KAIRA CAN COMPANY LTD, MUMBAI V. DCIT 6(2), MUMBAI

ITA 3003/MUM/2010

• Counselvise Citation: 300319914 RSA 2010
• Duration Of Justice: 5 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 17-06-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 15-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY PUNGALIA
• Assessee Lawyers: VALLABH GOKHALE
• Keywords: Earning of tax free income

Judgement Text

, A IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI , . . , , . . , BEFORE SHRI I.P. BANSAL , J M AND SHRI B.R. BASKARAN , A M . / ITA NO. 3003 / MUM/ 201 0 ( / ASSESSMENT YEAR : 200 4 - 0 5 , ) M/S. KAIRA CAN COMPANY LTD. , TIECICON HOUSE, DR. E. MOSES ROAD, MUMBAI 400 0 1 1 .. / APPELLANT V/S D CIT 6(2) , MUMBAI - .... / RESPONDEN T . / PERMANENT ACCOUNT NUMBER AAACK4319B APPELLANT BY : SHRI VALLABH GOKHALE (AR) REVENUE BY : SHRI SANJAY PUNGALIA (DR) / DATE OF HEARING 1 7 .0 6 .201 5 / DATE OF ORDER 17 .0 6 .2015 / ORDER . . , / PER B.R. BASKARAN , A .M. THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 28 - 10 - 2009 PASSED BY LD CIT(A) - 12, MUMBAI AND IT RELATES TO THE ASSESSMENT YEAR 2004 - 05. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN CONFIRMING THE PENALTY LEVIED U/S.271(1)(C) OF THE ACT . 2. LD. COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER LEVIED PENALTY ON THE HOUSE PROPERTY INCOME ENHANCED BY HIM BY COMPUTING OF NOTIONAL KAIRA CAN CO. LTD. 2 INT EREST INCOME ON THE INTEREST FREE ADVANCES ISSUED BY THE ASSESSEE. THE LD. COUNSEL FURTHER SUBMITTED THAT THE ENHANCEMENT MADE BY THE AO HAS SINCE BEEN DELETED BY THE C OORDINATE BENCH OF THE TRIBUNAL , VIDE I TS ORDER DATED 30.01.2015 , PASSED IN ITA NO.2733/ M/2008. ACCORDINGLY , HE SUBMITTED THAT THE IMPUGNED PENALTY WILL NOT SURVIVE AND ACCORDINGLY PRAYED FOR CONSEQUENTIAL RELIEF. THE LD. AR ALSO SUBMITTED THAT PENALTY LEVIED FOR ASSESSMENT YEAR 2006 - 07 ON IDENTICAL GROUND HAS BEEN DELETED BY THE C OORDINATE BENCH OF THE TRIBUNAL VIDE ORDER DATED 07.04.2015 PASSED IN ITA NO.6614/MUM/2013 RELATED TO ASSESSMENT YEAR 2006 - 07, SINCE THE ADDITION WAS DELETED BY THE TRIBUNAL. 3. THE LD. DR DID NOT CONTROVERT THE FACTUAL ASPECT S PRESENTED BY LD. AR. 4. WE NOTICE TH AT THE COORDINATE BENCH OF THE TRIBUNAL , WHI L E CONSIDERING THE APPEAL FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2006 - 07 CHALLENGING THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT IN ITA NO.6614/MUM/2013 , HAS FOLLOWED THE ORDER PASSED BY THE TRIBUNAL IN THE A SSESSEES OWN CASE IN ITA NO.6962/MUM/2011 RELATING TO AY 2005 - 06. F OR THE SAKE OF CONVENIENCE , WE EXTRACT BELOW THE OPERATIVE PORTION OF THE ORDER PASSED BY THE TRIBUNAL IN ITA NO.6614/MUM/ 2013: WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT WHILE DECIDING THE APPEALS FOR THE AYS 2004 - 05 TO 2007 - 08 ITA NO.2733/M/2008 & ORS. DT. 30.01.2015) THE TRIBUNAL HAD DELETED THE ADDITION CONFIRMED BY THE FAA. WHILE DECIDING THE APPEAL IN ITA NO.6962/M/2011 THE TRIBUNAL, HAD DELET ED THE CONCEALMENT PENALTY. WE WOULD LIKE TO REPRODUCE THE ORDER OF THE TRIBUNAL WHICH READS AS UNDER: - 21. THIS APPEAL FILED BY THE ASSESSEE ON 13.10.2011 IS AGAINST THE ORDER OF THE CIT(A) - 12, MUMBAI DATED 21.7.2011 FOR THE ASSESSMENT YEAR 2005 - 06. IN T HIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: THE APPELLANT OBJECTS TO THE ORDER DATED 21 ST JULY, 2011 PASSED BY THE CIT(A) FOR THE ASSESSMENT YEAR 2005 - 06, ON THE FOLLOWING GROUNDS. 1. THE LD. CIT(A) ERRED IN CONFIRMING THE PEN ALTY OF RS.6,32,734/ - LEVIED U/S.271(1)(C) OF THE ACT ON THE BASIS OF ADDITION MADE TO THE INCOME FROM HOUSE PROPERTY. 2.THE LD. CIT(A) ERRED IN RELYING UPON THE ORDER PASSED BY THE PREDECESSOR CIT(A) FOR THE ASSESSMENT YEAR 2004 - 05, WHEREIN THE CIT(A) KAIRA CAN CO. LTD. 3 HA S OBSERVED AS UNDER: IT WAS CLEAR THAT THE LOW RENT HAS BEEN CHARGED BECAUSE OF THE INTEREST FREE DEPOSIT THAT THE DEPOSIT COULD BE INVESTED IN SUCH A WAY THAT IT YIELDS EXEMPT INCOME OR INCOME SUBJECTED TO LOWER RATE OF TAX. THUS, THE APPELLANT WOULD OBT AIN A SIGNIFICANT TAX ADVANTAGE BY DECLARING LOW RENT UNDER INCOME FROM HOUSE PROPERTY. IT APPEARS THAT THERE IS NO OTHER REASON FOR OBTAINING AN INTEREST FREE DEPOSIT BUT TO AVOID TAX. THE INTEREST FREE DEPOSITS CAN ALSO BE TREATED AS RENT TAKEN IN ADVANC E FOR THE PERIOD OF TENANCY. 3. EACH ONE OF THE ABOVE GROUNDS OF APPEAL IS WITHOUT PREJUDICE TO THE OTHER. 22. THE ONLY ISSUE RAISED IN THIS APPEAL RE L ATED TO THE LEVY OF PENALTY U/S.271(1)(C) OF THE ACT AND THE SAME IS CONNECTED TO APPEAL ITA NO.6225/ M/2008 (AY 2005 - 06), WHICH IS A QUANTUM APPEAL. WHILE ADJUDICATING THE SAID QUANTUM APPEAL IN THE ABOVE PARAGRAPH OF THIS ORDER, WE HAVE DE LETED THE ADDITION AND GRANTED RELIEF TO THE ASSESSEE. CONSEQUENTLY, THE PENALTY LEVIED U/S.271(1)(C) IN RESPECT OF T HE SAID ADDITIONS IS NOT SUSTAINABLE. THEREFORE, THE GROUNDS RAISED BY THE ASSESSEE ARE TREATED AS ALLOWED. 23. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. 5. SINCE THE ADDITION, ON WHICH THE PENALTY WAS LEVIED U/S 271(1)(C) OF THE ACT, HAS BEEN D ELETED BY THE TRIBUNAL, THE IMPUGNED PENALTY DOES NOT SURVIVE. ACCORDINGLY, W E SET ASIDE THE ORDER OF LD. CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY LEVIED U/S.271(1)(C) OF THE ACT FOR THE YEAR UNDER CONSIDERATION . 6 . IN THE RESULT , THE APPEAL OF THE ASSESSEE I S ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT O N 17TH DAY OF JUNE, 2015. SD SD SD SD/ - . . I.P.BANSAL JU DICIAL MEMBER SD/ - . . B.R. BASKARAN ACCOUNTANT MEMBER MUMBAI, DATED : 17 . 06 .2015 PATEL KAIRA CAN CO. LTD. 4 / COPY 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 TRUE COPY / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI