DCIT 1(2), MUMBAI V. PRESSTRESS (INDIA) P. LTD, MUMBAI

ITA 519/MUM/2010

• Counselvise Citation: 51919914 RSA 2010
• Duration Of Justice: 4 year(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 12-02-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 21-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M L PERUMAL
• Assessee Lawyers: DAMODAR KABRA

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C , MUMBAI . . , , , BEFORE SHRI N.K.SAINI , AM AND SHRI SANJAY GARG , JM ITA NO. 519 /MUM/ 2010 : ASST.YEAR 200 3 - 200 4 THE DY.COMMISSIONER OF INCOME - TAX CIRCLE 1(2) MUMBAI. / VS. M/S. PRESSTRESS (INDIA) P LTD. 303, ELPHINSTONE HOUSE 17, MARZBAN ROAD, MUMBAI 400 001 PAN : AAACP2076J. ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI M.L.PERUMAL / RESPONDENT BY : SHRI DAMODAR KABRA / DATE OF HEARING : 12 .02 .201 4 / DATE OF PRONOUNCEMENT : 12 .02.20 1 4 / O R D E R PER N.K.SAINI (AM) : THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE ORDER DATED 27.11.2009 OF THE COMMISSIONER OF INCOME - TAX (APPEALS) - 2 , MUMBAI. 2. ONLY GRIEVANCE OF THE DEPARTMENT IN THIS APPEAL RELATES TO THE DELETION OF PENALTY OF RS.12,71,027 LEVIED BY THE ASSESSING OFFICER ( AO FOR SHORT) U/S 271(1)(C) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ). 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE HAD A JOINT VENTURE CONTRACT WITH M/S.TECHNO CONSTRUCTION RELATING TO A RAILWAY CONTRACT. THIS JOINT VENTURE WAS COMPLETED DURING THE PREVIOUS YEAR ITA NO. 519/MUM/2010 . M/S. PRESSTRESS (INDIA) P LTD . 2 RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. HOWEVER, THE ASSESSEE DID NOT DECLARE ANY INCOME FROM T HE JOINT VENTURE AND INSTEAD CLAIMED A LOSS OF RS.26,20,035/ - . THE AO DISALLOWED THE LOSS CLAIMED BY THE ASSESSEE AND ESTIMATED THE INCOME AT RS.8,38,543/ - . THE SAID ADDITION WAS CONFIRMED BY THE LEARNED CIT(A). THEREAFTER, THE AO LEVIED PENALTY U/S 271(1) (C) OF THE ACT FOR A SUM OF RS.12,71,027 / - . 4. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LEARNED CIT(A) AND SUBMITTED THAT THE LOSS OF RS.26.20 LAKH HAD BEEN CLAIMED AT THE RATE OF 20% OF THE TOTAL AMOUNT DUE FROM THE JOINT VENTURE PARTNER A ND ALL FACTS RELATING TO THE PROJECT UNDER CONSIDERATION , THE JOINT VENTURE, THE PROFIT FROM JOINT VENTURE, AS WELL AS THE LOSS WERE DISCLOSED IN THE RETURN OF INCOME. THEREFORE, THERE SHOULD NOT BE ANY OCCASION OF IMPOSING THE PENALTY UPON THE ASSESSEE. TH E LEARNED CIT(A) , AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, OBSERVED THAT HE HAD LOOKED INTO THE ACCOUNT OF M/S.TECHNO CONSTRUCTION WITH REGARD TO THE PAYMENT MADE BY THEM TO THE ASSESSEE AND THE EXPENSES INCURRED BY THEM ON BEHALF OF THE ASSESSE E BUT THAT FACT ITSELF DID NOT GO TO SUGGEST THAT HARMONY BETWEEN THE TWO JOINT VENTURE PARTNERS WA S CONTINUING. HE FURTHER OBSERVED THAT IN FACT ABSENCE OF ANY TRANSACTION AFTER A PARTICULAR DATE WAS ITSELF CONSPICUOUS AND WAS SUGGESTIVE OF SOMETHING GOING WRONG BETWEEN THE TWO PARTIES. SO, IT WAS THE INHERENT RIGHT OF THE ASSESSEE TO MAKE A CLAIM OF L OSS IF THEY FEEL THAT THEY HAVE INCURRED A LOSS AND THE PENALTY COULD NOT BE IMPOSED SIMPLY BECAUSE THE LOSS SO CLAIMED BY THE ASSESSEE HAD BEEN ITA NO. 519/MUM/2010 . M/S. PRESSTRESS (INDIA) P LTD . 3 DISALLOWED AND CONFIRMED BY THE FIRST APPELLATE AUTHORITY. THE LEARNED CIT(A) CATEGORICALLY STATED THAT THERE W AS ADEQUATE DIS CLOSURE IN THE RETURN OF INCOME, WHICH HAD NOT BEEN DISPUTED BY THE AO, SO, THERE SHOULD BE NO CASE FOR IMPOSITION OF PENALTY UNLESS THE DISCLOSURE WAS ITSELF INCOMPLETE OR NOT CORRECT. HE, THEREFORE, CANCELLED THE PENALTY LEVIED BY THE AO. 5. NOW THE DEPARTMENT IS IN APPEAL. DURING THE COURSE OF HEARING THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE QUANTUM ADDITION SUSTAINED BY THE LEARNED CIT(A) WAS SUBJECT MATTER OF THE ASSESSEE S APPEAL IN ITA NO. 2178/MUM/ 2007, 7157 & 7158/MU M/2008 FOR THE ASSESSMENT YEARS 2003 - 2004 TO 2005 - 2006, WHEREIN VIDE ORDER DATED 30.09.2013 THE MATTER WAS RESTORED TO THE FILE OF THE AO . THEREFORE, NO PENALTY WAS LEVIABLE SINCE THE BASIS FOR IMPOSING THE PENALTY ITSELF WAS SET ASIDE. HE FURTHER SUBMITTE D THAT THE ADDITION MADE BY THE AO WAS PURELY ON ESTIMATE BASIS, THEREFORE, NO PENALTY WAS LEVIABLE U/S 271(1)(C) OF THE ACT. IN HIS RIVAL SUBMISSIONS, T HE LEARNED DEPARTMENTAL REPRESENTATIVE ALTHOUGH SUPPORTED THE ORDER OF THE AO BUT COULD NOT CONTROVERT THE AFORESAID CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE. 6. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IT IS NOTICED THAT THE QUANTUM ADDITION, ON THE BASIS OF WHICH THE PE NALTY WAS LEVIED BY THE A.O., HAS BEEN SET ASIDE BY THE ITAT VIDE ORDER DATED 30.09.2013 IN ASSESSEE S OWN CASE, THEREFORE, PENALTY ORDER IS ALSO TO ITA NO. 519/MUM/2010 . M/S. PRESSTRESS (INDIA) P LTD . 4 BE SET ASIDE. IN THAT VIEW OF THE MATTER, WE DO NOT SEE ANY MERIT IN THE APPEAL OF THE DEPARTMENT. HOWEVER, THE AO MAY CONSIDER THIS ISSUE WHILE DECIDING THE SET ASIDE QUANTUM ADDITION, WHICH HAS BEEN RESTORED TO HIS FILE VIDE O RDER DATED 30.09.2013 IN ITA NO.2178/MUM/ 2007, 7157 & 7158/MUM/2008 FOR THE ASSESSMENT YEARS 2003 - 2004 TO 2005 - 2006. 7 . IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 12 TH DAY OF FEBRUARY, 2014. 12 , 2014 SD/ - SD/ - ( SANJAY GARG ) ( N.K.SAINI ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 12 TH FEBRUARY , 201 4 . DEVDAS* / COPY OF THE ORDER FORWARDED TO : / BY ORDER, //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT , MUMBAI. 4. / CIT(A) - 2 , MUMBAI. 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE.