WHISTLING WOODS INTERNATINAL LTD, MUMBAI V. ITO 9(3)(4), MUMBAI

ITA 2310/MUM/2010

• Counselvise Citation: 231019914 RSA 2010
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-04-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 06-04-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 23-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K NAYAK
• Assessee Lawyers: K SHIVARAM
• Keywords: Business income; Period of limitation; Time period of passing order

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G : MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI R.K.PANDA, ACCOUNTANT MEMBER ITA. NO. 2310/MUM/2010 ASSESSMENT YEAR 2003-2004 WHISTLING WOODS INTERNATIONAL LTD. MUMBAI 400 065 PAN AAACW4307R VS. ITO 9 (3)-4 MUMBAI 400 020. (APPELLANT) (RESPONDENT) FOR APPELLANT : S/SHRI K.SHIVARAM & PARAS SAVLA FOR RESPONDENT : SHRI A.K. NAYAK ORDER PER D. MANMOHAN, V.P. 1. THIS IS AN APPEAL FILED AT THE INSTANCE OF THE ASSESSEE- COMPANY AND IT PERTAINS TO THE ASSESSMENT YEAR 2003 -2004. PENALTY LEVIED BY THE ASSESSING OFFICER UNDER SECTION 271 ( 1) (C) OF THE ACT HAVING BEEN CONFIRMED BY THE LEARNED CIT(A), ASSESS EE IS IN APPEAL BEFORE US. THE ONLY GROUND URGED BEFORE US READS AS UNDER : LEARNED CIT(A) HAS ERRED IN CONFIRMING PENALTY LEV IED OF RS. 25 LAKHS BY THE ASSESSING OFFICER FOR THE REASONS S TATED IN THE ORDER. 2. THEREAFTER, HE HAS FILED AN ADDITIONAL GROUND C HALLENGING THE LIMITATION PERIOD FOR PASSING AN ORDER UNDER SE CTION 271 (1) (C) OF THE ACT. HOWEVER, AT THE TIME OF HEARING, LEARNED C OUNSEL, APPEARING ON BEHALF OF THE ASSESSEE, DID NOT PRESS THE ADDITI ONAL GROUND AND THEREFORE, THE SAME IS DISMISSED AS NOT PRESSED. 3. FACTS NECESSARY FOR THE DISPOSAL OF THE APPEAL ARE STATED IN BRIEF. ASSESSEE-COMPANY IS SET UP TO CARRY ON RE SEARCH AND TRAINING PROGRAMMES. FOR THE ASSESSMENT YEAR UNDER CONSIDERA TION ASSESSEE DECLARED NIL INCOME WHEREAS THE ASSESSMENT WAS COMP LETED ON A 2 TOTAL INCOME OF RS.61,56,030/-. FACTS LEADING TO TH E ADDITION ARE THAT THE ASSESSEE-COMPANY WAS ENGAGED IN THE BUSINESS OF ESTABLISHING RESEARCH & TRAINING INSTITUTE. DURING THE RELEVANT YEAR, THE PROJECT WAS UNDER CONSTRUCTION AND WORK WAS GIVEN ON CONTRA CT TO M/S. LARSEN & TOUBRO LTD. AS PER THE AGREEMENT, THE TOTA L CONTRACT HAS TO BE CARRIED OUT FOR AN AMOUNT OF RS.6.93 CRORES AND THE WORK HAS TO BE COMPLETED WITHIN ONE YEAR. AS ON 31-3-2003 ASSESSEE HAD SHOWN TOTAL EXPENDITURE OF RS.1.67 CRORES. ASSESSEE-COMPANY HAD ALSO RECEIVED INTEREST ON FIXED DEPOSITS AND LOANS. AGAINST THE S AID INCOME ASSESSEE SET OFF THE AFOREMENTIONED EXPENDITURE AND DECLARED CLOSING CAPITAL WORK-IN-PROGRESS AT RS.1.05 CRORES. THE ASSESSING O FFICER OBSERVED THAT THE INCOME IS NOWHERE LINKED WITH THE BUSINESS OF THE ASSESSEE AND THEREFORE, THE SAME HAS TO BE TREATED AS INCOM E FROM OTHER SOURCES AND ACCORDINGLY BROUGHT TO TAX. ASSESSEE I MMEDIATELY AGREED ON THIS ASPECT. HOWEVER, HE OBJECTED TO THE INITIAT ION OF PROCEEDINGS UNDER SECTION 271 (1) (C) OF THE ACT ON THE GROUND THAT BASIC PARTICULARS WERE ALREADY DECLARED BY THE ASSESSEE A ND IT WAS A CASE OF MERE ADJUSTMENT OF INCOME FROM ONE HEAD TO ANOTHER I.E., INSTEAD OF TREATING IT AS BUSINESS INCOME IT WAS TREATED BY TH E ASSESSING OFFICER AS INCOME FROM OTHER SOURCES. THEREFORE, IN THE LIG HT OF DECISION OF THE APEX COURT IN THE CASE OF RELIANCE PETRO 322 ITR 15 8, THERE IS NO CASE FOR LEVY OF PENALTY. BEFORE US, LEARNED COUNSEL, AP PEARING ON BEHALF OF THE ASSESSEE, SUBMITTED THAT UNDER IDENTICAL CIRCUM STANCES THE ISSUE INVOLVING THE LEVY OF PENALTY WAS DIRECTED TO BE CO NSIDERED AFRESH, IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 20 04-2005 AND 2005-2006 (ITAT, G BENCH, MUMBAI IN ITA. NO. 2311 , 2312/M/2010 AND 2313/M/2010 DATED 28-02-2011). BOTH THE PARTIES ADMITTED THAT THE ISSUE IS IDENTICAL AND THE MAIN CASE OF THE ASS ESSEE IS THAT THE LEARNED CIT(A) HAS NOT GIVEN A PROPER OPPORTUNITY O F BEING HEARD WHILE DISPOSING OF THE APPEAL CONCERNING THE LEVY OF PENA LTY UNDER SECTION 271 (1) (C) OF THE ACT AND THEREFORE, THE MATTER HA S TO BE RESTORED TO THE FILE OF THE LEARNED CIT(A) TO ENABLE HIM TO PAS S A DETAILED, REASONED AND SPEAKING ORDER. 3 4. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE AND IN LINE WITH THE VIEW TAKEN BY THE ITAT, G BENCH, MUMBAI (SUPRA), WE RESTORE THE ISSUE TO THE FILE OF THE LEARNED CIT(A) WHO IS DIRE CTED TO PASS A DETAILED, REASONED AND SPEAKING ORDER AFTER NECESSA RY EXAMINATION OF THE FACTS PLACED BEFORE HIM. NEEDLESS TO OBSERVE TH AT THE ASSESSEE IS AT LIBERTY TO RAISE ANY OTHER ISSUE IN SUPPORT OF HIS CLAIM THAT THERE WAS A BONAFIDE REASON FOR DECLARING THE INTEREST INCOME U NDER THE HEAD PROFITS AND GAINS OF BUSINESS AND PENALTY IS NOT LEVIABLE UNDER THE CIRCUMSTANCES OF THE CASE. WITH THESE OBSERVATIONS THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ACCORDINGLY IN THE OPEN COURT ON 6 TH APRIL, 2011. SD/- SD/- (R.K.PANDA) (D.MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATE 06 TH APRIL, 2011 VBP/- COPY TO 1. WHISTLING WOODS INTERNATIONAL LTD., FILM CITY CO MPLEX, GOREGAON (EAST), MUMBAI 400 065. PAN AAACW4307R 2. ITO 9 (3)-4 AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-40 0 020. 3. CIT(A)-20, MUMBAI 4. CIT-9, MUMBAI 5. DR G BENCH 6. GUARD FILE (TRUE COPY) BY ORDER ASST. REGISTRAR, ITAT, MUMBAI BENCHES MUMBAI. 4 DATE INITIALS 1. DATE OF DICTATION 06-04-11 SR. PS 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER/OTHER MEMBER 06-04-11 SR. PS 3. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 06-04 -11 A.M. 4. APPROVED DRAFT COMES TO THE SR. P.S. 06-04-11 SR. P.S. 5. KEPT FOR PRONOUNCEMENT ON --- SR. PS 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 18 -04-11 SR. PS 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 8. THE DATE ON WHICH THE FILE GOES TO THE ASST. REGI STRAR FOR SIGNATURE ON THE ORDER 9. DATE OF DESPATCH OF THE ORDER