M/S SNC JEWELS PVT LTD., MUMBAI V. DY CIT CIRCLE- 11 (2)(2), MUMBAI

ITA 7575/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 5550 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2015-2016
• Appeal Filed On: 10-12-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR MENON
• Keywords: Depreciation; Wrong claim; Set aside
• Section: 271(1)(c); 143(3); 274; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.7575/M/2019 ASSESSMENT YEAR: 2015-16 M/S. SNC JEWELS PVT. LTD., UNIT NO.124, SDF IV, SEEPZ, ANDHERI (E), MUMBAI 400 096 PAN: AAICS0348G VS. DCIT- 11(2)(2), ROOM NO.42116, AAYAKAR BHAVAN, MUMBAI - 400020 (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : MS. MRUGAKSHI JOSHI, A.R. REVENUE BY : SHRI VIJAY KUMAR MENON, D.R. DATE OF HEARING : 28.06.2021 DATE OF PRONOUNCEMENT : 07.07.2021 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVENU E AGAINST THE ORDER DATED 19.11.2019 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2015-16. 2. THE ONLY ISSUE RAISED BY THE ASSESSEE IN THREE GROUNDS OF APPEAL IS AGAINST THE IMPOSITION OF PENALTY ON THRE E DISALLOWANCES NAMELY DISALLOWANCE OF TRAVEL EXPENSE S OF RS.48,170/-, SHORTFALL IN CESSATION OF LIABILITY OF RS.11,236/- AND LASTLY DEPRECIATION ON MOTOR VEHICLE RS.5,70,750/-. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS FRAMED VIDE ORDER DATED 22.12 .2017 ITA NO.7575/M/2019 M/S. SNC JEWELS PVT. LTD. 2 ASSESSING THE TOTAL INCOME AT LOSS OF RS.3,83,09,56 5/- AFTER MAKING THREE ADDITIONS NAMELY WRONG CLAIM OF DEPREC IATION OF RS.5,70,750/-, PERSONAL EXPENSES THROUGH CREDIT CAR D RS.48,170/- AND CESSATION OF LIABILITY UNDER SECTIO N 41(1)(A) OF RS.11,236/-. ACCORDINGLY, THE AO TREATED THE SAME AS FURNISHING OF INACCURATE PARTICULARS OF INCOME BY T HE ASSESSEE AND PROCEEDINGS WERE INITIATED VIDE NOTICE DATED 22 .12.2017 ISSUED UNDER SECTION 274 READ WITH SECTION 271(1)(C ) OF THE ACT. THE ASSESSEE WAS CALLED UPON TO SHOW CAUSE AS TO WH Y THE PENALTY SHOULD NOT BE IMPOSED FOR FURNISHING INACCU RATE PARTICULARS OF INCOME WHICH WAS REPLIED BY THE ASSE SSEE VIDE WRITTEN SUBMISSION DATED 03.06.2018. HOWEVER THE RE PLY OF THE ASSESSEE WAS REJECTED BY THE AO AS NOT TENABLE AND LEVIED A PENALTY OF RS.1,94,719/- BEING 100% OF THE TAX SOUG HT TO BE EVADED BY PASSING ORDER UNDER SECTION 271(1)(C) DAT ED 19.06.2018. 4. IN THE APPELLANT PROCEEDINGS, THE LD. CIT(A) UPH ELD THE ORDER OF AO BY HOLDING THAT ASSESSEE HAS ACCEPTED T HE ADDITIONS IN THE ASSESSMENT AND HAS NOT PREFERRED ANY FURTHE R APPEAL CHALLENGING THE QUANTUM ADDITIONS. THE LD. CIT(A) WHILE PASSING THE ORDER DISMISSING THE APPEAL OF THE ASSE SSEE ALSO REFERRED TO EXPLANATION 1 TO SECTION 271(1)(C) OF T HE ACT TO HOLD THAT ASSESSEE HAS FAILED TO OFFER ANY EXPLANATION Q UA THE SAID FURNISHING OF INACCURATE PARTICULARS OF INCOME OR E XPLANATION OF THE ASSESSEE WAS FOUND TO BE FALSE BY THE AO AND TH US JUSTIFIED THE INVOCATION OF PROVISIONS OF SECTION 271(1)(C) O F THE ACT. 5. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE FIND THAT THERE ARE THREE DISALLOWANCES/ ADDITIONS IN ITA NO.7575/M/2019 M/S. SNC JEWELS PVT. LTD. 3 RESPECT OF WHICH THE PENALTY UNDER SECTION 271(1)(C ) OF THE ACT HAS BEEN LEVIED BY THE AO. THE FIRST IS AGAINST TH E DISALLOWANCE OF TRAVELLING EXPENSES OF RS.48,170/- WHICH WAS PAI D BY THE ASSESSEE THROUGH HIS CREDIT CARD IN RESPECT OF TRAV ELLING AND HOTEL STAY OF HIS WIFE AND WAS WRONGLY CLAIMED IN T HE EXPENSES. SIMILARLY, THE SECOND ITEM OF THE ADDITION WAS IN R ESPECT OF SHORTFALL IN CESSATION OF LIABILITY TO THE TUNE OF RS.11,236/- UNDER SECTION 41(1) OF THE ACT WHICH WAS OFFERED DURING T HE COURSE OF ASSESSMENT PROCEEDINGS AND THIRD ITEM OF ADDITION IN RESPECT OF WHICH THE PENALTY WAS IMPOSED WAS DEPRECIATION ON M OTOR VEHICLE WHICH WAS PURCHASED IN THE NAME OF THE DIRE CTOR OF THE ASSESSEE COMPANY AND WAS DULY ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS WHICH ACCORDING TO THE AO WAS NOT CORRECT AND HE DISALLOWED THE DEPRECIATION ON THE MOTOR CARS PURCH ASED BY THE ASSESSEE IN THE NAME OF THE DIRECTOR. HAVING CONSI DERED THESE THREE ITEMS OF ADDITIONS, WE ARE OF THE VIEW THAT T HE PENALTY IS NOT IMPOSABLE IN RESPECT OF THESE ADDITIONS AS ASSE SSEE HAS NOT FURNISHED ANY INACCURATE PARTICULARS OF INCOME. SO FAR AS THE DISALLOWANCE OF TRAVEL EXPENSES OF RS.48,170/- AND SHORTFALL IN CESSATION OF LIABILITY OF RS.11,236/- ARE CONCERNED , THE ASSESSEE HAS MADE FULL DISCLOSURE IN THE BOOKS OF ACCOUNTS A ND RETURN OF INCOME FILED AND THEREFORE CAN NOT BE HELD LIABLE F OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS (P.) LTD . [2010] 322 ITR 158 (SC) WHEREIN THE HONBLE SUPREME COURT HAS HELD THAT IF THE ASSESSEE HAS MADE A CLAIM WHICH HAS BEEN DIS CLOSED IN THE BOOKS OF ACCOUNTS NO PENALTY IS IMPOSABLE UNDER SECTION 271(1)(C) OF THE ACT EVEN IF THE SAID CLAIM IS NOT ACCEPTABLE TO THE ITA NO.7575/M/2019 M/S. SNC JEWELS PVT. LTD. 4 REVENUE. SO FAR AS THE THIRD ADDITION OF DISALLOWAN CE OF MOTOR CAR IS CONCERNED, WE ARE OF THE VIEW THAT SAME CAN NOT BE HELD TO BE INACCURATE PARTICULARS ON THE PART OF THE ASSESS EE. THE ASSESSEE SHOULD HAVE BEEN ALLOWED DEPRECIATION ON T HE MOTOR CAR PURCHASED IN THE NAME OF THE DIRECTOR OF THE AS SESSEE COMPANY. WE ARE OF THE OPINION THAT NO PENALTY IS IMPOSABLE ON THIS ITEM OF ADDITION. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, WE ARE INCLINED TO SET ASIDE THE ORDER OF THE LD. C IT(A) AND DIRECT THE AO TO DELETE THE PENALTY. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 07.07.2021. SD/- SD/- (SAKTIJIT DEY ) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 07.07.2021. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.