M/S. JASANI (FORMERLY RATHILAL BECHARLAL & SONS),MUMBAI vs. ACIT - 16(3), MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “F”, MUMBAI Before Shri Pawan Singh (JM) & Shri Rifaur Rahman ITA No. 4487/Mum/2018 (Assessment year : 2007-08)

Jasani (formerly Ratilal Vs ACIT -16(3) Room No. 206, 2nd Floor, Becharlal & Sons) HW 6010, Tower H, 6th Matru Mandir, Floor, Bharat Diamond Mumbai-400007 Bourse, Bandra Kurla Complex, Bandra (East) Mumbai-400002 PAN : AAAFR7913B APPELLANT RESPONDEDNT

Appellant by Shri Apurva Shah AR Respondent by Shri Mohammed Rizwan Add. CIT (Sr DR) Date of hearing 09-12-2019 Date of pronouncement 09-12-2019 O R D E R PER PAWAN SINGH, JM : 1. This appeal by assessee is directed against the order of learned Commissioner of Income tax (Appeals) {CIT(A)}-29, Mumbai dated 13-

04-2018, which in turn arises from penalty order passed u/s 271(1)(c) for assessment year 2007-08. The assessee has raised the following grounds of appeal:- “The Commissioner of Income Tax (Appeals) - 29, Mumbai erred: 1. in confirming levy of penalty of Rs. 8,883/- u/s 271 (1) ( c) of the Income Tax Act,1961.”

business of export / import of manufacturing of diamonds, filed its return

2 ITA No.4487 /Mum/2018 M/s. Jasani (Formerly Ratilal Becharlal & Sons) of income for AY 2007-08 declaring total income of Rs.14.67 crores.

The case was selected for scrutiny. The assessee reported international

transactions with its associated enterprises (AE). Accordingly, reference

was made to Transfer Pricing Officer (TPO) for computation for arm’s

length price (ALP) with regard to the international transaction.

Consequent upon determination of ALP, the assessing officer (AO)

passed draft assessment order, wherein the AO, besides other additions /

disallowances, disallowed depriciation on laptop. The AO while making

disallowance noted that assessee could not produce invoice / bill and

accordingly depreciation of Rs. 29,609/- was disallowed. On objection

before the Dispute Resolution Penal (DRP), the disallowance was

upheld. Accordingly, finally disallowance on depreciation was made in

assessment order passed u/s 143(3) r.w.s. 144C. On further appeal

before Tribunal, the additions// disallowances on depriciation was

upheld. 3. The AO issued show cause notice u/s 274 r.w.s. 271(1)(c) dated 21-10-

2011 and again on 23-08-2013. The assessee filed its reply, wherein the

assessee prayed for dropping the penalty proceedings. The reply

furnished by the assessee was not accepted by the AO. The AO noted

that disallowance of depreciation for Rs.29,609/- was made in

assessment order on which minimum penalty @100% of tax sought to be

3 ITA No.4487 /Mum/2018 M/s. Jasani (Formerly Ratilal Becharlal & Sons) evaded is Rs.8,883/-; hence, the AO levied penalty of Rs.8,883/- in his

order dated 30-03-2013. On further appeal before CIT(A), the action of

AO levying penalty was confirmed. Thus, further aggrieved by the order

of Ld. CIT(A), the assessee has filed present appeal before Tribunal. 4. We have heard the submission of Ld. authorised representative (AR) of

the assessee and Ld. departmental representative (DR) for Revenue and

perused the material available on record. The Ld. AR of the assessee

submits that assessee is a taxpayer in higher tax bracket and offered a

taxable income of Rs.14.67 crores. During the assessment the assessee

could not produce the invoice for purchase of laptop of Rs.98,696/-.

Cost of purchase was added in the schedule of fixed assets. The assessee

claimed depreciation on such laptop. However, the depreciation of

Rs.29,609/- was disallowed in absence of evidence of purchases. The

AO has not doubted the use of laptop for the purpose of business. The

Ld.AR for assessee fairly submits that on objection before DRP and on

further appeal before Tribunal, the assessee was not granted relief on

such depreciation. The Ld. AR for assessee submits that mere

disallowance would not lead to furnishing of inaccurate particulars when

use of laptop for the purpose of business is not disputed by AO. The

Ld.AR for the assessee further submits that the disallowance was made

for the reasons that assessee was unable to produce the receipt / purchase

4 ITA No.4487 /Mum/2018 M/s. Jasani (Formerly Ratilal Becharlal & Sons) invoice of laptop. The Ld.AR for the assessee submits that in the reply

to show cause notice under section 274 rws 271(1) (c), the assessee has

shown reasonable cause in its reply dated 28-08-2013. The Ld.AR for

the assessee finally submits that the assessee could not produce the

receipt due to bona fide reasons and otherwise, the assessee had no

occasion to furnish inaccurate particulars as the assessee has shown a

taxable income of about Rs.15 crores. The Ld.AR prayed for deletion of

entire penalty u/s 271(1)(c). 5. On the other hand, the Ld. DR for the revenue relied upon the orders of

lower authorities. 6. We have considered the rival submissions of both the parties and have

gone through the record of case. We have carefully perused the

assessment order, penalty order and order of ld CIT(A). The AO during

the assessment proceedings noted that the assessee in the block of assets

has added the cost of laptop. The assessee was asked to furnish invoice

of purchase of laptop. The assessee filed credit card statement showing

the payment of the purchase. The AO noted that the payment was made

by the partner of the assessee firm. The AO further noted that the

assessee could not file any evidence that payment was made for the

purchase of laptop. The AO by taking view that assessee could not file

evidence for acquisition of laptop. Accordingly depreciation of

5 ITA No.4487 /Mum/2018 M/s. Jasani (Formerly Ratilal Becharlal & Sons) Rs.29,609/- was disallowed in the draft assessment order. The objection

raised by assessee before DRP, with regard to disallowances of

depriciation, was rejected. On depreciation amount of Rs.29,609/-, the

AO levied penalty u/s 271(1)(c) being 100% of tax sought to be evaded.

The further appeal the ld. CIT(A) confirmed the action of AO by

referring the ingredients of Explanation 1 to section 271(1)(c). In our

view, the Explanation 1 deals with the deemed concealment. The AO

levied penalty for furnishing inaccurate particulars; however, the ld.

CIT(A) while confirming the penalty at para 3.3.10 referred the

ingredients of Explanation 1 to section 271(1)(c), which deals with

deemed concealment. We have also noted that the use of laptop for the

purpose of business is not disputed. The AO before making

disallowance has not verified the credit card statement. In our view, the

disallowance was made in absence of purchase bill/ invoice only. In

fact, the purchase is not in dispute. In our view the particulars furnished

by assessee was not inaccurate but could not be substantiated for want of

documentary evidence. Therefore, in our view it was not fit case for

levying penalty neither for furnishing inaccurate particulars of income or

for treating it as a concealment of income. Hence, we direct the AO to

delete the entire penalty.

6 ITA No.4487 /Mum/2018 M/s. Jasani (Formerly Ratilal Becharlal & Sons) Order pronounced in the open court on 09th December 2019, while

hearing the appeal.

Sd/- Sd/- (Rifaur Rahman) (Pawan Singh) ACCOUNTANT MEMBER JUDICIALMEMBER Mumbai, Dt : 9th December, 2019 Pk/- Copy to : 1. Appellant 2. Respondent 3. CIT(A) 4. CIT 5. DR /True copy/ By order

Asstt. Registrar, ITAT, Mumbai