GATEWAY TERMINALS INDIA PVT. LTD., MUMBAI V. DCIT- PANVEL -CIRCLE PANVEL, PANVEL

ITA 3132/MUM/2018

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 6067 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2012-2013
• Appeal Filed On: 10-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Difference of opinion
• Section: 271(1)(c); 143(3); 115JB; 80IA; 274

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE SHRI PRASHANT MAHARISHI, AM AND MS. KAVITHA RAJAGOPAL, JM ITA No. 3132/Mum/2018 (Assessment Year 2012-13) Ga te wa y T e rm in a ls In d ia P vt. L td GT I Ho u se , Ja wa h a rla l Ne h ru P o rt, S e va U ra n , Mu m b a i-4 0 0 7 0 7 Vs. The DCIT, Panvel, Circle Panvel (Appellant) (Respondent) PAN No. AACCG1899E Assessee by : Shri Manish Kanth, AR Revenue by : Shri Hoshang B. Irani, DR Date of hearing: 02.06.2022 Date of pronouncement : 18.07.2022 O R D E R PER PRASHANT MAHARISHI, AM: 01. This appeal is filed by the assessee against the order passed by the Commissioner of income-tax (Appeal)-2, Thane, [the learned CIT (A)] dated 26 th February, 2018 for A.Y. 2012-13 under Section 271(1)(c) of the Income-tax Act, 1961 (the Act), wherein penalty of Rs. 2,81,54,000/- was levied. The assessee has raised following grounds of appeal;- “Ground I: Levy of penalty under Section 271(1) (c) of the Act: Rs. 2, 81, 51,400/- 1.1 The learned Commissioner of Income-tax (Appeals) 2, Thane ['CIT(A"] has erred in law and on Page | 2 ITA No. 3132/Mum/2018 Gateway Terminals India P. Ltd.; A.Y. 12-13 facts in levying penalty of Rs. 2,81,51,400 under Section 271(1 (c) of the Act. . 1.2 The learned CIT(A) has erred in holding that the appellant has furnished inaccurate particulars of income by claiming deduction under section 80IA on interest income The learned CIT(A) failed to appreciate that, the deduction under Section 801A of the Act was claimed based on various judicial precedents, and (ii) penalty cannot be levied where there exists difference of opinion. 1.3. The learned CIT (A) has erred in holding that appellant has concealed income by claiming excess deduction under section 80IA. The CIT (A) failed to appreciate that the interest income of Rs 8,67,66,538 was clearly reflected in the audited financial statements of the Appellant and hence, there is no question, of concealment of income. 1.4 Without prejudice to the above, the learned CIT (A) has failed to appreciate that penalty cannot be levied in absence of any additional tax liability on account of reduction in benefit under Section 80IA of the Act (i.e., the tax sought to be evaded as per the law prevailing during the relevant period) as the tax liability continues to be payable on book profits as computed under the provisions of Section 115JB of the Act.” 02. Brief facts of the case shows that assessee field its return of income for the impugned A.Y. 2012-13 on 30 th November, 2012 at a income under the normal Page | 3 ITA No. 3132/Mum/2018 Gateway Terminals India P. Ltd.; A.Y. 12-13 computation of Rs.8,59,478/- and under the provision of Section 115JB of the Act of Rs.23,72,88,730/-. The Assessment was made under Section 143(3) of the Act on 29 th February, 2016 at a total income of Rs. 2,44,03,166/- under normal computation and book profit of Rs.24,99,16,405/- under Section 115JB of the Act. 03. Assessee is aggrieved with the action of the learned Assessing Officer in not granting deduction under Section 80IA of the Act on interest on income tax refund of Rs. 2,35,18,687/- in the normal provision and therefore, appeal was filed before the learned CIT (A). 04. On appeal before the learned CIT (A), he found that assessee has claimed deduction under Section 80IA of the Act on interest on Fixed Deposit of ₹8,67,66,538/- which is also not eligible for deduction under Section 80IA of the Act and therefore, the notice for enhancement was issued and consequently, he passed an order with the above enhancement. 05. He also issued notice under Section 274 read with section 271 (1) (c) of the Act on 31 October 2017 with respect to the enhancement. He was of the view that assessee has furnished inaccurate particulars of income. 06. In response to notice, assessee submitted several judicial precedents, which held that if the amounts are parked in fixed deposits on accounts of business requirement then the interest earned is eligible for deduction under Section 80IA of the Act. Assessee submitted that the tariff Page | 4 ITA No. 3132/Mum/2018 Gateway Terminals India P. Ltd.; A.Y. 12-13 collected by the assessee is under dispute and pending before the Hon'ble High Court, wherein interim order is passed. Accordingly, the amount collected was placed in fixed deposits. Assessee also submitted that as per license agreement with JNPT, assessee is required to replace crane after some time and for the availability of funds, the same was placed in fixed deposits. Assessee submitted that it was under a bonafide belief and therefore, the charge of furnishing of inaccurate particulars of income should not be imputed. 07. The learned CIT(A) rejected the contention of the assessee and held that interest received on fixed deposits and income tax refund are not eligible for deduction under Section 80IA of the Act in view of the decision of Supreme Court in case of Liberty India Vs. CIT 317 ITR 218, therefore, the claim of the assessee is not tenable. By claiming such excess deduction, assessee has filed inaccurate particulars of income with respect to the FDR interest income of ₹8,67,66,538/- which is not derived from undertaking, he levied the penalty of Rs. 2,81,51,400/-, against this assessee is in appeal before us. 08. We have heard the rival parties and considered the order of the learned lower authorities. 09. In the present case, assessee has filed a paper book containing 34 pages. Assessee referred license agreement with JNPT and decision of the Hon'ble Bombay High Court in writ petition no. 1410 of 2012, where the assessee has Page | 5 ITA No. 3132/Mum/2018 Gateway Terminals India P. Ltd.; A.Y. 12-13 challenged about the tariff rates. The Hon'ble High Court directed the assessee allowing it to collect the same but also held that collection of such amount would be subjected to further orders and therefore, as a prudent businessman assessee kept substantial amount in fixed deposits receipts and claimed deduction on the same as it arose from the tariff collected. It may be the case that deduction under Section 80IA of the Act may not be available to the assessee on the above sum but claim of the same cannot be said to be not bonafide. Assessee has also stated several judicial precedents where interest on fixed deposits receipts is allowed for deduction under Section 80IA of the Act. We are not on the merits of the deduction but on the issue whether penalty under Section 271(1) (c) of the Act can be levied on such claim for furnishing of inaccurate particulars of income. 010. It is also the fact that disallowance of deduction under Section 80IA of the Act on interest on Income tax refund was initiated by the learned Assessing Officer as the addition was made in order under Section 143(3) of the Act. Vide order dated 18 March 2019, proceedings initiated under Section 271(1) (c) of the Act by the learned Assessing Officer was dropped. 011. Assessee also submitted copy of the notice issued under Section 274 read with section 271 of the Act dated 31 October 2017 issued by learned CIT (A)-2, which is placed at page no. 34 of the Paper Book. It clearly shows that none of the twin charges was cancelled / strikes off by the Page | 6 ITA No. 3132/Mum/2018 Gateway Terminals India P. Ltd.; A.Y. 12-13 learned CIT (A) in the notice. In such a case despite finding in the assessment order and in the penalty order, the penalty cannot survive as per order of the Hon'ble Bombay High Court in case of Mhd. Farhan sheikh VS DCIT 434 ITR 1, Bombay. 012. The quantum addition confirmed by the ITAT was challenged before the Hon'ble High Court and same was admitted in ITA No. 1139 of 2021 which was posted for final hearing on 13 th January, 2022 vide order dated 14 th December, 2021. Thus, it was also stated when the issue is pending before the Hon'ble High Court it became debatable issue and penalty cannot be levied. 013. It was also stated that even after the addition confirmed by the co-ordinate Benches on the quantum proceedings, the income of the assessee is still assessed under Section 115JB of the Act. Circular dated 31 December 2015 was referred to that in cases prior to 1 April 2016 as any adjustment is made, the penalty cannot be levied under Section 271(1) (c) of the Act. Even on this ground, also penalty requires to be deleted. 014. In view of the above arguments, where individually these arguments are tested for levy of penalty levied by learned CIT (A), penalty order suffers from severe infirmities. 015. However following the decision of full Bench of Hon'ble Bombay High Court in Mohd. Farhan A. Shaikh V DCIT [2021] 125 taxmann.com 253 (Bombay)/[2021] 280 Taxman 334 where in it is held that Where assessment order clearly records Page | 7 ITA No. 3132/Mum/2018 Gateway Terminals India P. Ltd.; A.Y. 12-13 satisfaction for imposing penalty on one or other, or both grounds mentioned in section 271(1)(c), a mere defect in notice, not striking off irrelevant matter would vitiate penalty proceedings . Therefore, the appeal of the assessee deserves to be allowed on this point itself. 016. Accordingly, we quash the penalty levied by the learned CIT (A) amounting to ₹2,81,51,400/- under Section 271(1) (c) of the Act. 017. Accordingly, the appeal of the assessee is allowed. Order pronounced in the open court on 18.07.2022. Sd/- Sd/- (KAVITHA RAJAGOPAL) (PRASHANT MAHARISHI) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Mumbai, Dated: 18.07.2022 Sudip Sarkar, Sr.PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. The CIT(A) 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Mumbai