NIRMAL INFRASTRUCTURE PRIVATE LIMITED, MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX - CENTRAL CIRCLE 3(1), MUMBAI

ITA 1012/MUM/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5377 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 21-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 271(1)(c); 153A; 250; 27

Judgement Text

T HE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA ( A M) & SHRI RAMLAL NEGI ( J M) I.T.A. NO. 1012 /MUM/ 201 8 (ASSESSMENT YEAR 20 08 - 09 ) I.T.A. NO. 1013/MUM/2018 (ASSESSMENT YEAR 2009 - 10) I.T.A. NO. 1014/MUM/2018 (ASSESSMENT YEAR 2011 - 12) I.T.A. NO. 1015/MUM/2018 (ASSESSMENT YEAR 2012 - 13) I.T.A. NO. 1016/MUM/2018 (ASSESSMENT YEAR 2010 - 11) M/S. NIRMAL INFRASTRUCTURE PRIVATE LIMITED 3 RD FLOOR, MULTIPLEX BUILDING NOIRMAL LIFESTYLE LBS MARG, MULUND (WEST) MUMBAI - 400 080. PAN : AACCN4417H V S . DCIT, CC - 3(1) ROOM NO.1924 19 TH FLOOR AIR INDIA BUILDING NARIMAN POINT MUMBAI - 400 021. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI BHUPENDRA SHAH DEPARTMENT BY SHRI AARSI PRASAD DATE OF HEARING 12.3 . 201 9 DATE OF PRONOUNCEMENT 16 . 5 . 201 9 O R D E R PER SHAMIM YAHYA (AM) : THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST RESPECTIVE ORDER'S OF LEARNED CIT - A WHEREBY PENALTY LEVIED UNDER SECTION 271(1)(C) HAVE BEEN CONFIRMED AS UNDER : - A.Y. AMOUNT 200 8 - 09 2,71,057/ - 2009 - 10 4,34,011/ - 2010 - 11 3,49,339/ - 2011 - 12 3,49,339/ - 2012 - 13 47,372/ - 2. THE LEARNED COUNSEL OF THE ASSESSEE HAS CHALLENGED THE CONFIRMATION OF THE PENALTY ON BOTH THE GROUNDS - LACK OF THE SPECIFICATION OF CHARGE FOR THE LEVY OF PENALTY AND ALSO ON M ERITS OF LEVY OF PENALTY. M/S. NIRMAL INFRASTRUCTURE PRIVATE LIMITED 2 3. BRIEF FACTS OF THE CASE LEADING TO THE LEVY OF PENALTY ARE THAT ASSESSEE IS THE BUILDER AND DEVELOPER. IN THE ASSESSMENT COMPLETED UNDER SECTION 153A OF THE ACT , T HE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS ADJUSTED THE I NTEREST EARNED ON FIXED DEPOSIT WITH THE INTEREST PAID AND HAS ADJUSTED THE RESULTANT AMOUNT IN THE WORK IN PROGRESS. THE ASSESSING OFFICER WAS OF THE OPINION THAT IN VIEW OF THE HONOURABLE APEX COURT DECISION IN THE CASE OF TUTICORIN ALKALI & CHEMICALS 2 27 ITR 172 ( SC ) , THE INTEREST ON FIXED DEPOSIT WAS TO BE SHOWN AS INCOME FROM OTHER SOURCES. THE ASSESSEE AGREED FOR THE SAME. THE ASSESSING OFFICER ALSO INITIATED PENALTY FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN THE NOTICE ISSUED FOR THE INI TIATION OF PENALTY THE RELEVANT LIMB OF THE SPECIFICATION OF CHARGE WAS NOT IDENTIFIED. 4. IN THE PENALTY ORDER THE ASSESSING OFFICER LEVIED THE PENALTY FINALLY WITHOUT IDENTIFYING THE CHARGE , HE MENTIONED THAT PENALTY HAS BEEN LEVIED FOR CONCEALMENT OF I NCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. 5. ASSESSEE CHALLENGED THE AFORESAID ORDER BEFORE THE LEARNED CIT - A. LEARNED CIT - A CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 6. AGAINST ABOVE ORDER ASSESSEE IS IN APPEAL BEFORE US. 7. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT ASSESSING OFFICER HAS INITIATED THE PENALTY FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. HE SUBMITTED THAT IN THE NOTICE ISSUED FOR THE PENALTY THE RELEV ANT LIMB WAS NOT STRUCK OFF. HE FURTHER SUBMITTED THAT IN THE PENALTY ORDER AGAIN THE ASSESSING OFFICER IS NOT SURE ABOUT THE CHARGE AS HE HAS MENTIONED THAT PENALTY HAS BEEN LEVIED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOM E. HENCE L E A R NE D COUNSEL OF THE ASSESSEE SUBMITTED THAT THE PENALTY LEVIED IS BAD IN LAW AND CANNOT BE SUSTAINED. AS REGARDS MERITS OF THE L EV Y OF PENALTY THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT ASSESSEE HAS MADE A CLAIM. IF THE SAME IS NOT ACCE PTED IT CANNOT BE TAKEN AS REASO N TO INITIATE PENALTY PROCEEDINGS. HE SUBMITTED THAT ASSESSEE S ACCOUNTING OF INTEREST IS NOT EX FACIE M/S. NIRMAL INFRASTRUCTURE PRIVATE LIMITED 3 BAD. IN THIS REGARD HE PLACED RELIANCE UPON THE DECISION OF HON'BLE APEX COURT IN THE CASE OF KARNAL CO - OP. SUGAR MILLS L TD. 118 TAXMAN 489. H E FURTHER SUBMITTED THAT IN THE ASSESSMENT PROCEEDING ITSELF ASSESSEE HAS ACCEPTED THE ASSESSING OFFICERS ADDITION . H ENCE LEARNED COUNSEL SUBMITTED THAT ASSESSEE SHOULD NOT BE VISITED WITH THE RIGOURS OF PENALTY . IN THIS REGARD LEARNED COUNSEL OF THE ASSESSEE PLACED RELIANCE UPON FOLLOWING CASE LAWS : - RELIANCE PETROPRODUCTS (P) LTD. (2010) 189 TAXMAN 332 PRICE WATERHOUSE COOPERS (P) LTD. (2012) 25 TAXMANN.COM 400 SSAS EMERALD MEADOWS (2016) 73 TAXMANN.COM 248 SAMSON PERINCHERY (I.T. APPEAL NO. 1154 OF 2014 AND OTHERS) NALIN P. SHAH (HIF) (2013) 40 TAXMANN.COM 86 MANJUNATHA COTTON & GINNING FACTORY (2013) 35 TAXMANN.COM 250 SARITA MILIND DAVARE (ITA NO. 2187/MUM/2014) 8. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AND PERUSED THE RE CORDS. UPON CAREFUL CONSIDERATION WE NOTE THAT THE ISSUE IN DISPUTE IN THE INCOME TAX APPEAL IN THESE CASES WAS THE TREATMENT OF INTEREST ON FIXED DEPOSIT. THE ASSESSEE HAS ADJUSTED THE INTEREST EARNED WITH THE INTEREST EXPENDITURE AND THEREAFTER ADJUSTED THE RESULTANT FIGURE WITH THE WORK IN PROGRESS. THIS TREATMENT IN THE ACCOUNTS WAS DISPUTED BY THE ASSESSING OFFICER. HE WAS OF THE OPINION THAT INTEREST ON FIXED DEPOSITS SHOULD BE TREATED AS INCOME FROM OTHER SOURCES. IN THIS REGARD THE ASSESSING OFFICER REFERRED TO THE DECISION OF HON'BLE APEX COURT IN THE CASE OF TUTICORIN ALKALI. 9. ON THE OTHER HAND IT IS THE PLEA OF THE ASSESSEE THAT ASSESSEES ACCOUNTING IS NOT EXERCISE EX - FACIE BAD. IT IS CLAIMED THAT ASSESSEES TREATMENT DRAWS SUPPORT FROM THE DE CISION OF HON'BLE APEX COURT IN THE CASE OF KARNAL CO - OP. SUGAR MILLS (SUPRA) . HENCE, IT IS THE PLEA OF THE ASSESSEE THAT ASSESSEES CONDUCT WAS BONAFIDE. IN THESE CIRCUMSTANCES, IN OUR CONSIDERED OPINION THE ASSESSEES ACCOUNTING WAS NOT TOTALLY UNACCEPTA BLE THE SAME CANNOT LEAD TO LEVY OF PENALTY U/S. 271(1)(C). IN THIS REGARD, HON'BLE APEX COURT DECISION IN THE CASE OF RELIANCE PETROPRODUCTS (SUPRA) SUPPORTS THE CASE OF THE ASSESSEE. IN THIS CASE IT WAS HELD BY HON'BLE APEX COURT THAT IF THE ASSESSING OF FICER M/S. NIRMAL INFRASTRUCTURE PRIVATE LIMITED 4 DOES NOT ACCEPT A CLAIM OF THE ASSESSEE THAT WILL NOT IPSO FACTO BE A REASON TO INITIATE PENALTY PROCEEDINGS. 10. FURTHERMORE, WE NOTE THAT ASSESSEE HAS AGREED FOR THE SAID TREATMENT IN THE ASSESSMENT PROCEEDINGS. IT IS ALSO THE PLEA OF THE ASSESSE E THAT THE SAID ACCOUNTING TREATMENT CAN BE SAID TO BE AN INADVERTENT ERROR. IN THESE CIRCUMSTANCES ALSO ASSESSEE DESERVES TO SUCCEED ON THE TOUCHSTONE OF HON'BLE APEX COURT DECISION IN THE CASE OF PRICE WATERHOUSE COOPER (SUPRA). 11. ANOTHER LIMB OF THE ASSESSEES PLEA IS THAT ASSESSING OFFICER HAS MENTIONED THAT ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME IN THE ASSESSMENT ORDER. WHILE IN THE PENALTY ORDER ASSESSING OFFICER IS NOT SURE OF THE CHARGE IN AS MUCH AS HE HAS CONCLUDED THAT PENALTY HAS BEEN LEVIED FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULAR OF INCOME. IN THIS VIEW OF THE MATTER THE ASSESSEE DESERVES TO SUCCEED ON THE TOUCHSTONE OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CA S E OF SAMSON PERINCHERY (SUPRA). IN OUR CONSIDERED OPINION LEARNED CIT HAS ERRED IN DISTINGUISHING THIS DECISION FROM THE JURISDICTIONAL HIGH COURT, ON THE FACTS OF THIS CASE. IN THE BACKGROUND OF AFORESAID DISCUSSION AND PRECEDENT WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE PENALTY. 12 . IN THE RESULT, THESE APPEALS BY THE ASSESSEE STAND ALLOWED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 16 . 5 . 201 9 . SD/ - SD/ - (RAMLAL NEGI ) (SH A MIM YAHYA ) J U DICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 16 / 5 / 20 1 9 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI M/S. NIRMAL INFRASTRUCTURE PRIVATE LIMITED 5 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTAN T REGISTRAR ) PS ITAT, MUMBAI