SANTOGEN SILK MILLS LTD, MUMBAI V. ITO 8(3)(1), MUMBAI

ITA 7673/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8430 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2006-2007
• Appeal Filed On: 24-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B S BIST
• Keywords: Wrong claim; Bad and doubtful debts
• Section: 143(3); 37(1); 37

Judgement Text

ITA NO.7673/M/2014 SANTOGEN SILLKMILLS L TD 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH E,MUM BAI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.7673/MUM/2014 (ASSESSMENT YEAR- 2006-07) SANTOGEN SILK MILLS ,A-69, MIDC, INDUSTRIAL AREA ANDHERI EAST MUMBAI-400093 PAN: AACS7361R VS. INCOME TAX OFFICER -8(3)(1) [NEW RANGE 11(1)] 2 ND FLOOR AAYAKAR BHAVAN, M.K. ROAD ,MUMBAI-400020 (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI B.S. BIST (DR) DATE OF HEARING : 02.02.2017 DATE OF PRONOUNCEMENT : 01.03.2017 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. THIS APPEAL BY ASSESSEE U/S 253 OF THE INCOME-TAX A CT (THE ACT) IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS) [FOR SHORT THE CIT(A)] 18, MUMBAI DATED 27.02.2014 FOR ASSESSMENT YEAR (AY) 2006-07. THE ASSESSEE HAS RAISED ONLY ONE GROUND OF APPEAL THAT THE AUTHORITIES BELOW ERRED IN LEVYING/CONFIRMING PENALTY UNDER SECTION 271(1)(C) AMOUNTING TO RS. 18,09,327/- 2. BRIEF FACTS OF THE CASE ARE THAT WHILE FRAMING ASSE SSMENT ORDER THE ASSESSING OFFICER DISALLOWED THE CLAIM OF BAD DEBTS WRITTEN O FF OF RS. 53,64,903/- UNDER SECTION 36 (1)(VII) AND RS. 20,000 /-OUT OF EXCISE DUTY PENALTY UNDER SECTION 37(1) OF THE ACT. WE HAVE NOTICED THAT INITIALLY TH E CLAIM OF BAD DEBTS OF RS. 67,88,211/- WAS DISALLOWED BY ASSESSING OFFICER WHI LE PASSING ASSESSMENT ORDER 143 (3) DATED 01.12.2008. ON APPEAL BEFORE THE TRIB UNAL, THE ISSUE REGARDING THE DISALLOWANCE OF BAD DEBT WAS RESTORED TO THE FILE O F AO VIDE ORDER DATED 31 MARCH 2011. AND IN REMAND PROCEEDING THE ASSESSING OFFICE R AGAIN DISALLOWED THE CLAIM ITA NO.7673/M/2014 SANTOGEN SILLKMILLS L TD 2 OF BAD DEBTS OF RS.53,64,903/-. THE DISALLOWANCE OF RS. 20,000/- ON ACCOUNT OF EXCISE DUTY PENALTY WAS MADE ON THE BASIS OF ASSESS MENT ORDER PASSED U/S 143(3) R.WS. 147 OF THE ACT ON 30.12.2011. ON APPEA L BEFORE COMMISSIONER (APPEALS) BOTH THE DISALLOWANCE WAS UPHELD. AFTER R ECEIPT OF ORDER FROM COMMISSIONER (APPEALS) THE ASSESSING OFFICER INITIA TED PENALTY PROCEEDING UNDER SECTION 271(1) (C ) OF THE ACT. NOTICE UNDER SECTIO N 274 READ WITH SECTION 271(1)(C) WAS ISSUED ON 30 TH DECEMBER 2011. NO REPLY WAS ALLEGEDLY FILED BY ASSESSEE. HOWEVER, AFTER GIVING OPPORTUNITY OF HEAR ING THE REPRESENTATIVE OF ASSESSEE THE ASSESSING OFFICER PASSED THE PENALTY O RDER ON 15 MARCH 2013, LEVYING THE PENALTY AT THE RATE OF HUNDRED PERCENT ON THE AMOUNT ON WHICH TAX SOUGHT TO BE EVADED. THE ASSESSING OFFICER WORKED O UT A PENALTY OF RS.18,09,327/-. ON APPEAL BEFORE COMMISSIONER (APPE ALS) THE ORDER PENALTY WAS UPHELD. THUS FURTHER AGGRIEVED BY THE ORDER OF COMM ISSIONER (APPEALS) FOR CONFIRMING THE ORDER OF LEVY OF PENALTY THE ASSESSE E HAS FILED PRESENT APPEAL BEFORE US. 3. NONE APPEARED ON BEHALF OF ASSESSEE WHEN THE CASE W AS CALLED FOR HEARING, WHEN, DESPITE WAITING FOR SUFFICIENT TIME NOBODY APPEARED ; WE LEFT NO OPTION EXCEPT TO HEAR THE LD DEPARTMENT REPRESENTATIVE AND TO PROCEE D WITH TO DECIDE THE APPEAL ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. THE LD D R FOR THE REVENUE FAIRLY SUBMITTED THAT AGAINST THE DISALLOWANCE OF BAD DEBT S THE ASSESSEE FILED APPEAL BEFORE THE TRIBUNAL VIDE ITA NO. 7776/M/2012. THE T RIBUNAL HAS DECIDED THE APPEAL OF ASSESSEE VIDE ORDER DATED 23 RD MARCH 2016 AND THE ISSUE OF BAD DEBT HAD BEEN RESTORED BACK TO THE FILE OF ASSESSING OFFICER . THE LD DR SUBMITTED THAT THE PENALTY ON THE DISALLOWANCE OF RS. 20,000 /- ON ACC OUNT OF EXCISE DUTY MAY BE UPHELD. 4. WE HAVE CONSIDERED THE CONTENTION OF LANDED AR FOR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE SEEN THAT THE DISALLOWANCE OF BAD DEBTS OF RS. 53,64,903/- HAVE BEEN RESTORED TO THE FILE OF A SSESSING OFFICER BY THE COORDINATE BENCH OF THIS TRIBUNAL, THUS, IN THOSE C IRCUMSTANCES THE PENALTY ORDER ON SUCH DISALLOWANCE IS NOT SUSTAINABLE. HOWEVER, THE ASSESSING OFFICER IS LIBERTY ITA NO.7673/M/2014 SANTOGEN SILLKMILLS L TD 3 TO INITIATE PENALTY PROCEEDING AFRESH IN ACCORDANCE WITH LAW. SO FAR AS PENALTY ON ACCOUNT OF DISALLOWANCE OF RS. 20,000/- ON ACCOUNT OF EXCISE DUTY PENALTY IS CONCERNED, WE NOTICED THAT THE ASSESSEE HAS MADE CL AIM WHICH WAS NOT SUSTAINABLE AND IN LAW. THE AMOUNT OF RS.20,000/- WAS PAID BY ASSESSEE TO THE EXCISE DEPARTMENT WHICH WAS IN THE NATURE OF PENALTY AND I S NOT ALLOWABLE EXPENSES AS PER THE EXPLANATION1 OF SECTION 37 OF INCOME TAX ACT. WE ARE OF THE VIE W THAT THE ASSESSEE MERELY MADE A WRONG CLAIM WHICH IS NOT AN ALLOWABLE ONE AND WAS ULTIMATELY DISALLOWED BY AO. IT IS SETTLED LAW THAT EVERY DISALLOWANCE ON ACCOUNT OF UNSUSTAINABLE CLAIM OR SUCH CLAIM WHICH IS FOUN D LEGALLY UNSUSTAINABLE TO THE ASSESSING OFFICER WOULD NOT AUTOMATICALLY ATTRAC T THE PENALTY. HENCE, WE DELETE THE PENALTY ON THE DISALLOWANCE OF RS. 20,000/- PAI D ON ACCOUNT OF EXCISE DUTY PENALTY. 5. HENCE, THE APPEAL OF THE ASSESSEE IS ALLOWED. IN THE RESULT, APPEAL FILED BY ASSESSEE FO R IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 1 ST MARCH, 2017. SD/- SD/- (B.R. BASKARAN) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 01/03/2017 S.K.PS 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/