SUNIL HOTELS P. LTD, MUMBAI V. DCIT 8(3), MUMBAI

ITA 3255/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1872 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 30-01-2013
• Assessment Year: 2003-2004
• Appeal Filed On: 25-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHATURBHUJ DAS
• Assessee Lawyers: H M MOTIWALLA PIYU SH CHHAJED
• Keywords: Question of law; Wrong claim
• Section: 143(3); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E, MUMBAI BEFORE SHRI I.P.BANSAL,JUDICIAL MEMBER & SHRI N.K.BILLAIYA, ACCOUNTANT MEMBER ITA NO. 1551/MUM/2009(A.Y.1998-1999) ITA NO. 3251 TO 3256/MUM/2011 (A.Y. 1999-2000 TO 2004-05 ) M/S.SUNIL HOTELS PVT. LTD. KAKAD CORNER, KONDIVITA LANE, ANDHERI KURLA ROAD, ANDHERI (E), MUMBAI - 400 059. PAN:AAFCS 5261D (APPELLANT) VS. THE DCIT, RANGE 8(3), MUMBAI. (RESPONDENT) APPELLANT BY : S/SHRI H.M.MOTIWALLA PIYU SH CHHAJED RESPONDENT BY : SHRI CHATURBHUJ DAS DATE OF HEARING : 30/01/2013 DATE OF PRONOUNCEMENT : 3 0/01/2013 ORDER PER BENCH: ALL THESE SEVEN APPEALS ARE FILED BY THE ASSESEE . THEY ARE DIRECTED AGAINST SEPARATE ORDERS OF CIT(A)S, MUMBAI FOR THE ASSESSMENT YEARS 1998- 1999 TO 204-05. THE DATE OF ORDERS OF LD. CIT(A) ARE AS UNDER: ITA NO. DATE OF CIT(A) ORDER 1551/MUM/2009 26/12/2008 3251/MUM/2011 21/03/2011 3252/MUM/2011 21/03/2011 3253/MUM/2011 25/02/2011 3254/MUM/2011 25/02/2011 3255/MUM/2011 23/02/2011 3256/MUM/2011 25/02/2011 ITA NO. 1551/MUM/2009(A.Y.1998-1999) ITA NO. 3251 TO 3256/MUM/2011 (A.Y. 1999-2000 TO 2004-05 ) 2 2. IN ALL THESE CASES CONCEALMENT PENALTIES HAVE BE EN LEVIED IN RESPECT OF ASSESSMENT FRAMED U/S. 153A OF THE ACT IN PURSUANC E TO SEARCH CONDUCTED BY THE DEPARTMENT. 3. THE CONCEALMENT PENALTY HAS BEEN LEVIED MAINLY O N THREE ADDITIONS NAMELY (I) ADDITIONAL PACK-UP-INCOME (II) SUPPRESSI ON OF LIQUOR SALE AND (III) DELAYED PAYMENT OF P.F. AS THE ADDITION WITH REGAR D TO SUPPRESSION OF LIQUOR SALE IS DELETED BY THE TRIBUNAL IN QUANTUM ORDER AN D ADDITION REGARDING DELAYED PAYMENT OF P.F IS DELETED BY LD.CIT(A), TH EREFORE, THE QUESTION OF LEVY OF CONCEALMENT PENALTY SURVIVE ONLY WITH RESPEC T TO ADDITIONAL PACK -UP INCOME , THE QUANTUM OF WHICH YEAR WISE IS ARE UND ER: ASSESSMENT YEAR AMOUNT 1998-99 RS. 9,12,983/- 1999-2000 RS. 5,59,430/- 2000-2001 RS. 6,02,730/- 2001-2002 RS. 14,26,604/- 2002-2003 RS. 34,19,706/- 2003-2004 RS. 46,84,490/- 2004-05 RS. 46,00,533 THE TRIBUNAL HAS DELETED THE ADDITION MADE ON ACC OUNT OF SUPPRESSION OF LIQUOR SALE AND HAS UPHELD THE ADDITION ON ACCOUNT OF ADDITION PACK UP SALE VIDE ORDER DATED 11/5/2009 IN ITA NO. 705 TO 711/MU M/2007 IN RESPECT OF ASSESSMENT YEAR 1998-99 TO 2004-05. COPY OF THE OR DER HAS BEEN PLACED ON RECORD AND ALSO GIVEN TO LD. DR. 4. APART FROM ADDITION ON ACCOUNT OF PACK UP INCOM E THERE IS ONE MORE ADDITION OF RS.9,04,498/- PERTAINING TO ASSESSMENT YEAR 2000-01, WHICH IS REGARDING CLAIM OF DEDUCTION UNDER SECTION 80 HHD. THE OBSERVATION OF AO ITA NO. 1551/MUM/2009(A.Y.1998-1999) ITA NO. 3251 TO 3256/MUM/2011 (A.Y. 1999-2000 TO 2004-05 ) 3 WHILE MAKING THIS ADDITION AS PER PARA 40 OF THE ASSESSMENT ORDER IS AS UNDER: 40. ASSESSEE HAS CLAIMED 80HHD DEDUCTION OF RS.6, 75,916/- BEING 50% OF TOTAL EARNING OF RS.13,51,831/- IN THE RETURN FILED ON 29 .11.2000. THE DEDUCTION U/S.80HHD IS ALLOWED @ 50% ON THE PROFITS EARNED AN D NOT ON THE RECEIPTS. THE ASSESSEE REVISED DEDUCTION 80HHD TO RS.28,716/- BEI NG 50% OF PROFIT FROM HOTEL BUSINESS OF RS.57,432/-. THIIS DEDUCTION HAS BEEN REVISED IN THE RETURN FILED IN RESPONSE TO NOTICE U/S.153A. THE DEDUCTION IS ALLO WED AT RS.28,716/- 5. THERE IS ONE MORE AMOUNT OF RS.43,215/- WHICH IS AN ADDITION MADE IN RESPECT OF A.Y 2004-05 ON WHICH CONCEALMENT PENALTY HAS BEE N LEVIED. THE LEVY OF CONCEALMENT PENALTY ON THIS ADDITIONS IS AGITATED B Y THE ASSESSEE AS PER GROUND NO.2 IN THE APPEAL FOR A.Y 2004-05. THIS GROUND WAS NOT PRESSED BY LD. AR, THEREFORE, GROUND NO.2 FOR A.Y 2004-05 IS DISMISSED BEING NOT PRESSED. 6. AT THE OUTSET IT IS THE CASE OF LD. AR THAT SO A S IT RELATES TO ADDITION ON ACCOUNT OF PACK UP CREDIT ASSESSEE HAD FILED APPEAL BEFORE HONBLE HIGH COURT FOR DECIDING THE SUBSTANTIAL QUESTION OF LAW AND T HEIR LORDSHIP OF HONBLE BOMBAY HIGH COURT VIDE THEIR ORDER DATED 20/9/2010 HAVE ADMITTED FIRSTLY THE FOLLOWING QUESTION OF LAW: (A) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE HONBLE ITAT WAS RIGHT IN LAW IN CONFIRMING THE ADDITIONS O F PACK UP MONEY WHICH HAS BEEN TAXED IN THE HANDS OF MR. RAVINDRA SINGH U /S. 153C OF THE INCOME TAX ACT IN THE HANDS OF THE APPELLANT.? THEREAFTER, THE ADDITIONAL QUESTION OF LAW WAS ALS O ADMITTED BY ISSUE OF CHAMBER SUMMONS ON 20/9/2011 AS PER FOLLOWING OBSER VATIONS: 1. BY CONSENT, CHAMBER SUMMONS ARE MADE ABSOLUTE I N TERMS OF PRAYER CLAUSE (A). ALL THE APPEALS WHICH ARE ALREADY ADMITTED SH ALL HAVE AN ADDITION QUESTION OF LAW, AS FOLLOWS: WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE FINDING OF THE TRIBUNAL IN MAKING ADDITIONS ON ACC OUNT OF PACK OF MONEY IN THE HANDS OF THE APPELLANT IS PERVERSE SINCE THE SA ME IS BASED ON THE CONSIDERATION WHICH IS RELEVANT AND HENCE BAD IN LA W? ITA NO. 1551/MUM/2009(A.Y.1998-1999) ITA NO. 3251 TO 3256/MUM/2011 (A.Y. 1999-2000 TO 2004-05 ) 4 HE HAS SUBMITTED COPY OF THESE SAID ORDERS OF THE HONBLE HIGH COURT AND A COPY WAS ALSO GIVEN TO LD. DR. REFERRING TO THESE FACTS IT WAS SUBMITTED BY HIM THAT WHEN A SUBSTANTIAL QUESTION OF LAW HAS BE EN ADMITTED BY JURISDICTIONAL HIGH COURT AGAINST QUANTUM ORDER TH EN PENALTY HAS TO BE SET ASIDE AND DELETED. TO SUBSTANTIATE SUCH CONTENTION HE RELIED UPON THE DECISION RENDERED BY CO-ORDINATE BENCH ON 18/3/2011 IN THE C ASE OF M/S. NAYAN BUILDERS & DEVELOPERS PVT. LTD. VS. ITO (ITA NO.237 9/MUM/2009,A.Y. 1997- 98), WHEREIN FOLLOWING ORDER WAS PASSED: THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDE R PASSED BY THE CIT(A) ON 20.01.2009 CONFIRMING THE PENALTY OF RS.37,32,777 IMPOSED BY THE AO U/S.271(1)(C) OF THE ACT IN RELAT ION TO ASSESSMENT YEAR 1997-98. 2. SHORN OFF UNNECESSARY DETAILS IT IS AN ADMITTED POSITION FROM BOTH THE SIDES THAT THE PENALTY HAS BEEN FINALLY UPHELD QUA THE ADDITION OF RS.1,04,76,050 TOWARDS INCOME FROM SPECTRUM CORP ORATE SERVICES LTD. ASSESSED IN THIS YEAR, DISALLOWANCE O F BROKERAGE OF RS.10,79,221 AND DISALLOWANCE OF LEGAL FEES OF RS.2 ,00,000. IT IS SEEN THAT THE TRIBUNAL HAS UPHELD THESE ADDITIONS I N QUANTUM PROCEEDINGS FOR WHICH THE PENALTY HAS BEEN HELD TO BE IMPOSABLE. THE LEARNED A.R. HAS PLACED ON RECORD THE JUDGEMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN INCOME TAX APPEAL NO.2 368 OF 2009 ADMITTING INTER ALIA THE FOLLOWING TWO QUESTIONS:- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE TRIBUNAL WAS RIGHT IN HOLDING THAT THE DEP OSIT RS.1,04,76,050/- RECEIVED FROM SPECTRUM IS EXIGIBLE TO TAX IN THE ASSESSMENT YEAR 1997-98? WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE TRIBUNAL WAS CORRECT IN CONFIRMING THE DIS ALLOWANCE OF BROKERAGE RS.10,79,221/- AND LEGAL FEES RS.2,00,000 /-? 3. IT IS, THEREFORE, ABUNDANTLY CLEAR THAT THE ADDI TIONS IN RESPECT OF WHICH PENALTY WAS CONFIRMED HAVE BEEN ACCEPTED BY T HE HONBLE BOMBAY HIGH COURT LEADING TO SUBSTANTIAL QUESTION O F LAW. WHEN THE HIGH COURT ADMITS SUBSTANTIAL QUESTION OF LAW O N AN ADDITION, IT BECOMES APPARENT THAT THE ADDITION IS CERTAINLY DEB ATABLE. IN SUCH CIRCUMSTANCES PENALTY CANNOT BE LEVIED U/S 271(1) AS HAS BEEN HELD IN SEVERAL CASES INCLUDING RUPAM MERCANTILE VS . DCIT [(2004) 91 ITD 237 (AHD) (TM)] AND SMT.RAMILA RATILAL SHAH VS. ACIT [(1998) 60 TTJ (AHD) 171]. THE ADMISSION OF SUBSTAN TIAL QUESTION OF ITA NO. 1551/MUM/2009(A.Y.1998-1999) ITA NO. 3251 TO 3256/MUM/2011 (A.Y. 1999-2000 TO 2004-05 ) 5 LAW BY THE HONBLE HIGH COURT LENDS CREDENCE TO THE BONA FIDES OF THE ASSESSEE IN CLAIMING DEDUCTION. ONCE IT TURNS OUT THAT THE CLAIM OF THE ASSESSEE COULD HAVE BEEN CONSIDERED FOR DEDU CTION AS PER A PERSON PROPERLY INSTRUCTED IN LAW AND IS NOT COMPLE TELY DEBARRED AT ALL, THE MERE FACT OF CONFIRMATION OF DISALLOWANCE WOULD NOT PER SE LEAD TO THE IMPOSITION OF PENALTY. SINCE THE ADDITI ONS, IN RESPECT OF WHICH PENALTY HAS BEEN UPHELD IN THE PRESENT PROCEE DINGS, HAVE BEEN HELD BY THE HONBLE HIGH COURT TO BE INVOLVING A SUBSTANTIAL QUESTION OF LAW, IN OUR CONSIDERED OPINION, THE PEN ALTY IS NOT EXIGIBLE UNDER THIS SECTION. WE, THEREFORE, ORDER FOR THE DELETION OF PENALTY. 4. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED ON THIS 18 TH DAY OF MARCH, 2011 . 7. THE AFOREMENTIONED ORDER WAS LATER ON FOLLOWED B Y THE TRIBUNAL IN SUBSEQUENT DECISION DATED 29/9/2012 IN THE CASE OF SHRI SUDHAKAR M. SHETTY VS. ACIT IN ITA NO.6514 & 6515/MUM/2011, WHEREIN TH E CONCEALMENT PENALTY WAS DELETED WITH THE FOLLOWING OBSERVATION. ITA NO.6514/MUM/2011 IS AN APPEAL BY THE ASSESSEE AGAINST THE SUSTENANCE OF PENALTY U/S 271(1)(C) OF THE ACT, IN RELATION TO THE ASSESSMENT YEAR 2007-2008. 2. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE TRIBUNAL WAS PLEASED TO DECIDE THE QUESTION OF RECEIPT BY TH E ASSESSEE ON RETIREMENT FROM PARTNERSHIP FIRM M/S.D.S.CORPORATIO N AS TAXABLE, AGAINST THE ASSESSEE. IT WAS SUBMITTED THAT THE ASSESSEE AP PROACHED THE HONBLE BOMBAY HIGH COURT AGAINST THE QUANTUM ORDER PASSED BY THE TRIBUNAL AGAINST THE ASSESSEE AND THE SUBSTANTIAL QUESTION O F LAW HAS BEEN ADMITTED BY THE HONBLE BOMBAY HIGH COURT. A COPY O F THE ORDER ADMITTING THE SUBSTANTIAL QUESTION OF LAW ON THIS ISSUE HAS B EEN PLACED ON PAGE 16 OF THE PAPER BOOK. IN THE LIGHT OF THE ADMISSION OF SUBSTANTIAL QUESTION OF LAW ON THIS ISSUE, THE LEARNED AR SUBMITTED THAT N O PENALTY CAN BE SUSTAINED. IN SUPPORT OF THIS PROPOSITION, HE RELI ED ON CERTAIN DECISIONS. THE LEARNED DEPARTMENTAL REPRESENTATIVE FAIRLY CONC EDED THAT THE SOLITARY ISSUE WHICH WAS DECIDED BY THE TRIBUNAL AGAINST THE ASSESSEE HAS BEEN ADMITTED AS SUBSTANTIAL QUESTION OF LAW BY THE HON BLE BOMBAY HIGH COURT. HE HOWEVER, CONTENDED THAT THE PENALTY CAN S TILL BE LEVIED. 3. HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE RELEVANT MATERIAL ON RECORD IT IS FOUND AS UNDISPUTED THAT T HE HONBLE BOMBAY HIGH COURT HAS ADMITTED A SUBSTANTIAL QUESTION OF LAW AG AINST THE QUANTUM ORDER PASSED BY THE TRIBUNAL AGAINST THE ASSESSEE. SUSTENANCE OF SUCH ITA NO. 1551/MUM/2009(A.Y.1998-1999) ITA NO. 3251 TO 3256/MUM/2011 (A.Y. 1999-2000 TO 2004-05 ) 6 ADDITION IS THE SOLE BEDROCK FOR THE IMPOSITION AND CONFIRMATION OF PENALTY. THE QUESTION AS TO WHETHER PENALTY CAN BE SUSTAINED WHEN A SUBSTANTIAL QUESTION OF LAW HAS BEEN ADMITTED BY THE HONBLE HI GH COURT CAME UP FOR ADJUDICATION BEFORE THE MUMBAI BENCH OF THE TRIBUNA L IN THE CASE OF M/S.NAYAN BUILDERS & DEVELOPERS PVT. LTD. V. ITO. VIDE ITS ORDER DATED 18.03.2011 IN ITA NO.2379/MUM/ 2009 THE TRIBUNAL, A FTER RELYING ON CERTAIN DECISIONS, HAS HELD THAT WHERE SUBSTANTIAL QUESTION OF LAW IS ADMITTED BY THE HONBLE HIGH COURT, IT LENDS CREDEN CE TO THE BONA FIDES OF THE ASSESSEE IN SUPPORT OF ITS CASE. IN THAT VIEW O F THE MATTER IT HAS BEEN HELD THAT NO PENALTY CAN BE SUSTAINED BECAUSE OF TH E ACCEPTANCE OF THE BONA FIDES OF THE ASSESSEE. THE FACTS AND CIRCUMSTA NCES PREVAILING IN THE PRESENT CASE ARE MUTATIS MUTANDIS SIMILAR TO THE AF ORE-NOTED TRIBUNAL ORDER PASSED BY THE MUMBAI BENCH OF THE TRIBUNAL. R ESPECTFULLY FOLLOWING THE SAME, WE HOLD THAT NO PENALTY CAN BE IMPOSED IN RESPECT OF THE ADDITION SUSTAINED ON WHICH SUBSTANTIAL QUESTION OF LAW HAS BEEN ADMITTED BY THE HONBLE BOMBAY HIGH COURT. ACCORDIN GLY THE IMPUGNED ORDER IS SET ASIDE AND PENALTY IS ORDERED TO BE DEL ETED. 4. IN THE RESULT, THE APPEAL IS ALLOWED. 8. COPIES OF ALL THESE ORDERS WERE ALSO GIVEN TO LD . DR. HOWEVER, LD. DR RELIED UPON THE ORDERS OF AO AND LD.CIT(A). 9. WE HAVE HEARD BOTH PARTIES AND THEIR CONTENTIONS HAVE CAREFULLY BEEN CONSIDERED. SO AS IT RELATES ADDITION ON ACCOUNT TO PACK UP CREDIT SUBSTANTIAL QUESTION OF LAW HAS BEEN ADMITTED BY HONBLE JURISD ICTIONAL HIGH COURT. THE FACT OF ADMISSION OF SUBSTANTIAL QUESTION OF LAW HA S NOT BEEN DISPUTED. LD. DR ALSO COULD NOT SHOW ANY CONTRARY DECISION AGAINST T HE AFOREMENTIONED DECISIONS OF CO-ORDINATE BENCHES, WHEREIN A PROPOSI TION HAS BEEN LAID DOWN THAT IN A CASE WHERE SUBSTANTIAL QUESTION OF LAW HA S BEEN ADMITTED BY HIGH COURT IN RESPECT OF THE QUANTUM ORDER, PENALTY IS L IABLE TO BE SET ASIDE AND DELETED. IN THIS VIEW OF THE SITUATION RESPECTFULL Y FOLLOWING THE AFOREMENTIONED TWO ORDERS OF THE CO-ORDINATE BENCHES WE DELETE TH E CONCEALMENT PENALTY LEVIED IN RESPECT OF ADDITION MADE ON ACCOUNT OF P ACK UP CREDIT. 10. NOW COMING TO THE ANOTHER AMOUNT RELATING TO DEDUCTION UNDER SECTION 80 HHD THE OBSERVATION OF THE AO IN THE ASSESSMENT ORDER HAVE ALREADY BEEN REPRODUCED. IT CAN BE SEEN THAT INACCURATE PARTIC ULARS WERE NOT SUBMITTED ITA NO. 1551/MUM/2009(A.Y.1998-1999) ITA NO. 3251 TO 3256/MUM/2011 (A.Y. 1999-2000 TO 2004-05 ) 7 BY THE ASSESSEE. DEDUCTION UNDER SECTION 80 HHD WA S CLAIMED ON THE BASIS OF RECEIPT AS AGAINST IT SHOULD BE CLAIMED UPON PROFIT S. THE ASSESSEE HAD REALIZED ITS MISTAKE AND HAD REVISED THIS CLAIM IN THE RET URN FILED IN RESPONSE TO NOTICE UNDER SECTION 153A OF THE ACT. THE ASSESSME NT IS FRAMED UNDER SECTION 143(3) R.W.S. 153A OF THE ACT. IT IS JUST A WRONG CLAIM MADE UNDER MISTAKE WHICH WAS RECTIFIED BY THE ASSESSEE WHILE FILING TH E RETURN UNDER SECTION 153A. THEREFORE, AFTER HEARING BOTH THE PARTIES WE ARE OF THE OPINION THAT LEVY OF CONCEALMENT PENALTY CANNOT BE UPHELD ON THIS ADDITI ON. 11. IN VIEW OF ABOVE DISCUSSIONS ALL THE APPEALS EXCEPT ITA NO.3256/M/2011 (FOR A.Y 2004-05) FILED BY THE ASSES SEE ARE ALLOWED IN THE MANNER AFORESAID AND ITA NO.3256/M/2011 (A.Y.2004-0 5) IS PARTLY ALLOWED.. ORDER PRONOUNCED IN THE OPEN COURT ON THE 30 TH DAY OF JAN.2013 SD/- SD/- (N.K.BILLAIYA ) (I.P.BANSAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 30 TH JAN.2013 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CITY CONCERNED 4. THE CIT(A)- CONCERNED 5. THE D.R E BENCH. (TRUE COPY) BY ORDER ASST. REGISTRAR, I TAT, MUMBAI BENCHES MUMBAI. VM. ITA NO. 1551/MUM/2009(A.Y.1998-1999) ITA NO. 3251 TO 3256/MUM/2011 (A.Y. 1999-2000 TO 2004-05 ) 8 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 30/01/2013 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 30/01/2013 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER