MANJULAL M. GANDHI, MUMBAI V. ADDL CIT RG 19(2), MUMBAI

ITA 1953/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2242 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 21-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIPH
• Assessee Lawyers: H N MOTIWALA

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B , MUMBAI , , , BEFORE SHRI JOGINDER SINGH, J UDICIAL M EMBER , A ND SHRI RAM IT KOCHAR , A CCOUNTANT M EMBER ITA NO . 1953 /MUM/20 14 ASSESSMENT YEAR: 20 07 - 08 SHRI MAHENDRA N. GANDHI LEGAL HEIR OF SMT. MANJULA M . GANDHI, C/O H.N. MOTIWALL A & CO., 508, SHARDA CHAMBERS, 33, NEW MARINE LINES, MUMBAI - 20 / VS. ACIT 19( 2), MUMBAI ROO M NO. 315, 3 RD FLOOR, PIRAMAL CHAMBERS, LALBAUG, LOWER PAREL, MUMBAI 12 . ( /ASSESSEE) ( / REVENUE) P.A. NO. AAMPG 2517 Q / REVENUE BY SHRI NEIL PHILIPH - DR / ASSESSEE BY SHRI H.N. MOTIWALA . / DATE OF HEARING : 03 /1 1 /20 1 6 / DATE OF ORDER : 03 /1 1 /2016 SMT. M ANJULA M. GANDHI ITA NO S . 1953 /MUM/2014 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DATED 23/01/2014 OF THE LD. FIRST APPELLATE AUTHORITY, MUMBAI . 2. DURING HEARING OF THIS APPEAL, THE LD. COUNSEL FOR THE ASSESSEE, S HRI H.N. MOTIWALA CONTENDED THAT THE QUANTUM ADDITION WAS DELETED BY THE TRIBUNAL VIDE ORDER DATED 19/08/ 2015 (ITA NO. 1605 /MUM/2011) FOR ASSESSMENT YEAR 2007 - 08 . THE LD. COUNSEL FOR THE ASSESSEE ALSO PRODUCED THE PHOTOCOPY OF THE ORDER. THIS FACTUAL MATRIX WAS NOT CO NTROVERTED BY THE LD. DR, SHRI NEIL PHILIPH . . 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS IN BRIEF ARE THAT THE ASSESSEE WAS FOLLOWING CASH SYSTEM OF ACCOUNTING REGULARLY FOR THE LAST MORE THAN TEN YEARS AND DULY SHOWED IN PART - A - 01 , THE RELEVANT OTHER INFORMATION IN THE RETURN . THE ASSESSEE RECEIVED RS. 58,24,275/ - FROM M/S. SHEMAROO VIDEO PVT. LTD. FOR WORLD RIGHTS OF PICTURES SUHAG AND LAXMAN REKHA AS ADVANC ES. THE PERIOD OF AGREEMENT COMMENCE FROM 01/06/2007 AND 21/12/2007 RESPECTIVELY AND OFFERED THE AMOUNT FOR TAXA TION IN ASSESSMENT YEAR 2008 - 09 . THE CLAIM OF THE ASSESSEE IS THAT THE RIGHT OF PICTURE HAS COMMENCED WITH THE ASSESSEE FROM 01/06/2007 AND 21/ 12 /2007 AND THE SAME WAS SMT. M ANJULA M. GANDHI ITA NO S . 1953 /MUM/2014 3 SHOWN AS ADVANCE AND NOTE INCOME DURING THE PREVIOUS YEAR . THE LD. ASSESSING OFFICER TREATED THE AMOUNT AS INCOME DURING THE PREVIOUS YEAR AND BROUGHT THE SAME TO TAX . P ENALTY PROCEEDINGS UNDE R SECTION 271(1)(C) WERE INITIATED/IMPOSED . 2. 2 O N APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) , THE VIEW TAKEN IN THE ASSESSMENT ORDER WAS AFFIRMED . CONSEQUENT TO THIS AFFIRMATION, THE LD. ASSESSING OFFICER IMPOSED PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 2. 3 THE ASSESSEE CARRIED THE QUANTUM ADDITION IN APPEAL BEFORE THE TRIBUNAL , WHEREIN THE ADDITION WAS DELETED. THE RELEVANT PORTION FROM THE ORDER OF THE TRIBUNAL (ITA NO. 1605/MUM/2011, DATED 19/08/2015) IS REPRODUCED HEREUNDER FOR READY REFERENCE A ND A NALYSIS : - 2. IN THE ABOVE MENTIONED GROUNDS, ASSESSEE RAISED LEGAL ISSUE RELATING TO THE ISSUE OF NOTICE U/S 143(2) OF THE ACT AND THE LIMITATION OF TIME THEREOF. BRIEFLY STATED RELEVANT FACTS OF THE CASE NECESSARY FOR ADJUDICATION OF THE LEGAL ISSUE INCLUDES THAT T HE ASSESSEE FILED THE RETURN OF INCOME ON 31.7.2007 U/S 139(1) OF THE ACT FOR THE ASSESSMENT YEAR 2007 - 2008 DECLARING THE TOTAL INCOME OF RS. 25,24,198/ - . NOTICE U/S 143(2) OF THE ACT WAS ISSUED ON 2.9.2008 IE AFTER LAPSE OF ONE YEAR. THE SAID NOTICE WAS S ERVED ON THE ASSESSEE ON 29.9.2008. AS PER THE ASSESSEE, THE DUE DATE FOR ISSUE / SERVICE OF NOTICE IS 31.7.2008 IE 12 MONTHS FROM THE END OF THE MONTH IN WHICH RETURN WAS FILED. HOWEVER, THE SMT. M ANJULA M. GANDHI ITA NO S . 1953 /MUM/2014 4 CASE OF THE REVENUE IS THAT IN VIEW OF THE AMENDMENT BY THE FINA NCE ACT, 2008 W.E.F. 1.4.2008, THE DUE DATE FOR SERVICE OF NOTICE IS 30.9.2008 IE 6 MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RETURN WAS FURNISHED. AS PER THE ASSESSING OFFICER, THE ABOVE REFERRED AMENDMENT BY THE FINANCE ACT, 2008 APPLIES TO THE ASSESSMENT YEAR 2007 - 08 RETROSPECTIVELY. IN THIS REGARD, ASSESSEE RELIED ON THE DECISION OF THE SPECIAL BENCH IN THE CASE OF KUBER TOBACCO PRODUCTS P. LTD [28 SOT 292 (DEL) (SB)]. THE SAID SPECIAL BENCH DECISION WAS APPROVED BY THE HONBLE DELHI HIGH C OURT VIDE ITA NO.116/2010, DATED 5.3.2010. THE CIT (A) DID NOT APPRECIATE THE CONTENTION OF THE ASSESSSEE DESPITE THE ASSESSEES RELIANCE ON THE SAID JUDGMENT. OF COURSE, THIS JUDGMENT WAS DELIVERED IN THE CONTEXT OF THE PROVISIONS OF SECTION 292 - BB OF THE ACT. IN THE SAID JUDGMENT, IT WAS HELD THAT THE AMENDED PROVISIONS DO NOT APPLY TO THE ASSESSMENT YEAR 2007 - 2008, AND THE SAME APPLY PROSPECTIVELY FROM THE ASSESSMENT YEAR 2008 - 2009 ONWARDS. IGNORING THE SAID JUDGMENT OF THE HIGH COURT (SUPRA), CIT (A) D ISMISSED THE ASSESSEES LEGAL ROUND. CONTENTS OF PARAS 2.5 AND 2.6 OF THE IMPUGNED ORDER ARE RELEVANT IN THIS REGARD. AGGRIEVED WITH THE SAID DECISION OF THE CIT (A), ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. DURING THE PROCEEDINGS BEFORE US, LD COUNSE L FOR THE ASSESSEE FILED A COPY OF THE SAID JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF KUBER TOBACCO PRODUCTS P. LTD (SUPRA) AND SUBMITTED THAT THE AMENDMENT AIMED TO THE PROVISO TO SECTION 143(2) IS PROSPECTIVE IN NATURE, AND IT SMT. M ANJULA M. GANDHI ITA NO S . 1953 /MUM/2014 5 APPLIES FROM THE ASSESSMENT YEAR 2008 - 2009 ONWARDS AND NOT TO THE ASSESSMENT YEAR 2007 - 2008 UNDER CONSIDERATION. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS CITED PRECEDENTS AND ALSO THE RELEVANT MATERIAL PLACED BEFORE US. AFTER HEARING BOTH THE PARTIES, WE FIND MERIT IN THE ARGUMENT OF THE LD COUNSEL THAT THE AMENDED PROVISIONS OF SECTION 143(2) OF THE ACT APPLY PROSPECTIVELY IE FROM THE AY 2008 - 2009 ONWARDS ONLY. THEREFORE, THIS PART OF THE LEGAL GROUND, GROUND NO.1, RAISED BY THE ASSESSEE IS ALLOWED IN HER FAVOUR. 2.4 IN THE AFORESAID ORDER, ON QUANTUM ADDITION, THE TRIBUNAL DELETED THE DISALLOWANCE/ADDITION ON THE BASIS OF WHICH PENALTY WAS INITIATED/CONFIRMED. WHIEL COMING TO THE CONCLUSION , THE TRIBUNAL FOLLOWED THE DECISION FROM HON' BLE DELI HIGH COURT IN THE CASE OF KUBER TOBACCOC PRODUCTS P. LTD. (ITA NO. 116/2010 DATED 05/03/2010, APPROVING THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL [ 28 SOT 292 (DEL.) (SB)] HOLDING THAT PROVISO TO SECTION 143(2) IS PROSPECTIVE IN NATURE AND APPLIES FROM ASSESSMENT YEAR S 2008 - 09 ONWARDS AND NOT FOR ASSESSMENT YEAR 2007 - 08. THE ASSESSMENT YEAR BEFORE US IS ALSO 2007 - 08 . IN VIEW OF THIS FACTUAL MATRIX, WE ARE OF THE VIEW THAT PENALTY IMPOSED U/S 271(1)(C) WILL NOT SURVIVE. OUR VIEW FIND SUPPORT FROM THE DECISION IN K.C. BUILDERS VS ACIT (2004) 265 ITR 562 (SC) AND THE RATIO LAID DOWN IN CIT VS S.P. VIZ, 176 ITR 76 (PATNA). EVEN OTHERWISE, WHEN SMT. M ANJULA M. GANDHI ITA NO S . 1953 /MUM/2014 6 TH E QUANTUM ADDITION IS DELETED, THERE REMAINS NO BASIS AT ALL FOR LEVYING THE PENALTY FOR CONCEALMENT OR FURNISHING INACCURATE PARTICULARS. THE PENALTY CANNOT STAND ON ITS LEGS WHEN ADDITION ON THE BASIS OF WHICH THE PENALTY WAS IMPOSED REMAINS NO MORE IN E XISTENCE, THUS, THE APPEAL OF THE ASSESSEE IS ALLOWED AND THE LD. ASSESSING OFFICER IS DIRECTED TO DELETE THE PENALTY. FINALLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. T HIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FRO M BOTH SIDES AT T H E CONCLUSION OF THE HEARING ON 0 3 /1 1 /2016 . S D/ - SD/ - ( RAMIT KOCHAR ) (JOGINDER SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; DA TED : 0 3 / 1 1 /201 6 VR/ - . . / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT, MUMBAI. 4. / CIT(A) - , MUMBAI 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBA I,