ACIT, New Delhi V. M/s. Essel Shyam Communication Ltd., New Delhi

ITA 4356/DEL/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96913 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 31-07-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 30-09-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL

Judgement Text

ITA NO. 4356/DEL/2011 ASSTT.YEAR: 2005-06 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `B NEW DELHI BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER I.T.A.NO.4356/DEL/2011 ASSESSMENT YEAR : 2005-06 ACIT, VS M/S ESSEL SHYAM COMMUNICATION LT D., CENTRAL CIRCLE-2, C-138, NARAIN INDL. AREA, PHA SE-I, NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT B Y: SMT. PARWINDER KAUR, SR. DR RESPONDENT BY : SHRI VED JAIN, CA O R D E R PER CHANDRAMOHAN GARG, J.M. THIS APPEAL BY THE REVENUE HAS BEEN DIRECTED AGAINS T THE ORDER OF CIT(A)- III, NEW DELHI DATED 22.7.2011 IN APPEAL NO. 32/10- 11 FOR AY 2005-06 BY WHICH THE CIT(A) DIRECTED THE AO TO DELETE THE PENA LTY IMPOSED BY HIM U/S 271(1)( C) R/W SECTION 274 OF THE INCOME TAX ACT, 1 961 VIDE PENALTY ORDER DATED 25.3.2010. GROUND NO. 3 AND 4 OF THE REVENUE ARE G ENERAL IN NATURE WHICH NEED NO ADJUDICATION. THE REMAINING GROUNDS OF THE RE VENUE READ AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN CANCELLING THE PENALTY OF RS.68,56,155/- IMPOSED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE INCOME TAX ACT, 1961. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT MAKIN G CLAIM WHICH ITA NO. 4356/DEL/2011 ASSTT.YEAR: 2005-06 2 IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. 2. WE HAVE HEARD ARGUMENTS OF BOTH THE SIDES AND CA REFULLY PERUSED THE RELEVANT MATERIAL PLACED ON RECORD. LD. DR SUBMITT ED THAT DURING THE QUANTUM PROCEEDINGS, THE ASSESSMENT WAS COMPLETED U/S 143(3 ) OF THE ACT ON 24.12.2007 AT THE TAXABLE INCOME OF RS.1,99,94,278/- AS AGAINS T THE RETURNED INCOME OF RS.57,60,000/- AFTER CLAIMING DEDUCTION U/S 80IA OF THE ACT. LD. DR FURTHER SUBMITTED THAT IN THE ASSESSMENT ORDER, THE AO MADE AN ADDITION OF RS.1,42,34,278/- BY DISALLOWING EXCESS AND INCORREC T DEDUCTION U/S 80IA OF THE ACT ON ACCOUNT OF PROFIT FROM TRADING OF VSAT EQUIP MENT OF RS.50,42,717/-, SERVICE CHARGES FOR COMPUTER SOFTWARE UPDATING OF N MS OF RS.57,58,000/-, FDRS PLEDGED WITH BANK FOR AVAILING NON FUND BASED WORKING CAPITAL LIMITS OF RS.8,38,626/- TREATING IT AS INCOME FROM OTHER SOUR CES AND PROFIT EARNED FROM SEGMENT CHARGES OF RS.25,94,935/-. LD. DR FURTHER SUBMITTED THAT THE AO AFTER CONSIDERING AND REJECTING THE SUBMISSIONS AND EXPLA NATION OF THE ASSESSEE IMPOSED A PENALTY OF RS.68,56,155/- ON THE ASSESSEE U/S 271(1)(C) OF THE ACT WHICH IS 150% OF THE TOTAL AMOUNT OF TAX SOUGHT TO BE EVADED. 3. SUPPORTING THE ACTION OF THE AO, LD. DR SUBMITTE D THAT THE ASSESSEE FURNISHED INACCURATE PARTICULARS OF ITS INCOME AND ALSO CONCEALED SOME IMPORTANT ITA NO. 4356/DEL/2011 ASSTT.YEAR: 2005-06 3 PARTICULARS OF ITS INCOME, THEREFORE, THE AO WAS CO RRECT IN IMPOSING THE IMPUGNED PENALTY WHICH WAS WRONGLY DELETED BY THE C IT(A) WITHOUT ANY JUSTIFIED REASON OR BASIS. LD. DR FINALLY SUBMITTE D THAT THE IMPUGNED ORDER MAY BE SET ASIDE BY RESTORING PENALTY ORDER OF THE AO. 4. REPLYING TO THE ABOVE, LD. COUNSEL OF THE ASSESS EE REITERATED ITS ARGUMENT SUBMITTED IN THE FORM OF WRITTEN SYNOPSIS/ARGUMENTS AND SUBMITTED THAT THE AO HAD MADE DISALLOWANCE U/S 80IA OF THE ACT IN RESPEC T OF FOUR ISSUES VIZ. INCOME FROM SOFTWARE DIVISION, INCOME FROM TRADING OF VSAT EQUIPMENT, INCOME FROM INTEREST AND SERVICE INCOME EARNED FROM SEGMENT CHA RGES. LD. COUNSEL FURTHER POINTED OUT THAT THE ASSESSEE FILED AN APPEAL AGAIN ST THE ASSESSMENT ORDER BEFORE THE CIT(A) AND DELETED THE ADDITION IN RESPECT OF F OURTH ISSUE I.E. SERVICE INCOME FROM SEGMENT CHARGES OF RS.25,94,935/- AND REMAININ G ADDITION ON THREE COUNTS WAS UPHELD BY THE FIRST APPELLATE AUTHORITY. LD. COUNSEL FURTHER SUBMITTED THAT THE REVENUE FILED AN APPEAL AGAINST THE DELETION OF ADDITION IN RESPECT OF SERVICE INCOME WHEREBY THE ASSESSEE ALSO FILED APPEAL AGAIN ST THE UPHOLDING OF ADDITION MADE BY THE AO ON OTHER THREE COUNTS. LD. COUNSEL VEHEMENTLY CONTENDED THAT DURING THE PENDENCY OF THE SAID APPEALS BEFORE THE ITAT, THE AO PASSED IMPUGNED PENALTY ORDER ON 25.3.2010 LEVYING PENALTY OF RS.45,70,770/- BY HOLDING THAT THE ASSESSEE FURNISHED INACCURATE PART ICULARS OF INCOME IN RESPECT OF RS.1,16,39,343/- BY CLAIMING DEDUCTION U/S 80IA(4) OF THE ACT. LD. COUNSEL ITA NO. 4356/DEL/2011 ASSTT.YEAR: 2005-06 4 FURTHER POINTED OUT THAT THE ITAT VIDE ITS CONSOLID ATED ORDER DATED 31.3.2010 DISMISSED THE APPEAL OF THE REVENUE AND ALSO DELETE D THE DISALLOWANCE OF DEDUCTION U/S 80IA OF THE ACT IN RESPECT OF INCOME FROM TRADING OF VSAT EQUIPMENT AMOUNTING TO RS.50,42,717/-. LD. COUNSEL FURTHER POINTED OUT THAT AS REGARDS THE INCOME FROM SOFTWARE DIVISION, THE TRIB UNAL SET ASIDE THE MATTER TO THE FILE OF THE AO AND CONFIRMED THE DISALLOWANCE O F DEDUCTION IN RESPECT OF INTEREST INCOME. LD. COUNSEL FURTHER CONTENDED THA T THE ASSESSEE FILED AN APPEAL BEFORE THE HONBLE HIGH COURT ON THE ISSUE OF INTER EST WHICH WAS SET ASIDE BY HONBLE HIGH COURT BY ORDER DATED 17.5.12 AND THE I SSUE OF INTEREST WAS SET ASIDE TO THE TRIBUNAL TO EXAMINE THE FACTUAL MATRIX RELATING TO THE INTEREST INCOME AND EXPENDITURE THEREON. LD. COUNSEL POINTE D OUT THAT THE ISSUE OF INTEREST HAS TO GO TO THE FILE OF AO FOR PROPER VER IFICATION AND EXAMINATION TO FOLLOW THE DIRECTIONS OF HONBLE HIGH COURT. 5. LD. COUNSEL FURTHER CONTENDED THAT THE ASSESSEE HAS FULLY AND TRULY DISCLOSED ALL NECESSARY FACTS IN THE DETAILS FILED ALONG WITH RETURN OF INCOME AND IN THE COMPUTATION AND ALSO FILED CERTIFICATE REQUI RED FOR CLAIMING EXEMPTION U/S 80-IA(4) OF THE ACT. LD. COUNSEL FURTHER SUBMITTED THAT THE ISSUE OF CLAIMING DEDUCTION IN RESPECT OF ABOVE INCOME IS DEBATABLE A S THE CIT(A) HAS GIVEN RELIEF ON THE ONE ISSUE AND THE TRIBUNAL HAS ALSO GIVEN RE LIEF ON ONE ISSUE AND THE TRIBUNAL ALSO FOUND IT APPROPRIATE TO RE-EXAMINE TH E SECOND ISSUE OF INCOME ITA NO. 4356/DEL/2011 ASSTT.YEAR: 2005-06 5 FROM SOFTWARE DIVISION TO THE FILE OF THE AO FOR A FRESH ADJUDICATION, THEREFORE, THE ISSUE BECOMES DEBATABLE AND CONTROVERSIAL AND P ENALTY IN RESPECT OF THESE ISSUES CANNOT BE LEVIED U/S 271(1)( C) OF THE ACT. 6. LD. COUNSEL ALSO PLACED RELIANCE ON THE DECISION S OF HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LT D. 230 CTR 320 (SC) AND SUBMITTED THAT EVERY DISALLOWANCE DOES NOT ATTRACT PENALTY U/S 271(1)(C) OF THE ACT AND MERELY BECAUSE THE CLAIM OF THE ASSESSEE WA S NOT ACCEPTED OR WAS NOT FOUND TO BE ACCEPTABLE BY THE REVENUE DOES NOT AUTO MATICALLY ATTRACT PENALTY U/S 271(1)(C) OF THE ACT. LD. COUNSEL SUBMITTED THAT S INCE THE ORDERS OF AO/CIT(A) AND TRIBUNAL ARE AWAITED ON ALL FOUR ISSUES, THEREF ORE, PENALTY LEVIED BY THE AO AND DELETED BY THE CIT(A) CANNOT BE HELD AS FINAL A ND THE ISSUE OF PENALTY MAY KINDLY BE RESTORED TO THE FILE OF AO FOR A FRESH AD JUDICATION AS PER OUTCOME OF THE RESPECTIVE JUDICIAL AUTHORITIES ON ALL FOUR ISS UES. 7. LD. DR PLACED REJOINDER AND SUBMITTED THAT THE A O WAS RIGHT IN IMPOSING PENALTY ON ALL FOUR ISSUES WHICH WAS WRONGLY DELETE D BY THE CIT(A), THEREFORE, ORDER OF THE CIT(A) MAY KINDLY BE SET ASIDE BY REST ORING THAT OF THE AO, HOWEVER, LD. DR FAIRLY ACCEPTED THAT THE ISSUE OF D ISALLOWANCE AND ADDITION ON ALL FOUR GROUNDS/ISSUES HAS NOT ATTAINED FINALITY I N THE QUANTUM PROCEEDINGS AND ITA NO. 4356/DEL/2011 ASSTT.YEAR: 2005-06 6 THE ISSUE OF INCOME FROM SOFTWARE DIVISION HAS BEEN RESTORED TO THE FILE OF THE AO BY THE TRIBUNAL, ISSUE OF INCOME FROM TRADING OF VSAT EQUIPMENT HAS BEEN REMITTED TO ITAT BY HONBLE HIGH COURT, THE ISSUE O F INCOME FROM INTEREST HAS BEEN REMITTED TO THE TRIBUNAL BY HONBLE HIGH COURT WHICH AGAIN REQUIRES EXAMINATION AT THE END OF AO IN REGARD TO FACTUAL M ATRIX RELATING TO INTEREST INCOME AND THE EXPENDITURE THEREON AND THE ISSUE OF SERVICE INCOME EARNED HAS ALSO BEEN REMITTED TO THE TRIBUNAL BY HONBLE HIGH COURT FOR A FRESH ADJUDICATION. LD. DR FAIRLY POINTED OUT THAT THE D EPARTMENT HAS NO SERIOUS OBJECTION IF THE ISSUE OF PENALTY ON ALL FOUR GROUN DS IS SET ASIDE TO THE FILE OF AO FOR A FRESH ADJUDICATION AS PER OUTCOME OF THE ORDE RS OF THE RESPECTIVE AUTHORITIES VIZ. AO/CIT(A)/TRIBUNAL. 8. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS AN D FACTS AND CIRCUMSTANCES PLACED BY BOTH THE PARTIES BEFORE US, WE ARE OF THE CONSIDERED VIEW THAT THE ISSUE OF PENALTY IS CONSEQUENTIAL TO THE DISALLOWANCE/ADDITION MADE IN THE QUANTUM PROCEEDINGS. AS PER FACTS SUBMITTED BY THE ASSESSEE AND FAIRLY ACCEPTED BY THE LD. DR, WE OBSERVE THAT ALL FOUR IS SUES HAVE NOT ATTAINED FINALITY AND THESE ARE PENDING BEFORE THE AO AND THE TRIBUNA L FOR A FRESH ADJUDICATION AS PER ORDER OF HONBLE HIGH COURT DATED 17.5.2012 AND ORDER OF THE TRIBUNAL DATED 31.3.2010. THEREFORE, WE FIND IT APPROPRIATE TO RESTORE THE ISSUE OF PENALTY FOR A FRESH ADJUDICATION TO THE FILE OF AO WITH THE DIRECTION THAT THE AO SHALL ITA NO. 4356/DEL/2011 ASSTT.YEAR: 2005-06 7 DECIDE THE PENALTY PROCEEDINGS AFTER AFFORDING DUE OPPORTUNITY OF HEARING FOR THE ASSESSEE AND KEEPING IN VIEW THE OUTCOME OF QUANTUM PROCEEDINGS ORDERS BY RESPECTIVE QUASI-JUDICIAL AND JUDICIAL FORUMS AND W ITHOUT BEING PREJUDICED FROM THE EARLIER PENALTY AND IMPUGNED APPELLATE ORDERS. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DEEM ED TO BE ALLOWED FOR STATISTICAL PURPOSES IN THE MANNER AS INDICATED ABO VE. ORDER PRONOUNCED IN THE OPEN COURT ON 5.8.2015. SD/- SD/- (N.K. SAINI) (CHANDRAMOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 5TH AUGUST 2015 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. C.I.T.(A) 4. C.I.T. 5. DR BY ORDER ASSTT.REGISTRAR ITA NO. 4356/DEL/2011 ASSTT.YEAR: 2005-06 8