TOPACK FIELD SERVICES P.LTD, MUMBAI v. ITO 10(2)(2), MUMBAI

ITA 6482/MUM/2011 | 2006-2007
Pronouncement Date: 09-07-2013 | Result: Allowed

Appeal Details

RSA Number 648219914 RSA 2011
Assessee PAN AABCT2765P
Bench Mumbai
Appeal Number ITA 6482/MUM/2011
Duration Of Justice 1 year(s) 9 month(s) 16 day(s)
Appellant TOPACK FIELD SERVICES P.LTD, MUMBAI
Respondent ITO 10(2)(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 09-07-2013
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted E
Tribunal Order Date 09-07-2013
Date Of Final Hearing 09-07-2013
Next Hearing Date 09-07-2013
Assessment Year 2006-2007
Appeal Filed On 23-09-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E MUMBAI . . . !' # $ BEFORE SHRI I.P. BANSAL JM AND SHRI N.K. BILLA IYA AM . / ITA NO.6482/MUM/2011 % % % % / ASSESSMENT YEAR 2006-07 M/S. TOPACK FIELD SERVICES PVT. LTD. 415 SWASTIK CHAMBERS SION TROMBAY ROAD CHEMBUR MUMBAI 400 071 / VS. THE ITO 10(2)(2) MUMBAI. & # ./ '( ./ PAN/GIR NO. : AABCT 2765P ( &) / APPELLANT ) .. ( *+&) / RESPONDENT ) &) / APPELLANT BY: SHRI PRAKASH PANDIT *+&) - / RESPONDENT BY : SHRI RAJENDRA KUMAR - .# / DATE OF HEARING : 09/07/2013 /0% - .# / DATE OF PRONOUNCEMENT : 09/07/2013 1 / O R D E R PER I.P.BANSAL J.M: THIS IS AN APPEAL FILED BY THE ASSESSEE. IT IS DI RECTED AGAINST THE ORDER DATED 18/07/2011 PASSED BY LD. CIT(A)-22 MUMBAI FO R THE ASSESSMENT YEAR 2006-07. THE GROUNDS OF APPEAL READ AS UNDER: 1. IN THE FACTS AND CIRCUMSTANCES F THE CASE AND IN LAW THE LEARNED CIT APPEALS ERRED IN CONFIRMING PENALTY OF RS. 387 815/- LEVIED BY THE A. 0. UNDER SECTION 271 (1) (C) OF THE INCOME TAX ACT 1961. 2. REASONS GIVEN BY THE CIT APPEALS FOR CONFIRMING THE PENALTY OF RS 3 87 815/- LEVIED BY THE A. 0. UNDER SECTION 27) (1) (C> OF TH E INCOME TAX ACT 1961 ARE WRONG INSUFFICIENT AND CONTRARY TO THE FACTS AND EVIDENC E ON RECORD . / ITA NO.6482/MUM/2011 % % % % / ASSESSMENT YEAR 2006-07 2 3. THE APPELLANT CRAVES LEAVE TO ADD AMEND ALTER MODIFY OR OMIT ANY OF THE AFORESAID GROUNDS OF APPEAL AS OCCASION MAY ARISE O F DEMAND. 2. THE ASSESSEE SOLD OFFICE PREMISES OWNED BY IT FO R A SUM OF RS.12.00 LACS. SINCE THE PREMISES WERE USED FOR THE PURPOSE OF BU SINESS SHORT TERM CAPITAL GAIN UNDER SECTION 50 WAS COMPUTED BY THE ASSESSEE ON THE BASIS OF SALE PRICE OF RS. 12.00 LACS. THE AO APPLIED SECTION 50C AND SUB STITUTED THE SALE VALUE WHICH WAS DETERMINED AT RS.14 64 500/- AND IN THIS MANNER SHORT TERM CAPITAL GAIN WAS COMPUTED AT RS.11 52 154/- IN PLACE OF SHORT T ERM CAPITAL GAIN COMPUTED BY THE ASSESSEE AT RS.8 87 654/-. THE ADDITION HAS B EEN CONFIRMED BY THE TRIBUNAL VIDE ITS ORDER DATED 28/11/2011 IN ITA NO.1464/MUM/ 2010 WITH THE FOLLOWING OBSERVATIONS: I HAVE PERUSED THE RECORDS AND CONSIDERED THE MAT TER CAREFULLY. I FIND THAT THE ISSUE RAISED IN THIS APPEAL IS COVERED BY THE DECIS ION OF SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF UNITED MARINES ACADEMY (130 ITD 113) IN WHICH IT HAS BEEN HELD THAT THE TWO DEEMING PROVISIONS OF SECTION 50 AND SOC OPERATE IN DIFFERENT FIELDS AND THAT THERE IS NO CONFLICT BETWEEN THE TWO PROVI SIONS. THE TRIBUNAL ALSO HELD THAT THERE WAS NO EXCLUSION OF ONE PROVISION FROM THE OP ERATION OF OTHER DEEMING PROVISION. IT WAS ACCORDINGLY HELD THAT THE PROVI SIONS OF SECTION 50C WOULD APPLY WHILE COMPUTING THE SHORT TERM CAPITAL GAIN U/S.50 OF THE I.T.ACT. RESPECTFULLY FOLLOWING THE DECISION OF THE SPECIAL BENCH (SUPRA) WE SEE NO INFIRMITY IN THE ORDER OF THE CIT(A) IN HOLDING THAT FOR THE COMPUTATION OF S HORT TERM CAPITAL GAIN U/S.50 OF THE I.T. ACT THE SALE PRICE HAS TO BE SUBSTITUTED BY TH E STAMP DUTY VALUE. THE ORDER OF THE LD. CIT(A) IS ACCORDINGLY UPHELD. 5. IN THE RESULT THE APPEAL OF THE ASSESSEE IS DIS MISSED. THE A.O HAS LEVIED PENALTY ON SUCH ADDITION VIDE I MPUGNED ORDER DATED 21/2/2011. BEFORE A.O THE ASSESSEE RELIED UPON THE DECISION OF CALCUTTA BENCH IN THE CASE OF PANCHIRAM NAHTA VS. JCIT 127 TTJ 128 IN WHICH IT HAS BEEN HELD THAT THE OFFICE PREMISES SOLD WAS A DEPRECIAB LE ASSET THEREFORE SECTION 50 WAS APPLICABLE AND AO WAS NOT JUSTIFIED IN ADOPTING STAMP DUTY VALUATION IN PLACE OF AMOUNT SHOWN IN THE SALE DEED. THUS THE A DDITION MADE BY AO ON THE BASIS OF STAMP DUTY VALUATION WAS DELETED. THE A.O DID NOT ACCEPT SUCH SUBMISSION OF THE ASSESSEE ON THE GROUND THAT ASSES SEES BONAFIDE BELIEF ON THE BASIS OF CALCUTTA ITAT DECISION CANNOT BE ACCEPTED AS ASSESSEE IS NOT A LAY PERSON AND WAS AVAILING SERVICES OF WELL QUALIFI ED PROFESSIONALS. IN THIS MANNER . / ITA NO.6482/MUM/2011 % % % % / ASSESSMENT YEAR 2006-07 3 AO HAS HELD THAT THE ASSESSEE HAS FILED INACCURATE PARTICULARS OF ITS INCOME AND IS LIABLE FOR CONCEALMENT AND PENALTY PAYABLE HAS B EEN COMPUTED BY THE AO @100% OF THE TAX EVADED AMOUNTING TO RS.3 87 815/- . 3. THE LEVY OF PENALTY WAS CONTESTED IN AN APPEAL F ILED BEFORE LD. CIT(A) AND LD. CIT(A) HAS CONFIRMED THE PENALTY BY WAY OF EX- PARTE ORDER ON MERITS. LD. CIT(A) HAS CONFIRMED THE PENALTY ON THE BASIS THAT ASSESSEE DID NOT BRING ON RECORD ANY DECISION TO SHOW THAT SECTION 50C COULD NOT BE APPLIED ON THE FACTS OF THE CASE . ACCORDING TO LD. CIT(A) NO SUCH DECISIO N EXISTED ON THE DATE OF FILING THE RETURN WHICH IN THE CASE OF ASSESSEE IS 27 TH MARCH 2008. ACCORDINGLY HE CONFIRMED THE ADDITION. THE ASSESSEE IS AGGRIEVED HENCE HAS FILED AFOREMENTIONED GROUNDS. 4. AFTER NARRATING THE FACTS IT WAS SUBMITTED BY LD . A.R THAT IT IS A CASE WHERE ALL REQUIRED PARTICULARS WERE FULLY AND TRULY DISCL OSED. THERE WAS NO CONCEALMENT ON THE PART OF THE ASSESSEE. THE ASSESSEE HAD BONA FIDE BELIEF THAT ON SALE OF DEPRECIABLE ASSET SECTION 50C WAS NOT APPLICABLE. THE ISSUE WAS DEBATABLE. THERE WAS ONE ORDER OF THE TRIBUNAL IN FAVOUR OF TH E ASSESSEE.. THERE BEING A DEBATE ON THE ISSUE SPECIAL BENCH WAS FORMED IN W HICH IT HAS BEEN HELD THAT SECTION 50C COULD BE APPLIED ON SALE OF DEPRECIABL E ASSETS ALSO. THUS IT WAS PLEADED BY AR THAT THE ISSUE WAS DEBATABLE ON WHI CH CONCEALMENT PENALTY COULD NOT BE LEVIED. 5. ON THE OTHER HAND LD. DR RELIED UPON THE ORDERS PASSED BY THE AO AND LD. CIT(A). 6. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTEN TIONS HAVE CAREFULLY CONSIDERED. IT IS NOT THE CASE OF REVENUE THAT FAC TS AND PARTICULARS WERE NOT FULLY AND TRULY DISCLOSED BY THE ASSESSEE BUT IT IS THE C ASE OF AO THAT ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF ITS INCOME. TH E DIFFERENCE IN THE SALE . / ITA NO.6482/MUM/2011 % % % % / ASSESSMENT YEAR 2006-07 4 CONSIDERATION IS NOT ACTUAL BUT IN RESPECT OF DEEMI NG PROVISION. ACCORDING TO THE DECISION OF CALCUTTA TRIBUNAL RENDERED IN THE CASE OF PANCHIRAM NAHTA (SUPRA) SECTION 50C COULD NOT BE APPLIED ON SALE OF DEPRECI ABLE ASSETS. THUS THERE COULD BE A BONAFIDE BELIEF OF THE ASSESSEE AND SUCH VIEW WAS POSSIBLE. LD. CIT(A) HAS HELD THAT ON THE DATE OF FILING THE RETURN SUCH DEC ISION DID NOT EXIST. HOWEVER IT IS NOT NECESSARY THAT ON THE DATE OF FILING THE R ETURN SUCH DECISION SHOULD EXIST. WHAT IS NECESSARY IS THAT THE VIEW TAKEN BY THE ASS ESSEE SHOULD BE A POSSIBLE VIEW AND IN THE DECISION RENDERED BY THE TRIBUNAL IN THE CASE OF PANCHIRAM NAHTA (SUPRA) SUCH VIEW HAS BEEN TAKEN. THEREF ORE BONAFIDE OF THE ASSESSEE IN NOT COMPUTING CAPITAL GAIN AS PER SECTION 50C CANNOT BE DOUBTED OR CANNOT BE SAID TO BE A VIEW ENTIRELY NOT SUSTAINABLE IN L AW. BY THE DECISION OF SPECIAL BENCH IN THE CASE OF ITO VS. UNITED MARINES ACADEMY (SUPRA) IT HAS BEEN MADE CLEAR THAT SECTION 50C COULD BE APPLIED ON THE SALE VALUE OF DEPRECIABLE ASSET. 6.1 ACCORDING TO THE DECISION OF HONBLE BOMBAY HIG H COURT DATED 24/6/2013 IN THE CASE OF CIT VS. MANSUK DYEING AND PRINTING M ILL 213-TOIL-524-HC- MUMBAI-IT IN ITA NO.113 OF 2008 IT HAS BEEN HE LD THAT MERELY MAKING A CLAIM WHICH IS FOUND TO BE NOT SUSTAINABLE WOULD NOT WARR ANT IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) . WHILE HOLDING SO THEIR LORDSHIPS HAVE FOLLOWED THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CI T VS. RELIANCE PETRO PRODUCTS LTD. (2010) TIOL-21-SC-IT. IN THE SAID CASE AN AM OUNT OF RS.2.63 CRORES BEING GOODWILL WAS HELD TO BE CHARGEABLE TO CAPITAL GAIN ON ACCOUNT OF THE FACT THAT THE SAID AMOUNT WAS DEBITED TO PARTNERS CAPITAL ACCO UNT DURING THE ASSESSMENT YEAR 1992-93 AND ON SUCH ADDITION PENALTY WAS LEVIE D. IT WAS THE CONTENTION OF THE ASSESSEE THAT EVEN IF THE CONTENTION THAT NO CAPITAL GAIN TAX ON ACCOUNT OF GOOD WILL IS PAYABLE IS NOT FOUND ACCEPTABLE ON ME RITS NO CONCEALMENT PENALTY CAN BE LEVIED AS THERE WAS NEITHER CONCEALMENT OF ANY INCOME NOR FURNISHING OF ANY INACCURATE PARTICULARS OF INCOME ON THE PART OF THE ASSESSEE. THE AMOUNT WAS NOT OFFERED TO TAX AFTER HAVING FULLY DISCLOSED ALL THE FACTS IN ITS RETURN OF . / ITA NO.6482/MUM/2011 % % % % / ASSESSMENT YEAR 2006-07 5 INCOME AND BALANCE SHEET WHICH WAS FILED BY THEM TO THE AO. ON THESE FACTS THEIR LORDSHIP HAVE OBSERVED AS UNDER: 9. ON FACTS WE FIND THAT THERE HAS BEEN NO CONCEA LMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME ON T HE PART OF THE RESPONDENT ASSESSEE IN FILING ITS RETURN OF INCOME. AT THE HIGHEST THE CLAIM MADE BY THE RESPONDENT ASSESSEE THAT THE AMOUNT ATTRIBUTABLE TO THE GOODWI LL AMOUNT WHICH WAS WRITTEN OFF IS NOT CHARGEABLE TO TAX WAS NOT ACCEPTED BY THE RE VENUE. IN SUCH CIRCUMSTANCES MERELY MAKING OF A CLAIM WHICH IS FOUND TO BE NOT S USTAINABLE AND WOULD NOT WARRANT IMPOSITION OF PENALTY UNDER SECTION 271 (1) (C) OF THE SAID ACT AS HELD BY THE SUPREME COURT IN THE MATTER OF CIT V/S. RELIANCE PE TRO PRODUCTS LTD. REPORTED IN 321 ITR 158 = (2010-TIOL-21-SC-IT). THE SINEQUANON FOR IMPOSITION OF PENALTY UNDER SECTION 271 (1)(C) OF THE SAID ACT IS CONCEALMENT O F INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME WHICH IS ADMITTEDLY NOT SO IN THIS CASE. MOREOVER THE VIEW TAKEN BY THE RESPONDENT ASSESSEE WAS A POSSIBLE VIE W AS THE TRIBUNAL BY ORDER DATED 26 OCTOBER 2006 IN QUANTUM APPEAL ACCEPTED TH E VIEW. 10. IN VIEW OF THE ABOVE FACTS THE ISSUE WITH REGA RD TO NONIMPOSITION OF PENALTY IN THE ABSENCE OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS STANDS CONCLUDED IN FAVOUR OF THE RESPONDENT ASSESSEE BY T HE DECISION OF THE SUPREME COURT IN THE MATTER OF RELIANCE PETRO PRODUCTS (SUP RA) WE SEE NO REASON TO ENTERTAIN THE PROPOSED QUESTION OF LAW. 11. ACCORDINGLY APPEAL IS DISMISSED WITH NO ORDER AS TO COSTS. IF THE FACTS OF THE PRESENT CASE ARE SEEN IN THE LI GHT OF THE AFOREMENTIONED DECISION OF HONBLE JURISDICTIONAL HIGH COURT IT CANNOT BE SAID THAT IT IS A FIT CASE WHERE LEVY OF CONCEALMENT PENALTY CAN BE HELD TO BE JUSTI FIED. THE ASSESSEE HAD DISCLOSED ALL NECESSARY PARTICULARS REQUIRED FOR T AKING AN APPROPRIATE VIEW BY THE DEPARTMENT. THE VIEW TAKEN BY THE ASSESSEE IS ALSO SUPPORTED BY THE DECISION OF THE TRIBUNAL IN THE CASE OF PANCHIRAM NAHTA (SUPRA ). THEREFORE WE HOLD THAT LD. CIT(A) HAS ERRED IN CONFIRMING THE LEVY OF PENALTY . WE DELETE THE SAME AND THE APPEAL FIELD BY THE ASSESSEE IS ALLOWED. 7. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 09/07/2013 1 - /0% # 3 45 09/07/2013 0 - 6 7 SD/- SD/- ( !' / N.K.BILLAIYA ) ( . . / I.P. BANSAL ) # / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; 4 DATED 08/07/2013 . / ITA NO.6482/MUM/2011 % % % % / ASSESSMENT YEAR 2006-07 6 1 1 1 1 - -- - *.89 *.89 *.89 *.89 :9%. :9%. :9%. :9%. / COPY OF THE ORDER FORWARDED TO : 1. &) / THE APPELLANT 2. *+&) / THE RESPONDENT. 3. ; ( ) / THE CIT(A)- 4. ; / CIT 5. 9<6 *. / DR ITAT MUMBAI 6. 6= > / GUARD FILE. 1 1 1 1 / BY ORDER +9. *. //TRUE COPY// ? ?? ? / @ @ @ @ ' ' ' ' (DY./ASSTT. REGISTRAR) / ITAT MUMBAI . . ./ VM SR. PS