Sudha Agro Oil and Chemical Industries Limited, Samalkot V. The Assistant Commissioner of Income Tax, Circle-1, , Kakinada

ITA 165/VIZ/2019

• Counselvise Citation: [2019] 114 COUNSELVISE.COM (IT) 2246 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2003-2004
• Appeal Filed On: 12-04-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B RAMA KRISHNA
• Keywords: Initiation of penalty proceedings
• Section: 271(1)(c); 143(3); 115JB; 201; 68; 154

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER& SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./ I.T. A.NO. 165 /VIZ/201 9 ( / A SSESSMENT Y EAR : 20 0 3 - 04 ) M/S SUDHA AGRO OIL AND CHEMICAL INDUSTRIES LTD. POST BOX - 9, SAMALKOT G.RAGAMPETA EAST GODAVARI DIST. [ PAN : A ADCS1177N ] VS. ASST.COMMISSIONER OF INCOME TAX CIRCLE - 1 KAKINADA ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI G.V.N.HARI, AR / RESPONDENT BY : S HRI B.RAMA KRISHNA , DR / DATE OF HEARING : 13 . 1 1 . 201 9 / DATE OF PRONOUNCEMENT : . 1 1 . 201 9 / O R D E R P ER SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER : TH IS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS ) [CIT(A)] - 9, HYDERABAD IN I . T . A . NO. 10450/CIT(A) - 9/HYD/2017 - 18 DATED 30 .0 1 .201 9 FOR THE ASSESSMENT YEAR (A.Y.) 20 03 - 04. 2 I.T.A. NO . 165 /VIZ/201 9 , A.Y.20 0 3 - 04 M/S SUDHA AGRO OIL & CHEMICAL INDUSTRIES LTD., EAST GODAVARI DIST. 2. ALL THE GROUNDS OF APPEAL ARE REL ATED TO THE REJECTION OF PETITION FILED BY THE ASSESSEE U/S 154 OF THE INCOME TAX ACT (IN SHORT ACT) IN RESPECT OF PENALTY LEVIED BY THE ASSESSING OFFICER (AO) U/S 271(1)(C) OF THE ACT. THE ASSESSEE FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS .NIL AFTER SET OFF OF BROUGHT FORWARD LOSSES FOR THE A.Y.2003 - 04 . THE ASSESSEE ADMITTED THE BOOK PROFITS U/S 115JB AT RS.4,62,83,557/ - . THE ASSESSMENT WAS COMPLETED U/S 143(3) DETERMINING GROSS TOTAL INCOME OF RS.6,30,34,474/ - . IN THE ASSESSMENT PROCEE DINGS, THE AO MADE VARIOUS ADDITIONS, OUT OF WHICH ONE OF THE ADDITION WAS UNEXPLAINED DEPOSITS U/S 68 OF THE ACT AMOUNTING TO RS.18,95,000/ - . THE AO INITIATED THE PENALTY U/S 271(1)(C) OF THE ACT AND CALLED FOR THE ASSESSEES EXPLANATION AS TO WHY THE P ENALTY SHOULD NOT BE LEVIED IN RESPECT OF ADDITIONS MADE U/S 68 OF THE ACT. THOUGH THE AO HAS GIVEN REPEATED OPPORTUNITIES, THE ASSESSEE CHOOSE NOT TO FILE THE EXPLANATION. THEREFORE, THE AO LEVIED THE PENALTY OF RS.5,68,500/ - U/S 271(1)(C) OF THE ACT BY AN ORDER DATED 25.02.2008. 3. THE ASSESSEE FILED RECTIFICATION PETITION U/S 154 ON 13.04.2012 FOR CANCELLATION OF PENALTY LEVIED U/S 271(1)(C) STATING THAT THERE IS NO SANCTION IN THE ACT FOR LEVY OF PENALTY AS PER NORMAL PROVISION S, WHEN THE ASSESSEE P AID THE TAX U/S 115JB OF THE ACT . T HE AO REJECTED THE 154 PETITION FILED BY THE ASSESSEE STATING THAT THE PENALTY U/S 271(1)(C) WAS LEVIED AS PER THE 3 I.T.A. NO . 165 /VIZ/201 9 , A.Y.20 0 3 - 04 M/S SUDHA AGRO OIL & CHEMICAL INDUSTRIES LTD., EAST GODAVARI DIST. THEN EXISTING PROVISIONS OF THE ACT AND THERE IS NO MISTAKE APPARENT FROM THE RECORD, ACCORDINGLY REJECTED THE RECTIFICATION PETITION FILED BY THE ASSESSEE. 4. AGAINST THE ORDER OF THE AO PASSED U/S 154, THE ASSESSEE WENT ON APPEAL BEFORE THE LD.CIT(A) AND THE LD.CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE. 5. AGAINST WHICH THE ASSESSEE FILED THE APPEAL BEFO RE THIS TRIBUNAL. DURING THE APPEAL HEARING, THE LD.AR SUBMITTED THAT THE ASSESSEE FILED THE RETURN OF INCOME AND PAID THE TAXES U/S 115JB OF THE ACT, SINCE THE TAX LIABILITY U/S 115JB WAS MORE THAN THE TAX ON REGULAR INCOME COMPUTED AS PER NORMAL PROVISIONS OF THE ACT. THE LD.AR FURTHER SUBMITTED THAT WHEN THE ASSESSEE HAS PAID THE TAXES U/S 115JB , THERE IS NO CASE FOR LEVYING OF PENALTY U/S 271(1)(C) OF THE ACT , SINCE THE ASSESSMENTS DO NOT RESULT IN TO ADDITIONAL TAX OR REDUCE THE LOSS. IN THE C ASE OF THE ASSESSEE, THE COMPANY IS LIABLE TO PAY TAX ON BOOK PROFITS. AS PER THE ASSESSMENT ORDER, THE TAX ON BOOK PROFIT REMAINED THE SAME AND IT WAS MORE THAN TAX ON REGULAR INCOME. THUS, ARGUED THAT THERE IS NO TAX THAT WAS EVADED BY THE ASS ESSEE COMPANY, HENCE ARGUED THAT THERE IS NO CASE FOR LEVYING THE PENALTY. SINCE , THE LEVY OF PENALTY UNDER THE REGULAR PROVISIONS IS NOT PERMISSIBLE IN THE INSTANT CASE, 4 I.T.A. NO . 165 /VIZ/201 9 , A.Y.20 0 3 - 04 M/S SUDHA AGRO OIL & CHEMICAL INDUSTRIES LTD., EAST GODAVARI DIST. MISTAKE IS APPARENT FROM RECORD, THUS , SUBMITTED THAT THE AO HAS ERRED IN REJECTING THE RECTIFICATION PETITION, ACCORDINGLY REQUESTED TO CANCEL THE PENALTY LEVIED BY THE AO. THE ASSESSEE ALSO DRAWN OUR ATTENTION TO AMENDMENT MADE TO SECTION 271(1), EXPLANATION 4(A) VIDE FINANCE ACT (NO.2), 2015 AND ARGUED THAT IN THE INSTANT CASE, THE AM ENDMENT IS APPLICABLE AND ONLY AFTER THE AMENDMENT MADE APPLICABLE, THE PENALTY IS LEVIABLE. THIS AMENDMENT WAS APPLICABLE FROM THE A.Y.2016 - 17, HENCE ARGUED THAT THE AO IS NOT PERMITTED TO LEVY THE PENALTY FOR THE A.Y.2003 - 04, THUS, ARGUED THAT THERE WA S A MISTAKE APPARENT FROM THE RECORD AND ACCORDINGLY REQUESTED TO CANCEL THE PENALTY LEVIED BY THE AO. THE LD.AR ALSO DRAWN OUR ATTENTION TO THE FINANCE BILL 2015. 6. ON THE OTHER HAND, THE LD.DR ARGUED THAT AS PER THE THEN EXISTING PROVISIONS, THE AO LEV IED THE PENALTY ON THE CONCEALED INCOME. THE AMENDMENT WHICH HAS COME IN TO OPERATION VIDE FINANCE BILL, 2015 HAS NO APPLICATION IN THE ASSESSEES CASE. THUS, ARGUED THAT THERE IS NO MISTAKE APPARENT FROM RECORD WHICH CALLS FOR RECTIFICATION. HENCE, ARGU ED THAT NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE LD.CIT(A). ACCORDINGLY, REQUESTED TO UPHOLD THE ORDER OF THE LD.CIT(A) AND DISMISS THE APPEAL OF THE ASSESSEE . 5 I.T.A. NO . 165 /VIZ/201 9 , A.Y.20 0 3 - 04 M/S SUDHA AGRO OIL & CHEMICAL INDUSTRIES LTD., EAST GODAVARI DIST. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. THE AO HAD INITIATED THE PENALTY U/S 271(1)(C) AND ISSUED THE SHOW CAUSE NOTICE TO THE ASSESSEE FOR WHICH THE ASSESSEE CHOOSE NOT TO FILE EXPLANATION, WHICH SHOWS THE IMPLIED ACCEPT ANCE F OR INITIATION OF PENALTY PROCEEDINGS U/S 271(1) ON INCOME COMPUTED UNDER NORMAL PROVISIONS OF THE ACT. SINCE THERE IS NO EXPLANATION FROM THE ASSESSEE, THE AO LEVIED PENALTY U/S 271(1)(C) OF THE ACT. AS PER THE PROVISIONS OF SECTION 271(1)(C), PRI OR TO AMENDMENT VIDE FINANCE BILL 2015, PENALTY WAS LEVIABLE ON THE CONCEALED PARTICULARS OF INCOME OR ON THE AMOUNT OF INCOME RELATING TO WHICH THE ASSESSEE HAS FURNISHED THE INACCURATE PARTICULARS. AS PER EXPLANATION 4, THE AMOUNT OF TAX SOUGHT TO BE EVA DED WAS AS UNDER : ( A ) IN ANY CASE WHERE THE AMOUNT OF INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED OR INACCURATE PARTICULARS HAVE BEEN FURNISHED HAS THE EFFECT OF REDUCING THE LOSS DECLARED IN THE RETURN OR CONVERTING THAT LOSS INTO INCOME, MEANS THE TAX THAT WOULD HAVE BEEN CHARGEABLE ON THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED OR INACCURATE PARTICULARS HAVE BEEN FURISHED HAD SUCH INCOME BEEN THE TOTAL INCOME; ( B ) IN ANY CASE TO WHICH EXPLANATION 3 APPLIES, MEANS THE TAX ON THE TOTAL INCOME ASSESSED AS REDUCED BY THE AMOUNT OF ADVANCE TAX, TAX DEDUCTED AT SOURCE, TUX COLLECTED AT SOURCE AND SELF ASSESSMENT TAX PAID BEFORE THE ISSUE OF NOTICE UNDER SECTION 148. ( C ) IN BY OTHER CASE D MEANS THE DIFFERENCE BETWEEN THE TAX ON THE TOTAL IN COME ASSESSED AND THE TAX THAT WOULD HAVE BEEN CHARGEABLE HAD SUCH TOTAL INCOME BEEN REDUCED BY THE AMOUNT OF INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED OR INACCURATE PARTICULARS HAVE BEEN FURNISHED. 7.1. FROM PLAIN READING OF SECTION 271( 1)(C), BEFORE AMENDMENT, THE WORDS USED ARE THE CONCEALED INCOME OR THE INCOME RELATING TO WHICH THE 6 I.T.A. NO . 165 /VIZ/201 9 , A.Y.20 0 3 - 04 M/S SUDHA AGRO OIL & CHEMICAL INDUSTRIES LTD., EAST GODAVARI DIST. ASSESSEE HAS FURNISHED THE INACCURATE PARTICULARS. IN THE FINANCE ACT, IT WAS MENTIONED THAT WHERE CONCEALMENT OF INCOME WAS COMPUTED UNDER THE GENERAL PRO VISIONS HAVE TAKEN PLACE, PENALTY UNDER 271(1)(C) SHOULD BE LEVIABLE EVEN IF THE TAX LIABILITY OF THE ASSESSEE FOR THE YEAR HAS BEEN DETERMINED UNDER THE PROVISIONS OF SECTION 115JB OR 115JC OF THE ACT. THERE WERE DIVERGING DECISIONS WITH REGARD TO LEVY O F PENALTY U/S 271(1)(C) PRIOR TO THE AMENDMENT. AS PER THE PRE AMENDED PROVISIONS, THE CONCEALMENT OF INCOME GENERALLY REFERRED TO THE GENERAL PROVISIONS OF THE ACT, SINCE, 115JB IS ALWAYS REFERRED TO AS BOOK PROFITS AND THE TAX PAID UNDER THE SCHEME OF 11 5JB IS GIVEN CREDIT IN REGULAR TAXES . FROM THE PLAIN READING OF THE PENALTY ORDER, THERE IS NO MISTAKE WHICH IS VISIBLE FROM THE ORDER. THE ISSUE WITH REGARD TO AMENDMENT MADE VIDE FINANCE ACT, 2015 HAS NO APPLICATION IN THE ASSESSEES CASE. SINCE THE C ONCEALMENT OF INCOME REFERRED TO IN 271(1)(C) OF THE ACT IS IN RESPECT OF TAX SOUGHT TO BE EVADED IS DEFINED IN EXPLANATION 4 W.R.T. THE INCOME AND THE POTENTIAL TAX EF F ECT , THE ISSUE IS REQUIRED TO BE DEBATED BY LONG DRAWN PROCESS TO DECIDE THE ISSUE AND CANNOT BE ADJUDICATED U/S 154 OF THE ACT . THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD.CIT(A) AND THE SAME IS UPHELD. THE APPEAL OF THE ASSESSEE IS DISMISSED. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. 7 I.T.A. NO . 165 /VIZ/201 9 , A.Y.20 0 3 - 04 M/S SUDHA AGRO OIL & CHEMICAL INDUSTRIES LTD., EAST GODAVARI DIST. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH NOVEMBER, 2019. SD/ - SD/ - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /VISAKHAPATNAM /DATED : 20.11.2019 L.RAMA, SPS / COPY OF THE ORDER FORWARDED TO: - 1. / THE ASSESSEE - M/S SUDHA AGRO OIL AND CHEMICAL INDUSTRIES LTD. , POST BOX - 9, SAMALKOT, G.RAGAMPETA, EAST GODAVARI DIST. 2 . / THE REVENUE - ASST.COMMISSIONER OF INCOME TAX, CIRCLE - 1, KAKINADA 3. THE PRINCIPAL COMMISSIONER OF INCOME TAX - 2 , VISAKHAPATNAM 4. THE COMMISSIONER OF INCOME TAX (APPEALS) - 9 , HYDERABAD 5 . , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM