GANESH MEDICAMENT P.LTD, MUMBAI V. ITO 1(1)(4), MUMBAI

ITA 3626/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0321 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 20-04-2017
• Assessment Year: 1998-1999
• Appeal Filed On: 25-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M C OMI NINGSHEN
• Keywords: Business expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H MUMBAI BEFORE SHRI D.T. GARASIA (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 3626/MUM/2016 ASSESSMENT YEAR: 1998 - 99 GANESH MEDICAMENT PVT. LTD. DINA BUILDING, 1 ST FLOOR, 53, MK ROAD MARINE LINES MUMBAI - 400002 VS. ITO1(1)(4) PAN NO. AAA CG3262H (APPELLANT) (RESPONDENT) REVENUE BY : MR. HARIDAS BHAT, A R ASSESSEE BY: MR. M.C. OMI NINGSHEN, D R DATE OF HEARING : 20 /04/2017 DATE OF PRONOUNCEMENT: 14/06/2017 ORDER PER N.K. PRADHAN, AM THIS I S AN APPEAL FILED BY THE ASSESSEE . THE RELEVANT ASSESSMENT YEAR IS 1998 - 99 . THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER (APPEA LS) 2 , MUMBAI AND ARISES OUT OF ORDER U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (THE ACT). 2. THE GROUNDS OF APPEAL FILED BY THE ASSESSEE READ AS UNDER: - 1. THE LD. CIT FAILED TO APPRECIATE THAT A. THE ASSESSEE HAS NEITHER WITHHELD ANY RELEVANT INFORMATION NOR HAD FAILED TO FURNISH THE FULL PARTICULARS OF ITS INCOME OR HAS FURNISHED ANY INACCURATE PARTICULARS. ITA NO. 3626/MUM/2016 2 B. THE ADDITIONS ARE ROUTINE DISALLOWANCES OF EXPENSES OUT OF THE TOTAL EXPENSES MADE DURI NG THE ASSESSMENT. THERE IS NO MATERIAL OR RECORD TO PROVE THE INGENUITY OF EXPENSES. C. PART OF THE DISALLOWANCE WAS REDUCED WHICH PROVES THAT THE MATTER IS DEBATABLE AND TWO VIEWS ARE POSSIBLE. 2. (D). THE APPEAL WAS WITHDRAWN DURING THE RE - ASSESSMENT PRO CEEDINGS BASED ON THE SUBSTANTIAL RELIEF AVAILED ON THE APPEAL EFFECT. ACCEPTANCE OF THE STAND TAKEN BY THE A.O. DOES NOT AMOUNT TO CONCEALMENT OF INCOME OF FURNISHING OF INACCURATE PARTICULARS. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESS EE FILED ITS RETURN OF INCOME FOR THE A.Y. 1998 - 99 ON 30.11.1998 DECLARING TOTAL INCOME AT RS. NIL. THE ORIGINAL ASSESSMENT WAS COMPLETED U/S 143(3) ON 30.03.2001 DETERMINING THE TOTAL INCOME AT RS.29,97,380/ - . IN THE ORIGINAL ASSESSMENT, THE ONLY ADDITION OF RS.31,39,852/ - WAS MADE ON ACCOUNT OF DISALLOWANCE OF INTEREST EXPENSE BEING NON - BUSINESS EXPENDITURE. IN APPEAL, THE LD. CIT(A) UPHELD THE ADDITION MADE BY THE A.O. IN FURTHER APPEAL, THE ITAT SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORED THE MAT TER BACK TO THE FILE OF THE A.O. FOR FRESH ADJUDICATION. IN THE SET ASIDE ASSESSMENT COMPLETED U/S 143(3) R.W.S 254 ON 15.10.2007, THE A.O. MADE THE DISALLOWANCE OF INTEREST EXPENSE AMOUNTING TO RS.24,68,382/ - BEING NON - BUSINESS EXPENDITURE. THE A.O. THEN IMPOSED A PENALTY OF RS.8,63,934/ - ON THE ABOVE AMOUNT U/S 271(1)(C) OF THE ACT. 4. AGGRIEVED BY THE ORDER OF THE A.O., THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A). WE FIND THAT THE LD. CIT(A) DISMISSED THE APPEAL FILED BY THE ASSESSEE ON THE GROUND THAT THE ASSESSEE - COMPANY HAD WITHDRAWN THE APPEAL FILED BEFORE THE LD. CIT(A) AGAINST THE ORDER PASSED U/S 143(3) R.W.S 254 OF THE ACT DATED 15.10.2007. ITA NO. 3626/MUM/2016 3 5. BEFORE US, THE LD. COUNSEL OF THE ASSESSEE, FILED A COPY OF THE DECISION IN THE CASE OF CIT VS. R ELIANCE PETROPRODUCTS (P) LTD . (2010) 322 ITR 158 (SC), CIT VS. LARSEN & TOUBRO LTD . (2014) 366 ITR 502 (BOM.), CIT VS. PETALS ENGINEERS PVT. LTD. (2014) 264 CTR 577 (BOM.). 6. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDER PASSED BY THE LD. CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE SOLE ISSUE HERE IS DISALLOWANCE OF INTEREST OF RS.24,68,382/ - MADE BY THE A.O. AS NON - BUSINESS EXPENDITURE. IN RELIANCE PETROPRODUCTS (P) LTD . (SUPRA), THE HON'BLE SUPREME COURT HELD THAT MERELY BECAUSE THE ASSESSEE CLAIMED DEDUCTION OF INTEREST EXPENDITURE WHICH HAS NOT BEEN ACCEPTED BY THE REVENUE, PENALTY U/S 271(1)(C) IS NOT ATTRACTED, MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF, WILL NOT AMOUN T TO FURNISHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. IN LARSEN & TOUBRO LTD. (SUPRA), THE HON'BLE BOMBAY HIGH COURT HAS HELD THAT MERELY BECAUSE THE ASSESSEE RAISED A CLAIM WHICH WAS EVENTUALLY DISALLOWED, DOES NOT MEAN THAT INGREDIENTS OF SECTION 271(1)(C) ARE SATISFIED OR FULFILLED SO AS TO JUSTIFY IMPOSITION OF PENALTY. IN P ETALS ENGINEERS PVT. LTD . (SUPRA), THE HON'BLE BOMBAY HIGH COURT HAS HELD THAT MERELY BECAUSE, COURT FINDS THAT TWO VIEWS ARE POSSIBLE AND OTHER VIEW IS MORE ATTRACTIVE TO IT, IT COULD NOT BE THE GROUND TO INT ERFERE WITH WELL - REASONED ORDER. ITA NO. 3626/MUM/2016 4 7.1. IN VIE W OF THE FACTUAL MATRIX AND THE RATIO OF THE DECISIONS DELINEATED HERE - IN - ABOVE, WE CANCEL THE PENALTY OF RS.8,63,934/ - IMPOSED BY THE A.O. U/S 271(1)(C) OF THE ACT. 8. IN THE RESULT, APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14/06/2017 SD/ - SD/ - ( D.T. GARASIA ) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI : DATED: 14/06/2017 RAHUL SHARMA, SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI