THE WESTERN INDIA OIL DISTRIBUTING CO. LTD, MUMBAI V. ITO 7(3)(3), MUMBAI

ITA 2602/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84584 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 18-12-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 05-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PRIYANKA J MANE
• Keywords: Non-deduction of tax

Judgement Text

, G GG G IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL G GG G BENCH, BENCH, BENCH, BENCH, MUMBAI MUMBAI MUMBAI MUMBAI , . . , !' !' !' !' BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM & & & & SHRI SHRI SHRI SHRI . D. D.D. D.K KK KARUNAKARA ARUNAKARA ARUNAKARA ARUNAKARA RAO RAO RAO RAO , ,, , AM AMAM AM , , , , ./ I.T.A. NO. I.T.A. NO. I.T.A. NO. I.T.A. NO.2602 2602 2602 2602/MUM/201 /MUM/201 /MUM/201 /MUM/2011 11 1 ( # # # # $ $ $ $ / ASSESSMENT YEAR : 2005-06) M/S. THE WESTERN INDIA OIL DISTRIBUTION CO. LTD. PETROLEUM INSTALLATION, ANTOP HILL ROAD, P.O. WADALA, MUMBAI 400037 # # # # / VS. INCOME TAX OFFICER, 7(3)(3) AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020 '% ./ & ./ PAN/GIR NO. : AAACT 0057 D ( %' / APPELLANT APPELLANT APPELLANT APPELLANT) .. ( ()%' / RESPONDENT RESPONDENT RESPONDENT RESPONDENT) %' %' %' %' * * * * / APPELLANT BY : MS. PRIYANKA J. MANE ()%' ()%' ()%' ()%' + ++ + * * * * /RESPONDENT BY : SHRI. VIVEK BATRA(DR) # # # # + ++ + , , , , / DT. OF HEARING : 18 TH DECEMBER 2014 -.$ -.$ -.$ -.$ + ++ + , , , , / DT.OFPRONOUNCEMENT: 31 ST DECEMBER 2014 !/ / O R D E R PER : , . . / VIJAY PAL RAO, JM THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 23.11.2010 OF THE COMMISSIONER OF INCOME TAX (APPEALS) ARISING FROM PENALTY ORDER PASSED U/S.271(1)(C) OF THE INCOME TAX ACT FOR THE ASSESS MENT YEAR 2005-06. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN THIS APPEAL; 1.ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LD. COMMISSIONER OF INCOME TAX(A) ERRED IN CONFIRMING THE LEVY OF PENAL TY U/S.271(1)(C) @ 100% ON AMOUNT OF TAX SOUGHT TO BE EVADED ON THE INCOME OF RS.4,88,23 2/- 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LD. COMMISSIONER OF INCOME TAX (A) FAILED TO APPRECIATE THE FACT THAT T HE AMOUNT OF RENT OF RS.4,88,232/- WAS ALREADY ADDED BACK U/S.40(A) OF I.T. ACT IN THE RETURNED INCOME. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LD. COMMISSIONER OF INCOME TAX (A) ERRED IN OBSERVING THAT THE CLAIM OF RENT PAYABLE IS BASED ON INACCURATE PARTICULARS OF INCOME AND FAILED TO APPRECIATE THE FACT THAT THE ENTIRE ISSUE OF THE ITA NO.2602/M/11. . 2 PAYMENT OF RENT IS A SUBJECT MATTER OF LITIGATION K NOWN TO THE DEPARTMENT FOR NUMBER OF YEARS. 4. THE APPELLANT RESERVES ITS RIGHT TO ADD, AMEND A LTER OR DELETE ANY OF THE GROUNDS OF APPEAL. 3. THE ASSESSMENT WAS COMPLETED ON 28.12.2007 U/S.1 43(3) OF THE I.T. ACT, WHEREBY THE AO DISALLOWED AN AMOUNT OF RS.12,71,062 /- ON ACCOUNT OF RENT CLAIMED AS PAYABLE BY THE ASSESSEE FOR THE PREMISES OF BPT OCCUPIED BY THE ASSESSEE. THE DISALLOWANCE WAS MADE BY THE AO ON ACCOUNT OF DISPU TE BETWEEN THE PARTIES WAS PENDING BEFORE THE HONBLE HIGH COURT OF BOMBAY. TH OUGH THE ASSESSEE HAS BEEN CLAIMED THE SAME AS EXPENSES ON THE BASIS OF MERCAN TILE ACCOUNTING SYSTEM. THE AO IN THE ASSESSMENT HELD AS THE LIABILITY IS UNASCERTAIN ED. THE PENALTY WAS INITIATED U/S.271(1) FOR FURNISHING INACCURATE PARTICULARS. THE AO LEVIED A PENALTY OF RS.4,66,344/- BEING 100% OF THE TAX TO BE EVADED BY THE ASSESSEE IN RESPECT OF THE CLAIM OF RENT OF RS.12,71,062/- WHICH WAS DISALLOWE D. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE CIT(A). THE CIT(A) HAS DELETED THE PENALTY WITH RESPECT TO LEASE RENT OF RS.16,82,478/- AS A LIABILITY OF PAYM ENT OF RENT WAS FINALLY DECIDED BY THE HONBLE SUPREME COURT AND DIRECTING THE ASSESSEE C OMPUTING THE RENT PAYABLE. HOWEVER, THE CIT(A) HAS CONFIRMED PENALTY IN RESPEC T OF RENT OF RS.4,88,232/- PAYABLE TO INDIAN RAILWAYS. THIS AMOUNT WAS DISALLOWED ON A CCOUNT OF NON-DEDUCTION OF TDS U/S.40(A) AND NOT ON THE GROUND OF DISPUTED LIABILI TY. 4. BEFORE US, THE LD. AR OF THE ASSESSEE HAS POINTE D OUT THAT IN THE COMPUTATION OF THE INCOME THE ASSESSEE ITSELF AS DISALLOWED THIS S UM OF RS.4,88,232/- U/S.40(A) AND THE SAME DISALLOWANCE WAS TAKEN BY THE AO WHILE FRA MING THE ASSESSMENT. THEREFORE, THERE IS NO SEPARATE DISALLOWANCE BY THE AO. IN RES PECT OF THE SAID AMOUNT OF RENT PAYABLE TO NORTHERN RAILWAY U/S.40(A). SHE HAS REFE RRED THE RETURN OF INCOME AS WELL AS COMPUTATION OF INCOME AT PAGE 1 & 2 OF THE PAPER BOOK. THUS, THE LD. AR HAS SUBMITTED THAT THERE IS NO CONCEALMENT OR INACCURAT E PARTICULARS OF INCOME ON PART OF THE ASSESSEE WHEN THE ASSESSEE ITSELF HAS DISALLOWE D THE AMOUNT IN QUESTION U/S.40(A). ON THE OTHER HAND, LD. DR HAS NOT DISPUTED THIS FAC T POINTED OUT BY THE ASSESSEE THAT ITA NO.2602/M/11. . 3 THE RENT OF RS.4,88,232/- WAS DISALLOWED BY THE ASS ESSEE ITSELF IN THE COMPUTATION OF INCOME. 5. HAVING CONSIDERED RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD WE FIND THAT THERE IS NO ADDITIONAL DISALLOWANCE MADE BY THE AO SO FAR AS RENT OF RS.4,88,232/- PAYABLE TO NORTHERN RAILWAY. THE AO H AS TAKEN THE DISALLOWANCE WHICH WAS ALREADY MADE BY THE ASSESSEE IN ITS COMPU TATION OF INCOME. THE CONFUSION APPEARS TO HAVE IN THE MIND OF THE AO AT THE TIME I NITIATING THE PENALTY ON ACCOUNT OF COMPUTATION OF INCOME IN THE ASSESSMENT BY TAKING T HE NET PROFIT FROM THE PROFIT AND LOSS ACCOUNT OF THE ASSESSEE AND THEREAFTER MADE CERTAIN DISALLOWANCES INCLUDING THOSE OF WHICH ASSESSEE ITSELF MADE IN THE COMPUTATION. THE DISALLOWANCE U/S.40(A) ON ACCOUNT OF NON-DEDUCTION OF TAX IN RESPECT OF RENT PAYABLE TO NORTHERN INDIA OF RS.4,88,232/- WAS VERY MUCH MADE BY THE ASSESSEE IN THE COMPUTATI ON OF INCOME, THEREFORE, THERE IS NO QUESTION OF FURNISHING WRONG PARTICULARS OF INCO ME OR CONCEALMENT OF INCOME. THEREFORE, THE ACTION OF THE AO INITIATING THE PENA LTY AGAINST THE DISALLOWANCE OF RENT PAYABLE TO NORTHERN RAILWAY OF RS.4,88,232/- LACKS ANY SINCERITY TOWARDS ASSESSMENT PROCEEDINGS. WHEN THIS AMOUNT WAS ALREADY DISALLOWE D BY THE ASSESSEE ITSELF THEN INITIATING THE PROCEEDINGS U/S.271(1)(C) IS HIGHLY IMPROPER AND CONTRARY TO THE PROVISIONS OF LAW. ACCORDINGLY, WE DELETE THE PENALTY LEVIED U /S.271(1)(C) WHICH WAS CONFIRMED BY THE CIT(A). 6. IN THE RESULT, THE APPEAL OF ASSESSES IS ALLOWED . ORDER PRONOUNCED ON THIS 31 ST DAY OF DECEMBER, 2014 . SD/- SD/- ( . ) !' (D. KARUNAKARA RAO) ACCOUNTANT MEMBER ( ) !' (VIJAY PAL RAO ) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 31 ST DECEMBER 2014 A.K.PATEL ITA NO.2602/M/11. . 4 COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI