MELODIOUS MOVIES,MUMBAI vs. ITO 11(1)2, MUMBAI

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ITA 6067/MUM/2013Status: DisposedITAT Mumbai13 September 2017AY 2003-043 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal noted that the quantum addition itself, which formed the basis for the penalty, had been deleted by a previous Tribunal order. Since the primary addition was removed, the penalty levied on it could not survive.

What were the facts?

The assessee appealed a penalty levied under Section 271(1)(c) of the Income Tax Act, which was confirmed by the CIT(A). The penalty was based on an addition of Rs. 50,23,942/- related to sundry creditors, disregarded under Section 41(1).

What were the issues?

Whether a penalty under Section 271(1)(c) can be sustained when the underlying addition has been deleted. The validity of disregarding sundry creditors under Section 41(1) was also a factor.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 41(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCHES “B”, MUMBAI

Before: Shri B.R. Baskaran&Shri Amarjit Singh

For Appellant: Shri Bhupendra Shah, Shri Suman Kumar (DR)
Hearing: 15.06.2017Pronounced: 13.09.2017

O R D E R

Per Amarjit Singh, Judicial Member

1.

The assessee has filed the present appeal against the order of the CIT(A) -3, Mumbai, dated 28.08.2013, pertaining to A.Y. 2003-04, confirming the penalty levied by the AO u/s. 271(1)(c) of the I.T.Act.

2.

The assessee has raised the following grounds of appeal:

“1 In the facts and circumstances of the case and in law, the Ld. AO erred in levying penalty u/s 271(1)(c) on addition of Rs.50,23,942/- by disregarding sundry creditors u/s 41(1). 2. In the facts and the circumstances of the case and also in law, the Ld. CIT(A) also erred in confirming the penalty merely on rejection of confirmation of creditors and due to non attendance of the sundry creditors. Relief Prayed: Your appellant respectfully submits that the following prayers be allowed in full.

2 A.Y. 2009-10 To delete the penalty u/s 271(1)(c) on addition of Rs.50,23,942/- related to Sundry Creditors. D General: The appellant reserve rights to add alter or delete any portion of this appeal before its conclusion. This appeal is filed in time and may please be allowed in full. A detailed paper book along with case laws will be submitted at the time of hearing.”

3.

We have heard both the parties and considered their submissions alongwith the orders of the authorities below. At the outset, we find that the assessee had filed an appeal before this Tribunal against the addition of `.50,23,942/- by disregarding sundry creditors u/s 41(1) of the Act from Shri Gyanchand Jain and the Tribunal vide its order dated 24.05.2017 in for A.Y. 2003- 04 (along with other appeals), has deleted the addition observing as under:

“7. We have examined the details and noticed that notice u/s. 143(2) of the Act became time barredon 31.08.2004 at the time when the search took place much later on 03.08.2006. Therefore, it follows that as on the date of search there was an assessment completed or processing of return of income of the assessee under section143(1) of the Act. Subsequently, the A.O. initiated proceedings under s.153A and in the assessment completed under s.143(3) r.w.s. 153A, theA.O. has brought to tax a sum of `10,00,000/- being the amount of gift received from Shri Gayanchand Jain without any incriminating material found during the course of search. Once this is the position the issue is clearly covered in favour of the assessee and against the Revenue by the decision of Hon’ble Bombay High Court in the case of Continental Warehousing Corporation (Nhava Sheva) Ltd. (supra). Respectfully, following the same and in the given said of facts, we are of the view that this gift received from Shri Gayanchand Jain for an amount of ` 10,00,000/- disclosed in the return of income as evidence by the capital account and which has not been abated, the amount of gift cannot be added. Accordingly, we reverse the orders of the CIT(A) as well as that of the AO and delete the addition in all these eleven appeals of the assessee.”

3 A.Y. 2009-10 4. Since the Tribunal has already deleted the quantum addition in the case of the assessee, the penalty levied by the AO does not survive. Thus, the penalty levied by the AO and confirmed by the CIT(A) is hereby deleted.

5.

In the result, the appeal is allowed.

Order pronounced in the open court on this day of 13th September 2017

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