SAURASHTRA BALL PEN PVT. LTD., V. THE INCOME TAX OFFICER,WARD-8(3)(1), MUMBAI

ITA 4737/MUM/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1851 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Next Hearing Date: 05-04-2010
• Assessment Year: misc
• Appeal Filed On: 28-06-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M KHARE
• Assessee Lawyers: K K VED
• Keywords: Retrospective amendment; Initiation of penalty proceedings; Set aside
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI J BENCH, MUMBAI BEFORE SHRI D.K. AGRAWAL, (JUDICIAL MEMBER), AND SHRI PRAMOD KUMAR, (ACCOUNTANT MEMBER) ITA NO.4737/MUM./2007 ASSESSMENT YEAR : 1989-90 DATE OF HEARING 5.4.2010 SAURASHTRA BALL PEN P. LTD., C/O NIBS INDIA PLOT NO.A-3, MIRA MIDC, OFF WESTERN EXPRESS HIGHWAY, BEHIND HOTEL AMAR PALACE, MIRA ROAD, THANE (DIST.), PAN AAAS7658F .. APPELLANT VS THE INCOME TAX OFFICER, WARD 8(3)(1) MUMBAI RESPONDENT APPELLANT BY : SHRI K.K. VED RESPONDENT BY : MS. M. KHARE O R D E R PER PRAMOD KUMAR A.M. 1. BY WAY OF THIS APPEAL, THE ASSESSEE HAS CHALLENG ED CORRECTNESS OF ORDER DATED 19 TH NOVEMBER 2004, PASSED BY THE LEARNED COMMISSIONER ( APPEALS) XXIX, MUMBAI, UPHOLDING PENALTY OF RS.10,10,318/- LEVIED U/S 271(1)(C) OF T HE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ). ITA NO.4737/MUM./2007 SAURASHTRA BALL PEN P. LTD. [2] 2. LEARNED REPRESENTATIVE AGREE THAT ALL BUT ONE (I .E., OF RS.12,40,000/- TOWARDS DISALLOWANCE OF MOULDING CHARGES) OF THE RELATED QU ANTUM ADDITIONS HAVE BEEN DELETED BY A CO-ORDINATE BENCH OF THE TRIBUNAL, VID E ORDER DATED 7 TH MARCH 2008, IN ITA NO.425/MUM./2005. SO FAR AS THE ADDITION OF RS. 12,40,000/- ON ACCOUNT OF DISALLOWANCE OF MOULDING CHARGES, IS CONCERNED, THE MATTER HAS BEEN REMITTED TO THE FILE OF THE LEARNED CIT(A) FOR FRESH DECISION. 3. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED THE APPLICABLE LEGAL POSITION AS AL SO THE FACTUAL MATRIX OF THE CASE. 4. TO THE EXTENT RELATED QUANTUM ADDITIONS HAVE SIN CE BEEN DELETED, THE VERY BASIS OF THE IMPUGNED PENALTY CEASES TO EXIST AND, ACCORDINGLY, THE SAME IS TO BE DELETED. LEARNED REPRESENTATIVES AGREE ON THIS ISSU E AND THERE IS NO DISPUTE ABOUT THE SAME. AS REGARDS THE PENALTY FOR QUANTUM ADDITI ON WHICH HAS BEEN RESTORED TO THE FILE OF THE CIT(A), WHILE LEARNED COUNSEL FOR T HE ASSESSEE URGES US TO DELETE THE SAME, LEARNED DEPARTMENTAL REPRESENTATIVES SUGGEST ION IS THAT THE MATTER SHOULD BE RESTORED TO THE FILE OF THE LEARNED CIT(A) FOR F RESH DECISION AFTER DECIDING THE QUANTUM MATTER, LEARNED COUNSEL FOR THE ASSESSEE UR GES THAT WHEN THE QUANTUM IS SET ASIDE IN ITS PRESENT FORM, THE PENALTY CAN ONL Y BE IMPOSED AFTER ASSESSING OFFICER OR THE LEARNED CIT(A), AS THE CASE MAY BE, IS SATISFIED QUA THE FINAL ADDITION THAT IT IS A FIT CASE FOR IMPOSITION OF PE NALTY. 5. THE PLEA OF THE LEARNED COUNSEL DOES MEET OUR AP PROVAL. ONCE THE ADDITIONS TO INCOME IN RESPECT OF WHICH CONCEALMENT PENALTY I S IMPOSED, HAVE BEEN DISAPPROVED BY THE TRIBUNAL ON MERITS AND RESTORED TO THE FILE OF THE ASSESSING OFFICER OR THE CIT(A), AS THE CASE MAY BE, FOR FRES H CONSIDERATION, THE VERY FOUNDATION OF PENALTY CEASES TO EXIST. AS TO WHAT W ILL BE THE POSITION WHEN THE ADDITION SO REMITTED TO THE FILE OF THE ASSESSING O FFICER, OR THE CIT(A), ARE PARTLY OR WHOLLY REITERATED IN REMANDED PROCEEDINGS, THE CALL WILL HAVE TO BE TAKEN BY CONCERNED AUTHORITY IN REMANDED PROCEEDINGS. THE VE RY SCHEME OF PENALTY PROCEEDINGS IS SUCH THAT ONCE AN ADDITION TO INCOME IS MADE, THE ASSESSING OFFICER, OR THE CIT(A) AS THE CASE MAY BE, HAS ALSO TO SATIS FY HIMSELF THAT IT IS A FIT CASE FOR ITA NO.4737/MUM./2007 SAURASHTRA BALL PEN P. LTD. [3] INITIATING THE PENALTY PROCEEDINGS AS WELL. ONLY TH EN, AND ONLY IN RESPECT OF SUCH ADDITIONS WHICH ARE ALSO CONSIDERED APPROPRIATE FOR BEING VISITED WITH INITIATION OF PENALTY PROCEEDINGS, THE PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) ARE INITIATED. IT IS A NATURAL COROLLARY OF THE QUANTUM ADDITION B EING RESTORED TO THE FILE OF THE A.O. OR THE CIT(A) THAT THE ADDITION, EVEN IF REPEA TED WHOLLY OR PARTLY, DOES NOT NECESSARILY EXIST IN THE SAME FORM. THE REASONS OF, AND CIRCUMSTANCES SURROUNDING THE SAID AUTHORITY CONFIRMING THE QUANTUM ADDITIONS AGAIN, MAY VARY IN SUCH A SITUATION. THEREFORE, THE AUTHORITY CONFIRMING THE SAID ADDITION WHOLLY AND PARTLY, EVEN IF THAT BE SO, HAS TO TAKE A CALL ON WHETHER O R NOT IS IT A FIT CASE FOR INITIATING THE PENALTY PROCEEDINGS. THE INITIATION OF PENALTY PROCEEDINGS, IN THE COURSE OF ADDITIONS BEING MADE IN SUCH REMANDED PROCEEDINGS, CANNOT BE AUTOMATIC AND CONSEQUENTIAL. IT IS ALSO IMMATERIAL WHETHER THE MA TTER IS REMITTED TO THE FILE OF THE ASSESSING OFFICER OR THE CIT(A) BECAUSE BOTH THESE AUTHORITIES HAVE THE POWERS TO INITIATE PENALTY PROCEEDINGS UNDER SECTION 271(1)(C ). NO DOUBT, IN VIEW OF THE INSERTION OF SUB-SECTION (1B) TO SECTION 271(1)(C), WITH RETROSPECTIVE EFFECT FROM 1 ST APRIL 1989, EVEN A SIMPLE DIRECTION FOR INITIATION OF PENALTY PROCEEDINGS IN THE MAIN ASSESSMENT ORDER IS TO BE DEEMED TO CONSTITUTE SAT ISFACTION OF THE ASSESSING OFFICER FOR INITIATION OF PENALTY PROCEEDINGS, BUT SUCH A SATISFACTION, WHETHER DEEMED OR EXPLICIT, IS SINE QUA NON FOR INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271(1)(C). THAT SATISFACTION IS TO ARRIVED AT WHEN FATE OF THE RELATED QUANTUM ADDITION IS FINALLY DECIDED BY THE A.O. OR THE CIT(A) IN THE REMANDED PROCEEDINGS. WHEN A CO-ORDINATE BENCH HAS NOT EVEN APPROVED THE ORIGINAL QUANTUM ADDITIONS ON MERITS, IT IS FUTILE TO CONTEN D THAT THE PENALTY INITIATED ON THE BASIS OF SUCH QUANTUM ADDITIONS IS SUFFICIENT TO JU STIFY INITIATION OF PENALTY IN THE COURSE OF REMANDED PROCEEDINGS AS WELL. THE FACTS A ND CIRCUMSTANCES RELATING TO THE RELATED QUANTUM ADDITION, AS WE HAVE NOTED ABOV E, MAY CHANGE. THE AUTHORITY IN SEISIN OF THE REMANDED PROCEEDINGS IS AT LIBERTY TO INITI ATE THE PENALTY, IF SO DEEMED FIT, IN APPROPRIATE CASES EVEN IN THE CHANGE D CIRCUMSTANCES. HOWEVER, THAT CANNOT JUSTIFY OUR REMITTING THE PENALTY MATTER TO THE FILE OF SUCH AN AUTHORITY FOR FINALIZING THE PENALTY PROCEEDINGS. THAT WILL STILL BE A STEP REMOVED FROM THE ACTUAL PROCESS AT WHICH THE PENALTY IS TO BE INITIATED I.E ., BEING OF THE OPINION THAT THE RELATED QUANTUM PROCEEDINGS MUST ALSO BE VISITED WI TH INITIATION OF PENALTY ITA NO.4737/MUM./2007 SAURASHTRA BALL PEN P. LTD. [4] PROCEEDINGS. NOT ONLY IMPOSITION OF PENALTY BUT ALS O INITIATION OF PENALTY PROCEEDINGS IS NOT AN AUTOMATIC CONSEQUENCE OF RELA TE QUANTUM ADDITIONS BEING MADE TO INCOME OF THE ASSESSEE. IN VIEW OF THESE DI SCUSSIONS, AND BEARING IN MIND ENTIRETY OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE IMPUGNED PENALTY MUST BE DELETED IN RESPECT OF QUANTUM ADDITION IN RESPEC T OF WHICH THE MATTER IS RESTORED TO THE FILE OF THE LEARNED CIT(A). 6. FOR THE REASONS SET OUT ABOVE, IMPUGNED PENALTY MUST BE DELETED IN ENTIRETY IN RESPECT OF THE QUANTUM ADDITIONS DELETED AS ALSO IN RESPECT OF QUANTUM ADDITION REMITTED TO THE FILE OF THE LEARNED CIT(A) FOR FRES H ADJUDICATION. 7. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. PRO NOUNCED IN THE OPEN COURT TODAY ON 30 TH DAY OF APRIL 2010. SD/- (D.K. AGRAWAL) JUDICIAL MEMBER SD/- (PRAMOD KUMAR) ACCOUNTANT MEMBER MUMBAI; 30 TH DAY OF APRIL 2010 COPIES OF THE ORDER FORWARDED TO : (1) THE APPELLANT (2) THE RESPONDENT (3) CIT, MUMBAI (4) CIT(A), MUMBAI (5) DR, J BENCH (6) GUARD FILE TRUE COPY BY ORDER, ETC. ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PRADEEP J. CHOWDHURY MUMBAI BENCHES SR. PRIVATE SECRETARY ITA NO.4737/MUM./2007 SAURASHTRA BALL PEN P. LTD. [5] DATE INITIAL 1. DRAFT DICTATED ON 23.4.2010 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 23.4.2010 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 23.4.2010 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 23.4.2010 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 23.4.2010 SR.PS/PS 6. DATE OF PRONOUNCEMENT 30.4.2010 SR.PS 7. FILE SENT TO THE BENCH CLERK 30.4.2010 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER