ACIT 10(1), MUMBAI V. FIRST DATA (I) P.LTD, MUMBAI

ITA 8577/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9190 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2008-2009
• Appeal Filed On: 19-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VIREN SHAH
• Keywords: Business expenditure

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI . . !'#$ , % &' BEFORE SHRI H.L. KARWA, PRESIDENT AND SHRI N.K. BILLAIYA, AM ./I.T.A. NO. 8577/MUM/2011 ( ( ( ( ( / ASSESSMENT YEAR : 2008-09 THE ACIT-10(1), AAYAKAR BHAVAN, MUMBAI-400 020 / VS. M/S. FIRST DATA (INDIA) PVT. LTD., A-WING, 6 TH FLOOR, ARYSTON CENTER, JUHU TARA ROAD, VILE PARLE (W), MUMBAI-400 049 ') % ./ *+ ./PAN/GIR NO. : AAACF 9898A ( ), /APPELLANT ) .. ( -.), / RESPONDENT ) ), / / APPELLANT BY: SHRI MANOJ KUMAR -.), 0 / / RESPONDENT BY : SHRI VIREN SHAH 0 12% / DATE OF HEARING : 05.12.2012 34( 0 12% / DATE OF PRONOUNCEMENT : 07.12.2012 &5 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-21, MUMBAI DT.8.9.2011 PERTAINING TO A.Y. 20 08-09. 2. THE SOLE GRIEVANCE OF THE REVENUE IS THAT THE LD . CIT(A) ERRED IN DELETING THE PENALTY U/S. 271(1)(C) OF THE ACT IGNO RING THE FACT THAT INSPITE OF DELAY IN FILING THE RETURN THE ASSESSEE HAD CLAI MED CARRY FORWARD OF CURRENT YEARS LOSS. ITA NO. 8577/M/2011 2 3. THE ROOTS FOR THE LEVY OF PENALTY LIE IN THE ASS ESSMENT ORDER DT. 22.10.2010 PASSED U/S. 143(3). DURING THE COURSE O F THE SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTIC ED THAT THE ASSESSEE HAS NOT UNDERTAKEN ANY BUSINESS ACTIVITY AND YET C LAIMED HUGE EXPENSES ON ACCOUNT OF THE FOLLOWING HEADS IN THE PROFIT AND LOSS ACCOUNT. A) PERSONAL EXPENSES - RS. 3,19,66,907/- B) ADMINISTRATIVE & OTHER EXPENSES - RS. 1,06,60,009/ - ------------------------- TOTAL - RS. 4,26,26,916/- ============== 3.1. IN THE COMPUTATION OF INCOME, THE ASSESSEE SUO -MOTU DISALLOWED PROVISIONS AMOUNTING TO RS. 33,29,497/- AND RETURNE D A BUSINESS LOSS OF RS. 3,92,97,419/-. THE AO WAS OF THE OPINION THAT THE ENTIRE EXPENDITURE CLAIMED BY THE ASSESSEE TO THE TUNE OF RS. 3,92,97, 419/- WHICH HAS RESULTED INTO BUSINESS LOSS FOR THE YEAR UNDER CONS IDERATION IS NOT AT ALL ADMISSIBLE AS THERE IS NO BUSINESS ACTIVITY FOR THE YEAR UNDER CONSIDERATION. VIDE ORDER SHEET NOTING DT. 21.10. 2010, THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE ENTIRE AMOUNT CLAIME D AS EXPENDITURE SHOULD NOT BE DISALLOWED. THE AR ACCEPTED THE SAME . ACCORDINGLY THE EXPENDITURE OF RS. 3,92,97,419/- CLAIMED BY THE ASS ESSEE WAS DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE . 3.2. THE AO INITIATED THE PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS AND CONCEALIN G THE TAXABLE INCOME. STATUTORY NOTICES WERE ISSUED AND SERVED UPON THE A SSESSEE. THE ASSESSEE WAS SHOW CAUSED WHY PENALTY SHOULD NOT BE LEVIED. IN RESPONSE TO WHICH, THE ASSESSEE CONTENDED THAT THOUGH THE ASSES SEE HAS NOT ITA NO. 8577/M/2011 3 COMMENCED THE BUSINESS ACTIVITY BUT THE BUSINESS WA S SET UP AND THE EXPENSES INCURRED AFTER THE SET UP OF BUSINESS WER E CLAIMED AS BUSINESS EXPENSES. THE ASSESSEE MADE IT CLEAR THAT IT HAD N O INTENTION TO CARRY FORWARD THIS LOSS AND TO SUBSTANTIATE ITS CLAIM, T HE ASSESSEE SUBMITTED A COPY OF RETURN FOR A.Y. 2010-11 FILED ON 15.10.2010 SHOWING THAT IT HAD NOT CLAIMED ANY CARRY FORWARD OF BUSINESS LOSS. 3.3. AFTER CONSIDERING THE FACTS AND THE SUBMISSION S, THE AO WAS OF THE VIEW THAT THE ASSESSEE HAS DELIBERATELY FURNISHED I NACCURATE PARTICULARS OF ITS INCOME AND CONCEALED ITS TRUE INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE I.T. ACT TO THE TUNE OF RS. 3,92 ,97,419/- AND WENT ON TO LEVY THE MINIMUM PENALTY LEVIABLE BEING 100% OF THE TAX SOUGHT TO BE EVADED AND LEVIED RS. 1,33,57,193/-. 4. THE ASSESSEE AGITATED THE MATTER BEFORE THE LD. CIT(A) AND EXPLAINED THE FACTS AND THE CIRCUMSTANCES. THE ASS ESSEE EXPLAINED THAT THE RETURN OF INCOME WAS FILED ELECTRONICALLY AND T HE LOSS FOR THE YEAR IN CELL-XI IN SCHEDULE CFL WAS FILLED AT RS. 3,92,97,4 19/- BUT AS THE RETURN OF INCOME WAS FILED BEYOND THE PRESCRIBED TIME U/S. 80 OF THE ACT, THE ASSESSEE COMPANY WAS NOT ENTITLED TO CARRY FORWARD THE LOSS FOR SET OFF IN THE FUTURE. AFTER CONSIDERING THE FACTS AND THE CI RCUMSTANCES, THE LD. CIT(A) WAS OF THE FIRM BELIEF THAT THE DISALLOWANCE OF SUCH CLAIM OF CURRENT YEARS BUSINESS LOSS OF RS. 3.92 CRORES IN THE RETURN OF INCOME DID NOT ATTRACT THE PROVISIONS OF SEC. 271(1)(C) OF THE ACT FOR THE REASON THAT UNLESS SUCH LOSS HAS BEEN CLAIMED TO BE CARRY FORWARD, THERE CAN BE NO TAX IMPLICATIONS IN THE SUBSEQUENT YEARS WHICH T HE BASE FOR COMPUTING/QUANTIFYING PENALTY LEVIABLE U/S. 271(1)( C) OF THE ACT. THE LD. CIT(A) FURTHER OBSERVED THAT THE AO HAS NOT LEVIED PENALTY ON THE ISSUE THAT THE APPELLANTS CLAIM OF BUSINESS LOSS OF RS. 3.92 CRORES WAS ITA NO. 8577/M/2011 4 INCORRECT. THE AO HAS LEVIED PENALTY ONLY ON THE G ROUND THAT THE APPELLANTS CLAIM OF CARRY FORWARD OF SUCH CURRENT YEARS BUSINESS LOSS TO SUBSEQUENT YEARS WAS INCORRECT WHICH AMOUNTED TO FU RNISHING OF INACCURATE PARTICULARS OF INCOME SINCE IT HAD TAXED IMPLICATIONS IN THE SUBSEQUENT YEARS. THE LD. CIT(A) FURTHER CONSIDERE D THE FACTS OF THE SUBSEQUENT YEARS RETURN OF INCOME AND FOUND THAT I N RETURNS FOR A.YRS 2009-10 AND 2010-11, NO SUCH CLAIM OF SET OFF OF LO SS OF A.Y. 2008-09 WAS CLAIMED BY THE ASSESSEE AND FINALLY CONCLUDED T HAT ON THESE FACTS, THERE COULD NOT HAVE BEEN ANY TAX SOUGHT TO BE EVAD ED BY VIRTUE OF CURRENT YEARS BUSINESS LOSS OF RS. 3.92 CRORES AND ACCORDIN GLY DIRECTED THE AO TO DELETE THE PENALTY. 5. BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE S TRONGLY SUPPORTED THE FINDINGS OF THE AO AND SUBMITTED THAT THE ASSES SEE HAS DELIBERATELY SHOWN BUSINESS LOSS TO BE SET OFF AGAINST SUBSEQUEN T YEARS PROFIT. THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE ORDER OF T HE LD. CIT(A). 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND CAR EFULLY PERUSED THE ORDERS OF THE LOWER AUTHORITIES. THE ASSESSME NT ORDER CLEARLY INDICATES THAT THE ASSESSEE HAS CLAIMED CERTAIN EXP ENDITURE WITHOUT ANY CORRESPONDING INCOME WHICH HAS RESULTED INTO A NET LOSS OF RS. 3,92,97,419/-. IT IS THE SAY OF THE AO THAT THE AS SESSEE HAS INTENTIONALLY CLAIMED CARRY FORWARD OF THIS BUSINESS LOSS WHICH HAS RESULTED INTO FILING OF INACCURATE PARTICULARS AND CONCEALMENT OF INCOME . WE FAIL TO UNDERSTAND THE REASON AND LOGIC GIVEN BY THE AO. F IRSTLY, THIS IS THE CASE OF DISALLOWANCE OF ENTIRE EXPENSES CLAIMED BY THE A SSESSEE. THE ASSESSEE IN ITS COMPUTATION OF INCOME HAS SHOWN A NET LOSS O F RS. 3,92,97,419/- WHICH IN THE PRESENT FORMAT OF E-RETURN WOULD AUTOM ATICALLY GO UNDER THE ITA NO. 8577/M/2011 5 HEAD NET LOSS RETURN. AS THE RETURN HAS BEEN FILED BELATEDLY, LEGALLY THE ASSESSEE WAS NOT EVEN ENTITLED FOR SET OFF OF LOSS IN SUBSEQUENT YEARS. THEREFORE, THERE CANNOT BE ANY QUESTION OF DELIBERA TELY CLAIMING SET OFF OF LOSS. THE LD. CIT(A) HAS GIVEN A VERY CATEGORICAL FINDING THAT IN SUBSEQUENT YEARS RETURN, I.E. RETURN OF A.YRS 200 9-10 AND 2010-11, THE ASSESSEE HAS NOWHERE CLAIMED SET OFF OF LOSS OF EA RLIER YEARS. THEREFORE, THERE CANNOT BE A CASE OF BEING ANY TAX SOUGHT TO B E EVADED. CONSIDERING ALL THESE FACTS IN TOTALITY, IN OUR CONSIDERATE VIE W, THE LD. CIT(A) HAS GIVEN A CORRECT FINDING ON THE FACTS OF THE CASE WH ICH WE CONFIRM. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. 6 17 *' 0 8 %6* 0 *1 9# ORDER PRONOUNCED IN THE OPEN COURT ON 7.12. 2012 &5 0 4( % 8 :&7 7.12.2012 4 0 ; SD/- SD/- (H.L. KARWA) (N.K. BILLAIYA) /PRESIDENT % &' / ACCOUNTANT MEMBER MUMBAI; :& DATED 7.12.2012 . . ./ RJ , SR. PS ITA NO. 8577/M/2011 6 &5 &5 &5 &5 0 00 0 -1! -1! -1! -1! ; -1 , , / DR, ITAT, MUMBAI 6. ;? / GUARD FILE. &5 &5 &5 &5 / BY ORDER, .!1 -1 //TRUE COPY// @ @@ @ / 9 9 9 9 * * * * (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI