Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: articles on VAT and GST in India :: cpt :: TDS :: ACCOUNTING STANDARD :: ACCOUNTING STANDARDS :: VAT RATES :: form 3cd :: ARTICLES ON INPUT TAX CREDIT IN VAT :: Central Excise rule to resale the machines to a new company :: due date for vat payment :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: TAX RATES - GOODS TAXABLE @ 4% :: empanelment :: list of goods taxed at 4% :: VAT Audit
 
 
From the Courts »
  Micro Spacematrix Solution P Ltd vs. ITO (ITAT Delhi)
 Micro Spacematrix Solution P Ltd vs. ITO (ITAT Delhi)
 CIT vs. Greenfield Hotels & Estates Pvt. Ltd (Bombay High Court)
 IndiaBulls Financial Services Ltd vs. DCIT (Delhi High Court)
 Maharao Bhim Singh of Kota vs. CIT (Supreme Court)
 Ravneet Takhar Vs. Commissioner Of Income Tax Ix And Ors.
 Jaiprakash Associates Ltd. Vs. Commissioner Of Income Tax
 Formula One World Championship Limited Vs. Commissioner Of Income Tax, International Taxation-3 And Anr.
 Commissioner Of Income Tax International Taxation-3 Delhi Vs. Formula One World Championship Ltd. And Anr.
 Reliance Communications Ltd vs. DDIT (ITAT Mumbai)
  Sushila Devi vs. CIT (Delhi High Court)

Asstt. Commissioner of Income Tax, CC- 22, Room No.403, 4th Floor, Aayakar Bhavan, M K Road, Mumbai-400020 Vs. Ms. Rani Mukerji 701, Vidya Apartment, 7th Floor, Janki Kutir, Church Road, Juhu, Mumbai-400049.
August, 04th 2014
                    ,                  ""          
      IN THE INCOME TAX APPELLATE TRIBUNAL "D" BENCH, MUMBAI

       BEFORE S/SHRI B.R.BASKARAN (AM) AND VIVEK VARMA, (JM)
       .. ,                                       ,      

                   ./I.T.(SS)A. No.16/Mum/2012
       (   / Assessment Block P eriod : 1990-91 to 2001-02)

 Asstt. Commissioner of Income      /        Ms. Rani Mukerji
 Tax, CC- 22,                       Vs.      701, Vidya Apartment,
  Room No.403, 4th Floor,                    7th Floor, Janki Kutir,
 Aayakar Bhavan,                             Church Road,
  M K Road,                                  Juhu,
 Mumbai-400020                               Mumbai-400049.
        ( /Appellant)               ..       (    / Respondent)



          . /   . /PAN/GIR No. :AALPM8973B



              / Appellant by             :   Shri Santosh Kumar
               /Respondent by :              Shri B V Jhaveri



                / Date of Hearing
                                                 : 10.7.2014
               /Date of Pronouncement : 31.7.2014


                                   / O R D E R

Per B.R.BASKARAN, Accountant Member:


      The appeal filed by the revenue is directed against the order dated

16.01.2012 passed by Ld CIT(A)-39, Mumbai and it relates to the block period

from 1990-91 to 2001-02.


2.     The revenue is aggrieved by the decision of Ld CIT(A) in deleting the

penalty levied u/s 158BFA(2) of the Act in respect of the following two items of

income:-

      (a) Difference in remuneration received ­ Rs.9.00 lakhs
                                                         I.T(SS)A No.16/Mum/2012
                                         2                                         I   I   T   I   T   A




      (b) Unaccounted expenditure on renovation of flat ­ Rs.5.00 lakhs.


3.    A search and seizure action u/s 132 of the Act was conducted in the hands

of the assessee on 26-09-2000. The assessee filed her block return declaring

undisclosed income at Rs.26,17,283/-.        The AO, however, determined the

amount of undisclosed income at Rs.1,58,41,635/-. The assessment order was

challenged by the assessee before Ld CIT(A) and also before the ITAT. The

Tribunal passed the order on 07.01.2010 confirming certain additions made by

the AO. Subsequently, the assessing officer levied penalty u/s 158BFA(2) of the

Act on the additions confirmed by the Tribunal, which inter alia, included

following items:-

      (a) Addition relating to difference in the remuneration in respect of the
      film named "Bus Itna Sa Khwab Hai" ­ Rs.9.00 lakhs.

      (b) Addition on account of undisclosed investment made in interior
      decoration of flat ­ Rs.5.00 lakhs.

The Ld CIT(A), however, deleted the penalty by holding that both the above said

additions have been made / confirmed on estimated basis. Aggrieved by the

order of Ld CIT(A), the revenue has filed this appeal before us.


4.    The facts relating to the first item of addition of Rs.9.00 lakhs are that the

assessee had shown the remuneration received for the film cited above at

Rs.27.00 lakhs. Based on the seized material, the AO held that the assessee has

received Rs.48.00 lakhs as remuneration for the above said film and accordingly

added the difference to the undisclosed income of the assessee. The same was

confirmed by Ld CIT(A).       The Tribunal, however, gave a finding that the

remuneration for the film was Rs.36.00 lakhs and accordingly restricted the
                                                        I.T(SS)A No.16/Mum/2012
                                         3                                        I   I   T   I   T   A







addition to Rs.9.00 lakhs. Against this addition, the AO has levied penalty u/s

158BFA(2) of the Act.


5.    The facts relating to the second item of addition of Rs.5.00 lakhs are that

the assessee had incurred expenses on renovation of flat nos. 404, 405 and 305,

all the three flats having aggregate area of 2040 Sq.ft. Based on the seized

materials, the AO added amounts noted in various loose sheets, viz.,

Rs.2,81,716/-, Rs.5,21,000/-, Rs.8,68,230/-, Rs.4,98,680/- and Rs.5,00,000/-. In

the quantum appellate proceedings, the Tribunal accepted the contention of the

assessee that there were overlapping in noting down the expenditure incurred in

respect of the above said three flats.        Hence, considering the facts and

circumstances of the case, the Tribunal estimated the cost incurred on interior

decoration of all the three flats at Rs.40.00 lakhs.    Since the assessee had

already disclosed Rs.34,84,082/-, the Tribunal confirmed addition to the extent

of Rs.5.00 lakhs only. Against this addition also, the AO has levied penalty u/s

158BFA(2) of the Act.


6.      Since the penalty has been levied u/s 158BFA(2) of the Act, we feel it

pertinent to extract the said provision below:-

             "2. The Assessing Officer or the Commissioner (Appeals) in the
      course of any proceeding under this Chapter, may direct that a person
      shall pay by way of penalty a sum which shall not be less than the amount
      of tax leviable but which shall not exceed three times the amount of tax
      so leviable in respect of the undisclosed income determined by the
      Assessing Officer under clause (c) of section 158BC.

             Provided that no order imposing penalty shall be made in respect of
      a person if--
             (i)    such person has furnished a return under clause (a) of
                    section 158BC;
             (ii)   the tax payable on the basis of such return has been paid or,
                    if the assets seized consist of money, the assessee offers the
                    money so seized to be adjusted against the tax payable;
                                                         I.T(SS)A No.16/Mum/2012
                                         4                                         I   I   T   I   T   A




             (iii)   evidence of tax paid is furnished along with the return; and
             (iv)    an appeal is not filed against the assessment of that part of
                     income which is shown in the return.

             Provided further that the provisions of the preceding proviso shall
      not apply where the undisclosed income determined by the Assessing
      Officer is in excess of the income shown in the return and in such cases
      the penalty shall be imposed on that portion of undisclosed income
      determined which is in excess of the amount of undisclosed income shown
      in the return."


7.   The question- Whether the penalty provided u/s 158BFA(2) is mandatory or

discretionary was also considered by the various benches of Tribunal. Since the

opening portion of above said section uses the expression "May direct", the

Tribunal has expressed the view that there is a discretion to the Assessing officer

either to levy or not to levy penalty. In this regard, the decision rendered by

the Chennai bench of Tribunal in the case of Ch. Suresh Reddy Vs. ACIT (120

TTJ 523) may be referred to.


8.    With regard to the first issue, the Ld D.R submitted that the remuneration

for the film was originally determined by the AO at Rs.48.00 lakhs. However, the

Tribunal after appreciating the seized materials has held that the assessee was

to receive a remuneration of Rs.36.00 lakhs.       Accordingly, the Tribunal has

sustained the addition of Rs.9.00 lakhs holding that the assessee has received

the same by way of cash. Since the tribunal is a fact finding authority and since

the impugned issue has been decided by it on the basis of seized materials, the

ld D.R submitted that the AO was justified in levying penalty on this addition.


9.     On the contrary, the Ld A.R submitted that the Tribunal has wrongly

confirmed the said addition on the basis of noting found in a diary. Inviting our

attention to the copies of correspondences exchanged between the assessee and
                                                        I.T(SS)A No.16/Mum/2012
                                        5                                         I   I   T   I   T   A




the Production house subsequent to the date of search, the Ld A.R submitted

that the assessee herein, in fact, reduced the remuneration to Rs.27.00 lakhs as

against the amount of Rs.36.00 lakhs originally proposed. He submitted that the

manner of receipt of Rs.27.00 lakhs was also different from the one noted in the

diary. The ld A.R further submitted that the assessee was constrained to reduce

the remuneration to Rs.27.00, since the concerned film did not fair well.

Accordingly, the ld A.R submitted that the Tribunal was wrong in sustaining the

addition of Rs.9.00 lakhs without appreciating the events that took place

subsequently. Accordingly, the Ld A.R submitted that the Ld CIT(A) was justified

in deleting the penalty on the reasoning that the above said addition has been

sustained on estimate basis. The Ld A.R further submitted that the assessee has

challenged the addition of Rs.9.00 lakhs by filing appeal before the Hon'ble High

Court of Bombay and the same has been admitted.           He submitted that the

admission of substantial question of law by the High Court would mean that the

bonafides of the Assessee's stand established and in that case, the penalty is not

exigible on those issues. For this proposition, the Ld A.R placed reliance on the

decision rendered by the Mumbai bench of Tribunal in the case of ACIT Vs. Ekta

Exports in IT(SS)A No.27/Mum/2011 dated 24.08.2012.


10.     In the rejoinder, the Ld D.R submitted that the Tribunal has, in fact,

considered the submissions relating to subsequent reduction of remuneration in

paragraph 53 of the order and has rejected the same by holding the same to be

an after thought. He further submitted that the Hon'ble Delhi High Court, in the

case of CIT Vs. Splender Construction (2013)(352 ITR 588), has held that, when

the order of the assessing officer in the quantum proceedings was sustained by
                                                       I.T(SS)A No.16/Mum/2012
                                         6                                       I   I   T   I   T   A




all the authorities and the court also dismissed the appeal filed by the assessee

at the admission stage, it could not be said that the issue was debatable.

Accordingly, the Ld D.R submitted that the admission of appeal by the High

Court cannot make the issue debatable.


11.    We have heard the rival contentions on this issue and carefully perused

the record. Before us, the Ld A.R placed strong reliance to the correspondences

exchanged between the assessee and the production house subsequent to the

date of search and contended that the remuneration was in fact reduced from

Rs.36.00 lakhs to Rs.27.00 lakhs and hence there is no necessity to sustain the

addition of Rs.9.00 lakhs.   Accordingly he contended that the Tribunal has

sustained the addition on the basis of inferences. However a careful perusal of

the order passed by the Tribunal in the quantum assessment proceeding would

show that the Tribunal has considered the claim of reduction of remuneration

subsequent to the date of search and has expressed the view that the same

seems to be an after thought.     Further the Tribunal has duly considered the

noting made in the seized record, the conduct of the father of the assessee who

used to maintain records of the assessee and accordingly held that the assessee

was to receive a remuneration of Rs.36.00 lakhs.        Since the assessee has

claimed to have received a sum of Rs.27.00 lakhs only, the Tribunal has held

that the assessee must have received the balance amount of Rs.9.00 lakhs in

cash. Thus, we notice that the Tribunal has considered all the submissions made

by the assessee, the seized material, surrounding circumstances, conduct of the

assessee's father who maintained the record and finally has given a finding that

the remuneration was Rs.36.00 lakhs. Under these set of facts, we are unable to
                                                        I.T(SS)A No.16/Mum/2012
                                        7                                         I   I   T   I   T   A







agree with the contention of the Ld A.R as well as with the view expressed by Ld

CIT(A) that the addition of Rs.9.00 lakhs has been sustained on estimate basis.

In our view, the above said addition has been sustained on the basis of seized

material only. Hence, we are of the view that the assessing officer was justified

in levying penalty on the above said addition u/s 158BFA(2) of the Act.


12.     The Ld A.R also contended that the penalty is not exigible since the

Hon'ble High Court has admitted the appeal filed by the assessee challenging the

decision rendered by the Tribunal in respect of the addition of Rs.9.00 lakhs

referred above. In this regard, the Ld A.R also relied upon the decision rendered

by the Co-ordinate bench in the case of M/s Ekta Exports (supra). We have

gone through the said decision and we notice that the co-ordinate bench has

followed decisions rendered by other co-ordinate benches in respect of penalty

levied u/s 271(1)(c) of the Act. In respect of penalty levied u/s 271(1)(c) of the

Act, it has been held that the admission of substantial question of law by the

Hon'ble High Court lends credence to the bonafides of the assessee.        The said

view gets support from Explanation 1 to sec. 271(1)(c) of the Act.            Under

Explanation 1 to sec. 271(1)(c), an assessee can escape from penalty, if he

proves his bonafides. Hence, the Tribunals have expressed the view that the

admission of substantial question of law by the Hon'ble High Court makes the

issue debatable and thus proves the bonafides of the assessee. However the

Explanation 1 to sec. 271(1)(c) is not applicable to sec. 158BFA(2) of the Act. In

the absence of such kind of relation, we are unable to agree with the contentions

of the assessee with regard to the above said proposition.
                                                           I.T(SS)A No.16/Mum/2012
                                         8                                           I   I   T   I   T   A




13.   In view of the foregoing, we set aside the order of Ld CIT(A) with regard

to the penalty levied on the addition of Rs.9.00 lakhs referred above and restore

the order of the AO in respect of the same.


14.   The next issue relates to the penalty levied on the addition of Rs.5.00 lakhs

relating to the interior decoration carried out by the assessee in three flats. We

have already noticed that the Tribunal has given a finding that there were

overlapping in the seized materials wherein the items of work were found noted.

Under these circumstances, the Tribunal has estimated the amount spent on

interior works of three flats at Rs.40.00 lakhs and thus sustained the addition to

the extent of Rs.5.00 lakhs. Hence, we agree with the view expressed by Ld

CIT(A) on this addition that the Tribunal has sustained the addition on estimate

basis and the Tribunal could not come a conclusion from the seized material that

there was undisclosed income in incurring interior decoration works. Hence, in

respect of this issue, we agree with the Ld CIT(A) and accordingly hold that the

first appellate authority was justified in directing the assessing officer to delete

the penalty.


15.   In the result, the appeal filed by the revenue is partly allowed.



       The above order was pronounced in the open court on 31st July, 2014.


            31st July, 2014    

        Sd                                            sd

(   / VIVEK VARMA)                             (..  / B.R. BASKARAN)
     / JUDICIAL MEMBER                           / ACCOUNTANT MEMBER


  Mumbai: 31st July,2014.

                                         I.T(SS)A No.16/Mum/2012
                            9                                      I   I   T   I   T   A




. ../ SRL , Sr. PS

        /Copy of the Order forwarded to :
1.  / The Appellant
2.  / The Respondent.
3.     () / The CIT(A)- concerned
4.      / CIT concerned
5.      ,     ,                   /
     DR, ITAT, Mumbai concerned
6.     / Guard file.
                                              / BY ORDER,
            True copy
                                        (Asstt. Registrar)
                              ,  /ITAT, Mumbai

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Enterprise Resource Planning Solutions ERP Solutions Enterprise Resource Planning Software Solutions ERP Software Solutions Supply Chain Management Solutions SCM Solutions Supply Chain Management Software Solutions SCM Software Solutions Enterprise Resource Planning Solutions India ERP Solutions India Enterprise Resource Planning Software Solutions India ERP Software Solutions India Supply Chain Management Solutions India SCM Solutions India Supply Chain Management Software Solutions India SCM Software Solutions India

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions