Sh Ramesh Kumar Dudani, Mohali V. DCIT,Circle -6(1), Mohali

ITA 1146/CHANDI/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4452 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 1 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 15-10-2020
• Assessment Year: 2011-2012
• Appeal Filed On: 19-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RISHI KUMAR ACIT
• Keywords: Depreciation; Agreed addition; TDS
• Section: 271(1)(c); 143(3); 274; 154

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BE NCH A, CHANDIGARH (VIRTUAL COURT) .., !' '# $, % &' BEFORE: SHRI. N.K.SAINI, VP & SHRI , SANJAY GARG, J M ITA NO. 1146/CHD/2019 ASSESSMENT YEAR : 2011-12 SHRI RAMESH KUMAR DUDANI PLOT NO. C-104, INDUSTRIAL AREA PHASE-VII, MOHALI, PUNJAB THE DCIT, CIRCLE - 6(1) SECTOR-68, MOHALI PUNJAB PAN NO: ABBPD0633J APPELLANT RESPONDENT !' ASSESSEE BY : SHRI NALIN K. NOHRIA, C.A SHRI B.K. NOHRIA, C.A #!' REVENUE BY : SHRI RISHI KUMAR, ACIT $ %! & DATE OF HEARING : 15/10/2020 '()*! & DATE OF PRONOUNCEMENT : 15/10/2020 &(/ ORDER PER N.K. SAINI, VICE PRESIDENT THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DT. 28/05/2019 OF LD. CIT(A)-2, CHANDIGARH. 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEA L: 1. THAT THE LD. CIT(APPEALS)-2 CHANDIGARH HAS ERRED IN UPHOLDING THE ORDER OF THE LEARNED A 0 IN IMPOSING PENALTY OF RS. 17,24 2/- UNDER SECTION 271(L)(C) OF THE INCOME TAX ACT, 1961 WHICH IS BELOW 100% OF THE TAX SOUGHT TO BE EVADED AS PER SECTION 271(L)(III) OF THE ACT AND WITHOUT PRIO R APPROVAL OF THE LEARNED ADDL. CIT RANGE 6 MOHALI UNDER SECTION 274 OF THE ACT. 2. THAT THE LD. CIT(APPEALS)-2 CHANDIGARH HAS ERRED IN UPHOLDING THE ORDER OF THE LEARNED A 0 HAS IN THE NOTICE UNDER SECTION 271(L)(C) OF THE INCOME TAX ACT, 1961 HAS STATED THAT THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME AND FURNISHED INACCURATE PARTICULARS OF INCOME AS WELL AS IN THE BODY OF THE ASSESSMENT ORDER. THE LEARNED AO HAS NO CLEAR BELI EF REGARDING UNDER WHICH LIMB MENTIONED IN SECTION 271(L)(C) OF THE INCOME T AX ACT, 1961 THE PENALTY IS TO BE LEVIED UPON THE APPELLANT. SINCE THE LEARNED AO H AS NO SPECIFIC REASONS TO ISSUE PENALTY NOTICE NO PENALTY CAN BE LEVIED. 3. THAT THE LD. CIT(APPEALS)-2 CHANDIGARH HAS ERRED IN UPHOLDING THE ORDER OF THE LEARNED A 0 AS THE LEARNED A 0 WAS SATISFIED THAT THE APPELLANT HAS 2 FURNISHED INACCURATE PARTICULARS OF INCOME RESULTIN G IN CONCEALMENT OF INCOME FOR WHICH NO LIMB HAS BEEN SPECIFIED IN SECTION 271(L)( C ) OF THE INCOME TAX ACT, 1961 UNDER WHICH THE PENALTY HAS BEEN LEVIED. 4. THAT THE LD. CIT(APPEALS)-2 CHANDIGARH HAS ERRED IN HOLDING THAT SECTION 246A(Q) IS NOT APPLICABLE WHERE REQUEST FOR RECTIFI CATION HAS BEEN MADE UNDER SECTION 154 OF THE ACT. 5. THAT THE APPELLANT RESERVES THE RIGHT TO ADD, AMEND OR DELETE ONE OR MORE OF THE GROUNDS OF APPEAL BEFORE THE APPEAL IS DISPOSED OFF. 3. GROUND NO. 2 WAS NOT PRESSED, THEREFORE, THE SAM E IS DISMISSED AS NOT PRESSED. 4. THE GRIEVANCE OF THE ASSESSEE IN THIS APPEAL REL ATES TO THE SUSTENANCE OF PENALTY OF RS. 17,242/- LEVIED BY THE A.O. UNDER SE CTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT). 5. FACTS OF THE CASE AS APPEARING IN THE PENALTY OR DER DT. 30/03/2018 IN BRIEF ARE THAT THE ASSESSMENT IN THIS CASE WAS COMPLETED VIDE ORDER DT. 31/03/2014 AT AN INCOME OF RS. 25,71,060/- AGAINST THE RETURNED I NCOME OF RS. 20,33,820/- BY MAKING THE FOLLOWING ADDITION: 1. ADDITION OF RS. 81,072/- ON ACCOUNT OF LESS INCO ME SHOWN UNDER THE HEAD INCOME FROM OTHER SOURCES'. 2. ADDITION OF RS.3,15,213/-WAS MADE ON ACCOUNT OF ASSESSEE IS CLAIMING DEPRECIATION ON THE ENTIRE BLOCK OF 'BUILDING AND P LANT & MACHINERY'. 3. ADDITION OF RS. 1,40,955/ ON ACCOUNT OF DISALLO WANCE OF 'FOREIGN TRAVELLING EXPENSES'. PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT WERE ALSO INITIATED AGAINST THE ADDITION MENTIONED ABOVE. IN THE MEANTIME THE ASSES SEE FILED AN APPEAL BEFORE THE LD. CIT(A) WHO DELETED THE ADDITION MENT IONED AT SL. NO. 2 ABOVE . THE A.O. ASKED THE ASSESSEE AS TO WHY THE PENALTY U NDER SECTION 271(1)(C) OF THE ACT WAS NOT TO BE LEVIED. IN RESPONSE THE ASSES SEE SUBMITTED AS UNDER: '1. THAT AS REGARDS ADDITION OF RS.81,072/- ON A CCOUNT OF INTEREST ON FDR IT IS SUBMITTED THAT THE ASSESSEE HAS ALREADY STATED IN ASSESSMENT PROCEEDINGS THAT IT COULD NOT DISCLOSE THE SAME AS IT HAS NOT RECEIVED FORM 16AFROM THE RESPECTIVE DEDUCTORS DUE TO TDS ON ACCRUAL OF INTEREST. AS SUC H THE ASSESSEE HAS REASONABLE 3 CAUSE FOR NON-DISCLOSURE OF THE SAME AND HAS PAID T HE INCOME TAX DUE IN TIME. IT IS THEREFORE PRAYED THAT THE PENALTY PROCEEDINGS MA Y BE DROPPED ON THIS ISSUE .' .. 3. THAT DISALLOWANCE OF 20% OF THE FOREIGN TRAVELLI NG IS AN AGREED ADDITION OF RS. 1,40,955/- . IT IS ADHOC AGREED ADDITION SUBJECT TO NO PENALTY AS SUCH THEREFORE PRAYED THAT THE PENALTY PROCEEDINGS MAY BE DROPPED ON THIS ISSUE.' 5.1 THE A.O. WAS SATISFIED WITH THE EXPLANATION OF THE ASSESSEE WITH RESPECT TO THE DISALLOWANCE OF FOREIGN TRAVELLING EXPENSES AND THEREFORE THE PENALTY UNDER SECTION 271(1)(C) ON ACCOUNT OF THE SAID ADDITION W AS DROPPED. HOWEVER THE A.O. DID NOT FIND MERIT IN THE REPLY OF THE ASSESSE E ON THE ANOTHER ADDITION OF RS. 81,072/- RELATING TO THE ADDITION UNDER THE HEAD I NCOME FROM OTHER SOURCES. THE A.O. HELD THAT THE ASSESSEE FURNISHED THE INACC URATE PARTICULARS OF INCOME RESULTING IN THE CONCEALMENT OF INCOME. ACCORDINGLY , THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT AMOUNTING TO RS. 17,242/- WAS LEVIED. 6. BEING AGGRIEVED THE ASSESSEE, CARRIED THE MATTER TO THE LD. CIT(A) WHO SUSTAINED THE PENALTY LEVIED BY THE A.O. 7. NOW THE ASSESSEE IS IN APPEAL. 8. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE A.O. BEFORE LEVYING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT DID NOT OBTAIN THE APPROVAL FROM THE ADDITIONAL COMMISSIONER OF INCOME TAX WHICH IS MAND ATORY AS PER THE PROVISIONS OF SECTION 274 OF THE ACT WHICH PROVIDES THAT NO OR DER IMPOSING THE PENALTY SHALL BE MADE EXCEPT WITH PRIOR APPROVAL OF THE JOINT COM MISSIONER OF INCOME TAX. IT WAS SUBMITTED THAT THE ASSESSEE SOUGHT INFORMATION UNDER RTI ACT AND RECEIVED THE ORDER DT. 30/05/2019, COPY OF WHICH IS PLACED A T PAGE NO. 16 & 17 OF THE ASSESSEES PAPER BOOK WHEREIN IT HAS BEEN MENTIONED THAT THE NET MINIMUM PENALTY IMPOSABLE WAS RS. 25,051/- AND THAT SINCE T HE PENALTY LEVIED WAS RS. 17,242/-, APPROVAL UNDER SECTION 274 OF THE ACT, WH ICH IS REQUIRED IN CASE THE AMOUNT OF PENALTY UNDER SECTION 271(1)(C) OF THE AC T IS MORE THAN RS. 20,000/- FROM JOINT COMMISSIONER OF INCOME TAX WAS NOT SOUGH T. 4 9. IT WAS FURTHER SUBMITTED THAT SINCE THE A.O. FAI LED TO OBTAIN THE APPROVAL FROM THE JOINT COMMISSIONER / ADDITIONAL COMMISSION ER OF INCOME TAX, HE KNOWINGLY REDUCE THE PENALTY TO RS. 17,242/- INSTEA D OF RS. 25,051/- WHICH WAS THE MINIMUM PENALTY LEVIABLE ON THE CONCEALED INCOM E, IF ANY, OF RS. 81,072/-. IT WAS FURTHER SUBMITTED THAT THE A.O. IN THE NOTICE U NDER SECTION 274 R.W.S 271(1)(C) OF THE ACT DID NOT MENTION AS TO WHETHER THERE WAS A CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME. OUR ATTENTION WAS DRAWN TOWARDS THE COPY OF THE AFORESAID NOTICE WHIC H IS PLACED AT PAGE NO. 14 OF THE ASSESSEES PAPER BOOK. IT WAS SUBMITTED THAT THE A.O. WAS NOT SURE AS TO WHETHER THERE WAS A CONCEALMENT OF INCOME OR FURNIS HING OF INACCURATE PARTICULARS OF INCOME, THEREFORE THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT WAS NOT JUSTIFIED. THE RELIANCE WAS PLACED ON T HE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF DILIP N. SHROFF VS. JC IT REPORTED AT 291 ITR 591 AND THE DECISION OF HON'BLE KARNATAKA HIGH COURT IN THE CASE OF MANJUNATH COTTON & GINNING FACTORY & OTHERS REPORTED AT 359 ITR 565. 10. IN HIS RIVAL SUBMISSIONS THE LD. SR. DR STRONGL Y SUPPORTED THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) AND FURTHER SUBMITTE D THAT SINCE THE PENALTY LEVIED BY THE A.O. WAS LESS THAN RS. 20,000/- THERE WAS NO NEED OF OBTAIN THE APPROVAL FROM THE JOINT / ADDITIONAL COMMISSIONER O F INCOME TAX AND AS THE ASSESSEE CONCEALED THE INCOME OF RS. 81,072/- THE P ENALTY OF RS. 17,242/- UNDER SECTION 271(1)(C) OF THE ACT WAS RIGHTLY LEVIED BY THE A.O. AND THAT THE LD. CIT(A) WAS FULLY JUSTIFIED IN SUSTAINING THE ABOVE SAID PE NALTY. 11. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE IT IS NOTICED THAT THE A.O. WHILE FRAMING THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT MADE THREE ADDITION I.E; RS. 81,072/- ON ACCOUN T OF LESS INCOME SHOWN UNDER THE HEAD INCOME FROM OTHER SOURCES, RS. 3,1 5,213/- ON ACCOUNT OF EXCESS DEPRECIATION AND RS. 1,40,955/- ON ACCOUNT OF DISALLOWANCE OF FOREIGN 5 TRAVELLING EXPENSES. OUT OF THE AFORESAID ADDITIONS , THE ADDITION OF RS. 3,15,213/- WAS DELETED BY THE LD. CIT(A) VIDE ORDER DT. 24/10/ 2016 IN APPEAL NO. 149/2014- 15 AND THE A.O. HERSELF DROPPED THE PENALTY ON THE ADDITION OF RS. 1,40,955/-, THE ONLY ADDITION WHICH REMAINED INTACT FOR THE PUR POSES OF LEVYING PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS RS. 81,072/- . ON THE SAID ADDITION THE A.O. LEVIED PENALTY OF RS. 17,242/-. HOWEVER WHEN T HE INFORMATION WAS SOUGHT BY THE ASSESSEE UNDER RTI ACT RELATING TO THE AMOUNT O F PENALTY TO BE LEVIED AND AS TO WHETHER APPROVAL WAS TAKEN FROM THE JOINT/ADDITI ONAL COMMISSIONER OF INCOME TAX BEFORE LEVYING THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT, THE REPLY GIVEN VIDE LETTER DT. 30/05/2019 (COPY OF WHI CH IS PLACED AT PAGE NO. 16 & 17 OF THE ASSESSEES PAPER BOOK) WAS AS UNDER: F.NO:DCIT/CIRCLE6(1)/MOHALI/2019-20/178 DATED: 30.05.2019 TO SH. RAMESH DUDANI C-104, I.A., PHASE-7, MOHALI. SIR, SUB: CALCULATION IN RESPECT OF PENALTY U/S 271(1)(C ) FOR THE A.Y. 2011-12- REGARDING- KINDLY REFER TO THE ORDER U/S 19(1) OF THE RIGHT TO INFORMATION ACT, 2005 PASSED VIDE NO. DATED 17/05/2019 IN YOUR CASE. 2. IN CONNECTION WITH THE ABOVE, FURTHER, POINT WIS E INFORMATION IN RESPECT OF YOUR OFFICE LETTER NO. 934 DATED 21.05.2019 IS AS UNDER: - I. PLEASE PROVIDE THE INFORMATION AS TO IN HOW THE CALCULATION OF PENALTY AMOUNT OF RS.17,242/- HAS BEEN MADE ON 81,072/- STATED TO BE THE CONCEALED AMOUNT. AS PER INCOME TAX ACT, 1961, CALCULATION OF THE PEN ALTY TO BE LEVIED IS EQUAL TO THE TAX SOUGHT TO BE EVADED & CALCULATION IS AS PER THE TABLE GIVEN BELOW:- SR.NO PARTICULARS AMOUNT 1. TAX ON THE ASSESSED INCOME OF RS. 22,55,847/- (INCLUDING CONCEALED INCOME OF RS. 81,072/-) RS. 5,38,437/- 2. TAX ON THE INCOME OF RS. 21,74,775/ (I.E. ASSESSED INCOME CONCEALED INCOME OF RS. 81,072/-) RS. 5,13,386/- 3. MINIMUM PENALTY IMPOSABLE @ 100% OF THE TAX SOUGHT TO BE EVADED. RS. 25,051/- 4. MAXIMUM PENALTY IMPOSABLE @300% OF THE RS. 75,15 3/- 6 TAX SOUGHT TO BE EVADED. II. PLEASE PROVIDE THE INFORMATION THE CONCEALED AM OUNT ON WHICH THE PENALTY HAS BEEN IMPOSED AND HOW IT HAS BEEN CALCULATED. AS PER THE PENALTY ORDER, PENALTY U/S 271(L)(C) HAS BEEN LEVIED ON THE ADDITION OF RS. 81,072/- MADE UNDER THE HEAD 'INCOME FROM OTHER SOU RCES'. FURTHER, REPLY TO QUERY NO. 1 MAY BE REFERRED FOR THE CALCULATION OF PENALTY. III. PLEASE PROVIDE THE INFORMATION WHETHER ANY APPROVAL OF THE ADDL. CIT/JCIT MOHALI RANGE HAS BEEN OBTAINED BEFORE LEVY OF PENALTY. SINCE PENALTY LEVIED WAS AT RS. 17,242/-, APPROVAL FROM JCIT/ADDL CIT WAS NOT SOUGHT AS PER SEC 274 OF THE ACT. IV. IF NO.(III) INFORMATION IS YES PLEASE PROVIDE A COP Y OF THE APPROVAL AS REQUESTED IN PARA (III). NOT APPLICABLE THIS IS FOR YOUR INFORMATION AND FURTHER NECESSARY ACTION AT YOUR END. YOURS SINCERELY, SD/- (LALIT BISHNOI) DY. COMMISSIONER OF INCOME TAX, CIRCLE 6(1), MOHAL I 12. FROM THE AFORESAID REPLY DATED 30.05.2019 UNDER RTI ACT BY THE DEPARTMENT, IT IS CLEAR THAT THE MINIMUM PENALTY LE VIABLE ON THE ADDITION OF RS. 81,072/- WAS RS. 25,051/- THEREFORE THE APPROVAL FR OM JOINT / ADDITIONAL COMMISSIONER OF INCOME TAX WAS REQUIRED AS PER THE PROVISIONS CONTAINED IN SUB SECTION (2) OF SECTION 274 OF THE ACT WHICH READ AS UNDER: 274. (1). (2) NO ORDER IMPOSING A PENALTY UNDER THIS CHAPTER SHAL L BE MADE- (A) BY THE INCOME-TAX OFFICER, WHERE THE PENALTY EXCEED S TEN THOUSAND RUPEES; (B) BY THE ASSISTANT COMMISSIONER OR DEPUTY COMMISSIO NER, WHERE THE PENALTY EXCEEDS TWENTY THOUSAND RUPEES, HOWEVER IN THE PRESENT CASE, NO APPROVAL FROM THE J OINT / ADDITIONAL COMMISSIONER OF INCOME TAX WAS SOUGHT, THEREFORE TH E PENALTY LEVIED BY THE A.O. WAS NOT JUSTIFIED. IN THE PRESENT CASE IT APPE ARS THAT THE PENALTY OF RS. 17,242,/- WAS LEVIED BY THE A.O. BUT THE SAID PENAL TY WAS DIFFERENT FROM THE 7 PENALTY UNDER SECTION 271(1)(C) TO BE LEVIED. IT IS ALSO RELEVANT TO POINT OUT THAT THERE IS NO PROVISION UNDER SECTION 271(1)(C) OF TH E ACT TO IMPOSE THE PENALTY LESS THAN THE 100% OF THE TAX SOUGHT TO BE EVADED AND IN THE PRESENT CASE, THIS AMOUNT WAS AT RS. 25,051/-. 13. WE, THEREFORE, BY KEEPING IN VIEW THE AFORESAID DISCUSSION ARE OF THE VIEW THAT THE PENALTY AMOUNTING TO RS. 17,242/- [ WHEN T HE PENALTY UNDER SECTION 271(1)(C) OF THE ACT LEVIABLE WAS RS. 25,051/-] WIT HOUT TAKING THE APPROVAL FROM THE JOINT / ADDITIONAL COMMISSIONER OF INCOME TAX, UNDER SECTION 271(1)(C) OF THE ACT WAS NOT JUSTIFIED, ACCORDINGLY THE SAME IS DELETED. 14. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. (ORDER PRONOUNCED IN THE OPEN COURT ON 15/10/2020) SD/- SD/- '# $ .., (SANJAY GARG ) ( N.K. SAI NI) % &'/ JUDICIAL MEMBER / VICE PRESIDENT AG DATE: 15/10/2020 (+! ,-.- COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. $ / CIT 4. $ / 01 THE CIT(A) 5. -2 45&456789 DR, ITAT, CHANDIGARH 6. 8:% GUARD FILE