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Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
आयकर अपीलीय अधिकरण “A” न्यायपीठ म ुंबई में। IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, MUMBAI श्री शक्तिजीि डे,न्याययक सदस्य एवं श्री जी मंजूनाथ, लेखा सदस्य के समक्ष । BEFORE SRI SAKTIJIT DEY, JM AND SRI G. MANJUNATHA, AM आयकर अपील सुं./ ITA No. 7177 & 7178/Mum/2018 (यनर्ाारण वर्ा / Assessment Year 2008-09 AND 2010–11) M/s Arshiya Limited, The Asst. Commissioner of 302, Level–3, Ceejay House, Income, Circle-21(2)(5) F–Block, Shiv Sagar Estate,Dr. Room No. 116, 1 st Floor, बनाम/ Annie Besant Road, Worli, Piramal Chambers, Vs. Mumbai-400 018 Mumbai-400 012 (अपीलार्थी / Appellant) (प्रत्यर्थी/ Respondent) स्र्थायी लेखा सुं./PAN No. AAACI2679A अपीलाथी की ओर से / Appellant by : Shri Navnit Choudhary, AR प्रत्यथी की ओर से / Respondent by : Shri Michael Jerald, DR सुनवाई की िारीख / Date of hearing: 11.02.2020 घोर्णा की िारीख / Date of pronouncement: 20.03.2020 आदेश / O R D E R शक्तिजीि डे, न्याययक सदस्य/ PER SAKTIJIT DEY, JM:
The aforesaid appeals by the assessee are against two separate orders of learned Commissioner (Appeals)-54, Mumbai confirming penalty imposed under section 271(1)(c) of the Act for the Assessment Years 2008-09 and 2010-11. ITA No. 7177/Mum/2018-Assessment Year 2008-09 in this appeal the assessee has challenged penalty imposed under section 271(1)(c) of the Act for an amount of ` 2,33,699/-.
2 | P a g e Ars hi ya Li mi ted I TA nos . 7 1 77 & 7 17 8 /M um/ 2 0 18 2. Briefly stated facts are, the assessee, a resident company, filed its return of income for the impugned assessment year on 13.09.2018, declaring total income of `15,29,50,863/-. Assessment in case of the assessee was completed vide order dated 12.09.2012 determining the total income of `26,79,59,260/-, after making the following additions:- (i) Disallowance under section 28 of `4,40,351/. (ii) Disallowance under section 69C of `4,40,351/- (iii) disallowance under section 68 of `10,01,50,000/- (iv) addition on account of transfer pricing adjustment of `87,13,107/- (v) disallowance under section 14A `36,24,147/- (vi) pre-operative interest income of `13,40,444/- 3. Against the assessment order so passed, assessee filed appeal before learned Commissioner (Appeals). In the appeal so filed assessee did not contest disallowance of `4,40,351/- made under section 28 of the Act. In so far as the other additions are concerned, learned Commissioner (Appeals) confirmed an amount of `2,47,201/- out of the disallowance of `4,40,351/- made under section 69C of the Act. He deleted the disallowance of `10,01,50,000/- made under section 68 of the Act and disallowance of pre-operative expenses of `13,40,444/-. Whereas, he confirmed the TP adjustment of `87,13,107/- and partly confirmed an amount of `33,42,417/- out of total disallowance made under section 14A of the Act. Against the order passed by learned Commissioner (Appeals) the assessee
3 | P a g e Ars hi ya Li mi ted I TA nos . 7 1 77 & 7 17 8 /M um/ 2 0 18 preferred further appeal before the Tribunal. On the basis of the addition sustained by learned Commissioner (Appeals), the Assessing Officer initiated proceedings for imposition of penalty under section 271(1)(c) of the Act by issuing show cause notice to the assessee. After considering the explanation of the assessee, the Assessing Officer concluded that the assessee has furnished inaccurate particulars of income and has concealed income in so far as disallowance of `4,40,351/- made under section 28 of the Act and disallowance of `2,47,201/- made under section 69C of the Act as sustained by the learned Commissioner (Appeals). Thus, on the basis of the aforesaid additions aggregating to `6,87,552/-, the Assessing Officer imposed penalty under section 271(1)(c) of the Act for an amount of `2,33,699/- in order dated 29.03.2017. Though, the assessee contested the penalty order before learned Commissioner (Appeals), however, it was unsuccessful.
Addressing on merits, the learned Authorized Representative (AR) submitted, the assessee has not entered into such transactions and was even not aware of such transactions. He submitted, the sales team of the assessee company for the purpose of showing increase in turnover has adopted such tactics of obtaining accommodation bills. The learned AR submitted, once the assessee was made aware of such fact, it accepted the disallowance under section 28 of the Act. Thus, he submitted, since the assessee has furnished full particulars of its purchase and sale transaction and correctly furnished the particulars of income, no penalty under section 4 | P a g e Ars hi ya Li mi ted I TA nos . 7 1 77 & 7 17 8 /M um/ 2 0 18 271(1)(c) of the Act should be imposed. Without prejudice, the learned AR submitted, the assessee has raised an additional ground challenging the validity of the order passed under section 271(1)(c) of the Act as in the show cause notice issued under section 274 of the Act, the Assessing Officer has not specifically mentioned the exact charge for which he intends to impose penalty under section 271(1)(c) of the Act.
The learned Departmental Representative strongly relying on the observations of the Assessing Officer and learned Commissioner (Appeals) submitted, the additional ground raised by the assessee cannot be admitted at this stage as the assessee has never raised the issue either before the Assessing Officer or before learned Commissioner (Appeals).
We have considered rival submissions and perused the materials on record. Undisputedly, the addition of `6,87,552/- on the basis of which the Assessing Officer has imposed penalty under section 271(1)(c) of the Act is on account of non-genuine transaction. It is relevant to observe, the Assessing Officer has added the very same amount of `4,40,351/- both under sections 28 as well as 69C of the Act. While the assessee has accepted the addition made under section 28 of the Act, it had contested the disallowance made under section 69C of the Act. Learned Commissioner (Appeals) after considering the submissions of the assessee has restricted such disallowance to an amount of `2,47,201/-. Thus as could be seen, ultimately the addition sustained by learned Commissioner (Appeals) under section 69C of the Act is on estimate basis keeping in view the 5 | P a g e Ars hi ya Li mi ted I TA nos . 7 1 77 & 7 17 8 /M um/ 2 0 18 probable commission paid for such transaction. It is the contention of the learned AR before us that the assessee is totally unaware of such transaction and when it came to the notice before the assessee during the assessment proceedings, it offered the income of `4,40,351/-. In our view, the aforesaid explanation of the assessee appears to be plausible from the attendant facts. The very fact that the assessee had not contested the disallowance of `4,40,351/- made under section 28 of the Act establishes its bonafide. Further, as noted above, the assessee has offered income of `15,29,50,863/-. Thus, when the assessee is offering such huge income it cannot be accepted that it would have either furnished inaccurate particulars of income or concealed its income for a paltry sum of `6,87,552/-. In view of the aforesaid, we hold that the assessee cannot be accused of either furnishing of inaccurate particulars of income or concealing the income so as to impose penalty under section 271(1)(c) of the Act. Accordingly, we delete the penalty imposed of ` 2,33,699/-.
In view of our decision hereinabove, the additional ground raised by the assessee having become infructuous, is dismissed. This appeal of the assessee is partly allowed.
ITA No. 7178/Mum/2018-Assessment Year 2010-11
The quantum of penalty imposed in the present appeal is `23,45,910/-. Facts are more or less identical to ITA No.7177/Mum/2018. Difference is only in the quantum of additions.
6 | P a g e Ars hi ya Li mi ted I TA nos . 7 1 77 & 7 17 8 /M um/ 2 0 18 8. In the present case, the Assessing Officer had disallowed an amount of `50,74,126/- under section 28 and the very same amount under section 69C of the Act on account of non-genuine transaction. As was the case in Assessment Year 2008-09, the assessee did not contest the disallowance made under section 28 of the Act. Whereas, out of the disallowance made under section 69C of the Act, learned Commissioner (Appeals) confirmed an amount of `18,27,640/-. On the basis of the aforesaid two additions aggregating to `69,01,766/-, the Assessing Officer has imposed penalty of `23,45,910/- under section 271(1)(c) of the Act. 9. The facts being identical and the rival submissions made being similar to Assessment Year 2008-09, following our decision in ITA No. 7177/Mum/2018, we delete the penalty imposed under section 271(1)(c) of the Act. Further, following our decision in ITA No. 7177/Mum/2018 in the earlier part of the order, we dismiss the additional ground raised by the assessee for similar reasons. In the result, the appeal is partly allowed. 10. To sum up, both the appeals of the assessee are partly allowed. Order pronounced in the open court on 20.03.2020 (जी मंजूनाथ / G. MANJUNATHA) (शक्तिजीि डे /SAKTIJIT DEY) (लेखा सदस्य / ACCOUNTANT MEMBER) (न्याययक सदस्य/ JUDICIAL MEMBER) मुंबई, ददनांक/ Mumbai, Dated:20.03.2020 स दीप सरकार, व.यनजी सधिव / Sudip Sarkar, Sr.PS
7 | P a g e Ars hi ya Li mi ted I TA nos . 7 1 77 & 7 17 8 /M um/ 2 0 18
आदेश की प्रयिललपप अग्रेपिि/Copy of the Order forwarded to : अपीलाथी / The Appellant 1. प्रत्यथी / The Respondent. 2. 3. आयकर आयुति(अपील) / The CIT(A) 4. आयकर आयुति / CIT ववभागीय प्रयियनधर्, आयकर अपीलीय अधर्करण, मुंबई / DR, ITAT, Mumbai 5. गाडा फाईल / Guard file 6. आदेशान सार/ BY ORDER, सत्यावपि प्रयि //// /सहायक पुंजीकार (Asstt.