DCIT 8(2), MUMBAI v. PARADISE PLASTICS ENTERPRISES LTD, MUMBAI

ITA 5522/MUM/2012 | 2008-2009
Pronouncement Date: 31-10-2013 | Result: Dismissed

Appeal Details

RSA Number 552219914 RSA 2012
Assessee PAN AABCP5932G
Bench Mumbai
Appeal Number ITA 5522/MUM/2012
Duration Of Justice 1 year(s) 1 month(s) 27 day(s)
Appellant DCIT 8(2), MUMBAI
Respondent PARADISE PLASTICS ENTERPRISES LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 31-10-2013
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 31-10-2013
Assessment Year 2008-2009
Appeal Filed On 03-09-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH MUMBAI BEFORE SHRI H.L.KARWA PRESIDENT & SHRI N.K.BILLAIYA AM ITA N O. 5522 / MUM/ 20 1 2 ( ASSESSMENT YEAR : 20 0 8 - 20 0 9 ) DCIT - 8(2) MUMBAI - 400 020 VS. PARADISE PLASTICS ENTERPRISES LTD. 1203 HIGHLAND PARK LOKHANDWALA COMPLEX ANDHERI (W) - 400 053 PAN/GIR NO. : A A B C P 5932 G ( APPELLANT ) .. ( RESPONDENT ) /REVENUE BY : SHRI T.D.SINGH /ASSESSEE BY : SHRI VIJAY MEHTA & SHRI ANU J KISNADWALA DATE OF HEARING : 2 8 TH DATE OF PRONOUNCEMENT : 31 ST OCTOBER 2013 O R D E R PER N.K.BILLAIYA AM : THIS APPEAL BY THE REVENUE IS PREFERRED AGAINST THE ORDER OF THE CIT(A) - 17 MUMBAI DATED 28 - 6 - 2012 PERTAINING TO ASSESSMENT YEAR 20 0 8 - 200 9 . 2 . THE SOLE GRIEVAN CE OF THE REVENUE IS THAT THE CIT(A) ERRED IN DELETING THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT AMOUNTING TO RS. 69 95 807/ - . ITA NO. 5522 / 1 2 2 3 . THE ROOTS FOR LEVY OF PENALTY LIE IN THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) ON 23 - 12 - 2010 . DURING THE CO URSE OF THE SCRUTINY ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE ASSESSEE HAS SHOWN CAPITAL RESERVES OF RS. 6 17 45 872/ - . THE AO FURTHER NOTICED THAT THE ASSESSEE COMPANY HAS OFFERED LONG TERM CAPITAL GAINS OF RS. 4 63 77 857/ - . THE ASSESSEE WAS ASKED TO FILE T HE DETAILS OF CAPITAL RESERVES. ON PERUSING THE DETAILS THE AO OBSERVED THAT THE ASSESSEE HAS SHOWN SALE OF CAPITAL ASSETS DIRECTLY IN THE CAPITAL RESERVES. THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE SALE CONSIDERATION OF CAPITAL ASSETS HAVE BEEN DIRECTLY TAKEN TO CAPITAL RESERVES AND NOT CONSIDERED IT FOR THE COMPUTATION OF BOOK PROFIT UNDER SECTION 115JB OF THE ACT. THE ASSESSEE FURNISHED A REVISED CALCULATION OF BOOK PROFIT UNDER SECTION 115JB AFTER CONSIDERING THE CAPITAL RECEIPTS INTO TH E BOOK PROFIT. THE WORKING OF THE ASSESSEE COMPANY WAS ACCEPTED THOUGH PENAL PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT WAS INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME AS WELL AS CONCEALMENT OF PARTICULARS OF INCOME. THE ASSESSEE WAS SH OW CAUSED TO EXPLAIN AS TO WHY THE PENALTY SHOULD NOT BE LEVIED UNDER SECTION 271(1)(C) OF THE ACT FOR NOT SHOWING CAPITAL RECEIPT IN THE PROFIT AND LOSS ACCOUNT AS PER THE PROVISIONS OF THE COMPANIES ACT 1956. THE ASSESSEE EXPLAINED THAT IT HAD RELIED UP ON SIX JUDICIAL DECISIONS WHICH WERE IN FAVOUR OF THE ASSESSEE FOR DIRECTLY TAKING THE CAPITAL RECEIPTS TO THE CAPITAL RESERVES AND NOT ROUTING THROUGH THE PROFIT AND LOSS ACCOUNT. THE ASSESSEE FURTHER SUBMITTED ITA NO. 5522 / 1 2 3 THAT IF IT HAD CONTESTED IN QUANTUM APPEAL IT WOULD HAVE SUCCEEDED ON THE POINT OF CAPITAL GAINS. THEREFORE THERE IS NO QUESTION OF FILING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF THE PARTICULARS OF INCOME. THE AO DID NOT ACCEPT THE SUBMISSIONS OF THE ASSESSEE AND RELIED UPON TWO JUD ICIAL DECISIONS ONE OF MUMBAI BENCH OF THE TRIBUNAL AND OTHER OF HYDERABAD BENCH OF THE TRIBUNAL. THE AO WAS OF THE FIRM BELIEF THAT THE ASSESSEE BY NOT SHOWING THE CAPITAL RECEIPTS THROUGH ITS PROFIT AND LOSS ACCOUNT HAS VIOLATED THE PROVISIONS OF PART II AND PART III OF SCHEDULE VI OF THE COMPANIES ACT BECAUSE OF WHICH THE BOOK PROFITS WERE NOT COMPUTED IN ACCORDANCE WITH LAW. THE AO WENT ON TO LEVY PENALTY UNDER SECTION 271(1)(C) OF THE ACT AT THE RATE OF 100% AMOUNTING TO RS. 69 95 807/ - . 4 . AGGRIE VED BY ACTION OF THE AO THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A) AND REITERATED ITS STAND THAT BY NOT SHOWING THE CAPITAL RECEIPTS IN THE PROFIT AND LOSS ACCOUNT THE ASSESSEE STRONGLY BELIEVED IN THE DECISIONS IN FAVOUR OF THE ASSESSEE. AFTER CON SIDERING THE FACTS AND SUBMISSIONS OF THE ASSESSEE THE CIT(A) WAS CONVINCED THAT THIS IS NOT A FIT CASE FOR THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. NOW THE REVENUE IS IN APPEAL HERE BEFORE US. 5 . LEARNED DR STRONGLY SUPPORTED THE FINDING S OF THE AO. 6. PER CONTRA LEARNED COUNSEL FOR THE ASSESSEE REITERATED WHAT HAS BEEN SUBMITTED BEFORE THE AUTHORITIES BELOW. ITA NO. 5522 / 1 2 4 7 . WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE RELEVANT MATERIAL EVIDENCE S BROUGHT ON RECORD . IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS SHOWN SALE OF CAPITAL ASSETS DIRECTLY IN ITS CAPITAL RESERVE ACCOUNT. IT IS ALSO NOT IN DISPUTE THAT THIS ACTION OF THE ASSESSEE IS WELL SUPPORTED BY THE LEGAL DECISIONS ON THE BASIS OF WHICH THE CAPITAL RECEIPTS HAVE N OT BEEN CONSIDERED FOR COMPUTING THE PROFIT UNDER SECTION 115JB. THE ASSESSEE RELIED UPON THE FOLLOWING JUDICIAL DECISIONS : - I) KINETIC MOTOR CO. LTD. VS. DCIT ( 262ITR 330 ) ; II) ACIT VS. VIJAY FURNITURE MFG.CO.PVT. LTD ( ITANO. 7104/M/2005 ) (FB) ; III) ITO V. SANATAN TEXTRADE PVT. LTD. ( ITA NO. 1510/M/2002 ) ; IV) CIT VS. VIJAYSHREE FINANCE & INVESTMENT CO. P. LTD. 216 CTR 191 (MADRAS HIGH COURT) ; V) B JAMASJI MISTRY PVT. LTD. VS. ITO ITA ( NO.6987/6988/M/2004 ) (D BENCH) ; VI) ITO VS. RACHNA MERCHAN DISE (P) LTD. ( ITA NO. 1114/M/2002 ) (J - BENCH) AND VII) ITO VS. SWADEE CHEMICAL PVT. LTD. ( ITA 1446/M/2002 (I BENCH) THUS IT IS CLEAR THAT THE ASSESSEE WAS UNDER A BONAFIDE BELIEF BECAUSE OF THE AFORESAID JUDICIAL DECISIONS IN ITS FAVOUR. THE AO RELI ED UPON TWO DECISIONS FOR HIS ACTION. THIS ITSELF SHOWS THAT TWO VIEWS WERE POSSIBLE ON THE SAME SET OF FACTS. THAT BEING SO WE AGREE WITH THE FINDINGS OF THE LEARNED CIT(A) THAT THIS IS NOT A FIT CASE FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE A CT. WE ACCORDINGLY CONFIRM THE FINDINGS OF THE LEARNED CIT(A) AND DISMISS THE APPEAL FILED BY REVENUE. ITA NO. 5522 / 1 2 5 8 . RESULTANTLY THE APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 31/10 / 2013 . SD/ - ( ) ( H.L.KARWA ) SD/ - ( ) ( N.K.BILLAIYA ) / PRESIDENT / ACCOUNTANT MEMBER MUMBAI ; DATED : 31/10 / 2013 /PKM PS COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) MUMBAI. 4. / CIT 5. / DR ITAT MUMBAI 6. GUARD FILE. //TRUE COPY// / BY ORDER ( ASSTT. REGISTRAR) / ITAT MUMBAI