SKYLINE MILLARS LTD, MUMBAI V. ACIT 10(2), MUMBAI

ITA 8092/MUM/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71662 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 21-11-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 24-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M L PERUMAL
• Assessee Lawyers: SONALEE GODBOLE
• Keywords: Bad and doubtful debts
• Section: 115JB; 2

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E , BENCH MUMBAI , BEFORE SHRI D.KARUNAKARA RAO , A M & SHRI SANJAY GARG , J M IT A NO. 8092 /MUM/201 0 ( ASSESSMENT YEAR :200 7 - 200 8 ) M/S SKYLINE MILLARS LTD., 24, KURLA KIROL ROAD, P.O.BOX NO.9205, GHATKOPAR (W), MUMBAI - 400 086 VS. ACIT 10(2), MUMBAI PAN/GIR NO. : A AACT 2755 J ( APPELLANT ) .. ( RESPONDENT ) /ASSESSEE BY : MS. SONALEE GODBOLE /REVENUE BY : MR . M.L.PERUMAL DATE OF HEARING : 2 1 ST NOVEMBER , 201 3 DATE OF PRONOUNCEMENT : 2 1 ST NOVEMBER,2013 O R D E R PER D.KARUNAKARA RAO ( A .M.) : TH IS APPEAL BY THE ASSESSEE HAS BEEN PREFERRED AGAINST THE ORDER DATED 24 - 8 - 2010 , PASSED BY THE LEARNED CIT(A) - 22 , MUMBAI FOR THE ASSESSMENT YEAR 200 7 - 200 8 . 2 . AT THE OUTSET, LEAR NED COUNSEL FOR THE ASSESSEE STATED THAT THE ASSESSEE FILED RETURN OF INCOME DECLARING THE TOTAL INCOME AS PER THE SPECIAL PROVISIONS UNDER SECTION 115JB OF THE ACT (MAT). FURTHER, LEARNED COUNSEL STATED THAT THE ASSESSMENT WAS COMPLETED AGAIN ON THE MAT P ROVISIONS AFTER MAKING ADDITIONS ON ACCOUNT OF BAD DEBTS IN ONE HAND AND FOREIGN TRAVEL EXPENSES ON THE OTHER. ITA NO. 8092 /201 0 2 3 . IN APPEAL, THE CIT(A) CONFIRMED THE SAID ADDITIONS AND THE ASSESSEE DID NOT FILE ANY APPEAL BEFORE THE TRIBUNAL. THUS, THE QUANTUM ADDITION S HAVE ATTAINED FINALITY. PENALTIES WERE ALSO LEVIED UNDER SECTION 271(1)(C) OF THE ACT IN RESPECT OF THE ABOVE SAID ADDITIONS AND THE SAME WAS CONFIRMED BY THE CIT(A). AGGRIEVED THEREBY, THE ASSESSEE IS I N APPEAL HERE BEFORE THE TRI BUNAL PRAYING FOR DELET ION OF THE SAID PENALTIES. 4 . IN THIS REGARD THE COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PENALTIES ARE NOT SUSTAINABLE CONSIDERING THE FACT THAT THE ASSESSEE FILED RETURN OF INCOME IN ACCORDANCE WITH THE SPECIAL PROVISIONS OF MAT AND THE ASSESSMENT WAS ALSO COMPLETED IN ACCORDANCE WITH THE MAT PROVISIONS. FOR THIS PROPOSITION, THE COUNSEL RELIED ON VARIOUS DECISIONS AND FILED THE COMPILATION OF THE SAME. LIST OF THE DECISIONS AND OTHER DETAILS ARE AS UNDER : - SL. NO PARTICULARS ITA NO/REF.NO. JURISDIC TION PAGE NO. RELEVANT PARA/PAGE NOS. 1. CIT VS.NALWA SONGS INVESTMENTS LTD. 327 ITR 543 DELHI HC 1 - 11 PG. NO.11 2. UNISON HOTELS LTD. VS. DCIT 89/2013,DT.10 - 10 - 2013 DELHI HC 12 - 25 PARA 7 ON PG.14 - 15 3. ACIT VS.SERI INFRASTRACTURE FINANCE LTD 154 TTJ111 DELHI HC 16 - 25 PARA 11,12 ON PG.25 4. DCIT VS.USHDEV INTERNATIONAL LIMITED 129 ITD 167 MUMBAI ITAT 26 - 31 PG. NO.28 5. RUCHI STRIPS &ALLOYS LTD. VS. DCIT 6940&6941/M/ 08 MUMBAI ITAT 32 - 34 PARA 7 ON PG.34 6. PARAMOUNT MINERALS & CHEMICALS LTD. VS. DCIT 47 14,4715&47 16/M/09 MUMBAI ITAT 35 - 42 PARA 10 ON PG.NO.41 7. BSEL INFRASTRUCTURE REALTY LTD. VS. ACIT 150TTJ 159 MUMBAI ITAT 43 - 48 PARA 8.2 ON PG.NO.46 5 . ON THE OTHER HAND, LEARNED DR FOR THE REVENUE RELIED HEAVILY ON THE ORDER OF THE AO AS WELL AS CIT (A). ITA NO. 8092 /201 0 3 6 . WITHOUT GOING TO THE MERITS OF THE ADDITIONS, WE HAVE EXAMINED THE LEGAL ASPECTS AND THE LEGAL PROPOSITIONS, WHICH ARE IN FORCE. TO START WITH, WE HAVE GONE THROUGH THE JUDGMENT OF THE HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS. NALWA SONS INV ESTMENTS LIMITED, REPORTED IN 327 ITR 543 AND FOUND THAT THE SAME IS RELEVANT FOR THE PROPOSITION THAT THE PENALTIES IN RESPECT OF THE ADDITIONS MADE UNDER SECTION 115JB OF THE ACT ARE NOT SUSTAINABLE. THE RELEVANT PROPOSITION READS AS UNDER : - WHERE TH E INCOME COMPUTED IN ACCORDANCE WITH THE NORMAL PROCEDURE IS LESS THAN THE INCOME DETERMINED BY LEGAL FICTION, NAMELY, THE BOOK PROFITS UNDER SECTION 115JB OF THE ACT AND THE INCOME OF THE ASSESSEE IS ASSESSED UNDER SECTION 115JB AND NOT UNDER THE NORMAL P ROVISIONS, THE TAX IS PAID ON THE INCOME ASSESSED UNDER SECTION 115JB OF THE ACT. CONCEALMENT OF INCOME WOULD HAVE NO ROLE TO PLAY AND WOULD NOT LEAD TO TAX EVASION. THEREFORE, PENALTY CANNOT BE IMPOSED ON THE BASIS OF DISALLOWANCES OR ADDITIONS MADE UNDER THE REGULAR PROVISIONS. 7 . WE HAVE ALSO EXAMINED THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF RUCHI STRIPS AND ALLOYS LTD. VS. DCIT, DECIDED IN ITA NOS.6940&6941/M/2008, DATED 21 - 1 - 2011 , AND FOUND THAT PARA 7 OF THE ORDER OF THE T RIBUNAL IN THE AFORESAID CASE IS RELEVANT AND THE SAID PARAGRAPH READ S AS UNDER : - IN OUR VIEW THE AFORESAID RULING OF THE HON BLE DELHI HIGH C O URT APPLIES TO THE FACTS OF THE PRESENT CASE. IN THE FACTS AND CIRCUMSTANCES OF THE PRESE NT CASE NO PENALTY COU LD HAVE BE EN IM P OSED ON THE ASSESSEE BECAUSE THER E WAS NO TAX SOUGHT TO BE EVADED BECAUSE THE ADDITION IN RESPECT OF WHICH PENALTY WAS IMPOSED WAS MADE WHILE COMPUTING TOTAL INCOME UNDER THE NORMAL PROVISIONS OF THE ACT AND ULTIMATELY THE TOTAL INCOME OF T HE ASSESSEE WAS DETERMINED ON THE BASIS OF BOOK PROFITS U/S.115JB OF THE ACT. WE, THEREFORE, CANCEL THE PENALTY IMPOSED BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT(A). ITA NO. 8092 /201 0 4 8 . CONSIDERING THE ABOVE LEGAL PROPOSITIONS, WE ARE OF THE OPINION THAT IN PRI NCIPLE , THE PENALTY IS NOT SUSTAINABLE. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 9 . IN THE RESULT, APPEAL OF THE AS S ESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 2 1 ST OF NO V. 201 3 . 2 1 ST 201 3 SD/ - SD/ - ( ) ( SANJAY GARG ) ( ) ( D.KARUNAKARA RAO ) / JUDICIALMEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 2 1 /11/ 2013 /PKM , PS COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( ASSTT. REGISTRAR) / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) - X, MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//