AMIT RAJARAM NAR, MUMBAI V. ITO-33(1)(1), MUMBAI

ITA 7402/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2534 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 24-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHTAR ALI ANSARI
• Keywords: Set aside
• Section: 271(1)(c); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SMC BENCH MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER. ITA NO. 7402/MUM/2018 (ASSESSMENT YEAR : 2014-15 ) AMIT RAJARAM NAR, THE INCOME-TAX OFFICER, 604, KESAR ASISH COOP.HSG, VS. 33(1), MUMBAI. VILLAGE MOUZE, KNDIVLI, MUMBAI-400067. PAN AECPN5244D. APPELLANT. RESPONDENT . ASSESSEE BY : SHRI TANZIL R. PADVEKAR.(A.R.) REVENUE BY : SHRI AKHTAR ALI ANSARI (D.R) DATE OF HE ARING : 06-01-2020. DATE OF PRON OUNCEMENT : 16 -03-2020. / O R D E R PER SHAMIM YAHYA, A.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LEARNED CIT(APPEALS) DATED 27-07-2017 PASSED U/S 271(1(C) O F THE INCOME-TAX ACT. THE APPEAL RELATES TO ASSESSMENT YEAR 2014-15. THE ISSU E IS PENALTY U/S 271(1)(C) AMOUNTING TO RS.4,00,000/- 2. DURING THE ASSESSMENT PROCEEDINGS IT WAS NOTED B Y THE AO THAT THE ASSESSEE HAS DEBITED COMMISSION EXPENSES AMOUNTING TO RS.16, 48,406/-. OUT OF THIS, 2 ITA NO.7402 /MUM/2018. RS.12,75,000/- WAS PAID TO THREE FAMILY MEMBERS. TH E AO CALLED FOR DETAILS AND DURING THE COURSE OF ENQUIRY HE ISSUED SUMMONS U/S 131 TO THE THREE PARTIES FOR EXAMINATION. BUT THERE WAS NO RESPONSE. THE ASSESSE E CAME FORWARD AND VOLUNTARILY OFFERED THE AMOUNT OF RS12,75,000/- BEI NG COMMISSION PAID TO THREE MEMBERS TO TAX DURING THE ASSESSMENT PROCEEDINGS. A CCORDINGLY THIS AMOUNT WAS DISALLOWED AND PENALTY PROCEEDINGS WERE ALSO INITIA TED. THE ASSESSEES PLEA THAT THE ASSESSEE HAS VOLUNTARILY OFFERED THE AMOUNT AND HEN CE PENALTY IS NOT LEVIABLE WAS REJECTED BY THE AO. IN THE PENALTY ORDER THE AO INT ER ALIA, OBSERVED THAT THE ASSESSEE HAS NOT SUBMITTED THE COPIES OF RETURNS FO R ASSESSMENT YEAR 2014-15 OF THE THREE PARTIES WHO HAVE RECEIVED THE COMMISSION. 3. AGAINST THE LEVY OF PENALTY, THE ASSESSEE APPEAL ED BEFORE THE LEARNED CIT(APPEALS). THE LEARNED CIT(APPEALS) UPHELD THE L EVY OF PENALTY. IN THIS DECISION THE LEARNED CIT(APPEALS) HELD THAT THE DEC ISION OF HONBLE APEX COURT IN THE CASE OF RELIANCE PETRO PRODUCTS STOOD DISTINGUI SHED BY THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF ZOOM COMMUNICATION PVT. LT. 40 DTR 249. 4. NOW THE ASSESSEE IS IN APPEAL BEFORE US. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT THE PENALTY HAS B EEN LEVIED IN THIS CASE FOR DISALLOWANCE OF COMMISSION EXPENSES. THESE COMMISSI ON EXPENSES WERE PROVISIONS IN THE ACCOUNT. THE PAYMENT BY CHEQUE SUBSEQUENTLY IN THIS REGARD WAS DULY SUBMITTED BEFORE THE AO. HOWEVER, THE AO S ENT NOTICES U/S 131 TO THE RECIPIENT PARTIES. IN THE MEANWHILE THE ASSESSEE OF FERED THESE SUMS FOR TAXATION AS THE ASSESSEE CLAIMED THAT THE ASSESSEE WAS NOT IN A POSITION TO FURTHER SUBSTANTIATE JUSTIFICATION OF PAYMENT. IN THESE FACTS WE NOTE TH AT THERE IS NO DENIAL THAT THE PAYMENT HAS BEEN DONE. IT IS ONLY THE NON RESPONSE TO NOTICE U/S 131 BY THE CONCERNED PARTIES WHICH HAS LED TO THE AO TAKING AD VERSE INFERENCE AGAINST THE ASSESSEE. THE ASSESSEE HAS ALSO IN ORDER TO BUY PEA CE OFFERED THESE AMOUNTS FOR 3 ITA NO.7402 /MUM/2018. TAXATION IN THE COURSE OF ASSESSMENT BY THE AO. H ENCE EXCEPT FOR THE NON RESPONSE BY THE CONCERNED PARTIES THERE IS NO MATER IAL ON RECORD FOR THE REVENUE TO DISALLOW THE PAYMENT. IN THIS VIEW OF THE MATTER , IN OUR CONSIDERED OPINION, THE ASSESSEES CONDUCT IS BONAFIDE AND DOES NOT CALL FO R LEVY OF PENALTY U/S 271(1)(C). IN THIS REGARD WE PLACE RELIANCE UPON THE DECISION OF HONBLE APEX COURT IN THE CASE OF RELIANCE PETRO PRODUCTS (SUPRA). THIS DECIS ION HAS BEEN ERRONEOUSLY DISTINGUISHED BY THE LEARNED CIT(APPEALS) BY REFERR ING THE DELHI HIGH COURT DECISION IN THE CASE OF ZOOM COMMUNICATION PVT. LTD . IN RELIANCE PETRO PRODUCTS THE HONBLE APEX COURT HAS EXPOUNDED THAT IN EVERY CASE WHERE THE CLAIM OF THE ASSESSEE IS DENIED, IT DOES NOT MEAN THAT THE ASSES SEE NEEDS TO BE VISITED WITH LEVY OF PENALTY. WE FURTHER FIND THAT THE LARGER BENCH O F HONBLE SUPREME COURT COMPRISING THREE OF THEIR LORDSHIPS IN THE CASE OF HINDUSTAN STEEL LTD. VS. STATE OF ORISSA VS. 83 ITR 26 HAS HELD THAT THE AUTHORITY MAY NOT LEVY PENALTY UNLESS THE CONDUCT OF THE ASSESSEE IS FOUND TO BE CONTUMACIOUS . IN THIS CASE, IN OUR CONSIDERED OPINION, THE CONDUCT OF THE ASSESSEE IS NOT AT ALL CONTUMACIOUS WARRANTING LEVY OF PENALTY. 5. ACCORDINGLY IN THE BACKGROUND OF AFORESAID DISCU SSION AND PRECEDENT, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELET E THE PENALTY. 6. IN THE RESULT, THIS APPEAL BY THE ASSESSEE STAND S ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 16 / 03//2020 SD/- SD/- AMARJIT SINGH JUDICIAL MEMBER. SHAMIM YAHYA ACCONTANT MEMBER. MUMBAI; DATED 16 /03/ 2020 WAKODE, SR.PS 4 ITA NO.7402 /MUM/2018. 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//