DCIT CIR 2(2), MUMBAI v. LAWRENCE & MAYO (INDIA) P. LTD, MUMBAI

ITA 2485/MUM/2010 | 2002-2003
Pronouncement Date: 27-07-2011 | Result: Allowed

Appeal Details

RSA Number 248519914 RSA 2010
Assessee PAN AAACL1880A
Bench Mumbai
Appeal Number ITA 2485/MUM/2010
Duration Of Justice 1 year(s) 3 month(s) 27 day(s)
Appellant DCIT CIR 2(2), MUMBAI
Respondent LAWRENCE & MAYO (INDIA) P. LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 27-07-2011
Appeal Filed By Department
Order Result Allowed
Bench Allotted A
Tribunal Order Date 27-07-2011
Assessment Year 2002-2003
Appeal Filed On 30-03-2010
Judgment Text
1 ITA 2485 /M/2010 L AWRENCE & MAYO (I) P. LTD.. IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A BEFORE SHRI N.V. VASUDEVAN J.M. AND SHRI R.K. PAND A A.M. ITA NO. 2485/MUM/2010 ASSESSMENT YEAR 2002-03 DCIT CIRCLE 2(2) AAYAKAR BHAWAN ROOM NO. 545 5 TH FLOOR M.K. ROAD MUMBAI 400020. VS. LAWRENCE & MAYO (INDIA) PVT. LTD. 247 DR. D.N. ROAD FORT MUMBAI 400 001. PAN AAACL 1880A APPELLANT RESPONDENT APPELLANT BY SHRI P.K.B. MENON RESPONDENT BY SHRI JITENDRA JAIN ORDER PER R.K. PANDA A.M. THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER DT. 08.01.2010 OF THE CIT(A)- 5 MUMBAI RELATING TO A.Y. 2002-03. 2. THE REVENUE IN ITS ONLY EFFECTIVE GROUND HAS CHALLE NGED THE ORDER OF THE LD. CIT(A) IN CANCELLING THE PENALTY OF ` 30 26 021/- LEVIED BY THE A.O. U/S 271(1)(C) OF THE ACT. 3. FACTS OF THE CASE IN BRIEF ARE THAT THE REGULAR ASSESSMENT IN THIS CASE WAS COMPLETED U/S 143(3) DETERMINING THE TOTAL INCOME A T ` 14 86 74 720/-. DURING THE ASSESSMENT PROCEEDINGS IT WAS NOTED BY THE A.O . THAT THE ASSESSEE HAD OFFERED LONG TERM CAPITAL GAIN OF ` 10 47 50 000/- ON SURRENDER OF TENANCY RIGHTS IN A FLAT SITUATED AT TARAPOREWALA MANSION CUFFE PARADE MUMBAI AS AGAINST THE ACTUAL VALUE OF THE CONSIDERATION OF ` 13 84 76 250/-.ACCORDINGLY THE VALUE OF LONG TERM CAPITAL GAIN WAS ADOPTED AT ` 13 84 76 250/- RESULTING IN 2 ITA 2485 /M/2010 L AWRENCE & MAYO (I) P. LTD.. ADDITION OF ` 3 37 26 250/-. THE LD. CIT(A) REDUCED THE DISALLO WANCE ON ACCOUNT OF LONG TERM CAPITAL GAIN BY ` 2 52 50 000/- BY CONFIRMING THE DISALLOWANCE OF STAMP DUTY TO THE TUNE OF ` 84 76 250/. SUBSEQUENTLY THE A.O. INITIATED PENALTY PROCEEDING U/S 271(1)(C) OF THE ACT. REJECTING THE VARIOUS EXPLANATIONS GIVEN BY THE ASSESSEE THE A.O. LEVIED PENALTY OF ` 30 26 021/- BEING 100% OF THE TAX SOUGHT TO BE EVADED. 3.1 IN APPEAL THE LD. CIT(A) DELETED THE PENALTY S O LEVIED BY THE A.O. WHILE DOING SO HE NOTED THAT THE ASSESSEE HAS FURNISHED ALL THE RELEVANT DETAILS. AN EXPLANATION WAS ALSO FURNISHED WHICH WAS PARTLY ACC EPTED BY THE LD. CIT(A). THE MATTER INVOLVED BEING LEGAL IN NATURE MERE UPH OLDING THE ADDITION WOULD NOT LEAD TO THE CONCLUSION THAT THE ASSESSEE HAS CO NCEALED OR FURNISHED INACCURATE PARTICULARS OF ITS INCOME. THE CLAIM CA NNOT BE CONSIDERED AS MALA FIDE FROM ANY STRETCH OF IMAGINATION. SINCE THE HO NBLE BOMBAY HIGH COURT HAS ALSO ADMITTED THE QUESTION OF LAW FOR ITS CONSI DERATION THEREFORE IT CAN BE SAID THAT THE ISSUE INVOLVED IS A LEGAL QUESTION AN D ANY SUCH ISSUE CANNOT BE MADE THE BASIS FOR LEVYING PENALTY. ACCORDING TO H IM A DEBATABLE ISSUE IS BEYOND THE PURVIEW OF LEVY OF PENALTY. ACCORDING TO CIT(A) IT IS ALSO A SETTLED POSITION OF LAW THAT MERE DISALLOWANCE OF A CLAIM C ANNOT LEAD TO IMPOSITION OF PENALTY. HE FURTHER HELD THAT RAISING A LEGAL CLAI M EVEN IF THE SAME IS FOUND TO BE INCORRECT LATER ON CANNOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. ACCORDING TO THE CIT(A) WHEN AN EXPLANATIO N IS OFFERED BY THE ASSESSEE THE A.O. HAS TO CONSIDER THE EXPLANATION OBJECTIVELY AND UNLESS HE FINDS THE SAME AGAINST HUMAN PROBABILITIES OR UNLES S THERE ARE ANY REAL INCONSISTENCIES OR FACTUAL ERRORS IN SUCH EXPLANATI ON THE A.O. SHOULD ACCEPT THE SAME. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT (A) THE REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES PERUSED THE ORDERS OF THE A.O. AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE 3 ITA 2485 /M/2010 L AWRENCE & MAYO (I) P. LTD.. ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET DREW THE ATTENTION OF THE BENCH TO THE ORDER OF THE HONBLE HIGH COURT IN ASSESSEES OWN CASE WHEREIN THE APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE TRIBUNAL HAS BEEN ADMITTED ON THE FOLLOWING SUBSTANTIAL QUESTION OF LAW AND WHICH READS AS UNDER:- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW IN COMPUTING THE CAPITAL GAINS THE TRIBUNAL E RRED IN AFFIRMING THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) I N INCLUDING STAMP DUTY OF ` 84 76 250/- FOR COMPUTING THE FAIR MARKET VALUE OF THE FLATS RECEIVED BY THE APPELLANT IN CONSIDERATIO N FOR SURRENDERING ITS TENANCY RIGHTS. 4.1 IT IS THEREFORE CLEAR THAT THE APPEAL AGAINST QUANT UM ADDITION SUSTAINED BY THE TRIBUNAL AND IN RESPECT OF WHICH PENALTY HAS BEEN LEVIED BY THE A.O. AND DELETED BY THE LD. CIT(A) HAS BEEN ACCEPTED BY THE HONBLE HIGH COURT LEADING TO SUBSTANTIAL QUESTION OF LAW. IT HAS BEE N HELD IN A NUMBER OF DECISIONS THAT WHEN THE HIGH COURT ADMITS SUBSTANTI AL QUESTION OF LAW ON AN ADDITION IT BECOMES APPARENT THAT THE ADDITION IS CERTAINLY DEBATABLE. IN SUCH CIRCUMSTANCES PENALTY CANNOT BE LEVIED U/S 271(1)( C) OF THE ACT AS HAS BEEN HELD IN THE CASE OF RUPAM MERCANTILE V. DCIT [2004] 91 ITD 237 (AHD) TM AND SMT. RAMILA RATILAL SHAH V. ACIT [1998] 60 TTJ (AHD ) 171. THEREFORE WE FIND MERIT IN THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT ADMISSION OF A SUBSTANTIAL QUESTION OF LAW BY THE HONBLE HIGH COU RT LENDS CREDENCE TO THE BONAFIDES OF THE ASSESSEE IN CLAIMING DEDUCTION. 4.2 FURTHER THE HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LTD. REPORTED IN 322 ITR 158 HAS HELD THAT MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE W HICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE THAT BY ITSELF WOULD NOT ATTRACT PENALTY U/S 271(1)(C). IN THIS VIEW OF THE MATTER AND IN VIEW OF THE DETAILED OBSERVATION BY THE LD. CIT(A) DELETING THE PENALTY WE FIND NO INFIRMITY 4 ITA 2485 /M/2010 L AWRENCE & MAYO (I) P. LTD.. IN THE ORDER OF THE LD. CIT(A). WE ACCORDINGLY UPH OLD THE SAME. THE GROUND RAISED BY THE REVENUE IS THEREFORE DISMISSED. 5. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 27.07.2011. SD/- SD/- (N.V. VASUDEVAN) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED 27.07.2011. RK COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 22 MUMBAI 4. THE CIT-10. MUMBAI 5. THE DR BENCH A 6. MASTER FILE // TUE COPY// BY ORDER DY/ASSTT. REGISTRAR ITAT MUMBAI 5 ITA 2485 /M/2010 L AWRENCE & MAYO (I) P. LTD.. DATE INITIALS 1 DRAFT DICTATED ON 21.7.11 24.7.11 SR. PS 2 DRAFT PLACED BEFORE THE AUTHOR 22.7.11 24.7.11 SR. PS 3 DRAFT PLACED BEFORE THE SECOND MEMBER 4 APPROVED DRAFT COMES TO THE SR. PS SR. PS 5 KEPT FOR PRONOUNCEMENT ON SR. PS 6 FILE SENT TO THE BENCH CLERK SR. PS 7 DATE ON WHICH FILE GOES TO THE HEAD CLERK 8 DATE ON WHICH FILE GOES TO THE AR 9 DATE OF DISPATCH OF ORDER