ESSEM CAPITAL MARKET LTD, MUMBAI V. DCIT C(1), MUMBAI

ITA 3453/MUM/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7781 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 30-03-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 27-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D SONGATE
• Assessee Lawyers: SAMEER G DALAL
• Keywords: Opportunity of being heard; Wrong claim
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI BEFORE SHRI P.M. JAGTAP (AM) AND SMT. ASHA VIJAYARA GHAVAN (JM) ITA NO. 3453/MUM/2009- A.Y. 2003-04 ITA NO. 5612/MUM/2008- A.Y. 2005-06 M / S . ESSEM CAPITAL MARKETS LTD., 22, MANSUR BLDG., 98, PRINCESS STREET, MUMBAI-400 002 PAN-AAACA 3045Q VS. THE ITO 4(1)(1), AAYAKAR BHAVAN, MUMBAI-400 020 (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI SAMEER G. DALAL RESPONDENT BY: SHRI D. SONGATE O R D E R PER ASHA VIJAYARAGHAVAN (JM) THESE TWO APPEALS ARE FILED BY THE ASSESSEE ARE DIR ECTED AGAINST THE ORDERS PASSED BY THE LD. CIT(A)-IV FOR THE ASSESSM ENT YEARS 2003-04 & 2005-06. ITA NO. 5612/M/08- A.Y. 2005-06 2. THE ONLY GROUND OF APPEAL RAISED BY THE ASSESSEE BEFORE THE LD. CIT(A) WAS THAT THE AO ERRED IN DISALLOWING DEDUCTI ON U/S. 80IB OF THE I.T. ACT AMOUNTING TO RS. 43,00,983/-. THE AO DISA LLOWED THE DEDUCTION CLAIMED HOLDING THAT UNDER THE FACTS AND CIRCUMSTAN CES OF THE CASE, THE ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION AS IT DID N OT FULFILL ALL THE CONDITIONS AS LAID DOWN U/S. 80IB OF THE ACT. ESSEM CAPITAL MARKET LTD. 2 3. AGGRIEVED BY THE ORDER OF THE AO, ASSESSEE IS IN APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HELD AS FOLLOWS: THIS ISSUE CAME UP FOR ADJUDICATION IN THE APPELLA NTS OWN CASE FOR A.Y. 2003-04 AND A.Y. 2004-05 AND IT HAD B EEN DISCUSSED IN DETAIL IN MY PREDCESSORS APPELLATE ORDER FOR A. Y. 2003-04 DT. 19.10.2006. FOR THE REASONS AS MENTIONED IN THE AP PELLATE ORDER FOR A.Y. 2003-04, IT IS HELD THAT THE AO RIGHTLY DISAL LOWED THE DEDUCTION CLAIMED U/S. 80IB(10) OF THE ACT AND THE ADDITION I S CONFIRMED. 4. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE US AND RAISED THE FOLLOWING GROUNDS: 1. THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF TH E AO WHEREIN THE AO HAD NOT GRANTED THE BENEFIT OF DEDUCTION U/S. 80 IB (10) OF THE I.T. ACT, 1961. 2. WITHOUT PREJUDICE TO THE ABOVE, THE LD. CIT(A) ERRE D IN A) GIVING HIS FINDINGS ON SURMISES, CONJECTURES & SUSP ICION, WITHOUT BRINGING ON RECORD OF COGENT MATERIAL IN SU PPORT OF HIS ACTION: AND B) IGNORING THE RELEVANT MATERIAL AND CONSIDERATIONS B ROUGHT ON RECORD BY THE APPELLANT. 3. IT IS SUBMITTED THAT IN THE FACT AND THE CIRCUMSTAN CES OF THE CASE AND IN LAW, NO SUCH DISALLOWANCE WAS CALLED FOR. 5. WE FIND THAT BY THE ORDER OF MUMBAI TRIBUNAL J BENCH IN ITA NO. 6814/M/06 & ITA NO. 5349/M/07 FOR A.Y. 2003-04 AND A.Y. 2004-05, THE MATTER HAS BEEN DECIDED. THE LD. CIT(A) HAS IN THE PRESENT APPEAL RELIED ON THE ORDER OF HIS PREDECESSOR FOR THE A.YR S. 2003-04 & 2004-05. THE RELEVANT PORTION OF TRIBUNAL ORDER IS REPRODUCE D BELOW: THE LD. CIT (A) HAS OBJECTION THAT ONE OF THE CONDI TION REGARDING THE AREA OF THE PLOT IS NOT FULFILLED. T HE LD. CIT (A) HAS OBSERVED THAT THE TOTAL AREA OF THE PLOT OWNED BY T HE M/S. JAY JAY CONSTRUCTION CO., ORIGINAL OWNER IS 14865 SQ. METE RS AND HE HAS ALREADY CONSTRUCTED TWO BUILDINGS I.E. BUILDING A AND BUILDING B AND ON THE SAME PLOT BUILDING C HAS BEEN CONSTRUC TED BY THE ESSEM CAPITAL MARKET LTD. 3 ASSESSEE, CLAIMING THAT THE AREA OF THE PLOT FOR BU ILDING C IS MORE THAN 1 ACRE. THE LD. CIT (A) HAS RAISED THE DOUBT WHETHER THE ASSESSEE FULFILLS THE CONDITION OF THE AREA OF THE PLOT THAT IT SHOULD BE MINIMUM ONE ACRE. AS PER THE APPROVED LAY-OUT OF T HE PLOT OF LAND FILED BEFORE US, IT IS SEEN THAT THE ORIGINAL OWNER HAS UNDERTAKEN THE PROJECT AS PHASE-I IN WHICH HE CONSTRUCTED TWO BU ILDINGS I.E. BUILDING A AND BUILDING B AND BUILDING C IS C ONSTRUCTED BY PRESENT ASSESSEE. THE AREA OF THE PLOT ON WHICH TH E PHASE-I OF THE PROJECT IS UNDERTAKEN ADMEASURES 8573.18 SQ. METERS . THE RESERVATION OF THE 15% IS ALSO SHOWN AT 1,285.98 SQ . METERS. THE ORIGINAL OWNER HAS ALREADY CONSTRUCTED BUILDING A AND BUILDING B HAVING THE FOLLOWING BUILD-UP AREA. BUILDING A 3191.45 SQ. METERS BUILDING B 2423.96 SQ. METERS -------------------------- TOTAL 5615.44 SQ. METERS ================== IN RESPECT OF THE BUILDING C WHICH IS CLAIMED BY THE ASSESSEE AS A INDEPENDENT HOUSING PROJECT, AS PER APPROV ED LAY-OUT, THE BUILT UP AREA IS SHOWN AT 1391.60 SQ. METERS. IN O UR OPINION, THERE IS NO CLEAR FINDING BY BOTH THE AUTHORITIES ON THIS ISSUE. WE, THEREFORE, CONSIDERED IT FIT TO RESTORE THIS ISSUE TO THE FILE OF THE A.O. FOR VERIFYING WHETHER THE ASSESSEE FULFILS ONE OF T HE CONDITIONS REGARDING AREA OF THE PLOT ON WHICH BUILDING C HA S BEEN CONSTRUCTED IS ON ONE ACRE OF THE PLOT OR NOT, AS R EQUIRED U/S.80IB(10) OF THE ACT. THE ASSESSEE SHOULD FILE ALL THE APPROVED PLANS BEFORE THE A.O. NEEDLESS TO SAY THE A.O. SHO ULD GIVE REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. TO MAKE IT CLEAR AS THE FACTS ARE IDENTICAL IN THE A.Y. 2004-0 5 NO SEPARATE DISCUSSION IS MADE. RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL F OR A.YRS 2003-04 AND 2004-05, WE RESTORE THE ISSUE TO THE FILE OF TH E AO TO FOLLOW THE DIRECTIONS IN THE ORDER OF THE TRIBUNAL IN ITA NO. 6814/M/2006. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ESSEM CAPITAL MARKET LTD. 4 ITA NO. 3453/M/09 A.Y. 2003-04 7. THE ASSESSEES CLAIM OF DEDUCTION U/S. 80IB(10) OF RS. 16,36,178/- WAS FOUND TO BE NOT GENUINE IN COURSE OF ASSESSMENT PROCEEDING AND THE CLAIM OF DEDUCTION WAS DISALLOWED. 8. IN COURSE OF APPEAL PROCEEDING IT WAS HELD THAT WITHOUT FULFILLING VARIOUS CONDITIONS OF DEDUCTION UNDER SECTION 80IB( 10), THE APPELLANT CLAIMED THE DEDUCTION AND THE CLAIM OF DEDUCTION WA S FOUND TO BE NOT GENUINE. 9. IN COURSE OF PENALTY PROCEEDING THE APPELLANT SU BMITTED THAT THE DISALLOWANCE WAS MADE IS TECHNICAL IN NATURE HENCE, PENALTY SHOULD NOT BE LEVIED. THE A.O. HAS GIVEN FOLLOWING REASONS FOR LEVY OF PENALTY AND QUANTUM OF PENALTY AT PARA 4-5 OF HIS ORDER. THE SA ME IS QUOTED AS UNDER :- . A PENALTY NOTICE DATED 31.10.2006 HAS BEEN ISSUE D. DURING THE COUSE OF PENALTY PROCEEDINGS THE ASSESSEE COMPA NY HAS MADE ITS SUBMISSION VIDE ITS AUTHORIZED REPRESENTATIVES LETTER DATED 09.05.2007 WHICH IS DULY CONSIDERED. THE MAIN ARGUM ENT OF THE A/R IS THAT DISALLOWANCE MADE IS TECHNICAL IN NATUR E HENCE PENALTY SHOULD NOT BE LEVIED. THE A/R OF THE ASSESSEE HAS A LSO RELIED UPON A NUMBER OF CASE LAWS. HOWEVER, NONE OF THE CASE LAWS RELIED UPON BY THE A/R IS RELEVANT IN THIS CASE AS ALL THE CASE LA WS RELIED UPON WERE ENTIRELY ON DIFFERENT FACT. IN THE INSTANCE CA SE IT HAS BEEN ESTABLISHED BEYOND DOUBT THE ASSESSEE HAS MANIPULAT ED THE FACTS JUST TO CLAIM DEDUCTION U/S.80IB(10) WHICH IS NOT O NLY PROVED BY THE A.O. BUT ALSO FURTHER CONFIRMED BY THE CIT(A). IN T HE CASE OF CIT VS. CHEMIEQUIP LTD. REPORTED IN 265ITR 265 (BOM.), IT IS HELD BY THE JURISDICTIONAL HIGH COURT THAT MAKING WRONG CLAIM F OR DEDUCTION U/S.80HHC IS FURNISHING OF INACCURATE PARTICULARS O F INCOME, ACCORDINGLY, PENALTY U/S.271(1)(C) MAY BE LEVIED. S IMILAR VIEWS ARE ALSO EXPRESSED IN THE CASE OF NARAYAN HOSIERY PVT. LTD. VRS. CIT REPORTED IN 169 ITR 504 (BOM.) AND IN CIT VRS. GATE S FOAM & RUBBER COMPANY REPORTED IN 91 ITR 467 (KERALA). THE FACTS OF THE ASSESSEES CASE ARE SQUARELY COVERED BY THE DECISIO N ON CHEMIEQUIP LTD. IN 265 ITR 265 (BOM.), HENCE THIS IS A FIT CAS E FOR LEVY OF PENALTY U/S.271(1)(C) OF THE I.T. ACT. ESSEM CAPITAL MARKET LTD. 5 . MINIMUM PENALTY LEVIABLE ON THE TAX SOUGHT TO BE EVADED IS 100% OF THE SOUGHT TO BE EVADED WHICH IS RS.6,01,29 5/-. MAXIMUM PENALTY LEVIABLE IS 300% OF THE TAX SOUGHT TO BE EV ADED WHICH IS RS.18,03,886/-. AFTER TAKING INTO ACCOUNT THE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE CONSIDERED V IEW THAT IN THIS CASE, PENALTY @ 300% OF THE TAX SOUGHT TO BE EVADED WOULD MEET THE ENDS OF THE JUSTICE AND, THEREFORE, IT IS DECIDED A CCORDINGLY AND I IMPOSE A PENALTY OF RS.18,03,886/- U/S.271(1)(C) OF THE I.T. ACT. 10. AGGRIEVED ASSESSEE WAS IN APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) BY AN ELABORATE ORDER CONTAINED IN PARAS 2 ( A) TO 2(H) AT PAGES 6 TO 8 OF HIS ORDER CONFIRMED THE ORDER OF THE AO LEVYIN G PENALTY AT THE MAXIMUM RATE OF 300% OF TAX SOUGHT TO BE EVADED. 11. AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US. WE FIND THAT THE QUANTUM APPEAL IN ITA NO. 6814/M/2006 FOR A.Y. 2003 -04 BY ITAT J BENCH HAS SET ASIDE TO THE FILE OF THE AO AND DIRE CTIONS HAVE BEEN GIVEN BY THE TRIBUNAL TO THE AO TO BE FOLLOWED DURING TH E ASSESSMENT PROCEEDINGS, HENCE WE DEEM IT FIT THAT THE MATTER O F PENALTY SHALL ALSO BE RESTORED TO THE FILE OF THE AO TO DECIDE THE SAME I N ACCORDANCE WITH LAW. 12. IN THE RESULT, THE APPEALS FILED BY THE ASSESSE E ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON 30 TH MARCH, 2011. SD SD/- (P.M. JAGTAP) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 30 TH MARCH, 2011 RJ ESSEM CAPITAL MARKET LTD. 6 COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR E BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI ESSEM CAPITAL MARKET LTD. 7 DATE INITIALS 1 DRAFT DICTATED ON: 2 9 . 0 3 .201 1 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 2 9 .0 3 .2011 ______ 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. 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK: DATE ON WHICH FILE GOES TO AR _________ ______ 10 . DATE OF DISPATCH OF ORDER: _________ ______