ISMT LTD, MUMBAI v. ACIT 10(1), MUMBAI

ITA 3446/MUM/2010 | 2001-2002
Pronouncement Date: 18-11-2011 | Result: Allowed

Appeal Details

RSA Number 344619914 RSA 2010
Assessee PAN AAACJ9917A
Bench Mumbai
Appeal Number ITA 3446/MUM/2010
Duration Of Justice 1 year(s) 6 month(s) 18 day(s)
Appellant ISMT LTD, MUMBAI
Respondent ACIT 10(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 18-11-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted I
Tribunal Order Date 18-11-2011
Date Of Final Hearing 01-11-2011
Next Hearing Date 01-11-2011
Assessment Year 2001-2002
Appeal Filed On 30-04-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I MUMBAI BEFORE SHRI B.R. MITTAL (JUDICIAL MEMBER) AND SHRI P.M. JAGTAP (ACCOUNTANT MEMBER) ITA NO. 3446/MUM/2010 ASSESSMENT YEAR-2001-02 M/S. ISMT LTD. 10 SOHRAB BLDG. 499/505 KALBADEVI ROAD MUMBAI-400 002 PAN-AAACJ 9917A VS. THE ACIT-10(1) AAYAKAR BHAVAN MUMBAI-400 020 (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI D.R. RAIYANI RESPONDENT BY: SHRI C.G.K. NAIR DATE OF HEARING :01.11.2011 DATE OF PRONOUNCEMENT: 18.11.2011 O R D E R PER B.R. MITTAL JM : THE ASSESSEE HAS FILED THIS APPEAL FOR ASSESSMENT Y EAR 2001-02 AGAINST ORDER OF LD. CIT(A) DT.24.2.2010 DISPUTING CONFIRMA TION OF PENALTY LEVIED BY AO U/S. 271(1)(C) OF THE ACT. 2. THE RELEVANT FACTS GIVING RISE TO THIS APPEAL AR E THAT ASSESSEE DEBITED A SUM OF RS. 6 79 521/- AS MERGER EXPENSES. IN ADDIT ION THERETO ASSESSEE ALSO CLAIMED A SUM OF RS. 23 LAKHS WHICH WAS PAID AS CON SULTANCY CHARGES PERTAINING TO MERGER OF ASSESSEE COMPANY WITH M/S. KALYANI SEAMLESS TUBES LTD. THE ASSESSEE CLAIMED SAID EXPENSES IN THE RE TURN FILED. THE ASSESSING OFFICER STATED THAT THESE EXPENSES WERE COVERED BY PROVISIONS OF SEC. 35DD OF THE ACT AND WERE REQUIRED TO BE AMORTIZED. THER EFORE AO ALLOWED 1/5 TH OF EXPENDITURE AND DISALLOWED BALANCE AMOUNT OF RS. 23 83 617/-. IN VIEW THEREOF AO INITIATED PENALTY PROCEEDINGS U/S. 271( 1)(C) OF THE ACT AND LEVIED ITA NO. 3446/M/2010 2 PENALTY OF RS. 9 94 721/- ON THE GROUND THAT ASSESS EE FURNISHED INACCURATE PARTICULARS OF INCOME AND CONCEALED ITS INCOME BY C LAIMING EXCESS AND WRONGFUL EXPENDITURE OF RS. 23 83 617/- IN CONTRAVE NTION OF PROVISIONS OF SEC. 35DD OF THE ACT. BEING AGGRIEVED ASSESSEE FILED AN APPEAL BEFORE FIRST APPELLATE AUTHORITY. 3. ON BEHALF OF ASSESSEE IT WAS CONTENDED THAT PEN ALTY PROCEEDINGS WAS BARRED BY LIMITATION IN VIEW OF PROVISO TO SEC. 275 (1)(A) OF THE ACT. IT WAS CONTENDED THAT ASSESSEE FILED APPEAL AGAINST ASSESS MENT ORDER AND LD. CIT(A) PASSED ORDER DT.18 TH MAY 2006 ALLOWING CERTAIN RELIEFS TO ASSESSEE. THEREAFTER DEPARTMENT FILED APPEAL BEFORE TRIBUNAL AND TRIBUNAL PASSED ORDER DT. 11 TH SEPTEMBER 2008. ON BEHALF OF ASSESSEE IT WAS CO NTENDED THAT LD. CIT(A) PASSED ORDER U/S. 250 ON 18.5.2006 THE FINANCIAL YEAR OF THE RECEIPT OF ORDER ENDS ON 31.3.2007. AS PER PROVISO PENALTY ORDER COULD BE PASSED WITHIN ONE YEAR FROM THE END OF FINANCIAL YE AR IN WHICH ORDER WAS RECEIVED I.E. UPTO 31.3.2008. SINCE PENALTY ORDER WAS PASSED ON 27.4.2009 IT IS BARRED BY LIMITATION U/S. 275 OF THE ACT. HO WEVER LD. CIT(A) DID NOT ACCEPT SAID CONTENTION OF THE ASSESSEE AND STATED T HAT AS PER PROVISIONS OF SEC. 275(1)(A) OF THE ACT AND CONSIDERING THAT ORDE R OF ITAT DT. 11 TH SEPTEMBER 2008 WAS RECEIVED BY CIT ON 8 TH OCTOBER 2008 PENALTY ORDER COULD BE PASSED UPTO 30 TH APRIL 2009. SINCE PENALTY ORDER IS DT. 27.4.2009 IT IS WITHIN 6 MONTHS FROM THE END OF THE MONTH IN WHI CH CIT RECEIVED ITATS ORDER. HENCE PENALTY ORDER IS WITHIN THE TIME AS PRESCRIBED UNDER THE ACT. LD. CIT(A) ALSO STATED THAT PROVISO TO SEC. 275(1)( A) OF THE ACT IS NOT APPLICABLE. LD. CIT(A) FURTHER STATED THAT ASSESSE E HAD NOT ARGUED THE CASE ON MERIT AND HENCE HE HAS CONFIRMED PENALTY. THERE FORE ASSESSEE IS IN FURTHER APPEAL BEFORE TRIBUNAL. 4. DURING THE COURSE OF HEARING LD. AR REITERATED HIS SUBMISSIONS IN RESPECT OF ISSUE OF APPLICABILITY OF PERIOD OF LIMI TATION ON THE LINES AS SUBMITTED BEFORE LD. CIT(A) THAT LEVY OF PENALTY IS BARRED BY LIMITATION BECAUSE OF PROVISO TO SEC. 275(1)(A) OF THE ACT. H E SUBMITTED THAT DATE OF ITA NO. 3446/M/2010 3 PASSING OF ORDER BY ITAT AND RECEIPT OF IT BY CIT I S NOT MATERIAL AND ONLY THE DATE ON WHICH ORDER OF CIT(A) IS RECEIVED IS TO BE CONSIDERED. HOWEVER WE DO NOT FIND MERIT IN SAID CONTENTION OF LD. AR IN V IEW OF DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF RAYALA CORPORATION (P) LTD. VS UNION OF INDIA & ORS. 288 ITR 452 WHEREIN IT HAS BEEN HELD TH AT IF AN APPEAL IS PREFERRED TO TRIBUNAL U/S. 253 OF I.T. ACT AGAINST O RDER OF LD. CIT(A) IN SUCH AN EVENT LIMITATION PERIOD FOR LEVY OF PENALTY WOUL D BE AS PROVIDED FOR IN SEC. 275(1)(A) OF THE ACT I.E. SIX MONTHS FROM THE END OF MONTH IN WHICH ORDER OF THE TRIBUNAL IS RECEIVED BY CCIT OR CIT AND PROVIS O TO SEC. 275(1)(A) WILL NOT BE APPLICABLE. DURING THE COURSE OF HEARING LD. A R SUBMITTED THAT ABOVE DECISION OF HONBLE MADRAS HIGH COURT IS AN EX PART E DECISION HENCE SAME SHOULD NOT BE CONSIDERED. WE DO NOT AGREE WITH LD. AR BECAUSE HE IS NOT ABLE TO PRODUCE ANY OTHER DECISION OF ANY OTHER HIG H COURT AND/OR JURISDICTIONAL HIGH COURT CONTRARY TO DECISION OF H ONBLE MADRAS HIGH COURT(SUPRA). EVEN IF THE SAID DECISION OF HONBLE MADRAS HIGH COURT IS AN EX PARTE ORDER IT IS BINDING AND ACCORDINGLY WE HOLD THAT PROVISO TO SEC. 275(1)(A) OF THE ACT WILL NOT BE APPLICABLE IN THE FACTS OF THE CASE BEFORE US. CONSIDERING THE DATES AS MENTIONED HEREIN ABOVE THA T THE ORDER OF TRIBUNAL WAS RECEIVED BY CIT ON 8 TH OCTOBER 2008 AND PENALTY ORDER IS DT. 27 TH APRIL 2009 WE HOLD THAT SAID PENALTY ORDER IS NOT BARRED BY LIMITATION. 5. NOW COMING TO MERITS AS TO WHETHER LEVY OF PENAL TY IS JUSTIFIED OR NOT WE OBSERVE THAT ASSESSEE HAS FURNISHED RELEVANT PAR TICULARS IN THE RETURN FILED OF CLAIM OF EXPENSES. HOWEVER AO WHILE MAK ING ASSESSMENT FOUND THAT CLAIM OF EXPENSES IS NOT JUSTIFIED AS ASSESSE E IS ENTITLED TO CLAIM ONLY 1/5 TH OF EXPENSES INCURRED IN VIEW OF SEC. 35DD OF THE A CT. THEREFORE PENALTY HAS BEEN LEVIED BY THE DEPARTMENT FOR MAKIN G DISALLOWANCE OF 4/5 TH CLAIM OF EXPENSES. WE ARE OF THE VIEW THAT ASSESSE E HAS NOT CONCEALED ANY INCOME AND/OR FURNISHED ANY WRONG PARTICULARS OF IN COME. THE HONBLE MADRAS HIGH COURT HAS HELD IN THE CASE OF CIT VS IN DIAN BISLERI 158 CTR 323 THAT THE MERE FACT THAT CERTAIN CLAIM WAS DISALLOWE D IT DOES NOT FOLLOW THAT ASSESSEE HAD CONCEALED ANY INCOME. THE HONBLE GUJA RAT HIGH COURT HAS ALSO ITA NO. 3446/M/2010 4 HELD IN THE CASE OF NATIONAL TEXTILES VS CIT 249 IT R 125 THAT IMPOSITION OF PENALTY U/S. 271 (1)(C) IS NOT JUSTIFIED IF THE ASS ESSEE GIVES AN EXPLANATION WHICH IS UNPROVED BUT NOT DISPROVED I.E. IT IS NO T ACCEPTED BUT CIRCUMSTANCES DO NOT LEAD TO THE REASONABLE AND POSITIVE INFERENC E THAT ASSESSEES CLAIM IS FALSE. IN THE CASE BEFORE US ASSESSEE HAS CLAIMED EXPENSES INCURRED ON ACCOUNT OF MERGER BUT DEPARTMENT HAS NOT DISPUTED G ENUINENESS OF EXPENSES INCURRED BY ASSESSEE. THE ONLY CONTENTION OF DEPAR TMENT IS THAT ONLY A PART OF EXPENSES WAS ALLOWABLE IN ASSESSMENT YEAR UNDER CONSIDERATION AND REMAINING EXPENSES I.E. 4/5 TH IS ALLOWABLE IN SUBSEQUENT ASSESSMENT YEARS. WE ARE OF THE CONSIDERED VIEW THAT IT DOES NOT AMOU NT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME BY ASSESSEE NOR AS SESSEE HAS CONCEALED ITS INCOME. THEREFORE WE DO NOT AGREE WITH LD. DR THA T ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME BY CLAIMING EXCESS IVE DEDUCTION. THE HONBLE APEX COURT HAS ALSO HELD IN THE CASE OF CIT VS RELIANCE PETROPRODUCT LTD. 322 ITR 158 THAT MERE MAKING OF CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS REGARDING INCOME OF ASSESSEE. 6. CONSIDERING ABOVE DECISIONS AND THE FACTS OF THE CASE WE HOLD THAT LEVY OF PENALTY BY AO IS NOT JUSTIFIED. HENCE WE DELETE THE PENALTY LEVIED U/S. 271(1)(C) OF THE ACT BY VACATING THE ORDERS O F AUTHORITIES BELOW. 7. IN THE RESULT APPEAL FILED BY ASSESSEE IS ALLOWE D. ORDER PRONOUNCED ON THIS 18 TH DAY OF NOVEMBER 2011 SD/- SD/- ( P.M. JAGTAP) (B.R. MITTAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED 18 TH NOVEMBER 2011 RJ ITA NO. 3446/M/2010 5 COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR I BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR I.T.A.T MUMBAI