MEHTA SULFITES (I) LTD, MUMBAI V. ACIT 10(2), MUMBAI

ITA 4772/MUM/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2349 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 16-04-2015
• Assessment Year: 1999-2000
• Appeal Filed On: 20-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR SONI
• Assessee Lawyers: M SUBRAMANIAN
• Keywords: Depreciation; Tax effect
• Section: 143(3); 115JB; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUM BAI BEFORE SHRI JOGINDER SINGH, JM AND SHRI RAJESH KUMA R,AM ./ I.T.A. NO4772/MUM/2013 ( / ASSESSMENT YEAR:1999-2000) M/S MEHTA SULFITES (INDIA) LTD. C/O ATUL S. DESAI. A-302, GOLDENOAK, HIRANANDANI GARDENS, POWAI, MUMBAI-400 076 / VS. ASST. COMMISSIONER OF INCOME TAX CIRCLE 10 (2) R. NO.474, AAYAKAR BHAVAN, MUMBAI -400 020 ./ ./PAN/GIR NO. AAACM3109R ( /APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI M. SUBRAMANIAN / RESPONDENT BY : SHRI VIJAY KUMAR SONI / DATE OF HEARING : 27/10/2015 !'# / DATE OF PRONOUNCEMENT : 20/11/2015 / O R D E R PER RAJESH KUMAR, A. M: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 08-04-2013 OF COMMISSIONER OF INCOME TAX (APPEALS)22 , MUMBAI (HE REINAFTER CALLED AS THE CIT(A) ) FOR ASSESSMENT YEAR 1999-2000. THE ASSESSE E HAS RAISED THE FOLLOWING GROUNDS OF APPEAL AS PER FORM 35 AND ALSO ADDITIONA L GROUND AS PER APPLICATION FILED ON 26.10.2015: 2 I.T.A. NO4772/MUM/2013 (A.Y:1999-2000) M/S MEHTA SULFITES (INDIA) LTD VS CIT. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, ORDER U/S 271(1)(C) DATED 30-03-2012 IS INVALID AND BAD IN LA W. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED C.I.T.(A) ERRED IN CONFIRMING THE PENALTY LEVIED BY AO OF RS.1103657/- WITHOUT CONSIDERING OUR SUBMISSION PROPERLY. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED C.I.T.(A) ERRED IN CONFIRMING THE PENALTY ON FORFEI TURE OF SHARES AND PREMIUM AMOUNTING TO RS.1440000/- AND DISALLOWANCE OF DEPRECIATION 1105512/- WITHOUT CONSIDERING OUR SUBMISSION PROPER LY. ADDITIONAL GROUND: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED A.O. ERRED IN LEVYING A PENALTY OF RS.11,03,657/- U/S 27 1(1)(C) OF THE ACT AND THE LEARNED C.I.T.(A) ERRED IN CONFIRMING THE SAME ALTH OUGH THE TAX EFFECT IS NIL AS THE FINAL TAX HAS BEEN COMPUTED AS PER THE PROVISIONS O F SECTION 115JB OF THE ACT AND THE DISALLOWANCES MADE IN THE NORMAL COMPUTATION DO NOT HAVE EFFECT ON THE TAX LIABILITY. 2. AT THE OUTSET THE LD.AR DUE OUR ATTENTION TO THE ADDITIONAL GROUND FILED VIDE APPLICATION DATED 26/10/2015 RAISING THE ISSUE THAT PENALTY U/S 271(1)(C) OF THE ACT OF RS.11,03,657/- WAS WRONGLY LEVIED BY AO AND CONFIR MED BY CIT(A) IN VIEW OF THE FACT THAT FINAL TAX HAD BEEN COMPUTED AS PER THE PR OVISIONS OF 115JB OF THE INCOME TAX ACT AND THAT DISALLOWANCES MADE IN THE NORMAL C OMPUTATION DID NOT HAVE ANY EFFECT ON THE TAX LIABILITY OF THE ASSESSEE. THE LD . COUNSEL FURTHER SUBMITTED THAT THE ISSUE SOUGHT TO BE RAISED THROUGH THE ADDITIONAL G ROUNDS IS OF LEGAL NATURE AND WOULD GO TO THE ROOT OF THE MATTER IN APPEAL AND THEREFO RE PRAYED FOR THE ADMISSION OF THE SAME BY RELYING OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE NATIONAL THERMAL POWER LTD V/S CIT 229 ITR(383) (SC).ON THE OTHER HAND LD. DR OPPOSED THE ADMISSION OF THE ADDITIONAL GROUND. 3 I.T.A. NO4772/MUM/2013 (A.Y:1999-2000) M/S MEHTA SULFITES (INDIA) LTD VS CIT. 3.WE HAVE CONSIDERED THE APPLICATION FOR THE ADDITI ONAL GROUND AND AFTER PERUSING THE ISSUE RAISED IN THE GROUND, WE ARE OF THE VIEW THE ADDITIONAL L GROUND IS OF LEGAL NATURE AND ALSO GO TO THE ROOTS OF THE CASE AND IN VIEW OF THE RATIO LAID DOWN BY HONBLE SUPREME COURT NATIONAL THERMAL POWER LTD. (SUPRA) T HE ADDITIONAL GROUND IS ALLOWED. 4 THE FACTS OF THE CASE ARE THAT THE TRIBUNAL SET ASIDE THE ORIGINAL ASSESSMENT FRAMED U/S 144 VIDE ORDER DATED 28/02/2002 BY DIREC TING THE AO TO MAKE THE ASSESSMENT AFRESH BY ADMITTING THE ADDITIONAL EVIDE NCE AFTER GIVING FRESH OPPORTUNITY TO THE ASSESSEE. ASSESSMENT WAS FRAMED BY AO U/S 14 3(3) R.W.S. 250 OF THE ACT VIDE ORDER DATED 24/12/2009. INCOME UNDER THE NORMAL PRO VISIONS OF THE ACT WAS COMPUTED AT A LOSS OF RS.34,04,686/- BY MAKING INTERALIA VA RIOUS DISALLOWANCES WHILE MAKING THE ASSESSMENT ON THE BOOK PROFITS U/S 115JB OF THE ACT. THE QUANTUM APPEAL WAS ALSO DISMISSED BY CIT(A). THE LD.AO LEVIED THE PENALTY O F RS.11,03,657 U/S 271(1)(C) OF THE ACT ON THE GROUND THAT VARIOUS DISALLOWANCES M ADE BY HIM IN THE ASSESSMENT ORDER WERE UPHELD BY CIT(A) AND THUS THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME. THE LD. CIT(A) DISMISSED THE APPEAL BY CONFIRMING THE PENALTY IMPOSED BY THE AO BY HOLDING THAT THE ADDITIONS MAD E IN THE QUANTUM ORDER WERE CONFIRMED VIDE ORDER DATED 16.07.2010 AND THE EXP LANATION OFFERED BY THE APPELLANT HAD NOT BEEN ACCEPTED AS IT WAS COVERED BY 1(B) OF THE U/S 271(1)(C) WHICH SPECIFICALLY SAYS THAT IF THE EXPLANATION OFFERED B Y THE ASSESSEE IS NOT SUBSTANTIATED BY THE ASSESSEE, PENALTY IS IMPOSABLE. 5 THE LD. AR VEHEMENTLY SUBMITTED THAT PENALTY U/S2 71(1)(C) CANNOT BE IMPOSED IF THE INCOME OF THE ASSESSEE IS BROUGHT TO TAX UND ER THE PROVISIONS OF 115 JB OF THE ACT AND TAX WAS CHARGED ON BOOK PROFITS PURSUANT TO THESE PROVISIONS AND THE DISALLOWANCES MADE BY THE AO UNDER THE NORMAL PROVI SIONS OF THE ACT DID NOT HAVE 4 I.T.A. NO4772/MUM/2013 (A.Y:1999-2000) M/S MEHTA SULFITES (INDIA) LTD VS CIT. ANY EFFECT ON TAX LIABILITY BY THE ASSESSEE. THE LD .COUNSEL RELIED ON THE DECISION OF DELHI HIGH COURT IN THE CASE OF CIT(A) VS. M/S NALW A SONS INVESTMENT LTD. 327 ITR 543 AND THE DECISION OF GUJRAT HIGH COURT IN THE CA SE CIT(A) VS CITY TILES LTD. 370 ITR 127. LD. COUNSEL FURTHER SUBMITTED THAT SLP FIL ED BY THE DEPARTMENT IN THE CASE OF M/S NALWA SONS INVESTMENT LTD. STANDS DISMISSED ON 04/05/2012 . LD. DR , ON THE OTHER HAND, RELIED ON THE ORDERS AUTHORITIES BELOW . 6 WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED TH E MATTER ON RECORD. WE NOTE THAT THE ASSESSMENT IN THE CASE OF ASSESSEE WAS FRA MED U/S 143(3) RWS 250 OF THE ACT WIDE ORDER DATED 24/12/2009 WHEREIN THE INCOME OF T HE ASSESSEE WAS ASSESSED AT 30% OF THE BOOK PROFITS IN TERMS OF THE PROVISION OF SE CTION 115JB OF THE ACT WHILE SIMULTANEOUSLY MAKE VARIOUS ADDITIONS TO THE PROFIT AS PER PROFIT AND LOSS ACCOUNT UNDER NORMAL PROVISIONS OF THE ACT THEREBY WORKING OUT THE LOSS AS PER NORMAL PROVISIONS OF THE ACT AT RS.34,04,686/- WE HOWEVER , NOTE THAT THE QUANTUM APPEAL WAS DISMISSED BY CIT(A) CONFIRMING THE MADE BY THE LD AO. ALSO THE APPEAL AGAINST THE PENALTY ORDER WAS DISMISSED ON THE GROUND THAT ASSESSEE FILED INACCURATE PARTICULARS OF INCOME QUA THE ADDITIONS MADE IN THE THE ASSESSMENT ORDER. THE APPELLANT HAD BEEN ASSESSED U/S115JB ACT AND THE VA RIOUS DISALLOWANCES MADE IN THE ASSESSEMT ORDER DID NOT HAVE ANY IMPACT ON THE TAX LIABILITY OF THE ASSESSEE. IN OTHER WORDS THE INCOME COMPUTED UNDER THE NORMAL PROVISIO NS OF THE ACT IS LESS THAN THE BOOK PROFITS OF THE ASSESSEE. UNDER THESE CIRCUMSTA NCES, WE ARE OF THE CONSIDERED OPINION THAT THE PENALTY U/S271(1)(C) OF THE ACT CA NNOT BE LEVIED . THE CASE OF THE ASSESSEE IS FORTIFIED BY THE DECISION OF THE DELHI HIGH COURT V/S NALWA SONS LTD. SUPRA)WHEREIN THE INCOME WAS COMPUTED IN ACCORDANCE WITH NORMAL PROCEDURE IS LESS THAN THE INCOME DETERMINED SPECIAL PROVISIONS U/S 115JB OF THE ACT AND THUS THE INCOME OF THE ASSESSEE WAS ASSESSED U/S 115JB AND N OT UNDER THE NORMAL PROVISIONS AND THE TAX WAS PAID ACCORDINGLY ON THE INCOME AS C OMPUTED U/S 115JB OF THE ACT. 5 I.T.A. NO4772/MUM/2013 (A.Y:1999-2000) M/S MEHTA SULFITES (INDIA) LTD VS CIT. ONCE THE TAX IS LEVIED ON THE INCOME OF THE ASSESS EE U/S 115JB OF THE ACT , THEN THE CASE THE CONCEALED OF INCOME HAVE NO ROLE TO PLAY A ND WOULD NOT LEAD TO TAX EVASION AND THEREFORE, PENALTY CANNOT BE IMPOSED ON THE BAS IS OF DISALLOWANCES OR ADDITIONS MADE UNDER REGULAR PROVISIONS. FURTHER IN THE CASE OF CIT V/S CITY TILES (SUPRA), THE HONBLE GUJRAT HIGH COURT HAS HELD THAT WHERE THE A DDITION TO THE INCOME OF THE ASSESSEE DID NOT CHANGE THE TAX LIABILITY OF THE AS SESSEE AS THE ASSESSMENT WAS MADE U/S115JB OF THE BOOK PROFITS PENALTY COULD NOT BE I MPOSED. THE FACTS OF THE ASSESSEE ARE SQUARELY COVERED BY THE ABOVE DECISIONS AND W E THEREFORE, RESPECTFULLY FOLLOWING THE DECISIONS OF THE HIGH COURT , WE DELETE THE PE NALTY IMPOSED U/S 271(1)(C) BY ALLOWING THE APPEAL OF THE ASSESSEE. 6. THE GROUND 1,2 AND 3 RAISED BY THE ASSESSEE ARE NOT ADJUDICATED IN VIEW OF OUR DECISION ON THE ADDITIONAL GROUND AND THEY BECOME OF ACADEMIC NATURE IN VIEW OF OUR DECISION. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. &#'( )*+& , -. / ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH NOV, 2015 SD/- SD/- (JOGINDER SINGH ) (RAJESH KUMAR) 0) / JUDICIAL MEMBER / ACCOUNTANT MEMBER ' MUMBAI; 2 DATED : 20.11.2015 ASHWINI GAJAKOSH 6 I.T.A. NO4772/MUM/2013 (A.Y:1999-2000) M/S MEHTA SULFITES (INDIA) LTD VS CIT. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 3 ( ) / THE CIT(A) 4. 3 / CIT - CONCERNED 5. 678 ))9* , 9*# , ' / DR, ITAT, MUMBAI 6. 8;+ < / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) $%, ' / ITAT, MUMBAI