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Income Tax Appellate Tribunal, BENCH “D”, MUMBAI
Before: SHRI B.R. BASKARAN & SHRI PAWAN SINGH
Revenue by : Shri Naresh Kumar (AR) Assessee by : Capt. Prasad S. Arya (Sr. DR) Date of hearing : 04.07.2016 Date of Pronouncement : 08.07.2016 O R D E R PER PAWAN SINGH, JM: 1. These two appeals filed by assessee against the order of CIT(A)-16, Mumbai dated 23.12.2010 and 16.10.2012 for Assessment Year (AY) 2006-07. Both the appeals were heard together and are being decided by common order. is filed against the confirmation of disallowance of loss on account of flood in quantum assessment and Appeal against the confirmation of penalty levied u/s. 271(1)(c) of the Act. 2. First we shall take up the assessee’s appeal ITA No 1680/M/2011, wherein the assessee has raised only one ground of appeal that CIT(A) has erred in confirming the order of Assessing Officer (AO) disallowing the loss on account of flood of Rs. 83,89,000/-
3. Brief facts of the case are that assessee filed return of income on 27.11.2006 for relevant AY, declaring a loss of Rs 1,35,97,751/-. The return of income was selected for scrutiny. While framing assessment, the AO noted that in the Notes of account assessee has stated that it had suffered a loss on account of flooding of its godown wherein raw-material as well as finished goods were stored and a loss of Rs. 83.89 lacs changed to revenue. AO asked the assessee to submit the detail of loss along with the evidences. The assessee filed its reply and submitted the details of insurance claim filed before United Insurance Co. Ltd along with the copy of application filed before Consumer Dispute Redressal Commission. After considering the documentary evidences furnished before AO, the AO disallowed the claim of assessee on the basis of letter dated 27/6/2006 issued by United India Insurance Company Ltd, wherein the claim of assessee was rejected on the grounds that the evidences produced by the assessee were contradicting to each other. Aggrieved by the order of AO the assessee filed appeal before CIT(A), however, the same was dismissed on the ground that the claim of assessee is premature. Thus the present appeal is filed before us.
4. We have heard Ld. AR of assessee and DR for revenue and perused the material available on record. Ld AR of assessee argued that assessee submitted the Audited Account which is admissible in evidence. The Ld. CIT (A) grossly erred in holding that the claim of assessee is premature or the same cannot be allowed till attains finality. AR for assessee further relied on the decision of Patna High Court in Motilal Jethumal vs. CIT (1947) 15 ITR 0155, decision of Bombay High Court in Pohoolmal Brothers vs. CIT reported in 34 ITR 0064 and Judgment of Hon’ble Apex Court in CIT vs.
S.N.A.S.A Annamalai Chettiar (1972)86 ITR 0607. DR for revenue argued that the assessee has not filed any documentary evidence to substantiate his claim either before AO or CIT(A). Ld DR further for revenue further supported the order of authorities below.
We have considered the rival contention of the parties and perused the material available on record. The AO disallowed the claim of assessee only on the ground that the Insurance Co. rejected the claim of assessee. The CIT (A) while considering the claim instead of giving any finding of fact whether the claim is allowable or not, held that the claim is premature. The CIT (A) has not given any finding, if the assessee substantiated his claim by documentary or other corroborative evidence or not. The finding of AO is influenced by the order of rejection of insurance claim by United insurance Company. The rejection of claim by insurance company is pending adjudication before the Consumer Dispute Redressal Commission. In our opinion the order of AO is not correct. The AO has not investigated the claim of assessee independently. Considering the fact of the present case, we deem it appropriate to restore the present case to the file of AO to reconsider the claim of assessee vis-à-vis the evidence furnished by assessee and pass the order afresh in accordance with law. With these observations, the present appeal is allowed for statistical purpose.
On perusal of the appeal, we find that the present appeal is filed two days beyond the prescribed period of limitation; the appeal is accompanied with application for condonation of delay and affidavit of Sh. Manoj Aggarwal, Director of the Assessee Company. In the affidavit it is disclosed that the Accountant of assessee was sick, and availed leave from his office, thus the appeal could not be filed within the prescribed period limitation. Considering the fact explained in the affidavit, the delay of two days in filing the appeal is condoned.
The present appeal filed by assessee against the confirmation of order of penalty levied u/s 271(1)(c) of the Act. The AO levied penalty for furnishing inaccurate particulars of income in respect of claim for loss to assessee due to flood in godown wherein raw-material and finished goods stored. As in the appeal of quantum assessment, we have restored the appeal of the assessee to the file of AO for fresh consideration, thus, in view of the order passed in quantum assessment the penalty levied u/s. 271(1)(c) of the Act does not survive.
The coordinate bench of this tribunal in National Securities Depositories Ltd v/s. ACIT in while considering the ratio “If the addition of income in respect of which penalty is imposed have been disapproved by the tribunal on merit and restored to the file of AO or CIT(A), still penalty proceedings would survive, the answer was in negative. The coordinate bench of this tribunal made the following observation:
“once the additions to income in respect of which concealment penalty is imposed, have been disapproved by the Tribunal on merits and restored to the file of assessing officer or the CIT(A), as the case may be, for fresh consideration, the very foundation of penalty ceased to exist.”