THOMSON REITERES INDIA P. LTD, V. DCIT 2(3),

MA 53/MUM/2012

• Counselvise Citation: [2013] 123 COUNSELVISE.COM (IT) 9865 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 5 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 09-01-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: misc
• Appeal Filed On: 03-02-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: SHEETAL SH AH
• Keywords: Bonafide mistake

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'D' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER MA NO. 53/MUM/2012 (ARISING OUT OF ITA NO. 5599/MUM/2009) (ASSESSMENT YEAR: 1997-98) M/S. THOMSON REUTERS INDIA P. LTD. D C I T - 2(3) 4TH FLOOR, NICHOLAS PIRAMAL HOUSE ROOM NO. 555, 5TH FLOOR P. GANAPATRAO KADAM MARG VS. AAYAKAR BHAVAN, M.K. ROAD LOWER PAREL, MUMBAI 400013 MUMBAI 400020 PAN - AAACR 3717 L APPLICANT RESPONDENT APPELLANT BY: SHRI RAJAN VORA & MS. SHEETAL SHAH RESPONDENT BY: SHRI MOHIT JAIN DATE OF HEARING: 14.12.2012 DATE OF PRONOUNCEMENT: 09.01.2013 O R D E R PER D. MANMOHAN, V.P. BY THIS APPLICATION THE ASSESSEE COMPANY CONTENDS T HAT THE ORDER DATED 27 TH AUGUST, 2010 WAS PASSED ON AN INCORRECT APPRECIATI ON OF FACTS AND HENCE THE TRIBUNAL HAS COMMITTED AN APPARENT ERROR IN SETTING ASIDE THE ISSUE TO THE FILE OF THE CIT(A). 2. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITS THAT I N THE LIGHT OF SEVERAL DECISIONS REFERRED TO IN THE MISCELLANEOUS APPLICATION, THE DECISION RENDERED BY THE TRIBUNAL DESERVED TO BE REVIEWED/RE CONSIDERED AND IN THE LIGHT OF THE DECISION OF THE APEX COURT IN THE CASE OF RELIANCE PETRO PRODUCTS 322 ITR 158 AS WELL AS THE HON'BLE BOMBAY HIGH COUR T JUDGEMENT IN THE CASE OF HANS CHRISTIAN GASS ITA NO. 2209 OF 2010 IT DESERVES TO BE HELD THAT IT IS NOT A FIT CASE FOR LEVY OF PENALTY. 3. AT THE TIME OF HEARING THE LEARNED COUNSEL FOR THE ASSESSEE ADVERTED OUR ATTENTION TO PARA 10 OF THE MISCELLANEOUS APPLI CATION TO SUBMIT THAT THE TRIBUNAL WAS OF MISTAKEN OPINION THAT THE DISALLOWA NCE WAS NOT OFFERED SUO MOTO BUT ONLY AFTER BEING POINTED OUT BY THE AO WHE REAS THE FACT REMAINS MA NO. 53/MUM/2012 M/S. THOMSON REUTERS INDIA P. LTD. 2 THAT IT IS A BONAFIDE MISTAKE WHICH WAS RECTIFIED B Y THE ASSESSEE SOON AFTER IT HAS COME TO LIGHT. 4. ON THE OTHER HAND, THE LEARNED D.R. STRONGLY RELIED UPON THE ORDER OF THE TRIBUNAL AND IN PARTICULAR PARA NO. 12 OF THE I MPUGNED ORDER TO SUBMIT THAT THE CIT(A) HAS NOT APPRECIATED THE FACTS CORRE CTLY WHILE COMING TO THE CONCLUSION THAT IT WAS A BONAFIDE MISTAKE ON THE PA RT OF THE ASSESSEE AND HENCE THE MATTER WAS MERELY RESTORED TO THE FILE OF THE CIT(A). UNDER THESE CIRCUMSTANCES IT CANNOT BE STATED THAT THE ORDER OF THE TRIBUNAL SUFFERS FROM ANY MISTAKE APPARENT FROM RECORD. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. AS COULD BE NOTICED FROM THE ASSESSMENT OR DER DATED 01.03.2000, THE ASSESSEE DECLARED TOTAL INCOME OF ` 8.48 CRORES, ON 29.11.1997, WHICH WAS PROCESSED ON 20.08.1998. IT WAS ALSO NOTICED BY THE AO THAT VIDE LETTER DATED 14.12.1999 THE ASSESSEE HAS SUBMITTED THAT IT HAD NOT DEDUCTED TDS ON A SUM OF ` 27.90 CRORES BEING DISTRIBUTION FEES PAID TO M/S. R EUTERS INDIA LTD. WITH REGARD TO LICENCE FEES, VIDE LETTER DAT5E D 02.02.2000, ASSESSEE ADMITTED THAT NO TDS WAS DEDUCTED ON A SUM OF ` 61.46 LAKHS AND FURTHER ADMITTED THAT THOUGH IT WAS DEBITED TO THE P & L AC COUNT, IN VIEW OF THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT, IT DESE RVES TO BE DISALLOWED. IT CAN THUS BE NOTICED THAT EVEN AS ON 14.12.1999 IT WAS I N THE NOTICE OF THE AO THAT CERTAIN EXPENDITURES WERE CLAIMED WITHOUT DEDU CTING TAX AT SOURCE. IN FACT IN PARA 3 OF THE ORDER PASSED BY THIS BENCH IT WAS NOTICED THAT THE DATE OF ISSUANCE OF NOTICE UNDER SECTION 143(2) IS NOT V ERIFIABLE FROM RECORD. THE OVERALL CIRCUMSTANCES INDICATE THAT THE CASE WAS SE LECTED FOR SCRUTINY IN THE YEAR 1999. IN OTHER WORDS, THE VERY FACT THAT THE A SSESSEE HAS STATED, VIDE LETTER DATED 14.12.1999, THAT IT HAD NOT DEDUCTED T AX AT SOURCE ON DISTRIBUTION FEES PAID TO M/S. REUTERS INDIA LTD. H IGHLIGHTS THAT THE AO HAS STARTED PROCESS OF VERIFICATION. HAVING HIGHLIGHTED THAT THE FACTS ARE NOT VERIFIABLE FROM RECORD AND HENCE OVERALL CIRCUMSTAN CES HAD TO BE TAKEN INTO CONSIDERATION, IT CANNOT BE SAID THAT THE TRIBUNAL HAS NOT RECORDED THE CORRECT FACT. ASSUMING FOR A MOMENT THAT THE ASSESS EE ADMITTED IN ITS LETTER DATED 2 ND FEBRUARY, 2000, IT CANNOT BE SAID THAT BEFORE THE SO CALLED VOLUNTARY OFFER OF DISALLOWANCE BY THE ASSESSEE THE RE WAS NOTHING ON RECORD TO SUGGEST THAT THE AO HAS NOT MADE ANY ENQUIRY. ON THE CONTRARY, THE LETTER MA NO. 53/MUM/2012 M/S. THOMSON REUTERS INDIA P. LTD. 3 DATED 14.12.1999 ADDRESSED BY THE ASSESSEE, IN ITSE LF, PROVES THAT THE ASSESSEE MADE CERTAIN CLAIMS FOR DEDUCTION WITHOUT DEDUCTING TDS. IN PARA 12 OF THE ORDER OF THE TRIBUNAL IT WAS CATEGORICALL Y MENTIONED AS TO WHAT WERE THE REASONS THAT WEIGHED IN THE MIND OF THE BE NCH TO COME TO THE CONCLUSION THAT IT WAS A FIT CASE FOR LEVY OF PENAL TY. IN PARA 12 IT WAS MENTIONED THAT IF THE ASSESSEES CLAIM IS BONAFIDE IT CAN ONLY BE PROVED BY SHOWING THAT ON THE DATE OF REALISING THE MISTAKE A ND MAKING A CLAIM IN SUBSEQUENT YEARS THE MISTAKE WOULD HAVE BEEN POINTE D OUT TO THE AO AND THERE WAS NO NEED FOR THE ASSESSEE TO ALLOW THE AO TO GROPE IN DARK TILL 2 ND FEBRUARY, 2000. AT THE COST OF REPETITION PARA 12 I S REPRODUCED TO HIGHLIGHT THAT THE TRIBUNAL HAS CAREFULLY GONE THROUGH THE CI RCUMSTANCES OF THE CASE, WITHOUT GIVING MUCH EMPHASIS TO THE LETTER, IF ANY, ISSUED BY THE AO, WHILE CONCLUDING THAT THE CIT(A) HAS NOT EXAMINED THE FAC TS IN ITS CORRECT PERSPECTIVE AND, IN THE INTERESTS OF SUBSTANTIAL JU STICE, THE MATTER WAS SET ASIDE TO THE FILE OF THE CIT(A) TO RECONSIDER ACCOR DING TO LAW. 12. SECTION 40A(I) OF THE ACT LEAVES NO ROOM FOR I NTERPRETATION AND A PLAIN READING OF THE SECTION SHOWS THAT ANY PAYMENT MADE BY AN ASSESSEE ON WHICH TAX IS DEDUCTIBLE AT SOURCE AND S UCH TAX HAS NOT BEEN DEDUCTED OR UPON DEDUCTION NOT PAID DURING THE PREVIOUS YEAR OR IN THE SUBSEQUENT YEAR BEFORE THE EXPIRY OF THE TIM E PRESCRIBED BY SUB- SECTION (1) OF SECTION 200 THE SAME SHALL NOT BE AL LOWED AS DEDUCTION. THUS THE ASSESSEES CLAIM FOR DEDUCTION IN THE YEAR UNDER CONSIDERATION IS PALPABLY WRONG. IF THE ASSESSEE HA S MADE THE PAYMENT SUBSEQUENTLY, AFTER THE EXPIRY OF THE TIME PRESCRIBED UNDER SECTION 200 (1) OF THE ACT, PROVISO TO SECTION 40A( I) OF THE ACT PERMITS AN ASSESSEE TO CLAIM DEDUCTION IN THE YEAR IN WHICH SU CH TAX HAS BEEN PAID. NO INFORMATION WAS FURNISHED BEFORE US TO SHO W AS TO WHEN THE PAYMENT WAS ACTUALLY MADE BY THE ASSESSEE. THOUGH L EARNED CIT(A) MERELY REPRODUCED THE SUBMISSION OF THE ASSESSEE BY STATING THAT IT WAS ALLOWED IN THE SUBSEQUENT YEAR, THE DATE OF PAY MENT AND THE DATE OF MAKING A CLAIM OF DEDUCTION IN THE SUBSEQUENT YE AR WAS NOT HIGHLIGHTED. IN OTHER WORDS, IF THERE IS A BONAFIDE CLAIM OF DEDUCTION IN THIS YEAR THE ASSESSEE WOULD NOT HAVE CLAIMED DEDUC TION IN THE SUBSEQUENT YEAR EVEN THOUGH THE RETURN OF INCOME WA S FILED FOR THE SUBSEQUENT YEAR AND ONLY UPON NOTICING THE MISTAKE, IF ANY, AT A LATER STAGE THE ASSESSEE COULD HAVE CLAIMED DEDUCTION IN THE SUBSEQUENT YEAR. THOSE FACTS WERE NOT BROUGHT ON RECORD. IT IS ASSUMED THAT ASSESSEE IS OTHERWISE ELIGIBLE FOR DEDUCTION IN THE ASSESSMENT YEAR 1999-2000, RETURN OF INCOME SHOULD HAVE BEEN FILED BEFORE DECEMBER 1999 WHEREIN ASSESSEE WOULD HAVE CLAIMED DEDUCTION; IF A CLAIM IS MADE IN THE RETURN FOR THE ASSESSMENT YEAR 1999-200 0, SIMULTANEOUSLY ASSESSEE SHOULD RECTIFY THE MISTAKE OF CLAIMING A W RONG DEDUCTION IN THE ASSESSMENT YEAR 1997-98. IF THERE IS OMISSION T O MAKE A CLAIM IN MA NO. 53/MUM/2012 M/S. THOMSON REUTERS INDIA P. LTD. 4 THE ASSESSMENT YEAR 1999-2000, IN THE RETURN OF INC OME ALREADY FILED, IT SHOULD HAVE BEEN HIGHLIGHTED TO PROVE ITS BONAFI DES. THESE FACTS WERE NOT BROUGHT ON RECORD. SINCE THE LEARNED CIT(A ) MERELY ACCEPTED THE CLAIM OF THE ASSESSEE WITHOUT PROPERLY VERIFYIN G THE FACTS, WE ARE OF THE CONSIDERED OPINION THAT THE MATTER DESERVES TO BE SET ASIDE TO HIS FILE FOR FRESH CONSIDERATION, IN THE INTERESTS OF J USTICE. WE MAY ALSO POINT OUT THAT MAXIMUM PENALTY IS IMPOSED ONLY IN EXCEPTI ONAL CASES; THOUGH ORDINARILY QUANTUM OF PENALTY TO BE LEVIED IS LEFT TO THE DISCRETION OF THE AUTHORITY CONCERNED, SUCH DISCRETION BEING A JUDICI AL DISCRETION, IT MUST BE EXERCISED ON CONSIDERATION OF ALL THE RELEVANT F ACTS AND CIRCUMSTANCES OF THE CASE, INCLUDING DEGREE OF CONT UMACIOUSNESS INVOLVED AND MAXIMUM PENALTY SHOULD BE RESERVED ONL Y FOR EXCEPTIONALLY BAD CASES. (BRAJA LAL BANIK V. STATE OF TRIPURA (1990) 78 STC 283 AT 297 (GAUH.) WHILE RECONSIDERING THE MATT ER LEARNED CIT(A) SHALL ALSO BEAR IN MIND THAT IN ORDER TO LEVY MAXIM UM PENALTY SUFFICIENT REASONS HAVE TO BE SHOWN AS TO WHY THE CASE DESERVE S TO BE VISITED WITH MAXIMUM PENALTY. WITH THESE OBSERVATIONS THE O RDER OF THE CIT(A) IS HEREBY SET ASIDE AND HE IS DIRECTED TO RECONSIDE R THE MATTER IN ACCORDANCE WITH LAW, IN THE LIGHT OF OBSERVATIONS I N THE IMMEDIATELY PRECEDING PARAGRAPHS. 6. HAVING REGARD TO THE ABOVE MENTIONED CIRCUMSTANCES, THE MATTER WAS SET ASIDE TO THE CIT(A) TO RE-EXAMINE THE FACTS; AS SESSEE IS AT LIBERTY TO FURNISH THE FACTS AND PLACE ITS OBJECTION BEFORE TH E LEARNED CIT(A). UNDER THESE CIRCUMSTANCES WE ARE OF THE VIEW THAT THE ORD ER OF THE TRIBUNAL DATED 27 TH AUGUST 2010 DOES NOT SUFFER FROM ANY MISTAKE APPAR ENT FROM RECORD. WE MAY ALSO CLARIFY THAT THE ORDER OF THE TRIBUNAL DOES NOT CONTAIN ANY INCORRECT FACT BUT THE LANGUAGE USED IN PARA 3, PAR A 8, PARA 9 AND THE LAST PARAGRAPH SHOULD BE READ IN THE BACKGROUND OF THE F ACTS AND CIRCUMSTANCES HIGHLIGHTED IN THE SAID ORDER WITHOUT GIVING UNNECE SSARY EMPHASIS TO EACH WORD USED THEREIN. HAVING REGARD TO THE OVERALL CIR CUMSTANCES WE REJECT THE MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE COM PANY. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH JANUARY, 2013. SD/- SD/- (RAJENDRA SINGH) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATED: 9 TH JANUARY, 2013 MA NO. 53/MUM/2012 M/S. THOMSON REUTERS INDIA P. LTD. 5 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) XXX, MUMBAI 4. THE CIT 2, MUMBAI CITY 5. THE DR, D BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.