Kailash Motors Finance Pvt. Ltd., Kanpur V. DY. Commissioner of Income Tax-Vi, Kanpur

ITA 139/LKW/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1138 (ITAT-LUCKNOW)
• Duration Of Justice: 11 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 27-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A , LUCKNOW BEFORE SHRI. T.S. KAPOOR, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ITA NO. 139/LKW/2017 ASSESSMENT YEAR: 2011 - 12 KAILASH MOTORS FINANCE PVT. LTD. 84/105, G.T. ROAD KANPUR V. DY. CIT - VI KANPUR T AN /PAN : AAACK5547R (APP ELL ANT) (RESPONDENT) APPELLANT BY: SHRI RAKESH GARG, ADVOCATE RESPONDENT BY: SHRI RAJIV KUMAR, D.R. DATE OF HEARING: 05 02 201 8 DATE OF PRONOUNCEMENT: 07 0 2 201 8 O R D E R PER P ARTHA SAR ATHI CHAUDHURY, J.M : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LD. CIT(A) - III, KANPUR DATED 7/12/2016. 2 . IN THE ORIGINAL GROUNDS OF APPEAL, THE ASSESSEE HAS RAISED VARIOUS GROUNDS OF APPEAL. BUT AT THE TIME OF HEARING, THE LD. A. R. OF THE ASSESSEE MOVED AN APPLICATION FOR ADMISSION OF ADDITIONAL GROUND WHICH READS AS UNDER: - BECAUSE THE PENALTY OF RS.3,17,000/ - IMPOSED BY ACIT AND UPHELD BY THE LD. CIT(A) UNDER SECTION 271(1)(C) OF THE ACT IS BAD IN LAW AND BE QUASHED, IN AS MUCH AS THE PENALTY HAS BEEN INITIATED FOR CONCEALMENT OF PARTICULARS OF INCOME WHILE PENALTY HAS BEEN SHOW CAUSED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME, THE CHARGE AND SATISFACTION BEING DIFFERENT, THE PENALTY IMPOSED BE DELETED. ITA NO.139/LKW/2017 PAGE 2 OF 5 3 . THE LD. A.R. OF THE ASSESSEE SUBMITTED THAT THE ABOVE LEGAL GROUND GOES TO THE ROOT OF THE MATTER AND NEEDS NO FACTUAL VERIFICATION AND, THEREFORE, THE SAME MAY BE ADMITTED AND ADJUDICATED UPON. 4 . SINCE THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IS A LEGAL GROUND AND GOE S TO THE ROOT OF THE MATTER AND DOES NOT NEED ANY FACTUAL VERIFICATION, THE SAME IS ADMITTED AND WE WILL DEAL WITH THE ADDITIONAL GROUND FIRST. 5 . THE FACTS IN BRIEF ARE THAT THE TOTAL RECEIPTS SHOWN BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION WAS RS.2,4 4,19,178/ - WHEREAS THE TOTAL RECEIPTS AS PER FORM 26 - AS WAS RS.2,52,39,580/ - . THE ASSESSEE WAS CONFRONTED ON THIS AND IT WAS EXPLAINED THAT THE DIFFERENCE IS BECAUSE OF TWO DIFFERENT METHODS OF ACCOUNTING BEING FOLLOWED BY THE ACCOUNTANT, AS A RESULT OF W HICH SERVICE TAX COLLECTED OF RS.10,54,690/ - COULD NOT BE ROUTED THROUGH PROFIT & LOSS ACCOUNT. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS COLLECTED SERVICE TAX TOTALING TO RS.20,20,560/ - (RS.19,77,300/ - ON COMMISSION AND RS.43,260/ - ON RENT), OUT OF WHICH COLLECTION TO THE TUNE OF RS.10,54,690/ - WAS NOT CREDITED IN THE PROFIT & LOSS ACCOUNT , THOUGH THE ENTIRE SERVICE TAX COLLECTED OF RS.20.20 LAKHS WAS CLAIMED AS EXPENDITURE. THE DIFFERENTIAL AMOUNT OF SERVICE TAX COLLECTED OF RS.10,54,690/ - WAS B ROUGHT TO TAX AND THEREON PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS ALSO INITIATED. 6 . AT THE TIME OF HEARING BEFORE US, THE LD. A.R. OF THE ASSESSEE INVITED OUR ATTENTION TO THE ASSESSMENT ORDER AND VEHEMENTLY ARGUED THAT SO FAR AS THE ISSUE OF RECEIPTS ARE CONCERNED, PENALTY PROCEEDINGS INITIATED W ERE FOR CONCEALMENT OF PARTICULARS OF INCOME AND THE LD. A.R. OF THE ASSESSEE ALSO DREW OUR ATTENTION TO THE NOTICE OF PENALTY UNDER SECTION 274 READ WITH SECTION 271(1)(C) OF THE ACT , WHICH IS PLACED AT PAGE 12 OF THE PAPER BOOK WHEREIN THE REASON MENTIONED WAS FOR ITA NO.139/LKW/2017 PAGE 3 OF 5 FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE LD. A.R. OF THE ASSESSEE VEHEMENTLY ARGUED THAT WHEN INITIATION OF PENALTY IS FOR ONE LIMB AND ISSUANCE OF NOTICE IS ON ANOTHER LIMB OF SECTION 2 71(1)(C) OF THE ACT, CHARGE AND SATISFACTION OF THE ISSUING AUTHORITY CANNOT BE VERIFIED AND, THEREFORE, IMPOSI TION OF PENALTY WAS ILLEGAL, BAD IN LAW AND LIABLE TO BE QUASHED. 7 . THE LD. D.R., ON THE OTHER HAND, PLACED RELIANCE ON THE ORDERS OF THE AUTHORITI ES BELOW. 8 . WE HAVE PERUSED THE CASE RECORDS, HEARD THE RIVAL CONTENTIONS AND FROM A PERUSAL OF THE ASSESSMENT ORDER WE FIND THAT PENALTY PROCEEDINGS WERE INITIATED FOR CONCEALMENT OF INCOME WHEREAS THE REASON MENTIONED IN THE SHOW CAUSE NOTICE WAS FOR FURNI SHING OF INACCURATE PARTICULARS OF INCOME. IT IS AN UNDISPUTED FACT TH AT CHARGE AND SATISFACTION OF THE ISSUING AUTHORITY IS NOT MADE OUT IN THIS CASE. T O ADJUDICATE UPON THIS ISSUE, WE ARE ALSO T AKING GUIDANCE FROM THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF CIT VS. M/S SSAS EMERALD MEADOWS IN CC NO.11485/2016 (SC) WHEREIN THE HON'BLE APEX UPHELD THE ORDER OF THE TRIBUNAL ALLOWING THE APPEAL OF THE ASSESSEE . THE ORDER OF THE TRIBUNAL WAS BASED UPON THE DECISION OF THE DIVISION BENCH OF THE HO N'BLE APEX COURT IN THE CASE OF CIT VS. MANJUNATHA C OTTON AND G INNING FACTORY [2013] 359 ITR 565 WHEREIN IT WAS HELD THAT IF NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 READ WITH SECTION 271(1)(C) OF THE ACT DID NOT SPECIFY THE LIMB OF CHARGE UNDER SECTION 271(1)(C), THEN PENALTY PROCEEDINGS INITIATED IS BAD IN LAW. SIMILAR ISSUE CAME UP FOR CONSIDERATION BEFORE THIS BENCH OF THE TRIBUNAL IN THE CASE OF ASHOKA FOODS & DEHYDRATES SANSTHAN, KANPUR VS. INCOME TAX OFFICER (EXEMPTION), KANPUR IN IT A NO302/LKW/2017 WHEREIN THE TRIBUNAL HAS OBSERVED AS UNDER: - ITA NO.139/LKW/2017 PAGE 4 OF 5 8 . WE HAVE PERUSED THE CASE RECORD AND WE FIND THAT NOTICE UNDER SECTION 271(1)(C) OF THE ACT IS NOT SPECIFIC AS IT DID NOT MENTION SPECIFICALLY AS TO WHICH LIMB PENALTY UNDER SECTION 271(1)(C) OF THE ACT IS IMPOSED UPON THE ASSESSEE BY THE ASSESSING OFFICER. TAKING GUIDANCE FROM THE AFORESAID JUDICIAL PRONOUNCEMENT, WE ARE OF THE CONSIDERED VIEW THAT NOTICE FOR IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT ISSUED IN THE CASE OF THE ASSESSEE IS BAD IN LAW, INVALID AND, THEREFORE, LIABLE TO BE QUASHED. WE, THEREFORE, SET ASIDE THE ORDER OF THE LD. CIT(A) AND THE PENALTY IMPOSED BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A) UNDER SECTION 271(1)(C) OF THE ACT IS DELETED. 9 . TAK ING GUIDANCE FROM THE AFORESAID DE C I S IONS/ORDER, WE ARE OF THE CONSIDERED VIEW THAT IN THE PRESENT CASE THE ASSESSING OFFICER HAS INITIATED PENALTY PROCEEDINGS FOR CONCEALMENT WHEREAS THE NOTICE UNDER SECTION 274/271(1)(C) OF THE ACT WAS ISSUED FOR FURNISH ING OF INACCURATE PARTICULARS OF INCOME AND IT IS A N UNDISPUTED FACT THAT SATISFACTION AND CHARGE IS NOT ESTABLISHED IN THIS CASE AND, THEREFORE, WE ORDER CANCELLATION OF PENALTY AND ALLOW THE APPEAL OF THE ASSESSEE. 10 . SINCE WE HAVE ALLOWED THE APPEAL OF TH E ASSESSEE BASED ON THE LEGAL GROUND, ALL OTHER GROUNDS OF APPEAL FILED BY THE ASSESSEE BECOME ACADEMIC AND INFRUCTUOUS. 11 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 07 / 0 2 / 201 8 . SD/ - SD/ - [ T.S. KAPOOR ] [PARTH A SARATHI CHAUDHURY ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 7 TH FEBR UARY , 201 8 JJ: 0502 ITA NO.139/LKW/2017 PAGE 5 OF 5 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR