DCIT CIR 6(1)(2), MUMBAI V. ASIAN ELECTRONICS LTD, MUMBAI

ITA 3997/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3638 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-08-2016
• Appeal Filed By: Department
• Bench Allotted: SMC
• Assessment Year: 1999-2000
• Appeal Filed On: 26-06-2015
• Court: TRIBUNAL
• Department Lawyers: SUNIL KUMAR AGARWALDR
• Section: 143(3)

Judgement Text

, - , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC, MUMBAI , ! ' , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, ITA NO.3997/MUM/2015 ASSESSMENT YEAR:1999-2000 DCIT, CIRCLE-6(1)(2), ROOM NO.506, 5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020 / VS. ASIAN ELECTRONICS LTD. 107, SUMER KENDRA, P.B. MARG, OPP. MAHINDRA TOWER, WORLI, MUMBAI-400018 / REVENUE / ASSESSEE P.A. NO . AAB CA0832C $ % & / ASSESSEE BY NONE $ % & / REVENUE BY SHRI SUNIL KUMAR AGARWAL-DR / DATE OF HEARING 16/08/2016 & / DATE OF ORDER: 01/09/2016 & / O R D E R THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATED 26/03/2015 OF THE LD. FIRST APPELLATE AUTHORI TY, MUMBAI. THE REVENUE HAS CHALLENGED DELETION OF PENA LTY OF RS.42,92,178/- IMPOSED U/S 271(1)(C) OF THE INCO ME ITA NO.3997/MUM/2015 M/S ASIAN ELECTRONICS LTD. 2 TAX ACT, 1961 (HEREINAFTER THE ACT) HOLDING THAT TH E ADDITION IS DEBATABLE ISSUE, THEREFORE, PENALTY IS NOT LEVIABLE. 2. DURING HEARING, THE LD. DR, SHRI SUNIL KUMAR AGARWAL, DEFENDED IMPOSITION AS WELL AS CONFIRMATIO N OF PENALTY U/S 271(1)(C) BY CONTENDING THAT THE ASSESS EE CONCEALED THE INCOME/FURNISHED INACCURATE PARTICULA RS OF SUCH INCOME. THE REGISTERED AD LETTER SENT TO THE A SSESSEE WAS RETURNED BACK BY THE POSTAL AUTHORITY WITH THE REMARMK LEFT, THEREFORE, I HAVE NO OPTION BUT TO PROCEED EX-PARTE, QUA THE ASSESSEE, AND TEND TO DISPOSE OF THIS APPEAL IN THE BASIS OF MATERIAL AVAILABLE ON RECORD . 2.1. I HAVE CONSIDERED THE SUBMISSIONS OF THE LD. DR AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE F ACTS, IN BRIEF, ARE THAT THE ASSESSEE DECLARED INCOME OF RS.20,52,640/- IN ITS RETURN FILED ON 30/12/1999. T HE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT DETERMINING THE TOTAL INCOME AS RETURNED BY THE ASS ESSEE. THE ASSESSEE COMPANY IS HAVING TWO UNITS I.E. UNIT 1 AND UNIT 2 AT SILVASA, ELIGIBLE FOR DEDUCTION TO THE EX TENT OF 100% OF THEIR PROFIT U/S 80IA OF THE ACT. THE ASSES SEE CLAIMED THAT UNITS AT SILVASA HAD IN ADDITION TO TH E SWITCH AUTOMATIC LOAD MONITORING SYSTEMS AND ENERGY SAVING DEVICES FOR TUBE LIGHT. THE NEW PRODUCTS HAD NO REL ATION WITH THE OLD UNITS. THE ASSESSING OFFICER OBSERVED THAT ALMS IS NOTHING BUT ASSEMBLY OF SWITCH OPERATORS AL ONG ITA NO.3997/MUM/2015 M/S ASIAN ELECTRONICS LTD. 3 WITH SOME OTHER SOFTWARE WHICH IS MERELY A VALUE AD DITION TO THE ITEM AND THE THUS INGREDIENTS OF ALMS IS SAM E ITEM FOR WHICH ROYALTY SHOULD BE CHARGED. HE NOTIONALLY CHARGED ROYALTY AT THE RATE OF 5% ON THE TOTAL VOLU ME OF SALES OF SWITCH CAPACITORS AND ALMS CHARGES NOTIONA LLY AS AN EXPENDITURE TO UNIT-1 AND UNIT-2. THE ROYALTY WA S WORKED OUT TO RS.1,42,63,365/- I.E. 5% OF NET AMOUN T OF SALES OF ALMS OF RS.26,41,15,050/- AND SWITCH OPERA TORS OF RS.12,11,52,52,245/- WAS REDUCED FROM PROFITS EL IGIBLE FOR DEDUCTION U/S 80IA OF THE ACT. THE ASSESSING OF FICER LEVIED PENALTY OF RS.49,92,178/- U/S 271(1)(C) ON T HE AMOUNT OF RS.1,42,63,365/-. 2.2. ON APPEAL, BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEAL), THE FACTUAL MATRIX WAS CONSIDE RED AND HELD THAT MERE ADDITION CANNOT LEAD TO INFERENC E THAT THERE WAS CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS. PLACING RELIANCE UPON THE DECISION IN CIT VS RELIANCE PETRO PRODUCTS LTD. 322 ITR 158 (SC), CIT VS NALIN P. SHAH (HUF) (40 TAXMAN.COM 86)(BOM.),SESA RESOURCES LTD. VS ACIT (219 TAXMAN 92)(BOM.), DIT V S ADMINSTRATOR OF THE ESTATE OF LATE MR. E.F. DINSHAW (218 TAXMAN 125)(BOM.), CIT VS ADITYA BIRLA NUVO LTD. (I TA NO.3899 OF 2010) (BOM.), CIT VS GUJRAT INSECTICIDES LTD. 218 TAXMAN 130 (GUJ.), HARSHA H. JAVERI VS DCIT 53 SOT 59 (MUM.), NARANGS INTERNATIONAL HOTELS PVT. LTD. V S DCIT 22 TAXMAN.COM 147 (TM)(MUMBAI TRIBUNAL) HELD THAT ITA NO.3997/MUM/2015 M/S ASIAN ELECTRONICS LTD. 4 PENALTY IS NOT LEVIABLE, MORE SPECIFICALLY WHEN THE ISSUE IS DEBATABLE. THE REVENUE IS AGGRIEVED AND IS IN APPE AL BEFORE THIS TRIBUNAL. 2.3. IF THE OBSERVATION MADE IN THE ASSESSMENT ORDER, LEADING TO ADDITION MADE TO THE TOTAL INCOME , CONCLUSION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RES PECTIVE COUNSEL, IF KEPT IN JUXTAPOSITION AND ANALYZED, CON SIDERING THE FACTUAL MATRIX, CASE LAWS RELIED UPON BY THE CI T(A) AND EXPLANATION-1 TO SECTION 271(1)(C) OF THE ACT, THE DECISION ON THE ISSUE BEING DEBATABLE, JUDICIAL PRONOUNCEMEN T IN CIT VS KRISHNA MARUTI LTD. 330 ITR 547, CIT VS GURDASPUR COOPERATIVE SUGAR MILLS LTD. 354 ITR 27 ( P & H), CIT VS H. M. A. UDYOG PVT. LTD. 195 TAXMAN 394 (DEL.), BENNET COLEMAN & CO. LTD. VS ACIT 144 ITD 45 (MUM.) , I FIND THAT NEITHER THERE IS CONCEALMENT OF INCOME NO R FURNISHING OF INACCURATE PARTICULARS OF INCOME, THE REFORE, THE PENALTY IS NOT LEVIABLE. EVEN OTHERWISE, IF A W RONG CLAIM, IF ANY, IS MADE BY THE ASSESSEE THAT ITSELF DOES NOT TANTAMOUNT TO FURNISHING OF INACCURATE PARTICULARS AS WAS HELD BY HON'BLE APEX COURT IN CIT VS RELIANCE PETRO PRODUCTS PVT. LTD. 322 ITR 158 (SC) AND VARIOUS OTH ER DECISIONS DISCUSSED (SUPRA). IN THE ABSENCE OF ANY CONTRARY MATERIAL, I FIND NO INFIRMITY IN THE CONCL USION OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL). IT IS AFFIRMED. ITA NO.3997/MUM/2015 M/S ASIAN ELECTRONICS LTD. 5 FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN IN T HE PRESENCE OF LD. DR AT THE CONCLUSION OF THE HEARING ON 16/08/2016. SD/- (JOGINDER SINGH) ! ' / JUDICIAL MEMBER MUMBAI; DATED : 01/09/2016 F{X~{T? P.S / ! & $ )!*+ ,&+-* / COPY OF THE ORDER FORWARDED TO : 1. '#$%& / THE APPELLANT 2. '(%& / THE RESPONDENT. 3. ) ) * / THE CIT, MUMBAI. 4. ) ) * / CIT- , MUMBAI 5. +,- ' , ) '#$ ' / , / DR, ITAT, MUMBAI 6. -0 1$ / GUARD FILE. & / BY ORDER, (+# ' //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI