JUST LIFESTYLE P.LTD, MUMBAI V. DCIT 8(2), MUMBAI

ITA 3871/MUM/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3299 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2016
• Appeal Filed By: Assessee
• Bench Allotted: J
• Assessment Year: 2008-2009
• Appeal Filed On: 29-05-2014
• Court: TRIBUNAL

Judgement Text

, , J, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES J, MUMBAI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.3871/MUM/2014 ASSESSMENT YEAR: 2008-09 JUST L IFESTYLE P. LTD , UNIT NO.302, 3 RD FLOOR, KAMLA EXECUTIVE PARK, J.B. NAGAR, ANDHERI KURLA ROAD, OPP. VAZIR GLASS FACTORY ANDHERI (E) MUMBAI- 400059 / VS. DCIT, RANGE - 8(2) , AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020 (ASSESSEE ) (REVENUE) P.A. NO. AA DCP2398G / ASSESSEE BY SHRI K. GOPAL (AR) / REVENUE BY SHRI ASHISH HELIWAL , (DR) / DATE OF HEARING : 01/03/2016 / DATE OF ORDER: 16/03/2016 / O R D E R PER ASHWANI TANEJA (ACCOUNTANT MEMBER): THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS), MUMBAI- 17 {(IN SHORT CIT(A)}, ORDER DATED 11.04.2014 PAS SED AGAINST JUST LIFESTYLE PVT. LTD. 2 PENALTY ORDER U/S 271(1)(C) OF THE ACT, DATED 14.03 .2013 FOR THE ASSESSMENT YEAR 2008-09, ON THE FOLLOWING GROUN DS: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN UPHOLDING THE LEVY OF PENALTY OF RS. 46,34,830/- U/S 271(1)(C) OF THE INC OME TAX ACT, 1961. 2. DURING THE COURSE OF HEARING, ARGUMENTS WERE MADE B Y SHRI K. GOPAL, AUTHORISED REPRESENTATIVE (AR) ON BE HALF OF THE ASSESSEE AND BY SHRI ASHISH HELIWAL, DEPARTMENTAL REPRESENTATIVE (DR) ON BEHALF OF THE REVENUE. 3. THE BRIEF FACTS ARE THAT DURING THE ASSESSMENT PRO CEEDINGS THE AO OBSERVED THAT ASSESSEE HAD FILED ITS RETURN AFTER CLAIMING SET OFF OF BROUGHT FORWARD LOSSES OF EARLI ER YEARS AMOUNTING TO RS.1,65,21,117/-. THE AO REJECTED THE CLAIM OF SET OFF OF THE LOSSES BY INVOKING PROVISIONS OF SEC TION 79 ON THE GROUND THAT THERE WAS A CHANGE IN MAJORITY SHAREHOL DING PATTERN AND PROVISIONS OF SECTION 79 WERE VIOLATED. 3.1. BEING AGGRIEVED, THE ASSESSEE HAD FILED AN APPEAL IN THE QUANTUM PROCEEDINGS BEFORE THE LD. CIT(A) BUT NO RE LIEF WAS GIVEN. ACCORDINGLY, THE ASSESSEE HAD FILED SECOND A PPEAL BEFORE THE TRIBUNAL AND THE TRIBUNAL ALSO CONFIRMED THE AC TION OF THE AO VIDE ITS ORDER DATED 23.10.2013 IN ITA NO.2638/MUM/2012. SUBSEQUENTLY, THE AO INITIATED PE NALTY PROCEEDINGS AND GAVE SHOW CAUSE TO THE ASSESSEE. TH E ASSESSEE SUBMITTED THAT THERE WAS NO CONCEALMENT OF INCOME AND NO INACCURATE PARTICULARS OF INCOME WERE FILED. THE ASSESSEE WAS UNDER BONA FIDE BELIEF THAT CONTROL IS EXERCISED BY AT LEAST 51% SHAREHOLDERS BELONGING TO THE SAME GRO UP, EVEN JUST LIFESTYLE PVT. LTD. 3 IN THE YEAR UNDER CONSIDERATION. IT WAS FURTHER SUB MITTED THAT DISALLOWANCE HAS BEEN MADE ON HYPER TECHNICAL GROUN D AND THEREFORE, NO PENALTY WAS LIABLE TO BE LEVIED. THE AO DID NOT AGREE WITH THE SUBMISSIONS OF THE ASSESSEE AND LEVI ED THE PENALTY. 3.2 . BEING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEF ORE THE LD. CIT(A) WHEREIN DETAILED SUBMISSIONS WERE MADE. THERE ALSO, ASSESSEE COULD NOT GET ANY RELIEF AND PENALTY WAS CONFIRMED. 3.3. DURING THE COURSE OF HEARING BEFORE US, LD. COUNSE L OF THE ASSESSEE HAS MADE SUBMISSIONS IN DETAIL AND MADE AN ATTEMPT TO DEMONSTRATE THAT EVEN AFTER THE CHANGE I N SHAREHOLDING PATTERN AT LEAST 65% OF THE HOLDING IS STILL WITH THE SAME GROUP WHICH WAS APPEARING IN EARLIER YEAR. THUS, IN FACT PROVISIONS OF SECTION 79 ARE NOT ATTRACTED. AL THOUGH, THE ASSESSEE HAD LOST IN QUANTUM PROCEEDINGS BUT IT WAS NOT A CASE OF CONCEALMENT OF INCOME OR FURNISHING OF INAC CURATE PARTICULARS OF INCOME. HE SUBMITTED THAT UNDER SUCH CIRCUMSTANCES PENALTY IS NOT LEVIABLE MERELY BECAUS E THE CLAIM OF SET OFF OF BROUGHT FORWARD LOSS WAS REJECTED BY INVOKING PROVISIONS OF SECTION 79, AND IN SUPPORT OF HIS PRO POSITION HE RELIED UPON THE JUDGMENT OF DELHI BENCH OF ITAT IN THE CASE OF CENTURY METAL RECYCLING (P.) LTD. VS DCIT 53 TAXMAN N.COM 309 (DELHI-TRIB). 3.4. ON THE OTHER HAND, LD. DR SUBMITTED THAT THE CLAIM OF THE ASSESSEE IN THE QUANTUM PROCEEDINGS HAS BEEN RE JECTED AT JUST LIFESTYLE PVT. LTD. 4 THREE STAGES AND IT HAS BEEN CLEARLY ESTABLISHED TH AT THERE WAS VIOLATION OF SECTION 79. UNDER SUCH CIRCUMSTANCES T HE PENALTY HAS BEEN CORRECTLY LEVIED BY THE AO AND RIGHTLY CON FIRMED BY THE LD. CIT(A), AND HE RELIED UPON THE ORDERS OF TH E LOWER AUTHORITIES. 3.5. WE HAVE GONE THROUGH THE FACTS OF THE CASE. THE AS SESSEE HAS SUBMITTED A CHART DURING THE COURSE OF HEARING WHEREIN IT HAD MADE A CLAIM THAT THE EARLIER GROUP OF SHAREHOL DERS IS STILL HOLDING AT LEAST 65% OF THE TOTAL PAID OF SHARE CAP ITAL. THUS, AT LEAST 51% OF THE SHARE CAPITAL IS STILL RETAINED BY THE EARLIER SHAREHOLDERS. THE STAND OF THE LD. COUNSEL IS THAT WHILE COMPUTING 65%, HE HAS ALSO CONSIDERED THE CLAIM OF MS. MANISHA SANGAVI WHO IS SHAREHOLDER OF THE COMPANY, M/S PRIORITY MARKETING PVT. LTD., WHICH WAS SHAREHOLDER OF THE ASSESSEE COMPANY IN EARLIER YEARS WITH 80% OF THE SHAREHOLDING. ACCORDING TO LD. COUNSEL MS. SANGAVI IS BENEFICIAL SHAREHOLDER AND FALLS IN THE SAME GROUP AND THEREFORE, THE VIEW OF THE ASSESSEE IS ONE OF THE P LAUSIBLE VIEWS. IT WAS CONTENDED THAT THOUGH THE CLAIM OF TH E ASSESSEE WAS REJECTED EVEN BY THE TRIBUNAL IN THE QUANTUM PR OCEEDINGS, BUT STAND TAKEN BY THE ASSESSEE WAS NOT WHOLLY UNFO UNDED. WE FIND FORCE IN THE ARGUMENT OF LD. COUNSEL THAT T HERE WERE BASIS TO HAVE A BONA FIDE BELIEF THAT MAJORITY CONTROL STILL REMAINED WITH THE SAME GROUP. THE PROVISIONS OF SEC TION 79 ARE COMPLEX AND HIGHLY TECHNICAL. THOUGH, TECHNICAL LY SPEAKING THERE WAS VIOLATION OF SECTION 79, BUT IT IS NOT A CASE OF CONCEALMENT OF INCOME OR FILING OF INACCURATE PA RTICULARS ON THE PART OF THE ASSESSEE. THE BENEFIT OF SET OFF OF LOSSES WAS JUST LIFESTYLE PVT. LTD. 5 CLAIMED BY THE ASSESSEE IN THE RETURN AS PER ITS UN DERSTANDING OF SECTION 79. THE CLAIM WAS REFUSED BY THE AO BECA USE OF HIS UNDERSTANDING OF SECTION 79. THE APPELLATE AUTHORIT IES UPHELD THE STAND OF THE AO. BUT, THAT ITSELF WOULD NOT ATT RACT LEVY OF PENALTY, AS WAS ALSO HELD IN THE SIMILAR FACTS BY H ONBLE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF CENTURY METAL RECYCLING (PVT) LTD.(SUPRA) WHEREIN IT WAS OBSERVED THAT WHER E DISALLOWANCE OF CARRY FORWARD OF LONG TERM LOSSES W AS MADE ON TECHNICAL GROUND AND NOT ON ACCOUNT OF CONCEALMENT OF PARTICULARS OF INCOME, PENALTY U/S 271(1)(C) WOULD NOT BE LEVIED. WE FIND THAT MAKING OF DISALLOWANCE AND LEV Y OF PENALTY ARE TWO DIFFERENT EVENTS UNDER THE INCOME TAX LAW, AND HAPPENING OF ONE EVENT DOES NOT AUTOMATICALLY LEADS TO THE OTHER. 3.6. WE FIND THAT IN THE GIVEN FACTS OF THE CASE AND IN VIEW OF THE ABOVE SAID JUDGMENT OF THE TRIBUNAL PENALTY IS NOT LEVIABLE IN THIS CASE, AND THEREFORE, THE SAME IS DIRECTED T O BE DELETED. 4. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 6 TH MARCH, 2016. SD/- (C.N. PRASAD) SD/- (ASHWANI TANEJA) ! / JUDICIAL MEMBER '! / ACCOUNTANT MEMBER MUMBAI; DATED : 16/ 03 /2016 CTX? P.S/. .. JUST LIFESTYLE PVT. LTD. 6 # $%&'&($ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !'# / THE RESPONDENT. 3. $# $# % ( ) / THE CIT, MUMBAI. 4. $# $# % / CIT(A)- , MUMBAI 5. ()* # !+ , $# # +- , / DR, ITAT, MUMBAI 6. *. / / GUARD FILE. / BY ORDER, '#( ! //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI