Case Law Details
IN THE ITAT MUMBAI BENCH ‘J’
Income-tax Officer
Versus
Jain Associates
IT Appeal No. 2625 (Mum.) of 2011
[ASSESSMENT YEAR 2007-08]
JUNE 8, 2012
ORDER
S.S. Godara, Judicial Member.
This Revenue’s appeal challenges deletion of penalty by the learned Commissioner of Income-tax (Appeals), vide order dated January 19, 2011 imposed under section 271(1)(c) by the Assessing Officer, pertaining to the assessment year 2007-08.
2. The brief facts of the case are that the assessee which is a partnership firm engaged in the business of copyrights of motion pictures filed its return of the assessment year 2006-07. In the said assessment year, it had received an amount of Rs. 37,50,000 regarding transfer of ownership rights of the movie “Amar Akbar Anthony” to M/s. Tips Industries Ltd. The said consideration was not admitted as sales in the profit and loss account. Therefore, the Assessing Officer added the amount in assessment of the assessment year 2006-07.
3. The assessee preferred an appeal before the learned Commissioner of Income-tax (Appeals). In the said appeal, the learned Commissioner of Income-tax (Appeals) held by the order dated November 13, 2009 that the consideration had to be taxed in the assessment year 2007-08, i.e., assessment year in hand in present appeal before us instead of the assessment year 2006-07.
4. In the meantime, regarding the assessment year 2007-08, i.e., assessment year in hand, the assessee had already filed return on October 26, 2007. Before the finalisation of assessment, in pursuance of order dated November 13, 2009 (supra), it filed a revised computation of total income as well as the profit and loss account duly mentioning the consideration amount. The Assessing Officer did not accept the revised computation. He held that since the assessee had not included the amount in question in the sales, and, therefore, the same was added by assessment order dated December 22, 2009. Notice of penalty under section 271(1)(c) of the Act was also issued.
5. In penalty proceedings, the assessee submitted that the reason as to why the sale consideration had not been stated in the original return was that some dispute had arisen. Therefore, when in appeal, the learned Commissioner of Income-tax (Appeals) vide order dated November 13, 2009 held that the consideration had to be offered for taxation in the assessment year 2007-08 (supra), it filed a revised return and the profit and loss account.
6. The Assessing Officer did not accept the assessee’s explanation. He held vide penalty order dated June 28, 2010, the assessee’s conduct to be as a case of false explanation calling it a its failure to disclose all the material facts and particulars in assessment. Hence, he imposed penalty at 100 per cent. of the tax sought to be evaded, i.e., Rs. 7,44,763.
7. In appeal, the learned Commissioner of Income-tax (Appeals) has deleted the penalty on the ground that the assessee had already disclosed the fact in the earlier assessment year, i.e., the assessment year 2006-07. Per the learned Commissioner of Income-tax (Appeals), it showed that the assessee had never intended to conceal the amount from the knowledge of the Assessing Officer. Therefore, the penalty has been ordered to be struck down.
8. Hence, the Revenue is aggrieved.
9. The learned Departmental representative appearing for the Revenue has vehemently contended that the assessee’s conduct in not disclosing the consideration amount in pursuance of the sale of the rights in hand is a case of concealment. In this regard, he has placed reliance on the penalty order as well as the judgment of the hon’ble Supreme Court in the case of Union of India v. Dharamendra Textile Processors [2008] 306 ITR 277 and prayed for upholding the penalty order.
10. The learned authorised representative opposing the Revenue’s arguments has submitted that the assessee is not at all guilty of either furnishing inaccurate particulars or concealment of income. By reiterating the above factual position, he has submitted that in the earlier assessment year, i.e., assessment year 2006-07, the assessee had duly disclosed the amount. The learned Commissioner of Income-tax (Appeals) vide order dated November 13, 2009 held that the said amount had to be taxed in the next assessment year in 2007-08. After the said order, the assessee filed a revised computation as well as the profit and loss account in the assessment proceedings for the assessment year 2007-08. However, the Assessing Officer did not accept it. Therefore, the assessee is not guilty of either furnishing inaccurate particulars or concealment of income in hand.
11. Besides this, the learned authorised representative has also relied on case law of CIT v. Reliance Petroproducts (P.) Ltd. [2010] 322 ITR 158 as well as Metal Rolling Works Ltd. v. CIT [2011] 339 ITR 373 (Bom.) wherein it had been held that when the assessee had disclosed the income in the earlier assessment year, i.e., original return of income as advance received, the same cannot be called an act of concealment.
12. In rebuttal, the learned Departmental representative has submitted that the facts of the case in Metal Rolling Works Ltd. (supra) and those in the present appeal are different.
13. We have heard both learned representatives in detail. Necessary findings in the orders passed by the lower authorities as well as the relevant case law referred have been perused. Undoubtedly, the consideration was received in 2006-07. The agreement was signed in 2007-08. The assessee had disclosed the consideration amount in the assessment year 2006-07. The learned Commissioner of Income-tax (Appeals), vide order dated November 13, 2009 held that the said amount could only be taxed in the next assessment year, i.e., 2007-08.
14. Thereafter, since assessment proceedings in the assessment year 2007-08 were yet to be finalised, the assessee filed a revised computation of income as well as profit and loss account. That was not accepted in the assessment order dated December 23, 2009. The Assessing Officer observed that it was an act of concealment. Subsequently, imposed penalty in hand.
15. The above factual matrix of the case nowhere proves that the assessee had either concealed the income or furnished any inaccurate particulars. The very fact that it had duly mentioned the consideration in the year of receipt itself proves its bona fides. In this regard, we fortify our opinion from the hon’ble Bombay High Court judgment in the case of Metal Rolling Works Ltd. (supra).
16. Even otherwise also, every instance of addition in the assessment proceedings does not ipso facto led to a conclusion that the assessee is guilty of concealment, etc., as the penalty proceedings are altogether different in nature. We rely on the hon’ble Supreme Court judgment in the case of Reliance Petroproducts (P.) Ltd. (supra).
17. Hence, we hold that the learned Commissioner of Income-tax (Appeals) has not erred in deleting the penalty in question. So, the Revenue’s appeal is rejected.
