LUMINANT INVESTMENTS LTD, MUMBAI v. ASST CIT CEN CIR 40, MUMBAI

ITA 3845/MUM/2013 | 2006-2007
Pronouncement Date: 12-03-2021 | Result: Allowed

Appeal Details

RSA Number 384519914 RSA 2013
Assessee PAN AAACL0834A
Bench Mumbai
Appeal Number ITA 3845/MUM/2013
Duration Of Justice 7 year(s) 9 month(s) 28 day(s)
Appellant LUMINANT INVESTMENTS LTD, MUMBAI
Respondent ASST CIT CEN CIR 40, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 12-03-2021
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted G
Tribunal Order Date 12-03-2021
Last Hearing Date 05-10-2020
First Hearing Date 05-10-2020
Assessment Year 2006-2007
Appeal Filed On 14-05-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G MUMBAI BEFORE SHRI RAJESH KUMAR ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI JUDICIAL MEMBER ITA NO.3845/M/2013 ASSESSMENT YEAR: 2006-07 M/S. LUMINANT INVESTMENTS LTD. (FORMERLY KNOWN AS LUMINANT INVESTMENTS P. LTD.) RADHA BHAVAN 1 ST FLOOR 121 NAGINDAS MASTER ROAD MUMBAI 400 023 PAN: AAACL0834A VS. ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-40 MUMBAI - 400020 (APPELLANT) (R ESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI RAJIV KHANDELWAL A.R. REVENUE BY : SHRI SRINIVAS BOTTA D.R. DATE OF HEARING : 07.12.2020 DATE OF PRONOUNCEMENT : 12.03.2021 O R D E R PER RAJESH KUMAR ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 18.03.2013 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2006-07. 2. THE ONLY ISSUE RAISED BY THE ASSESSEE IN THE VAR IOUS GROUNDS OF APPEAL IS THAT THE ASSESSEE HAS ASSAILED THE ORDER OF LD. CIT(A) CONFIRMING THE PENALTY OF RS.9 35 24 310 /- THEREBY ITA NO.3845/M/2013 M/S. LUMINANT INVESTMENTS LTD. (FORMERLY KNOWN AS LUMINANT INVESTMENTS P. LTD.) 2 UPHOLDING THE ORDER PASSED BY THE AO UNDER SECTION 271(1)(C) OF THE ACT. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSMENT IN TH IS CASE WAS FRAMED UNDER SECTION 143(3) OF THE ACT VIDE ORDER D ATED 07.11.2008 BY MAKING AN ADDITION OF RS.27 78 50 000 /- RECEIVED TOWARDS SHARE APPLICATION MONEY FOR ALLOTM ENT OF 55 57 000 EQUITY SHARES. THE ALLEGATION OF THE AO WAS THAT THE ASSESSEE HAS ROUTED HIS UNACCOUNTED MONEY AND THUS ADDED THE SAME UNDER SECTION 68 OF THE ACT AND PENALTY PROCEE DINGS WERE INITIATED FOR FILING INACCURATE PARTICULARS OF INCO ME. AFTER TAKING INTO ACCOUNT THE REPLY OF THE ASSESSEE FILED IN RES PONSE TO PENALTY NOTICE ISSUED UNDER SECTION 271(1)(C) OF TH E ACT THE AO LEVIED A PENALTY OF RS.9 35 24 310/- BEING 100% OF THE TAX SOUGHT TO BE EVADED BY THE ASSESSEE VIDE ORDER DATE D 28.03.2011 PASSED UNDER SECTION 271(1)(C) OF THE ACT. 4. AGGRIEVED BY THE ORDER OF AO THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE LD. CIT(A) CHALLENGING THE ORDER PASSED UNDER SECTION 271(1)(C) OF THE ACT HOWEVER THE LD. CIT( A) ALSO DISMISSED THE APPEAL OF THE ASSESSEE BY OBSERVING T HAT AO HAS RIGHTLY IMPOSED THE PENALTY AS THE ASSESSEE HAS MOB ILIZED THE UNACCOUNTED MONEY BY CREATING VARIOUS LAYERS OF TRA NSACTIONS OF WHICH THE ASSESSEE WAS AN ULTIMATE BENEFICIARY AND HENCE DISMISSED THE PLEA OF THE ASSESSEE THAT IT HAS CONC EALED INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THE LD. A.R. VEHEMENTLY SUBMITTED BEFORE US THAT TH E PENALTY ORDER PASSED BY THE AO IMPOSING A PENALTY O F RS.9 35 24 310/- IS INVALID AND CAN NOT BE SUSTAINE D IN THE EYES ITA NO.3845/M/2013 M/S. LUMINANT INVESTMENTS LTD. (FORMERLY KNOWN AS LUMINANT INVESTMENTS P. LTD.) 3 OF LAW AS THE SAME HAS BEEN PASSED WITHOUT FRAMING OR MENTIONING THE CHARGE AGAINST THE ASSESSEE. IN OTH ER WORDS THE CHARGE/LIMB ON WHICH THE PENALTY WAS LEVIED IS NOT MENTIONED AT ALL IN THE PENALTY ORDER. THE LD. A.R. TOOK US THR OUGH THE PENALTY ORDER TO PROVE HIS AVERMENTS AND SUBMITTED THAT THE SAID ORDER MAY KINDLY BE QUASHED AS BEING NON-EST A ND INVALID IN THE EYES OF LAW. THE LD. A.R. SUBMITTED THAT HO W THE ASSESSEE CAN BE SUBJECTED TO SUCH A HUGE AMOUNT OF PENALTY W ITHOUT EVEN DISCUSSING OR MENTIONING THE CHARGE UNDER WHICH THE PENALTY WAS PROPOSED TO BE LEVIED. THE LD. A.R. SUBMITTED THAT THIS IS A FATAL MISTAKE ON THE PART OF THE AO WHICH GOES TO T HE ROUTE OF THE PENALTY ORDER AND IS NOT CURABLE. THE LD. A.R. TH EREFORE SUBMITTED THAT THE SAID ORDER MAY KINDLY BE QUASHED AS BEING NO ORDER IN THE EYES OF LAW. THE LD. A.R. HOWEVER FAIRLY ADMITTED THE FACT THAT QUANTUM PROCEEDINGS HAVE BEE N RESTORED BY THE TRIBUNAL TO THE FILE OF THE LD. CIT(A) TO DE CIDE THE ISSUE AFRESH AND TILL DATE NO ORDER HAS BEEN PASSED BY TH E LD. CIT(A). 5. THE LD. D.R. ON THE OTHER HAND SUBMITTED THAT THOUGH IN THE PENALTY ORDER THE AO HAS FORGOTTEN TO MENTION T HE CHARGE ON WHICH THE PENALTY WAS LEVIED BUT THE SAME IS NOT RE LEVANT AT THIS STAGE AS THE QUANTUM APPEAL HAS BEEN RESTORED BY TH E TRIBUNAL TO THE FILE OF THE LD. CIT(A) TO DECIDE THE ISSUE A FRESH. THE LD. D.R. THEREFORE SUBMITTED THAT THE PENALTY ISSUE M AY ALSO BE RESTORED TO THE FILE OF THE LD. CIT(A) TO DECIDE IT AFRESH. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTI ES AND PERUSED THE MATERIAL ON RECORD INCLUDING THE PENALT Y ORDER PASSED UNDER SECTION 271(1)(C) OF THE ACT AS WELL AS THE ITA NO.3845/M/2013 M/S. LUMINANT INVESTMENTS LTD. (FORMERLY KNOWN AS LUMINANT INVESTMENTS P. LTD.) 4 APPELLATE ORDER. WE NOTE THAT IN THIS CASE WHILE PASSING THE PENALTY ORDER THE AO HAS NOT DISCUSSED OR MENTIONE D THE CHARGE ON WHICH THE PENALTY WAS LEVIED. THE RELEVA NT PARAS ARE AS UNDER: 5. I HAVE CAREFULLY EXAMINED THE ASSESSEE'S CONTEN TION. THE OPPORTUNITIES GIVEN TO THE ASSESSEE TO CROSS EXAMINE THE DIRECTOR S OF THE SAID COMPANIES HAS BEEN BROUGHT CUT M DETAIL IN SHE ASSESSMENT ORDER I TSELF. THE DDIT(LNV.). UNIT-1(2) KOLKATA HAD GIVEN SEVERAL OPPORTUNITIES TO THE ASSE SSEE TO CROSS EXAMINE (HE PARTIES CONCERNED HOWEVER THE ASSESSEE CHOOSE NO! TO EXERCISE THIS RIGHT OF CROSS EXAMINATION BY SEEKING ADJOURNMENT AFTER ADJOURNMEN T FURTHER THE ASSESSMENT WAS MADE AFTER A THOROUGH INVESTIGATION INVOLVING V ARIOUS PARTIES AND AFTER GIVING SUFFICIENT OPPORTUNITIES TO THE ASSESSEE TO REPUDIA TE THE FINDINGS. AS THE ASSESSEE HAS CHOSEN NOT TO DO SO AT THE ASSESSMENT STAGE IT S CONTENTION AT THIS STAGE THAT THE ADDITION WAS MADE MERELY ON THE BASIS OF STATEM ENTS OF THIRD PARTIES IS NO TENABLE. 5.1 THE MODUS OPERANDI DISCUSSED IN DETAIL IN THE A SSESSMENT ORDER CLEARLY INDICATES THAT THE ASSESSEE HAD MOBILIZED THE UNACC OUNTED CASH BY CREATING VARIOUS LAYERS OF TRANSACTION OF WHICH THE ASSESSEE WAS THE ULTIMATE BENEFICIARY. HENCE THE ASSESSEE'S CONTENTION THAT IT HAS NOT CONCEALED THE INCOME OR FURNISHED INACCURATE PARTICULARS IS NOT TENABLE. 5.2 CUMULATIVE EFFECTS OF ALL THE FACTS OF THE CASE CLEARLY INDICATE MANIPULATION AT EVERY STAGE OF THE TRANSACTIONS WITH AN INTENSION O F INFUSING HUGE AMOUNTS OF FUNDS INTO THE BOOKS OF ACCOUNT OF THE ASSESSEE COMPANY W HICH WAS LATER UTILIZED TO REPAY ITS DUES. 6. SINCE THE ASSESSEE HAS FAILED TO PROVE THE GEN UINITY OF THE TRANSACTIONS IT IS CONCLUDED THAT THE ASSESSEE HAS CHANNELED ITS OWN U NACCOUNTED MONEY INTO ITS ACCOUNT IN THE GUISE OF APPLICATION MONEY TO FINANC E THE REPAYMENT OF ITS DUES TO MADHAVPURA MERCANTILE GO-OP BANK LTD HENCE IT IS A FIT CASE TO IMPOSE PENALTY U/S 271(1)(C). 7. THE PENALTY IMPOSABLE IS AS UNDER: INCOME / LOSS SOUGHT TO BE EVADED (WRONG CLAIM OF LOSS) RS 27 78 50 000 TAX SOUGHT TO BE EVADED (INCLUSIVE OF SC @ 10% & EC @ 2% RS 9 35 24 310/- MINIMUM PENALTY LEVIABLE 100% RS 9 35 24 310/- MAXIMUM PENALTY LEVIABLE - 300% RS.28 05 72 930/ - 6.1 HOWEVER AFTER CONSIDERING THE FACTS AND CIRCUM STANCES OF THE CASE I LEVY A SUM OF RS.9 35 24 310/- (RUPEES NINE CRORES THIRTY FIVE LAKHS TWENTY FOUR THOUSAND ITA NO.3845/M/2013 M/S. LUMINANT INVESTMENTS LTD. (FORMERLY KNOWN AS LUMINANT INVESTMENTS P. LTD.) 5 THREE HUNDRED TEN ONLY) BY WAY OF PENALTY U/S. 271I (I)(C) OF SHE INCOME-TAX ACT 1961 WITH A DIRECTION TO PAY THE SAME. 7. THIS PENALTY IS LEVIED WITH THE PRIO R APPROVAL OF THE ADDITIONAL COMMISSIONER OF INCOME TAX CENTRAL RANGE-6 MUMBAI VIDE LETTER NO.ADDL CIT CENT. RG-6/33/271(1)(C)/2010-11 DATED 25.03.2011 NOTICE OF DEMAND U/S 156 IS ISSUED FOR OF RS.9 35 24 310/- ACCORDINGLY. THUS IT IS CLEAR FROM THE ABOVE THAT AO HAS NOT DI SCUSSED AT ALL ONE OF THE TWO LIMBS ON WHICH THE PENALTY WA S PROPOSED TO BE LEVIED. WE ARE QUITE CONVINCED WITH THE ARGUMEN TS OF THE LD. A.R. THAT HOW A PENALTY COULD BE IMPOSED WITHOUT A O BEING SATISFIED ON THE CHARGE ON WHICH THE PENALTY WAS PR OPOSED TO BE LEVIED. THUS THE PENALTY HAS BEEN LEVIED IN A MECH ANICAL MANNER WITHOUT APPLICATION OF MIND. IN OUR VIEW T HIS IS A SERIOUS MISTAKE IN THE PENALTY ORDER WHICH IS INCUR ABLE AT THIS STAGE AND THE PENALTY ORDER PASSED BY THE AO IS AN INVALID ORDER AND THEREFORE CAN NOT BE SUSTAINED. WE HAVE ALSO C ONSIDERED THE REQUEST OF THE LD. D.R. THAT THE PENALTY MAY BE RESTORED TO THE FILE OF THE LD. CIT(A) HOWEVER THE SAME CAN N OT BE ACCEPTED AT THIS STAGE AS IT WILL NOT SERVE ANY USEFUL PURPO SE BY RESTORING THE APPEAL TO THE FILE OF THE LD. CIT(A). THIS IS SO BECAUSE BY RESTORING THE PENALTY TO THE FILE OF THE LD. CIT(A) THE APPELLATE AUTHORITY CAN NOT CURE THE DEFECT/MISTAKE WHICH HA S BEEN COMMITTED BY THE AO IN THE PENALTY ORDER PASSED UND ER SECTION 271(1)(C) DATED 28.03.2011. UNDER THESE FACTS AND CIRCUMSTANCES WE ARE NOT IN A POSITION TO SUSTAIN THE ORDER OF LD. CIT(A) WHEREBY THE LD. CIT(A) HAS AFFIRMED THE ORDER OF AO ON THE ISSUE OF PENALTY. ACCORDINGLY WE SET ASIDE THE ORDER OF LD. CIT(A) BY HOLDING THAT THE ORDER OF PENALTY PAS SED UNDER ITA NO.3845/M/2013 M/S. LUMINANT INVESTMENTS LTD. (FORMERLY KNOWN AS LUMINANT INVESTMENTS P. LTD.) 6 SECTION 271(1)(C) OF THE ACT BY THE AO IS AN INVALI D ORDER AND IS ACCORDINGLY QUASHED. 7. THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12.03.2021. SD/- SD/- ( RAM LAL NEGI) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED: 12.03.2021. * KISHORE SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT CONCERNED MUMBAI THE CIT (A) CONCERNED MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASS TT. REGISTRAR ITAT MUMBAI.