M/s. MODEST MARITIME SERVICES P. LTD., MUMBAI v. ACIT CIR. 9(2), MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J : MUMBAI BEFORE SHRI D.K. AGARWAL (JM) AND SHRI PRAMOD KUMAR ( AM ) ITA NO. 5016/MUM/2005 ASSESSMENT YEAR : 2001 - 02 MODEST MARITIME SERVICES PVT. LTD. 601 - B PANCHSHEEL (II) RAHE JA TOWNSHIP MALAD(WEST) MUMBAI - 400 0 97 . ..( APPELLANT ) P.A. NO. ( AABCM 6269 K) VS. ASSTT. COMMISSIONER OF INCOME TAX CIRCLE - 9(2) AAYAKAR BHAVAN MUMBAI . ..( RESPONDENT ) APPELLANT BY : SHRI DAMODAR KABRA RESPONDENT BY : SHRI L.K. AGRAWAL O R D E R PER D.K. AGARWAL (JM). THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 17.6.2005 PASSED BY THE LD. CIT(A) FOR THE ASSESSMENT YEAR 2001 - 02. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS AS SHIPPING AGENTS AND OFF - SHORE REPRESENTATIVES. THE RETURN WAS FILED DECLARING TOTAL I NCOME OF RS.27 39 770/ - . DURING THE COURSE OF ASSESSMENT THE AO INTERALIA ITA NO. 5016/M/05 A.Y: 01 - 02 2 ADDED CESSATION OF LIABILITY U/S.41(1) OF THE INCOME TAX ACT 1961(THE ACT) AMOUNTING TO RS.45 72 318/ - WHICH WAS ALSO CONFIRMED BY THE LD. CIT(A). IN RESPONSE TO SHOW CAUSE AS TO WH Y PENALTY U/S. 271(1)(C) MAY NOT BE IMPOSED THE ASSESSEE WHILE RELYING ON THE JUDGMENT OF HON BLE SUPREME COURT IN HINDUSTAN STEEL LTD. VS. STATE OF ORISSA (1972) 83 ITR 26(SC) SUBMITTED THAT NONE OF THE INGREDIENTS THAT ARE NECESSARY FOR LEVYING PENALT Y U/S.271(1)(C) ARE PRESENT IN THIS CASE AND THEREFORE NO PENALTY IS LEVIABLE. HOWEVER THE AO WAS OF THE VIEW THAT THE ASSESSEE'S CASE FALLS UNDER PROVISIONS OF EXPLANATION 1 TO SEC. 271(1)(C) OF THE ACT AND HENCE THE ASSESSEE IS LIABLE TO PENALTY AND ACCORDINGLY HE IMPOSED PENALTY OF RS.18 08 352/ - VIDE ORDER DATED 17.3.2005 PASSED U/S.271(1)(C) OF THE ACT. ON APPEAL THE LD. CIT(A) WHILE OBSERVING THAT THE AMOUNT OF RS.45 25 318/ - NO LONGER EXISTED AS A LIABILITY AND THE ASSESSEE WAS REQUIRED TO OFFER THE SAME AS INCOME U/S.41(1) OF THE ACT CONFIRMED THE PENALTY IMPOSED BY THE AO. 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US CHALLENGING IN ALL THE GROUNDS THE SUSTENANCE OF PENALTY IMPOSED BY THE AO. 4. AT THE TIME OF HEARING BOTH PARTIES HAVE AGREED THAT THE TRIBUNAL IN THE QUANTUM APPEAL OF THE ASSESSEE IN M/S. MODEST MARITIME ITA NO. 5016/M/05 A.Y: 01 - 02 3 SERVICES P. LTD. VS. ACIT IN ITA NO.6477 /MUM/2003 FOR THE ASSESSMENT YEAR 2001 - 02 ORDER DATED 4.11.2009 HAS DELETED THE ADDITION OF RS .45 72 318/ - MADE BY THE AO U/S.41(1) OF THE ACT. THEREFORE PENALTY IS NOT LEVIABLE. THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO PLACED ON RECORD THE COPY OF THE SAID ORDER OF THE TRIBUNAL . 5. HAVING CAREFULLY HEARD THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD WE FIND MERIT THAT THE TRIBUNAL IN THE QUANTUM APPEAL OF THE ASSESSEE VIDE ORDER DATED 4.11.2009 SUPRA HAS DELETED THE ADDITION OF RS.45 72 318/ - MADE BY THE AO U/S.41(1) OF THE ACT ON WHICH THE AO HAS IMP OSED THE IMPUGNED PENALTY. SINCE THE ADDITION ITSELF HAS BEEN DELETED THE PENALTY HAS NO LEGS TO STAND AND ACCORDINGLY THE PENALTY IMPOSED BY THE AO AND CONFIRMED BY THE LD. CIT(A) IS DELETED. THE GROUNDS TAKEN BY THE ASSESSEE ARE THEREFORE ALLOWED. 6 . IN THE RESULT THE ASSESSEE S APPEAL STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20.4.2010. SD/ - SD/ - ( PRAMOD KUMAR ) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED: 20.4. 20 10 . JV. ITA NO. 5016/M/05 A.Y: 01 - 02 4 COPY TO: THE APPELLANT THE RESPONDENT THE CIT CONCERNED MUMBAI THE CIT(A) CONCERNED MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR ITAT MUMBAI.