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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Assessee by .. Nitish Patel, AR .. B.S. Bist, Sr. DR Revenue by .. Date of hearing 07-11-2016 Date of pronouncement .. 07-11-2016 O R D E R PER MAHAVIR SINGH, JM:
This appeal by the assessee is arising out of the order of CIT (A)-22, Mumbai in appeal No. CIT (A)-22/ITO-10(3)-(4)/IT-70/2013-14 dated 22-07-14. The Assessment was framed by ITO Ward 10(3)(4), Mumbai for the AY 2009-10 vide order dated 20-10-2011under section 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’). The penalty under dispute was levied by the ITO ward 10(3)(4) Mumbai u/s 271(1) (c) of the Act vide his order dated 22-03-2013.
The only issue in this appeal of assessee is against the order of CIT (A) confirming the levy of penalty by the Assessing Officer u/s 271 (1) (c) of the Act. At the outset learned Counsel for the assessee filed a copy of order of Tribunal in assessee’s case in MA No. 158/Mum/2016 arising out of wherein the issue on which penalty is levied in the present appeal in respect of taxing the amounts outstanding u/s 41(1) of the Act in respect of remission of liability amounting to Rs.1, 48, 43,395/-. The Learned Counsel for the assessee took us through the MA order dated 17-10-2016 wherein the Tribunal has allowed the claim of assessee vide Para 8 as under:-
“8. We have considered rival contentions and deliberated on the judicial pronouncements cited at bar by learned AR and DR in the context of factual matrix of instant case. We have also carefully gone through the Tribunal dated 24/01/2014 where in the Tribunal had confirmed the action of AO applying provisions of Section 41(1) on account of remission of liability. However, while deciding the issue the Tribunal has not considered the judicial pronouncements laid down by the Jurisdictional High Court in the case of Mahindra and Mahindra (supra) wherein it was held that waiver of loan liability does not amount to remission, therefore, cannot be added under Section 41(1) or Section 28 (iv). Similar view has been taken by Bombay High Court in case of Xylon Holdings Pvt. Ltd. ,(supra). Hon’ble Supreme Court in case of Saurashtra Kutch Stock Exchange Ltd., (supra) has held that non-consideration of decision of Jurisdictional High Court amounts to mistake apparent from record which can be rectified u/s. 254(2) of I.T. Act. However, in the order passed by Tribunal, the ratio laid down by jurisdictional High Court have not been considered which amounts to mistake apparent from record u/s. 254(2). Accordingly, we rectify the same and direct that remission of liability on capital account should not be treated as income under section 41(1) in so far as it is not on revenue account. Accordingly we hold that AO was not justified in bringing to tax net Rs.1,48,43,395 as remission of liability under Section 41(1) of the IT Act. AO is directed to delete the addition of Rs.1,48,43,395/-.” On query from the Bench, the learned Senior DR conceded the position. We find that the Tribunal has deleted the quantum addition and once quantum addition is deleted on which this penalty is levied, the penalty will not survive. Accordingly, we delete the penalty and allow this appeal of assessee.
In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 07-11-2016.