DCIT 17(3), MUMBAI V. WESTERN INDIA MARINE CORPORATION, MUMBAI

ITA 2006/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84521 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-12-2014
• Appeal Filed By: Department
• Bench Allotted: G
• Next Hearing Date: 15-12-2014
• Assessment Year: 2000-2001
• Appeal Filed On: 26-03-2012
• Court: TRIBUNAL
• Department Lawyers: IN CIRCUMSTANCES OF CA SE

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO.2006/MUM/2012 ASSESSMENT YEAR: -2000-01 DCIT 17(3), ROOM NO. 614, 6 TH FLOOR, PIRAMAL CHAMBERS PAREL, MUMBAI 12. VS.` M/S WESTERN INDIA MARINE CORPORATION 1, GANPAT BAUG, OFF. T.J. RD., SEWREE, MUMBAI 15. PAN:- AAACC450B APPELLANT RESPONDENT ORDER PER VIJAY PAL RAO, JM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 5.1.2012 OF CIT(A) FOR A.Y. 2000-01 ARISING FROM PENALTY ORDER PASSED U/S 271(1)(C) OF THE INCOME TAX ACT. THE REVENUE HAS RAISED FOLLOWING GR OUNDS:- 1. 'ON THE FACT AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CLT (A) HAS ERRED IN HOLDING THAT PENALTY IS NOT SUSTAINABL E U/S. 271(1)(C) OBSERVING THAT THE FACTUM OF ILLEGAL PAYMENT IS NOT IN DOUBT NEGLE CTING THE FACT THAT THE ASSESSEE HAD FAILED TO BRING ANY MATERIAL ON RECORD TO ESTAB LISH THAT THE PAYMENTS AS CLAIMED HAD INDEED BEEN MADE. ' 2. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CLT (A) HAS ERRED IN HOLDING THAT AO IS EMPOWERED TO INITIA TE/ LEVY PENALTY BASED ON OUTCOME OF DISALLOWANCE OF RS.10,32,750/- SET ASIDE PROCEEDINGS IN TERMS OF SEC.275A OF THE ACT.' 3. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CLT (A) HAS ERRED IN NOT DIRECTING THE AO TO REVISE THE AMOUNT OF PENALTY AFTER EFFECT OF THE ITA T'S ORDER ON DISALLOWANCE OF RS.10,32, 750/- U/ S.SEC.275(1A) OF THE ACT.' REVENUE BY SHRI VIVEK BATRA ASSESSEE SHRI NISHANT THAKKAR DATE OF HEARING 15.12.2014 DATE OF PRONOUNCEMENT 15.12.2014 M/S WESTERN INDIA MARINE CORPORATION 2 | P A G E 2. WE HAVE HEARD THE LD. DR AS WELL AS LD. AR AND C ONSIDERED THE RELEVANT MATERIAL ON RECORD. IN THE SCRUTINY ASSESSMENT THE ASSESSING OFFICER DISALLOWED THE FOLLOWING LABOUR CHARGES ON THE GROUND THAT THE LAB OUR CHARGES WERE SUPPORTED BY SELF MADE VOUCHERS. (I) LABOUR CHARGES RS. 14,85,181/- (II) LABOUR CHARGES PAID TO VIPUL KHONA RS. 10,32,750/ - TOTAL RS. 25,17,931/- 3. ON APPEAL, THIS TRIBUNAL HAS RESTRICTED THE DIS ALLOWANCE MADE BY THE ASSESSING OFFICER TO THE EXTENT OF 25% IN RESPECT O F LABOUR CHARGES OF RS. 14,85,181/- . AS REGARDS THE DISALLOWANCE OF LABOUR CHARGES 10, 32,750/-, THE TRIBUNAL SET ASIDE THE SAID ISSUE TO THE RECORD OF ASSESSING OFFICER. IN THE MEANTIME THE ASSESSING OFFICER LEVIED THE PENALTY U/S 271(1)(C) AGAINST TH E DISALLOWANCE OF LABOUR CHARGES. THE ASSESSEE CHALLENGED THE ACTION OF ASSESSING OFF ICER BEFORE THE CIT(A). THE CIT(A) DELETED THE PENALTY IN PARA 4.5 AS UNDER:- 4.5. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, THE SUBMISSIONS OF THE APPELLANT, PENALTY ORDER AND THE ORDER OF HON'BLE I TAT. IT IS NOTED THAT AT PARA 8 OF THE ORDER OF HON'BLE ITAT, IT IS MENTIONED THAT AMPLE EVIDENCES ARE ON RECORD WHICH SHOW THAT THE ASSESSEE WAS FORCED TO PAY CASH INCENTIVE TO DOCK WORKERS AT SHIPYARD AND THAT WITHOUT CASH PAYMENT, IT IS IMPOS SIBLE TO RUN THE SHIPPING ACTIVITY. IT IS ALSO INDICATED THAT THE DISALLOWANC E IN SUCH CASES HAVE BEEN DELETED BY MADRAS HIGH COURT IN SOUTH INDIA CORPORATION 290 ITR 217 WHEREAS IN APL INDIA LTD. VS. ACIT 279 ITR 68 (AT)(MUM) THE TRIBUN AL RESTRICTED THE DISALLOWANCE TO 25%. THUS, THE FACTUM OF ILLEGAL PA YMENTS IS NOT IN DOUBT AND THE DISALLOWANCE HAS BEEN SUSTAINED ON ESTIMATE BASIS A ND THUS PENALTY ON SUCH DISALLOWANCE OF RS.14,85,181/- IS NOT SUSTAINABLE. IN REGARD TO DISALLOWANCE OF RS.10,32,750/- OF LABOUR CHARGES, THE ADDITION HAS BEEN SET ASIDE TO A.O. AND THUS, THE PENALTY DOES NOT SURVIVE ON THE SAID ADDITION. THE A.O. IS HOWEVER EMPOWERED TO INITIATE/LEVY PENALTY BASED ON OUTCOME OF SET AS IDE PROCEEDINGS IN TERMS OF SEC.275A. AT PRESENT THE PENALTY IS DIRECTED TO BE DELETED. M/S WESTERN INDIA MARINE CORPORATION 3 | P A G E 4. AS IT IS CLEAR THAT THE CIT(A) HAS DELETED THE P ENALTY BY CONSIDERING THE FACT THAT ONE OF THE ADDITIONS WAS SET ASIDE BY THE TRIB UNAL TO THE RECORD OF ASSESSING OFFICER, THEREFORE, THE PENALTY WOULD NOT SURVIVE T O THAT EXTENT. THE SECOND ADDITION WAS RESTRICTED BY THE TRIBUNAL BY ESTIMATING ONLY T O THE EXTENT OF 25%, THEREFORE, THE COMMISSIONER HAS FOLLOWED THE DECISION OF HONBLE M ADRAS HIGH COURT IN CASE OF SOUTH INDIA CORPORATION 290 ITR 217 AS WELL AS THE DECISION OF THIS TRIBUNAL IN THE CASE OF APL INDIA LTD. VS. ACIT 279 ITR 68 (AT)(MUM) WHILE DELETING THE PENALTY AGAINST THE DISALLOWANCE SUSTAINED ON ESTIMATED BAS IS. THE COMMISSIONER HAS GIVEN THE OPPORTUNITY TO ASSESSING OFFICER FOR INITIATING THE PENALTY SO FAR AS ISSUE WAS SET ASIDE BY THE TRIBUNAL IN QUANTUM APPEAL. ACCORDINGL Y, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE DO NOT FIND ANY OR ILLEGALITY IN TH E IMPUGNED ORDER OF CIT(A). 4. IN THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 15 TH DAY OF DECEMBER 2014. SD/- SD/- (D. KARUNAKARA RAO) (VIJAY PAL RAO) (ACCOUNTANT MEMBER/ YS[KK LNL; YS[KK LNL; YS[KK LNL; YS[KK LNL; ) (JUDICIAL MEMBER/ U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; ) MUMBAI DATED 15-12-2014 SKS SR. P.S, COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, D BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI