DY CIT, CC-7(1), MUMBAI, MUMBAI V. M/S. MANEESH PHARMACEUTICALS LTD., MUMBAI

ITA 1713/MUM/2020

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 0978 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 04-08-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJAY SHARMA LD
• Assessee Lawyers: J P BAIRAGRA LD
• Keywords: Bogus purchase; Transfer pricing; International transaction
• Section: 271(1)(c); 92C; 143(3); 139(1); 13

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI , , BEFORE HONBLE SHRI MAHAVIR SINGH, VP AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM (HEARING THROUGH VIDEO CONFERENCING MODE) ./ I.T.A. NO.1713/MUM/2020 ( / ASSESSMENT YEAR : 2012-13) DCIT - CC - 7(1) 653, AAYKAR BHAWAN M.K.ROAD MUMBAI 400 020 / VS. M/S MANEESH PHARMACEUTICALS LTD. 2 ND FLOOR, KALPATRU COURT DR. CHOTIRAM GIDWANI MARG CHEMBUR, MUMBAI 400 074 *+ ./ ./PAN/GIR NO. AAACM-3635-Q ( +- /APPELLANT ) : ( ./+- / RESPONDENT ) ASSESSEE BY : SHRI J.P. BAIRAGRA-LD. AR REVENUE BY : SHRI AJAY SHARMA-LD. DR / DATE OF HEARING : 02/07/2021 / DATE OF PRONOUNCEMENT : 12/07/2021 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE REVENUE IS AGGRIEVED BY DELETION OF PENALTY U/S 271(1)(C) BY LD. COMMISSIONER OF INCOME-TAX (APPEALS)-49, MUMBAI {CI T(A)} VIDE ORDER DATED 31/01/2020. THE PENALTY WAS LEVIED BY LD. AO VIDE ORDER DATED 25/10/2019. 2. THE LD. AR, AT THE OUTSET, SUBMITTED THAT THE QU ANTUM APPEAL HAS ALREADY BEEN DECIDED IN ASSESSEES FAVOR BY THE TRI BUNAL VIDE ITA 2 NOS.4185/MUM/2019 & ORS., COMMON ORDER DATED 17/06/ 2021. A COPY OF THE SAME HAS BEEN PLACED ON RECORD. THE LD. AR SUBM ITTED THAT SINCE THE QUANTUM HAS BEEN DELETED, THE PENALTY WOULD NOT SURVIVE. THE LD. DR COULD NOT CONTROVERT THE AFORESAID POSITION. IN THE SAID BACKGROUND, OUR ADJUDICATION TO THE APPEAL WOULD BE AS GIVEN IN SUCCEEDING PARAGRAPHS. 3. THE FACTS LEADING TO PENALTY ARE THAT AN ASSESSM ENT WAS FRAMED AGAINST THE ASSESSEE FOR THE YEAR U/S 143(3) ON 31/ 03/2016. WHILE FRAMING THE ASSESSMENT, THE ASSESSEE WAS SADDLED WI TH CERTAIN ADDITIONS / DISALLOWANCES. UPON FURTHER APPEAL, LEA RNED FIRST APPELLATE AUTHORITY GRANTED PARTIAL RELIEF TO THE ASSESSEE VI DE ORDER DATED 28/03/2019. AFTER CONSIDERING THE SAME, THE PENALTY U/S 271(1)(C) WAS LEVIED BY LD. AO VIDE ORDER DATED 25/10/2019. 4. THE DISALLOWANCES / ADDITIONS AGAINST WHICH THE IMPUGNED PENALTY WAS LEVIED WAS (I) INVESTMENTS WRITTEN-OFF TO THE E XTENT ADDITION WAS CONFIRMED BY LD. CIT(A); (II) ADVANCES WRITTEN-OFF AS CONFIRMED BY LD. CIT(A); (III) TRANSFER PRICING ADJUSTMENT WITH RESP ECT TO INTEREST ON LOANS GIVEN TO ASSOCIATED ENTERPRISES AS CONFIRMED BY LD. CIT(A); (IV) DISCLOSURE MADE BY ASSESSEE DURING SEARCH TO COVER UP DISCREPANCIES AND ON ACCOUNT OF BOGUS PURCHASES WHICH WAS OFFERED TO TAX IN THE RETURN OF INCOME. 5.1 THE ASSESSEE CONTESTED THE IMPUGNED PENALTY WIT H SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 31/10/2020. TH E LD. CIT(A) DELETED PENALTY AGAINST ITEM NOS. (I) TO (II) BY OB SERVING THAT ALL SUCH CLAIMS WERE MADE IN THE RETURN OF INCOME WHICH WERE NOT ACCEPTED BY THE AUTHORITIES. THE DETAILS FILED BY THE ASSESSEE WAS NOT FOUND TO BE FACTUALLY INCORRECT. THE ISSUES WERE DEBATABLE. THE REFORE, IN TERMS OF 3 DECISION OF HONBLE SUPREME COURT IN CIT V/S RELIANCE PETROPRODUCTS PVT. LTD. (322 ITR 158), IT COULD NOT BE SAID THAT THERE WAS FURNISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME ON THE PART OF THE ASSESSEE. 5.2 REGARDING PENALTY ON TRANSFER PRICING ADJUSTMEN TS, IT COULD NOT BE SAID THAT THE ASSESSEE HAD NOT DETERMINED THE ARMS LENGTH PRICE OF INTERNATIONAL TRANSACTIONS IN ACCORDANCE WITH THE S CHEME OF SECTION 92C IN GOOD FAITH AND WITH DUE DILIGENCE. ACCORDINGLY, THE CONDITIONS PRECEDENT FOR INVOKING EXPLANATION-7 TO SEC.271(1)( C) DID NOT EXIST ON THE FACTS OF THE CASE. THEREFORE, THE PENALTY ON TH IS ITEM WAS ALSO DELETED. 5.3 THE PENALTY AGAINST DISCLOSURE OF RS.39.47 LACS AS OFFERED BY ASSESSEE IN RETURN OF INCOME WAS DELETED SINCE NO P ENALTY WAS INITIATED BY LD. AO FOR THE SAME IN THE ASSESSMENT ORDER. THE REFORE, THE PENALTY COULD NOT BE LEVIED IN TERMS OF DECISION OF HONBLE DELHI HIGH COURT IN MS. MADHUSHREE GUPTA V/S UOI (2009; 317 ITR 107). 5.4 REGARDING BALANCE DISCLOSURE AS MADE IN THE RET URN OF INCOME, IT WAS OBSERVED BY LD. CIT(A) THAT SEARCH TOOK PLACE O N 29/08/2011. THE PENALTY COULD NOT BE LEVIED UNDER MAIN PROVISION AS THE ASSESSEE HAD INCLUDED THE INCOME IN THE RETURN OF INCOME FILED U /S 139(1) AND THE SAME WAS ASSESSED AS WELL. THERE WAS NO VARIATION B ETWEEN THE RETURNED INCOME AND THE ASSESSED INCOME, QUA THIS A DDITION. FOR LEVYING PENALTY IN CASE OF INCOME DISCLOSED DURING SEARCH O PERATION AFTER 01/06/2007, THE DEEMING PROVISIONS OF EXPLANATION 5 A COULD BE INVOKED WHICH LD. AO HAD NOT INVOKED. EVEN OTHERWISE CONSID ERING THE SAME, THERE WERE A SAVING CLAUSE SINCE THE INCOME WAS SHO WN IN THE RETURN OF INCOME FILED ON DUE DATE. THUS, THE PENALTY COULD N OT BE LEVIED. 4 AGGRIEVED, AS AFORESAID, THE REVENUE IS IN FURTHER APPEAL BEFORE US. OUR FINDINGS AND ADJUDICATION 6. AS RIGHTLY POINTED OUT BY LD. AR, THE QUANTUM AP PEAL FOR AY 2012- 13 HAS BEEN ADJUDICATED BY THIS VERY BENCH VIDE ORD ER DATED 17/06/2021. WE FIND THAT QUANTUM ADDITION WITH RESPECT TO ITEM NOS. (I) TO (III) HAS COMPLETELY BEEN DELETED BY THE BENCH AND NO ADDITIO N REMAIN AGAINST THE ASSESSEE UNDER THESE HEADS. THIS BEING SO, THE PENALTY ON THESE ITEMS WOULD NOT SURVIVE. EVEN OTHERWISE, WE CONCUR WITH THE OBSERVATION OF LD. CIT(A) THAT CONSIDERING THE NATURE OF ADDITI ONS / DISALLOWANCE, IT COULD NOT BE SAID THAT THE ASSESSEE HAD FURNISHED I NACCURATE PARTICULARS OF INCOME OR CONCEALED ITS INCOME. THE ISSUES WERE DEBATABLE. NEVERTHELESS, ALL THE CLAIMS WERE MADE IN THE RETUR N OF INCOME AND THE SAME WERE SUPPORTED BY NECESSARY EVIDENCES / EXPLAN ATION OF THE ASSESSEE. HENCE, IMPUGNED ORDER WOULD REQUIRE NO IN TERFERENCE TO THAT EXTENT. 7. REGARDING PENALTY ON DISCLOSURE OF RS.39.47 LACS , IT IS UNDISPUTED FACT THAT NO PENALTY WAS INITIATED BY LD. AO FOR TH E SAME IN THE ASSESSMENT ORDER WHICH WAS SINE-QUA-NON FOR LEVY OF PENALTY. WITH RESPECT TO REMAINING DISCLOSURE, IT COULD VERY WELL BE NOTED THAT SEARCH TOOK PLACE ON 29/08/2011. THE FINANCIAL YEAR 2011-1 2 HAD NOT EVEN COMPLETED ON THAT DATE AND HENCE, THERE WOULD BE NO QUESTION OF FILING RETURN OF INCOME BY THAT DATE. THE ASSESSEE MADE CE RTAIN DISCLOSURE FOR AY 2012-13 WHICH WAS INCLUDED IN THE RETURN OF INCO ME FILED U/S 139(1). THE SAME HAS DULY BEEN ACCEPTED BY LD. AO WITHOUT A NY VARIATIONS. THUS, IT WAS CLEAR THAT THERE WAS NO FURNISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME IN THE RETURN OF INCOME FILED BY THE ASSESSEE. THE LD. CIT(A) HAS ALSO EXAMINED THE APPL ICABILITY OF 5 EXPLANATION-5A AND RIGHTLY CONCLUDED THAT THE SAME WAS NOT APPLICABLE SINCE THE ASSESSEE HAD INCLUDED THE ADMITTED INCOME IN THE RETURN OF INCOME FILED ON DUE DATE U/S 139(1). THUS, THE PENA LTY COULD NOT BE LEVIED AND SAME HAS RIGHTLY BEEN DELETED BY LD. CIT (A). HENCE, ON THE FACT & CIRCUMSTANCES OF THE CASE, THE IMPUGNED ORDE R WOULD NOT REQUIRE ANY INTERREFERENCE ON OUR PART, IN ANY MANNER. 8. RESULTANTLY, THE APPEAL STANDS DISMISSED. ORDER PRONOUNCED ON 12 TH JULY, 2021 SD/- SD/- (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) / VICE PRESIDENT / ACCOUNTANT MEMBER MUMBAI; DATED : 12/07/2021 SR.PS, JAISY VARGHESE !'! / COPY OF THE ORDER FORWARDED TO : 1. +- / THE APPELLANT 2. ./+- / THE RESPONDENT 3. 6 ( ) / THE CIT(A) 4. 6 / CIT CONCERNED 5. 78.19 , 9 , / DR, ITAT, MUMBAI 6. 8:;< / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.