M/S. C.V. TRADING & INVESTMENTS CO. P. LTD, V. THE ACIT CIR 4(1),

ITA 9600/MUM/2004

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 7285 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 02-06-2011
• Assessment Year: 1994-1995
• Appeal Filed On: 30-12-2004
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S K SINGH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI I BENCH, MUMBAI. BEFORE SHRI R.V.EASWAR, HONBLEPRESIDENT AND SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER I.T.A NO.9600/ MUM/2004 ASSESSMENT YEAR: 1994-95 C.V.TRADING & INVESTMENTS CO.P.LTD. .. APPELLAN T C/O SHRI HEMANT CHIKHAL, 5, OLD HANUMAN, 1 ST CROSS LANE, 4 TH FLOOR, KALBADEVI ROAD, MUMBAI-02. PA NO. VS ACIT, CIRCLE 4(1) ,. RESPONDEN T AAYAKAR BHAVAN, M.K. ROAD, MUMBAI. APPEARANCES: P K PARIDA, FOR THE APPELLANT S.K.SINGH, FOR THE RESPONDENT DATE OF HEARING : 02-06-2011 DATE OF PRONOUNCEMENT: 05 -08-2011 O R D E R PER PRAMOD KUMAR: 1. BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT H AS CHALLENGED CORRECTNESS OF CIT(A)S ORDER DATED 1 ST OCTOBER, 2004, IN PARTIALLY CONFIRMING THE PENALTY UNDER SECTION 271(1)(C) OF T HE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 1994-95. 2. IN THE FIRST GROUND OF APPEAL, THE ASSESSEE HAS RAISED THE FOLLOWING GRIEVANCE; I .T.A NO.9600/ MUM/2004 ASSESSMENT YEAR: 1994-05 2 THE LD. CIT(A) ERRED IN UPHOLDING THE PENALTY LEVI ED @100% U/S.271(1)(C) OF THE INCOME TAX ACT, 1961 ON THE DISALLOWANCE OF COMMISSION AMOUNTING TO ` `` ` .68,86,935 PAID TO VARIOUS PARTIES WITHOUT APPRECIATING THE FACT TH AT THE PAYMENT OF COMMISSION HAS BEEN MADE THROUGH ACCOUNT PAYEE CHEQUE, ALL THE PARTIES CONFIRMED HAVING RECE IVED THE SAID COMMISSION, THE PARTIES ARE IDENTIFIABLE, THE RECIPIENTS ARE INCOME TAX ASSESSES AND THEY HAVE SHOWN THE COMMISSION INCOME IN THEIR PROFIT AND LOSS ACCOUNT. 3. VIDE OUR ORDER OF EVEN DATE AND ON THE SAME SET OF FACTS, IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 1993-94, WE HAVE U PHELD THE GRIEVANCE RAISED BY THE ASSESSEE AND DIRECTED THE AO DELETE T HE PENALTY IMPOSED UNDER SECTION 271(1)(C). FOLLOWING THE VIEW SO TAKEN BY US, IN THIS YEAR ALSO, WE DIRECT THE AO TO DELETE THE PENALTY. 4. GROUND NO.1 IS THUS ALLOWED. 5. IN GROUND NO.2, THE ASSESSEE HAS RAISED THE FOLL OWING GRIEVANCE: THE CIT(A) ERRED IN UPHOLDING THE PENALTY LEVIED @ 100% U/S.271(1)(C) OF THE ACT ON ` `` ` .1,80,000 BEING PAYMENT RECEIVED FROM M/S. DEVDOOT INVESTMENTS PVT LTD., TO WARDS SALE OF 2400 SHARES OF G.E.SHIPPING CO. LTD., WHICH DUE TO INADVERTENCE AND MISTAKE ON THE PART OF THE ACCOUNT ANT, SHOWN AS A CREDIT IN THE NAME OF M/S. DEVDOOT INVES TMENT PVT LTD., INSTEAD OF CREDIT TO THE ACCOUNT OF G.E. SHIPPING SHARES ACCOUNT. THE LD CIT(A) FAILED TO APPRECIATE THAT THE SAID MI STAKE OF THE ACCOUNTANT HAD BEEN RECTIFIED BY THE APPELLANT IN A.Y. 1995-96 AND NECESSARY EVIDENCES IN THE FORM OF LEDG ER ACCOUNTS SHOW SUCH RECTIFICATION ENTRIES. 6. THE RELEVANT MATERIAL FACTS ARE LIKE THIS. DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS CLAIMED TO HAVE RECEIVED A SUM OF ` .1,80,000 FROM M/S. DEVDOOT INVESTMENT & CO. P.LTD. , BY CHEQUE BUT THE LOAN CONFIRMATION COULD NOT BE FILED BECAUSE IT WAS MISP LACED. IN THE APPELLATE PROCEEDINGS BEFORE THE CIT(A), THE STAND WAS TAKEN THAT THIS AMOUNT REPRESENTS THE SALE PROCEEDS OF 2400 SHARES OF G.E. SHIPPING CO. LTD., I .T.A NO.9600/ MUM/2004 ASSESSMENT YEAR: 1994-05 3 HOWEVER, WHEN THE CIT(A) REFERRED THE MATTER TO THE FILE OF THE AO FOR FRESH ADJUDICATION, IT APPEARS THAT THE ASSESSEE DID NOT SUBSTANTIATE THE CLAIM SO MADE. IT IS IN CONNECTION WITH THIS QUANTUM ADDITI ON THAT THE IMPUGNED PENALTY HAS BEEN LEVIED. 7. HAVING HEARD THE RIVAL CONTENTIONS AND HAVING PE RUSED THE MATERIAL ON RECORD, WE FIND THAT THERE IS NO EVIDENCE WHATSOEVE R TO SUPPORT THE EXPLANATION OF THE ASSESSEE. THE PENALTY HAS BEEN RIGHTLY UPHELD BY THE CIT(A). NO MATERIAL HAS BEEN BROUGHT ON RECORD BEF ORE US TO INDICATE ANY BONAFIDES OR GIVEN ANY SUPPORT THE CLAIM MADE BY TH E ASSESSEE. WE, THEREFORE, CONFIRM AND APPROVE THE ACTION OF THE CIT(A) AND DE CLINE TO INTERFERE IN THE MATTER. 8. GROUND NO.2 IS THUS DISMISSED. 9. IN GROUND NO.3, THE ASSESSEE HAS RAISED THE FOLL OWING GRIEVANCE: THE LD CIT(A) ERRED IN UPHOLDING THE PENALTY LEVIE D @ 100% U/S.271(1)(C) OF THE INCOME TAX ACT, 1961 FOR DISAL LOWANCE ON ACCOUNT OF WHILE OF LOADING AND UNLOADING EXPENS ES OF ` `` ` .2,75,350 WITHOUT APPRECIATING THE FACT THE APPELLA NTS PURCHASE FOR THE YEAR WAS ` `` ` .87,94,260 AND SALES WAS ` `` ` .1,09,77,187, WHICH DEFINITELY INVOLVED LOADING AND UNLOADING EXPENSES. 10. SO FAR AS THIS GRIEVANCE IS CONCERNED, IT IS SU FFICIENT TO TAKE NOTE OF THE FACT THAT THE PENALTY HAS BEEN LEVIED IN CONNECTIO N WITH QUANTUM DISALLOWANCE OF ` .2,75,350 FOR LOADING AND UNLOADING EXPENSES, GENUI NENESS OF WHICH COULD NOT BE PROVED. THESE EXPENSES WERE INCURRED FOR THE FIRST TIME IN THIS ASSESSMENT YEAR AND THE CLAIM OF THE A SSESSEE WAS THAT THE EXPENSES HAVE BEEN INCURRED AS THERE WAS A CHANGE I N THE TERMS OF THE SALES PERMITS INASMUCH WHEREAS THE EXPENSES WERE INCURRED BY THE BUYER EARLIER. THIS HAD TO BE PAID BY THE ASSESSEE IN THE CURRENT ASSESSMENT YEAR. HOWEVER, AS THE ASSESSEE COULD NOT SUBSTANTIATE THE CLAIM SO MADE OR PRODUCED ANY VOUCHERS IN SUPPORT OF THE EXPENSES INCURRED ON THI S LOADING AND UNLOADING, I .T.A NO.9600/ MUM/2004 ASSESSMENT YEAR: 1994-05 4 THE DISALLOWANCE WAS CONFIRMED. PENALTY UNDER SECT ION 271(1)(C) WAS LEVIED IN CONNECTION WITH THE SAME. THE APPEAL FILED BEFO RE THE CIT(A) DID NOT YIELD ANY RESULT AND IT WAS DISMISSED ON THE GROUND THAT THE INITIAL PROVING OF ONUS WAS DISCHARGED. THE ASSESSEE IS NOT SATISFIED AND IS IN APPEAL BEFORE US. 11. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTUAL MATRIX OF THE CASE AS ALSO THE APPLI CABLE LEGAL POSITION. 12. WE FIND THAT THE IMPUGNED PENALTY HAS BEEN CONF IRMED BY THE CIT(A) ON THE GROUND THAT SUCH EXPENSES ARE NOT SUPPORTED BY SELF MADE VOUCHERS DULY SIGNED BY THE RECIPIENTS BUT THEN THE CLAIM OF THE ASSESSEE HAS BEEN THAT THESE EXPENSES CONSTITUTE PETTY CASH EXPENSES OF LO ADING AND UNLOADING INCURRED ON DAY TO DAY BASIS AND CONSIDERING THE QU ANTUM OF AMOUNT INVOLVED THE ASSESSEE HAS NOT OBTAINED VOUCHERS FOR THE EXPE NSES SO INCURRED. LOOKING TO THE SMALLNESS OF THE AMOUNT INVOLVED AS ALSO THE FACT THAT THE ASSESSEES EXPLANATION ABOUT INCURRING OF EXPENSES HAS NOT BEEN PROVED TO BE FALSE AND IT IS ONLY IN THE ABSENCE OF EVIDENCE TO SUBSTANTIATE THE SAME, THE DISALLOWANCE HAS BEEN MADE. WE ARE OF THE CONSIDER ED VIEW THAT IT IS NOT A FIT CASE FOR IMPOSITION OF PENALTY UNDER SECTION 271(1) (C). IN OUR CONSIDERED VIEW EVEN THOUGH THE ASSESSEE HAS NOT BROUGHT ENOUG H MATERIAL ON RECORD TO JUSTIFY THE CLAIM FOR EXPENSES, THERE IS A REASONAB LE EXPLANATION FOR ASSESSEE HAVING INCURRED THESE EXPENSES AND THIS EXPLANATION HAS NOT BEEN FOUND TO BE FALSE AND, THEREFORE, THE IMPUGNED DISALLOWANCE DESERVES TO BE DELETED. WE, ACCORDINGLY, DIRECT THE AO TO DELETE THE PENALT Y ON THIS POINT. 13. GROUND NO.3 IS THUS ALLOWED. 14. IN GROUND NO.4, THE ASSESSEE HAS RAISED THE FOL LOWING GRIEVANCE:- THE LD CIT(A) ERRED IN UPHOLDING THE PENALTY LEVIE D @ 100% UNDER SECTION 271(1)(C) OF THE ACT WITHOUT APPRECIA TING THE FACT THAT THERE IS NO CONCEALMENT OF INCOME AS THE INTEREST INCOME HAS BEEN ACCOUNTED IN NEXT YEAR I.E. A.Y. 19 95-96. 15. SO FAR AS THIS GRIEVANCE OF THE ASSESSEE IS CON CERNED, IT IS SUFFICIENT TO TAKE OF THE FACT THAT THE PENALTY UNDER SECTION 271 (1)(C) HAS BEEN LEVIED I .T.A NO.9600/ MUM/2004 ASSESSMENT YEAR: 1994-05 5 BECAUSE WHEREAS THE AO HAS HELD THAT THIS INCOME IS TAXABLE IN THE CURRENT ASSESSMENT YEAR, THE ASSESSEE HIMSELF HAS OFFERED T HE SAME TO TAX IN SUBSEQUENT ASSESSMENT YEAR I.E. 1995-96. THE STAND OF THE AUTHORITIES BELOW ALL ALONG IS FOLLOWING MERCANTILE SYSTEM OF ACCOUN TING AND THEIR RELATED INCOME WAS TAXABLE IN THE CURRENT ASSESSMENT YEAR, THE ASSESSEE HAS SUPPRESSED THE INCOME FOR THIS ASSESSMENT YEAR AND, ACCORDINGLY, THE ASSESSEE IS TO BE LEVIED PENALTY UNDER SECTION 271( 1)(C) OF THE ACT IN RESPECT OF THE SAME. THE CIT(A) HAS ALSO CONFIRMED THE PEN ALTY ON THE GROUND THAT THERE IS NO JUSTIFICATION OF CREDITING SUCH INTERE ST IN ASSESSMENT YEAR 1995- 96. THE ASSESSEE IS NOT SATISFIED AND IS IN APPEA L BEFORE US. 16. HAVING HEARD THE RIVAL CONTENTIONS AND HAVING P ERUSED THE MATERIAL ON RECORD, WE FIND THAT IT IS NOT A CASE OF CONCEALMEN T OF INCOME INASMUCH THE DISPUTE IS CONFINED AS TO IN WHICH YEAR THE INCOME IS TO BE TAXED. WHEREAS THE ASSESSEE HAS HIMSELF OFFERED THE INCOME TO TAX IN THE ASSESSMENT YEAR 1995-96, THE AO HAS BROUGHT THE SAME TO TAX IN A.Y. 1994-95. IN THESE CIRCUMSTANCES, AND BEARING IN MIND THE FACT THAT TH E ASSESSEE HAS HIMSELF OFFERED THE INCOME TAX IN SUBSEQUENT YEAR, WE DO NO T THINK IT IS A FIT CASE FOR IMPOSITION OF PENALTY. WE, ACCORDINGLY, DIRECT THE AO TO DELETE THE SAME. THE ASSESSEE GETS RELIEF ACCORDINGLY. 17. IN THE RESULT, APPEAL IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 5 TH AUGUST, 2011 SD/- (R.V.EASWAR) PRESIDENT SD/- (PRAMOD KUMAR) ACCOUNTANT MEMBER MUMBAI, DATED 5 TH AUGUST, 2011 PARIDA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS),IV, MUMBAI 4. COMMISSIONER OF INCOME TAX, CITY-IV , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH I, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI