VENUS EXPORTS, MUMBAI V. DCIT 13(2), MUMBAI

ITA 312/MUM/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2899 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 13-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJEEV GUBGOTRA
• Assessee Lawyers: MAMTA PARMAR
• Keywords: Reasonable cause; Bonafide mistake; Set aside
• Section: 271(1)(c); 43B

Judgement Text

1 IN THE INCOME-TAX APPELLATE TRIBUNAL F BENCH MUMB AI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA NO. 312 & 313/MUM/2017 (ASSESSMENT YEARS 2010-1 1 & 2011-12) VENUS EXPORTS 5, JJV CHAMBERS, KESHAVJI NAIK ROAD MUMBAI-400 009 PAN: AAAFV6748H VS. DEPUTY COMMISSIONER OF INCOME TAX-13(2) MUMBAI APPELLANT RESPONDENT APPELLANT BY : MI SS. MAMTA PARMAR (AR) RESPONDENT BY : SHRI RAJEEV GUBGOTRA (DR) DATE O F HEARING : 04.04.2019 DATE OF PRONOUNCEMENT :12.04.2019 PER PAWAN SINGH, JUDICIAL MEMBER; 1. THESE APPEAL FILED BY THE ASSESSEE ARE DIRECTED AGA INST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-2 8, MUMBAI [HEREINAFTER REFERRED AS LD. CIT(A)] DATED 2 9.09.2016 AND 03/10/2016 FOR AY 2010-11 AND 2011-12 RESPECTFU LLY. THE ASSESSEE HAS RAISED CERTAIN COMMON GROUNDS OF A PPEAL. THEREFORE, BOTH THE APPEALS WERE CLUBBED, HEARD AND ARE DECIDED BY CONSOLIDATED ORDER FOR THE SAKE OF CONVE NIENCE AND BREVITY. FOR APPRECIATION OF FACTS IN APPEAL FOR AY 2010-11 WAS TREATED AS LEAD CASE. 2. THE ASSESSEE HAS IN APPEAL FOR AY 2010-11 RAISED FO LLOWING GROUNDS OF APPEAL. 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) ERRED IN LEVYING PENALTY US 271 (1)(C) AMOUN TING TO RS. 81,21,478/- 2. THE LD. CIT(A) ERRED IN APPRECIATING THE FACT THAT 43B IS A DEEMING PROVISION AND THEREFORE LEVYING PENALTY BAS ED ON THE SAME IS LEGALLY NOT JUSTIFIABLE. ITA NO. 312 & 313/MUM/2017-VENUS EXPORTS 2 3. THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN NOT APP RECIATING THE FACTS THAT THERE WERE NO INAPPROPRIATE FACTS FURNIS HED IN AUDIT REPORT. THE AUDIT REPORT WAS SIGNED MUCH BEFORE THE DUE DATE AND PROVISIONS OF SECTION 43B ALLOWS THE TIME TILL DUE DATE OF FILING OF RETURN FOR THE PAYMENT OF THE STATUTORY D UES. 4. THE LD. CIT(A) ERRED IN CONFIRMING PENALTY ON DEEME D DISALLOWANCE U/S 43B. 5. THE LD. CIT(A) ERRED IN NOT FOLLOWING THE DECISIONS OF JURISDICTIONAL BENCHES OF ITAT AND JURISDICTIONAL H IGH COURTS AND SUPREME COURT ON THE ISSUE BEFORE CONFIRMING THE PE NALTY ORDER. 6. THE LD. CIT(A) ERRED IN RELYING ON SEVERAL NON-APPL ICABLE LEGAL DECISIONS MENTIONED IN THE ORDER. 7. THE APPELLANT CRAVES TO ADD, ALTER, AMEND, AND DELE TE ANY OF THE ABOVE GROUNDS OF APPEAL EITHER IN FULL OR IN PART O N OR BEFORE THE FINAL HEARING OF THE APPEAL. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAS E NGAGED IN THE BUSINESS OF DIAMOND TRADING AND EXPORT. THE ASS ESSEE FILED ITS RETURN OF INCOME ON 30/09/2010 DECLARING LOSS OF RS.6,32,14,940/-. THE RETURN OF INCOME WAS SELECTED FOR SCRUTINY. DURING THE ASSESSMENT PROCEEDING, THE AO NOTED THAT THE ASSESSEE HAS CLAIMED A DEDUCTION OF RS. 2,62,83,103/- AS BANK INTEREST PAYABLE IN PROFIT A ND LOSS ACCOUNT. THE AO ISSUED SHOW CAUSE NOTICE AS TO WHY THE EXPENSES SHOULD NOT BE DISALLOWED. THE ASSESSEE FIL ED ITS REPLY VIDE LETTER DATED 06/01/2013. IN THE REPLY TH E ASSESSEE CONTENDED THAT THE AMOUNT OF RS. 2,62,83,103/- DEBI TED TO P&L ACCOUNT AS INTEREST PAYABLE, IT WAS FURTHER CO NTENDED THAT INTEREST WAS PAYABLE ON OVER DUE BILLS. THE IN TEREST WAS PAYABLE FOR THE EXPORT BILLS DISCOUNTED FROM THE BA NK AGAINST EXPORT DONE BUT REALIZATION NOT RECEIVED ON DUE DAT ES FROM EXPORTS. THE CONTENTION OF ASSESSEE WAS NOT ACCEPTE D BY THE AO HOLDING THAT THE ASSESSEE HAS NOT PAID INTEREST IN THE PREVIOUS YEAR TO THE BANK AND ACCORDINGLY THE INTER EST WAS NOT ALLOWABLE TO THEM. THE AO CONCLUDED THAT AS PER SECTION 43B THE DEDUCTIONS SHALL BE ALLOWED IN THE PREVIOU S YEAR IN ITA NO. 312 & 313/MUM/2017-VENUS EXPORTS 3 WHICH THE SPECIFIED SUM IS ACTUALLY PAID, IRRESPECT IVE OF THE PREVIOUS YEAR IN WHICH THE LIABILITY TO PAY SUCH SU M WAS INCURRED ACCORDING TO THE METHOD ACCOUNTING ADOPTE D BY THE ASSESSEE. THE AO THEREFORE ALSO DISALLOWED THE PROV ISION U/S 43B AND ADDED BACK TO THE TOTAL INCOME OF THE ASSES SEE AND INITIATED PENALTY U/S 271(1)(C). NO APPEAL WAS FILE D AGAINST THE QUANTUM ASSESSMENT. THE AO LEVIED THE PENALTY @ 100% OF TAX WERE LEVIED. THE AO WORKED OUT THE PENALTY O F RS. 81,21,478/- VIDE ORDER DATED 24/09/2013. ON APPEAL BEFORE US THE LD. CIT(A) THE ACTIONS OF AO WAS CONFIRMED. THUS FURTHER AGGRIEVED BY THE ORDER OF LD CIT(A), THE AS SESSEE HAS FILED PRESENT APPEAL BEFORE US. 4. WE HAVE HEARD THE SUBMISSIONS OF LD. AR OF THE ASSE SSEE AND LD. DR FOR REVENUE AND PERUSED THE MATERIAL AVAILA BLE ON RECORD, WE HAVE ALSO DELIBERATED ON VARIOUS CASE LA WS RELIED BY THE LOWER AUTHORITIES. THE LD. AR OF THE ASSESSE E SUBMITS THAT DURING THE ASSESSMENT THE AO DISALLOWED BANK I NTEREST AS IN THE TAX AUDIT REPORT (TAR), OUTSTANDING DELAY ED PAYMENT CHARGES WERE NOT REPORTED BY THE AUDITOR. T HE AUDITOR HAS GIVEN NOTE THAT INFORMATION GIVEN UNDER 21 (B) IS ONLY UPTO DAY OF SIGNING OF REPORT. DUE TO LACK OF LEGAL KNOWLEDGE, SINCE THE SUM WAS NOT REPORTED IN THE TA R, IT WAS OVERLOOKED WHILE FILING RETURN OF INCOME. DURING TH E ASSESSMENT, THE ASSESSING OFFICER WAS DULY INFORMED THAT INTEREST WAS PAYABLE TO SYNDICATE BANK FOR OVER DUE S BILLS AND COPY OF STATEMENT WAS ALSO FILED. THE DISALLOWA NCE WAS ACCEPTED AS IT WAS A BONAFIDE MISTAKE AND NO FURTHE R APPEAL WAS FILED. THE TAX AUDIT REPORT WAS PREPARED MUCH BEFORE FILING OF RETURN OF INCOME. THE LD. AR SUBMITS THAT ASSESSEE ITA NO. 312 & 313/MUM/2017-VENUS EXPORTS 4 HAS NOT EVADED ANY TAX. THE ASSESSEE HAS SHOWN NIL INCOME WHILE FILING OF RETURN INCOME AS THE ASSESSEE HAS S UFFERED HUGE LOSSES. DESPITE DISALLOWANCE NO TAX WAS PAYAB LE BY THE ASSESEE. THE ASSESSE HAS SUFFERED HUGE LOSSES WHICH HAVE ALSO EXPIRED IN AY 2018-19 THEREFORE IT CANNOT BE S AID THAT THE ASSESSEE EVADED THE TAX. THE LD. AR HOWEVER SUB MITTED THAT THE ASSESSEE HAS FILED AFFIDAVIT OF ONE OF THE PARTNER OF THE FIRM NAMELY SHRI GOUTHAM JAICHAND VORA. IN THE AFFIDAVIT THE PARTNER HAS SPECIFICALLY CONTENDED THAT DISALLO WED PAYMENT CHARGES FOR AY 2010-11 AND 2011-12 OF RS. 2,62,83,102/- AND RS.5,38,52,522/- WHICH REMAIN UN PAID. AS PER NORMAL ACCOUNTING PRACTICE THE SAME WERE DEB ITED IN P&L ACCOUNT AS BANK INTEREST PAYABLE. FOR AY 2010- 11 AND 2011-12 THE TAX AUDIT REPORT WAS COMPLETED ON 03/08 /2010 AND 05/09/2011 RESPECTABLY. HOWEVER, THE RETURN OF INCOME WAS FILED U/S 139(1) ON 30/09/2010 AND 30/09/2011 RESPECTIVELY THAT IS APPROXIMATELY TWO MONTHS AFTER PREPARATION OF TAX AUDIT REPORT. 5. IN THE AFFIDAVIT IT IS FURTHER CONTENDED THAT THE A SSESSEE FIRM SUFFERED HUGE LOSSES DURING AY 2010-11 AND 2011-12 AND EVEN AFTER DISALLOWANCES OF BANK INTEREST PAYMENT. THE FINALLY RETURN INCOME REMAINED AS LOSS AND THE BANK HAS CLA SSIFIED FIRMS LOAN AS NON PERFORMING ASSET (NPA) ON 15/10/ 2010. IT IS FURTHER CONTENDED IN THE AFFIDAVIT THAT ALL CARR Y FORWARD LOSS FOR AY 2010-11 HAS EXPIRED IN AY 2018-2019 AND FOR AY 2010-11 WILL EXPIRE IN CURRENT YEAR AS THERE IS NO BUSINESS. THEREFORE, THERE IS NO REVENUE LOSS. 6. THE LD. AR FURTHER CONTENDED THAT THE CASE LAWS REL IED BY LOWER AUTHORITIES ARE NOT APPLICABLE ON THE FACTS O F THE ITA NO. 312 & 313/MUM/2017-VENUS EXPORTS 5 PRESENT CASE. IN A.M SHAH & COMPANY VS CIT 108 TAXM AN 137 (GUJ), THE ASSESSEE MANIPULATED THE STOCK. IN D CIT VS CHAMPALAL K. VARDHAN [2011] 128 ITD 309 (MUM), THE ASSESSEE WRONGLY CLAIMED DEDUCTION U/S 54. IN CIT V S ZOOM COMMUNICATION (P.) LTD. [2010] 191 TAXMAN 179 [DEL] THE ASSESSEE CLAIMED INCOME TAX PAID WHICH WAS NOT PAID . 7. IN THE SUPPORT OF HER SUBMISSION THE LD. AR RELIED UPON THE DECISION OF PUNE TRIBUNAL IN PATSON AUTO PRODUCTS P VT. LTD. VS ACIT IN ITA NO. 457/MUM/2007 DATED 13/11/2010. R ABO INDIA FINANCE LTD. VS. ACIT IN MUMBAI TRIBUNAL IN I TA NO. 3356/MUM/2009 DATED 29/07/2010, ( 2011) 048 SOT 0052. THE LD. AR SUBMITS THAT THE FACTS OF PRESENT CASE A RE IDENTICAL TO THE FACTS IN PATSON AUTO PRODUCTS PVT. LTD. (SUPRA). 8. ON THE OTHER HAND THE LD. DR FOR THE ASSESSEE SUBMI TTED THAT THE INTEREST OF RS. 2,62,83,103/- WAS NOT PAYABLE D URING THE YEAR. THE ASSESSING OFFICER DISALLOWED THE INTEREST IN THE ASSESSMENT ORDER. NO FURTHER APPEAL WAS FILED BY TH E ASSESSEE AGAINST SUCH DISALLOWANCE. THE LD. CIT(A) WHILE CO NFIRMING THE PENALTY CONCLUDED THAT IT IS A FIT CASE FOR C ONFIRMING THE PENALTY. THE LD. DR FOR REVENUE PRAYED FOR THE DISM ISSAL OF THE APPEAL OF THE ASSESSEE. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE LD. REPRESENTATIVE OF THE PARTIES AND PERUSED THE MATER IAL AVAILABLE ON RECORD. WE HAVE ALSO DELIBERATED ON VA RIOUS CASE LAW RELIED BY LOWER AUTHORITIES. DURING THE ASSESSM ENT, THE ASSESSING OFFICER DISALLOWED THE DEDUCTION OF RS. 2 .62 CRORE AS BANK INTEREST PAYABLE. BEFORE DISALLOWING THE PA YABLE INTEREST, THE ASSESSING OFFICER ISSUED SHOW-CAUSE N OTICE TO ITA NO. 312 & 313/MUM/2017-VENUS EXPORTS 6 THE ASSESSEE. IN REPLY TO THE SHOW-CAUSE NOTICE, TH E ASSESSEE CONTENDED THAT INTEREST WAS PAYABLE TO SYNDICATE BA NK FOR OVER DUES BILLS AND COPY OF STATEMENT WAS ENCLOSED. THE SAID INTEREST WAS PAYABLE FOR EXPORT BILLS DISCOUNTED FR OM BANK AGAINST EXPORT DONE BUT REALIZATION NOT RECEIVED ON DUE DATES FROM THE EXPORTS. THE REPLY OF ASSESSEE WAS NOT ACC EPTED BY ASSESSING OFFICER HOLDING THAT ASSESSEE HAS NOT PAI D INTEREST IN THE PREVIOUS YEAR TO THE BANK PAYABLE BY THEM. T HE ASSESSING OFFICER CONCLUDED THAT THE INTEREST CAN O NLY BE ALLOWABLE WHEN THE SAME IS ACTUALLY PAID AND NOT ME RELY BECAUSE THE SAME IS DUE AS PER METHOD OF ACCOUNTING ADOPTED BY ASSESSEE. NO ACTUAL PAYMENT WAS MADE, TH US, THE DEDUCTION CANNOT BE ALLOWED UNDER THE PROVISIONS OF SECTION 43B. THE ASSESSING OFFICER ISSUED SHOW-CAUSE NOTICE UNDER SECTION 274 DATED 28.03.2013. NO REPLY WAS RECEIVED FROM ASSESSEE. FURTHER REMINDER NOTICE DATED 30.07.2013 WAS AGAIN ISSUED BY ASSESSING OFFICER. THE ASSESSING OF FICER NOTED THAT DESPITE SERVICE OF NOTICE, NO REPLY WAS FURNISHED BY ASSESSEE. HOWEVER, THE ASSESSING OFFICER IN PARA-6 OF PENALTY ORDER NOTED THAT THE EXPLANATION OF ASSESSEE IS FAR FROM REASONABLE AS FAR AS NON-INCLUSION OF OUTSTANDING I NTEREST OF RS. 2,62,83,103/- IN THE COMPUTATION OF INCOME IS C ONCERNED. THE ASSESSING OFFICER FURTHER OBSERVED THAT ASSESSE E IS ASSISTED BY QUALIFIED TAX PROFESSIONALS AND SHOULD HAVE MADE ADDITION OF THIS AMOUNT IN THE COMPUTATION. HAD TH E CASE GOT ESCAPED FROM SCRUTINY, THE AMOUNT WOULD HAVE ESCAPE D FROM ASSESSMENT. THE ASSESSING OFFICER LEVIED THE PENALT Y @ 100% OF TAX SOUGHT TO BE EVADED. ITA NO. 312 & 313/MUM/2017-VENUS EXPORTS 7 10. WE HAVE NOTED THAT THE ASSESSING OFFICER ON ONE HAN D HAD NOTED THAT NO EXPLANATION/REPLY WAS FURNISHED BY AS SESSEE, ON THE OTHER HAND, THE ASSESSING OFFICER RECORDED T HAT THE EXPLANATION OF ASSESSEE IS FAR FROM REASONABLE FOR NON- INCLUSION OF OUTSTANDING INTEREST IN THE COMPUTATIO N OF INCOME. WE HAVE FURTHER NOTED THAT STAND OF ASSESSE E THROUGHOUT THE PROCEEDINGS I.E. ASSESSMENT, PENALTY PROCEEDING AND BEFORE THE LD. CIT(A) THAT THERE WAS NO EVASION OF TAX. THE DELAYED PAYMENT CHARGES WERE NO T REPORTED BY THE AUDITOR IN TAX AUDIT REPORT, IT WAS OVERLOOKED WHILE FILING RETURN OF INCOME. THE NARRATION IN PAR A-6 OF PENALTY ORDER THAT THE EXPLANATION OF ASSESSEE IS F AR FROM REASONABLE AS FAR AS NON-INCLUSION OF OUTSTANDING I NTEREST IN COMPUTATION OF INCOME IS CONCERNED, IS CLEARLY SHOW S THAT THE ASSESSEE TOOK THE SIMILAR STAND DURING THE ASSESSME NT AS WELL AS IN PENALTY PROCEEDING. 11. THE CO-ORDINATE BENCH OF PUNE TRIBUNAL IN PATSON AU TO PRODUCTS PVT. LTD. VS. ACIT (SUPRA) WHILE DECIDING THE APPEAL AGAINST THE PENALTY LEVIED ON SIMILAR DISALLOWANCES PASSED THE FOLLOWING ORDER: 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. SECTION 271(1)(C ) OF THE ACT, EMPOWERS THE ASSESSING OFFICER TO IMPO SE PENALTY IF HE IS SATISFIED THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF I NCOME. IT IS A TRITE LAW THAT IN ORDER TO JUSTIFY IMPOSITION OF PENALTY, EITHER OF THE TWO INGREDIENTS IS REQUIRED TO BE FULFILLED. THE ASSESS ING OFFICER HAS TO ESTABLISH EITHER THAT THE ASSESSEE HAS CONCEALED IT S INCOME OR THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF SU CH INCOME. IT IS A WELL SETTLED PROPOSITION THAT MAKING OF A CLAIM, WH ICH IS UNSUSTAINABLE IN LAW, BY ITSELF, WOULD NOT RESULT I N LEVY OF PENALTY U/S 271(1)(C) OF THE ACT FOR CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. ITA NO. 312 & 313/MUM/2017-VENUS EXPORTS 8 7. FACTUALLY SPEAKING, IN THE PRESENT CASE, THE DIS ALLOWANCE OF RS. 36,41,047/-, MADE IN TERMS OF SECTION 43B(E) OF THE ACT, HAS RESULTED IN THE LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. SECTION 43B(E) OF THE ACT PRESCRIBES THAT NO DEDUCTION ON ACCOUNT OF ANY SUM PAYABLE BY THE ASSESSEE AS INTEREST ON A TERM LOAN FROM A SCHE DULED BANK SHALL BE ALLOWED UNLESS THE SAME IS ACTUALLY PAID BY HIM. THE AFORESAID AMOUNT OF INTEREST WAS OUTSTANDING FOR PAYMENT TO A SCHEDULED BANK AND, THEREFORE, THE SAME WAS DISALLOWED IN THE ASSE SSMENT. OSTENSIBLY, THE ASSESSEE ERRED IN NOT APPLYING THE PROVISIONS OF SECTION 43B(E) OF THE ACT AND MAKING THE DISALLOWANCE IN THE RETU RN OF INCOME. ON THE MERITS OF THE ADDITION, THERE IS NO DISPUTE INASMUCH AS THE APPELLANT HAS FAIRLY CONCEDED THAT THE SAME COMES WITHIN THE PURVIEW OF SECTION 43B(E) OF THE ACT. THE CIRCUMSTANCES IN WHICH THE SAID AMOUNT REMAINED TO BE ADDED BACK IN THE RETURN OF INCOME HAS BEEN EXPLAINED BY THE ASSESSEE BEFORE TH E LOWER AUTHORITIES AS WELL AS BEFORE US. THE CLAIM OF THE ASSESSEE IS THAT THE SAME WAS NOT REFLECTED IN REPORT OF THE AUDITOR ISS UED U/S 44AB OF THE ACT INSPITE OF A SPECIFIC REQUIREMENT THEREOF. THE APPELLANT HAS ALSO EXPLAINED THAT ITS DIRECTORS ARE TECHNICAL PER SONS, NOT WELL VERSED WITH THE LEGAL PROVISIONS. QUITE CLEARLY, THE ASSES SEE FILED A RETURN OF INCOME SHOWING A LOSS AND EVEN AFTER THE AFORESAID DISALLOWANCE, THE FINALLY ASSESSED INCOME REMAINS A LOSS. WE MAY HAST EN TO ADD HERE THAT WE ARE NOT SAYING THAT IN EVERY CASE OF LOSS R ETURN NO PENALTY IS LEVIABLE OR THAT A MISTAKE OF THE PROFESSIONAL WOUL D ALWAYS NEGATE THE PENALTY LEVIABLE U/S 271(1)(C) OF THE ACT. WE ARE O NLY TRYING TO GAUGE WHETHER AFTER CONSIDERING THE TOTALITY OF CIRCUMSTA NCES, COULD IT BE SAID THAT THE EXPLANATION OF THE ASSESSEE IS BONAFI DE OR NOT. IN OUR CONSIDERED OPINION, WITHOUT GOING INTO THE MERITS O R OTHERWISE OF THE AFORESAID PLEAS, IT WOULD BE SUFFICIENT TO OBSERVE THAT INSOFAR THE BONAFIDES OF THE ASSESSEE'S CLAIM IN THE RETURN OF INCOME IS CONCERNED, THE SAME IS WELL-FOUNDED, ESPECIALLY, CO NSIDERING THAT AN ADDITION MADE U/S 43B OF THE ACT IS A CASE OF MERE DISALLOWANCE RESULTING FROM AN APPLICATION OF A PROVISION OF LAW AND WOULD NOT TANTAMOUNT TO CONCEALMENT OR FURNISHING OF INACCURA TE PARTICULARS OF INCOME, WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT IN THE PRESENT CASE. IN THE AFORESAID PROPOSITION, WE ARE SUPPORTED BY THE JUDGMENT OF THE HON'BLE MADRAS HIGH COURT IN THE CA SE OF CIT VS. MSK CONSTRUCTION (P.) LTD., 296 ITR 18(MAD.), WHERE IN IT HAS BEEN OBSERVED THAT A DISALLOWANCE MADE U/S 43B OF THE AC T DOES NOT AMOUNT TO CONCEALMENT WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT. 8. IN THE BACKGROUND OF THE AFORESAID DISCUSSION, W E ARE INCLINED TO UPHOLD THE ULTIMATE PRAYER OF THE ASSESSEE THAT PEN ALTY U/S 271(1)(C) OF THE ACT, IS NOT MERITED IN THE PRESENT CASE. ACC ORDINGLY, THE ORDER OF THE CIT(A) IS SET ASIDE AND THE ASSESSING OFFICE R IS DIRECTED TO DELETE THE PENALTY IMPOSED U/S 271(1)(C) OF THE ACT AMOUNTING TO RS. 13,06,365/-. ITA NO. 312 & 313/MUM/2017-VENUS EXPORTS 9 12. FURTHER, THE CO-ORDINATE BENCH OF MUMBAI TRIBUNAL I N RABO INDIA FINANCE LTD. VS. ACIT (SUPRA) HELD THAT THE A PPLICABILITY OF PROVISION OF SECTION 43B(E) WAS NEITHER CONSIDER ED BY AUDITOR NOR BY THE ASSESSING OFFICER IN THE ORIGINA L ASSESSMENT, RE-ASSESSMENT THE OMISSION BY THE ASSES SEE TO NOT CONSIDERED THE PROVISION OF SECTION 43B(E) HAS TO BE CONSIDERED AS BONAFIDE AS IT WOULD NOT AMOUNT TO CONCEALMENT AND HENCE, NO PENALTY UNDER SECTION 271 (1) BE LEVIED IN RELATION TO THE ADDITIONS MADE BY ASSESSI NG OFFICER ON ACCOUNT OF DISALLOWANCE OF INTEREST. THE EXPLANA TION OF ASSESSEE FOR NOT MAKING DISALLOWANCE OF INTEREST HA S TO BE CONSIDERED AS A BONAFIDE. PENALTY CANNOT BE LEVIED ONLY ON THE GROUND THAT ASSESSEE NOT FILED DISPUTE THE ADD ITION IN APPEAL. 13. WE HAVE FURTHER NOTED THAT THE ASSESSEE HAS SUFFERE D LOSS AND ASSESSEE HAS SHOWN NIL INCOME BY SHOWING LOSS O F RS. 6.32 CRORE. THUS, THERE WAS NO TAX EVASION BY DISAL LOWANCE OF PROVISION OF INTEREST. THE PARTNER OF ASSESSEE HAS ALSO FILED AFFIDAVIT THAT THERE WAS NO MALAFIDE INTENTION FOR EVADING TAX AND NO TAX WAS EVADED AT ALL. THE RIGHT OF SET OFF OF CARRY FORWARD LOSSES FOR A.Y. 2010-11 WILL EXPIRED IN A.Y . 2018-19 AND FOR A.Y. 2011-12 WILL GET EXPIRED IN THE CURREN T YEAR. THERE IS NO BUSINESS OF ASSESSEE. IN OUR VIEW, THE ASSESSEE HAS SHOWN A REASONABLE CAUSE AS PRESCRIBED UNDER SE CTION 273B, FOR NOT LEVYING THE PENALTY UNDER SECTION 271 (1)(C). CONSIDERING THE ABOVE FACTUAL AND LEGAL DISCUSSION, THE ORDER OF ASSESSING OFFICER IN LEVYING PENALTY, WHICH WAS CONFIRMED BY LD CIT(A) OFFICER IS SET-ASIDE AND THE ASSESSING OFFICER IS ITA NO. 312 & 313/MUM/2017-VENUS EXPORTS 10 DIRECTED TO DELETE THE ENTIRE PENALTY. IN THE RESUL T, THE GROUNDS OF APPEAL RAISED BY ASSESSEE ARE ALLOWED. 14. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ITA.NO. 313/MUM/2017 FOR A.Y. 2011-12 15. THE FACTS OF THIS APPEAL FOR THIS YEAR ARE IDENTICA L; THE ASSESSEE HAS RAISED IDENTICAL GROUNDS OF APPEAL. CO NSIDERING THE FACT THAT WE HAVE ALREADY ALLOWED THE APPEAL FO R A.Y. 2010-11 ON IDENTICAL GROUNDS OF APPEAL, THEREFORE F OLLOWING THE PRINCIPLES OF CONSISTENCY, THE APPEAL FOR AY 20 11-12 IS ALSO ALLOWED WITH SIMILAR OBSERVATION. 16. IN THE RESULT, APPEAL FOR AY 2011-12 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 2/04/2019. SD/- SD/- G. MANJUNATHA PAWAN SINGH ACCOUNTANT MEMBER JUDICIA L MEMBER MUMBAI, DATE: 12.04.2019 THIRUMALESH COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR F BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST.REGISTRAR ITAT, MUMBAI