PHOTOQUIP INDIA LTD, MUMBAI V. DCIT 1(2), MUMBAI

ITA 3683/MUM/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4863 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 27-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHIRAMA KARTHIKEYAN
• Section: 271(1)(c); 143(3); 115JB; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER IT A NO. 3683/MUM./2016 ( ASSESSMENT YEAR : 20 06 07 ) PHOTO Q UIP INDIA LTD. A 33, ROYAL INDUSTRIAL ESTATE NAIGAON CROSS ROAD, MUMBAI 400 031 PAN AAECP0468Q . APP ELL ANT V/S DY. COMMISSIONER OF INCOME TAX CIRCLE 1 ( 2 ), MUMBAI . RESPONDENT ASSESSEE BY : SHRI KIRIT SANGHAVI REVENUE BY : SHRI ABHI RAMA KARTHIKEYAN DATE OF HEARING 0 8 .0 5 .2019 DATE OF ORDER 22.05.2019 O R D E R PER SAKTIJIT DEY. J.M. THE AFORESAID APPEAL HA S BEEN FILED BY THE ASSESSEE CHALLENGING T HE ORDER DATED 5 TH MARCH 2016 PASSED BY THE LEARNED COMMISSIONER (APPEALS) 2 , MUMBAI, CONFIRMING PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ) PERTAINING TO THE ASSESSMENT YEAR 200 6 07 . 2 PHOTO QUIP INDIA LTD. 2 . T HE LEGAL ISSUE RAISED IN THE PRESENT APPEAL IS , WHERE THE TAX LIABILITY OF THE ASSESSEE IS ULTIMATELY COMPUTED ON THE BOOK PROFIT UNDER SECTION 115JB OF THE ACT, WHETHER PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT ON THE BASIS OF DISALLOWANCE MADE UNDER THE NORMAL PROV ISIONS OF THE ACT WOULD SURVIVE? 3 . BRIEF FACTS ARE, WHILE COMPLETING THE ASSESSMENT IN CASE OF THE ASSESSEE FOR THE IMPUGNED ASSESSMENT YEAR UNDER THE NORMAL PROVISION, THE ASSESSING OFFICER MADE CERTAIN DISALLOWANCE S/ ADDITIONS WHICH RESULTED IN DETERMINATION OF INCOME AT ` 46,36,310, AS AGAINST THE LOSS R ETURNED BY THE ASSESSEE AT ` 1,63,19,690. HOWEVER, THE TAX LIABILITY COMPUTED UNDER THE NORMAL PROVISIONS OF THE ACT EXCEEDED THE TAX LIABILITY COMPUTED UNDER SECTION 115JB OF THE ACT. THEREFORE, THE ASSESSING OFFICER ULTIMATELY PASSED THE ASSESSMENT ORDER BY BRINGING THE TOTAL INCOME COMPUTED UNDER THE NORMAL PROVISIONS OF THE ACT TO TAX. ON THE BASIS OF ADDITION/ DISALLOWANCE MADE IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER INITIATED PROCEEDINGS FOR IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE A CT AND ULTIMATELY PASSED THE ORDER UNDER THE SAID PROVISION ON 31 ST MARCH 2014, IMPOSING PENALTY UNDER SECTION 271(1)(C) OF THE ACT FOR AN AMOUNT OF ` 26,70,921. 4 . THOUGH , THE ASSESSEE FILED AN APPEAL AGAINST THE AFORESAID PENALTY ORDER, HOWEVER, LEARNED CO MMISSIONER (APPEALS) CONFIRMED THE PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT. 3 PHOTO QUIP INDIA LTD. 5 . THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED BEFORE US , WHILE GIVING EFFECT TO THE ORDER OF THE LEARNED COMMISSIONER (APPEALS) FOR THE IMPUGNED ASSESSMENT YEAR, THE ASSESSING OFFICER HAS ULTIMATELY COMP UTED THE TAX LIABILITY OF THE ASSESSEE UNDER SECTION 115JB OF THE ACT , SINCE , UNDER THE NORMAL PROVISIONS OF THE ACT LOSS OF ` 74,77,297 WAS DETERMINED. THUS, HE SUBMITTED , WHEN ASSESSEES TAX LIABILITY WAS ULTIMATELY C OMPUTED UNDER SECTION 115JB OF THE ACT, THE PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT ON THE BASIS OF DISALLOWANCE MADE UNDER THE NORMAL PROVISIONS OF THE ACT WILL NOT SURVIVE. IN SUPPORT OF SUCH CONTENTION, HE RELIED UPON THE DECISION OF THE CO O RDINATE BENCH IN MEHTA SULFITES INDIA LTD. V/S ACIT, ITA NO. 4772/MUM./2013, DATED 20 TH NOVEMBER 2015. 6 . THE LEARNED DEPARTMENTAL REPRESENTATIVE , THOUGH , RELIED UPON THE OBSERVATIONS OF LEARNED COMMISSIONER (APPEALS), HOWEVER, HE FAIRLY SUBMITTED THAT ASSESSEES TAX LIABILITY HAS ULTIMATELY BEEN COMPUTED UNDER SECTION 115JB OF THE ACT. 7 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. FROM THE FACTUAL MATRIX OF THE CASE IT IS SEEN THAT WHILE COMPLETING THE ASSESSMENT UNDER SECTION 143(3) R/W SECTION 147 OF THE ACT, THE ASSESSING OFFICER MADE VARIOUS ADDITION S/ DISALLOWANCE S WHICH RESULTED IN A POSITIVE INCOME OF ` 46,36,310, UNDE R THE NORMAL 4 PHOTO QUIP INDIA LTD. PROVISIONS OF THE ACT AS AGAINST THE LOSS SHOWN OF ` 1,63,19,690. SINCE THE TAX LIABILITY ON THE TOTAL INCOME COMPUTED UNDER THE NORMAL PROVISIONS OF THE ACT EXCEED ED THE TAX LIABILITY ON THE BOOK PROFIT COMPUTED UNDER SECTION 115JB OF THE ACT , THE ASSESSING OFFICER PROCEEDED TO LEVY TAX AS PER THE NORMAL PROVISIONS OF THE ACT. ON T HE BASIS OF ADDITIONS/ DISALLOWANCE S MADE UNDER THE NORMAL PROVISIONS OF THE ACT, THE ASSESSING OFFICER IMPOSED PENALTY UNDER SECTION 271(1)(C) OF THE ACT. HOWEVER, W HILE GIVING EFFECT TO THE ORDER PASSED BY THE LEARNED COMMISSIONER (APPEALS), THE ASSESSING OFFICER IN HIS ORDER DATED 26 TH JULY 2017, A COPY OF WHICH IS PLACED BEFORE US BY THE LEARNED AUTHORISED REPRESENTATIVE HAS COMPUTED THE TOTAL LOSS OF THE ASSESSEE UNDER THE NORMAL PROVISIONS OF THE ACT AT ` 74,77,297, AND HAS ULTIMATELY COMPUTED THE TAX LIABILITY OF THE ASSESSEE ON THE BOOK PROFIT DETERMINED UNDER SECTION 115JB OF THE ACT. KEEPING IN VIEW THE AFORESAID FACTUAL ASPECT IF WE EXAMINE THE LEGAL POSITION , IT CAN BE SEEN THAT THE HON'BLE DELHI HIGH COURT IN CIT V/S NALWA SONS INVESTMENT LTD., 327 ITR 543 (DEL.) HAS HELD THAT WHEN THE INCOME OF THE ASSESSEE IS COMPUTED UNDER SECTION 115JB OF THE ACT, PENALTY UNDER SECTION 271(1)(C) OF TH E ACT ON THE BASIS O F ADDITIONS / DISALLOWANCE S MADE UNDER THE NORMAL PROVISIONS OF THE ACT WOULD NOT SURVIVE. THE AFORESAID DECISION OF THE HON'BLE DELHI HIGH COURT HAS BEEN FOLLOWED BY THE CO ORDINATE BENCH IN MEHTA SULFITES INDIA LTD. 5 PHOTO QUIP INDIA LTD. (SUPRA) WHILE DECIDING IDENTICAL ISSUE . THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE DELHI HIGH COURT AND THE CO ORDINATE BENCH CITED SUPRA, WE DELETE THE PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT. GROUNDS ARE ALLOWED. 8 . IN THE RESULT, APPEAL IS ALLOWED. ORDER PRONOUNC ED IN THE OPEN C OURT ON 22.05.2019 SD/ - MANOJ KUMAR AGGARWAL ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 22.05.2019 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (ASSTT. REGISTRAR) ITAT, MUMBAI