MTZ POLYFILMS LTD., MUMBAI V. D.C.I.T.-9(2), MUMBAI

ITA 2590/MUM/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88658 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 17-03-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 17-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JEETENDRA KUMAR
• Keywords: Capital asset
• Section: 43B

Judgement Text

, B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , , . . , . BEFORE SHRI VIJAY PAL RAO , JM AND SHRI N.K. BILLAIYA, AM ./ I.T.A. NO. 2590 /MUM/2012 ( / ASSESSMENT YEAR : 200 5 - 06 ) M/S. MTZ POLYFILMS LTD. NEW INDIA CENTRE, 5 TH FLOOR, 17, CO - OPERAGE ROAD, M UMBAI - 400 039 . / VS. DCIT - 9(2) AAYAKAR BHAVAN MUMBAI. ./ ./ PAN/GIR NO. : AAACT 0193 N ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : NONE / RESPONDENT BY : SHRI JEETENDRA KUMAR - DR / DATE OF H EARING 17/03/2015 / DATE OF PRONOUNCEMENT 26/03/2015 / O R D E R PER VIJAY PAL RAO, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 16.02.2012 OF CIT(A) ARISING FROM PENALTY ORDER PASSED U/S.271 FOR THE ASSESSMENT YEAR 2 005 - 06. THE ASSESSEE HAS RAISED THE FOLLOWING EFFECTIVE GROUNDS IN THIS APPEAL : - 1. THE CIT(A) ERRED IN PARTLY CONFIRMING THE ORDER PASSED BY THE ASSESSING OFFICER LEVYING PENALTY U/S. 271(1)(C) OF THE I.T. ACT. YOUR APPELLANT SUBMITS THAT THE ORDER PA SSED BY THE CIT(A) IS ULTRA VIRES, BAD IN LAW AND CONTRARY TO THE PROVISION OF THE ACT AND DESERVE TO BE VACATED. 2 ITA NO. 2590/M/12 MTZ POLYFILMS LTD. 2.(A) THE CIT(A) ERRED IN CONFIRMING LEVY OF PENALTY U/S. 271(1)(C) ON DISALLOWANCE OF RS.1,44,00.000/ - U/S. 43B OF THE I.T. ACT. YOUR APPEL LANT SUBMITS THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, IT HAS NEITHER CONCEALED ANY INCOME NOT FURNISHED ANY INACCURATE PARTICULARS OF SUCH INCOME WITH REFERENCE TO THE SAID DISALLOWANCE SO AS TO JUSTIFY LEVY OF PENALTY. (B) THE CIT(A) ERRED IN CO NFIRMING THE INCOME SOUGHT TO BE EVADED AT RS.1,44,00,000/ - AS AGAINST THE ACTUAL FIGURE OF RS.1,39,86,215/ - . 2. NONE HAS APPEARED ON BEHALF OF THE ASSESSEE WHEN THIS APPEAL WAS CALLED FOR HEARING. IT TRANSPIRES FROM RECORD THAT DESPITE REPEATED NOTICE S ISSUED THROUGH RPAD AND SERVICE AS PER ACKNOWLEDGEMENT ON RECORD THE ASSESSEE HAS NOT APPEARED EVEN ON THE LAST DATE OF HEARING. ACCORDINGLY, WE PROPOSE TO HEAR AND DISPOSE OFF THIS APPEAL EX - PARTE. 3. WE HAVE HEARD THE LD. DR AND CONSIDERED THE RELEVAN T RECORD. THE ASSESSING OFFICER HAS LEVIED THE PENALTY IN RESPECT OF TWO ADDITIONS MADE ON ACCOUNT OF FINANCE CHARGES OF RS.79,29,330/ - U/S. 36(1)(III) A S THE CAPITAL ASSET AMOUNTING TO RS.34.56 CRORES WAS NOT PUT TO USE DURING THE YEAR. THE SECOND DISALLO WANCE OF RS.1,44,00,000/ - WAS MADE BY THE ASSESSING OFFICER U/S.43B BECAUSE THE ASSESSEE DID NOT PAY THE INTEREST TO THE BANK. THUS, THE ASSESSING OFFICER LEVIED THE PENALTY OF RS.81,70,859/ - BEING 100% OF TAX SOUGHT TO BE EVADED. 3 ITA NO. 2590/M/12 MTZ POLYFILMS LTD. 3.1 ON APPEAL, THE LD. C OMMISSIONER OF INCOME TAX(APPEALS) DELETED THE PENALTY IN RESPECT OF DISALLOWANCE OF FINANCE CHARGES MADE U/S. 36(1)(III) OF THE ACT. HOWEVER, THE PENALTY IN RESPECT OF DISALLOWANCE U/S. 43B HAS BEEN CONFIRMED BY THE CIT(A) VIDE IMPUGNED ORDER. WE FIND THA T THE ASSESSEE HAS EXPLAINED BEFORE THE ASSESSING OFFICER AS WELL AS CIT(A) THAT INTEREST COULD NOT BE PAID TO THE BANK BECAUSE THE ASSESSEE IS A BIFR COMPANY AND WAS HAVING NO FUNDS TO PAY THE INTEREST. FURTHER, THE ASSESSEE HAS ALREADY FILED APPLICATION BEFORE BIFR WHICH IS PENDING DISPOSAL AND THE ORDER. THE ASSESSING OFFICER AS WELL AS CIT(A) HAS NOT FOUND THE EXPLANATION OF THE ASSESSEE AS FALSE OR INCORRECT THAT THE ASSESSEE COMPANY HAD APPROACHED THE BIFR FOR RESTRUCTURING OF THE LOAN. THEREFORE, IN OUR VIEW THE OUTCOME OF THE BIFR WILL HAVE A SIGNIFICANT BEARING ON THE ISSUE OF LEVY OF PENALTY. IN CASE , ANY PART OF THE ABOVE INTEREST LIABILITY OF THE ASSESSEE IS WAIVED OFF, THE SAME MAY BE TREATED AS INCOME BUT SINCE THE ASSESSING OFFICER HAS ALREADY DISALLOWED THE SAID CLAIM OF INTEREST U/S. 43B T HEN THE WAIVER OF THE INTEREST AMOUNT IN SETTLEMENT AS PER BIFR PROCEEDINGS WOULD NOT BE TAXED AGAIN. ACCORDINGLY, IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE INTEREST OF JUSTICE , WE SET ASIDE THE ORDER OF AUTHORITIES BELOW AND 4 ITA NO. 2590/M/12 MTZ POLYFILMS LTD. REMIT THE ISSUE TO THE RECORD OF THE ASSESSING OFFICER TO RECONSIDER THE SAME AS PER OUTCOME OF THE BIFR PROCEEDINGS. 4. APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 26/03/2015. 26/3/2015 SD/ - SD/ - (N.K. BILLAIYA) (VIJAY PAL RAO ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; DATED 26 / 03 /201 5 . . ./ JV , SR. PS / 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