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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Before: SHRI C.N.PRASAD, JM & SHRI RAJESH KUMAR, AM
आयकर अपीलीय अिधकरण, मुंबई "ायपीठ ‘जी’ मुंबई IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI "ी सी. एन. "साद, "ाियक सद", एवं "ी राजेश कुमार, लेखा सद", के सम" BEFORE SHRI C.N.PRASAD, JM AND SHRI RAJESH KUMAR, AM आयकर अपील सं/ I.T.A. No. 1379/Mum/2007 (िनधा"रण वष" / Assessment Year: 2000-01) बनाम/ ACIT (LTU) – 1 M/s. Gujarat Ambuja World Trade Centre, Cements Ltd. Vs. Centre – 1, 29th Floor, 122, Maker Chambers-III, Cuffe Parade, Nariman Point, Mumbai - 400005 Mumbai - 400021 "थायी लेखा सं./जीआइआर सं./PAN/GIR No. : AAACG0569P (अपीलाथ" /Appellant) (""थ" / Respondent) .. Revenue by: Shri Anand Mohan (CIT-DR) Assessee by: Shri Soumen Adak सुनवाई की तारीख / Date of Hearing: 12.01.2017 घोषणा की तारीख /Date of Pronouncement: 07.04.2017 आदेश / O R D E R PER C.N.PRASAD, JM:
This appeal is filed by the revenue against the order of the Commissioner of Income Tax (Appeals)-XXVII, Mumbai [hereinafter referred to as the “CIT(A)”] dated 22.11.2006 for the A.Y. 2000-01 in deleting the penalty u/s.271(1)(c) of the Income Tax Act, 1961 ( in short “the Act”) on various additions made by the Assessing Officer.
The revenue has raised the following grounds in its appeal:- A.Y.2000-01
“1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the penalty levied by the A.O. u/s.271(1)(c) of the Act in respect of disallowance of consultancy charges and service charges totally amounting to Rs.13,81,080/- in respect of which wrong claim was made by the assessee company. Therefore, there was failure on part of the assessee to substantiate the claim which tantamounts to furnishing of inaccurate particulars as envisaged in Explanation 1 to Section 271(1)(c) which results in levy of penalty.
On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the penalty levied by the A.O. u/s.271(1)(c) of the Act in respect of disallowance of premium paid for lease hold land amounting to Rs.22,37,951/- taking into submission of the assessee that claim of exclusion of amount of premium on leasehold land was based on the decision of Apex Court int eh case of Goton Lime Syndicate Vs. CIT(1966) 59 ITR 718 (SC) was prevailing at the time of filing of return of income according to which it was allowable deduction but subsequently decision rendered by Apex Court in the case of Aditya Minerals Pvt. Ltd. Vs. CIT (1999) 236 ITR 39 (SC) and R.B.Seth Moolchand Suganchand Vs. CIT, 86 ITR 647 which were against assessee company and assessee had not made a claim based upon a settled law in their favour and hence filed inaccurate particulars of income.
On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the penalty levied by the A.O. u/s.271(1)(c) on the addition on account of unutilized Modvat credit of Rs.2,20,57,408/- which was added by the A.O. to the declared income of the assessee relying on the jurisdictional High Court’s decision in the case of Melmould Corporation Vs. CIT, 202 ITR 789 (Bom), in respect of which wrong claim was made by the assessee thus attracting the provisions of Explanation 1 to Section 271(1)(c) resulting in levy of penalty.
On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the penalty on 2 A.Y.2000-01
disallowance of Employees Stock Option Scheme expenses of Rs.2,44,57,408/- representing proportionate charges disallowed by the A.O. stating to be a notional figure and contingent liability in respect of which the assessee made a wrong claim which it was not in a position to substantiate thus, attracting the penalty u/s.271(1)(c) as per Explanation 1. 5. Ion the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the penalty in respect of disallowance made by the A.O. u/s.14A amounting to Rs.50,000/- in respect of which the assessee made a wrong claim which it was not in a position to substantiate thereby attracting provisions of section 271(1)(c) as per Explanation 1. 6. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the penalty levied by the A.O. u/s.271(1)(c) of the Act in respect of non allowance of exclusion of export profit u/s.80HHC computed by applying the percentage of export turnover with the total turnover on the profit as per Profit and Loss Account for the purpose of computing book profit u/s.115JA amounting to Rs.2,50,53,532/- by making a wrong claim and assessee’s reliance on CBDT Circular 618 dated 21.02.1995 is totally misplaced as the said circular was in connection with the provisions of section 115JA which are materially different from the provisions of section 115JA. This wrong claim tantamount to concealment as envisaged in section 271(1)(c) read with Explanation 1 thereto. 7. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the penalty levied by the A.O. u/s.271(1)(c) on denial of exclusion of deduction u/s.81-IA on profits derived by an industrial undertaking located in an industrially backward state or district, in computing the books profit for the purpose of section 115JA of the Act amounting to Rs.6,36,49,650/-. The CIT(A) failed to appreciate the fact that assessee had made a patently wrong claim as assessee did not earn any income
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assessable u/s.28 from its unit in Himachal Pradesh and hence it amounts to concealment of income as envisaged in section 271(1)(c) read with Explanation 1 thereto.”
The learned counsel for the assessee at the outset submits that the additions made in the assessment order against which penalty was levied by the Assessing Officer in respect of the grounds raised by the revenue in ground nos.1, 3, 4, 6 and 8, the quantum addition was deleted by the Tribunal in ITA No.3359/Mum/2005 dated 21.10.2016. Copy of the order is placed on record. Therefore, the learned counsel submits that since the quantum addition is deleted in respect of the above said grounds the penalty will not survive. The learned DR agreed with the submissions of the learned counsel for the assessee that the Tribunal in quantum proceedings deleted the addition made in the assessment order on which penalty was levied and contested by the revenue in its appeal in ground numbers 1,3,4,6 and 8. 4. We have heard both the parties. Since the quantum additions are deleted by ITAT in the appeal against the quantum proceedings the penalty levied by the Assessing Officer in respect of those grounds will not survive. Hence ground numbers 1,3,4,6 and 8 of the revenues appeal before us are dismissed.
Coming to ground no.2, 5 and 7, the learned counsel for the assessee submits that ground no.2 raised by the department is in respect of the penalty deleted by the CIT(A) on the disallowance of 4 A.Y.2000-01
premium paid for lease hold land. The learned counsel submits that the penalty was levied on the similar disallowances while completing the assessments for the A.Ys. 1998-99 and 1999-2000 by the Assessing Officer and the co-ordinate bench of the Tribunal in ITA No.570/Mum/2007 and 1415/Mum/2007 dated 21.10.2016 deleted the penalty. Therefore, the learned counsel submits that since penalty is deleted on similar disallowance in earlier years the same may be following and penalty for this year also to be deleted.
We have perused the order of the co-ordinate bench in ITA No.570/Mum/2007 dated 21.10.2016 passed for the A.Y.1998-99. Tribunal in para 8 and 9 of the order deleted the penalty levied by the Assessing Officer by affirming the order of CIT(A) observing as under:-
“8. Ground No.2 relates with the deletion of penalty by Ld. CIT(A) in respect of disallowance of premium paid for lease hold land amounting to Rs.21,07,945/-. The ld. AR for the assessee argued that penalty was levied by AO as the disallowance was uphold by CIT(A) in quantum assessment. The penalty was deleted by ld. CIT(A) by following the decision of his predecessor in A.Y.1996- 97. IT was further argued that at the time of filing of return the issue was squarely covered by the decision of Kerala High Court in case of CIT Vs. H.M.T. (1993) 203 ITR 0820 (Kar.). The similar claim was allowed in A.Y.1997-98. The ld. AR for the assessee would argue that this issue is highly debatable and divergent views are available thus penalty order was rightly deleted by ld. CIT(A). The ld. AR for the assessee further relied upon the decision of CIT Vs. Reliance Petroproducts 322 ITR 158 (SC) and decision of Delhi High Court in CIT Vs. Nalwa Sons Investments Ltd. 327 ITR 543 (Del). On the other hand the ld DR for the revenue supported the order of AO and would argue that the order of Ld. CIT(A) be reversed and the order of AO may be restored.
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We have considered the rival contentions of the ld representatives of the parties and gone through the orders of the authorities below. At the time of filing of return the assessee claimed deduction on account of premium paid on lease hold land, the same was denied by AO. In appeal the disallowance was confirmed and thereafter penalty was levied. The assessee claimed that the time of filing of return of income the issue was covered in favour of assessee by the decision of Kerla High Court in CIT Vs. HMT (1993) 203 ITR 820. The similar claim was allowed in A.Y.1997-98 (page 76 to 79 of PB). It is settled law that where two legally sustainable views are available on the point and the assessee adopt one of the possible view in preference to the other, than it cannot be considered a case of concealment of income. The similar view was held in Uniflex Cables Ltd. Vs. DCIT (2012) 136 ITD 374 (Mum). Moreover, mere disallowance of claim would not automatically lead to draw a conclusion for concealment of income. Thus, keeping in view of peculiarity of the case, we do not find any illegality or infirmity in deleting the penalty levied by AO in respect of disallowance of premium paid for lease hold. Thus, this ground of appeal raised by Revenue has no force and the same is dismissed.” 7. Respectfully following the above said order we uphold the order of the CIT(A) in deleting the penalty on the disallowance of premium paid for lease hold for this assessment also.
Ground no.5 is relating to the deletion of penalty levied in respect of disallowance made u/s.14A of the Act. The learned counsel for the assessee submits that disallowance u/s.14A of the Act came to be made by operations of the provisions of section 14A and there is no concealment of income or furnishing of inaccurate particulars of such income by the assessee. Placing reliance on the decision of the Mumbai Bench in the case of Skill Infrastructure Ltd. Vs. ACIT
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(2013) 157 TTJ 565 (Mum), learned counsel submits that penalty was deleted on similar disallowance made under 14A of the Act.
The learned DR placed reliance on the penalty order.
Heard both the parties, perused the orders of the authorities below. The disallowance of Rs.50,000/-u/s.14A of the Act. came to be made by operations of provisions of section 14A of the Act even though it is the submission of the assessee that no expenditure was incurred for earning exempt income. Simply because there is difference in the income returned and income assessed and certain expenses were disallowed, it cannot be said that there is a concealment of income or furnishing inaccurate particulars of income. In the case of Skill Infrastructure Ltd. Vs. ACIT (supra), the Tribunal observed as under:-
“Out of two major amounts of disallowance, one was expenses of 30/- lakhs disallowed on adhoc basis. This amount cannot be basis for levy of penalty as it was adhoc disallowance. Therefore, penalty levied on this amount cannot be sustained. The other amount is disallowance under section 14A, even though assessee contended that no such disallowance was warranted. Be that as it may, the disallowance under section 14A was considered by the Hon’ble Supreme Court in the case of CIT Vs. Reliance Petro Products Ltd. 322 ITR 158, wherein furnishing of inaccurate particulars was examined and cancellation of penalty was upheld. Therefore, disallowance under section 14A also does not call for penalty keeping the principles laid down by the above judgement of the Hon’ble Supreme Court. The other one is disallowance of depreciation which also does not call for levy of penalty.”
In view of the above we hold that there is no concealment of income or furnishing of inaccurate particulars of such income. Thus
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we sustain the order of the CIT(A) in deleting the penalty levied for the disallowance made u/s.14A of the Act.
The last ground i.e. ground no.7 is in respect of deletion of penalty levied u/s.271(1)(c) of the Act on the addition made by the Assessing Officer in computing book profit u/s.115JA of the Act in respect of capital profits i.e. penalty was levied for non-inclusion of profit on sale of investments in computing the book profit. The learned counsel for the assessee submits that penalty levied on similar addition during the A.Y.1999-2000 was deleted by the CIT(A) and this was confirmed by the co-ordinate bench in ITA No.570/Mum/2007 dated 21.10.2016. The learned counsel referring to para 10 and 11 submits that the co-ordinate bench deleted the penalty. Therefore, we submits that the penalty levied for the assessment year under consideration on similar addition be deleted.
Learned DR relied on the penalty order passed u/s.271(1)(c) of the Act.
We have heard the rival submissions perused the orders of the authorities below. On identical circumstances, we find that the co- ordinate bench deleted the penalty i.e. in the A.Y.1998-99 on the addition made towards non-exclusion of profit on sale of investment in computing book profit u/s.115JA of the Act observing as under:-
“10. Ground No.5 is related with deletion of penalty for non- exclusion of profit on sale of investment in computing book
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profit. Ld. DR for the Revenue supported the order of AO and prayed that the penalty was deleted by ld. CIT(A) without any basis. Ld. AR of the assessee argued that the assesse made a claim in the return of income on the basis of decision of various Tribunal viz. Sutlej Cotton Mills Ltd. Vs. ACIT (1993) 45 ITD 22 (Cal), GKW Ltd. Vs. JCIT (2000) 74 ITD 61 (Cal) and ACIT Vs. North India Theaters P. Ltd. (1996) 133 CTR 326 (Del. TM). Ld. AR of the assessee further argued that and SLP No.29862/2011 on 03.07.2012. It is further argued that when a substantial question of law is admitted, it is certainly a debatable issue and in such circumstances penalty cannot be levied. 11. We have considered the rival contention of the parties and gone through the orders of authorities below. The AO levied penalty on addition made in the normal computation as well as in computation of book profit u/s.115JA. The ld. CIT(A) while considering this ground concluded that assessee lodged claim on the basis of various decisions of the Tribunal and the assessee’s claim for deduction based on certain legal contention could not be treated as a case of concealment of income within the meaning of section 271(1)(c) of the Act and deleted the penalty. It is settled legal position that where two legally sustainable views are possible and the assessee has followed one of such view in preference of the other the same cannot be considered as a case of concealment of income. Moreover, the issue is debatable one and as per our considered opinion, the findings of ld. CIT(A) does not require any further interference. In the result, appeal filed by the revenue is dismissed.”
Facts and circumstances being identical following the said order we affirm the order of the CIT(A) in deleting the penalty levied u/s.271(1)(c) of the Act on this issue of non-exclusion of profit on sale of investments while computing book profit u/s.115JA of the Act.
In the result, the appeal filed by the revenue is hereby Dismissed.
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Order pronounced in the open court on 7th April, 2017. (RAJESH KUMAR) (C.N.PRASAD) लेखा सद" / ACCOUNTANT MEMBER "ाियक सद"/JUDICIAL MEMBER मुंबई Mumbai; िदनांक Dated : 7th एि"ल, 2017 MP
आदेश की "ितिलिप अ"ेिषत/Copy of the Order forwarded to : अपीलाथ" / The Appellant 1. ""थ" / The Respondent. 2. आयकर आयु"(अपील) / The CIT(A)- 3. आयकर आयु" / CIT 4. िवभागीय "ितिनिध, आयकर अपीलीय अिधकरण, मुंबई / DR, ITAT, Mumbai 5. गाड" फाईल / Guard file. 6. आदेशानुसार/ BY ORDER, स"ािपत "ित //// उप/सहायक पंजीकार /(Dy./Asstt.