THOMAS COOK (INDIA) LIMITED, MUMBAI V. ADDL. CIT 1(3), MUMBAI

ITA 5909/MUM/2016

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0283 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 05-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AWUNGHI GIMSON
• Keywords: Sale consideration of property below Jantri Value; Depreciation; Principle of natural justice; Set aside
• Section: 271(1)(c); 143(3); 274; 73

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C, MUMBAI BEFORE SHRI A.D. JAIN, VICE PRESIDENT AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NOS.5909 & 5910/M/2016 ASSESSMENT YEARS: 2007-08 & 2008-09 M/S. THOMAS COOK (INDIA) LTD., THOMAS COOK BUILDING, DR. D.N. ROAD, FORT, MUMBAI 400 001 PAN: AAACT4050C VS. ADDL. CIT 1(3), MUMBAI (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : SHRI MADHUR AGGARWAL, A.R. REVENUE BY : SHRI AWUNGHI GIMSON, D.R. DATE OF HEARING : 25.09.2019 DATE OF PRONOUNCEMENT : 17.12.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 27.07.2016 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2008-09. ITA NO.5909/M/2016 2. THE GROUNDS RAISED BY THE ASSESSEE IN ITA NO.5909/M/2016 A.Y. 2007-08 ARE AS UNDER: 1.1 ON THE FACTS AND CIRCUMSTANCES OF THE CA SE , THE COMMISSIONER OF INCOME TAX (APPEALS) -3, MUMBAI, (HEREINAFTER REFERRED TO AS THE 'CIT(A)-3)') ERRED IN LEVYING PENALTY UNDER SECTION 271(1)(C)OF THE ACT, AGGREGATING TO RS. 5,01,93,601/-. 1.2 THE APPELLANT PRAYS THAT THE RESPONDENT BE DIRECTED TO DELETE THE PENALTY LEVIED OF RS.5,01,93,601/- ITA NOS.5909 & 5910/M/2016 M/S. THOMAS COOK (INDIA) LTD. 2 THE ASSESSEE HAS ALSO RAISED ADDITIONAL GROUNDS WHI CH ARE REPRODUCED BELOW: 1 : 0 RE.: LEVY OF PENALTY U/S. 271(1)(C): 1 : 1 THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN UPHOLDING THE PENALTY LEVIED BY THE ASSESSING OFFICER U/S. 271(L)(C) OF T HE INCOME-TAX ACT, 1961 ON THE APPELLANT. 1 : 2 THE APPELLANT SUBMITS THAT CONSIDERING THE FA CTS AND CIRCUMSTANCES OF ITS CASE AND THE LAW PREVAILING ON THE SUBJECT, IT HAS NEITH ER CONCEALED ANY INCOME NOR FURNISHED INACCURATE PARTICULARS OF INCOME. HENCE N O PENALTY WHATSOEVER CAN BE LEVIED ON IT U/S.271(L)(C) OF THE INCOME-TAX ACT, 1 961 AND THE COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE HELD AS SUCH. 1 : 3 THE APPELLANT SUBMITS THAT THE IMPUGNED ORDER LEVYING PENALTY U/S.271(L)(C) OF THE INCOME-TAX ACT, 1961 BE STRUCK DOWN. 2:0 RE : GENERAL: 2 : 1 THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AME ND, SUBSTITUTE AND/OR MODIFY IN ANY MANNER WHATSOEVER ALL OR ANY OF THE FOREGOING G ROUNDS OF APPEAL AT OR BEFORE THE HEARING OF THE APPEAL. 3. THE ONLY ISSUE RAISED BY THE ASSESSEE IS WITH RE SPECT TO ERRONEOUS CONFIRMATION OF LEVY OF PENALTY BY LD. CI T(A) AS IMPOSED BY THE AO UNDER SECTION 271(1)(C) OF THE AC T OF RS.5,01,93,601/-. 4. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FILED T HE RETURN OF INCOME ON 30.10.2007 DECLARING AN INCOME OF RS.24,5 3,92,971/- WHICH WAS REVISED TO RS.24,20,16,971/- ON 26.03.200 9. THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS COMP LETED ON 10.02.2011 ASSESSING THE INCOME OF RS.39,50,69,028/ - BY MAKING THREE DISALLOWANCES NAMELY DEPRECIATION OF VACANT PROPERTY OF RS.2,07,435/-, DISALLOWANCE OF NON COMP ETE FEE OF RS.14,70,00,000/- AND DISALLOWANCE OF WEB DEVELOPM ENT CHARGES OF RS.19,12,000/-. THE PENALTY PROCEEDINGS WERE INITIATED IN THE ASSESSMENT ORDER BY ISSUING NOTIC E DATED 10.02.2011 UNDER SECTION 271 READ WITH SECTION 274 OF THE ACT. FINALLY, THE PENALTY WAS LEVIED OF RS.5,01,93,601/- EQUAL TO 100% OF THE TAX SOUGHT TO BE EVADED. ACCORDING TO THE AO, THE ITA NOS.5909 & 5910/M/2016 M/S. THOMAS COOK (INDIA) LTD. 3 ASSESSEE HAS CONCEALED A PARTICULAR OF INCOME AMOUN TING TO RS.14,91,19,435/-. IN THE ASSESSMENT ORDER THE AO HAS NOT RECORDED HIS SATISFACTION WHETHER THE PENALTY IS BE ING INITIATED FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FIL ING INACCURATE PARTICULARS OF INCOME. SIMILARLY, IN THE NOTICE IS SUED DATED 10.02.2011 THE AO HAS NOT SPECIFIED ONE OF THE TWO LIMBS ON WHICH THE PENALTY WAS PROPOSED TO BE LEVIED. 5. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) DIS MISSED THE APPEAL OF THE ASSESSEE AFTER TAKING INTO CONSIDERAT ION THE SUBMISSIONS OF THE ASSESSEE ON LEGAL ISSUE AS WELL AS ON MERIT AND HENCE THE ASSESSEE IS IN APPEAL BEFORE US. THE LD. A.R. VEHEMENTLY SUBMITTED BEFORE US THAT THE PENALTY HAS BEEN INITIATED BY THE AO WITHOUT APPLICATION OF MIND AS IS CLEAR FROM THE ASSESSMENT ORDER DATED 10.02.2011 PASSED UNDER SECTION 143(3) OF THE ACT WHERE THE AO HAS SIMPLY MENTIONED THAT PENALTY INITIATED UNDER SECTION 271(1)(C) OF THE AC T WITHOUT MENTIONING WHETHER I.E. FOR THE CONCEALMENT OF PART ICULARS OF INCOME OR FOR FILING INACCURATE PARTICULARS OF INCO ME. SIMILARLY, THE NOTICE DATED 10.02.2011 HAS BEEN ISSUED IN A ME CHANICAL MANNER WITHOUT APPLICATION OF MIND AS IS CLEAR FROM THE FACT THAT ONE OF THE TWO LIMBS ON WHICH THE PENALTY WAS PROPO SED TO BE LEVIED WAS NOT INDICATED IN THE NOTICE. IN OTHER W ORDS, THE LD. A.R. SUBMITTED THAT THE NOTICE HAS BEEN ISSUED IN A STANDARD FORMAT THEREBY DEPRIVING THE ASSESSEE OF ITS RIGHT TO RESPOND ON THE CHARGE ON WHICH THE PENALTY WAS BEING PROPOSED TO BE LEVIED. THE LD. A.R. THEREFORE PRAYED THAT THE SAI D DEFECTS IS INCURABLE AND GOES TO THE ROOT OF THE MATTER AND TH EREFORE THE PENALTY ORDER CAN NOT BE SUSTAINED. THE LD. A.R. R ELIED ON THE FOLLOWING DECISION IN SUPPORT OF HIS ARGUMENTS. ITA NOS.5909 & 5910/M/2016 M/S. THOMAS COOK (INDIA) LTD. 4 A)CIT VS SSAS EMERALD MEADOWS(SC) (2016) 73 TAXMANN.COM 241 KARNATAKA SLP DISMISSED AS REPORT ED IN (2016) 73 TAXMANN.COM 248 (SC) B) CIT VS. MANJUNATH COTTON AND GINNING FACTORY (20 13) 359 ITR 565 (KAR.) C) CIT VS. SHRI SAMSON PERINCHERY (2017) 392 ITR 4 (BOM.) D) CIT VS. MRS. PIEDADE PERINCHERY ITXA NO.1310 OF 2014 ORDER DATED 10.01.2017 (BOM. HC) 6. THE LD. DR ON THE OTHER HAND RELIED ON THE ORDER S OF AUTHORITIES BELOW. 7. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT IN THIS CASE THE AO WHILE P ASSING THE ORDER HAS NOT INDICATED OR RECORDED HIS SATISFACTIO N IN THE ASSESSMENT ORDER WHETHER THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME OR FILED INACCURATE PARTICULA RS OF INCOME. THE AO SIMPLY STATED THE INITIATION OF PENALTY UNDE R SECTION 271(1)(C) OF THE ACT IN THE ASSESSMENT FRAMED. BESI DES PERUSAL OF NOTICE ISSUED UNDER SECTION 271 READ WITH SECTIO N 274 OF THE ACT DATED 10.02.2011 REVEALS THAT THERE WAS NO APPL ICATION OF MIND ON THE PART OF AO WHILE ISSUING THE PENALTY NO TICE AS THE SAME HAS BEEN ISSUED IN A STANDARD FORMAT BY SPECIF YING BOTH THE CHARGES THEREBY DEPRIVING THE ASSESSEE TO RESPO ND TO THE CHARGE ON WHICH THE PENALTY WAS PROPOSED TO BE LEVI ED. IN OUR OPINION, THE ASSESSEE IS DEPRIVED TO RESPOND TO THE CHARGE ON WHICH THE PENALTY WAS PROPOSED TO BE LEVIED THEREBY CAUSING VIOLATION OF PRINCIPLE OF NATURAL JUSTICE. UNDER T HESE CIRCUMSTANCES, WE ARE NOT IN A POSITION TO SUSTAIN THE ORDER PASSED BY THE LOWER AUTHORITIES. THE CASE OF THE A SSESSEE IS SUPPORTED BY THE DECISIONS OF THE JURISDICTIONAL HI GH COURT IN THE CASE OF CIT VS. SHRI SAMSON PERINCHERY AND CI T VS. MRS. ITA NOS.5909 & 5910/M/2016 M/S. THOMAS COOK (INDIA) LTD. 5 PIEDADE PERINCHERY (SUPRA) WHEREIN THE HONBLE COUR T HAS HELD THAT WHERE THE NOTICE U/S 271 R.W.S.274 OF THE ACT IS ISSUED IN STANDARDIZED FORMAT WITHOUT SPECIFYING THE CHARGE O N WHICH THE PENALTY IS TO BE LEVIED, THE PENALTY IMPOSED CAN NO T BE SUSTAINED.V AFTER CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF THE DECISIONS AS DISCUSSED HEREINABOVE, WE ARE I NCLINED TO SET ASIDE THE ORDER OF LD. CIT(A) AND DIRECT THE AO TO DELETE THE PENALTY. ACCORDINGLY, THE APPEAL OF THE ASSESSEE I S ALLOWED. ITA NO.5910/M/2016 8. THE ISSUE INVOLVED IN THE PRESENT APPEAL IS IDEN TICAL TO THE ONE AS STATED ABOVE IN ITA NO.5909/M/2016 A.Y. 2007 -08. THEREFORE, OUR FINDING IN ITA NO.5909/M/2016 A.Y. 2 007-08, WOULD, MUTATIS MUTANDIS, APPLY TO THIS APPEAL AS WE LL. ACCORDINGLY THE APPEAL OF THE ASSESSEE IS ALLOWED. 9. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17.12.2019. SD/- SD/- (A.D. JAIN) (RAJESH KUMAR) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI, DATED: 17.12.2019. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI