M/S OVERSEAS PLASTIC MOULDERS INDIA PVT LTD.,MUMBAI vs. ITO 10 (3)(2), MUMBAI

When the case was called for hearing neither the appellant assessee nor any of its authorized representatives appeared before us to assist the Bench in disposing off its appeal. There is no application for adjournment either. Accordingly, the Bench 2 Overseas Plastic Moulders India P. Ltd. was of the view to proceed with disposing off the present appeal ex–parte qua the appellant assessee after hearing the learned Departmental Authorities and on the basis of material available on record.

Facts in brief:– In the present case, the assessee during the year under consideration was engaged in the business of manufacturing, process, market, distribute and sell, deal in all kinds of plastic moulded products and providing storage, warehousing, etc. The return of income was filed by the assessee on 30th September 2008, declaring total income at ` 77,107. The Assessing Officer noticed from the Profit & Loss Account that the assessee credited rental income at ` 30 lakh, under the head “Other Income” and claimed expenditure of ` 29,22,893, resulting in business income at ` 77,107, which was offered to tax. During the course of assessment proceedings, the assessee was asked to explain as to why rental income received should not be taxed under the head "Income from House Property”. Further, in absence of business income during the year, the assessee company was asked to explain the justification for the allowability of expenditure debited to the Profit & Loss Account. The assessee vide letter dated 15th February 2013 submitted that the main business activity of the assessee is to carry on the business of providing storage, warehousing and the said services amount to a commercial activity and also within the main business objects of the assessee. Hence, income earned on provision of the said warehousing services would be characterized as income from business. The explanation of the assessee has been considered and found the same to be untenable by the Assessing Officer. He observed that the assessee is mainly into the business of trading of plastic moulded products. Further, the assessee has failed to establish as to why section 23 of the Act is not applicable in this case. The Assessing

The Assessing Officer also initiated penalty proceedings under section 271(1)(c) of the Act separately. The assessee being aggrieved by the penalty order so passed by the Assessing Officer, filed appeal before the first appellate authority for contesting the issue of penalty under section 271(1)(c) of the Act only. The quantum addition made by the Assessing Officer has not been challenged before the first appellate authority.

The learned CIT(A) upheld the order of the Assessing Officer levying penalty under section 271(1)(c) of the Act. Since there was no compliance from the assessee 4 Overseas Plastic Moulders India P. Ltd. side. He chose to dismiss the appeal for non-compliance and adjudicated on merits based on the findings of AO.

The learned Departmental Representative supported the order of the authorities below.

Considered the submissions of the learned Departmental Representative and perused the material on record. It was submitted before us that subsequently, AO has passed order giving effect to the order bearing dated 11.10.2017 to the ITAT ‘C’ Bench, Mumbai. In the above order, the AO has reduced the penalty amount to the extent of ₹5,42,937/- whereas in the present appeal, the impugned penalty amount is ₹6,30,000/-. We notice that Ld. CIT(A) has passed the order without there being any representation from assessee and without considering the fact that the Co-ordinate Bench has passed order giving certain relief to the assessee. The fact that the quantum appeal has no relevance to independently assess the applicability of penalty imposition. Therefore, we are remitting this issue back to the file of Ld. CIT(A) to adjudicate the issue afresh after giving proper opportunity of being heard to the assessee. Accordingly, the appeal filed by the assessee is allowed for statistical purposes.

In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on 29/09/2021. Sd/- Sd/- SAKTIJIT DEY S. RIFAUR RAHMAN JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 29/09/2021