E.S. PATANWALA, MUMBAI v. DCIT-13(1), MUMBAI

ITA 2616/MUM/2018 | 2008-2009
Pronouncement Date: 27-11-2019 | Result: Allowed

Appeal Details

RSA Number 261619914 RSA 2018
Assessee PAN AAAFE1723A
Bench Mumbai
Appeal Number ITA 2616/MUM/2018
Duration Of Justice 1 year(s) 7 month(s)
Appellant E.S. PATANWALA, MUMBAI
Respondent DCIT-13(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 27-11-2019
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted E
Tribunal Order Date 27-11-2019
Last Hearing Date 09-05-2019
First Hearing Date 09-05-2019
Assessment Year 2008-2009
Appeal Filed On 27-04-2018
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH MUMBAI BEFORE SHRI MAHAVIR SINGH JM & SHRI M.BALAGANESH AM ITA NO. 2616 /MUM/201 8 ( ASSESSMENT YEAR : 2008 - 09 ) M/S. E.S. PATANWALA 182/184 ABDUL REHMAN STREET MUMBAI 400 003 VS. DCIT CIRCLE 1 3(1) MUMBAI PAN/GIR NO. AAAFE1723A (APPELLANT ) .. (RESPONDENT ) ASSESSEE BY SHRI MUKARRAM H SACHIKOT REVENUE BY MR. AMIT PRATAP SINGH DATE OF HEARING 06/11 /2019 DATE OF PRONOUNCEMENT 27 / 11 /2019 / O R D E R PER M. BALAGANESH (A.M) : THIS APPEAL IN ITA NO. 2616/MUM/2018 FOR A.Y. 2008 - 09 ARISES OUT OF THE ORDER BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 56 MUMBAI IN APPEAL NO. CIT(A) - 56/DCIT CIRCLE - 13(1)/2017 - 18/539 DATED 21/02/2018 (LD. C IT(A) IN SHORT) IN THE MATTER OF IMPOSITION OF PENALTY U/S.271(1)(C) 2. THE ONLY EFFECTIVE ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN UPHOLDING THE LEVY OF PENALTY U/S.271(1)(C) OF THE ACT IN THE FACTS AND CIRCUMSTA NCES OF THE CASE. ITA NO. 2616/MUM/2018 M/S. E.S.PATANWALA 2 3. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT ASSESSEE IS A REGISTERED PARTNERSHIP FIRM AND HAD DECLARED NIL INCOME IN THE RETURN FILED BY IT FOR THE A.Y.2008 - 09 ON 30/09/2008. THE ASSESSM ENT WAS COMPLETED U/S.143(3) OF THE ACT ON 10/12/2010 DETERMINING NIL INCOME AFTER ADJUSTING A LOSS OF RS.1 04 83 875/ - BROUGHT FORWARD FROM A.Y.2001 - 02. WE FIND THAT THE LD. AO HAD OBSERVED THAT ASSESSEE HAD PAID INTEREST TO ITS PARTNERS ON THE AMOUNTS CO NTRIBUTED BY THEM AND INTEREST WAS ALSO PAID ON BORROWED FUNDS. THE PARTNERS WERE HAVING DEBIT BALANCES ON ACCOUNT OF EXCESS WITHDRAWALS. ACCORDINGLY THE LD. AO ADDED INTEREST @12% ON THOSE EXCESS WITHDRAWALS AND MADE AN ADDITION TOWARDS NOTIONAL INTEREST IN THE ASSESSMENT. THE ASSESSEE DID NOT FILE ANY APPEAL AGAINST THIS QUANTUM ADDITION. BASED ON THIS FACT OF ASSESSEE NOT PREFERRING ANY APPEAL AND QUANTUM ASSESSMENT BECOMING FINAL THE LD. AO PROCEEDED TO LEVY PENALTY U/S. 271(1)(C) OF THE ACT BY LEVYI NG THE MINIMUM PENALTY OF RS.2 41 081/ - VIDE ORDER U/S.271(1)(C) OF THE ACT DATED 24/06/2011. THIS ACTION OF THE LD. AO WAS UPHELD BY THE LD. CIT(A) . BUT WE FIND FROM THE PERUSAL OF THE ENTIRE PENALTY ORDER THE LD. AO NOWHERE HAD EVEN WHISPERED AS TO WHET HER THE ASSESSEE HAD CONCEALED THE PARTICULARS OF ITS INCOME OR HAD FURNISHED INACCURATE PARTICULARS OF ITS INCOME. THE ENTIRE ORDER OF THE LD. AO IS TOTALLY SILENT ON THIS ASPECT. IN ANY CASE WE FIND THE ADDITION HAS BEEN MADE ON A NOTIONAL BASIS BY TH E LD. AO BY CHARGING INTEREST AT AN ESTIMATED RATE OF 12% ON EXCESS WITHDRAWAL S MADE BY THE PARTNERS FROM THE FIRM. ON THIS COUNT ITSELF THE PENALTY U/S.271(1)(C) OF THE ACT DESERVES TO BE DELETED. MOREOVER WE ALSO HOLD THAT THERE IS ABSOLUTELY NO CONCE ALMENT OF PARTICULARS OF INCOME BY THE ASSESSEE OR FURNISHING OF INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE. HENCE THERE CANNOT BE ANY LEVY OF PENALTY U/S.271(1)(C) OF THE ACT MERELY BECAUSE AN ADDITION HAS BEEN MADE IN THE ASSESSMENT WHICH REMAIN UNCONTESTED BY THE ASSESSEE . A CCORDINGLY THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. ITA NO. 2616/MUM/2018 M/S. E.S.PATANWALA 3 4. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 27 / 11 /201 9 SD/ - ( MAHAVIR SINGH ) SD/ - (M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 27 / 11 / 2019 KARUNA SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER ( ASSTT. REGISTRAR) ITAT MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) MUMBAI. 4. CIT 5. DR ITAT MUMBAI 6. GUARD FILE. //TRUE COPY//