SOFT WARE ELEMETS (I) P.LTD, MUMBAI V. ITO 2(3)(2), MUMBAI

ITA 908/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92532 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 14-05-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 04-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N V NADKARNI
• Assessee Lawyers: M SUBRAMANIAN
• Keywords: Rectification of order; Opportunity of being heard
• Section: 115JB; 10B; 154

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE S/SHRI VIJAY PAL RAO ( JM ) AND D. KARUNAKAR A RAO, (AM) , . , ./ I.T.A. NO . 908 / MUM/20 1 3 ( / ASSESSMENT YE A R : 20 0 7 - 08 ) SOFT WARE ELEMENTS (I) PVT. LTD, 192, MAKER TOWER A, CUFFE PARAD, COLABA, MUMBAI - 400005 / VS. INCOME TAX OFFICER 2(3)(2), MUMBAI . ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN/GIR NO. : AAACI6258H / ASSESSEE BY SHRI M SUBRAMANIAN / REVENUE BY SMT.N V NADKARNI / DATE OF HEARING : 1 4 .5.2015 / DATE OF PRONOUNCEMENT : 22. .5. 2015 / O R D E R PER VIJAY PAL RAO ( JM ) THIS APPEAL BY THE ASSESSEE IS DIRECT ED AGAINST THE ORDER DATED 17.12.2012 ARISING FROM PENALTY ORDER PASSED UNDER SECTION 271(1)(C) OF THE INCOME T AX A T, 1961 (THE ACT) FOR THE ASSESSMENT YEAR 200 7 - 08 . 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE PENALTY ORDER PASSED U /S 271(1)(C) OF THE I T. ACT IS INVALID AND BAD IN LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED C. I T. (A) ERRED IN CONFIRMING THE PENALTY LEVIED OF RS.13,20,743 / - U/ S 271(1)(C) OF THE I T. ACT BY DISMISSING THE APPEAL. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED C. I T. (A) ERRED IN FURTHER ENHANCING THE PENALTY LEVIED U/S 271(1)(C) BY RS.26,41,486/ - . 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED C.LT. (A) ERRED IN DISMISSING THE APPEAL AND ALSO FURTHER 908 /MUM/201 3 2 ENHANCING TH E PENALTY LEVIED BY RS.26,41,486/ - AND THAT TOO WITHOUT EVEN GIVING AN OPPORTUNITY OF BEING HEARD IN THE MATTER. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED C. I T. (A) ERRED IN DISMISSING THE APPEAL AND ALSO FURTHER ENHANC ING THE PENALTY LEVIED BY RS.26,41,486 / - AND THAT TOO WITHOUT EVEN APPRECIATING FULLY AND PROPERLY THE FACTS OF THE CASE. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED C. I T. (A) ERRED IN DISMISSING THE APPEAL AND ALSO FURTHER ENHANCING THE PENALTY LEVIED BY RS.26,41,486/ - , ALTHOUGH THERE HAS BEEN NEITHER ANY CONCEALMENT OF INCOME NOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE ASSESSEE IN THE RETURN OF INCOME DECLARED AN INCOME OF RS.NIL AFTER CLAIMING DEDUC TION U/S 10B OF THE ACT. WHILE COMPLETING THE ASSESSMENT UNDER SECTION 143(3), DATED 11.12.2009, THE AO DETERMINED THE TOTAL INCOME AT RS.10,77,208/ - AND INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)( C ). IN THE QUANTUM APPEAL, THE LD.CIT(A) DISMIS SED THE APPEAL OF THE ASSESSEE . T HEREAFTER, THE AO RECTIFIED THE ASSESSMENT ORDER BY PASSING AN ORDER DATED 4.3.2011 UNDER SECTION 154 AND COMPUTED BOOK PROFIT UNDER SECTION 115JB OF THE ACT AT RS.43,59,753/ - AS AGAINST THE EARLIER INCOME OF RS.10,77, 210/ - UNDER THE NORMAL PROVISIONS OF ACT. SUBSEQUENTLY, THE AO LEVIED PENALTY UNDER SECTION 271(1)( C ) OF THE ACT VIDE ORDER DATED 11.6.2010 AT 100% OF THE TAX SOUGHT TO BE EVADED BY THE ASSESSEE. ON APPEAL, THE LD. CIT(A) HAS ENHANCED THE PENALTY TO 300% OF THE TAX SOUGHT TO BE EVADED. 3 . BEFORE US, THE LD.AR SUBMITTED THAT SINCE TH E AO HAS RECTIFIED ITS ASSESSMENT ORDER BY PASSING THE ORDER DATED 4.3.2011 UNDER SECTION 154 OF THE ACT, WHEREBY THE ASSESSMENT OF TAX MADE UNDER MAT AS PER SECTION 115JB OF THE ACT. THEREFORE, PENALTY LEVIED IN RESPECT OF ASSE SS MENT MADE UNDER THE NORMAL PROVISIONS OF ACT IS NOT SUSTAINABLE. HE HAS RELIED UPON THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT V/S NALWA SONS INVESTMENTS LTD. [2010] 327 ITR 543 (DEL) . 4 . THE LD. DR RELIED ON THE ORDERS OF AUTHORITIES BELOW. 5 . HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL AVAIL ON RECORD , WE NOTE THAT THE AO HAS LEVIED PENALTY IN RESPECT OF DISALLOWANCE 908 /MUM/201 3 3 CLAIMED UNDER SECTION 10B OF T HE ACT AMOUNTING TO RS.39 , 54 , 844. IN THE MEAN TIME, THE AO HAS RECTIFIED THE ASSE SS MENT BY PASSING AN ORDER DATED 4.3.2011 UNDER SECTION 154 AND COMPUTED THE INCOME OF THE ASSESSEE AS PER THE PROVISIONS OF MAT UNDER SECTION 115JB. WHILE PASSING THE PEN ALTY ORDER DATED 8.6.20111, THE AO HAS NOT CONSIDERED THE RECTIFICATION ORDER DATED 4.3.2011. THE LD. CIT(A) HAS ALSO NOT DISCUSSED THE RECTIFICATION ORDER PASSED BY THE AO, THEREBY , THE INCOME OF THE ASSESSEE WAS ASSESSED UNDER THE PROVISIONS OF SECTI ON 115JB. ACCORDINGLY, IN THE FACTS AND CIRCUMSTANCE OF THE CASE AND IN THE INTEREST OF JUSTICE WE SET ASIDE THE IMPUGNED ORDER OF LD. CIT(A) AND REMIT THE ISSUE TO HIS FILE TO RECONSIDER THE SAME AFRESH BY CONSIDERING THE RECTIF I CATION ORDER PASSED BY AO UNDER SECTION 154 OF THE ACT AND AS WELL AS THE DECISION RELIED UPON BY THE ASSESSEE . 6 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE . THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 22 ND MAY , 201 5 . 22 ND MAY , 2015 SD SD ( . / D. KARUNAKAR A RAO) ( / VIJAY PAL RAO ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI: 22 ND MAY , 2015 . . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLA NT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI