Rathna Stores Private Limited, CHENNAI V. DCIT, CHENNAI

ITA 928/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7508 (ITAT-CHENNAI)
• Duration Of Justice: 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 11-04-2016
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS JT
• Keywords: Revised return
• Section: 143(3); 263

Judgement Text

, , IN THE INCOME-TAX APPELLATE TRIBUNAL A BENCH, CHE NNAI , ! ' # $' # % . &' , ( ! )* BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ I T.A. NO. 928/MDS/2016 / ASSESSMENT YEAR :2007-08 RATNA STORES PVT. LTD., NEW NO.79, USMAN ROAD, T.NAGAR, CHENNAI 600 017. [PAN: AACCR 7287F] VS. DY. COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE V(3), CHENNAI ( +, /APPELLANT ) ( -.+, / RESPONDENT ) / APPELLANT BY : NONE / RESPONDENT BY : SHRI SHIVA SRINIVAS, JT. CIT / DATE OF HEARING : 04.01.2017 /DATE OF PRONOUNCEMENT : 15.03.2017 / / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-3, CHENNAI DAT ED 20.01.2016 (CIT(A)) FOR SHORT) PASSED UNDER SECTION 271(1)(C ) OF THE INCOME TAX ACT, 1961 [ACT IN SHORT], FOR THE ASSESSMENT YEAR (AY) 2007-08. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NO. .. .928 928928 928/M /M/M /MDS DSDS DS/ // /201 201201 2016 66 6 2 2. THE LD. AR FOR THE ASSESSEE HOWEVER FILED P ETITION FOR ADJOURNMENT STATING THAT THE ASSESSEE HAS APPEALED AGAINST THE ORDER PASSED U/S. 263 OF THE ACT, WHICH IS PENDING BEFORE THE HIGH COURT AND SOUGHT FOR ADJOURNMENT. FURTHER, NOBODY APPEARED PERSONALLY BEFORE THIS TRI BUNAL IN THIS REGARD. IN OUR OPINION, THE REASON ADVANCED BY THE AR IN ITS P ETITION FOR ADJOURNMENT CANNOT BE CONSIDERED AS A GOOD AND SUFFICIENT REASO N TO ADJOURN THE CASE AND ACCORDINGLY HE REJECT ADJOURNMENTS SOUGHT BY TH E ASSESSEE AND WE TOOK UP THE CASE TO DECIDE AFTER HEARING THE LD. D R. 3. THE FACTS OF THE CASE ARE THAT IN THIS CASE, THE ASSESSEE ORIGINALLY FILED RETURN OF INCOME ON 26.11.2007 DECLARING TOTAL INCO ME OF RS. 54,79,580/- SUBSEQUENTLY REVISED THE INCOME AT RS. 61,09,423/-. THE ASSESSMENT ORDER PASSED U/S. 143(3) ON 30.12.2009 SUBSEQUENT TO THIS THE ASSESSMENT ORDER WAS SUBJECT TO REVISION U/S. 263 BY CIT HOLDING THA T THE ASSESSMENT ORDER DATED 30.12.2009 IS ERRONEOUS AND PREJUDICIAL TO TH E INTEREST OF THE REVENUE. SUBSEQUENTLY, ORDER PASSED U/S. 143(3) R/W S. 263 W ERE PASSED ON 07.03.2013. IT IS FURTHER TO BE NOTED THAT THERE I S NO STATEMENT OF SALE ON JEWELLERY IN THE MONTH OF MARCH, 2007 TO THE TUNE O F RS. 43,48,402/- AND FURTHER VERIFICATION HE FOUND THAT THERE WAS NO STA TEMENT OF INCOME TO THE TUNE OF RS. 43.50 LACS. FURTHER, THERE WAS NON DED UCTION OF TDS ON EXPENDITURE TO THE TUNE OF RS. 2,12,01,732/-. THES E ADDITIONS WERE ACCEPTED BY THE ASSESSEE BY FILING THE REVISED STATEMENT OF INCOME DURING THE COURSE I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NO. .. .928 928928 928/M /M/M /MDS DSDS DS/ // /201 201201 2016 66 6 3 OF ORIGINAL ASSESSMENT PROCEEDINGS. HOWEVER, THE AS SESSEE PLEADED BEFORE THE ASSESSING OFFICER THAT NO PENALTY COULD BE LEVI ED FOR THESE DISCREPANCIES. HOWEVER, THE ASSESSING OFFICER CONS IDERED THESE ADDITIONS OF LEVYING PENALTY U/S 271(1)(C) OF THE ACT. ON AP PEAL BEFORE THE CIT(A) IT IS SUBMITTED THAT LD. A.R AS FOLLOWS: 1. PENALTY LEVIED BY THE AO U/S.271(1) OF THE INC OME TAX ACT INCLUDES PENALTY ON ADDITION OF RS. 43,50,000/- MADE DURING THE COURSE OF ORIGINAL ASSESSMENT. 2. IN THE COURSE OF ORIGINAL ASSESSMENT U/S. 143(3) FOR THE A. Y.207-08 (DT: 30.12.2009) THE AO ADDED A SUM OF RS. 43,50,000/-= ON THE GROUNDS THAT THE SAME WAS OFFERED BY THE ASSESSE. 3. THERE IS NO MENTION ANYWHERE IN THE ASSESSMENT O RDER OF DETECTION OF ANY CONCEALED INCOME, DISCOVERY OF ANY DISCREPANCY IN THE BOOKS OF ACCOUNTS, FALSE OR INADEQUATE INFORMATION FURNISHED BY THE ASSESSE, ETC. 4. THE ADDITIONAL INCOME OFFERED VOLUNTARILY BY THE ASSESSE PURELY TO PURCHASE PEACE AND FOR THIS REASON, AS AGREED PENAL TY NOTICE U/S. 271(1) WAS ALSO NOT ISSUED AT THE TIME OF ORIGINAL ASSESSM ENT. 5. IN VIEW OF THE ABOVE AND MORE PARTICULARLY IN TH E ABSENCE OF MENSREA OR DISCOVERY OF ANY CONCEALMENT OF INCOME OR FURNISHING OF INADEQUATE PARTICULARS THE PENALTY DESERVES TO BE DELETED. 6. MERE FACT THAT THERE IS A ADDITION DURING THE COURSE OF ASSESSMENT OR THAT THE SAME IS SUSTAINED IN THE APPEAL IS NOT SUFFICIE NT REASON FOR LEVY OF PENALTY U/S. 271 (1 ). 7. COMMISSIONER OF INCOME TAX VS. RELIANCE PETRO PR ODUCTS PVT. LTD. REPORTED IN [2010] 322 ITR 158 (SC). ON READING OF SECTION 271(1), THE HON'BLE SUPREME COURT POINTED OUT THAT IN ORDER TO BRING THE CASE U/S. 271(1), THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF T HE INCOME OF THE ASSESSE. SECONDLY THE ASSESSE MUST HAVE FURNISH ED INACCURATE PARTICULARS OF HIS INCOME. IN ORDER TO EXPOSE THE A SSESSE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISIO N, THE PENALTY PROVISION COULD NOT BE INVOKED. THUS THE HON'BLE SUPREME COUR T POINTED OUT THAT A MERE MAKING OF A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF WOULD NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSE. 8. HON'BLE SUPREME COURT IN THE CASE OF CIT VS. SUR ESH CHANDRA MITTAL [2001] 251 ITR 9, AND ARGUED THAT THE HON'BLE SUPRE ME COURT HAS HELD I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NO. .. .928 928928 928/M /M/M /MDS DSDS DS/ // /201 201201 2016 66 6 4 THAT ONCE REVISED RETURNS FILED BY THE ASSESSE HAVE BEEN REGULARIZED BY THE REVENUE THE EXPLANATION OF THE ASSESSE THAT HE HAD DECLARED ADDITIONAL INCOME TO BUY PEACE TO COME OUT OF LITIG ATION COULD BE BONAFIDE AND PENALTY U/S. 271(1) OF THE ACT WAS NOT JUSTIFIED. 9. NO PENALTY CAN BE LEVIED ON THE QUANTUM ADDITION S MERELY ON THE GROUND THAT THE SAME ARE ACCEPTED BY THE ASSESSE FOR BUYIN G PEACE AND AVOID LITIGATION. FOR THIS PROPOSITION, SUPPORT FROM HIGH COURT IN THE CASE OF CIT VS. MLS. DALRNIA DYECHEN INDUSTRIES LTD. IN INCOME TAX APPEAL NO. 1396 OF 2013, DATED 6.7.2015. 10. FURTHER THE NOTICE ULS. 271(1) DT: 7.3.2013 IS ITSELF DEFECTIVE SINCE THE AO IN THE SHOW CAUSE NOTICE DT': 7.3.2013 HAS NOT S PECIFIED THE ACQUISITION AGAINST THE ASSESSE-WHETHER CONCEALMENT OF PARTICULARS INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. THE SAID NOTICE DOES NOT SPECIFY WHERE THE PRESENT PENALTY IS BEING LEVIED FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IT IS NOT CLEAR AS TO THE RE LEVANT LIMB OF THE PROVISIONS OF SECTION 271 (1) OF THE ACT FOR WHICH PENALTY SHOULD BE LEVIED. IN THIS CONNECTION ASSESSE RELIES ON THE JU DGMENT OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF MANJUNATH COTTO N & GINNING FACTORY (92 DTR 111)(KAR.HC). 4. THE LD. CIT(A) WITHOUT AGREEING WITH THE CONTENT ION OF LD. LD. A.R HE HAS CONFIRMED THE LEVY OF PENALTY BY OBSERVING AS F OLLOWS: I. ORIGINAL RETURN OF THE INCOME FILED BY THE APPELLAN T FOR THE RELEVANT A.Y ON 26.11.2007 DECLARING TOTAL INCOME OF RS.54,79,58 0. II. THIS RETURN WAS SUBJECTED TO SCRUTINY AND CERTAIN D ISCREPANCIES WITH REGARD TO SALE OF BULLION WERE DETECTED BY THE A.O. III. ON DELETION OF DISCREPANCIES APPELLANT HAS OFFERED INCOME OF RS. 43,50,000/- IV. NON DEDUCTION OF TDS BY THE APPELLANT FOR THE EXPEN DITURE OF RS. 2,12,01,73 HAS BEEN POINTED OUT BY THE AO AT THE TI ME OF SCRUTINY PROCEEDINGS. V. REVISED MEMO OF INCOME WAS FILED BY THE APPELLANT A T THE TIME OF SCRUTINY ASSESSMENT DISALLOWING AN AMOUNT OF RS. 2,12,01,732 . VI. THE ORIGINAL ASSESSMENT PROCEEDINGS WERE INITIATED BY THE AO ON 15.09.2008. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NO. .. .928 928928 928/M /M/M /MDS DSDS DS/ // /201 201201 2016 66 6 5 VII. EVEN IF APPELLANT HAD FILED REVISED RETURN THAT WOU LD HAVE BECOME NONEST, WHICH IS WHY APPELLANT HAD FILED REVISED ME MO OF INCOME BUT NOT REVISED RETURN U/S.139(5). VIII. THE REVISED MEMO OF INCOME FILED BY THE APPELLANT W AS REGULARIZED BY THE APPELLANT AUTHORITIES AS WELL AS ORDER U/S. 143(3) R.W.S 263. IX. THE ABOVE FACTS CLEARLY ESTABLISHED THAT APPELLANT HAD CONCEALED THE INCOME AND ALSO FILED INACCURATE PARTICULARS WITH R ESPECT TO THE ORIGINAL RETURN OF INCOME FILED ON 26.11.2007. AGAIN THIS ASSESSEE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD THE LD DR. AND PERUSED THE MATERI AL ON RECORD. IN THIS CASE, THE FIRST ADDITION OF RS. 43.5 LACS IS B ASED ON THE REVISED STATEMENT OF INCOME FILED BY THE ASSESSEE AFTER DISCREPANCIE S NOTICED BY ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT. THE ASSES SEE HEREIN NOT ABLE TO SUBSTANTIATE WITH THE REASONABLE EXPLANATIONS HOW T HIS UNDER STATEMENT WAS MADE BY ASSESSEE. IT IS THE DUTY OF THE ASSESSEE T O GIVE BONAFIDE EXPLANATION HOW THIS INCOME WAS UNDER REPORTED BY T HE ASSESSEE. THE ASSESSEE IN THIS CASE ONLY AFTER DETECTION BY THE ASSESSING OFFICER FILED REVISED STATEMENT OF INCOME IN THE COURSE OF ASSE SSMENT PROCEEDINGS. HAD THE ASSESSING OFFICER NOT DETECTED THESE DISCR EPANCIES IN THE COURSE OF ASSESSMENT PROCEEDINGS, IT WOULD HAVE ESCAPED FROM THE ASSESSMENT. THE ASSESSEE IN THIS CASE NOT BONAFIDE IN RECORDING THE SALES PROPERLY IN ITS ACCOUNT THOUGH IT WAS SUBJECT TO STATUTORY AUDIT AN D TAX AUDIT BY CHARTERED ACCOUNTANT. IN OUR OPINION, THIS ISSUE IS CLEARLY FALLS UNDER PURVIEW OF I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NO. .. .928 928928 928/M /M/M /MDS DSDS DS/ // /201 201201 2016 66 6 6 CONCEALING PARTICULARS OF INCOME WHICH WARNS PENALT Y U/S. 271(C) OF THE ACT. ACCORDINGLY, WE INCLINED TO CONFIRM THE LEVY OF PEN ALTY ON THIS ISSUE. 6. COMING TO THE PENALTY, WITH REGARD TO DISALLOWA NCE OF EXPENDITURE U/. 40(A)(IA) OF THE ACT, IN OUR OPINION THIS DISALLOWA NCE ITSELF CANNOT BE CONSTRUED AS FURNISHING INACCURATE PARTICULARS OF I NCOME OR CONCEALMENT OF INCOME. THE ASSESSEE HAS FAILED TO DEDUCT TDS WHIC H RESULTED IN DISALLOWANCE OF EXPENDITURE. THE MISTAKE COMMITTED BY ASSESSEE WAS COMPENSATED BY DISALLOWANCE OF EXPENDITURE. FURTHE R, THE REVENUE CANNOT PARALYSE THE ASSESSEE BY LEVYING PENALTY U/S. 271(1 )(C) OF THE ACT. IN ORDER TO LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT, THER E HAS TO BE CONCEALMENT OF PARTICULARS OF INCOME OF THE ASSESSEE OR THE ASSESS EE MUST HAVE FURNISHED INACCURATE PARTICULARS OF ITS INCOME. PRESENT CASE IS NOT THE CASE OF CONCEALMENT OF INCOME OR IT IS NOT A CASE OF REVENU E THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME. THE DE PARTMENT HAS NOT FOUND OUT THAT THE ASSESSEE HAS FURNISHING ANY FACTUAL IN CORRECT INFORMATION AND THE ASSESSEE IS NOT GUILTY OF FURNISHING OF INACCUR ATE PARTICULARS OF INCOME. IN OUR OPINION, THE CONDITIONS LAID DOWN U/S. 271(1 )(C) OF THE ACT IS NOT COMPLIED WITH. BEING SO, LEVY OF PENALTY IS NOT JU STIFIED MERELY BECAUSE THE ASSESSEE HAS CLAIMED CERTAIN EXPENDITURE THAT EXPEN DITURE IS NOT ELIGIBLE FOR DEDUCTION IN VIEW OF THE PROVISIONS OF SECTION 40 ( A)(IA) OF THE ACT AND FOR THAT REASON THE EXPENDITURE IS DISALLOWED. PENALTY CAN NOT BE LEVIED FOR MERE I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NO. .. .928 928928 928/M /M/M /MDS DSDS DS/ // /201 201201 2016 66 6 7 MAKING OF A CLAIM OF THE EXPENDITURE WHICH IS NOT A LLOWABLE AND DELETION OF PENALTY BY CIT(A) IS JUSTIFIED ON THIS ISSUE. WE PL ACE RELIANCE ON THE JUDGMENT OF SUPREME COURT IN THE CASE OF CIT V. RELIANCE PETRO PRODUCTS PVT. LTD. [2010] 322 ITR 158 (SUPREME COURT). ACCORDINGLY, T HE PENALTY LEVIED U/S. 271(1)(C) OF THE ACT WITH REGARD TO DIS ALLOWANCE U/S. 40(A)(IA) OF THE ACT CANNOT BE SUSTAINED AND THE SAME IS DELETED . 7. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED. ORDER PRONOUNCED ON THE 15 TH MARCH, 2017 AT CHENNAI. SD/- SD/- (DUVVURU RL REDDY) JUDICIAL MEMBER (CHANDRA POOJARI) ACCOUNTANT MEMBER CHENNAI, DATED, THE 15.03.2017 EDN / KSSUNDARAM !' #$ %$ /COPY TO: 1. /APPELLANT, 2. / RESPONDENT, 3. & ( )/CIT(A), 4. & /CIT, 5. $'( ) /DR & 6. (* + /GF.