M/S. NORRIS MEDICINES LTD., MUMBAI V. THE DY. C.I.T. 9(2), MUMBAI

ITA 6761/MUM/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1702 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 07-06-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 24-11-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A R BAIWAR
• Assessee Lawyers: H V GANDHI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, B, MUMBAI BEFORE SHRI R V EASWAR, PRESIDENT AND SHRI J SUDHAKAR REDDY, ACCOUNTANT MEMBER I T A NO: 6761/MUM/2008 (ASSESSMENT YEAR: 2001-02) M/S NORRIS MEDICINES LTD., MUMBAI APPELLANT (PAN: AAACN1258L) VS DEPUTY COMMISSIONER OF INCOME TAX 9(2) RESPONDENT MUMBAI APPELLANT BY: SHRI H V GANDHI RESPONDENT BY: SHRI A R BAIWAR O R D E R R V EASWAR, PRESIDENT: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 08.09.2008 PASSED BY THE CIT(A), BY WHICH HE CONFIR MED THE LEVY OF PENALTY OF RS.23,45,006/- ON THE ASSESSEE UNDER SEC TION 271(1)(C) OF THE INCOME TAX ACT, 1961. 2. CONSEQUENT TO THE COMPLETION OF THE ASSESSMENT U NDER SECTION 144, IN WHICH THE LOSS OF RS.59,29,219/- DECLARED B Y THE ASSESSEE IN THE RETURN WAS DISALLOWED, PENALTY PROCEEDINGS FOR CONCEALMENT OF INCOME WERE INITIATED BY THE ASSESSING OFFICER. TH E ASSESSING OFFICER, AFTER CONSIDERING THE ASSESSEES EXPLANATION, WAS N OT SATISFIED WITH THE SAME AND IMPOSED THE PENALTY. BEFORE THE CIT(A) TH E ASSESSEE TOOK UP THE CONTENTION, BASED ON THE JUDGMENT OF THE SUP REME COURT IN THE CASE OF VIRTUAL SOFT SYSTEMS LTD. VS. CIT (2007) 28 9 ITR 83 (SC) THAT MERE DISALLOWANCE OF LOSS AND REDUCING THE SAME TO RS.NIL DID NOT ATTRACT THE PROVISIONS OF SECTION 271(1)(C). IT WO ULD APPEAR THAT THE ITA NO: 6761/MUM/2008 2 ASSESSEE DID NOT RAISE ANY CONTENTION ON THE MERITS OF THE LEVY OF PENALTY. BY THE TIME THE APPEAL CAME TO BE DECIDED BY THE CIT(A), THE LATER JUDGMENT OF THE SUPREME COURT IN THE CASE OF GOLD COIN HEALTH FOOD PVT. LTD., DATED 18.08.2008 BECAME AVAILABLE, IN WHICH THE EARLIER JUDGMENT IN VIRTUAL SOFT SYSTEMS LTD. (SUPR A) WAS OVERRULED AND IT WAS HELD THAT THE EXPLANATION 4 TO SECTION 271(1 )(C) WAS CLARIFICATORY AND APPLIED EVEN TO THE PERIOD PRIOR TO 01.04.2003. IN VIEW OF THE LATER JUDGMENT OF THE SUPREME COURT, THE CIT(A) UPHELD TH E LEVY OF PENALTY. IN HIS ORDER HE MENTIONED THAT THE ASSESSEE HAD EXP RESSED ITS INABILITY TO PRODUCE THE DETAILS OF PURCHASES AND SALES AND S HOW THAT THEY WERE NOT BOGUS. IN OTHER WORDS, THE CIT(A) HAD NO OCCAS ION TO EXAMINE THE MERITS OF THE LEVY OF PENALTY. 3. THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRI BUNAL AND THE ONLY CONTENTION ADVANCED BEFORE US IS THAT THE CIT( A) SHOULD BE DIRECTED TO DISPOSE OF THE APPEAL AFTER EXAMINING T HE MERITS OF THE LEVY OF PENALTY. PAPERS HAVE BEEN FILED IN THE PAPER BO OK BEFORE US TO SHOW THAT THE PURCHASES AND SALES WERE GENUINE AND THAT THIS CLAIM SHOULD BE EXAMINED FACTUALLY. IT IS CONCEDED BEFOR E US THAT ON THE LEGAL QUESTION AS TO EXPLANATION 4 TO SECTION 271(1 )(C), THE JUDGMENT OF THE SUPREME COURT IN GOLD COIN HEALTH FOOD PVT. LTD . (SUPRA) IS AGAINST THE ASSESSEE. 4. WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENT ATIVE ALSO. SO FAR AS THE LEGAL QUESTION IS CONCERNED, THE DECI SION OF THE CIT(A) CANNOT BE FAULTED. HOWEVER, THE ASSESSEE AT THAT T IME HAD RELIED ON THE EARLIER JUDGMENT OF THE SUPREME COURT IN THE CA SE OF VIRTUAL SOFT ITA NO: 6761/MUM/2008 3 SYSTEMS LTD. (SUPRA) WHICH WAS IN ITS FAVOUR, THOUG H BY THE TIME THE APPEAL CAME TO BE DISPOSED OF BY THE CIT(A), THE LA TER JUDGMENT OF THE SUPREME COURT IN GOLD COIN HEALTH FOOD PVT. LTD. (S UPRA) BECAME AVAILABLE. THE ASSESSEE SOMEHOW WOULD APPEAR TO HA VE NOT CONVERSED THE LEVY OF PENALTY ON MERITS, NAMELY, AS TO WHETHER FACTUALLY THERE WAS ANY CONCEALMENT OR NOT. IN THE INTEREST OF JUSTICE WE ARE OF THE VIEW THAT THE MATTER SHOULD RECEIVE T HE CONSIDERATION OF THE CIT(A). WE, THEREFORE, RESTORE THE APPEAL TO H IS FILE ONLY FOR THE PURPOSE OF DECIDING WHETHER THERE WAS CONCEALMENT O F INCOME BY THE ASSESSEE ATTRACTING THE PENALTY UNDER SECTION 271(1 )(C). WE DIRECT ACCORDINGLY AND ALLOW THE APPEAL OF THE ASSESSEE FO R STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH JUNE 2010. SD/- SD/- (J SUDHAKAR REDDY) (R V EASWAR) ACCOUNTANT MEMBER PRESIDENT MUMBAI, DATED 11 TH JUNE 2010 SALDANHA COPY TO: 1. M/S NORRIS MEDICINES LTD. V L SHAH & CO., CHARTERED ACCOUNTANTS 1, ANN-VILLA, N P THAKKAR MARG VILE PARLE (EAST), MUMBAI 400 057 2. DCIT 9(2) 3. CIT-IX 4. CIT(A)-IX 5. DR B BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI