M/s. Renaissance Asset Management Co. Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 4462/DEL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2806 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 20-06-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 13-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRAVAN GOTRU
• Assessee Lawyers: M L DUJARI
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F, NEW DELHI BEFORE SH. N. K. SAINI , ACCOUNTANT MEMBER AND SMT. BEENA A. PILLAI, JUDICIAL MEMBER ITA NO. 4462/DEL/2014 (ASSESSMENT YEAR: 2005-06) R ENAISSANCE ASSET MANAGEMENT CO. PVT. LTD. 2 ND FLOOR, SHIV MAHAL, B-47 CANNAUGHT PLACE, NEW DELHI. VS. DC IT, CIRCLE-15(1), NEW DELHI PAN : A ABCR6696K (APPELLANT) (RESPONDENT) APPELLANT BY : SH. M. L. DUJARI, CA RESPONDENT BY : SH. SHRAVAN GOTRU, SR. DR. DATE OF HEARING : 20.06.2017 DATE OF PRONOUNCEMENT : 28.06.2017 O R D E R PER BEENA A. PILLAI, J.M : 1. THE PRESENT APPEAL HAS BEEN FILED BY ASSESSEE AGAI NST ORDER DATED 01.07.2014 PASSED BY LD. CIT(A)-XVII, NEW DEL HI ON THE FOLLOWING GROUNDS OF APPEAL: 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN SUMMARILY DISMISSING THE VAR IOUS GROUNDS RAISED BY THE APPELLANT IN RESPECT OF ASSES SEE'S CLAIM FOR NON LEVY OF PENALTY U/S 271(L)(C) OF THE INCOME TAX ACT,1961 AND CONFIRMING THE PENALTY LEVIED BY THE ASSESSING OFFICER AMOUNTING TO RS. 4,71,120/-. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN NOT GIVING SPECIFIC FINDING IN RESPECT OF ASSESSEE'S OBJECTIONS THAT THE ASSESSING OFFICER WAS NOT COMPETENT TO REINITIATE PENALTY IN PROCEEDINGS U/S 271(L)(C) OF THE INCOME TAX ACT, 1961 TO GIVE EFFECT TO THE O RDER OF THE APPELLATE AUTHORITIES U/S 254/250/143(3) OF THE INC OME TAX ACT, 1961, EVEN THOUGH THE PENALTY HAS BEEN INI TIATED AND IMPOSED IN ORIGINAL ASSESSMENT PROCEEDINGS AND 2 ITA NO. 4462 /DEL/2014 (AY 2005-06) DELETED BY THE APPELLATE AUTHORITIES ON MERITS WITH OUT ANY DIRECTION TO REINITIATE SUCH PROCEEDINGS IN APPEAL EFFECT ORDER, WHICH HAS BEEN ACCEPTED BY THE DEPARTMENT. 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ALSO ERRED IN NOT APPRECIATING THE FA CT THAT NO PENALTY CAN BE LEVIED IN PROCEEDINGS U/S 254/250/14 3(3) OF THE INCOME TAX ACT, 1961 ON AN ISSUE, WHICH WAS NOT A SUBJECT MATTER OF PENALTY IN THE ORIGINAL ASSESSMEN T ORDER, BUT HAS ARISEN ONLY ON ACCOUNT OF CERTAIN DIRECTION S OF THE APPELLATE AUTHORITIES, WHICH IN VIEW OF SUBSEQUENT JUDICIAL PRONOUNCEMENTS WERE NOT APPLICABLE FOR THE YEAR UND ER CONSIDERATION. 4. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE PENALTY LEVIE D UNDER SECTION 271(L)(C) OF THE INCOME TAX ACT, 1961 WITHO UT APPRECIATING THE FACT THAT NO PENALTY IS EXIGIBLE I N RESPECT OF AN ADDITION, WHICH IS DEBATABLE AND WHICH HAS NOT B EEN ADDED BACK IN THE COMPUTATION OF INCOME ON A BONA F IDE BELIEF FULLY SUPPORTED BY THE JUDICIAL PRONOUNCEMEN TS. 5. THAT WITHOUT PREJUDICE TO THE AFORESAID GROUNDS, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ER RED IN NOT APPRECIATING THE FACT THE QUANTUM OF PENALTY IN THE PRESENT CASE HAS TO BE DETERMINED UNDER CLAUSE (C) OF EXPLANATION 4 OF SECTION 271(1) AND NOT UNDER CLAUS E (A) OF THE SAID EXPLANATION. 6. THAT THE ABOVE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO ONE ANOTHER. 7. THAT THE APPELLANT CRAVES PERMISSION TO ADD, ALT ER, AMEND, VARY OR DELETE ONE OR MORE GROUNDS OF APPEAL ON OR BEFORE THE DATE OF HEARING. 2. BRIEF FACTS OF THE CASE ARE AS UNDER: ORIGINAL ASSESSMENT IN THE CASE WAS COMPLETED ON 30.10.2007 AT AN INCOME OF RS. 3,11,76,157/-. THE L D. AO HAD MADE DISALLOWANCE OF RS. 45,73,144/- IN VIEW OF THE PROPORTIONATE EXPENSES RELATING TO CAPITAL GAINS AND SPECULATIVE TRANSACTIONS AS NOT ALLOWABLE ALONG WITH OTHER ADDITIONS MADE BY HI M. IN ORIGINAL ASSESSMENT ORDER ASSESSING OFFICER HAD ACCEPTED THE SUO MOTO DISALLOWANCE MADE BY ASSESSEE OF RS. 3,83,580/-, UN DER SECTION 3 ITA NO. 4462 /DEL/2014 (AY 2005-06) 14A OF THE ACT, WHICH WAS CONFIRMED BY LD.CIT(A). A SSESSEE FILED APPEAL BEFORE THIS TRIBUNAL AGAINST ORDER PASSED BY LD. CIT(A), WHEREIN THIS TRIBUNAL GRANTED RELIEF IN RESPECT OF OTHER ADDITION OF RS. 13,17,000/- AND RS. 45,73,144/-. WHILE GRANTING ABOVE RELIEF, THIS TRIBUNAL DIRECTED LD. AO TO RECOMPUTE DISALLOW ANCE UNDER SECTION 14A OF THE ACT, IN ACCORDANCE WITH RULE 8D OF INCOME TAX RULES IN VIEW OF SPECIAL BENCH DIVISION, IN CASE OF ITO VS. DAGA CAPITAL MANAGEMENT PVT. LTD, REPORTED IN 117 ITD 16 9, WHEREIN IT WAS HELD THAT RULE 8D WAS RETROSPECTIVE IN OPERATIO N. 3. DURING ORIGINAL ASSESSMENT, PROCEEDINGS UNDER SECT ION 271(1)(C) WAS INITIATED AND PENALTY OF RS. 9,13,504 /- WAS LEVIED. 4. ON FURTHER APPEAL TO SAID PENALTY LEVIED ON RECOMP UTATION OF 14A DISALLOWANCE READ WITH RULE 8D OF THE ACT WAS C ANCELLED ON MERITS BY LD. CIT(A), VIDE ORDER DATED 04.01.2011, WHICH HAS BEEN PLACED AT PAGE 1 TO 11 OF PAPER BOOK. AGAINST THIS DELETION OF PENALTY REVENUE DID NOT PREFER ANY APPEAL BEFORE TH IS TRIBUNAL. 5. IN THE MEANWHILE ORDER UNDER SECTION 254/250/143 ( 3) OF THE ACT WAS PASSED BY LD. AO ON 28.02.2010 AS PER DIREC TIONS OF THIS TRIBUNAL, WHEREIN LD. AO MADE DISALLOWANCE OF RS. 1 4,11,915/- UNDER SECTION 14A READ WITH RULE 8D OF THE ACT. SIN CE A SUM OF RS. 3,83,580/- WAS ALREADY DISALLOWED BY ASSESSEE ITSEL F IN ITS RETURN OF INCOME, ASSESSING OFFICER GRANTED RELIEF WHILE COMP UTING DISALLOWANCE UNDER SECTION 14A READ WITH RULE 8D. T HAT NET DISALLOWANCE COMPUTED UNDER SECTION 14A READ WITH R ULE 8D WAS RS. 10,28,335/-. 6. AGGRIEVED BY THIS ASSESSEE PREFERRED AN APPEAL BEF ORE LD. CIT(A) WHO GRANTED RELIEF OF RS. 1,24,443/-. ON AN APPEAL BEFORE THIS TRIBUNAL FURTHER AMOUNT OF RS. 45,73,144/- WAS DIRECTED TO BE REDUCED VIDE ORDER DATED 09.08.2012 IN ITA NO. 181/ DEL/2012. 4 ITA NO. 4462 /DEL/2014 (AY 2005-06) THUS, AFTER GIVING EFFECT TO ORDER OF THIS TRIBUNAL DATED 09.08.2012 AND LD. CIT(A) ORDER, ASSESSED INCOME STOOD REDUCED TO RS. 2,61,36, 804/-. ASSESSING OFFICER THEREAFTER IN ITIATED PENALTY PROCEEDINGS AND LEVIED A PENALTY AND ISSUED A SHOW CAUSE NOTICE ON 07.03.2013 WHEREIN ASSESSEE WAS REQUIRED TO SHOW CAUSE AS TO WHY PENALTY UNDER SECTION 271(1)(C) SHOULD NOT BE L EVIED ON AMOUNT OF DISALLOWANCE MADE BY LD. AO UNDER SECTION 14A READ WITH RULE 8D. BY THIS TIME DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ AND BOYCE MANUFACTURING CO. L TD. VS DCIT REPORTED IN 328 ITR 81 WAS AVAILABLE, WHEREIN IT WAS HELD THAT RULE 8D COULD NOT BE CONSTRUED TO BE RETROSPECTIVE IN OP ERATION, BUT IS PROSPECTIVE AND IS APPLICABLE FROM ASSESSMENT YEAR 2008-09 ONWARDS. 7. ASSESSEE HAS BEEN CONSISTENTLY SUBMITTING BEFORE A UTHORITIES BELOW AND HAD PLACED RELIANCE UPON DECISION OF HON BLE BOMBAY HIGH COURT HOWEVER LD. AO FOUND SUBMISSIONS TO BE N OT TENABLE AND LEVIED 100% PENALTY. 8. AGGRIEVED BY PENALTY ORDER PASSED BY LD. AO, ASSES SEE PREFERRED APPEAL BEFORE LD. CIT(A) WHO ALSO FAILED TO CONSIDER ISSUE AS PER THE RATIO LAID DOWN BY HONBLE BOMBAY HIGH C OURT IN THE CASE OF HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ AND BOYCE MANUFACTURING CO LTD VS DCIT (SUPRA). 9. AGGRIEVED BY ORDER OF LD. CIT (A) ASSESSEE IS IN A PPEAL BEFORE US NOW. 10. THE LD. AR SUBMITTED ON TWO GROUNDS THAT; THE ISSUE ON WHICH PENALTY HAS BEEN LEVIED WAS A DE BATABLE ISSUE AND ASSESSING OFFICER HAS FAILED TO APPRECIAT E THE DECISION OF HONBLE DOUBLE BOMBAY HIGH COURT IN TH E CASE OF HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ AND BOYCE MANUFACTURING CO LTD VS DCIT THAT WAS VERY MUCH AVA ILABLE 5 ITA NO. 4462 /DEL/2014 (AY 2005-06) ON THE PUBLIC DOMAIN AT THE TIME WHEN THE RECENT PE NALTY PROCEEDINGS WERE INITIATED, AND WAS PLACED. ON READ BY ASSESSEE. FURTHER IT WAS SUBMITTED THAT WHILE THE ORIGINAL AS SESSMENT WAS CONDUCTED THE DISALLOWANCE MADE BY ASSESSEE WAS ACCEPTED BY LD. AO WHICH WAS CONFIRMED BY LD. CIT(A ) AND IT WAS COMPUTED UPON THE DIRECTION ISSUED BY THIS TRIB UNAL, FOLLOWING THE SPECIAL BENCHS DECISION IN THE CASE OF DAGA CAPITAL (SUPRA). HE SUBMITTED THAT WHEN THE PENALTY WAS INITIATED AND LEVIED UPON THE RECOMPUTATION OF DISA LLOWANCE UNDER SECTION 14A PURSUANT TO DIRECTIONS OF THIS TR IBUNAL AGAINST WHICH APPEAL AGAINST BEFORE LD. CIT (A) TO DELETED THE PENALTY ON MERITS AND DEPARTMENT DID NOT PURSUE AN APPEAL BEFORE THIS TRIBUNAL ON THE PENALTY BEING DELETED. 11. LD. AR SUBMITTED THAT AT THIS JUNCTURE ON BOTH THE SE GROUNDS PENALTY DESERVES TO BE DELETED AS THE ISSUE INVOLVE D ON WHICH PENALTY HAS BEEN LEVIED HAS NOW FURTHER ATTAINED FI NALITY BY VIRTUE OF DECISION OF HONBLE SUPREME COURT UPHOLDING THE RATIO LAID DOWN BY HONBLE BOMBAY HIGH COURT IN GODERAJ & BOYCE. 12. ON THE CONTRARY LD. SR. DR PLACED RELIANCE UPON DE CISIONS OF THE AUTHORITIES BELOW. 13. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SIDES IN THE LIGHT OF RECORDS PLACED BEFORE US. IT IS OBSERVED T HAT ASSESSMENT YEAR INVOLVED IS 2005-06. THIS TRIBUNAL IN THE 1 ST ROUND OF APPEAL DIRECTED LD. AO TO RECOMPUTE DISALLOWANCE UNDER SEC TION 14A READ WITH RULE 8D, BASED UPON SPECIAL BENCH DECISION IN THE CASE OF DAGA CAPITAL (SUPRA). THEREAFTER, RATIO LAID DOWN B Y HONBLE BOMBAY HIGH COURT HELD APPLICABILITY OF RULE 8D TO BE PROSPECTIVE, FROM ASSESSMENT YEAR 2008-09. 14. WE ARE THEREFORE, INCLINED TO DELETE PENALTY RESPE CTFULLY FOLLOWING DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF 6 ITA NO. 4462 /DEL/2014 (AY 2005-06) HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ AND BOYCE MANUFACTURING CO LTD VS DCIT WHICH HAS BEEN APPROVE D BY HONBLE SUPREME COURT AS THE ISSUE HAS ATTAINED FINALITY. ON THE BASIS OF THE ABOVE DISCUSSION ALL THE GROUND S RAISED BY ASSESSEE STANDS ALLOWED. IN THE RESULT APPEAL FILED BY THE ASSESSEE STANDS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH JUNE, 2017. SD/- SD/- (N. K. SAINI) (BEENA A. PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 28.06.2017 @M!T/BINITA COPY OF ORDER TO: - 1) THE APPELLANT; 2) THE RESPONDENT; 3) THE CIT; 4) THE CIT(A)-, NEW DELHI; 5) THE DR, I.T.A.T., NEW DELHI; TRUE COPY BY ORDER ITAT, NEW DELHI 7 ITA NO. 4462 /DEL/2014 (AY 2005-06) S.NO. DETAILS DATE 1 DRAFT DICTATED ON 2 3 .0 6 .2017 2 DRAFT PLACED BEFORE AUTHOR 2 3 .06 .2017 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 5 APP ROVED DRAFT COMES TO THE SR. PS/PS 6 KEPT FOR PRONOUNCEMENT ON 7 FILE SENT TO BENCH CLERK 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE ON WHICH FILE GOES TO THE A.R. 10 DATE OF DISPATCH OF ORDER