Dy. Commissioner of Income-tax, Pune V. Aurangabad Electricals Ltd., Pune

ITA 1770/PUN/2013

• Counselvise Citation: 177024514 RSA 2013
• Duration Of Justice: 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 23-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P S NAIK
• Section: 143(3); 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE: SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO. 1770 /PN/20 1 3 ASSESSMENT YEAR : 2006 - 07 DY. COMMISSIONER OF INCOME TAX, C IRCLE 8, PUNE VS. AURANGABAD ELECTRICALS LTD., MIDC, CHAKAN, PUNE (APPELLANT) (RESPONDENT) PAN NO. AACCA2867L APPELLANT BY: SHRI P.S. NAIK RESPONDENT BY: SHRI SHARAD SHAH DATE OF HEARING : 08 - 0 9 - 2014 DATE OF PRONOUNCEMENT : 12 - 0 9 - 2014 ORDER P ER R.S. PADVEKAR , JM : - IN T HIS APPEAL , THE REVENUE HAS CHALLENGED THE IMPUGNED ORDER OF THE LD. CIT(A) - V - PUNE DATED 18 - 06 - 2013 FOR THE A.Y. 2006 - 07 DELETING THE PENALTY LEVIED BY THE ASSESSING OFFICER U/S. 271(1)(C) OF THE INCOME - TAX ACT. TH E REVENUE HAS TAKEN THE FOLLOWING GROUNDS IN THE APPEAL: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) WAS JUSTIFIED IN DELETING THE PENALTY LEVIED U/S . 271 (1)(C) OF THE I . T . ACT, WITHOUT CONSIDERING THE ISSUES INVOLVED AND IGN ORING THE MERITS OF THE CASE? 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) WAS JUSTIFIED IN DELETING THE PENALTY LEVIED U/S 271 (1)(C) OF THE ACT ON THE BASIS OF THE SUBMISSION MADE BY THE ASSESSEE THAT THE QUANTUM ADDITION IN RESPECT OF WHICH PENALTY HAS BEEN LEVIED BY THE ASSESSING OFFICER HAS BEEN DELETED BY THE HON'BLE ITAT, WITHOUT VERIFYING THAT THE DEPARTMENT HAS ALREADY GONE IN FURTHER APPEAL AGAINST THE ORDER OF HON'BLE ITAT AND THE MATTER IS PENDING BEFORE THE HON'BLE HIGH COURT? 2 ITA NO. 1770/PN/2013, AURANGABAD ELECTRICALS LTD., PUNE 2. THE BRIEFLY STATED FACTS WHICH REVEALED FROM THE IMPUGNED ORDER ARE AS UNDER. THE ASSESSEE IS ENGAGED IN THE MANUFACTURING OF VARIOUS ENGINEERING PARTS AS WELL AS IN WIND POWER GENERATION. THE ASSESSEE FILED THE RETURN OF INCOME FOR THE A. Y. 2006 - 07 ON 30 - 11 - 2006, DECLARING TOTAL INCOME OF RS.51,99,718/ - UNDER REGULAR COMPUTATION AND ALSO RS.13,84,43,057/ - U/S. 115JB OF THE INCOME - TAX ACT. THE ASSESSMENT OF THE ASSESSEE WAS COMPLETED U/S. 143(3) OF THE ACT. WHILE COMPLETING THE ASSESSMENT THE ASSESSING OFFICER MADE THE FOLLOWING ADD I TIONS / DISALLOWANCES: SR. NO. PARTICULARS TOTAL DISALLOWANCE / ADDITIONS CONFIRMED BY CIT(A) 1 DISCOUNT ON THE PAYMENT OF DEFERRED SALES TAX LOAN 2,95,01,776/ - 2,95,01,776/ - 2 AMORTIZATION OF SHARE ISSUE E XPENSES 18,94,491/ - 18,94,491/ - 3. THE ASSESSING OFFICER LEVIED THE PENALTY ON BOTH THE ADDITIONS U/S. 271(1)(C) OF THE ACT VIDE ORDER DATED 27 - 03 - 2012 WHICH WAS TO THE EXTENT OF RS.1,05,67,983/ - . THE ASSESSEE CHALLENGED THE PENALTY ORDER BEFORE THE LD . CIT(A) AND LD. CIT(A) DELETED THE PENALTY AT ENTIRETY. NOW, THE REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD. SO FAR AS THE FIRST ADDITION OF RS.2,95,01,776/ - TOWARDS THE BENEFIT/DISCOUNT ON THE PAYMENT OF DEFERR ED SALES TAX LOAN IS CONCERNED , THE SAID ADDITION WAS DELETED BY THE TRIBUNAL AS T HE ASSESSEE HAD FILED THE APPEAL BEING ITA NO. 1269/PN/2010, A.Y. 2006 - 07 VIDE ORDER DATED 30 - 05 - 2012 CHALLENGING THE SAID ADDITION. H ENCE TO THE EXTENT OF RS.2,95,01,776/ - 3 ITA NO. 1770/PN/2013, AURANGABAD ELECTRICALS LTD., PUNE NO PENALTY CAN BE LEVIED AS THE QUANTUM ADDITION ITSELF IS DELETED BY THE TRIBUNAL. 5. THE NEXT ADDITION IS IN RESPECT OF AMORTIZATION OF SHARE ISSUE EXPENSES OF RS.18,94,491/ - ON SHARE ISSUE EXPENSES BEING THE PREMIUM EXPENSES. THE SAID CLAIM WAS DISAL LOWED BY THE ASSESSING OFFICER ON THE REASON THAT THE SHARE ISSUE EXPENSES WERE NOT DIRECTLY RELATED TO SETUP OF NEW UNIT/EXPANSION. ACCORDINGLY, THE ASSESSING OFFICER MADE THE DISALLOWANCE SEC. 35D AND SAID ADDITION WAS EVEN CONFIRMED BY THE TRIBUNAL AND THE ASSESSING OFFICER LEVIED THE PENALTY ON THE SAID ADDITION. THE ASSESSEE HAS PLACED HEAVY RELIANCE ON THE DECISION OF THE CIT VS. RELIANCE PETROPRODUCTS (P) LTD., 322 ITR 158 (SC) AND HE SUBMITS THAT MERE BECAUSE THE ASSESSEE HAS MADE THE LEGAL CLAIM WHICH IS DISALLOWED CANNOT BE THE REASON FOR LEVYING THE PENALTY. HE ALSO RELIED ON THE DECISION OF THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. ESCORT FINANCE LTD. 3 28 ITR 44. THE LD. COUNSEL ALSO SUBMITS THAT THE ASSESSEES INCOME IS DETERMIN ED U/S. 115JB IN OTHERWISE ALSO IN VIEW OF THE DECISION OF THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. NALWA SONS INVESTMENTS LTD., 327 ITR 543 (DEL) , T HE SAID ADDITIONS CANNOT BE THE SUBJECT MATTER OF THE PENALTY U/S. 271(1)(C) OF THE ACT. IN OUR OPINION THE ASSESSEES CASE IS SQUARELY COVERED BY THE DECISION IN THE CASE OF ESCORT FINANCE (SUPRA) AND IN THE SAID CASE ALSO THE RESPONDENT - ASSESSEE HAD CLAIMED THE DEDUCTION U/S. 35D WHICH WAS NOT ALLOWED AND PENALTY WAS LEVIED. IN THE PRESENT CAS E, ALL THE PARTICULARS WERE BEFORE THE ASSESSING OFFICER AND MERELY BECAUSE THE CLAIM IS NOT ALLOWED THAT WILL NOT JUSTIFY TO LEVY THE PENALTY U/S. 271(1)(C) OF THE ACT AS THERE IS NO CONCEALMENT OF THE PARTICULARS NOR IT IS CASE OF FURNISHING INACCURATE P ARTICULARS OF INCOME AS DISALLOWANCE WAS MERELY A LEGAL CLAIM MADE BY THE ASSESSEE. WE, THEREFORE, FIND NO REASON TO INTERFERE WITH THE ORDER OF 4 ITA NO. 1770/PN/2013, AURANGABAD ELECTRICALS LTD., PUNE THE LD. CIT(A) ON THE PENALTY LEVIED ON THE SECOND ADDITION ALSO. ACCORDINGLY, GROUNDS TAKEN BY THE REVENUE A RE DISMISSED. 6. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 12 - 0 9 - 201 4 SD/ - SD/ - ( G . S . PAN NU ) ( R.S. PADVEKAR ) ACCOUNTANT MEMBER JUDICIAL MEMBER RK /PS PUNE , DATE D : 12 TH SEPTEMBER, 2014 COPY TO 1 ASSESSEE 2 DEPARTMENT 3 4 5 THE CIT(A) - V, PUNE THE CIT - V, PUNE THE DR, ITAT, B BENCH, PUNE. 6 GUARD FILE. //TRUE COPY// BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE