DCIT CENT. CIR. 4(2), MUMBAI V. SARYU PROPERTIES AND HOTELS PVT. LTD., MUMBAI

ITA 5271/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0157 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 24-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Section: 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH I, MU MBAI BEFORE SHRI B.R.BASKARAN, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.5271/MUM/2016 (ASSESSMENT YEAR- 2009-10) DCIT CENTRAL CIRCLE-4(2) ROOM NO. 1918, 19 TH FLOOR, AIR INDIA BUILDING, NARIMAN POINT, MUMBAI-21. VS. M/S SARYU PROPERTIES AND HOTELS PVT. LTD., PLOT NO. 25, B-WING, GIRNARA, PALI MALA ROAD, PALI HILL, BANDRA(W), MUMBAI-400050 PAN:AAACS6983M (APPELLANT) (RESPONDENT) REVENUE BY : SHRI V. JUSTIN (DR) ASSESSEE BY : SHRI VINAY SINHA ( AR) DATE OF HEARING : 08.03.2018 DATE OF PRONOUNCEMENT : 08.03.2018 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. THIS APPEAL BY REVENUE UNDER SECTION 253 OF INCOME TAX ACT IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-52, MUMBAI, [FOR SHORT THE LD. CIT(A)] DATED 29.06.2016 FOR ASSESSMENT YEAR 2009-2010. THE SOLE GROUND OF APPEAL RAISED BY REVE NUE IS THAT THE LD. CIT(A) ERRED IN DELETING THE PENALTY LEVIED UNDER S ECTION 271(1)(C) OF THE I.T. ACT. 2. AT THE OUTSET OF HEARING, THE LD. AUTHORISED REPRES ENTATIVE (AR) OF THE ASSESSEE SUBMITS THAT THE ADDITION/DISALLOWANCE ON WHICH THE PENALTY UNDER SECTION 271(1)(C) WAS LEVIED BY ASSESSING OFFICER, HAS ALREADY BEEN DELETED BY THE TRIBUNAL IN ITA NO. 4246/MUM/2014 DA TED 09.08.2017. THEREFORE, THE PENALTY ORDER PASSED BY ASSESSING OF FICER WOULD NOT SURVIVE. ITA NO. 5271/MUM/2016- M/S SARYU PROPE RTIES AND HOTELS PVT. LTD. 2 ON GOING THROUGH THE ORDER OF TRIBUNAL, THE LD. AR OF THE ASSESSEE FAIRLY CONCEDED THAT THE ADDITION IN THE ASSESSMENT ORDER MADE BY ASSESSING OFFICER ON ACCOUNT OF UNSECURED LOAN OF RS. 60,00,0 00/- HAS BEEN DELETED BY THE TRIBUNAL. 3. WE HAVE CONSIDERED THE SUBMISSION OF BOTH THE PARTI ES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW AND THE ORD ER PASSED BY CO-ORDINATE BENCH OF TRIBUNAL IN APPEAL ON THE QUANTUM ASSESSME NT IN ITA NO. 4246/MUM/2014 DATED 09.08.2017. THE RELEVANT PART O F ORDER PASSED BY TRIBUNAL IN APPEAL ON QUANTUM ASSESSMENT IS EXTRACT ED BELOW. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT WFPL HAD ADVANCED LOAN OF RS.60 LAKHS TO THE ASSESSEE IN THE AY.1998-99,THAT THE ASSESSEE DID NOT PAY ANY INTERE ST TO WFPL, THAT DURING THE YEAR UNDER CONSIDERATION WFPL HAD WRITTEN OFF T HE AMOUNT IN ITS BOOK OF ACCOUNT AS IRRECOVERABLE, THAT THE AO HELD THAT LIABILITY CEASED TO EXIST AND THAT BY ADOPTING COLOURABLE DEVICE THE ASSESSEE HAD AVOIDED PAYMENT OF TAX FOR THE DISPUTED AMOUNT, THAT FAA CONFIRMED THE ORDER OF THE AO, THAT BOTH THE ENTITIES ARE OF SAME GROUP-I.E. RAHEJA GRO UP, THAT EVEN AFTER FOUR YEARS OF WRITING OFF OF THE DISPUTED AMOUNT BY WFPL THE ASSESSEE HAD NOT PAID THE AMOUNT/INTEREST TO THE LENDER. WE FIND THAT WHILE DECIDING THE ISSUE THE AO AND FA A HAD NOT INVOKED THE PROVISIONS OF SECTION 41(1) OR SECTION 28 .IN OTHER WORDS IN THEIR OPINION, IT IS NOT CESSATION OF LIABILITY. THE WRITING OF LOAN BY THE LENDER CAN BE RESULT OF MANY A FACTORS. THE ASSESSEE IS OWNING ITS LIABILIT Y. THE AO OR THE FAA HAS NOT BROUGHT ON RECORD ANY FACT THAT COULD PROVE THE COMING IN OF AN ITEM TO THE POCKET OF THE ASSESSEE I.E. OCCURANCE OF INCOME . THE ASSESSEE IS NOT DENYING ITS LIABILITY, SO, IT CANNOT BE ASSESSED AS INCOME FROM OTHER SOURCES (U/S.56 OF THE ACT). WE AGREE THERE ARE CERTAIN FAC TORS THAT CREATE SOME SUSPICION ABOUT THE TRANSACTION, BUT NO SUSPICION C AN TAKE PLACE OF EVIDENCE. IN THE CASE BEFORE US, THERE IS EVIDENCE TO PROVE T HAT AMOUNT IN QUESTION CAN BE TERMED AS INCOME. THE AO FROM AY.1998-99 WAS ACC EPTING THE GENUINENESS OF THE TRANSACTION. IN THE YEAR OF WRIT ING OFF OF THE AMOUNT BY THE LENDER WOULD NOT AUTOMATICALLY TURN THE LOAN IN TO INCOME. HE HAS ALLEGED THAT IT WAS A COLOURABLE DEVICE, BUT IT IS A MERE A LLEGATION. IT HAS NOT BEEN ITA NO. 5271/MUM/2016- M/S SARYU PROPE RTIES AND HOTELS PVT. LTD. 3 PROVED. THE CASE LAWS RELIED UPON BY THE AR SUPPORT THE VIEW TAKEN BY US. CONSIDERING THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE OPINION THAT THE ORDER OF THE FAA CANNOT BE ENDORSE D. SO, REVERSING THE SAME, WE DECIDE EFFECTIVE GROUND OF APPEAL IN FAVOU R OF THE ASSESSEE. 4. CONSIDERING THE DECISION OF TRIBUNAL IN APPEAL ON Q UANTUM ASSESSMENT IN ITA NO. 4246/MUM/2014 DATED 09.08.2017, WHEREIN THE ADDITION OF UNSECURED LOAN HAS ALREADY BEEN DELETED. HENCE, IN OUR VIEW, ONCE THE ADDITION, ON THE BASIS OF WHICH THE PENALTY WAS LEV IED, HAS BEEN DELETED, THE PENALTY ORDER WOULD NOT SURVIVE. 5. IN THE RESULT, APPEAL FILED BY REVENUE IS DISMISSED ON THE BASIS OF ORDER ON QUANTUM ASSESSMENT PROCEEDING IN ITA NO. 4246/MUM/2 014 DATED 09.08.2017. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH DAY OF MARCH 2018. SD/- SD/- ( B.R.BASKARAN ) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 08/03/2018 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE C