DCIT - 8(1), MUMBAI v. M/s. GODFREY PHILIPS INDIA LTD., MUMBAI

ITA 2274/MUM/2008 | 1997-1998
Pronouncement Date: 17-02-2010 | Result: Dismissed

Appeal Details

RSA Number 227419914 RSA 2008
Assessee PAN AABCG4768K
Bench Mumbai
Appeal Number ITA 2274/MUM/2008
Duration Of Justice 1 year(s) 10 month(s) 14 day(s)
Appellant DCIT - 8(1), MUMBAI
Respondent M/s. GODFREY PHILIPS INDIA LTD., MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 17-02-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted G
Tribunal Order Date 17-02-2010
Date Of Final Hearing 09-12-2009
Next Hearing Date 09-12-2009
Assessment Year 1997-1998
Appeal Filed On 03-04-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G : MUMBAI BEFORE SHRI D.K. AGARWAL (JM) AND SHRI R.K. PAND A (AM) ITA NO.2274/MUM/2008 ASSESSMENT YEAR : 1997-98 DY. COMMISSIONER OF INCOME TAX -8(1) ROOM NO.210 AAYAKAR BHAVAN M.K. ROAD MUMBAI-400 020. ..( APPELLANT ) VS. M/S. GODFREY PHILIPS INDIA LTD. CHAKALA ANDHERI(E) MUMBAI-400 099. ..( RESPONDENT ) P.A. NO. (AABCG 4768 K) APPELLANT BY : SHRI P.C. MOURYA RESPONDENT BY : SH RI YOGESH THAR O R D E R PER D.K. AGARWAL (JM). THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER DATED 11/01/2008 PASSED BY THE LD. CIT(A) FOR T HE ASSESSMENT YEAR 1997-98. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE COM PANY IS ENGAGED IN THE MANUFACTURING AND SELLING OF CIGARETT E AND ALSO EXPORTED TEA DURING THE YEAR. THE RETURN WAS FILED SHOWING AN INCOME OF RS.18 95 01 460/- . HOWEVER THE ASSESSMENT WAS COMPLET ED DETERMINING TOTAL INCOME AT RS.20 36 99 430/- VIDE OR DER DATED ITA NO.2274/M/08 A.Y: 97-98 2 15.7.1999 PASSED U/S.143(3) OF THE INCOME TAX ACT 1961 (THE ACT). IN THE ASSESSMENT FOLLOWING ADDITIONS/DISALLOWANCES WERE MAD E ON ACCOUNT OF (I) VALUATION OF CLOSING STOCK (INCLUDING EXCISE DUTY) RS. NIL. (II) DISALLOWANCE UNDER RULE 6D RS. 64 001 (III) ENTERTAINMENT EXPENSES RS.21 49 621 (IV) GUEST HOUSE EXPENSES RS.15 17 524 (V) DEDUCTION U/S.80HHC REDUCED BY RS.56 48 412 (VI) PROVISION FOR LEAVE ENCASHMENT RS.32 73 000 (VII) COMPENSATION RECEIVED FROM ROTHMANS RS.26 20 500 PENALTY PROCEEDINGS U/S.271(1)(C) WERE ALSO INITIATED B Y ISSUE OF NOTICE U/S.274 OF THE I.T. ACT 1961. AGAINST THE ORDER PA SSED BY THE ASSESSING OFFICER MAKING ADDITIONS AS ABOVE ASSESSEE PREFER RED AN APPEAL BEFORE THE CIT(A). THE LEARNED CIT(A) VID E HIS ORDER DATED 04.03.2003 PARTLY ALLOWED THE APPEAL AS UNDER: A) ADDITION IN RESPECT OF VALUATION OF CLOSING STOCK DELETED; B) DISALLOWANCE IN RESPECT OF ENTERTAINMENT EXPENSE PARTLY ALLOWED; C) DISALLOWANCE IN RESPECT OF GUEST HOUSE EXPENSE C ONFIRMED; D) DISALLOWANCE IN RESPECT OF REDUCTION IN DEDUCTION U /S.80HHC DELETED; E) DISALLOWANCE IN RESPECT OF PROVISION FOR LEAVE ENCA SHMENT ALLOWED; AND F) ADDITION IN RESPECT OF COMPENSATION RECEIVED FROM R OTHMANS CONFIRMED. AGAINST THE APPELLATE ORDER PASSED BY THE LEARNED CIT (A) THE ASSESSEE AND REVENUE BOTH PREFERRED APPEAL BEFORE THE T RIBUNAL. HOWEVER THE TRIBUNAL DISMISSED BOTH THE APPEALS VIDE EX PARTE ORDERS DATED 27.12.2006 AND 31.03.2006 RESPECTIVELY. IN CONNE CTION WITH THE PENALTY PROCEEDINGS U/S.271(1)(C) OF THE I.T. ACT A NOT ICE DATED ITA NO.2274/M/08 A.Y: 97-98 3 17.10.2006 WAS ISSUED ASKING TO SHOW CAUSE AS TO WHY PENALT Y U/S.271(1)(C) SHOULD NOT BE LEVIED. IN RESPONSE TO THE N OTICES ASSESSEE VIDE ITS LETTER DATED 07.11.2006 AND 17.07.2007 FILED ITS SUBMISSIONS INTERALIA STATED THAT ALL THE AMOUNTS WERE MADE AVAILABLE TO THE ASSESSING OFFICER AND NO AMOUNT WAS AS SUC H CONCEALED OR ANY INACCURATE PARTICULARS WERE FURNISHED. I T HAS FURTHER STATED THAT MERELY BECAUSE THE ASSESSED INCOME WAS HIGHER TH AN THE RETURNED INCOME AS A RESULT OF DISALLOWANCE IT CANNOT BE SAID THAT THE ASSESSEE HAD CONCEALED PARTICULARS OF INCOME. HOWEVER THE AO DID NOT ACCEPT THE ASSESSEES EXPLANATION. THE AO AFTER DISCUSSIN G FACTUAL POSITION OF DISALLOWANCE UNDER RULE 6D ENTERTAINMENT EXPENSES GUEST HOUSE EXPENSES AND COMPENSATION RECEIVED FROM ROTHMA NS AT PAGE 3 4 OF THE PENALTY ORDER WAS OF THE VIEW THAT ON THE SAID DISALLOWANCE MADE BY THE AO IN THE ASSESSMENT THE ASSESSEE I S LIABLE TO PENALTY FOR FURNISHING INACCURATE PARTICULARS OF IT S INCOME WHICH LED TO CONCEALMENT OF INCOME AND ACCORDINGLY HE IMPOSED PENAL TY OF RS.21 12 736/- VIDE ORDER DATED 24.7.2007 PASSED U/S.27 1(1)(C) OF THE ACT. ON APPEAL THE LD. CIT(A) OBSERVED THAT IT IS ABUNDANTLY CLEAR THAT THERE IS NOT A SINGLE ISSUE WHERE IT CAN BE SAID THAT THE AO HAS DISCOVERED CONCEALMENT OF INCOME BY THE FILING OF INACCURA TE PARTICULARS OF INCOME OR OTHERWISE. HE FURTHER OBSERVED THAT MOST OF THE ISSUES WERE PART OF THE TAX AUDIT REPORT AND THEY HAVE BEEN ITA NO.2274/M/08 A.Y: 97-98 4 DISCLOSED IN THE COMPUTATION OF INCOME. THE ISSUES WERE D EBATABLE ISSUES ON WHICH THERE COULD BE GENUINE DIFFERENCE OF OPIN ION INASMUCH AS TREATMENT OF COMPENSATION RECEIVED FROM ROTHMANS RE QUIRED EXTENSIVE JUDICIAL ANALYSIS AND INTERPRETATION. IN SU CH CIRCUMSTANCES THE QUESTION OF IMPOSITION OF PENALTY FOR CONCEALMENT O F INCOME DOES NOT ARISE AND ACCORDINGLY HE DELETED THE PENALTY IMPOSE D BY THE AO. 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE REVENUE IS IN APPEAL BEFORE US CHALLENGING IN THE SOLE GROUND OF AP PEAL THE DELETION OF PENALTY IMPOSED BY THE AO. 4. AT THE TIME OF HEARING THE LD. DR SUBMITS THAT FOR THE REASONS AS DISCUSSED IN THE IMPUGNED ORDER OF PENALTY THE LD. CIT (A) WAS NOT JUSTIFIED IN DELETING THE PENALTY IMPOSED BY THE AO. HE THEREFORE SUBMITS THAT THE PENALTY IMPOSED BY THE AO BE RESTORED. 5. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSESSEE WH ILE REITERATING THE SAME SUBMISSIONS AS SUBMITTED BEFORE TH E AO AND THE LD. CIT(A) FURTHER SUBMITS THAT THE COMPLETE PARTICULAR S IN RESPECT OF DISALLOWANCE UNDER RULE 6D AND ENTERTAINMENT EXPENSES HAVE BEEN DISCLOSED IN TAX AUDIT REPORT APPEARING AT PAGE-7 11 12 AND 8 OF THE ASSESSEES PAPER BOOK. WITH REGARD TO THE GUEST HOUSE EXP ENSES AND COMPENSATION RECEIVED FROM ROTHMANS HE SUBMITS THAT FULL PARTICULARS HAVE BEEN DISCLOSED IN THE CHART OF COMPUTATION OF INCOME VIDE NOTE 1 ITA NO.2274/M/08 A.Y: 97-98 5 AND 4 APPEARING AT PAGE-3 OF ASSESSEES PAPER BOOK. HE FURTHER SUBMITS THAT THE TRIBUNAL IN ASSESSEES OWN CASE IN DCIT VS. GODFREY PHILIPS INDIA LTD. IN ITA NO.1604/MUM/2008 FOR ASSESSM ENT YEAR 1998-99 ORDER DATED 6/8/2009 HAS DELETED THE PENALTY IMPOSED BY THE AO U/S. 271(1)(C) ON THE DEDUCTION CLAIMED BY THE ASSESSEE IN RESPECT OF COMPENSATION OF RS.62 10 000/- RECEIVED FROM ROTHMA N. HE ALSO PLACED ON RECORD THE COPY OF THE SAID ORDER OF THE TRIB UNAL . THE RELIANCE WAS ALSO PLACED ON THE FOLLOWING DECISIONS FOR T HE PROPOSITION THAT NO PENALTY CAN BE LEVIED WHEN DISCLOSURES ARE MADE AND CLAIM IS CERTIFIED BY EXPERT: 1. ITAT ORDER FOR ASSESSMENT YEAR 1998-99 (ITA NO.1 604/M/08) 2. CHANDRAPAL BAGGA VS. ITAT AND ANR (261 ITR 67) ( RAJ) 3. UOI VS. RAJASTHAN SPINNING AND WEAVING LTD. (182 TAXMAN 609) (SC) 4. GEM GRANITES (KARNATAKA) VS. DCIT (31 SOT 21)( C HEN)(URO) 5. ACIT VS. VIP INDUSTRIES (30 SOT 254) (MUM) 6. CIT VS. SIDDHARTA ENTERPRISES (184 TAXMAN 460) ( P & H) 7. CIT VS. CAPLING POINT LABORATORIES LTD.(293 ITR 524) (MAD) 8. CIT VS. PREMIER PROTEINS LTD. (278 ITR 252) (P & H) 9. CIT VS. MRS. ROSHAN D. NARIMAN (2008) 169 TAXMAN 1 (BOM) 10. ZYCUS INFOTECH PVT. LTD. VS. ITO (17 SOT 310) ( BOM) 11. ITO VS. ROBORANT INVESTMENTS (P) LTD.(7 SOT 181 ) (MUM) 12. CIT VS. LAKHANI INDIA LTD. (17 DTR 304) (P & H) 13. KANBAY SOFTWARE INDIA LTD. VS. DCIT (31 SOT 153 ) 14. SHYAM GOPAL CHARITABLE TRUST VS. DCIT (EXEMPTIONS)( 290 ITR99)(DEL) 15. T. ASHOK PAI VS. CIT (2007) (292 ITR 11) (SC) 16. CIT VS. SHRI. S. DHANABAL (309 ITR 268) (DEL) 17. CIT VS. AMAR NATH (173 TAXMAN 395) (P & H) 18. M/S. TEKSONS COOLING SYSTEMS PVT. LTD. VS. ITO 2009 TIOL 662 (MUM) HE THEREFORE SUBMITS THAT THE ORDER PASSED BY THE LD. C IT(A) IN DELETING THE PENALTY BE UPHELD. ITA NO.2274/M/08 A.Y: 97-98 6 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RI VAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS SET TLED LAW THAT PENALTY UNDER SECTION 271(1)(C) IS A CIVIL LIABILITY AN D THE REVENUE IS NOT REQUIRED TO PROVE WILLFUL CONCEALMENT AS HELD BY T HE HONBLE SUPREME COURT IN CASE THE OF UNION OF INDIA VS. DHARM ENDRA TEXTILES AND PROCESSORS (2008) 306 ITR 277(SC). HOWEVER EACH AND EVERY ADDITION OR DISALLOWANCE MADE IN THE ASSESSMENT CANNOT AUT OMATICALLY LEAD TO LEVY OF PENALTY FOR CONCEALMENT OF INCOME. A CASE FOR IMPOSITION OF PENALTY HAS TO BE EXAMINED IN TERMS OF THE PROVISIONS OF EXPLANATION 1 TO SECTION 271(1)(C). SECONDLY IT IS ALSO A SETTLED LEGAL POSITION THAT PENALTY PROCEEDINGS ARE DIFFERENT FROM A SSESSMENT PROCEEDINGS. THE FINDING GIVEN IN THE ASSESSMENT THOUGH I S A GOOD EVIDENCE BUT THE SAME IS NOT CONCLUSIVE IN PENALTY PROCEED INGS AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF ANANTHARAM VEERASINGHAIAH & CO. VS. CIT ((1980) 123 ITR 457 (SC) . IN THE INSTANT CASE WE FIND THAT THERE IS NO DISPUTE THAT THE ASSESSEE HAS MADE CLAIM OF TRAVELLING EXPENSES AS PER LIMIT LAID DOWN UNDER R ULE 6D CLAIM OF ENTERTAINMENT EXPENSES GUEST HOUSE EXPENSES AND COMPENSA TION RECEIVED FROM ROTHMANS WAS MADE ON THE BASIS OF EXPLANA TION GIVEN IN TAX AUDIT REPORT AND CHART OF COMPUTATION OF INCOM E AND ALSO AS PER CERTAIN DECISIONS AVAILABLE AT THAT TIME. THIS BONAF IDE BELIEF OF THE ASSESSEE WAS NOT CONTROVERTED BY THE REVENUE EVEN AT THIS STAGE. IT IS ITA NO.2274/M/08 A.Y: 97-98 7 ALSO NOT THE CASE OF THE REVENUE THAT THE ASSESSEE HAS NOT DISCLOSED COMPLETE PARTICULARS OF HIS INCOME OR THE CLAIM MADE BY THE ASSESSEE IS NOT SUPPORTED BY TAX AUDIT REPORT/EXPLANATION OR D ECISIONS OR THE SAME WAS FOUND TO BE FALSE OR UNTRUE. IT IS REPEATEDL Y HELD BY THE COURTS THAT WHEN THE FACTS ARE CLEARLY DISCLOSED IN THE RE TURN OF INCOME PENALTY CAN NOT BE LEVIED. MERELY BECAUSE AN AMOUNT I S NOT ALLOWED OR TAXED TO INCOME IT CANNOT BE SAID THAT THE ASSESSEE HAD F ILED INACCURATE PARTICULARS OR CONCEALED ANY INCOME CHARGEABLE TO TAX. EVEN IF SOME DEDUCTION OR BENEFIT IS CLAIMED BY THE A SSESSEE WRONGLY BUT BONAFIDE AND NO MALAFIDE CAN BE ATTRIBUTED THE PENALTY WOULD NOT BE LEVIED. THIS BEING SO AND KEEPING IN VIEW THE RATI O OF DECISIONS RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE WE ARE OF THE VIEW THAT THERE IS NO CONCEALMENT OR FURNISHING OF INACCURATE PART ICULARS ON THE PART OF THE ASSESSEE AND ACCORDINGLY THE PENALTY IMPOSED B Y THE AO IS NOT SUSTAINABLE IN LAW. THE ORDER PASSED BY THE LD. CIT(A) IN DELETING THE PENALTY DOES NOT CALL FOR ANY INTERFERENCE. THE G ROUND TAKEN BY THE REVENUE IS THEREFORE REJECTED 7. IN THE RESULT REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17.2.2010. SD/- SD/- ( R.K. PANDA ) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED: 17.2.2010. JV. ITA NO.2274/M/08 A.Y: 97-98 8 COPY TO: THE APPELLANT THE RESPONDENT THE CIT CONCERNED MUMBAI THE CIT(A) CONCERNED MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR ITAT MUMBAI. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 2.2.10 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 3.2.10 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 17.2.2010 SR.PS/PS 7. FILE SENT TO THE BENCH CLERK 18.2.2010 SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER