TRIUMPH INTERNATIONAL FINANCE INDIA LTD, MUMBAI V. ACIT CEN CIR 40, MUMBAI

ITA 7221/MUM/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6631 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2003-2004
• Appeal Filed On: 20-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bad and doubtful debts; TDS
• Section: 271(1)(c); 142(1); 274; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO. 7221 / MUM/ 20 1 7 ( / ASSESSMENT YEAR: 2003 - 04 ) TRIUMPH INTERNATIONAL FINANCE INDIA LTD. OXFO RD CENTRE, 10, SHORFF LANE, COLABA CAUSEWAY, COLABA, MUMBAI - 400005 . / VS. ACIT CENTRAL CIRCLE - 40 AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020. ./ ./ PAN/GIR NO. : AAACE 0308 A ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 21 .0 2 .201 9 / DATE OF PRONOUNCEMENT : 27 . 02 .2019 / O R D E R PER AMARJIT SI NGH, J M: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 24 . 11 .2017 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 49 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 2003 - 04 IN WHICH THE PENALTY LEVIED BY THE A O HAS BEEN ORDER TO BE CONFIRMED . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - 1 THE COMMISSIONER OF INCOME - TAX (APPEALS) 49, MUMBAI (HEREINAFTER REFERRED TO AS THE CIT(A))) ERRED IN FRAMING AN EXPARTE ORDER. ASSESSEE BY : SHRI AKASH KUMAR REVENUE BY: SHRI P. DANIEL ITA. NO .7221 /M/201 7 A.Y. 2003 - 04 2 THE APPELLANTS CONTEND THAT ON THE MO RE AND IN THE CI RCUMSTANCES OF THE CASE AND IN LAW, THE CJT(A) OUGHT NOT TO HAVE FRAMED AN EXPARTE ORDER INASMUCH AS, IN SOME CONFUSION. THE IMPUGNED ORDER HAS BEEN PASSED BEFORE THE DATE OF HEARING (15 TH DECEMBER, 2017) GIVEN BY THE CIT(A) 2. THE CIT(A) E RRED IN UPHOLDING THE ACTION OF THE ASSISTANT COMMISSIONER OF INCOME - TAX, CONRAD CIRCLE 40, MUMBAI (HEREINAFTER REFERRED TO AS THE ASSESSING OFFICER) IN CONFIRMING THE LEVY OF PENALTY OF IF 26,24,000 UNDER SECTION 271(L)(C) OF THE ACT. THE APPELLANTS CONTE ND THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) OUGHT NOT TO HAVE CONFIRMED THE LEVY OF THE IMPUGNED PENALTY UNDER SECTION 271(1)(C) OF THE ACT INASMUCH AS THE ASSESSING OFFICER ERRED IN NOT ISSUING PROPER NOTICE DATED 12.1 2.2005 UNDER SECTION 274 R.W.S. 271; THE ASSESSING OFFICER OUGHT TO HAVE ISSUED A PROPER NOTICE UNDER SECTION 274 R.W.S. 271, TICK MARKING THE RELEVANT LIMB NAMELY, CONCEALING THE PARTICULARS OF INCOME/ FURNISHING INACCURATE PARTICULARS OF INCOME CARD HAVI NG NOT DONE SO, THE PENALTY ORDER PASSED CONSEQUENT THERETO IS BAD IN LAW AND HENCE, THE SAME OUGHT TO BE QUASHED. 3. THE APPELLANTS FURTHER, CONTEND THAT THE CIT(A) ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN LEVYING PENALTY ON THE BASIS OF INCOME - HAS. INCLUDING SURCHARGE. 4. THE APPELLANTS FURTHER, CONTEND THAT THE ORDER OF PENALTY IS BAD IN LAW AND HENCE, THE SAME OUGHT TO BE QUASHED. THE APPELLANTS CRAVE LEAVE TO ADD TO, ALTER OR AMEND THE AFORESTATED GROUND OF APPEAL. ' 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 01 . 12 .20 03 DECLARING TOTAL I NCO ME TO THE TUNE OF RS. NIL / - . THE ASSESSEE SHOWED THE CARRY FORWARD LOSS IN SUM OF RS.17,27,21,815/ - AFTER SET OFF OF BROUGHT FORWARD SPECULATION PROFIT OF RS.2, 86,34,48,301/ - . THE SET OFF OF LOSS AND CARRY FORWARD LOSS WAS NOT IN ORDER. THE RETURN WAS ACCOMPANIED BY STATEMENT OF ACCOUNT VIZ. PROFIT AND LOSS ACCOUNT, BALANCE - SHEET AND TAX AUDIT REPORT U/S 44AB AND TDS CERTIFICATE. THE RETURN WAS PROCESSED U/S 143( 1) OF THE ACT ITA. NO .7221 /M/201 7 A.Y. 2003 - 04 3 RESULTING REFUND OF RS.23,21,903/ - ON ACCOUNT OF TDS WHICH WAS ISSUED TO THE ASSESSEE. THE CASE WAS SELECTED FOR SCRUTINY, THEREFORE, NOTICES U/S 143(2) & 142(1) OF THE ACT WERE ISSUED AND SERVED UPON THE ASSESSEE. THE ASSESSEE WAS IN THE BUS INESS OF TRADING IN SHARES AND SECURITIES. THE ASSESSEE SHOWED THE BAD DEBTS OF RS.4,56,62,415/ - WHICH WAS DISALLOWED ON ACCOUNT OF NON - EXPLANATION AND ADDED TO THE INCOME OF THE ASSESSEE. THE INCOME OF THE ASSESSEE WAS ASSESSED TO THE TUNE OF RS.36,185/ - . THEREAFTER, THE PENALTY PROCEEDING WAS INITIATED AND THE AO LEVIED THE PENALTY IN SUM OF RS.26,24,000/ - WHICH WAS CONFIRMED BY THE CIT(A) , THEREFORE, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. 4 . WE HAVE HEARD THE ARGUMENT ADVANCED BY THE LD. R EPRESENTATIVE OF THE PARTIES AND PERUSED THE RECO R D. AT THE VERY OUTSET, THE LD. REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT THE QUANTUM ON THE BASIS OF WHICH THE PENALTY WAS LEVIED HAS BEEN DELETED BY THE HONBLE ITAT IN THE ASSESSEES OWN CASE IN ITA. NO. 242/M/2011 FOR THE A.Y. 2003 - 04 DATED 06.07.2018 , THEREFORE, IN THE SAID CIRCUMSTANCES, THE PENALTY IS NOT LIABLE TO BE SUSTAINABLE IN THE EYES OF LAW. HOWEVER, ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE DEPARTMENT HAS REFUTED THE SAID CONTENTION . ON APPRAISAL OF THE PENALTY ORDER DATED 30.03.2012 , W E NOTICED THAT THE PENALTY WAS INITIATED ON ACCOUNT OF DISALLOWANCE OF THE CLAIM OF BAD DEBTS IN SUM OF RS.4,56,62,415/ - . A FTER THE DISALLOWANCE OF CLAIM OF THE BAD DEBTS ITA. NO .7221 /M/201 7 A.Y. 2003 - 04 4 IN SUM OF RS.4,56,62,415/ - , TH E ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO RESTRICTED THE CLAIM TO THE EXTENT OF RS. 71,38,731/ - . THEREAFTER, THE PENALTY PROCEEDING WAS INITIATED AND PENALTY IN SUM OF RS.26,23,484/ - WAS LEVIED. THE MATTER OF CONTROVERSY CAME BEFORE THE HONBLE ITAT IN VIEW OF THE ITA. NO. 242/M/2011 FOR THE A.Y. 2003 - 04 DATED 06.07.2018 IN WHICH THE CLAIM OF BAD DEBTS HAS BEEN ALLOWED. THE RELEVANT FINDING HAS BEEN GIVEN IN PARA NO. 4 WHICH IS HEREBY REPRODUCED AS UNDER.: - 4 WE NOTICE THAT THE LD. CIT(A) HAS CONFIRM ED THE DISALLOWANCE TO THE EXTENT OF RS.71.38 IAKHS ONLY AND THE REASON THAT SAID BAD DEBTS CLAIM RELATED TO THE AMOUNT ONE FROM SISTER CONCERNS OF THE ASSESSEE. HOWEVER, A PERUSAL OF THE LEDGER ACCOUNTS OF THE SISTER CONCERNS WOULD SHOW THAT THEY ARE FRAN CHISEES OF THE ASSESSEE CARRYING AND SHARE BROKING BUSINESS. THE LEDGER ACCOUNT SHOWS THAT THE BILLS RAISED BY THE ASSESSEE AGAINST THEM FOR PURCHASE AND SALE OF SHARES. ACCORDINGLY, WE NOTICE THE TRANSACTIONS WITH THE SISTER CONCERNS WERE REGULAR BUSINESS TRANSACTIONS. THE LD. AR SUBMITTED THAT THE SISTER CONCERNS, BEING FRANCHISEES OF THE ASSESSEES SHARE BROKING BUSINESS, COULD NOT REPAY THE DEBTS DUE TO HEAVY LOSSES INCURRED BY THEM. THE CONTENTION OF THE LD. AR COULD NOT BE CONTROVERTED BY THE LD. DR. IN THIS VIEW OF THE MATTER, WE ARE OF THE VIEW THAT THERE IS NO REASON TO DOUBT THE GENUINENESS OF CLAIM. ACCORDINGLY, WE MODIFY THE ORDER PASSED BY LD. CIT(A) AND DIRECT THE AO TO ALLOW THE CLAIM OF RS.71,38 LAKHS, REFERRED ABOVE. 5. SINCE THE CLAIM OF T HE ASSESSEE IN CONNECTION WITH BAD DEBTS HAS BEEN ALLOWED AND THE VERY BASE TO LEVY THE PENALTY IS NOT IN EXISTEN CE, THEREFORE, NO PENALTY IS LIABLE TO BE SUSTAINABLE IN THE EYES OF LAW. ACCORDINGLY, WE DELETE THE PENALTY . ACCORDINGLY, WE DECIDE THESE ISSU ES IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE . ITA. NO .7221 /M/201 7 A.Y. 2003 - 04 5 6 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS HEREBY ORDERED TO BE ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 27. 0 2 .2019 . SD/ - SD/ - ( SHAMIM YAHYA ) (AMARJIT SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; DATED : 27. 02 .2019 . V IJAY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI