DCIT 8(3), MUMBAI V. S.M. DYECHEM LTD, MUMBAI

ITA 6625/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8590 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2006-2007
• Appeal Filed On: 31-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BEENA SANTOSH
• Assessee Lawyers: S A KANJI
• Keywords: Revised return
• Section: 143(3)

Judgement Text

, B BB B INCOME TAX APPELLATE TRIBUNAL,MUMBAI - E BENCH , IOU IOUIOU IOU , BEFORE S/SH. RAJENDRA, ACCOUNTANT MEMBER & PAWAN SINGH, JUDICIAL MEMBER /.ITA NO.6625/MUM/2014, /ASSESSMENT YEAR-2006-07 DCIT-8(3), ROOM NO. 217, AAYAKAR BHAVAN, M.K. MARG, MUMBAI-400020. VS. M/S S.M. DYECHEM LTD., 136, GREAT WESTERN BUILDING, NAGINDAS MASTER ROAD, EXTN. FORT, MUMBAI-400001 PAN: AAACS7371K ( / APPELLANT) ( / RESPONDENT) / REVENUE BY : MS. BEENA SANTOSH (DR) ! ! / ASSESSEE BY : SHRI S. A. KANJI (AR) ' ! / DATE OF HEARING : 12 -01-2017 ! '( / DATE OF PRONOUNCEMENT : 08. 02-2017 , 1961 ' 254(1) #!$! ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER PAWAN SINGH, J.M. IOU IOUIOU IOU : 1. THIS APPEAL BY REVENUE UNDER SECTION 253 OF THE INC OME TAX ACT (ACT) IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME-TAX (AP PEALS)-18, MUMBAI DATED 27.08.2014 FOR ASSESSMENT YEAR(AY) 2006-07. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE FILED RETURN OF INCOME FOR RELEVANT AY ON 30.11.2006 DECLARING TOTAL INCOME OF RS. NIL. FURTH ER REVISED RETURN WAS FILED ON 23.02.2007 DECLARING TOTAL INCOME OF RS. NIL. THE A SSESSMENT ORDER U/S 143(3) WAS PASSED ON 11.12.2008 ASSESSING THE INCOME AT NIL. T HE ASSESSING OFFICER (AO) MADE THE DISALLOWANCE ON ACCOUNT OF DEBIT BALANCE WRITTE N OFF OF RS. 2,27,88,192/- AND UN- RECONCILED INCOME OF RS. 51,126/-,. ON APPEAL BEFOR E CIT(A) THE DISALLOWANCE OF RS. 54,67,146/- WAS SUSTAINED. AFTER ORDER OF LD. C IT(A), THE AO ISSUED NOTICE U/S 274 RWS 271(1)(C) DATED 11.12.2008. NO RESPONSE WAS MADE BY ASSESSEE. THE AO AGAIN ISSUED NOTICE DATED 06.03.2013. THE AO RECORD ED THAT NO RESPONSE WAS MADE BY ASSESSEE. THUS, THE AO LEVIED THE PENALTY @ 100% ON THE TAX SOUGHT TO BE EVADED AND WORKS OUT THE PENALTY OF RS. 18,40,241/- IN ITS ORDER DATED 21.03.2013. AGGRIEVED, BY THE PENALTY ORDER, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A) WHEREIN THE ENTIRE PENALTY WAS DELETED. THUS, BEING AGGRIEVED BY THE ORDER OF LD. CIT(A), THE REVENUE HAS FILED THIS APPEAL BEFORE US . 2 ITA NO. 6625/M/2015 M/S S.M. DYECHEM LTD. 3. WE HAVE HEARD LD. DR FOR REVENUE AND LD. AR FOR THE ASSESSEE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. DR FOR THE RE VENUE SUPPORTED THE ORDER OF AO AND WOULD ARGUE THAT THE PENALTY WAS LEVIED BY AO O NLY ON THE DISALLOWANCE WHICH WAS CONFIRMED BY LD. CIT(A). THE ASSESSEE DESPITE S ERVICE OF NOTICE HAS NOT GIVEN ANY EXPLANATION BEFORE THE AO. THE AO LEVIED THE MI NIMUM PENALTY ON THE DISALLOWANCE SUSTAINED BY LD. CIT(A). ON THE OTHER HAND, LD. AR OF THE ASSESSEE SUPPORTED THE ORDER OF LD. CIT(A) AND ARGUED THAT O UT OF THE TOTAL WRITE OFF OF DEBIT BALANCE, ONLY A SUM OF RS. 54,67,146/- WAS SUSTAINE D. IT WAS FURTHER ARGUED THAT IT IS SETTLED LAW THAT IN ALL CASES WHERE DISALLOWANCE IS MADE PENALTY IS NOT FOLLOWED AUTOMATICALLY. 4. WE HAVE CONSIDERED THE RIVAL CONTENTION OF THE PART IES AND FURTHER GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE AO LEVIED THE PENA LTY HOLDING THAT ON APPEAL BEFORE LD CIT(A) THE DISALLOWANCE WAS RESTRICTED TO RS. 54 ,67,146/-. THE AO FURTHER CONCLUDED THAT ON SHOW CAUSE NOTICE FOR INITIATION OF PENALTY, NO EXPLANATION WAS FURNISHED BY ASSESSEE. DURING FIRST APPELLATE PROCE EDING, IT WAS SUBMITTED DURING THE ASSESSMENT PROCEEDINGS THE BANKERS OF THE ASSESSES TOOK THE POSSESSION OF THE UNDER SARFESAI ACT. THE BANKERS OF ASSESSEE RECOMMENDED T HE WINDING UP OF ASSESSEE IN BIFR AND IN THOSE CIRCUMSTANCES; THE ASSESSEE CO ULD NOT ATTAIN THE ASSESSMENT AS WELL AS APPELLATE PROCEEDING IN QUANTUM ASSESSMENT. AFTER CONSIDERING THE FACTS OF THE CASE, LD. CIT(A) CONCLUDED THAT ASSESSEE CLAIME D A BAD DEBT WRITTEN OFF OF RS. 2,27,88,192/- WHICH WAS DISALLOWED BY AO AND BRING BACK TO THE TAXABLE INCOME. ON APPEAL, THE LD. CIT(A) RESTRICTED THE AMOUNT TO RS. 54,67,146/- ON WHICH PENALTY WAS LEVIED. AFTER CONSIDERING THE VARIOUS DECISION OF H ONBLE APEX COURT, THE LD. CIT (A) COMES TO THE CONCLUSION THAT THE ASSESSEE NEITH ER CONCEALED ANY PARTICULAR OF INCOME NOR SUBMITTED INACCURATE PARTICULAR TO MEET A CLAIM OF BAD DEBT WHICH WAS WRITTEN OFF OF IN THE BOOKS OF ACCOUNT. THUS, LEVY OF PENALTY U/S 271(1)(C) OF THE ACT IS NOT SUSTAINABLE. 5. WE HAVE SEEN THAT THE ORDER OF LD CIT(A) IS SUPPORT ED WITH THE SOUND REASONING, BASED ON THE SETTLED LEGAL POSITION THAT MERE DISAL LOWANCE OF CLAIM IN ALL CASES WHERE THE ADDITIONS / DISALLOWANCE IS MADE PENALTY SHALL NOT AUTOMATICALLY FOLLOW AS HELD BY 3 ITA NO. 6625/M/2015 M/S S.M. DYECHEM LTD. HONBLE APEX COURT IN CIT VS. RELIANCE PETROPRODUCT S 328 ITR 158. THUS, WE DO NOT FIND ANY INFIRMITY AND ILLEGALITY IN THE ORDER PASSED BY LD. CIT(A). 6. IN THE RESULT, APPEAL FILED BY REVENUE IS DISMISSED . ' JKTLO , - ! ./ UKK 0 ! ' 1 . ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH FEBRUARY,2017. 3 ! 4 5 8 QJ ( , 201 7 ! ./ 9 SD/- SD/- ( / RAJENDRA ( IOU IOUIOU IOU / PAWAN SINGH)) ( / ACCOUNTANT MEMBER # ( / JUDICIAL MEMBER / /MUMBAI, 5 /DATE: 08.02.2017 SK ' )!*+ ,+! / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ ,: ( ;' , 4. THE CONCERNED CIT / ,: ;' 5. DR E BENCH, ITAT, MUMBAI / <=. '>: B BB B , . . . / 6. GUARD FILE/ . / <' ' //TRUE COPY// 3 / BY ORDER, / DY./ASST. REGISTRAR ( >: , / /ITAT, MUMBAI