R.J. Infotech Services P. Ltd, Mumbai vs Assessee

आयकर अपीलीय अिधकरण, अिधकरण, मुंबई Ûयायपीठ 'डȣ ' मुंबई । IN THE INCOME TAX APPELLATE TRIBUNAL " D " BENCH, MUMBAI

᮰ी िवजय पाल राव, ᭠याियक सद᭭य, एवं ᮰ी एन. के . िबलै᭦या, लेखा सद᭭य. के समᭃ ।

BEFORE SHRI VIJAY PAL RAO , JM AND SHRI N.K. BILLAIYA, AM

आयकर अपील सं./I.T.A. No. 1336/Mum/2013 ( िनधाᭅरण वषᭅ / Assessment Year : 2007-08)

R.J. Infotech बनाम/ बनाम Income tax officer Services Pvt. Ltd. Vs. Ward 7 (2)(1) 501, Fantasia, Raheja Mumbai. Garden, LBS Marg, Teen Haath Naka, Thane (W)-400 601. ᭭थायी ले खा सं . /जीआइआर सं . /PAN/GIR No. : AABCR 8963 R (अपीलाथᱮ /Appellant) .. (ᮧ᭜यथᱮ / Respondent)

अपीलाथᱮ ओर से / Appellant Shri Vimal G. Jain (AR) by : ᮧ᭜यथᱮ कᳱ ओर Shri Jeetendra Kumar (DR) से/Respondent by :

सुनवाई कᳱ तारीख / Date of 25/11/2014 Hearing : घोषणा कᳱ तारीख /Date of 14/01/2015 Pronouncement :

आदेश / O R D E R

PER VIJAY PAL RAO, JM:

This appeal by the assessee is directed against the order dated 13/12/2012 of CIT(A) arising from penalty order passed u/s. 271(1)(c) of the Income tax Act, 1961 for the assessment year 2007-08. The assessee has raised the following grounds :-

1)The assessee company incorporated with the main object of carrying business of Information technology and to manufacture, assemble, buy, sell, Lease, Import, Export of all types of hardware and 2 ITA No.1336/M/13 R.J. Infotech Services Pvt. Ltd.

software and also consultancy in Information Technology, as per Memorandum of Association (MOA) of the company. The learned ITO has erred in holding that company (Co.) has not exported the software as per the co's object ,during the year, when the copy of MOA was already provided to him.

2)The learned ITO was also provided the Income Tax Return copies, alongwith Balance Sheet and Profit & Loss A/c for various previous years wherein export of software was regularly done by the assessee Co. and previous ITO has allowed the deduction u/s 80 HHE also, in previous years, which is sufficient proof of export done.

3)The le arned ITO has diffe rre d in his opinion with the Le arne d Authorised Representative (LAR) that the export was never made by the Co. during the year, whereas it is the regular business of the Co. for which sufficient Proof has been given. Even the item what is exported is not mentioned by the Co. as stated in the learned ITO's order, which is clearly known to him.

4) The learned ITO erred in taking Business Income as Income From Other Sources even after all the proof of export was given including confirmation letter from the client, bank FIRC (Foreign Inward Remittance Certificate) for the amount received in convertible foreign exchange for export done.

5) The learned ITO thus erred in levying penalty u/s 271 (1 )(c) that inappropriate details are given, which is his imagination only, when "Business Income" has been declared as "Business Income", is in no way inappropriate, which has been also proved by various documents.

2. The assessee claimed to have carried out business and disclosed income from exports and also income from other sources. In the return of income the assessee disclosed nil total income and paid tax on book profit amounting to Rs.15,94,865/- u/s. 115JB of the Income tax Act. During the course of assessment proceedings the AO found that the assessee credited consultancy fee of Rs.16,16,662/-, which was not verifiable. The AO confronted the assessee and asked to furnish supporting details. In response, the assessee produced certificate of foreign inward remittance on account of advance against exports. The AO further asked the assessee to furnish supporting details of export and nature of commodity exported. However, the assessee failed to produce any supporting evidence. The AO further noted that there was no employee with the assessee as well as no opening or closing stock in the books of the assessee company . On the basis of the facts detected during the enquiry in the assessment proceedings the AO treated the said receipt of 3 ITA No.1336/M/13 R.J. Infotech Services Pvt. Ltd.

Rs.16,16,662/- as unexplained cash credit u/s. 68 of the Income tax Act and assessed the same to tax under the head 'income from other sources'. Penalty proceedings u/s.271(1)(c) were initiated for furnishing inaccurate particulars of income and consequently penalty of Rs.5,44,168/- being minimum leviable penalty on the tax evaded was levied vide order dated 24/05/2010. The assessee challenged the action of the AO before the CIT(A) but could not succeed.

3. Before us, the ld. AR for the assessee has contended that the amount of Rs.16,16,662/- was received on export of software consultancy from Bradford Advisors Inc. in convertible foreign exchange. The assessee produced details and evidence of foreign remittance in the bank account. He has further contended that it was a regular business of the assessee to export software and Revenue has accepted the same in the assessment years 2003-04 and 2004-05 and allowed deduction u/s. 80HHA for export. For the year under consideration the deduction u/s. 80HHA was not claimed as it was removed though the export of Rs.16,16,662/- was made during the year. He has also referred to the confirmation received from the party and submitted that the party has confirmed the transaction of export and remittance. Though the assessee accepted the treatment of export received as income from other sources because of no tax effect for the year under consideration, however, the same does not lead to the conclusion that the assessee furnished inaccurate particulars of income or concealed particulars of income. He has also referred to the invoice raised by the assessee as well as certificate of foreign inward remittance. Thus, the ld. AR has submitted that the assessee has produced the relevant records to show that the amount in question was received on account of export. In support of his contention he has relied upon the judgment of Hon'ble Supreme Court in the case of T. Ashok Pai vs. CIT (292 ITR 11).

4. On the other hand the ld. DR has submitted that the amount in question was credited in the books of account and also in the Profit & Loss Account. The assessee made a bogus claim of the said amount as consultancy fee. However, the AO investigated the matter and found that such money was credited in the 4 ITA No.1336/M/13 R.J. Infotech Services Pvt. Ltd.

books of account without any supporting evidence. He has relied upon the orders of authorities below and submitted that when the AO has given the finding of the fact that assessee was not having any employee as well as any opening and closing stock the claim of the assessee is found to be bogus. Thus it is a case of furnishing of inaccurate particulars of income, thereby the assessee set off carryforward business loss against the said amount treating the same as business income.

5. We have considered the rival submissions and relevant material available on record. The assessee has shown his export income of Rs.16,16,662/- on account of consultancy, software export . The assessee filed return of income showing nil total income after claiming set off brought forward losses. However, tax was paid on book profit. The AO made the enquiry during assessment proceedings and came to the conclusion that receipt shown by the assessee on account of export is not true and accordingly treated the said amount as unexplained cash credit u/s. 68 of the Income tax Act. Hence, the AO assessed the said income of Rs.16,16,662/- as income from other sources. The AO reached to the conclusion of no export by the assessee by considering that the assessee had no employee, no opening stock and no closing stock. Further, the alleged confirmation was very vague not showing sale consideration. We also find that the confirmation does not indicate any detail of export quantity and sale consideration. The assessee accepted the action of the AO in treating the said amount as unexplained cash credit and income from other sources. The export income offered and accepted in the earlier assessment years has no relevance or bearing on the claim of the assessee for the year under consideration, when, on an enquiry it was found that there was no export during this year. Accepting the action of AO proved the fact that the claim of export was factually incorrect and consequently the assessee was guilty of furnishing inaccurate particulars of income, thereby reducing the tax liability by showing nil total income in the return of income as against Rs.16,16,662/- assessed by the AO. Therefore, it is a case of bogus claim of export which is a factual concealment of particulars of income. The case of the assessee does not 5 ITA No.1336/M/13 R.J. Infotech Services Pvt. Ltd.

fall under the category of bonafide claim which was not accepted by the AO in the assessment proceedings but it is factually a wrong claim as per enquiry of the AO which attained finality. Accordingly in the facts and circumstances of the case we do not find any error or illegality in the impugned order of CIT(A) in confirming levy of penalty u/s. 271(1)(c). The decision relied upon by the assessee in the case of T. Ashok Pai vs. CIT (292 ITR 11) (supra), is not applicable in the facts of the present case, when the AO has made out a case of factually wrong claim by the assessee .

6. In the result, the appeal of the assesse is dismissed.

Order pronounced in the open court on 14/01/2015. .

आदेश कᳱ घोषणा खुले ᭠यायालय मᱶ ᳰदनांकः 14/01/2015 को कᳱ गई ।

Sd/- Sd/- (N.K. Billaiya) (Vijay Pal Rao )

लेखा सद᭭य / ACCOUNTANT MEMBER ᭠याियक सद᭭य / JUDICIAL MEMBER

मुंबई Mumbai; ᳰदनांक Dated 14/01/2015.

व.िन.स./ Jv, Sr. PS

आदेश कᳱ ᮧितिलिप अᮕेिषत/Copy षत of the Order forwarded to : 1. अपीलाथᱮ / The Appellant 2. ᮧ᭜यथᱮ / The Respondent. 3. आयकर आयुᲦ(अपील) / The CIT(A)- 4. आयकर आयुᲦ / CIT

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

6. गाडᭅ फाईल / Guard file.

आदेशानुसार/ ार BY ORDER, स᭜यािपत ᮧित //True Copy// उप/ उप/सहायक पंजीकार (Dy./Asstt.

Registrar) आयकर अपीलीय अिधकरण, अिधकरण, मुंबई / ITAT, Mumbai