CLASSIC SHARE & STOCK BROKING SERVICES LIMITED ,MUMBAI vs. DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 7(1), MUMBAI

From the records, we noticed that there is a delay of 188 day in filing the present appeal, in this regard the assessee has filed an affidavit explaining the reasons which prevented him to file the appeal in time, which is reproduced herein below: I, Mahalingam R, aged about 52 years, working with R.S Khandelwal & Associates, Chartered Accountants having office at 407, Prospect Chambers, 317, D.N. Road, Fort, Mumbai 400 001 do hereby solemnly affirm and state as under: 1. years. that I am working with R.S. Khandelwal & Associates since more than 25 years. 2. the order of the CIT(A) in the case of Classic Share and Stock Broking Services Limited for income-tax assessment year 2012-13 dated 26.11.2024, served on even date and as such, the appeal to Income-tax Appellate Tribunal was due to be filed on 25th January, 2025. 3 ITA No.4962/Mum/2025; A.Y. 2012-13 Classic share & Stock Broking Services Limited

We received the impugned CIT(A) order from the CIT(A) by e- mail on 26th November, 2024. I took print of the order and relevant papers to be given to CA Akash Kumar; however, inadvertently, the papers remained on my desk and it totally slipped of my mind. 4. On perusing through the e-portal in August, I realised that no appeal was filed against the impugned CIT(A) order and the relevant papers were then given to CA Akash Kumar who advised our clients that an appeal ought to be filed to the Tribunal at the earliest, though belatedly. 5. We immediately sent the Memorandum of Appeal and the grounds of appeal to our clients for signatures, and the appeal has been filed, though belatedly on 7th August, 2025 with a delay of 194 days. 6. the delay is neither intentional nor due to negligence but due to the aforesaid reasons and hence, is beyond the control of the appellants. 3. On the other hand Ld. DR refuted the claim of the assessee and requested to dismiss the application for seeking condonation of delay on the ground that there was no sufficient cause for condoning the delay. 4. After having heard the counsel for both the parties on this application and considering the entire factual position as explained before us and also keeping in view the principles laid down by the Hon’ble Supreme Court in the case of Land Acquisition Collector vs MST Kitji& Others, 1987, AIR, 1353 Supreme Court Wherein it has been held that where substantial justice is pitted against technicalities of non-deliberate delay, then in that eventuality substantial justice is to be preferred. In our view, the principles of advancing substantial justice are of prime importance. Hence, considering the explanation put

The grounds raised by the assessee relates to challenging the order of Ld. CIT(A) in upholding the order of imposition of penalty passed u/s 271(1)(c) of the Act.

In this regard Ld. AR appearing on behalf of the assessee reiterated the same arguments as were raised by him before the revenue authorities and submitted that penalty u/s 271(1)(c) of the Act has wrongly been levied and upheld by the revenue authorities. It was submitted that the impugned noticed dated 30.03.2016 issued u/s 271(1)(c) r.w.s 274 of the Act is printed form of notice not specifying the charge brought against the assessee i.e whether it was for furnishing of Inaccurate particulars of income or Concealment thereof, as such the notice suffers from the virus of non application of mind and therefore impugned order passed by the Ld. CIT(A) confirming the levy of penalty is not tenable in the eyes of law. In support of his arguments Ld. AR also relied upon the decision of Hon’ble Bombay High Court in the case of Md. Farhan A. Shaik Vs. DCIT, [2021] 125 taxmann.com 253 (Bom).

On the contrary, Ld. DR while placing reliance upon the orders passed by the revenue authorities, submitted that penalty proceedings u/s 271(1)(c) of the Act were rightly initiated by the AO for furnishing “Inaccurate particulars of income”. It was further submitted that in the order of Assessment itself the AO had clearly mentioned that notice of penalty u/s 274 r.w.s 271(1)(c) of the Act be issued for Inaccurate particulars of income. It was submitted that at no stage the assessee had communicated any defect in the penalty notice to the AO. Ld. DR submitted that other notices dated 01.02.2023 and 09.02.2023 were also issued and served upon the assessee but assessee had not challenged those notice at all. Even otherwise the notices issued to the assessee were also valid as per Sec. 292BB of the Act. In support of his arguments Ld. DR also placed reliance upon the decision of Hon’ble Bombay High court in the case of Veena Estate P. Ltd Vs. CIT, [2024] 158 taxmann.com 341 (Bom) and the decision of Hon’ble Kolkata High Court in the case of PCIT Vs. Thakur Prasad Sao & Sons (P.) Ltd, [2024] 163 taxmann.com 449 (Cacutta).

We have heard the counsels for both the parties, perused the material placed on record, judgments cited before us and also the orders passed by the revenue authorities. From the records we noticed that as per the facts of the present case, the assessee did not file return

Although assessee challenged the additions, but Ld. CIT(A) also confirmed the disallowance of expenses to the extent of Rs. 40,32,180/-. Further assessee preferred appeal before the Tribunal against the Ld. CIT(A) order which had been dismissed by the Tribunal vide order dated

12.2022. The assessee was found liable for penalty for unsubstantiated expenses of Rs. 40,32,180/- for furnishing inaccurate particulars of income, as it was found that the assessee furnished inaccurate particulars of expenses claimed by him while filing its return of income in response to notice u/s 148 of the Act.

Thereafter, on decision of CIT(A) order the assessee was again issued show-cause notice for furnishing inaccurate particulars of income on 01.02.2023 as an opportunity to furnish its reply in respect of the penalty proceedings on account of the above confirmed addition by 08.02.2023. Thereafter final show cause dated 09.02.2023 was issued to the assessee.

The only contention of the assessee is that specific limb for penalty was not specified in the penalty notice, however, it is to be noticed that the assessment order at para no.4 clearly mentioned that the penalty proceedings were initiated for furnishing inaccurate particulars of income. Therefore, in this way assessee was clearly communicated the limb of penalty through assessment order itself. Further, notices were issued on 01.02.2023 and 09.02.2023 in which it is clearly mentioned that penalty proceedings are for furnishing inaccurate particulars of income.

Even before us also the assessee has challenged only notice dated 30.03.2016 and has not challenged at all, the other notices dated 01.02.2023 and 09.02.2023 even in spite of the fact that when there are specific findings of Ld. CIT(A) thereby referring to both notices while passing its order. It is important to refer to the findings of Coordinate Bench of Tribunal which are contained in para 7.1 of order of Ld. CIT(A) and the same are produced herein below:

The ground no 2 relates to disallowance of business development expenses of Rs 28,43,819/-. Before us, the Ld Counsel of the assessee submitted that mainly expenses pertain to hotel and credit cards. The assessee filed ledger account of the business development expenses along with supporting vouchers which are available on page 2 to page 24 of the paper book. The Ld counsel submitted that these expenses were incurred for meeting in relation to ongoing litigations etc. However, no evidence in support of the claim are filed. On perusal of vouchers, we find that expenses mostly for dining in five star hotels. The assessee has failed to establish that these expenses were incurred wholly and exclusively for the purpose of business of the assessee. In light of the observation that no income from either trading or broking was shown in the profit and loss account, we uphold the disallowance sustained by the Ld CIT(A)".

We also noticed that disallowance of miscellaneous expenses of Rs 8,24,666/- are upheld as the assessee had 9 ITA No.4962/Mum/2025; A.Y. 2012-13 Classic share & Stock Broking Services Limited not produced vouchers in support of its claim. Thus, it can be concluded that these expenses were not made by the assessee. As for as the Business development expenses of Rs 28,43,819/-, are considered Hon'ble ITAT had observed that most of the expenses are for dining in five-star hotels and that the assessee had failed to establish that these expenses were incurred wholly and exclusively for the purpose of the business. Thus while drawing inference from the order of ITAT it can be conclusively said that the assessee had claimed such expenses which were not related to its business. Hon'ble ITAT has given its clear findings on both the issues. The addition to the income is not made as a result of 'difference of opinion' as contented by the assessee. We are of the view, that the assessee had made an incorrect claim of expenses of Rs. 8,24,666/- and Rs. 28,43,819 and thereby can be said to have filed inaccurate particulars with respect to such expenses.

Although the assessee has relied upon the decision in the case of Md. Farhan A. Shaik (supra) wherein it was held that “where assessment order clearly records satisfaction for imposing penalty on one or other, or both grounds mentioned in section 271(1)(c), a mere defect in notice, not striking off irrelevant matter would vitiate penalty proceedings.”

However, the facts of the present case are all together different as assessee had not challenged other notices

After having evaluating the entire facts and circumstances placed on record we find that the AO had clearly recorded his satisfaction in the para 4 of the Assessment Order dated 30/3/2016 passed u/s 143(3), that the 'penalty proceedings u/s 271(1)(c) is to be initiated for filing of ‘inaccurate particulars'. In any case no prejudice was caused to the assessee, as it was communicated to him, through the assessment order, that the penalty was initiated for filing of ‘inaccurate particulars’. Even the subsequent notices issued during the penalty proceedings clearly mentioned that the penalty proceedings were initiated for filing of inaccurate particulars.

Therefore considering the totality of the facts and circumstances as discussed by us above, we uphold the order passed by Ld. CIT(A) and consequently dismiss the grounds raised by the assessee.

In the result, appeal filed by the assessee stands dismissed.