Income Tax Appellate Tribunal - Mumbai
Aasia Business Ventures P Ltd, Mumbai vs Department Of Income Tax on 22 May, 2015
आयकर अपील य अ
धकरण, मंब ु ई
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCHES 'A' MUMBAI
सव ी आय.पी. बंसल, या यक सद य /एवं
BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER /AND
ी डी. क णाकर राव,ु लेखा सद य
SHRI D.KARUNAKARA RAO, ACCOUNTANT MEMBER
आयकर अपील सं. / ITA No.7477/MUM/2013
नधा रण वष /Assessment Year 2007-08
The I TO-9(1)(1), बनाम/ M/s. Aasia Business Ventures
Room No.226, Aaykar Pvt. Ltd.,
Vs.
Bhavan, MK Road, Kirabo, 1st Floor, 13th TRoad,
Mumbai 400 020 Khar West, Mumbai 400 052.
थायी ले खा सं . /जीआइआर सं . /PAN/GIR No. :AAACG 3698K
(अपीलाथ /Appellant) .. ( यथ / Respondent)
Appellant by Shri Asghar Zain
Respondent by Shri S.K. Mutsaddi
सनु वाई क" तार$ख / Da te o f Hearing : 21/05/2015
घोषणा क" तार$ख /Date of Pronouncement : 21/05/2015
आदे श / O R D E R
PER I.P.BANSAL, J.M:
This is an appeal filed by the Revenue and it is directed against the order passed by Ld. CIT(A)-19, Mumbai dated 03/10/2013 for assessment year 2007-08. Grounds of appeal read as under:
"1.Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in cancelling the penalty u/s. 271(1) (c) of the I.T. Act without appreciating the fact that addition of Rs.3,04,38,400/- on account of advance against export taxed u/s. 41(1) of the Act was confirmed by the CIT(A) and, by claiming non-existing liability, the assessee had furnished inaccurate particulars of income?
2 आयकर अपील सं. / ITA No.7477/MUM/2013 नधा रण वष /Assessment Year 2007-08
2. At the outset it was pointed out by Ld. AR that the addition on which penalty has been levied has already been deleted by the Tribunal. Therefore, it was submitted that the order passed by Ld. CIT(A) should be confirmed vide which penalty has been deleted. Reference was made to the decision of Tribunal dated 8/11/2013 in ITA No.430/Mum/2011, copy of which has been filed at pages 1 to 7 of the paper book. Reference was made to the following observations:
" 7. We have carefully considered the orders of the authorities below and submissions of the representative of the parties. We have also gone through the relevant pages of the paper book to which our attention was drawn at the time of hearing and have also considered the cases relied upon by the Assessing Officer as well as referred by learned AR (supra). It is a fact that the assessee received a sum of Rs. 3,04,38,400/- from M/s. Amas Mauritius Ltd. on 24.1.1997 as an advance for the purpose of export of goods and the same has been appearing in the books of account of the assessee till date. It is also fact that the assessee neither has made export against the said advance nor the amount has been returned till date. Moreover, the assessee has admittedly stopped export business and is in the business of advisory as well as in share dealing. It is not in dispute that the said amount is shown as advance in the balance sheet of the assessee. The said liability is also shown as on 31.3.2007. Therefore the liability has been acknowledged by the assessee. Since amount has not been written off by the assessee in its books of account, it cannot be said that the liability has ceased to exists. Hon'ble Madras High Court has held in the case of CIT Vs. Tamilnadu Warehousing Corporation (292 ITR 310) that the amount representing liabilities which were shown year after year could not be added back u/s. 41(1) of the Act, 1961. The same view has also been taken by Hon'ble P&H High Court in the case of Smt. Sita Devi Juneja (2010) TIOL 32 (P&H High Court IT). Bombay High Court has also held in the case of Chase Bright Steel Ltd. (177 ITR 128) that the issue of limitation is not applicable for cessation of liability for the purpose of section 41(1) of the Income Tax Act. In view of above, we agree with learned AR that learned CIT(A) and Assessing Officer are not justified to apply provisions of section 41(1) of the Act. We also observe that the Assessing Officer has doubted the genuineness of the transaction as well as creditworthiness of the lender/payee. We are of the considered view that since the said amount received by the assessee in January, 1997 and the same was appearing in the books of account of the assessee, genuineness of the transaction as well as creditworthiness of the party could not be considered in the assessment year under consideration for making the said addition u/s. 41(1) read with section 28(iv) of the Act.
8. Be that as it may, it is the fact that the assessee has not written back the said amount to its profit and loss account, we are of the considered view that the provisions of section 28(iv) which provides value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession shall be chargeable to Income Tax under the head "profit and gains of business or profession" could not be applied as the said benefit has not arisen to the assessee because the assessee is showing the said amount as its liability in the balance-sheet year after year. Therefore, we are of the considered view that the said amount cannot be added as income of the assessee u/s. 28(iv) of the Act.
3 आयकर अपील सं. / ITA No.7477/MUM/2013 नधा रण वष /Assessment Year 2007-08
9. We may also state that on and identical facts similar issue has also been considered by the ITAT, Mumbai Bench in the case of M/s. Jayram Holdings Pvt. Ltd. (supra) and the Tribunal has held that the provisions of section 41(1) and/or section 28(iv) of the Act cannot be applied to make the said addition of advance received by the assessee in that case in A.Y. 1997-98 if the amount was not written off and the liability still subsist. The decision of ITAT dated 4.7.2012 squarely apply to the facts of the case under consideration before us.
10. Hence, in view of above, the grounds of appeal taken by the assessee are allowed by deleting the addition made by the authorities below.
11. Before we part with this appeal, we may state that if the Assessing Officer was of the view that the assessee has violated provisions of FEMA by not making the export within the period of one year as per Regulation 16 of the FEMA Regulation dated 3.5.2000 and the said transaction was a sham transaction in the guise of receiving advance for making export, the Assessing Officer should have taken up the matter with RBI to make an inquiry in this respect.
12. In view of the above ground of appeal taken by the assessee is allowed."
3. Ld. DR did not controvert to the submissions of the assessee.
4. In this view of the situation, as quantum has already been deleted, the penalty does not survive. Therefore, we decline to interfere in the relief granted by Ld. CIT(A). Accordingly, Revenue's appeal is dismissed.
5. In the result, the appeal filed by the Revenue is dismissed.
Order pronounced in the open court on 21/05/2015
आदे श क" घोषणा खल
ु े यायालय म* +दनांकः 21/05/2015 को क" गई ।
Sd/- Sd/-
(डी. क णाकर रावु / D.KARUNAKARA RAO) (आय.पी. बंसल / I.P. BANSAL)
लेखा सद य / ACCOUNTANT MEMBER या यक सद य / JUDICIAL MEMBER
मुंबई Mumbai; +दनांक Dated 21/05/2015
4 आयकर अपील सं. / ITA No.7477/MUM/2013
नधा रण वष /Assessment Year 2007-08
आदे श क त ल प अ!े षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent.
3. आयकर आयु/त(अपील) / The CIT(A)-
4. आयकर आय/
ु त / CIT
5. 0वभागीय त न2ध, आयकर अपील$य अ2धकरण, मंब
ु ई / DR, ITAT,
Mumbai
6. गाड फाईल / Guard file.
आदे शानुसार/ BY ORDER,
स या0पत त //True Copy//
उप/सहायक पंजीकार (Dy./Asstt. Registrar)
आयकर अपील य अ
धकरण, मुंबई / ITAT, Mumbai
व. न.स./Vm, Sr. PS