DIGNITY TRADING CO.PVT.LTD., MUMBAI V. ITO CIRCLE 9(1)(3), MUMBAI

ITA 605/MUM/2011

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2930 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 14-01-2015
• Assessment Year: 1997-1998
• Appeal Filed On: 21-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K SRIVASTAVA
• Assessee Lawyers: Y P TRIVEDI MS VASANTI PATEL
• Keywords: Unexplained cash credit; Question of law
• Section: 143(3); 14A; 260A; 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI N.K . BILLAIYA, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH , JUDICIAL MEMBER / I .T.A. NO . 605/MUM/2011 ( / ASSESSMENT YEAR : 1997 - 98 M/S. DIGNITY TRADING CO. PVT. LTD., SWATI BLDG., NORTH AVENUE ROAD, SANTACRUZ (W), MUMBAI - 400 054 / VS. THE ITO, WARD 9(2)(3), AAYAKAR BHAVAN, MUMBAI - 400 020 ./ ./ PAN/GIR NO. : AAACD 2127J ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI Y.P. TRIVEDI MS. VASANTI PATEL / RESPONDENT BY: SHRI A.K. SRIVASTAVA / DATE OF HEARING : 12 .10. 2015 / DATE OF PRONOUNCEMENT : 21 .10 .2015 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST THE ORDER OF THE LD. CIT(A) - 19 , MUMBAI D ATED 1 5 .1 1 .201 0 PERTAINING TO ASSESSMENT YEAR 1997 - 98. 2. THE GRIEVANCE OF THE ASSESSEE RELATES TO THE LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT UPHOLD BY THE LD. CIT(A). ITA. NO. 605/M/2011 2 2.1. THE ROOTS FOR THE LEVY OF PENALTY LIE IN THE ASSESSMENT ORDER DATED 31.3.2005 MADE U/S. 143( 3) R.W. SECTION 250 OF THE ACT. THE ORIGINAL ASSESSMENT WAS MADE U/S. 143(3) OF THE ACT VIDE ORDER DATED 28.3.2000. 3. AGGRIEVED BY THE ADDITION, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) AND BEING UNSUCCESSFUL BEFORE THE FIRST APPELLATE AUTH ORITY, THE MATTER TRAVELLED UPTO THE TRIBUNAL AND THE TRIBUNAL VIDE ORDER DATED 21.4.2003 IN ITA NO. 4561/M/2001 RESTORED THE ISSUE BACK TO THE FILE OF THE AO FOR FRESH CONSIDERATION. 4. THE UNDISPUTED ADDITION RELATES TO THE ADVANCE RECEIVED BY THE ASS ESSEE AGAINST SHARES AMOUNTING TO RS. 7 CRORES. 4.1. ONCE AGAIN THE SAME AMOUNT WAS ADDED BACK BY THE AO AS UNEXPLAINED CASH CREDIT U/S. 68 OF THE ACT. PENALTY PROCEEDINGS HAVE BEEN INITIATED FOR FURNISHING INACCURATE PARTICULARS. AFTER CONSIDERING TH E DETAILED SUBMISSIONS MADE BY THE ASSESSEE DURING THE COURSE OF THE PENAL PROCEEDINGS, DRAWING SUPPORT FROM THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF DHARMENDRA TEXTILES PROCESSORS AND OTHERS 306 ITR 277, THE AO WAS CONVINCED THAT PENALTY IS LEVIABLE U/S. 271(1)(C) OF THE ACT AND ACCORDINGLY LEVIED PENALTY OF RS. 3.01 CRORES. 5. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) BUT WITHOUT ANY SUCCESS. 6. AGGRIEVED BY WHICH THE ASSESSEE IS BEFORE US. ITA. NO. 605/M/2011 3 7. AT THE VERY OUTSET, THE LD. SENIOR COUNSEL DREW OUR ATTENTION TO THE ORDER OF THE HONBLE HIGH COURT OF BOMBAY IN INCOME - TAX APPEAL NO. 3590 OF 2009 AND POINTED OUT THAT THE HONBLE COURT HAD ADMITTED THE FOLLOWING SUBSTANTIAL QUESTION OF LAW: WHETHER ON THE FACTS AND IN THE CIRCUM STANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN DISREGARDING THE FACT THAT THE AMOUNT OF RS. 700 LACS RECEIVED BY THE APPELLANT WAS ON ACCOUNT OF SHARE APPLICATION MONEY AND THE SAME CANNOT BE TREATED AS UNEXPLAINED CASH CREDIT U/S. 68 OF THE ACT? 7.1. IT IS THE SAY OF THE LD. COUNSEL THAT ONCE A SUBSTANTIAL QUESTION OF LAW IS ADMITTED BY THE HIGH COURT, NO CASE IS MADE OUT FOR IN LEVYING OF PENALTY. THE LD. COUNSEL HEAVILY RELIED UPON THE DECISION OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF NAYAN BUILDERS AND DEVELOPERS IN INCOME TAX APPEAL NO. 415 OF 2012 WHICH WAS FOLLOWED BY THE TRIBUNAL IN THE CASE OF S.B. BILLIMORIA & CO IN ITA NO. 34/M/2012. 8. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY SUBMITTED THAT EITHER THE APPELLATE PROCEEDINGS SHOULD BE KEPT IN ABEYANCE TILL THE OUTCOME OF THE DECISION BY THE HONBLE HIGH COURT IN QUANTUM PROCEEDINGS OR THE APPEAL SHOU LD BE ADJOURNED TILL THE DISPOSAL OF THE APPEAL BY THE HONBLE HIGH COURT. 9. AFTER GOING CAREFULLY THROUGH THE ORDERS OF THE AUTHORITIES BELOW, WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE RIVAL CONTENTIONS. AT THE VERY OUTSET, WE DO NOT FIND ANY FO RCE IN THE CONTENTIONS OF THE LD. DR. IF THE REVENUE AUTHORITIES WERE SO ITA. NO. 605/M/2011 4 CONCERNED WITH THE OUTCOME OF THE QUANTUM ADDITION BY THE DECISION OF THE HONBLE HIGH COURT, THEN THEY SHOULD NOT HAVE PROCEEDED WITH THE PENALTY PROCEEDINGS AT ALL . B E THAT AS IT MAY , T HE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF NAYAN BUILDERS & DEVELOPERS (SUPRA) HAS HELD AS UNDER: WE FIND THAT THIS APPEAL CANNOT BE ENTERTAINED AS IT DOES NOT RAISE ANY SUBSTANTIAL QUESTION OF LAW. THE IMPOSITION OF PENALTY WAS FOUND NO T TO BE JUSTIFIED AND THE APPEAL WAS ALLOWED. AS A PROOF THAT THE PENALTY WAS DEBATABLE AND ARGUABLE ISSUE, THE TRIBUNAL REFERRED TO THE ORDER ON ASSESSEES APPEAL IN QUANTUM PROCEEDIN GS AND THE SUBSTANTIAL QUESTIONS OF LAW WHICH HAVE BEEN FRAMED THEREI N. IN OUR VIEW, THERE WAS NO CASE MADE OUT FOR IMPOSITION OF PENALTY AND THE SAME WAS RIGHTLY SET ASIDE 10. A SIMILAR VIEW WAS TAKEN BY THE HONBLE HIGH COURT OF DELHI IN THE CASE OF LIQUID INVESTMENT AND TRADING CO. IN INCOME - TAX APPEAL NO. 240/2009 . THE FINDINGS OF THE HONBLE HIGH COURT READ AS UNDER: BOTH THE CIT(A) AS WELL AS THE ITAT HAVE SET ASIDE THE PENALTY IMPOSED BY THE AO U/S. 271(1)(C) OF THE I.T. ACT, 1961 ON THE GROUND THAT THE ISSUE OF DEDUCTION U/S. 14A OF THE ACT WAS A DEBATABLE I SSUE. WE MAY ALSO NOTE THAT AGAINST THE QUANTUM ASSESSMENT WHERE UNDER DEDUCTION U/S. 14A OF THE ACT WAS PRESCRIBED TO THE ASSESSEE, THE ASSESSEE HAS PREFERRED AN APPEAL IN THIS COURT U/S. 260A OF THE ACT WHICH HAS ALSO BEEN ADMITTED AND SUBSTANTIAL QUES TION OF LAW FRAMED. THIS ITSELF SHOWS THAT THE ISSUE IS DEBATABLE. FOR THESE REASONS, WE ARE OF THE OPINION THAT NO QUESTION OF LAW ARISES IN THE PRESENT CASE. RESPECTFULLY FOLLOWING THE DECISIONS REFERRED TO HEREINABOVE, IN OUR CONSIDERED OPINION, THIS IS NOT A FIT CASE FOR THE LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT. WE, THEREFORE, SET ASIDE THE ORDER OF THE LD. ITA. NO. 605/M/2011 5 CIT(A) AND DIRECT THE AO TO DELETE THE PENALTY LEVIED U/S. 271(1)(C) OF THE ACT. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST OCTOBER , 2015 SD/ - SD/ - ( AMARJIT SINGH ) (N.K. BILLAIYA) /JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 21 ST OCTOBER , 2015 . . ./ RJ , SR. PS / 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