NETAMAGIC IT SERVICES P.LTD, MUMBAI v. ITO 9(2)(3), MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH MUMBAI BEFORE SHRI D. KARUNAKARA RAO ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH JUDICIAL MEMBER I.T.A. NO.3157/M/2013 (ASSESSMENT YEAR: 2007 - 2008 ) NETMAGIC IT SERVICES PVT LTD. BUILDING NO.22 NIRLON COMPLEX WESTERN EXPRESS HIGHWAY GOREGAON (E) MUMBAI - 400063. / VS. ITO - 9(2)(3) MUMBAI. ./ PAN : AACCN2366D ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI ANUJ KISNADWALA / RESPONDENT BY : SHRI MANOJ KUMAR DR / DATE OF HEARING : 03.10.2016 / DATE OF PRONOUNCEMENT : 03.10.2016 / O R D E R PER D. KARUNAKARA RAO AM: THIS APPEAL FILED BY THE ASSESSEE ON 25.4.2013 IS AGAINST THE ORDER OF THE CIT (A) - 20 MUMBAI DATED 4.2.2013 FOR THE ASSESSMENT YEAR 2007 - 2008. IN THIS APPEAL ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: - 1.1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT (A) HAS GROSSLY ERRED IN UPHOLDING PENALTY LEV IED BY THE AO U/S 271(1)(C) OF R S. 47 80 773/ - . 1.2. THE CIT (A) OUGHT TO HAVE APPRECIATED THAT NO PROPER SATISFACTIONS WAS REACHED BY AO AT THE TIME OF INITIATING PENALTY U/S 27 1(1)(C) AS GROUND ON WHICH DISALLOWANCE WAS MADE BY AO WAS REJECTED BY THE CIT (A) AND THE DISALLOWANCE WAS UPHELD BY THE CIT (A) ON OTHER GROUND ON WHICH NO SATISFACTION WAS REACHED BY THE AO FOR INITIATING PENALTY U/S 271(1)(C) OF THE ACT. 2.1. ON THE FA CTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT (A) GROSSLY ERRED IN UPHOLDING LEVY OF PENALTY ON THE DISALLOWANCE OF DEDUCTION CLAIMED U/S 10A WITHOUT APPRECIATING THAT THE ISSUE UNDER CONSIDERATION IS LEGAL AND DEBATABLE AND THAT THE APPE LLANT HAD DOME COMPLETE DISCLOSURE OF ALL FACTS RELEVANT TO THE CLAIM OF DEDUCTION. 2. AT THE OUTSET LD COUNSEL FOR THE ASSESSEE BRIEFLY NARRATED THE FACTS AND SUBMITTE D THAT IN THE ASSESSMENT MADE U/S 143(3) OF THE ACT AO DISALLOWED THE CLAIM OF DEDUC TION OF RS. 1 42 03 012/ - U/S 10A OF THE ACT. AGGRIEVED ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY AND THE CIT (A) CONFIRMED THE REJECTION OF EXEMPTION. MATTER TRAVELLED TO THE TRIBUNAL AND IN THE FIRST 2 ROUND OF THE PROCEED INGS BEFORE THE ITAT THE TRIBUNAL ALLOWED THE APPEAL VIDE ITA NO.8810/M/2010 (AY 2007 - 2008) DATED 6.4.2016. BEFORE US IT IS THE SUBMISSION OF THE LD COUNSEL FOR THE ASSESSEE THAT SINCE THE TRIBUNAL ALLOWED THE QUANTUM APPEAL PENALTY LEVIED U/S 271(1) (C) OF THE ACT IS REQUIRED TO BE DELETED. 3. AFTER HEARING THE LD REPRESENTATIVES OF BOTH THE PARTIES AND ON PERUSAL OF THE CITED ORDER OF THE TRIBUNAL (SUPRA) WE FIND VIDE PARA 10 OF THE SAID ORDER TRIBUNAL DIRECTED THE AO TO ALLOW THE DEDUCTION U/S 10A AND DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. CONSIDERING THE SAME WE ARE OF THE CONSIDERED OPINION SINCE THE TRIBUNAL ALLOWED THE QUANTUM APPEAL PENALTY LEVIED U/S 271(1)(C) HAS NO LEGS TO STAND. ACCO RDINGLY WE DELETE THE PENALTY. THUS GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 4. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD OCTOBER 2016. SD/ - SD/ - ( AMARJIT SINGH ) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 03.10.2016 . . ./ OKK SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. / DR ITAT MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER / (DY./ASSTT. REGISTRAR) / ITAT MUMBAI