ITO 25(3)(2), MUMBAI V. JITENDRA P. PATEL, MUMBAI

ITA 2626/MUM/2011

• Counselvise Citation: 262619914 RSA 2011
• Duration Of Justice: 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Assessment Year: 1999-2000
• Appeal Filed On: 06-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JI TENDRA YADAV
• Assessee Lawyers: RAJESH SHAH
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, J, MUMBAI BEFORE SHRI R.S. SYAL (A.M.) AND SHRI D.K.AGARWAL ( JM) ITA NO.2626/MUM/2011 (ASSESSMENT YEAR: 2005-06) INCOME TAX OFFICER 25(3)(2), C-11, ROOM NO.306, PRATYAKSHA KAR BHAVAN, BANDRA-KURLA COMPLEX, BANDRA (EAST), MUMBAI-400051. SHRI JITENDRA P.PATEL, (PROP.OF M/S. VAQ SYSTEM), FLAT NO.1404, VASANT ARADHANA APTS., NEAR PANCHSHEEL HEIGHTS, MAHAVIR NAGAR, KANDIVALI (W), MUMBAI-400067. PAN: AAAPP3558Q. APPELLANT V/S RESPONDENT DATE OF HEARING : 31.1.2012 DATE OF PRONOUNCEMENT : 8.2.2012 APPELLANT BY : SHRI JITENDRA YADAV RESPONDENT BY : SHRI RAJESH SHAH O R D E R PER D.K.AGARWAL (JM) THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 19.1.2011 PASSED BY THE L D. CIT(A) FOR THE ASSESSMENT YEAR 2005-06. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL DERIVES INCOME FROM TRADI NG IN ENGINEERING GOODS AND SS MACHINERY, FILED RETUR N DECLARING TOTAL INCOME AT RS.1,23,903/-. HOWEVER, THE ITA NO.2626/MUM/2011 (ASSESSMENT YEAR: 2005-06) 2 ASSESSMENT WAS COMPLETED AT AN INCOME OF RS.16,06,580/- VIDE ORDER DATED 27.12.2007 PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961(IN SHORT TH E ACT). THE ADDITIONS MADE BY THE AO INCLUDED RS.12,74,727/- U/S 41(1) OF THE ACT TOWARDS CESSATI ON OF LIABILITY AND OUTSTANDING COMMISSION OF RS.1,10,945/- TREATED AS CEASED LIABILITY U/S 41(1) OF THE ACT AND ADHOC DISALLOWANCE OF EXPENSES TO THE EXTENT OF RS.97,005/-. ON APPEAL, THE LD. CIT(A) RESTRICTED THE ADDITION IN RESPECT OF SUNDRY CRE DITORS TO RS.11,50,734/- AS AGAINST RS.12,74,727/- MADE BY THE AO AND ALSO CONFIRMED THE ADDITION OF RS.1,10,945/- IN RESPECT OF OUTSTANDING COMMISSION. ON FURTHER APPEAL BEFORE THE TRIBUNAL, THE TRIBUNAL IN ITA NO.1020/MUM/2009 FOR THE ASSESSMENT YEAR 2005- 06 DATED 7.4.2010, HOWEVER, SET ASIDE BOTH THE ISSUES TO THE FILE OF THE AO. WHILE COMPLETING TH E ASSESSMENT THE AO HAS INITIATED THE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT AND ACCORDIN GLY A SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE AS TO WHY THE PENALTY U/S 271(1)(C) SHOULD NOT BE IMPOSED . IN RESPONSE, IT WAS INTERALIA SUBMITTED BY THE ITA NO.2626/MUM/2011 (ASSESSMENT YEAR: 2005-06) 3 ASSESSEE THAT THERE IS NO CONCEALMENT ON THE PART O F THE ASSESSEE, THEREFORE, THE PENALTY PROCEEDINGS INITIATED BE DROPPED. HOWEVER, THE AO DID NOT ACCE PT THE ASSESSEES EXPLANATION AND HELD THAT IT IS A FIT CASE WHERE THE PENALTY U/S 271(1)(C) READ WITH EXPLANATION (1) SHOULD BE LEVIED AND ACCORDINGLY HE IMPOSED MINIMUM PENALTY OF RS.3,68,504/- VIDE ORDER DATED 30.3.2010 PASSED U/S 271(1)(C) OF THE ACT. ON APPEAL, BEFORE THE LD. CIT(A) THE ASSESSEE SUBMITTED THAT THE TRIBUNAL HAS SET ASIDE THE ISS UE OF ADDITION OF SUNDRY CREDITORS AND OUTSTANDING COMMISSION U/S 41(1) TO THE FILE OF THE AO FOR FRES H DECISION, THEREFORE, THE PENALTY IMPOSED BY THE AO BE CANCELLED. THE LD.CIT(A) IN VIEW OF THE ORDER OF T HE TRIBUNAL DIRECTED THE AO TO CANCEL THE PENALTY IMPOSED SUBJECT TO THE CONDITION THAT THE AO SHALL BE FREE TO CONSIDER THE LEVY OF PENALTY AS AND WHEN HE DECIDES THE ISSUE SET ASIDE TO HIM. HE FURTHER HEL D THAT THERE CAN NOT BE LEVY OF CONCEALMENT OF PENALT Y IN RESPECT OF DISALLOWANCE OF 10% OF THE EXPENSES AND ACCORDINGLY ALLOWED THE APPEAL. ITA NO.2626/MUM/2011 (ASSESSMENT YEAR: 2005-06) 4 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE US CHALLENGING IN ALL THE GROUNDS THE CANCELLATION OF PENALTY IMPOSED BY THE AO. 4. AT THE TIME OF HEARING, THE LD. DR SUBMITS THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE L D. CIT(A) WAS NOT JUSTIFIED IN CANCELLING THE PENALTY IMPOSED BY THE AO IN VIEW OF THE DECISION OF THE HONBLE MADRAS HIGH CIT V/S CHINNIKRISHNA CHETTY (K.R.) (1989) 177 ITR 145 (MAD) AND CIT V/S HIND MERCANTILE CORPORATION (1989) 177 ITR 149 (MAD). 5. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE WHILE RELYING ON THE ORDER OF THE LD. CIT( A), ALSO PLACED RELIANCE ON THE DECISION OF THE HONBL E DELHI HIGH COURT IN CIT V/S CONTINENTAL AIR EXPRE SS (P.) LTD. (2009) 176 TAXMAN 41 (DEL). 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABL E ON RECORD. WE FIND THAT THE FACTS ARE NOT IN DISPUTE INASMUCH AS IT IS ALSO NOT IN DISPUTE THAT THE TR IBUNAL IN THE QUANTUM PROCEEDINGS HAS SET ASIDE THE ADDITI ON ITA NO.2626/MUM/2011 (ASSESSMENT YEAR: 2005-06) 5 OF SUNDRY CREDITORS AND OUTSTANDING COMMISSION MADE U/S 41(1) TO THE AO FOR FRESH DECISION. TH E LD. CIT(A) IN THE LIGHT OF THE ORDER OF THE TRIBUN AL DIRECTED THE AO TO CANCEL THE PENALTY IMPOSED SUBJ ECT TO THE CONDITION THAT THE AO SHALL BE FREE TO CONSI DER THE LEVY OF PENALTY AS AND WHEN HE DECIDES THE IS SUE SET ASIDE TO HIM AND AGAINST THE SAID DIRECTION T HE ASSESSEE IS NOT IN APPEAL BEFORE US. 7. IN CIT V/S CONTINENTAL AIR EXPRESS (P.) LTD. (SUPRA) IT HAS BEEN HELD (PARA 3, PAGE 42): . .THAT SINCE THE QUANTUM APPEAL WAS ALLOWED ON THIS GROUND AND THE MATTER HAS BEEN REMANDED TO THE AO, THE PENALTY PROCEEDINGS ARISING OUT OF THE VERY SAME ORDERS CANNOT SURVIVE ANY FURTHER. IT HAS ALSO BEEN CONFIRMED BY THE LEARNED COUNSEL FOR THE APPELLANT THAT THE REVENUE HAS NOT PREFERRED ANY APPEAL AGAINST THE SAID ORDER PASSED BY THE TRIBUNAL ON 5TH APRIL, 2007 IN ITA NO. 1397/DEL/2005. 8. IN THE ABSENCES OF ANY MATERIAL PLACED ON RECOR D BY THE LD. COUNSEL FOR THE ASSESSEE AS TO WHETHER T HE REVENUE HAS PREFERRED ANY APPEAL AGAINST THE SAID ORDER OF THE TRIBUNAL IN QUANTUM PROCEEDINGS SET ASIDE TO THE FILE OF THE AO, THE DECISION RELIED ON BY ITA NO.2626/MUM/2011 (ASSESSMENT YEAR: 2005-06) 6 THE LD. COUNSEL FOR THE ASSESSEE IS DISTINGUISHABL E AND NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE . 9. THAT BEING SO, WE DECLINE TO INTERFERE WITH THE ORDER PASSED BY THE LD. CIT(A) IN DIRECTING THE AO TO CANCEL THE PENALTY IMPOSED SUBJECT TO THE CONDITION THAT THE AO SHALL BE FREE TO CONSIDER THE LEVY OF PENALTY AS AND WHEN HE DECIDES THE ISSUE SET ASID E TO HIM WHICH ARE IN THE LINE WITH THE DECISION OF HONBLE MADRAS HIGH COURT IN CHINNIKRISHNA CHETTY (K.R.)(SUPRA) AND IN HIND MERCANTILE CORPORATION (SUPRA) RELIED ON BY THE REVENUE. THE GROUNDS TAKEN BY THE REVENUE ARE, THEREFORE, REJECTED. 10. IN THE RESULT, REVENUES APPEAL STANDS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 8TH FEB., 201 2. (R.S. SYAL) (D.K.AGARWAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, 8TH FEBRUARY, 2012 SRL: ITA NO.2626/MUM/2011 (ASSESSMENT YEAR: 2005-06) 7 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH 6. GUARD FILE. BY ORDER TRUE COPY ASSTT. REGISTRAR, ITAT, MUMBAI