THE ACIT CIR 21(2), MUMBAI V. MRS. SHRADDHA S. KARALKAR,

ITA 5827/MUM/2007

• Counselvise Citation: 582719914 RSA 2007
• Duration Of Justice: 3 year(s) 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 14-03-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 10-09-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANDEEP DAHIYA
• Assessee Lawyers: RAHUL LATHI
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J BEFORE SHRI D. MANMOHAN (VP) & SHRI R.K. PANDA (AM) I.T.A.NO. 5827/MUM/2007 (ASSESSMENT YEAR : 2002-03 ) ACIT, CIRCLE 21(2) 5 TH FLOOR, C-10 BANDRA KURLA COMPLEX BANDRA, MUMBAI-400051. VS. MRS. SHRADDHA S. KARALKAR 1, MEGHDOOT, P.M. ROAD VILE PARLE (EAST) MUMBAI-400 057. APPELLANT RESPONDENT PAN/GIR NO. : AAKPK3562E ASSESSEE BY : SHRI RAHUL LATHI DEPARTMENT BY : SHRI SANDEEP DAHIYA ORDER PER D. MANMOHAN VP :- THIS APPEAL IS FILED AT THE INSTANCE OF THE REVENU E AND IT PERTAINS TO A.Y. 2002-03. 2. PENALTY OF ` 6,97,499/- LEVIED BY THE ASSESSING OFFICER BUT CANCELLED BY LEARNED CIT(A), IS THE SUBJECT MATTER OF DISPUTE BEFORE US. FOLLOWING GROUNDS WERE URGED BY THE REVENUE. 1(I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED CIT(A) ERRED IN DELETING THE PENALTY OF ` 6,97,499/- LEVIED U/S. 271(1)(C) OF THE I.T. ACT, 1961 ON THE ENTIRE QUANTUM OF ADDITION MADE. (II) THE CIT(A) ERRED IN ALLOWING THE APPEAL AFTER THE E XPIRY OF STATUTORY TIME LIMIT FOR FILING OF APPEAL. (III) THE CIT(A) FAILED TO APPRECIATE THAT THE DEPARTMENT HAS FILED SECOND APPEAL AGAINST THE QUANTUM INVOLVED. 2. THE APPELLANT PRAYS THAT THE ORDER OF LEARNED CI T(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSIN G OFFICER RESTORED. 3. FACTS NECESSARY FOR THE DISPOSAL OF THE APPEAL A RE STATED IN BRIEF. ASSESSEE WAS A CABLE OPERATOR. DURING THE YEAR UNDE R CONSIDERATION, MRS. SHRADDHA S. KARALKAR 2 ASSESSEE HAS SHOWN INCOME FROM BUSINESS AND CAPITAL GAIN. AN AMOUNT OF ` 24,50,000/- WAS SHOWN AS NON-COMPETE FEES IN THE C APITAL GAIN ACCOUNT AND IT WAS NOT OFFERED FOR TAX. HOWEVER, CA PITAL GAIN WAS SHOWN ON SALE OF ASSETS AND GOOD WILL. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS SUBMITTED THAT HE WAS RUNNING TH E CABLE BUSINESS WITH 800 CONNECTIONS/CUSTOMERS. THE SAME WAS DISCO NTINUED DURING THE PREVIOUS YEAR AND IT WAS TRANSFERRED TO M/S. HA THWAY CABLE & DATACOME PVT. LIMITED. IN RETURN THE ASSESSEE RECEI VED AN AMOUNT OF ` 49,00,000/- TOWARDS (A) NON-COMPETE FEES (B) GOODWI LL & (C) SALE OF BUSINESS ASSETS. CASE OF THE ASSESSEE IS THAT AN AM OUNT OF ` 24,50,000/- RECEIVED TOWARDS NON-COMPETE FEE IS NOT ATTRACTED T O TAX. THE ASSESSING OFFICER HAS NOT ACCEPTED THE CONTENTION OF THE ASSE SSEE. 4. SIMILARLY IT WAS CONTENDED THAT EXCESS RECEIVED OVER THE VALUE OF ASSETS TRANSFERRED WAS OFFERED TO TAX AND THERE WAS NO INFIRMITY WITH THE SAME. HOWEVER, ASSESSING OFFICER WAS OF THE OPINION THAT THE CORRECT VALUE OF THE BUSINESS ASSETS WAS NOT TAKEN INTO CON SIDERATION. AS PER THE ASSESSING OFFICER, UPON DEDUCTION OF WDV FROM SALE VALUE OF ` 11,20,000/-, THE INCOME WOULD BE ` 9,88,675/- INSTEAD OF ` 8,67,965/- . AN ADDITION OF ` 1,20,710/- WAS ACCORDINGLY MADE TO THE INCOME RETURNED. FURTHER, AS REGARDS SUBSCRIPTION AMOUNT RECEIVABLE BY THE ASSESSEE, AN AMOUNT OF ` 5,99,667/- WAS ADDED AS UNDISCLOSED RECEIPTS. CONSEQUENTLY PENALTY WAS LEVIED U/S. 271(1)(C) OF T HE ACT. 5. ON AN APPEAL FILED BY THE ASSESSEE, LEARNED CIT( A) CANCELLED THE PENALTY ON THE GROUND THAT THE ASSESSEE HAS DISCLOS ED ALL THE PARTICULARS OF INCOME AND IT IS NOT A CASE OF CONCEALMENT OF IN COME, IN THE CIRCUMSTANCES OF THE CASE. A DETAILED ORDER WAS PAS SED BY LEARNED CIT(A) ON EACH ASPECT OF ADDITION MADE BY THE ASSESSING OF FICER. 6. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 7. AT THE TIME OF HEARING LEARNED COUNSEL APPEARING ON BEHALF OF THE ASSESSEE FILED A COPY OF THE ORDER OF THE ITAT H BENCH MUMBAI, IN THE QUANTUM PROCEEDINGS (ITA NO. 4110/MUM/2006 DATED 31 .3.2010), TO SUBMIT THAT THE APPELLATE TRIBUNAL ACCEPTED THE CON TENTION OF THE MRS. SHRADDHA S. KARALKAR 3 ASSESSEE THAT NON-COMPETE FEES IS NOT TAXABLE AND A LSO DELETED THE ADDITION REFERABLE TO THE ESTIMATED BUSINESS RECEIP TS. AS REGARDS ADDITION OF ` 1,20,710/-, THE TRIBUNAL RESTORED THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR VERIFICATION OF RECORD. IT MA Y BE NOTICED THAT THE ASSESSEE HAS FURNISHED DETAILS BEFORE LEARNED CIT(A ) IN THE QUANTUM PROCEEDINGS BUT THE SAME WAS NOT TAKEN ON RECORD. T HE PLEA OF THE ASSESSEE WAS THAT THE ALLEGED DIFFERENCE WAS ON ACC OUNT OF ADDITION TO FIXED ASSET TO THE TUNE OF ` 1,20,710/- WHICH WAS NOT TAKEN INTO CONSIDERATION BY THE ASSESSING OFFICER. 8. LEARNED DR STRONGLY RELIED UPON THE ORDER PASSED BY THE ASSESSING OFFICER WHEREAS LEARNED COUNSEL APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ORDER OF LEARNED CIT(A) IS FURTHER STRENGTHENED BY THE ORDER OF THE ITAT IN THE QUANTU M PROCEEDINGS AND HENCE IT IS NOT A FIT CASE FOR LEVY OF PENALTY. 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE RECORD. HAVING REGARD TO THE CIRCUMSTANCES OF T HE CASE, AS DISCUSSED IN DETAIL BY LEARNED CIT(A), AND ALSO IN THE LIGHT OF THE DECISION OF ITAT IN THE QUANTUM PROCEEDINGS, WE DO NOT FIND ANY INFIRMI TY IN THE ORDER OF LEARNED CIT(A) AND HENCE WE DISMISS THE APPEAL FILE D BY THE REVENUE. PRONOUNCED ACCORDINGLY ON 29 TH DAY OF APRIL, 2011. SD/- (R.K.PANDA) ACCOUNTANT MEMBER SD/- (D. MANMOHAN) VICE-PRESIDENT DATED : 29 TH APRIL, 2011. COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)-CONCERNED. 4. THE CIT, CONCERNED. 5. THE DR CONCERNED, MUMBAI 6. GUARD FILE BY ORDER TRUE COPY ASSTT. REGISTRAR, ITAT, MUMBAI PS