NEW PHARMA P.LTD, MUMBAI V. DCIT CEN CIR 5(3), MUMBAI

ITA 1740/MUM/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7110 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2011-2012
• Appeal Filed On: 23-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: POOJA SWARUP
• Assessee Lawyers: VASANTI B PATEL
• Keywords: Unexplained expenditure
• Section: 69C; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H , MUMBAI BEFORE SHRI C.N. PRASAD, HON'BLE JUDICIAL MEMBER AND SHRI RAJESH KUMAR , HON'BLE ACCOUNTANT MEMBER ITA.NO. 1740 /MUM/201 6 (A.Y : 2011 - 12 ) M/S. NEO PHARMA PRIVATE LIMITED 101, KALPATARU SYNERGY, OPPOSITE GRAND HYATT, VA KOLA, SANTACRUZ (EAST), MUMBAI 400 055 PAN NO : AAACN 1812 A V. DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 5(3), AIR INDIA BUILDING, 19 TH FLOOR, MADAME CAMA ROAD, NARIMAN POINT, MUMBAI 400 021 (APPELLANT) (RESPONDENT) ASSESSEE BY : MS. VASANTI B. PATEL REVENUE BY : MS. POOJA SWARUP DATE OF HEARING : 0 6 .03 .2018 DATE OF PRONOUNCEMENT : 31 . 05 .2018 O R D E R PER C. N. PRASAD (JM) 1. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) 53, MUMBAI DATED 30.12.2015 FOR THE ASSESSMENT YEAR 2011 - 12 IN SUSTAINING THE PENALTY LEVIED U/S. 271(1)(C) OF THE ACT. 2 ITA.NO. 1740/MUM/2016 (A.Y:2011 - 12) M/S. NEO PHARMA PRIVATE LIMITED 2. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE P ENALTY WAS LEVIED WITH REFERENCE TO THE DISALLOWANCE MADE TOWARDS UNEXPLAINED EXPENDITURE U/S. 69C OF THE ACT BEING THE NON - GENUINE PURCHASES WHILE COMPUTING THE INCOME UNDER NORMAL PROVISIONS OF THE ACT. REFERRING TO PARA 4 OF THE ASSESSMENT ORDER, IT WA S FURTHER SUBMITTED THAT THE ASSESSING OFFICER THOUGH MADE ADDITION U/S.69C UNDER NORMAL PROVISIONS OF THE ACT ULTIMATELY THE INCOME WAS ASSESSED UNDER PROVISIONS OF SECTION 115JB OF THE ACT AS THE TAX LIABILITY WAS MORE IN COMPUTING THE BOOK PROFITS. THE REFORE, THE LD. COUNSEL REFERRING TO THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT V. NALWA SONS INVESTMENTS LTD . [327 ITR 543] SUBMITTED THAT WHEN ADDITIONS/DISALLOWANCES WERE MADE UNDER NORMAL PROVISIONS OF THE ACT AND PENALTY WAS LEVIE D WITH REFERENCE TO SUCH ADDITIONS AND ULTIMATELY IF THE INCOME IS ASSESSED UNDER BOOK PROFITS U/S. 115JB OF THE ACT , PENALTY U/S. 271(1)(C) WILL NOT ATTRACT. LD. COUNSEL ALSO SUBMITTED THAT CBDT HAD ISSUED CIRCULAR NO. 25/2015 IN F.NO.279/MISC./140/2015/I TJ DATED 31 ST DECEMBER, 2015 CLARIFYING THAT NO SUCH PENALTY CAN BE LEVIED WHEN INCOME IS ASSESSED UNDER THE PROVISIONS OF SECTION 115JB THE BOOK PROFITS AND THE PENALTY WAS LEVIED WITH REFERENCE TO THE ADDITIONS/DISALLOWANCES MADE UNDER NORMAL PROVISIONS OF THE ACT . THEREFORE, IT IS SUBMITTED THAT IN VIEW OF THE ABOVE, PENALTY IS NOT SUSTAINABLE. 3 ITA.NO. 1740/MUM/2016 (A.Y:2011 - 12) M/S. NEO PHARMA PRIVATE LIMITED 3. LD. DR VEHEMENTLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF THE AUTHORITIES B ELOW, THE DECISION OF THE HONBLE DELHI HIGH COURT AND THE CBDT CIRCULAR NO. 25/2015. IT IS AN ADMITTED FACT THAT THE INCOME IN THIS CASE WAS ASSESSED UNDER THE PROVISIONS OF S ECTION 115JB OF THE ACT AND THE PENALTY WAS LEVIED WITH REFERENCE TO THE ADDITION MADE U/S .69C WHILE COMPUTING THE INCOME UNDER NORMAL PROVISIONS OF THE ACT. IN THE CASE OF CIT V. NALWA SONS INVESTMENTS LTD. (SUPRA) THE HONBLE DELHI HIGH COURT CONSIDERED A SIMILAR SITUATION WHERE THE PENALTY WAS LEVIED WITH REFERENCE TO THE ADDITIONS/DISALLOW ANCE MADE UNDER NORMAL PROVISIONS OF THE ACT AND PENALTY WAS LEVIED WITH REFERENCE TO SUCH ADDITIONS THOUGH THE INCOME WAS FINALLY ASSESSED UNDER THE PROVISION OF 115JB AND IT WAS HELD THAT PENALTY IN SUCH SITUATION IS NOT ATTRACTED. WE ALSO FIND THAT THE CBDT IN CIRCULAR NO. 2 5/2015 DATED 31 ST DECEMBER, 2015 TAKING NOTE OF THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT V. NALWA SONS INVESTMENTS LTD. (S UPRA) ALSO CLARIFIED THAT PRIOR TO 01.04.2016 WHERE THE INCOME T AX PAYABLE ON THE TOTAL INCOME AS COMPUTED UNDER THE NORMAL PROVISIONS OF THE ACT IS LESS THAN THE TAX PAYABLE ON THE BOOK PROFI TS U/S. 115JB OF THE ACT, THEN PENALTY U/S.271(1)(C) IS NOT ATTRACTED WITH REFERENCE TO THE ADDITIONS/ DISALLOWANCE S MADE UNDER NORMAL PROVISIONS OF THE ACT. IN THESE CIRCUMSTANCES FOLLOWING THE DECISION OF THE HONBLE DELHI HIGH 4 ITA.NO. 1740/MUM/2016 (A.Y:2011 - 12) M/S. NEO PHARMA PRIVATE LIMITED COURT , WE HOLD THAT SINCE THE INCOME IN ASSESSEES CASE WAS ASSESSED U/S. 115JB THE PENALTY U/S.271(1)(C) IS NOT ATTRACTED TO THE ADDITIONS M ADE WHILE COMPUTING THE INCOME UNDER NORMAL PROVISIONS OF THE ACT. THUS, WE DELETE THE PENALTY LEVIED U/S.271(1)(C) OF THE ACT. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 31 ST MAY , 2018 . SD/ - SD/ - ( RAJESH KUMAR ) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI / DATED 31 / 05 / 2017 GIRIDHAR , S R. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// BY ORDER, (ASST. REGISTRAR ) ITAT, MUM