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Income Tax Appellate Tribunal, “I” BENCH, MUMBAI
Before: SHRI R.C. SHARMA, AM & SHRI MAHAVIR SINGH, JM
PER MAHAVIR SINGH, JM: Both these appeals by assessee are arising out of common order of CIT(A)-6, Mumbai vide Appeal Nos.CIT(A)-6/IT.55&56/Rg.2(3)/12-13 dated 16.08.2013. Assessments were framed by Addl.CIT, Special Range-15, Mumbai and Asst. CIT, Circle-2(3), Mumbai u/s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for Assessment Years 1998- 99 and 1999-2000 vide their separate orders dated 19.03.2001 and 31.01.2002 respectively. Penalties under dispute were levied by ACIT
2 ITA No. 6756&6620/Mum/2013 M/s. Indusind Bank Limited (OSD), Circle-2(3), Mumbai u/s. 271(1)(c) of the Act vide his different orders both dated 24.09.2012.
The only issue in these two appeals of assessee is against different orders of CIT(A)-6, Mumbai confirming the action of the Assessing Officer levying penalty under section 271(1)(c) of the Act. For this the issue has raised identically worded ground in these two appeals. For the sake of clarity and brevity, we are reproducing the ground as raised in ITA No. 6756/Mum/2013 for A.Y. 1998-99 as under: -
“On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming levy of penalty of Rs.9,72,47,434/- without appreciating the fact that the Appellant had neither concealed particulars of income nor furnished inaccurate particulars of income.” 3. Brief facts in these assessment years, i.e. 1998-99 and 1999-2000 are that the AO, while framing assessments under section 143(3) of the Act, disallowed the claim of depreciation on leased assets for the detailed reasons stated in the assessment orders. According to the learned counsel of the assessee, Shri H.P. Mahajani, in quantum, the matter is pending before the Hon'ble Bombay High Court and the Hon'ble Bombay High Court had admitted the substantial question of law on the above additions in both years. The learned counsel of the assessee, in the paper book, filed copy of the High Court order admitting the appeal for A.Y. 1998-99 and A.Y. 1999-2000 at pages 128 to 131 of the paper book. The Hon'ble Bombay High Court in Income Tax Appeal No. 708 of 2012 has admitted the substantial question of law vide order dated 18.03.2013 by observing as under: - “Heard, Admit on the following substantial questions of law. a) Whether on the facts and in the circumstances of the case and in law, the Tribunal’s conclusion that the lease agreement dated 4/9/1997 is a finance lease can be upheld both in fact and in law?
3 ITA No. 6756&6620/Mum/2013 M/s. Indusind Bank Limited b) Whether on the facts and in the circumstances of the case and in law, the Tribunal’s finding that the appellant was not entitled to depreciation under section 32 of the Act is sustainable? 2. Whether on the facts and in the circumstances of the case and in law, the Tribunal is right in holding that in a finance lease the lessee is the owner of the leased asset and not the lessor and hence only the lessee is entitled to depreciation under Section 32 of the Act? 2. To be head along with the Income Tax Appeal No. 760/2012.” 4. The learned counsel of the assessee also relied upon the judgment of the Hon'ble Bombay High Court in assessee’s own case in CIT vs. Indusind Bank Ltd. in Income Tax Appeal No. 1293 of 2012 wherein the Hon'ble High Court has accepted the proposition that wherever substantial question of law is admitted, the Tribunal was right in deleting the penalty levied by AO on disallowance of depreciation on lease transactions. The Hon'ble High Court, vide order dated 24.09.2014 held as under: - “2] With their assistance, we have gone through the concurrent findings on the point of deletion of penalty. In para 5.2 of the order of the Commissioner of Income Tax (Appeals), it has been held that there is disallowance of depreciation made by the Assessing Officer in the assessment order for the assessment year in question, namely, 200102. That is with reference to the lease transactions entered by the Assessee during the assessment year 199596. The claim that these are genuine transactions and made by the Assessee was not accepted by the Revenue. However, the Assessee persisted and claimed depreciation in the assessment year in question as well. The Commissioner as also the Tribunal found that there is no concealment of particulars of income nor furnishing of inaccurate particulars of income for the assessment year. 3] The argument of Mr. Vimal Gupta is that when such was the stand of the department, the Assessee approached the Settlement Commission during some assessment years and accepted the order of the Settlement Commission. However, in the present assessment year, it raises the very claim and, therefore, the Commissioner's findings could not have been endorsed by the Tribunal and this is a substantial question of law particularly when it failed to assign independent reasons of its own. 4] We do not find any merit in this contention because in the given facts the only conclusion that has been reached is that all particulars were available with the department/Revenue. There was no concealment nor the particulars have been termed as inaccurate and for the subject assessment year. It is on these findings that the penalty has been deleted. Pertinently, it has been deleted also Qua other claims but the Revenue raised deletion of penalty on lease transaction as the only substantial question of law. For all these reasons, we do not find that the Tribunal's order is either perverse or
4 ITA No. 6756&6620/Mum/2013 M/s. Indusind Bank Limited vitiated by any error of law apparent on the face of the record. There is no merit in the Appeal. It is, accordingly, dismissed. No costs.” Similarly, the Hon'ble Delhi High Court in CIT vs. Liquid Investment and Trading Co. in ITA No. 240 of 2009 dated 04.10.2010 has laid down a similar proposition by observing 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 datable 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 section 260A 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.” 5. On the other hand, the Ld. CIT, DR Shri B.C.S. Naik filed written notes on the arguments taken up by the department dated 22.03.2016, wherein he relied on the decision of Hon’ble Delhi High Court in the case of CIT Vs. Splender Construction 352 ITR 588 (Del.). According to him, this issue where quantum proceedings have been considered by Hon’ble High Court and substantial question of law has been framed, it itself does not give rise to the facts that the issue is debatable. He referred to para 10 of Hon’ble High Court’s judgment, which reads as under: “10. The issue was not debatable, as held by the Tribunal in the impugned order. No doubt, appeal was admitted. However, the Tribunal has glossed over a very important and fundamental fact. In quantum proceedings, appeal filed by the assessee i.e. ITA 662/2009 came up for admission on 16th September, 2009. On the same date, appeal was admitted, arguments heard and orders were dictated in the Court dismissing the appeal there and then. In this factual backdrop, when order of the Assessing Officer in quantum proceedings was sustained by all successive authorities and this court also dismissed the appeal at the admission stage, albeit after admitting the same, it cannot be said that the issue was debatable.”
He also relied on the decision of Hon’ble Gujarat High Court in the case of Dharamshi B. Shah 51 Taxmann.com 274 wherein it was held that the penalty u/s. 271(1)(c) of the Act cannot be deleted on the sole ground of
5 ITA No. 6756&6620/Mum/2013 M/s. Indusind Bank Limited admission of assessee’s appeal and framing of substantial question of law by the Hon’ble High Court. Hon’ble High Court held as under:
“8. Identical question came to be considered by the Division Bench of this Court in Tax Appeal No.606/23010 and in paragraph 10 to 13 the Division Bench of this Court has observed as under and has quashed and set aside the order of the tribunal deleting the penalty on the aforesaid ground and has remanded the matter to the tribunal to consider the appeal afresh in accordance with law and on its own merits.
"10. Having, thus, heard learned counsel for the parties, we reiterate that the sole ground on which the Tribunal deleted the penalty was that with respect to the quantum additions, the assessee had approached the High Court and High Court had admitted the appeal framing substantial questions of law for consideration. In view of the Tribunal, this would indicate that the issue was debatable and that therefore, no penalty under Section 271(1)(c) could be imposed.
We are of the opinion that the Tribunal erred in deleting the penalty on this sole ground. Admission of a Tax Appeal by the High Court, in majority cases, is ex- parte and without recording even prima facie reasons. Whether ex-parte or after by-parte hearing, unless some other intention clearly emerges from the order itself, admission of a Tax Appeal by the High Court only indicates the Court's opinion that the issue presented before it required further consideration. It is an indication of the opinion of the High Court that there is a prima facie case made out and questions are required to be O/TAXAP/189/2014 JUDGMENT decided after admission. Mere admission of an appeal by the High Court cannot without there being anything further, be an indication that the issue is debatable one so as to delete the penalty under Section 271(1)(c) of the Act even if there are independent grounds and reasons to believe that the assessee's case would fall under the mischief envisaged in the Clause (c) of Sub-Section (1) of Section 271 of the Act. In other words, unless there is any indication in the order of admission passed by the High Court simply because the Tax Appeal is admitted, would give rise to the presumption that the issue is debatable and that therefore, penalty should be deleted.
This is not to suggest that no such intention can be gathered from the order of Court even if so expressed either explicitly or in implied terms. This is also not to suggest that in no case, admission of a Tax Appeal would be a relevant factor for the purpose of deciding validity of a penalty order. This is only to put the record straight insofar as the opinion that the Tribunal as expressed in the present impugned order viz. that upon mere admission of a Tax Appeal on quantum additions, is an indication that the issue is debatable one and that therefore, penalty should automatically be deleted without any further reasons or grounds emerging from the record.
6 ITA No. 6756&6620/Mum/2013 M/s. Indusind Bank Limited 13. This is precisely what has been done by the Tribunal in the present case. Order of the Tribunal, therefore, cannot be sustained. Question framed is answered in favour of the Revenue and against the assessee. Order of the Tribunal is reversed. Since apparently the assessee had raised other contentions also in support of the appeal before the Tribunal, the proceedings are remanded before the Tribunal for fresh consideration and disposal in accordance with law. Tax Appeal is disposed of accordingly."
In view of these case laws the Ld. CIT, DR stated that the penalty imposed by AO be not deleted solely on the basis that the assessee is able to demonstrate that there is substantial question of law admitted by Hon’ble High Court.
We have heard both sides and gone through the facts and circumstances of the case. We find that the only issue is of disallowance of depreciation of lease transactions, on which the AO has levied penalty and CIT(A) confirmed. On this issue the Hon'ble Bombay High Court, in quantum, has admitted the substantial question of law as noted above. In view of these facts, we find that the issue is squarely covered by the decision of the jurisdictional High Court in assessee’s own case cited supra and also of Hon'ble Delhi High Court in the case of Liquid Investment and Trading Co., supra, wherein it is held that whenever the assessee had preferred appeal in Hon'ble High Court under section 260A of the Act, which has been admitted and substantial question of law frames, that itself shows that the issue is debatable and for that reason the penalty under section 271(1)(c) of the Act cannot be levied. We are of the view that Hon’ble Jurisdictional High Court has clearly laid down the principle that once Hon’ble High Court admits the substantial question of law in quantum appeal of the assessee, that itself shows that the issue is debatable and for that reason penalty u/s. 271(1)(c) of the Act cannot be levied. As the issue is squarely covered by jurisdictional High Court and respectfully following the same and Hon'ble Delhi High Court, we delete the penalty and allow the appeals of the assessee.
7 ITA No. 6756&6620/Mum/2013 M/s. Indusind Bank Limited 7. In the result, appeals of assessee are allowed.
Order pronounced in the open court on 1st April, 2016.
Sd/- Sd/- (R.C. SHARMA) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai, Dated April, 2016 Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. The CIT(A)-6, Mumbai 4. The CIT-II, Mumbai 5. DR, “I” Bench ITAT, Mumbai 6. Guard file. By Order स�यािपत �ित //True Copy// (Asstt. Registrar) ITAT, Mumbai n.p.
8 ITA No. 6756&6620/Mum/2013 M/s. Indusind Bank Limited IN THE INCOME TAX APPELLATE TRIBUNAL “I” BENCH, MUMBAI
BEFORE SHRI R.C. SHARMA, AM AND SHRI MAHAVIR SINGH, JM ITA Nos. 6756 & 6620/Mum/2013 (Assessment Years: 1998-99 & 1999-2000)
M/s. Indusind Bank Limited 8th Floor, Tower One, One Indiabulls Centre 841, Senapati Bapat Marg Appellant Elphinstone Road (W), Mumbai 400013
Vs. Asstt. Commissioner of Income (Range - 2(3) Respondent Aayakar Bhavan, M.K. Road Mumbai 400020 PAN - AAACI1314G Appellant by: Shri H.P. Mahajani Respondent by: Shri B.C.S. Naik Date of Hearing : 22.03.2016 Date of Pronouncement : 01.04.2016
CORRIGENDUM
PER MAHAVIR SINGH, JM: In the above two appeals, there exist some inadvertent mistakes which are rectified as under:
Instead of the original cause title of the order, newly corrected cause title of the order should be read as under:
“IN THE INCOME TAX APPELLATE TRIBUNAL “I” BENCH, MUMBAI
BEFORE SHRI R.C. SHARMA, AM
9 ITA No. 6756&6620/Mum/2013 M/s. Indusind Bank Limited AND SHRI MAHAVIR SINGH, JM ITA No. 6756/Mum/2013 (Assessment Year: 1998-99)
M/s. Indusind Bank Limited 8th Floor, Tower One, One Indiabulls Centre 841, Senapati Bapat Marg Appellant Elphinstone Road (W), Mumbai 400013
Vs. Asstt. Commissioner of Income (Range - 2(3) Respondent Aayakar Bhavan, M.K. Road Mumbai 400020 PAN - AAACI1314G And
ITA No.6620/Mum/2013 (Assessment Year: 1999-2000)
Asstt. Commissioner of Income Appellant (Range - 2(3) Aayakar Bhavan, M.K. Road Mumbai 400020 Vs.
M/s. Indusind Bank Limited Respondent 8th Floor, Tower One, One Indiabulls Centre 841, Senapati Bapat Marg Elphinstone Road (W), Mumbai 400013
Assessee by: Shri H.P. Mahajani Revenue by: Shri B.C.S. Naik
Date of Hearing : 22.03.2016 Date of Pronouncement : 01.04.2016”
10 ITA No. 6756&6620/Mum/2013 M/s. Indusind Bank Limited 1. The original first para of the order reads as under:
“Both these appeals by assessee are arising out of common order of CIT(A)-6, Mumbai vide Appeal Nos.CIT(A)-6/IT.55&56/Rg.2(3)/12-13 dated 16.08.2013. Assessments were framed by Addl.CIT, Special Range-15, Mumbai and Asst. CIT, Circle-2(3), Mumbai u/s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for Assessment Years 1998-99 and 1999-2000 vide their separate orders dated 19.03.2001 and 31.01.2002 respectively. Penalties under dispute were levied by ACIT (OSD), Circle-2(3), Mumbai u/s. 271(1)(c) of the Act vide his different orders both dated 24.09.2012.” In place of the first para of original order, first para of the order should be read as under:
“These cross appeals by assessee and revenue are arising out of common order of CIT(A)-6, Mumbai vide Appeal Nos.CIT(A)- 6/IT.55&56/Rg.2(3)/12-13 dated 16.08.2013. Assessments were framed by Addl.CIT, Special Range-15, Mumbai and Asst. CIT, Circle- 2(3), Mumbai u/s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for Assessment Years 1998-99 and 1999- 2000 vide their separate orders dated 19.03.2001 and 31.01.2002 respectively. Penalties under dispute were levied by ACIT (OSD), Circle-2(3), Mumbai u/s. 271(1)(c) of the Act vide his different orders both dated 24.09.2012.”
The original para 2 of the order reads as under: “2. The only issue in these two appeals of assessee is against different orders of CIT(A)-6, Mumbai confirming the action of the Assessing Officer levying penalty under section 271(1)(c) of the Act. For this the issue has raised identically worded ground in these two appeals. For the sake of clarity and brevity, we are reproducing the ground as raised in ITA No. 6756/Mum/2013 for A.Y. 1998-99 as under: -
11 ITA No. 6756&6620/Mum/2013 M/s. Indusind Bank Limited “On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming levy of penalty of Rs.9,72,47,434/- without appreciating the fact that the Appellant had neither concealed particulars of income nor furnished inaccurate particulars of income.” In place of para 2 of original order, para 2 of the order should be read as under:
“The only common issue in these two appeals, that of the assessee and of the revenue is against the different orders of CIT(A)- 6, Mumbai confirming the penalty in Asst. Year 1998-99 in ITA No. 6756/Mum/2013 and deleting the penalty in Asst. Year 1999-2000 in ITA No.6620/Mum/2013 levied by AO u/s. 271(1)(c) of the Act. For this, assessee has raised following ground in ITA No.6756/Mum/2013, which reads as under:
“On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming levy of penalty of Rs.9,72,47,434/- without appreciating the fact that the Appellant had neither concealed particulars of income nor furnished inaccurate particulars of income.” And the revenue has raised following two grounds in ITA No.6620/Mum/2013, which read as under:
“1.On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in cancelling the penalty levied u/s. 271(1)(c) of the I. T. Act of Rs.9,72,74,434/- for the Asst. Year 1999-2000 without appreciating that the assessee purposefully tried to reduce its income in malafide manner by increasing the depreciation and, therefore, the case of the assessee is fully covered by the provisions of section 271(1)(c) of the I. T. Act. 2.On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in cancelling the penalty levied u/s. 271(1)(c) of the I. T. Act of Rs.9,72,74,434/- for the Asst. Year 1999-2000 without appreciating that the on the similar issue he has upheld the penalty for the Asst. Year 1998-99.” At the outset, it is noticed that the AO has disallowed the claim of depreciation in Asst. Year 1998-99 on boiler used for less than 183 days
12 ITA No. 6756&6620/Mum/2013 M/s. Indusind Bank Limited i.e. 50% and balance 50% of depreciation was disallowed in Asst. Year 1999-2000. The AO levied the penalty u/s. 271(1)(c) in each of the AYs 1998-99 and 1999-2000. The CIT(A) deleted the penalty in Asst. Year 1999-2000 but confirmed the penalty in Asst. Year 1998-99 for the reason that the claim of depreciation on heat boiler was claimed even though the same was not put to use or was not commissioned. According to CIT(A), this fact was not disclosed by the assessee in its return of income nor during the course of assessment proceedings suo moto. Accordingly, the CIT(A) confirmed the penalty.”
The original para 7 of the order reads as under: “In the result, appeals of assessee are allowed”
In place of para 7 of original order, para 7 of the order should be read as under:
“In the result, the appeal of assessee is allowed and that of the revenue is dismissed.”
Sd/- Sd/- (R.C. SHARMA) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai, Dated 11th April, 2016 Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. The CIT(A)-6, Mumbai 4. The CIT-II, Mumbai 5. DR, “I” Bench ITAT, Mumbai 6. Guard file. By Order स�यािपत �ित //True Copy// (Asstt. Registrar) ITAT, Mumbai J.D. Sr. P.S.