DCIT CENTRAL CIRCLE 5(2), MUMBAI V. IPCA LABORATORIES LIMITED, MUMBAI

ITA 25/MUM/2025

AI Insights

The case involves appeals by the Revenue Department against M/s. IPCA Laboratories Limited concerning penalties imposed following disallowances made by the Assessing Officer under various sections of the Income Tax Act, 1961. The disallowances were related to issues such as deduction of profit on sale of empty containers, additional depreciation, transfer pricing adjustments, and others. The Tribunal had previously deleted or reduced these disallowances, leading to the deletion of penalties by the Commissioner of Income Tax (Appeals). The Revenue challenged the deletion of penalties, but the Tribunal upheld the Commissioner's decision, noting that the foundational disallowances for the penalties no longer existed.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 37323 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R.A. DHYANI; LD. .; MAHESH PAMNANI; LD.
• Assessee Lawyers: MANI JAIN; LD.; PRATEEK JAIN; LD
• Keywords: Depreciation; Additional depreciation; Bogus purchase; Bogus
• Section: 143(3); 250; 48; 11; 153A; 80IC; 80IC

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “C”, MUMBAI BEFORE SHRI NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER AND SHRI PRABHASH SHANKAR, ACCOUNTANT MEMBER ITA No.25/M/2025 Assessment Year: 2009-10 & ITA No.24/M/2025 Assessment Year: 2012-13 DCIT Central Circle 5(2), Room No.427, 4th Floor, Kautilya Bhavan, G Block, Bandra Kurla Complex, Bandra East, Mumbai Maharashtra – 400 051 Vs. M/s. IPCA Laboratories Limited, 48, Kandivali Industrial Estate, Kandivali West, Mumbai Maharashtra – 400 067 PAN: AAACI1220M (Appellant) (Respondent) Present for: Assessee by : Mr. Mani Jain, Ld. A.R & Mr. Prateek Jain, Ld. A.R. Revenue by : Shri R.A. Dhyani, Ld. Sr. D.R. & Shri Mahesh Pamnani, Ld. Sr. D.R. Date of Hearing : 13.02.2025 Date of Pronouncement : 25.03.2025 O R D E R Per : Narender Kumar Choudhry, Judicial Member: These appeals have been preferred by the Revenue Department against the order even dated 30.10.2024, impugned herein, passed by the Ld. Commissioner of Income Tax (Appeals) (in short Ld. Commissioner) u/s 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2009-10 & 2012-13. ITA No.25/M/2025 & ors. M/s. IPCA Laboratories Limited 2 2. As both the appeals are based on the almost identical facts and issues and the penalties, therefore for the sake of brevity the same were heard together and are being disposed of by this composite order by taking into consideration the facts and circumstances and issues involved in ITA No.25/M/2025 as a lead case and result of the same would be mutatis mutandis applicable to both the appeals under consideration. 3. Coming to ITA No.25/M/2025, the Assessing Officer (AO) vide assessment order dated 30.12.2016 u/s 153A r.w.s. 143(3) of the Act has made the certain disallowances as mentioned below in para no. 5 of this order, which have been affirmed by the Ld. Commissioner, vide order dated 31.03.2021. 4. Therefore the disallowances affirmed, were subjected to levy of penalties by the AO vide penalty order dated 16.03.2022 5. Subsequently the Hon’ble Tribunal vide composite order in ITA no.880/M/2021 & ors. decided on 08.04.2024, partly deleted/affirmed the disallowances to the extent as detailed below: Sr. No. Nature of Addition / Disallowance Amount confirmed by CIT(A) in quantum proceedings on which penalty levied Amount confirmed by ITAT in quantum proceedings Remarks 1. Disallowance on deduction of profit on sale of empty containers claimed u/s 80IC 10,27,691 0 Deleted by ITAT (Para 4.1- 4.5 of ITAT order pg. no. 7 & 8)- Penalty deleted by CIT(A) since quantum deleted. 2. Disallowance on account of additional depreciation 2,84,75,543 0 Assessee claimed additional deprecation in AY 2008-09 (put to use for less than 180 in AY 2008-09) and part of the additional depreciation claimed in AY 2009-10. AO disallowed stating no ITA No.25/M/2025 & ors. M/s. IPCA Laboratories Limited 3 concept to carry forward additional depreciation. Confirmed by CIT(A). ITAT deleted (Para 4.1-4.5 of ITAT order pg. no. 7 & 8) - Penalty deleted by CIT(A) since quantum deleted. 3. Disallowance on account of adjustment by TP Officer 2,09,60,016 0 Addition deleted by ITAT (Para 4.1-4.5 of ITAT order pg. no. 7 & 8) - Penalty deleted by CIT(A) since quantum deleted. 4. Disallowance of Rs. 24,92,650/- on account of bogus purchases 26,988 12,272 Purchases alleged to be bogus based of sales tax department information. CIT(A) held that material was duly consumed and therefore, estimated the disallowance to 12.5%. Tribunal further restricted estimation to 8%. (Para 9.10 of ITAT order pg. no. 47 & 48 ) - Penalty deleted by CIT(A) since income assessed under MAT as well as on merits holding estimated addition 5. Disallowance on account of over invoicing 16,83,900 0 Tribunal deleted the entire addition holding no over invoicing done by assessee. (Para 8.6 to 8.12 of ITAT order Pg. no. 35) - Penalty deleted by CIT(A) since quantum deleted. 6. Disallowance of loss pertaining to exempt unit (Adjustment made in Book profits u/s 11 5JB) 5,97,86,283 0 Loss incurred on account of various trial expenses in respect of unit situated in SEZ area at Pritampur, was added back to the book profit u/s 115JB. ITAT deleted the adjustment (Para 5.4 of ITAT order Pg. No. 12) - Penalty deleted by CIT(A) since quantum deleted. 6. The Ld. Commissioner, by taking into consideration the decision/order dated 08.04.2024 (supra) of the Hon’ble Tribunal in partly deleting/affirming the additions, vide impugned order dated 30.10.2024, deleted the penalties imposed by the AO. 7. The Revenue Department in respect of the disallowances as mentioned in column nos. 1, 2, 3, 5 & 6 as depicted above, though raised the grounds of appeal challenging the decision of the Ld. ITA No.25/M/2025 & ors. M/s. IPCA Laboratories Limited 4 Commissioner in deleting the penalties referred to above mainly on the reason that an approval for filing appeal before the Hon’ble Bombay High Court, against the decision of the Hon’ble Tribunal on the quantum issues involved therein, have been approved. Admittedly there is no stay against the order dated 08.04.2024 by the Tribunal referred to above and as on today, as additions mentioned in clause 1, 2, 3, 5 & 6 which were the foundation for imposing the penalties, are not in existence. We further observe that the Ld. Commissioner before deleting the penalties imposed, not only considered the peculiar facts and circumstances of the case in totality, but also considered the decision/findings of the Tribunal in deleting the additions and therefore considering the fact that quantum additions have been deleted, he deleted the penalties imposed. Thus, in our considered view, the decision of the Ld. Commissioner in deleting the penalties imposed on the aforesaid disallowances cannot be faulted with and therefore the decision of the Ld. Commissioner needs no interference. 8. Coming to the disallowance as mentioned at sl. No.4, which pertains to bogus purchases, we observe that the AO has made the disallowance of Rs.24,92,650/- on account of bogus purchases, which was restricted to the extent of Rs. 26,988/- being profit element @ 12.5%, embedded in the said purchases, by the Ld. Commissioner. The AO therefore on the said addition of Rs. Levied the penalty. 8.1 Thereafter, the Hon’ble Tribunal vide order dated 08.04.2024 referred to above, further reduced the said addition 26,988 {@ 12.5%} of the bogus purchases, to the extent of 17212/- being 8% in lieu of 26,988/- {@12.5%}, as affirmed by the Ld. Commissioner. ITA No.25/M/2025 & ors. M/s. IPCA Laboratories Limited 5 8.2 Admittedly, the penalty levied by AO pertains to addition on account of disallowance of bogus purchases, which has been sustained to the extent @ 8 % only by the Tribunal and even otherwise the same is based on the estimation and therefore, the same is un-sustainable and thus we are in concurrence with the Ld. Commissioner and inclined not the interference in the decision of Ld. Commissioner in deleting the penalty imposed on the addition made on account of disallowance on account of bogus purchases as well. Thus, the appeal i.e. ITA no.25/M/2025 filed by the Revenue Department, which is under consideration, stand dismissed. 9. In view of our judgment in ITA no.25/M/2025, both the appeals under consideration are dismissed on the same footing. Order pronounced in the open court on 25.03.2025. Sd/- Sd/- (PRABHASH SHANKAR) (NARENDER KUMAR CHOUDHRY) ACCOUNTANT MEMBER JUDICIAL MEMBER * Kishore, Sr. P.S. Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The DR Concerned Bench //True Copy// By Order Dy/Asstt. Registrar, ITAT, Mumbai. "