INCOME TAX OFFICER-31(2)(1), Mumbai V. M/S NEMINATH MUMBAI SHELTER, MUMBAI

ITA 1400/MUM/2022

AI Insights

The case involves an appeal by the revenue against the order of the CIT(A)-47, Mumbai, which deleted the penalty imposed on M/s. Neminath Mumbai Shelter for the Assessment Year 2009-10. The penalty was originally levied following an addition of Rs.3.75 crores by the AO, which was later vacated by the Tribunal in a quantum appeal. The CIT(A) deleted the penalty based on this decision, leading to the revenue's appeal. The Tribunal, referencing the legal maxim 'Sublato Fundamento credit opus', agreed with the CIT(A)'s decision to delete the penalty, as the foundational addition that justified the penalty had been removed.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 125092 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 21-12-2022
• Assessment Year: 2009-2010
• Appeal Filed On: 26-05-2022
• Other Referred Cases: Badarinath Vs. Tamilnadu [AIR 2000 (SC) 3243 SC]
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Accommodation entries

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, MUMBAI BEFORE SHRI ABY T. VARKEY, JM AND SHRI OM PRAKASH KANT, AM आयकर अपील सं/ I.T.A. No.1400/Mum/2022 (निर्धारण वर्ा / Assessment Years: 2009-10) ITO-31(2)(1) Kautilya Bhavan, Room No. 615, 6t Floor, Bandra Kurla Complex Bandra (E), Mumbai-400051. बिधम/ Vs. M/s. Neminath Mumbai Shelter Flat No. 01, Kalpaka Apartment Road No. 16, Siddharth Nagar, Goregaon (W), Mumbai- 400062. स्थधयी लेखध सं./जीआइआर सं./PAN/GIR No. : AAAAN4781G (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) सुनवाई की तारीख / Date of Hearing: 22/12/2022 घोषणा की तारीख /Date of Pronouncement: 06/01/2023 आदेश / O R D E R PER ABY T. VARKEY, JM: This is an appeal preferred by the revenue against the order of the Ld. CIT(A)-47, Mumbai dated 15.12.2021 for AY. 2009-10 wherein the Ld. CIT(A) was pleased to delete the penalty levied u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter “the Act”). 2. At the outset, the Ld. AR of the assessee brought to our notice that the Ld. CIT(A) has deleted the penalty because this Tribunal in the quantum appeal of the assessee for AY. 2009-10 has deleted the entire addition of Rs.3.75 crores. And therefore, the Ld. CIT(A) has deleted the penalty levied on it. 3. Per contra, the Ld. DR, could controvert this factual assertion made by the Ld. AR that the addition made by the AO in the Assessee by: Shri Rushabh Mehta Revenue by: Shri Manoj Sinha (Sr. AR) ITA No.1400/Mum/2022 A.Y. 2009-10 M/s. Neminath Mumbai Shelter 2 assessment order for AY. 2009-10 has been deleted by this Tribunal and based on this fact, the Ld. CIT(A) has deleted the addition. 4. We have heard both the parties and perused the records. We find that the Ld. CIT(A) has taken note of this Tribunal’s decision in the quantum appeal and has allowed the appeal by deleting the quantum addition of Rs.3.75 crores as under:- “Para 22, We, in the backdrop of our aforesaid deliberations are of the considered view that as the assessee had discharged the ‘onus’ that was cast upon it under sec.68 of the Act, therefore, the AO without rebutting the genuineness of the said loan transactions in question on the basis of supporting documents was in no way justified’ in treating the loans amounting to Rs.53.75 crores received by the assessee from the aforementioned parties as unexplained cash credits under sec.68 of the Act. Accordingly, not finding favour with the view taken by the lower authorities, we herein set aside the order of the CIT(A) and vacate the addition of 3.75 crore made by the AO. The grounds of appeal no.2 & 6 raised by the assessee are allowed in terms of our aforesaid observations. Para 23. We shall now advert to the disallowance of the interest expenditure of Rs.3,72,328/- that was claimed by the assessee to have been paid to the aforementioned seven lender parties. We find that the aforesaid claim of expenses of the assessee was disallowed by the AO, for the reason, that the loan transactions in question had been held by him to be bogus. Now, as we have concluded that the assessee had raised genuine loans from the aforementioned parties, therefore, the consequential ITA No.1400/Mum/2022 A.Y. 2009-10 M/s. Neminath Mumbai Shelter 3 disallowance by the AO of the interest paid to the said lenders by treating the loan transactions as bogus shall stand vacated. Accordingly, the order of the CIT(A) is set aside and the disallowance of interest expense of Rs.3,72,328/- made by the AO is vacated. The Ground of appeal no.3 raised by the assessee is allowed. Para24. As regards the addition of Rs.1,40,000/- made u/s.69C w.r.t. the commission which as per the lower authorities the assessee would had paid for obtaining the accommodation entries of loan, the same, in the backdrop of our observation that the assessee had raised genuine loans, thus, cannot survive and is liable to be vacated. The Ground of appeal no.4 is allowed in terms of our aforesaid observations. Para 25. As we have held the loan transactions in question as genuine and have vacated the addition of Rs.3.75 crore made by the AO u/s.68 of the Act, therefore, the Ground of appeal no.7 having been rendered as infructuous is dismissed as such”. 5. Since the foundation for the penalty proceeding has been removed, the legal Maxim “Sublato Fundamento credit opus” meaning in case foundation is removed, the super-structure falls squarely applies to the case in hand. The Hon’ble Supreme Court while applying this maxim in the case of Badarinath Vs. Tamilnadu [AIR 2000 (SC) 3243 SC] held that once the basis of proceeding is gone, all consequential order and acts would fall on the ground automatically which is applicable to judicial and quasi-judicial proceedings. Therefore, since the foundation of penalty in this case, i.e. the addition of Rs.3.75 crores made by the AO has been removed, the penalty levied because of this addition has to necessarily go; and the Ld. ITA No.1400/Mum/2022 A.Y. 2009-10 M/s. Neminath Mumbai Shelter 4 CIT(A) has rightly deleted the penalty, which is confirmed and revenue appeal is dismissed. 6. In the result, the appeal of the revenue stands dismissed. Order pronounced in the open court on this 06/01/2023. Sd/- Sd/- (OM PRAKASH KANT) (ABY T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER मुंबई Mumbai; दिनांक Dated : 06/01/2023. Vijay Pal Singh, (Sr. PS) आदेश की प्रनिनलनि अग्रेनर्ि/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त(अपील) / The CIT(A)- 4. आयकर आयुक्त / CIT 5. दवभागीय प्रदतदनदि, आयकर अपीलीय अदिकरण, मुंबई / DR, ITAT, Mumbai 6. गार्ड फाईल / Guard file. आदेशधिुसधर/ BY ORDER, सत्यादपत प्रदत //True Copy// उि/सहधयक िंजीकधर /(Dy./Asstt. Registrar) आयकर अिीलीय अनर्करण, मुंबई / ITAT, Mumbai