ITO 8(2)-1, MUMBAI V. HAMISH ENGINEERING INDUSTRIES P. LTD, MUMBAI

ITA 6394/MUM/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4208 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-07-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 03-07-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 30-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJAY
• Assessee Lawyers: K SHIVARAM
• Keywords: Bad and doubtful debts
• Section: 43B; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI . .. . . . . . , ,, , ! '#$ ! '#$ ! '#$ ! '#$ % % % % &'. ' '' '. .. .( (( (. .. . . . . . %) %) %) %), ,, , * '#$ * '#$ * '#$ * '#$ '+ '+ '+ '+ BEFORE SHRI P.M. JAGTAP, AM AND DR. S.T.M. PAVALAN, JM './ I.T.A. NO. 6394/MUM/2010 ( *) - %.- *) - %.- *) - %.- *) - %.- / / / / ASSESSMENT YEAR : 2000-01) './ I.T.A. NO. 7993/MUM/2010 ( *) - %.- *) - %.- *) - %.- *) - %.- / / / / ASSESSMENT YEAR : 1999-2000) './ I.T.A. NO. 7994/MUM/2010 ( *) - %.- *) - %.- *) - %.- *) - %.- / / / / ASSESSMENT YEAR : 2003-04) './ I.T.A. NO. 4153/MUM/2011 ( *) - %.- *) - %.- *) - %.- *) - %.- / / / / ASSESSMENT YEAR : 2000-01) D.C.I.T, CIRCLE-8(2), R.NO.216-A, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 ) ) ) ) / VS. HAMISH ENGINEERING INDUSTRIES (P) LTD. A-2,1 MIDC, STREET NO.3, ANDHERI(EAST) MUMBAI-400093 $/ ! ' ./ PAN : AAACH2609E ( /0 / // / REVENUE ) .. ( 12/0 / RESPONDENT ) REVENUE BY : MR. AJAY 12/0 : ; ' / RESPONDENT BY : SHRI K. SHIVARAM & NEELAM JADHAV ' )% : ! / // / DATE OF HEARING : 03-07-2013 <=. : ! / DATE OF PRONOUNCEMENT : 05-07 -2013 # > / O R D E R PER BENCH : THESE FOUR APPEALS FILED BY THE REVENUE IN THE CASE OF SINGLE ASSESSEE INVOLVE COMMON ISSUES AND THE SAME THEREFORE HAVE B EEN HEARD TOGETHER 2 ITA NO.6394,7993,7994/MUM/2010 & 4153/M/11 M/S HAMISH ENGINEERING INDUSTRIES PVT. LTD.. AND ARE BEING DISPOSED OF BY THIS SINGLE CONSOLIDAT ED ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST WE SHALL TAKE UP THE APPEAL OF THE REVENUE FOR A.Y.1999-2000 BEING ITA NO. 7993/MUM/2010 WHICH IS DIRECTED AGAIN ST THE ORDER OF LD. CIT(A)17, MUMBAI, DATED 13.08.2010 WHEREBY HE CANC ELED THE PENALTY OF RS.6,81,681/- IMPOSED BY THE ASSESSING OFFICER U/S. 271(1)(C) OF THE INCOME-TAX ACT. 3. WE HAVE HEARD THE ARGUMENTS OF BOTH SIDES AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. AS SUBMITTED BY THE L D. COUNSEL FOR THE ASSESSEE, THE ISSUES RELATING TO ADDITIONS MADE TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF DISALLOWANCE OF INTEREST, PU RCHASES ETC. IN RESPECT OF WHICH IMPUGNED PENALTY WAS IMPOSED BY THE AO, WE RE RESTORED BY THE TRIBUNAL TO THE FILE OF THE AO WHILE DISPOSING OF T HE QUANTUM APPEALS BY A COMMON ORDER DATED 22.07.2011 PASSED IN ITA NO. 328 7 & 3288/MUM/2007 AND 1732/MUM/2008 FOR A.Y.1999-2000, 2000-01, 2003-04 FOR AFRESH CONSIDERATION. AS FURTHER SUBMI TTED BY HIM, THE AO HAS ALREADY COMPLETED THE FRESH ASSESSMENT AS PER THE DIRECTION OF THE TRIBUNAL GIVING SUBSTANTIAL RELIEF TO THE ASSESSEE AND HAD ALSO INITIATED AND IMPOSED THE PENALTY U/S. 271(1)(C) AFRESH IN RE SPECT OF WHATEVER ADDITION THAT HAS BEEN SUSTAINED BY HIM. KEEPING I N VIEW THIS FACTUAL POSITION NARRATED BY THE LD. COUNSEL FOR THE ASSESS EE, WHICH HAS NOT BEEN DISTRIBUTED BY THE LD. DR, WE ARE OF THE VIEW THAT THE PENALTY IMPOSED BY THE AO HAS NO LEGS TO STAND AND THE IMPUGNED ORDER OF THE LD. CIT(A) CANCELING THE SAID PENALTY DESERVES TO BE UPHELD. 4. THE APPEAL OF THE REVENUE FOR A.Y.1999-2000 IS A CCORDINGLY DISMISSED. 5. NOW WE SHALL TAKE UP THE APPEAL OF THE REVENUE F OR A.Y.2000-2001 BEING ITA NO. 6394/MUM/2010 WHICH IS DIRECTED AGAIN ST THE ORDER OF THE LD. CIT(A)-17, MUMBAI, DATED 26.05.2010 WHEREBY HE CANCELED THE PENALTY 3 ITA NO.6394,7993,7994/MUM/2010 & 4153/M/11 M/S HAMISH ENGINEERING INDUSTRIES PVT. LTD.. IMPOSED BY THE AO U/S. 271(1)(C) OF THE INCOME TAX ACT IN RESPECT OF ADDITIONS OF RS. 41,19,531/- MADE TO THE TOTAL INCO ME OF THE ASSESSEE. 6. WE HAVE HEARD THE ARGUMENTS OF BOTH SIDES AND AL SO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT T HE PENALTY U/S. 271(1)(C) WAS IMPOSED BY THE AO IN RESPECT OF THE FOLLOWING A DDITIONS MADE TO THE TOTAL INCOME OF THE ASSESSEE:- 1. DISALLOWANCE OF INTEREST OF RS.- 11,75,166/- 2. DISALLOWANCE U/S. 43B OF RS.- 9,96,079/- 3. PRIOR YEAR EXPENSES OF RS.- 28,034/- 4. DISALLOWANCE OF PURCHASES RS.- 6,20,908/- 5. DISALLOWANCE OF ON ACCOUNT OF BAD DEBT RS.- 13,24,0 62/- 7 AS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE, THE ISSUES RELATED TO THREE OF THE ABOVE FIVE ADDITIONS WERE RESTORED BY THE TRIBUNAL TO THE FILE OF THE AO WHILE DISPOSING OF THE QUANTUM APPEAL VID E ITS ORDER DATED 22.07.2011(SUPRA) AND IN THE FRESH ASSESSMENT COMPL ETED AS PER THE ORDER OF THE TRIBUNAL, THE ASSESSING OFFICER HAS ALLOWED SUBSTANTIAL RELIEF TO THE ASSESSEE ON THESE ISSUES. AS FURTHER SUBMITTED BY HIM, THE AO HAS ALREADY INITIATED AND IMPOSED PENALTY U/S 271(1)(C ) AFRESH IN RESPECT OF WHATEVER ADDITIONS HE HAS SUSTAINED ON THESE ISSUES . KEEPING IN VIEW THIS FACTUAL POSITION POINTED OUT BY THE LD. COUNSEL FOR THE ASSESSEE, WHICH HAS NOT BEEN DISTRIBUTED BY THE LD. DR, WE ARE OF THE V IEW THAT THE PENALTY IMPOSED BY THE AO IN RESPECT OF THESE THREE ADDITIO NS MADE ON ACCOUNT OF DISALLOWANCE OF INTEREST, DISALLOWANCE U/S.43B, AND DISALLOWANCE OF PURCHASES HAS NO LEGS TO STAND AND THE IMPUGNED ORD ER OF THE LD. CIT(A) CANCELING THE PENALTY IN RESPECT OF THESE THREE ADD ITIONS DESERVES TO BE UPHELD. 8. AS REGARDS THE ADDITIONS OF RS.13,24,062/- MADE ON ACCOUNT OF DISALLOWANCE OF BAD DEBTS, IT IS OBSERVED THAT THE TRIBUNAL VIDE ITS ORDER DATED 22.07.2011(SUPRA) PASSED IN THE QUANTUM PROCE EDINGS HAS ALREADY 4 ITA NO.6394,7993,7994/MUM/2010 & 4153/M/11 M/S HAMISH ENGINEERING INDUSTRIES PVT. LTD.. ALLOWED A RELIEF OF RS.2,59,520/- TO THE ASSESSEE. AS REGARDS THE BALANCE ADDITION OF RS.10,54,542/-, IT IS OBSERVED THAT ALT HOUGH THE SAME WAS CONFIRMED BY THE TRIBUNAL IN THE QUANTUM PROCEEDING S ON THE GROUND THAT THE ASSESSEE WAS HAVING REGULAR TRANSACTIONS OF SAL E WITH THE SAID PARTY EVEN DURING THE YEAR UNDER CONSIDERATION, THERE IS NO DISPUTE THAT THE AMOUNT IN QUESTION WAS WRITTEN OFF BY THE ASSESSEE AS IRRECOVERABLE IN THE BOOKS OF ACCOUNT. MOREOVER, THE MATERIAL PARTICULA RS RELATING TO ITS CLAIM ON ACCOUNT OF BAD DEBTS WERE FULLY & TRULY FURNISHE D BY THE ASSESSEE AND THERE IS NO ALLEGATION MADE BY THE AO THAT ANY SUCH PARTICULAR FURNISHED BY THE ASSESSEE WERE INACCURATE. KEEPING IN VIEW THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF TRF LTD. VS. CIT (2010) (35 DTR 156) AND THAT OF HONBLE BOMBAY HIGH COURT IN THE C ASE OF RELIANCE PETRO PRODUCTS (P) LTD. 322 ITR 158, WE ARE OF THE VIEW T HAT THE PENALTY IMPOSED BY THE AO U/S. 271(1)(C) IN RESPECT OF DISALLOWANCE OF BAD DEBTS WAS RIGHTLY CANCELED BY THE LD. CIT(A). SIMILARLY, THE CLAIM MADE BY THE ASSESSEE FOR DEDUCTION ON ACCOUNT OF PRIOR PERIOD E XPENSES OF RS. 28,034/-, IN OUR OPINION, IT WAS A BONA-FIDE CLAIM AND THE ASSESSEE HAVING FURNISHED ALL THE MATERIAL PARTICULARS RELATING TO THE SAID C LAIM FULLY & TRULY TO THE LD. CIT(A) WAS JUSTIFIED IN CANCELING THE PENALTY I MPOSED BY THE AO IN RESPECT OF ADDITION MADE BY OF DISALLOWANCE OF PRIO R PERIOD EXPENSES. WE THEREFORE FIND NO INFIRMITY IN THE IMPUGNED ORDER O F THE LD. CIT(A) CANCELING THE PENALTY IMPOSED BY THE AO U/S. 271(1) (C) IN RESPECT OF ADDITIONS OF RS.41,19,531/- MADE TO THE TOTAL INCOM E OF THE ASSESSEE AND UPHOLDING THE SAME, DISMISS THE APPEAL OF THE REVEN UE FOR A.Y. 2000-01. 9. NOW WE SHALL TAKE UP THE APPEAL OF THE REVENUE F OR A.Y.-2003-04 WHICH IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)17 , MUMBAI, DATED 13 TH AUGUST 2010 WHEREBY HE CANCELED THE PENALTY OF RS. 16,56,019/- IMPOSED BY THE AO U/S 271(1)(C). 10. WE HAVE HEARD THE ARGUMENTS OF BOTH SIDES AND P ERUSED THE RELEVANT MATERIAL ON RECORD. AS SUBMITTED BY THE L D. COUNSEL FOR THE 5 ITA NO.6394,7993,7994/MUM/2010 & 4153/M/11 M/S HAMISH ENGINEERING INDUSTRIES PVT. LTD.. ASSESSEE, THE ISSUES RELATING TO ADDITIONS MADE TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF DISALLOWANCE OF PURCHASES AN D COMMISSION IN RESPECT OF WHICH THE AMOUNT PENALTY WAS IMPOSED BY THE AO, WERE RESTORED BY THE TRIBUNAL TO THE FILE OF THE AO VIDE ITS ORDER DATED 22.07.2011 (SUPRA) PASSED IN QUANTUM PROCEEDINGS AN D IN THE FRESH ASSESSMENT MADE BY THE AO AS PER THE SAID ORDER OF THE TRIBUNAL, SUBSTANTIAL RELIEF HAS ALREADY BEEN ALLOWED TO THE ASSESSEE. AS FURTHER SUBMITTED BY HIM, THE AO HAS ALSO INITIATED AND IMP OSED PENALTY U/S.271(1)(C) AFRESH IN RESPECT OF WHATEVER ADDITIO NS SUSTAINED BY HIM IN THE FRESH ASSESSMENT. KEEPING IN VIEW THIS FACTUAL POSITION POINTED OUT BY THE LD. COUNSEL FOR THE ASSESSEE, WHICH HAS NOT BEE N DISTRIBUTED BY THE LD. DR, WE ARE OF THE VIEW THAT THE PENALTY IMPOSED BY THE AO HAS NO LEGS TO STAND AND THE IMPUGNED ORDER OF THE LD. CIT(A) CANC ELING THE SAID PENALTY DESERVES TO BE UPHELD. THE APPEAL OF THE REVENUE FO R A.Y.2003-04 IS ACCORDINGLY DISMISSED. 11. AS REGARDS ANOTHER APPEAL FILED BY THE REVENUE FOR A.Y.2000-01 BEING ITA NO.4153/MUMBAI/2011, IT IS OBSERVED THAT THE SAME IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)17, MUMBAI DATED 31 ST JANUARY 2011 PASSED IN U/S.154 OF THE INCOME-TAX ACT WHEREBY HE RECTIFIED THE AMOUNT OF PENALTY AMOUNT WRONGLY MENTIONED IN HIS APPELLAT E ORDER DATED 26.05.2010. IN THIS REGARD, IT IS OBSERVED THAT PE NALTY EQUAL TO 100% OF THE TAX SOUGHT TO BE EVADED BY THE ASSESSEE WAS HEL D TO BE LEVIABLE BY THE AO VIDE HIS ORDER DATED 31.03.2009 PASSED U/S. 271( 1)(C). HOWEVER, WHILE CALCULATING THE SAID PENALTY, HE WRONGLY TOOK THE A MOUNT OF RS. 41,19,531/-, WHICH WAS THE TOTAL ADDITION MADE BY T HE AO TO INCOME OF THE ASSESSEE IN RESPECT OF WHICH PENALTY WAS IMPOSE D. IN THE DEMAND NOTICE ALSO THE SAID AMOUNT TAKEN WRONGLY WAS MENTI ONED BY THE AO. IN HIS APPELLATE ORDER DATED 26.05.2010, THE AMOUNT OF PENALTY HOWEVER WAS MENTIONED BY THE LD. CIT(A) AS RS. 6,81,681/- WHICH PERHAPS WAS THE AMOUNT OF PENALTY IMPOSED IN THE CASE OF ASSESSEE F OR A.Y.1999-2000. WHEN THE ASSESSEE POINTED OUT THIS MISTAKE IN THE A PPLICATION FILED 6 ITA NO.6394,7993,7994/MUM/2010 & 4153/M/11 M/S HAMISH ENGINEERING INDUSTRIES PVT. LTD.. U/S.154, THE LD. CIT(A) RECTIFIED THE SAID MISTAKE BY SUBSTITUTING THE AMOUNT OF RS. 41,19,531/- AS PENALTY. KEEPING IN VI EW THAT THE SAID FIGURE WAS APPEARING IN THE DEMAND NOTICE ISSUED BY THE AO , WE ARE OF THE VIEW THAT THERE WAS THUS AN INADVERTENT MISTAKE COMMITTE D BY THE LD. CIT(A) IN MENTIONING THE AMOUNT OF PENALTY IN HIS APPELLATE O RDER AND THERE IS NO MISTAKE IN HIS IMPUGNED ORDER PASSED U/S. 154 IN RE CTIFYING THE SAME. WE THEREFORE UPHOLD HIS IMPUGNED ORDER AND DISMISSE D THE APPEAL OF THE REVENUE FOR A.Y. 2000-01 BEING ITA NO. 4153/MUM/201 1. 12. IN THE RESULT, FOUR APPEALS OF THE REVENUE ARE DISMISSED ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH JULY.2013 # > : <=. ! ?#)@ 5 TH JULY.2013 = : SD/- SD/- ( DR. S.T.M. PAVALAN ) ( P.M. JAGTAP ) ! '#$ / JUDICIAL MEMBER * '#$ / ACCOUNTANT MEMBER MUMBAI; ?#) DATED. 05-07-2013 *).'./ S.S.K , PS # > : 1*AB C B. # > : 1*AB C B. # > : 1*AB C B. # > : 1*AB C B./ COPY OF THE ORDER FORWARDED TO : 1. /0 / THE APPELLANT 2. 12/0 / THE RESPONDENT. 3. D ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. D / CIT CONCERNED, MUMBAI 5. B%G 1**) , , / DR, ITAT, MUMBAI E BENCH 6. &- H / GUARD FILE. # >) ' # >) ' # >) ' # >) ' / BY ORDER, '2B 1* //TRUE COPY// I II I/ // /'J 'J 'J 'J (DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI