ITO 8(3)-3, MUMBAI V. TECHNICARTS P. LTD, MUMBAI

ITA 6793/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8894 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2005-2006
• Appeal Filed On: 07-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bonafide belief
• Section: 115JB; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI BEFORE SHRI D.K. AGARWAL, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ITA NO.6793/MUM/2011 ASSESSMENT YEAR- 2005-06 THE ITO 8(3)-3, AAYAKAR BHAVAN, MUMBAI-400 020 VS. M/S. TECHNICARTS PVT. LTD., 802A, DEEPALI CO. OP. HSG. SOC. LTD., ST. CYRIL ROAD, BANDRA (W), MUMBAI-400 050 PAN-AAACT 4356P (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI CHARANJIT SINGH RESPONDENT BY: NONE DATE OF HEARING :6.09.2012 DATE OF PRONOUNCEMENT: 12.09.2012 O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)- 18, MUMBAI DT. 6.7.2011 PERTAINING TO ASSESSMENT Y EAR 2005-06. 2. THE SOLE GRIEVANCE OF THE REVENUE IS THAT THE LD . CIT(A) HAS ERRED IN DELETING THE PENALTY LEVIED U/S. 271(1)(C) OF THE A CT. 3. FACTS GIVING RISE TO THE LEVY OF PENALTY FIND IT S ROOT IN THE ASSESSMENT ORDER FOR THE YEAR UNDER CONSIDERATION DT. 17.12.20 07. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE DECLARED TOTAL INCOME A T RS. 66,440/- WHICH WAS REVISED DECLARING TOTAL INCOME AT RS. NIL. THE SAI D RETURN WAS TAKEN FOR SCRUTINY ASSESSMENT AND THE SAME WAS ASSESSED AT R S. 65,330/-. BOOK PROFIT WAS ASSESSED AT RS. 2,26,10,590/- AND MAT INCLUDING SURCHARGE AND CESS ITA NO. 6793/M/2011 2 CHARGE WAS TAKEN AT RS. 17,72,953/-. AS THE REGULA R TAX ON THE TOTAL INCOME WAS MUCH LESS THAN THE MAT, THE ASSESSING OFFICER I NVOKED PROVISIONS OF SEC. 115JB AND DETERMINED MAT AS THE TAX PAYABLE AND ACC ORDINGLY DECIDED TO LEVY PENALTY U/S. 271(1)(C) OF THE ACT. 4. DURING THE COURSE OF THE PENAL PROCEEDINGS, IT W AS OBSERVED BY THE AO THAT DURING THE QUANTUM PROCEEDINGS, THE AO GAVE TH E FINDING THAT THE ASSESSEE HAS REDUCED AN AMOUNT OF RS. 2,24,67,112/- FROM THE BOOK PROFIT ON THE GROUND THAT THIS INCOME WAS NOT TAXABLE U/S. 54 -EC OF THE ACT. THE AO HOWEVER DID NOT AGREE WITH THE ASSESSEES CLAIM ON THE GROUND THAT SEC. 115JB DOES NOT PROVIDE FOR DEDUCTION U/S. 54-EC OF THE ACT FROM THE BOOK PROFIT AS CLAIMED BY THE ASSESSEE. ACCORDINGLY, TH E AO BROUGHT TO TAX THE AMOUNT OF RS. 2,24,67,112/- WHICH WAS REDUCED BY TH E ASSESSEE U/S. 54EC FROM THE BOOK PROFIT. THE ASSESSEE WAS SHOW CAUSE D AS TO WHY AN ORDER IMPOSING A PENALTY SHOULD NOT BE U/S. 271(1)(C) OF THE ACT. IN RESPONSE TO WHICH, THE ASSESSEE FILED A DETAILED REPLY SUBSTANT IATING ITS CLAIM THAT IT RELIED ON THE DECISION IN THE CASE OF ITO VS FRIGSALES (I) LTD. 4 SOT 376 (MUM)(2005) AND ON THE BASIS OF THE SAID DECISION T HE ASSESSEE HAS COMPUTED THE BOOK PROFIT. HOWEVER, THE EXPLANATION S AND SUBMISSIONS MADE BY THE ASSESSEE WERE REJECTED BY THE AO AND CONCLU DED THAT HE IS CONVINCED THAT THE ASSESSEE HAS CLAIMED INADMISSIBLE DEDUCTIO N AND THE CASE IS FIT FOR LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT AND WENT ON TO LEVY MINIMUM PENALTY @ 100% OF THE TAX SOUGHT TO BE EVADED AT RS. 17,6 1,700/-. 5. THE ASSESSEE AGITATED THIS MATTER BEFORE THE LD. CIT(A). AFTER CONSIDERING THE SUBMISSIONS AND EXPLANATIONS GIVEN BY THE ASSESSEE, THE LD. CIT(A) CAME TO THE CONCLUSION THAT THE CLAIM OF THE ASSESSEE U/S. 54-EC OR COMPUTATION OF BOOK PROFIT IS CLEARLY OF A DEBATABL E NATURE AND THE ASSESSEE HAD A BONAFIDE BELIEF THAT IT HAD MADE A CLAIM CORR ECTLY WHILE FILING THE RETURN. FOLLOWING THE RATIO LAID DOWN BY THE HONBLE SUPREM E COURT IN THE CASE OF CIT VS RELIANCE PETROPRODUCTS 322 ITR 158, THE LD. CIT( A) DELETED THE PENALTY LEVIED AT RS. 17,61,700/-. ITA NO. 6793/M/2011 3 6. THE REVENUE IS IN APPEAL BEFORE US AGAINST THE F INDING OF LD. CIT(A). THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPOR TED THE PENALTY ORDER OF THE AO. THE LD. COUNSEL FOR THE ASSESSEE RELIED UP ON THE FINDING OF LD. CIT(A). 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE ORDERS OF LOWER AUTHORITIES. THE UNDISPUTED FACT IS THAT THE ASSESSMENT HAS BEEN COMPLETED NOT ON THE REGULAR INCOME BUT ON BOOK PRO FIT INVOKING PROVISIONS OF SEC. 115 JB OF THE ACT. IT IS A SETTLED LAW THAT NO PENALTY IS LEVIABLE WHEN THE INCOME IS ASSESSED NOT ON NORMAL PROVISIONS OF THE ACT BUT BY INVOKING PROVISIONS OF BOOK PROFIT AS LAID DOWN BY THE HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS NALWA SONS INVESTMENTS LTD. (2011) 37 ITCL 218. THIS DECISION OF THE HONBLE DELHI HIGH COURT WAS TAKEN BEFORE THE SUPREME COURT IN SLP APPEAL (CIVIL) NO. 18564/2011 WHEREIN THE HO NBLE SUPREME COURT HAS DISMISSED THE SLP FILED BY THE REVENUE. THE SAME F INDINGS WERE FOLLOWED BY US IN ITA NO. 6600/M/2011 IN THE CASE OF ACIT VS M/ S. SURFACE GRAPHICS PVT. LTD., VIDE ORDER DT. 5.9.2012. THE FACTS AND THE LA W OF THE INSTANT CASE BEING IDENTICAL, RESPECTFULLY FOLLOWING THE DECISION OF T HE HONBLE HIGH COURT, THE HONBLE SUPREME COURT AND OUR OWN DECISION IN ITA N O. 6600/M/2011 (SUPRA), WE DO NOT FIND ANY REASON TO TINKER WITH T HE FINDINGS OF THE LD. CIT(A), THEREFORE ORDER OF THE LD. CIT(A) IS CONFIR MED. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED ON THIS 12 TH DAY OF SEPTEMBER, 2012 SD/- SD/- (D.K. AGARWAL) (N.K. BILLAIYA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED 12 TH SEPTEMBER, 2012 RJ ITA NO. 6793/M/2011 4 COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR E BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI