Case Law Details

Case Name : The Asst. Commissioner of Income Tax Vs M/s A F Ferguson & Co. (ITAT Mumbai)
Appeal Number : ITA No. 2036/Mum/2009
Date of Judgement/Order : 18/05/2011
Related Assessment Year : 2003- 2004
Courts : All ITAT (4337) ITAT Mumbai (1439)

The Asst. Commissioner of Income Tax Vs M/s A F Ferguson & Co. (ITAT Mumbai)- The learned Counsel for the assessee contended that the instant penalty be also not sustained in view of the order passed by the Tribunal in assessment year 2001-2002. Copy of the said order was placed on record. In the opposition, the learned Departmental Representative relied on the penalty order passed by the A.O. It is noticed that the Tribunal has deleted the penalty in assessment year 2001-2002 on the ground that the addition itself was deleted by the Tribunal in quantum proceedings.

In the instant year the facts are not similar inasmuch as the Tribunal has not deleted the addition but simply restored a larger part of it to the file of Assessing Officer for fresh verification. When the addition has been restored to the file of A.O., in our considered opinion, the penalty on this aspect should also be restored to the file of A.O. for taking a fresh decision in accordance with the view finally taken by him in respect of addition in quantum proceedings. Our view is fortified by the judgement of the Hon’ble Supreme Court in the case of Mohammed Mohatram FarooquiVs. CIT (SC) 2010-TIOL-23-SC-IT. We, therefore, overturn the impugned order on this issue and restore the matter to the file of A.O.

ITAT Mumbai

The Asst. Commissioner of Income-tax Vs. M/s.A. F. Ferguson & Co.

ITA No. 2036/Mum/2009 

Asst. Year- 2003- 2004

M/s.A.F.Ferguson & Co. Vs. The Asstt. Commissioner of Income-tax

ITA No. 2167/Mum/2009

Asst. Year- 2003- 2004

O R D E R

Per R.S. Syal, AM :

These two cross appeals – one by the assessee and the other by the Revenue – arise out of the order passed by the CIT(A) on 20.01.2009 against the penalty order u/s. 271(1)(c) in relation to the assessment year 2003-2004.

2. The assessee is aggrieved against the confirmation of penalty on addition of Rs. 32.85 lakhs, being the payment made to retired partners by way of an overriding title added to the assessee’s income.
3. We have heard the rival submissions and perused the relevant material on record. Briefly stated the facts of the case are that the assessee made the above referred payment to the retired partners by way of an overriding title on the fees collected by the firm. The Assessing Officer made this dis allowance which came to be upheld by the learned CIT(A). However when the matter came up before the Tribunal in ITA No.111 3/Mum/2007, the said addition was deleted vide its order dated 13.08.2010. The copy of the order passed by the Tribunal is placed on record and it is seen that the issue has been discussed in paras 8 to 12 of the order. The Assessing Officer imposed penalty u/s. 271(1)(c) in respect of the said addition which was affirmed by the learned CIT(A). In view of the fact that the addition of Rs. 32.85 lakhs, which constituted the basis for imposition of penalty u/s. 271(1)(c), has been deleted by the Tribunal, there remains no foundation on which the edifice of penalty could be constructed. We, therefore, order for the deletion of penalty on this amount.

4. The Revenue is aggrieved in its appeal against the deletion of penalty on the addition made in respect of outstanding sundry creditors. The assessee was following cash system of accounting. A comparative statement of sundry creditors was submitted for assessment years 2001-2002 and 2002-2003. In the said statement creditors were claimed at Rs. 19,33,796 for assessment year 2003-2004. It was submitted before the A.O. that the learned CIT(A) had upheld the addition of Rs.14,03,806 in assessment year 200 1-2002. The A.O. noted that the three items of Rs. 94,238, Rs. 1,58,688 and Rs. 34,415 were appearing in assessment year 2001- 2002 and were confirmed. Therefore, excluding these three items from the sundry creditors shown at Rs.19.33 lakhs, the A.O. made an addition of Rs. 16,46,455. When the matter came up before the learned CIT(A), he directed the Assessing Officer to verify these sundry creditors from the records and restrict the addition in the manner decided by the first appellate authority for his order for assessment year 2001-2002. The assessee could not give supportive documentary evidence before the AO. As a result of which the addition was again made. The Assessing Officer imposed penalty u/s.271(1)(c) on this amount which came to be deleted in the first appeal.

5. After considering the rival submissions and perusing the relevant material on record it is noticed that the assessee challenged the addition in quantum before the Tribunal. The items listed in para 5 of the Tribunal order were taken up and the Tribunal vide para 7 of its order restored the matter to the A.O. on majority of items.

6. The learned Counsel for the assessee contended that the instant penalty be also not sustained in view of the order passed by the Tribunal in assessment year 2001-2002. Copy of the said order was placed on record. In the opposition, the learned Departmental Representative relied on the penalty order passed by the A.O. It is noticed that the Tribunal has deleted the penalty in assessment year 2001-2002 on the ground that the addition itself was deleted by the Tribunal in quantum proceedings. In the instant year the facts are not similar inasmuch as the Tribunal has not deleted the addition but simply restored a larger part of it to the file of Assessing Officer for fresh verification. When the addition has been restored to the file of A.O., in our considered opinion, the penalty on this aspect should also be restored to the file of A.O. for taking a fresh decision in accordance with the view finally taken by him in respect of addition in quantum proceedings. Our view is fortified by the judgement of the Honourable Supreme Court in the case of Mohammed Mohatram Farooqui Vs. CIT (SC) 2010-TIOL-23-SC-IT. We, therefore, overturn the impugned order on this issue and restore the matter to the file of A.O.

7. In the result, the appeal of the assessee is allowed and that of the Revenue is allowed for statistical purposes.

Order pronounced on this 18th day of May, 2011.

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