ITO 13(3)(3), MUMBAI V. VIDYASAGAR ENTERPRISES LLP, MUMBAI

ITA 4943/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0668 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 10-04-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 02-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANJU GORADIA
• Section: 143(3); 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES J MUMBAI BEFORE SHRI C.N. PRASAD (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 4943/MUM/2016 ASSESSMENT YEAR: 2010-11 ITO 13(3)(3) VS. M/S. VIDYASAGAR ENTERPRIS ES LLP 2 ND FLOOR, R. NO. 227 FORMERLY KNOWN AS VIDYA SAGAR AAYAKAR BHAVAN INVESTMENT P. LTD. 6 TH FLOOR, MUMBAI 400020 BUSINESS PARK, S.V. RD. CH INCHOLI PHATAK, MALAD (W) MUMBAI - 400064 PAN NO. AABCV1066B (APPELLANT) (RESPONDENT) REVENUE BY : MS. ANJU GORADIA, DR ASSESSEE BY: MR. HARIDAS BHAT, AR DATE OF HEARING : 10/04 /2017 DATE OF PRONOUNCEMENT: 12/05/2017 ORDER PER N.K. PRADHAN, AM THIS IS AN APPEAL FILED BY THE REVENUE. THE RELEVAN T ASSESSMENT YEAR IS 2010-11. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER (APPEALS) 21, MUMBAI AND ARISES OUT OF ORDER U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (THE ACT). 2. THE GROUND OF APPEAL FILED BY THE REVENUE READS AS UNDER: WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE PENALTY U/S 271(1) (C) OF THE ACT LEVIED BY THE A.O. WITHOUT APPRECIATING THE FACT TH AT THE ASSESSEE HAS FAILED TO COMPLY WITH THE PROVISION OF SECTION 40(A)(IA) OF THE INCOME TAX ACT, 1961? ITA NO. 4943/MUM/2016 2 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE FILED ITS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YE AR ON 27.08.2010 SHOWING INCOME OF RS. 3,40,540/- AND BOO K PROFIT U/S 115JB OF RS. 29,99,719/-. IN THE ASSESSMENT ORDER U /S 143(3) DATED 01.03.2013, THE ASSESSING OFFICER (A.O.) DISALLOWED RS. 75,00,000/- U/S 40(A)(IA). IN APPEAL, THE ABOVE DISALLOWANCE WA S CONFIRMED BY THE LEARNED CIT(A). SUBSEQUENT TO THE ORDER OF THE LEARNED CIT(A), THE A.O. LEVIED PENALTY OF RS. 23,61,270/- U/S 271( 1)(C) OF THE ACT. AGGRIEVED BY THE ORDER OF THE A.O., THE ASSESSEE FI LED AN APPEAL BEFORE THE LEARNED CIT(A). WE FIND THAT THE LEARNED CIT(A) HAS FOLLOWED THE ORDER OF THE ITAT IN QUANTUM PROCEEDIN GS AND DELETED THE PENALTY LEVIED BY THE A.O. 4. BEFORE US THE LEARNED DR RELIED ON THE ORDER OF THE A.O. ON THE OTHER HAND THE LEARNED COUNSEL OF THE ASSESSEE RELI ED ON THE ORDER OF THE TRIBUNAL IN THE CASE OF THE ASSESSEE IN RESPECT OF QUANTUM PROCEEDINGS FOR THE IMPUGNED ASSESSMENT YEAR (ITA N O. 6764/MUM/2013). 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE ISSUE BEFORE THE TRIBUNAL I N QUANTUM PROCEEDINGS WAS THE ADDITION OF RS. 75,00,000/- MAD E BY THE A.O. REPRESENTING SETTLEMENT AMOUNT PAID BY A THIRD PART Y, ON BEHALF OF THE ASSESSEE CONSIDERING THE SAME AS COVERED U/S 40 A(IA) OF THE ACT. THE TRIBUNAL HELD AS UNDER: 7. IN OUR CONSIDERED OPINION, THE PAYMENT IN QUEST ION, AS AVAILABLE FROM THE ABOVE FACTS, WAS NOT IN CONSEQUENCE OF ANY WORK CARRIED OUT BY THE CONTRACTOR FOR THE ASSESSEE, BUT IT WAS AGREED PAYM ENT TO GET THE TITLE OF THE PROPERTY CLEARED, BY WAY OF OUT OF COURT SETTLE MENT OF THE SUIT FILED BY THE CONTRACTOR. THUS, THE ASSESSEE WAS CORRECT IN N OT MAKING TDS ON THE AMOUNT PAID BY THE PURCHASER, M/S SILVERLINE ENTERP RISES, DIRECTLY TO THE CONTRACTOR, M/S SAROVAR DEVELOPER, ON BEHALF OF THE ASSESSEE. AS SUCH, THE ITA NO. 4943/MUM/2016 3 PROVISIONS OF SECTION 40(A)(IA) OF THE ACT DO NOT G ET ATTRACTED. THEREFORE, THE LD. CIT(A) HAS ERRED IN APPLYING THE DECISIONS OF TORQUE PHARMACEUTICALS PVT. LTD. VS. ADDL. CIT, 577 (2011 ) TIOL 577 (ITAT CHANDIGARH) AND ACIT VS. GRANDPRIX FAB (P) LTD., 34 DTR 248, ITAT , DELHI INASMUCH AS IN THE PRESENT CASE, THE PAYMENT MADE W AS NOT QUA ANY WORK CONTRACT BUT WAS MADE TO GET A CLEAR TITLE OF THE P ROPERTY. 8. FOR THE ABOVE DISCUSSION, THE GRIEVANCE OF THE ASSESSEE IS FOUND TO BE JUSTIFIED AND IS ACCEPTED AS SUCH. THE ADDITION OF RS. 75 LACS MADE BY THE A.O., AS CONFIRMED BY THE LD. CIT(A), IS CANCELLED. 6. IN K.C. BUILDERS VS. ACIT (2004) 265 ITR 562, 569 (SC), IT HAS BEEN HELD THAT WHERE THE ADDITIONS MADE IN THE ASSESSMENT ORDERS, ON THE BASIS OF WHICH PENALTY FOR CONCEALME NT WAS LEVIED, ARE DELETED, THERE REMAINS NO BASIS AT ALL FOR LEVYING THE PENALTY FOR CONCEALMENT AND, THEREFORE, IN SUCH A C ASES NO SUCH PENALTY CAN SURVIVE AND THE SAME IS LIABLE TO BE CA NCELLED. 7. IN VIEW OF THE FOREGOING REASONS, WE UPHOLD THE ORDER OF THE LEARNED CIT(A) AND DISMISS THE APPEAL FILED BY THE REVENUE. ORDER PRONOUNCED IN THE OPEN COURT ON 12/05/2017 SD/- SD/- (C.N. PRASAD) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBE R MUMBAI: DATED: 12/05/2017 BISWAJIT, SR. P.S. 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// ITA NO. 4943/MUM/2016 4 (DY./ASSTT. REGISTRAR) ITAT, MUMBAI