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Order u/s.254(1)of the Income-tax Act,1961(Act) लेखा सद�य सद�य,राजे�� राजे�� केकेकेके अनुसार अनुसार -Per Rajendra,AM: लेखा लेखा लेखा सद�य सद�य राजे�� राजे�� अनुसार अनुसार Challenging the order dated 16/08/2011 of CIT (A)-16,Mumbai the assessee has filed the present appeal.Assessee-company is engaged in the business of information technology enabled services called call centre service.Return of income was filed on 27/10/2004, declaring Loss of Rs.3.41 corrodes.A revised return was filed on 22/06/205,declaring Loss at Rs. 4.12 crores.The Assessing Officer(AO)completed the assessment u/s. 143 (3) on 22/12/2006 determining the income of the assessee at Rs.(-) 1.36 crores. While computing the assessment, the AO held that claim of the assessee with regard to project development expenses to the tune of Rs. 2.21 crores was not admissible. He disallowed and amount of Rs. 2.04 crores.The matter travelled up to the Tribunal.Vide its order dated 13/08/2010 (ITA/3173/Mumbai/2008,AY.2004-05),the Tribunal confirmed the order of the First Appellate Authority (FAA) and dismissed the appeal filed by the assessee.
2.The AO initiated penalty proceedings as per the provisions of section 271(1)(c) of the Act. Vide his order,dated 25/03/2009,he levied a penalty of Rs.73.29 lakhs for filing inaccurate particulars of income.Aggrieved by the order of the AO, the assessee preferred an appeal before the FAA.Before him it made elaborate submissions.
After considering the assessment order, penalty order and the submissions of the assessee, the FAA referred to the cases of Zoom Communication Private Ltd.(40 DTR 249) NathuLal
7979/M/11(04-05)- Aditya Birla Minacs Agarwal and Sons (150 ITR 292)and Durga Prasad More (82 ITR 540) and confirmed the levy of penalty.
3.During the course of hearing before us,the Authorised Representative (AR) stated that the Hon’ble Bombay High Court had admitted a substantial question of law with regard to the quantum appeal,that penalty would not survive after admission of question of law by the Hon’ble court. He referred to an order delivered by the Tribunal in one of the group entities i.e. in the case of Aditya Birla Nuvo Ltd. (ITA/796/Mumbai/2010,AY. 1993-94, dated 25/05/2016) and stated that identical issue had been deliberated upon by the Tribunal in that matter. He also relied upon the cases of Nayan Builders and Developers (Income Tax Appeal Number 415 of 2012) of the Hon’ble Bombay High Court and Liquid Investment and Trading Company (ITA 240 of 2009,dtd.05/10/2010 of the Hon’ble Delhi High Court.The Departmental Representative (DR) contended that Tribunal had upheld the order in the quantum proceedings, that the AO was justified in levying penalty.
4.We have heard the rival submissions and perused the material before us. We find that while deciding the quantum appeal the Tribunal had dismissed the Ground raised by the assessee with regard to project development expenses, that the Hon’ble Jurisdictional High Court has admitted a substantial question of law vide its order dated 07/12/2011 and it reads as under: “Whether on the facts and in the circumstances of the case and in law, the Tribunal in holding that the amount of Rs.2,04,30,000/-being business development expenses was not allowable.” The levy of penalty u/s. 271(1)(c),after admission of a substantial question of law by the Hon’ble High Court,has been dealt in the case of Aditya Birla Nuvo Ltd. (supra)as follow: “2. Brief facts of the case are that the assessee in the had claimed depreciation on Power Plant Install Rajshree Cement Ltd. and on the boiler it had claimed depreciation for full year at normal rate of 100% amounting to Rs. 6,52,24,546/-. AO disallowed the claim of depreciation for full year on the ground that boiler was not use for more than 180 days, accordingly allowed only 50% of the claim. The order of AO was confirmed by CIT(A) and subsequently by ITAT observing that boiler was not ready to use on that date.
3. After dismissal of the appeal of the assessee by ITAT, the assessee was served notice dated 25.03.1996 u/s. 274 r.w.s. 271(1)(c) for initiation of penalty. The assessee submitted its reply dated 19.08.2008 wherein the penalty was opposed and explained the background of the case. The explanation of assessee was not accepted by AO and the AO levied penalty of Rs. 33753700/- u/s. 271(1)(c) of the Act @ 100% of the amount of the tax sought to be evaded. Aggrieved by the order of AO assessee filed appeal before CIT(A), wherein it was contended that Hon’ble High Court has admitted the substantial question of law in respect of order passed by Tribunal pertaining to the 2
7979/M/11(04-05)- Aditya Birla Minacs ground related with the depreciation of boiler and also made submission on the merit of the case. The ld. CIT(A) after considering the contention of assessee hold as under: “I hold that the appellant had not made conscious efforts to conceal the particulars of its income and as such no malafide is involved on the part of the appellant in claiming full normal depreciation on the boiler. Hence, in given circumstances though the disallowance on the part of deprecation claimed by appellant is justified, but the penal action for concealment of income is held to be not justified. Accordingly, the penalty imposed for concealment u/s. 271(1)(c) is deleted.”
Aggrieved by the order of CIT(A), the Revenue has filed the present appeal and the assessee filed C.O. We have heard ld. DR for Revenue and AR for assessee and perused the material available on record. Ld. DR for Revenue argued that assessee was conscious since filing of return of income that depreciation on the boiler is not allowable and concealed the material date when the same was put to use. Ld. DR further argued that the disallowance was confirmed by CIT(A) as well as Co-ordinate Bench of ITAT. Ld. DR further relied upon the order of ITAT, Delhi in ACIT vs. M/s Khanna & Annandhanam reported vide [2013] 13 taxmann.com 94 (Delhi). On the other hand, ld. AR of assessee argued that assessee’s appeal before the Hon’ble High Court in quantum appeal is admitted vide order dated 16.09.2008. Hence, substantial question of law on which the disallowance was made has been admitted by the Hon’ble High Court and no penalty can be levied against the assessee. Ld. AR heavily relied upon the judgment of Hon’ble Delhi High Court in CIT vs. Liquid Investment & Trading Co. (ITA No. 240/09), order of Co-ordinate Bench of ITAT in ACIT vs. Aditya Birla Centre (ITA No. 5931/Mum/2010(T Mum) and judgment of Hon’ble jurisdictional High Court in CIT vs. Nayan Builders & Developer in ITA No. 415/2012.
We have considered the rival contentions of the parties and gone through the record of the case and the law cited by ld. representative of the parties. The law cited by ld. DR in ACIT vs. Khanna & Annandhanam is not applicable as the fact of this case is in difference from the case in hand. “In Khanna & Annandhanam the receipt of compensation was a revenue receipt and the assessee instead of crediting the amount in its P&L A/c credited the amount directly in the account of partners, therefore, the assessee tried to evade taxes by treating patent revenue receipt as capital receipt by crediting to partners’ account.”
The Hon’ble Bombay High Court while considering the almost identical ratio(grounds) held as under: “Having heard Mr Ahuja, learned counsel appearing on behalf of the Appellant, we find that this Appeal cannot be entertained as it does not raise any substantial question of law. The imposition of penalty was found not to be justified and the Appeal was allowed. As a proof that the penalty was debatable and arguable issue, the Tribunal referred to the order on Assessee’s Appeal in Quantum proceedings and the substantial questions of law which have been framed therein. We have also perused that order dated 27th September 2010 admitting Income Tax Appeal No.2368 of 2009. In our view, there was no case made out for imposition of penalty and the same was rightly set aside. The Appeal raises no substantial question of law, it is dismissed, No costs.” Further, the Hon’ble Delhi High Court while discussing the issue of penalty wherein substantial question of law framed has been admitted for consideration held as under: “Both the CIT(A) as well as the ITAT have set aside the penalty imposed by the Assessing Officer under Section 271(1)(c) of the Income Tax Act, 1961 on the ground that the issue of deduction under Section 14A of the Act was a debatable issue. We may also note that against the quantum assessment where under deduction under Section 14A of the Act was prescribed to the assessee, the assessee has preferred an appeal in this Court under Section260A of the Act which has also been admitted and substantial question of law framed. This itself shows that the issue is debatable. For these reasons, we are of the opinion that no question of law arises in the present case.”
Now coming to the facts of the present case. It is not in dispute in the plea of assessee that a substantial question of law has been admitted by Hon’ble jurisdictional High Court on quantum 3
7979/M/11(04-05)- Aditya Birla Minacs