DOSANI PROPERTIES LIMITED, MUMBAI V. DCIT-3(3), MUMBAI

ITA 7524/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 5876 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 01-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A H ANSARI
• Keywords: Business income; Initiation of penalty proceedings; Wrong claim; Corroborative evidences
• Section: 271(1)(c); 274

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA NO. 7524/MUM/2018 ASSESSMENT YEAR : 2010-11 M/S. DOSANI PROPERTIES LTD., 97/99, 9 TH FLOOR, MAKER TOWER, F WING, CUFFE PARADE, MUMBAI 400005. / VS. DY. CIT 3(3) MUMBAI. ./ ./ PAN/GIR NO. : AALCS0108B ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI GAURAV KABRA / RESPONDENT BY : SHRI A.H. ANSARI / DATE OF HEARING 20.01.2020 !'# / DATE OF PRONOUNCEMENT 05 .02.2020 / O R D E R PER SHRI SAKTIJIT DEY, JAM: AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE CHALLENGING THE ORDER DATED 22.05.2018 PASSED BY TH E LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 10, MUMBAI, CONFIRMING THE PENALTY IMPOSED UNDER SECTIO N 271(1)(C) OF THE ACT FOR AN AMOUNT OF RS. 4,53,389/ -. ITA NO . 7525/MUM/2018 M.M. DOSANI PROPERTIES LTD., MUMBAI. - 2 - 2. BRIEFLY THE FACTS ARE, THE ASSESSEE, A RESIDENT COMPANY, IS ENGAGED IN THE BUSINESS OF PROVIDING BUSINESS SU PPORT SERVICES, INVESTMENTS IN SHARES AND SECURITIES AND SHARE TRADING. FOR THE ASSESSMENT YEAR UNDER DISPUTE, TH E ASSESSEE FILED ITS RETURN OF INCOME ON 15.10.2010 D ECLARING LOSS OF RS. 39,34,508/-. DURING THE ASSESSMENT PRO CEEDING THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS DEBITED AN AMOUNT OF RS. 8,76,706/- TO THE PROFIT AND LOSS ACCOUNT TOWARDS EXPENDITURE INCURRED FOR PROMOTION AND ADVERTISEMENT. NOTICING THE ABOVE, THE ASSESSING O FFICER CALLED UPON THE ASSESSEE TO PROVE THE GENUINENESS O F SUCH EXPENDITURE THROUGH SUPPORTING EVIDENCES. THOUGH, THE ASSESSEE FURNISHED THE BREAK-UP OF SUCH EXPENSES, HOWEVER, THE ASSESSING OFFICER REJECTING THE SUBMIS SIONS MADE BY THE ASSESSEE DISALLOWED THE AMOUNT OF RS. 8,76,706/-. FURTHER, HE FOUND THAT THE ASSESSEE HA S CLAIMED LOSS OF RS. 22,25,839/- ON SALE OF MOTOR CA R. BEING OF THE VIEW THAT SUCH LOSS CAPITAL LOSS, HENCE, SHO ULD HAVE BEEN DISALLOWED BY THE ASSESSEE WHILE COMPUTING HIS BUSINESS INCOME, THE ASSESSING OFFICER DISALLOWED T HE LOSS OF RS. 22,25,839/-, AND ADDED BACK TO THE INCOME OF THE ASSESSEE. HOWEVER, HE ALLOWED THE SHORT TERM CAPIT AL LOSS ITA NO . 7525/MUM/2018 M.M. DOSANI PROPERTIES LTD., MUMBAI. - 3 - ON SALE OF MOTOR CAR FOR AN AMOUNT OF RS. 16,35,266 /-. ADMITTEDLY, THE COUPLE OF ADDITIONS MADE BY THE ASS ESSING OFFICER, AS DISCUSSED ABOVE, WERE ACCEPTED BY THE A SSESSEE. ON THE BASIS OF THE AFORESAID ADDITIONS, THE ASSESS ING OFFICER INITIATED PROCEEDINGS FOR IMPOSITION OF PEN ALTY UNDER SECTION 271(1)(C) OF THE ACT ALLEGING FURNISHING OF INACCURATE PARTICULARS OF INCOME AND CONCEALMENT OF INCOME. T HOUGH, THE ASSESSEE FURNISHED HIS EXPLANATION OBJECTING TO INITIATION OF PENALTY PROCEEDINGS AND ALSO STATED T HAT THERE IS NO CONTUMACIOUS CONDUCT OF THE ASSESSEE TO EITHE R FURNISH INACCURATE PARTICULARS OF INCOME OR CONCEAL MENT OF INCOME, HOWEVER, REJECTING THE EXPLANATION OF THE A SSESSEE THE ASSESSING OFFICER PROCEEDED TO IMPOSE PENALTY U NDER SECTION 271(1)(C) OF THE ACT FOR AN AMOUNT OF RS. 4 ,53,389/-. THOUGH, THE ASSESSEE CHALLENGED THE PENALTY ORDER S O PASSED BEFORE THE FIRST APPELLATE AUTHORITY, HOWEVE R, IT WAS UNSUCCESSFUL. 3. THE LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED, IN THE SHOW CAUSE NOTICE ISSUED UNDER SECTION 274 OF T HE ACT, THE ASSESSING OFFICER HAS NOT SPECIFIED THE EXACT C HARGE FOR WHICH HE HAS INITIATED PROCEEDING FOR IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. THEREFORE, HE SUBMITTED, ITA NO . 7525/MUM/2018 M.M. DOSANI PROPERTIES LTD., MUMBAI. - 4 - THE PENALTY ORDER PASSED UNDER SECTION 271(1)(C) OF THE ACT CANNOT BE SUSTAINED. IN SUPPORT, HE RELIED UPON TH E DECISION OF THE TRIBUNAL IN THE CASE OF HC JAHANGEE R VS. ACIT IN ITA NO. 1261/MUM/2011 DATED 17.05.2017. WITHOUT PREJUDICE, HE SUBMITTED, THE ADDITIONS ON T HE BASIS OF WHICH THE ASSESSING OFFICER HAS IMPOSED PENALTY UNDER SECTION 271(1)(C) OF THE ACT WERE NOT MADE AS A RES ULT OF ANY INACCURATE PARTICULARS FURNISHED BY THE ASSESSEE OR CONCEALMENT PARTICULARS BY THE ASSESSEE. HE SUBMI TTED, ASSESSEE HAS MADE A BONAFIDE CLAIM OF DEDUCTION WHI CH HAS BEEN REJECTED BY THE ASSESSING OFFICER. HE SUBMITT ED, MERELY BECAUSE THE ASSESSEE HAS ACCEPTED THE DISALL OWANCE / ADDITION MADE BY THE ASSESSING OFFICER, IT WILL N OT LEAD TO THE CONCLUSION THAT THE ASSESSEE HAS EITHER FURNISH ED INACCURATE PARTICULARS OF INCOME OR HAS CONCEALED I TS INCOME. THUS, HE SUBMITTED, NO CASE OF IMPOSITION O F PENALTY U/S 271(1)(C) OF THE ACT IS MADE OUT. 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, STRONGLY RELYING UPON THE ORDERS PASSED BY TH E ASSESSING OFFICER AND LEARNED COMMISSIONER (APPEALS ) SUBMITTED, FACTS ON RECORD CLEARLY REVEAL THAT THE ASSESSEE HAS NOT DISCLOSED ITS INCOME PROPERLY, THEREBY, HAS ITA NO . 7525/MUM/2018 M.M. DOSANI PROPERTIES LTD., MUMBAI. - 5 - FURNISHED INACCURATE PARTICULARS OF INCOME. THAT B EING THE CASE, IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS JUSTIFIED. 5. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. AS COULD BE SEEN FROM THE FACT S ON RECORD, THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT HAS BEEN IMPOSED ON THE BASIS OF ADDITIONS MADE ON ACCO UNT OF DISALLOWANCE OF PROMOTIONAL AND ADVERTISEMENT EXPEN SES OF RS. 8,76,706/- AND CLAIM OF EXCESS LOSS ON SALE OF MOTOR CAR AMOUNTING TO RS. 5,99,472/-. AS REGARDS ADVERTISEM ENT AND PROMOTIONAL EXPENSES, IT IS NOTICED, THE ASSESS ING OFFICER HIMSELF HAS STATED THAT SUCH EXPENDITURE WA S INCURRED BY THE ASSESSEE IN THE PRECEDING YEARS. I T IS FURTHER EVIDENT, ONLY DUE TO INCREASE IN THE QUANTU M OF EXPENDITURE THE ASSESSING OFFICER HAS DISALLOWED TH E EXPENDITURE ON THE ALLEGATION THAT THE ASSESSEE HAS FAILED TO FURNISH ANY EVIDENCE TO SUPPORT SUCH INCREASE IN TH E EXPENDITURE. THUS, AS COULD BE SEEN, THE DISALLOWA NCE IS NOT DUE TO ANY FALSE CLAIM MADE BY THE ASSESSEE BUT ON THE BASIS OF DOUBT ENTERTAINED WITH REGARD TO THE QUANT UM OF EXPENDITURE. THAT BEING THE CASE, IN OUR CONSIDERE D OPINION, THE ASSESSEE CANNOT BE ACCUSED OF FURNISHI NG ITA NO . 7525/MUM/2018 M.M. DOSANI PROPERTIES LTD., MUMBAI. - 6 - INACCURATE PARTICULARS OF INCOME OR CONCEALING INCO ME. IN SO FAR AS CLAIM OF EXCESS LOSS ON ACCOUNT OF SALE O F MOTOR CAR, IT IS THE CLAIM OF THE ASSESSEE THAT SUCH EXCE SS LOSS WAS CLAIMED INADVERTENTLY DUE TO IGNORANCE. THE LEARN ED AUTHORIZED REPREHENSIVE HAS SUBMITTED, DURING THE ASSESSMENT PROCEEDING THE ASSESSEE HAS FURNISHED A WORKING OF SHORT TERM CAPITAL LOSS ON SALE OF MOTOR CAR AND THE ASSESSING OFFICER HAS ACCEPTED SUCH LOSS AND AL LOWED CARRY FORWARD OF THE SAME. IN OUR VIEW, THE EXCESS CLAIM OF LOSS WAS BECAUSE OF THE FACT THAT THE ASSESSEE HAS DEBITED IT TO HIS PROFIT AND LOSS ACCOUNT. THE EXPLANATION OF THE ASSESSEE THAT, IT IS A BONAFIDE AND INADVERTENT MIS TAKE IS ACCEPTABLE. THEREFORE, EVEN IN RESPECT OF THIS ADD ITION ALSO, THERE CANNOT BE ANY ALLEGATION OF EITHER FURNISHING INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. IN VIEW OF THE AFORESAID, WE HOLD THAT THE IMPOSITI ON OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT IN THE P RESENT CASE IS UNCALLED FOR. ACCORDINGLY, WE DELETE THE P ENALTY IMPOSED OF RS. 4,53,389/- UNDER SECTION 271(1)(C) O F THE ACT. IN VIEW OF OUR AFORESAID DECISION ON MERIT, W E DO NOT CONSIDER IT NECESSARY TO DEAL WITH THE SUBMISSIONS MADE BY ITA NO . 7525/MUM/2018 M.M. DOSANI PROPERTIES LTD., MUMBAI. - 7 - THE LEARNED AUTHORIZED REPRESENTATIVE REGARDING VAL IDITY OF THE PENALTY ORDER. 6. IN THE RESULT, THE APPEAL IS ALLOWED AS INDICATE D ABOVE. THIS ORDER IS PRONOUNCED IN OPEN COURT ON 05 .01.2020 SD/ SD/ (G. MANJUNATHA) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 05.02.2020 KRK, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. & '( ) / THE CIT(A) 4. ) ( ) / CONCERNED CIT 5. ,-. //'( , '(# , & / DR, ITAT, MUMBAI 6. .34 5 / GUARD FILE. / BY ORDER, , / //TRUE COPY// / ( ASST. REGISTRAR) !' #, / ITAT, MUMBAI