LION MERCANTILE P.LTD, MUMBAI V. ITO 9(|2)(2), MUMBAI

ITA 7567/MUM/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7463 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 23-12-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V VIDHYADHARDR
• Keywords: Corroborative evidences
• Section: 43B

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G, MUMBAI , . , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA NO.7567/MUM/2016 ASSESSMENT YEAR: 2011-12 M/S LION MERCANTILE PVT LTD. B/18, JAMUNA DARSHAN, BANGUR NAGAR, GORGAON (WEST), MUMBAI-400062 / VS. INCOME TAX OFFICER-9(2)(2), AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020 ( ! /ASSESSEE) ( ' / REVENUE) P.A. NO.AABCL0795P ! / ASSESSEE BY NONE ' / REVENUE BY SHRI V.VIDHYADHAR-DR # '$ % !& / DATE OF HEARING : 25/04/2018 % !& / DATE OF PRONOUNCEMENT 25/04/2018 ITA NO.7567/MUM/2016 M/S. LION MERCANTILE PVT LTD. 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DATED 26/08/2016 OF THE LD. FIRST APPELLATE AUTHORI TY, MUMBAI, CONFIRMING THE PENALTY OF RS.1,65,143/- IMP OSED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAF TER THE ACT). 2. DURING HEARING, NONE WAS PRESENT FOR THE ASSESSEE, IN SPITE OF ISSUANCE OF REGISTERED NOTICE ON 17/10/2017. THIS APPEAL WAS FILED BY THE ASSESSEE O N 23/12/2016 AS IS EVIDENT FROM RECORD. THE APPEAL W AS FIXED FOR 09/11/2017 FOR WHICH REGISTERED AD NOTICE WAS ISSUED. ON 25/01/2018, THE ASSESSEE REQUESTED FOR ADJOURNMENT AND THE APPEAL WAS ADJOURNED. TODAY, AT THE TIME OF HEARING, THE ASSESSEE NEITHER APPEARED NOR MOVED ANY ADJOURNMENT PETITION, THEREFORE, WE HAVE NO OP TION BUT TO PROCEED EX-PARTE, QUA THE ASSESSEE AND TEND TO DISPOSE OF THIS APPEAL ON THE BASIS OF MATERIAL AVA ILABLE ON RECORD. ON THE OTHER HAND, THE LD. DR, DEFENDED TH E IMPOSITION OF PENALTY BY THE LD. ASSESSING OFFICER, WHICH ITA NO.7567/MUM/2016 M/S. LION MERCANTILE PVT LTD. 3 WAS CONFIRMED BY THE LD. COMMISSIONER OF INCOME TAX (APPEAL). 2.1. WE HAVE CONSIDERED THE SUBMISSIONS OF LD. DR AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE F ACTS, IN BRIEF, ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSI NESS OF TRADING, MANUFACTURING OF TEXTILES/YARN ETC, DECLAR ED TOTAL INCOME OF RS.2,75,501/-, WHICH WAS PROCESSED U/S 14 3(1) OF THE ACT. THE CASE OF THE ASSESSEE WAS SELECTED F OR SCRUTINY, THEREFORE, NOTICE U/S 143(2) OF THE ACT W AS ISSUED/SERVED UPON THE ASSESSEE. THE ASSESSEE WAS A SKED TO FURNISH THE DETAILS. ON VERIFICATION OF THE BALA NCE SHEET, IT WAS OBSERVED THAT VAT AND CST TAX PAYABLE WAS SH OWN AT RS.6,51,165/- AND THE ASSESSEE SUBMITTED THE CHA LLAN OF RS.1,16,723/- PAID TOWARDS MVAT AND CST TOWARDS OUTSTANDING LIABILITIES AS ON 31/03/2011. AS PER TH E REVENUE, THE ASSESSEE COULD NOT SUBMIT THE SUPPORTI NG EVIDENCE FOR BALANCE TAX LIABILITIES OF RS.5,34,442 /-, THE SAME WAS DISALLOWED U/S 43B AND ADDED TO THE TOTAL INCOME. FURTHER, THE ASSESSEE PAID CERTAIN AMOUNTS FOR PERSONAL USE OF THE DIRECTORS OF THE COMPANY AND LO OKING INTO THE NATURE OF THE BUSINESS 10% OF THE EXPENSES , WHICH ITA NO.7567/MUM/2016 M/S. LION MERCANTILE PVT LTD. 4 WORKED OUT TO RS.38,647/- WERE DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. THE LD. ASSESS ING OFFICER INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) FOR FURNISHING OF INACCURATE PARTICULARS AND CONCEALMEN T OF INCOME. THE LD. ASSESSING OFFICER LEVIED THE PENALT Y OF RS.1,65,143/-. 3. ON APPEAL, BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEAL), THE NOTICES OF HEARING WERE IS SUED TO THE ASSESSEE BUT ON THE APPOINTED DATE NONE APPEARE D AND THUS THE LD. COMMISSIONER OF INCOME TAX (APPEAL) CONFIRMED THE PENALTY. THE ASSESSEE FILED APPEAL BE FORE THIS TRIBUNAL. 3. 1. IF THE OBSERVATION MADE IN THE ASSESSMENT ORDER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCL USION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. DR, IF KEPT IN JUXTAPOSI TION AND ANALYZED, THERE IS NO DISPUTE TO THE FACT THAT THE LD. ASSESSING OFFICER ON PERUSAL OF RECORD MADE THE AD DITION. THERE IS OBSERVATION IN THE ASSESSMENT ORDER THAT W ITH RESPECT TO DISALLOWANCE OF EXPENSES, THE ASSESSEE A DMITTED ITA NO.7567/MUM/2016 M/S. LION MERCANTILE PVT LTD. 5 THAT THE PAYMENT WAS MADE TO THE DIRECTORS FOR PERS ONAL USE, THEREFORE, HE MADE A DISALLOWANCE AT THE RATE OF 10% OF EACH EXPENSES AND ADDED TO THE TOTAL INCOME. SO FA R AS, PAYMENT OF VAT AND CST TAX IS CONCERNED, THE ASSESS EE DID NOT PRODUCE ANY SUPPORTING EVIDENCE FOR THE TAX LIA BILITY TO THE TUNE OF RS.5,34,442/-, WHICH WAS DISALLOWED U/S 43B AND ADDED TO THE TOTAL INCOME. 3. 2. IN THE LIGHT OF THE ABOVE OBSERVATION, WE ARE REPRODUCING HEREUNDER THE RELEVANT SECTION 271(1)(C ) OF THE ACT FOR READY REFERENCE AND ANALYSIS:- SECTION 271(1)(C) IS AS UNDER:- '271(1) IF THE ASSESSING OFFICER OR THE COMMISSIONE R (APPEALS) OR THE COMMISSIONER IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT, IS SATISFIED THAT ANY P ERSON- (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME.' 3. 3. A GLANCE AT THIS PROVISION WOULD SUGGEST THAT IN ORDER TO BE COVERED UNDER THIS SECTION FIRSTLY, THE RE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE AND SECONDLY, THE ASSESSEE MUST HAVE FURNI SHED INACCURATE PARTICULARS OF HIS INCOME. PRESENT IS NO T THE CASE OF CONCEALMENT OF THE INCOME. THAT IS NOT THE CASE OF ITA NO.7567/MUM/2016 M/S. LION MERCANTILE PVT LTD. 6 THE REVENUE EITHER. AS PER LAW LEXICON, THE MEANING OF THE WORD 'PARTICULAR' IS A DETAIL OR DETAILS (IN PLURAL SENSE); THE DETAILS OF A CLAIM, OR THE SEPARATE ITEMS OF AN ACC OUNT. THEREFORE, THE WORD 'PARTICULARS' USED IN THE SECTI ON 271(1)(C) WOULD EMBRACE THE MEANING OF THE DETAILS OF THE CLAIM MADE. IT IS AN ADMITTED POSITION IN THE PRESE NT CASE THAT NO INFORMATION GIVEN IN THE RETURN WAS FOUND T O BE INCORRECT OR INACCURATE. IT IS NOT AS IF ANY STATEM ENT MADE OR ANY DETAIL SUPPLIED WAS FOUND TO BE FACTUALLY IN CORRECT. HENCE, AT LEAST, PRIMA FACIE, THE ASSESSEE CANNOT B E HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. THE WO RDS ARE PLAIN AND SIMPLE. IN ORDER TO EXPOSE THE ASSESSEE T O THE PENALTY UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY ANY STR ETCH OF IMAGINATION, MAKING AN INCORRECT CLAIM IN LAW CANNO T TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. IN COMMISSIONER OF INCOME TAX, DELHI VS. ATUL MOHAN BI NDAL [2009(9) SCC 589], WHERE HON'BLE APEX COURT WAS CONSIDERING THE SAME PROVISION, THE COURT OBSERVED THAT THE ASSESSING OFFICER HAS TO BE SATISFIED THAT A PE RSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHE D ITA NO.7567/MUM/2016 M/S. LION MERCANTILE PVT LTD. 7 INACCURATE PARTICULARS OF SUCH INCOME. HON'BLE COUR T REFERRED TO ANOTHER DECISION OF THIS COURT IN UNION OF INDIA VS. DHARAMENDRA TEXTILE PROCESSORS [2008(13) SCC 36 9], AS ALSO, THE DECISION IN UNION OF INDIA VS.RAJASTHA N SPG. & WVG. MILLS [2009(13) SCC 448] AND REITERATED IN PAR A 13 THAT:- '13. IT GOES WITHOUT SAYING THAT FOR APPLICABILITY OF SECTION 271(1)(C), CONDITIONS STATED THEREIN MUST E XIST.' THEREFORE, IT IS OBVIOUS THAT IT MUST BE SHOWN THAT THE CONDITIONS UNDER SECTION 271(1)(C) MUST EXIST BEFOR E THE PENALTY IS IMPOSED. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY TH E ASSESSEE BECAUSE THAT IS THE ONLY DOCUMENT, WHERE T HE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LI ABILITY WOULD ARISE. IN DILIP N. SHROFF VS. JOINT COMMISSIO NER OF INCOME TAX, MUMBAI & ANR. [2007(6) SCC 329], HON'BL E COURT EXPLAINED THE TERMS 'CONCEALMENT OF INCOME' A ND 'FURNISHING INACCURATE PARTICULARS'. THE COURT WENT ON TO HOLD THEREIN THAT IN ORDER TO ATTRACT THE PENALTY U NDER SECTION 271(1)(C), MENS REA WAS NECESSARY, AS ACCORDING TO ITA NO.7567/MUM/2016 M/S. LION MERCANTILE PVT LTD. 8 THE COURT, THE WORD 'INACCURATE' SIGNIFIES A DELIBE RATE ACT OR OMISSION ON BEHALF OF THE ASSESSEE. IT WENT ON T O HOLD THAT CLAUSE (III) OF SECTION 271(1) PROVIDED FOR A DISCRETIONARY JURISDICTION UPON THE ASSESSING AUTHO RITY, INASMUCH AS THE AMOUNT OF PENALTY COULD NOT BE LESS THAN THE AMOUNT OF TAX SOUGHT TO BE EVADED BY REASON OF SUCH CONCEALMENT OF PARTICULARS OF INCOME, BUT IT MAY NO T EXCEED THREE TIMES THEREOF. IT WAS POINTED OUT THAT THE TERM 'INACCURATE PARTICULARS' WAS NOT DEFINED ANYWHERE I N THE ACT AND, THEREFORE, IT WAS HELD THAT FURNISHING OF AN ASSESSMENT OF THE VALUE OF THE PROPERTY MAY NOT BY ITSELF BE FURNISHING INACCURATE PARTICULARS. IT WAS FURTHER H ELD THAT THE ASSESSEE MUST BE FOUND TO HAVE FAILED TO PROVE THAT HIS EXPLANATION IS NOT ONLY BONA FIDE BUT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS INCOME WERE NOT DISCLOSED BY HIM. IT WAS THEN HELD THAT TH E EXPLANATION MUST BE PRECEDED BY A FINDING AS TO HOW AND IN WHAT MANNER, THE ASSESSEE HAD FURNISHED THE PARTICULARS OF HIS INCOME. THE COURT ULTIMATELY WEN T ON TO HOLD THAT THE ELEMENT OF MENS REA WAS ESSENTIAL. IT WAS ONLY ON THE POINT OF MENS REA THAT THE JUDGMENT IN DILIP N. ITA NO.7567/MUM/2016 M/S. LION MERCANTILE PVT LTD. 9 SHROFF VS. JOINT COMMISSIONER OF INCOME TAX, MUMBAI & ANR. WAS UPSET. IN UNION OF INDIA VS. DHARAMENDRA T EXTILE PROCESSORS (CITED SUPRA), AFTER QUOTING FROM SECTIO N 271 EXTENSIVELY AND ALSO CONSIDERING SECTION 271(1)(C), THE COURT CAME TO THE CONCLUSION THAT SINCE SECTION 271 (1)(C) INDICATED THE ELEMENT OF STRICT LIABILITY ON THE AS SESSEE FOR THE CONCEALMENT OR FOR GIVING INACCURATE PARTICULAR S WHILE FILING RETURN, THERE WAS NO NECESSITY OF MENS REA. THE COURT WENT ON TO HOLD THAT THE OBJECTIVE BEHIND ENA CTMENT OF SECTION 271(1)(C) READ WITH EXPLANATIONS INDICAT ED WITH THE SAID SECTION WAS FOR PROVIDING REMEDY FOR LOSS OF REVENUE AND SUCH A PENALTY WAS A CIVIL LIABILITY AN D, THEREFORE, WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDIENT FOR ATTRACTING CIVIL LIABILITY AS WAS THE CASE IN T HE MATTER OF PROSECUTION UNDER SECTION 276-C OF THE ACT. THE BAS IC REASON WHY DECISION IN DILIP N. SHROFF VS. JOINT COMMISSIONER OF INCOME TAX, MUMBAI & ANR. (CITED SU PRA) WAS OVERRULED BY HON'BLE APEX COURT IN UNION OF IND IA VS. DHARAMENDRA TEXTILE PROCESSORS (CITED SUPRA), WAS T HAT ACCORDING TO THE COURT THE EFFECT AND DIFFERENCE B ETWEEN SECTION 271(1)(C) AND SECTION 276-C OF THE ACT WAS LOST ITA NO.7567/MUM/2016 M/S. LION MERCANTILE PVT LTD. 10 SIGHT OF IN CASE OF DILIP N. SHROFF VS. JOINT COMMI SSIONER OF INCOME TAX, MUMBAI & ANR. (CITED SUPRA). HOWEVER, I T MUST BE POINTED OUT THAT IN UNION OF INDIA VS. DHARAMEND RA TEXTILE PROCESSORS (CITED SUPRA), NO FAULT WAS FOUN D WITH THE REASONING IN THE DECISION IN DILIP N. SHROFF VS . JOINT COMMISSIONER OF INCOME TAX, MUMBAI & ANR. (CITED SU PRA), WHERE THE COURT EXPLAINED THE MEANING OF THE TERMS 'CONCEAL' AND INACCURATE'. IT WAS ONLY THE ULTIMATE INFERENCE IN DILIP N. SHROFF VS. JOINT COMMISSIONER OF INCOME TAX, MUMBAI & ANR. (CITED SUPRA) TO THE EFFE CT THAT MENS REA WAS AN ESSENTIAL INGREDIENT FOR THE PENALTY UNDER SECTION 271(1)(C) THAT THE DECISION IN DILIP N. SHR OFF VS. JOINT COMMISSIONER OF INCOME TAX, MUMBAI & ANR. (CI TED SUPRA) WAS OVERRULED. WE ARE NOT CONCERNED IN THE P RESENT CASE WITH THE MENS REA . HOWEVER, WE HAVE TO ONLY SEE AS TO WHETHER IN THIS CASE, AS A MATTER OF FACT, THE ASSE SSEE HAS GIVEN INACCURATE PARTICULARS. IN WEBSTER'S DICTIONA RY, THE WORD 'INACCURATE' HAS BEEN DEFINED AS:- 'NOT ACCURATE, NOT EXACT OR CORRECT; NOT ACCORDING TO TRUTH; ERRONEOUS; AS AN INACCURATE STATEMENT, COPY OR TRAN SCRIPT'. ITA NO.7567/MUM/2016 M/S. LION MERCANTILE PVT LTD. 11 3. 4 WE HAVE ALREADY SEEN THE MEANING OF THE WORD 'PARTICULARS' IN THE EARLIER PART OF THIS ORDER. RE ADING THE WORDS IN CONJUNCTION, THEY MUST MEAN THE DETAILS SU PPLIED IN THE RETURN, WHICH ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TRUTH OR ERRONEOUS. WE MUST HASTEN TO ADD HERE THAT IN THIS CASE, THERE IS NO FINDING THA T ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN WERE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE. SUCH NOT BEING THE CASE, THERE WOULD BE NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT. SO FAR AS, THE DECISI ON IN THE CASE OF CIT V/S ZOOM COMMUNICATION P LTD (SUPRA), I S CONCERNED THE HON'BLE APEX COURT OBSERVE SO LONG AS THE ASSESSEE HAS NOT CONCEALED ANY MATERIAL FACT OR MAT ERIAL INFORMATION GIVEN BY HIM HE WILL NOT LIABLE FOR IMP OSITION OF PENALTY U/S 271(1)( C ) OF THE ACT, EVEN IF THE CL AIM MADE BY HIM IS UNSUSTAINABLE IN LAW. THE ASSESSEE BEFOR E THE LD. ASSESSING OFFICER DID NOT FURNISHED THE NECESSA RY DETAILS WITH RESPECT TO PAYMENT TOWARDS MVAT AND CS T. EVEN BEFORE THE LD. COMMISSIONER OF INCOME TAX (APP EAL), THE ASSESSEE DID NOT APPEAR ON 20/01/2016, 02/03/20 16 AND THE SENDING OF NOTICE THROUGH SPEED POST WAS KE PT ON ITA NO.7567/MUM/2016 M/S. LION MERCANTILE PVT LTD. 12 RECORD. EVEN ON PROVIDING OF FINAL OPPORTUNITY FOR 24/08/2016, THE ASSESSEE DID NOT APPEAR. BEFORE THI S TRIBUNAL ALSO, AS MENTIONED EARLIER, THE ASSESSEE S OUGHT ADJOURNMENT AND THEREAFTER SOUGHT ADJOURNMENT FOR 20/12/2017 AND THEREAFTER DID NOT APPEAR. IT IS THE CASUAL APPROACH OF THE ASSESSEE. CONSIDERING THE TOTALITY OF FACTS AND IN THE ABSENCE OF ANY SUPPORTING EVIDENCE, FILE D AT ANY STAGE, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL), IN CONFIRMING THE PENALTY, THUS, THE APPEAL OF THE ASSESSEE IS DISMIS SED. FINALLY, THE APPEAL OF THE ASSESSEE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. DR AT THE CONCLUSION OF THE HEARING ON 25/04/2018. SD/- (G. MANJUNATHA) SD/- (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER # $ MUMBAI; , DATED : 25/04/2018 F{X~{T? P.S/. . . , %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. -./0 / THE APPELLANT 2. 12/0 / THE RESPONDENT. 3. 3 3 # 4! , ( -. ) / THE CIT, MUMBAI. ITA NO.7567/MUM/2016 M/S. LION MERCANTILE PVT LTD. 13 4. 3 3 # 4! / CIT(A)- , MUMBAI 5. 6'7 1! , 3 -.& - , # $ / DR, ITAT, MUMBAI 6. 8 9$ / GUARD FILE. / BY ORDER, 26.! 1! //TRUE COPY// / (DY./ASSTT. REGISTRAR) , # $ / ITAT, MUMBAI