M/S VISHWAS INVESTMENT AN TRADING CO. PVT. LTD., MUMBAI V. DCIT, CIRCLE - 5(3), MUMBAI

ITA 2588/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100770 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 03-03-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 04-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANDHIR KUMAR GUPTA
• Assessee Lawyers: S UNIL HIRWAT
• Keywords: Earning of tax free income; Wrong claim
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI , , , BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI N.K . BILLAIYA, A CCOUNTANT M EMBER / I .T.A. NO . 2588/MUM/2013 ( / ASSESSMENT YEAR : 2009 - 10 M/S. VISHWAS INVESTMENT & TRADING CO. PVT. LTD., ROOM NO. 10, 2 ND FLOOR, KITAB MAHAL, 192, DR. D.N. ROAD, FORT, MUMBAI - 400 001 / VS. THE DCIT, CIRCLE - 5(3), AAYAKAR BHAVAN, MUMBAI - 400 020 ./ ./ PAN/GIR NO. : AAACV 1612L ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI SUNIL HIRWAT / RESPONDENT BY : SHRI RANDHIR KUMAR GUPTA / DATE OF HEARING : 05 . 0 8 .2015 / DATE OF PRONOUNCEMENT : 19 .0 8 .2015 / O R D E R PER N.K. BILLAIYA, AM: THIS IS AN APPEAL BY THE ASSESSEE IS PREFERRED AGAINST THE ORDER OF THE LD. CIT(A) - 9 , MUMBAI DT. 7 .0 2 .201 3 PERTAINING TO ASSESSMENT YEAR 200 9 - 1 0. 2. THE SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE LD. CIT(A) ERRED IN CONFIRMING THE LEVY OF PENALTY MADE U/S. 271(1)(C) OF THE ACT ON THE DISALLOWANCE OF THE EXPENDITURE U/S. 14A OF THE ACT. ITA. NO . 2588/M/2013 2 3. THE ASSESSEE IS IN THE BUSINESS OF LEASING, INVESTMENT, TRADING, FINANCING ACTIVITIES AND AGRICULTURAL OPERATIONS. RETURN FOR THE YEAR UNDER CONSIDERATION WAS SELECTED FOR SCRUTINY ASSESSMENT UNDER CASS . DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS MADE INVESTMENT TO THE TUNE OF RS. 23.81 CRORES ON WHICH THE ASSESSEE HAS EARNED DIVIDEND OF RS. 19.90 LAKHS. THE AO FOUND THAT THE ASSESSEE HAS ALSO EARNED AGRICULTURAL INCOME OF RS. 10,129/ - . THE ASSESSEE WAS ASKED TO FILE COMPUTATION OF DISALLOWANCE U/S. 14A R.W. RULE 8D. THE ASSESSEE DID NOT OBJECT TO THE DISALLOWANCE U/S. 14A R.W. RULE 8D. HOWEVER, THE C OMPUTATION OF DISALLOWANCE SUBMITTED BY THE ASSESSEE WAS NOT FOUND CORRECT. THE AO PROCEEDED TO COMPUTE THE DISALLOWANCE U/S. 14A R.W. RULE 8D. DISALLOWANCE SO COMPUTED WAS AT RS. 2,15,955/ - . 3.1. THE AO INITIATED PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND CONCEALING THE INCOME. A SHOW CAUSE NOTICE WAS ISSUED AND SERVED UPON THE ASSESSEE. IN THE PENAL PROCEEDINGS, THE ASSESSEE STRONGLY SUPPORTED THAT THE DISALLOWANCE HAVE BEEN MADE AS PER THE COMP UTATION OF THE AO BECAUSE THE COMPUTATION MADE BY THE ASSESSEE WAS NOT ACCEPTED BY THE AO THEREFORE IT IS NOT A FIT CASE FOR THE LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT. STRONG RELIANCE WAS PLACED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS RELIANCE PETROPRODUCTS PVT. LTD. 322 ITR 158. THE AO DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND LEVIED PENALTY U/S. 271(1)(C) OF THE ACT AT RS. 66,730/ - . 4. AGGRIEVED BY THIS, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) BUT WITHOUT ANY SUCCESS. ITA. NO . 2588/M/2013 3 5. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE REITERATED THAT THE DISALLOWANCE MADE U/S. 14A CANNOT BE THE BASIS FOR THE LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT. 6. THE LD. DEPARTMENTAL REPRESENTATIVE SIMPLY RELIED UPON THE ORDE RS OF THE REVENUE AUTHORITIES. 7. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORDERS OF THE AUTHORITIES BELOW QUA THE FACTS IN ISSUE. THERE IS NO DISPUTE THAT THE QUANTIFICATION OF DISALLOWANCE U/S. 14A IS A DEBATABLE ISSUE. DIFFEREN T TRIBUNALS AN D HONBLE HIGH COURTS HAVE TAKEN DIFFERENT VIEWS IN THIS RESPECT. FURTHER, THE EXPENSES CLAIMED BY THE ASSESSEE WERE PROPERLY DEBITED IN THE BOOKS OF ACCOUNT AND THEREFORE THIS IS NOT A CASE FOR FALSE CLAIM OF EXPENDITURE AT THE MOST IT CAN BE A CASE OF W RONG CLAIM OF EXPENDITURE NOT PROPERLY APPROPRIATED BETWEEN THE TAXABLE AND THE EXEMPT INCOME. IN OUR CONSIDERED OPINION, NO PENALTY U/S. 271(1)(C) BE SUSTAINED ON SUCH DISALLOWANCE. THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF RELIAN CE PETROPRODUCTS (SUPRA) SQUARELY APPLY . WE, THEREFORE, SET ASIDE THE ORDER OF THE FIRST APPELLATE AUTHORITY AND DIRECT THE AO TO DELETE THE PENALTY LEVIED U/S. 271(1)(C) OF THE ACT. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. OR DER PRONOUNCED IN THE OPEN COURT ON 19 TH AUGUST , 2015 SD/ - SD/ - ( VIJAY PAL RAO ) (N.K. BILLAIYA) /JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 19 TH AUGUST , 2015 . . ./ RJ , SR. PS ITA. NO . 2588/M/2013 4 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI