DIXON CARGO CONSOLIDATORS P. LTD, MUMBAI V. ACIT CIR (2)(1), MUMBAI

ITA 4707/MUM/2008

• Counselvise Citation: 470719914 RSA 2008
• Duration Of Justice: 2 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 19-10-2010
• Assessment Year: 1998-1999
• Appeal Filed On: 15-07-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C G K NAIK
• Assessee Lawyers: M SUBRAMANIAN
• Keywords: Question of law

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: MUMBAI BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.4707/MUM/2008 (ASSESSMENT YEAR: 1998-99) DIXON CARGO CONSOLIDATORS P. LTD., 4/5, BEZZOLA COMPLEX, S.T. ROAD, CHEMBUR, MUMBAI -400 071 ....... APPELLANT VS ACIT, CIR (2)(1), MUMBAI ..... RESPONDENT PAN: AAACD 5732 F APPELLANT BY: SHRI M. SUBRAMANIAN RESPONDENT BY: SHRI C.G.K. NAIK O R D E R PER R.S. PADVEKAR, JM IN THIS APPEAL THE ASSESSEE HAS CHALLENGED THE IMPU GNED ORDER OF THE LD. CIT (A) II, MUMBAI DATED 22.5.2008 FOR T HE A.Y. 1998-99. THE ASSESSEE HAS TAKEN THE FOLLOWING EFFECTIVE GROU ND:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT (A) HAS ERRED IN HAVING CONFIRMED THE PENALTY ORDER LEVYING PENALTY OF RS 7,00,000/- FOR AN ALLEGED DEFAULT U/S.271(1)(C) OF I.T. ACT, 1961 WITHOUT HAVING APPR ECIATED THE VARIOUS CONTENTION AND PLEAS TAKEN BY THE APPEL LANT IN THE ORAL ARGUMENTS AND IN THE WRITTEN SUBMISSION DA TED 06/03/2008 IN ITS PROPER PERCEPTIVE. 2. THE FACTS PERTAINING TO THE CASE ARE IN NARROW C OMPASS. THE ASSESSEE IS CARRYING ON THE BUSINESS OF THE INTERNA TIONAL FREIGHT, ITA 4707/MUM/2008 DIXON CARGO CONSOLIDATORS P. LTD. 2 FORWARDERS, CARGO CONSOLIDATORS, CLEARING AND FORWA RDING AGENTS ETC. THERE WAS A SURVEY ACTION ON THE ASSESSEES BUSINES S PREMISES U/S.133A ON 12.11.1997. DURING THE COURSE OF THE S URVEY ACTION, STATEMENT OF SHRI R. VENKATESH, MANAGING DIRECTOR O F THE ASSESSEE- COMPANY WAS RECORDED. IN THE STATEMENT SHRI R. VEN KATESH DECLARED ADDITIONAL INCOME OF RS 20 LAKHS FOR THE A.Y. 1998- 99. WHEN THE ASSESSEE FILED THE RETURN OF INCOME FOR THE A.Y. 19 98-99, IT WAS NOTICED BY THE A.O. THAT THE ASSESSEE DID NOT STICK-UP TO D ECLARATION MADE DURING THE COURSE OF THE SURVEY ACTION U/S.133A. I T APPEARS THAT THE ASSESSEE RETRACTED THE DECLARATION VIDE LETTER DATE D 27.3.2001, BY TAKING THE STAND THAT THE SAID DECLARATION WAS MADE UNDER PRESSURE. THE A.O. MADE THE ADDITION OF RS 20 LAKHS. THE SAI D ADDITION WAS CONFIRMED BY THE CIT (A). THE MATTER WAS CARRIED T O THE TRIBUNAL BY WAY OF AN APPEAL. THE TRIBUNAL CONFIRMED THE ADDIT ION. THE A.O. INITIATED THE PENALTY PROCEEDINGS AND LEVIED THE PE NALTY OF RS 7 LAKHS ON THE AMOUNT OF THE ADDITION OF RS 20 LAKHS. THE ASSESSEE CHALLENGED THE PENALTY ORDER BEFORE THE LD. CIT (A) BUT WITHOUT SUCCESS AS THE PENALTY WAS CONFIRMED. NOW, THE ASS ESSEE IS IN APPEAL BEFORE US. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTI ES AND PERUSED THE RECORDS. THE LD. COUNSEL SUBMITS THAT THE ASSE SSEE HAS CHALLENGED THE ORDER OF THE TRIBUNAL IN THE QUANTUM APPEAL BEFORE THE HONBLE HIGH COURT OF BOMBAY AND THE APPEAL FILED B Y THE ASSESSEE HAS BEEN ADMITTED AND ALSO RESTORED BEING ITA NO.11 38 OF 2007. HE FURTHER SUBMITS THAT VIDE ORDER DATED 22.8.2008 THE IR LORDSHIPS ARE PLEASED TO FRAME THE SUBSTANTIAL QUESTION OF LAW. THE LD. COUNSEL ALSO FILED THE COPY OF THE ORDER OF THE HONBLE HIG H COURT PASSED IN THE ASSESSEES APPEAL BEING ITA NO.1138 OF 2007 DATED 2 2.8.2008. HE FURTHER SUBMITS THAT ONCE THE APPEAL OF THE QUANTUM IS ADMITTED FRAMING THE SUBSTANTIAL QUESTION OF LAW THAT GOES T O SHOW THAT THE ADDITION IS DEBATABLE ONE AND IF THE ADDITION IS DE BATABLE, THE SAME CANNOT BE SUBJECT MATTER OF THE PENAL CONSEQUENCES U/S.271(1)(C) OF ITA 4707/MUM/2008 DIXON CARGO CONSOLIDATORS P. LTD. 3 THE ACT. THE LD. COUNSEL ALSO FILED THE COPY OF TH E DECISION IN THE CASE OF NAYAN BUILDERS & DEVELOPERS P. LTD. VS. ITO IN I TA NO.2379/MUM/2009 DATED 18.3.2001. WE HAVE ALSO HEA RD THE LD. D.R. 4. IN THE PRESENT CASE, THE ORDER OF THE TRIBUNAL I N THE QUANTUM APPEAL HAS BEEN CHALLENGED BY WAY OF APPEAL BEFORE THE HONBLE HIGH COURT OF BOMBAY, THE SUBSTANTIAL QUESTION OF LAW HA VE BEEN FRAMED ADMITTING THE APPEAL FILED BY THE ASSESSEE. ADMITT EDLY, ONCE THE HIGHER FORUM CONSIDERS THE APPEAL FILED BY THE ASSE SSEE IN VIEW OF THE SUBSTANTIAL QUESTION OF LAW, HENCE, IT IS APPARENT THAT THE ADDITION ITSELF IS DEBATABLE ONE. THIS VIEW IS ALSO SUPPORT ED BY ANOTHER CO- ORDINATE BENCH DECISION IN THE CASE OF M/S. NAYAN B UILDERS & DEVELOPERS P. LTD. (SUPRA). IN THE SAID CASE, THOU GH THE QUANTUM ADDITION WAS UPHELD BY THE TRIBUNAL BUT THE ORDER O F THE TRIBUNAL WAS SUBJECTED TO THE APPEAL BEFORE THE HONBLE HIGH COU RT AND HONBLE HIGH COURT FRAMED THE SUBSTANTIAL QUESTION OF LAW I N THE SAID CASE. IN THE BACKDROP OF DECISION OF THIS BENCH, THE TRIBUNA L HAS HELD AS UNDER:- 3. IT IS, THEREFORE, ABUNDANTLY CLEAR THAT THE ADDI TIONS IN RESPECT OF WHICH PENALTY WAS CONFIRMED HAVE BEEN ACCEPTED BY T HE HONBLE BOMBAY HIGH COURT LEADING TO SUBSTANTIAL QUESTION O F LAW. WHEN THE HIGH COURT ADMITS SUBSTANTIAL QUESTION OF LAW O N AN ADDITION, IT BECOMES APPARENT THAT THE ADDITION IS CERTAINLY DEBATABLE. IN SUCH CIRCUMSTANCES PENALTY CANNOT BE LEVIED U/S 271 (1) AS HAS BEEN HELD IN SEVERAL CASES INCLUDING RUPAM MERCANTI LE VS. DCIT [(2004) 91 ITD 237 (AHD) (TM)] AND SMT.RAMILA RATIL AL SHAH VS. ACIT [(1998) 60 TTJ (AHD) 171]. THE ADMISSION OF SU BSTANTIAL QUESTION OF LAW BY THE HONBLE HIGH COURT LENDS CRE DENCE TO THE BONA FIDES OF THE ASSESSEE IN CLAIMING DEDUCTION. O NCE IT TURNS OUT THAT THE CLAIM OF THE ASSESSEE COULD HAVE BEEN CONSIDERED FOR DEDUCTION AS PER A PERSON PROPERLY INSTRUCTED IN LA W AND IS NOT COMPLETELY DEBARRED AT ALL, THE MERE FACT OF CONFIR MATION OF ITA 4707/MUM/2008 DIXON CARGO CONSOLIDATORS P. LTD. 4 DISALLOWANCE WOULD NOT PER SE LEAD TO THE IMPOSITIO N OF PENALTY. SINCE THE ADDITIONS, IN RESPECT OF WHICH PENALTY HA S BEEN UPHELD IN THE PRESENT PROCEEDINGS, HAVE BEEN HELD BY THE H ONBLE HIGH COURT TO BE INVOLVING A SUBSTANTIAL QUESTION OF LAW , IN OUR CONSIDERED OPINION, THE PENALTY IS NOT EXIGIBLE UND ER THIS SECTION. WE, THEREFORE, ORDER FOR THE DELETION OF PENALTY. 5. WE, THEREFORE, HOLD THAT AS THE HONBLE HIGH COU RT HAS ADMITTED THE APPEAL FILED BY THE ASSESSEE IN QUANTUM AND ALS O FRAMED THE SUBSTANTIAL QUESTION OF LAW HENCE IT IS A DEBATABLE ISSUE AND IN OUR OPINION IT IS BEYOND ITS PURVIEW OF SECTION 271(1)( C). WE, THEREFORE, ALLOW THE APPEAL FILED BY THE ASSESSEE AND DELETED THE PENALTY. 6. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 3 0TH JUNE 2011. SD/- SD/- ( R.S. SYAL ) ACCOUNTANT MEMBER ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI, DATE : 30TH JUNE 2011 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A)II, MUMBAI. 4) THE CIT-CITY - II, MUMBAI. 5) THE D.R. D BENCH, MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN ITA 4707/MUM/2008 DIXON CARGO CONSOLIDATORS P. LTD. 5 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 20.06.2011 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 21.06.2011 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER