ADVAITA ESTATE DEVELOPMENT PVT. LTD., MUMBAI V. I.T.O.9(1)(1), MUMBAI

ITA 7589/MUM/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70948 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 06-03-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 11-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS JOTHILAKSHMI NAYAK
• Assessee Lawyers: JIGNESH R SHAH
• Keywords: Question of law
• Section: 143(3); 14A; 260A; 68

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI . . , . ! , '# ' $ BEFORE SHRI I.P. BANSAL, JM AND SHRI SANJAY ARO RA, AM ./ I.T.A. NO. 7589/MUM/2011 ( % % % % & & & & / ASSESSMENT YEAR: 2006-07 ADVAITA ESTATE DEVELOPMENT PVT. LTD., OFFICE NO.9, GR.FLOOR, PRATAP NAGAR, OFF. JOGESHWARI VIKHROLI LINK ROAD, MUMBAI 400 060. % % % % / VS. THE INCOME TAX OFFICER, WARD 9(1)(1), MUMBAI. ' '# ./ ( ./ PAN/GIR NO. : AAMFA 6807H ( ') / APPELLANT ) .. ( *+') / RESPONDENT ) ') , ' / APPELLANT BY: SHRI JIGNESH R. SHAH *+') - , ' / RESPONDENT BY : MRS. JOTHILAKSHMI NAYAK % - .# / DATE OF HEARING : 27/08/2013 / & - .# / DATE OF PRONOUNCEMENT : 27/08/2013 '0 / O R D E R PER I.P.BANSAL,J.M: THIS IS AN APPEAL FILED BY THE ASSESSEE. IT IS DI RECTED AGAINST THE ORDER PASSED BY LD. CIT(A)19, MUMBAI DATED 8/8/2011 FOR A SSESSMENT YEAR 2006-07. GROUNDS OF APPEAL READ AS UNDER: 1.ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-19 MUMBAI (HEREINAFTER REFE RRED TO AS THE CIT(A)) HAS ERRED IN CONFIRMING THE PENALTY OF RS. 91,89,181/- UNDER SECTION 271(1) (C ) OF THE INCOME TAX ACT ,1961 (THE ACT). 2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT (A) HAS ERRED IN CONFIRMING THE IMPOSITION OF PENALTY AMOUNTING TO R S. 91,89,181/- ON THE ADDITION MADE BY ITO DURING THE ASSESSMENT PROCEEDINGS UNDER SECTION 143(3) OF THE ACT FOR ./ I.T.A. NO. 7589/MUM/2011 ( % % % % & & & & / ASSESSMENT YEAR: 2006-07 2 THE ADVANCE RECEIVED BY APPELLANT FROM M/S KUBER DE VELOPERS AMOUNTING TO RS.2,73,00,000/- UNDER SECTION 68 OF THE ACT. 3) ON FACTS AND CIRCUMSTANCES OF THE CASE THE LEARN ED CIT HAS NOT APPLIED HIS MIND AND GIVEN DUE CONSIDERATION TO THE FOLLOWING EVIDEN CE AND SUBMISSIONS MADE BY THE APPELLANT DURING THE COURSE OF ASSESSMENT PROCE EDINGS BEFORE HIM AND THE ITO. A) DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS BEFORE ITO I) THE APPELLANT HAS SUBMITTED LOAN CONFIRMATION, P AN OF THE LENDER, APPELLANT BANK STATEMENT OF THE SPECIFIC PERIOD INDICATING RECEIPT AND PAYMENT OF ADVANCE BEING ROUTED THROUGH THE BANKING CHANNEL. II) STAMPED RECEIPT GIVEN BY THE LENDER CONFIRMING THAT HE HAS RECEIVED BACK THE ADVANCE AMOUNT. III) THE ITO HAS INDEPENDENTLY PROCURED BANK STATEM ENTS OF THE LENDER FROM THE LENDERS BANK. THE DETAILS OF THE ADVANCE RECEIVED AND REPAID BACK GIVEN BY THE APPELLANT, MATCHED WITH THE BANK STATEMENT OF THE L ENDER. B) DURING THE ASSESSMENT PROCEEDING BEFORE THE LEAR NED CIT(A) THE APPELLANT SUBMITTED: I) DETAILS STATED IN PARA (A) ABOVE. II) FINANCIALS AND INCOME TAX RETURN OF THE LENDER, WHEREIN ADVANCE GIVEN TO APPELLANT IS DISCLOSED. 4) ON FACTS AND CIRCUMSTANCES OF THE CASE THE LEARN ED CIT HAS ERRED IN CONCLUDING THAT THE APPELLANT HAS FAILED TO PROVE THE GENUINEN ESS/CREDIT WORTHINESS AND CAPACITY OF THE LENDER. 5) AS ON FIRST PRINCIPLES, IMPOSITION OF PENALTY UN DER SECTION 271(1)(C) IS NOT SIMPLY A CONSEQUENCE OF AN ADDITION BEING MADE TO THE INCOME OF THE APPELLANT. PENALTY UNDER SECTION 271(1)(C) IRRESPECTIVE OF WHETHER IT IS A CIVIL LIABILITY OR CRIMINAL LIABILITY CAN ONLY BE IMPOSED WHEN THE SCHEME OF THE ACT PERM ITS OR REQUIRES SO. IT IS NOT AN AUTOMATIC CONSEQUENCE OF AN ADDITION BEING MADE TO THE INCOME. AN ADDITION MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS, BY ITS ELF CANNOT BE ENOUGH TO INITIATE, LEAVE ASIDE CONCLUDE PENALTY PROCEEDINGS. 6) YOUR APPELLANT CRAVES TO LEAVE, ADD OR DELETE AL L ARE OR ANY OF THE ABOVE GROUNDS WHICH ARE INDEPENDENT TO EACH OTHER. 2. AT THE OUTSET IT WAS SUBMITTED BY LD. AR THAT TH E IMPUGNED PENALTY HAS BEEN LEVIED ON AN ADDITION OF RS.2.73 CRORES, WHICH WAS ADDED UNDER SECTION 68 OF THE INCOME TAX ACT, 1961 (THE ACT). IT WAS FURT HER SUBMITTED THAT ADDITION HAS BEEN UPHELD BY THE TRIBUNAL AND THE ASSESSEE H AS PREFERRED AN APPEAL BEFORE HONBLE HIGH COURT AGAINST QUANTUM ORDER OF THE TRI BUNAL. IT WAS FURTHER SUBMITTED THAT FOLLOWING QUESTIONS OF LAW HAVE BEE N ADMITTED BY THE HONBLE HIGH COURT VIDE THEIR ORDER DATED 12/03/2013 IN INC OME TAX APPEAL NO.2582 OF 2011. COPY OF THE ORDER IS PLACED AT PAGES 1 & 2 OF THE PAPER BOOK. ./ I.T.A. NO. 7589/MUM/2011 ( % % % % & & & & / ASSESSMENT YEAR: 2006-07 3 2.. ADMIT ON THE FOLLOWING SUBSTANTIAL QUESTIONS OF LAW: (A) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F CASE AND IN LAW, IS THE ORDER OF THE TRIBUNAL PERVERSE INASMUCH AS IT IGNOR ED THE BASIC DOCUMENTS LIKE STATEMENT OF CONFIRMATION OF ACCOUNT, BANK STA TEMENT SHOWING RECEIPT OF MONEY FROM AND PAYMENT OF MONEY TO M/S. KUBER DEVEL OPERS CORPORATION AND CONFIRMATION FROM THE SAID PARTY OF HAVING GIVE N AND RECEIPT OF THE ADVANCE WHICH WERE PRODUCED BEFORE THE CIT(A) AND T HE TRIBUNAL WHILE CONFIRMING THE ADDITION OF RS.2.73 CRORES UNDER SEC TION 68 OF THE ACT IN THE HANDS OF THE APPELLANT? (B) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, WAS THE TRIBUNAL JUSTIFIED IN NOT ADMITTING THE ADD ITIONAL EVIDENCE OF LOAN CREDITOR MR. MAHENDRA MANSINGH ARORA IN THE FORM OF RETURN OF INCOME, BALANCE SHEET AND PROFIT & LOSS ACCOUNT FOR ASSESSM ENT YEAR 2006-07 FILED BEFORE THE I. T. DEPARTMENT ON THE GROUND THAT THE SAME WERE NOT FILED BEFORE THE RESPONDENT NO.2 EARLIER WITHOUT APPRECIATING TH AT THE APPELLANT CANNOT BE PENALIZED FOR THE DEFAULT OF LOAN CREDITOR? 2.1 IT WAS FURTHER SUBMITTED THAT A CONSISTENT VIEW IS BEING TAKEN BY THE TRIBUNAL THAT IN A CASE WHERE THE QUESTION OF LAW IS ADMITTED BY HONBLE HIGH COURT IN QUANTUM PROCEEDINGS AGAINST WHICH CONCEALM ENT PENALTY HAS BEEN LEVIED THEN PENALTY IS TO BE DELETED SIMPLY ON THE GROUND THAT ISSUE REGARDING ADDITION WAS DEBATABLE. FOR THIS PURPOSE LD. AR R ELIED ON THE FOLLOWING DECISION. 1. NAYAN BUILDERS & DEVELOPERS PVT. LTD. V ITO (ITA NO. 2379/MURN/2009) (ORDER DATED 18.3.2011) 2. CIT V LIQUID INVESTMENT & TRADING CO. (DELHI HIG H COURT) (ITA NO. 240/2009) (JUDGMENT DATED 5.10.2010) 3. SHRI YUGAL KISHORE JAJOO V DY. CIT (ITA NO. 272/ IND/2011) (ORDER DATED 12.2.2013) 4.RUPAM MERCANTILE V DY. CIT [2004] 91 ITD 237 (AHD ) (TM) 6 SMT. RAMILA RATILAL SHAH V ASSTT. CIT [1998] 60 T TJ (AHD) 171 THEREFORE, LD. A.R PLEADED THAT IMPUGNED PENALTY SH OULD BE DELETED. 3. ON THE OTHER HAND, LD. D.R SUBMITTED THAT AS QUA NTUM ADDITION HAS BEEN UPHELD BY TRIBUNAL, THE ORDER PASSED BY LD.CIT(A) S HOULD BE SUSTAINED VIDE WHICH IMPUGNED PENALTY HAS BEEN CONFIRMED. 4. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTENT IONS HAVE CAREFULLY BEEN CONSIDERED. THE FACT THAT AFOREMENTIONED QUESTIONS OF LAW HAVE BEEN ADMITTED AGAINST THE ADDITIONS SUSTAINED BY THE TRIBUNAL OF WHICH IMPUGNED PENALTY HAS ./ I.T.A. NO. 7589/MUM/2011 ( % % % % & & & & / ASSESSMENT YEAR: 2006-07 4 BEEN LEVIED IS NOT DISPUTED BY THE REVENUE. CO-ORD INATE BENCH IN THE AFOREMENTIONED CASE OF M/S. NAYAN BUILDERS & DEVELO PERS PVT. LTD.(SUPRA) RELYING UPON THE DECISION OF AHMEDABAD THIRD MEMBER IN THE CASE OF M/S. RUPAM MERCANTILE VS. DCIT, 91 ITD 237 AND SMT RAMILA R ATILAL SHAH VS. ACIT, 60 TTJ (AHD) 171, UNDER SIMILAR CIRCUMSTANCES, HAS DELETED THE PENALTY WITH THE FOLLOWING OBSERVATIONS: 2. SHORN OFF UNNECESSARY DETAILS IT IS AN ADMITTED POSITION FROM BOTH THE SIDES THAT THE PENALTY HAS BEEN FINALLY UPHELD QUA THE ADDITIO N OF RS.L,04,76,050 TOWARDS INCOME FROM SPECTRUM CORPORATE SERVICES LTD. ASSESS ED IN THIS YEAR, DISALLOWANCE OF BROKERAGE OF RS. 10,79,221 AND DISALLOWANCE OF L EGAL FEES OF RS.2,00,000. IT IS SEEN THAT THE TRIBUNAL HAS UPHELD THESE ADDITIONS I N QUANTUM PROCEEDINGS FOR WHICH THE PENALTY HAS BEEN HELD TO BE IMPOSABLE. TH E LEARNED A.R. HAS PLACED ON RECORD THE JUDGEMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN INCOME TAX APPEAL NO.2368 OF 2009 ADMITTING INTER ALIA THE FOLLOWING TWO QUESTIONS: WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE TRIBUNAL WAS RIGHT IN HOLDING THAT THE DEPOSIT RS.1 ,04,76,050/- RECEIVED FROM SPECTRUM IS EXIGIBLE TO TAX IN THE ASSESSMENT YEAR 1997-98.? WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE TRIBUNAL WAS CORRECT IN CONFIRMING THE DISALLOWANCE OF BROKERAGE RS.10,79,221/- AND LEGAL FEES RS. 2,00,000/-? 3. IT IS, THEREFORE, ABUNDANTLY CLEAR THAT THE ADDI TIONS IN RESPECT OF WHICH PENALTY WAS CONFIRMED HAVE BEEN ACCEPTED BY THE HONBLE BOM BAY HIGH COURT LEADING TO SUBSTANTIAL QUESTION OF LAW. WHEN THE HIGH COURT AD MITS SUBSTANTIAL QUESTION OF LAW ON AN ADDITION, IT BECOMES APPARENT THAT THE AD DITION IS CERTAINLY DEBATABLE. IN SUCH CIRCUMSTANCES PENALTY CANNOT BE LEVIED U/S.271 (1)(C) AS HAS BEEN HELD IN SEVERAL CASES INCLUDING RUPAM MERCANTILE VS. DCIT [ (2004) 91 ITD 237 (AHD) (TM)] AND SMT.RAMILA RATILAL SHAH VS. ACIT [(1998) 60 TTJ (AHD) 171]. THE ADMISSION OF SUBSTANTIAL QUESTION OF LAW BY THE HONBLE HIGH COU RT LENDS CREDENCE TO THE BONA FIDES OF THE ASSESSEE IN CLAIMING DEDUCTION. ONCE I T TURNS OUT THAT THE CLAIM OF THE ASSESSEE COULD HAVE BEEN CONSIDERED FOR DEDUCTION A S PER A PERSON PROPERLY INSTRUCTED IN LAW AND IS NOT COMPLETELY DEBARRED AT ALL, THE MERE PENALTY. SINCE THE ADDITIONS, IN RESPECT OF WHICH PENALTY HAS BEEN UPH ELD IN THE PRESENT PROCEEDINGS, HAVE BEEN HELD BY THE HONBLE HIGH COURT TO BE INVO LVING A SUBSTANTIAL QUESTION OF LAW, IN OUR CONSIDERED OPINION, THE PENALTY IS NOT EXIGIBLE UNDER THIS SECTION. WE, THEREFORE, ORDER FOR THE DELETION OF PENALTY. 4.1 HONBLE DELHI HIGH COURT IN THE AFOREMENTIONED CASE OF CIT VS. LIQUID INVESTMENT & TRADING COMPANY(SUPRA) HAS ALSO DISMIS SED DEPARTMENTAL APPEAL IN SIMILAR CIRCUMSTANCES WITH THE FOLLOWING OBSERV ATIONS: BOTH THE CIT(A) AS WELL AS THE ITAT HAVE SET ASIDE THE PENALTY IMPOSED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE I NCOME TAX ACT, 1961 ON THE GROUND THAT THE ISSUE OF DEDUCTION UNDER SECTION 14 A OF THE ACT WAS A DEBATABLE ISSUE. WE MAY ALSO NOTE THAT AGAINST THE QUANTUM AS SESSMENT WHERE UNDER ./ I.T.A. NO. 7589/MUM/2011 ( % % % % & & & & / ASSESSMENT YEAR: 2006-07 5 DEDUCTION UNDER SECTION 14A OF THE ACT WAS PRESC RIBED TO THE ASSESSEE, THE ASSESSEE HAS PREFERRED AN APPEAL IN THIS COURT UNDE R SECTION 260A OF THE ACT WHICH HAS ALSO BEEN ADMITTED AND SUBSTANTIAL QUESTION OF LAW FRAMED. THIS ITSELF SHOWS THAT THE ISSUE IS DEBATABLE. FOR THESE REASONS, WE ARE OF THE OPINION FL1RIO QUESTION OF LAW ARISES IN THE PRESENT CASE. THIS APPEAL IS ACCORDINGLY DISMISSED. 4.2 IN THIS VIEW OF THE SITUATION, AFTER HEARING B OTH THE PARTIES, WE SET ASIDE THE ORDER PASSED BY LD. CIT(A) AND DELETE THE IMPUG NED PENALTY. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED IN THE MANNER AFORESAID. ORDER PRONOUNCED IN THE OPEN COURT ON 27/08/2013 . '0 - & #' 1 2%3 27/08/2013 - 4 SD/- SD/- ( SANJAY ARORA) (I.P.BANSAL) /ACCOUNTANT MEMBER '# /JUDICIAL MEMBER MUMBAI; 2% DATED 27/08/2013 '0 '0 '0 '0 - -- - *.56 *.56 *.56 *.56 7'6&. 7'6&. 7'6&. 7'6&. / COPY OF THE ORDER FORWARDED TO : 1. ') / THE APPELLANT 2. *+') / THE RESPONDENT. 3. 8 ( ) / THE CIT(A)- 4. 8 / CIT 5. 694 *.% , , / DR, ITAT, MUMBAI 6. 4: ; / GUARD FILE. '0% '0% '0% '0% / BY ORDER, +6. *. //TRUE COPY// < << < / = = = = (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . % . .VM , SR. PS