YASH RAJ FILMS P.LTD, MUMBAI V. ASST CIT CIR 29, MUMBAI

ITA 7519/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93142 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2006-2007
• Appeal Filed On: 23-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PAWAN KU MAR BEERLA
• Keywords: Initiation of penalty proceedings
• Section: 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI . . , , , BEFORE SHRI A.D. JAIN , JUDICIAL MEMBER AND SHRI N.K . BILLAIYA, A CCOUNTANT M EMBER / I .T.A. NO . 7519/MUM/2013 ( / ASSESSMENT YEAR : 2006 - 07 M/S. YASH RAJ FILMS PVT. LTD., 5, SHAH INDUSTRIAL ESTATE, VEERA DESAI ROAD, ANDHERI (W), MUMBAI - 400 053 / VS. THE ACIT, CENTRAL CIRCLE - 29, MUMBAI ./ ./ PAN/GIR NO. : AAACY 1176E ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI RAJESH SHAH / RESPONDENT BY : SHRI PAWAN KUMAR BEERLA / DATE OF HEARING : 08 . 0 7 .2015 / DATE OF PRONOUNCEMENT : 08 .0 7 .2015 / O R D E R PER N.K. BILLAIYA, AM: T HIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST THE ORDER OF THE LD. CIT(A) - 3 , MUMBAI DT. 11 . 11 .2013 PERTAINING TO ASSESSMENT YEAR 2007 - 08. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT IN THIS CASE AN ASSESSMENT MADE U/S. 143(3) OF THE ACT ON 31.12.2008 ASSESSING TOTAL ITA. NO. 7519/M/2013 2 INCOME AT RS. 54,69,22,180/ - . THE MATTER TRAVELLED UPTO THE TRIBUNAL AND THE TRIBUNAL IN ITA NO. 6350/MUM/2010 BY ITS ORDER DT. 5.4.2013 HAS INTER ALIA RESTRICTED THE DISALLOWANCE ON ACCOUNT OF COST OF AUDIO CDS AMOUNTING TO RS. 52,02,936/ - TO 20% OF THE EXPENSES CLAIMED. THUS, THE DISALLOWANCE WAS RESTRICTED TO 20% OF RS. 52,02,936/ - . THE AO LEVIED PENALTY ON THIS DISALLOWA NCE ALONGWITH OTHER DISALLOWANCES. 3. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A). THE LD. CIT(A) DELETED THE PENALTY IN RESPECT OF OTHER DISALLOWANCES BUT CONFIRMED THE LEVY OF PENALTY IN RESPECT OF THE PENALTY ON THE DISALLOWANCE OF RS. 52,0 2,936/ - . 4. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO THE RELEVANT PARAS IN THE ORDER OF THE TRIBUNAL IN QUANTUM APPEAL IN ITA NO. 6350/M/2010 AND STATED THAT THE TRIBUNAL HAS RESTRICTED THE DISALLOWANCE WHICH WAS MADE ON ADHOC BAS IS. THEREFORE, THERE IS NO CASE FOR CONCEALMENT OF INCOME OR FILING OF INACCURATE PARTICULARS. THE LD. COUNSEL CONTINUED TO STATE THAT EVEN OTHERWISE THE AO HAS NOT RECORDED ANY SATISFACTION WHILE MAKING THE DISALLOWANCE OF RS. 52, 02,936/ - . IN SUPPORT OF HIS CONTENTION, THE LD. COUNSEL RELIED UPON THE DECISION OF THE TRIBUNAL IN THE CASE OF CIT VS TRIVENI ENGINEERING &INDUSTRIES LTD. IN ITA NO. 5709/DEL/2010. 5. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPORTED THE ORDERS OF THE REV ENUE AUTHORITIES. 6. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE ALSO CONSIDERED THE DECISIONS RELIED UPON BY THE ASSESSEE. THE RELEVANT PART OF THE TRIBUNALS ORDER READ AS UNDER: ITA. NO. 7519/M/2013 3 AFTER CONSIDERING THE FACTS AND THE SUBM ISSIONS AND THE MATERIAL EVIDENCES BROUGHT ON RECORD, NO DOUBT THESE EXPENSES DO PERTAIN TO THE BUSINESS ACTIVITY OF THE ASSESSEE BUT AT THE SAME TIME IT CANNOT BE IGNORED THAT THE ASSESSEE HAS NOT BROUGHT ANY MATERIAL EVIDENCE ON RECORD TO SHOW THAT BLANK ACDS/VCDS ARE PURCHASED FROM THE MARKET FOR THE PURPOSE OF DISTRIBUTION. IT MAY BE POSSIBLE THAT THE SONGS/MOVIES WERE COPIED ON ACDS/VCDS ALREADY IN THE STOCK OF THE ASSESSEE. IN THAT CASE, WHEN THOSE ACDS/VCDS HAD BEEN PURCHASED, THE COST WOULD HAVE BEEN ALREADY DEBITED TO EXPENSES. THEREFORE, FURTHER CHARGING THE COST OF ACD/VCDS WOULD AMOUNT TO DOUBLE DEDUCTION. AS THESE FACTS ARE NOT AVAILABLE ON RECORD, IN OUR CONSIDERATE VIEW, THE DISALLOWANCE SHOULD BE RESTRICTED TO 20% OF THE EXPENSES CLAIME D I.E. 20% OF RS. 52,02,936/ - . WE DIRECT THE AO TO RESTRICT THE DISALLOWANCE ACCORDINGLY. GROUND NO. 9 IS PARTLY ALLOWED. 7. FROM THE ABOVE DECISION OF THE TRIBUNAL, IT IS CLEAR THAT ULTIMATELY PART OF THE DISALLOWANCE HAS BEEN CONFIRMED ON ESTIMATE BASIS. IT IS ALMOST SETTLED NOW THAT PENAL ACTION CANNOT BE TAKEN ON THE BASIS OF ESTIMATED ADDITIONS. A REFERENCE MAY BE MADE TO THE DECISION S OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS RAVAILSINGH AND CO. & CIT VS SANGRUR VANAS PATI MILLS LTD., 303 ITR 53. THEREFORE, IN OUR CONSIDERED OPINION, THIS IS NOT A FIT CASE FOR LEVY OF PENALTY BECAUSE THE PART OF THE DISALLOWANCE WAS CONFIRMED ON ESTIMATED BASIS. 8. FOR THE SAKE OF COMPLETENESS, A PERUSAL OF THE ASSESSMENT ORDER SHOW S THAT THE IMPUGNED ADDITION HAS BEEN MADE BY THE AO AT PARA - 9 OF HIS ORDER. ADMITTEDLY , NO SATISFACTION HAS BEEN RECORDED FOR THE INITIATION OF THE PENALTY PROCEEDINGS WHEREAS IN RESPECT OF EVERY DISALLOWANCE MADE. THE AO HAS SPECIFICALLY MENTIONED THAT P ENALTY PROCEEDINGS U/S. 271(1)(C) ARE INITIATED SEPARATELY. SINCE THERE IS NOTHING TO SHOW THAT AO HAD RECORDED HIS SATISFACTION AS REQUIRED BY THE STATUTE FOR INITIATION OF PENALTY PROCEEDINGS. THEREFORE, ORDER LEVYING PENALTY CANNOT BE ITA. NO. 7519/M/2013 4 SUSTAINED. FOR THIS PROPOSITION, WE RELY UPON THE DECISION OF THE TRIBUNAL IN THE CASE OF TRIVENI ENGINEERING (SUPRA). CONSIDERING THE ABOVE IN TOTALITY, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE AO TO DELETE THE PENALTY SO LEVIED. 9. IN THE RESULT, THE AP PEAL FILED BY THE ASSESSEE IS ALLOWED. OR DER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON 8 TH JU LY , 2015 SD/ - SD/ - ( A.D. JAIN ) (N.K. BILLAIYA) /JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 8 TH JU LY , 2015 . . ./ RJ , SR. PS / 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