N VENSIMAL SECURITIES LTD, MUMBAI V. ACIT-4(3), MUMBAI

ITA 942/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83665 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-09-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 02-09-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 10-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SANJIV G BRAHME
• Keywords: Question of law; Bad and doubtful debts

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B , BENCH MUMBAI , BEFORE : SHRI R.C.SHARMA , A M & SHRI AMIT SHUKLA , J M ITA NO. 942 / MUM/20 12 ( ASSESSMENT YEAR : 2005 - 06 ) M/S N VENSIMAL SECURITIES LTD., 37/41, SHAHIVIRI BUILDING, PICKET ROAD, MUMBAI - 400 002 VS. ACIT - 4(3), MUMBAI PAN/GIR NO. : A A A C N 3305 Q ( APPEL LANT ) .. ( RESPONDENT ) /ASSESSEE BY : SHRI JAYANT BHATT & SHRI SANJIV G. BRAHME /REVENUE BY : SHRI MAURYA PRATAP DATE OF HEARING : 2 ND SEPT. 201 4 DATE OF PRONOUNCEMENT : 2 ND SEPT , 201 4 O R D E R PER R.C.SHARMA ( A .M.) : THIS IS AN APPEAL FILED BY ASSESSEE AGAINST THE ORDER CIT(A ) , DATED 9 - 12 - 2011 FOR ASSESSMENT YEAR 2005 - 06 , IN THE MATTER OF IMPOSITION OF PENALTY OF RS.27,27,675/ - U/S. 271(1)(C) OF THE ACT. 2 . AT THE OUTSET, LEARNED AR PLACED ON RECORD, THE ORDER OF HON BLE BOMBAY HIGH COURT DATED 30 - 11 - 2011, WHEREIN THE SUBSTANTIAL QUESTION OF LAW HAS BEEN ACCEPTED. AS PER LEARNED AR, IN VIEW OF THE DECISION OF THE HONBLE JURISD ICTIONAL HIGH COURT IN THE CASE OF M/S NAYAN BUILDERS & DEVELOPERS PVT. LTD., DATED 24 - 7 - 2014 , WHEREIN IT WAS HELD THAT ONCE THE ITA NO. 942 / 12 2 SUBSTANTIAL QUESTION OF LAW IS ACCEPTED WITH RESPECT TO ADDITION SO MADE, NO PENALTY SHOULD BE IMPOSED U/S. 271(1)(C) OF THE ACT . 3 . LEARNED DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 4 . WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND FROM THE RECORD THAT AGAINST THE ADDITION SO MAD E AND CONFIRMED BY THE TRIBUNAL ON ACCOUNT OF BAD DEBTS AMOUNTING TO RS. 7 4,54,700/ - , THE HO NBLE JURISDICTIONAL HIGH COURT VIDE ORDER DATED 30 - 11 - 2011 HAS ACCEPTED THE FOLLOWING SUBSTANTIAL QUESTION OF LAW : - WHETHER THE TRIBUNAL WAS JUSTIFIED IN REJECTING THE CLAIM OF BAD DEBTS UNDER SECTION 36(1)(VII) R.W.S.36(2), EVEN THOUGH THE APPELLANT H AD DISCLOSED INSURANCE CLAIM OF RS. 74,54,700/ - AS INCOME, IN THE PROFIT AND LOSS ACCOUNT UNDER THE HEAD OTHER INCOME IN THE A.Y.2003 - 2004 ? WHEN THE ISSUE IS DEBATABLE AND SUBSTANTIAL QUESTION OF LAW HAS BEEN ACCEPTED BY THE HONBLE HIGH COURT, NO PEN ALTY IS LEVIABLE. THIS ISSUE IS SQUARELY COVERED BY THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S NAYAN BUILDERS & DEVELOPERS PVT. LTD. DATED 24 - 7 - 2014 (SUPRA), WHEREIN IT WAS CATEGORICALLY HELD THAT MERE ADMISSION OF APPEAL BY THE H IGH COURT IS SUFFICIENT TO DEBAR THE PENALTY LEVIED U/S.271(1)(C) OF THE ACT. KEEPING IN VIEW THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE AND RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S NAYAN BUIL DERS & DEVELOPERS PVT. LTD. (SUPRA) , WE DIRECT TO DELETE THE PENALTY SO IMPOSED. ITA NO. 942 / 12 3 5 . THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF M/S NAYAN BUILDERS & DEVELOPERS PVT LTD., DECIDED IN ITA NO.2379/MUM/2009, VIDE ORDER DATED 18 - 3 - 2011 , HELD AS UNDER : - 3. IT IS, THEREFORE, ABUNDANTLY CLEAR THAT THE ADDITIONS IN RESPECT OF WHICH PENALTY WAS CONFIRMED HAVE BEEN ACCEPTED BY THE HON'BLE BOMBAY HIGH COURT LEADING TO SUBSTANTIAL QUESTION OF LAW. WHEN THE HIGH COURT ADMITS SUBSTANTIAL QUESTION OF LAW ON AN ADDITI ON, IT BECOMES APPARENT THAT THE ADDITION IS CERTAINLY DEBATABLE. IN SUCH CIRCUMSTANCES PENALTY CANNOT BE LEVIED U/S 271 (L1)(C) AS HAS BEEN HELD IN SEVERAL CASES INCLUDING RUPAM MERCANTILE VS. DCIT [(2004) 91 ITD 237 (AHD) (TM)] AND SMT.RAMILA RATILAL SHA H VS. ACFT [(1998) 60 IT] (AHD) 171]. THE ADMISSION OF SUBSTANTIAL QUESTION OF LAW BY THE HON'BLE HIGH COURT LENDS CREDENCE TO THE BONA FIDES OF THE ASSESSEE IN CLAIMING DEDUCTION. ONCE IT TURNS OUT THAT THE CLAIM OF THE ASSESSEE COULD HAVE BEEN CONSIDERE D FOR DEDUCTION AS PER A PERSON PROPERLY INSTRUCTED IN LAW AND IS NOT COMPLETELY DEBARRED AT ALL, THE MERE FACT OF CONFIRMATION OF DISALLOWANCE WOULD NOT PER SE LEAD TO THE IMPOSITION OF PENALTY. SINCE THE ADDITIONS, IN RESPECT OF WHICH PENALTY HAS BEEN UP HELD IN THE PRESENT PROCEEDINGS, HAVE BEEN HELD BY THE HON'BLE HIGH COURT TO BE INVOLVING A SUBSTANTIAL QUESTION OF LAW, IN OUR CONSIDERED OPINION, THE PENALTY IS NOT EXIGIBLE UNDER THIS SECTION. WE, THEREFORE, ORDER FOR THE DELETION OF PENALTY. 4. IN TH E RESULT, THE APPEAL IS ALLOWED. 6 . IT WAS CLARIFIED BY THE LEARNED AR THAT OUT OF TOTAL PENALTY, THE ASSESSEE HAS CONTESTED THE PENALTY IMPOSED WITH REGARD TO ADDITION OF BAD DEBTS OF RS. 74,54,700/ - AGAINST WHICH QUANTUM APPEAL HAS BEEN ADMITTED BY THE HONBLE HIGH COURT AND NOT THE PENALTY ON OTHER ADDITIONS. ACCORDINGLY, OUR CONCLUSION WITH REGARD TO PENALTY NOT LEVIABLE U/S. 271(1)(C) OF THE ACT IS CONFINED TO THE ADDITION MADE ON ACCOUNT OF BAD DEBTS FOR WHICH THE HONBLE HIGH COURT HAS ADMITTED SUBS TANTIAL QUESTION OF LAW AS REPRODUCED ABOVE, AND NOT AGAINST THE OTHER PENALTY. ACCORDINGLY, OTHER PENALTY LEVIED IS BEING UPHELD AND PENALTY ATTRIBUTABLE TO BAD DEBTS IS DELETED IN TERMS OF DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S NAYAN BUILDERS & DEVELOPERS PVT. LTD (SUPRA). ITA NO. 942 / 12 4 7 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 02/09/ 201 4 . 02/09/ 2014 SD/ - SD/ - ( ) ( AMIT SHUKLA ) ( ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 02/09 /2014 /PKM , PS COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( ASSTT. REGISTRAR) / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A), MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//