EMARSSO EXPORTS P. LTD, MUMBAI V. DCIT RG 8(1), MUMBAI

ITA 7817/MUM/2011

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7774 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-03-2017
• Appeal Filed By: Assessee
• Bench Allotted: E
• Next Hearing Date: 26-05-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 18-11-2011
• Court: TRIBUNAL
• Department Lawyers: VISHWAS MUNDHE
• Assessee Lawyers: I P RATHI
• Keywords: Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER I.T.A. NO.7817/M/2011 (ASSESSMENT YEAR: 2008 - 2009 ) EMARSSO EXPORTS PVT LTD, CRYSTAL SHOPPERS PARADISE, GR. FLOOR, SHOP NO.32, OFF BANDRA LLINKING ROAD, BANDRA(W), MUMBAI - 050. / VS. DCIT, RANGE - 8(1), AAYAKAR BHAVAN, MUMBAI 020. ./ PAN : AABCE6544M ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI I.P. RATHI / RESPONDENT BY : SHRI VISHWAS MUNDHE, DR / DATE OF HEARING : 01.03.2017 / DATE OF PRONOUNCEMENT : 17 .03.2017 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 18.11.2011 IS AGAINST THE ORDER OF THE CIT (A) - 16, MUMBAI DATED 2.9.2011 FOR THE ASSESSMENT YEAR 2008 - 2009. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUND WHICH READS AS UNDER: - THE LD CIT (A) HAS ERRED IN CONFIRMING THE PENALTY CHARGED U/S 271(1)(C) OF THE ACT FOR RS. 2,82,98,339/ - . 2. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING, TRADING AND EXPORT OF READYMADE GARMENTS. ASSESSEE F ILED THE RETURN OF INCOME DECLARING THE TOTAL LOSS OF RS. 8,31,53,070/ - . ASSESSMENT WAS COMPLETED U/S 143(III) OF THE ACT AND THE ASSES SED INCOME WAS DETERMINED AT RS. 1,01,826/ - . IN THE ASSESSMENT, AO MADE CERTAIN DISALLOWANCES VIZ (I) DISALLOWANCE OF R S. 8,22,49,900/ - ON THE GROUND THAT NO EVIDENCE OF STOCK REDUCING TO NIL HAS BEEN FURNISHED AND (II) DISALLOWANCE OF EXPENSES CLAIMED AS BAD DEBTS AMOUNTING RS. 6,53,074/ - . DURING THE ASSESSMENT PROCEEDINGS, AO NOTICED THAT THE OPENING STOCK WAS SHOWN AT RS. 8,22,49,900/ - AND CLOSING STOCK AT RS. NIL. ASSESSEE WAS ASKED TO JUSTIFY THE STOCK ALONG WITH THE CLAIM OF EXPENSES MADE IN THE P & L ACCOUNT. CONSIDERING THE ASSESSEES FAILURE TO SUBSTANTIATE ITS CLAIM, AO HELD 2 THAT THE ASSESSEE CONCEALED PARTICULA RS OF INCOME, FURNISHED INACCURATE PARTICULARS OF INCOME AND PROCEEDED TO INITIATE THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. ACCORDINGLY, PENALTY ORDER WAS PASSED ON 3.3.2011. MATTER TRAVELLED TO THE CIT (A). 3. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT (A) DISMISSED THE APPEAL AND CONFIRMED THE PENALTY LEVIED BY THE AO. AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4. BEFORE US, AT THE OUTSET, LD COUNSEL FOR THE AS SESSEE BRIEFLY NARRATED THE BACKGROUND FACTS OF THE CASE AND BROUGHT OUR ATTENTION THE COPY OF THE NOTICE ISSUED U/S 274 OF THE ACT AND MENTIONED THAT THE AO DID NOT TICKED ANY OF THE COLUMNS PROVIDED ON PAGE OF THE SAID NOTICE. LD AR FOR THE ASSESSEE REA SONED THAT THE AO HAS AMBIGUITY ON THE APPLICABLE LIMB IE CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULAR OF INCOME. 5 . FURTHER, BRINGING OUR ATTENTION TO THE PENALTY ORDER DATED 03.03.2011 , LD COUNSEL FOR THE ASSESSEE READ OUT THE PARA 2 WHICH READS AS UNDER: - ................ AS THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME , FURNISHED INACCURATE PARTICULARS OF INCOME , THE PENALTY PROCEEDING U/S 271(1)(C) OF THE ACT ARE INITIATED . 6 . AFTER HEARING BOTH THE PARTIES AND ON PERUSAL OF THE ORDERS OF THE REVENUE AUTHORITIES, WE FIND, THERE IS NO CLARITY IN THE MINDS OF THE REVENUE AUTHORITIES, WHETHER THE AMOUNT INVOLVED IS A CASE OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PART ICULARS OF INCOME. IN SUCH CIRCUMSTANCES, THE ASSESSEE IS ENTITLED TO RELIEF AS PER THE RATIO LAID DOWN IN THE BINDING JUDGMENT OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY [2013] 359 ITR 565 (KARN.). FO R ALL THE ABOVE REASONS, WE FIND, THE PENALTY LEVIED BY THE AO AND CONFIRMED BY THE CIT (A) IS NOT LEGALLY SUSTAINABLE. ACCORDINGLY, GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 7 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE O PEN COURT ON 1 7 T H MARCH, 2017 . S D / - S D / - ( SANDEEP GOSAIN ) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 17.03.2017 3 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI