TOSHNIWAL INDUSTREIS P. LTD, MUMBAI V. ACIT 1(3), MUMBAI

ITA 555/MUM/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1865 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 9 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2016
• Appeal Filed By: Assessee
• Bench Allotted: E
• Next Hearing Date: 30-09-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 21-01-2013
• Court: TRIBUNAL
• Department Lawyers: AKHILENDRA YADAV
• Keywords: Principle of natural justice; Bonafide belief
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI C.N. PRASAD, JUDICIAL MEMBER I.T.A. NO.555/M/2013 (ASSESSMENT YEAR: 2006 - 2007) TOSHNIWAL INDUSTRIES P LTD., 8 MOHATTA BHAVAN OFF, DR. E. MOSES ROAD, WORLI, MUMBAI - 18. / VS. ACIT - 1(3), MUMBAI - 20. ./ PAN : AAACT1582B ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI MIHIR NANIWADEKAR / RESPONDENT BY : SHRI AKHILENDRA YADAV, DR / DATE OF HEARING : 07.11.2016 / DATE OF PRONOUNCEMENT : 18 .11.2016 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 21.1.2013 IS AGAIN ST THE ORDER OF THE CIT (A) - 7, MUMBAI DATED 12.10.2012 FOR THE ASSESSMENT YEAR 2006 - 07. IN THIS APPEAL ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD C IT (A) ERRED IN SUSTAINING PENALTY OF RS. 1,59,795/ - LEVIED U/S 271(1)(C), WITHOUT APPRECIATING THAT MERE MAKING OF A CLAIM WHICH WAS DISALLOWED DOES NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS OR TO CONCEALMENT OF INCOME. THE LD CIT (A) FAILED TO APP RECIATE THAT ALL THE PRIMARY FACTS WERE DISCLOSED BY THE APPELLANT AND THERE WAS NO CONCEALMENT AT ALL IN LAW MERELY BECAUSE THE CLAIM WAS INCORRECTLY MADE. 2. THE ORDER OF THE CIT (A) IS AGAINST THE WEIGHT OF EVIDENCE, EQUITY AND NATURAL JUSTICE. 2. THE ONLY ISSUES RAISED IN THE ABOVE GROUNDS RELATES TO THE LEVY OF PENALTY OF RS. 1,59,795/ - U/S 271(1)(C) OF THE ACT. ON APPEAL, CIT (A) CONFIRMED THE SAID PENALTY. 3. BEFORE US, LD COUNSEL FOR THE ASSESSEE BRIEFLY SUBMITTED THAT THE ASSESSEE IS A PRIVATE L IMITED COMPANY ENGAGED IN THE MANUFACTURING OF SCIENTIFIC, INDUSTRIAL PROCESS AND TEMPERATURE MEASUREMENT / CONTROL INSTRUMENTS. IN THE RETURN OF INCOME FOR YEAR UNDER CONSIDERATION, ASSESSEE CLAIMED DEDUCTION U/S 35(2AB) OF THE ACT. 2 HOWEVER, DURING THE ASSESSMENT PROCEEDINGS, AO NOTICED THAT THE ASSESSEE COULD NOT FOLLOW THE PROPER PROCEDURE IN ENCLOSING THE COPY OF THE AGREEMENT BETWEEN THE ASSESSEE AND THE PRESCRIBED AUTHORITY, WHICH IS THE REQUIREMENT OF THE LAW U/S 35(2AB) OF THE ACT. HOWEVER, THERE IS NO DISPUTE ABOUT THE ASSESSEE BEING RECOGNISED BY THE DEPARTMENT OF SCIENTIFIC AND INDUSTRIAL RESEARCH (DSIR), GOVERNMENT OF INDIA, AS A RESEARCH AND DEVELOPMENT UNIT. CONSIDERING THE SAID PROCEDURE AND THE LAPSES, ASSESSEE OFFERED TO WITHDRAW THE SAI D DEDUCTION. ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT AFTER DISALLOWING THE SAID CLAIM. IN THIS REGARD, THE PENALTY U/S 271(1)(C) WAS LEVIED, IN TURN WHICH WAS CONFIRMED BY THE CIT (A), AND THE SAME IS THE SUBJECT MATTER OF THE DISPUTE BEFORE THE T RIBUNAL. 4. DURING THE PROCEEDINGS BEFORE US, LD COUNSEL FOR THE ASSESSEE PLEADED THAT THE SAID PENALTY WAS CLAIMED BY THE ASSESSEE UNDER BONAFIDE BELIEF AND THE MISTAKE, IF ANY, WHICH IS UNINTENTIONAL. THERE IS NO DISPUTE ABOUT THE ASSESSEE GETTING DUE R ECOGNITION BY THE DISR, GOVERNMENT OF INDIA AND HOWEVER, THE REQUIRED AGREEMENT WAS NOT ENTERED INTO. ON REALISING THE SAME, THE CLAIM OF WEIGHTED DEDUCTION U/S 35(2AB) IS WITHDRAWN. AS PER THE LD COUNSEL FOR THE ASSESSEE, THIS IS A CASE OF BONAFIDE MIST AKE AND THE PENALTY CANNOT BE CONFIRMED. LD COUNSEL FOR THE ASSESSEE NARRATED THE ABOVE FACTS AND PRAYED FOR REVERSAL OF THE ORDER OF THE CIT (A). 5. ON HEARING BOTH THE PARTIES, WE FIND THAT THE ARGUMENTS OF THE LD COUNSEL FOR THE ASSESSEE ARE SUSTAINABL E. IT IS AN ADMITTED FACT THAT THE ASSESSEE IS OTHERWISE ELIGIBLE FOR DEDUCTION; BUT FOR THE PROCEDURAL IRREGULARITIES, IF ANY. CONSIDERING THE SAME, WE ARE OF THE OPINION, IT IS NOT A FIT CASE FOR LEVY OF PENALTY. WE ORDER ACCORDINGLY. THUS, THE GROUN DS RAISED BY THE ASSESSEE ARE ALLOWED. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH NOVEMBER, 2016. SD/ - SD/ - ( C.N. PRASAD ) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 18.11 .2016 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 3 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI