DCIT, Circle- 2(3), Hyderabad V. M/s Transport Corporation of India Limited, Secunderabad

ITA 152/HYD/2014

• Counselvise Citation: 15222514 RSA 2014
• Duration Of Justice: 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2000-2001
• Appeal Filed On: 31-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K HARITA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER I.T.A. NOS. 152, 153, 154, 155 & 156/HYD/2014 A.YRS. : 2000-01, 2001-02, 2002-03, 2003-04 & 2004- 05 DY. COMMISSIONER OF INCOME-TAX, L CIRCLE 2(3), HYDERABAD. VS. M/S TRANSPORT CORPORATION OF INDIA LTD., HYDERABAD. PAN AAACT7966R APPELLANT RESPONDENT REVENUE BY: SMT. K. HARITA ASSESSEE BY: SHRI Y. RATNAKAR DATE OF HEARING: 15.05.2014 DATE OF PRONOUNCEMENT: 28.05.2014 O R D E R PER SAKTIJIT DEY, JM: THESE BUNCH OF FIVE APPEALS, ALL BY THE DEPARTMENT , ARE AGAINST A COMMON ORDER DATED 01/11/2013 OF THE CIT(A)-III, HYDERABAD, DELETING PENALTIES IMPOSED U/S 271(1)(C) OF THE ACT PERTAINING TO THE ASSESSMENT YEARS 2000-01 TO 2004-05. SINCE ISSUE IS COMMON AND FACTS ARE IDENTICAL, ALL THESE APPEALS ARE CLUBBED TOGETHER AND DISPOSED OF IN THIS COMBINED ORDER FOR THE SAKE OF CONVENIENCE. 2. BRIEFLY THE FACTS ARE, THE ASSESSEE A COMPANY IS ENGAGED IN TRANSPORT BUSINESS. THE ASSESSEE IN REGULAR COURSE HAS FILED ITS RETURNS OF INCOME FOR THE ASSESSMENT YEARS UNDER CO NSIDERATION DECLARING INCOME AS UNDER: AY INCOME (RS.) 2000-01 3,84,45,650/- 2001-02 2,94,29,440/- 2002-03 4,73,49,740/- 2003-04 5,66,87,250/- 2004-05 1,84,62,310/- I.T.A. NO. 152 TO 156//HYD/2014 M/S TRANSPORT CORPORATION OF INDIA LTD. 2 3. SIMILARLY FOR AY 2005-06 ASSESSEE HAS FILED HIS RETURN OF INCOME DECLARING INCOME OF RS. 2,61,95,600/-. DURING THE A SSESSMENT PROCEEDING THE ASSESSING OFFICER WHILE EXAMINING TH E BOOKS OF ACCOUNT NOTICED THAT THE ASSESSEE HAS DEBITED EXPEN DITURE TOWARDS COMMISSION PAYMENTS OF VARIOUS AMOUNTS IN A.YS. 200 0-01 TO 2005- 06. WHILE COMPLETING THE ASSESSMENT FOR THE AFORESA ID ASSESSMENT YEARS THE ASSESSING OFFICER DISALLOWED 15% OF THE C OMMISSION PAYMENT FOR A.YS. 2001-02 AND 2002-03, WHEREAS HE D ISALLOWED ENTIRE COMMISSION PAYMENTS FOR A.YS. 2000-01, 2003- 04, 2004-05 AND 2005-06. THE ASSESSEE CHALLENGED THE DISALLOWANCE M ADE IN APPEALS PREFERRED BEFORE THE CIT(A). BEING UNSUCCESSFUL BEF ORE THE CIT(A), ASSESSEE APPROACHED THE ITAT. THE ITAT IN A COMMON ORDER DATED 25/0/2012 PASSED FOR ALL THE AFORESAID ASSESSMENT Y EARS RESTRICTED THE DISALLOWANCE TO 15% OF THE COMMISSION PAYMENTS. CONSEQUENT UPON THE ORDER PASSED BY THE ITAT SUSTAINING DISALL OWANCE OF 15%, THE ASSESSING OFFICER INITIATED PROCEEDING FOR IMPO SITION OF PENALTY U/S 271(1)(C) OF THE ACT BY ISSUING SHOW CAUSE NOTICES TO THE ASSESSEE. IN RESPONSE TO THE SHOW CAUSE NOTICES, THE ASSESSEE EX PLAINED THAT NEITHER THERE WAS ANY CONCEALMENT OF INCOME OR FURN ISHING OF INACCURATE PARTICULARS OF INCOME. IT WAS SUBMITTED THAT AS THE ASSESSEE HAS MADE FULL DISCLOSURE ON COMMISSION PAY MENTS, PENALTY SHOULD NOT BE IMPOSED U/S 271(1)(C). THE ASSESSING OFFICER, NEVERTHELESS, REJECTING THE EXPLANATION OF THE ASSE SSEE PROCEEDED TO PASS ORDERS FOR THE ASSESSMENT YEARS 2000-01 TO 200 5-06 IMPOSING PENALTY U/S 271(1)(C) OF THE ACT. ASSESSEE CHALLENG ED THE PENALTY ORDERS IN APPEALS PREFERRED BEFORE THE CIT(A). AS I T APPEARS FROM THE FACTS ON RECORD, THE CIT(A) HEARD THE APPEAL RELATI NG TO AY 2005-06 ALONE AND PASSED AN ORDER ON 11/12/2012 BY DIRECTIN G THE ASSESSING OFFICER TO RESTRICT THE PENALTY U/S 271(1)(C) TO TH E DISALLOWANCE OF 15% ON COMMISSION PAYMENTS SUSTAINED BY THE TRIBUNAL. S TILL AGGRIEVED WITH THE ORDER OF THE CIT(A) SUSTAINING PART OF THE PENALTY FOR AY 2005-06, THE ASSESSEE PREFERRED APPEAL BEFORE THE I TAT. THE ITAT IN I.T.A. NO. 152 TO 156//HYD/2014 M/S TRANSPORT CORPORATION OF INDIA LTD. 3 ITA NO. 195/HYD/2013 AND ITA NO. 233/HYD/2013 DATED 27/09/2013 DELETED THE PENALTY IMPOSED BY HOLDING AS UNDER: 16. SINCE IN THE FACTS OF THE PRESENT CASE, THE DISA LLOWANCE OUT OF COMMISSION PAYMENTS SUSTAINED BY THE TRIBUNAL IS ME RELY BY ESTIMATION OF THE EXCESS AMOUNT OF EXPENDITURE WHIC H THE ASSESSEE MIGHT HAVE BEEN CLAIMED BY THE ASSESSEE, A ND FURTHER, SINCE SUCH DISALLOWANCE HAS BEEN MADE ON THE BASIS OF THE MATERIAL FURNISHED BY THE ASSESSEE ITSELF AND ALREA DY AVAILABLE ON RECORD, WE ARE OF THE VIEW THAT THIS IS NOT A FIT C ASE FOR IMPOSITION OF THE PENALTY UNDER S.271(1)(C) OF THE ACT. FURTHER, THE IMPUGNED ORDERS OF THE LOWER AUTHORITIES PROCEED ME RELY ON THE BASIS OF THE FINDINGS IN THE QUANTUM PROCEEDINGS AN D HAVE NOT INDEPENDENTLY EXAMINED THE MATTER IN THE PENAL PROC EEDINGS FOR LEVY OF PENALTY UNDER S.271(1)(C) OF THE ACT. EVEN ON THIS PROCEDURAL COUNT, THE PENALTY LEVIED CANNOT BE SUST AINED. THOUGH THE ADDITION WAS SUSTAINED AT 15% OF THE COMMISSION PAYMENT BY THE TRIBUNAL, THAT BY ITSELF DOES NOT PROVE THAT TH ERE IS ANY CONCLUSIVE MATERIAL TO SUGGEST THAT THE ASSESSEE HA S EARNED EXACTLY THAT AMOUNT OF PROFIT, OUT OF THIS DISALLOW ANCE DETERMINED BY THE ASSESSING OFFICER. PENALTY CANNOT BE LEVIED IN THIS KIND OF SITUATION. FURTHER, UNLESS THE CLAIM OF THE ASSESSE E WAS PROVED TO BE BOGUS OR THAT ANY AMOUNT WAS RECEIVED BACK BY TH E ASSESSEE, THE DISALLOWANCE OF THE EXPENDITURE BY ITSELF, CANN OT BE A REASON FOR LEVY OF PENALTY. THE ADDITION IS ONLY ON ACCOUN T OF DIFFERENCE IN ESTIMATION OF EXPENDITURE LIABLE FOR DISALLOWANCE M ADE BY THE ASSESSING OFFICER AND THE TRIBUNAL, AND THE CLAIM O F THE ASSESSEE ITSELF WAS NOT FOUND TO BE BOGUS. THE ASSESSING OFF ICER COULD NOT PROVE THAT THERE WAS WILLFUL OR GROSS NEGLIGENCE ON THE PART OF THE ASSESSEE, RESULTING THEREBY EITHER IN CONCEALMENT O F INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. AS HEL D BY THE ALLAHABAD HIGH COURT IN THE CASE OF CIT V/S. K.L. M ANGAL SAIN(107 ITR 598), WHEN THE ASSESSING OFFICER IS NOT ABLE TO P ROVE THAT THE ASSESSEE WAS GUILTY OF FRAUD OR GROSS OR WILLFUL NE GLIGENCE, PENALTY CANNOT BE SUSTAINED. IF, LOOKING TO THE NATURE OF T HE BUSINESS, PARTICULAR METHOD OF ACCOUNTING IS ADOPTED BY THE A SSESSEE FOR BOOKING THE EXPENDITURE, BUT THE ASSESSING OFFICER IS NOT SATISFIED WITH THE METHOD OF ACCOUNTS KEPT BY THE ASSESSEE AN D THE BOOK RESULTS ARE REJECTED, THERE IS NO FAILURE TO RETURN CORRECT INCOME DUE TO FRAUD, GROSS OR WILLFUL NEGLECT, AS HELD BY THE BOMBAY HIGH COURT IN THE CASE OF CIT V/S. MOHAMMED YAKUB MOHD. IBRAHIM & CO. (143 ITR 67). SOMETIMES, THE ASSESSING OFFICER ESTI MATES THE INCOME OF THE ASSESSEE AND THEREAFTER THE APPELLATE AUTHORITIES ADOPTS DIFFERENT METHOD AND ESTIMATES INCOME. IN SU CH CIRCUMSTANCES, AS HELD BY THE PUNJAB AND HARYANA HI GH COURT IN THE CASE OF HARGOPAL SIGH V/S. CIT(258 ITR 85), PENALT Y CANNOT BE LEVIED. TO LEVY PENALTY FOR CONCEALMENT, IT IS NECE SSARY THAT THERE MUST BE EITHER CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF ITS INCOME BY THE ASSESSEE. AS THE A SSESSING OFFICER I.T.A. NO. 152 TO 156//HYD/2014 M/S TRANSPORT CORPORATION OF INDIA LTD. 4 AND THE APPELLATE AUTHORITY ARRIVED AT DIFFERENT ES TIMATES OF INCOME OF THE ASSESSEE, IT CANNOT BE SAID THAT THE ASSESSEE CONCEALED PARTICULARS OF INCOME, SO AS TO ATTRACT P ENALTY. IT WAS HELD BY THE ALLAHABAD HIGH COURT IN THE CASE OF CIT V/S. RAJ BANS SINGH (276 ITR 351), THAT WHEN INCOME IS ESTIMATED BY D IFFERENT AUTHORITIES RIGHT FROM ASSESSING OFFICER TO TRIBUNA L AND IT WAS A SIMPLE CASE OF ONE ESTIMATE AGAINST ANOTHER ESTIMAT E, AND THEREFORE, PENALTY CANNOT BE LEVIED. SIMILARLY, BOM BAY HIGH COURT IN THE CASE OF CIT V/S. BADVE (138ITR 82); PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT V/S. METAL PRODUCTS O F INDIA (150 ITR 714); DELHI HIGH COURT IN THE CASE OF CIT V/S. AJAY H ARI DALMIA(157 ITR 145); AND MADRAS HIGH COURT IN THE CASE OF BOMBAY HARDWARE SYNDICATE V/S. CIT(114 ITR 586) HAVE TA KEN A VIEW THAT PENALTY UNDER S.271(1)(C) WAS NOT IMPOSABLE IN RELATION TO ESTIMATED ADDITIONS BECAUSE THE FACTUM OF EITHER CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURAT E PARTICULARS OF INCOME, WERE NOT PROVED. 17. CONSIDERING TOTALITY OF FACTS AND CIRCUMSTANCES O F THE CASE ON HAND IN THE LIGHT OF THE SETTLED LEGAL PRINCIPLES L AID DOWN BY VARIOUS COURTS AS DISCUSSED ABOVE, WE ARE OF THE VI EW THAT THIS IS NOT A FIT CASE FOR LEVY OF PENALTY. WE ACCORDINGLY CANCEL THE ENTIRE PENALTY UNDER S.271(1)(C) OF THE ACT LEVIED BY THE AS SESSING OFFICER. CONSEQUENTLY, APPEAL OF THE ASSESSEE IS A LLOWED. 4. WHEN THE APPEALS AGAINST THE PENALTY ORDERS PASS ED FOR THE IMPUGNED ASSESSMENT YEARS CAME UP FOR HEARING BEFOR E THE CIT(A), THE ASSESSEE BROUGHT TO THE NOTICE OF THE CIT(A) TH E AFORESAID ORDER OF THE TRIBUNAL IN ITS OWN CASE FOR AY 2005-06 AND REQUESTED FOR DELETING THE PENALTIES. THE CIT(A) AFTER EXAMINING ASSESSEES SUBMISSIONS IN THE LIGHT OF FACTS ON RECORD AND GOI NG THROUGH THE ORDER OF THE TRIBUNAL (SUPRA) DELETED THE PENALTY I MPOSED FOR ALL THE ASSESSMENT YEARS UNDER APPEAL WITH FOLLOWING FINDIN GS: 4.3 SINCE THE ISSUE INVOLVED IN THE FIVE APPEALS BE ING ADJUDICATED NOW IS IDENTICAL, I.E., PENALTY HAS BEE N IMPOSED ON THE COMMISSION PAYMENTS DISALLOWANCE, THE ORDER OF THE HONOURABLE ITAT REPRODUCED ABOVE IS DIRECTLY APPLIC ABLE. RESPECTFULLY FOLLOWING THE AFOREMENTIONED ORDER, I HOLD THAT GIVEN THE FACTS AND CIRCUMSTANCES PENALTY U/S 271(1 )(C) IS NOT LEVIABLE AND THE SAME IS ORDERED TO BE CANCELLED FO R ALL THE FIVE APPEALS BEING ADJUDICATED UPON. I.T.A. NO. 152 TO 156//HYD/2014 M/S TRANSPORT CORPORATION OF INDIA LTD. 5 5. BEING AGGRIEVED, THE DEPARTMENT IS BEFORE US. 6. AT THE OUTSET, THE LEARNED AR SUBMITTED THAT THE ISSUE IN APPEAL BEING SQUARELY COVERED BY THE DECISION OF THE TRIBU NAL IN ASSESSEES OWN CASE FOR AY 2005-06 WHICH HAS BEEN FOLLOWED BY THE CIT(A), THERE IS NO INFIRMITY IN THE ORDER OF THE CIT(A). 7. THE LEARNED DR FAIRLY CONCEDED THAT ISSUE IS COV ERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE COORDINATE BENC H. 8. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERI ALS ON RECORD. AS CAN BE SEEN FROM THE FACTS ON RECORD, THE ASSESS ING OFFICER HAS IMPOSED PENALTY U/S 271(1)(C) OF THE ACT IN THE IMPUGNED ASSESSMENT YEARS BY TREATING THE 15% DISALLOWANCE ON COMMISSIO N PAYMENT SUSTAINED BY THE ITAT AS CONCEALED INCOME OF THE AS SESSEE. HOWEVER, AS CAN BE SEEN FROM THE ORDER PASSED BY TH E TRIBUNAL IN ITA NO. 195/HYD/2013 (SUPRA), RELEVANT PORTION OF W HICH HAS BEEN REPRODUCED HEREINBEFORE, THE COORDINATE BENCH WHILE CONSIDERING IDENTICAL ISSUE OF IMPOSITION OF PENALTY U/S 271(1) (C) ON DISALLOWANCE SUSTAINED BY ITAT BEING 15% ON COMMISSION PAYMENT, HAS DELETED THE PENALTY BY HOLDING THAT SUCH DISALLOWANCE HAVIN G BEEN MADE ON ESTIMATION AND ON THE BASIS OF MATERIAL FURNISHED B Y THE ASSESSEE ITSELF, THERE CANNOT BE ANY CONCEALMENT OF INCOME O R FURNISHING OF INACCURATE PARTICULARS OF INCOME IN TERMS OF SECTIO N 271(1)(C) OF THE ACT. FACTS BEING IDENTICAL AND THE CIT(A) HAVING FO LLOWED THE ORDER OF THE ITAT (SUPRA) IN LETTER AND SPIRIT, WE DO NOT FI ND ANY INFIRMITY IN THE IMPUGNED ORDER OF CIT(A). OTHERWISE ALSO, AS HELD B Y THE HONBLE SUPREME COURT IN CASE OF RELIANCE PETROPRODUCTS P. LTD., (322 ITR 158) EVERY DISALLOWANCE OF AN EXPENDITURE/EXEMPTION CLAIMED BY THE ASSESSEE IN THE RETURN CANNOT AUTOMATICALLY LEAD TO THE CONCLUSION THAT ASSESSEE HAS CONCEALED THE INCOME OR FURNISHED INACCURATE I.T.A. NO. 152 TO 156//HYD/2014 M/S TRANSPORT CORPORATION OF INDIA LTD. 6 PARTICULARS OF INCOME. IN THE AFORESAID VIEW OF THE MATTER, WE UPHOLD THE ORDER OF CIT(A) BY DISMISSING THE GROUNDS RAISE D. 9. IN THE RESULT, ALL THE APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28/05/2014. SD/ - (B. RAMAKOTAIAH) ACCOUNTANT MEMBER SD/ - (SAKTIJIT DEY) JUDICIAL MEMBER HYDERABAD, DATED 28 TH MAY, 2014 KV COPY FORWARDED TO: 1. DCIT, CIRCLE 2(3), HYDERABAD. 2. M/S TRANSPORT CORPORATION OF INDIA LTD., 306 & 3 07, III FLOOR, BHOOPAL CHAMBERS, SP ROAD, SECUNDERABAD 500 003. 3. THE CIT(A)-VII, HYDERABAD. 4. THE CIT-II HYDERABAD 5. THE DR, ITAT, HYDERABAD S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER