AVENTIS PHARMA LTD, MUMBAI v. DCIT CIR 8(1), MUMBAI

ITA 1087/MUM/2009 | 1990-1991
Pronouncement Date: 03-12-2010 | Result: Allowed

Appeal Details

RSA Number 108719914 RSA 2009
Assessee PAN AAACH2736F
Bench Mumbai
Appeal Number ITA 1087/MUM/2009
Duration Of Justice 1 year(s) 9 month(s) 15 day(s)
Appellant AVENTIS PHARMA LTD, MUMBAI
Respondent DCIT CIR 8(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 03-12-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 03-12-2010
Date Of Final Hearing 30-12-2009
Next Hearing Date 30-12-2009
Assessment Year 1990-1991
Appeal Filed On 17-02-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A MUMBAI. BEFORE SHRI J. SUDHAKAR REDDY ACCOUNTANT MEMBER AN D SHRI V. DURGA RAO JUDICIAL MEMBER ITA NO.1087/MUM/2009 (ASSESSMENT YEAR : 1990-91) M/S. AVENTIS PHARMA LTD. SIR MATHURADAS VASANJI ROAD ANDHERI (EAST) MUMBAI-400092 PAN AAACH2736F VS. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 8(1) MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI J.D. MISTRI & SHRI SANJIV M. SH AH. RESPONDENT BY : SHRI K. SINGH. PER V. DURGA RAO J.M. : THIS APPEAL FILED BY THE ASSESSEE AGAINST THE ORD ER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-VIII MUMBAI DT.2.12.2008. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E-COMPANY FILED RETURN OF INCOME DECLARING INCOME OF ` .2 73 27 470 UNDER SECTION 115J OF THE INCOME TAX ACT 1961 (THE ACT). THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) AND SUBSEQUENTLY THE ASSESSEE HAS FI LED REVISED RETURN OF INCOME IN WHICH THE DEDUCTION UNDER SECTION 115JB R EMAIN THE SAME AS IN THE ORIGINAL RETURN OF INCOME. BUT INCOME WAS REVI SED AND RE-COMPUTED UNDER THE NORMAL PROVISIONS OF THE ACT. A NOTICE UNDER SECTION 143(3) WAS ISSUED THE RETURN WAS SELECTED FOR SCRUTINY AND CE RTAIN DISALLOWANCES WERE MADE. SUBSEQUENTLY THE AO HAS INITIATED THE PENALT Y PROCEEDINGS U/S. 271(1)(C) FOR THE FOLLOWING DISALLOWANCES : A) DISALLOWANCE UNDER SECTION 40A(12) ` .7 23 800 B) UNPAID SALES TAX (DISALLOWED U/S 43B) ` .3 99 641 C) UNPAID CUSTOMS DUTY (DISALLOWED U/S.43B) ` .10 18 394 ITA 1087/MUM/09 2 ON APPEAL BY THE ASSESSEE THE LD. CIT(A) CANCELLED THE PENALTY IMPOSED BY AO U/S. 40A(12) OF ` 7 23 800 ON THE GROUND THAT IT IS A DEBATABLE ISSU E. THE REVENUE HAS NOT FILED ANY APPEAL AGAINST THE CANCEL LATION OF THE PENALTY. 3. THE PRESENT PENALTY APPEAL BEFORE U S RELATES TO DISALLOWANCE OF UNPAID SALES TAX (DISALLOWED U/S 43B) ` .3 99 641 AND UNPAID CUSTOMS DUTY (DISALLOWED U/S.43B) ` .10 18 394. 4. THE BRIEF FACTS ARE WITH REGARD T O DISALLOWANCE U/S. 43B OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS T HE AO HAS NOTICED THAT THE ASSESSEE HAS CLAIMED UNPAID SALES TAX AND UNPAI D CUSTOMS DUTY WHICH IS NOT ALLOWABLE AS DEDUCTION U/S. 43B. ACCORDING TO T HE AO AND CIT(A) THE ASSESSEE COMPANY HAS DEBITED THIS AMOUNT TO PROFIT AND LOSS ACCOUNT TO REDUCE THE TAX LIABILITY. THE ASSESSEE HAS SUBMITT ED BEFORE THE AUTHORITIES BELOW THAT THE ASSESSEE DISCLOSED ALL THE MATERIAL FACTS IN THE ORIGINAL RETURN OF INCOME AND THIS CLAIM WAS MADE INADVERTENTLY AND THERE WAS NO INTENTION OF THE DEFRAUD THE REVENUE. THE ASSESSEE FURTHER S UBMITTED BEFORE THE A.O. AND CIT(A) THAT THE ASSESSEE COMPANY DULY DISCLOSED THIS INFORMATION IN THE TAX AUDIT REPORT FILED ALONG WITH THE RETURN OF INC OME AND IT WAS INADVERTENTLY CLAIMED IN THE PROFIT AND LOSS ACCOUNT. THE AUTHO RITIES BELOW NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE AND CONFIRMED THE P ENALTY UNDER SECTION 271(1)(C). 5. AGGRIEVED BY THE ASSESSEE APPEALED BEFORE THE TR IBUNAL. 6. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSEE COMPUTED INCOME UNDER NORMAL PROVISIONS OF THE ACT WHICH IS LESS THAN THE ITA 1087/MUM/09 3 BOOK PROFITS DETERMINED UNDER 115JB AND THE INCOME IS ASSESSED UNDER SECTION 115JB. THERE CAN BE NO PENALTY IMPOSED ON THE BASIS OF DISALLOWANCE AND ADDITION MADE UNDER THE REGULAR PROVISIONS OF T HE ACT. HE RELIED ON THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. NALWA SONS INVESTMENTS LTD. 327 ITR 543. 7. THE LEARNED COUNSEL ALTERNATIVELY SUBMITTED THAT THE ASSESSEE COMPANY DISCLOSED ALL THE FACTS BEFORE THE ASSESSIN G OFFICER AND TAX AUDIT REPORT FILED ALONG WITH THE RETURN OF INCOME AND THAT THE ASSESSEE-COMPANY ITSELF MADE DISCLOSURE ON REQUIREMENT OF DISALLOWAN CE UNDER SECTION 43B WHICH WAS FILED BEFORE THE ASSESSING OFFICER. THE A SSESSEE-COMPANY INADVERTENTLY DID NOT DISALLOW THE SAME IN THE RETU RN OF INCOME. THEREFORE IT IS BONA FIDE MISTAKE AND THAT NO PENALTY CAN BE IMP OSED. 8. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REPR ESENTATIVE SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 9. WE HAVE HEARD BOTH THE SIDES PERUSED THE RECORD S AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ONLY ISSU E FOR CONSIDERATION IN THIS APPEAL IS WHETHER THE PENALTY IS LEVIABLE WHEN DISA LLOWANCE MADE UNDER SECTION 43B OF THE ACT UNDER THE REGULAR ASSESSMENT UNDER SECTION 143(3) WHEN A TAX IS LEVIED UNDER SECTION 115JB.. THE ASS ESSEE FILED RETURN OF INCOME DECLARING TOTAL INCOME OF ` .2 73 27 470 UNDER SECTION 115JB OF THE ACT. SUBSEQUENTLY AFTER RECEIVING THE NOTICE UNDER SECTION 143(1) THE ASSESSEE FILED A REVISED RETURN OF INCOME UNDER SEC TION 115JB OF THE ACT REMAIN SAME AS IN THE ORIGINAL RETURN BUT INCOME CO MPUTED UNDER THE NORMAL PROVISIONS OF THE ACT WAS REVISED. DURING THE COUR SE OF ASSESSMENT ITA 1087/MUM/09 4 PROCEEDINGS THE ASSESSING OFFICER HAS DISALLOWED U NDER NORMAL PROVISIONS OF THE ACT CLAIM UNDER SECTION 43B OF THE ACT IN RESP ECT OF UNPAID SALES TAX OF ` .3 99 641 AND UNPAID CUSTOMS DUTY OF ` .10 18 394. NO APPEAL HAS BEEN FILED. THE ASSESSING OFFICER LEVIED THE PENALTY. T HE ASSESSEE CARRIED THE MATTER OF LEVY OF PENALTY IN APPEAL BEFORE THE LEAR NED CIT(A). THE LD. CIT(A) CONFIRMED THE PENALTY IMPOSED BY THE A.O. IN RESPEC T OF PENALTY IMPOSED WITH REGARD TO 43B OF THE ACT. THE ASSESSING OFFIC ER COMPUTED THE INCOME UNDER SECTION 115JB AND THE BOOK PROFIT OFFERED BY THE ASSESSEE WAS ACCEPTED WITHOUT ADJUSTMENTS. 10. THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMIT TED BEFORE US AS PER THE JUDGEMENT OF CIT VS. NALWA SONS INVESTMENT LTD. (SUPRA) NO PENALTY CAN BE LEVIED. THE HONBLE DELHI HIGH COURT HAS CONSIDE RED THIS ISSUE AND HELD AS UNDER : UNDER THE SCHEME OF THE INCOME TAX ACT 1961 THE TOTAL INCOME OF THE ASSESSEE IS FIRST COMPUTED UNDER THE NORMAL PROVISIONS OF THE ACT AND TAX PAYABLE ON SUCH TOTAL INCOME IS COMPARED WITH THE PRESCRIBED PERCENTAGE OF THE BOOK PROFITS COMPUTED UNDER SECTION 115JB OF THE ACT. THE HIGHE R OF THE TWO AMOUNTS IS REGARDED AS TOTAL INCOME AND TAX IS PAYA BLE WITH REFERENCE TO SUCH TOTAL INCOME. IF THE TAX PAYABL E UNDER THE NORMAL PROVISIONS IS HIGHER SUCH AMOUNT IS THE TOT AL INCOME OF THE ASSESSEE OTHERWISE THE BOOK PROFITS ARE DEEM ED AS THE TOTAL INCOME OF THE ASSESSEE IN TERMS OF SECTION 11 5JB OF THE ACT. WHERE THE INCOME COMPUTED IN ACCORDANCE WITH THE NORMAL PROCEDURE IS LESS THAN THE INCOME DETERMINED BY LEG AL FICTION NAMELY THE BOOK PROFITS UNDER SECTION 115JB OF TH E ACT AND THE INCOME OF THE ASSESSEE IS ASSESSED UNDER SECTION 11 5JB AND NOT UNDER THE NORMAL PROVISIONS THE TAX IS PAID ON THE INCOME ASSESSED UNDER SECTION115JB OF THE ACT. CONCEALMEN T OF INCOME WOULD HAVE NO ROLE TO PLAY AND WOULD NOT LEAD TO TA X EVASION. THEREFORE PENALTY CANNOT BE IMPOSED ON THE BASIS O F DISALLOWANCES OR ADDITIONS MADE UNDER THE REGULAR P ROVISIONS. ITA 1087/MUM/09 5 WE FIND THAT THE ABOVE JUDGEMENT APPLIES TO THE FAC TS OF THE CASE. AS THE INCOME ASSESSED UNDER SECTION 115JB IS THE SAME AS THE INCOME RETURNED UNDER SECTION 115JB THE ADDITION UNDER SECTION 143 (3) HAVE NO BEARING ON THE QUANTUM OF TAX LEVIED. IN SO FAR AS ALTERNATE S UBMISSION MADE BY THE ASSESSEE IS CONCERNED THE ASSESSEE HIMSELF DISCLOS ED THE FACT OF DISALLOWANCE UNDER SECTION 43B IN HIS TAX AUDIT REP ORT FILED ALONG WITH THE RETURN OF INCOME AND IT WAS SUBMITTED BEFORE THE AU THORITIES BELOW AS WELL AS BEFORE THE TRIBUNAL THAT THE CLAIM WAS MADE INADVER TENTLY. WE FIND THAT THE EXPLANATION GIVEN BY THE ASSESSEE IS BONA FIDE. THE RE IS NOTHING ON RECORD TO DISBELIEVE THE EXPLANATION OF THE ASSESSEE. WE THE REFORE RESPECTFULLY FOLLOW THE HON'BLE DELHI HIGH COURT IN THE CASE OF NALWA SON S INVESTMENTS LTD. (SUPRA) AND CONSIDERING THE EXPLANATION OF THE ASSE SSEE AND TAKING INTO ACCOUNT ALL THE FACTS AND CIRCUMSTANCES OF THE CASE THE PENALTY IMPOSED IN THIS CASE IS CANCELLED BY SETTING ASIDE THE CIT(A) S ORDER. THIS GROUND OF APPEAL RAISED BY THE ASSESSEE IS ALLOWED. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD DEC. 2010. SD/- SD/- (J. SUDHAKAR REDDY) (V. DURGA RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DT.03.12.2010. *GPR ITA 1087/MUM/09 6 COPIES OF THE ORDER FORWARDED TO : (1) THE APPELLANT (2) THE RESPONDENT (3) CIT MUMBAI (4) CIT(A) MUMBAI (5) DR (6) GUARD FILE RUE COPY BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES DATE INIT IALS 1. DRAFT DICTATED ON 25.11.2010 2. DRAFT PLACED BEFORE AUTHOR 3. DRAFT PROPOSED & PLACED BEFORE SECOND MEMBER 4. DRAFT DISCUSSED & APPROVED BY SECOND MEMBER 5. APPROVED DRAFT COMES TO SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 3.12.2010 7. FILE SENT TO BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER.