IRAISAA HOTELS P. LTD, NAVI MUMBAI V. ITO 15(2)(1), MUMBAI

ITA 3201/MUM/2017

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 9839 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2007-2008
• Appeal Filed On: 03-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PRADIP M KAPASI
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI SANDEEP GOSAIN , JM ITA NO. 3201 / MUM/20 17 ( ASSESSMENT YEAR : 2007 - 08 ) M/S. IRAISAA HOTELS PVT. LTD., D/2, BIG SPLASH SEC - 17, VASHI NAVI MUMBAI 400 705 VS. ITO 15(2)(1) MUMBAI PAN/GIR NO. AABCI5332H ( APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY SHRI PRADIP M KAPASI REVENUE BY SHRI ABI RAMA KARTHIKEYAN DATE OF HEARING 24 / 09 /201 8 DATE OF PRONOUNCEMENT 25 / 09 /201 8 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 24, MUMBAI DATED 21/02/2017 FOR A.Y.2007 - 08 IN THE MATTER OF IMPOSITION OF PENALTY U/S.271(1)(C) OF THE IT ACT. 2. AT THE OUTSET, LEARNED AR PLA CED ON RECORD THE QUANTUM ORDER OF THE TRIBUNAL, WHEREIN ADDITION WITH RESPECT TO WHICH PRESENT PENALTY HAS BEEN LEVIED U/S. 271 (1) (C), HAS BEEN DELETED BY THE TRIBUNAL VIDE ITS ORDER DATED 08/09/2017. WE HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES B ELOW AND FOUND THAT PENALTY WAS LEVIED WITH RESPECT TO ADDITION OF RS.36 LAKHS TO THE BUSINESS INCOME OF THE ASSESSEE. ITA NO. 3201/MUM/2017 M/S. IRAISAA HOTELS PVT. LTD., 2 3. WE FOUND THAT THIS ADDITION HAS BEEN DELETED BY THE TRIBUNAL VIDE ITS ORDER DATED 08/09/2017 BY OBSERVING AS UNDER: - 7. WE HAVE HEA RD RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS EVIDENT, THERE IS NO DISPUTE ABOUT THE FACT THAT THE ASSESSEE AND BHUMINATH CONSTRUCTION HAVE ENTERED INTO MOU FOR DEVELOPMENT OF A HOTEL. IT IS ALSO A FACT THAT AS PER THE TERMS OF M OU, BHUMINATH CONS TRUCTION WILL ADVANCE A SUM OF RS. 5 CRORE IN INSTALLMENTS TO THE ASSESSEE FOR DEVELOPMENT OF THE PROJECT. IT IS ALSO MADE CLEAR IN THE MOU THAT THE SAID AMOUNT OF RS. 5 CRORE SHALL BE INTEREST FREE. NEITHER OF THE DEPARTMENTAL AUTHORITIES HA VE TAKEN INTO CONSIDERATION THE ADVANTAGE DERIVED BY THE ASSESSEE FROM THE INTEREST FREE FUND RECEIVED BY IT FROM BHUMINATH CONSTRUCTION. MOREOVER, IT APPEARS THAT IN CASE OF BHUMINATH CONSTRUCTION, THE ASSESSING OFFICER HAS ACCEPTED THE COMPENSATION PAID OF RS. 6,75,150 TO THE ASSESSEE WHILE COMPLETING THE ASSESSMENT. THEREFORE, IF ACTUALLY HIGHER COMPENSATION HAS NOT BEEN PAID TO THE ASSESSEE, NO ADDITION CAN BE MADE NOTIONALLY AND ON MERE PRESUMPTION AND SURMISES THAT THE ASSESSEE MIGHT HAVE RECEIVED EXCES S COMPENSATION OR THE COMPENSATION RECEIVED IS MEAGER. 8. ANOTHER IMPORTANT ASPECT WHICH IS NECESSARY TO DEAL WITH ,IS, THOUGH, THE LEARNED COMMISSIONER (APPEALS) HAS CATEGORICALLY STATED THAT THE ASSESSING OFFICER HAD NEVER DOUBTED THE GENUINENESS OF T HE PURCHASES AND TOTAL COST INCURRED TOWARDS THE CONSTRUCTION, HOWEVER, HE HAS SUSTAINED THE ADDITION PRIMARILY FOR THE REASON THAT EXPENDITURE INCURRED BY THE ASSESSEE ON ACCOUNT OF INTEREST PAYMENT AT RS. 9,60,000 IS MORE THAN THE COMPENSATION RECEIVED. HO WEVER, ON A PERUSAL OF THE AUDITED PROFIT & LOSS ACCOUNT FOR THE YEAR ENDING 31 ST MARCH 2007, WE FIND THE TOTAL EXPENDITURE DEBITED TO THE PROFIT & LOSS ACCOUNT OF RS. 6,30,617, INCLUDING INTEREST EXPENDITURE OF RS. 1,59,706. THUS, WE ARE UNABLE TO UNDERSTAND WHERE FROM THE LEARNED COMMISSIONER (APPEALS) HAS OBTAINED THE INTEREST PAYMENT AMOUNT OF RS. 9.60 LAKH. THUS, ON THE BASIS OF SUCH HALF BAKED FACTS ADDITION CANNOT BE MADE ON MERE PRESUMPTION AND SURMISES. THEREFORE, WE HAVE NO HESITATION IN DEL ETING THE ADDITION MADE ON ESTIMATE BASIS. HOWEVER/ THE ASSESSING OFFICER IS DIRECTED TO BRING TO TAX THE COMPENSATION RECEIVED BY THE ASSESSEE FROM BHUMINATH CONSTRUCTION. GROUNDS NO.L AND' 2 ARE DISPOSED OFF ACCORDINGLY. 4. AS THE ADDITION W ITH RESPECT TO WHICH PENALTY HAS BEEN LEVIED HAVE ALREADY BEEN DELETED BY THE TRIBUNAL, THE ORDER OF AO LEVYING PENALTY U/S.271(1)(C) WITH RESPECT TO SUCH ADDITION HAS NO LEGS TO STAND. ACCORDINGLY, AO IS DIRECTED TO DELETE THE PENALTY SO IMPOSED. ITA NO. 3201/MUM/2017 M/S. IRAISAA HOTELS PVT. LTD., 3 5. IN TH E RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 25 / 09 /201 8 SD/ - ( SANDEEP GOSAIN ) SD/ - (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 25 / 09 /201 8 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//