ASST CIT 11(3)(1), MUMBAI V. TOTAL LUBRICANTS INDIA LTD, MUMBAI

ITA 896/MUM/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5377 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2006-2007
• Appeal Filed On: 09-02-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, AM AND SHRI RAM LAL NEGI, JM I.T.A. NO. 89 6 /MUM/2015 (ASSESSMENT YEAR: 200 6 - 0 7 ) ASST. CIT - 11(3)(1), R. NO. 427, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI - 400 0 20 VS. M/S. TOTAL LUBRICANTS INDIA LTD. (NOW KNOWN AS TOTAL OIL INDIA PVT. LTD.) 3 RD FLOOR, THE LEELA GALLERIE, ANDHERI KURLA ROAD, ANDHERI (E), MUMBAI - 400 059 PAN/GIR NO. AAACE 1877 C ( APPELLANT ) : ( RESPONDENT ) APPELLANT BY : SHRI V. JUSTIN RESPONDENT BY : SHRI NIRAJ SHETH DATE OF HEARING : 01.05.2018 DATE OF PRONOUNCEMENT : 30.07 .2018 O R D E R PER SHAMIM YAHYA, A. M.: THIS APPEAL BY THE R EVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 10.1 1.2014 AND PERTAINS TO ASSESSMENT YEAR 2006 - 0 7 . 2. T HE ISSUE RAISED I S THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DELETING THE PENALTY LE V IED IN THIS CASE U /S. 271(1)(C) OF THE ACT. THE G ROUNDS RAISED IN THIS REGARD ARE AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING PENALTY OF RS.59,54,490/ - LEVIED U/S. 271(L)(C) OF THE INCOME TAX ACT, 1961, WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAD DEBITED TO THE PROFIT AND LOSS ACCOUNT A SUM OF RS.1,19,00,000/ - BEING PROVISION FOR SCHEMES AND RS.57,50,000/ - BEING PROVISION FOR EMPLOYEES COST EVEN THOUGH THE ASSESSEE HAD ACTUALLY NOT PAID THE SAME IN THE PRESENT YEAR AND HENCE WAS NOT ENTITLED TO THE SAID DEDUCTION. 2 ITA NO. 896/MUM/2015 M/S. TOTAL LUBRICANTS INDIA LTD. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LT. CIT(A) ERRED IN DELETING THE PENALTY LEVIED U/S 271(L)(C) WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAD NOT ACTUALLY PAID THE AMOUNT AND HAD ONLY CREATED A PROVISION, WHEN THE ASSESSE E WAS F OLLOWING MERCANTILE SYSTEM OF ACCOUNTING WHICH THEREBY TANTAMOUNT TO FILING OF INACCURATE PARTICULARS OF ITS INCOME WITHIN THE MEANING OF SECTION 271(L)(C) OF THE IT. ACT, 1961. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, TH E LD. CIT(A) ERRED IN DELETING THE PENALTY LEVIED U/S 271(L)(C), RELYING ON THE SUPREME COURT'S JUDGMENT IN THE CASE OF CTT V/S RELIANCE PETRO PRODUCTS PVT. LTD.(322 ITR 158)(SC) WITHOUT APPRECIATING THAT THE PRINCIPLES LAID DOWN BY THE APEX COURT IN THE J UDGMENT CITED SUPRA ARE NOT APPLICABLE TO THE FACTS OF THE CASE OF THE ASSESS E E. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN IGNORING THE RATIO LAID DOWN BY THE HON'BLE DELHI HIGH COURT IN THE C ASE OF CI T VS. ZO OM COMMUNICATIONS PVT. LTD.(327 ITR 510)(DEL). 3. I N THIS CASE , THE PENALTY HAS BEEN LEVIED FOR THE TWO ADDITIONS IN THIS CASE WHICH ARE AS UNDER : 1 . PROVISION FOR A SUM OF RS. 1 , 19 , 00 , 000 / - BEING THE PROVISION FOR SCHEMES ; 2 . PROVISION FOR A SUM OF RS. 57 , 50,000 / - BEING THE PROVISION FOR EMPLOYEES COST . T HE PENALTY LE V IED IN THIS CASE HAS BEEN DELETED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS). 4. A GAINST THIS ORDER , THE R EVENUE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED T HE RECORDS. THE L EARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDERS OF THE ASSESSING OFFICER. 6. PER CONTRA , THE LEARNED COUNSEL OF THE ASSESSEE SUPPORTED THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) . HE FURTHER SUBMITTED THAT THIS I TAT IN THE QUANTUM APPEAL HAS REMIT T ED THE FIRST ISSUE BEING THE PROVISION FOR SCHEMES FOR FRESH CONSIDERATION BY THE ASSESSING OFFICER WITH CERTAIN DIRECTIONS. HE FURTHER SUBMITTED THAT 3 ITA NO. 896/MUM/2015 M/S. TOTAL LUBRICANTS INDIA LTD. ON THE SECOND ISSUE OF PROVISION FOR EMPLOYEES COST, THAT ADDITION HA S BEEN DULY DELETED BY THE ITAT. HENCE , THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT LEVY OF PENALTY ON THIS ACCOUNT DOES NOT SURVIVE. 7. UP ON CAREFUL CONSIDERATION WE FIND THAT SINCE ON THE ISSUE OF PROVISION OF SCHEMES FOR A SUM OF RS. 1,19,00,000 / - , THE ISSUE HAS BEEN REMITTED TO THE FILE OF THE ASSESSING OFFICER , T HE ISSUE OF PENALTY ALSO DESERVES TO BE REMITTED TO THE FILE OF THE ASSESSING OFFICER. ACCORDINGLY , THE ISSUE OF PENALTY ON THIS ACCOUNT IS REMITTED TO THE FILE OF THE ASSESSING OFFICER. THE SAME SHALL BE CONSIDERED BY THE ASSESSING OFFICER UPON THE ADJUDICATION OF THE ISSUE PURSUANT TO THE REMAND BY THE ITAT. 8. AS REGARDS THE LEVY OF PENALTY WITH REFERENCE TO THE ADDITION OF RS.57,50,000 / - RELATING TO PROVISION FOR EMPLOYEE COST, SINCE THE CONCERN ADDITION HAS BEEN DULY DELETED BY THE ITAT, THE PENALTY ON THIS ISSUE DOES NOT SURVIVE. HENCE , WE UPHOLD THE DELETION OF PENALTY ON THIS ACCOUNT. 9. IN THE RESULT , THIS APPEAL BY THE R EVENUE STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.07.2018 SD/ - SD/ - ( RAM LAL NEGI ) (S HAMIM YAHYA) J UDICIAL MEMBER A CCOUNTANT MEMBER MUMBAI ; DATED : 30.07.2018 ROSHANI , S R. PS 4 ITA NO. 896/MUM/2015 M/S. TOTAL LUBRICANTS INDIA LTD. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT - CONCERNED 5. DR, ITAT, MUMBAI 6. GUARD F ILE BY ORDER, (DY./ASSTT. REGISTRAR) ITAT, MUMBAI