ACIT 11(2), MUMBAI V. A.F. FERGUSON & CO., MUMBAI

ITA 2036/MUM/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48893 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-05-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 03-05-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 02-04-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SANDEEP DAHIYA
• Assessee Lawyers: P F KAKA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI BEFORE SHRI R.S.SYAL, AM AND SHRI VIJAY PAL RAO, JM ITA NO.2036/MUM/2009 : ASST.YEAR 2003-2004 THE ASSTT.COMMISSIONER OF INCOME-TAX CIRCLE 11(2) MUMBAI. VS. M/S.A.F.FERGUSON & CO. ALLAHABAD BANK BUILDING BOMBAY SAMACHAR MARG MUMBAI 400 001. PAN : AABFA5846M (APPELLANT) (RESPONDENT) ITA NO.2167/MUM/2009 : ASST.YEAR 2003-2004 M/S.A.F.FERGUSON & CO. ALLAHABAD BANK BUILDING BOMBAY SAMACHAR MARG MUMBAI 400 001. VS. THE ASSTT.COMMISSIONER OF INCOME-TAX CIRCLE 11(2) MUMBAI. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI SANDEEP DAHIYA ASSESSEE BY : SHRI P.F.KAKA O R D E R PER R.S.SYAL, AM : THESE TWO CROSS APPEALS ONE BY TH E ASSESSEE AND THE OTHER BY THE REVENUE ARISE OUT OF THE ORDER PASSED BY THE CIT(A) ON 20.01.2009 AGAINST THE PENALTY ORDER U/S. 271(1)(C) IN RELATION TO THE ASSESSMENT YEAR 2003-2004. 2. THE ASSESSEE IS AGGRIEVED AGAINST THE CONFIRMATION OF PENALTY ON ADDITION OF RS.32.85 LAKHS, BEING THE PAYMENT MADE TO RETIRED PARTNERS BY WAY OF AN OVERRIDING TITLE ADDED TO THE ASSESSEES INCOME. 3. WE HAVE HEARD TH E RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE ASSESSEE MADE THE ABOVE REFERRED PAYMENT TO THE RETIRED PARTNERS BY WAY OF AN OVERRIDING TITLE ON THE FEES COLLECTED BY THE FIRM. THE ASSESSING OFFICER MADE THIS DISALLOWANCE WHICH CAME TO BE UPHELD BY THE LEARNED CIT(A). HOWEVE R WHEN THE MATTER CA ME UP BEFORE THE TRIBUNAL IN ITA NO.1113/MUM/2007, THE SAID ADDITION WAS DELETED VIDE ITS ORDER ITA NOS.2036 & 2167/MUM/2009 M/S.A.F.FERGUSON & CO. 2 DATED 13.08.2010. THE COPY OF THE ORDER PASSED BY THE TRI BUNAL IS PLACED ON RECORD AND IT IS SEEN THAT TH E ISSUE HAS BEEN DISCU SSED IN PARAS 8 TO 12 OF THE ORDER. THE ASSESSING OFFICER IMPOSED PENALTY U/S. 271(1)(C) IN RESPECT OF THE SAID ADDITION WHICH WAS AFFIRMED BY THE LEARNED CIT(A). IN VIEW OF THE FACT THAT THE ADDITION OF RS.32.85 LAKHS, WHICH CONSTITUTE D THE BASIS FOR IMPOSITION OF PENALTY U/S. 271(1)(C), HAS BEEN DELETED BY THE TRIBUNAL, THERE REMAINS NO FOUNDATION ON WHICH THE EDIFICE OF PENALTY COULD BE CONSTRUCTED. WE, THER EFORE, ORDER FOR THE DELETION OF PENALTY ON THIS AMOUNT. 4. THE REVENUE IS AGGRIEVE D IN ITS APPEAL AGAINST TH E DELETION OF PENALTY ON THE ADDITION MADE IN RESPECT OF OUTSTA NDING SUNDRY CREDITORS. THE ASSESSEE WAS FOLLOWING CASH SYSTEM OF ACCOUNTING. A CO MPARATIVE STATEMENT OF SUNDRY CREDITORS WAS SUBMITTED FOR ASSESSMENT YEARS 2001-2002 AND 2002-2003. IN THE SAID STATEMENT CREDITORS WERE CLAI MED AT RS.19,33,796 FOR ASSE SSMENT YEAR 2003-2004. IT WAS SUBMITTED BEFORE THE A.O. THAT THE LEARNED CIT(A) HAD UPHELD THE ADDITION OF RS.14,03,806 IN ASSESSMENT YEAR 2001-2002. THE A.O. NOTED THAT THE THREE ITEMS OF RS.94,238, RS.1,58,688 AND RS.34,415 WER E APPEARING IN AS SESSMENT YEAR 2001- 2002 AND WERE CONFIRMED. TH EREFORE, EXCLUDING THESE THREE ITEMS FROM THE SUNDRY CREDITORS SHOWN AT RS.19.33 LAKHS, THE A. O. MADE AN ADDITION OF RS.16,46,455. WHEN THE MATTER CAME UP BEFORE THE LEAR NED CIT(A), HE DIR ECTED THE ASSESSING OFFICER TO VERIFY THESE SUNDRY CREDITORS FROM THE RECORDS AND RESTRICT THE ADDITION IN THE MANNER DECIDED BY THE FIRST APPELLATE AU THORITY FOR HIS ORDER FOR ASSESSMENT YEAR 2001-2002. THE ASSESSEE COUL D NOT GIVE SUPPORTIVE DOCUMENTARY EVIDENCE BEFORE THE AO. AS A RESULT OF WHICH THE ADDITIO N WAS AGAIN MADE. TH E ASSESSING OFFICER IMPOSED PENALTY U/S.271(1)(C) ON THIS AMOUNT WHICH CAME TO BE DELETED IN THE FIRST APPEAL. 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSING THE RELE VANT MATERIAL ON RECORD IT IS NOTICED THAT TH E ASSESSEE CHALLENGED THE ADDI TION IN QUANTUM BEFORE THE ITA NOS.2036 & 2167/MUM/2009 M/S.A.F.FERGUSON & CO. 3 TRIBUNAL. THE ITEMS LISTED IN PARA 5 OF THE TRIBUNAL ORDER WE RE TAKEN UP AND THE TRIBUNAL VIDE PARA 7 OF ITS ORDER RESTORED THE MATTER TO THE A.O. ON MAJORITY OF ITEMS. 6. THE LEARNED COUNSEL FOR THE ASSESSEE CONTENDED THAT THE INSTANT PENALTY BE ALSO NOT SUSTAINED IN VIEW OF THE ORDER PA SSED BY THE TRIBUNAL IN ASSESSMENT YEAR 2001-2002. COPY OF THE SAID ORDER WAS PLACED ON RECORD. IN THE OPPOSITION, THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED ON THE PENALTY ORDER PASSED BY THE A.O. IT IS NOTICED THAT THE TRI BUNAL HAS DELETED THE PENALTY IN ASSESSM ENT YEAR 2001-2002 ON THE GROUND THAT THE ADDITION ITSELF WAS DELETED BY THE TRIBUNAL IN QUANTUM PROCEEDINGS. IN THE INSTANT YE AR THE FACTS ARE NOT SIMILAR INASMUCH AS THE TRIBUNAL HAS NOT DELETED THE ADDITION BUT SIMPLY RESTOR ED A LARGER PART OF IT TO THE FILE OF ASSESSING OFFICER FOR FRESH VERIFICATION. WH EN THE ADDITION HAS BEEN RESTORED TO THE FILE OF A.O., IN OUR CONSIDERED OPINION, THE PENALTY ON THIS ASPECT SHOULD ALSO BE RESTORED TO THE FILE OF A.O. FOR TAKING A FRESH DECISION IN ACCO RDANCE WITH THE VIEW FINALLY TAKEN BY HIM IN RESPECT OF ADD ITION IN QUANTUM PROC EEDINGS. OUR VIEW IS FORTIFIED BY THE JUDGEMENT OF THE HON'BLE SUPREME COUR T IN THE CASE OF MOHAMMED MOHATRAM FAROOQUIVS. CIT (SC) 2010-TIOL-23-SC-IT. WE, THEREFORE, OVERTURN THE IMPUGNED ORDER ON THIS IS SUE AND RESTORE THE MATTER TO THE FILE OF A.O. 7. IN THE RESULT, THE APPEAL OF THE ASSE SSEE IS ALLOWED AND THAT OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 18 TH DAY OF MAY, 2011 . SD/- SD/- (VIJAY PAL RAO) (R.S.SYAL) JUDICIAL MEMBER A CCOUNTANT MEMBER MUMBAI : 18 TH MAY, 2011. DEVDAS* ITA NOS.2036 & 2167/MUM/2009 M/S.A.F.FERGUSON & CO. 4 COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A) XI, MUMBAI. 5. THE DR/ITAT, MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, MUMBAI.