Cipy Polyurethanes Private Ltd., Pune V. Assistant Commissioner Income-tax,

ITA 1817/PUN/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9512 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 07-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANN KAPTHUAMA
• Assessee Lawyers: D R BARVE
• Section: 143(3); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI RAJESH KUMAR, AM . / ITA NO . 1817 /P U N/201 4 / ASSESSMENT YEAR : 20 09 - 10 CIPY POLYURETHANES PRIVATE LIMITED, T - 127, MIDC, BHOSARI INDUSTRIAL AREA, BHOSARI, PUNE 411026 PAN : AAACC7264R . / APPELLANT VS. ASSISTANT COMMISSIONER OF INCOME TAX , CIRCLE 8, PUNE . / RESPONDENT / APPELLANT BY : SHRI D.R. BARVE / RESPONDENT BY : MS. ANN KAPTHUAMA / DATE OF HEARING : 0 3 .05. 201 7 / DATE OF PRONOUNCEMENT: 05 . 0 5 .201 7 / ORDER PER RAJESH KUMAR, A M : TH E APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - V, PUNE DATED 26 - 06 - 2014 FOR THE ASSESSMENT YEAR 20 09 - 10 ARISING OUT OF ASSESSMENT ORD ER PASSED U/S. 14 3(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT). ITA NO . 1817/PUN/2014 2 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER : 1. THE LEARNED CIT (APPEALS) - V, PUNE, HAS ERRED IN CONFIRMING THE PENALTY U/S. 271(1)(C) OF THE INCOME - TAX ACT, 1961 AMOUNTING T O RS .1,07,000/ - . THE APPELLANT HAS DISCLOSED ALL THE RELEVANT DETAILS SUBSTANTIATING THE GENUINENESS OF PAYMENT OF COMMISSION. THEREFORE, THE SAID AMOUNT OF PENALTY NEEDS CANCELLATION. 2. THE LEARNED CIT (APPEALS) - V, PUNE, HAS ERRED IN CONFIRMING PENALTY OF RS .1,07,000/ - U /S . 271(1)(C) OF THE ACT. THE ADDITION OF INCOME CONFIRMED BY THE CIT (APPEALS) - V, PUNE WAS RS 1,07,000/ - FOR WANT OF CONFIRMATION FROM PAYEES TO WHOM COMMISSION WAS PAID. CONSIDERING THE GENUINENESS OF PAYMENTS, THERE NEED NOT BE LEVY O F PENALTY. THE APPELLANT COMPANY HAS PROVIDED ALL THE DETAILS AND THEREFORE, THERE WAS NO SUBMISSION OF 'INACCURATE PARTICULARS' OR 'CONCEALMENT OF INCOME '. THEREFORE, THE PENALTY NEEDS TO BE CANCELLED. 3. WITHOUT PREJUDICE TO THE ABOVE, THE PENALTY U/S 2 71(1)( C) IS RELATED TO 'TAX EVADED' AND NOT TO 'ADDITION TO INCOME . THEREFORE, THE PENALTY AMOUNT WORKED OUT IS WRONG AND REQUIRES CORRECTION. 4. THE APPELLANT CRAVES LEAVE TO ADD, MODIFY, EXPAND THE GROUND(S) OF APPEAL AND LAY/PRODUCE THE EVIDENCE(S) AT THE TIME OF HEARING. 3 . THE COMMON ISSUE RAISED IN ALL THE GROUNDS OF APPEAL BY THE ASSESSEE IS AGAINST THE CONFIRMATION OF PENALTY U/S. 271(1)(C) OF THE ACT AMOUNTING TO RS.1,07,000/ - . 4. THE B RIEF FACT S OF THE CASE ARE THAT THE RETURN OF INCOME WAS FILED ON 30 - 10 - 2009 DECLARING TOTAL INCOME OF RS.5,75,41,744/ - . THE ASSESSMENT WAS FRAMED BY THE ASSESSING OFFICER VIDE ORDER DATED 29 - 12 - 2011 PASSED U/S. 143(3) OF THE ACT AT RS.6,00,18,110/ - BY MAKING ADDITION OF RS.24,76,363/ - ON ACCOUNT OF COMMIS SION ON SALES . THE SAID ADDITION WAS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF NON - SERVICE OF NOTICE S ISSUED U/S. 133(6) OF THE ACT ON 17 - 11 - 20111 AND NON - FURNISHING OF NECESSARY DETAILS SUCH AS IDENTITY OF PARTY, PAN, ETC. THEREAFTER PENALTY U/S 271(1 ) (C) OF THE ACT WAS LEVIED EQUAL TO 100% OF THE TAX SOUGHT TO BE EVADED AT RS. 8,41,715/ - . IN QUANTUM THE APPEAL , THE COMMISSIONER OF INCOME TAX (APPEALS) PARTLY ALLOWED ITA NO . 1817/PUN/2014 3 THE APPEAL OF THE ASSESSEE AFTER EXAMINING EVIDENCES PRODUCED BY THE ASSESSEE HOWEVER SUSTAIN ED THE ADDITION IN RESPECT OF TWO PARTIES NAMELY M/S F LOOR AND C OATINGS OF RS.87,381/ - AND MR . SATBIR SING H OF RS.19,619/ - AGGREGATING TO RS.1,07,000/ - BY OBSERVING THAT THE ASSESSEE DID NOT FURNISH THE NECESSARY PROOFS FOR VERIFICATION AND ALSO NOTICE S ISSUED U/S. 133(6) OF THE ACT WERE NOT SERVED. THE CIT(A) WAS NOT SATISFIED WITH THE CONTENTIONS RAISED BY THE LD AR THAT NON SERVICE OF NOTICE SHOULD NOT BE THE BASIS FOR MAKING THE ADDITION AS ALL THE NECESSARY PROOF AND THE SUFFICIENT SAID P AYMENT SUCH AS COPY OF BILLS, PAY PAYMENTS OF BANKING CHANNEL, DEDUCTION OF TDS ETC. THE ASSESSING OFFICER WHILE GIVING EFFECT TO THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IMPOSED A PENALTY OF EQUAL TO AMOUNT OF ADDITION OF RS. 1,07,000/ - AS SUSTAI NED BY THE COMMISSIONER OF INCOME TAX (APPEALS) INSTEAD OF LEVYING THE PENALTY BASED ON THE AMOUNT OF TAX SOUGHT TO BE EVADED. A GGRIEVED BY THE ORDER OF ASSESSING OFFICER T HE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) WH O ALSO CONFIRMED THE PENALTY IMPOSED U/S. 271(1)(C) BY OBSERVING AND HOLDING AS UNDER : 6. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AS WELL AS REPLY OF THE APPELLANT. IN THIS CASE, IT IS SEEN THAT THE DISALLOWANCE OF COMMISSION AMOUNTING TO RS.2 4 ,76,363/ - HAS BEEN RESTRICTED TO RS. 1,07,000/ - AS PER MY APPELLATE ORDER DATED 10.03.2014. THE DISALLOWANCE WAS CONFIRMED IN RESPECT OF COMMISSION PAYMENT TO M/S. FLOORS & COATINGS AMOUNTING TO RS. 87,381/ - AND TO SHRI SATBIR SINGH AMOUNTING TO RS. 19,619/ - . THE DISALLOWANCE WAS CONFIRMED ON ACCOUNT OF THE FACT THAT NOTICES ISSUED U/S. 133(6) OF INCOME - TAX ACT RETURNED UNSERVED AND THE APPELLANT COULD NOT PROVIDE THE CURRENT ADDRESSES OF THE ABOVE PARTIES. THE APPELLANT CONTENDS THAT MERELY BECAUSE ADDITION OF RS. 1,07,000/ - HAS BEEN SUSTAINED, PENALTY U/S. 271( 1 )(C) OF INCOME - TAX ACT SHOULD NOT BE SUSTAINED AS PAYMENT WAS MADE BY CHEQUE AND TDS WAS DEDUCTED AS PER APPROPRIATE RATES. THIS CONTENTION OF THE APPELLANT IS DIFFICULT TO BE ACCEPTED AS THE PAYMENT O F COMMISSION COULD NOT BE VERIFIED BY THE ASSESSING OFFICER AS THE RECIPIENTS WERE NOT AVAILABLE AT THE GIVEN ADDRESS AND THE ONUS WAS ON 'THE APPELLANT TO PROVIDE THE CURRENT ADDRESS SO THAT PROPER VERIFICATION COULD HAVE BEEN MADE. SINCE, THIS ONUS WAS N OT DISCHARGED PROPERLY BY THE APPELLANT, ADDITION OF RS. 1,07,000/ - WAS SUSTAINED BY THE UNDERSIGNED. IN MY VIEW, THE COMMISSION HAS BEEN DISALLOWED AS THE SAME COULD NOT BE SUBSTANTIATED BY THE APPELLANT AND THEREFORE, IT IS A FIT CASE FOR PENALTY U/S. 271(1)(C) OF INCOME - TAX ACT. ACCORDINGLY, THE ITA NO . 1817/PUN/2014 4 ASSESSING OFFICER IS DIRECTED TO RESTRICT THE AMOUNT OF PENALTY ON THE DISALLOWANCE OF RS. 1,07,000/ - . ACCORDINGLY, THE GROUND IS PARTLY ALLOWED. 5. THE LD. AR VEHEMENTLY SUBMITTED BEFORE US THAT THE CO MMISSIONER OF INCOME TAX (APPEALS) HAS GROSSLY ERRED ON LAW AND FACTS BY UPHOLDING THE ORDER OF ASSESSING OFFICER IMPOSING THE PENALTY OF RS.1,07,000/ - WHICH WAS A CLASSICAL CASE OF NON - APPLICATION OF MIND ON THE PART OF THE ASSESSING OFFICER AS WELL AS TH E COMMISSIONER OF INCOME TAX (APPEALS) WHERE THE PENALTY WAS IMPOSED AND CONFIRMED EQUAL TO THE AMOUNT OF TOTAL INCOME AND NOT AS PER THE MECHANISM OF CALCULATION AS PROVIDED IN SECTION 271(1) (C) OF THE ACT . THE LD. AR SUBMITTED THAT THE ASSESSEE GENUINEL Y ACCOUNTED FOR THE COMMISSION PAID TO VARIOUS PARTIES AMOUNTING TO RS.24,76,363/ - ON WHICH THE ASSESSEE HAS DULY DEDUCTED TDS AT SOURCE AND DEPOSITED THE SAME I N THE GOVT. TREASURY , PAYMENTS WERE ALSO MADE THROUGH BANKING CHANNEL AND ALL THE NECESSARY PROOF FILED BEFORE THE AUTHORITIES BELOW. THE LD. AR FURTHER ARGUED THAT THE FIRST APPELLATE AUTHORITY DELETED THE ADDITION PARTLY ON EXAMINATION OF THE PROOF S AND EVIDENCES FILED BY THE ASSESSEE IN RESPECT OF THESE PARTIES EXCEPT TWO NAMELY M/ S. F LOORS AND C OATINGS AND SHRI SATBIR SINGH , TO WHOM COMMISSION OF RS.87,381/ - AND RS.19,619/ - WERE PAID. NEEDLESS TO SAY THAT THESE PAYMENTS WERE ALSO SUBJECTED TO TDS AND PAYMENTS WERE MADE BY CHEQUE S . HOWEVER, THE COMMISSIONER OF INCOME TAX (APPEALS) SUSTAINED THE ADDITION QUA THESE TWO PARTIES BECAUSE OF NON - SERVICE OF NOTICE S ISSUED U/S. 133(6) OF THE ACT AND ALSO THESE WERE NOT TRACEABLE. THE LD. AR FURTHER STATED THAT MERE THE FACT THAT NOTICE ISSUED BY THE ASSESSING OFFICER COULD NOT BE SERVED CANNOT B E A GROUND FOR IMPOSING PENALTY U/S. 271(1)(C) OF THE ACT. THE LD. AR IN DEFENSE OF HIS ARGUMENTS RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. RELIANCE PETROPRODUCTS PVT. LTD. IN CIVIL APPEAL NO. 2463 OF 20 10. ITA NO . 1817/PUN/2014 5 6. THE LD. DR ON THE OTHER HAND RELIED ON THE ORDER OF AUTHORITIES BELOW WHILE ADMITTING MISTAKE OF LOWER AUTHORITIES IN IMPOSING THE PENALTY EQUAL TO THE AMOUNT OF TOTAL ADDITION CONFIRMED. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED ON RECORD INCLUDING THE ORDERS OF AUTHORITIES BELOW AND CASE LAW CITED BY THE LD. AR OF THE ASSESSEE. WE FIND THAT IN THIS CASE THE PENALTY HAS BEEN IMPOSED BY THE ASSESSING OFFICER IN RESPECT OF ADDITIONS WHICH WERE CONFIRMED BY CIT(A) TH AT THERE WAS NO SERVICE OF NOTICE S U/S. 133(6) OF THE ACT FOR TWO PARTIES NAMELY FLOORS AND COATINGS AND SATBIR SINGH TO WHOM TOTAL COMMISSION OF RS.1,07,000/ - HAVE BEEN PAID HOLDING THE SAME TO BE NOT GENUINE . IN OUR OPINION THE ASSESSEE HAS DISCHARGED HIS ONUS BY FILING THE NECESSARY DETAILS SUCH AS BILLS , VOUCHERS , PAYMENTS DETAILS THROUGH BANKS , DETAILS OF TDS DEDUCTED AND DEPOSITED ALONG WITH THE ADDRESS AND THEREAFTER THE ON US IS SHIFTED TO BE ASSESSING OFFICER TO TAKE ENQUIRY TO THE LOGICAL E ND . MERE CONFIRMATION OF ADDITION DOES NOT ITSELF LEAD TO THE IMPOSITION OF PENALTY. MOREOVER, THE MERE CLAIM OF EXPENDITURE WHICH IS NOT ACCEPTABLE TO THE REVENUE CANNOT BE A GROUND FOR IMPOSING THE PENALTY U/S. 271(1)(C) OF THE ACT. IN THE CASE OF COMM ISSIONER OF INCOME TAX VS. RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA) IT HAS BEEN HELD THAT MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT, IN OUR OPINION, ATTRAC T THE PENALTY UNDER SECTION 271(1)(C). IN THE INSTANT CASE THE ASSESSEE HAS CLAIMED EXPENSES BY WAY OF COMMISSION WHICH WERE DISALLOWED BY THE REVENUE FOR NON VERIFICATION OF ADDRESS AND THEREFORE PENALTY CANNOT BE ATTRACTED FOR MERE DISALLOWANCE BY THE R EVENUE. IN VIEW OF THESE FACTS WE ARE OF VIEW THAT THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE RATIO LAID BY THE HONBLE APEX CO URT. WE, THEREFORE, ITA NO . 1817/PUN/2014 6 RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE HONBLE APEX COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA) HOLD THAT THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IS NOT SUSTAINABLE AND ACCORDINGLY, THE SET ASIDE WITH DIRECTION TO THE ASSESSING OFFICER TO DELETE THE PENALTY LEVIED U/S. 271(1)(C) OF THE ACT . 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH MAY, 2017. SD/ - SD/ - ( SUSHMA CHOWLA ) ( RAJESH KUMAR ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE ; DATED : 5 TH MAY, 201 7 . RK / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - V, PUNE ; 4. / THE CIT - V, PUNE ; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER, // // TRUE COPY // / ASSISTANT REGISTRAR, , / ITAT, PUNE