TOPIAM PROPERTIES P. LTD, MUMBAI v. ITO WD 8(3)(3), MUMBAI

ITA 390/MUM/2009 | 2003-2004
Pronouncement Date: 21-05-2010 | Result: Allowed

Appeal Details

RSA Number 39019914 RSA 2009
Assessee PAN AAACT3722B
Bench Mumbai
Appeal Number ITA 390/MUM/2009
Duration Of Justice 1 year(s) 4 month(s) 2 day(s)
Appellant TOPIAM PROPERTIES P. LTD, MUMBAI
Respondent ITO WD 8(3)(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 21-05-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted E
Tribunal Order Date 21-05-2010
Date Of Final Hearing 14-05-2010
Next Hearing Date 14-05-2010
Assessment Year 2003-2004
Appeal Filed On 19-01-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E MUMBAI BEFORE SHRI R.S.SYAL AM AND SHRI VIJAY PAL RAO JM ITA NO.390/MUM/2009 : ASST.YEAR 2003-2004 M/S.TOPIAM PROPERTIES PRIVATE LIMITED C/O.AHUJA CONSTRUCTION RAJPIPLA GROUND FLOOR OPP. STANDARD CHARTERED BANK LINKING ROAD SANTACRUZ(WEST) MUMBAI 400 054. PA NO.AAACT3722B. VS. THE INCOME TAX OFFICER WARD 8(3)(3) MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI REEPAL TRALSHAWALA RESPONDENT BY : DR.ANIL KUMAR SINGH O R D E R PER R.S.SYAL AM : THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDE R PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON 19.11.2008 UPHOLDING THE PENALTY OF RS.59 28 940 IMPOSED BY THE ASSESSING OFFICER U/S.2 71(1)(C) OF THE ACT IN RELATION TO THE ASSESSMENT YEAR 2003-2004. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE IS ENGAGED IN THE BUSINESS OF CIVIL CONTRACTOR AND MARBLE PROCESSORS. IT CLAIMED EXPENDITURE OF RS.25 00 000 BEING PAYMENT MADE TO CUSTOMS DEPARTM ENT COMPRISING OF PENALTY OF RS.5 00 000 AND REDEMPTION FINE OF RS.20 00 000 IN RESPECT OR GOODS CONFISCATED BY THE CUSTOMS.. THE ASSESSING OFFICER DISALLOWED T HE ENTIRE SUM BY TREATING IT AS PENALTY COVERED BY EXPLANATION TO SECTION 37(1). HE ALSO IMPOSED PENALTY IN RESPECT OF SUCH DISALLOWANCE OF PAYMENT MADE TO CUS TOMS. WHEN THE MATTER CAME UP BEFORE THE TRIBUNAL IT DELETED THE ADDITION OF RS.20 00 000 VIDE ITS ORDER IN ITA NO.1084/MUM/2007 DATED 20.10.2009 AND SUSTAINED THE ADDITION FOR THE REMAINING SUM OF RS.5 00 00. INSOFAR AS THE DELETION OF ADDIT ION OF RS.20 LAKHS BY THE TRIBUNAL IS CONCERNED OBVIOUSLY THERE CANNOT BE A NY QUESTION OF UPHOLDING THE ITA NO.390/MUM/2009 M/S.TOPIAM PROPERTIES PRIVATE LIMITED. 2 PENALTY ON THAT. INSOFAR AS THE REMAINING AMOUNT OF RS.5 LAKHS REPRESENTING THE SUSTENANCE OF DISALLOWANCE IS CONCERNED THE FACTU AL POSITION AS EMANATING FROM THE ORDER DATED 10.07.2002 PASSED BY THE COMMISSION ER OF CUSTOMS COPY PLACED AT PAGES 55 ONWARDS OF THE PAPER BOOK IS THAT THE ASSESSEE DECLARED 39 MARBLE BLOCKS CLASSIFYING THEM UNDER CODE 6802.000. ACCORD ING TO THE CUSTOMS AUTHORITIES THESE WERE LIABLE TO BE CLASSIFIED UND ER CHAPTER 25.15 OF CUSTOMS TARIFF ACT. IT IS ON THIS BASIS THAT THE ASSESSEE W AS VISITED WITH PENALTY OF RS.5 LAKHS. THE RELEVANT DISCUSSION IS THERE IN PARA 24 ONWARDS OF THIS ORDER. FROM HERE IT CAN BE SEEN THAT THE ASSESSEE CLASSIFIED THESE M ARBLE BLOCKS UNDER WRONG CODE AS IN ITS INTERPRETATION SUCH BLOCKS WERE LIABLE TO BE CLASSIFIED UNDER THAT CODE WHEREAS AS PER THE CUSTOMS AUTHORITIES THE SAID BLO CKS WERE TO BE CONSIDERED UNDER OTHER CODE LIABLE FOR DIFFERENT RATE OF CUSTOMS DUT Y. IT IS IN THIS RESPECT THAT THE ASSESSEE WAS MADE TO PAY RS.5 LAKHS WHICH CLAIM WAS FOUND TO BE UNACCEPTABLE BY THE AUTHORITIES. IT IS A CASE IN WHICH THE ASSESSEE DECLARED ALL THE NECESSARY PARTICULARS AND GENUINELY CLAIMED SUCH AMOUNT OF RS .5 LAKHS TO BE EXPENDITURE WHICH WAS CONSIDERED BY THE AUTHORITIES BELOW AND T RIBUNAL AS PENALTY. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. [(2010) 322 ITR 158 (SC)] HAS HELD THAT MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT ATTRACT PEN ALTY U/S.271(1)(C). IN OUR CONSIDERED OPINION THE ASSESSEE IS RIGHTLY COVERED BY THIS JU DGMENT FOR THE REASON THAT THE MERE DISALLOWANCE OF DEDUCTION FOR RS.5.00 LACS BY DISCLOSING ALL THE NECESSARY FACTS WOULD NOT BRING THE CASE WITHIN THE PURVIEW OF CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. CONSEQUENTLY THE PENALTY TO THAT EXTENT DESERVES TO BE AND IS HEREBY DELETED. 3. THE SECOND COMPONENT OF PENALTY IS THE ADDITION OF RS.1 916 MADE TOWARDS UNUTILIZED MODVAT CREDIT. ON THIS GROUND ALSO WE FI ND THAT THE ASSESSEE WAS FOLLOWING EXCLUSIVE METHOD OF ACCOUNTING FOR MODVAT CREDIT AS A RESULT OF WHICH EXCISE DUTY WAS NOT MADE PART COST OF GOODS OR CLOS ING STOCK. THE FACT OF HAVING ITA NO.390/MUM/2009 M/S.TOPIAM PROPERTIES PRIVATE LIMITED. 3 UNUTILIZED MODVAT CREDIT CAME TO THE NOTICE OF THE ASSESSING OFFICER ONLY FROM A LOOK AT THE BALANCE SHEET. IF THE CLOSING MODVAT I S TO BE INCLUDED IN THE VALUATION OF CLOSING STOCK THEN NATURALLY THE OPENING MODVA T IS ALSO REQUIRED TO BE INCLUDED IN THE OPENING STOCK. DUE TO SMALLNESS OF THE AMOUN T THE ASSESSEE DID NOT PRESS THIS GROUND BEFORE THE LOWER AUTHORITIES IN QUANTUM PROCEEDINGS. CERTAINLY IT IS NOT A CASE WHERE THE ASSESSEE HAS CONCEALED ITS INCOME OR FURNISHED ANY INACCURATE PARTICULARS OF INCOME. IT IS A CASE OF SIMPLE DISAL LOWANCE AND HENCE THE RATIO OF THE JUDGMENT IN THE CASE OF RELIANCE PETRO PRODUCTS PVT. LTD. (SUPRA) WILL REQUIRE THE DELETION OF PENALTY. WE ORDER ACCORDINGLY. 4. THE NEXT AMOUNT ON WHICH PENALTY WAS IMPOSED BY THE ASSESSING OFFICER IS THE DISALLOWANCE OF INTEREST OF RS.39 29 482 OUT OF RS.1 46 15 872 ON PROPORTIONATE AD HOC BASIS. ON THIS ISSUE WE FIND THAT THE SAID ADDITI ON OF RS.39.29 LAKHS CAME UP BEFORE THE TRIBUNAL AND THE MATTER WAS RESTORED TO THE FILE OF A.O. WITH CERTAIN DIRECTIONS. THE COPY OF CONSEQUENTIAL ORDER PASSED BY THE A.O. IS AVAILABLE ON RECORD AS PER WHICH A MEAGER ADDITION OF RS.50 000 AND ODD HAS BEEN SUSTAINED. AGAIN IT IS A QUESTION OF DISALLOWING A CLAIM MADE BY THE ASSESSEE IN THE NORMAL COURSE AND NOTHING CAN BE ATTRIBUTED TO THE CONCEAL MENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. 5. THE LAST ITEM IS THE G.P. ADDITION MADE BY THE ASSESSING OFFICER BY APPLYING THE PROFIT RATE OF 33% AS AGAINST 13.51% DECLARED B Y THE ASSESSEE. HERE ALSO WE FIND THAT THE ADDITION MADE BY THE A.O. WAS CHALLEN GED BEFORE THE TRIBUNAL WHICH EVENTUALLY REDUCED IT BY DIRECTING THAT THE GP RATE OF 25% BE APPLIED. MAKING OF ADDITION AND THE REDUCTION OF THE ADDITION BY THE T RIBUNAL IS ON THE BASIS OF ESTIMATE. IT IS A SETTLED LEGAL POSITION THAT NO PE NALTY U/S. 271(1)(C ) CAN BE IMPOSED WHEN INCOME IS DETERMINED AT ESTIMATION BASIS. THI S VIEW HAS BEEN TAKEN BY THE HONBLE PUNJAB & HARYANA HIGH COURT IN NARIGOPAL SINGH VS. CIT (2002) 258 ITR 85(P&H); CIT VS. DHILLON RICE MILLS(2002) 256 ITR 4 47(P&H) AND CIT VS. RAVIL ITA NO.390/MUM/2009 M/S.TOPIAM PROPERTIES PRIVATE LIMITED. 4 SINGH & CO.(2002) 254 ITR 191 (P&H). SIMILAR VIEW HAS BEEN EXPRESSED BY SEVERAL HIGH COURTS INCLUDING THE HONBLE GUJARAT H IGH COURT IN THE CASE OF CIT VS. SUBHASH TRADING CO. 221 ITR 110 (GUJ). UNDER THESE CIRCUMSTANCES WE ARE OF THE CONSIDERED OPINION THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE PENALTY. WE THEREFORE ORDER FOR THE DELETION OF T HIS PENALTY. 6. IN THE RESULT THE APPEAL IS ALLOWED. ORDER PRONOUNCED ON THIS 21 ST DAY OF MAY 2010. SD/- SD/- ( VIJAY PAL RAO ) ( R.S.SYAL ) JUDICIAL MEMBER ACCOUNTANT M EMBER MUMBAI : 21 ST MAY 2010 . DEVDAS* COPY TO : 1. THE APPELLANT. 2. THE RESPONDENTS. 3. THE CIT CONCERNED 4. THE CIT(A)-XXIX MUMBAI. 5. THE DR/ITAT MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR ITAT MUMBAI.