SHAHZAAD S. DALAL, MUMBAI V. ITO (IT) 1(1), MUMBAI

ITA 4740/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7794 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-03-2017
• Appeal Filed By: Assessee
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 11-07-2014
• Court: TRIBUNAL
• Department Lawyers: VISHWAS MUNDHE
• Assessee Lawyers: MUKARRAM H SADIKOT
• Keywords: Initiation of penalty proceedings; Difference of opinion

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER I.T.A. NO.4740/M/2014 (ASSESSMENT YEAR: 2010 - 2011 ) MR. SHAHZAAD S DALAL, 242, A.R. STREET, MUMBAI 400 003. / VS. ITO (IT) - 1(1), MUMBAI. ./ PAN : AAFKPD9537P ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI MUKARRAM H. SADIKOT / RESPONDENT BY : SHRI VISHWAS MUNDHE, DR / DATE OF HEARING : 28.02 .2017 / DATE OF PRONOUNCEMENT : 17 .03.2017 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 11.7.2014 IS AGAINST THE ORDER OF THE CIT (A) - 10, MUMBAI DATED 31.10.2013 FOR THE ASSESSMENT YEAR 2010 - 2011. 2. IN THIS APPEAL, ASSESSEE RAISED THE ONLY ISSUE RELATING TO THE VALIDITY OF THE PENALTY U/S 271(1)(C) OF THE ACT WHEN THE RELATABLE ADDITION INVOLVES ESTIMATIONS AS WE LL AS MULTIPLE VIEWS. BRINGING OUR ATTENTION TO THE FACTS OF THE CASE, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE RECEIVED DEPOSITS IN CONNECTION WITH THE RENT OF PREMISES AND THE SAID DEPOSIT WAS INVESTED IN HDFC BANK WHICH PAID INTEREST INC OME ON ACCRUAL BASIS. ASSESSEE IS UNDER OBLIGATION TO OFFER THE INTEREST INCOME AT THE END OF THE MATURITY OF THE BOND. HOWEVER, ASSESSING OFFICER PROCEEDED TO MAKE ADDITION ON ESTIMATIONS AND TAXED THE RELATABLE INTEREST INCOME IN YEAR UNDER CONSIDERATI ON. THIS IS THE ADDITION, WHICH IS THE SOURCE FOR THE PRESENT PENALTY U/S 271(1)(C) OF THE ACT. 3. AFTER HEARING BOTH THE PARTIES AND ON PERUSAL OF THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE RELEVANT MATERIAL PLACED BEFORE US, WE FIND, THIS IS THE CASE OF DIFFERENCE OF OPINION OF THE ASSESSING OFFICER AND THEREFORE, IT IS A DEBATABLE ISSUE. A S SUCH, NO PENALTY IS LEVYABLE WHEN THE ADDITION INVOLVES DEBATE AND ESTIMATIONS. 2 THEREFORE, IN OUR VIEW, THIS IS NOT THE FIT CASE FOR LEVY OF PENALTY. FURTHER, WE ALSO FIND THAT THE NOTICE ISSUED U/S 274 R.W.S 271(1)(C) OF THE ACT DATED 22.2.2013, THE A SSESSING OFFICER DID NOT TICK THE CORRECT LIMB OF CLAUSE (C) OF SECTION 271(1) OF THE ACT. THAT SUGGESTS NON - APPLICATION OF MIND BY THE AO AT THE TIME OF INITIATION OF PENALTY PROCEEDINGS. CONSIDERING THE SAME, THIS APPEAL IS REQUIRED TO BE DISMISSED REL YING ON THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SHRI SAMSON PERINCHERY IN IT APPEAL NO.1154 OF 2014 AND OTHERS DATED 5.1.2017 READ WITH THE JUDGMENT OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNATH C ONNON AND GINNING FACTORY (359 ITR 565), WHICH IS RELEVANT FOR THE PROPOSITION THAT PENALTY PROCEEDINGS DOES NOT SURVIVE WHEN THE AO FAILED TO DELETE FROM THE STANDARD PROFARMA OF THE RELEVANT CLAUSES, SUCH FAILURE LEADS TO AN INFERENCE AS TO NON - APPLICAT ION OF MIND. 12. CONSIDERING THE ABOVE BINDING JUDGMENT ON THE ISSUE / ARGUMENTS OF THE LD COUNSEL FOR THE ASSESSEE, WE FIND, THE ORDER OF THE CIT (A) IS REQUIRED TO BE REVERSED. FOR THE SAID REASONS, PENALTY HAS TO BE DELETED. ACCORDINGLY WE ORDER. T HUS, GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNC ED IN THE OPEN COURT ON 17 TH MARCH, 201 7 . SD/ - SD/ - (SANDEEP GOSAIN) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 17.03 .201 7 . . ./ OKK , SR. PS / 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 . 3 //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI