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Income Tax Appellate Tribunal, B Bench, Mumbai
Before: Shri P K Bansal & Shri Pawan Singh
Per P.K. Bansal, Vice President
This appeal has been filed by the Revenue against the order of the CIT(A)-17, Mumbai dated 19.05.2014 for A.Y. 2008-09 by which the CIT(A) has deleted the penalty levied on the assessee under section 271(1)(c) on the addition of `132,58,59,023/- on account of surplus Passenger Service Fee.
The brief facts of the case are that the AO in this case initiated penalty proceedings under section 271(1)(c) in respect of the following additions made by him: - 1 Leave Encashment 1,37,82,831/- Surplus on collection of Passenger 2 132,58,59,023/- Services Fee (Security Component) 3 Disallowance u/s 40(a)(ia) 83,318/- Total disallowances (penalty initiated) which has 133,96,41,854/- been confirmed by the action of AO The AO levied a penalty of `46,00,00,000/- by observing as under: - M/s. Mumbai International Airport Pvt. Ltd. “14. In view of the above observation of Hon'ble Supreme Court and High Court, I hold that the assessee has filed the inaccurate particulars of income amounting to concealment of his income for A.Y. 2008-09. Therefore, it is a fit case for levy of penalty under section 271(1)(c) of the IT. Act. Accordingly, Penalty u/s.271(1)(c) is to be levied on the assessee.
The amount of income for which concealment/inaccurate particulars have been submitted is Rs. 133,96,41,854/-. The minimum penalty leviable on the amount of income concealed works out to Rs. 45,53,44,266/- and the maximum penalty leviable come to Rs.136,60,32,798/-. After considering all the facts, I levy a lumpsum penalty of Rs.46,00,00,000/- under section 271(l)(c) of the I.T. Act, 1961.” When the matter went before the CIT(A), the CIT(A) deleted the penalty levied by the AO vide his order dated 19.05.2014. Aggrieved, Revenue is in appeal before the Tribunal.
After hearing the rival submissions and going through the tax authorities below we noted that the addition of `137,82,831/- and `83,318/- in respect of leave encashment and disallowance under section 40(a)(ia) were deleted by the CIT(A) and confirmed the addition of `,132,58,59,203/- in respect of surplus on collection of passenger service fees (security component). We noted that this Tribunal in & 2760/Mum/2012 vide order dated 06.09.2016 restored this issue for the purpose of verification to the AO although they held in para 14.44 of its order that the said amount is not taxable as income in the hands of the assessee by holding as under: -
“14.44. Before parting with, we have also analysed the facts about utilization of the impugned amount. The Escrow Account maintained by the assessee is simply a pool created by the MOCA through assessee for meeting security expenses. Under these circumstances, if at all any income can be computed, that would be possible only if any surplus arises, which is not possible to happen since entire amount collected by Assessee Company is deposited in Escrow Account which is earmarked wholly and exclusively for meeting security expenses. There is no flexibility for using the funds elsewhere. If at all any amount is left unspent from this account, then, the same is to be transferred to the account of Airport Authority of India for meeting security expenses. We had directed the assessee as well as the Ld. CIT-DR to examine requisite facts and inform us whether there was surplus or deficit in the escrow account finally. The information provided by the Assessing Officer, through Ld. CIT-DR, vide his letter
M/s. Mumbai International Airport Pvt. Ltd. dated 06-09-2016 reveals that upto the assessment year 2013-14 though there was surplus in the said account, but from A.Y. 2014-15 onwards, there was huge deficit, meaning thereby, the expenditure was more than the amount of collection. As per the terms of SOP issued by MOCA, if ultimately there was some deficit, then it was required to be funded by Government of India, and if there was ever any surplus (i.e. unspent amount), it was to be transferred to the account of Airport Authority of India (AAI). Thus, viewed from this angle also, there was no question of there being any income in this exercise, much less, any income, which could be characterised as taxable income in the hands of the assessee company. Thus, we have no hesitation in holding that the aforesaid amount is not taxable as income in the hands of the assessee company. The AO is directed to recompute the income of the assessee accordingly. The AO has also the liberty to examine that no portion of amount collected by the assessee on account of PSF-SC is utilised by the assessee for its own purposes or for any purposes which are not permitted by MOCA/other competent authorities. In case any violation is done by the assessee in this regard, then the AO will be at his liberty to treat the amount so misappropriated as income of the assessee but to that extent only. Further, if any refund is received by the assessee on account of TDS deducted on this component, i.e. on PSF-SC, then the same shall also be deposited by the assessee in the Escrow Account, as was fairly agreed by the Ld. Counsel during the course of hearing before us, failing which it would be treated as income of the assessee, to that extent only. We direct accordingly. This ground is allowed subject to directions given above.” We also noted that subsequent to this the AO vide his order dated 04.07.2017 after giving effect to the Tribunal’s order deleted the said addition of `132,58,59,203/-. The ultimate fact is that all the additions in respect of which penalty under section 271(1)(c) were levied on the assessee stand deleted since all the additions stand deleted. Therefore, no penalty under section 271(1)(c) consequently can be levied on the assessee. We, therefore, do not find any illegality of infirmity in the order of the CIT(A) deleting the penalty levied by the AO.
In the result, the appeal filed by the Revenue stands dismissed.