Income Tax Appellate Tribunal - Mumbai
Triumph International Finance India ... vs Acit Cen Cir 40, Mumbai on 27 February, 2019
IN THE INCOME TAX APPELLATE TRIBUNAL "E" BENCH, MUMBAI
BEFORE SHRI SHAMIM YAHYA, AM AND SHRI AMARJIT SINGH, JM
आयकर अपील सं / I.T.A. No. 7221/Mum/2017
(निर्धारण वर्ा / Assessment Year: 2003-04)
Triumph International बिधम/ ACIT Central Circle-40
Finance India Ltd. Vs. Aayakar Bhavan, M.K.
Oxford Centre, 10, Shorff Road, Mumbai-400020.
Lane, Colaba Causeway,
Colaba, Mumbai-400005.
स्थायी लेखा सं ./जीआइआर सं ./PAN/GIR No. : AAACE0308A
(अपीलाथी /Appellant) .. (प्रत्यथी / Respondent)
Assessee by: Shri Akash Kumar
Revenue by: Shri P. Daniel
सुनवाई की तारीख / Date of Hearing: 21.02.2019
घोषणा की तारीख /Date of Pronouncement: 27.02.2019
आदे श / O R D E R
PER AMARJIT SINGH, JM:
The assessee has filed the present appeal against the order dated 24.11.2017 passed by the Commissioner of Income Tax (Appeals)-49, Mumbai [hereinafter referred to as the "CIT(A)"] relevant to the A.Y. 2003-04 in which the penalty levied by the AO has been order to be confirmed.
2. The assessee has raised the following grounds: -
"1 The Commissioner of Income-tax (Appeals) - 49, Mumbai (hereinafter referred to as the CIT(A))) erred in framing an exparte order.
ITA. No.7221/M/2017 A.Y. 2003-04 the appellants contend that on the more and in the circumstances of the case and in law, the CJT(A) ought not to have framed an exparte order inasmuch as, in some confusion. the impugned order has been passed before the date of hearing (15th December, 2017) given by the CIT(A)
2. The CIT(A) erred in upholding the action of the Assistant Commissioner of Income-tax, Conrad Circle 40, Mumbai (hereinafter referred to as the Assessing Officer) in confirming the levy of penalty of If 26,24,000 under section 271(l)(c) of the Act. The appellants contend that on the facts and in the circumstances of the case and in law, the CIT(A) ought not to have confirmed the levy of the impugned penalty under section 271(1)(c) of the Act inasmuch as the Assessing Officer erred in not issuing proper notice dated 12.12.2005 under section 274 r.w.s. 271; the Assessing Officer ought to have issued a proper notice under section 274 r.w.s. 271, tick marking the relevant limb namely, concealing the particulars of income/ furnishing inaccurate particulars of income card having not done so, the penalty order passed consequent thereto is bad in law and hence, the same ought to be quashed.
3. The appellants further, contend that the CIT(A) erred in upholding the action of the Assessing Officer in levying penalty on the basis of income -has. including surcharge.
4. The appellants further, contend that the order of penalty is bad in law and hence, the same ought to be quashed.
The appellants crave leave to add to, alter or amend the aforestated ground of appeal."
3. The brief facts of the case are that the assessee filed its return of income on 01.12.2003 declaring total income to the tune of Rs. Nil/-. The assessee showed the carry forward loss in sum of Rs.17,27,21,815/- after set off of brought forward speculation profit of Rs.2,86,34,48,301/-. The set off of loss and carry forward loss was not in order. The return was accompanied by statement of account viz. profit and loss account, balance-sheet and tax audit report u/s 44AB and TDS certificate. The return was processed u/s 143(1) of the Act 2 ITA. No.7221/M/2017 A.Y. 2003-04 resulting refund of Rs.23,21,903/- on account of TDS which was issued to the assessee. The case was selected for scrutiny, therefore, notices u/s 143(2) & 142(1) of the Act were issued and served upon the assessee. The assessee was in the business of trading in shares and securities. The assessee showed the bad debts of Rs.4,56,62,415/- which was disallowed on account of non-explanation and added to the income of the assessee. The income of the assessee was assessed to the tune of Rs.36,185/-. Thereafter, the penalty proceeding was initiated and the AO levied the penalty in sum of Rs.26,24,000/- which was confirmed by the CIT(A), 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. At the very outset, the Ld. Representative of the assessee has argued that the quantum on the basis of which the penalty was levied has been deleted by the Hon'ble ITAT in the assessee's own case in ITA. No.242/M/2011 for the A.Y. 2003-04 dated 06.07.2018, therefore, in the said circumstances, the penalty is not liable to be sustainable in the eyes of law. However, on the other hand, the Ld. Representative of the Department has refuted the said contention. On appraisal of the penalty order dated 30.03.2012, we noticed that the penalty was initiated on account of disallowance of the claim of bad debts in sum of Rs.4,56,62,415/-. After the disallowance of claim of the bad debts 3 ITA. No.7221/M/2017 A.Y. 2003-04 in sum of Rs.4,56,62,415/-, the assessee filed an appeal before the CIT(A) who restricted the claim to the extent of Rs.71,38,731/-. Thereafter, the penalty proceeding was initiated and penalty in sum of Rs.26,23,484/- was levied. The matter of controversy came before the Hon'ble ITAT in view of the ITA. No.242/M/2011 for the A.Y. 2003- 04 dated 06.07.2018 in which the claim of bad debts has been allowed. The relevant finding has been given in para no. 4 which is hereby reproduced as under.: -
"4 We notice that the Ld. CIT(A) has confirmed the disallowance to the extent of Rs.71.38 Iakhs only and the reason that said bad debts claim related to the amount one from sister concerns of the assessee. However, a perusal of the ledger accounts of the sister concerns would show that they are franchisees of the assessee carrying and share broking business. The ledger account shows that the bills raised by the assessee against them for purchase and sale of shares. Accordingly, we notice the transactions with the sister concerns were regular business transactions. The Ld. AR submitted that the sister concerns, being franchisees of the assessee's share broking business, could not repay the debts due to heavy losses incurred by them. The contention of the Ld. AR could not be controverted by the ld. DR. In this view of the matter, we are of the view that there is no reason to doubt the genuineness of claim. Accordingly, we modify the order passed by Ld. CIT(A) and direct the AO to allow the claim of Rs.71,38 lakhs, referred above."
5. Since the claim of the assessee in connection with bad debts has been allowed and the very base to levy the penalty is not in existence, therefore, no penalty is liable to be sustainable in the eyes of law. Accordingly, we delete the penalty. Accordingly, we decide these issues in favour of the assessee against the revenue.
4ITA. No.7221/M/2017 A.Y. 2003-04
6. In the result, the appeal filed by the assessee is hereby ordered to be allowed.
Order pronounced in the open court on 27.02.2019.
Sd/- Sd/-
(SHAMIM YAHYA) (AMARJIT SINGH)
ले खध सदस्य / ACCOUNTANT MEMBER न्यधनिक सदस्य/JUDICIAL MEMBER
मुंबई Mumbai; दिनां क Dated : 27.02.2019.
Vijay
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// उि/सहधिक िंजीकधर /(Dy./Asstt. Registrar) आिकर अिीलीि अनर्करण, मुंबई / ITAT, Mumbai 5