M/s. United Steel Corporation, Kolkata V. ACIT, Circle-36, Kolkata, Kolkata

ITA 1674/KOL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1886 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 8 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2017
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 14-08-2014
• Court: TRIBUNAL
• Department Lawyers: RAJAT K KUREEL JCITSR
• Keywords: Business expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C, BENC H KOLKATA BEFORE SHRI N.V. VASUDEVAN, JM & DR. A.L.SAINI, AM ./ ITA NO.1674/KOL/2014 ( / ASSESSMENT YEAR :2007-2008) M/S. UNITED STEEL CORPORATION, 24- STRAND ROAD, GROUND FLOOR, KOLKATA-700001 VS. ACIT, CIRCLE -36, AAKAR BHAVAN (PURVA),110,SHANTIPALLY, KOLKATA-700110 ./ ./PAN/GIR NO. : AAAFU 7712 R ( /APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI SUNIL SURANA, AR /REVENUE BY : SHRI RAJAT K KUREEL, JCIT,SR.(DR) / DATE OF HEARING : 05/04/2017 /DATE OF PRONOUNCEMENT 26/04/2017 / O R D E R PER DR. ARJUN LAL SAINI, AM: THE CAPTIONED APPEAL FILED BY THE ASSESSEE, PERTAI NING TO THE ASSESSMENT YEAR 2007-2008, IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-XX, KOLKAT A, IN APPEAL NO.8/CIT(A)-XX/CIRCLE-36/2012-13/KOL, DATED 23.04.2 014, WHICH IN TURN ARISES OUT OF AN ORDER PASSED BY THE ASSESSING OFFI CER U/S.271 (1) (C ) OF THE INCOME TAX ACT 1961, (HEREINAFTER REFERRED TO A S THE ACT), DATED 23/03/2012. 2. BRIEF FACTS OF THE CASE QUA THE ASSESSEE ARE THA T IN THE INSTANT CASE THE ASSESSMENT U/S 143(3) WAS MADE ON 15.12.2009 AF TER COMPUTING TOTAL INCOME AT RS.2,08,33,210/- AGAINST THE RETURNED INC OME OF RS.2,05,20,600/- THE ASSESSEE DEALS IN TRADING OF I RON & STEEL, ALLOYS STEEL BAR, RODS AND FLATS. DURING THE COURSE OF ASS ESSMENT PROCEEDINGS, IT WAS FOUND BY THE A.O. THAT THE ASSESSEE FAILED T O PRODUCE ANY ITA NO.1674/KOL/2014 M/S UNITED STEEL CORPORATION 2 EVIDENCES TO SHOW THAT THE FOREIGN TOUR WAS UNDERTA KEN FOR THE PURPOSE OF BUSINESS. IT WAS SUBMITTED AT THE ASSESSMENT STAGE THAT THE ASSESSEE WAS THE IMPORTER OF TOOLS AND ALLOY STEELS AND THE FOREIGN TOUR WAS UNDERTAKEN FOR FINALIZING THE TERMS AND CONDITIONS FOR IMPORT. THE A.O. NOTED THAT THE ASSESSEE HAS MADE ALL THE IMPORTS FR OM CHINA WHEREAS THE FOREIGN TOUR WAS MADE TO AUSTRALIA AND DUBAI. T HUS THE AO HELD THAT FOREIGN TOUR EXPENSES WERE NOT INCURRED FOR THE PU RPOSE OF BUSINESS AND WERE NOT ALLOWABLE AS BUSINESS EXPENDITURE. ACCORDI NGLY, THE AO DISALLOWED THE ENTIRE SUM OF RS. 2,25,720/- AND PEN ALTY PROCEEDINGS U/S 271(1) (C ) OF THE I.T. ACT WAS INITIATED FOR CONCE ALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS. 3. NOT BEING SATISFIED WITH THE PENALTY ORDER PASS ED BY THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE LD CIT(A), WHO HAS CONFIRMED THE PENALTY IMPOSED BY AO UNDER SECTION 271(1) (C) OF T HE ACT. THE LD CIT(A) OBSERVED THAT ASSESSEE HAD CONCEALED THE PARTICULAR S OF INCOME AND FURNISHED INACCURATE PARTICULARS OF INCOME TO THE E XTENT OF ADDITION MADE BY THE ASSESSING OFFICER U/S 143(3) OF THE ACT. BES IDES, THE ASSESSEE DID NOT FILE ANY APPEAL AGAINST THE ORDER OF CIT(A), FO R QUANTUM, THEREFORE, THE AO WAS JUSTIFIED TO LEVY PENALTY U/S 271(1) (C ) OF THE ACT. 4. NOT BEING SATISFIED WITH THE ORDER OF LD. CIT(A) , THE ASSESSEE IS IN FURTHER APPEAL BEFORE US AND HAS TAKEN THE FOLLOWIN G GROUNDS OF APPEAL :- 1.FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(APPEALS) WAS WRONG IN CONFIRMING THE PENALTY OF RS.75,978/- U/S 271(1) (C ) ON ACCOUNT OF FOREIGN TRAVEL EXPENS ES. THERE WAS NO ELEMENT OF CONCEALMENT OF INCOME OR FURNISHING OF I NACCURATE PARTICULARS ITA NO.1674/KOL/2014 M/S UNITED STEEL CORPORATION 3 2.FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(APPEALS) WAS WRONG IN COMING TO THE CONCLUSION THAT NON FILING OF SECOND APPEAL BEFORE HIGHER AUTHORITIES AGAINST QUANTUM ADDITION CONSTITUTED ADMISSION OF ADDITION BY THE A PPELLANT. THE LD CIT(APPEALS) FAILED TO UNDERSTAND THAT NON FILING O F SECOND APPEAL BY THE APPELLANT AGAINST QUANTUM ADDITION WAS FOR R EASON TO AVOID PROTRACTED LITIGATION. 3. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD CIT(APPEALS) IS WRING AND NOT SPECIFIC IN COMING TO THE CONCLUSION WHETHER THE APPELLANT HAD CONCEALED THE PARTICULARS OF ITS INCOME OR FURNISHED INACCURATE PARTICULARS THEREOF. 5. LD. AR FOR THE ASSESSEE HAS SUBMITTED, BEFORE US , STATING THAT AT THE OUTSET NOTICE ISSUED BY THE ASSESSING OFFICER U /S 271(1) (C ) OF THE ACT IS DEFECTIVE. THE SAID NOTICE DOES NOT SPEAK ABOUT ANY SPECIFIC CHARGE FOR WHICH THE PENALTY ON THE ASSESSEE IS TO BE LEVIED. IT IS NOT CLEAR AS TO WHETHER THE ASSESSEE IS BEING PENALIZED FOR THE CON CEALMENT OF INCOME OR FOR THE FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE ASSESSING OFFICER DID NOT STRIKE OFF THE IRRELEVANT PORTION I N THE NOTICE, THEREFORE IT IS NOT CLEAR FOR WHICH PARTICULAR DEFAULT THE ASSESSEE IS BEING PENALIZED. THE LD AR FOR THE ASSESSEE HAS RELIED ON THE JUDGMENT O F HON`BLE KARANATAKA HIGH COURT IN THE CASE OF MANJUNATHA COTTON & GINNI NG MILLS 359 ITR 565 (KARNATAKA), WHEREIN IT WAS HELD THAT NOTICE UNDER SECTION 271(1) (C ) OF THE ACT, SHOULD SPECIFICALLY STATE AS TO WHETHER PE NALTY IS BEING IMPOSED FOR CONCEALMENT OF INCOME OR FOR FURNISHING INACCUR ATE PARTICULARS OF INCOME AND AS WAS FOLLOWED BY THE KOLKATA TRIBUNAL IN THE CASE OF SUVAPRASANANA BHATTACHARYA VS. ACIT, ITA NO. 1303/ K/2010, DATED 6.11.2015, KOLKATA. THEREFORE, PENALTY U/S 271 (1) (C ) SHOULD NOT BE LEVIED. ITA NO.1674/KOL/2014 M/S UNITED STEEL CORPORATION 4 6. LD. DR FOR THE REVENUE HAS PRIMARILY RELIED ON THE FINDINGS OF THE AO, WHICH WE HAVE ALREADY NOTED IN OUR EARLIER PARA AND IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. 7. HAVING HEARD THE SUBMISSIONS OF LD AR FOR THE ASSES SEE AND PERUSED THE MATERIAL AVAILABLE ON RECORDS, WE ARE O F THE VIEW THAT NOTICE ISSUED BY THE AO UNDER SECTION 271(1) (C ) OF THE A CT IS DEFECTIVE. THE NOTICE UNDER SECTION 271 (1) (C ) OF THE ACT, SHOUL D SPECIFICALLY STATE AS TO WHETHER PENALTY IS BEING IMPOSED FOR CONCEALMENT OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. THERE IS NO ANY SPECIFIC CHARGE ON THE ASSESSEE IN THE CASE UNDER CONSIDERAT ION THEREFORE THE PENALTY IMPOSED BY THE AO AND CONFIRMED BY THE LD C IT(A) NEEDS TO BE DELETED. ACCORDINGLY, WE DELETE THE PENALTY. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE, IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 26/ 04/2017. SD/ - (N.V. VASUDEVAN) SD/ - (DR. A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA ; $% DATED 26/04/2017 & ()* /PRAKASH MISHRA ,SR.PS. / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) & ' , / ITAT, KOLKATA 1. / THE APPELLANT- M/S UNITED STEEL CORPORATION 2. / THE RESPONDENT.-ACIT, CIRCLE-36, KOLKATA 3. 4 ( ) / THE CIT(A), KOLKATA. 4. 4 / CIT 5. 56 7 8 , 8 , / DR, ITAT, KOLKATA 6. 7 9 / GUARD FILE. 5 //TRUE COPY//