Income Tax Appellate Tribunal - Mumbai
Acit 20(1), Mumbai vs Bhushan Kamalnayan Vora, Mumbai on 8 September, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL " B" BENCH, MUMBAI
BEFORE SRI MAHAVIR SINGH, JM AND SRI MANOJ KUMAR AGGARWAL, AM
ITA No. 4643/Mum/2015
(A.Y:2008-09)
Asst. Commissioner of Shri Bhushan Kamalnayan
Income Tax 20(1) Vora
1 st Floor, R. No. 113, Piramal Flat No. 02, Lamba Building
Chambers, Lalbaug, Parel, Vs. 215, Bhalchandra Road,
Mumbai Matunga, Mumbai-19
PAN No. AAAPV8776E
Appellant .. Respondent
CO No. 46/Mum/2017
(Arising out of ITA No. 4643/Mum/2015 A.Y:2008 -09)
Shri Bhushan Kamalnayan Asst. Commissioner of
Vora Income Tax 20(1)
Flat No. 02, Lamba Building 1 st Floor, R. No. 113,
215, Bhalchandra Road, Vs. Piramal Chambers, Lalbaug,
Matunga, Mumbai-19 Parel, Mumbai
PAN No. AAAPV8776E
Appellant .. Respondent
Revenue by .. Shri Suman Kuma r, DR
Assessee by .. S/Shri Dinesh R. Shah &
Bhushan Vyas, ARs
Date of hearing .. 05-09-2017
Date of pronouncement .. 08-09-2017
ORDER
PER MAHAVIR SINGH, JM:
In these two appeals, one by the Revenue and one Cross Objection by the assessee are arising out of the order of CIT(A)-32 Mumbai, in appeal No. CIT(A)-32/IT-27/DCIT(2)/2014-15 dated 14-05-2015. The Assessment was framed by ACIT Circle 17(2), Mumbai for the A.Y. 2008- 2 ITA No. 4643/ Mum/2015 & CO No. 46/ Mum/2017 S hri Bhu sh an Kam aln ayan V or a ( A . Y : 2 0 0 8 - 0 9 ) 09 vide order dated 29-12-2010 under section 143(3)(ii) of the Income Tax Act, 1961(hereinafter 'the Act'). The penalty was levied by DCIT Circle 17(2), Mumbai vide order dated 05-03-2014 under section 271(1)(c) of the Act.
2. The only issue in this appeal of Revenue is against the order of CIT(A) deleing the penalty levied by the AO u/s 271(1)(c) of the Act on the following three items: -
"i. Unexplained investment towards discrepancy in stock 15,12,091 ii. Loan received from the HUF of the appellant 2,00,000 iii. Bogus commission paid by the assessee 12,95,000 Total 30,07,091/
3. The Revenue has raised the following two grounds: -
"1. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the penalty w.r.t unexplained investment under section 69 stating that the fiction created under section 68,69,69A and 69C by itself, cannot be extended to penalty proceeding in spite of the fact that the assessee during the survey under section 133A voluntarily accepted that discrepancy in stock and that was not based on any fiction.
2. On the facts and in the circumstances of the case, Ld. CIT(A) erred in deleting the penalty wrt unexplained cash credit under section 68 and commission expenses without considering the fact that the Ld. CIT(A) has confirmed the quantum addition and assessee preferred not to appeal against said order."
4. At the outset, the learned counsel for the assessee stated that he is raising the issue of jurisdiction under rule 27 of Income Tax (Appellate 3 ITA No. 4643/ Mum/2015 & CO No. 46/ Mum/2017 S hri Bhu sh an Kam aln ayan V or a ( A . Y : 2 0 0 8 - 0 9 ) Tribunal) Rules 1963 that the AO has levied the penalty u/s 271(1)(c) of the Act on both the charges i.e. for concealment of particulars of income as well as for furnishing of inaccurate particulars of income. The learned counsel for the assessee referred to the following para of penalty order at page 3: -
"I have carefully studied the facts of the case and have come to the conclusion that the assessee has concealed income/ furnished inaccurate particualrs of the income within the meaning of section 271(1)I,r.w. explanation 1 to this section and made himself liable for penalty under section 271(1)I. Had the case of assessee has not been selected for scrutiny the assessee would have easily escaped without paying taxes on this income. I am satisfied that penalty is clearly leviable in this case. "
5. The first issue raised by the learned Counsel for the assessee is that the AO is not sure about the charge of concealment, whether it is fot concealment of particulars of income or for furnishing of inaccurate particulars of income. The learned Counsel for the assessee referred to Para of penalty order and Para of assessment order whereby the penalty initiated and levied by the AO. We have already reproduced this Para in above of this order. From the above Para of the penalty order, we are of the view that concealment is initiated and penalty is levied and the AO is not sure about the charge of levy of penalty under section 271(1)(c) of the Act.
6. At the outset, it is clear that this issue is squarely covered in favour of assessee and against the Revenue by the decision of Hon'ble Bombay High Court in the case of CIT vs. Samson Perinchery (Bom) in ITA No. 1154 of 2014 dated 05-01-2017. We find that the AO while levying penalty under section 271(1)(c) of the Act in his discussion clearly stated that the expression used in section 271(1)(c) of the Act "furnishing of 4 ITA No. 4643/ Mum/2015 & CO No. 46/ Mum/2017 S hri Bhu sh an Kam aln ayan V or a ( A . Y : 2 0 0 8 - 0 9 ) inaccurate particulars of income" and also "concealing the particulars of income" but these are two distinct term. But according to him both lead to the same effect. This issue is dealt by Hon'ble Bombay High Court in the case of Samson Perinchery (supra) wherein Hon'ble Supreme Court relying on the decision of the Karnataka High Court in the case of CIT vs. Manjunath Cotton & Ginning Factory [2013] 359 ITR 565 (Karnataka) observed as under: -
"The impugned order of the Tribunal deleted the penalty imposed upon the Respondent Assessee. This by holding that the initiation of penalty under Section 271(1)(c) of the Act by Assessing Officer was for furnishing inaccurate particulars of income while the order imposing penalty is for concealment of income. The impugned order holds that the concealment of income and furnishing inaccurate particulars of income carry different connotations. Therefore, the Assessing Officer should be clear as to which of the two limbs under which penalty is imposable, has been contravened or indicate that both have been contravened while initiating penalty proceedings. It cannot be that the initiation would be only on one limb i.e. for furnishing inaccurate particulars of income while imposition of penalty on the other limb i.e. concealment of income. Further, the Tribunal also noted that notice issued under Section 274 of the Act is in a standard proforma, without having striked out irrelevant clauses therein. This indicates non application of mind on the part of the Assessing Officer while issuing the penalty notice."
Respectfully, following Hon'ble Bombay High Court decision in the case of Samson Perinchery (supra) on specific charge, penalty levied by the 5 ITA No. 4643/ Mum/2015 & CO No. 46/ Mum/2017 S hri Bhu sh an Kam aln ayan V or a ( A . Y : 2 0 0 8 - 0 9 ) AO cannot be sustained. Accordingly, we confirm the order of CIT(A) deleing the penalty and dismiss the appeal of Revenue.
7. Coming to the merits of the case, we find from the penalty order of the AO i.e. as regards to unexplained investment towards discrepancy in stock, loan received from HUF and claim of commission paid by assessee, the penalty is levied just because additions are made. We find that the CIT(A) has deleted the penalty in Paras 3.3, 4.3 and 5.3 which reads as under: -
"3.3 I have perused the facts and the case and appellant's submissions carefully. The appellant had declared certain unexplained stock during survey action. The appellant stated that the excess G.P. of 2.63% is achieved by including the unexplained stock. The addition was made in quantum assessment because the appellant had not separately added the unexplained investment in stock in profit and loss account, and the claim of increase in gross profit rate of 2.63% due to such unexplained stock was found misleading and incorrect. The quantum addition made of unexplained investment in stock under section 69 has been confirmed by CIT(A). However, as regards the levy of penalty under section 271(1)(c) on such deemed income, the decision f Hon'ble High Court of Gujarat in the case of CIT vs. Baroda Tin Works [1996] 221 ITR 661 (Guj) is relevant wherein it was held that the fiction created under sections 68, 69,69A,69B and 69C by itself, cannot be extended to penalty proceedings to raise a presumption about concealment of such income. The Hon'ble High court has also held that once the presumption of concealment or concealed income is rebutted, it is 6 ITA No. 4643/ Mum/2015 & CO No. 46/ Mum/2017 S hri Bhu sh an Kam aln ayan V or a ( A . Y : 2 0 0 8 - 0 9 ) for the department to establish that the income which the assessee is alleged to have concealed is, in fact, his income as distinguished from deemed income of the assessee which he failed to disclose in his return. In the present case of the appellant, I find that effectively the penalty has been levied on the deemed income under section 69, which is not sustainable relying upon the aforesaid case laws. Hence, the penalty levied under section 271(1)(c) on this issue is deleted, and therefore, the ground of appeal is allowed.
4.3 I have perused the facts of the case and appellant's submissions carefully. I find that the addition has been made of the amount received from HUF of Rs. 2,00,000/- as unexplained cash credit under section 68. It was observed that HUF was not assessed to tax and there was no PAN of HUF. Hence, the identity was proved, but the credit worthiness and gaminess of transaction were not proved. Without prejudice to the addition made of deemed income under section 68. Reliance is placed on the same decision of Hon'ble High Court of Gujarat in the case of CIT vs. Baroda Tin Works (1999) 221 ITR 661 (Guj.), as also relied upon in ground No.1 above. Hence, the penalty levied under section 271(1)(c) on this issue is deleted, and therefore, the ground of appeal is allowed.
5.3 I have perused the facts of the case and appellant's submissions carefully. I find that the appellant on his part as given detailed explanations about the impugned commission expenses, which is not accepted by the AO and accordingly, he same are disallowed. Subsequently, the disallowance is 7 ITA No. 4643/ Mum/2015 & CO No. 46/ Mum/2017 S hri Bhu sh an Kam aln ayan V or a ( A . Y : 2 0 0 8 - 0 9 ) also confirmed by CIT(A). These are claim of expenditure which could not be sustained for whatsoever reasons. In the case of Reliance Petroproducts Ltd. (Supra) relied upon by the appellant, the Hon'ble Supreme Court has held that section 271(1)(c) penalty cannot be imposed even for making unsustainable claims of expenses.
Relying upon the said case law, I find the levy of penalty on this issue to be sustainable, hence the same is deleted. Therefore, the ground of appeal is allowed."
8. At the time of hearing before us, the learned DR could not point out what is the defect in the findings of CIT(A). As the Revenue could not contest the findings of CIT(A) and hence, even on merits the assessee succeeds. We confirm the order of CIT(A) on merits deleting the penalty. On merit also the Revenue's appeal is dismissed.
9. CO of assessee is supportive of the order of CIT(A), hence, the same is dismissed.
10. In the result, the appeal of Revenue as well as CO of assessee is dismissed.
Order pronounced in the open court on 08-09-2017.
Sd/- Sd/-
(MANOJ KUMAR AGGARWAL) (MAHAVIR SINGH)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai, Dated: 08-09-2017
Sudip Sarkar /Sr.PS
8
ITA No. 4643/ Mum/2015 & CO No. 46/ Mum/2017 S hri Bhu sh an Kam aln ayan V or a ( A . Y : 2 0 0 8 - 0 9 ) Copy of the Order forwarded to:
1. The Appellant
2. The Respondent.
3. The CIT (A), Mumbai.
4. CIT
5. DR, ITAT, Mumbai
6. Guard file. //True Copy// BY ORDER, Assistant Registrar ITAT, MUMBAI