TOPS SECURITY LTD, MUMBAI V. DCIT RG 8(3), MUMBAI

ITA 7150/MUM/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92908 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2015
• Appeal Filed By: Assessee
• Bench Allotted: E
• Next Hearing Date: 04-09-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 21-10-2011
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Assessee Lawyers: SANJEEV LALAN
• Keywords: Bonafide belief; Onus to prove
• Section: 14A; 2

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E , BENCH MUMBAI . . , , BEFORE SHRI R.C.SHARMA , A M & SHRI SANJAY GARG , J M ./ ITA NO . 7150/ MUM/20 11 ( / ASSESSMENT YEAR :20 05 - 06 ) TOPS SECURITY LTD., 5 ROYAL PALMS GOLF COUNTRY CLUB, SURVEY 169 AAREY MILK COLONY, GOREGAON (E) VS. DCIT RG.8(3), MUMBAI ./ ./ PAN/GIR NO. : A A ACT 0160 F ( / APPEL LANT ) .. ( / RESPONDENT ) AND ./ ITA NO. 4327 / MUM/20 1 3 ( / ASSESSMENT YEAR : 20 10 - 11 ) DCIT RG.8( 3 ), MUMBAI VS. TOPS SECURITY LTD., 5 ROYAL PALMS GOLF COUNTRY CLUB, SURVEY 169 AAREY MILK COLONY, GOREGAON (E) ./ ./ PAN/GIR NO. : A AACT 0160 F ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI SANJEEV LALAN /REVENUE BY : SHRI NEIL PHILIP / DATE OF HEARING : 1 9 /0 3 / 20 15 / DATE OF PRONOUNCEMENT 1 5 /06 /2015 / O R D E R PER R.C.SHARMA (A.M) : TH ESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) FOR THE ASSESSMENT YEAR S 200 5 - 06 , IN THE MATTER OF IMPOSITION OF ITA NO.7150/11 & ITA NOS.4327/13 2 PENALTY U/S. 271(1) (C) OF THE ACT ; AND BY THE REVENUE FOR THE ASSESSMENT YEAR 2010 - 11, IN THE MATTER OF ORDER PASSED U/S.143(3) OF THE ACT. ITA NO.4327/MUM/2013 (BY REVENUE FOR AY : 2010 - 2011) 2. THE REVENUE IN ITS APPEAL HAS RAISED THE FOLLOWING GROUNDS : - ON THE FACTS AN D IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN DELETING THE DISALLOWANCE COMPUTED BY THE AO AS PER RULE 8D(2)(II) BY DIRECTING THE AO TO EXCLUDE INTEREST OF RS. 1072.54 LAKHS ON THE GROUNDS THAT SUCH INTEREST PERTAINED TO BUSINESS PURPOS ES WITHOUT APPRECIATING THAT UNDER RULE 8D(2)(II) ONLY INTEREST DIRECTLY ATTRIBUTABLE TO ANY PARTICULAR INCOME OR RECEIPT IS ELIGIBLE FOR EXCLUSION, CONTRARY TO THE VIEW OF THE CIT(A) REGARDING INTEREST PERTAINING TO BUSINESS PURPOSES SINCE BUSINESS PURPOS ES IMPLIES INVESTMENTS/EXPENDITURE AND NOT INCOME/RECEIPT. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN HOLDING THAT THE SERVICE TAX THROUGH DEBITED TO THE PROFIT AND LOSS ACCOUNT BUT NOT CREDITED TO THE CENTRAL GOVER NMENT, CANNOT BE DISALLOWED U/S.43B OF THE INCOME TAX ACT, 1961 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN FOLLOWING THE JUDGMENT OF THE HONBLE TRIBUNAL, CHENNAI BENCH IN THE CASE OF ACIT VS. REAL IMAGE MEDIA TECH NOLOGIES PRIVATE LIMITED (2008) 114 ITD 573 (CHENNAI), WHEREAS THE FACTS OF THE ASSESSEES CASE ARE DISTINGUISHABLE FROM THE FACTS OF THE AFORESAID CASE. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE I TO/AC/DCIT BE RESTORED. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. DURING TH E COURSE OF SCRUTINY ASSESSMENT FOR THE A.Y.2010 - 2011, THE AO DISALLOWED INTEREST OF RS. 17,60,400/ - ON THE PLEA THAT ASSESSEE HAS DEBITED INTEREST OF RS.10.72 CRORE S TO THE PROFIT AND LOSS ACCOUNT, HOWEVER, THE ASSESSEE HAS GIVEN FUNDS TO DIRECTOR WITHOUT CHARGING ANY INTEREST AND ALSO TO ASSOCIATE CONCERN M/S TOP SECURITIES (UK) LIMITED. THE AO FURTHER OBSERVED THAT DEPOSITS AND ADVANCE OF RS. 1,46,70,000/ - WERE PLAC ED WITH THE DIRECTORS AND ASSOCIATE CONCERNS AS ON 31.3.2010 . HOWEVER, NO ITA NO.7150/11 & ITA NOS.4327/13 3 INTEREST WAS CHARGED ON THESE ADVANCES. ACCORDINGLY, THE AO DISALLOWED INTEREST OF RS. 17,60,400/ - . 4. BY THE IMPUGNED ORDER THE CIT(A) DELETED THE DISALLOWANCE OF INTEREST AFTER HAVI NG FOLLOWING OBSERVATIONS : - 4.3 I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT, ORDER OF THE AO AND FACTS OF THE CASE CAREFULLY. IT IS NOTICED THAT THIS ISSUE HAS ALREADY BEEN COVERED IN THE CASE OF THE APPELLANT FOR THE A.Y. 2005 - 06 TO 2009 - 10 BY THE LD. CIT(A) AND TRIBUNAL IN FAVOUR OF THE ASSESSEE. MY PREDECESSOR FOR A. Y.2009 - 1 0 HAS DECIDED THIS ISSUE BY HOLDING AS UNDER: 'THE INFORMATION ON RECORD IS CAREFULLY EXAMINED. REGARDING THE CHARGING OF INTEREST ON RENT DEPOSITS, THE SAME ISSUE WAS DECIDED IN F AVOUR OF THE APPELLANT BY THE HON'BLE ITA T FOR AY 2003 - 04 VIDE ORDER DATED 20.11.2009 WHEREIN IT WAS HELD THAT; 'JUST BECAUSE IN THE OPINION OF REVENUE, THE ASSESSEE HAD GIVEN A HIGHER DEPOSI T FOR TAKING THE PREMISES ON LEASE OR FOR TAKING C ERTAIN VEHICLES ON HIRE, IT CANNOT BE SAID THAT THE ASSESSEE SHOULD HAVE EARNED INTEREST INCOME, HAD HE NOT DEPLOYED HIS FUNDS FOR GIVING A HIGHER THAN NORMAL DEPOSIT. IT IS NOT DISPUTED THAT PREMISES AND THE VEHICLES HAVE BEEN USED FOR THE PURPOSE OF BUS INESS. UNDER THESE CIRCUMSTANCES, AS THE LAW DOES NOT PERMIT BR INGING TO TAX NOTIONAL INCOME, THIS ADDITION HAS TO BE NECESSARILY DELETED'. SIMILAR DISALLOWANCE MADE BY THE A. O. IN A. Y. 2006 - 07, 2007 - 08 & 2008 - 09 WAS DELETED BY THE LD. CIT(A ) - 18. ACCO RDINGLY, THE A. O. IS DIRECTED NOT TO CHARGE INTEREST ON THE INTEREST FREE DEPOSITS AND ADVANCES GIVEN TO DIRECTORS / ASSOCIATE CONCERNS OF R S.276.30 LACS .' 3.4 SINCE THE HON'BLE TRIBUNAL HAS ALLOWED THE APPEA L OF THE ASSESSEE I N EARLIER YEARS THEREFORE, BY FOLLOWING THE SAME DECISIONS TILE ADDITION MADE BY THE AO IS NOT SUSTAINABLE, HENCE DELETED. THE GROUND OF APPEAL IS ALLOWED. 5. AT THE OUTSET, IT WAS SUBMITTED BY LD. AR THAT ISSUE UNDER CONSIDERATION IS SQUARELY COVERED BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE IN THE ASSESSMENT YEAR 2009 - 10. OUR ATTENTION WAS ITA NO.7150/11 & ITA NOS.4327/13 4 DRAWN TO PARA 6.2 OF THE ORDER OF THE TRIBUNAL DATED 14 - 11 - 2014. WE HAD CAREFULLY GONE THROUGH THE PARA 6.2 AT PAGE 6 OF THE ORDER OF THE TRIBUNAL, WHEREIN THE DELETION OF DISALLOWA NCE OF INTEREST WERE CONFIRMED AFTER HAVING THE FOLLOWING OBSERVATIONS : - 6.2 HAVING CONSIDERED THE RIVAL SUBMISSION AS WELL AS RELEVANT MATERIAL ON RECORD, WE NOTE THAT AS REGARDS THE DISALLOWANCE U/S 14A ON ACCOUNT OF INTEREST EXPENDITURE, THE CIT(A) H AS GIVEN A FINDING THAT THE ASSESSEES OWN FUND WAS SUFFICIENT FOR MAKING THE INVESTMENT AND FURTHER IT WAS ALSO HELD BY THE CIT(A) THAT THE TOTAL INTEREST OF RS. 9.98 CRORES IS WHOLLY AND EXCLUSIVE LY FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE AND NO DISA LLOWANCE COULD BE MADE U/S 14A AND UNDER RULE 8D(II). THE CIT(A) HAS GIVEN THE DETAILS OF THE INTEREST EXPENDITURE IN PARA 1.6 OF THE IMPUGNED ORDER AND FOUND THAT AS PER THE SCHEDULE 15 OF THE AUDIT ACCOUNT SHOW THAT THE INTEREST WAS WHOLLY FOR THE PURPOS E OF BUSINESS OF THE ASSESSEE MAINLY TO FINANCE/COVER THE RECEIVABLES/DEBTORS. THE WORKING CAPITAL LOAN WERE TAKEN AGAINST THE HYPOTHECATION OF ENTIRE BOOK DEBTS, EQUITABLE MORTGAGE OF IMMOVABLE PROPERTY, PARI PASSU CHARGE ON CURRENT ASSETS AND PERSONAL GU ARANTEE OF THE DIRECTORS. NOTHING HAS BEEN BROUGHT BEFORE US TO CONTROVERT THE FINDING OF FACT GIVEN BY THE CIT(A) REGARDING THE BORROWED FUNDS UTILIZED FOR SPECIFIC PURPOSE OF BUSINESS/WORKING CAPITAL LOAN, THEREFORE, WE DO NOT FIND ANY ERROR OR ILLEGALIT Y IN THE ORDER OF CIT(A) TO THE EXTENT OF DELETION OF ADDITION ON ACCOUNT OF INTEREST EXPENDITURE U/S 14A. 6. WE HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND THAT IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR 2009 - 2010, THE CIT(A) HAS D ELETED THE DISALLOWANCE OF INTEREST AFTER RECORDING A FINDING TO THE EFFECT THAT INTEREST WAS WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE . THE CIT(A) ALSO FOUND THAT AS PER THE SCHEDULE 15 OF THE AUDIT ED ACCOUNT THE INTEREST WAS WHOL LY FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE MAINLY TO FINANCE/COVER THE RECEIVABLES/DEBTORS. THE CIT(A) FURTHER OBSERVED THAT T HE WORKING CAPITAL LOAN WERE TAKEN AGAINST THE HYPOTHECATION OF ENTIRE BOOK DEBTS, EQUITABLE MORTGAGE OF ITA NO.7150/11 & ITA NOS.4327/13 5 IMMOVABLE PROPERTY, P ARI PASSU CHARGE ON CURRENT ASSETS AND PERSONAL GUARANTEE OF THE DIRECTORS. THE FINDINGS RECORDED BY THE CIT(A) WAS FOUND TO BE AS PER EVIDENCE AVAILABLE ON RECORD. ACCORDINGLY, THE TRIBUNAL HAS CONFIRMED THE DISALLOWANCE OF INTERE ST. HOWEVER, IN THE INSTA NT ASSESSMENT YEAR 2010 - 2011 BEFORE USE, NO FINDING HAS BEEN GIVEN BY THE CIT(A) WITH REGARD TO THE FACT THAT INTEREST BEARING FUNDS HAVE BEEN WHOLLY AND EXCLUSIVELY USED FOR THE PURPOSE OF BUSINESS. SINCE NO FINDING HAS BEEN GIVEN BY CIT(A), IN THE INTERE ST OF JUSTICE, WE RESTORE THIS GROUND BACK TO THE FILE OF THE CIT(A) FOR DECIDING AFRESH IN TERMS OF DECISION OF THE TRIBUNAL DATED 14 - 11 - 2014 GIVEN ABOVE . THE CIT(A) IS DIRECTED TO RECORD THE FINDING WITH REGARD TO APPLICATION OF INTEREST BEARING FUNDS FO R WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE, WE DIRECT ACCORDINGLY. 7. THE REVENUE IS ALSO AGGRIEVED FOR DELETING DISALLOWANCE OF SERVICE TAX DEBITED TO THE PROFIT AND LOSS ACCOUNT. THE CIT(A) HAS DELETED THE DISALLOWANCE AFTER FO LLOWING THE DECISION OF THE TRIBUNAL IN ASSESSMENT YEAR 2005 - 06 TO 2009 - 2010. 8. WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT EXACTLY SIMILAR ISSUE HAS BEEN CONSIDERED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2005 - 06, WHEREIN T HE TRIBUNAL DELETED THE ADDITION AFTER HAVING THE FOLLOWING OBSERVATIONS : - 14. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSING THE RELEVANT MATERIAL ON RECORD IT IS SEEN THAT A SUM OF RS.2,74,26,695 REPRESENTS THE AMOUNT WHICH WAS DEBITED TO THE PRO FIT AND LOSS ACCOUNT BUT NOT PAID TO THE GOVERNMENT AS IT WAS NOT COLLECTED. THE REMAINING AMOUNT OF RS.45 LAKHS AND ODD REPRESENTS THE AMOUNT ITA NO.7150/11 & ITA NOS.4327/13 6 WHICH WAS COLLECTED BY THE ASSESSEE AND IN TURN PAID TO THE GOVERNMENT IN THIS YEAR. THE CONTENTION OF THE LEARNE D DEPARTMENTAL REPRESENTATIVE THAT THE SAID SUM OF RS.3.19 CRORE WHICH WAS CLAIMED AS DEDUCTION SHOULD BE DISALLOWED U/S.43B AS IT WAS NOT PAID TO THE GOVERNMENT, DOES NOT MERIT ACCEPTANCE IN VIEW OF A DIRECT ORDER OF THE TRIBUNAL PASSED BY THE CHENNAI BEN CH IN ACIT VS. REAL IMAGE MEDIA TECHNOLOGIES (P.) LTD. [(2008) 114 ITD 573 (CHENNAI)]. IN THIS CASE IT HAS BEEN HELD THAT SERVICE TAX THOUGH BILLED BUT NOT RECEIVED NOT HAVING BEEN CREDITED TO THE CENTRAL GOVERNMENT BY VIRTUE OF FINANCE ACT, 1994 READ WITH RULE 6 OF SERVICE TAX RULES, 1994, CAN NOT BE DISALLOWED U/S.43B. NO CONTRARY JUDGEMENT HAS BEEN BROUGHT TO OUR NOTICE BY THE LEARNED DEPARTMENTAL REPRESENTATIVE. RESPECTFULLY FOLLOWING THE PRECEDENT, WE UPHOLD THE VIEW TAKEN BY THE LEARNED CIT(A) ON THIS ISSUE. THIS GROUND IS NOT ALLOWED. AS THE FACTS AND CIRCUMSTANCES DURING THE YEAR UNDER CONSIDERATION ARE SAME, RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE, WE CONFIRM THE ACTION OF THE CIT(A) FOR DELETING THE ADDITION MADE O N ACCOUNT OF SERVICE TAX. 9. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED IN PART FOR STATISTICAL PURPOSES. ITA NO.7150/MUM/2011(BY ASSESSEE FOR AY:2005 - 06) 10. THE ASSESSEE HAS PREFERRED THIS APPEAL AGAINST THE ORDER OF CIT(A) FOR ASSESSMENT YEAR 2005 - 06, IN THE MATTER OF IMPOSITION OF PENALTY U/S.271(1)(C) OF THE ACT. 11. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT ASSESSEE COMPANY IS ENGAGED IN PROVIDING DETECTIVE AND SECURITIES SERVICES. THE INCOME RETURNED AT RS. 10 ,77,90,112/ - WAS ASSESSED U/S.143(3) AFTER MAKING ADDITION AMOUNTING TO RS. 12.89 CRORES. IN THE FIRST APPEAL, THE CIT(A) HAS GIVEN RELIEF OF RS. 9.52 CRORS. IN FURTHER APPEAL BEFORE THE TRIBUNAL, FURTHER RELIEF OF RS. 2.78 CRORES WAS GIVEN BY ITA NO.7150/11 & ITA NOS.4327/13 7 THE TRIBUNAL. A FTER GIVING EFFECT TO THE ORDER OF THE TRIBUNAL, ASSESSED INCOME REMAINS AT RS. 11.36 CRORES AS AGAINST RETURN INCOME OF RS. 10.77 CRORES. THUS, ADDITION OF RS. 59.04 LAKHS HA S BEEN UPHELD. WE FOUND THAT THE AO HAS LEVIED PENALTY WITH RESPECT TO DISALLOWANCE OF TRAVELLING EXPENSES ON THE PLEA THAT ASSESSEE HAS NOT DISCHARGED ITS ONUS TO PROVE THAT THESE EXPENSES WERE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. THE DISALLOWANCE SO MADE WAS FINALLY CONFIRMED BY THE TRIBUNAL INSOFAR AS DUE TO SMA LLNESS OF THE AMOUNT THE ASSESSEE HAS NOT PRESSED THE SAME BEFORE THE TRIBUNAL. AFTER GOING THROUGH THE RECORDS, WE FOUND THAT WITH REGARD TO THE TRAVELLING EXPENSES INCURRED, THE AO HAS NOT FOUND ANY DISCREPANCY IN THE DETAILS SO FILED. IN CASE OF COMPANY THERE CANNOT ALSO BE ANY CASE OF PERSONAL EXPENDITURE ON ACCOUNT OF TRAVELLING. KEEPING IN VIEW THE DETAILS FURNISHED BY THE ASSESSEE ALONG WITH EXPLANATION, WE DO NOT FIND ANY MERIT FOR THE IMPOSITION OF PENALTY FOR THE DISALLOWANCE OF TRAVELLING EXPENSE S OF RS. 8.88 LAKHS. 12. A N ADHOC DISALLOWANCE OF 10% AMOUNTING TO RS.6,40,850/ - WAS MADE BY THE AO ON THE PLEA THAT DETAILS FURNISHED IN RESPECT OF TRAVELLING EXPENSES ARE VERY SKETCHY IN NATURE AND DOES NOT DESCRIBE PURPOSE OF EXPENSES . KEEPING IN VIEW TO TALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE DO NOT FIND ANY MERIT FOR LEVYING THE PENALTY ON THE ADHOC DISALLOWANCE OF TRAVELLING EXPENSES AMOUNTING TO RS.6,40,850/ - . 13. WE FOUND THAT FOR THE SIMILAR DISALLOWANCE MADE ON ACCOUNT OF TRAVELLING EXPENS ES, THE TRIBUNAL HAS DELETED PENALTY IMPOSED U/S.271(1)(C) IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2003 - 04 ITA NO.7150/11 & ITA NOS.4327/13 8 VIDE ORDER DATED 10 - 10 - 2012 . THE PRECISE OBSERVATION OF THE TRIBUNAL WAS AS UNDER : - 1 0. WE HAVE CONSIDERED THE VIEWS TAKEN BY BOTH SIDES. WE ARE IN AGREEMENT THAT ALL THE DETAILS AS ASKED FOR HAD BEEN FILED AND AS SUCH THERE COULD BE NO INACCURATE PARTICULARS SUBMITTED BY THE ASSESSEE. WE HAVE ALSO SEEN THE ASSESSMENT ORDER AND FIND THAT THE AO HAS SIMPLY MENTIONED 'ISSUE DEMAND NOTICE, NOTICE U/S 271(1)(C) AND CHALLAN ACCORDINGLY'. NOWHERE IN THE ASSESSMENT ORDER OR EVEN IN THE CONCLUSION, THE AO HAS SPECIFICALLY TALKED ABOUT INITIATION AND LEVY OF PENALTY U/S 271(1)(C). WE HAVE ALSO GONE THROUGH THE CITATION QUOTED BY THE AR IN THE CASE OF HA RYANA OXYGEN LTD. AND SAYAJI ENGINEERING CO., WHEREIN IT HAS BEEN HELD THAT EXPENSES INCURRED BY THE COMPANY ON ITS DIRECTORS SHALL REMAIN THE EXPENSE OF THE COMPANY WHICH SHALL BE ALLOWED TO THE ASSESSEE COMPANY. AS REFERRED TO IN THE WRITTEN SUBMISSION, THE CASE OF CIT V/S RELIANCE PETROPRODUCTS (P) LTD. REPORTED IN 322 ITR158 WHEREIN THE HON'BLE SUPREME COURT OF INDIA WERE CEASED WITH THE ISSUE, I.E. WHETHER PENALTY COULD BE LEVIED IN CASE THE CLAIM IS NOT ALLOWED BY THE REVENUE AUTHORITIES AND THE HON'B LE SUPREME COURT HELD THAT IN SUCH A CASE, PENALTY SHALL NOT BE EXIGIBLE. 11. TAKING INTO ACCOUNT THE FACTS AND RESPECTFULLY FOLLOWING THE VARIOUS DECISIONS, WE DELETE THE PENALTY. THE PENALTY SUSTAINED ON ACCOUNT OF TRAVELING EXPENSES NOT ACCEPTED BY THE AO IS THEREFORE DELETED. RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL AND THE REASONING DISCUSSED HEREINABOVE, WE DO NOT FIND ANY MERIT IN THE ORDER OF AO FOR LEVYING PENALTY WITH REGARD TO DISALLOWANCE OF TRAVELLING EXPENSES. 14. THE AO HAS ALSO LEV IED PENALTY FOR DISALLOWANCE OF SERVICE TAX OF RS. 74,04,935/ - . 15. FROM THE RECORD WE FOUND THAT OUT OF TOTAL DISALLOWANCE OF SERVICE TAX OF RS. 3.94 CRORES, UPTIL THE LEVEL OF TRIBUNAL ADDITION OF RS. 3.20 CRORES WAS DELETED AND DISALLOWANCE TO THE EXTENT OF RS.74.04 LAKHS WAS UPHELD. THE CONTENTION OF THE ASSESSEE BEFORE THE CIT(A) WAS THAT ASSESSEE COMPANY HAS 50 REGIONAL OFFICES, THEREFORE, THERE WAS SOME INADVERTENT ITA NO.7150/11 & ITA NOS.4327/13 9 MISTAKE IN THE PAYMENT OF SERVICE TAX AND THE SAME COULD NOT PAID WITHIN THE STATUTORY T IME LIMIT, HOW EVER, WE FOUND THAT THE CIT(A) HAS NOT GIVEN ANY FINDING WITH REGARD TO THE PENALTY IMPOSED IN RESPECT OF ADDITION MADE ON ACCOUNT OF UNPAID SERVICE TAX OF RS. 74.04 LAKHS. 16. IT WAS CONTENDED BY THE LD. AR PENALTY U/S.271(1)(C) CANNOT BE IM POSED MERELY ON THE GROUND THAT ADDITION WAS CONFIRMED IN THE ASSESSMENT PROCEEDINGS AND MORE PARTICULARLY WHEN THE ASSESSEE HAS MADE ITS CLAIM BASED ON THE RECORD IN ITS POSSESSION AND ON BONAFIDE BELIEF. RELIANCE WAS ALSO PLACED ON THE DECISION OF COORDI NATE BENCH IN THE CASE OF VIP INDUSTRIES LIMITED, 30 SOT 254, WHEREIN AFTER REFERRING TO THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF DHARMENDRA TEXTILES, 306 ITR 277, IT WAS HELD THAT MERE ACT OF CONFIRMATION OF ADDITION CANNOT PER SE LED TO T HE CONFIRMATION OF THE PENALTY. 17. WE HAVE CONSIDERED RIVAL CONTENTIONS. THERE IS NO DISPUTE TO THE FACT THAT BOTH QUANTUM AND PENALTY PROCEEDINGS ARE INDEPENDENT TO EACH OTHER. IN THE PENALTY PROCEEDINGS ASSESSEE HAS BEEN GIVEN CHANCE TO SHOW THAT WHY TH E PENALTY BE NOT IMPOSED WITH REFERENCE TO THE ADDITIONS MADE OR CONFIRMED IN THE QUANTUM PROCEEDINGS. IF THE ASSESSEE SUCCEDS IN EXPLAIN ING HIS CASE THEN NO PENALTY CAN FOLLOW AND VICE VERSA. IN VIEW OF THE FACT THAT CIT(A) HAS NOT GIVEN ANY FINDING FOR C ONFIRMING THE PENALTY, WE, IN THE INTEREST OF JUSTICE AND FAIR - PLAY, RESTORE THE MATTER BACK TO THE FILE OF THE CIT(A) FOR DECIDING AFRESH KEEPING IN VIEW THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS LTD. ITA NO.7150/11 & ITA NOS.4327/13 10 322 I TR 158, AFTER GIVING DUE OPPORTUNITY TO THE ASSESSEE. HENCE, THE APPEAL OF THE ASSESSEE IS ALLOWED IN PART. 18 . IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED IN PART FOR STATISTICAL PURPOSES WHEREAS APPEAL OF THE ASSESSEE IS ALLOWED IN PART. O RDER PRON OUNCED IN THE OPEN COURT ON THIS 1 5 /06 / 201 5 . SD/ - ( ) ( SANJAY GARG ) SD/ - ( . . ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 1 5 /06 /201 5 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//