JEFERRIS INDIA P.LTD, MUMBAI V. ACIT-14(2)(1), MUMBAI

ITA 7397/MUM/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0221 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2011-2012
• Appeal Filed On: 24-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJIV GUBGOTRA
• Keywords: Invalid notice; Reasonable cause; Condonation of delay; Revised return; Bonafide mistake; Capital expenditure
• Section: 271(1)(c); 143(3); 250; 28

Judgement Text

1 IN THE INCOME-TAX APPELLATE TRIBUNAL F BENCH MUMB AI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 7397/MUM/2018 (ASSESSMENT YEAR 2011-12 ) JEFFERRIS INDIA PVT. LTD. 42,-43, NORTH AVENUE, MAKER MAXITY, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI-400051 . PAN: AABCJ7850R VS. ACIT-14(2)(1), ROOM NO. 432, 4 TH FLOOR, AAYAKAR BHA VAN, M.K. ROAD, MUMBAI-400051. APPELLANT RESPONDE NT APPELLANT BY : SHRI RAJAN R. VORA (AR) RESPONDENT BY : SHRI RAJIV GUBGOTRA (DR) DATE OF HEARING : 28.03.2019 DATE OF PRONOUNCEMEN T : 28.03.2019 ORDER UNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORD ER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-22, (HEREINAFTER REFERRED A S LD CIT (A), MUMBAI DATED 04.12.2017, WHICH IN TURN ARISES FROM THE PEN ALTY LEVIED BY ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE AC T FOR ASSESSMENT YEAR 2011-12. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPA NY FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2011-12 DECLARING INCOME OF RS. 9,78,51,166/-. THE RETURN OF INCOME WAS REVISED ON 25.05.2012 DECLARING INCOME OF RS. 9,58,51,166/-. IN THE REVISED RETURN OF INCOME, THE ASSESSEE REVISED REDUCTION OF DISALLOWANCE UNDER SECTION 40( A)(IA) OF RS. ITA NO . 7397 MUM 2018-JEFFERRIS INDIA PVT. LTD. 2 20,00,000/-, WITHDRAWAL OF MINIMUM ALTERNATIVE TAX (MAT) CREDIT OF RS. 80,77,413/- AND DEPOSIT OF SELF-ASSESSMENT TAX. THE RETURN WAS SELECTED FOR SCRUTINY. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) ON 23.12.2015. DURING THE ASSESSMENT, THE AS SESSING OFFICER NOTED THAT THE AUTHORISED CAPITAL OF THE ASSESSEE W AS INCREASED FROM RS. 36 CRORE TO RS. 230 CRORE. THE ASSESSING OFFICER CA LLED RATES AND TAXES. ON PERUSAL OF THE DETAILS, THE ASSESSING OFFICER NO TED THAT STAMP DUTY OF RS. 97,00,000/-, FEE OF REGISTRAR OF COMPANY (ROC) OF RS.38,80,000/- AND FRANKING CHARGE OF RS. 22,50,000/- WERE DEBITED FOR INCREASE OF AUTHORIZED SHARE CAPITAL. THE SAID EXPENDITURE WAS INCURRED SUBSEQUENT TO THE COMMENCEMENT OF BUSINESS AND THE SAME WAS CA PITAL IN NATURE INCURRED FOR ACQUIRING BENEFIT FOR ENDURING NATURE NOT ALLOWABLE UNDER SECTION 35D. THE ASSESSEE THOUGH DISALLOWED THE STA MP AND ROC FEES WHILE COMPUTING ITS INCOME, HOWEVER, THE SAID FRANK ING CHARGE WAS NOT DISALLOWED. THE ASSESSING OFFICER DISALLOWED THE SA ID FRANKING CHARGE RS. 22,50,000/-. WHILE PASSING THE ASSESSMENT ORDER , THE ASSESSING OFFICER INITIATED THE PENALTY UNDER SECTION 271(1)( C). THE ASSESSING OFFICER LEVIED THE PENALTY OF 100% OF THE TAX SOUGH T TO BE EVADED. THE ASSESSING OFFICER WORKED OUT THE PENALTY OF RS. 7,6 4,775/-. NO APPEAL IN QUANTUM ASSESSMENT WAS FILED BY ASSESSEE. HOWEVER, THE ASSESSEE UNSUCCESSFULLY CHALLENGED THE LEVY OF PENALTY UNDER SECTION 271(1)(C) ITA NO . 7397 MUM 2018-JEFFERRIS INDIA PVT. LTD. 3 BEFORE THE LD. CIT(A). THUS, FURTHER AGGRIEVED, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. 3. PERUSAL OF RECORDS REVEALS THAT THE LD. CIT(A) PASS ED THE IMPUGNED ORDER ON 04.12.2017, HOWEVER, THE PRESENT APPEAL WAS FILE D ON 24.12.2018, THUS, THERE IS DELAY OF 280 DAYS IN FILING OF APPEA L. THE ASSESSEE HAS FILED AN APPLICATION FOR CONDONATION OF DELAY AND AFFIDAV IT OF SH. BRIJMOHAN GOPALDASS SONI, DIRECTOR OF ASSESSEE IN SUPPORT OF APPLICATION FOR SEEKING CONDONATION IN FILING APPEAL BEFORE US. 4. THE LD. AR OF THE ASSESSEE SUBMITS THAT THE ASSESSE E WHILE COMPUTING TAXABLE INCOME AND FILING RETURN OF INCOME FOR RELE VANT ASSESSMENT YEAR PLACED RELIANCE ON TAX AUDIT REPORT (TAR) AND INADV ERTENTLY MISSED TO DISALLOW THE FRANKING CHARGES AMOUNTING TO RS. 22,5 0,000/-, IT WAS A BONAFIDE MISTAKE ON RELYING ON THE TAR. DURING THE ASSESSMENT, THE ASSESSEE REALIZE ITS ERROR IN NOT DISALLOWING THE F RANKING CHARGES AND SUO- MOTO ADMITTED THAT AFORESAID CHARGES OUGHT TO HAVE BEEN DISALLOWED WHILE ARRIVING THE TAXABLE PROFIT AND ACCEPTED THE DISALLOWANCE. THE PENALTY WAS LEVIED ON THE ASSESSEE FOR RS. 7,64,775 /-, THOUGH, THE ASSESSEE CONTESTED THE APPEAL BEFORE THE LD. CIT(A) ON THE VALIDITY OF THE NOTICE AS WELL AS ON MERIT. AFTER DISMISSAL OF APPE AL, THE ASSESSEE NOT FILED FURTHER APPEAL BEFORE THE TRIBUNAL TO AVOID T HE LONG DRAWN LITIGATION PARTICULARLY LOOKING AT THE SMALLNESS OF THE AMOUNT AND CHOSE NOT TO PURSUE THE MATTER. THE ASSESSEE ALSO FILED A LETTER DATED 12.03.2018 IN THE ITA NO . 7397 MUM 2018-JEFFERRIS INDIA PVT. LTD. 4 OFFICE OF ASSESSING OFFICER THAT THE ASSESSEE IN PR INCIPLE, DOES NOT AGREE WITH THE PENALTY AS THEY HAVE NO MALAFIDE INTENTION OF CONCEALING ANY INCOME OR FURNISHING INACCURATE PARTICULAR THEREOF. NO FURTHER PROCEEDING BE INITIATED AND PRAYED FOR PASSING THE ORDER GIVIN G EFFECT TO THE ORDER OF LD. CIT(A). HOWEVER, TO THE SURPRISE OF ASSESSEE, T HE REVENUE HAS STARTED PROSECUTION OF THE DIRECTOR BY ISSUING NOTICE UNDER SECTION 276/277 OF INCOME-TAX ACT. THE LD. AR OF THE ASSESSEE FURTHER SUBMITS THAT THOUGH THE ASSESSEE HAS GOOD CASE ON MERIT AND ON THE ADVI CE OF HIS TAX CONSULTANT DUE TO SMALLNESS OF AMOUNT, THE ASSESSEE CHOSE NOT TO FILE FURTHER APPEAL. THE LD. AR OF THE ASSESSEE SUBMITS THAT THERE WAS A SUFFICIENT GROUND FOR CONDONING THE DELAY AS THE AS SESSEE ACTED BONAFIDELY FOR NOT FILING APPEAL IN TIME. THE ASSES SEE NOW COMPELLED TO FILE APPEAL BEFORE THE TRIBUNAL AS THE DEPARTMENT H AS ISSUED SHOW-CAUSE NOTICE FOR ISSUING PROSECUTION AGAINST ALL THE DIRE CTORS OF THE ASSESSEE. IN SUPPORT OF HIS SUBMISSION, THE LD. AR OF THE ASSESS EE RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN COLLECTOR, LAN D ACQUISITION VS. MST. KATIJI AND OTHERS. [1987] 167 ITR 471 (SC), VE DABAI ALIAS VAIJAYANATABAI BABURAO PATIL [2002] 173 CTR 300 (SC ) AND THE DECISION OF HONBLE BOMBAY HIGH COURT IN VIJAY VISHIN MEGHAN I VS. DCIT [2017] 398 ITR 250 (BOMBAY HC). THE LD AR WOULD SUB MIT THAT THE ASSESSEE HAS GOOD CASE ON MERIT AND IS LIKELY TO SU CCEED. ITA NO . 7397 MUM 2018-JEFFERRIS INDIA PVT. LTD. 5 5. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUBMI TS THAT THE ASSESSEE HAS NOT SHOWN GOOD CAUSE FOR CONDONATION OF DELAY. ONCE THE ASSESSEE HAS TAKEN A CONSCIOUS DECISION FOR NOT FILING APPEA L, THE ASSESSEE NOW CANNOT TAKE AN ARTIFICIAL GROUND FOR CONDONING THE DELAY. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES. WE HAVE ALSO PERUSED THE AFFIDAVIT FILED ON BEHALF OF THE ASSESS EE IN SUPPORT OF APPLICATION FOR CONDONING THE DELAY. WE HAVE ALSO D ELIBERATED ON VARIOUS CASE LAW RELIED UPON BY LD. AR OF THE ASSES SEE. THE HONBLE SUPREME COURT IN B. MADHURI GOUD V. B. DAMODAR RED DY (2012) 12 SCC 693, BY REFERRING VARIOUS EARLIER DECISIONS OF SUPERIOR COURTS HELD THAT THE AUTHORITIES MUST KEPT IN MIND WHILE C ONSIDERING THE APPLICATION FOR CONDONATION OF DELAY ; (I) THERE SHOULD BE A LIBERAL, PRAGMATIC, JUSTICE ORIEN TED, NON-PEDANTIC APPROACH WHILE DEALING WITH AN APPLICATION FOR COND ONATION OF DELAY, FOR THE COURTS ARE NOT SUPPOSED TO LEGALISE INJUSTI CE BUT ARE OBLIGED TO REMOVE INJUSTICE. (II) THE TERMS SUFFICIENT CAUSE SHOULD BE UNDER STOOD IN THEIR PROPER SPIRIT, PHILOSOPHY AND PURPOSE REGARD BEING HAD TO THE FACT THAT THESE TERMS ARE BASICALLY ELASTIC AND ARE TO BE APPLIED IN PROP ER PERSPECTIVE TO THE OBTAINING FACT-SITUATION. (III) SUBSTANTIAL JUSTICE BEING PARAMOUNT AND PIVOT AL THE TECHNICAL CONSIDERATIONS SHOULD NOT BE GIVEN UNDUE AND UNCALL ED FOR EMPHASIS. (IV) NO PRESUMPTION CAN BE ATTACHED TO DELIBERATE CAUSE OF DELAY BUT, GROSS NEGLIGENCE ON THE PART OF THE COUNSEL OR LITIGANT I S TO BE TAKEN NOTE OF. (V) LACK OF BONA FIDES IMPUTABLE TO A PARTY SEEK ING CONDONATION OF DELAY IS A SIGNIFICANT AND RELEVANT FACT. ITA NO . 7397 MUM 2018-JEFFERRIS INDIA PVT. LTD. 6 (VI) IT IS TO BE KEPT IN MIND THAT ADHERENCE TO ST RICT PROOF SHOULD NOT AFFECT PUBLIC JUSTICE AND CAUSE PUBLIC MISCHIEF BECAUSE TH E COURTS ARE REQUIRED TO BE VIGILANT SO THAT IN THE ULTIMATE EVE NTUATE THERE IS NO REAL FAILURE OF JUSTICE. (VII) THE CONCEPT OF LIBERAL APPROACH HAS TO ENCAP SULATE THE CONCEPTION OF REASONABLENESS AND IT CANNOT BE ALLOWED A TOTALLY U NFETTERED FREE PLAY. (VIII)THERE IS A DISTINCTION BETWEEN INORDINATE DEL AY AND A DELAY OF SHORT DURATION OR FEW DAYS, FOR TO THE FORMER DOCTRINE OF PREJUDICE IS ATTRACTED WHEREAS TO THE LATTER IT MAY NOT BE ATTRA CTED. THAT APART, THE FIRST ONE WARRANTS STRICT APPROACH WHEREAS THE SECO ND CALLS FOR A LIBERAL DELINEATION. (IX) THE CONDUCT, BEHAVIOUR AND ATTITUDE OF A PART Y RELATING TO ITS INACTION OR NEGLIGENCE ARE RELEVANT FACTORS TO BE TAKEN INTO CO NSIDERATION. IT IS SO AS THE FUNDAMENTAL PRINCIPLE IS THAT THE COURTS ARE REQUIRED TO WEIGH THE SCALE OF BALANCE OF JUSTICE IN RESPECT OF BOTH PART IES AND THE SAID PRINCIPLE CANNOT BE GIVEN A TOTAL GO BY IN THE NAME OF LIBERAL APPROACH. (X) IF THE EXPLANATION OFFERED IS CONCOCTED OR THE GROUNDS URGED IN THE APPLICATION ARE FANCIFUL, THE COURTS SHOULD BE VIGI LANT NOT TO EXPOSE THE OTHER SIDE UNNECESSARILY TO FACE SUCH LITIGATION. (XI) IT IS TO BE BORNE IN MIND THAT NO ONE GETS AWA Y WITH FRAUD, IS REPRESENTATION OR INTERPOLATION BY TAKING RECOURSE TO THE TECHNICALITIES OF LAW OF LIMITATION. (XII) THE ENTIRE GAMUT OF FACTS ARE TO BE CAREFULLY SCRUTINIZED AND THE APPROACH SHOULD BE BASED ON THE PARADIGM OF JUDICIA L DISCRETION WHICH IS FOUNDED ON OBJECTIVE REASONING AND NOT ON INDIVI DUAL PERCEPTION. (XIII) THE STATE OR A PUBLIC BODY OR AN ENTITY REPR ESENTING A COLLECTIVE CAUSE SHOULD BE GIVEN SOME ACCEPTABLE LATITUDE. 7. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE RATIO OF LAW LAID DOWN AS REFERRED ABOVE, WE ARE OF THE VIEW THA T THE ASSESSEE HAS ACTED ON THE ADVICE OF HIS TAX ADVISOR. THE ASSESSE E ACTED ON THE ADVICE KEEPING IN VIEW THE COST OF LITIGATION, WHICH IN OU R VIEW IS A REASONABLE ITA NO . 7397 MUM 2018-JEFFERRIS INDIA PVT. LTD. 7 CAUSE. AND THE ASSESSEE IS NOW COMPELLED TO FILE TH E PRESENT APPEAL. WE HAVE ALSO FOUND THAT THE ASSESSEE HAS GOT MERIT IN THEIR FAVOUR. THEREFORE, IN VIEW OF THE ABOVE DISCUSSION THE DELA Y IN FILING THE PRESENT APPEAL IS CONDONED. THEREFORE, ASSESSEE AND THE REV ENUE WAS ALSO HEARD ON MERIT. 8. ON MERIT, WE HAVE HEARD THE SUBMISSION OF LD. AR OF THE ASSESSEE AND LD. DR FOR THE REVENUE. THE LD. AR OF THE ASSESSEE SUBM ITS THAT DURING THE ASSESSMENT, THE ASSESSEE SUO-MOTO ADMITTED THAT FRA NKING CHARGES OUGHT TO HAVE BEEN DISALLOWED WHILE OFFERING TAXABLE PROF IT AND ACCEPTED THE DISALLOWANCE IN THE ASSESSMENT ORDER DATED 23.02.20 15. HOWEVER, THE ASSESSING OFFICER INITIATED AND LEVIED THE PENALTY UNDER SECTION 271(1)(C) VIDE ORDER DATED 28.08.2015 FOR RS. 7,64,775/-, WIT HOUT CONSIDERING THE BONAFIDE EXPLANATION FURNISHED BY ASSESSEE. THE ASS ESSEE CONTESTED THE APPEAL BEFORE THE LD. CIT(A) ON MERIT AS WELL AS ON VALIDITY OF NOTICE UNDER SECTION 271(1)(C) AS RELEVANT LIMB OF SECTION 271(1)(C) WHICH WAS NOT APPLICABLE IN ASSESSEES CASE, HAD NOT BEEN STU CK OFF IN THE PENALTY NOTICE. THE LD. CIT(A) CONFIRMED THE ORDER WITHOUT CONSIDERING THE BONAFIDE EXPLANATION OFFERED BY THE ASSESSEE. THE L D. AR OF THE ASSESSEE IN SUPPORT OF HIS SUBMISSION RELIED UPON THE DECISI ON OF PRICE WATERHOUSE P. LTD. VS. CIT [2012] 348 ITR 306 (SC). 9. THE LD. AR OF THE ASSESSEE FURTHER SUBMITS THAT NOT ICE UNDER SECTION 271(1)(C) IS ALSO INVALID AND BAD-IN-LAW AS THE REL EVANT LIMBS UNDER ITA NO . 7397 MUM 2018-JEFFERRIS INDIA PVT. LTD. 8 SECTION 271(1)(C) WHICH IS INAPPLICABLE IN CASE OF ASSESSEE HAD NOT BEEN STUCK OFF. IN SUPPORT OF HIS SUBMISSION, THE LD. AR OF THE ASSESSEE RELIED UPON THE DECISION OF CIT VS. SSAS EMERALD MEADOWS [2016] 242 TAXMAN 180 (SC), CIT VS. SAMSON PERINCHERY (ITA NO. 1154 OF 2014, CIT VS. MANJUNATHA COTTON & GINNING FACTORY [2013] 359 ITR 565. THE LD AR FOR THE ASSESSEE SUBMITS THAT THE NOTICE UNDE R SECTION 274 READ WITH SECTION 271(1)(C) IS INVALID AND THUS ACTION I NITIATED ON THE INVALID NOTICE IS VOID AB INITIO. 10. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUPPO RTED THE ORDER OF LOWER AUTHORITIES BELOW. THE LD. DR FOR THE REVENUE SUBMITS THAT ASSESSEE WHILE FILING RETURN OF INCOME WRONGLY CLAI MED FRANKING CHARGES. THE FRANKING CHARGE WAS NOT ALLOWABLE UNDER SECTION 35D. NO APPEAL WAS FILED BY ASSESSEE AGAINST THE ADDITION/DISALLOW ANCE MADE BY ASSESSING OFFICER. THE ADDITION HAS ATTENDED FINALI TY. THE LD DR FURTHER SUBMITS THAT IT IS A FIT CASE FOR LEVY OF PENALTY. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THERE IS N O DISPUTE THAT DURING THE ASSESSMENT, THE ASSESSING OFFICER DISALLOWED FR ANKING CHARGES TREATING IT A CAPITAL EXPENDITURE. IN REPLY TO THE SHOW NOTICE UNDER SECTION 274 READ WITH SECTION 271(1)(C), THE ASSESSEE FILED ITS REPLY DATED 17.08.2015. IN THE REPLY, THE ASSESSEE CONTENDED TH AT IN COURSE OF SCRUTINY ASSESSMENT WHILE PROVIDING THE DETAILS IN RESPECT OF RATE AND ITA NO . 7397 MUM 2018-JEFFERRIS INDIA PVT. LTD. 9 TAXES, THE ASSESSEE REALIZE ITS ERROR IN NOT DISALL OWING THE FRANKING CHARGES AND ADMITTED THAT THE AFORESAID CHARGES OUG HT TO HAVE BEEN DISALLOWED WHILE ARRIVING AT THE TAXABLE PROFIT. TH E CONTENTION OF ASSESSEE WAS NOT ACCEPTED BY ASSESSING OFFICER HOLD ING THAT THE PENALTY UNDER SECTION 271(1)(C) IS ATTRACTED, WHERE THE ASS ESSING OFFICER IS SATISFIED THAT ANY PERSON HAS CONCEALED THE PARTICU LAR OF INCOME OR FURNISHED INACCURATE PARTICULAR OF SUCH INCOME. THE CASE OF ASSESSEE IS SQUARELY FALLS UNDER EXPLANATION (1) TO THE PROVISO OF SECTION 271(C). THE ASSESSING OFFICER LEVIED THE 100% PENALTY OF TAX SO UGHT TO BE EVADED ON DISALLOWANCE OF FRANKING CHARGES OF RS. 22,50,000/- . THE LD. CIT(A) UPHELD THE ACTION OF ASSESSING OFFICER HOLDING THAT ASSESSEE DEBITED THE CAPITAL EXPENDITURE OF FRANKING CHARGES FOR INCREAS E IN AUTHORIZED SHARE CAPITAL WITHOUT ADDING BACK THE SAME IN ITS COMPUTA TION OF INCOME. IT IS SETTLED LEGAL POSITION THAT ANY EXPENSES INCURRED FOR INCREASE OF AUTHORIZED SHARE CAPITAL IS CAPITAL IN NATURE, THIS FACT CAME TO THE LIGHT ONLY AFTER ASSESSING OFFICER CALLED FOR DETAILS OF RATES AND TAXES AND WAS NOT VOLUNTARILY DISCLOSED BY THE ASSESSEE. THE CONT ENTION OF ASSESSEE IS THAT IT HAD INADVERTENTLY MISTAKE TO DISALLOWING TH E FRANKING CHARGES INCURRED ON ACCOUNT OF INCREASED IN THE AUTHORIZED SHARE CAPITAL, WHILE STAMP DUTY AND FILING OF FEES PAID TO ROC FOR THE S AME PURPOSE OF RS. 1.35 CRORE WAS DULY DISALLOWED IN THE COMPUTATION. THE STAMP DUTY AND ROC FEES WERE REFLECTED IN TAR AND FRANKING CHARGES WAS NOT REFLECTED ITA NO . 7397 MUM 2018-JEFFERRIS INDIA PVT. LTD. 10 IN THE TAR BY THE AUDITOR, WHICH WAS THE BONAFIDE M ISTAKE. THE ASSESSEE ACTED ON THE TAR BONAFIDELY. THE CONTENTION OF ASS ESSEE THAT THERE WAS NO WILLFUL CONCEALMENT WAS ALSO REPUDIATED BY LD. C IT(A). 12. WE HAVE NOTED THAT IN THE REPLY TO THE SHOW-CAUSE N OTICE UNDER SECTION 271(1)(C), THE ASSESSEE SPECIFICALLY CONTENDED THAT DURING THE SCRUTINY ASSESSMENT, THE ASSESSEE REALIZED ITS ERROR IN NOT DISALLOWING THE FRANKING CHARGE AND ADMITTED THAT THE AFORESAID CHARGES OUGH T TO HAVE BEEN DISALLOWED. THE ASSESSING OFFICER HAS NOT DISPUTED THE CONTENTION OF ASSESSEE IN THE PENALTY ORDER. THE CONTENTION OF AS SESSEE THROUGHOUT THE PROCEEDING ARE THAT THE FRANKING CHARGES WERE INADV ERTENTLY MISTAKE TO BE DISALLOWED BY THE ASSESSEE AS THE SAME WAS NOT REPO RTED IN TAR. THE ASSESSEES CONTENTION IS THAT THE ERROR WAS UNINTEN TIONAL AND BONAFIDE MISTAKE. IN OUR VIEW, THE ASSESSEE HAS SHOWN REASON ABLE CAUSE BY OFFERING THE FRANKING CHARGES DURING THE ASSESSMENT BY OFFERING SUO- MOTO DISALLOWANCE AT THE COST OF REPETITION, WE MAY AD THAT THE ASSESSEE WHILE FILING REPLY TO THE SHOW-CAUSE NOTICE THAT AS SESSEE REALIZED ITS ERROR AND ADMITTED THAT AFORESAID FRANKING CHARGES OUGHT TO HAVE BEEN DISALLOWED. THIS FACT IS DULY RECORDED BY ASSESSING OFFICER IN PARA-2.1 OF THE PENALTY ORDER. THE ASSESSING OFFICER HAS NOT CO UNTERED THE BONAFIDE EXPLANATION FURNISHED BY ASSESSEE. THE HONBLE APEX COURT IN PRICE WATERHOUSE P. LTD. VS. CIT (SUPRA) HELD THAT THE PE NALTY UNDER SECTION 271(1)(C) COULD NOT BE LEVIED, WHERE IT INVOLVES A MISTAKE BY ASSESSEE ON ITA NO . 7397 MUM 2018-JEFFERRIS INDIA PVT. LTD. 11 ACCOUNT OF HUMAN ERROR. THEREFORE, CONSIDERING THE DECISION OF HONBLE APEX COURT WHICH IS ALMOST ON SIMILAR FACT, WE FIND THAT THE ASSESSEE HAS SHOWN REASONABLE CAUSE DURING THE ASSESSMENT AS WEL L AS DURING THE PENALTY PROCEEDING AND NO PENALTY WAS LEVIABLE ON T HE ASSESSEE. THEREFORE, WE DIRECT THE ASSESSING OFFICER TO DELET E THE ENTIRE PENALTY. 13. AS WE HAVE ACCEPTED THE PRIMARY STATEMENT OF ASSESS EE ON MERIT AND DELETED THE ENTIRE PENALTY, THEREFORE, THE DISCUSSI ON ON OTHER ADJUDICATION AND SUBMISSION AND GROUND NO. 3 TO 6 RAISED BY ASSE SSEE HAVE BECOME ACADEMIC. 14. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28/03/2019. SD/- SD /- SHAMIM YAHYA PAWAN SINGH ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 28 .03.2019 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR F BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI