GEORGE DUKE, MUMBAI v. ACIT 10(1), MUMBAI

ITA 4890/MUM/2011 | 2001-2002
Pronouncement Date: 23-04-2014 | Result: Allowed

Appeal Details

RSA Number 489019914 RSA 2011
Assessee PAN ADWPD0278N
Bench Mumbai
Appeal Number ITA 4890/MUM/2011
Duration Of Justice 2 year(s) 10 month(s) 6 day(s)
Appellant GEORGE DUKE, MUMBAI
Respondent ACIT 10(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 23-04-2014
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted G
Tribunal Order Date 23-04-2014
Date Of Final Hearing 07-04-2014
Next Hearing Date 07-04-2014
Assessment Year 2001-2002
Appeal Filed On 17-06-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH MUMBAI . . BEFORE SHRI N.K. BILLAIYA ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA JUDICI AL MEMBER . / ITA NO. 4889 / MUM./ 2011 ( / ASSESSMENT YEAR : 20 00 01 ) . / ITA NO. 4890 /MUM./2011 ( / ASSESSMENT YEAR : 200 1 02 ) . / ITA NO. 4891 /MUM./2011 ( / ASSESSMENT YEAR : 200 5 06 ) MR. GEORGE DUKE 403 URVASHI SAYANI ROAD PRABHADEVI MUMBAI 400 025 .. / APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 10 ( 1 ) MUMBAI .... / RESPONDENT . / PERMANENT A CCOUNT NUMBER ADWPD0278N / ASSESSEE BY : MR. VIJAY C. KOTHARI / REV ENUE BY : MR. R.K. SAHU / DATE OF HEARING 07 . 0 4 .201 4 / DATE OF ORDER 23.04.2014 MR. GEORGE DUKE 2 / ORDER / PER AMIT SHUKLA J.M. THE PRESENT APPEAL S HA VE BEEN PREFERRED BY THE ASSESSEE CHALLENGING THE IMPUGNED SEPARATE BUT IDENTICAL ORDER OF EVEN DATE 12 TH MAY 2011 PASSED BY THE LEARNED COMMISSIONER (APPEALS) XX I MUMBAI FOR THE ASSESSMENT YEAR 2000 01 2001 02 AND 2005 06 . 2 . THE SOLE COMMON DISPUTE IN ALL THE ASSESSMENT YEARS UNDER APPEALS IS WHETHER OR NOT THE LEARNED COMMISSIONER (APPEALS) WAS JUSTIFIED IN CONFIRMING PENALTY OF ` 17 82 000 FOR THE ASSESSME NT YEAR 2000 01 ` 6 31 800 FOR THE ASSESSMENT YEAR 2001 02 AND ` 5 94 800 FOR THE ASSESSMENT YEAR 2005 06 ON ACCOUNT OF ALLEGED RECEIPT OF COMMISSION INCOME UNDER SECTION 271(1)(C) LEVIED BY THE ASSESSING OFFICER. 3 . SINCE ALL THESE APPEALS PERTAIN TO THE S AME ASSESSEE INVOLVING COMMON ISSUE ARISING OUT OF IDENTICAL SET OF FACTS AND CIRCUMSTANCES THEREFORE AS A MATTER OF CONVENIENCE THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY WAY OF THIS CONSOLIDATED ORDER. HOWEVER IN ORDER TO UNDERST AND THE IMPLICATION IT WOULD BE NECESSARY TO TAKE NOTE OF THE FACTS OF ONE APPEAL. WE ARE ACCORDINGLY NARRATING THE FACTS AS THEY APPEAR IN THE APPEAL IN ITA NO. 4889 /MUM./2011 FOR ASSESSMENT YEAR 200 0 01. 4 . FACTS IN BRIEF : THE ASSESSEE WAS A DIRECTOR OF DUKE OFFSHORE LTD. (DOL) AND WAS DERIVING SALARY INCOME. DOL WAS APPOINTED BY FOKKER AIRCRAFT B.V. OF NETHERLANDS AS ITS REPRESENTATIVE FOR MONTHLY LEASE RENTAL OF AIRCRAFT LEASED TO EAST WEST AIRLINES MUMBAI ON A MR. GEORGE DUKE 3 COMMISSION @ 6% ON LEASE RENTALS AND @ 5% ON ALL SPARE PARTS ON SALES AND REPAIRS. THE REPRESENTATION AGREEMENT DATED 1 ST JULY 1995 TO THIS EFFECT WAS SIGNED BY THE ASSESSEE AS A DIRECTOR OF THE COMPANY. SUBSEQUENTLY IN THE YEAR 1996 BOTH E.W. AIRLINES AND FOKKER AIRCRAFT B.V. WENT INTO L IQUIDATION. THEREAFTER THE DOL LODGED ITS CLAIM TO THE LIQUIDATOR FOR THE PAYMENT OF COMMISSION ON SPARES AND LEASE RENTALS . THE CLAIM OF THE ASSESSEE WAS RECOGNISED AND ACCORDINGLY THE COMPANY WAS ENTITLED TO RECEIVE AN AMOUNT EQUIVALENT TO DUTCH GUILDE RS. A SEARCH AND SEIZURE ACTION TOOK PLACE UNDER SECTION 132(1) ON 28 TH OCTOBER 2004 AT THE RESIDENCIAL AND BUSINESS PREMISE OF THE ASSESSEE AND THE STATEMENT ON OATH WAS RECORDED ON 9 TH NOVEMBER 2004 IN WHICH HE ADMITTED HAVING DONE THE LIAISON WORK FOR FOKKER AIRCRAFT B.V. IN INDIA IN HIS CAPACITY AS INDIVIDUAL AND NOT AS REPRESENTATIVE OF DOL. HE ALSO ADMITTED HAVING RAISED THE SAID CLAIM ON THE OFFICIAL L IQUIDAT O R . HOWEVER HE DENIED RECEIVING ANY SUM TOWARDS SETTLEMENT OF THE SAID CLAIM. THE DEPARTME NT MADE A REFERENCE TO THE AUTHORITY OF NETHERLANDS TO ASCERTAIN THE FACT AND IN RESPONSE TO WHICH THE NETHERLANDS AUTHORITIES FURNISHED INFORMATION VIDE LETTER DATED 13 TH DECEMBER 2006 WHICH HAS BEEN DEALT BY THE LEARNED COMMISSIONER (APPEALS) AT PAGE 3 OF THE ORDER. ONE VERY IMPORTANT FACT WHICH WAS SUBMITTED BY THE NETHERLANDS AUTHORITIES WAS THAT THERE WAS A CONSIGNMENT OF THE CLAIM OF COMMISSION TO SHUDDER & CO. ON RECEIPT OF THE SAID INFORMATION THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE AMOUNT RECEIVED FROM OFFICIAL LIQUIDATOR OF FOKKER AIRCRAFT B.V. SHOULD NOT BE TAXED IN THE HANDS OF THE COMPANY. IN RESPONSE T HE ASSESSEE DENIED HAVING ASSIGNED SUCH CLAIM TO THE COMPANY. THE ASSESSING OFFICER AFTER DETAIL ANALYSIS AND EXAM INATION OF FACTS HELD AS UNDER: A.Y. 2000 01 EURO 113003.71 BEING 60% OF THE TOTAL CLAIM OF ` 188339.51 (NLG 415045.67). THE AMOUNT OF RECEIPT DURING THE MR. GEORGE DUKE 4 YEAR WAS EQUIVALENT TO ` 54 00 000 AND ACCORDINGLY THE SAME WAS ADDED TO THE TOTAL INCOME OF THE COMPANY ON SUBSTANTIVE BASIS AND IN THE HANDS OF APPELLANT ON A PROTECTIVE BASIS. A.Y. 2001 02 EURO 37667.902 BEING 50% OF THE REMAINING 40% OF THE TOTAL CLAIM OF 188339.51 (NLG 415045.67). THE AMOUNT OF RECEIPT DURING THE YEAR WAS EQUIVALENT TO ` 18 0 0 000 AND ACCORDINGLY THE SAME WAS ADDED TO THE TOTAL INCOME OF THE COMPANY ON SUBSTANTIVE BASIS AND IN THE HANDS OF APPELLANT ONA PROTECTIVE BASIS. A.Y. 2005 06 EURO 37667.902 BEING 50% OF THE REMAINING 40% OF THE TOTAL CLAIM OF 188339.51 (NLG 415045.6 7). THE AMOUNT OF RECEIPT DURING THE YEAR WAS EQUIVALENT TO ` 18 00 000 AND ACCORDINGLY THE SAME WAS ADDED TO THE TOTAL INCOME OF THE COMPANY ON SUBSTANTIVE BASIS AND IN THE HANDS OF APPELLANT ON A PROTECTIVE BASIS. 5 . IN THE QUANTUM PROCEEDINGS THE MATTE R HAD REACHED UP TO THE STAGE OF THE TRIBUNAL WHEREIN THE TRIBUNAL HELD THAT THE SUMS IN QUESTION WAS RECEIVABLE ONLY BY THE ASSESSEE IN HIS INDIVIDUAL CAPACITY AND THE DOL HAD NOTHING TO DO WITH THE CLAIM. THUS IN VIEW OF THE DECISION OF THE TRIBUNAL T HE ENTIRE SUM WAS TO BE TAXED IN THE HANDS OF THE ASSESSEE ONLY. THE PENALTY PROCEEDINGS WERE RE INITIATED ON THE BASIS OF THE FINDINGS OF THE TRIBUNAL AND ACCORDINGLY PENALTY WAS LEVIED 6 . IT HAS BEEN INFORMED BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT AGAINST THE SAID ORDER OF THE TRIBUNAL THE ASSESSEE HAD FILED ON APPEAL BEFORE THE BOMBAY HIGH COURT UNDER SECTION 260A WHEREIN THIS ISSUE HAS BEEN ADMITTED AS SUBSTANTIAL QUESTION OF LAW. HE SUBMITTED THAT ONCE THE MATTER IS SUBJUDICE BEFORE THE HIGH CO URT AND THE QUESTION OF LAW HAS BEEN ADMITTED THEN IT GOES TO SHOW THAT THE ISSUE INVOLVED IS DEBATABLE AND THEREFORE PENALTY UNDER SECTION 271(1)(C) CANNOT BE LEVIED. IN SUPPORT OF HIS CONTENTION HE RELIED UPON VARIOUS DECISIONS OF THE TRIBUNAL AND AL SO FILED COPY OF THE SAID DECISIONS. THUS MR. GEORGE DUKE 5 WITHOUT GOING INTO MERITS OF THE ISSUE INVOLVED IN THE PENALTY PROCEEDINGS HE SUBMITTED THAT AT THE VERY THRESHOLD THE PENALTY ORDER SHOULD BE SET ASIDE. 7 . IN ANY CASE THE LEARNED COUNSEL ALTERNATIVELY SUBMITT ED THAT THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER TILL THE OUTCOME OF THE QUANTUM PROCEEDINGS BEFORE THE HIGH COURT AND FOR THIS PROPOSITION HE STRONGLY RELIED UPON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN CIT V/S WAN DER PVT. LTD. ITA NO.2753 OF 2010 JUDGMENT DATED 21 ST AUGUST 2012. 8 . THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND SUBMITTED THAT SIMPLY BECAUSE THE SUBSTANTIAL QUESTION OF LAW HAS BEEN ADMITTED BY THE HIGH COURT THE PENALTY CANNOT BE SET A SIDE. IT HAS TO BE DECIDED ON MERIT. ALTERNATIVELY HE SUBMITTED THAT THE MATTER CAN BE RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER TO BE DECIDED AFTER THE OUTCOME OF THE DECISION OF THE HIGH COURT. 9 . A FTER CAREFULLY CONSIDERING THE RIVAL CONTENTIONS WE FIND THAT NONE OF THE PARTIES HAVE ADDRESSED US ON MERIT S OF THE PENALTY BUT HAVE MAINLY SUBMITTED THAT PENALTY SHOULD BE SET ASIDE ON THE GROUND THAT THE QUANTUM APPEAL HAS BEEN ADMITTED BY THE HIGH COURT UNDER SECTION 260A ON SUBSTANTIAL QUESTION OF LAW. FROM THE DECISION OF THE HIGH COURT AS RELIED UPON BY THE LEARNED COUNSEL IN CIT V/S WANDER PVT. LTD. (SUPRA) IT IS SEEN THAT THE HIGH COURT HAS SET ASIDE THE PENALTY PROCEEDINGS TO THE FILE OF THE ASSESSING OFFICER WHEN IN THE QUANTUM PROCEEDIN GS THE QUESTION OF LAW HAS BEEN ADMITTED ON THE SAME ISSUE AND IS PENDING BEFORE THE HIGH COURT. THE RELEVANT OBSERVATIONS AND FINDINGS OF THE HIGH COURT ARE REPRODUCED AS UNDER: 3. THE ISSUES DO NOT GIVE RISE TO A SUBSTANTIAL QUESTION OF LAW. THE RESP ONDENTS APPEAL AGAINST THE ORDER OF THE TRIBUNAL IN THE MR. GEORGE DUKE 6 QUANTUM PROCEEDINGS HAS BEEN ADMITTED BY THIS COURT. IN VIEW THEREOF THE TRIBUNAL INSTEAD OF DECIDING THIS ISSUE AS TO PENALTY UNDER SECTION 271 BY THE IMPUGNED ORDER RESTORED THE SAME TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO DECIDE THE ISSUE OF LEVY OF PENALTY AFTER THE DECISION OF THIS COURT IN THE SAID APPEAL. THE TRIBUNAL ACCORDINGLY SET ASIDE THE ORDER OF THE CIT(A) AND DIRECTED THE A.O. TO GIVE THE RESPONDENT A REASONABLE OPPO RTUNITY OF BEING HEARD BEFORE PASSING THE ORDER UPON REMAND. 4. AS NOTED EARLIER THE APPEAL AGAINST THE QUANTUM PROCEEDINGS HAS BEEN ADMITTED AND IS PENDING HEARING IN THIS COURT. IF THE APPELLANT SUCCEEDS IN THE QUANTUM PROCEEDINGS IT WOULD NOT EVEN BE NECESSARY TO CONSIDER THE PROCEEDINGS UNDER SECTION 271. IN THE CIRCUMSTANCES NO PREJUDICE HAS BEEN CAUSED TO THE APPELLANT EVEN QUA THE PENALTY PROCEEDINGS. 5. THE APPREHENSION THAT ANY ORDER IN THE PENALTY PROCEEDINGS MAY BE BARRED BY LIMITATION UNDER SECTION 275(1A) IS NOT WELL FOUNDED. IN ANY EVENT THE APPREHENSION IS SET AT REST BY DIRECTING THAT IN THE EVENT THE SAME BEING HELD TO BE BARRED BY LIMITATION THIS APPEAL SHALL STAND REVIVED AUTOMATICALLY AND WITHOUT FURTHER ORDERS OF THIS COURT. 6. SUBJECT TO THE SAME THE APPEAL IS DISMISSED. THUS RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE LEARNED COMMISSIONER (APPEALS) FOR ALL THE ASSESSMENT YEARS UNDER AP PEAL I.E. FOR THE ASSESSMENT YEAR 2000 01 2001 02 AND 2005 06 AND RESTORE THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER AND DIRECT HIM TO DECIDE THE ISSUE AFRESH ON MERITS AFTER THE OUTCOME OF THE QUANTUM APPEAL PREFERRED BY THE ASSESSEE UNDER SECT ION 260A . THE ASSESSING OFFICER WILL ALSO PROVIDE DUE AND EFFECTIVE OPPORTUNITY OF HEARING TO THE ASSESSEE . SINCE THE HIGH COURT HAS ALSO CONSIDERED THE ISSUE OF LIMITATION UNDER SECTION 275(1)(A) THEREFORE THE SAME WILL NOT BE ANY HINDRANCE TO THE ASSES SING OFFICER. THUS THE GROUND RAISED BY THE ASSESSEE FOR ALL THE YEARS UNDER APPEAL I.E. FOR THE ASSESSMENT MR. GEORGE DUKE 7 YEAR 2000 01 2001 02 AND 2005 06 ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 10 . 2000 01 2001 02 2005 06 1 0 . IN THE RESULT ASSESSEES APPEAL S FOR THE ASSESSMENT YEAR 2000 01 2001 02 AND 2005 06 ARE ALLOWED FOR STATISTICAL PURPOSES. 23 RD APRIL 2014 ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD APRIL 2014 SD / - . . N.K. BILLAIYA ACCOUNTANT MEMBER SD / - AMIT SHUKLA JUDICIAL MEMBER MUMBAI DATED : 23 RD APRIL 2014 / COPY OF THE ORDER FORWARDED TO : ( 1 ) / THE ASSESSEE ; ( 2 ) / THE REVENUE; ( 3 ) ( ) / THE CIT(A ) ; ( 4 ) / THE CIT MUMBAI CITY CONCERNED ; ( 5 ) / THE DR ITAT MUMBAI ; ( 6 ) / GUARD FILE . / TRUE COPY / BY ORDER . / PRADEEP J. CHOWDHURY / SR. PRIVATE SECRETARY / / (DY./ASSTT. REGISTRAR) / ITAT MUMBAI