ACIT 16(2), MUMBAI V. B.D. FIBRE ASSOCIATES, MUMBAI

ITA 6708/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3268 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 05-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SACHIDANANDA DUBE
• Keywords: Question of law
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER & SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.6708/MUM/2014 ASSESSMENT YEAR : 2008-09 THE ACIT 16(2) MUMBAI VS. B D FIBRE ASSOCIATES 32 ASHIYANA NAPEAN SEA ROAD, MUMBAI- 400 036 PAN AAATB1773B (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SACHIDANANDA DUBE RESPONDENT BY : SHRI SUNIL TALATI DATE OF HEARING : 3 1 .0 5 .201 6 DATE OF PRONOUNCEMENT : 08 .0 6 . 201 6 O R D E R PER MAHAVIR SINGH, JUDICIAL MEMBER THIS APPEAL BY REVENUE IS ARISING OUT OF THE ORDER OF THE CIT(A) 27, MUMBAI, IN APPEAL NO.CIT(A)-27/AC-16(2)/55/13-14 DA TED 28.08.2014. THE ASSESSMENT WAS FRAMED BY THE ACIT 16(2), MUMBAI, FO R A.Y. 2009-10 VIDE HIS ORDER DATED 10.12.2010 U/S. 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). THE PENALTY UNDER DISPUTE WAS LEVIED BY THE AO U/S. 271(1)(C) OF THE ACT VIDE HIS ORDER DATED 26.03.2013. 2. THE ONLY ISSUE IN THIS APPEAL OF THE REVENUE IS AGAINST THE ORDER OF THE CIT(A) DELETING THE PENALTY IMPOSED BY THE AO U/S. 271(1)( C), FOR THIS THE REVENUE HAS RAISED THE FOLLOWING GROUND: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY IMPOSED U/S. 271( 1)(C) OF THE I.T.ACT ITA NO.6708/MUM/2014 SHRI B D FIBRE ASSOCIATES 2 PREMATURELY AFTER FLOWING HIS OWN DECISION IN THE A SSESSEES OWN CASE FOR A.Y. 2003-04 WITHOUT APPRECIATING THE FACT THAT IN QUANTUM APPEAL THE ISSUE OF CHANGE OF HEAD OF INCOME HAS BEEN SUSTAINE D BY THE HONBLE ITAT MUMBAI AND APPEAL OF THE ASSESSEE IS PENDING I N HIGH COURT FOR THE A.Y. 2003-04 AND APPEAL AGAINST CANCELLATION OF PEN ALTY U/S. 271(1)(C) FOR THE A.Y. 2003-04 IS PENDING BEFORE ITAT MUMBAI. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AO DU RING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT THE TRUST WAS FORMED FOR T HE BENEFIT OF BENEFICIARIES I.E. A DISCRETIONARY TRUST. IN THIS TRUST THERE WERE 100 TRUSTEES HAVING ONE PER SHARE EACH IN THE INCOME. DURING THE COURSE OF ASSESSMENT PRO CEEDINGS, IT WAS NOTICED THAT THE ASSESSEE HAS DECLARED INCOME UNDER THE HEAD IN COME FROM OTHER SOURCES AMOUNTING TO RS.50,51,122/- AND ALSO CLAIMED DEDUCT ION OF INTEREST PAID AT RS.50,01,484/- WHICH WAS DISTRIBUTED EQUALLY AMONG THE 100 BENEFICIARIES. ACCORDINGLY, INCOME WAS DECLARED AT NIL. THE AO AD DED THE CLAIM OF INTEREST OF RS.50,01,484/- IN VIEW OF THE DECISION OF ITAT IN E ARLIER YEAR. THE AO INITIATED PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT FOR F URNISHING OF INACCURATE PARTICULARS OF INCOME. THE AO BASED ON THE DECISION OF THE ORD ER OF CIT(A)-27, MUMBAI IN QUANTUM, LEVIED THE PENALTY @100% OF TAX SOUGHT TO BE EVADED. ACCORDINGLY, THE PENALTY AMOUNTING TO RS.17,00,004/- WAS LEVIED U/S. 271(1)(C) OF THE ACT. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). 3. THE CIT(A) DELETED THE PENALTY BY RELIED ON EARL IER YEARS DECISION OF THE CIT(A) FOR A YS 2003-04 AND 2006-07 IN APPEAL NOS. CIT(A)-27/ACIT16(2)/25/2011- 12 DATED 31.07.2013 AND CIT(A)-27/ACIT 16(2)/26/201 1-12 DATED 16.10.2012. THE CIT(A) FURTHER RELIED ON THE DECISION OF HONBLE BO MBAY HIGH COURT IN THE CASE OF CIT VS. NAYAN BUILDERS IN I.T.APPEAL NO.415 OF 2012 , JUDGMENT DATED 08.07.2014, WHEREIN HONBLE HIGH COURT HAS CANCELLED THE PENALT Y BY STATING THAT THE QUANTUM ITA NO.6708/MUM/2014 SHRI B D FIBRE ASSOCIATES 3 ADDITION HAS BEEN CHALLENGED BEFORE THE HONBLE HIG H COURT, WHICH HAS BEEN ADMITTED AND ONCE QUANTUM ADDITION IS ADMITTED ON A SUBSTANTIAL QUESTION OF LAW, THE PENALTY CANNOT BE SUSTAINED. AGGRIEVED, NOW TH E REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD RIVAL CONTENTIONS AND HAVE GONE TH ROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. BEFORE US THE LEARNED C OUNSEL FOR THE ASSESSEE STATED THAT IN THIS CASE THE QUANTUM APPEAL IS ADMITTED BY HONBLE HIGH COURT ON A SUBSTANTIAL QUESTION OF LAW AND ONCE SUBSTANTIAL QU ESTION IS ADMITTED, LEARNED COUNSEL STATED THAT THE PENALTY WILL NOT SURVIVE IN VIEW OF THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF NAYAN BUILDERS (SU PRA). WE FIND THAT THIS PROPOSITION IS SETTLED BY HONBLE BOMBAY HIGH COURT IN THE CASE OF NAYAN BUILDERS (SUPRA), WHEREIN IT IS HELD THAT ONCE THE SUBSTANTI AL QUESTION OF LAW IS ADMITTED BY HONBLE HIGH COURT IN QUANTUM APPEAL, THE PENALTY U /S. 271(1)(C) OF THE ACT WILL NOT SURVIVE. WE CONFIRM T HE ORDER OF THE CIT(A) DELET ING THE PENALTY. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 8 TH JUNE 2016. SD/- SD/- (RAJESH KUMAR) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED : 8 TH JUNE, 2016. SA ITA NO.6708/MUM/2014 SHRI B D FIBRE ASSOCIATES 4 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE C I T(A), MUMBAI. 4. THE C I T 5. THE DR, B BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, MUMBAI