CONCEPT INTERNATIONAL, MUMBAI v. ACIT 19(2), MUMBAI

ITA 5007/MUM/2010 | 2006-2007
Pronouncement Date: 03-11-2011 | Result: Allowed

Appeal Details

RSA Number 500719914 RSA 2010
Assessee PAN AAAFC0063B
Bench Mumbai
Appeal Number ITA 5007/MUM/2010
Duration Of Justice 1 year(s) 4 month(s) 17 day(s)
Appellant CONCEPT INTERNATIONAL, MUMBAI
Respondent ACIT 19(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 03-11-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 03-11-2011
Date Of Final Hearing 03-11-2011
Next Hearing Date 03-11-2011
Assessment Year 2006-2007
Appeal Filed On 16-06-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL 'C' BENCH MUMBAI BEFORE SHRI D. MANMOHAN VICE PRESIDENT AND SHRI T.R. SOOD ACCOUNTANT MEMBER ITA NO. 5007/MUM/2010 (ASSESSMENT YEAR: 2006-07) M/S. CONCEPT INTERNATIONAL ACIT WARD 19(2) 167 C.S.T. ROAD KALINA 3RD FLOOR PIRAMAL CHAMBER S SNATACRUZ (W) MUMBAI 400098 VS. LALBAUG MUMBAI 400012 PAN - AAAFC 0063 B APPELLANT RESPONDENT APPELLANT BY: MS. VASANTI B. PATEL RESPONDENT BY: SHRI ALEXANDER CHANDY DATE OF HEARING: 03.11.2011 DATE OF PRONOUNCEMENT: 03.11.2011 O R D E R PER D. MANMOHAN V.P. THIS APPEAL BY ASSESSEE IS AGAINST THE ORDER OF THE CIT(A)-XXX MUMBAI DATED 17.03.2010. PENALTY OF ` 79 070/- LEVIED BY THE A.O. AND CONFIRMED BY THE CIT(A) IS THE SUBJECT MATTER OF DISPUTE BEFORE US. 2. THE FACTS IN SHORT ARE THAT ASSESSEE WHICH IS A RE GISTERED FIRM DECLARED TOTAL INCOME OF ` 21 95 082/- WHEREAS THE ASSESSMENT WAS COMPLETED ON A TOTAL INCOME OF ` 25 23 810/-. THE MAIN ADDITION IS OF ` 2 34 909/- REFERABLE TO DISALLOWANCE OF EXPENDITURE UNDER SECTION 14A OF THE I.T. ACT. 3. ASSESSEE IS ENGAGED IN THE BUSINESS OF EXPORT TRADI NG IN PHARMACEUTICAL FORMULATIONS AND CHEMICALS. ASSESSEE SHOWED DIVIDEN D INCOME TO THE TUNE OF ` 6 00 000/- AND THE SAME WAS CLAIMED AS EXEMPT UNDER SECTION 10(33) OF THE INCOME TAX ACT (THE ACT). IT HAS ALSO SHOWN INVES TMENT TO THE TUNE OF ` 202.34 LAKHS COMPRISING OF 7800 SHARES OF DENA BANK AND 48 00000 SHARES OF CONCEPT PHARMACEUTICALS LTD. AND SINCE THE DIVIDEND IS EXEMPT FROM TAX A.O. WAS OF THE OPINION THAT A PORTION OF THE EXPENDITUR E IS TO BE DISALLOWED UNDER SECTION 14A OF THE ACT R.W. RULE 8D OF THE I.T. RUL ES. ACCORDING TO THE A.O. SINCE ASSESSEE HAS NOT WORKED OUT THE AMOUNT DISALL OWABLE UNDER SECTION 14A ITA NO. 5007/MUM/2010 M/S. CONCEPT INTERNATIONAL 2 OF THE ACT ASSESSEE CAN BE SAID TO HAVE FAILED TO DISCLOSE ITS TRUE INCOME CHARGEABLE TO TAX AND CONCEALED PARTICULARS OF INCO ME AND ACCORDINGLY LEVIED PENALTY OF ` 79 070/- BEING 100% OF TAX SOUGHT TO BE EVADED. ON AN APPEAL FILED BY ASSESSEE THE LEARNED CIT(A) OBSERVED THAT IN THE LIGHT OF THE ITAT MUMBAI SPECIAL BENCH IN THE CASE OF DAGA CAPITAL MANAGEMEN T (P) LTD. ALL THE EXPENSES CONNECTED WITH THE EXEMPT INCOME HAS TO BE DISALLOW ED UNDER SECTION 14A R.W. RULE 8D REGARDLESS OF WHETHER THEY ARE DIRECT OR IN DIRECT FIXED OR VARIABLE AND MANAGERIAL OR FINANCIAL. SINCE ASSESSEE FAILED TO W ORKOUT THE DISALLOWANCE THE LEARNED CIT(A) CONCLUDED THAT ASSESSEE COMMITTED DE FAULT WITHIN THE MEANING OF SECTION 271(1)(C) AND ACCORDINGLY CONFIRMED THE PENALTY LEVIED BY THE A.O. UNDER SECTION 271(1)(C) OF THE ACT. AGGRIEVED ASSES SEE IS IN APPEAL BEFORE US. 4. AT THE TIME OF HEARING THE LEARNED COUNSEL SUBMITT ED THAT THE DISALLOWANCE MADE BY THE A.O. WAS CHALLENGED BEFORE THE ITAT C BENCH MUMBAI. IN THE LIGHT OF THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG. CO. LTD. VS. DCI T 328 ITR 81 THE BENCH IN ITS ORDER DATED 31 ST MARCH 2011 IN ITA NO. 3092/MUM/2010 SET ASIDE THE ISSUE TO THE FILE OF THE A.O. FOR FRESH ADJUDICATIO N IN ACCORDANCE WITH LAW. THE LEARNED COUNSEL SUBMITTED THAT SINCE THE VERY BASIS FOR THE LEVY OF PENALTY IS THE ADDITION MADE IN THE ASSESSMENT ORDER WHICH IN TURN WAS SET ASIDE BY THE TRIBUNAL PENALTY PROCEEDINGS ARE LIABLE TO BE SET ASIDE. 5. WE HAVE HEARD THE LEARNED D.R. ALSO IN THIS REGARD AND CAREFULLY PERUSED THE RECORD. SINCE THE DISALLOWANCE NO LONGE R SUBSISTS IN THE LIGHT OF THE DECISION OF THE ITAT CITED SUPRA WE SET ASIDE THE PENALTY LEVIED BY THE A.O. AND DIRECT HIM TO RECONSIDER THE QUESTION OF L EVY OF PENALTY IN ACCORDANCE WITH LAW. 6. AS PRONOUNCED IN THE OPEN COURT THE APPEAL FILED BY ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD NOVEMBER 2011. SD/- SD/- (T.R. SOOD) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI DATED: 3 RD NOVEMBER 2011 ITA NO. 5007/MUM/2010 M/S. CONCEPT INTERNATIONAL 3 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) XXX MUMBAI 4. THE CIT XIX MUMBAI CITY 5. THE DR C BENCH ITAT MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI N.P.