Lanxess ABS Limited, Baroda V. The ACIT., Circle-1(1), Baroda

ITA 2409/AHD/2008

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 9981 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 31-08-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 25-06-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K M MAHESH
• Assessee Lawyers: DIVYAKANT PARIKH
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'C' BEFORE SHRI BHAVNESH SAINI,JM & SHRI A N PAHUJA,AM ITA NO.2409/AHD/2008 (ASSESSMENT YEAR:-2002-03) LANXESS ABS LTD.,6 TH FLOOR,ABS TOWER,OLD PADRA ROAD,VADODRA [PAN:AAACB6164H] V/S ASSISTANT COMMISSIONER OF INCOME-TAX OFFICER, CIRCLE- 1(2), BARODA [APPELLANT] [RESPONDENT] REVENUE BY :- SHRI K M MAHESH, DR ASSESSEE BY:- SHRI DIVYAKANT PARIKH, AR O R D E R A N PAHUJA: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST A N ORDER DATED 19-5-2008 OF THE LD. CIT(APPEALS)-I, BA RODA, UPHOLDING A PENALTY OF RS.1,33,88,000/-LEVIED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE INCOME TAX ACT, 1961[HEREINAFTER REFERRED TO AS THE ACT] 2 FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT THE ASSESSEE, ENGAGED IN THE BUSINESS OF TRADING IN POLYCARBONATE S & WIND POWER GENERATION, FILED RETURN DECLARING INCOME OF RS.14, 33,10,350/- ON 31.10.2002. SUBSEQUENTLY, THE ASSESSMENT WAS COMP LETED ON 31- 03-2005 U/S. 143(3) OF THE ACT, DETERMINING INCOME OF RS.17,52,33,342/-. INTER ALIA, AN AMOUNT OF RS. 3,0 0,00,000/- WAS DISALLOWED ON ACCOUNT OF WRITE OFF OF ICDS, RELYI NG ON THE DECISION OF HONBLE APEX COURT IN HASIMARA INDUSTRIES LTD. V S. CIT,231 ITR 842(SC). THE SAID AMOUNT HAD BEEN ADVANCED TO TWO P ARTIES IN THE PERIOD RELEVANT TO THE AY 1996-97.SIMULTANEOUSLY, P ENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT WERE ALSO INI TIATED. ON APPEAL, THE LD. CIT(A) UPHELD THE DISALLOWANCE, THE AMOUNT BEING LOSS OF INVESTMENT. ON RECEIPT OF ORDER OF THE LD. CIT(A), IN RESPONSE TO A SHOWCAUSE NOTICE DATED 5-6-2007, THE ASSESSEE IN HIS WRITTEN SUBMISSIONS DATED 15-06-2007 WHILE RELYING UPON A N UMBER OF DECISION PLEADED THAT MERE ADDITION TO RETURNED IN COME WOULD NOT ITA NO.2409/AHD/2008 2 AMOUNT TO CONCEALMENT AND REQUESTED TO DROP THE PEN ALTY PROCEEDINGS. HOWEVER, THE AO DID NOT ACCEPT THESE SUBMISSIONS OF THE ASSESSEE AND IMPOSED A PENALTY OF RS. 1,33,88, 000/- @ 125% OF THE TAX SOUGHT TO BE EVADED ON THE AMOUNT OF RS. 3 CRORES, INVOKING EXPLANATION 1 TO SEC. 271(1)(C) OF THE ACT . 3. ON APPEAL, THE LD. CIT(A) CONFIRMED THE LEVY O F PENALTY. 4. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID ORDER OF THE LD. CIT(A).AT THE OUTSET, BOTH THE PAR TIES AGREED THAT THE ITAT HAVING ALLOWED DEDUCTION FOR THE AFORESAID AMOUNT VIDE THEIR ORDER DATED 30.4.2010 IN ITA NO.908/AHD./2007 FOR THE AY 2002-03, PENALTY DOES NOT SURVIVE AT THIS STAGE. 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THR OUGH THE RELEVANT ORDER OF THE ITAT IN QUANTUM APPEAL. WE FIND THAT THE ITAT IN THEIR ORDER DATED 30-4-2010 IN QUANTUM APPEAL IN THE ASS ESSEES OWN CASE IN ITA NO.908/AHD/2007 WHILE RELYING UPON DEC ISION IN THE CASE OF GOETZE (INDIA ) LTD. VS. DCIT,119 TTJ(DEL.) 351, ALLOWED THE CLAIM OF THE ASSESSEE U/S 36(1)(VII) READ WITH SEC. 36(2) OF THE ACT. 5.1 HONBLE SUPREME COURT IN THE CASE OF K. C.BUILDERS VS. ACIT,265 ITR 562(SC) HELD THAT ORDINARILY, PENALTY CANNOT STAND IF THE ASSESSMENT ITSELF IS SET ASIDE. WHERE AN ORDER OF ASSESSMENT OR REASSESSMENT ON THE BASIS OF WHICH PENALTY HAS BEEN LEVIED ON THE ASSESSEE, HAS ITSELF BEEN FINALLY SET ASIDE OR CANCELLED BY THE TRIBUNAL OR OTHERWISE, THE PENALTY CANNOT STAND BY ITSELF AND THE SAME IS LIABLE TO BE CANCELLED. HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. R.DALMIA,(1992)107 TAXATION 107, HELD THAT NO PENAL TY SURVIVES AFTER DELETION OF ADDITIONS, FORMING THE BASIS FOR THE LEVY OF PENALT Y. SIMILAR VIEW WAS TAKEN IN ADDL. COMMISSIONER OF INCOME-TAX V. BADRI KASHI PRA SAD (1993] 200 ITR 206 (ALL) AND PRABHAT OIL TRADERS V. INCOME-TAX OFFICER (NO. 3) (1996) 218 ITR (A.T.) 39 (ITAT, AHMEDABAD),CITY DRY FISH COMPANY V. COMMISSI ONER OF INCOME-TAX ITA NO.2409/AHD/2008 3 (1999) 238 ITR 63 (A.P.) , CIT VS. MOHD. BUX SOKAT ALI (2004) 265 ITR 326 (RAJ)AND ACIT VS. VIP INDUSTRIES (2009) 122 TTJ 289 (MUM). 5.2 SINCE THE VERY BASIS UPON WHICH THE PENALTY HAS BEEN IMPOSED DOES NOT EXIST IN VIEW OF AFORESAID ORDER DATED 30-04-2010 OF THE ITAT IN QUANTUM APPEAL IN ITA NO.908/AHD/2007 , WE ARE OF THE OPIN ION THAT PENALTY LEVIED IN RELATION TO THE AFORESAID DISALLOWANCE DOES NOT SURVIVE AND THE IMPUGNED ORDER IS , THEREFORE, SET ASIDE. WITH THESE OBSERVA TIONS, GROUNDS RAISED IN THE APPEAL ARE ALLOWED. 6. NO ADDITIONAL GROUND HAVING BEEN RAISED BEF ORE US IN TERMS OF THE RESIDUARY GROUND, ACCORDINGLY, THIS GROUND IS DISMISSED. 7. IN THE RESULT, APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE COURT TODAY ON 31 -8 -2010 SD/- SD/- (BHAVNESH SAINI) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATE : 31 -08-2010 COPY OF THE ORDER FORWARDED TO: 1. LANXESS ABS LTD.,6 TH FLOOR,ABS TOWER,OLD PADRA ROAD,VADODRA 2. ASSISTANT COMMISSIONER OF INCOME-TAX OFFICER, CI RCLE-1(2), BARODA 3. CIT CONCERNED 4. CIT(A)-I, BARODA 5. DR, BENCH-C, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD