Dresser Valve India Pvt. Limited, Coimbatore V. ACIT, Coimbatore

ITA 1849/CHNY/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68632 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2013
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 05-08-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 15-10-2012
• Court: TRIBUNAL
• Department Lawyers: GURU BHASHYAM

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI [BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT & SHRI VIKAS AWASTHY, JUDICIAL MEMBER] I.T.A. NO. 1849/MDS/2012 ASSESSMENT YEAR : 2006-07 DRESSER VALVE INDIA PRIVATE LIMITED, SF 608, CHETTIPALAYAM ROAD, EACHANARI POST, COIMBATORE-641 021. [PAN: AAACD 2199 L] VS ASST. COMMISSIONER OF INCOME TAX, CIRCLE 1(1), COIMBATORE. (APPELLANT) (RE SPONDENT) APPELLANT BY : SHRI ARVIND P. DATAR, SR.ADVOCATE WITH SHRI SANDEEP BAGMAR R. ADVOCATE RESPONDENT BY : SHRI GURU BHASHYAM, JCIT DATE OF HEARING : 05-08-2013 DATE OF PRONOUNCEMENT : 05-08-2013 O R D E R PER VIKAS AWASTHY, JUDICIAL MEMBER THE APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, COIM BATORE DATED I.T.A. NO. 1849/MDS/2012 2 02-07-2012 PASSED U/S. 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT). THE ASSES SING OFFICER VIDE ASSESSMENT ORDER DATED 25-08-2010 PASSED U/S. 143(3 ) OF THE ACT HAD REJECTED THE CLAIM OF THE ASSESSEE WITH REGARD TO PAYMENT OF AGENCY COMMISSION. THE ASST. COMMISSIONER OF INCOME TAX VIDE ORDER DATED 30-03-2011 HAD LEVIED A PENALTY OF ` 12,26,182/- UNDER THE PROVISIONS OF SECTION 271(1)(C) ON ASSESSEE FOR CLAIMING ` 35,03,377/- AS AGENCY COMMISSION. THE CIT(APPEA LS) VIDE IMPUGNED ORDER, CONFIRMED THE ORDER OF LEVY OF PENA LTY U/S. 271(1)(C) AND DISMISSED THE APPEAL OF THE ASSESSEE. NOW, THE ASSESSEE HAS COME IN SECOND APPEAL BEFORE THE TRIBUNAL ASSAILING THE ORDER OF THE CIT(APPEALS). 2. BOTH SIDES, HEARD. THE PENALTY HAS BEEN LEVIED ON ACCOUNT OF DIS-ALLOWANCE OF AGENCY COMMISSION ALLEGED TO HA VE BEEN PAID BY THE ASSESSEE. THE ASSESSEE PREFERRED AN APPEAL AGAINST THE ASSESSMENT ORDER FROM WHICH PENALTY ORDER HAS E MANATED. THE TRIBUNAL CONFIRMED THE ORDER OF ASSESSING OFFIC ER ON THE ISSUE. THE MATTER TRAVELLED TO THE HONBLE HIGH CO URT. THE HONBLE MADRAS HIGH COURT IN TAX CASE APPEAL NOS. 8 9 & 121 OF 2012 SET ASIDE THE FINDINGS OF THE TRIBUNAL WITH RE GARD TO DIS- ALLOWANCE OF AGENCY COMMISSION AND REMITTED THE CAS E BACK FOR I.T.A. NO. 1849/MDS/2012 3 DECIDING THE ISSUE AFRESH. SINCE THE SUBSTRATUM ON WHICH THE PENALTY WAS LEVIED CEASES TO EXIST, THE ORDER OF PE NALTY HAS TO GO. 3. BE THAT AS IT MAY, THE PENALTY HAS BEEN LEVIED O N THE CLAIM MADE BY THE ASSESSEE. IT IS NOT THE CASE OF THE RE VENUE THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF ITS INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF THE INCOME. FOR LEVY OF PENALTY UNDER THE PROVISIONS OF SECTION 271(1)(C), CONCEALMENT OR FUR NISHING OF INACCURATE PARTICULARS IS ESSENTIAL PRE-CONDITION. MERE CLAIMING OF THE DEDUCTION OR EXPENDITURE WOULD NOT MAKE THE ASS ESSEE LIABLE FOR LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT. THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS P. LTD., REPORTED AS 322 ITR 158 HAS HELD AS UNDER: 10. IT WAS TRIED TO BE ARGUED THAT THE FALS EHOOD IN ACCOUNTS CAN TAKE EITHER OF THE TWO FORMS; (I) AN I TEM OF RECEIPT MAY BE SUPPRESSED FRAUDULENTLY; (II) AN ITEM OF EXPENDI TURE MAY BE FALSELY (OR IN AN EXAGGERATED AMOUNT) CLAIMED, AND BOTH TYPES ATTEMPT TO REDUCE THE TAXABLE INCOME AND, THEREFORE , BOTH TYPES AMOUNT TO CONCEALMENT OF PARTICULARS OF ONE'S INCOM E AS WELL AS FURNISHING OF INACCURATE PARTICULARS OF INCOME. WE DO NOT AGREE, AS THE ASSESSEE HAD FURNISHED ALL THE DETAILS OF ITS E XPENDITURE AS WELL AS INCOME IN ITS RETURN, WHICH DETAILS, IN THEMSELV ES, WERE NOT FOUND TO BE INACCURATE NOR COULD BE VIEWED AS THE CONCEAL MENT OF INCOME ON ITS PART. IT WAS UP TO THE AUTHORITIES TO ACCEPT ITS CLAIM IN THE RETURN OR NOT. MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE I.T.A. NO. 1849/MDS/2012 4 REVENUE, THAT BY ITSELF WOULD NOT, IN OUR OPINION, ATTRACT THE PENALTY UNDER S. 271(1)(C). IF WE ACCEPT THE CONTENTION OF THE REVENUE THEN IN CASE OF EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTED BY AO FOR ANY REASON, THE ASSESSEE WILL INVITE PENALTY UN DER S. 271(1)(C). THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATU RE. WE ARE OF THE CONSIDERED OPINION THAT, PENALTY U/S. 271(1)(C), CAN ONLY BE LEVIED IF THERE IS CONCEALMENT OF PARTICULA RS OF INCOME OR IN CASE OF FURNISHING OF INACCURATE PARTICULARS OF SUC H INCOME, THAT IS NOT THE CASE HEREIN. IN THE FACTS AND CIRCUMSTANCE S OF THE CASE AND THE LAW LAID DOWN BY THE HONBLE SUPREME COURT OF INDIA, WE SET ASIDE THE ORDER OF THE CIT(APPEALS) AND ALLOW T HIS APPEAL OF THE ASSESSEE. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON MONDAY, THE 5 TH AUGUST, 2013 AT CHENNAI. SD/- SD/- (DR. O.K. NARAYANAN) (VI KAS AWASTHY) VICE PRESIDENT JUDICIAL MEMBER DATED: 5 TH AUGUST, 2013 TNMM COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR