ITO 9(1)(1), MUMBAI V. AASIA BUSINESS VENTURES P LTD, MUMBAI

ITA 7477/MUM/2013

• Counselvise Citation: 747719914 RSA 2013
• Duration Of Justice: 1 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 19-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASGHAR ZAIN
• Assessee Lawyers: S K MUTSADDI

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A MUMBAI . . , / BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER /AND . , SHRI D.KARUNAKARA RAO, ACCOUNTANT MEMBER . / ITA NO.7477/MUM/2013 / ASSESSMENT YEAR 2007-08 THE ITO-9(1)(1), ROOM NO.226, AAYKAR BHAVAN, MK ROAD, MUMBAI 400 020 / VS. M/S. AASIA BUSINESS VENTURES PVT. LTD., KIRABO, 1 ST FLOOR, 13 TH TROAD, KHAR WEST, MUMBAI 400 052. ./ ./ PAN/GIR NO. :AAACG 3698K ( / APPELLANT ) .. ( / RESPONDENT ) APPELLANT BY SHRI ASGHAR ZAIN RESPONDENT BY SHRI S.K. MUTSADDI ' # $ / DATE OF HEARING : 21/05/2015 ' # $ / DATE OF PRONOUNCEMENT : 21/05/2015 / O R D E R PER I.P.BANSAL, J.M: THIS IS AN APPEAL FILED BY THE REVENUE AND IT IS DIRECTED AGAINST THE ORDER PASSED BY LD. CIT(A)-19, MUMBAI DATED 03/10/2 013 FOR ASSESSMENT YEAR 2007-08. GROUNDS OF APPEAL READ AS UNDER: 1.WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN CANCELLING THE PENALTY U/S. 271(1) (C) OF THE I.T. ACT WITHOUT APPRECIATING THE FACT THAT ADDITION OF RS.3,04,38,4 00/- ON ACCOUNT OF ADVANCE AGAINST EXPORT TAXED U/S. 41(1) OF THE ACT WAS CONF IRMED BY THE CIT(A) AND, BY CLAIMING NON-EXISTING LIABILITY, THE ASSESSEE HAD F URNISHED INACCURATE PARTICULARS OF INCOME? . / ITA NO.7477/MUM/2013 / ASSESSMENT YEAR 2007-08 2 2. AT THE OUTSET IT WAS POINTED OUT BY LD. AR THAT THE ADDITION ON WHICH PENALTY HAS BEEN LEVIED HAS ALREADY BEEN DELETED BY THE TRIBUNAL. THEREFORE, IT WAS SUBMITTED THAT THE ORDER PASSED BY LD. CIT(A) SHOULD BE CONFIRMED VIDE WHICH PENALTY HAS BEEN DELETED. REFERENCE WAS MADE TO THE DECISION OF TRIBUNAL DATED 8/11/2013 IN ITA NO.430/MUM/2011, CO PY OF WHICH HAS BEEN FILED AT PAGES 1 TO 7 OF THE PAPER BOOK. REFERENCE WAS MADE TO THE FOLLOWING OBSERVATIONS: 7. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMISSIONS OF THE REPRESENTATIVE OF THE PARTIES. WE HAVE ALSO GON E THROUGH THE RELEVANT PAGES OF THE PAPER BOOK TO WHICH OUR ATTENTION WAS DRAWN AT THE TIME OF HEARING AND HAVE ALSO CONSIDERED THE CASES RELIED UPON BY THE ASSESSING O FFICER AS WELL AS REFERRED BY LEARNED AR (SUPRA). IT IS A FACT THAT THE ASSESSEE RECEIVED A SUM OF RS. 3,04,38,400/- FROM M/S. AMAS MAURITIUS LTD. ON 24.1.1997 AS AN ADVANCE FOR THE PURPOSE OF EXPORT OF GOODS AND THE SAME HAS BEEN APPEARING IN THE BOOKS OF ACCOUNT OF THE ASSESSEE TILL DATE. IT IS ALSO FACT THAT THE ASSESSEE NEITHER HAS MADE EXPORT AGAI NST THE SAID ADVANCE NOR THE AMOUNT HAS BEEN RETURNED TILL DATE. MOREOVER, THE ASSESSEE HAS ADMITTEDLY STOPPED EXPORT BUSINESS AND IS IN THE BUSINESS OF ADVISORY AS WELL AS IN SHARE DEALING. IT IS NOT IN DISPUTE THAT THE SAID AMOUNT IS SHOWN AS ADVANCE IN THE BALANCE SHEET OF THE ASSESSEE. THE SAID LIABILITY IS ALSO SHOWN AS ON 31.3.2007. T HEREFORE THE LIABILITY HAS BEEN ACKNOWLEDGED BY THE ASSESSEE. SINCE AMOUNT HAS NOT BEEN WRITTEN OFF BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT, IT CANNOT BE SAID THAT THE LI ABILITY HAS CEASED TO EXISTS. HON'BLE MADRAS HIGH COURT HAS HELD IN THE CASE OF CIT VS. T AMILNADU WAREHOUSING CORPORATION (292 ITR 310) THAT THE AMOUNT REPRESENTING LIABILIT IES WHICH WERE SHOWN YEAR AFTER YEAR COULD NOT BE ADDED BACK U/S. 41(1) OF THE ACT, 1961 . THE SAME VIEW HAS ALSO BEEN TAKEN BY HON'BLE P&H HIGH COURT IN THE CASE OF SMT. SITA DEVI JUNEJA (2010) TIOL 32 (P&H HIGH COURT IT). BOMBAY HIGH COURT HAS ALSO HELD IN THE C ASE OF CHASE BRIGHT STEEL LTD. (177 ITR 128) THAT THE ISSUE OF LIMITATION IS NOT APPLIC ABLE FOR CESSATION OF LIABILITY FOR THE PURPOSE OF SECTION 41(1) OF THE INCOME TAX ACT. IN VIEW OF ABOVE, WE AGREE WITH LEARNED AR THAT LEARNED CIT(A) AND ASSESSING OFFICER ARE NO T JUSTIFIED TO APPLY PROVISIONS OF SECTION 41(1) OF THE ACT. WE ALSO OBSERVE THAT THE ASSESSING OFFICER HAS DOUBTED THE GENUINENESS OF THE TRANSACTION AS WELL AS CREDITWOR THINESS OF THE LENDER/PAYEE. WE ARE OF THE CONSIDERED VIEW THAT SINCE THE SAID AMOUNT RE CEIVED BY THE ASSESSEE IN JANUARY, 1997 AND THE SAME WAS APPEARING IN THE BOOKS OF ACC OUNT OF THE ASSESSEE, GENUINENESS OF THE TRANSACTION AS WELL AS CREDITWORTHINESS OF T HE PARTY COULD NOT BE CONSIDERED IN THE ASSESSMENT YEAR UNDER CONSIDERATION FOR MAKING THE SAID ADDITION U/S. 41(1) READ WITH SECTION 28(IV) OF THE ACT. 8. BE THAT AS IT MAY, IT IS THE FACT THAT THE ASSES SEE HAS NOT WRITTEN BACK THE SAID AMOUNT TO ITS PROFIT AND LOSS ACCOUNT, WE ARE OF THE CONSI DERED VIEW THAT THE PROVISIONS OF SECTION 28(IV) WHICH PROVIDES VALUE OF ANY BENEFIT OR PERQU ISITE, WHETHER CONVERTIBLE INTO MONEY OR NOT, ARISING FROM BUSINESS OR THE EXERCISE OF A PRO FESSION SHALL BE CHARGEABLE TO INCOME TAX UNDER THE HEAD PROFIT AND GAINS OF BUSINESS OR PROFESSION COULD NOT BE APPLIED AS THE SAID BENEFIT HAS NOT ARISEN TO THE ASSESSEE BEC AUSE THE ASSESSEE IS SHOWING THE SAID AMOUNT AS ITS LIABILITY IN THE BALANCE-SHEET YEAR A FTER YEAR. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE SAID AMOUNT CANNOT BE ADDE D AS INCOME OF THE ASSESSEE U/S. 28(IV) OF THE ACT. . / ITA NO.7477/MUM/2013 / ASSESSMENT YEAR 2007-08 3 9. WE MAY ALSO STATE THAT ON AND IDENTICAL FACTS SI MILAR ISSUE HAS ALSO BEEN CONSIDERED BY THE ITAT, MUMBAI BENCH IN THE CASE OF M/S. JAYRA M HOLDINGS PVT. LTD. (SUPRA) AND THE TRIBUNAL HAS HELD THAT THE PROVISIONS OF SECTION 41 (1) AND/OR SECTION 28(IV) OF THE ACT CANNOT BE APPLIED TO MAKE THE SAID ADDITION OF ADVA NCE RECEIVED BY THE ASSESSEE IN THAT CASE IN A.Y. 1997-98 IF THE AMOUNT WAS NOT WRITTEN OFF AND THE LIABILITY STILL SUBSIST. THE DECISION OF ITAT DATED 4.7.2012 SQUARELY APPLY TO T HE FACTS OF THE CASE UNDER CONSIDERATION BEFORE US. 10. HENCE, IN VIEW OF ABOVE, THE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ARE ALLOWED BY DELETING THE ADDITION MADE BY THE AUTHORITIES BELOW . 11. BEFORE WE PART WITH THIS APPEAL, WE MAY STATE THAT IF THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE HAS VIOLATED PROVISIONS OF FEMA BY NOT MAKING THE EXPORT WITHIN THE PERIOD OF ONE YEAR AS PER REGULATION 16 OF THE FEMA REGULATION DATED 3.5.2000 AND THE SAID TRANSACTION WAS A SHAM TRANSA CTION IN THE GUISE OF RECEIVING ADVANCE FOR MAKING EXPORT, THE ASSESSING OFFICER SH OULD HAVE TAKEN UP THE MATTER WITH RBI TO MAKE AN INQUIRY IN THIS RESPECT. 12. IN VIEW OF THE ABOVE GROUND OF APPEAL TAKEN BY THE ASSESSEE IS ALLOWED. 3. LD. DR DID NOT CONTROVERT TO THE SUBMISSIONS OF THE ASSESSEE. 4. IN THIS VIEW OF THE SITUATION, AS QUANTUM HAS ALREADY BEEN DELETED, THE PENALTY DOES NOT SURVIVE. THEREFORE, WE DECLINE TO INTERFERE IN THE RELIEF GRANTED BY LD. CIT(A). ACCORDINGLY, REVENUES APPEAL IS DI SMISSED. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21/05/201 5 ' )* + , 21/05/2015 ' SD/- SD/- ( . / D.KARUNAKARA RAO ) ( . . / I.P. BANSAL ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER ) MUMBAI; + DATED 21/05/2015 . / ITA NO.7477/MUM/2013 / ASSESSMENT YEAR 2007-08 4 ! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. /# ( ) / THE CIT(A)- 4. /# / CIT 5. 01 #23 , $ 23 , ) / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, 0# # //TRUE COPY// / (DY./ASSTT. REGISTRAR) , ) / ITAT, MUMBAI . . ./ VM , SR. PS