ITO 3(3)(3), MUMBAI V. SRIDIVYA TRADING P. LTD, MUMBAI

ITA 31/MUM/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 8044 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 09-03-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 04-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SU RENDRA KUMAR
• Assessee Lawyers: JEHANGIR MISTRY; GHANSHYAM RAMCHANDANI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI BEFORE SHRI R.S.SYAL, AM AND SHRI VIJAY PAL RAO, JM ITA NO.28/MUM/2010 : ASST.YEAR 2001-2002 THE INCOME TAX OFFICER WARD 3(3)(3) MUMBAI. VS. M/S.SWARAG TRADERS PRIVATE LIMITED 84-A MITTAL COURT, 8 TH FLOOR 224, NARIMAN POINT, MUMBAI 400 021. PAN : AAACS5559B. (APPELLANT) (RESPONDENT) ITA NO.30/MUM/2010 : ASST.YEAR 2002-2003 THE INCOME TAX OFFICER WARD 3(3)(3) MUMBAI. VS. M/S.SPELLBOUND TRADING PRIVATE LIMITED 84-A MITTAL COURT, 8 TH FLOOR 224, NARIMAN POINT, MUMBAI 400 021. PAN :AAACS5564Q. (APPELLANT) (RESPONDENT) ITA NOS.29 & 31/MUM/2010 : ASST.YEARS 2001-2002 & 2002-2003 THE INCOME TAX OFFICER WARD 3(3)(3) MUMBAI. VS. M/S.SRIDIVYA TRADING PRIVATE LIMITED 84-A MITTAL COURT, 8 TH FLOOR 224, NARIMAN POINT, MUMBAI 400 021. PAN :AAACS8054M. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SURENDRA KUMAR RESPONDENTS BY : S/SHRI JEHANGIR MISTRY & GHANSHYAM RAMCHANDANI O R D E R PER BENCH : THESE FOUR APPEALS BY THE REVENUE ARE AGAINST THE D ELETION OF PENALTY U/S.271(1)(C) IN THE CASES OF M/S.SWARAG TRADERS PR IVATE LIMITED FOR ASSESSMENT YEAR 2001-2002, M/S.SPELLBOUND TRADING PRIVATE LIM ITED FOR ASSESSMENT YEAR 2002-2003 AND M/S.SRIDIVYA TRADING PRIVATE LIMITED FOR ASSESSMENT YEARS 2001- 2002 AND 2002-2003. SINCE COMMON GROUND HAS BEEN RA ISED IN THESE APPEALS, WE ARE, THEREFORE, PROCEEDING TO DISPOSE THEM OFF BY T HIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. ITA NO.28/MUM/2010 & ORS M/S.SWARAG TRADERS PVT.LTD. & ORS. 2 M/S.SWARAG TRADERS PRIVATE LIMITED : ASST. YEAR 200 1-2002 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE FURNISHED ITS RETURN DECLARING TOTAL INCOME OF RS.1,30,970 WHICH WAS ACC EPTED U/S.143(1). THE CASE WAS REOPENED WITH NOTICE U/S.148 ON THE GROUND THAT IN THE COURSE OF ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2004-2005 IT HAS TR ANSPIRED THAT THE ASSESSEE HAD NOT OFFERED INTEREST U/S.244A RECEIVED ON INCOME T AX REFUNDS IN THE PROFIT AND LOSS ACCOUNT BUT SHOWN IT UNDER THE HEAD OTHER LIABILIT IES IN THE BALANCE SHEET. THE ASSESSEE FILED RETURN IN RESPONSE TO NOTICE U/S.14 8 DECLARING INCOME OF RS.7,93,270 INCLUSIVE OF SUCH INTEREST ON INCOME TAX REFUND AMO UNTING OF RS.6,62,304. THE ASSESSING OFFICER COMPUTED THE TOTAL INCOME BY ADOP TING THE FIGURE OF TOTAL INCOME AS PER ORIGINAL RETURN OF INCOME AND THEREAFTER ADD ED, INTER ALIA, THE AMOUNT OF INTEREST U/S.244A AT RS.6,62,304. THE OTHER ADJUSTM ENTS MADE BY THE A.O. ARE NOT RELEVANT FOR OUR PURPOSE. THEREAFTER PENALTY WAS IM POSED U/S.271(1)(C) QUA THE AMOUNT OF SUCH INTEREST U/S.244A OF RS.6,62,304. TH E LEARNED CIT(A), AFTER CONSIDERING THE SUBMISSIONS ADVANCED ON BEHALF OF T HE ASSESSEE, ORDERED FOR THE DELETION OF PENALTY. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE CASE OF THE ASSESSEE IS THAT SUCH E INT EREST INCOME WAS REGULARLY SHOWN BY THE ASSESSEE ON THE FINALITY OF PROCEEDINGS FOR THE RELEVANT YEAR. FROM THE IMPUGNED ORDER IT IS NOTICED THAT THE ORDER OF THE LEARNED CIT(A) WHICH RESULTED INTO REFUND AND CONSEQUENT INTEREST TO THE ASSESSEE WAS NOT ACCEPTED BY THE DEPARTMENT, WHO CHOSE TO FILE FURTHER APPEAL BEFORE THE TRIBUNAL. THIS FINDING IS CONTAINED ON PAGE 4 OF THE IMPUGNED ORDER. IT SHOWS THAT THE PROCEEDINGS IN RESPECT OF WHICH INTEREST WAS GRANTED TO THE ASSESSEE U/S.2 44A HAD NOT ATTAINED FINALITY WHEN THE ASSESSEE FURNISHED ITS RETURN OF INCOME. T HE VIEW POINT OF THE ASSESSEE FOR NOT OFFERING SUCH INTEREST FOR TAXATION IN THE YEAR OF RECEIPT OF INTEREST WAS ITA NO.28/MUM/2010 & ORS M/S.SWARAG TRADERS PVT.LTD. & ORS. 3 SUPPORTED BY THE ORDERS OF THE TRIBUNAL IN M/S.SHRU STI TRADING PVT. LTD. ITA NO.366/MUM/2001, M/S.CREDITABLE INVESTMENTS PVT. LT D. ITA NO.3638/MUM/ 2001 AND M/S.GAIETY MERCANTILE P. LTD. VS. ACIT ITA NO.4468/MUM/2001. IN THESE CASES IT HAS BEEN HELD BY THE TRIBUNAL THAT I NTEREST GRANTED U/S.244A WAS NOT TO BE CONSIDERED AS INCOME ON THE PROCESSING OF RE TURN U/S.143(1). IT IS SEEN THAT THEREAFTER A DIFFERENT VIEW WAS TAKEN BY THE TRIBUN AL IN M/S.PROLAB SYNTHETICS & DETERGENTS PVT. LTD. ITA NO.1309/MUM/2001 AND THE I SSUE WAS REFERRED TO THE SPECIAL BENCH IN M/S.AVADA TRADING CO. PVT. LTD. VS. JCIT [(2006) 1 00 ITD 131 (MUM.) (SB)] . VIDE ITS ORDER DATED 18.01.2006 THE SPECIAL BENCH OF THE TRIBUNAL HELD THAT INTEREST ON REFUND U/S.244A GRANTED TO TH E ASSESSEE IN PROCEEDINGS U/S.143(1) WOULD BE ASSESSABLE IN THE YEAR IN WHICH IT IS GRANTED AND NOT IN THE YEAR IN WHICH PROCEEDINGS U/S.143(1)(A) ATTAINED FINALIT Y. HERE IT IS IMPORTANT TO NOTE THAT THE WHEN THE ASSESSEE FILED ITS RETURN ON 30.1 0.200, AT THAT TIME THE PREVAILING VIEW WAS ABOUT NOT OFFERING OF INTEREST U/S.244A FO R TAXATION IN THE YEAR OF RECEIPT. IT WAS ON THE STRENGTH OF SUCH ORDERS, AS NOTED AB OVE, THAT THE ASSESSEE ENTERTAINED THE BELIEF THAT SUCH INTEREST WOULD BE CHARGEABLE T O TAX ONLY WHEN THE PROCEEDINGS ATTAIN FINALITY. IT WAS ONLY IN THE YEAR 2006 THAT THE TRIBUNAL, BY WAY OF SPECIAL BENCH ORDER, HELD THAT THE INTEREST WAS LIABLE TO BE TAXED IN THE YEAR IN WHICH IT IS GRANTED AND NOT IN THE YEAR IN WHICH THE PROCEEDING S ATTAINED FINALITY. AS THE VIEW POINT OF THE ASSESSEE WAS DULY SUPPORTED BY CERTAIN ORDERS PASSED BY THE TRIBUNAL, IN OUR CONSIDERED OPINION, IT COULD NOT BE SAID THA T BY NOT OFFERING INTEREST U/S.244A FOR TAXATION THE ASSESSEE CONCEALED THE PARTICULARS OF ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF ITS INCOME. THE HONBLE S UPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. [(2010) 322 ITR 158 (SC)] HAS HELD THAT MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT ATTRACT PENALTY U/S.271(1)(C). WHEN THE ASSESSEE HAS FURNIS HED ALL THE PARTICULARS IN RETURN WHICH ARE NOT FOUND TO BE INACCURATE, IT WAS FOR TH E AUTHORITIES TO ACCEPT THE CLAIM OR NOT BUT THAT COULD NOT LEAD TO THE IMPOSITION OF PENALTY. IN OUR CONSIDERED ITA NO.28/MUM/2010 & ORS M/S.SWARAG TRADERS PVT.LTD. & ORS. 4 OPINION THE LEARNED CIT(A) WAS JUSTIFIED IN ORDERIN G FOR THE DELETION OF PENALTY. WE, THEREFORE, UPHOLD THE IMPUGNED ORDER. SRIDIVYA TRADING PRIVATE LIMITED ITA NOS.29 & 31/MUM/2010 AYS 2001-2002 & 2002-2003 SPELLBOUND TRADING PRIVATE LIMITED ITA NO.30/MUM/2010 : A.Y.2002-2003 4. BOTH THE SIDES ARE IN AGREEMENT THAT THE FACTS A ND CIRCUMSTANCES OF THESE APPEALS ARE MUTATIS MUTANDIS SIMILAR TO THOSE OF M/S.SWARAG TRADERS PVT. LTD. I N ITA NO.28/MUM/2010. FOLLOWING THE VIEW TAKEN HEREIN ABOVE, WE UPHOLD THE IMPUGNED ORDERS FOR THESE APPEALS AS WELL. 5. IN THE RESULT, ALL THE APPEALS STAND DISMISSED. ORDER PRONOUNCED ON THIS 16 TH DAY OF MARCH, 2011 . SD/- SD/- (VIJAY PAL RAO) (R.S.SYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI : 16 TH MARCH, 2011. DEVDAS* COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A) VII, MUMBAI. 5. THE DR/ITAT, MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, MUMBAI.