DEPUTY COMMISSIONER OF INCOME TAX-11(1)(1), MUMBAI V. ROYAL STAR JEWELLERY P. LTD, MUMBAI

ITA 4744/MUM/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3901 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Assessment Year: 2008-2009
• Appeal Filed On: 05-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MICHAEL JERALD
• Keywords: Depreciation; Set aside
• Section: 271(1)(c); 143(3); 40a(ia)

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI SHRI SHAMIM YAHYA (AM) & SHRI PAVANKUMAR GADALE ( JM) I.T.A. NO. 4744/MUM/2017 (ASSESSMENT YEAR 2008-09) DCIT-11(1)(1) ROOM NO. 204 AAYAKAR BHAVAN M.K. ROAD MUMBAI-400 020. VS. M/S. ROYAL STAR JEWELLERY PVT. LTD. GEM & JEWELLERY COMPLEX-III, G-40 SEEPZ, ANDHERI-E MUMBAI-400 096. PAN : AADCR2371P (APPELLANT) (RESPONDENT) ASSESSEE BY NONE DEPARTMENT BY SHRI MICHAEL JERALD DATE OF HEARING 30.09.2021 DATE OF PRONOUNCEMENT 04.10.2021 O R D E R PER SHAMIM YAHYA (AM) :- THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A) WHEREIN LEARNED CIT(A) HAS DELETED PENALTY U NDER SECTION 271(1)(C) OF THE I.T. ACT AMOUNTING TO RS. 1,01,55,000/-. 2. BRIEF FACT OF THE CASE LEAD TO LEVY OF PENALTY A RE AS UNDER :- THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE-C OMPANY FILED ITS RETURN OF INCOME FOR A.Y. 2008-09 ON 28.09.2008 DECLARING TOTAL LOSS OF RS. 93,16,475/-. THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT ORDER U/S 143(3) OF THE ACT WAS PASSED ON 21.09.2012 ASSESSIN G THE TOTAL INCOME OF THE APPELLANT AT RS.3,20,86,220/-. PENALTY PROCEEDINGS WERE ALSO INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME ON THE T.P. ADJUSTMENT OF RS. 3,33,27,978/-, DISALLOWANCE U/S 40A(IA) OF RS. 6,18 ,437/- AND DISALLOWANCE OF DEPRECIATION OF RS. 74,56,280/-. THE ASSESSEE REQUE STED TO KEEP THE PENALTY PROCEEDINGS IN ABEYANCE AS IT WAS IN THE PROCESS OF FILING AN APPEAL BEFORE ITAT. THE HON'BLE ITAT,'K' BENCH, MUMBAI, HAS VIDE ORDER BEARING ITA NO. 7065/MUM/2012 DATED 17/07/2013, DIRECTED THE A.O. T O RESTRICT THE ADDITION ROYAL STAR JEWELLERY P. LTD. 2 OF T.P. ADJUSTMENT ONLY TO THE INTERNATIONAL TRANSA CTION. CONSEQUENT TO THE DIRECTIONS OF THE ITAT, THE TPO (ADDL. CIT-TP-II(3) , MUMBAI) HAS REVISED WORKING OF THE ARM'S LENGTH PRICE ADJUSTMENT TO RS. 2,17,98,947/- .CONSEQUENT TO THE HON'BLE ITAT ORDER THE ASSESSEE WAS SHOW CAUSED AS TO WHY PENALTY U/S 271(L)(C) SHOULD NOT BE LEVIED. AFT ER GIVING AN OPPORTUNITY OF HEARING TO THE ASSESSEE, AN ORDER U/S 271(L)(C) OF THE ACT WAS PASSED BY THE A.O. ON 28.03.2014 LEVYING PENALTY OF RS. L,01,55,0 00/-. 3. UPON ASSESSEES APPEAL LEARNED CIT(A) HAS DELETE D THE PENALTY. 4. AGAINST THIS ORDER THE REVENUE IS IN APPEAL BEFO RE US. WE HAVE HEARD LEARNED DEPARTMENTAL REPRESENTATIVE. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE NOTICE. 5. UPON CAREFUL CONSIDERATION, WE NOTE THAT WHILE D ELETING THE PENALTY LEARNED CIT(A) HAS ALSO HELD THAT NOTICE UNDER SECT ION 271(1)(C) OF THE ACT IS INVALID. IN THIS REGARD HE HAS REPRODUCED THE ASSES SEES SUBMISSION/GROUND. COPIED HEAD NOTE OF HON'BLE SUPREME COURT CASE LAW AND THEREAFTER HELD THAT THE GROUND IS ALLOWED. THERE IS NO DISCUSSION AS TO HOW THE CASE LAW IS APPLICABLE ON THE FACT OF THIS CASE. THERE IS NO WH ISPER THAT EVEN THE NOTICE HAS BEEN EXAMINED BY THE LEARNED CIT(A). SUCH A LACONIC , NON-SPEAKING ORDER WITHOUT APPLICATION OF MIND IS NOT LEGALLY SUSTAINA BLE. IN SIMILAR MANNER LEARNED CIT(A) HAS DELETED OTHER ASPECTS OF PENALTY . HENCE, WE SET ASIDE THE ISSUE TO THE FILE OF LEARNED CIT(A). LEARNED CIT(A) IS DIRECTED TO PASS APPROPRIATE SPEAKING ORDER AFTER PROPER APPLICATION OF MIND. NEEDLESS TO ADD ASSESSEE SHOULD BE GIVEN PROPER OPPORTUNITY OF BEIN G HEARD. 6. IN THE RESULT, REVENUES APPEAL IS ALLOWED FOR S TATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 4.10.2021. SD/- SD/- (PAVANKUMAR GADALE) (SHAM IM YAHYA) JUDICIAL MEMBER ACCO UNTANT MEMBER MUMBAI; DATED : 04/10/2021 ROYAL STAR JEWELLERY P. LTD. 3 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. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR) PS ITAT, MUMBAI