SHREENATH MOTORS P.LTD, MUMBAI V. DCIT 5(3), MUMBAI

ITA 4379/MUM/2018

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 3747 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2005-2006
• Appeal Filed On: 04-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T S KHALSA
• Assessee Lawyers: S C TIWARI
• Keywords: Set aside
• Section: 271(1)(c)

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI SHRI SHAMIM YAHYA (AM) & SHRI AMARJIT SINGH (JM) I.T.A. NO. 4379/MUM/2018 (ASSESSMENT YEAR 2005-06) I.T.A. NO. 4380/MUM/2018 (ASSESSMENT YEAR 2006-07) M/S. SHREENATH MOTORS PVT. LTD. MORYA ESTATE, NEW LINK ROAD ANDHERI WEST MUMBAI-400 053. PAN : AAAFC0033D VS. DCIT, CIRCLE- 5(3) AAYAKAR BHAVAN M.K. ROAD CHURCHGATE MUMBAI- 400020. (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI S.C. TIWARI DEPARTMENT BY SHRI T.S. KHALSA DATE OF HEARING 23 . 02 . 20 2 1 DATE OF PRONOUNCEMENT 01.03.2021 O R D E R PER SHAMIM YAHYA (AM) :- THESE ARE APPEALS BY THE ASSESSEE AGAINST COMMON OR DER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [IN SHORT LEAR NED CIT(A)] DATED 23.4.2018 WERE IN FOLLOWING PENALTIES LEVIED UNDER SECTION 271 (1) C HAVE BEEN CONFIRMED. ASSESSMENT YEAR AMOUNT 2005-06 2,13,928/- 2006 - 07 1,91,250/ - 2. BRIEF FACTS OF THE CASE LEADING TO THE LEVY OF P ENALTY AT THAT IN ONE OF THE ASSESSMENT YEARS THERE WAS DISALLOWANCE OF DIRECTOR S REMUNERATION AND PAYMENT TO THE MANAGEMENT INSTITUTE FOR THE DIRECTO RS EDUCATION EXPENSES. THIS DISALLOWANCE WAS OF THE GROUND THAT THE SAID D IRECTOR WAS YOUNG AND SON OF THE ONE OF THE OTHER DIRECTORS OF THE COMPANY. I N ANOTHER YEAR THE DISALLOWANCE WAS ON ACCOUNT OF TRAVELLING EXPENSES OF THE DIRECTOR WITH RESPECT TO THE PORTION OF TRAVELLING EXPENSES ATTRIBUTED TO THE TRAVEL OF THE WIFE OF THE DIRECTOR. THIS WAS DONE BY THE AO ON THE GROUND THA T ASSESSEE COULD NOT M/S. SHREENATH MOTORS PVT. LTD. 2 ESTABLISH THAT THERE WAS ANY EVIDENCE THAT THE DIRE CTOR WAS REQUIRED TO TAKE THE WIFE INTO SOME SOCIAL MEETINGS DURING TRAVELLIN G. 3. THESE DISALLOWANCES WERE CONFIRMED UP TO THE LEV EL OF ITAT. PENALTY ON THE DISALLOWANCES WERE LEVIED AND CONFIRMED BY THE LEARNED CIT(A). 4. AGAINST THIS ORDER ASSESSEE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS. WE FIND THAT PENALTY IN THIS CASE HAS BEEN LEVIED ON DISALLOWANC E OF DIRECTORS REMUNERATION AND TRAVELLING EXPENSES. FROM THE FACTS NARRATED AB OVE WE FIND THAT ASSESSEE HAS DULY MADE THE CLAIM. ALL ASPECTS ARE DISCLOSED. THERE IS NO FURNISHING OF INACCURATE PARTICULARS OR CONCEALMENT OF INCOME. HO NOURABLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS PVT. LTD., ( 322 ITR 158)(SC) HAS HELD THAT MERE REJECTION OF THE CLAIM OF THE ASSESSEE CA NNOT IPSO FACTO LEAD TO THE CONCLUSION THAT THE ASSESSEE SHOULD BE VISITED WITH THE REGOURS OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. IN OUR CONSIDER ED OPINION THIS PROPOSITION IS DULY APPLICABLE ON THE FACTS OF THE PRESENT CASE. I T CANNOT BE SAID THAT ASSESSEE'S CLAIM WAS EX FACIE BOGUS. HENCE REJECTIO N OF THE SAID CLAIM CANNOT WARRANT LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. 6. FURTHERMORE WE FIND THAT A LARGER BENCH OF HONOU RABLE SUPREME COURT IN THE CASE OF HINDUSTAN STEEL VS. STATE OF ORISSA (83 ITR 26) H AS EXPOUNDED THAT THE AUTHORITY MAY NOT LEVY PENALTY IF THE COND UCT OF THE ASSESSEE IS NOT FOUND TO BE CONTUMACIOUS. IN THE PRESENT CASE WE AR E OF THE CONSIDERED OPINION THAT ASSESSEES CONDUCT IS NOT CONTUMACIOUS TO WARRANT LEVY OF PENALTY. ACCORDINGLY IN THE BACKGROUND OF AFORESAID DISCUSSION AND PRECEDENTS, WE SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND DELETE THE PENALTY. M/S. SHREENATH MOTORS PVT. LTD. 3 7. IN THE RESULT, APPEALS BY THE ASSESSEE STAND ALL OWED. PRONOUNCED IN THE OPEN COURT ON 1.3.2021. SD/- SD/- (AMARJIT SINGH) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED : 01/03/2021 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR) PS ITAT, MUMBAI