ITO 8(3)(1), MUMBAI V. RAMESH D. TAINWALA, MUMBAI

ITA 2175/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4095 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 24-07-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 02-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D B SHAH
• Assessee Lawyers: D K SINHA
• Keywords: Salary income; Question of law; Capital receipt

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D, MUMBAI BEFORE SHRI R. S. SYAL, ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO. 2175/MUM/2012 ASSESSMENT YEAR: 2007-08 ITO 8(3)(1) MUMBAI VS. RAMESH D. TAINWALA 401/B, ELEGANT BUSINESS PARK, ANDHERI KURLA ROAD, ANDHERI (E) MUMBAI-400 059 PAN: AAAPT 9296 K (APPELLANT) (RESPONDENT) RESPONDENT BY : SHRI D. K. SINHA APPELLANT BY : SHRI D.B. SHAH DATE OF HEARING : 24.07.2013 DATE OF PRONOUNCEMENT : 31.07.2013 O R D E R PER DR. S.T.M. PAVALAN, JM: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF THE LD.CIT (A)-18, MUMBAI DATED 13.01.2012 DELETING THE PENALTY OF RS. 70,00,000/- LEVIED BY THE AO U/S 271(1)(C) OF THE ACT FOR THE ASSESSMENT YEAR 2007-0 8. 2. BRIEFLY STATED, THE ASSESSEE, AN INDIVIDUAL, A D IRECTOR OF M/S SAMSONITE SOUTH ASIA PVT. LTD. EARNING SALARY INCOME, WHILE DECLARING A TOTAL INCOME OF RS.7,29,18,046/- DURING THE YEAR UNDER CONSIDERATION, HAD CLAIMED A SUM OF RS. 2 CRORES RECEIVED BY HIM ON ACCOUNT OF NON-COMPETE FEES AS CAPITAL RECEIPT WH ICH IS NOT LIABLE FOR TAX. HOWEVER, IN THE ASSESSMENT FRAMED U/S 143(3), THE AO TREATED TH E IMPUGNED AMOUNT AS A REVENUE RECEIPT U/S 28(VA) OF THE ACT AND ADDED THE SAME TO THE TOTAL IN COME OF THE ASSESSEE. THE SAID ADDITION WAS CONFIRMED BY THE LD.CIT(A) AN D THE ITAT. PURSUANT TO THE ADDITION, A PENALTY OF RS.70,00,000/- WAS LEVIED BY THE AO. O N APPEAL AGAINST THE SAID PENALTY ORDER, THE LD.CIT(A) HAD DELETED THE PENALTY ON THE GROUNDS, AMONG OTHER THINGS, THAT THERE ARE TWO POSSIBLE VIEWS ON THE ISSUE OF ADDITI ON AND THE CONDUCT OF THE ASSESSEE ITA NO. 2175/MUM/2012 RAMESH D. TAINWALA ASSESSMENT YEAR: 2007-08 2 CLEARLY SHOWED THAT NO INACCURATE PARTICULARS WERE FILED AND ALSO THERE WAS NO CONCEALMENT OF INCOME. AGGRIEVED BY THE IMPUGNED OR DER, THE REVENUE IS IN APPEAL BEFORE US. 3. AT THE OUTSET IT HAS BEEN OBSERVED THAT THE APPE AL OF THE ASSESSEE AGAINST THE ITAT ORDER IN THE QUANTUM PROCEEDINGS IN ITA NO. 3853/MU M/2010 CONFIRMING THE ADDITION MADE BY THE REVENUE AUTHORITIES HAS BEEN ADMITTED B Y THE HONBLE HIGH COURT OF BOMBAY VIDE ORDER DATED 22.03.2013 IN INCOME TAX APPEAL NO . 96 OF 2012 UNDER SECTION 260 A OF THE INCOME TAX ACT AS THE ISSUE INVOLVES SUBSTANTIA L QUESTION OF LAW. WHERE THE HIGH COURT HAS ACCEPTED THE APPEAL AS THE SUBJECT MATTER OF ADDITION INVOLVES SUBSTANTIAL QUESTION OF LAW U/S 260A, IT IS NEEDLESS TO EMPHASI S THAT THE ISSUE IS DEBATABLE AND ACCORDINGLY, NO PENALTY IS IMPOSABLE U/S 271(1)(C) OF ACT. THE HONBLE DELHI HIGH COURT IN CIT V. LIQUID INVESTMENT & TRADING CO. [IN ITA NO.2 40/2009] VIDE ITS JUDGMENT DATED 5.10.2010 HAS HELD THAT AN ISSUE BECOMES DEBATABLE ON THE ADMISSION OF SUBSTANTIAL QUESTION OF LAW AGAINST THE TRIBUNAL ORDER BY THE H IGH COURT. IN SUCH A CASE ALSO PENALTY HAS BEEN HELD TO BE NOT IMPOSABLE U/S 271(1)(C) OF THE ACT. THE MUMBAI BENCH OF THE TRIBUNAL IN NAYAN BUILDERS & DEVELOPERS PVT. LTD. V. ITO [ITA N O.2379/MUM/2009], VIDE ORDER DATED 18.03.2011, HAS ALSO HELD THAT WHERE SU BSTANTIAL QUESTION OF LAW HAS BEEN ADMITTED BY THE HONBLE HIGH COURT AGAINST THE ADDI TIONS SUSTAINED BY THE TRIBUNAL, THERE CANNOT BE ANY QUESTION OF PENALTY U/S.271(1)(C). SI MILAR VIEW HAS BEEN TAKEN BY THE THIRD MEMBER OF THE TRIBUNAL IN THE CASE OF RAPAM MERCANTILES LIMITED V. DCIT [(2004) 91 ITD 237 (AHD.) (TM)]. IN VIEW OF THAT MATTER, THE ORDER OF THE LD.CIT(A) DELETING THE LEVY OF PENALTY IS UPHELD. 4. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 31 ST DAY OF JULY, 2013. SD/- SD/- (R. S. SYAL) (DR. S.T.M. PAVALAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 31.07.2013. *SRIVASTAVA ITA NO. 2175/MUM/2012 RAMESH D. TAINWALA ASSESSMENT YEAR: 2007-08 3 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR D BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.