DCIT 14(3)(2), MUMBAI V. SHIVSHAHI PUNARVASAN PRAKALP LTD, MUMBAI

ITA 4344/MUM/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0818 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 13-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAM TIWARI
• Assessee Lawyers: M SUBRAMANIYAM
• Keywords: Question of law

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E, MUMBAI BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI N.K. PRADHAN, ACCOUNTANT MEMBER ITA NO.4344/M/2015 ASSESSMENT YEAR: 2009-10 DY. CIT-14(3)(2), 455, AAYAKAR BHAVAN, 4 TH FLOOR, M.K. MARG, MUMBAI 400 020 VS. M/S. SHIVSHAHI PUNARVASAN PRAKALP LTD., 5 TH FLOOR, GRIHA NIRMAN BHAVAN, BANDRA EAST, MUMBAI 400 051 PAN: AACCS1590C (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI M. SUBRAMANIYAM, A.R. REVENUE BY : SHRI RAM TIWARI, D.R. DATE OF HEARING : 14.11.2017 DATE OF PRONOUNCEMENT : 24.01.2018 O R D E R PER D.T. GARASIA , JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVEN UE AGAINST THE ORDER DATED 28.04.2015 OF THE COMMISSIONER OF I NCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO ASSESSMENT YEAR 2009-10. 2. THE SHORT FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY IS ENGAGED IN THE BUSINESS OF SLUM REDEVELOPMENT PROJE CTS. THE ASSESSEE COMPANY CARRIES INVENTORY OF UNDER CONSTRU CTION PROJECTS (WORK-IN-PROGRESS). DURING THE YEAR UNDER CONSIDER ATION, THE ITA NO.4344/M/2015 M/S. SHIVSHAHI PUNARVASAN PRAKALP LTD. 2 ASSESSEE HAD CLAIMED PROVISION FOR LOSS OF RS.6,74, 00,000/- WHICH WAS DISALLOWED BY THE ASSESSING OFFICER (HEREINAFTE R REFERRED TO AS THE AO) IN THE ASSESSMENT ORDER. LATER ASSESSEE WA S GRANTED RELIEF ON PROTECTIVE BASIS FOR RS.3,65,35,260/- WHICH WAS EVEN UPHELD BY THE AO. FURTHER THE ASSESSEE CLAIMED 10% DEPRECIATI ON ON THE TRANSIT ACCOMMODATION WHICH AO CONSIDERED AT 5% ON THE GROU ND THAT THIS IS A RESIDENTIAL ACCOMMODATION. ON THE ABOVE ISSUE, THE AO HAD LEVIED PENALTY UNDER SEC. 271(1)(C ) ON THE GROUND THAT THE ASSESSEE HAD FILED INACCURATE PARTICULARS OF INCOME. 3. MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CIT (A) HAS ALLOWED THE APPEAL OF THE ASSESSEE BY OBSERVING AS UNDER: 3.3 I HAVE CONSIDERED THE APPELLANT'S SUBMISSIONS THE APPELLANT HAD CLAIMED PROVISION FOR LOSS OF RS.6,74,00,000/- WHICH AO HAD DISALLOWED CONSIDERING IT AS PENDING IN NATURE. HOWEVER, CIT(A) AND ITAT ALLOWED LOSS ON PROPORTIONATE BASIS, FOR RS.3,65,35,360/-. FURTHER AO DISALLOWED THE DEP RECIATION FOR RS.3,64,726/-. ON THE ABOVE TWO ADDITIONS, THE AO LEVIED PENALTY UNDE R SEC 271(1)(C ) ON THE GROUND THAT APPELLANT HAD FILED INACCURATE PARTICULARS OF INCOME. HOWEVER THE APPELLANT HAD FILED APPEAL BEFORE THE ITO. THE APPEAL WAS ADM ITTED BY THE HIGH COURT VIDE ITS ORDER NOS 353 OF 2012 WITH NO 355 OF 2015 WITH APPE AL NO.368 OF 2012 WITH APPEAL NO.375 OF 2012 WHEREIN APPEAL OF THE APPELLA NT WAS ADMITTED BY ORDER DT. 10 TH JULY 2014 BY BOMBAY HIGH COURT. WHEN THE APPEAL OF THE APPELLANT IS ADMITTED BY THE HIGH COURT, THEN THE MATTER BECOMES DEBATABL E IN VIEW OF THE BOMBAY HIGH COURT'S DECISION IN CIT-7 VS M/S NAYAN BUILDERS AND DEVELOPERS ITA NO.415 OF 2012 DT 8 TH JULY 201. IDENTICAL ISSUE IS HELD BY CIT VS ANITA ELECTRONICS (KARNATAKA) ITA NO. 297/2014, SUPREME COURT'S DECISION IN THE CASE OF S ANTOSH HAZAR PURUSHOTTAM TIWARI CIVIL APPEAL-NO. 1117 OF 2001 WHEREIN HIGH C OURT AND SUPREME COURT THE ISSUE ON THE APPELLATE THAT WHEN QUESTION OF LAW IS ADMITTED IN HC/SC, THEN IT HAS TO BE CONSIDERED AS DEBATABLE ISSUE WHERE TWO VIEWS ARE POSSIBLE. IN SUCH A CASE, THE ISSUE IS DEBATABLE IN NATURE IN THE FOLLOWING C ASES: (I) CIT VS M/S NAYAN BUILDERS AND DEVELOPERS ....IT IS THEREFORE ABUNDANTLY CLEAR THAT THE ADDITIONS IN RESPECT OF W HICH PENALTY WAS CONFIRMED HAVE BEEN ACCEPTED BY THE HON'BLE BOMBAY HC LEADING TO SUBSTANTIAL QUESTION OF LAW. WHEN THE HIGH COURT AD MITS SUBSTANTIAL QUESTION OF LAW ON AN ADDITION, IT BECOMES APPARENT THAT THE ADDITION IS CERTAINLY DEBATABLE. IN SUCH CIRCUMSTANCES, PENALTY CANNOT BE LEVIED UNDER SEC. 271 (1)(C) AS HAS BEEN HELD IN SEVERAL CASES I NCLUDING RUPAM MERCANTILE ITA NO.4344/M/2015 M/S. SHIVSHAHI PUNARVASAN PRAKALP LTD. 3 VS DCIT [(2004) 91 ITD 237 (AHD) (TM)] AND SMT. RAM ILA RATILAL SHAH VS ACIT [(1998) 60 TTJ (AHD) 171]. THE SUBMISSION OF SUBSTA NTIAL QUESTION, OF LAW BY THE HON'BLE HIGH COURT LENDS CREDENCE TO THE BONAFI DES OF THE ASSESSEE IN CLAIMING DEDUCTION. ONCE IT TURNS OUT THAT THE CLAI M OF THE ASSESSEE COULD HAVE BEEN CONSIDERED FOR DEDUCTION AS PER A PERSONA PROPERLY INSTRUCTED IN LAW AND IS NOT COMPLETELY DEBARRED AT ALL, THE MERE FACT OF CONFIRMATION OF DISALLOWANCE WOULD NOT PER SE LEAD TO THE IMPOSITIO N OF PENALTY. SINCE THE ADDITIONS, IN RESPECT OF WHICH PENALTY HAS BEEN UPH ELD IN THE PRESENT PROCEEDINGS, HAVE BEEN HELD BY THE HON'BLE HIGH COU RT TO BE INVOLVING A SUBSTANTIAL QUESTION OF LAW, IN OUR CONSIDERED OPIN ION, THE PENALTY IS NOT ELIGIBLE UNDER THIS SECTION. WE THEREFORE ORDER FOR THE DELETION OF PENALTY. CIT VS ANKITA ELECTRONICS PVT LTD --- THE MERE ADMISSION OF THE APPEAL BY THE HC ON THE SUBSTANTIAL QUESTIONS OF LAW AS HAVE BEEN QUOTED ABOVE, WOULD MAKE IT APPARENT THAT THE ADDITIONS MADE WERE DEBAT ABLE. THE TRIBUNAL HAS THUS RIGHTLY HELD THAT THE SUBMISSION OF SUBSTANTIA L QUESTION OF LAW BY THE HC LEADS CREDENCE TO THE BONAFIDE OF THE ASSESSEE A ND THEREFORE, THE PENALTY IS NOT ELIGIBLE UNDER SEC. 271(1)(C ) OF TH E ACT. MERELY BECAUSE THE CLAIM OF THE ASSESSEE HAS BEEN REJECTED BY THE REVE NUE AUTHORITIES WOULD NOT MAKE THE ASSESSEE LIABLE FOR PENALTY. (III) SANTOSH HAZARI VS PURUSHBTTAM TIWARI --- WHEN A QUESTION OF LAW IS FAIRLY ARGUABLE, WHERE THERE IS ROOM FOR DIFFERENCE OF OPI NION ON IT OR WHERE THE COURT THOUGHT IT NECESSARY TO DEAL WITH THAT QUESTI ON AT SOME LENGTH AND DISCUSS ALTERNATIVE VIEW, THEN THE QUESTION WOULD B E A SUBSTANTIAL QUESTION OF LAW. 3.4 HERE AS HIGH COURT ADMITTED THE CASE, IT MEANS SUBSTANTIAL QUESTION OF LAW IS INVOKED. HENCE ISSUE IS DEBATABLE IN NATURE. PENALT Y LEVIED IS CANCELLED. 3.5 REGARDING THE SECOND ISSUE, DISALLOWANCE OF DEP RECIATION, IT IS THE CLAIM OF THE APPELLANT WHICH AO DISALLOWED. IN SUCH A CASE, WHEN THE CLAIM IS DISALLOWED BY THE AO IN THE DECISION OF CIT VS RELIANCE PETRO PRODUCT S (P) LTD. REPORTED IN (2010) 322 ITR 158 HELD THAT WHEN THE CLAIM IS DISALLOWED BY T HE AO IT WOULD BE EQUIVATED WITH FILING OF INACCURATE PARTICULARS OF INCOME FOR CONCEALMENT OF PARTICULARS. HENCE PENALTY LEVIED IS CANCELLED IN VIEW OF THE ABOVE DE CISION. HENCE GROUND OF APPEAL IS ALLOWED. 4. AGGRIEVED BY THE DECISION OF THE LD. CIT(A), REV ENUE HAS COME IN APPEAL BEFORE US. 5. THE LD. D.R. HAS SUBMITTED THE WRITTEN SUBMISSIO NS WHICH READ AS UNDER: WE ARE OF THE OPINION THAT THE TRIBUNAL ERRED IN D ELETING THE PENALTY ON THIS SOLE ITA NO.4344/M/2015 M/S. SHIVSHAHI PUNARVASAN PRAKALP LTD. 4 GROUND. ADMISSION OF A TAX APPEAL BY THE HIGH COURT , IN MAJORITY CASES, IS EX-PARTE AND WITHOUT RECORDING EVEN PRIMA FACIE REASONS. WHE THER EX-PARTE OR AFTER BY- PARTE HEARING, UNLESS SOME OTHER INTENTION CLEARLY EMERGES FROM THE ORDER ITSELF, ADMISSION OF A TAX APPEAL BY THE HIGH COURT ONLY IN DICATES THE COURTS OPINION THAT THE ISSUE PRESENTED BEFORE IT REQUIRED FURTHER CONS IDERATION. IT IS AN INDICATION OF THE OPINION OF THE HIGH COURT THAT THERE IS A PRIMA FACIE CASE MADE OUT AND QUESTIONS ARE REQUIRED TO BE DECIDED AFTER ADMISSIO N. MERE ADMISSION OF AN APPEAL BY THE HIGH COURT CANNOT WITHOUT THERE BEING ANYTHING FURTHER, BE AN INDICATION THAT THE ISSUE IS DEBATABLE ONE SO AS TO DELETE THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT EVEN IF THERE ARE INDEPENDENT GROUNDS AND REASONS TO BELIEVE THAT THE ASSESSEES CASE WOULD FALL UNDER THE MISCHI EF ENVISAGED IN THE SAID CLAUSE (C) OF SUB-SECTION (1) OF SECTION 271 OF THE ACT. I N OTHER WORDS, UNLESS THERE IS ANY INDICATION IN THE ORDER OF ADMISSION PASSED BY THE HIGH COURT SIMPLY BECAUSE THE TAX APPEAL IS ADMITTED, WOULD GIVE RISE TO THE PRESUMPTION THAT THE ISSUE IS DEBATABLE AND THAT THEREFORE, PENALTY SHOULD BE DEL ETED. 12. THIS IS NOT TO SUGGEST THAT NO SUCH INTENTION CAN B E GATHERED FROM THE ORDER OF COURT EVEN IF SO EXPRESSED EITHER EXPLICITLY OR IN IMPLIED TERMS. THIS IS ALSO NOT TO SUGGEST THAT IN NO CASE, ADMISSION OF A TAX APPEAL WOULD BE A RELEVANT FACTOR FOR THE PURPOSE OF DECIDING VALIDITY OF A PENALTY ORDER . THIS IS ONLY TO PUT THE RECORD STRAIGHT INSOFAR AS THE OPINION THAT THE TRIBUNAL A S EXPRESSED IN THE PRESENT IMPUGNED ORDER VIZ, THAT UPON MERE ADMISSION OF A T AX APPEAL ON QUANTUM ADDITIONS, IS AN INDICATION THAT THE ISSUE IS DEBAT ABLE ONE AND THAT THEREFORE, PENALTY SHOULD AUTOMATICALLY BE DELETED WITHOUT ANY FURTHER REASONS OR GROUNDS EMERGING FROM THE RECORD. 13. THIS IS PRECISELY WHAT HAS BEEN DONE BY THE TRIBUNA L IN THE PRESENT CASE. ORDER OF THE TRIBUNAL, THEREFORE, CANNOT BE SUSTAINED. QUEST ION FRAMED IS ANSWERED IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. ORD ER OF THE TRIBUNAL IS REVERSED. SINCE APPARENTLY THE ASSESSEE HAD RAISED OTHER CONT ENTIONS ALSO IN SUPPORT OF THE APPEAL BEFORE THE TRIBUNAL, THE PROCEEDINGS ARE REM ANDED BEFORE THE TRIBUNAL FOR FRESH CONSIDERATION AND DISPOSAL IN ACCORDANCE WITH LAW. TAX APPEAL IS DISPOSED OF ACCORDINGLY...... THE LD. D.R. RELIED UPON THE ORDER OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. PRAKASH S. VYAS. 6. THE LD. A.R. HAS RELIED UPON THE ORDER OF THE LD . CIT(A). 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE P ARTIES. WE FIND THAT THE LD. CIT(A), FOLLOWING THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. NAYAN BUILDERS AN D DEVELOPERS, HELD THAT WHEN THE QUESTION OF LAW IS ADMITTED IN H IGH COURT OR ITA NO.4344/M/2015 M/S. SHIVSHAHI PUNARVASAN PRAKALP LTD. 5 HONBLE SUPREME COURT THEN THE ADDITION IS DEBATABL E AND WHEN TWO VIEWS ARE POSSIBLE THE PENALTY CANNOT BE IMPOSED. THEREFORE, APPEAL WAS ALLOWED. 8. THE LD. D.R. HAS RELIED UPON THE DECISION OF HON BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. PRAKASH S. VYAS A ND SUBMITTED THAT AS PER THE DECISION OF HONBLE GUJARAT HIGH COURT T HE APPEAL OF THE DEPARTMENT MAY BE ALLOWED. 9. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE P ARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE HONBLE GUJARAT HIGH COURT, IN THE CASE OF CIT VS. PRAKASH S. VYAS CONSIDERING THE VARIOUS DECISIONS, HELD THAT AN ADM ISSION OF TAX APPEAL BY GUJARAT HIGH COURT IN MANY CASES ARE EX-P ARTE WITHOUT RECORDING A PRIMA-FACIE VISION AND IT IS A PRIMA-FA CIE OPINION OF THE COURT THAT MERE ADMISSION OF APPEAL IN HIGH COURT C ANNOT BE AN INDICATION THAT ISSUE IS DEBATABLE AND DELETE THE P ENALTY. WE FIND THAT THE JURISDICTIONAL HIGH COURT HAS TAKEN A CONTRARY VIEW AND WHEN THE JURISDICTIONAL HIGH COURT IN THE CASE OF NAYAN BUIL DERS AND DEVELOPERS HAS SPECIFICALLY HELD THAT WHEN ADDITION IN RESPECT OF WHICH THE PENALTY WAS CONFIRMED HAS BEEN ACCEPTED B Y HONBLE GUJARAT HIGH COURT LEADING TO A SUBSTANTIAL QUESTIO N OF LAW, THEN IT IS APPARENT THAT ADDITION IS CERTAINLY DEBATABLE. WE FIND THAT THE HIGH COURT HAS RELIED UPON THE DECISION OF TRIBUNAL IN R OOPAM MERCANTILE VS. DCIT 19 ITD 239 (AHMEDABAD -THIRD MEMBER). THE REFORE, WHEN JURISDICTIONAL HIGH COURT IN THIS APPEAL HAS A DMITTED THE APPEAL ITA NO.4344/M/2015 M/S. SHIVSHAHI PUNARVASAN PRAKALP LTD. 6 WHICH CLEARLY BORNE OUT FROM THE APPEAL ADMITTED BY HIGH COURT VIDE ORDER NO.353 OF 2012 WITH NO.355 OF 2015 WITH APPEA L NO.368 OF 2012 WITH APPEAL NO.375 OF 2012 WHEREIN APPEAL OF T HE ASSESSEE WAS ADMITTED BY ORDER DT. 10 TH JULY 2014 BY BOMBAY HIGH COURT. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION JURI SDICTIONAL HIGH COURT, WE DISMISS THE DEPARTMENTAL APPEAL. 10. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 24.01.2018. SD/- SD/- (N.K. PRADHAN) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 24.01.2018. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.