M/S. HEREDILLIA LTD, NAVI MUMBAI V. THE JCIT RG 3(3), MUMBAI

ITA 2236/MUM/2007

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79288 (ITAT-MUMBAI)
• Duration Of Justice: 7 year(s) 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 30-06-2014
• Assessment Year: 2000-2001
• Appeal Filed On: 20-03-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R K SAHU
• Assessee Lawyers: NEERAJ SETH
• Keywords: Wrong claim

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H MUMBAI . . , , BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER /AND SHRI SANJAY ARORA, ACCOUNTANT MEMBER ITA NO.2236/MUM/2007, A.Y. 2000-01. SI GROUP INDIA LIMITED, (FORMERLY KNOWN AS SCHENECTADY HEREDILLIA LIMITED) PLOT NO.2/1, TTC INDUSTRIAL AREA, THANE BELAPUR ROAD, NAVI MUMBAI 400 705 PAN:AAACH 7323L (APPELLANT ) VS. THE JCIT (OSD), RANGE 3(3), AAYKAR BHAVAN, MK MARG, MUMBAI (RESPONDENT) ITA NO. 1400/MUM/2007,A.Y. 2000-01 THE JCIT (OSD), RANGE 3(3), AAYKAR BHAVAN, MK MARG, MUMBAI (APPELLANT ) VS. SI GROUP INDIA LIMITED, (FORMERLY KNOWN AS SCHENECTADY HEREDILLIA LIMITED) PLOT NO.2/1, TTC INDUSTRIAL AREA, THANE BELAPUR ROAD, NAVI MUMBAI 400 705 PAN:AAACH 7323L (RESPONDENT) ASSESSEE BY : SHRI NEERAJ SETH REVENUE BY : SHRI R.K.SAHU DATE OF HEARING : 30/06/20 14 DATE OF PRONOUNCEMENT : 30/06/2014 ORDER PER I.P.BANSAL, J.M, THESE ARE CROSS APPEALS AND ARE DIRECTED AGAINST ORDER PASSED BY LD. CIT(A)XXXII, MUMBAI DATED 11/12/2006 FOR ASSESSMENT YEAR 2000-01. GROUNDS OF APPEAL IN BOTH THE APPEALS READ AS UNDER: ITA NO.2236&1400/MUM/2007, A.Y. 2000-01. 2 REVENUES GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(A) ERRED IN REDUCING THE PENALTY LEVIED BY THE ASSESSI NG OFFICER U/S.271(1)(C) OF THE INCOME TAX ACT, 1961 FROM RS.50,00,000/- TO RS.5,26 ,632/- AND THEREBY ALLOWING THE RELIEF OF RS.44,73,368/- TO THE ASSESSEE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO LEVY TH E PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 TO THE EXTENT OF TAX SOUGHT TO BE EVADED ON THE POSITIVE INCOME AND NOT ON THE ENTIRE EVADED INCOME OF RS.1,15,92,0 43/- WHICH WAS THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IN THE O RDER AND CONFIRMED BY THE CIT(A). 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED IN DIRECTING TO LEVY THE PENALTY OF RS.5,26,6 321- ONLY ON DIFFERENCE BETWEEN AMOUNT OF TAX SOUGHT TO BE EVADED ON RETURNED INCOM E AND FINALLY ASSESSED INCOME AND NOT IN RESPECT OF CONCEALED INCOME OF RS.1,15,9 2,0431- IN TOTAL CONTRAVENTION OF PROVISIONS OF EXPLANATION 4 TO SECTION 271(1)(C) RE LYING ON THE DECISION IN THE CASE OF CIT VS. PRITHIPAL SINGH 183 ITR 69. 4. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. ASSESSEES GROUNDS OF APPEAL : GROUND I : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - XXXII, MUMBA I (THE CIT(A)) ERRED IN, CONFIRMING THE ACTION OF THE JOINT COMMISSIONER OF INCOME-TAX, RANGE-3 (3), MUMBAI (THE JCIT) IN CHARGING PENALTY U/S. 2 71(1)(C) OF THE INCOME TAX ACT, 1961 (THE ACT) ON THE ALLEGED GROUND THAT THE APP ELLANT HAS FURNISHED INACCURATE PARTICULARS OF ITS INCOME BY MAKING A WRONG CLAIM I N RESPECT OF LEASE RENT. 2. THE APPELLANT PRAYS THAT THE JCIT BE DIRECTED TO DELETE THE AFORESAID PENALTY PASSED U/S. 271(1)(C) OF THE ACT. GROUND II: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE CIT (A) ALSO ERRED IN UPHOLDING THE ACTION OF THE JCIT IN LEVYING THE PEN ALTY U/S 271(1)(C) OF THE ACT ON THE ALLEGED GROUND THAT THE APPELLANT HAS NOT FURNISHED ANY EVIDENCE TO DISCHARGE ITS ONUS IN PROVING THAT IT HAS NOT FILED INACCURATE PA RTICULARS OF ITS INCOME BY SUBSTANTIATING WITH EVIDENCE THAT BORROWED MONEYS O N WHICH IT HAS CLAIMED INTEREST PAYMENT HAVE NOT GONE INTO GIVING OF INTEREST FREE LOANS TO ITS SUBSIDIARY COMPANIES. ITA NO.2236&1400/MUM/2007, A.Y. 2000-01. 3 2. ON ACCOUNT OF FOLLOWING TWO ADDITIONS CONCEALMEN T PENALTY WAS LEVIED UPON THE ASSESSEE VIDE ORDER DATED 9/3/2006 PASSED UNDE R SECTION 271(1)(C) INCOME TAX ACT, 1961 (THE ACT). (A) DISALLOWANCE OF LEASE RENT - RS. 1,52,61,839/- (B) DISALLOWANCE OF INTEREST OF LOANS TO TO GROUP COMPANIES - RS. 11,75,175/- 3. SO FAR AS IT RELATES TO ADDITION MENTIONED AT SL .NO.2, I.E. A SUM OF RS.11,75,175/- THE SAID ADDITION HAS BEEN DELETED IN QUANTUM PROCEEDINGS BY THE TRIBUNAL VIDE ITS ORDER DATED 20/03/2013 PASSED IN ITA NO.4380/MUM/2010 ( COPY OF ORDER FILED AT PAGES 275 TO 279 OF THE P APER BOOK) AND VIDE FOLLOWING OBSERVATIONS THE ADDITION WAS DELETED. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE HAS AD MITTED THAT DUE TO FLOOD IN MUMBAI CITY IN 2006, ALL THESE RELEVANT DOCUMENTS HAVE BEEN DES TROYED THEREFORE IT IS NOT POSSIBLE TO FURNISH BANK STATEMENTS. AFTER CONSIDERING THE ENT IRE FACTS IN THE LIGHT OF THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE MENTIONED HEREINABO VE FOR EARLIER YEARS, WE HAVE NO HESITATION TO HOLD THAT THE DISALLOWANCE OF NOTIONA L INTEREST AT RS. 11,75,176/- IS NOT JUSTIFIABLE. ACCORDINGLY, WE DIRECT THE AO TO DELE TE THE ADDITION OF RS. 11,75,176/-. THIS GROUND OF THE ASSESSEE IS ACCORDINGLY ALLOWED. IN VIEW OF THE ABOVE POSITION, SO FAR AS IT RELATES TO LEVY OF CONCEALMENT PENALTY ON A SUM OF RS.11,75,175/-, WE HOLD THAT NO CONCEALMEN T PENALTY IS LEVIABLE 4. SO FAR AS IT RELATES TO OTHER COMPONENT, ADDITI ON ON WHICH IMPUGNED PENALTY HAS BEEN LEVIED I.E. A SUM OF RS.1,52,61,83 9/-, WE FIND THAT LD. CIT(A) HAS HELD THAT SINCE THERE WAS NO TAXABLE INCOME OR TAX ASSESSED FOR PAYMENT DURING A PARTICULAR YEAR, THE QUESTION OF EVASION A ND SUBSEQUENTLY PENALTY DOES NOT ARISE AND PROVISIONS OF SECTION 271(1)(C) OF TH E ACT WILL BE ATTRACTED IN THE CASE WHERE ASSESSEE HAS POSITIVE INCOME ONLY AND NO T LOSS. FOR HOLDING SO LD. CIT(A) HAS FOLLOWED THE DECISION OF HONBLE APEX C OURT IN THE CASE OF CIT VS. PRITHIPAL SINGH, 183 ITR 69 AND ALSO THE DECISION OF HONBLE BOMBAY HIGH COURT ITA NO.2236&1400/MUM/2007, A.Y. 2000-01. 4 IN THE CASE OF CIT VS. ORIENT SYNTEX LIMITED , ITA NO. 1069 OF 2000 AND THE DECISION OF MUMBAI ITAT IN THE CASE OF M/S. KILLIC HALCO LTD., ITA NO.5793/MUM/2000. 5. ON THESE FACTS, IT WAS THE COMMON CONTENTION OF THE PARTIES THAT SIMILAR ISSUE WAS RESTORED BACK BY THE TRIBUNAL TO THE FILE OF LD. CIT(A) IN RESPECT OF ASSESSMENT YEAR 1999-2000 TO BE DECIDED DENOVO AS SUBSEQUENTLY HONBLE SUPREME COURT IN THE CASE OF CIT VS. GOLD COIN HE ALTH FOOD (P) LTD., 304 ITR 308 HELD THAT AMENDMENT MADE IN EXPLANATION -4 TO SECTION 271(1)(C) (III) W.E.F. 1/4/2003 WAS CLARIFICATORY IN NATURE AND HAS RETROS PECTIVE EFFECT. THE ORDER OF TRIBUNAL, WHICH IS DATED 12/11/2008 IN ITA NO.3155/ MUM/2006 (COPY PLACED AT PAGES 255 TO 256 OF THE PAPER BOOK) IS REPRODUCE D BELOW. THIS APPEAL BY THE REVENUE FOR THE ASSESSMENT YEAR 1999-2000 IS DIRECTED AGAINST THE ORDER OF CIT(A). THE GROUND OF APPEAL NO. 1 OF THE REVENUE IS AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN DELETING THE PENALTY OF RS. 84,00,720/- U/S. 271(1) (C) OF THE ACT. 2. THE LD. DR SUBMITTED THAT THE ISSUE OF VALIDITY OF PENALTY U/S. 271(1)(C) OF THE ACT IN CASES WHERE THE ASSESSED INCOME OF THE ASSESSEE IS A LOSS HAS BEEN DECIDED BY THE HONBLE SUPREME COURT IN CIVIL APPEAL NO. 5065 OF 2 008 IN FAVOUR OF THE REVENUE. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE CIT(A) HAS NOT DECIDED THE ISSUE OF PENALTY U/S. 271(1)(C) OF THE ACT ON MERITS AND THEREFORE, HE MAY BE DIRECTED TO DECIDE THE ISSUE BEFORE HIM ON MERITS. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IN THE FACTS OF THE CASE, WE SET ASIDE THE ORDER OF THE CIT(A) TO HIS FILE WI TH DIRECTION TO PASS A DE NOVO APPELLATE ORDER IN ACCORDANCE WITH LAW AFTER ALLOWING THE REA SONABLE OPPORTUNITY OF HEARING TO THE PARTIES AND TO DECIDE THE ISSUES BEFORE HIM ON MERI TS THEREOF. WE DIRECT ACCORDINGLY. 3. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 12.11.2008. 6. IN THIS VIEW OF THE SITUATION, AFTER HEARING BOT H THE PARTIES, THE QUESTION OF LEVY OR OTHERWISE OF THE CONCEALMENT PENALTY ON THE ADDITION OF RS.1,52,61,839/- IS RESTORED BACK TO THE FILE OF LD. CIT(A) WITH THE SAME DIRECTIONS AS HAVE BEEN GIVEN BY THE TRIBUNAL IN THE CASE OF ASSESSEE FOR A SSESSMENT YEAR 1999-2000. THE ORDER HAS ALREADY BEEN REPRODUCED ABOVE. WE DI RECT ACCORDINGLY. ITA NO.2236&1400/MUM/2007, A.Y. 2000-01. 5 7. IN THE RESULT, BOTH THE APPEALS ARE CONSIDERED TO BE ALLOWED FOR STATISTICAL PURPOSES IN THE MANNER AFORESAID. ORDER PRONOUNCED IN THE OPEN COURT ON 3 0/06/2014 ! ' #$ % &'( 30/06/2014 ' ) SD/- SD/- ( /SANJAY ARORA ) ( . . / I.P. BANSAL ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; &' DATED 30/06/2014 ! ! ! ! ' '' ' *+, *+, *+, *+, -,$+ -,$+ -,$+ -,$+ / COPY OF THE ORDER FORWARDED TO : 1. ./ / THE APPELLANT 2. *0./ / THE RESPONDENT. 3. 1 ( ) / THE CIT(A)- 4. 1 / CIT 5. ,2) *+' , , / DR, ITAT, MUMBAI 6. )3 4 / GUARD FILE. !' !' !' !' / BY ORDER, 0,+ *+ //TRUE COPY// 5 55 5 / 6 6 6 6 (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . ' . ./ VM , SR. PS