Mamta Silk Mills Pvt.Ltd., Surat V. The Income tax Officer,Ward-1(3), Surat

ITA 2401/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85800 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 5 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 22-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Assessee Lawyers: RASESH SHAH
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH BEFORE: SHRI SHAILENDRA KR. YADAV, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUN TANT MEMBER MAMTA SILK PVT. LTD, K-1286, SURAT TEXTILE MARKET, RING ROAD, SURAT PAN:AABCM5904D (APPELLANT) VS INCOME TAX OFFICER, WARD 1(3), SURAT (RESPONDENT) REVENUE BY: SHRI M.K. SINGH, SR. D.R. ASSESSEE BY: SHRI RASESH SHAH, A.R. DATE OF HEARING : 04-03-2015 DATE OF PRONOUNCEMENT : 13-03- 2015 / ORDER PER : ANIL CHATURVEDI, ACCOUNTANT MEMBER:- THIS IS THE ASSESSEES APPEAL AGAINST THE ORDER OF LD. CIT(A)-I, SURAT DATED 30-08-2011 FOR A.Y. 2006-07. ITA NO. 2401/AHD/2011 ASSESSMENT YEAR 2006-07 I.T.A NO. 2401/AHD/2011 A.Y. 2006-07 PAGE NO MAMTA SILK MILLS PVT LTD VS. ITO 2 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI AL ON RECORD ARE AS UNDER. 3. ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN TH E BUSINESS OF DYING AND PRINTING OF ART SILK CLOTH AND RESALE OF ART SILK CLOTH. ASSESSEE ELECTRONICALLY FILED ITS RETURN OF INCOME FOR A.Y. 2006-07 ON 27-07-2006 SHOWING TOTAL INCOME AT RS. NIL. THE CASE WAS SELE CTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED U/S. 143(3) VI DE ORDER DATED 09-10- 2008 AND THE TOTAL INCOME BEFORE ADJUSTMENT OF UNAB SORBED DEPRECIATION WAS DETERMINED RS. 44,75,455/-. WHILING FRAMING THE ASSESSMENT, REMUNERATION PAID TO DIRECTORS TO THE EXTENT OF RS. 3,60,000/- WAS DISALLOWED AND ADDED TO THE INCOME. ON THE ADDITIO N MADE ON ACCOUNT OF DISALLOWANCE OF REMUNERATION TO DIRECTORS, AO VIDE PENALTY ORDER DATED 16- 03-2011 LEVIED PENALTY OF RS. 1,22,974/- U/S. 271(1 )(C) OF THE ACT. AGGRIEVED BY THE AFORESAID PENALTY ORDER LEVIED BY AO, ASSESSEE CARRIED THE MATTER BEFORE CIT(A) WHO VIDE ORDER DATED 30 TH AUGUST, 2011 UPHELD THE PENALTY LEVIED ON THE DIRECTORS REMUNERATION. AGGRIEVED BY THE AFORESAID ORDER OF CIT(A), ASSSESSE IS NOW IN APPEA L AND HAS RAISED THE FOLLOWING GROUND:- 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE A S WELL AS LAW ON THE SUBJECT, THE LD. CIT(A) HAS ERRED IN PARTLY CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN LEVYING PENALTY U/S. 271(1)(C) OF THE IT ACT, 1961 ON ACCOUNT OF DISALLOWANCE OF EXPENDIT URE IN RELATION TO PAYMENTS TO DIRECTORS OF RS. 3,60,000/- 4. BEFORE US, AT THE OUTSET, LD. AR SUBMITTED THAT AGAINST THE QUANTUM ADDITION OF DISALLOWANCE OF DIRECTORS REMUNERATION , ASSESSEE HAD PREFERRED APPEAL BEFORE TRIBUNAL. TRIBUNAL VIDE OR DER DATED 25-10-2011 IN ITA NO. 2405/AHD/2009 HAD RESTORED THE ISSUE TO THE FILE OF AO AND I.T.A NO. 2401/AHD/2011 A.Y. 2006-07 PAGE NO MAMTA SILK MILLS PVT LTD VS. ITO 3 DIRECTED THE AO TO RE-ADJUDICATE THE ISSUE AFRESH I N ACCORDANCE WITH LAW AND IN VIEW OF THE DIRECTIONS OF THE TRIBUNAL IN A. Y. 2005-06. HE ALSO PLACED THE COPY OF THE AFORESAID ORDER. LD. AR THE REFORE SUBMITTED THAT SINCE THE ISSUE OF QUANTUM ADDITION HAS BEEN REMITT ED TO AO, THE ISSUE OF PENALTY MAY ALSO BE SET ASIDE TO THE FILE OF AO. L D AR ALSO SUBMITTED THAT ON IDENTICAL FACTS IN A.Y. 2005-06, THE PENALTY ON THE SIMILAR ADDITION MADE WAS RESTORED TO AO. HE ALSO PLACED ON RECORD THE C OPY OF THE AFORESAID ORDER IN ITA NO. 1966/AHD/20011 ORDER DATED 19-02-2 015. LD. DR ON THE OTHER HAND DID NOT SERIOUSLY OBJECT TO THE SUBMISSI ON MADE BY THE AR OF RESTORING THE ISSUE BACK TO AO. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS UNDISPUTED FACT THAT ADDITION ON ACC OUNT OF DIRECTORS REMUNERATION WAS MADE BY AO IN A.Y. 2006-07 AND AGA INST WHICH ASSESSEE HAD PREFERRED APPEAL BEFORE TRIBUNAL. THE CO-ORDINATE BENCH OF TRIBUNAL, WHILE DECIDING THE ISSUE IN ITA NO. 2405/ AHD/2009 HAD REMITTED THE ISSUE TO THE FILE OF AO WITH CERTAIN DIRECTIONS CONTAINED THEREIN. WE ALSO FIND THAT ON THE ISSUE OF PENALTY ON THE ADDIT ION MADE ON ACCOUNT OF DIRECTORS REMUNERATION IN A.Y. 2005-06, THE ISSUE WAS REMITTED TO THE FILE OF AO BY THE CO-ORDINATE BENCH OF TRIBUNAL. SINCE THE FACTS OF THE CASE IN THE YEAR UNDER APPEAL ARE IDENTICAL TO THAT OF A.Y. 2005-06 AND SINCE THE MATTER WITH RESPECT TO QUANTUM ADDITION FOR THE ASS ESSMENT YEAR UNDER CONSIDERATION IS BEFORE AO, WE ARE OF THE VIEW THAT THE ISSUE OF PENALTY SHOULD ALSO BE REMITTED BEFORE AO TO DECIDE IT AFRE SH. WE THEREFORE IN THE INTEREST OF JUSTICE RESTORE THE PENALTY MATTER TO A O AND DIRECT HIM TO DECIDE THE SAME IN ACCORDANCE WITH LAW INCLUDING THE OUTCO ME OF THE QUANTUM PROCEEDING AND AFTER PROVIDING REASONABLE OPPORTUNI TY OF HEARING TO THE ASSESSEE. IN THE RESULT, THIS GROUND OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. I.T.A NO. 2401/AHD/2011 A.Y. 2006-07 PAGE NO MAMTA SILK MILLS PVT LTD VS. ITO 4 6. THUS, THE APPEAL OF ASSESSEE IS ALLOWED FOR STAT ISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE SD/- SD/- (SHAILENDRA KR. YADAV) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 13/03/2015 AK / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,