DCIT 10(1), MUMBAI V. MAHANAGAR GAS LTD, MUMBAI

ITA 5330/MUM/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3559 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 27-05-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 01-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M MOHANDOSS
• Assessee Lawyers: P P JAYARAMAN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI BEFORE SHRI R.C.SHARMA (AM) AND SHRI RAM LAL NEGI (JM ) ITA NO. 5330/MUM/2013 ASSESSMENT YEAR: 2006-07 THE DCIT - 10(1), 455, 4 TH FLOOR, AAYKAR BHAVAN, MUMBAI- 400020. VS. M/S. MAHANAGA R GAS LTD. G-33, MGL HOUSE, OPP. ICICI BANK, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI- 400051. PAN : AABCM4640G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI. M.MOHANDOSS RESPONDENT BY : SHRI. P. P. JAYARAMAN DATE OF HEARING: 2 7/05/2016 DATE OF PRONOUNCEMENT: 25/08/20 16 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER DATED 15/05/2013 PASSED BY THE LD. CIT(APPEALS)-21, MUMBA I, FOR THE ASST. YEAR 2006-07 WHEREBY THE LD.CIT(A) GRANTED RELIEF TO THE ASSESSEE/APPELLANT BY DELETING PENALTY OF RS 10,09,800/-LEVIED BY THE A.O . U/S 271(1)(C) OF THE ACT. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE APPELLA NT/ASSESSEE ENGAGED IN THE BUSINESS OF SUPPLY AND DISTRIBUTION OF PIPED NATURA L GAS TO DOMESTIC, COMMERCIAL AND INDUSTRIAL CONSUMERS AND CNG TO VEHI CLES, RECEIVED COMPENSATION ON GUARANTEED SUPPLY OF GAS AND DELAY PAYMENT IN THE SUPPLY OF GAS. THE APPELLANT OFFERED THE INCOME ON RECEIPT BA SIS. HOWEVER, THE ASSESSING OFFICER ESTIMATED THE INCOME AT RS. 30,00,000/- ON ACCRUAL BASIS DURING THE 2 ITA NO. 5330/MUM/2013 ASSESSMENT YEAR: 2006-07 ASSESSMENT PROCEEDINGS FOR THE REASON THAT THE APPE LLANT HAS BEEN FOLLOWING MERCANTILE METHOD OF ACCOUNTING. 3. ON THE BASIS OF THE ADDITION AFORESAID, THE ASSE SSING OFFICER LEVIED PENALTY U/S 271(1)(C) OF THE ACT, HOLDING THAT THE APPELLAN T HAS FURNISHED INACCURATE PARTICULARS OF INCOME. AGAINST THE PENALTY ORDER, T HE ASSESSEE FILED FIRST APPEAL BEFORE THE CIT(A). THE LD. CIT(A) AFTER HEARING THE ASSESSEE ALLOWED THE APPEAL OF THE ASSESSEE BY THE FOLLOWING THE RATIO LAID DOW N BY HONBLE SUPREME COURT IN CIT VS. RELIANCE PETRO PRODUCTS LTD. 322 ITR 158(SC ). THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST THE IMPUGNED ORD ER PASSED BY THE LD.CIT(A). THE REVENUE HAS CHALLENGED THE PRESENT APPEAL ON TH E FOLLOWING EFFECTIVE GROUND OF APPEAL:- ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) ERRED IN DELETING PENALTY OF RS. 10,09,8 00/- U/S 271(1)(C). 4. BEFORE US, THE LD. DR SUBMITTED THAT IN QUANTUM APPEAL, SINCE THE LD. CIT(A) HAS UPHELD THE INCOME ASSESSED BY ASSESSING OFFICER ON ACCRUAL BASIS, THE ASSESSEE IS LIABLE TO PAY THE PENALTY U/S 271(1 (C) OF THE ACT FOR CONCEALMENT OF INCOME. THEREFORE, THE IMPUGNED ORDER IS APPAREN TLY ERRONEOUS AND LIABLE TO BE SET ASIDE. 5. ON THE OTHER HAND THE LD. AR RELYING ON THE ORDE R OF THE LD. CIT(A) SUBMITTED THAT THE LD.CIT(A) HAS RIGHTLY DELETED TH E PENALTY IMPOSE BY THE ASSESSING OFFICER IN THE LIGHT OF THE JUDGMENT OF H ONBLE SUPREME COURT IN CIT VS. RELIANCE PETRO PRODUCTS LTD. 322 ITR 158 (SC) . THE ASSESSEE HAD TO DEVIATE FROM THE GENERAL PRACTICE OF FOLLOWING ACCRUAL METH OD IN THE GIVEN SITUATION DUE TO UNCERTAIN NATURE OF THE INCOME. HENCE, THERE IS NO SCOPE TO INTERFERE WITH THE ORDER PASSED BY THE LD. CIT(A). 3 ITA NO. 5330/MUM/2013 ASSESSMENT YEAR: 2006-07 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PER USED THE DOCUMENTS ON RECORD IN THE LIGHT OF THE RIVAL CONTENTIONS OF THE PARTIES. THE ONLY ISSUE TO BE ADJUDICATED IN THIS APPEAL IS WHETHER MERE ACT OF O FFERING INCOME IN QUESTION ON RECEIPT BASIS BY THE ASSESSEE AMOUNTS TO FURNISH ING OF INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT SO AS TO IMPOSE PENALTY UNDER THE SAID SECTION? IN ORDER TO ANSWER THIS QUESTION IT IS NECESSARY TO ASCERTAIN THE REAL INTENTION OF THE AS SESSEE BEHIND FOLLOWING THE RECEIPT BASIS FOR CALCULATING THE INCOME IN QUESTIO N. AS A MATTER OF FACT THE ASSESSING OFFICER IN THE PRESENT CASE HAS ASSESSED THE INCOME FROM COMPENSATION RECEIVED FROM CUSTOMERS ON ACCRUAL BAS IS FOR THE REASON THAT THE ASSESSEE HAD BEEN FOLLOWING THE MERCANTILE SYSTEM. IN OUR CONSIDERED VIEW THERE IS MERIT IN THE CONTENTION OF THE ASSESSEE TH AT THE INCOME IN QUESTION WAS OFFERED ON RECEIPT BASIS BECAUSE THERE WAS NO CERTA INTY AND IT WAS NOT POSSIBLE FOR THE ASSESSEE TO OFFER THE SAME ON ACCRUAL BASIS . THE LD. CIT IN QUANTUM APPEAL HAS ISSUED DIRECTION TO THE AO TO GIVE RELIE F TO THE ASSESSEE ON THE GROUND THAT THE ASSESSEE IS REQUIRED TO OFFER THE S AID INCOME TO TAX IN THE SUBSEQUENT YEAR ON ACCRUAL BASIS. THEREFORE, IN OUR CONSIDERED VIEW, IN THIS PARTICULAR CASE, THE ACT OF THE ASSESSEE TO OFFER T HE INCOME ON RECEIPT BASIS DOES NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS OF THE INCOME. MOREOVER, IN RELIANCE PETRO PRODUCTS LTD. (SUPRA) THE HONBLE SUPREME COURT HAS HELD THAT MAKING AN INCORRECT CLAIM IN LAW CANNOT TANTAMOUNT TO FURNISHING OF INACCURATE PARTICULARS. 7. IN VIEW OF THE RATIO LAID DOWN BY THE HONBLE SU PREME COURT, WE DO NOT FIND ANY LEGAL OR FACTUAL INFIRMITY IN THE ORDER OF LD.C IT(A) TO INTERFERE WITH. HENCE, WE FIND NO MERIT IN THE APPEAL OF THE REVENUE. WE, THEREFORE, DISMISS THE SOLE GROUND OF THE APPEAL OF REVENUE AND UPHOLD THE ORDE R OF THE LD. CIT(A). 4 ITA NO. 5330/MUM/2013 ASSESSMENT YEAR: 2006-07 8. IN THE RESULT APPEAL FILED BY THE REVENUE FOR TH E ASSESSMENT YEAR 2006-07 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 2 5 TH AUG, 2016. SD/- SD/- ( R.C.SHARMA ) (RAM LAL NEGI) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED: 25/08/2016 / 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// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI PRAMILA