DENIM CLINIC, MUMBAI V. INCOME TAX OFFICER 23(2)(2), MUMBAI

ITA 973/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1137 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2001-2002
• Appeal Filed On: 20-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JYOTI LAXMI NAYAK
• Keywords: Wrong claim; Fuel Charges
• Section: 271(1)(c); 143(2); 13

Judgement Text

DENIM CLINIC VS. ITO 23(2)(2) ITA 973/MUM/2018 A.Y 2001 - 02 1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI BEFORE SHRI G. MANJUNATHA (ACCOUNTANT MEMBER) AND SHRI RAVISH SOOD (JUDICIAL MEMBER) ITA NOS.973/MUM/2018 (ASSESSMENT YEARS: 2001 - 02) DENIM CLINIC, A - 5, VEENA TOWER, VEENA NAGAR, PHASE II, BAL RAJESHWAR EXTENSION ROAD, MULUND (W), MUMBAI 400 080. (APPELLANT) PAN : AACFD5250D VS. INCOME - TAX OFFICER 29(1093), MUMBAI, C - 10, PRATYAKSHAKAR BHAVAN, BKC, BANDRA (E), MUMBAI - 400 051. (RESPONDENT) ASSESSEE BY : MS. HIRAL SEJPAL, A.R REVENUE BY : MS. JYOTILAXMI NAYAK, D.R DATE OF HEARING : 12/12/2019 DA TE OF PRONOUNCEMENT : 13 /12/2019 ORDER RAVISH SOOD, J.M : THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) - 4 0, MUMBAI FOR A.Y. 2001 - 02, WHICH IN TURN ARISES FROM THE ORDER PASSED BY THE A.O UNDER SE. 271(1)(C) OF THE INCOME - TAX ACT, 1961 (FOR SHORT ACT). THE ASSESSEE HAS ASSAILED THE IMPUGNED ORDER ON THE FOLLOWING GROUND S OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE AND IN LA W, THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) - 40, MUMBAI [THE CIT(A)] ERRED IN CONFIRMING THE PENALTY LEVIED BY THE INCOME - TAX OFFICER 23(2)(2) [THE AO] U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (THE ACT) AMOUNTING TO RS. 4, 85,416/ - . 2. BRIEFLY STATED, THE ASSESSEE FIRM WHICH IS ENGAGED IN THE BUSINESS OF RUNNING A GARMENT LAUNDRY HAD FILED ITS RETURN OF INCOME FOR A.Y 2001 - 02 ON 31.10.2001, DECLARING ITS TOTAL INCOME AT RS. 2,90,810/ - . SUBSEQUENTLY, THE CASE OF THE ASSESSE E WAS SELECTED FOR SCRUTINY ASSESSMENT UNDER SEC. 143(2) OF THE ACT. THE A.O WHILE FRAMING THE ASSESSMENT HAD INTER ALIA DISALLOWED THE DENIM CLINIC VS. ITO 23(2)(2) ITA 973/MUM/2018 A.Y 2001 - 02 2 UNSUBSTANTIATED FUEL CHARGES AGGREGATING TO RS. 12,38,304/ - , WHICH WERE CLAIMED BY THE ASSESSEE TO HAVE BEEN PAID TO T WO PARTIES VIZ. (I).M/S OASIS ENTERPRISES : RS. 7,62,650/ - ; AND (II) M/S SWETA ENTERPRISES : RS. 4,75,654/ - , AND ASSESSED THE INCOME VIDE HIS ORDER PASSED UNDER SEC. 144, DATED 22.12.2003 AT AN AMOUNT OF RS. 32,13,950/ - . 3. AGGRIEVED, THE ASSESSEE ASSAI LED THE ASSESSMENT ORDER BEFORE THE CIT(A). HOWEVER, THE CIT(A) NOT FINDING FAVOUR WITH THE CONTENTIONS ADVANCED BY THE ASSESSEE SUSTAINED THE ADDITION OF RS. 12,38,304/ - . 4. AFTER THE RECEIPT OF THE ORDER OF THE CIT(A), THE A.O CALLED UPON THE ASSESSEE TO EXPLAIN AS TO WHY PENALTY UNDER SEC. 271 ( 1 )( C) MAY NOT BE IMPOSED AS REGARDS THE DISALLOWANCE OF FUEL CHARGES OF RS. 12,38,304/ - . AS THE REPLY FILED BY THE ASSESSEE DID NOT FIND FAVOUR WITH THE A.O, THEREFORE, HE VIDE HIS ORDER DATED 24.03.2006 IMPOSE D A PENALTY OF RS. 4,85,416/ - UNDER SEC. 271(1)(C) OF THE ACT . 5. O BSERVING THAT THE ASSESSEE HAD RAISED A BOGUS CLAIM OF EXPENDITURE IN ITS RETURN OF INCOME, THE CIT(A) UPHELD THE PENALTY IMPOSED BY THE A.O U/S 271(1)(C) AND DISMISSED THE APPEAL. 6. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAS CARRIED THE MATTER IN APPEAL BEFORE US. THE LD. AUTHORISED REPRESENTATIVE (FOR SHORT A.R) FOR THE ASSESSEE, AT THE VERY OUTSET OF THE HEARING OF THE APPEAL SUBMITTED THAT THE QUANTUM APPEAL OF THE ASSESSEE HAD BEEN WAY BACK RESTORED BY A COORDINATE BENCH OF THE TRIBUNAL, VIZ. ITAT J BENCH, MUMBAI, TO THE FILE OF THE CIT(A), VIDE ITS ORDER PASSED IN M/S DENIM CLINIC VS. ITO 23(2)(2), MUMBAI [ITA NO. 2632/MUM/2005; DATED 17.03.2008] (COPY PLACE D ON RECORD). OBSERVING, THAT THE CIT(A) WITHOUT CONFRONTING THE REMAND REPORT, DATED 09.12.2004 WHICH WAS OBTAINED BY HIM IN THE COURSE OF THE QUANTUM APPELLATE PROCEEDINGS, HAD WITHOUT CONFRONTING THE SAME TO THE ASSESSEE THEREIN ACTED UPON IT AND CON FIRMED THE DISALLOWANCE MADE BY THE A.O, IT WAS SUBMITTED BY THE LD. A.R THAT THE TRIBUNAL IN ALL FAIRNESS HAD RESTORED THE MATTER VIDE ITS ORDER DATED 17.03.2008 TO THE FILE OF THE CIT(A) , WITH A DIRECTION TO READJUDICATE THE SAME AFTER AFFORDING SUFFICIE NT OPPORTUNITY TO THE DENIM CLINIC VS. ITO 23(2)(2) ITA 973/MUM/2018 A.Y 2001 - 02 3 ASSESSEE. IT WAS SUBMITTED BY THE LD. A.R THAT THOUGH A SUBSTANTIAL TIME PERIOD OF MORE THAN 10 YEARS HAD LAPSED, HOWEVER, THE MATTER PURSUANT TO THE DIRECTIONS OF THE TRIBUNAL, VIDE ITS ORDER DATED 17.03.2008 HAD NOT BEEN DISPOSED OF F AND IS STILL PENDING BEFORE THE CIT(A). 7. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R) RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. IT WAS SUBMITTED BY THE LD. D.R, THAT AS THE ASSESSEE HAD RAISED A BOGUS CLAIM OF EXPENDITURE, T HEREFORE, THE A.O HAD RIGHTLY IMPOSED THE PENALTY UNDER SEC. 271(1) (C) , WHICH THEREAFTER HAD BEEN SUSTAINED BY THE CIT(A). 8. WE HAVE HEARD THE AUTHORISED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. AS IS DISCERNIBLE FROM THE RECORDS, THE QUANTUM APPEAL OF THE ASSESSEE HAD BEEN RESTORED BY A COORDINATE BENCH OF THE TRIBUNAL, VIZ. ITAT J BENCH, MUMBAI , TO THE FILE OF THE CIT(A), WAY BACK VIDE ITS ORDER PASSED IN M/S DENIM CLINIC VS. ITO 23(2)(2), MUMBAI [ITA NO. 2632/MUM/2005; DATED 17.03.2008] . AS THE CIT(A) WITHOUT CONFRONTING THE REMAND REPORT, DATED 09.12.2004 WHICH WAS OBTAINED BY HIM IN THE COURSE OF THE QUANTUM APPELLATE PROCEEDINGS, HAD ACTED UPON IT AND CONFIRMED THE DISALLOWANCES MADE BY THE A.O, THEREFORE, THE TRIBUNAL VIDE ITS AFORESAID ORDER DATED 17.03.2008 HAD RESTORED THE MATTER TO THE FILE OF THE CIT(A), WITH A DIRECTION TO REDECIDE THE SAME AFTER AFFORDING SUFFICIENT OPPORTUNITY TO THE ASSESSEE TO REBUT THE EVIDENCE THAT WAS GATHERED BY THE DEPARTMENT. IN OUR CONSIDERED VIEW, AS THE QUANTUM ASSESSMENT HAD BEEN RESTORED BY THE TRIBUNAL TO THE FILE OF THE CIT(A), THEREFORE, WE DEEM IT FIT TO RESTORE THE ORDER PASSED BY THE A.O IMPOSING PENALTY UNDER SEC. 271(1) (C), WHICH IS INEXTRICABLY INTERWOVEN AND INTERLINKED TO THE QUANTUM ASSESSMENT , TO THE FILE OF THE CIT(A), WHO IS DIRECTED TO DISPOSE OFF THE SAME AFTER ADJUDICATING THE QUANTUM APPEAL OF THE ASSESSEE WHICH WE ARE INFORMED IS PENDING BEFORE HIM AS ON DATE . 9. BEFORE PARTING, WE MAY HEREIN OBSERVE, THAT AS INFORMED BY THE LD. A.R, DESPITE LAPSE OF A SUBSTANTIAL TIME PERIOD OF MORE THAN 10 YEARS FROM THE DATE OF THE ORDER OF THE TRIBUNAL VIZ. 17.03.2008, THE CIT(A) HAD YET NOT GIVEN EFFECT TO THE DIRECTION S OF THE TRIBUNAL AND READJUDICATED THE ISSUE. AS A RESULT THEREOF, THE PRESENT APPEAL OF THE ASSESSEE AGAINST THE PENALTY IMPOSED DENIM CLINIC VS. ITO 23(2)(2) ITA 973/MUM/2018 A.Y 2001 - 02 4 UNDER SEC. 271(1)(C), LEFT WITH NO CHOICE, HAD ALSO TO BE RESTORED BY US TO THE FILE OF THE CIT(A), WHICH THUS HAD RESULTED I NTO MULTIPLICITY OF LITIGATIONS AND HAD PUSHED THE ASSESSEE INTO PROLONGED LITIGATION. IN THE BACKDROP OF THE AFORESAID PECULIAR CIRCUMSTANCES OF THE CASE, WE HEREIN DIRECT THE CIT(A) TO DISPOSE OFF THE QUANTUM APPEAL WHICH IS PENDING BEFORE HIM FOR MORE T HAN LAST 10 YEARS , AS IT IS ONLY THEN THAT THE PRESENT APPEAL OF THE ASSESSEE AGAINST THE ORDER IMPOSING PENALTY UNDER SEC. 271(1)(C) AS HAD BEEN RESTORED BY US TO HIS FILE CAN THEREAFTER BE DISPOSED OFF. 9. RESULTANTLY, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRO NOUNCED IN THE OPEN COURT ON 13. 1 2 .2019 SD/ - SD/ - ( G. MANJUNATHA ) (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; 13 .1 2 .2019 PS. ROHIT / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . DENIM CLINIC VS. ITO 23(2)(2) ITA 973/MUM/2018 A.Y 2001 - 02 5