DCIT vs M/S. Total Energies Marketing… | ITAT Mumbai 2023

Income Tax Appellate Tribunal, E BENCH, MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL "E" BENCH, MUMBAI SHRI B.R. BASKARAN, ACCOUNTANT MEMBER SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER Deputy Commissioner of Income Tax, Circle-3(3)(1), Mumbai, Room No. 609, Aaykar Bhavan, M.K. Road, Churchgate, Mumbai - 400020 …………… Appellant M/s Total Energies Marketing India Vs Private Limited, (Formerly known as M/s Total Oil India Pvt. Ltd.), 3rd Floor, The Leela Galleria, Andheri- Kurla Road, Andheri (East), Mumbai - 400059 [PAN:AAACE2175M] ……………. Respondent Appearance For the Appellant/Department : Shri P.D. Chogule For the Respondent/Assessee : Shri Ketan Ved Shri Abdul Kadir Jawadwala Date Conclusion of hearing : 09.10.2023 Pronouncement of order : 18.10.2023 O R D E R Per Rahul Chaudhary, Judicial Member: By way of the present appeal the Revenue has challenged the order, 1. dated 24/04/2023, passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘the CIT(A)’] for the Assessment Year 2010-11, whereby the Ld. CIT(A) had dismissed the appeal of the Assessee against the Penalty Order, passed under Section 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) levying the penalty of INR 5,12,67,712/-.

The Revenue has raised the following grounds of appeal: 2. "1. Whether on the facts and circumstances of the case, the Ld. CIT(A) is justified in holding that penalty levied u/s 271(1)(c) has become infructuous and in an implied manner holding that this penalty cannot be sustained in view of Hon’ble ITAT’s earlier order in dated 09/07/2019, deleting the quantum additions, when the department had filed an appeal against the said order of the Hon’ble ITAT before the Hon’ble High Court of Bombay which is pending for disposal.” The relevant facts in brief are that the assessment was made under 3. Section 143(3) of the Act vide assessment order, dated 30/03/2014, determining total income of INR 153,35,36,310/- under the normal provisions of the Act as against the returned income of INR 131,42,39,311/-. Penalty proceedings were also initiated against the Assessee under Section 271(1)(c) of the Act.

In appeal preferred by the CIT(A) against the assessment order, the 4. CIT(A) confirmed the additions/disallowances made by the Assessing Officer and dismissed the appeal vide order, dated 28/03/2016. Thereafter, penalty order was passed under Section 271(1)(c) of the Act on 30/03/2018 levying a penalty of INR 5,12,67,712/- passed under Section 271(1)(c) of the Act computed as under:

S.No. Particulars Amount (INR) 1 Disallowance of Demurrage Expenses under 2,59,99,105/- Section 40(a)(i) of the Act 2 Disallowance of License Charges of for 1,87,220/- purchase of software under Section 40(a)(i) of the Act 3 Disallowance of Software & EDP Expenses 5,62,002/- as capital in nature 2 4 Addition on account of mismatch of 3,407 contractual and professional fee as reflected in form 26AS and books of accounts 5 Denial of benefit of brought forward 12,08,31,751/- unabsorbed depreciation A Aggregate Amount 15,08,31,751/- B Tax on Aggregate Amount @ 30% plus 5,12,67,712/- applicable surcharge and cess C Penalty @ 100% Tax Amount 5,12,67,712/- The Assessee preferred appeal against the above penalty order 5. before the CIT(A). Thereafter, vide rectification, order dated 04/06/2018, passed under Section 154 of the Act, the penalty amount was revised downwards to INR 2,67,51,734/- after excluding the penalty of INR 12,08,31,751/- levied on account of denial of brought forward unabsorbed depreciation. Further, vide common order dated 09/07/2019, passed in cross-appeal for Assessment Year 2010-2011 [ITA No. 4300 & 4135/Mum/2016] dealing with quantum additions on merit, deleted the following additions confirmed by the CIT(A):

3 “6.3 On perusal of the documents submitted by the appellant, it was found that the ITAT I Bench, Mumbai (ITA No. 4300/M/2016) has already passed the order in favour of the appellant dated 09/07/2019 against assessment order 143 (3) of the Act. Accordingly, following the decision of the ITAT "I" Bench, Mumbai in the appellant's own case against the assessment order 143 (3) of the Act. 6.4 The present appeal against the penalty order u/s 271(1) (c) of the Act becomes infructuous and the same is accordingly dismissed as the penalty becomes infructuous since the ITAT "I" Bench, Mumbai (ITA No. 4300/M/2016) vide dated 09/07/2019 has allowed the appeal against 143(3) of the Act on all grounds.”

The Revenue is now in appeal before us.

The grievance of the Revenue is that the common order, dated 8. 09/07/2019, passed in cross-appeal for Assessment Year 2010-2011 [ITA No. 4300 & 4135/Mum/2016] by the Tribunal has not been accepted and the Revenue is in appeal before the Hon’ble Bombay High Court against the same, therefore, the CIT(A) was not justified in deciding the appeal of the Assessee on the basis of the same. While the contention advanced on behalf of the Assessee is that once quantum additions have been deleted, the question of levying penalty does not arise. Further, no penalty can be levied in case of mismatch of income of INR 3,407/-. Therefore, the grievance of the Revenue is without any basis.

We have considered the rival submissions and perused the material on record. It is not the case of the Revenue that the common order, dated 09/07/2019, passed by the Tribunal in cross-appeal for Assessment Year 2010-2011 [ITA No. 4300 & 4135/Mum/2016] has been stayed by the Hon’ble Bombay High Court. Since the aforesaid common order of the Tribunal continues to hold the field, in our view, it cannot be said that the CIT(A) committed an error in placing 4 reliance on the same while disposing the appeal of the Assessee. Further, we note that the CIT(A) has disposed off the appeal on the Assessee as being infructuous. Therefore, we do not find any merit in the ground raised by the Revenue. Ground No. 1 raised by the Revenue is dismissed.

DCIT, CIRCLE-3(3)(1), MUMBAI vs. M/S. TOTAL ENERGIES MARKETING INDIA P LTD. (FORMERLY KNOWN AS M/S. TOTAL OIL INDIA P LTD.), MUMBAI