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Income Tax Appellate Tribunal, MUMBAI BENCHES “B”, MUMBAI
Before: Shri Joginder Singh, & Shri Ramit Kochar
आदेश / O R D E R Per Joginder Singh (Judicial Member) The assessee is aggrieved by the impugned order dated 23/01/2014 of the Ld. First Appellate Authority, Mumbai.
During hearing of this appeal, the ld. counsel for the assessee, Shri H.N. Motiwala contended that the quantum addition was deleted by the Tribunal vide order dated 19/08/2015 (ITA No.1605/Mum/2011) for Assessment year 2007-08. The ld. counsel for the assessee also produced the photocopy of the order. This factual matrix was not controverted by the ld. DR, Shri Neil Philiph..
2.1. We have considered the rival submissions and perused the material available on record. The facts in brief are that the assessee was following cash system of accounting regularly for the last more than ten years and duly showed in part-A-01, the relevant other information in the return. The assessee received Rs.58,24,275/- from M/s. Shemaroo Video Pvt. Ltd. for World Rights of Pictures Suhag and Laxman Rekha as advances. The period of agreement commence from 01/06/2007 and 21/12/2007 respectively and offered the amount for taxation in Assessment year 2008-09. The claim of the assessee is that the Right of Picture has commenced with the assessee from 01/06/2007 and 21/12/2007 and the same was shown as advance and note income during the previous year. The ld. Assessing Officer treated the amount as income during the previous year and brought the same to tax. Penalty proceedings under section 271(1)(c) were initiated/imposed.
2.2 On appeal before the Ld. Commissioner of Income Tax (Appeals), the view taken in the assessment order was affirmed. Consequent to this affirmation, the ld. Assessing Officer imposed penalty under section 271(1)(c) of the Act.
2.3 The assessee carried the quantum addition in appeal before the Tribunal, wherein the addition was deleted. The relevant portion from the order of the Tribunal (ITA No. 1605/MUM/2011, dated 19/08/2015) is reproduced hereunder for ready reference and analysis:- “2. In the above mentioned grounds, assessee raised legal issue relating to the issue of notice u/s 143(2) of the Act and the limitation of time thereof. Briefly stated relevant facts of the case necessary for adjudication of the legal issue includes that the assessee filed the return of income on 31.7.2007 u/s 139(1) of the Act for the assessment year 2007-2008 declaring the total income of Rs. 25,24,198/-. Notice u/s 143(2) of the Act was issued on 2.9.2008 ie after lapse of one year. The said notice was served on the assessee on 29.9.2008. As per the assessee, the due date for issue / service of notice is 31.7.2008 ie 12 months from the end of the month in which return was filed. However, the case of the Revenue is that in view of the amendment by the Finance Act, 2008 w.e.f. 1.4.2008, the due date for service of notice is 30.9.2008 ie 6 months from the end of the Financial Year in which the return was furnished. As per the Assessing Officer, the above referred amendment by the Finance Act, 2008 applies to the assessment year 2007-08 retrospectively. In this regard, assessee relied on the decision of the Special Bench in the case of Kuber Tobacco Products P. Ltd [28 SOT 292 (Del) (SB)]. The said Special Bench decision was approved by the Hon’ble Delhi High Court vide dated 5.3.2010. The CIT (A) did not appreciate the contention of the assesssee despite the assessee’s reliance on the said judgment. Of course, this judgment was delivered in the context of the provisions of section 292-BB of the Act. In the said judgment, it was held that the amended provisions do not apply to the assessment year 2007-2008, and the same apply prospectively from the assessment year 2008- 2009 onwards. Ignoring the said judgment of the High Court (supra), CIT (A) dismissed the assessee’s legal round. Contents of paras 2.5 and 2.6 of the impugned order are relevant in this regard. Aggrieved with the said decision of the CIT (A), assessee is in appeal before the Tribunal.
During the proceedings before us, Ld Counsel for the assessee filed a copy of the said judgment of the Hon’ble Delhi High Court in the case of Kuber Tobacco Products P. Ltd (supra) and submitted that the amendment aimed to the proviso to section 143(2) is prospective in nature, and it applies from the assessment year 2008-2009 onwards and not to the assessment year 2007-2008 under consideration.
We have heard both the parties and perused the orders of the Revenue Authorities as well as cited precedents and also the relevant material placed before us. After hearing both the parties, we find merit in the argument of the Ld Counsel that the amended provisions of section 143(2) of the Act apply prospectively ie from the AY 2008- 2009 onwards only. Therefore, this part of the legal ground, Ground no.1, raised by the assessee is allowed in her favour.” 2.4 In the aforesaid order, on quantum addition, the Tribunal deleted the disallowance/addition on the basis of which penalty was initiated/confirmed. Whiel coming to the conclusion, the Tribunal followed the decision from Hon'ble Deli High Court in the case of Kuber Tobaccoc Products P. Ltd. (ITA No. 116/2010 dated 05/03/2010, approving the decision of the Special Bench of the Tribunal [28 SOT 292 (Del.) (SB)] holding that proviso to section 143(2) is prospective in nature and applies from Assessment years 2008-09 onwards and not for Assessment year 2007-08. The Assessment year before us is also 2007-08. In view of this factual matrix, we are of the view that penalty imposed u/s 271(1)(c) will not survive. Our view find support from the decision in K.C. Builders vs ACIT (2004) 265 ITR 562 (SC) and the ratio laid down in CIT vs S.P. Viz, 176 ITR 76 (Patna). Even otherwise, when the quantum addition is deleted, there remains no basis at all for levying the penalty for concealment or furnishing inaccurate particulars. The penalty cannot stand on its legs when addition on the basis of which the penalty was imposed remains no more in existence, thus, the appeal of the assessee is allowed and the ld. Assessing Officer is directed to delete the penalty. Finally, the appeal of the assessee is allowed. This Order was pronounced in the open court in the presence of ld. representatives from both sides at the conclusion of the hearing on 03/11/2016.