ITO 11(1)(1), MUMBAI V. DEVGAN ENTERTAINMENT & SOFTWARE LTD, MUMBAI

ITA 7364/MUM/2013

• Counselvise Citation: 736419914 RSA 2013
• Duration Of Justice: 1 year(s) 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2007-2008
• Appeal Filed On: 13-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LOVE KUMAR
• Assessee Lawyers: S K MUTSADDI; RUTURAJ HARIVIJAY GURJAR
• Section: 115JB

Judgement Text

D IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ./ I.T.A. NO. 7364 /MUM/2013 ( / ASSESSMENT YEAR 2007-08) INCOME TAX OFFICER - 11(1)(1), ROOM NO. 436A, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. / VS. M/S DEVGAN ENTERTAINMENT & SOFTWARE LTD., 5,6 SHEETAL APARTMENT, GROUND FLOOR, OPP. CHANDAN CINEMA, JUHU, VILE PARLE, MUMBAI 400 049. ./ PAN : AAACD7789G ( / APPELLANT ) .. ( / RESPONDENT ) A PPELLANT BY SHRI LOVE KUMAR R E SPONDENT BY : SHRI S.K. MUTSADDI & SHRI RUTURAJ HARIVIJAY GURJAR / DATE OF HEARING : 14-05-2015 / DATE OF PRONOUNCEMENT : 22-07-2015 [ !' / O R D E R PER R.C. SHARMA, AM : THIS IS AN APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A) -3, MUMBAI DATED 11-10-2013 FOR A.Y. 200 7-08 IN THE MATTER OF PENALTY IMPOSED U/S 271(1(C) OF THE INCOME TAX ACT, 1961. 2. THE ONLY GROUND TAKEN BY THE REVENUE RELATES TO THE DELETION OF PENALTY AMOUNTING TO RS. 48,77,192/- LEVIED U/S 271(1)(C) O F THE ACT. THE BRIEF FACTS OF ITA 7364/M/13 2 THE MATTER ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AN ADDITION OF RS.1 ,44,69,593/- WAS MADE TO THE INCOME U/S.41 (1) OF THE ACT, AS THE ASSESSEE HAS FAILED TO FILE CONFIRMATION IN RESPECT OF THESE SUNDRY CREDITORS. EVEN AFTER MAKING THIS ADDITION, INCOME OF ASSESSEE WAS NOT LIABLE TO TAX, THEREFORE. A.O. ASSESSED INCOME AS PER BOOK PROFIT U/S 115JB. THEREAFTER, THE AO HELD THAT THE ASSESSEE HAD FAILED TO PROVE T HE GENUINENESS OF THE SUNDRY CREDITORS OUTSTANDING IN HIS BOOKS. THE AO A LSO LEVIED PENALTY U/S. 271 (1) (C) OF THE ACT FOR SUCH ADDITION. BY THE IM PUGNED ORDER, THE LD. CIT(A) DELETED THE PENALTY AFTER HAVING FOLLOWING OBSERVAT ION:- I HAVE EXAMINED THE FACTS IN THIS CASE, THE ORDER OF THE AO AND THE SUBMISSIONS OF THE ASSESSEE. THERE ARE SEVERAL DECI SIONS WHEREIN IT HAS BEEN HELD THAT THE PROVISIONS OF SECTION 41 (1) ARE APPL ICABLE ONLY WHEN THERE IS A WRITE BACK OF LIABILITY IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. IT HAS ALSO BEEN HELD IN THE CASE OF ALLIED LEATHER FINISHERS P LTD , CITED (SUPRA) THAT IN CASE THE AO IS OF THE CONCLUSION THAT THE TRADING LIABILITY IS NOT GENUINE THEN THE SAME HAS TO BE TAXED U/S.68 IN THE YEAR IN WHICH THE LIA BILITY WAS CREATED. IN THE INSTANT CASE, ALL THE LIABILITIES ARE OLD LIABILITI ES AND THERE HAS BEEN NO WRITE BACK IN THE BOOKS OF THE ASSESSEE. THEREFORE, THE V ERY MERITS OF THE ADDITION ARE DISPUTABLE. IN THE CASE OF CIT V SSP LTD (2010) 189 TAXMAN 282 (P&H), IT HAS BEEN HELD THAT MERE ERRONEOUS CLAIM FOR DEDUCTI ON, IN THE ABSENCE OF ANY CONCEALMENT OR GIVING OF INACCURATE PARTICULARS, IS NO GROUND FOR LEVYING PENALTY UNDER SECTION 271 (L)(C). WHERE THE ASSESSE E HAD OFFERED VALID EXPLANATION AND HAD RAISED DEBATABLE ISSUES FOR CLA IMING THE EXPENDITURE, DISALLOWANCE OF THE CLAIM ALONE WOULD NOT JUSTIFY I MPOSITION OF PENALTY. FURTHER IN THE CASE OF RELIANCE PETROPRODUCTS P LTD . 189 TAXMAN 322, THE SUPREME COURT HAS HELD THAT AN INCORRECT CLAIM IN L AW CANNOT TANTAMOUNT TO FURNISHING OF INACCURATE PARTICULARS. IT MUST BE SH OWN THAT THE CONDITIONS UNDER SECTION 271 (1) (C) EXIST BEFORE THE PENALTY IS IMPOSED. THE WORD 'PARTICULARS' MUST MEAN DETAILS SUPPLIED IN THE RET URN WHICH ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TRUTH, ERRON EOUS. CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO FUR NISHING OF INACCURATE PARTICULARS OF INCOME. IN VIEW OF THE ABOVE RATIO O F DECISIONS, PENALTY U/S.271 (1 )(C) IS NOT SUSTAINABLE. AGAINST THE ABOVE ORDER OF LD. CIT(A), THE REVENUE IS IN FURTHER APPEAL BEFORE US. 3. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND FOU ND THAT THE ISSUE UNDER CONSIDERATION IS SQUARELY COVERED BY THE DECI SION OF HONBLE P&H HIGH ITA 7364/M/13 3 COURT IN THE CASE OF CIT VS. SSP LTD. (2010) 189 TA XMAN 282 (P&H) AS WELL AS BY THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. NALWA SONS INVESTMENT LTD. [2010] 194 TAXMAN 387 WHEREIN IT WAS HELD THAT WHERE INCOME IS ASSESSED U/S 115JB OF THE ACT AT BOOK PROFIT AND N OT UNDER NORMAL PROVISIONS, NO PENALTY IS IMPOSABLE U/S 271(1)(C) O F THE ACT. THE SLP FILED AGAINST THE JUDGMENT OF HONBLE DELHI HIGH COURT IN CIT VS. NALWA SONS INVESTMENT LTD. HAS BEEN DISMISSED BY THE HONBLE S UPREME COURT AND REPORTED IN (2012) 21 TAXMANN.COM 184 (SC). THE HO NBLE HIGH COURTS RULING WAS AS UNDER:- WHEN ASSESSMENT WAS MADE ON INCOME COMPUTED UNDER SECTION 115JB AND TAX HAD BEEN PAID ON INCOME SO COMPUTED, PENALTY UN DER SECTION 271(1)(C) WOULD NOT BE IMPOSED WITH REFERENCE TO ADDITIONS TH AT WOULD HAVE BEEN MADE TAKING INTO ACCOUNT CONCEALMENT MADE BY ASSESSEE WH ILE MAKING ASSESSMENT UNDER NORMAL PROCEDURE. IN THE INSTANT CASE BEFORE US, INCOME WAS ASSESSED U/S 11JB AND NOT UNDER NORMAL PROVISIONS OF THE ACT, THEREFORE, IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT WITH REFERENCE TO THE ADDITION SO MADE UNDE R NORMAL PROVISION IS NOT SUSTAINABLE. 4. RESPECTFULLY FOLLOWING THE ORDER OF THE HONBLE DELHI HIGH COURT IN THE CASE OF NALWA SONS INVESTMENT LTD. (SUPRA), WE CONF IRM THE ORDER OF THE LD. CIT(A) DELETING THE PENALTY IMPOSED BY THE A.O. U/S 271 (1)(C) OF THE ACT, NOT ON THE REASONING GIVEN BY HIM, BUT FOR THE PROPOSIT ION OF LAW LAID DOWN BY THE HONBLE DELHI HIGH COURT, AS DISCUSSED ABOVE. ITA 7364/M/13 4 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND JULY, 2015. !' # $% &! ' 22-07-2015 ( ) SD/- SD/- (SANJAY GARG) (R.C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER $ 5 MUMBAI ; &! DATED 22-07-2015 .6../ RK RKRK RK , SR. PS ! '#$% &%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. 7 () / THE CIT(A) 3, MUMBAI 4. 7 / CIT -11 MUMBAI 5. :;( 66<= , <= , $ 5 / DR, ITAT, MUMBAI D BENCH 6. (?@ A / GUARD FILE. ' / BY ORDER, : 6 //TRUE COPY// (/') * ( DY./ASSTT. REGISTRAR) , $ 5 / ITAT, MUMBAI