PRANAB TULSIDAS SHENDE, MUMBAI V. ITO WD 15(3(4), MUMBAI

ITA 6377/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3720 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 14-10-2014
• Court: TRIBUNAL
• Department Lawyers: K MOHANDA S

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI PAWAN SINGH , JM ./ ITA NO. 6377 / MUM/20 1 4 ( / ASSESSMENT YEAR : 20 09 - 20 1 0 ) SHRI PR ANAB TULSIDAS SHENDE, C/O - SHRI PRAKASH JHUNJHUNWALA, CHARTERED ACCOUNTANT, 5, JOLLY BHAWAN NO.2, GR. FLOOR, 7, NEW MARINE LINES, CHURCHGATE, MUMBAI - 20 VS. ITO - WARD - 15(3)(4), MUMBAI ./ ./ PAN/GIR NO. : A ZFPS 6390 H ( / APPELLA NT ) .. ( / RESPONDENT ) /AS SESSEE BY : SHRI PRAKASH JHUNJHUNWALA /REVENUE BY : SHRI K.MOHANDAS / DATE OF HEARING : 01 /0 8 /2016 / DATE OF PRONOUNCEMENT 03 / 0 8 /201 6 / O R D E R PER R.C.SHARMA (A.M) : TH IS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A), MUMBAI, DATED 28 - 8 - 2014, FOR THE ASSESSMENT YEAR 20 09 - 2010 , IN THE MATTER OF IMPOSITION OF PENALTY U/S. 271(1)(C) OF THE I.T.ACT. 2. WE HAVE CONSID ERED RIVAL CONTENTIONS AND FOUND FROM THE RECORD THAT PENALTY HAS BEEN LEVIED WITH RESPECT TO THE ESTIMATED ADDITION OF 5% MADE IN RESPECT OF LIABILITY OF CREDITORS. THE AO MADE ADDITION U/S.41(1) ON SUNDRY CREDITORS OF RS.11,25,964/ - ON THIS ADDITION PENA LTY OF RS.3,82,715/ - WAS LEVIED WHICH WAS CONFIRMED BY CIT(A). 3. IT WAS CONTENDED BY LD. AR THAT SUCH ADDITION HAD BEEN MADE PURELY ON THE BASIS ON ESTIMATION AND ADHOC BASIS. THE LD. AO MADE THE ITA NO. 6377 /1 4 2 ADDITION @5% OF THE OUTSTANDING CREDITORS WITHOUT POINTING A SPECIFIC REMISSION OR CESSATION OF THE LIABILITY. THE ASSESSEE DUE TO POOR FINANCIAL CONDITION IS UNABLE TO FURNISH THE RELEVANT DETAILS SINCE IT HAVE BITTER RELATIONS WITH THE CREDITORS. RELIANCE WAS PLACED ON THE DECISION OF HONBLE RAJASTHAN HIGH COU RT IN THE CASE OF MAHENDRA SINGH KHEDLA, 71 DTR 189, DELHI HIGH COURT IN THE CASE OF NOKIA INDIA PVT. LTD., 343 ITR 434, P&H HIGH COURT IN THE CASE OF RAVAIL SINGH & CO., 254 ITR 191 AND CHATTISHGARH HIGH COURT IN THE CASE OF VIJAY KUMAR JAIN, 325 ITR 378. IN SUPPORT OF THE PROPOSITION THAT ADDITION U/S.41(1) CANNOT BE MADE IF THE LIABILITY IS RECOGNISED IN THE BOOKS OF ACCOUNT, RELIANCE WAS PLACED ON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF BHOGILAL RAMJIBHAI ATARA, 222 TAXMAN 313, DELHI H IGH COURT IN THE CASE OF JAIPUR JEWELLERS (EXPORTS), 77 CCH 599. 4. ON THE OTHER HAND, LD. DR RELIED ON THE ORDER OF LOWER AUTHORITIES. 5. WE HAVE CONSIDERED RIVAL CONTENTIONS AND DELIBERATED ON THE JUDICIAL PRONOUNCEMENTS REFERRED BY LD. AR DURING THE CO URSE OF HEARING BEFORE US. THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF MAHENDRA SINGH KHEDLA (SUPRA), HELD THAT NO PENALTY IS IMPOSABLE WITH RESPECT TO ADDITION MADE ON ESTIMATED BASIS. THE HIGH COURT OBSERVED THAT BASIS FOR LEVY OF PENALTY WAS ONLY ES TIMATION WHICH IS PURELY QUESTION OF FACT. SIMILAR VIEW HAS BEEN TAKEN BY DELHI HIGH COURT IN THE CASE OF NOKIA INDIA PVT. LTD.(SUPRA) , WHEREIN IT WAS HELD THAT ADDITION MADE ON ESTIMATED BASIS WITHOUT FINDING CLAIM OF ASSESSEE TO BE FALSE, NO PENALTY WAS LEVIABLE. IN THE INSTANT CASE ALSO, THE AO HAS LEVIED PENALTY WITH ITA NO. 6377 /1 4 3 RESPECT TO ESTIMATED ADDITION MADE ON ACCOUNT OF SUNDRY CREDITORS U/S.41(1) WHICH HAS BEEN PAID IN SUBSEQUENT YEARS, THE AO WAS NOT JUSTIFIED IN LEVYING PENALTY FOR SUCH ESTIMATED ADDITION. 6 . IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED O RDER PRONOUNCED IN THE OPEN COURT ON THIS 03/08 / 201 6 . SD/ - ( PAWAN SINGH ) SD/ - ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 03/08 /201 6 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORD ER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE R ESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//