N R Constructions, Kakinada V. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1, Kakinada

ITA 18/VIZ/2024

• Counselvise Citation: [2024] 130 COUNSELVISE.COM (IT) 5134 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 11-08-2024
• Assessment Year: 2012-2013
• Appeal Filed On: 19-01-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

आयकरअपीलीयअधिकरण,धिशाखापटणमपीठ,धिशाखापटणम INTHEINCOMETAXAPPELLATETRIBUNAL VISAKHAPATNAMBENCH,VISAKHAPATNAM श्द ु व्वआरएलरेडी,न्यायसदसएवंश्एसब्ल्यृष्,लेख्सदसयेसमक BEFORESHRIDUVVURURLREDDY,HON’BLEJUDICIALMEMBER & SHRISBALAKRISHNAN,HON’BLEACCOUNTANTMEMBER आयकरअपीलसं./I.T.A.No.18/VIZ/2024 (धििाधरणिरध/AssessmentYear:2012-13) NRConstructions 2-59-7,ShanthiNagar Kakinada–533003 AndhraPradesh [PAN:AABFN7969A] v. ACIT–Circle–1 Kakinada (अपीलार्/Appellant)(प्र्/Respondent) यरद्त्य्पयतय्यिध/AssesseeRepresentedby:Ms.Keerthana,AR र्जसय्पयतय्यिध /DepartmentRepresentedby:Dr.AparnaVilluri,Sr.AR सु्व्ईसम्पहो्ेय्यतयि / DateofConclusionofHearing : 12.08.2024 घोषण्य्त्र्ख/DateofPronouncement : 05.09.2024 आदेश/ORDER PERSHRISBALAKRISHNAN,ACCOUNTANTMEMBER: 1.ThisappealisfiledbytheassesseeagainsttheorderofLearned CommissionerofIncomeTax(Appeals),NFAC,Delhi[hereinafterin short“Ld.CIT(A)”]videDIN&OrderNo.ITBA/NFAC/S/250/2023- I.T.A.No.18/VIZ/2024 NRConstructions PageNo.2 24/1058342735(1)dated30.11.2023fortheA.Y.2012-13arisingoutof thepenaltyorderpassedundersection271(1)(c)ofIncomeTaxAct, 1961(inshort‘Act’)dated25.03.2022. 2.Brieffactsofthecasearethat,assesseeisinthebusinessof constructionworksfiledhisreturnofincomeadmittingthetotalincome ofRs.22,10,162/-.Thereturnwassummarilyprocessedundersection 143(1)oftheAct.Subsequently,thecasewasselectedforscrutinyand theassessmentwascompletedon04.03.2015undersection143(3)of theAct.WhileframingtheassessmenttheAssessingOfficerconsidered thattheassesseehasclaimedhugelabourexpenditureamountingto Rs.2,89,09,008/-andfoundthatthesepaymentsaremadeincashwith nosupportingvouchersorbills.Therefore,theAssessingOfficer estimated8%onamountofgrosscontractreceiptswhileframingthe assessment.ThematterwascarriedbeforeLd.CIT(A)whodirectedthe AssessingOfficertodisallow10%oflabourexpensesinsteadoftaking 8%asprofitonthetotalreceipts.Furtheraggrieved,thematterwas carriedbeforetheITATTribunal,VisakhapatnamBench.TheTribunal confirmedtheorderoftheLd.CIT(A).Subsequently,penalty proceedingswereinitiatedundersection271(1)(c)oftheActbythe I.T.A.No.18/VIZ/2024 NRConstructions PageNo.3 AssessingOfficertherebylevyingthepenaltyofRs.8,93,288/-vide orderdated25.03.2022passedundersection271(1)(c)oftheAct. 3.Aggrievedbythepenaltyorder,assesseefiledappealbefore Ld.CIT(A).Ld.CIT(A)byrelyingonvariousdecisionsasdetailedinhis orderconfirmedthepenaltyleviedbytheAssessingOfficer. 4.AggrievedbytheorderoftheLd.CIT(A),assesseeisinappeal beforeusbyraisingfollowinggroundsofappeal:- 1.OnthefactsandCircumstancesofthecasetheorderpassedofHon'bleCIT(A)is erroneousbothonfactsandinlaw.TheLd.CIT(A)oughttohaveannulledthepenalty proceedingsu/s271(1)(c)oftheActamountingtoINRRs.8,93,288,astheappellanthas neitherconcealedanyincomenorfurnishedanyinaccurateparticularsofincome. 2.TheLd.CIT(A)oughttohaveappreciatedthefactthatthenoticeissuedundersection 271(IisbadinlawastheAssessingOfficerhasnotspecifiedunderwhichlimbofsaid sectionpenaltyproceedingshadbeeninitiated,i.e.whetherforconcealmentof particularsofincomeorforfurnishingofinaccurateparticularsofincome.TheLd. CIT(A)oughttohaveappreciatedthefactthatevenintheorder,itwasmentionedthat theassesseehasconcealedincomeandfurnishinginaccurateparticularsinsteadof specifyingthelimbofsaidpenaltyproceedings. 3.Withoutprejudice,theLd.CIT(A)erredinnotappreciatingthefactthat,theLd.AOin theordermentionedthatpenaltyisimposedforfurnishinginaccurateparticularsof incomeandsatisfactionbyvirtueofexplanation1toSec271(1oftheAct,without appreciatingthefactthatExplanation1couldbeinvokedonlyifthereisaconcealment ofincomeandnotfurnishingofinaccurateparticulars. 4.TheLd.CIT(A)oughttohaveappreciatedthefactthatthepenaltyproceedingsu/s 271(I)(c)oftheActisunsustainableinabsenceofrecordingofsatisfactionbytheLd. AO.TheLd.CIT(A)oughttohaveappreciatedthefactthattheLd.AOhaserredin passinganon-speakingorder,withoutgivingaclearfindingonthefacts,meritsofreply andapplicabilityofprovisionofSec271(1)oftheAct,readwithexplanation1thereof. 5.TheLd.CIT(A)erredinnotconsideringthefactthatthedisallowanceof10%oflabour expensesonestimationbasisdoesn'tamounttoconcealmentofparticularsofincome norfurnishingofinaccurateparticularsofincome. 6.TheLd.CIT(A)oughttohaveappreciatedthefactthatpenaltyu/s271(1)(C)isnot leviableinthematterofbonafidedifferenceofopinionbetweentheassesseeandthe departmentregardingallowabilityoftheclaim. I.T.A.No.18/VIZ/2024 NRConstructions PageNo.4 7.TheLd.CIT(A)oughttohaveappreciatedthefactthattheassesseehasnotgonefor furtherappealbeforeHonourableHighcourtondisallowancemadeonestimationbasis topurchasepeaceofmind. 8.TheLd.CIT(A)oughttohaveappreciatedthefactthatdisallowanceofcertain expenditureonestimatedbasisonsomenotionalbasisisneithertheconcealmentof incomeparticularsofincomenorfurnishingofinaccurateparticularsassuch. 9.TheLd.CIT(A)oughttohaveappreciatedthefactthatdisallowanceofexpenseswillnot perseamounttofurnishinginaccurateparticularsofincomeor,merelybecausethe assesseehadclaimedexpenditurewhichclaimwasnotacceptedorwasnotacceptable torevenue,thatbyitselfwouldnotattractpenaltyu/s271(1)(c)oftheAct. 10.TheLd.CIT(A)erredinlevyingpenaltyu/s271(I)(c)oftheActaspenaltycannotbe leviedmerelybecausetheassesseehasacceptedthedisallowancemadeonestimation basisasthereisnodeliberateattempttoconcealincomeortofurnishinaccurate particularsofincome. 11.Theassesseemayadd,alter,ormodifyorsubstituteanyotherpointstothegroundsof appealatanytimebeforeoratthetimeofhearingofappeal. 5.Ld.AuthorisedRepresentative[hereinafter“Ld.AR”]inhiswritten statementshasstatedthattheAssessingOfficerhasnotleviedpenalty bystatingthatwhetheritisforconcealmentofparticularsofincomeor forfurnishingofinaccurateparticularsofincome.Furtherhealso arguedbeforeusthatwhentheincomeisestimateorexpenditureis disallowedonestimationbasisnopenaltycanbeleviableundersection 271(1)(c)oftheAct.Onthisproposition,hereliedonthefollowingcase laws:- i.CITv.U.P.StateBridgeCorporationLtd.,[2018]97 taxmann.com279(SC). ii.PCITv.TorquePharmaceuticalsLtd.,[2017]81taxmann.com 283(P&H). I.T.A.No.18/VIZ/2024 NRConstructions PageNo.5 iii.ACITv.VisionResearch&ManagementLtd.,[2015]63 taxmann.com8(Lucknow–Trib) iv.PotluriPhanendraBabuv.ITOinITANo.241&242/VIZ/2022 dated10.08.2023. v.CITv.SangrurVanaspatiMillsLtd.,[2008]171Taxman320(P &H). 6.Percontra,Ld.DepartmentalRepresentative[hereinafterinshort “Ld.DR”]heavilyreliedontheordersoftheRevenueAuthorities. 7.Wehaveheardboththesidesandperusedthematerialavailable onrecordandthecaselawscitedbytheLd.AR.Admittedlytheaddition isbasedonestimationbytheAssessingOfficerwhichwaslateragain estimatedbytheLd.CIT(A)todisallow10percentageofexpenditure whileadjudicatingthequantumappeal.Itisalsonotdisputedthat assesseehasfurnisheddetailsregardingexpenditureaswellasincome inthereturnofincome.Thedisallowancebytherevenueisduetothe factthatitwasnotacceptabletotherevenue.TheHon’bleSupreme CourtinthecaseofCITv.UPStateBridgecorporationLtd.,(supra)held thatwhereassesseehadfurnishedcertaindetailsregardingexpenditure aswellasininreturn,whichwerenotfoundinaccurate,norcouldbe viewedasconcealmentofincomeonpartofassessee,merelybecause saidclaimwasnotacceptedorwasnotacceptablebytherevenue,that byitselfwouldnotattractpenaltyundersection271(1)(c)oftheAct. I.T.A.No.18/VIZ/2024 NRConstructions PageNo.6 FurtherthisTribunalinthecaseofPotluriPhanendraBabuv.ITO(supra) heldasfollows:- “5......Sincetheadditionismadeonestimatebasis,various judicialpronouncementshaveheldthatpenaltycannotbelevied whentheadditionisestimated.Wethereforefindthatthelevyof penaltybasedontheadditionmadebyanestimatecannotbea validgroundandhenceitshouldbedeleted.Itisordered accordingly.” 8.Respectfullyfollowingtheabovejudicialprecedents,andprinciple ofconsistency,weareoftheviewthatnopenaltycanbeleviedinthe casewherethedisallowanceexpenditureisestimatedandtherefore,we areinclinedtodeletethepenaltyleviedbytheAssessingOfficer. GroundNos.8to10areallowed. 9.SinceGroundNos.8to10areadjudicatedinfavourofthe assesseetheadjudicationofothergroundsismerelyacademicinnature. 10.Intheresult,appealoftheassesseeisallowed. Orderpronouncedintheopencourton05 th September,2024. Sd/- (द ु व्वआर.एलरेड्) (DUVVURURLREDDY) नाधयकसदस/JUDICIALMEMBER Sd/- (एसब्ल्यृष्) (S.BALAKRISHNAN) लेखासदस /ACCOUNTANTMEMBER Dated:.05.09.2024 Giridhar,Sr.PS I.T.A.No.18/VIZ/2024 NRConstructions PageNo.7 आदेशय्पयतयलयिअगेयषत /Copyoftheorderforwardedto:- 1. य्ि्धारत्/TheAssessee : NRConstructions 2-59-7,ShanthiNagar Kakinada–533003 AndhraPradesh 2. र्जस/TheRevenue :ACIT–Circle–1 Kakinada 3.ThePrincipalCommissionerofIncomeTax 4. यवभ्ग्ापयतय्यि,आयकरअपीलीयअधिकरण,धिशाखापटणम/ DR,ITAT,Visakhapatnam 5.TheCommissionerofIncomeTax 6. ग्रधफ़्ईल/Guardfile //TrueCopy// आदेश््ुस्र/BYORDER Sr.PrivateSecretary ITAT,Visakhapatnam