VISHAL M. CHHABRIA, MUMBAI V. ADDL CIT 11(1), MUMBAI

ITA 2762/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8368 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 11-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARJU GARODIA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ITA NO.2762/MUM. /2015 ( ASSESSMENT YEAR: 2009 - 10 ) VISHAL M. CHHABRIA, 301 GRAND CANYON 87, PALI HILL, BANDRA (W), MUMBAI 400 050. PAN AABPC2336C . APPELLANT V/S ACIT 11(1) MUMBAI . RESPONDENT ASSESSEE BY : SHRI. DARSHAN GANDHI REVENUE BY : MS. ARJU GARODIA DATE OF HEARING 16.02.2017 DATE OF ORDER 24.02.2016 O R D E R PER: SHAMIM YAHYA T HIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER OF LEARNED CIT - A DATED 30.04.2011 , AND PE RTAINS TO ASSESSMENT YEAR 2009 - 10. 2. THE GROUNDS OF APPEAL READ AS UNDER; I) THE LD. CIT(A) ERRED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER FOR LEVY OF PENALTY AMOUNTING TO RS.6,58,573/ - U/S 271(L)(C) OF THE INCOME TAX ACT, 1961. VISHAL M. CHHABRIA ITA NO. 2762/MUM. /2015 2 II) THE APPELLANT CRAVES TO ADD FURTHER GROUNDS TO AMEND OR ALTER THE EXISTING GROUNDS OF APPEAL ON OR BEFORE THE DATE OF HEARING. 3. BRIE F FACTS OF THE CASE LEADING TO THE LEVY PENALTY IN THIS CASE ARE AS UNDER; THE APPELLANT, A RESIDENT INDIVIDUAL, IS A DIRECTOR OF M/S. FAIRDEAL MULTIMEDIA PVT. LTD. AND M/S. FAIRDEAL STUDIOS PVT. LTD. HE FURNISHED HIS RETURN OF INCOME FOR A.Y.2009 - 10 ON 26.02.2 010 DISCLOSING TOTAL INCOME OF RS .5,65,43,162/ - , AS NOTED IN THE ASSESSMENT ORDER. THE A.O. COMPLETED THE ASSESSMENT U/S.143(3) ON 24.10.2011 ASSESSING TOTAL INCOME AT RS.5,84,80,710/ - . IN THE SAID ASSESSMENT ORDER DATED 24.10.2011, THE A.O. HAS OBS ERVED THAT THE APPELLANT HAD RECEIVED THE MANAGEMENT BONUS OF RS.19,37,552/ - FROM M/S. FAIRDEAL MULTIMEDIA PVT. LTD. BUT HAD NOT OFFERED THE SAID MANAGEMENT BONUS FOR TAXATION. HE CONFRONTED THE APPELLANT VIDE OFFICE ORDER - SHEET ENTRY DATED 11.10.2011 AND OBTAINED APPELLANTS REPLY. IN HIS REPLY, THE APPELLANT HAS STATED THAT ....'THE AUDIT OF THE FAIRDEAL MULTIMEDIA WAS COMPLETED IN THE SEPTEMBER MONTH AND HENCE THE AMOUNT WAS ALSO DETERMINED ONLY AT THE END OF THE SEPTEMBER. AGAIN AS THE TD S ON THE MANAGEM ENT BONUS WAS NOT PAID BY THE COMPANY THERE WAS A VISHAL M. CHHABRIA ITA NO. 2762/MUM. /2015 3 DELAY IN RECEIVING THE TDS CERTIFICATE BY ME AND BY THAT TIME MY COMPUTATION WAS FINALIZED BY MY ACCOUNTANT AND HENCE THIS PARTICULAR OF INCOME ESCAPED TO BE SHOWN IN THE TAXATION. HOWEVER, THE ENTIRE AMOUN T OF TDS ON THIS MANAGEMENT BONUS WAS DEDUCTED AND PAID BY THE COMPANY AND AS SUCH THERE WAS NO TAX W HICH HAS ESCAPED TO BE PAID IN THIS TRANSACTION. MOREOVER THE SAID ITEM OF INCOME WAS APPROPRIATELY DISCLOSED IN MY BALANCE SHEET AND I HONESTLY DECLARED T HE SAME TO THE ASSESSING OFFICER AT TIME OF THE ASSESSMENT . THE A.O. ADDED THE SAID MANAGEMENT BOUNS OF RS.19,37,552/ - RECEIVED BY THE APPELLANT FROM M.S/ FAIRDEAL MULTIMEDIA PVT. LTD. TO THE TOTAL INCOME OF THE APPELLANT FOR THE REASONS DISCUSSED IN TH E RELEVANT ASSESSMENT ORDER. HE ALSO INITIATED PENALTY PROCEEDINGS U/S. 274(1)(C) OF THE ACT. THE A.O. LEVIED A PENALTY OF RS. 6,58,573/ - ON INCOME OF RS.19,37,552/. 4. AGAINST ABOVE ORDER ASSESSEE APPEARED BEFORE THE LD. CIT - A . 5. LD. CIT - A UPHELD THE PEN ALTY, PLACING INTER - ALIA RELIANCE UPON HONBLE APEX COURT DECISION IN THE CASE OF DHARAMENDRA TEXTILE . 6. AGAINST ABOVE ORDER ASSESSEE IS IN APPEAL BEFORE US. 7. W E HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT IN THIS CASE THE BONUS WAS DETERMINED AFTER FINALISATION OF ACCOUNTS IN THE MONTH OF SEPTEMBER 2009 . THE SAME RELATED TO VISHAL M. CHHABRIA ITA NO. 2762/MUM. /2015 4 I NCOME FOR THE PERIOD ENDED 31 ST MARCH 200 9 . THE COMPANY WHICH IS THE EMPLOYER OF THE ASSESSEE DID NO T DEDUCT TDS OF THE SAID INCOME TILL FILING OF INCOME TAX RETURN BY THE ASSESSEE. IN THIS FACTUAL SCENARIO ASSESSEES B ELIEF THAT THE MANAGEMENT BONUS DID NOT A CCRUE FOR THE PERIOD ENDING 31 ST OF MARCH 2009 CANNOT BE SAID TO BE LACKING BONAFIDE . 8. IN SUCH SITUATION ASSESSEE CANNOT BE HELD G UILTY OF FURNISHING IN ACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. FURTHER MORE THE CONDUCT OF THE ASSESSEE CANNOT BE HELD TO BE CONTUMACIOUS SO AS TO WARRANT LEVY OF PENALTY. THIS PROPOSITION IS ALSO SUPPORTED BY THE DECISION RENDERED BY THE LARGER BENCH OF HONBLE APEX C OURT IN THE CASE OF HINDUSTAN STEEL LTD VS STATE OF ORISSA 83 ITR 26. THE DECISION OF APEX COURT IN THE CASE OF DHARMENDRA TEXTILE REFERRED BY LD. CIT - A DOES NOT SUPPORT THE CASE OF REVENUE AT ALL. 9. I N THE BACKGROUND OF AFORESAID DISCUSSION AND P RECEDENTS WE SET ASIDE THE ORDER OF AUTHORITIES BELOW & DELETE THE PENALTY. VISHAL M. CHHABRIA ITA NO. 2762/MUM. /2015 5 IN THE RESULT THIS APPEAL BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 .02.2017 SD/ - SD/ - SANJAY GARG SHAMIM YAHIYA JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 24 .02.2017 C OPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER NISHANT VERMA SR. PRIVATE SECRETARY (DY./ASSTT.REGISTRAR) ITAT, MUMBAI VISHAL M. CHHABRIA ITA NO. 2762/MUM. /2015 6