Income Tax Appellate Tribunal - Mumbai
Sanghavi Jewels P.Ltd, Mumbai vs Acit Cir 5(3), Mumbai on 20 December, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL "G" BENCH, MUMBAI
BEFORE SHRI B. R. BASKARAN, AM AND SHRI AMARJIT SINGH, JM
आयकर अपील सं / I.T.A. No.4947/Mum/2017
(निर्धारण वर्ा / Assessment Year: 2008-09)
Sanghavi Jewel P. Ltd. बिधम/ DCIT-Circle-5(3)(1)
GJ-01, Seepz++, Andheri (E) Vs. Aayakar Bhavan, M.K.
Mumbai-400096. Road, Mumbai-400020.
स्थायी लेखा सं ./जीआइआर सं ./PAN/GIR No. : AAICS7624R
(अपीलाथी /Appellant) .. (प्रत्यथी / Respondent)
Assessee by: Ms. Arati Vissanji
Revenue by: Shri Chaudhary Arun Kumar
Singh
सुनवाई की तारीख / Date of Hearing: 03.12.2018
घोषणा की तारीख /Date of Pronouncement: 20.12.2018
आदे श / O R D E R
PER AMARJIT SINGH, JM:
The assessee has filed the present appeal against the order dated 24.12.2015 passed by the Commissioner of Income Tax (Appeals)-10, Mumbai [hereinafter referred to as the "CIT(A)"] relevant to the A.Y. 2008-09 wherein the penalty levied by the AO has been ordered to be confirmed.
2. The assessee has raised the following grounds: -
" On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the action of AO to levy penalty of Rs.14,16,484/- u/s 271(1)(c) of the Act on Rs.45,84,091/- being net interest income on fixed deposits placed with banks held to be not ITA. No.4947/M/2017 A.Y. 2008-09 forming part of eligible profits relevant for computing deduction u/s 10AA of the Act.
2. It is humbly prayed that the reliefs as prayed for hereinabove and/or such other reliefs as may be justified by the facts and circumstances of the case and as may meet the ends of justice should be granted.
3. The appellant craves leave to amend or alter any ground or add a new ground, which may be necessary."
3. The brief facts of the case are that the assessee filed its return of income for the A.Y. 2008-09 on 30.09.2008 declaring total income to the tune of Rs. Nil after claiming the deduction u/s 10AA of the Act of Rs.17,10,23,488/-. The assessment u/s 143(3) of the Act was completed on 23.12.2011 by disallowance of the claim to the tune of Rs.80,18,592/- u/s 10AA of the Act. Thereafter, the penalty proceeding was initiated by issuance of notice dated 23.12.2011 which was served upon the assessee. In reply, the assessee produced the copy of the order of CIT(A) in which the claim to the extent of Rs.45,84,091/- was found non-admissible u/s 10AA of the Act. The claim u/s 10AA of the Act in sum of Rs.45,84,091/- was found non- admissible, therefore, the AO levied the penalty to the extent of Rs.100% of tax sought to be evaded which was worked out to the tune of Rs.14,16,484/-. Feeling aggrieved, the assessee filed an appeal before the CIT(A) who dismissed the appeal of the assessee, therefore, the assessee has filed the present appeal before us.
4. We have heard the argument advanced by the Ld. Representative of the parties and perused the record. We noticed that the assessee filed the present appeal 447 days delayed. The Ld. 2 ITA. No.4947/M/2017 A.Y. 2008-09 Representative of the assessee has contended that the assessee company received the copy of order of CIT(A) on 19.02.2016 which was placed on the table of Mrs. Suchetha Shetty who forgot to take the notice, therefore, after some time when the matter came into notice then the present appeal has been filed immediately before the Hon'ble ITAT and the delay is unintentionally, therefore, the delay is liable to be condoned. However, on the other hand, the Ld. Representative of the Department has refuted the said contention. The assessee received the appellate order on 19.02.2016 and the delay happened due to this fact that Mrs. Suchetha Shetty was on leave and the order was kept in her drawer. After availing the leave, she find the order in her drawer then she immediately pursued the matter and filed the present appeal. The affidavit is not controverted by revenue. Moreover, we noticed that the assessee has a good case on merits which is required to be decided in the interest of justice in accordance with law. Accordingly, we condoned the delay. The Ld. Representative of the assessee has argued that the penalty was levied on account of declining the claim to some extent u/s 10AA of the Act, therefore, in the said circumstances, no penalty is leviable in view of the law settled in Cybertech System & Software Ltd. Vs. DCIT (Bombay High Court) (ITA. No. 578, 579 & 582 of 2016). It is also argued that the no penalty is leviable on account of rejection of claim in view of the law settled in Reliance Petroproducts Pvt. Ltd. 322 ITR 158. However, on the other hand, the Ld. Representative of the 3 ITA. No.4947/M/2017 A.Y. 2008-09 Department has refuted the said contention. Rival contentions have been heard. We find that the assessee initially filed its return of income on 30.09.2008 by declaring its total income to the tune of Rs. Nil. Thereafter, the case was selected for scrutiny and the AO declined the claim to the tune of Rs. 80,18,592/- u/s 10AA of the Act. The total claim was to the tune of Rs.17,10,23,488/-. Sub subsequently, the assessee filed an appeal before the CIT(A) who restricted the claim to the extent of Rs. 45,84,091/- and the remaining claim was allowed. Thereafter, the AO levied the penalty to the extent of 100% of the tax evaded to the tune of Rs. 45,84,091/- i.e. to the tune of Rs.14,16,484/-. The assessee initially claimed the exemption u/s 10AA of the Act. The claim was found justifiable to the extent of Rs.80,18,592/-. Thereafter, the CIT(A) restricted the claim to the extent of 45,84,091/-. Declining the claim of the assessee nowhere attracts the penalty in view of the law settled in Cybertech System & Software Ltd. Vs. DCIT (Bombay High Court) (ITA. No. 578, 579 & 582 of 2016) in which it is specifically held that the allowance of the claim of the interest u/s 10B of the Act is debatable issue, therefore, the penalty is not leviable. It is also specifically held in the case of Reliance Petroproducts Pvt. Ltd. 322 ITR 158 (SC) that rejection of claim raised by assessee by itself nowhere attract the penalty u/s 271(1)(c) of the Act. The controversy among the assessee and the revenue is that whether the income derived from fixed deposit placed with the banks is eligible for deduction u/s 10AA or not. This 4 ITA. No.4947/M/2017 A.Y. 2008-09 issue is debatable, however, in some cases such type of claim has been allowed and in some cases such type of claim has been disallowed. In the assessee's own case titled as Sanghavi Jewel Pvt. Ltd. V. DCIT (ITA. No. 5672/M/2016 such claim has been directed to be allowed finding nexus with the business and restored the issue before the AO. We also noticed that the Hon'ble Karnataka High Court has allowed the claim of interest in case of CIT S. M/s. Hewlett Packard Global Soft Ltd. (Karnataka High Court) (30.10.2017) 403 ITR 453. Since the issue is debatable and rejection of claim nowhere attract the penalty, therefore, in view of the above mentioned law, we are of the view that the finding of the CIT(A) is wrong against law and facts and is not liable to be sustainable in the eyes of law, therefore, we set aside the finding of the CIT(A) on this issue and delete the penalty.
5. In the result, the appeal filed by the assessee is hereby ordered to be allowed.
Order pronounced in the open court on 20.12.2018.
Sd/- Sd/-
(B. R. BASKARAN) (AMARJIT SINGH)
ले खध सदस्य / ACCOUNTANT MEMBER न्यधनिक सदस्य/JUDICIAL MEMBER
मुंबई Mumbai; दिनां क Dated : 20.12. 2018.
Vijay
5
ITA. No.4947/M/2017
A.Y. 2008-09
आदे श की प्रनिनलनि अग्रेनर्ि/Copy of the Order forwarded to :
1. अपीलाथी / The Appellant
2. प्रत्यथी / The Respondent.
3. आयकर आयु क्त(अपील) / The CIT(A)-
4. आयकर आयु क्त / CIT
5. दवभागीय प्रदतदनदि, आयकर अपीलीय अदिकरण, मुंबई / DR, ITAT, Mumbai
6. गार्ड फाईल / Guard file.
आदे शधिुसधर/ BY ORDER, सत्यादपत प्रदत //True Copy// (Sr. PS) आिकर अिीलीि अनर्करण, मुंबई / ITAT, Mumbai 6