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

ITA 899/MUM/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5391 (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: Dismissed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 09-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Keywords: Tax effect
• Section: 143(3)

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 9 /MUM/2015 (ASSESSMENT YEAR: 200 9 - 10 ) 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) - 18, MUMBAI DATED 05.11.2014 AND PERTAINS TO ASSESSMENT YEAR 200 9 - 10 . 2. T HE ISSUE RAISED I S THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DELETING THE LEVY OF PENALTY OF RS.11,04,582/ - . 3. IN THIS CASE, IN THE ASSESSMENT ORDER, THE ADDITIONS WE RE MADE WITH RESPECT TO TH E FOLLOWING: 1) DISALLOWANCE OF EDP EXPENSES OF RS.8,93,726/ - ; 2 ITA NO. 896/MUM/2015 M/S. TOTAL LUBRICANTS INDIA LTD. 2) INTEREST OF RS.3,50,000/ - ATTRIBUTABLE TO WARDS HOUSING LOANS AND CAR LOANS TO EMPLOYEES; AND 3) DONATION OF RS.3,000/ - 4 . THE PENALTY LEVIED IN THIS REGARD WAS DELETED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS). QUA DELETING THE LEVY OF PENALTY IN RESPECT OF EDP EXPENDITURE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) RELIED UPON THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF RELIANCE PETROPRODUCTS (P.) LTD. [2010] 322 ITR 158 (SC) . F OR DELETION OF PENALTY WITH REFERENCE TO INTEREST EXPENDITURE AND DONATION , T HE LD. COMMISSIONER OF INCOME TAX (APPEALS) HELD AS UNDER: 2.3 I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT, ORDER OF THE A.O. AND FACTS OF THE CASE CAREFULLY. IT IS NOTICED THAT IN THE ASSESSMENT ORDER, THE A.O. HAS MADE DISALLOWANCE OF RS,3,5 0 , 000 / - ON ACCOUNT OF HOUSING ADVANCES AND CAR LOAN GIVEN TO THE EMPLOYEES ON THE BASIS OF DISALLOWANCE MADE IN THE PRECEDING YEAR. DURING PENALTY PR OCEEDINGS, THE A.O. HAS ISSUED SHOW CAUSE NOTICE TO THE APPELLANT TO EXPLAIN AS TO WHY PENALTY MAY NOT BE LEVIED U/S 271(1)(C). IN RESPONSE TO THIS, THE AR OF THE APPELLANT HAS SUBMITTED ITS REPLY. AFTER CONSIDERING THE REPLY OF THE APPELLANT, THE A.O. HAS HELD THAT THE APPELLANT HAS FAILED TO ESTABLISH ANY NEXUS BETWEEN THE INTEREST PAID ON BEHALF OF THE EMPLOYEES AND INTEREST RECOVERED FROM THE EMPLOYEES. THUS, IT WAS HELD THAT THE APPELLANT HAS SUBMITTED INACCURATE PARTICULARS OF INCOME WHICH HAS RESULTE D INTO CONCEALMENT, AND LEVIED PENALTY U/S 271(1)(C). ON THE OTHER HAND, THE AR OF. THE APPELLANT HAS SUBMITTED THAT COMPLETE DETAILS OF INTEREST PAID TO HDFC BANK OF RS.3,08,166/ - AND INTEREST RECOVER ED FROM EMPLOYEES OF RS.3,94,471/ - WERE SUBMITTED BEFOR E THE A.O. AND THE EXCESS RECOVERY OF RS.86,303/ - WAS' OFFERED TO TAX IN THE RETURN OF INCOME. THE AR OF THE APPELLANT HAS ALSO SUBMITTED THAT IT IS NOT KNOWN AS TO HOW THE FIGURE OF RS.3,50,0007 - WAS ESTIMATED WHEN COMPLETE DETAILS WERE SUBMITTED BEFORE T HE A.O. PENALTY CANNOT BE SUSTAINED ON ESTIMATED DISALLOWANCES. FROM THE PERUSAL OF THE SUBMISSIONS AND FACTS OF THE CASE, IT IS NOTICED THAT THE APPELLANT HAS SUBMITTED DETAILS OF INTEREST PAID TO HDFC BANK OF RS.3,08,166/ - AND INTEREST RECEIVED FROM EMPLO YEES WAS RS.3,94,47 1/ - . THE EXCESS RECOVERY OF RS.86,303/ - WAS OFFERED TO TAX IN THE RETURN OF INCOME. THE AR OF THE APPELLANT HAS ALSO SUBMITTED THAT COMPLETE DOCUMENTS AND DETAILS WERE SUBMITTED BEFORE THE A.O. AND IT IS NOT KNOWN WHERE FROM SHE HAS ADOP TED THE FIGURE OF RS.3,50,000/ - WHEN THE DIFFERENCE OF INTEREST PAID TO THE BANK AND RECOVERY FROM THE EMPLOYEES WAS ONLY 3 ITA NO. 896/MUM/2015 M/S. TOTAL LUBRICANTS INDIA LTD. RS86,303/ - WHICH IS ALSO ADMITTED BY THE A.O. FROM THE FACTS OF THE CASE , I T IS CLEAR THAT THE APPELLANT HAS PAID INTEREST TO HDFC BAN K ON ACCOUNT OF H OUSING LOAN AND VEHICLE ADVANCES TO EMPLOYEES OF RS . 3,08 ,1 66/ - AN D RECO VERED FROM THE EMPLOYEES OF RS.3,94,471/ - AND EXCESS INTEREST OF R S.86,303 / - IS DECLARED IN THE RETURN OF INCOME. IT IS NOT UNDERSTANDABLE HOW THE A.O. HAS TREATED IT A S CONCEALMENT OF INCOME AND SUBMISSION OF INACCURATE PARTICULARS OF INCOME. MERELY THE FACT THAT THE APPELLANT HAS NOT FILED APPEAL AGAINST THE DISALLOWANCE MADE IN THE ASSESSMENT ORDER U/S 143(3) DOES NOT MEAN THAT IT HAS CONCEALED ITS INCOME. IT IS WELL ESTABLISHED THAT ASSESSMENT AND PENALTY PROCEEDINGS ARE DIFFERENT AND INDEPENDENT TO EACH OTHER. THE A.O. HAS ALSO MADE DISALLOWANCE OF DONATION OF RS.3,000/ - INCLUDED IN THE MISCELLANEOUS EXPENSES. DURING PENALTY PROCEEDINGS, THE A.O. HAS ISSUED A SHOW CA USE NOTICE TO THE APPELLANT AS TO WHY PENALTY U/S 271(1)(C) MAY NOT BE LEVIED. IN RESPONSE TO THIS, THE APPELLANT HAS NOT FILED ANY SUBMISSIONS. IN THE PENALTY PROCEEDINGS, IT WAS HELD THAT THE APPELLANT HAS CONCEALED INCOME AND SUBMITTED INACCURATE PARTIC ULARS OF INCOME BY CLAIMING THIS EXPENDITURE AND LEVIED PENALTY U/S 271(1)(C). THE DISALLOWANCE OF RS.3, 000/ - ON ACCOUNT OF DEDUCTION U/S 80 G IS A SMALL AMOUNT AND HAS A VERY LITTLE TAX EFFECT, THEREFORE IGNORED. KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES , IT IS HELD THAT THE APPELLANT HAS SUBMITTED COMPLETE DETAILS OF INTEREST PAID TO THE BANK AND RECOVERY FROM THE EMPLOYEES AND ALSO THE EXCESS AMOUNT OF RS,86,303/ - WAS DECLARED IN THE RETURN OF INCOME, THEREFORE, IT IS NOT THE CASE OF CONCEALMENT OF INCO ME AND SUBMISSION OF INACCURATE PARTICULARS. HENCE, THE PENALTY LEVIED BY THE A.O. IS DELETED. 5 . A GAINST THIS ORDER , THE R EVENUE IS IN APPEAL BEFORE US. 6 . WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. AS REGARDS TH E ADDITION QUA EDP EXPENDITU RE IS CONCERNED , WE FIND THAT IT HAS BEEN SUBMITTED BY THE LD. COUNSEL OF THE ASSESSEE THAT THE SAID ADDITION HAS BEEN DELETED AND THE DEPARTMENT HAS NOT FILED AN APPEAL BEFORE THE ITAT. THE ITAT IN THE PRECEDING YEAR HAS DELETED THE SIMILAR ADDITION. HENC E, UPON CAREFUL CONSIDERATION WE FIND THAT SINCE THE QUANTUM ADDITION DID NOT SUCCEED, THE PENALTY LEVIED IN THIS RESPECT IS NOT SUSTAINABLE. AS REGARDS THE PENALTY WITH REFERENCE TO THE INTEREST AND HOUSING LOAN, THE LD. COMMISSIONER OF INCOME TAX (APPEA LS) HAS GIVEN A FINDING THAT THE ASSESSING OFFICER 4 ITA NO. 896/MUM/2015 M/S. TOTAL LUBRICANTS INDIA LTD. HAS TOTALLY ERRED IN UNDERSTANDING THE ISSUE. THERE WAS IN FACT AN EXCESS RECOVERY OF RS.86,303/ - FROM THE EMPLOYEES WHICH WAS OFFERED TO TAX. HENCE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS RIGHTL Y DELETED THE PENALTY IN THIS REGARD. AS REGARDS THE OTHER ADDITION OF DONATION, WE AGREE WITH THE REASONING ATTRIBUTABLE BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) FOR DELETION OF THE PENALTY. ACCORDINGLY, IN THE BACKGROUND OF THE AFORESAID DISCU SSION AND PRECEDENT, WE UPHOLD THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS). 7 . IN THE RESULT , THIS APPEAL BY THE R EVENUE STANDS DISMISSED . 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 , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT - CONCE RNED 5. DR, ITAT, MUMBAI 6. GUARD F ILE BY ORDER, (DY./ASSTT. REGISTRAR) ITAT, MUMBAI