N OF THE ASSESSEE AND, ACCORDINGLY, DISMISSED THE APPEAL BY THE ASSESSEE. 7. THE LEARNED AR SUBMITTED THAT AN IDENTICAL ISSUE CAME BEFORE THE CO- ORDINATE DIVISION BENCHES OF MUMBAI IN THE GROUP CO NCERNS OF THE ASSESSEE VIZ. M/S. MIHIR AGENCIES PVT. LTD. IN ITA NO. 695/MUM/2015, A ND THE PENALTY WAS DELETED BY THE TRIBUNAL FOLLOWING THE DECISION RENDERED BY THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF DURGA KAMAL RICE MILLS 265 ITR 25. ACC ORDINGLY, HE PLEADED THAT THE PENALTY LEVIED IN THIS CASE MAY BE KINDLY DELETED. ITA NO7477 & 7478./MUM/2014 TALENT INFOWAY LTD. 3 8. ON THE CONTRARY, THE LEARNED DR PLACED STRONG RE LIANCE ON THE ORDER PASSED BY THE LEARNED CIT(A). 9. I NOTICE THAT IDENTICAL ISSUE CAME UP FOR CONSID ERATION OF CO-ORDINATE DIVISION BENCH IN THE CASE OF MIHIR AGENCIES PVT. LTD. (SUPR A), AND THE DIVISION BENCH HAS DELETED THE PENALTY LEVIED U/S. 271(1)(C) ON IDENT ICAL SET OF FACTS BY MAKING THE FOLLOWING OBSERVATIONS: 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PRODUCE THE MATERIAL BEFORE US. WE FIND THAT CASE UNDER CONSIDERATION AN ACTION U/S. 132 OF THE ACT WAS CARRIED OUT COVERING ALL GROUP ENTITIES INCLUDI NG THE ASSESSEE UNDER CONSIDERATION, THAT IT WAS FOUND GROUP CONCERNS WER E ENGAGED IN PROVIDING ACCOMMODATION BILLS/HAWALA ENTRIES THAT T HE ASSESSEE DID NOT DISPUTE THE SAID FACT, THAT THE AO ESTIMATED THE IN COME FROM THE ACCOMMODATION ENTRIES @ 2% OF THE TOTAL TRANSACTION S APPEARING IN THE BANK ACCOUNTS OF THE ASSESSEE, THAT THE THEN FAA CO NFIRMED THE QUANTUM ADDITION MADE BY THE AO, THAT IN THE CASE UNDER CON SIDERATION THE TRIBUNAL HAD HELD THAT COMMISSION INCOME SHOULD BE TAKEN AT THE RATE OF 0.15% (ITA /6435/MUM/2012 -AY-2004-05 AND OTHER SIX APPEALS DT.6.1.16). THE UNDISPUTED FACT IS THAT THERE IS D IFFERENCE OF OPINION AS TO HOW MUCH INCOME SHOULD BE ESTIMATED FOR THE HAWALA ENTRIES-THE AO ESTIMATED AT A PARTICULAR PERCENTAGE, WHEREAS THE A SSESSEE HAD SHOWN THE INCOME AT A DIFFERENT PERCENT. THE ADDITION MAD E BY THE AO AND CONFIRMED BY THE FAA IN QUANTUM ADDITION MAY OR MAY NOT BE. BUT, LEVYING PENALTY ON THE BASIS OF AN ESTIMATED ADDITI ON COULD NOT BE HELD TO BE JUSTIFIED. NO AUTHORITY IS REQUIRED TO BE CITED THAT PENALTY AND ASSESSMENT PROCEEDINGS ARE SEPARATE AND DISTINCT PR OCEEDINGS AND THE QUANTUM PROCEEDINGS SHOULD NOT RESULT IN AUTOMATIC LEVY OF CONCEALMENT PENALTY. IT IS A CASE OF ESTIMATION OF INCOME BY TH E AO AND THE ASSESSEE. HERE WE WOULD LIKE TO DISCUSS TWO CASES. ONE OF THE M IS AERO TRADERS P. LTD.(322 ITR 316). IN THAT CASE THE ASSESSEE-COMPAN Y HAD FILED ITS RETURN OF INCOME FOR THE YEAR 1997-98 ON A NOTICE U /S.148 OF THE ACT, 1961 DECLARING A LOSS OF RS. 83, 64, 468/-.THE ASSE SSEE HAD, IN THE RETURN ATTACHED A NOTE STATING THAT IT WAS IMPOSSIBLE FOR IT TO SUBSTANTIATE ITS CLAIM OF LOSS BY WAY OF ANY EVIDENCE AS THE RELEVAN T RECORDS WERE SEIZED AND WERE WITH THE POLICE AUTHORITIES. THE AO AFTER BEING UNABLE TO OBTAIN COPIES OF THE SEIZED DOCUMENTS, BASED HIS ASSESSMEN T ORDER ON THE LIMITED DOCUMENTS PROVIDED AND REJECTED THE BOOK RE SULTS DECLARED BY THE ASSESSEE. HE ESTIMATED THE INCOME OF THE ASSESSEE A T RS.61,00,000/-.HE ALSO INITIATED PENALTY PROCEEDINGS SEPARATELY. THE FAA ESTIMATED THE TOTAL INCOME OF THE ASSESSEE AT RS. 1,02,980/-. THE TRIB UNAL CONFIRMED THIS ORDER. THE AO OBSERVED THAT THE PROFIT WAS ESTIMATE D AFTER REJECTION OF BOOKS OF ACCOUNT DUE TO CERTAIN DISCREPANCIES AND I MPOSED A PENALTY ON ITA NO7477 & 7478./MUM/2014 TALENT INFOWAY LTD. 4 THE ASSESSEE OF RS. 36,41,003/-, ON THE GROUND THAT IT WAS A CLEAR CASE OF FURNISHING INACCURATE PARTICULARS OF INCOME. THE FA A DELETED THE PENALTY HOLDING THAT THE ADDITION MADE BY THE AO ON THE BAS IS OF ESTIMATED PROFIT COULD NOT BE A SUBJECT-MATTER OF PENALTY FOR CONCEA LMENT OF INCOME. THE TRIBUNAL CONFIRMED THIS ORDER. ON APPEAL, THE AO DI SMISSED THE APPEAL AND HELD THAT THE FINDING ARRIVED AT BY THE TRIBUNA L DID NOT WARRANT INTERFERENCE AS IT WAS PURELY A FINDING OF FACT. IN THE CASE OF DURGA KAMAL RICE MILLS (265 ITR 25) THE HON'BLE CALCUTTA HIGH C OURT HAS HELD AS UNDER: ' WHEN TWO VIEWS ARE POSSIBLE AND WHEN NO CLEAR AND DEFINITE INFERENCE CAN BE DRAWN, IN A PENALTY PROCEEDING, PE NALTY CANNOT BE IMPOSED.......IN QUANTUM PROCEEDINGS, A PARTICULAR PROVISION MIGHT BE ATTRACTED FOR ADDITION TO THE INCOME OF THE ASSE SSEE. BUT WHEN IT COMES TO THE QUESTION OF IMPOSITION OF PENALTY, THE N INDEPENDENT OF THE FINDING ARRIVED AT IN THE QUANTUM PROCEEDINGS, THE AUTHORITY HAS TO FIND CONCLUSIVELY THAT THE ASSESSEE OWNS THE CON CEALED AMOUNT. ' CONSIDERING THE FACT THAT TRIBUNAL HAS ADOPTED A PA RTICULAR RATE FOR ESTIMATING THE INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATIONS HOLD THAT THE FAA WAS NOT JUSTIFIED IN CONFIRMING T HE ORDER PASSED BY THE AO U/S. 271(1)(C) OF THE ACT. THEREFORE, REVERSING HIS ORDER, WE DECIDE THE EFFECTIVE GROUND OF APPEAL IN FAVOUR OF THE ASS ESSEE. ) THE FACTS AND CIRCUMSTANCES SURROUNDING THE ADDITIO N, ON WHICH PENALTY WAS LEVIED, BEING IDENTICAL IN NATURE, FOLLOWING THE DECISION O F THE DIVISION BENCH IN THE ABOVE CASE, THE ORDER PASSED BY THE LEARNED CIT(A) IS SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO DELETE THE IMPUGNED PENALTY. 10. IN THE RESULT, THE APPEAL FOR A.Y. 2007-08 IS D ISMISSED AS WITHDRAWN AND THE APPEAL FOR A.Y. 2008-09 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 1 9 TH JUNE 2017 SD/- (B R BASKARAN) ACCOUNTANT MEMBER MUMBAI, DATED : 19 TH JUNE, 2017. SA ITA NO7477 & 7478./MUM/2014 TALENT INFOWAY LTD. 5 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE C I T(A), MUMBAI. 4. THE C I T 5. THE DR, SMC BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, MUMBAI