M/S TRANSCON SHETH CREATORS PVT LTD., MUMBAI V. ITO 13 (3)(4), MUMBAI

ITA 7130/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 1918 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 20-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR MENON
• Keywords: Set aside
• Section: 271(1)(c); 37(1)

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI SHRI SHAMIM YAHYA (AM) & SHRI PAVAN KUMAR GADALE (JM) I.T.A. NO. 7130 TO 7135/MUM/2019 (ASSESSMENT YEARS 2009-10 TO 2014-15) TRANSCON SHETH CREATORS PVT.LTD. C-302, 3 RD FLOOR WATER FORD BUILDING ABOVE NAVNIT MOTORS, JUHU GALLI, ANDHERI(W) MUMBAI-400 058 PAN : AAACT0197J VS. ITO - 13(3)(4) AAYKAR BHAWAN, M.K.ROAD MUMBAI-400 020 ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY NONE DEPARTMENT BY SHRI VIJAY KUMAR MENON DATE OF HEARING 14.06 .202 1 DATE OF PRONOUNCEMENT 01.07 .2021 O R D E R PER BENCH :- THESE ASSESSEE APPEALS ARE AGAINST THE RESPECTIVE ORDER OF LEARNED CIT(A), CONFERRING FOLLOWING LEVY OF PENALTY U/S 271(1)(C) OF THE I.T.ACT, 1961. SR.NO. ASSESSMENT YEAR PENALTY (RS.) 1 2009-10 6,10,000 2 2010-11 4,50,000 3 2011-12 6,50,000 4 2012-13 22,75,000 5 2013-14 9,00,000 6 2014-15 6,75,000 2. SINCE FACTS ARE IDENTICAL, WE REFER TO ORDER OF AY 2009-10 OF AUTHORITIES BELOW. TRANSCON SHETH CREATORS PVT.LTD. 2 3. THE BRIEF FACTS OF THE CASE LEADING TO THE DIS ALLOWANCES WITH REFER TO WHICH PENALTY IS LEVIED IS AS UNDER:- DURING THE ASSESSMENT PROCEEDINGS, IT WAS FOUND TH AT THE ASSESSEE COMPANY HAS CLAIMED EXPENSES PERTAINING TO ORELEM PROJECT AMOUNTING TO RS.19,50,000/- AS PROFESSIONAL FEE UNDER WORK IN PROGRESS(WIP) OF THE COMPANY. HOWEVER , THE TRANSACTION WAS NOT FOUND TO BE WHOLLY AND EXCLUSIVELY NOT CONNECTED TO THE B USINESS AND WHICH WAS FOUND TO BE NON-GENUINE, AND ACCORDINGLY, THE SAME WAS DISALLOW ED U/S 37(1) AND ADDED TO THE WIP. 4. ON THE ABOVE DISALLOWANCES FROM THE WORK IN PR OGRESS PENALTY U/S 271(1)(C) WAS LEVIED. WHILE LEVYING PENALTY, THE AO DID NOT DISCU SS THE DECISION OF CIT VS RELIANCE PETROPRODUCT PVT.LTD. [322 ITR 158] (SC) REFERRED B Y ASSESSEE. HE REFERRED TO HONBLE SUPREME COURT DECISION IN UNION OF INDIA V DHARMENDRA TEXTILE PROCESSORS(2006) 306 ITR 277 AND HONBLE DELHI HIGH COURT DECISION IN ZOOM COMMUNICATION(2010) 327 ITR 510. UPON ASSESSEES AP PEAL LD.CIT(A) CONFIRMED THE PENALTY. 5. AGAINST THIS ORDER ASSESSEE IS IN APPEAL BEFOR E US. 6. WE HAVE HEARD THE LD. DR AND PERUSED THE RECOR D AND LD. DR SUPPORTED THE ORDER OF AUTHORITIES BELOW. HE FURTHER POINTED OUT THAT ASSESSEE IN QUANTUM ADDITION HAS GONE FOR SETTLEMENT OF DISPUTE UNDER VIVAD SE VISHWAS SCHEME. 7. UPON CAREFUL CONSIDERATION, WE FIND THAT THE PE NALTY IS WITH REFERENCE TO DISALLOWANCE OF EXPENSES, WHICH RESULTING IN DECREA SE IN CLOSING WORK IN PROGRESS. THERE IS NO IMPACT ON THE INCOME SHOWN FOR THE YEAR . MOREOVER, THE DISALLOWANCES OF AN EXPENSE IPSO FACTO CANNOT LEAD TO RIGOURS OF PE NALTY U/S 271(1)(C), AS HELD BY HONBLE SUPREME COURT IN THE CASE OF RELIANCE PET ROPRODUCT PVT.LTD. [322 ITR 158]. TRANSCON SHETH CREATORS PVT.LTD. 3 8. IN THIS REGARD, WE ARE DRAW THE SUPPORT FROM THE DECISION OF A LARGER BENCH OF THE HONBLE SUPREME COURT IN THE CASE OF THE STATE OF O RISSA 82 ITR 26 WHEREIN IT WAS HELD THAT THE AUTHORITY MAY NOT LEVY THE PENALTY, I F THE CONDUCT OF THE ASSESSEE IS NOT FOUND TO BE CONTUMACIOUS. 9. WE ARE FURTHER OF THE OPINION THAT MERE ASSESS EE GOING FOR SETTLEMENT OF DISPUTE UNDER VIVAD SE VISHWAS SCHEME IN QUANTUM ADDITION C ANNOT BE REASON TO SUSTAIN THE PENALTY. PENALTY IS TO BE LEVIED UNDER PROVISION SE CTION 271(1)(C). HERE, WE HAVE ALREADY FOUND THAT THE ASSESSEE DOES NOT DESERVE TO BE VISITED WITH THE RIGOURS OF PENALTY U/S. 271(1)(C). MOREOVER, THE REDUCTION WO RK IN PROGRESS FOR THE YEAR HAS NOT AFFECTED THE INCOME FOR THE YEAR, AS IT IS AN INCOM PLETE PROJECT. HENCE, THE LEVY OF PENALTY WITH REFERENCE TO THE INCOME SOUGHT TO BE E VADED HAS NOT BEEN PROPERLY DEALT WITH IN THE PENALTY ORDER. 10. ACCORDINGLY, IN THE BACKGROUND OF AFORESAID D ISCUSSION AND PRECEDENT, WE SET ASIDE THE ORDER OF THE AUTHORITIES BELOW AND DELETE THE PENALTY. 11. IN THE RESULT, ALL ASSESSEES APPEALS ARE ALL OWED. PRONOUNCED IN THE OPEN COURT ON 01.07.2021 SD/- SD/- ( PAVAN KUMAR GADALE) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTAN T MEMBER MUMBAI; DATED : 01/07/2021 SR.PS. THIRUMALESH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT TRANSCON SHETH CREATORS PVT.LTD. 4 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR) ITAT, MUMBAI