ITO 9(2)(3), MUMBAI V. NAWANY CONSTRUCTION P. LTD, MUMBAI

ITA 3341/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93311 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 23-07-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 30-04-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: CHANDIP SINGHDR
• Section: 260A

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI SANJAY ARORA, ACCOUNTANT MEMBER ITA NO.3341/MUM/2013 ASSESSMENT YEAR:2002-03 ITO-9(2)(3), ROOM NO.225, 2 ND FLOOR, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 / VS. M/S NAWANY CONSTRUCTION PVT. LTD. 384-1, BANDANA, 15 TH ROAD, BANDRA (WEST), MUMBAI-400050 ( !' # /ASSESSEE) ( $ / REVENUE) P.A. NO. AAACC1471D $ / REVENUE BY SHRI CHANDIP SINGH-DR, !' # / ASSESSEE BY SHRI NISHIT GANDHI % $& ' # ( / DATE OF HEARING 27/07/2015 ' # ( / DATE OF ORDER: 28/08/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DAT ED 11/02/2013 OF THE LD. CIT(A), MUMBAI DELETING THE P ENALTY IMPOSED U/S. 271(1)(C) OF THE INCOME-TAX ACT, 1961 ITA NO.3341MUM/2013 , NAWANY CONSTRUCTION COMPANY PVT. LTD. 2 (HEREINAFTER THE ACT) MERELY BECAUSE QUANTUM ADDITI ON WAS DELETED BY THE TRIBUNAL AND THE DEPARTMENT IS IN AP PEAL BEFORE THE HONBLE HIGH COURT. 2. DURING HEARING OF THIS APPEAL, THE LEARNED DR SH RI CHANDIP SINGH, ADVANCED HIS ARGUMENTS WHICH ARE IDE NTICAL TO THE GROUND RAISED. ON THE OTHER HAND, SHRI NISH IT GANDHI, LD. COUNSEL FOR THE ASSESSEE, CONTENDED THAT THE TR IBUNAL IN THE CASE OF ASSESSEE FOR A.Y. 2002-03 QUASHED THE ASSESSMENT. THIS FACTUAL MATRIX WAS NOT CONTROVERT ED BY LD. DR. 3. WE HAVE CONSIDERED THE SUBMISSIONS PUT FORTH BY THE LEARNED DR AND PERUSED THE MATERIAL AVAILABLE ON RE CORD. WE NOTE THAT WHEN QUANTUM ADDITION HAS ALREADY BEEN QU ASHED BY THE TRIBUNAL, THEREFORE, THE PENALTY CANNOT SURV IVE. OUR VIEW FINDS SUPPORT FROM THE DECISION OF THE TRIBUNA L IN THE CASE OF ITO VS. M/S FOBEOZ INDIA PVT. LTD.(ITA NO. 4378/MUM/2012 ORDER DATED 28.11.2014. THE RELEVANT PORTION OF THE SAME IS REPRODUCED HEREUNDER FOR REA DY REFERENCE: THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DAT ED 10/04/2012 OF THE LD. FIRST APPELLATE AUTHORITY, MUMBAI. THE ONLY GROUND RAISED PERTAINS TO DELETING THE PENALTY OF RS.1,77,98,081/ - LEVIED U/S 271(1)(C) OF THE INCOME-TAX ACT 1961( HEREINAFTER THE ACT ). 2. DURING HEARING, THE LD. DR SHRI PAWAN KUMAR BEE RLA CONTENDED THAT THE PENALTY HAS BEEN DELETED WITHOUT ASSIGNING A VALID REASON OVERLOOKING THE FACT THAT APPEAL U/S 2 60A OF THE ACT HAS BEEN FILED AGAINST THE DECISION OF THE TRIBUNAL, DE LETING QUANTUM ITA NO.3341MUM/2013 , NAWANY CONSTRUCTION COMPANY PVT. LTD. 3 ADDITION, BEFORE THE HONBLE HIGH COURT. ON THE OT HER HAND, NONE APPEAR ON BEHALF OF THE ASSESSEE, THEREFORE, WE HAV E NO OPTION TO PROCEED EX-PARTE QUA THE ASSESSEE AND DISPOSED OF T HIS APPEAL ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. 2.1 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE DERIVED ITS INCOME FROM LOCAL AND EXPORT S ALE, INTEREST ON DEPOSIT ETC. THE ASSESSMENT WAS COMPLETED U/S 143( 3) OF THE ACT WITH RESPECT TO NON DEDUCTION OF TDS ON THE CLAIMED EXPENSES IN ITS PROFIT AND LOSS ACCOUNT, CAPITALIZATION OF AMOUNT P AID TOWARD DEVELOPMENT AGREEMENT, WORK IN PROGRESS, TAXABILITY OF INTEREST ON PROJECT ADVANCES UNDER THE HEAD INCOME FROM OTHER S OURCES ETC. ASSESSING THE TAXABLE INCOME AT RS.1,80,05,214/-. T HE ASSESSING OFFICER THEREAFTER IMPOSED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. HOWEVER, THE APPEAL ON QUANTUM ADDITION WAS DE CIDED IN FAVOUR OF THE ASSESSEE DELETING THE ALLEGED ADDITION. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE PENALTY ON THE GROUND THAT SINCE THE TRIBUNAL HAS DELETED THE ADDITION, THEREFORE, T HE PENALTY SO IMPOSED U/S 271(1)(C) OF THE ACT CANNOT SURVIVE AGA INST WHICH THE REVENUE IS AGGRIEVED AND IS IN APPEAL BEFORE THIS T RIBUNAL. THE SUM AND SUBSTANCE OF THE ARGUMENTS ADVANCED BY THE LD. DR IS THAT THE DEPARTMENT HAS FILED APPEAL U/S 260A OF THE ACT BEF ORE THE HONBLE HIGH COURT. WE ARE REPRODUCING HEREUNDER THE RELEV ANT CONCLUDING PORTION FROM THE IMPUGNED ORDER: I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, THE SUBMISSIONS OF THE APPELLANT AND PENALTY ORDER. THERE ARE TWO ISS UES ON WHICH PENALTY IS LEVIED. THE FIRST ISSUE IS AN ADDITION MADE OF RS.1,77,98,081 ON ACCOUNT OF ACCRUAL OF INTEREST ON ADVANCE GIVEN TO M/S KUBER DEVELOPERS. THE HONBLE ITAT HAS DELETED THIS ADDITION IN PARA 12 OF THE ORDER AND HAS HELD INTERALIA THAT TH E INCOME ON NOTIONAL BASIS CANNOT BE BROUGHT TO TAX. SINCE, TH E QUANTUM ADDITION ITA NO.3341MUM/2013 , NAWANY CONSTRUCTION COMPANY PVT. LTD. 4 HAS BEEN DELETED BY HONBLE ITAT, MUMBAI, THE PENAL TY LEVIED ON THIS GROUND ALSO IS DELETED. 2.2. THERE IS NO DISPUTE THAT QUANTUM ADDITION HAS BEEN DELETED BY THE TRIBUNAL, THEREFORE, IN OUR HUMBLE OPINION, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS JUSTIFIED IN REACHING TO A PARTICULAR CONCLUSION. OUR VIEW FURTHER FINDS SUPPORT FROM TH E DECISION AND THE RATIO LAID DOWN IN CIT VS S.P VIZ CONSTRUCTION COMP ANY 176 ITR 47 (PATNA) AND K.C. BUILDERS VS ACIT 265 ITR 562 (SUPR EME COURT). WE ARE OF THE VIEW WHERE THE PENALTY FOR CONCEALMENT O R FURNISHING INACCURATE PARTICULARS WAS LEVIED AND AFTER DELETIN G THE QUANTUM ADDITION, THERE REMAINS NO BASIS AT ALL FOR LEVYING THE PENALTY. ORDINARILY, PENALTY CANNOT STAND IN ITSELF IF THE A DDITION MADE IN THE ASSESSMENT ITSELF IS SET ASIDE OR CANCELLED BY THE SUPERIOR AUTHORITY/COURT. THE PENALTY CANNOT STAND BY ITSEL F BECAUSE FALSE RESULT MAY BE PRODUCED BY THE FALSITY OF ONE OR MOR E OF THE CONSTITUENT ITEMS IN THE RETURN. THE WORD INACCUR ATE PARTICULARS WOULD COVER FALSITY IN THE FINAL FIGURE AND ALSO TH E CONSTITUENT ELEMENTS OR ITEMS. THEY SIMPLY WOULD MEAN INACCURA TE IN SOME SPECIFIC OR DEFINITE RESPECT WHETHER IN THE CONSTIT UENT OR SUBORDINATE ITEMS OF INCOME OR THE END RESULT. CONCEALMENT OR FURNISHING INACCURATE PARTICULARS IMPLIES SOME DELIBERATE ACT ON THE PART OF THE ASSESSEE IN WITHHOLDING THE TRUE FACTS FROM THE AUT HORITIES. SINCE, THE BASIS OF LEVYING PENALTY REMAINS NO MORE IN EXI STENCE, AFTER DELETION OF QUANTUM ADDITION, THEREFORE, FROM THIS ANGLE THE STAND OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS JUS TIFIED. 2.3. SO FAR AS, THE CONTENTION OF THE LD. DR THAT A PPEAL U/S 260A OF THE ACT HAS BEEN FILED BEFORE THE HONBLE HIGH COUR T AGAINST THE DELETION OF QUANTUM ADDITION BY THE TRIBUNAL, IS CO NCERNED, NO ORDER HAS BEEN PRODUCED BEFORE US REVERSING/STAYING THE O RDER OF THE TRIBUNAL, THEREFORE, AS ON TODAY, THE ORDER OF THE TRIBUNAL STANDS, CONSEQUENTLY, MERE FILING OF APPEAL IS NOT ENOUGH. HOWEVER, IF AT ANY STAGE, THE ORDER OF THE TRIBUNAL IS REVERSED, THE C ONSEQUENCES MAY ITA NO.3341MUM/2013 , NAWANY CONSTRUCTION COMPANY PVT. LTD. 5 FOLLOW AND THE DEPARTMENT IS FREE TO TAKE THE LEGAL RECOURSE. THEREFORE, WE FIND NO FORCE IN THE ARGUMENT OF THE LD. DR FROM THIS ANGLE ALSO. 4 . THERE IS NO DISPUTE THAT QUANTUM ADDITION HAS BEE N DELETED BY THE TRIBUNAL, THEREFORE, IN OUR HUMBLE O PINION, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS JUSTIFI ED IN REACHING TO A PARTICULAR CONCLUSION. OUR VIEW FURT HER FINDS SUPPORT FROM THE DECISION AND THE RATIO LAID DOWN I N CIT VS S.P VIZ CONSTRUCTION COMPANY 176 ITR 47 (PATNA) AND K.C . BUILDERS VS ACIT 265 ITR 562 (SUPREME COURT). WE AR E OF THE VIEW WHERE THE PENALTY FOR CONCEALMENT OR FURNISHIN G INACCURATE PARTICULARS WAS LEVIED AND AFTER DELETIN G THE QUANTUM ADDITION, THERE REMAINS NO BASIS AT ALL FOR LEVYING THE PENALTY. ORDINARILY, PENALTY CANNOT STAND IN ITSEL F IF THE ADDITION MADE IN THE ASSESSMENT ITSELF IS SET ASIDE OR CANCELLED BY THE SUPERIOR AUTHORITY/COURT. THE PENALTY CANNO T STAND BY ITSELF BECAUSE FALSE RESULT MAY BE PRODUCED BY THE FALSITY OF ONE OR MORE OF THE CONSTITUENT ITEMS IN THE RETURN. TH E WORD INACCURATE PARTICULARS WOULD COVER FALSITY IN THE FINAL FIGURE AND ALSO THE CONSTITUENT ELEMENTS OR ITEMS. THEY S IMPLY WOULD MEAN INACCURATE IN SOME SPECIFIC OR DEFINITE RESPEC T WHETHER IN THE CONSTITUENT OR SUBORDINATE ITEMS OF INCOME OR T HE END RESULT. CONCEALMENT OR FURNISHING INACCURATE PARTI CULARS IMPLIES SOME DELIBERATE ACT ON THE PART OF THE ASSE SSEE IN WITHHOLDING THE TRUE FACTS FROM THE AUTHORITIES. S INCE, THE BASIS OF LEVYING PENALTY REMAINS NO MORE IN EXISTEN CE, AFTER DELETION OF QUANTUM ADDITION, THEREFORE, FROM THIS ANGLE THE ITA NO.3341MUM/2013 , NAWANY CONSTRUCTION COMPANY PVT. LTD. 6 STAND OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL S) IS JUSTIFIED. 4.1. SO FAR AS, THE CONTENTION OF THE LD. DR THAT A PPEAL U/S 260A OF THE ACT HAS BEEN FILED BEFORE THE HONBLE H IGH COURT AGAINST THE DELETION OF QUANTUM ADDITION BY THE TRI BUNAL, IS CONCERNED, NO ORDER HAS BEEN PRODUCED BEFORE US REVERSING/STAYING THE ORDER OF THE TRIBUNAL, THEREF ORE, AS ON TODAY, THE ORDER OF THE TRIBUNAL STANDS, CONSEQUENT LY, MERE FILING OF APPEAL IS NOT ENOUGH. HOWEVER, IF AT ANY STAGE, THE ORDER OF THE TRIBUNAL IS REVERSED, THE CONSEQUENCES MAY FOLLOW AND THE DEPARTMENT SHALL BE AT LIBERTY TO PROSECUTE ITS APPEAL BEFORE US ON MERITS. FINALLY, WE FIND NO INFIRMITY IN THE STAND OF THE L D. COMMISSIONER OF INCOME TAX (APPEALS), CONSEQUENTLY, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN TH E PRESENCE OF LD. REPRESENTATIVE OF BOTH SIDES, AT TH E CONCLUSION OF HEARING ON 27/07/2015 . SD/- SD/- ( SANJAY ARORA ) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER % & MUMBAI; ) DATED : 28/08/2015 F{X~{T? P.S/. . . %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. +,- / THE APPELLANT 2. ./,- / THE RESPONDENT. 3. 0 0 % 1# ( + ) / THE CIT, MUMBAI. 4. 0 0 % 1# / CIT(A)- , MUMBAI ITA NO.3341MUM/2013 , NAWANY CONSTRUCTION COMPANY PVT. LTD. 7 5. 3$4 .# , 0 +( 5 , % & / DR, ITAT, MUMBAI 6. ! 7& / GUARD FILE. / BY ORDER, /3+# .# //TRUE COPY// / (DY./ASSTT. REGISTRAR) , % & / ITAT, MUMBAI