Income Tax Appellate Tribunal - Mumbai
Laxmi Ventrues (India) P.Ltd, Mumbai vs Asst Cit Rg 6(3), Mumbai on 18 September, 2017
आयकर अपीऱीय अधिकरण, मुंबई न्यायपीठ "ऐ" मुंबई
IN THE INCOME TAX APPELLATE TRIBUNAL "A" BENCH, MUMBAI
BEFORE HON'BLE S/SHRI JOGINDER SINGH (JM), AND RAJESH KUMAR,(AM)
आमकय अऩीर सं./I.T.A. No.5412/Mum/2015
(ननधधायण वषा / Assessment Year :2004-05)
M/s Laxmi Ventures (India) बनाम/ Asstt. Commissioner of Income
Pvt.Ltd., Tax- Range 6(3),
Vs.
36/40, Mahalaxmi Bridge, Mumbai.
Arcade, Mahalaxmi,
Mumbai-400034
(अऩीरधथी /Appellant) .. (प्रत्मथी / Respondent)
स्थधमी रेखध सं ./PAN No. :AAACL1082G
अऩीरधथी ओय से / Appellant by: Shri Haridas Bhat
प्रत्मथी की ओय से/Respondent by Shri Saurabh Deshpande
सन
ु वधई की तधयीख / Date of Hearing : 28.8.2017
घोषणध की तधयीख /Date of Pronouncement : 18.9.2017
आदे श / O R D E R
Per RAJESH KUMAR, Accountant Member:
This is an appeal filed by the assessee and is directed against the order of the Ld. CIT(A)-21, Mumbai dated 22.9.2015 pertaining to A.Y.2004-05.
2. The assessment, in this case was completed u/s 143(3) on 28.11.2006 at an income of Rs.4,67,13,230/-against the returned income of Rs.26,64,360/- filed by the assessee by making various additions inter-alia on account of estimation of income of Bhilai Plant and Tedessara Unit amounting to Rs.10,00,000/- and disallowance of Rs.3,50,000/- on account of depreciation in respect of freehold land. In the quantum proceedings the ld. CIT(A) directed the AO to restrict the income at 5% of sales of the said ITA No.5412/M/15 2 two units beside confirming the addition of Rs.3,00,893/-. In the further appeal before the ITAT, the disallowance of depreciation was confirmed. Accordingly, the AO issued show cause notice to the assessee u/s 271(1)(c) on 4.1.2010 for furnishing inaccurate particulars of income and finally the penalty of Rs.2,27,813/- was levied of the 100% of the tax sought to be evaded by an order dated 23.3.2010 passed under section 271(1)( c ) of the Act.
3. In the appellate proceedings, the ld. CIT(A) dismissed the appeal of the assessee by observing and holding as under :
"8. I have considered the facts of the case, the assessment and the appellate Orders, the penalty order and the submissions of the AR carefully. There can be no general principle that no penalty can be levied where income is assessed based on estimate.
9. In the case of Dy.CIT Vs. Sushmadevi Agarwal (2012) 67 DTR(Kol) (TM) (Trib.) 430, Hon'ble Third Member of Bench of Kolkatta Tribunal has held that there is no rule that penalty for concealment u/s.
271(1)(c) cannot be imposed where income is estimated. The levy of penalty u/s. 271 (1 )(c) depends on the facts and circumstances or each case. Where the concealment of income is apparent from record, there is no reason why the penalty u/s 271(1)( c ) cannot be imposed for concealment of income, Reliance in this regard is also placed on the following:
i) CIT vs Krishnaswamy and Sons (Mad) 219 ITR 157
i) Samsundar Bhan Sadh Vs. CIT 188 ITR 638(All).
iii) Vidya Sagar Oswal Vs. CITR 108 ITR 861(P&H).
iv) CIT Vs. Handloorn Emporium 282 ITR 431 (All)
v) CIT Vs. Mahabit Prasad Bajaj 298 ITR 109 (Jharkhand) Further, if the view that penalty cannot be levied where income is computed based on estimation is followed it will lend a premium to evasion by assessee who do not maintain any records and do not offer their income to lax because in such cases the income cannot be ITA No.5412/M/15 3 assessed without estimation based on such evidence as is unearthed by the assessing officer.
9. As regards the claim 01 depreciation on land, it is patently not allowable. Further, the depreciation is claimed year after year. If the argument of the AR is taken to its logical end it would require penalty to be levied each year based on the depreciation claimed.
10. Keeping in view the factual matrix obtaining in this case and relying on the decisions cited supra, I am satisfied that Ld.AO had rightly imposed penalty u/s. 271(1)( c ) of the Act.
11. In the result the appeal is dismissed"
4. We have carefully considered the submissions of the rival parties and perused the material placed before us including the orders of authorities below. We find from the record before us that the penalty was imposed by the AO on the income estimated at the rate of 5% which was worked out to Rs.3,00,893/- and depreciation for Rs.3,50,000/- towards free hold land. In respect of first items of estimation of income, we are of the view that no penalty can be levied in the case of estimation of income as it is purely guesswork and therefore, we are not in agreement with the findings of the ld. CIT(A) on this issue that even on estimation of income penalty is leviable. With regard to the second item on which the penalty was imposed, we find that the depreciation on freehold land issue under the head factory and buildings, the facts were fully disclosed in the accounts in the returned filed by the assessee. In the present case, the assessee has not filed any inaccurate particulars of income or furnished any inaccurate particulates. In this case, it has been stated by the ld.AR that the mistake has happened due ITA No.5412/M/15 4 to litigation before the Company Law Board. The ld. AR submitted that fixed assets of Bhilai Plant and Tedessara Unit have been incorporated in these account on the basis of last year account received from the respective units. However, due to inquiry pending before the Company Law Board the information was not available with the Head Office. These facts has also informed to the department accordingly. In our opinion, all these information was not available before assessing assessee due litigation pending before the Company Law Board and unaudited account of Bhilai and Tedewara plant were not incorporated in the accounts which has been resulted into the said mistake. In our view it would be fair and meet the ends of justice if the penalty is deleted in such type of cases where the assessee is not having correct information due to court case. Accordingly, the penalty is deleted. The appeal of the assessee is allowed. Accordingly, we set aside the order of the ld.CIT(A) and direct the AO to delete the penalty.
5. In the result the appeal of the assessee is allowed.
The above order was pronounced in the open court on 18th Sept, 2017. घोषणध खर ु े न्मधमधरम भें ददनधंकः18th Sept. 2017 को की गई ।
Sd sd (JOGINDER SINGH) ( RAJESH KUMAR) Judicial Member Accountant Member भुंफई Mumbai: 18.9.2017 व.नन.स./ SRL , Sr. PS ITA No.5412/M/15 5
आदे श की प्रतिलऱपप अग्रेपिि/Copy of the Order forwarded to :
1. अऩीरधथी / The Appellant
2. प्रत्मथी / The Respondent.
3. आमकय आमुक्त(अऩीर) / The CIT(A)- concerned
4. आमकय आमुक्त / CIT concerned
5. ववबधगीम प्रनतननधध, आमकय अऩीरीम अधधकयण, भुंफई / DR, ITAT, Mumbai concerned
6.
गधर्ा पधईर / Guard file.
आदे शधनुसधय/ BY ORDER, True copy सहधमक ऩंजीकधय (Asstt. Registrar) आमकय अऩीरीम अधधकयण, भंफ ु ई /ITAT, Mumbai