M/s. Gatti & Piccolo India Pvt. Ltd., Delhi V. ITO, New Delhi

ITA 1573/DEL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81720 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 08-09-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 18-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SATPAL SINGH SENIOR
• Assessee Lawyers: G N GUPTA I T P
• Keywords: Bogus Share capital; Non-deduction of tax
• Section: 143(3); 142(1); 194C; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C : NEW DELHI) BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.1573/DEL./2012 (ASSESSMENT YEAR : 2006-07) M/S. GATTI & PICCOLO INDIA PVT. LTD., VS. ITO, CO. WARD 12 (1), C/O KAILASH SUSHIL & ASSOCIATES, NEW DELHI. 1A (K-429/135), ADARSH NAGAR EXTN., G.T. KARNAL ROAD, DELHI 110 033. (PAN : AACCG3318E) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.N. GUPTA, I.T.P. REVENUE BY : SHRI SATPAL SINGH, SENIOR DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE ASSESSEE EMANATES FROM TH E ORDER OF CIT (APPEALS)-VIII, NEW DELHI DATED 31.05.2012. 2. THE ASSESSEE COMPANY IS INCORPORATED ON 17.05.20 05. IT IS A MANUFACTURING COMPANY ENGAGED IN THE BUSINESS OF MA NUFACTURE, DESIGN, MOULDS AND DIES FOR FOOTWEAR INDUSTRY. THE ASSESSEE FILED RETURN OF INCOME DECLARING LOSS OF RS.23,16,095/- ON 16.11.20 06. THE SAME WAS PROCESSED U/S 143(1) OF THE INCOME-TAX ACT, 1961 ON 24.07.2007. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY AN D NOTICES U/S 143(2) ITA NO.1573/DEL/2013 2 AND 142(1) WERE ISSUED. THE ASSESSING OFFICER WHIL E MAKING ORDER U/S 143(3) DISALLOWED RS.51,810/- FROM SHARE CAPITAL, R S.35,521/- FROM UNSECURED LOANS AND ADDITION OF RS.40,082/- WAS MAD E ON ACCOUNT OF CUSTOMS DUTY AND ALSO DISALLOWANCE OF RS.1,69,524/- U/S 40(A)(IA) FOR NON-DEDUCTION OF TDS ON FREIGHT & CARTAGE. THUS, TH E ADDITIONS AND DISALLOWANCE ARE MADE ON THE FOLLOWING COUNTS :- (I) ADDITION U/S 68 ON ACCOUNT OF UNEXPLAINED SHARE CAPITAL AND UNSECURED LOAN (RS.51,810/- & RS.35,521/- RESPECTIVELY) RS. 87,32 1/- (II) DISALLOWANCE OUT OF CUSTOM DUTY EXPENSES RS. 40,082/- (III) DISALLOWANCE U/S 40(1)(IA) ON ACCOUNT OF NON-DEDUCTION OF TAX AT SOURCE RS.1,69 ,524/- PENALTY PROCEEDINGS U/S 271(1)(C) WERE INITIATED ON ACCOUNT OF THE ABOVE ADDITIONS AND DISALLOWANCES. THE ASSESSING OFFICER RELYING ON THE DECISIONS OF HON'BLE DELHI HIGH COURT IN THE CASE O F CIT VS. GURBACHAN LAL (250 ITR 157) AND HON'BLE SUPREME COURT IN THE CASE OF UOI VS. DHARMENDRA TEXTILE PROCESSORS (306 ITR 277) LEVIED A PENALTY OF RS.99,949/- U/S 271(1)(C) OF THE ACT. AGAINST THIS ORDER, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT (A). THE CIT (A) PROCEEDE D TO DECIDE THE APPEAL EX-PARTE AND UPHELD THE PENALTY ORDER OF THE ASSESSING OFFICER RELYING ON THE DECISIONS OF HON'BLE SUPREME COURT I N THE CASES OF K.P. MADHUSUDAN VS. CIT (251 ITR 99), DHARMENDRA TEXTILE S PROCESSORS & ITA NO.1573/DEL/2013 3 ORS. (306 ITR 277 AND ATUL MOHAN BINDAL (317 ITR 1) . NOW, THE ASSESSEE IS IN APPEAL BEFORE US. 3. GROUND NO.1 IN THE ASSESSEES APPEAL READ AS UND ER :- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-VI II, NEW DELHI (HEREINAFTER CALLED THE CIT (A) FOR SHORT ) ERRED IN PASSING AN EX-PARTE ORDER DISMISSING THE APPEAL. 4. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. DURI NG THE COURSE OF APPELLATE PROCEEDINGS, NOTICE WAS ISSUED ON 17.10.2 011 FIXING THE DATE FOR HEARING ON 31.10.2011 BUT NONE ATTENDED. FURTHER, NOTICES DATED 02.03.2012 AND 25.05.2012 WERE ISSUED FIXING THE DA TE FOR HEARING ON 21.03.2012 AND 30.05.2012 RESPECTIVELY, HOWEVER, TH ESE DATES WERE ALSO REMAINED UNCOMPLIED WITH. IN VIEW OF THESE FACTS, THE CIT (A) HAS NO OTHER ALTERNATIVE BUT TO DECIDE THE APPEAL EX-PARTE ON MERITS. IN VIEW OF THIS, WE UPHOLD THE ORDER OF CIT (A) AND DISMISS TH IS GROUND OF ASSESSEES APPEAL. 5. GROUND NOS.2 & 3 OF THE ASSESSEES APPEAL READ A S UNDER :- 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LEARNED CIT (A) ERRED IN UPHOLDING THE PENALTY OF RS.99,949/- IMPOSED BY INCOME TAX OFFICER. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND WITHOUT PREJUDICE TO GROUND OF APPEAL NO.2 ABOV E, PENALTY OF RS.99,949/- IMPOSED U/S 271(1)(C) OF THE INCOME- TAX ACT, 1961 IS EXCESSIVE. 6. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. LD. AR SUBMITTED THAT THE ASSESSEE HAS NOT PREFERRED AN APPEAL AGAINST TH E QUANTUM ORDER AS ITA NO.1573/DEL/2013 4 THERE WAS NET LOSS OF RS.23,16,095/- AND EVEN AFTER THE ADDITIONS, LOSS WAS REDUCED TO RS.20,19,158/-. HE SUBMITTED THAT THE A SSESSEE WAS UNDER THE IMPRESSION THAT THERE IS NO TAX IMPLICATION & HENCE THERE IS NO NEED TO FILE AN APPEAL AGAINST THE ORDER. ON THE ADDITIONS RELA TED TO RS.87,321/- U/S 68 ON ACCOUNT OF UNCONFIRMED SHARE CAPITAL AND UNSECUR ED LOAN, THE LD. AR PLEADED THAT CONFIRMATIONS FOR ONLY A MINISCULE PAR T OF THE SHARE CAPITAL AND UNSECURED LOAN COULD NOT BE SUBMITTED MERELY BE CAUSE THE COPIES OF FIRCS FROM THE BANK COULD NOT BE PROCURED DUE TO PA UCITY OF TIME. HE ALSO SUBMITTED THAT THERE WAS NO MENS REA ON ASSESS EES PART, HENCE THE PENALTY PROCEEDINGS DESERVES TO BE DROPPED ON THESE ADDITIONS. WE FIND THAT CONFIRMATION/EVIDENCE WITH REGARD TO THE SHARE CAPITAL OF RS.51,810/- AGAINST TOTAL SHARE CAPITAL OF RS.24,48,100/- AND U NSECURED LOANS OF RS.35,521/- AGAINST TOTAL LOAN OF RS.35,23,925/- C OULD NOT BE FILED DUE TO PAUCITY OF TIME TO PROCURE THE SAME. IN VIEW OF T HESE FACTS, WE HOLD THAT ONLY ON MEAGER AMOUNT, THE ASSESSEE WAS NOT ABLE TO FILE THE CONFIRMATIONS DUE TO PAUCITY OF TIME. THEREFORE, IN OUR CONSIDERED VIEW, NO PENALTY U/S 271(1)(C) OF THE ACT COULD BE LEVIED ON SUCH ADDITIONS MADE TO THE INCOME OF THE ASSESSEE, HENCE WE ORDER TO DELETE THE SAME. 6.1 HOWEVER, WITH REGARD TO THE ADDITION MADE OUT O F CUSTOMS DUTY EXPENSES CLAIMED TO HAVE BEEN PAID, WE HOLD THAT NO EVIDENCES OF PAYMENT OF SUCH DUTY WERE FURNISHED BY THE ASSESSEE . IT WAS THE DUTY OF ASSESSEE TO FURNISH NECESSARY EVIDENCE IN SUPPORT O F SUCH CLAIM. ITA NO.1573/DEL/2013 5 SIMILARLY, WITH REGARD TO DISALLOWANCE OUT OF FREIG HT AND CARTAGE EXPENSES FOR NOT DEDUCING TDS, WE HOLD THAT ASSESSEE WAS UND ER STATUTORILY OBLIGATION TO DEDUCT TAX AT SOURCE AS PER EXPRESSED PROVISION OF SECTION 194C OF THE ACT AS THESE WERE CONTRACTUAL PAYMENTS. ASSESSEE HAD NOT DONE SO AND CLAIMED THESE EXPENSES WHICH ARE NOT DE DUCTIBLE AS PER EXPRESSED PROVISIONS OF SECTION 40(IA) OF THE ACT. ASSESSEE HAD CLAIMED EX-FACIE NOT DEDUCTIBLE EXPENSES. IN VIEW OF THESE FINDINGS, WE HOLD THAT ASSESSEE IS LIABLE TO LEVY PENALTY FOR CLAIMING EX- FACIE NOT ALLOWING EXPENSES. BY HOLDING SO, WE FIND NO FAULT IN THE L EVY OF PENALTY ON THESE ADDITIONS. WE UPHOLD THE SAME UP TO THAT EXTENT. 6.2 IN VIEW OF OUR ABOVE FINDINGS, THE ASSESSING OF FICER IS DIRECTED TO WORK OUT THE MINIMUM PENALTY ON THESE ADDITIONS AND MAKE ORDER ACCORDINGLY. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 15 TH DAY OF SEPTEMBER, 2014. SD/- SD/- (I.C. SUDHIR) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 15 TH DAY OF SEPTEMBER, 2014 TS ITA NO.1573/DEL/2013 6 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-VIII, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR/ITAT