Appeal details
Counselvise Citation
[2017] 128 COUNSELVISE.COM (IT) 8639 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
5 year(s) 2 month(s) 15 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
10-02-2017
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
A
Next Hearing Date
13-04-2015
Assessment Year
2004-2005
Appeal Filed On
25-11-2011
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUM BAI , , BEFORE S/SHRI RAJENDRA, A.M. AND SANJAY GARG,J.M. ./ITA NO.7979/MUM/2011 , / ASSESSMENT YEAR: 2004-05 M/S. ADITYA BIRLA MINACS WORLDWIDE LIMITED (FORMERLY KNOWN AS TRANSWORKS INDORMATION SERVICES LTD.) TERITAX BUILDING, SAKI VIHAR ROAD ANDHERI (E), MUMBAI-400 072. PAN: AAACT 1567 A VS. DCIT, RANGE -8(3) AAYAKAR BHAVAN, MK ROAD MUMBAI-400 020. ( /APPELLANT ) ( / RESPONDENT ) REVENUE BY: SHRI RAJESH KUMAR YADAV ASSESSEE BY: SHRI J.D. MISTRI / DATE OF HEARING: 30.01.2017 / DATE OF PRONOUNCEMENT: 10.02.2017 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) , -PER RAJENDRA,AM: CHALLENGING THE ORDER DATED 16/08/2011 OF CIT (A)-1 6,MUMBAI THE ASSESSEE HAS FILED THE PRESENT APPEAL.ASSESSEE-COMPANY IS ENGAGED IN THE BUSINESS OF INFORMATION TECHNOLOGY ENABLED SERVICES CALLED CALL CENTRE SERVICE.RETURN OF INCOME WAS FIL ED ON 27/10/2004, DECLARING LOSS OF RS.3.41 CORRODES.A REVISED RETURN WAS FILED ON 22/06/205,DE CLARING LOSS AT RS. 4.12 CRORES.THE ASSESSING OFFICER(AO)COMPLETED THE ASSESSMENT U/S. 143 (3) ON 22/12/2006 DETERMINING THE INCOME OF THE ASSESSEE AT RS.(-) 1.36 CRORES. WHILE COMPUTING THE ASSESSMENT, THE AO HELD THAT CLAIM OF THE ASSESSEE WITH REGARD TO PROJECT DEVELO PMENT EXPENSES TO THE TUNE OF RS. 2.21 CRORES WAS NOT ADMISSIBLE. HE DISALLOWED AND AMOUNT OF RS. 2.04 CRORES.THE MATTER TRAVELLED UP TO THE TRIBUNAL.VIDE ITS ORDER DATED 13/08/2010 (ITA/3173/ MUMBAI/2008,AY.2004-05),THE TRIBUNAL CONFIRMED THE ORDER OF THE FIRST APPELLATE AUTHORIT Y (FAA) AND DISMISSED THE APPEAL FILED BY THE ASSESSEE. 2. THE AO INITIATED PENALTY PROCEEDINGS AS PER THE PRO VISIONS OF SECTION 271(1)(C) OF THE ACT. VIDE HIS ORDER,DATED 25/03/2009,HE LEVIED A PENALTY OF RS.73.29 LAKHS FOR FILING INACCURATE PARTICULARS OF INCOME.AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE FAA.BEFORE HIM IT MADE ELABORATE SUBMISSIONS. AFTER CONSIDERING THE ASSESSMENT ORDER, PENALTY ORD ER AND THE SUBMISSIONS OF THE ASSESSEE, THE FAA REFERRED TO THE CASES OF ZOOM COMMUNICATION PRI VATE LTD.(40 DTR 249) NATHULAL 7979/M/11(04-05)- ADITYA BIRLA MINACS 2 AGARWAL AND SONS (150 ITR 292)AND DURGA PRASAD MORE (82 ITR 540) AND CONFIRMED THE LEVY OF PENALTY. 3. DURING THE COURSE OF HEARING BEFORE US,THE AUTHORIS ED REPRESENTATIVE (AR) STATED THAT THE HONBLE BOMBAY HIGH COURT HAD ADMITTED A SUBSTANTIA L QUESTION OF LAW WITH REGARD TO THE QUANTUM APPEAL,THAT PENALTY WOULD NOT SURVIVE AFTER ADMISSION OF QUESTION OF LAW BY THE HONBLE COURT. HE REFERRED TO AN ORDER DELIVERED BY THE TRI BUNAL IN ONE OF THE GROUP ENTITIES I.E. IN THE CASE OF ADITYA BIRLA NUVO LTD. (ITA/796/MUMBAI/2010 ,AY. 1993-94, DATED 25/05/2016) AND STATED THAT IDENTICAL ISSUE HAD BEEN DELIBERATED UP ON BY THE TRIBUNAL IN THAT MATTER. HE ALSO RELIED UPON THE CASES OF NAYAN BUILDERS AND DEVELOPERS (IN COME TAX APPEAL NUMBER 415 OF 2012) OF THE HONBLE BOMBAY HIGH COURT AND LIQUID INVESTMENT AND TRADING COMPANY (ITA 240 OF 2009,DTD.05/10/2010 OF THE HONBLE DELHI HIGH COURT .THE DEPARTMENTAL REPRESENTATIVE (DR) CONTENDED THAT TRIBUNAL HAD UPHELD THE ORDER IN THE QUANTUM PROCEEDINGS, THAT THE AO WAS JUSTIFIED IN LEVYING PENALTY. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT WHILE DECIDING THE QUANTUM APPEAL THE TRIBUNAL HAD DISMIS SED THE GROUND RAISED BY THE ASSESSEE WITH REGARD TO PROJECT DEVELOPMENT EXPENSES, THAT THE HO NBLE JURISDICTIONAL HIGH COURT HAS ADMITTED A SUBSTANTIAL QUESTION OF LAW VIDE ITS ORDER DATED 07/12/2011 AND IT READS AS UNDER: WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE TRIBUNAL IN HOLDING THAT THE AMOUNT OF RS.2,04,30,000/-BEING BUSINESS D EVELOPMENT EXPENSES WAS NOT ALLOWABLE. THE LEVY OF PENALTY U/S. 271(1)(C),AFTER ADMISSION OF A SUBSTANTIAL QUESTION OF LAW BY THE HONBLE HIGH COURT,HAS BEEN DEALT IN THE CASE OF ADITYA BIR LA NUVO LTD. (SUPRA)AS FOLLOW: 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IN THE HAD CLAIMED DEPRECIATION ON POWER PLANT INSTALL RAJSHREE CEMENT LTD. AND ON THE BOILER IT H AD CLAIMED DEPRECIATION FOR FULL YEAR AT NORMAL RATE OF 100% AMOUNTING TO RS. 6,52,24,546/-. AO DIS ALLOWED THE CLAIM OF DEPRECIATION FOR FULL YEAR ON THE GROUND THAT BOILER WAS NOT USE FOR MORE THAN 180 DAYS, ACCORDINGLY ALLOWED ONLY 50% OF THE CLAIM. THE ORDER OF AO WAS CONFIRMED BY CIT(A) AND SUBSEQUENTLY BY ITAT OBSERVING THAT BOILER WAS NOT READY TO USE ON THAT DATE. 3. AFTER DISMISSAL OF THE APPEAL OF THE ASSESSEE B Y ITAT, THE ASSESSEE WAS SERVED NOTICE DATED 25.03.1996 U/S. 274 R.W.S. 271(1)(C) FOR INITIATION OF PENALTY. THE ASSESSEE SUBMITTED ITS REPLY DATED 19.08.2008 WHEREIN THE PENALTY WAS OPPOSED AND EXPL AINED THE BACKGROUND OF THE CASE. THE EXPLANATION OF ASSESSEE WAS NOT ACCEPTED BY AO AND THE AO LEVIED PENALTY OF RS. 33753700/- U/S. 271(1)(C) OF THE ACT @ 100% OF THE AMOUNT OF THE TA X SOUGHT TO BE EVADED. AGGRIEVED BY THE ORDER OF AO ASSESSEE FILED APPEAL BEFORE CIT(A), WHEREIN IT WAS CONTENDED THAT HONBLE HIGH COURT HAS ADMITTED THE SUBSTANTIAL QUESTION OF LAW IN RESPECT OF ORDER PASSED BY TRIBUNAL PERTAINING TO THE 7979/M/11(04-05)- ADITYA BIRLA MINACS 3 GROUND RELATED WITH THE DEPRECIATION OF BOILER AND ALSO MADE SUBMISSION ON THE MERIT OF THE CASE. THE LD. CIT(A) AFTER CONSIDERING THE CONTENTION OF ASSESSEE HOLD AS UNDER: I HOLD THAT THE APPELLANT HAD NOT MADE CONSCIOUS E FFORTS TO CONCEAL THE PARTICULARS OF ITS INCOME AND AS SUCH NO MALAFIDE IS INVOLVED ON THE P ART OF THE APPELLANT IN CLAIMING FULL NORMAL DEPRECIATION ON THE BOILER. HENCE, IN GIVEN CIRCUMSTANCES THOUGH THE DISALLOWANCE ON THE PART OF DEPRECATION CLAIMED BY APPELLANT IS JUS TIFIED, BUT THE PENAL ACTION FOR CONCEALMENT OF INCOME IS HELD TO BE NOT JUSTIFIED. ACCORDINGLY, THE PENALTY IMPOSED FOR CONCEALMENT U/S. 271(1)(C) IS DELETED. 4. AGGRIEVED BY THE ORDER OF CIT(A), THE REVENUE H AS FILED THE PRESENT APPEAL AND THE ASSESSEE FILED C.O. WE HAVE HEARD LD. DR FOR REVENUE AND AR FOR ASSESSEE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. LD. DR FOR REVENUE ARGUED THAT ASSESSEE WAS CONSCIOUS SINCE FILING OF RETURN OF INCOME THAT DEPRECIATION ON THE BOILER IS NOT AL LOWABLE AND CONCEALED THE MATERIAL DATE WHEN THE SAME WAS PUT TO USE. LD. DR FURTHER ARGUED THAT THE DISALLOWANCE WAS CONFIRMED BY CIT(A) AS WELL AS CO-ORDINATE BENCH OF ITAT. LD. DR FURTHER RELIED UPON THE ORDER OF ITAT, DELHI IN ACIT VS. M/S KHANNA & ANNANDHANAM REPORTED VIDE [2013] 1 3 TAXMANN.COM 94 (DELHI). ON THE OTHER HAND, LD. AR OF ASSESSEE ARGUED THAT ASSESSEES APP EAL BEFORE THE HONBLE HIGH COURT IN QUANTUM APPEAL IS ADMITTED VIDE ORDER DATED 16.09.2008. HEN CE, SUBSTANTIAL QUESTION OF LAW ON WHICH THE DISALLOWANCE WAS MADE HAS BEEN ADMITTED BY THE HON BLE HIGH COURT AND NO PENALTY CAN BE LEVIED AGAINST THE ASSESSEE. LD. AR HEAVILY RELIED UPON TH E JUDGMENT OF HONBLE DELHI HIGH COURT IN CIT VS. LIQUID INVESTMENT & TRADING CO. (ITA NO. 240/09 ), ORDER OF CO-ORDINATE BENCH OF ITAT IN ACIT VS. ADITYA BIRLA CENTRE (ITA NO. 5931/MUM/2010 (T MUM) AND JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN CIT VS. NAYAN BUILDERS & DEVELOPER IN ITA NO. 415/2012. 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS OF THE PARTIES AND GONE THROUGH THE RECORD OF THE CASE AND THE LAW CITED BY LD. REPRESENTATIVE OF THE PART IES. THE LAW CITED BY LD. DR IN ACIT VS. KHANNA & ANNANDHANAM IS NOT APPLICABLE AS THE FACT OF THIS CASE IS IN DIFFERENCE FROM THE CASE IN HAND. IN KHANNA & ANNANDHANAM THE RECEIPT OF COMPENSATI ON WAS A REVENUE RECEIPT AND THE ASSESSEE INSTEAD OF CREDITING THE AMOUNT IN ITS P&L A/C CREDITED THE AMOUNT DIRECTLY IN THE ACCOUNT OF PARTNERS, THEREFORE, THE ASSESSEE TRIED TO EVADE TAXES BY TREATING PATENT REVENUE RECEIPT AS CAPITAL RECEIPT BY CREDITING TO PARTNERS ACCOUNT. 6. THE HONBLE BOMBAY HIGH COURT WHILE CONSIDERING THE ALMOST IDENTICAL RATIO(GROUNDS) HELD AS UNDER: HAVING HEARD MR AHUJA, LEARNED COUNSEL APPE ARING ON BEHALF OF THE APPELLANT, WE FIND THAT THIS APPEAL CANNOT BE ENTERTAINED AS IT DOES N OT RAISE ANY SUBSTANTIAL QUESTION OF LAW. THE IMPOSITION OF PENALTY WAS FOUND NOT TO BE JUSTIFIED AND THE APPEAL WAS ALLOWED. AS A PROOF THAT THE PENALTY WAS DEBATABLE AND ARGUABLE ISSUE, THE TRIBU NAL REFERRED TO THE ORDER ON ASSESSEES APPEAL IN QUANTUM PROCEEDINGS AND THE SUBSTANTIAL QUESTION S OF LAW WHICH HAVE BEEN FRAMED THEREIN. WE HAVE ALSO PERUSED THAT ORDER DATED 27TH SEPTEMBER 2 010 ADMITTING INCOME TAX APPEAL NO.2368 OF 2009. IN OUR VIEW, THERE WAS NO CASE MADE OUT FOR I MPOSITION OF PENALTY AND THE SAME WAS RIGHTLY SET ASIDE. THE APPEAL RAISES NO SUBSTANTIAL QUESTIO N OF LAW, IT IS DISMISSED, NO COSTS. FURTHER, THE HONBLE DELHI HIGH COURT WHILE DISCUSSING THE ISSUE OF PENALTY WHEREIN SUBSTANTIAL QUESTION OF LAW FRAMED HAS BEEN ADMITTED FOR CONSIDERATION HELD AS UNDER: 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 INCOME TAX A CT, 1961 ON THE GROUND THAT THE ISSUE OF DEDUCTION UNDER SECTION 14A OF THE ACT WAS A DEBATA BLE ISSUE. WE MAY ALSO NOTE THAT AGAINST THE QUANTUM ASSESSMENT WHERE UNDER DEDUCTION UNDER SECTION 14A OF THE ACT WAS PRESCRIBED TO THE ASSESSEE, THE ASSESSEE HAS PREFERRED AN APPE AL IN THIS COURT UNDER SECTION260A OF THE ACT WHICH HAS ALSO BEEN ADMITTED AND SUBSTANTIAL QU ESTION OF LAW FRAMED. THIS ITSELF SHOWS THAT THE ISSUE IS DEBATABLE. FOR THESE REASONS, WE ARE OF THE OPINION THAT NO QUESTION OF LAW ARISES IN THE PRESENT CASE. 7. NOW COMING TO THE FACTS OF THE PRESENT CASE. IT IS NOT IN DISPUTE IN THE PLEA OF ASSESSEE THAT A SUBSTANTIAL QUESTION OF LAW HAS BEEN ADMITTED BY HO NBLE JURISDICTIONAL HIGH COURT ON QUANTUM 7979/M/11(04-05)- ADITYA BIRLA MINACS 4 APPEAL. IN VIEW OF THE JUDGMENTS OF HONBLE JURISDI CTIONAL HIGH COURT AND DELHI HIGH COURT NO PENALTY CAN BE LEVIED ON THE DEBATABLE AND ARGUABLE ISSUE. ADMITTEDLY, SUBSTANTIAL QUESTION OF LAW HAD BEEN ADMITTED BY THE HONBLE HIGH COURT ON THE ASSESSEES APPEAL. 8. IN VIEW OF THE ABOVE LEGAL DISCUSSION, THE PENA LTY ORDER U/S 271(1)(C) OF THE ACT WAS NOT JUSTIFIE D WHEN DEBATABLE AND ARGUABLE ISSUE ON SUBSTANTIAL QU ESTION OF LAW HAS BEEN ADMITTED BY THE HONBLE HIGH COURT. THUS, THE APPEAL OF REVENUE IS DISMISSED. 4.1. CONSIDERING THE ABOVE AND RESPECTFULLY FOLLOWING TH E JUDGMENTS OF NAYAN BUILDERS AND DEVELOPERS AND LIQUID INVESTMENT AND TRADING COMPAN Y(SUPRA),WE HOLD THAT AFTER ADMISSION OF SUBSTANTIAL QUESTION OF LAW BY THE HONBLE BOMBAY H IGH COURT THE ISSUE HAS BECOME DEBATABLE AND THAT PENALTY U/S. 271(1)(C) CANNOT BE IMPOSED I N SUCH CASES.REVERSING THE ORDER OF THE FAA, WE DECIDE EFFECTIVE GROUND OF APPEAL IN FAVOUR OF T HE ASSESSEE. AS A RESULT, APPEAL FILED BY THE ASSESSEE S TANDS ALLOWED. . ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH FEBRUARY, 2017. 10 , 2017 SD/- SD/- ( /SANJAY GARG) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; /DATED : 10 .02.2017. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR A BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.
