RPG Industries Pvt. Ltd., Kolkata V. ITO, Ward - 4(1), Kolkata

CO 46/KOL/2009

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7476 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 19 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 12-07-2012
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 1998-1999
• Appeal Filed On: 23-06-2009
• Court: TRIBUNAL
• Department Lawyers: SUSANTA SINHA
• Assessee Lawyers: D S DAMLE
• Keywords: Business expenditure; Question of law; Revised return
• Section: 14A; 133(6)

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BEN CH C, KOLKATA () BEFORE , , , , , SHRI MAHAVIR SINGH, JUDICIAL MEMBER. /AND . .. . ! ! ! !. .. . , '# SHRI C.D.RAO, ACCOUNTANT MEMBER $%& $%& $%& $%& ' ' ' ' / ITA NO . 919/KOL/2009 () *+/ ASSESSMENT YEAR : 1998-99 (-. / APPELLANT ) I.T.O., WARD-4(1), KOLKATA. - ( - - VERSUS - . (01-./ RESPONDENT ) M/S.R.P.G.INDUSTRIES (P) LTD., KOLKATA (PAN:AABCR 2799 D) 2 %& 2 %& 2 %& 2 %& /C.O. NO.46/KOL/2009 ' ' ' ' / A/O ITA NO.919/KOL/2009 () *+/ ASSESSMENT YEAR : 1998-99 (-. / CROSS OBJECTOR ) M/S.R.P.G.INDUSTRIES PVT. LTD., KOLKATA. (PAN:AABCR 2799 D) - ( - - VERSUS - . (01-./ RESPONDENT ) I.T.O., WARD-4(1), KOLKATA. -. 3 4 '/ FOR THE DEPARTMENT: SHRI SUSANTA SINHA, SR.DR 01-. 3 4 '/ FOR THE ASSESSEE : SHRI D.S.DAMLE 5(6 3 !# /DATE OF HEARING : 18.06.2012. 7* 3 !# /DATE OF PRONOUNCEMENT : 12.07.2012. '8 / ORDER ( (( ( . .. . ! ! ! !. .. . ) )) ), , , , '# PER SHRI C.D.RAO, AM THE ABOVE TWO APPEALS ONE FILED BY THE REVENUE AND THE CROSS OBJECTION FILED BY THE ASSESSEE ARE AGAINST ORDER DATED 27.02.2009 OF THE CIT(A)-IV, KOLKATA PERTAINING TO A.YR. 1998-99. 2 2. THE ISSUE INVOLVED IN THE REVENUES APPEAL AS W ELL AS THE CROSS OBJECTION OF ASSESSEE ARE RELATING TO LEVYING OF PENALTY U/S 271 (1)(C) OF THE I.T.ACT. 3. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE AO L EVIED PENALTY OF AMOUNT OF RS.14.03,644/- BY OBSERVING AS UNDER :- IN THE INSTANT CASE RETURN OF INCOME WAS FILED ON 30.11.1998 SHOWING TOTAL LOSS OF RS.83,09,420/- FOLLOWED BY A REVISED RETURN FILED O N 22.12.1999 SHOWING REDUCED LOSS OF RS.59,53,513/-. ASSESSMENT UNDER SEC.143(3) WAS COM PLETED ON 23-03-2001 DETERMINING TOTAL INCOME OF RS.20,42,690/-. A SUM O F RS.76,64,995/- WHICH WAS DEBITED AS INTEREST WAS DISALLOWED BEING RELATED TO INVESTM ENT WHICH IS EXEMPTED UNDER SEC. 10(33) OF THE INCOME TAX ACT AND ALSO RELATED TO RE COVERABLE PROJECT EVALUATION EXPENSES AND BOTH BEING NOT BUSINESS EXPENDITURE. APART FROM THAT AN AMOUNT OF RS.6,50,000/- UNDER THE HEAD DONATION WAS DISALLOWED BEING INAD MISSIBLE AND AN AMOUNT OF RS.3,29,212/- WAS ALSO DISALLOWED UNDER THE HEAD C ONSULTANCY CHARGE AS SAME PERTAINED TO FINANCIAL YEAR 1998-99 RELEVANT TO ASS TT. YEAR 1999-2000. PENALTY PROCEEDINGS UNDER SEC.271(1)(C) WAS INITIATED SEPAR ATELY. BEING AGGRIEVED THE ASSESSEE COMPANY WENT TO APPEAL EXCEPT THE GROUNDS ON DONATION AND CONSULTANCY CHARGES AS MENTIONED ABOVE AND THE LD. CIT(A)-V, KOLKATA VIDE HIS ORDER NO.T.121/V/CC-7(1)/2001-02 DTD.06-03 -2003 HAS APPORTIONED THE INTEREST IN THE RATIO OF INVESTMENT YIELDING TAXABL E INCOME AND INVESTMENT YIELDING NON- TAXABLE INCOME AND ARRIVED AT A SUM OF RS.36,79,200 /- BEING NOT ALLOWABLE INTEREST AS PER PROVISIONS OF SECTION 14A OF THE INCOME TAX ACT AND THEREBY GIVEN RELIEF TO THE ASSESSEE A SUM OF RS.39,85,795/- (76,64,995 36,7 9,200) ONLY. THE ASSESSEE COMPANY FURTHER WENT TO HONBLE TRIBUNAL AGAINST THE ORDER OF THE LD. CIT(A)-V, KOLKATA BUT THE HONBLE ITAT A BENCH, KOLKATA VIDE ITA NO.1315(KO L) OF 2003 DTD. 18-06-2004 HAS DISMISSED THE APPEAL FILED BY THE ASSESSEE COMP ANY AND SUSTAINED THE ORDER OF THE LD. CIT(A). PENALTY PROCEEDINGS UNDER SEC.271(1)(C) WAS RE-INIT IATED ON 02-09-2004. REFIXATION LETTER WAS SERVED ON ASSESSEE ON 03-09-2 004 AND ON 10-02-2005. IN RESPONSE TO THE SAME THE ASSESSEE COMPANY FILED ITS SUBMISSI ON ON 22-02-2005 MERELY STATING THAT IT HAS FILED AN APPEAL UNDER SEC.260A BEFORE THE HO NBLE CALCUTTA HIGH COURT BUT FAILED TO PRODUCE ANY SUBSTANTIAL MATERIAL IN SUPPORT OF A LLEGED CONCEALMENT OF INCOME. HENCE I CONSIDER IT A FIT CASE FOR IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. 3.1. ON APPEAL AFTER RECORDING THE SUBMISSIONS OF T HE LD. COUNSEL FOR ASSESEE AT PARA 3 AT PAGE NO.2 TO 5 AND AFTER ANALYZING THE FACTS A T PARAS 4 TO 5 THE LD. CIT(A) FINALLY CONCLUDED AT THE END OF PARA 5 WHICH IS AS UNDER :- 5 ....... I THUS FIND THAT THE HIGH COURT HAS FOUND A SUBSTANTI AL QUESTION OF LAW IN THE CASE OF THE APPELLANT. I ALSO FIND THAT THE APPELLANT HAS OFFER ED ADEQUATE EXPLANATION AND MATERIAL FOR ALLOWABILITY OF THE CLAIM OF INTEREST BEFORE THE A. O. AND THE CIT(A) IN THE QUANTUM 3 PROCEEDINGS AND THE SAME WAS NOT FOUND TO BE FALSE. I ALSO FIND THAT NO EVIDENCE OR ALLEGATION OF ANY MALA FIDE INTENT HAS BEEN BROUGHT AGAINST THE APPELLANT BY THE A.O. OR THE CIT(A) IN THE QUANTUM PROCEEDINGS. THE DISALLOW ANCE WAS UPHELD BY THE CIT(A) IN TERMS OF A PROVISION OF LAW WHICH WAS INSERTED SUBS EQUENT TO THE COMPLETION OF THE ASSESSMENT ORDER IN WHICH THE PENALTY PROCEEDINGS W ERE INITIATED. THE CALCUTTA HIGH COURT HAS FOUND A SUBSTANTIAL QUESTION OF LAW INVOL VED WITH RESPECT TO THE DISALLOWANCE OF INTEREST AMOUNTING TO RS.36,79,200/. I THEREFORE HOLD THAT THE DISALLOWANCE OF INTEREST OF RS.36,79,200/- CANNOT BE TREATED AS CONCEALMENT OF INCOME AND THE LEVY OF PENALTY WITH REFERENCE TO THE SAID SUM OF RS.36,79,200/- HO LDING IT TO BE A CONCEALMENT OF INCOME WAS NOT CORRECT. I FURTHER FIND THAT AS REGA RDS CONSULTANCY FEES OF RS.3,29,212/-, THE ADDITION WAS MADE IN THE ASSESSMENT BASED ON IN FORMATION COLLECTED BY THE A.O. U/S 133(6) AND THE ASSESSEE WAS CONFRONTED WITH THE DIF FERENCE IN THE AMOUNT SHOWN THEREIN WITH THE AMOUNTS CLAIMED BY THE ASSESSEE. THE APPEL LANT VIDE ITS LETTER DATED 23.03.2001 FILED WITH THE A.O. ACCEPTED THAT THE SUM OF RS.3,2 9,212/- RELATED TO FY 1998-99 RELEVANT FOR AY 1999-2000 AND WAS THEREFORE ALLOWAB LE IN AY 1999-2000 AND NOT IN AY 1998-99. I FIND THAT THE APPELLANT MAINTAINS BOO KS OF ACCOUNTS ON MERCANTILE BASIS AND THEREFORE THE CLAIM MADE BY THE APPELLANT OF A SUM OF RS.3,29,212/- WHICH RELATED TO THE SUBSEQUENT ASSESSMENT YEAR WAS WRONG. I THEREFO RE HOLD THAT THE A.O. WAS FULLY JUSTIFIED IN LEVYING PENALTY ON THE SAID SUM OF RS. 3,29,212/- ONLY. I THEREFORE DIRECT THE A.O. TO RESTRICT THE LEVY OF PENALTY U/S 271(1)(C) TO A SUM OF RS.1,15,224/- ONLY, BEING 100% OF THE TAX @ 35% ON RS.3,29,212/-. THE APPELLA NT THEREFORE GETS RELIEF OF RS.12,88,420/- (RS.14,03,644/- MINUS RS.1,15,224). 3.2. AGGRIEVED BY THIS NOW THE REVENUE IS IN APPEAL BEFORE US REGARDING THE DELETION OF PENALTY AND ASSESSEE IS IN CROSS OBJECTION RAISE D THAT EVEN THE CONFIRMATION OF THE PENALTY TO THE EXTENT OF RS.1,15,224/- IS NOT WARRA NTED. 4. AT THE TIME OF HEARING THE LD. DR APPEARING ON B EHALF OF THE REVENUE RELIED ON THE ORDERS OF AO. 5. ON THE OTHER HAND, THE LD. COUNSEL APPEARING ON BEHALF OF ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE REVENUE AUTHORITIES WHICH WERE INCORPORATED AS STATED ABOVE IN THE IMPUGNED ORDER. HE FURTHER SUBM ITTED THAT REGARDING ESTIMATION OF PENALTY THE AMOUNT OF CLAIM BY THE ASSESSEE THOUGH RELATING TO SUBSEQUENT ASSESSMENT YEARS WILL NOT TANTAMOUNT TO FILING OF INACCURATE P ARTICULARS AND IT IS SUBJECT TO LEVYING OF PENALTY U/S 271(1)(C) OF THE IT ACT. THEREFORE H E REQUESTED TO DELETE THE ENTIRE PENALTY. 4 6. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CAREF UL PERUSAL OF MATERIALS AVAILABLE ON RECORD, WE ARE OF THE VIEW THAT THE LD . CIT(A) IS JUSTIFIED IN SUSTAINING THE PENALTY OF AN AMOUNT OF RS.3,29,212/-. KEEPING IN V IEW OF THE FACT THAT THERE IS NO DISPUTE THAT THE ASSESSEE IS FOLLOWING THE MERCANTI LE METHOD OF ACCOUNTING AND THE AMOUNT OF CLAIM AS EXPENDITURE IS RELATING TO THE S UBSEQUENT ASSESSMENT YEARS AND THE REVENUE HAS BROUGHT OUT THIS FACT, IN OUR CONSIDERE D OPINION THIS WILL TANTAMOUNT TO FILING OF INACCURATE PARTICULARS AS WELL AS CONCEAL MENT OF INCOME. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDERS OF LD. CIT(A) TO B E INTERFERED WITH. WE CONFIRM THE SAME AND DISMISS THE APPEAL OF REVENUE. 7. IN THE RESULT THE APPEAL OF THE REVENUE AS WELL AS THE CROSS OBJECTION OF ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 12.07.2012. SD/- SD/- , , , , MAHAVIR SINGH, JUDICIAL MEMBER . .. . ! ! ! !. .. . , ,, , '# '# '# '# , C.D.RAO, ACCOUNTANT MEMBER. ( (( (!# !# !# !#) )) ) DATE: 12.07.2012. '8 3 0% 9'%*:- COPY OF THE ORDER FORWARDED TO: 1. M/S.R.P.G.INDUSTRIES (P)LTD., 31, NETAJI SUBHAS ROA D, DUNCAN HOUSE, KOLKATA-700001. 2 THE I.T.O., WARD-4(1), KOLKATA. 3. THE CIT, 4. THE CIT(A)-IV, KOLKATA. 5. DR, KOLKATA BENCHES, KOLKATA 1% 0/ TRUE COPY, '8(5/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES R.G.(.P.S.) 5