ITO 9(1)-3, MUMBAI V. EVERISING INFOTECH P. LTD, MUMBAI

ITA 4750/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 0896 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 22-09-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 13-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJASHI DWIVEDY SR
• Section: 144

Judgement Text

1 ITA NO4750/MUM/2009 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I MUMBAI BEFORE SHRI R S PADVEKAR, JM & SHRI RAJENDRA SINGH, AM ITA NO.4750/MUM/2009 (ASST YEARS 2003-04 ) THE INCOME TAX OFFICER WARD 9(1)(3), MUMBAI VS EVERSING INFOTECH P LTD 104 LINK WAY ESTATE LINK ROAD MALAD (W), MUMBAI (APPELLANT) (RESPONDENT) PAN AAACE9253C ASSESSEE BY: NONE REVENUE BY: SHRI RAJASHI DWIVEDY, SR AR O R D E R PER R S PADVEKAR: THE REVENUE HAS FILED THIS APPEAL CHALLENGING THE I MPUGNED ORDER OF THE LD CIT(A) IX, MUMBAI FOR THE ASSESSMENT YEAR 2003-0 4 DATED 5.6.2009. 2 THE REVENUE HAS TAKEN THE FOLLOWING EFFECTIVE GRO UND: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) ERRED IN DELETING PENALTY OF RS.2,78,813/- I MPOSED U/S 271(1)(C) OF THE ACT ON THE GROUND THAT TWO OPINIONS ARE POSSIBL E ON THE ISSUE OF CONCEALMENT OF INCOME ASSESSED U/S 41(1) OF THE I T ACT, 1961 WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE NOT ONLY FA ILED TO FURNISH THE CONFIRMATION OF THE CREDITOR BUT ALSO REFUSED TO FI LE THE CONFIRMATION ON THE GROUND THAT IT WAS NOT POSSIBLE, AS MENTIONED BY TH E LD CIT(A) HERSELF IN PARA 4 OF HER ORDER CANCELLING THE SAID PENALTY. 3 WHEN THE APPEAL WAS CALLED FOR HEARING, THE LD DR FOR THE REVENUE WAS PRESENT AND NONE WAS PRESENT ON BEHALF OF THE RESPO NDENT ASSESSEE. IT IS SEEN 2 ITA NO4750/MUM/2009 THAT THE NOTICE OF HEARING WAS SERVED ON THE ASSESS EE. WE, THEREFORE, PROCEEDED TO DISPOSE OFF THE APPEAL ON MERIT AFTER HEARING TH E LD DR. 4 THE BRIEF FACTS, WHICH REVEAL FROM THE RECORDS AR E THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MULTIPLE LEVEL MARKETING ACTIVITIES. THE ASSESSMENT IN THIS CASE WAS COMPLETED U/S 144 DETERMINING THE TOTAL INCOME AT RS. 7,27,320/-. THE AO MADE THE ADDITION OF RS. 9,05,92 4/- ON THE REASONS THAT IN RESPECT OF THE LIABILITIES SHOWN IN THE BALANCE SHE ET OF M/S APTECH LTD AND M/S SHLTRON COMPUTER SYSTEMS WERE OUTSTANDING FOR LONG PERIOD AND ARE BROUGHT FORWARD FROM EARLIER YEARS. THE AO, THEREFORE, STR AIGHT AWAY MADE THE ADDITION U/S 40(1) OF THE ACT TREATING THE SAME AS CESSATION OF THE LIABILITY WITHOUT FURTHER CONFRONTATION. 5 IT APPEARS THAT THE ASSESSEE CHALLENGED THE SAID ADDITION BEFORE THE LD CIT(A) AND THE LD CIT(A) SUSTAINED THE ADDITION TO THE EXTENT OF THE LIABILITY SHOWN OUTSTANDING OF M/S APTECH LTD. THE AO LEVIED PENALTY U/S 271(1)( C) OF THE ACT ON THE AMOUNT OF RS. 7,58,674/- WHICH WAS T HE ADDITION MADE BY THE AO U/S 41(1) OF THE ACT WHICH WAS SHOWN PAYABLE TO M/S APTECH LTD. THE ASSESSEE CHALLENGED THE PENALTY BEFORE THE LD CIT(A ), WHO DELETED THE SAME. NOW, THE REVENUE IS IN APPEAL HERE BEFORE THE TRIBU NAL. 6 WE HAVE HEARD THE LD DR AND ALSO PERUSED THE RELE VANT MATERIAL ON RECORD. WE HAVE ALSO GONE THROUGH THE ASSESSMENT OR DER WHICH IS PASSED EX- PARTE BY THE AO. THE AO MADE THE ADDITION OF RS. 7 ,58,674/- WHICH WAS SHOWN AS OUTSTANDING LIABILITY PAYABLE TO M/S APTEC H LTD. AS PER THE PENALTY ORDER, IT APPEARS THAT THE SAID ADDITION WAS ALSO C ONFIRMED BY THE LD CIT(A). 3 ITA NO4750/MUM/2009 NOTHING IS ON RECORD TO SHOW THAT THE ASSESSEE HAS WRITTEN OFF THE AMOUNT PAYABLE TO M/S APTECH LTD IN ITS BOOKS OF ACCOUNT. MOREOVER, AS PER THE FACTS ON RECORD, THE SAID LIABILITY IS NOT CREATED IN THE AY 2003-04 BUT THE SAID LIABILITY WAS BROUGHT FORWARD FROM EARLIER YEARS. MERELY BECAUSE THE ADDITION IS MADE BY THE AO AND THE SAME SUSTAINED BY THE LD CIT (A) THAT ITSELF MAY NOT JUSTIFY THE LEVY OF PENALTY U/S 271(1)( C) OF THE A CT. WE AGREE WITH THE FINDINGS OF THE LD CIT(A) THAT THE ADDITION MADE BY THE AO ITSE LF IS A DEBATABLE ISSUE AND IT IS NOT THE CASE WHERE THE ASSESSEE HAS CONCEALED A NY PARTICULARS OF INCOME OR FURNISHED WRONG PARTICULARS OF INCOME. WE, THEREFOR E, UPHOLD THE ORDER OF THE LD CIT(A). 7 IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON THE 30 TH , DAY OF JULY 2010. SD/- SD/- ( RAJENDRA SINGH ) ACCOUNTANT MEMBER (R S PADVEKAR ) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 30 TH , JULY 2010 RAJ* COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI