GOLDEN TOBACCO LTD ( FORMELRY GTC INDUSTRIES LTD), MUMBAI V. JTCIT (OSD)8(1), MUMBAI

ITA 549/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78753 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 1996-1997
• Appeal Filed On: 21-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K SAHU
• Assessee Lawyers: VINOD KUMAR BINDAL
• Keywords: Business expenditure; Bonafide belief; Bad and doubtful debts
• Section: 6

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI . . , , , BEFORE SHRI N.K. BILLAIYA , ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUDICIA L MEMBER . / ITA NO. 549 / MUM./ 2013 ( / ASSESSMENT YEAR : 1996 97 ) . / ITA NO. 5 50 / MUM./ 2013 ( / ASSESSMENT YEAR : 1997 98 ) . / ITA NO. 551 / MUM./ 2013 ( / ASSESSMENT YEAR : 1998 9 9 ) GOLDEN TOBACCO LTD. (FORMERLY GTC INDUSTRIES LTD.) TOBACCO HOUSE, S.V. ROAD VILE PARLE (W), MUMBAI 400 056 .. / APPELLANT V/S J T. COMMISSIONER OF INCOME TAX SPECIAL RANGE 50 , AAYAKAR BHAVAN 101, M.K. ROAD, MUMBAI 400 020 .... / RESPONDENT . / PERMANENT ACCOUNT NUMBER AAACG1421A / ASSESSEE BY : MR. VINOD KUMAR BINDAL / REV ENUE BY : MR. R.K. SAHU / DATE OF HEARIN G 0 9 . 0 4 .201 4 / DATE OF ORDER 24.04.2014 GOLDEN TOBACCO LTD. 2 / ORDER , / PER AMIT SHUKLA , J.M. THE PRESENT APPEAL S HA VE BEEN PREFERRED BY THE ASSESSEE CHALLENGING THE IMPUGNED SEPARATE BUT IDENTICAL ORDER OF E VEN DATE 1 9 TH OCTOBER 2012 , PASSED BY THE LEARNED COMMISSIONER (APPEALS) XX I , MUMBAI, FOR THE ASSESSMENT YEAR 1996 97, 1997 98 AND 1998 99 . 2 . THE SOLE COMMON DISPUTE IN ALL THE ASSESSMENT YEARS UNDER APPEALS IS, WHETHER OR NOT THE LEARNED COMMISSIONER (APPE ALS) WAS JUSTIFIED IN CONFIRMING PENALTY UNDER SECTION 271(1)(C) LEVIED BY THE ASSESSING OFFICER F OR ` 1 6,20,139 FOR THE ASSESSMENT YEAR 1997 98 , ` 69,05,858, F OR THE ASSESSMENT YEAR 1996 97 AND ` 2,90,631 FOR THE ASSESSMENT YEAR 1998 99. 3 . SINCE ALL THESE APPEALS PERTAIN TO THE SAME ASSESSEE INVOLVING COMMON ISSUE ARISING OUT OF IDENTICAL SET OF FACTS AND CIRCUMSTANCES, THEREFORE, AS A MATTER OF CONVENIENCE, THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY WAY OF THIS CONSOLIDATED ORDER. W E FIRST TAKE UP ASSESSEES APPEAL IN ITA NO. 549/MUM./2013 , FOR ASSESSMENT YEAR 1996 97 AND 550/MUM./2013 , FOR ASSESSMENT YEAR 1997 08. 4 . AT THE OUTSET, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT MOST OF THE ISSUES ON WHICH THE PENALTY HAS BEEN LEV IED, HAS EITHER BEEN SET ASIDE BY THE TRIBUNAL OR STANDS DELETED IN THE QUANTUM GOLDEN TOBACCO LTD. 3 PROCEEDINGS. INSOFAR AS THE GROUNDS RAISED IN THE ASSESSMENT YEAR 1996 97, HE SUBMITTED THAT THE ADDITIONS ON WHICH PENALTY HAS BEEN LEVIED ARE WITH REGARD TO THE FOLLOWING: FOR THE A.Y. 1996 97 PROVISION FOR DOUBTFUL DEBT / ADVANCE ` 1,39,90,295 PROVISION FOR IRRECOVERABLE ADVANCE ` 5,22,441 PROVISION FOR PROFESSIONAL FEE ` 5,00,000 5 . THE AFORESAID ADDITIONS HAVE BEEN REMANDED BACK TO THE FILE OF THE ASSESSING OFFICER F OR FRESH EXAMINATION. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS ALSO NOT DISPUTED THE SE FACTS. 6 . AFTER CAREFULLY CONSIDERING THE SUBMISSIONS AND ALSO ON A PERUSAL OF THE MATERIAL AVAILABLE ON RECORD, IT IS SEEN THAT THE TRIBUNAL, IN THE QUANTUM PROCEEDING S, VIDE ORDER DATED 30 TH SEPTEMBER 2013, IN ITA NO.132/MUM./2011 AND 195/MUM./2011, HAS SET ASIDE TH ESE ISSUE S TO THE FILE OF THE ASSESSING OFFICER. ACCORDINGLY, THE PENALTY WHICH HAS BEEN LEVIED ARE ALSO SET ASIDE AND THE ASSESSING OFFICER WOULD BE AT LIBER TY TO RE INITIATE OR DECIDE THE LEVY OF PENALTY AFRESH IN ACCORDANCE WITH THE PROVISIONS OF LAW AFTER COMPLETING THE ASSESSMENT. THUS, THE GROUND RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 7 . SIMILARLY, IN THE ASSESSMENT YEAR 1997 98, IT HAS BEEN SUBMITTED BEFORE US THAT THE PENALTY HAS BEEN LEVIED ON THE FOLLOWING ADDITIONS: FOR THE A.Y. 1997 98 PROVISION FOR DOUBTFUL DEBT / ADVANCE ` 33,67,040 PROVISION FOR IRRECOVERABLE ADVANCE ` 2,85,033 PROVISION FOR PROFESSIONAL FEE ` 1,15,692 8 . THE LEARNED COUNSEL SUBMITTED THAT INSOFAR AS THE ADDITION MADE ON ACCOUNT OF PROVISIONS FOR DOUBTFUL DEBT AND PROVISIONS FOR GOLDEN TOBACCO LTD. 4 IRRECOVERABLE ADVANCES, THE SAME HAS BEEN ALLOWED BY THE TRIBUNAL IN THE QUANTUM PROCEEDINGS VIDE ORDER DATED 30 TH SEPTEMBER 2013 IN ITA NO.2402/MUM./2011. THUS, THE PENALTY SHOULD BE DELETED. 9 . INSOFAR AS THE ADDITION ON ACCOUNT OF GUEST HOUSE EXPENSES, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE DISALLOWANCE HAS BEEN MADE IN VIEW OF THE DECISION OF THE HON'BLE SUPREME C OURT IN BRITANNIA INDUSTRIES LTD. V/S CIT [ 2005 ] 278 ITR 546 (SC). HOWEVER, AT THE TIME OF FILING OF THE RETURN OF INCOME, THE DECISION OF THE JURISDICTIONAL HIGH COURT WAS IN FAVOUR OF THE ASSESSEE WHICH WAS THE LAW PREVALENT AT THAT TIME BY VIRTUE OF THE DECISION OF THE JURISDICTIONAL HIGH COURT IN CIT V/S CHASE BRIGHT STEEL, [1989] 177 ITR 124 (BOM.) AND CENTURY SPINNING AND MFG. CO. LTD. V/S CIT, [ 1991 ] 189 ITR 660 ( BOM. ). IN THIS DECISION, THE BOMBAY HIGH COURT HAS HELD THAT THE BUSINESS EXPENDITURE SU CH AS RENT AND REPAIRS FOR THE PREMISES USED AS GUEST HOUSE CANNOT BE DISALLOWED UNDER SECTION 37(III). THUS, THE CLAIM OF THE ASSESSEE SHOULD NOT BE ADVERSELY VIEWED FOR THE PURPOSE OF PENALTY BECAUSE THE DECISION OF THE HON'BLE SUPREME COURT CAME LATER O N I.E., ON 5 TH OCTOBER 2005. THUS, NO PENALTY SHOULD BE LEVIED. 10 . THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE LEARNED COMMISSIONER (APPEALS). 11 . AFTER CAREFULLY CONSIDERING THE RIVAL SUBMISSIONS, WE FIND THAT INSOF AR AS THE LEVY OF PENALTY ON ACCOUNT OF PROVISIONS FOR DOUBTFUL DEBTS AND PROVISIONS FOR IRRECOVERABLE ADVANCE ARE CONCERNED, NO PENALTY CAN BE LEVIED AS THE TRIBUNAL HAS DELETED THE ADDITION IN THE QUANTUM PROCEEDINGS. ACCORDINGLY, THE PENALTY IS DELETED ON THESE TWO ADDITIONS . WITH REGARD TO THE LEVY OF PENALTY ON GUEST HOUSE EXPENSES, WE AGREE WITH THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE GOLDEN TOBACCO LTD. 5 THAT AT THE TIME OF FILING OF THE RETURN OF INCOME, ASSESSEES CLAIM WAS ALLOWABLE IN VIEW OF THE DECIS ION OF THE JURISDICTIONAL HIGH COURT IN CHASE BRIGHT STEEL (SUPRA). IT WAS MUCH LATER THAT THE HON'BLE SUPREME COURT, VIDE JUDGMENT DATED 5 TH OCTOBER 2005, IN BRITANNIA INDUSTRIES LTD. (SUPRA), HAS HELD THAT SUCH EXPENDITURE CANNOT BE ALLOWED. THUS, THE AS SESSEE HAD A BONAFIDE BELIEF WHILE MAKING SUCH A CLAIM AT THE TIME OF FILING OF THE RETURN OF INCOME AND, THEREFORE, NO PENALTY FOR FURNISHING INACCURATE PARTICULARS AND CONCEALMENT OF INCOME CAN BE LEVIED. ACCORDINGLY, THE PENALTY ON THIS SCORE IS DELETED . 12 . 1996 97 19997 98 12. IN THE RESULT, ASSESSEES APPEAL S FOR THE ASSESSMENT YEAR 1996 97 AND 1996 97 ARE ALLOWED. WE NOW TAKE UP ASSESSEES APPEAL IN ITA NO.55 1 /MUM./2013, FOR THE ASSESSMENT YEAR 199 8 99 . 13 . IN THE PRESENT CASE, PENALTY HAS BEEN LEVIED ON THE ADDITION MADE ON ACCOUNT OF PROVISIONS FOR DOUBTFUL DEBT OF ADVANCE OF ` 8,28,620. 14 . IT HAS BEEN ADMITTED BY BOTH THE PARTIES THAT THIS ADDITION STANDS DELETED BY THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.3198/MUM./ 2011, VIDE ORDER DATED 26 TH JUNE 2013. 15 . IN VIEW OF THE AFORESAID FACT THAT THE ADDITION ITSELF HAS BEEN DELETED AND, THEREFORE, THE LEVY OF PENALTY DOES NOT SURVIVE. CONSEQUENTLY, WE SET ASIDE THE IMPUGNED ORDER PA SSED BY THE LEARNED COMMISSIONER (APPEALS) AND DELETE THE PENALTY. GOLDEN TOBACCO LTD. 6 16 . 198 99 1 6 . IN THE RESULT, ASSESSEES APPEAL FOR THE ASSESSMENT YEAR 1998 99 IS ALLOWED. 23 RD APRIL 2014 ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD APRIL 2014 SD / - . . N.K. BILLAIYA ACCOUNTANT MEMBER SD / - AMIT SHUKLA JUDICIAL MEMBER MUMBAI, D ATED : 23 RD APRIL 2014 / COPY OF THE ORDER FORWARDED TO : ( 1 ) / THE ASSESSEE ; ( 2 ) / THE REVENUE; ( 3 ) ( ) / THE CIT(A ) ; ( 4 ) / THE CIT, MUMBAI CITY CONCERNED ; ( 5 ) , , / THE DR, ITAT, MUMBAI ; ( 6 ) / GUARD FILE . / TRUE COPY / BY ORDER . / PRADEEP J. CHOWDHURY / SR. PRIVATE SECRETARY / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI