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Golden Tobacco Ltd. (Formerly GTC Industries Ltd.) Tobacco House, S.V. Road Vile Parle (W), Mumbai 400 056 Vs. Appellant
April, 28th 2014
                 ,   ,,' 

                               "G" BENCH, MUMBAI

   .  . ,  ,    ,    


                      . / ITA no. 549/Mum./2013
                    (  / Assessment Year : 1996­97)

                      . / ITA no. 550/Mum./2013
                    (  / Assessment Year : 1997­98)

                      . / ITA no. 551/Mum./2013
                    (  / Assessment Year : 1998­99)

Golden Tobacco Ltd.
(Formerly GTC Industries Ltd.)                            .......................  /
Tobacco House, S.V. Road                                                          Appellant
Vile Parle (W), Mumbai 400 056


Jt. Commissioner of Income Tax
                                                               ...................  /
Special Range­50, Aayakar Bhavan
101, M.K. Road, Mumbai 400 020                                             Respondent

  ./ Permanent Account Number ­ AAACG1421A

                / Assessee by              : Mr. Vinod Kumar Bindal
                / Revenue by               : Mr. R.K. Sahu

     /                                                  /
Date of Hearing ­ 09.04.2014                       Date of Order ­ 24.04.2014
                                                       Golden Tobacco Ltd.


                               / ORDER

 ,     /

      The present appeals have been preferred by the assessee
challenging the impugned separate but identical order of even date
19th October 2012, passed by the learned Commissioner (Appeals)­
XXI, Mumbai, for the assessment year 1996­97, 1997­98 and 1998­

2.    The sole common dispute in all the assessment years under
appeals is, whether or not the learned Commissioner (Appeals) was
justified in confirming penalty under section 271(1)(c) levied by the
Assessing Officer for ` 16,20,139 for the assessment year 1997­98, `
69,05,858, for the assessment year 1996­97 and ` 2,90,631 for the
assessment year 1998­99.

3.    Since all these appeals pertain to the same assessee involving
common issue arising out of identical set of facts and circumstances,
therefore, as a matter of convenience, these appeals were heard
together and are being disposed off by way of this consolidated order.

      We first take up assessee's appeal in ITA no. 549/Mum./2013, for
assessment year 1996­97 and 550/Mum./2013, for assessment year

4.    At the outset, the learned Counsel for the assessee submitted
that most of the issues on which the penalty has been levied, has
either been set aside by the Tribunal or stands deleted in the quantum
                                                          Golden Tobacco Ltd.


proceedings. Insofar as the grounds raised in the assessment year
1996­97, he submitted that the additions on which penalty has been
levied are with regard to the following:­

     For the A.Y. 1996­97
     Provision for doubtful debt / advance          ` 1,39,90,295
     Provision for irrecoverable advance            ` 5,22,441
     Provision for professional fee                 ` 5,00,000

5.   The aforesaid additions have been remanded back to the file of
the Assessing Officer for fresh examination. The learned Departmental
Representative has also not disputed these facts.

6.   After carefully considering the submissions and also on a perusal
of the material available on record, it is seen that the Tribunal, in the
quantum proceedings, vide order dated 30th September 2013, in ITA
no.132/Mum./2011 and 195/Mum./2011, has set aside these issues to
the file of the Assessing Officer. Accordingly, the penalty which has
been levied are also set aside and the Assessing Officer would be at
liberty to re­initiate or decide the levy of penalty afresh in accordance
with the provisions of law after completing the assessment. Thus, the
ground raised by the assessee is allowed for statistical purposes.

7.   Similarly, in the assessment year 1997­98, it has been submitted
before us that the penalty has been levied on the following additions:­

     For the A.Y. 1997­98
     Provision for doubtful debt / advance          ` 33,67,040
     Provision for irrecoverable advance            ` 2,85,033
     Provision for professional fee                 ` 1,15,692

8.   The learned Counsel submitted that insofar as the addition made
on account of provisions for doubtful debt and provisions for
                                                         Golden Tobacco Ltd.


irrecoverable advances, the same has been allowed by the Tribunal in
the quantum proceedings vide order dated 30th September 2013 in ITA
no.2402/Mum./2011. Thus, the penalty should be deleted.

9.    Insofar as the addition on account of guest house expenses, the
learned Counsel for the assessee submitted that the disallowance has
been made in view of the decision of the Hon'ble Supreme Court in
Britannia Industries Ltd. v/s CIT [2005] 278 ITR 546 (SC). However, at
the time of filing of the return of income, the decision of the
Jurisdictional High Court was in favour of the assessee which was the
law prevalent at that time by virtue of the decision of the Jurisdictional
High Court in CIT v/s Chase Bright Steel, [1989] 177 ITR 124 (Bom.)
and Century Spinning and Mfg. Co. Ltd. v/s CIT, [1991] 189 ITR 660
(Bom.). In this decision, the Bombay High Court has held that the
business expenditure such as rent and repairs for the premises used as
guest house cannot be disallowed under section 37(iii). Thus, the claim
of the assessee should not be adversely viewed for the purpose of
penalty because the decision of the Hon'ble Supreme Court came later
on i.e., on 5th October 2005. Thus, no penalty should be levied.

10.   The learned Departmental Representative, on the other hand,
relied upon the order of the learned Commissioner (Appeals).

11.   After carefully considering the rival submissions, we find that
insofar as the levy of penalty on account of provisions for doubtful
debts and provisions for irrecoverable advance are concerned, no
penalty can be levied as the Tribunal has deleted the addition in the
quantum proceedings. Accordingly, the penalty is deleted on these two
additions. With regard to the levy of penalty on guest house expenses,
we agree with the contention of the learned Counsel for the assessee
                                                        Golden Tobacco Ltd.


that at the time of filing of the return of income, assessee's claim was
allowable in view of the decision of the Jurisdictional High Court in
Chase Bright Steel (supra). It was much later that the Hon'ble
Supreme Court, vide judgment dated 5th October 2005, in Britannia
Industries Ltd. (supra), has held that such expenditure cannot be
allowed. Thus, the assessee had a bonafide belief while making such a
claim at the time of filing of the return of income and, therefore, no
penalty for furnishing inaccurate particulars and concealment of
income can be levied. Accordingly, the penalty on this score is deleted.

12.        1996­97  19997­98   

12.   In the result, assessee's appeals for the assessment year 1996­
97 and 1996­97 are allowed.

      We now take up assessee's appeal in ITA no.551/Mum./2013, for
the assessment year 1998­99.

13.   In the present case, penalty has been levied on the addition
made on account of provisions for doubtful debt of advance of `

14.   It has been admitted by both the parties that this addition stands
deleted by the Tribunal in assessee's own case in ITA no.3198/Mum./
2011, vide order dated 26th June 2013.

15.   In view of the aforesaid fact that the addition itself has been
deleted and, therefore, the levy of penalty does not survive.
Consequently, we set aside the impugned order passed by the learned
Commissioner (Appeals) and delete the penalty.
                                                       Golden Tobacco Ltd.


16.        198­99       

16.   In the result, assessee's appeal for the assessment year 1998 ­99
is allowed.

              23rd April 2014   
      Order pronounced in the open Court on 23rd April 2014

              Sd/-                                         Sd/-
       .  .                                             
     N.K. BILLAIYA                                   AMIT SHUKLA
  ACCOUNTANT MEMBER                                JUDICIAL MEMBER

 MUMBAI,  DATED: 23rd April 2014

     / Copy of the order forwarded to:
(1)    / The Assessee;
(2)    / The Revenue;
(3)    () / The CIT(A);
(4)     / The CIT, Mumbai City concerned;
(5)    ,   ,  / The DR, ITAT, Mumbai;
(6)     / Guard file.
                                         / True Copy
                                          / By Order
 .  / Pradeep J. Chowdhury
   / Sr. Private Secretary
                               /   / (Dy./Asstt. Registrar)
                               ,  / ITAT, Mumbai
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