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Income Tax Appellate Tribunal, MUMBAI BENCH “I”, MUMBAI
Before: SHRI R.C.SHARMA & SHRI PAWAN SINGH
PER PAWAN SINGH, JM: 1. These two identical appeals were filed by the assessee against the order of CIT(A)-5, Mumbai dated 31.03.2013 in the matter of imposition of penalty in respect of Assessment Year (AY) 1995-96 and AY 1996-97.
Ground of appeal for AY-1995-96 are as under:
The learned Commissioner of Income-Tax (Appeals) has erred in law and facts in passing order and confirming the penalty levied by the Assessing Officer u/s. 271(1)(c) of the Act.
The learned Commissioner of Income-Tax (Appeals) has erred in law and facts in not appreciating that the initiation of penalty proceedings were not in accordance with the law. 3. The learned Commissioner of Income-Tax (Appeals) has erred in law and facts in not appreciating that the penalty order passed by the Assessing Officer is without jurisdiction and bad in law. 4. The learned Commissioner of Income-Tax (Appeals) has erred in law and facts in confirming the penalty on the disallowance of depreciation of Rs 1,00,00,000/- in respect of lease transaction with M/s. Rajasthan State Electricity Board. 5. The learned Commissioner of Income-Tax (Appeals) has erred in law and facts in confirming the penalty on the disallowance of depreciation of Rs 24,64,450/- in respect of lease transaction with M/s. Prestige Foods Ltd. 6. The appellant craves leave of Your Honour to add to, alter, amend and/ or delete all or any of the foregoing grounds of appeal.
Ground of appeal for AY-1996-97 are as under:
Following grounds of appeal are without prejudice to each other:
1. The learned Commissioner of Income-Tax (Appeals) has erred in law and facts in passing order and confirming the penalty levied by the Assessing Officer u/s. 271(1)(c) of the Act.
2. The learned Commissioner of Income-Tax (Appeals) has erred in law and facts in not appreciating that the initiation of penalty proceedings were not in accordance with the law.
3. The learned Commissioner of Income-Tax (Appeals) has erred in law and facts in confirming the penalty on the disallowance of depreciation of Rs 24,64,450/- in respect of lease transaction with M/s. Prestige Foods Ltd.
4. The appellant craves leave of Your Honour to add to, alter, amend and/ or delete all or any of the foregoing grounds of appeal.
2. At the outset of the hearing, ld. Authorized Representative (AR) of the assessee placed on record has drawn our attention that initially the assessee filed his return of income on 15.12.1995 in respect of AY 1995-96 and the order of 143(3) was passed on 31.03.1998 wherein an addition on account of staff welfare, motor car expenses and depreciation of lease assets in respect of lease made into Rajasthan Electricity Board. In respect of AY-1996-97 an addition of depreciation of lease assets to M/s Prestige Food Ltd. was disallowed by the AO. The same was challenged before the CIT(A) and the CIT(A) in its order dated 18.02.2000 the appeal was of the assessee was partly allowed against which further appeal was filed before ITAT, Mumbai which was registered vide and was disposed off vide order dated 09.09.2004 wherein the matter was remanded to the file of AO in respect of issue for treating the lease transaction with Prestige Food Ltd. and Rajasthan Electricity Board and the same was remanded to the file of AO in the light of direction and guidelines contained in ITAT, Mumbai Special Bench case titled as East Portfolio Management Ltd. vs. DCIT reported as 87 ITD 537 along with the additions/issues in respect of AY-1996-97. However, as per the paper book filed by the assessee, the ld. CIT(A) in its order dated 03.02.2010 upheld the addition made by the AO and dismissed the appeal by common order. Against which further appeal was filed by the assessee which was registered vide ITA No. 4013 & 4011/Mum/ 2010 and our predecessor bench vide order dated 10.12.2012 further remanded the cases/appeals to the record of CIT(A) to reconsider and decide the same after considering all relevant fact in the light of decision of special bench in Indus-Ind Bank reported vide 135 ITD 165. The ld. CIT(A) while dealing with the remand proceedings, the CIT(A) dismissed both the appeal of the assessee against which to different appeal are filed before jurisdictional High Court.
The ld. AR of the assessee has shown the copy of order-sheet of Hon’ble jurisdictional High Court at page no. 91 & 92 of paper book about the filing an admission of appeal of the assessee in respect of AY 1996-97 and at page no. 93 & 94 about the filing of appeal of assessee in respect of AY-1995-96, which has been accepted by the Hon’ble Bombay High Court vide order dated 23.09.2008 and and appeal for AY 1995-96 has been accepted by Hon’ble High Court vide order dated 01.08.2008.
Ld. AR of the assessee further argued that as per the decision of Nayan Builders and Developers Pvt. Ltd. Dated 24.07.2014 reported viz 368 ITR 722(Bom) wherein it has held that once the substantial question of law is accepted in respect of the addition so made in the assessment, no penalty should be imposed u/s 271(c) of the Act, the ld.
The Ld. AR of the assessee further relied upon the judgment of co-ordinate bench of Bombay Tribunal in titled as M/s N Vensimal Securities Ltd, in ITA No. 3864/Mum/13 titled as ITO vs. H.B.Waswani and ITA No. 8223/10 titled as Schradar Duncan Ltd. Vs. ACIT wherein all the decision respectfully consistently following the judgment of jurisdictional High Court in Nayan Builders and Developers Pvt. Ltd. has held that where High Court has admitted the substantial question of law on the additions, it became apparent that the addition so made had became debatable ,the penalty so imposed on the basis of admission had also become debatable, therefore, penalty imposed u/s 271(c) of the Act cannot survive. However, it is a matter of fact and is made clear that if at any stage the order of Hon’ble High Court came in favor of the revenue, the department is free to proceed in accordance with law.
In view of the above, the cases of the assessee are squarely covered by the Judgments mentioned above. The ld. DR of the revenue has not shown any contrary law to us, hence the order dated 24.02.2006 passed by AO against the assessee in respect of AY 1995-96 and 1996-97 and which were upheld by the CIT(A) in appeal are set aside and the appeals filed by the assessee are accepted.
In the result, both the appeals filed by the assessee are allowed.
Order pronounced in the open court on this 30th October 2015.