GLOBAL AIRGREIGHT P.LTD, MUMBAI V. ACIT 8(1), MUMBAI

ITSSA 44/MUM/2011

• Counselvise Citation: [2012] 124 COUNSELVISE.COM (IT) 7437 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 11 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 11-04-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: misc
• Appeal Filed On: 30-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K RAVIKIRAN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH G BENCH BEFORE SHRI J. SUDHAKAR REDDY (ACCOUNTANT MEMBER) AND SHRI S.S. GODARA (JUDICIAL MEMBER) ITA NO. 44/MUM/2011 ASSESSMENT YEAR / BLOCK PERI OD : 01.04.1988 TO 04.02.1999 GLOBAL AIRFREIGHT P. LTD. 1 & 2 ROY APARTMENT, NEAR CARGO COMPLEX, SAHAR RD. ANDHERI (E) MUMBAI PAN NO. AABCG4113A VS. ACIT 8(1) 2 ND FLOOR, AAYKAR BHAVAN, M.K. ROAD, MUMBAI 400020 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI HARIDAS BHAT RESPONDENT BY : SHRI K. RAVI KIRAN DATE OF HEARING : 02.04.2012 DATE OF PRONOUNCEMENT : 11.04.2012 ORDER PER S.S. GODARA, JM: THE ASSESSEE / APPELLANT HAS FILED THE INSTANT APPEAL BEFORE US CHALLENGING PENALTY IMPOSED U/S 158 BFA (2) OF THE INCOME TAX ACT (HEREINAFTER TO BE REFERRED AS ACT) CONFIRMED BY THE LD.CIT(A) VIDE ORDER DATED 09.03.2011. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY IS INVOLVED IN BUSINESS OF CLEARING / FORWARDING OF AIR CARGO OPERATIONS OF THE MUMBAI AIRPORT. IN THE ASSESSEES PREMISES, SEARCH UNDER THE PROVISION OF THE ACT WAS CARRIED OUT ON 04.02.1999. IT LASTED UP TO 17.02.1999. 3. ON 03.11.1999, THE ASSESSEE FILED ITS BLOCK RETURN FOR THE ABOVE SAID BLOCK PERIOD. DECLARED UNDISCLOSED INCOME OF RS. 1,50,90,498, REVISED TO RS.1,53,11,864 IN ASSESSMENT PROCEEDINGS. VIDE ASSESSMENT ORDER DATED 15.02.2001, THE AO COMPUTED ITA NO. 44/MUM/2011 GLOBAL AIRGREIGHT P. LTD. 2 TOTAL INCOME AT RS. 2,78,48,093 (INCLUDING UNDISCLOSED INCOME OF RS. 2,12,95,553.) THE AO ALSO ISSUED NOTICE OF PENALTY U/S. 158 BFA (2). 4. THE ASSESSEE / APPELLANT PREFERRED APPEAL AGAINST ASSESSMENT ORDER. VIDE ORDER DATED 30.04.2003, THE LD. CIT(A) ACCEPTED ASSESSEES APPEAL IN PART. HELD THAT DISALLOWANCES OF THE EXPENDITURE SHOWN TO HAVE BEEN INCURRED BY THE ASSESSEE @ 50% AS HELD BY THE AO WAS ON THE HIGHER SIDE. SO THE LD.CIT(A) DETERMINED THE SAID DISALLOWANCE @ 25% ONLY. 5. THEREAFTER, THE CO-ORDINATE BENCH OF MUMBAI ITAT ALSO UPHELD THE LD.CIT(A) ORDER BY OBSERVING AS UNDER : THE DISALLOWANCE WAS MAINLY ON THE GROUND THAT THE VOUCHER WAS SELF MADE AND, THERE WAS LACK OF ONE TO ONE CO-RELATION BETWEEN ADVANCE GIVEN AND CORRESPONDING EXPENDITURE AND ALSO KEEPING IN VIEW THE FACT THAT THERE WAS PARTIAL DISALLOWANCE OF EXPENDITURE UNDER THE DIFFERENT HEAD OF RELATED EXPENDITURE LIKE HANDING, CLEARING ETC. FOR WANT OF PROPER VERIFIABILITY. SINCE THE EXPENSES WERE INCURRED FOR BUSINESS PURPOSE, IN OUR PINION, THE ESTIMATED DISALLOWANCE TO THE EXTENT OF 25% WAS QUITE REASONABLE. WE ACCORDINGLY CONFIRM THE SAME. 6. ON THE OTHER HAND, THE PENALTY MATTER U/S 158 BFA (2) WAS TAKEN UP. IN THE SAID PROCEEDINGS, THE PENALTY AUTHORITY HELD THAT THE ADDITIONS IN QUESTION HAD SEEN MADE IN THE ASSESSMENT PROCEEDINGS FOR FAILURE OF THE ASSESSEE IN PROVING EXPENSES. SO TREATED THE CASE IN HAND AS THAT OF NON-SUBSTANTIATION OF THE EXPENDITURE AND IN THE ABSENCE OF AUTHENTICATION OF THE VOUCHERS IN QUESTION. ACCORDINGLY PENALTY @ 100% OF THE ALLEGED UNDISCLOSED INCOME SOUGHT TO BE EVADED I.E. RS. 3,54,240 HAD BEEN IMPOSED. 7. IN APPEAL, THE LD.CIT(A) HAS UPHELD THE SAID PENALTY. HENCE, THE ASSESSEE HAS FILED THE INSTANT APPEAL. 8. SO FAR AS GROUND RAISE IN THE INSTANT APPEAL ARE CONCERNED, IN TOTAL THERE ARE 3 GROUNDS. SO ALL ARE DECIDED TOGETHER BEING INTERCONNECTED. 8. IN SUPPORT OF THE GROUNDS RAISED, THE LD.CIT(A) HAS REFERRED TO PARA 29 PAGE 12 OF THE LD.CIT(A) ORDER DATED 30.04.2003. ARGUED THAT, LD.CIT(A) HAD DELETED THE ADDITION TO THE EXTENT OF 50% I.E. 25% FROM 50%. MEANING THEREBY THAT IN PRINCIPLE, THE ITA NO. 44/MUM/2011 GLOBAL AIRGREIGHT P. LTD. 3 EXPENDITURE IN QUESTION HAD BEEN DULY UPHELD. ONCE THAT IS SO, IT IS NEITHER THE CASE OF CONCEALMENT NOR OF FURNISHING INACCURATE PARTICULARS BY THE ASSESSEE. SIMILARLY, THE LD.AR HAS ALSO RELIED ON CASE LAW 119 ITD 153 SUPER METAL INDUSTRIES VS. DCIT ARGUED THAT SINCE THE PENALTY PROVISION SECTION 158 BFA (2) WAS INTRODUCED BY FINANCE ACT. 2002, AND RETURNS IN QUESTION WERE FILED IN THE YEAR 1999, THEREFORE, THE SAID PENALTY IS ALSO LIABLE TO BE DELETED. THE LD.AR HAS ALSO SUPPLIED PHOTOCOPIES OF THE OTHER CASE LAWS NAMELY 100 ITO 510, 160 AS WELL AS ALSO REFERRED TO 322 ITR 158 AND SUBMITTED THAT FOR PENALTY PROCEEDINGS, IT HAS TO BE A CASE OF FURNISHING INACCURATE PARTICULARS ONLY THAT PENALTY CAN BE IMPOSED. ACCORDINGLY, HE PRAYED FOR ACCEPTANCE OF THE INSTANT APPEAL. 9. LD. DR APPEARING FOR THE REVENUE ON THE OTHER HAND, RELIED ON ORDER OF LD.CIT(A). PRAYED FOR REJECTION OF THE APPEAL. 10. WE HAVE HEARD BOTH THE LD.REPRESENTATIVES. ALSO GONE THROUGH THE RECORD AS WELL AS CASE LAW. WE FIND THAT THAT ADMITTEDLY, THERE IS NO DISPUTE ON PRINCIPAL THAT EXPENDITURE IN QUESTION HAD NOT BEEN INCURRED BY THE ASSESSEE / APPELLANT. RELIANCE IN THIS REGARD IS MADE ON THE ORDER OF THE LD.CIT(A) ORDER DATED 03.04.2003 (SUPRA). SO FAR AS THE AUTHENTICITY OF THE CLAIM RAISE BY THE ASSESSEE IS CONCERNED, THE RETURNS ARE REGARDING BLOCK PERIOD FROM 01.04.1988 TO 04.02.1999 I.E THE TIME PERIOD OF ABOUT 11 YEARS. IF THIS BLOCK PERIOD IS COUPLED WITH THE EXPENDITURE ALLOWED, IT COMES OUT THE LD.CIT(A) HAD DULY HELD THAT OF COURSE THE ASSESSEE HAD INCURRED THE EXPENDITURE. MERELY BECAUSE THE ASSESSEE COULD NOT PRODUC E ANY OTHER EVIDENCE EXCEPT SELF MADE VOUCHERS IN SUPPORT CANNOT BE SOLE CRITERIA TO IMPOSE THE PENALTY IN QUESTION. EVEN IN PENALTY ORDER, NOTHING HAS BEEN SAID ABOUT THE VALIDITY OF THE CLAIM RAISED. IT IS ONLY NON- SUBSTANTIATION OF EXPENDITURE WHICH HAS BEEN MAIN REASON TO PENALISE THE ASSESSEE. IT HAS BEEN SETTLED BY HONBLE SUPREME COURT IN RELIANCE PETROCHEMICAL CASE THAT FOR THE PURPOSE OF PENALTYINSTEAD OF GROUND OF UNSUBSTANTIATED CLAIM, IT IS THE GENUINENESS OF THE CLAIM WHICH IS THE PRIME FACTOR. (322 ITR 158). FURTHER, IN VIEW OF THE CASE LAW SUPER METAL INDUSTRIES (SUPRA) IT HAS BEEN HELD THAT U/S 158 BFA (2), PENALTY CANNOT BE IMPOSED ONLY ON THE UNSATISFACTORY EXPLANATION OFFERED BY ASSESSEE. ITA NO. 44/MUM/2011 GLOBAL AIRGREIGHT P. LTD. 4 11. IN LIGHT OF OUR ABOVE DISCUSSION, WE ARE OF THE FIRM OPINION THAT THE PENALTY IN HAND CANNOT BE UPHELD. 12. CONSEQUENTLY WE SET ASIDE THE IMPUGNED ORDER. ALLOW THE INSTANT APPEAL. ORDER PRONOUNCED ON THIS 11 TH DAY OF APRIL, 2012. SD/- (J. SUDHAKAR REDDY ) SD/- (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 11 TH APRIL, 2012 RASIKA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX CONCERN 4. CIT(A)-1, MUMBAI 5. DEPARTMENTAL REPRESENTAT IVE, BENCH G MUMBAI 6. GUARD FILE //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI