MILLENIUM TELECOM LTD, MUMBAI V. ITO 5(2)(3), MUMBAI

ITA 34/MUM/2017

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5802 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2003-2004
• Appeal Filed On: 03-01-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: CHAITANYA ANJARIA
• Assessee Lawyers: A K PRADHAN
• Keywords: Opportunity of being heard; Bonafide belief; Wholly owned subsidiary; Set aside
• Section: 271(1)(c); 143(3); 234B; 250; 80IA; 6; 263; 10; 2; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D , MUMBAI BEFORE S HRI R.C. SHARMA (AM) AND SHRI RAM LAL NEGI (JM) ITA NO. 34/MUM/2017 ASSESSMENT YEAR: 2003 - 04 ITA NO. 5779/MUM/2010 ASSESSMENT YEAR: 2004 - 05 ITA NO. 4149/MUM/2015 ASSESSMENT YEAR: 20 05 - 06 M/S MILLENNIUM TELECOM LIMITED, OFFICE OF DGM (1A & RA), 1 ST FLOOR, TELEPHONE EXCHANGE BUILDING, V. S. MARG, PRABHADEVI, MUMBAI - 400028 PAN: AADCM3056G VS. THE INCOME TAX OFFICER - 5(2)(3), AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 (APPELLANT ) (RESPONDENT) ITA NO. 730/MUM/2014 ASSESSMENT YEAR: 2004 - 05 THE INCOME TAX OFFICER - 5(2)(3), AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 VS. M/S MILLENNIUM TELECOM LIMITED, OFFICE OF DGM (1A & RA), 1 ST FLOOR, TELEPHONE EXCHANGE BUILDING, V. S. MARG , PRABHADEVI, MUMBAI - 400028 PAN: AADCM3056G (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI A.K. PRADHAN ( A R) REVENUE BY : SHRI CHAITANYA ANJARIA (D R) DATE OF HEARING: 17/09 /201 8 DATE OF PRONOUNCE MENT: 07 / 12 /201 8 O R D E R PER RAM LAL NEGI, JM THESE APPEALS HAVE BEEN FILED BY THE SAME ASSESSEE AND THE REVENUE . ITA NO. 5779/MUM/2010 FOR THE A.Y. 2004 - 05, ITA NO. 4139/MUM/2015 FOR 2 ITA NO S . 730/MUM/2014, 34/MUM/2017, 5779/MUM/201 0 & 4139/MUM/2015 ASSESSMENT YEAR S : 2003 - 04, 2004 - 05 & 2005 - 06 A.Y. 2005 - 06 AND 34/MUM/2017 ARE THE ASSESSESS APPEA L AGAINST THE ORDER DATED 14.05.2010 PASSED BY THE C OMMISSIONER OF I NCOME T AX (APPEALS) - (FOR SHORT THE CIT (A) - 09, MUMBAI, ORDER DATED 09.03.2015 PASSED BY THE CIT (A) - 10, MUMBAI AND ORDER DATED 28.09.2016 PASSED BY THE CIT (A) - 10, MUMBAI RESPECTIVELY V IDE WHICH THE CONCERNED CIT S (A) HAVE DISMISSED THE APPEALS FILED BY THE ASSESSEE AGAINST THE ASSESSMENT ORDER PASSED BY THE AO U/S 143 (3), 143 (3) R.W.S. 250 AND 143 (3) R.W.S. 250 OF THE ACT RESPECTIVELY. VIDE APPEAL NO. 730/MUM/2014, THE DEPARTMENT HAS CHALLENGED THE ORDER PASSED BY THE LD. CIT (A), WHEREBY THE LD. CIT (A) HAS DELETED THE PENALTY LEVIED BY THE AO U/S 271 (1) (C) OF THE ACT. SINCE, ALL THE APPEALS PERTAIN TO THE SAME ASSESSEE, THESE WERE CLUBBED AND HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON AND CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. ITA NO. 34/MUM/2017 (ASSE SSMENT YEAR: 2003 - 2004 ) BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY, A 100% SUBSIDIARY OF MAHANAGAR TELEPHONE NIGAM LTD. ENGAGED IN THE BUSINESS OF R ETENDERING SERVICES, CYBER CAF AND TELEPHONE AND INTERNET SERVICES, FILED ITS RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR DECLARING THE TOTAL INCOME OF RS. 4,38,820/ - . THE AO COMPLETED THE ASSESSMENT U/S 143 (3) OF THE ACT AND ACCEPTED THE RETURN FI LED BY THE ASSESSEE ALLOWING THE CLAIM OF THE ASSESSEE U/S 80IA. SUBSEQUENTLY, THE CIT - 5, MUMBAI PASSED ORDER U/S 263 AND SET ASIDE THE ORDER ON THE GROUND THAT THE AO HAS WRONGLY ALLOWED THE CLAIM U/S 80IA OF THE ACT. ACCORDINGLY, THE AO PASSED THE ASSESS MENT ORDER U/S 143 (3) READ WITH SECTION 263. THE ASSESSEES APPEAL AGAINST THE SAID ORDER WAS DISMISSED BY THE CIT (A). IN THE APPEAL AGAINST REVISION ORDER PASSED U/S 263 OF THE ACT , THE ITAT SET ASIDE THE ISSUE REGARDING ASSESSEES CLAIM U/S 80 I A OF THE ACT TO THE AO. ACCORDINGLY, THE AO COMPLETED THE ASSESSMENT U/S 143 (3) R.W.S. 250 OF THE ACT DETERMINING THE TOTAL INCOME AT RS. 1,14,74,050/ - . THE ASSESSEE CHALLENGED THE ORDER PASSED BY THE AO ON THE GROUND THAT THE AO HAS NOT 3 ITA NO S . 730/MUM/2014, 34/MUM/2017, 5779/MUM/201 0 & 4139/MUM/2015 ASSESSMENT YEAR S : 2003 - 04, 2004 - 05 & 2005 - 06 FOLLOWED THE DIRECTIONS GIVEN BY THE ITAT WHILE PASSING THE ORDER GIVING EFFECT TO THE ITAT ORDER. THE LD. CIT (A) AFTER HEARING THE ASSESSEE DISMISS THE APPEAL HOLDING THAT THE AO HAS RIGHTLY HELD THAT THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION U/S 80IA(4)(II ) HOLDING THAT THE A O HAS RIGHTLY FOLLOW ED THE ORDER PASSED IN THE ASSESSEES CASE PERTAINING TO THE A.Y. 2005 - 06 . THE ASSESSEE HAS FILED THE PRESENT APPEAL A GAINST THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) . 2. THE ASSESSEE HAS RAISED THE FOLLOWING EFFECTIVE GROUNDS OF APP EAL AGAINST THE IMPUGNED ORDER PASSED BY THE LD. CIT (A): - 1. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED BY NOT CONSIDERING THE DIRECTION OF LEARNED JUDGES OF ITAT AND HAS MECHANICALLY PASSED THE ASSESSMENT ORDER BY RELYING ON THE PREVIOUS ASSESSMENT ORDERS OF AO FOR A.Y. 2005 - 06 DATED 30.03.2013. 2. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN NOT CONSIDERING THE INFRASTRUCTURE INSTALLED OF THE ASSESSEE FOR PROVIDING TELECOMMUNICATION SERVICES. 3. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERR ED IN NOT CONSIDERING INTERNET SERVICE PROVIDER LICENSE OBTAIN BY THE ASSESSEE FOR PROVIDING TELECOMMUNICATION AND INTERNET SERVICES. 4. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN NOT CONSIDERING THE AFFIDAVIT OF THE TELECOM ENGINEER IN RESPECT OF TELECOMMUNICATION SERVICES PROVIDED BY THE ASSESSEE. 5. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING DISALLOWANCE OF DEDUCTION U/S 80IA AND ADDITION OF RS. 1,10,35,233/ - TO THE INCOME WITHOUT CONSIDERING THE TECHNICAL PARAMETERS OF THE C ASE. 6. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING NON CREDIT OF RS. 59,83,525/ - INCOME TAX DIRECTLY ATTACHED FROM THE ASSESSEES BANK ACCOUNT ON 30 TH MARCH, 2009. 4 ITA NO S . 730/MUM/2014, 34/MUM/2017, 5779/MUM/201 0 & 4139/MUM/2015 ASSESSMENT YEAR S : 2003 - 04, 2004 - 05 & 2005 - 06 7. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING COMPU TATION OF INTEREST U/S 234B AND 234C DUE TO THE NON CREDIT OF RS. 59,83,525/ - WHEREBY THE ASSESSEE IS ENTITLED TO SUBSTANTIAL REFUND WITH INTEREST. 3. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LD. CIT (A) HAS WRONGLY CONFIRMED THE ASSESSMENT ORDER PASSED BY THE AO , WITHOUT CONSIDERING THE DIRECTIONS OF THE ITAT. THE LD. CIT (A) HAS ERRED IN NOT CONSIDERING THAT ASSESSEE HAD CREATED INFRASTRUCTURE AND OBTAINED INTERNET SERVICE PROVIDER LICENSE FOR PROVIDING TELECOMMUNICATION SERVICES . THE LD. COMMISSIONER HAS FURTHER ERRED IN NOT CONSIDERING THE CONTENTS OF AFFIDAVIT OF SH. AJAY KUMAR SAHU, T ELE COM E NGINEER SUBMITTED BY THE ASSESSEE BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS PERTAINING TO THE ASSESSMENT YEAR 2004 - 05 TO SUBSTANTIA TE ITS CLAIM. THE LD. CIT (A) HAS FURTHER ERRED IN CONFIRMING DISALLOWANCE OF DEDUCTION U/S 80IA AND MAKING ADDITION OF RS. 1,10,35,233/ - TO THE INCOME OF THE ASSESSEE WITHOUT CONSIDERING THE TECHNICAL PARAMETERS FULFILLED BY THE ASSESSEE . T HE LD. COUNSE L FURTHER SUBMITTED THAT THE CIT (A) HAS ERRED IN CONFIRMING NON CREDIT OF RS. 59,83,525/ - DIRECTLY ATTACHED FROM THE ASSESSEES BANK ACCOUNT ON 30 TH MARCH, 2009. IN THE LIGHT OF THE AFORESAID FACTS, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE CONT ENTS OF THE AFFIDAVIT GO TO THE ROOT OF THE ISSUE IN QUESTION, AND SINCE THE AUTHORITIES BELOW HAS NOT CONSIDERED THE SAME WHILE PASSING ASSESSMENT ORDER AND THE APPELLATE ORDER, THE MATTER REQUIRES RE - EXAMINATION IN THE LIGHT OF THE CONTENTS OF THE AFFIDA VIT . 4. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE (DR) RELYING ON THE ORDER PASSED BY THE LD. CIT (A) SUBMITTED THAT SINCE THE AO HAS PASSED THE ASSESSMENT ORDER TAKING INTO CONSIDERATION THE ENTIRE FACTS OF THE CASE AND MATERIAL ON RECORD AND THE SUBMISSIONS MADE BEFORE BY THE ASSESSEE, THERE IS NO INFIRMITY IN THE ORDER PASSED BY THE LD. CIT (A) TO INTERFERE WITH. THE LD. 5 ITA NO S . 730/MUM/2014, 34/MUM/2017, 5779/MUM/201 0 & 4139/MUM/2015 ASSESSMENT YEAR S : 2003 - 04, 2004 - 05 & 2005 - 06 COUNSEL FURTHER SUBMITTED THAT IN THE ASSESSEES CASE FOR THE ASSESSMENT YEAR 2005 - 06, AO HAD EXAMINED ALL TECHNICAL ISSUES WHICH ARE INVOLVE IN THIS APPEAL AND SINCE THE AO HAD DECIDED THE ISSUE INVOLVED IN THIS CASE BY TAKING INTO CONSIDERATION OF THE FINDINGS OF AO IN THE ASSESSMENT ORDER FOR THE A.Y. 2005 - 06, THE LD. CIT(A) HAS RIGHTLY CONFIRMED THE ACTION OF AO AND HELD T HAT THE ASSESSEE IS NOT ELIGIBLE FOR CLAIM OF DEDUCTION U/S 80IA (4)(II) OF THE ACT 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO GONE THROUGH THE MATERIAL ON RECORD IN THE LIGHT OF THE RIVAL CONTENTIONS OF THE PARTIES. THE COORDINATE BENCH VIDE ITS O RDER DATED 18.09.2013 PASSED IN ASSESSEES APPEAL ITA NO. 5949/MUM/2008 SET ASIDE THE ORDER DATED 31.03.2008 OF THE CIT (A) PASSED U/S 263 OF THE ACT AND DIRECTED THE AO TO VERIFY AS TO WHETHER THE SERVICES BEING RENDERED BY THE ASSESSEE CONSTITUTES BASIC OR CELLULAR TELECOMMUNICATION SERVICES OR THE SAME CONSTITUTE ONLY AN APPLICATION OF SUCH SERVICES S O AS TO DETERMINE THE ELIGIBILITY OF ASSESSEES CLAIM U/S 80IA(4)(II) OF THE ACT. THE RELEVANT PARA OF THE ORDER OF THE COORDINATE BENCH READS AS UNDER: - CONTINUING FURTHER, WE, HOWEVER, MAKE IT CLEAR THAT WE ARE NOT IN ANY MANNER MAKING ANY OBSERVATION TOWARD THE MERITS OF THE CASE, WHICH THE AO SHALL BE AT FULL LIBERTY, RATHER, DUTY BOUND TO EXAMINE AND ADJUDICATE IN THE SET ASIDE PROCEEDINGS. THAT IS, WE CONFIRM THE SET ASIDE OF THE ASSESSMENT UNDER REFERENCE, AND ALSO VACATE THE OTHER DIRECTIONS BY THE LD. CIT TO ENABLE REFRAMING THE ASSESSMENT BY THE REVENUE WITH REGARD TO THE DEDUCTIBILITY IN LAW OF THE ASSESSEES CLAIM U/S 80 - IA(4)(II). THE MATTER WOULD THUS STAND TO BE DECIDED IN ACCORDANCE WITH LAW PER A SPEAKING ORDER AFTER HEARING THE ASSESSEE IN THE MATTER, DECIDING THE ISSUE UNDER REFERENCE, I.E. THE PROVISION OR OTHERWISE BY THE ASSESSEE OF THE TELECOMMUNICATION SERVICES, WHETHER BASIC OR CE LLULAR, VIZ, RADIO PAGING, DOMESTIC SATELLITE SERVICES, NETWO RK OF TRUNKING, BROADBAND NETWOR K AND INTERNET SERVICES, OVER THE SPECIFIED PERIOD. THE ASSESSEE HAS PROVIDED AND, ACCORDINGLY, ITS REVENUE 6 ITA NO S . 730/MUM/2014, 34/MUM/2017, 5779/MUM/201 0 & 4139/MUM/2015 ASSESSMENT YEAR S : 2003 - 04, 2004 - 05 & 2005 - 06 STREAM/S FOR THE YEAR IS FROM E - TENDERING, BESIDES C YBER CAF SERVICES (IMPLYING ACCESS TO INTERNET FACILITY) AND SALE OF INTERNET PACKS. THE CONTROVERSY TO BE RESOLVED, AS WE SEE IT, IS THUS IF THE SAID SERVICES COULD BE SAID TO CONSTITUTE BASIC OR CELLULAR TELECOMMUNICATION SERVICES , OR DO ITS SERVICES C ONSTITUTE AN APPLICATION OF SUCH SERVICES. THE FOCUS THEREFORE AT ALL TIMES SHOULD BE ON THE SERVICES BEING PROVIDED BY THE ASSESSEE, I.E. AS DISTINCT AND IN CONTRADISTINCTION TO THE (INPUT) SERVICES UTILIZ ED BY IT IN PROVIDING ITS (OUTPUT) SERVICES. FURT HER, IF THE BASIC OR CELLULAR TELECOMMUNICATIO0N SERVICES, EITHER AS SUCH OR IN ITS DIFFERENT FORMS, AS FOR EXAMPLE THOSE SPECIFIED IN THE PROVISION ARE SUBJECT TO LICENSING OR OTHER REGULATORY PROCESSES, THE RELEVANT POLICY OF THE TELECOM SECTOR REGULATOR (DEPARTMENT OF TELECOMMUNICATIONS (DOT) OR THE TELECOM REGULATORY AUTHORITY (TRAI) COULD AGAIN BE A USEFUL GUIDE IN THE MATTER . THE ONUS TO ESTABLISH ITS CLAIMS THOUGH SHALL BE ON THE ASSESSEE. WE DECIDE ACCORDINGLY. 6. IN THE LIGHT OF THE OBSERVATIONS OF THE COORDINATE BENCH WE AGREE WITH THE LD. COUNSEL FOR THE ASSESSEE THAT THE CONTENTS OF THE AFFIDAVIT SWORN BY SH. AJAY KUMAR SAHU, TELECOM ENGINEER ARE RELEVANT TO ASCERTAIN THE CLAIM OF THE ASSESSEE. HOWEVER, WE NOTICE THAT THE AUTHORITIES BELOW HAS NOT EXAMINED THE CONTENTS OF THE AFFIDAVIT DATED 16.01.2015 VIDE WHICH, THE DEPONENT HAS CONFIRMED THAT THE ASSESSEE HAS FULFILLED THE TECHNICAL SPECIFICATIONS ISSUED BY THE GOVT. OF INDIA, MINISTRY OF COMMUNICATION DEPARTMENT OF TELECOMMUNICATION GUIDEL INES AND GENERAL INFORMATION FOR INTERNET SERVICE PROVIDER (ISP) NO. 845 - 51/97. AS PER SUB - CLAUSE (II) OF CLAUSE (4) OF SECTION 80IA ANY UNDERTAKING WHICH HAS STARTED OR STARTS PROVIDING TELECOMMUNICATION SERVICES, WHETHER BASIC OR CELLULAR, INCLUDING RAD IO PAGING, DOMESTIC CELLULAR SERVICE, NETWORK OF TRUNKING, BROADBAND NETWORK AND INTERNET SERVICES ON OR AFTER THE FIRST DAY APRIL 1995, BUT BEFORE THE 31 ST DAY OF MARCH, 2005, IS ELIGIBLE FOR DEDUCTION OF AN AMOUNT EQUAL TO 100% OF THE PROFITS AND GAINS D ERIVED FROM SUCH BUSINESS FOR TEN CONSECUTIVE ASSESSMENT YEARS. SO IN ORDER TO ASCERTAIN WHETHER THE SERVICES OF THE ASSESSEE FALL WITHIN THE AMBIT OF THE AFORESAID 7 ITA NO S . 730/MUM/2014, 34/MUM/2017, 5779/MUM/201 0 & 4139/MUM/2015 ASSESSMENT YEAR S : 2003 - 04, 2004 - 05 & 2005 - 06 PROVISIONS , AO HAS NEITHER EXAMINED THE DEPONENT NOR GIVEN ANY FINDINGS ON THE CONTENTS OF THE AFFIDAVIT . THE AO HAS NOT POINTED OUT ANY DOCUMENT OR POLICY OF THE DEPARTMENT OF TELECOMMUNICATION OR TELECOM REGULATORY AUTHORITY TO JUSTIFY ITS ACTION. THE LD. CIT(A) HAS ALSO NOT TOUCHED THIS ASPECT DURING THE APPELLATE PROCEEDINGS. UNDER THESE CIR CUMSTANCES, THE ISSUE REQUIRES FRESH DETERMINATION IN THE LIGHT OF THE CONTENTS OF THE AFFIDAVIT AFORESAID. 7. IN THE LIGHT OF THE AFORESAID FACTS, WE CONSIDER IT APPROPRIATE TO SENT THIS ISSUE BACK TO THE AO FOR DECIDING THE ISSUE AFRESH AFTER CONSIDERI NG THE CONTENTS OF THE AFFIDAVIT AFORESAID AND CONDUCTING VERIFICATION TO ASCERTAIN THE CLAIM OF THE ASSESSEE U/S 80IA(4)(II) OF THE ACT IN ACCORDANCE WITH THE OBSERVATIONS OF THE COORDINATE BENCH MADE IN THE ASSESSEES APPEAL DISCUSSED ABOVE . WE ACCORDING LY SET ASIDE THE IMPUGNED ORDER AND SEND THIS APPEAL BACK TO AO FOR DETERMINING THE ISSUE AFRESH , CONSIDERING THE CONTENTS OF AFFIDAVIT AFORESAID AFTER GIVING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 8. THE SECOND ISSUE RAISED BY THE ASSE SSEE PERTAINS TO NON - CREDIT OF RS. 59,83,525/ - , INCOME TAX DIRECTLY ATTACHED FROM ASSESSEES BANK ACCOUNT ON 30 TH MARCH, 2009. AS PER THE ORDER OF THE LD. CIT (A), THIS ISSUE DOES NOT ARISE FROM THE IMPUGNED ORDER PASSED BY THE LD. CIT (A) AS ONLY THREE GR OUNDS WERE RAISED BY THE ASSESSEE BEFORE THE LD. CIT (A). 9. THE THIRD GROUND ISSUE PERTAINS TO CHAR G ING INTEREST U/S 234B AND 234C OF THE ACT. SINCE, THE CHARGING OF INTEREST UNDER THE AFORESAID SECTIONS IS MANDATORY AND OF CONSEQUENTIAL NATURE , THE SAID GROUND DOES NOT REQUIRE ANY ADJUDICATION. ITA NO. 5779/MUM/2010 (ASSESSMENT YEAR: 2004 - 2005) AND ITA NO. 4139/MUM/2015 (ASSESSMENT YEAR: 2005 - 2006) 8 ITA NO S . 730/MUM/2014, 34/MUM/2017, 5779/MUM/201 0 & 4139/MUM/2015 ASSESSMENT YEAR S : 2003 - 04, 2004 - 05 & 2005 - 06 THE ASSESSEE HAS RAISED THE IDENTICAL GROUNDS IN ITA NO. 5779/MUM/2010 FOR A.Y. 2004 - 05 AND ITA NO. 413 9/MUM/2015 FOR A.Y. 2005 - 06. 2. SINCE, WE HAVE SET ASIDE THE ISSUE PERTAINING TO THE CLAIM OF THE ASSESSEE U/S 801A(4)(II) OF THE ACT AND SEND THE MATTER BACK TO THE AO FOR FRESH CONSIDERATION, CONSISTENT WITH OUR FINDINGS IN THE ASSESSEES CASE HAVING SA ME SET OF FACTS AND ISSUES , WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE LD. CIT (A) IN THE PRESENT CASE AND SEND THE MATTER BACK TO THE AO FOR FRESH CONSIDERATION IN THE LIGHT OF THE CONTENTS OF AFFIDAVIT SUBMITTED BY THE ASSESSEE AFTER GIVING A REASONAB LE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 3. THE SECOND ISSUE PERTAINS TO INTEREST U/S 234B AND 234C AND 234D IN BOTH THE APPEALS . SINCE, THE CHARGING OF INTEREST UNDER THE AFORESAID SECTIONS IS MANDATORY AND OF CONSEQUENTIAL NATURE, THE SAID GROUND DOES NOT REQUIRE ANY ADJUDICATION. ITA NO. 730/MUM/2014 (ASSESSMENT YEAR: 2004 - 2005 ) THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 21.11.2013 PASSED BY THE LD. CIT (A) VIDE WHICH THE LD. CIT (A) HAS DELETED THE PENALTY LEVIED BY THE AO U/S 271 (1)(C) OF THE ACT. 2. THE REVENUE HAS RAISED THE FOLLOWING EFF ECTIVE GROUND OF APPEAL AGAINST THE IMPUGNED ORDER PASSED BY THE LD. CIT (A): - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND AS PER LAW, THE LD. CIT (A) ERRED IN DELETING TH E PENALTY ORDER PASSED BY THE A.O. U/S 271 (1) (C) OF THE INCOME TAX ACT, 1961, IMPOSING PENALTY OF RS. 28,17,432/ - . 3. BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE (DR) RELYING ON THE ORDER PASSED BY THE AO SUBMITTED THAT SINCE IT HAS BEEN ESTABLISHE D THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 80IA(4)(II) OF THE ACT AND DESPITE THAT THE ASSESSEE HAS CLAIMED WRONG DEDUCTION SO AS TO REDUCE GENUINE TAX LIABILITY 9 ITA NO S . 730/MUM/2014, 34/MUM/2017, 5779/MUM/201 0 & 4139/MUM/2015 ASSESSMENT YEAR S : 2003 - 04, 2004 - 05 & 2005 - 06 ON ITS EARNING, THE LD. CIT (A) HAS WRONGLY DELETED THE PENALTY OF RS. 28,17,432/ - . THEREFORE, THE IMPUGNED ORDER IS LIABLE TO BE SET ASIDE. 4. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE DEPARTMENT HAS NOT INITIATED ANY PROCEEDINGS IN RESPECT OF THE A.Y. 2003 - 04, 2004 - 05 AND 2005 - 06, HOWEVER, INITIATED THE PROCEEDINGS U/S 271 (1) (C) OF THE ACT AND IMPOSED PENALTY IN THE ASSESSMENT YEAR 2004 - 05. T HE LD. COUNSEL FOR THE ASSESSEE RELYING ON THE ORDER PASSED BY THE LD. CIT (A) SUBMITTED THAT SINCE THE CLAIM OF THE ASSESSEE WAS BONA FIDE , THE LD. CIT (A) HAS RIGH TLY DELETED THE PENALTY. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PERUSED THE MATERIAL ON RECORD. THE LD. CIT (A) HAS DELETED THE PENALTY HOLDING AS UNDER: - 5.1 I HAVE CAREFULLY AND DISPASSIONATELY CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CAS E, STATEMENT OF FACTS, RELEVANT ASSESSMENT ORDER, WRITTEN SUBMISSION, RELIED UPON CASE LAWS AND THE ARGUMENTS MADE BY THE LAR BEFORE THE UNDERSIGNED. AFTER CONSIDERING THE RIVAL SUBMISSION, IT IS NOTED THAT THE ISSUE OF CLAIM OF REDUCTION U/S 80IA ON WHICH PENALTY HAS BEEN LEVIED Y THE AO APPEARS TO BE A HIGHLY DEBATABLE ISSUE, BECAUSE IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR I.E. AY 2003 - 04, WHICH WAS COMPLETED AFTER SCRUTINY U/S 143 (3) OF THE I T ACT, THE AO WAS ALSO AGREEING TO THE CLAIM OF THE APPE LLANT THAT IT IS ENTITLED TO THE DEDUCTION U/S 80IA. IT IS FURTHER NOTED THAT EVEN IN ORIGINAL ASSESSMENT IN THE CURRENT ASSESSMENT YEAR I.E. AY 2004 - 05, WHICH WAS COMPLETED ON 25/09/2006 U/S 143 (3), THE AO ALLOWED THE DEDUCTION CLAIMED BY THE APPELLANT. THEREFORE, UNDER THESE CIRCUMSTANCES I AGREE WITH THE CONTENTION OF THE APPELLANT THAT IT WAS UNDER THE BONAFIDE BELIEF THAT IT IS ENTITLED FOR DEDUCTION U/S 80IA. THEREFORE, UNDER THESE CIRCUMSTANCES IT IS QUITE APPARENT THAT ON THE ISSUE IN QUESTION TWO OPINION ARE POSSIBLE, THEREFORE IT IS NOT A FIT CASE FOR ATTRACTING THE PROVISIONS OF SEC. 271 (1) (C). OTHERWISE, ALSO THE APPELLANT HAS FURNISHED ALL MATERIAL FACTS REGARDING THE CLAIM OF DEDUCTION U/S 80IA AND IT IS NOT A CASE OF FURNISHING OF ANY WRONG , FALSE OR INCORRECT PARTICULARS OF INCOME. THEREFORE, UNDER THESE CIRCUMSTANCES I 10 ITA NO S . 730/MUM/2014, 34/MUM/2017, 5779/MUM/201 0 & 4139/MUM/2015 ASSESSMENT YEAR S : 2003 - 04, 2004 - 05 & 2005 - 06 AGREE WITH THE LAR THAT IN THE LIGHT OF THE DECISION OF HONBLE APEX COURT IN CASE OF M/S RELIANCE PETRO PRODUCTS PVT. LTD. (SUPRA), PENALTY U/S 271 (1) (C) IS NOT JUSTIFIED . HENCE, THE SAME IS DIRECTED TO BE DELETED. 6. WE NOTICE T HE LD. CIT (A) HAS DELETED THE PENALTY OBSERVING THAT IN CLAIM OF THE ASSESSEE IS BONA FIDE AS THE AO HAD ALLOWED THE DEDUCTION U/S 80IA CLAIMED BY THE ASSESSEE IN THE ORIGINAL ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT AND THE DEDUCTION WAS DENIED SUBSEQUENTLY ON THE BASIS OF THE ORDER PASSED BY THE LD. CIT (A) U/S 263 OF THE ACT. HOWEVER, THIS ISSUE IS COVERED BY THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. RELIANCE PETROPRODUCT (P) LTD., 322 ITR 0158 IN WHICH THE HONBLE SUPREME COURT HAS HELD THAT MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF DOES NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME OF THE ASSESSEE WIT HIN THE MEANING OF SECTION 271(1)(C) OF THE ACT . MOREOVER, THE ISSUE HAS NOT ATTAINED FINALITY AND THE ELIGIBILITY OF THE ASSESSEE FOR DEDUCTION U/S 80IA IS YET TO BE DETERMINED BY THE AUTHORITIES BELOW IN TERMS OF THE OBSERVATIONS OF THE ITAT IN ALL THE A SSESSMENT YEAR S UNDER CONSIDERATION INCLUDING THE ASSESSMENT YEAR 2004 - 05 . UNDER THESE CIRCUMSTANCES, WE DISMISS THE APPEAL OF THE REVENUE AND DIRECT THE AO TO DELETE THE PENALTY . IN THE RESULT, APPEALS FILED BY THE ASSESSEE ARE ALLOWED FOR THE STATISTI CAL PURPOSES AND THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH DECEMBER , 2018 . SD/ - SD/ - ( R.C. SHARMA ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 07 / 12 / 2018 ALINDRA, PS 11 ITA NO S . 730/MUM/2014, 34/MUM/2017, 5779/MUM/201 0 & 4139/MUM/2015 ASSESSMENT YEAR S : 2003 - 04, 2004 - 05 & 2005 - 06 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RES PONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER , //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI