NAYAN BUILDERS & DEVELOPERS P. LTD, MUMBAI V. ITO 7(1)(1), MUMBAI

ITA 2379/MUM/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7883 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 28-12-2010
• Assessment Year: 1997-1998
• Appeal Filed On: 15-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARIGOVIND SINGH
• Assessee Lawyers: SANJIV M SHAH
• Keywords: Question of law

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI BEFORE SHRI R.S.SYAL, AM AND SMT.ASHA VIJAYARAGHAVA N, JM ITA NO.2379/MUM/2009 : ASST.YEAR 1997-98 M/S.NAYAN BUILDERS & DEVELOPERS PVT.LTD 36 FANCY CHAMBERS, 94 SURAT STREET MUMBAI 400 009. PAN : AAACN1198H. VS. THE INCOME TAX OFFICER WARD 7(1)(1) MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SANJIV M.SHAH RESPONDENT BY : SHRI HARI GOVIND SINGH O R D E R PER R.S.SYAL, AM : THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER PASSED BY THE CIT(A) ON 20.01.2009 CONFIRMING THE PENALTY OF RS.37,32,777 IMPOSED BY THE AO U/S.271(1)(C) OF THE ACT IN RELATION TO ASSESSMENT YEAR 1997-98. 2. SHORN OFF UNNECESSARY DETAILS IT IS AN ADMITTED POSITION FROM BOTH THE SIDES THAT THE PENALTY HAS BEEN FINALLY UPHELD QUA THE ADDITION OF RS.1,04,76,050 TOWARDS INCOME FROM SPECTRUM CORPORATE SERVICES LTD. ASSESS ED IN THIS YEAR, DISALLOWANCE OF BROKERAGE OF RS.10,79,221 AND DISALLOWANCE OF LE GAL FEES OF RS.2,00,000. IT IS SEEN THAT THE TRIBUNAL HAS UPHELD THESE ADDITIONS I N QUANTUM PROCEEDINGS FOR WHICH THE PENALTY HAS BEEN HELD TO BE IMPOSABLE. THE LEAR NED A.R. HAS PLACED ON RECORD THE JUDGEMENT OF THE HONBLE JURISDICTIONAL HIGH CO URT IN INCOME TAX APPEAL NO.2368 OF 2009 ADMITTING INTER ALIA THE FOLLOWING TWO QUESTIONS:- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE TRIBUNAL WAS RIGHT IN HOLDING THAT THE DEP OSIT RS.1,04,76,050/- RECEIVED FROM SPECTRUM IS EXIGIBLE TO TAX IN THE ASSESSMENT YEAR 1997-98? ITA NO.2379/MUM/2009 M/S.NAYAN BUILDERS & DEVELOPERS PRIVATE LIMITED. 2 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE TRIBUNAL WAS CORRECT IN CONFIRMING THE DISALLOW ANCE OF BROKERAGE RS.10,79,221/- AND LEGAL FEES RS.2,00,000 /-? 3. IT IS, THEREFORE, ABUNDANTLY CLEAR THAT THE ADDI TIONS IN RESPECT OF WHICH PENALTY WAS CONFIRMED HAVE BEEN ACCEPTED BY THE HON BLE BOMBAY HIGH COURT LEADING TO SUBSTANTIAL QUESTION OF LAW. WHEN THE HI GH COURT ADMITS SUBSTANTIAL QUESTION OF LAW ON AN ADDITION, IT BECOMES APPARENT THAT THE ADDITION IS CERTAINLY DEBATABLE. IN SUCH CIRCUMSTANCES PENALTY CANNOT BE LEVIED U/S 271(1) AS HAS BEEN HELD IN SEVERAL CASES INCLUDING RUPAM MERCANTILE VS. DCIT [(2004) 91 ITD 237 (AHD) (TM)] AND SMT.RAMILA RATILAL SHAH VS. ACIT [(1998) 60 TTJ (AH D) 171] . THE ADMISSION OF SUBSTANTIAL QUESTION OF LAW BY THE HONBLE HIGH COURT LENDS CREDENCE TO THE BONA FIDES OF THE ASSESSEE IN CLAIMING DEDUCTION. ONCE IT TU RNS OUT THAT THE CLAIM OF THE ASSESSEE COULD HAVE BEEN CONS IDERED FOR DEDUCTION AS PER A PERSON PROPERLY INSTRUCTED IN LAW AND IS NOT COMPLE TELY DEBARRED AT ALL, THE MERE FACT OF CONFIRMATION OF DISALLOWANCE WOULD NOT PER SE LEAD TO THE IMPOSITION OF PENALTY. SINCE THE ADDITIONS, IN RESPECT OF WHICH PENALTY HAS BEEN UPHELD IN THE PRESENT PROCEEDINGS, HAVE BEEN HELD BY THE HONBLE HIGH COURT TO BE INVOLVING A SUBSTANTIAL QUESTION OF LAW, IN OUR CONSIDERED OPIN ION, THE PENALTY IS NOT EXIGIBLE UNDER THIS SECTION. WE, THEREFORE, ORDER FOR THE D ELETION OF PENALTY. 4. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED ON THIS 18 TH DAY OF MARCH, 2011 . SD/- SD/- (ASHA VIJAYARAGHAVAN) (R.S.SYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI : 18 TH MARCH, 2011. DEVDAS* ITA NO.2379/MUM/2009 M/S.NAYAN BUILDERS & DEVELOPERS PRIVATE LIMITED. 3 COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A) VII, MUMBAI. 5. THE DR/ITAT, MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, MUMBAI.