Madhava Hytech Engineers Pvt. Ltd., Hyd, Hyderabad V. ACIT, Circle-16(2), Hyd, Hyderabad

ITA 1412/HYD/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5998 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 15-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIKHIL KUMAR GOVILA
• Assessee Lawyers: P MURALI
• Section: 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA.NO.1412/HYD/2015 ASSESSMENT YEAR 2011-2012 M/S. MADHAVA HYTECH ENGINEERS P. LTD., HYDERABAD. PAN AABCM3921A VS. ACIT, CIRCLE-16(2) HYDERABAD. (APPELLANT) (RESPONDENT) FOR ASSESSEE: MR. P. MURALI FOR REVENUE : MR. NIKHIL KUMAR GOVILA DATE OF HEARING : 1 0 .03.2016 DATE OF PRONOUNCEMENT : 17 .03.2016 ORDER PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y. 2011- 2012 AGAINST THE PENALTY UNDER SECTION 271(1)(C.) O F THE I.T. ACT CONFIRMED BY THE LD. CIT(A). 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF EXECUTION OF CIVIL CONTRACT WORKS. IT FILED ITS RETURN OF INCOME FOR T HE RELEVANT ASSESSMENT YEAR ON 20.03.2012 DECLARING TO TAL INCOME AS NIL. THE ASSESSMENT UNDER SECTION 143( 3) OF THE ACT WAS COMPLETED ON 19.03.2014 BY REDUCING THE LOSS FROM RS.1,43,61,497 TO RS.56,78,078 BY MAKING THE ADDITION OF THE DISALLOWED UNVERIFIABLE EXPENSES OF 2 ITA.NO.1412/HYD/2015 MADHAVA HYTECH ENGINEERS P. LTD., HYD. RS.56,78,078. THE DISALLOWANCE WAS MADE DUE TO NON- FURNISHING OF PROPER VOUCHERS AND BILLS. THEREAFTER , THE A.O. INITIATED PENALTY PROCEEDINGS UNDER SECTION 27 1(1)(C) OF THE ACT BY ISSUING NOTICE DATED 10.09.2014. IN R ESPONSE TO THE SAME, THE ASSESSEE FILED REPLY VIDE LETTER D ATED 14.09.2014. THE A.O. HOWEVER, WAS NOT SATISFIED WIT H THE ASSESSEES EXPLANATION AND HELD THAT THE ASSESSEE C OULD NOT SUBSTANTIATE THIS CLAIM WITH PROPER EVIDENCE EI THER AT THE TIME OF ASSESSMENT PROCEEDINGS OR AT THE TIME O F PENALTY PROCEEDINGS. HE THEREFORE, LEVIED THE MINIM UM PENALTY OF RS.18,86,116 UNDER SECTION 271(1)(C) OF THE I.T. ACT. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO CONFIRMED THE ORDER OF THE A.O., AGA INST WHICH, THE ASSESSEE IS IN APPEAL BEFORE US. 3. THE LD. COUNSEL FOR THE ASSESSEE, MR. P. MURALI, SUBMITTED THAT THE ASSESSEE HAD FILED ITS R ETURN OF INCOME AFTER THE DUE DATE AND THEREFORE, THE ASSESS EE COULD NOT HAVE CARRIED FORWARD THE LOSS AND HENCE T HE REDUCTION OF LOSS IN THE ASSESSMENT DID NOT HAVE AN Y REVENUE EFFECT FOR THIS OR ANY OTHER YEAR AND THERE CANNOT BE ANY TAX THAT WAS SOUGHT TO BE EVADED ATTRACTING THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT. FURTHER ALSO, HE SUBMITTED THAT THE BILLS AND VOUCHERS OF THE ASSESS EE WERE ALL AUDITED AND THERE WAS NO QUANTIFICATION EI THER BY THE AUDITOR THAT THE ACCOUNTS OF THE ASSESSEE WERE NOT VERIFIABLE OR RELIABLE. HE SUBMITTED THAT THE A.O. HAD MADE THE DISALLOWANCE OF THE EXPENDITURE ON AN ESTI MATE BASIS HOLDING THAT THE DETAILS OF BILLS AND VOUCHER S ARE NOT 3 ITA.NO.1412/HYD/2015 MADHAVA HYTECH ENGINEERS P. LTD., HYD. VERIFIABLE AND THOUGH THIS MAY BE A GROUND FOR MAKI NG OF ADDITION, IT CANNOT BE A GROUND FOR LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE I.T. ACT. HE PLACED RELIAN CE UPON THE JUDGMENT OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. SANGRUR VANASPATHI MIL LS LTD., REPORTED IN (2008) 303 ITR 53 (P & H) (HC). 4. THE LD. D.R. ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE DISALLOWANCE O F THE EXPENDITURE WAS MAINLY ON THE GROUND THAT THE ASSES SEE HAS NOT BEEN ABLE TO SUBSTANTIATE ITS CLAIM WITH TH E RELEVANT BILLS, DETAILS AND VOUCHERS AND WAS NOT ON THE GROUND THAT THE ASSESSEE HAS FURNISHED IN ACCURATE PARTICULARS OF INCOME. IT IS SETTLED PRINCIPLE THAT EVERY ADDITION DOES NOT AUTOMATICALLY ATTRACT PENALTY UND ER SECTION 271(1)(C) OF THE ACT. THE A.O. ON THE BASIS OF THE MATERIAL ON RECORD HAS TO COME TO THE CONCLUSION TH AT THE ASSESSEE HAS FILED INACCURATE PARTICULARS OF INCOME OR CONCEALED ITS INCOME FOR LEVY OF PENALTY UNDER SECT ION 271(1)(C) OF THE ACT. NO SUCH FACTS CIRCUMSTANCES H AVE BEEN BROUGHT ON RECORD OR BEFORE US. FURTHER, THE H ONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. SANGRUR VANASPATHI MILLS LTD., (CITED SUPRA) HAS HE LD AS UNDER : 'IN ORDER TO ATTRACT CLAUSE (C) OF SECTION 271(1) O F THE INCOME-TAX ACT, 1961, IT IS NECESSARY THAT THERE MU ST 4 ITA.NO.1412/HYD/2015 MADHAVA HYTECH ENGINEERS P. LTD., HYD. BE CONCEALMENT BY THE ASSESSEE OF THE PARTICULARS O F HIS INCOME OR FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME. THE PROVISIONS OF SECTION 271 (1)( C) OF THE ACT ARE NOT ATTRACTED TO CASES WHERE THE INCOME OF AN ASSESSEE IS ASSESSED ON ESTIMATE BASIS AND ADDITIONS ARE MADE THEREIN. WHEN THE ADDITIONS HAVE BEEN MADE ON THE BASIS OF ESTIMATE AND NOT ON ACCOUNT OF ANY CONCRETE EVIDENCE OF CONCEALMENT, THEN THE PENALTY IS NOT LEVIABLE. ' 5.1. RESPECTFULLY FOLLOWING THE ABOVE JUDGMENT OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. SANGRUR VANASPATI MILLS LTD., WE SET ASIDE THE PENALTY ORDER OF THE A.O. PASSED UNDER SECTION 271( 1)(C). ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 17.03.2016. SD/- SD/- (S. RIFAUR RAHMAN) (SMT. P. MADHAVI DEVI) ACOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 17 TH MARCH, 2016 VBP/- COPY TO : 1. MADHAVA HYTECH ENGINEERS P. LTD., 3 - 6 - 69, FLAT NO.209, VENKATRAMA TOWERS, BASHEERBAGH, HYDERABAD 500 029. 2. ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 16(2), HYDERABAD. 3. CIT(A) - I V, 3 RD FLOOR ANNEXE, AAYAKAR BHAVAN, BASHERBAGH, HYDERABAD. 4. PR. CIT - IV, HYDERABAD. 5. D.R. ITAT B BENCH, HYDERABAD. 6. GUARD FILE