DCIT (LTU) 1, MUMBAI V. POWERICA LTD, MUMBAI

ITA 447/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3295 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-09-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 19-01-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M C OM NANGSHEN
• Keywords: Opportunity of being heard
• Section: 43B; 143(3); 115JB; 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ' C ' BENCH, MUMBAI BEFORE SHRI SHAILENDR KUMAR YADAV, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER ITA NO. 447 /MUM/201 5 (ASSESSMENT YEAR: 2008 - 09 ) DCIT (LARGE TAXPAYER UNIT) - 1 VS. M/S. POWERICA LTD. WORLD TRADE CENTRE, CENTRE - 1 29 TH FLOOR, CUFFE PARADE MUMBAI 400005 9 TH FLOOR, BAKHTAWAR NARIMAN POINT MUMBAI 400021 PAN - AAACP3812E APPELLANT RESPONDENT APPELLANT BY: SHRI M.C. OM NANGSHEN RESPONDENT BY: SHRI VIJAY MEHTA DATE OF HEARING: 30 .08 .2016 DATE OF PRONOUNCEMENT: 02 .0 9 .2016 O R D E R PER JASON P. BOAZ, A.M . THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A) - 24 , MUMBAI DATED 31 . 10 .201 4 FOR A.Y. 2008 - 09 DELETING THE PENALTY OF ` 33,33,992/ - LEVIED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT') BY THE ASSESSING OFFICER ( AO ) . THE PENALTY LEVIED UNDER SECTION 271(1)(C) WAS IN RESPECT OF THE FOLLOWING ADDITIONS MADE TO THE TOTAL INCOME OF THE ASSESSEE WHILE C OMPLETING THE ORDER OF ASSESSMENT UNDER SECTION 143(3) OF THE ACT DATED 27.10.2010: - (I) DISALLOWANCE OF DEDUCTION UNDER SECTION 10A ` 14,07,352/ - (II) DISALLOWANCE UNDER SECTION 43B ` 84,00,179/ - (III) DISALLOWANCE UNDER SECTION 80IB ` 1,214 THE AO THUS DETERMINED THE ASSESSEES INCOME UNDER THE NORMAL PROVISIONS OF THE ACT AT ` 64,29,31,402/ - AS AGAINST THE RETURNED INCOME OF ` 61,29,00,410/ - . 2 . THE G ROUNDS OF APPEAL RAISED BY THE REVENUE ARE AS UNDER: - IT A NO. 447/MUM/2015 M/S. POWERICA LTD. 2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN DELETING THE PENALTY U/S 271(1)(C) OF THE ACT ON THE BASIS OF JUDGEMENT OF THE APEX COURT IN THE CASE OF NALWA SONS INVESTMENT LTD. WITHOUT APPRECIATING THE FACT THAT THE RATIO OF THE DECISION IS NO T APPLICABLE AS THE INCOME WAS DETERMINED AS PER NORMAL PROVISIONS AND NOT U/S 115JB. 2. THE APPELLANT PRAYS THAT THE ORDER OF THE LEARNED CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. 3. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 3 . AT THE OUTSET IT WAS BROUGHT TO THE NOTICE OF THE BENCH BY THE COUNSELS OF BOTH SIDES THAT THE CIT(A) HAS DELETED THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT ON THE GROUND THA T THE INCOME OF THE ASSESSEE HAS BEEN TAXED ON INCOME COMPUTED UNDER SECTION 115JB OF THE ACT AND THEREFORE THE SAID PENALTY COULD NOT BE LEVIED WITH RESPECT TO ADDITION S MADE UNDER THE NORMAL PROVISIONS OF THE ACT. THIS IS FACTUALLY INCORRECT. FOR THE SAK E OF CLARITY THE DECISION OF THE CIT(A) WHILE DELETING THE SAID PENALTY AT PARA 4.3 OF THE IMPUGNED ORDER IS EXTRACTED HEREUNDER: - 4.3 DECISION : - I HAVE CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSIONS MADE BY THE ASSESSEE. CRUX OF ASSESSEES SUBM ISSION IS THAT IN VIEW OF SUPREME COURT DECISION IN THE CASE OF NALWA SONS INVESTMENT LIMITED (18564/2011 DATED 4/5/2012/ TAXMANN.COM/184/SC - 2010/194/ TAXMANN.COM/387/ DEL), LEVY OF PENALTY U/S. 271(1)(C) OF I.T. ACT, 1961 IS NOT JUSTIFIED IN RESPECT OF VA RIATIONS MADE IN TOTAL INCOME UNDER THE NORMAL PROVISIONS OF I.T. ACT, 1961 WHEN THE TOTAL INCOME AND TAX PAYABLE HAVE BEEN COMPUTED UNDER SECTION 115JB OF I.T. ACT, 1961. IN VIEW OF THE SUPREME COURT DECISION CITED IN THE CASE OF NALWA SONS INVESTMENT LIM ITED, IT IS HELD THAT LEVY OF PENALTY UNDER SECTION 271(1)(C) OF I.T. ACT, 1961 IN RESPECT OF VARIATIONS MADE TO TOTAL INCOME UNDER THE NORMAL PROVISIONS OF I.T. ACT, 1961 IS NOT JUSTIFIED WHEN THE COMPUTATION OF TOTAL INCOME AND TAX PAYABLE IS MADE UNDER SECTION 115JB OF I.T. ACT, 1961. COMMENTS HAVE NOT BEEN OFFERED REGARDING THE LEVY OF PENALTY U/S. 271(1)(C) OF I.T. ACT, 1961 BY THE ASSESSING OFFICER IN RESPECT OF VARIATIONS MADE TO TOTAL INCOME UNDER NORMAL PROVISIONS OF I.T. ACT, 1961 IN VIEW OF THE F ACTS OF THE CASE. HOWEVER, THE ASSESSING OFFICER MAY CONSIDER THE APPLICABILITY OF SECTION 271(1)(C) OF I.T. ACT, 1961 IN RESPECT OF VARIATIONS OF RS.2,84,43,817/ - (125,46,471 - 122,62,53,654), MADE IN THE ASSESSMENT ORDER U/S. 143(3) OF I.T. ACT, 1961 DAT ED 27/12/2010 PARTLY BECAUSE OF THE VARIATIONS LIKE DISALLOWANCE U/S. 10A, 32, ETC. IT A NO. 447/MUM/2015 M/S. POWERICA LTD. 3 MADE IN THE TOTAL INCOME AS PER PROVISIONS OF I.T. ACT, 1961 AND ALSO BECAUSE OF THE INCORRECT COMPUTATION OF BOOK PROFITS U/S. 115JB OF I.T. ACT, 1961 MADE BY THE ASSESSEE IN THE RETURN OF INCOME FILED ON 21/09/2008 DECLARING BOOK PROFITS AT RS.122,62,53,654/ - U/S. 115JB OF I.T. ACT, 1961. IN NUTSHELL, ASSESSEES APPEAL IS ALLOWED . 3.1 IT WAS BROUGHT TO THE NOTICE OF THE BENCH BY BOTH THE LEARNED A.R. FOR THE ASSESSEE AND LEARNED D.R. THAT THE LEARNED CIT(A) IN THE DECISION CITED ABOVE RELIED ON THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF NALWA SONS INVESTMENT LIMITED (18564/2011 DATED 4/5/2012 ) TO HOLD THAT LEVY OF P ENALTY UNDER SECTION 271(1)(C) OF THE ACT IN RESPECT OF VARIATIONS MADE TO TOTAL INCOME UNDER THE NORMAL PROVISIONS OF I.T. ACT, 1961 IS NOT JUSTIFIED WHEN THE COMPUTATION OF TOTAL INCOME AND TAX PAYABLE WAS ON BOOK PROFIT IS COMPUTED UNDER SECTION 115JB O F THE ACT. IT IS SUBMITTED BEFORE THE BENCH THAT THIS IS FACTUALLY ERRONEOUS SINCE THE ASSESSEE HAS BEEN TAXED UNDER THE NORMAL PROVISIONS OF THE ACT AND NOT UNDER MAT UNDER SECTION 115JB OF THE ACT. IN THIS REGARD THE FOLLOWING DETAILS FILED SHOW THAT THE ASSESSEE WAS TAXED UNDER THE NORMAL PROVISIONS OF THE ACT AS PER THE ASSESSMENT ORDER UNDER SECTION 143(3) AND NOT UNDER MAT PROVISIONS IS EXTRACTED HEREUNDER: - AS PER ROI AS PER ORDER 143(3) ST GAIN BALANCE INCOME TOTAL INCOME ST GAIN @10% BALANCE INCOME TAX UNDER NORMAL PROVISION BOOK PROFIT MAT @10% 5,189,998 607,710,410 612,900,408 519,000 182,313,123 182,832,123 1,226,253,564 122,625,364 5,189,998 637,741,404 642,931,402 519,000 191,322,421 191,841,421 1,254,697,471 125,469,747 3.2 IN THIS FACTUAL MATRIX OF THE CASE AND AFTER PERUSING THE IMPUGNED ORDER AND THE DETAILS FILED AND BROUGHT TO OUR NOTICE BY THE COUNSELS OF BOTH SIDES , IT IS SEEN THAT THE ASSESSEE WAS TAXED UNDER THE NORMAL PROVISIONS OF THE ACT AND NOT ON THE BOOK PROFI TS COMPUTED UNDER SECTION 115JB AND THEREFORE THE FINDING RENDERED BY THE CIT(A) IN THE IMPUGNED ORDER TO DELETE THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT WAS BASED ON FACTUALLY INCORRECT APPRECIATION OF FACTS. IN THIS VIEW OF THE MATTER, WE S ET ASIDE THE IT A NO. 447/MUM/2015 M/S. POWERICA LTD. 4 DECISION OF THE LEARNED CIT(A) IN DELETING THE PENALTY OF ` 33,33,992/ - LEVIED UNDER SECTION 271(1)(C) OF THE ACT AND SET ASIDE THE MATTER TO THE FILE OF THE CIT(A) WITH THE DIRECTION TO CONSIDER AND ADJUDICATE ON THE MERITS OF THE GROUNDS OF A PPEAL PREFERRED BY THE ASSESSEE BEFORE HIM IN RESPECT OF THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT , AFTER AFFORDING THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD AND TO FILE DETAILS AND SUBMISSIONS REQUIRED IN THE MATTER. WE HOLD AND DIRECT ACCORDINGLY. 4 . IN THE RESULT, REVENUES APPEAL FOR A.Y. 2008 - 09 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON 2 ND SEPTEMBER , 2016. SD/ - SD/ - ( SHAILENDR KUMAR YADAV ) (JASON P. BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 2 ND SEPTEMBER , 2016 COPY TO: 1 . THE APPELLANT 2 . THE RESPONDENT 3 . THE CIT(A) - 24 , MUMBAI 4 . THE CIT - LTU , MUMBAI 5 . THE DR, C BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.