DCIT, Circle - 8, Kolkata, Kolkata V. M/s. Baljit Securities Pvt. Ltd., Kolkata

ITA 949/KOL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54673 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 29-06-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R GUPTA
• Keywords: Reopening of assessment; Business expenditure; Reassessment proceedings
• Section: 147; 27; 148

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KOLKATA [ . . . . . .. . , ! !! !. . . . '#$! '#$! '#$! '#$!, ,, , ] [BEFORE SHRI S.V. MEHROTA, A.M. & SHRI N. VIJAYA KUMARAN, JM] % % % % / I.T.A NO.949/KOL/2010 &!' () &!' () &!' () &!' ()/ // / ASSESSMENT YEAR : 2003-04 INCOME TAX OFFICER/WARD-2(2) -VS.- M/S. L.C.C. INFOTECT LIMITED KOLKATA. KOLKATA [PAN : AACCA 2580 J] [ +, +, +, +, /APPELLANT ] ]] ] [ ./+, ./+, ./+, ./+,/ // / RESPONDENT ] ]] ] +, +, +, +, / FOR THE APPELLANT : S/SHRI A.K. SINGH, CIT & R. GUPTA, SR.DR ./+, ./+, ./+, ./+, / FOR THE RESPONDENT : SHRI SUBHAS AGARWAL $!0 1 2 $!0 1 2 $!0 1 2 $!0 1 2 /DATE OF HEARING : 20.10.2011 3( 1 2 3( 1 2 3( 1 2 3( 1 2 /DATE OF PRONOUNCEMENT : 18.11.11 4 /ORDER ! !! !. . . . '# $! '# $! '# $! '# $! , PER N. VIJAYA KUMARAN, J. M. THIS APPEAL BY THE DEPARTMENT IS DIRECTED AGAINST O RDER OF LD. CIT(A)-I, KOLKATA DATED 02.02.2010 FOR ASSESSMENT YEAR 2003-04. THIS APPEAL IS AGAINST THE DELETION OF PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT. 2. THE FACTS RELEVANT ARE THAT THE ASSESSEE IS ENGA GED IN THE BUSINESS OF TRAINING IN COMPUTER EDUCATION AND SOFTWARE DEVELOPMENT. IN THE PROFIT & LOSS ACCOUNT EXPENDITURE ON ACCOUNT OF ADMINISTRATION AND OTHERS WAS CLAIMED. ASSESSING OFFICER WAS OF THE VIEW THAT THE PROVISIONS OF SECTION 71(3) OF THE ACT BEING VIOLATED RESULTED IN ESCAPEMENT OF INCOME. HE INITIATED PROCEEDINGS FOR REOPENING OF ASSESSMENT FOLLOWED BY NOTICE UNDER SECTION 148 OF THE ACT. ASSESSING OFFICER OBSERVED THAT BESIDES LOSS ON SAL E OF SHARES AND LOSS ON SALE OF MUTUAL FUNDS, AN AMOUNT OF RS.42,000/- BEING CLAIMED ON ACCOUNT OF L OSS ON SALE OF ASSETS WITHIN THE TERM BUSINESS EXPENDITURE IS SHOWN UNDER THE HEAD ADMINISTRATION & OTHERS. ASSESSING OFFICER, WHILE FRAMING [ ITA NO. 949/KOL/2010] 2 ASSESSMENT LOSS ON SALE OF SHARES AS WELL AS LOSS O N SALE OF MUTUAL FUNDS ADDED BACK TO THE BUSINESS PROFIT OF THE ASSESSEE. THUS, THE LOSS RET URN CLAIMED BY THE ASSESSEE AFTER THE REOPENING FRAMED POSITIVE TOTAL INCOME TO THE TUNE OF RS.20,1 8,674/-. THIS RESULTED IN PENALTY PROCEEDINGS INITIATED BY THE ASSESSING OFFICER UNDER SECTION 27 1(1)(C) OF THE ACT. ASSESSING OFFICER FOUND THAT ASSESSEE FILED INACCURATE PARTICULAR OF INCOME. SO FAR AS ITS CLAIMS OF RS.1,19,33,000 ON ACCOUNT OF LOSS ON SALE OF SHARES, RS.29,56,000/- ON ACCOUNT O F LOSS ON SALE OF MUTUAL FUNDS & RS.42,000/- ON ACCOUNT OF SALE OF ASSETS WHICH WERE ALL PLACED AND DISCLOSED AS EXPENDITURE UNDER THE HEAD ADMINISTRATION & OTHERS AGAINST THE BUSINESS PROF IT OF THE ASSESSEE. IT IS WILLFUL NEGLECT ACCORDING TO THE ASSESSING OFFICER, ON THE PART OF THE ASSESSEE, IN SO FAR AS THE ASSESSEE FAILED TO BRING SUCH MISTAKE TO THE NOTICE OF THE ASSESSING O FFICER BEFORE INITIATION AND REOPENING OF PROCEEDINGS EVEN AFTER NOTICE UNDER SECTION 148 ISS UED AND SERVED ON THE ASSESSEE. THEREFORE, ASSESSING OFFICER LEVIED MINIMUM PENALTY @ 100% AS THE ASSESSEE RECTIFIED THE CLAIMS IN THE RETURN IN PURSUANCE TO SECTION 148 OF THE ACT. 3. ON APPEAL TO THE LD. CIT(A), LD. CIT(A) FOUND TH AT THE VERY FACTS OF FILING TAX AUDIT REPORT AND OTHER DETAILS WOULD NEGATE ALLEGATION BY THE ASSESSING OFFICER THAT THE ASSESSEE FURNISHED INACCURATE PARTICULARS OF INCOME. SINCE T HE CONCEALMENT INVOLVED A PENAL ASPECT. ACCORDING TO THE LD. CIT(A), IT NEEDS TO BE PROVED AS A DELIBERATE AND CONSCIOUS ATTEMPT BY THE ASSESSEE TO EVADE TAX. ON THIS REASONING, HE DELETE D THE PENALTY. 4. AGGRIEVED ON THIS, DEPARTMENT IS IN APPEAL BEFOR E US. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD INCLUDING THE PRECEDENTS. SECTION 271(1)(C) WILL AT TRACT WHEN THE ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE P ARTICULARS OF SUCH INCOME. HERE, IN THIS CASE, ASSESSEE CLAIMED REFUND BY SHOWING LOSS OF RS.40,42 ,774 IN THE ORIGINAL RETURN OF INCOME FILED ON 10.12.2003 RELEVANT TO THE ASSESSMENT YEAR. IT IS N OT DISPUTED THAT ASSESSEE-COMPANY WAS ENGAGED IN THE BUSINESS OF TRAINING IN COMPUTER EDUCATION AND SOFTWARE DEVELOPMENT. ORIGINALLY, UNDER THE HEAD ADMINISTRATION AND OTHER EXPENSES, LOSS ON SALE OF SHARES AND LOSS ON SALE OF MUTUAL FUNDS WERE DEBITED IN THE COMPUTATION OF TOTAL INCO ME. THIS AMOUNTS WERE NOT ADDED BACK TO THE BUSINESS OF THE TOTAL INCOME. THIS IS THE VERY REAS ON FOR REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE ACT BY THE ASSESSING OFFICER. IN RESPONSE TO REASSESSMENT NOTICE, ASSESSEE WAS DULY [ ITA NO. 949/KOL/2010] 3 REPRESENTED BY THE LD. AUTHORISED REPRESENTATIVE OF THE ASSESSEE. HOWEVER, IT IS NOT EXPLAINED WHY THIS LOSS ON SALE OF SHARES AS WELL AS LOSS ON SALE OF MUTUAL FUNDS SHOWN AS BUSINESS EXPENDITURE UNDER THE HEAD ADMINISTRATION AND OTHE RS. IT IS NOT DISPUTED THAT ASSESSEE IS NOT A BANKING COMPANY AND THE ASSESSEES BUSINESS IS TRAI NING IN COMPUTER EDUCATION. THAT BEING THE POSITION. HOW THIS EXPENDITURE CAN ACCOMMODATE UNDE R THE HEAD ADMINISTRATION & OTHERS REMAINS UNEXPLAINED. ASSESSING OFFICER AFTER SATISF IED THAT THERE IS ESCAPEMENT OF INCOME PARTICULARLY WHEN PROVISIONS OF SECTION 71(3) OF TH E INCOME TAX ACT BEING VIOLATED. ASSESSING OFFICER IN THE PENALTY PROCEEDINGS HAS MADE OUT THE CASE THAT THE ASSESSEE-COMPANY HAS NOT DISCLOSED ALL THE MATERIAL FACTS IN THE RETURN OF I NCOME AND THE ASSESSEE FILED TAX AUDIT REPORT ONLY IN PURSUANCE TO REASSESSMENT PROCEEDINGS. HENC E, INACCURATE PARTICULARS ALREADY AVAILABLE IN THE RECORD AS FURNISHED BY THE ASSESSEE CAN NOT BE GET CURED THE CLEAR INTENTION OF THE ASSESSEE. THE EXPENDITURE WHICH WAS NOT AT ALL A BUSINESS EXPENDI TURE INTENTIONALLY SHOWN AS BUSINESS EXPENDITURE UNDER THE HEAD ADMINISTRATION & OTHERS AND CLAIMED IT AS EXPENDITURE CLEARLY PROVES THE INTENTION OF THE ASSESSEE AND RESULTED I N ESCAPEMENT OF INCOME. THAT BEING THE POSITION. THE APPLICATION OF SECTION 271(1)(C) HAS BEEN CLEAR LY ESTABLISHED BY THE DEPARTMENT WHICH ATTRACTS PENALTY FOR THE FACT THAT ASSESSEE HAS CONCEALED PA RTICULARS OF INCOME AND HAS FURNISHED INACCURATE PARTICULARS OF INCOME. THEREFORE, IT IS CLEAR CASE OF ATTRACT OF SECTION 271(1)(C) OF THE ACT. 6. LD. DEPARTMENTAL REPRESENTATIVE WHILE SUBMITTING HIS ARGUMENTS RELIED ON THE DECISION IN THE CASE OF UNION OF INDIA VS. DHARMENDRA TEXTILES PROCESSORS AND OTHERS [2008] 306 ITR 277 (SC). 7. ON THE OTHER HAND, LD. COUNSEL APPEARING ON BEHA LF OF THE ASSESSEE RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. REL IANCE PETROPRODUCTS (P) LTD. [2010] 322 ITR 155 (SC). 8. WE ARE OF THE VIEW THAT THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF DHARMENDRA TEXTILES PROCESSORS AND OTHERS (SUPRA) IS CLEARLY A PPLICABLE IN THIS CASE AS RIGHTLY ARGUED BY LD. CIT(DR). IT IS THE EFFORT OF THE DEPARTMENT WHICH U NEARTH THE ESCAPEMENT OF INCOME. IN OTHER WORDS, ESCAPEMENT OF INCOME BY FILING INACCURATE PA RTICULARS OF INCOME DETECTED BY THE DEPARTMENT AND IT IS THE REASON FOR REOPENING OF AS SESSMENT BUT FOR THAT REOPENING THE ASSESSEE WOULD NOT HAVE DISCLOSED. THE ASSESSEE IS ON THE BU SINESS OF TRAINING IN COMPUTER EDUCATION AND [ ITA NO. 949/KOL/2010] 4 SOFTWARE DEVELOPMENT. HOW HE CAN SHOW THE ABOVE EX PENDITURE LOSS ON SALE OF SHARES AND LOSS ON SALE OF MUTUAL FUNDS UNDER THE HEAD ADMINISTR ATION & OTHERS AND IT IS TO BE EXPLAINED BY THE ASSESSEE THAT THE CLAIM IS A BONAFIDE CLAIM. LD . CIT(DR) FURTHER SUBMITTED THAT CAN NOT BE A BONAFIDE CLAIM AS ASSESSEE IS NOT IN THE BUSINESS O F TRADING IN SHARES. VOLUNTARILY, ASSESSEE SHOWN THE ABOVE EXPENDITURE UNDER THE HEAD ADMINISTRATIO N & OTHERS. THEREFORE, WE ARE OF THE VIEW THAT IT IS A CLEAR CASE OF CONCEALMENT OF PARTICULA RS OF ASSESSEES INCOME AND ASSESSEE FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. BY FURNISHIN G THIS INACCURATE PARTICULARS OF INCOME, ASSESSEE GOT THE BENEFIT OF RETURNED LOSS WHICH RESULTED IN REFUND ALSO IN THE INITIAL ASSESSMENT. THEREAFTER, ONLY THE ASSESSMENT WAS REOPENED AS THERE WAS ESCAP EMENT OF INCOME. IT IS A CLEAR CASE OF VIOLATION OF SECTION 271(1)((C) OF INCOME TAX ACT W HICH ATTRACTS PENALTY. THE DECISIONS RELIED BY THE LD. COUNSEL IN THE CASE OF MRS. GITA SANGHI VS. CIT [2005] 277 ITR 388 (MP) AND IN THE CASE OF CIT VS. SRI SARADHA TEXTILE PROCESSORS (P) LTD. [2006] 286 ITR 499 (MAD.) WILL NOT HELP THE ASSESSEE AS IT IS A CLEAR CASE OF INTENTIONAL ACT O F THE ASSESSEE WITH DELIBERATE AND CONSCIOUS ATTEMP T TO EVADE TAX AS RIGHTLY POINTED OUT BY THE LD. CIT( DR). IT IS UNEARTHED ONLY ON THE EFFORT TAKEN BY THE DEPARTMENT, ONLY ON REOPENING, THIS WAS DETECTE D AND CHARGED TO TAX. HENCE, WE ARE OF THE VIEW THAT THE ORDER OF THE LD. CIT(A) REQUIRES TO B E REVERSED AND THAT OF THE ASSESSING OFFICER SHOULD BE RESTORED. HENCE, PENALTY LEVIED UNDER SEC TION 271(1)(C) OF THE ACT BY THE ASSESSING OFFICER IS JUSTIFIED UNDER THE ABOVE SET OF FACTS A ND CIRCUMSTANCES AND ALLOW THE APPEAL OF THE DEPARTMENT. 8. IN THE RESULT, APPEAL OF THE DEPARTMENT IS ALLOW ED. 4 4 4 4 $ $ $ $ 5 $! 6 7 5 $! 6 7 5 $! 6 7 5 $! 6 7 2 2 2 2 ORDER PRONOUNCED IN THE COURT ON 18.11.2011. SD/- SD/- [ . . . . . .. . , ] [ ! !! !. . . . '# $ '# $ '# $ '# $! !! !, ,, , ] [ S. V. MEHROTRA ] [ N. VIJAYAKUMARAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER D ATED : 18TH NOVEMBER, 2011. [ ITA NO. 949/KOL/2010] 5 4 1 .&&' 8'(/ COPY OF THE ORDER FORWARDED TO: 1. +, /APPELLANT : INCOME TAX OFFICER, WARD-2(2), AAYAKA R BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 001. 2 . ./+, / RESPONDENT : M/S. L.C.C. INFOTECH LIMITED, P-16, CIT ROAD, KOLKATA-700 014 . 3. &4 - ! / CIT, 4. &4! ()/ CIT(A), KOLKATA. 5. &6 .&!/ DR, KOLKATA BENCHES, KOLKATA [/' .&/ TRUE COPY] 4!$/ BY ORDER, # /ASSTT REGISTRAR [KKC AB &!C# &D /SR.PS]