Mennen Financial Services Ltd , Mumbai vs Assessee

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BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND

SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER

आयकर अपील सं./I.T.A. No. 5691/Mum/2010 िनधा रण वष / Assessment Year :2002-03 (िनधा M/s. Mennen Financial बनाम The ITO, 9(2)(3), बनाम/ Services Ltd., Mumbai Vs. 501, Acme Industrial Park, Western Express Highway, Goregaon (W), Mumbai-400 063 ःथायी ले खा सं . /जीआइआर सं . /PAN/GIR No. :AAACM 3164A (अपीलाथ* /Appellant) .. (ू,यथ* / Respondent) अपीलाथ* ओर से/ Appellant by: Shri Beharilal ू,यथ* क. ओर से/Respondent by: Shri Jeetendra Kumar

सुनवाई क. तार0ख / Date of Hearing :16.03.2015 घोषणा क. तार0ख /Date of Pronouncement :18.03.2015

आदे श / O R D E R

PER N.K. BILLAIYA, AM:

This is an appeal by the assessee preferred against the order of the Ld. CIT(A)-20, Mumbai dt. 20.5.2010 pertaining to assessment year 2002-03.

2. The sole grievance of the assessee is that the Ld. CIT(A) erred in confirming the penalty levied u/s. 271(1)(c) of the Act amounting to Rs. 6,09,332/-.

2 ITA. No. 5691/M/2010 3. The roots for the levy of penalty lie in the assessment order dt. 29.12.2004 made u/s. 143(3) of the Act wherein inter alia, the Assessing Officer has made additions on account of bogus claim of depreciation - Rs. 3,78,974/-, bogus claim of expenses-Rs. 10,08,832/- and suppression of sales -Rs. 6,26,598/-. When the disallowances were contested before the Ld. CIT(A), the Ld. CIT(A) allowed Rs. 41,181/- out of bogus claim of depreciation , Rs. 4,72,061/- out of bogus claim of expenses and Rs. 4,60,732/- out of suppression of sale. The AO proceeded to levy penalty u/s. 271(1)(c) of the Act in respect of the additions sustained by the Ld. CIT(A).

4. The assessee was asked to explain why penalty should not be levied u/s. 271(1)(c) of the Act. It was claimed that the variation in the returned income and the assessed income is due to the disallowances of genuine expenses made by the AO. It was strongly contended that there was no malafide intention or any deliberate attempt on the part of the assessee to conceal the income. The explanations made by the assessee did not find any favour from the AO who was of the strong belief that the assessee has deliberately inflated its expenditure thereby filing inaccurate particulars of income. The AO proceeded by levying penalty u/s. 271(1)(c) of the Act at Rs. 6,09,332/-.

5. The assessee carried the matter before the Ld. CIT(A) but without any success.

6. Aggrieved, the assessee is before us.

7. The Ld. Counsel for the assessee reiterated what has been submitted before the lower authorities. It is the say of the Ld. Counsel that the additions on account of suppression of sale is for the sales made 3 ITA. No. 5691/M/2010

in earlier years and has been shown as sales returned during the year under consideration which has not been properly appreciated by the AO. In so far as the disallowance on the claim of depreciation is concerned, the Ld. Counsel stated that the claim was reduced by filing a revised return which has been accepted by the AO.

8. Per contra, the Ld. Departmental Representative supported the orders of the authorities below.

9. We have carefully perused the assessment order and the order of the First Appellate Authority. In so far as the levy of penalty on the claim of excess depreciation is concerned, we find that during the course of the assessment proceedings itself the assessee has revised the claim of depreciation and the said revised return has been duly accepted by the AO. We, therefore do not find any merit in levying penalty u/s. 271(1)(c) of the Act on this count.

9.1. In so far as the suppression of sale is concerned, we find that in the quantum appeal while reconciling the difference in the sales figure, the assessee itself has accepted that sales upto Rs. 1,82,056/- stands unreconciled. The claim of the assessee that the sales were of earlier years and shown as sales returned. The Ld. CIT(A) has considered this submission and has deleted the addition of Rs. 4,60,732/-, therefore the submissions made by the Ld. Counsel on this issue does not hold any water. The penalty has been levied on the unreconciled and accepted addition on account of suppression of sale. Therefore, we do not find any reason to interfere with the findings of the Ld. CIT(A) on this issue.

9.2. In so far as the disallowance on account of bogus claim of expenditure is concerned, we find that in the quantum addition, the Ld. CIT(A) has given a substantial relief to the assessee. For the balance of 4 ITA. No. 5691/M/2010

the claim, the assessee could not adduce any satisfactory reply neither in the quantum proceedings nor in the penal proceedings. We, therefore, confirm the findings of the Ld. CIT(A) on this issue also.

10. To sum up, the AO is directed to delete the penalty on the additions made on account of depreciation and recompute the levy as per our findings given in respect of other disallowances.

11. In the result, the appeal filed by the assessee is partly allowed.

Order pronounced in the open court on 18th March, 2015.

Sd/- Sd/- (VIJAY PAL RAO ) (N.K. BILLAIYA) याियक सदःय/JUDICIAL MEMBER लेखा सदःय / ACCOUNTANT MEMBER

मुंबई Mumbai; 4दनांक Dated : 18th March, 2015 व.िन.स./ RJ , Sr. PS आदे श क. ूितिल प अमे षत/Copy षत of the Order forwarded to :

1. अपीलाथ* / The Appellant

2. ू,यथ* / The Respondent.

3. आयकर आयु6(अपील) / The CIT(A)-

4. आयकर आयु6 / CIT

5. वभागीय ूितिनिध, आयकर अपीलीय अिधकरण, मुंबई / DR, ITAT, Mumbai

6. गाड फाईल / Guard file.

आदे शानुसार/ ार BY ORDER, स,या पत ूित //True Copy// उप/सहायक उप सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अिधकरण मुंबई / ITAT, Mumbai