ITO 22 (3) (3), MUMBAI V. SHANTI KUTIR CHS LTD, MUMBAI

MA 648/MUM/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9429 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 5 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 05-07-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2006-2007
• Appeal Filed On: 31-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAJEEV GUBGOTRA
• Keywords: Opportunity of being heard; Principle of natural justice; Set aside
• Section: 271(1)(c)

Judgement Text

E IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER MA NO. 648/MUM/2018 ARISING OUT OF ITA NO. 5280/MUM/2014 ASSESSMENT YEAR 2006 - 07 I NCOME T AX O FFICER - 22(3)(3 ) 303, 3 RD FLOOR, PIRAMAL CHAMBERS, LALBAUG, MUMBAI - 400012 V. M/S. SHANTI KUTIR CHS LTD., GROUND FLOOR, 10 TH ROAD, SANTACRUZ (E), MUMBAI 400055 PAN AAAAS6226M APPLICANT RESPONDENT RESPONDENT BY SHRI. RAJEEV GUBGOTRA APPELLANT BY SHRI. MUKESH CHOKSHI DATE OF HEARING : 21 - 06 - 2019 DATE OF PRONOUNCEMENT : 05 - 07 - 2019 ORDER PER RAMIT KOCHAR, ACCOUNTANT MEMBER THIS MISCELLANEOUS APPLICATION BEARING NUMBER MA NO. 648/MUM/2018 ARISING OUT OF ITA NO. 5280/MUM/2014 FOR ASSESSMENT YEAR 2006 - 07 , IS FILED BY R EVENUE U/S 254(2) OF THE INCOME - TAX ACT, 1961( HEREINAFTER CALLED THE ACT) BEING AGGRIEVED BY APPELLATE ORDER DATED 09.04.2018 PASSED BY INCOME - TAX APPELLATE TRIBUNAL, E BENCH, MUMBAI ( HEREINAFTER CALLED THE TRIBUNAL) PASSED BY TRIBUNAL U/S 254(1) OF THE 1961 ACT , WHEREIN THE TRIBUNAL HAD SET ASIDE THE MATTER BACK TO THE FI LE OF THE LEARNED ASSESSING OFFICER(HEREINAFTER CALLED THE AO) FOR FRESH ADJUDICATION BY HOLDING IN PARA NO. 5 , AS UNDER: - 5. WE HAVE CONSIDERED RIVAL CONTENTIONS AND HAVE PERUSED THE MATERIAL ON RECORD . WE HAVE OBSERVED THAT THE ASSESSEE IS A CO - MA NO. 648/MUM/2018 ARISING OUT OF ITA NO. 5280/MUM/2014 2 | P A G E OP ERATIVE GROUP HOUSING SOCIETY. THE ASSESSEE HAS ENTERED INTO TWO AGREEMENTS BOTH DATED 24.06.2003, WITH RESPECT TO INSTALLATION OF ANTENNA AND TOWER AT TERRACE. THE ISSUE SO FAR AS LICENSE FEE OF RS.1,00,000/ - PER ANNUM RECEIVED BY THE ASSESSEE FROM TATA T ELESERVICES MAHARASHTRA LIMITED IS CONSIDERED HAS REACHED FINALITY AS LEARNED CIT(A) WHILE ADJUDICATING QUANTUM ASSESSMENT ACCEPTED THE CLAIM OF THE ASSESSEE. THE DISPUTE IS W.R.T. SERVICE CHARGES OF RS. 1,50,000/ - RECEIVED BY ASSESSEE FROM TATA TELESERVIC ES MAHARASHTRA LTD. FOR PROVIDING VARIOUS SERVICES SUCH AS LIFT, SECURITY GUARD ETC. . THE ASSESSEE HAS CREDITED SAID INCOME OF RS. 1,50,000/ - TO INCOME & EXPENDITURE ACCOUNT AND DEBITED EXPENSES INCURRED IN RELATION TO THE EARNING OF THE SAID INCOME TO I NCOME & EXPENDITURE ACCOUNT . THE AO HAS BROUGHT THE SAID INCOME TO TAX AT GROSS LEVEL OF RS. 1,50,000/ - UNDER THE HEAD INCOME FROM OTHER SOURCES AND NO BENEFIT OF EXPENSES WERE ALLOWED WHICH WAS CLAIMED TO BE INCURRED IN RELATION TO THE EARNING OF SAID INCOME AS THE ASSESSEE COULD NOT SHOW THAT THESE EXPENSES WERE INCURRED IN CONNECTION WITH THE SERVICES FOR WHICH SERVICE CHARGES WERE RECEIVED . IT IS THE CLAIM OF THE ASSESSEE THAT THE EXPENSES WERE INCURRED EXCLUSIVELY FOR EARNING THE SAID INCOME AND I F THE OPPORTUNITY IS PROVIDED , THE ASSESSEE WILL BE ABLE PROVE ITS CASE THAT THESE EXPENSES WERE GENUINELY , BONAF IDILY , EXCLUSIVELY AND WHOLLY INCURRED FOR PROVIDING SERVICES TO TATA TELESERVICES MAHARASHTRA LIMITED . IN OUR CONSIDERED VIEW , THE MATTE R NEED TO BE RESTORED BACK TO THE FILE OF THE AO FOR FRESH ADJUDICATION ON MERITS IN ACCORDANCE WITH LAW . NEEDLESS TO SAY THAT THE AO SHALL PROVIDE PROPER AND ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN ACCORDANCE WITH THE PRINCIPAL OF NATURAL JUSTICE. THE ONUS IS ON ASSESSEE TO PROVE THAT THESE EXPENSES WHICH WERE DEBITED TO INCOME AND EXPENDITURE ACCOUNT AGAINST SERVICE CHARGES OF RS. 1,50,000/ - RECEIVED FROM TATA TELESERVICES MAHARASHTRA LIMITED CREDITED TO INCOME AND EXPENDITURE ACCOUNT , W ERE GENUINELY, WHOLLY, EXCLUSIVELY AND BONAFIDELY INCURRED IN RELATION TO SERVICES RENDERED AS PER CONTRACT TO TATA TELESERVICES MAHARASHTRA LIMITED. THE AO SHALL ALLOW ASSESSEE TO FILE NECESSARY EVIDENCES / EXPLANATION IN SUPPORT OF ITS CONTENTIONS. WE OR DER ACCORDINGLY. (EMPHASIS SUPPLIED BY US) 2. THE GRIEVANCE OF THE R EVENUE IS THAT THE MATTER WAS RESTORED BACK TO THE FILE OF THE AO FOR FRESH ADJUDICATION ON MERITS IN ACCORDANCE WITH LAW . I T IS CLAIMED BY LD. DR THAT THIS IS A PENALTY APPEAL U/S. 271(1)(C) OF THE 1961 ACT AND IN QUANTUM ASSESSMENT , THE ISSUE HAS ALREADY BEEN DECIDED AGAINST THE ASSESSEE ON MERITS BY THE AO WHICH WAS LATER CONFIRMED BY LEARNED CIT(A) AND , THUS, IT ATTAINED FINALITY . THUS, IT IS CONTENDED BY LEARNED DR THAT THERE IS NOW NO QUESTION OF GOING BACK AND ADJUDICATING THE ADDITIONS ON MERITS AS IT ATTAINED FINALITY . THE LD. COUNSEL FOR ASSESSEE MA NO. 648/MUM/2018 ARISING OUT OF ITA NO. 5280/MUM/2014 3 | P A G E WHO IS SECRETARY OF THE AFORESAID CO - OPERATIVE SOCIETY SUBMITTED THAT THERE IS NO MISTAKE APPARENT ON RECORD WHICH CAN BE RECT IFIED UNDER THIS MISCELLANEOUS APPLICATION AS TRIBUNAL HAS PASSED WELL REASONED ORDER DATED 09.04.2018 U/S 254(1) OF THE 1961 ACT . IT IS EXPLAINED THAT TRIBUNAL HAS VERY LIMITED POWERS U/S 254(2) OF THE 1961 ACT TO RECTIFY MISTAKES APPARENT FROM RECORDS. 3. WE HAVE CONSIDERED RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD . WE HAVE OBSERVED THAT THE ASSESSEE FILED APPEAL WITH TRIBUNAL IN ITA NO. 5280/MUM/2014 FOR AY 2006 - 07 WHICH WAS AGAINST APPELLATE ORDER PASSED BY LEARNED CIT(A) CONFIRMING PENALTY U /S 271(1)(C) OF THE 1961 ACT LEVIED BY THE AO. THE SAID APPEAL FILED BY ASSESSEE WITH TRIBUNAL WAS ADJUDICATED BY TRIBUNAL VIDE APPELLATE ORDER DATED 09.04.2018 IN ITA NO. 5280/MUM/201 4 FOR AY 2006 - 07, WHEREIN THE MATTER WAS REMANDED BACK TO THE FILE OF T HE AO BY TRIBUNAL FOR FRESH ADJUDICATION ON MERITS IN ACCORDANCE WITH LAW AFTER CONSIDERING CONTENTIONS OF THE ASSESSEE THAT IT INCURRED EXPENSES WHOLLY AND EXCLUSIVELY FOR RENDERING SERVICES TO TATA TELESERVICES MAHARASHTRA LIMITED FROM WHOM SERVICE CHARG ES OF RS. 1,50,000/ - WAS RECEIVED. THE CONTENTION OF THE ASSESSEE WAS THAT THE AUTHORITIES BELOW DID NOT GAVE HIM PROPER OPPORTUNITY TO EXPLAIN ITS CASE. THE QUANTUM HAS ATTAINED FINALITY AS LEARNED CIT(A) UPHELD THE ASSESSMENT ORDER PASSED BY AO CONFIRMI NG ADDITIONS OF RS. 1,50,000/ - WHEREIN EXPENSES CLAIMED BY ASSESSEE WERE NOT ALLOWED AGAINST THE SAID INCOME. IT IS WELL SETTLED NOW THAT PENALTY PROCEEDINGS U/S 271(1)(C) OF THE 1961 ACT ARE INDEPENDENT PROCEEDINGS THAN THE QUANTUM ASSESSMENT PROCEEDINGS AND MERELY BECAUSE ADDITIONS IN QUANTUM ARE SUS TAINED BY APPELLATE AUTHORITIES , LEVIABILITY OF PENALTY U/S 271(1)(C) OF THE 1961 ACT IS NOT AUTOMATIC. T HE TRIBUNAL WHILE SETTING ASIDE BACK TO THE FILE OF THE AO FOR FRESH ADJUDICATION HAS DIRECTED AO TO RE - ADJUDICATE THE LEVIABILITY OF PENALTY U/S. 271(1)(C) ON MERITS OF THE PENALTY PROVISIONS AS ARE CONTAINED U/S. 271(1)(C) OF THE 1961 ACT . PROVISIONS OF SECTION 271(1)(C) OF THE 1961 ACT ARE TO BE R EAD WITH EXPLANATIONS . IF THE ASSESSEE COMES WITH AN EXP LANATION IN PENALTY PROCEEDINGS U/S 271(1)(C) , WHICH EXPLANATIONS ARE GENUINE AND MA NO. 648/MUM/2018 ARISING OUT OF ITA NO. 5280/MUM/2014 4 | P A G E BONAFIDE AS PROVIDED UNDER EXPLANATION1 TO SECTION 271(1)(C) OF THE 1961 ACT , THE ASS ESSEE WILL BE OUT OF CLUTCHES OF PENALTY PROVISIONS AS ARE CONTAINED IN SECTION 271(1)( C) OF THE 1961 ACT , THE ASSESSEE WILL BE OUT OF CLUTCHES OF PENALTY PROVISIONS . THE EXPLANATIONS WHICH ARE OFFERED BEFORE THE TRIBUNAL BY ASSESSEE AS DETAILED IN ORDER DATED 09.04.2018 NEEDED VERIFICATION BY THE AO AS IT IS A FACTUAL MATTER AND THUS, TRIBU NAL WAS PLEASED TO SET ASIDE THE MATTER TO THE FILE OF AO FOR RE - ADJUDICATION ON MERITS IN ACCORDANCE WITH LAW . THUS, WHEN TRIBUNAL DIRECTED AO TO DECIDE THE MATTER ON MERITS IN ACCORDANCE WITH LAW , IT MEANT MERITS UNDER THE PROVISIONS OF SECTION 271(1)(C) OF THE 1961 ACT. THUS, WE DO NOT FIND ANY MERIT IN MA FILED BY REVENUE , WHICH STAND DISMISSED. WE ORDER ACCORDINGLY. 4. IN THE RESULT, M.A. NO. 648/MUM/2018 ARISING OUT OF APPEAL IN ITA NO. 5280/MUM/2014 FOR AY 2006 - 07 FILED BY REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 0 5 .07.2019 0 5 .07.2019 S D / - S D / - (MAHAVIR SINGH) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 0 5 .07.2019 COPY TO NISHANT VERMA SR. PRIVATE SECRETARY 1 . THE APPELLANT 2 . THE RESPONDENT 3 . THE CIT(A) CONCERNED, MUMBAI 4 . THE CIT - CONCERNED, MUMBAI 5 . THE DR BENCH, 6 . MASTER FILE // TUE COPY// BY ORDER DY/ASSTT. REGISTRAR ITAT, MUMBAI