Hooghly Dock & Port Engineers Ltd., Kolkata V. DCIT, CIR-1, KOLKATA, Kolkata

ITA 186/KOL/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4639 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 08-02-2016
• Court: TRIBUNAL
• Section: 143(3)

Judgement Text

I.T.A. NO. 186/KOL./2016 ASSESSMENT YEAR: 2008-2009 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 186/KOL/ 2016 ASSESSMENT YEAR: 2008-2009 HOOGHLY DOCK & PORT ENGINEERS LIMITED,............. ..............APPELLANT 1, R.N. MUKHERJEE ROAD, 2 ND FLOOR, MARTIN BURN HOUSE, KOLKATA-700 001 [PAN : AAACH 7473 B] -VS.- DEPUTY COMMISSIONER OF INCOME TAX,................. .................RESPONDENT CIRCLE-1, KOLKATA, AAYAKAR BHAWAN, 7 TH FLOOR, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 APPEARANCES BY: SHRI SANJAY BHATTACHARYA, FCA, FOR THE ASSESSEE SHRI SALLONG YADEN, ADDITIONAL CIT, D.R., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : JUNE 27, 2016 DATE OF PRONOUNCING THE ORDER : JUNE 29, 2016 O R D E R PER SHRI S.S. VISWANETHRA RAVI :- THIS APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 13.11.2015 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEA LS)-6, KOLKATA, WHERE THE LD. CIT(APPEALS) CONFIRMED THE PENALTY IM POSED BY THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR RELEVANT TO 2008-09. 2. THE BRIEF FACTS OF THE CASE ARE THAT M/S. HOOGHL Y DOCK & PORT ENGINEERS LIMITED, KOLKATA, A PUBLIC SECTOR UNDERTA KING, HAVE BEEN WORKING UNDER THE ADMINISTRATIVE CONTROL OF THE MIN ISTRY OF SHIPPING, GOVERNMENT OF INDIA (GOI). THE COMPANY HAS BEEN PAS SING THROUGH SEVERE FINANCIAL CONSTRAINTS WITH A NEGATIVE NET WO RTH OF RS.558.61 CRORE AND ACCUMULATED LOSS TO THE TUNE OF RS.587.19 CRORE AS ON 31.03,2010 I.T.A. NO. 186/KOL./2016 ASSESSMENT YEAR: 2008-2009 PAGE 2 OF 5 (AUDITED). THE ORGANISATION IS A SICK INDUSTRIAL CO MPANY ENGAGED IN SHIP BUILDING ACTIVITIES. THE COMPANY IS PERENNIALLY A L OSS MAKING ORGANIZATION WITH NEGATIVE NET WORTH SINCE 1985 - 86. THE GOVT. HAS BEEN CONSIDERING THE REVIVAL OF THE COMPANY THROUGH REHABILITATION - CUM - RESTRUCTURING PACKAGE. THE PROPOSAL OF REVIVAL OF HDBEL HAS GOT T HE RECOMMENDATION OF BRPSE (BOARD FOR RECONSTRUCTION OF PUBLIC SECTOR ENTERPRISE) VIDE THE MEETING DATED.22.06.2007. SINCE THEN THE PACKAGE HA S BEEN UNDER FURTHER REVIEW OF CCEA (CABINET COMMITTEE ON ECONOMIC AFFAI RS) FOR A FINAL DECISION. 3. ALMOST THE LAST TWO DECADE THE COMPANY HAS BEEN GETTING NON-PLAN ASSISTANCE FROM GOI FOR PAYMENT OF SALARY AND WAGES AND STATUTORY DUES, THE SAID ASSISTANCE IS NOT REGULAR IN NATURE FOR WH ICH DEFERMENT OF SALARY AND WAGES HAS BECOME AN INTERMITTENT OUTCOME. IN FA CT, THE EMPLOYEES OF THE COMPANY HAVE BEEN SURVIVING ON THE DOLE FROM TH E GOVT. FROM THE TAX COMPUTATION SHEET, IT IS MOREOVER CLEAR THAT TAX LI ABILITY OF THE COMPANY IS EVEN NIL BY WAY OF HAVING NEGATIVE INCOME EVEN A FTER DISALLOWANCE OF THE ITEMS SELECTED BY THE ASSESSING OFFICER. 4. THE ASSESSING OFFICER INITIATED PENALTY PROCEEDI NGS AGAINST ASSESSEE FOR NOT SUBMITTING PROPER EXPLANATION IN T HE ASSESSMENT PROCEEDINGS. THE CASE OF THE ASSESSING OFFICER WAS THAT THE ASSESSEE MADE LEVIES OF UNJUSTIFIED CLAIMS I.E. CLAIM FOR VAT/SER VICE TAX, PROVISION FOR FRINGE BENEFIT TAX, PRIOR PERIOD EXPENSES AND PENAL TY CHARGES, WHEREBY THE ASSESSING OFFICER FOUND THAT AN EXTENT OF RS.1, 27,22,180/- WAS ESCAPED ASSESSMENT AND THE CASE THEREON OF RS.43,24 ,269/- WAS IMPOSED AS PENALTY ON THE GROUND THAT THE SAID AMOUNT WAS S OUGHT TO BE EVADED. 5. IN FIRST APPEAL, THE ASSESSEE CONTENDED BEFORE T HE LD. CIT(APPEALS) AS UNDER:- THE ASSESSEE IS A PUBLIC SECTOR UNDERTAKING ENGAGE D IN SHIP BUILDING, REPAIRING, AND GENERAL ENGINEERING. THE R ETURN FOR THE ASSESSMENT YEAR 2008-09 WAS FILED DECLARING A L OSS OF RS.49,60,78,820/-. THE ASSESSMENT WAS COMPLETED ON 03RD I.T.A. NO. 186/KOL./2016 ASSESSMENT YEAR: 2008-2009 PAGE 3 OF 5 DECEMBER 2010 AND THE LOSS WAS ASSESSED AT RS.47,09 ,97,612/- ON ACCOUNT OF CERTAIN ADDITIONS MADE BY THE LD. ASS ESSING OFFICER. THE LD. ASSESSING OFFICER ALSO ISSUED NOTI CE U/ S 271(1)(C) OF THE INCOME TAX ACT, 1961. THE LD. ASSE SSING OFFICER PASSED THE ORDER U/S 271(1)(C) ON 29TH JUNE 2011 LEVYING A PENALTY OF RS 43,24,269 BEING 100% OF THE TAX SOUGHT TO BE EVADED ON THE INCOME OF RS.1,27,22, 180 ESCAP ING ASSESSMENT. THE APPELLANT IS A PERENNIALLY LOSS MAK ING UNDERTAKING WITH ACCUMULATED LOSSES OF RS.47,905 LA CS AS AT THE END OF THE RELEVANT PREVIOUS YEAR. THE APPELLAN T DID NOT PREFER AN APPEAL AGAINST THE SAID ADDITIONS SINCE T HE ADDITIONS MADE BY THE LD. ASSESSING OFFICER DID NOT RESULT IN ANY TAX OUTGO, BUT ONLY REDUCED THE LOSS FROM RS. 4,960 LAC S TO RS.4,709 LACS. THE APPELLANT DID NOT ALSO FORESEE ANY PROFIT S IN THE NEAR FUTURE TO TAKE ADVANTAGE OF THE ASSESSED LOSS. 2. IT IS SUBMITTED THAT PENALTY U/ S 271(1)(C) OF T HE INCOME TAX ACT, 1961 CAN BE IMPOSED ONLY FOR THE FOLLOWING TWO SPECIFIC OFFENCES; A) CONCEALMENT OF PARTICULARS OF INCOME; OR B) FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN THE IMPUGNED ORDER PASSED U/S. 271(L)(C) OF THE INCOME TAX ACT, 1961, THE LD. ASSESSING OFFICER HAS LEVIED PEN ALTY FOR REASONS THAT THE APPELLANT HAS FAILED TO OFFER ANY EXPLANATION DURING ASSESSMENT PROCEEDINGS FOR THE DISALLOWANCES MADE IN THE ASSESSMENT ORDER DATED 3 RD DECEMBER, 2010 PASSED U/ S 143(3) OF THE INCOME TAX ACT, 1961 AND HENCE IT IS PROVED THAT THE APPELLANT HAS 'DELIBERATELY' FURNISHED INACCURA TE PARTICULARS OF INCOME. THEREFORE AS PER THE LD. ASS ESSING OFFICER'S ORDER, THE APPELLANT'S CASE IS NOT OF 'CO NCEALMENT', BUT OF FURNISHING OF INACCURATE PARTICULARS. IT IS SUBMITTED THAT THE ASSESSEE HAS MADE COMPLETE DISCLOSURE IN THE RE TURN OF INCOME WHICH IS DULY SUPPORTED BY THE TAX AUDIT REP ORT AND THE AUDITED ACCOUNTS AND FILED THE RELEVANT DETAILS DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS. THIS IS EVIDENT F ROM THE DETAILS GIVEN HEREUNDER WITH RESPECT TO THE OBSERVA TIONS OF THE LD. ASSESSING OFFICER ON THE DISALLOWANCES MADE BY HIM IN THE ASSESSMENT ORDER PASSED U/S 143(3) OF THE INCOME TA X ACT, 1961. 6. THE LD. CIT(APPEALS) AFTER CONSIDERING THE SUBMI SSIONS OF ASSESSEE CONFIRMED THE ORDER OF THE ASSESSING OFFICER IN IMP OSING THE PENALTY BY OBSERVING THAT THE ASSESSEE FAILED TO DISCHARGE THE ONUS AS CONTEMPLATED I.T.A. NO. 186/KOL./2016 ASSESSMENT YEAR: 2008-2009 PAGE 4 OF 5 BY THE EXPLANATION 1 TO SECTION 271(1)(C) OF THE AC T, THE RELEVANT PORTION IS REPRODUCED HEREIN BELOW:- THUS THE POSSIBILITY THAT AN ASSESSEES CASE MAY N OT BE PICKED UP FOR SCRUTINY MAY MOTIVATE SOME ASSESSEES NOT TO DISCLOSE TRUE AND FULL INCOME IN THEIR RETURNS. CON SIDERING THE ABOVE OBSERVATIONS OF THE HONBLE COURT AND THE FAILURE OF THE APPELLANT TO DISCHARGE THE ONUS PUT ON IT BY EXPLANATION 1 TO SECTION 271(1)(C) TO ESTABLISH THA T THE EXPLANATION GIVEN BY IT IN RELATION TO THE ADDITION S IS BONA FIDE, IT HAS TO BE HELD THAT THE ASSESSING OFFICER RIGHTLY IMPOSED PENALTY OF RS.43,24,269/- ON THE APPELLANT. HENCE, THE PENALTY OF RS.43,24,269/- IMPOSED ON THE APPELL ANT U/S 271(1)(C) IS CONFIRMED. 7. BEFORE US, THE LD. A.R. REITERATES THE SUBMISSIO NS MADE BEFORE THE LD. CIT(APPEALS). FURTHER AGREED THAT THE ASSESSEE MADE COMPLETE DISCLOSURE BY GIVING ALL DETAILS INCLUDING TAX AUDI T REPORT AND AUDITED ACCOUNTS BEFORE THE ASSESSING OFFICER DURING THE AS SESSMENT PROCEEDINGS. FURTHER CONTENDED THAT THE ASSESSING OFFICER INITIA TED THE PENALTY PROCEEDINGS FOR NOT OFFERING THE PROPER EXPLANATION AGAINST THE CLAIMS MADE BY THE ASSESSEE BUT FOR NOT UNDER THE CONDITIO NS CONTEMPLATED IN 271(1)(C) OF ACT AND PROCEEDED TO REMAND THE CASE T O THE FILE OF ASSESSING OFFICER FOR EXAMINATION AND VERIFICATION OF ALL DET AILS. THE LD. D.R. RELIED ON THE ORDERS OF BOTH THE LOWER AUTHORITIES. 8. HEARD RIVAL SUBMISSIONS AND PERUSED THE RELEVANT RECORD. WE FIND THAT THE ASSESSING OFFICER INITIATED PENALTY PROCEE DINGS FOR NOT OFFERING PROPER EXPLANATIONS CAN BE SEEN FROM THE PAGE NO. 2 OF PENALTY ORDER. THE ASSESSEE CONTENDED BEFORE THE LD. CIT(APPEALS) THAT ALL THE DETAILS WERE PRODUCED BEFORE THE ASSESSING OFFICER INCLUDING TAX AUDIT REPORT AND AUDITED ACCOUNTS. WE FIND THAT THE PROCEEDINGS IMPU GNED BEFORE US NOT INITIATED INVOLVING THE CONDITIONS CONTEMPLATED THE REIN IN SECTION 271(1)(C), IN SUCH CIRCUMSTANCES THAT THE IMPOSITIO N OF PENALTY IS NOT VALID UNDER LAW, BUT, HOWEVER, IN THE CIRCUMSTANCES OF THE CASE, TAKING INTO CONSIDERATION OF SUBMISSION OF THE LD. A.R., W E ARE OF THE VIEW THAT THE CASE ON HAND SHALL GO BACK TO ASSESSING OFFICER FOR VERIFICATION AND I.T.A. NO. 186/KOL./2016 ASSESSMENT YEAR: 2008-2009 PAGE 5 OF 5 EXAMINATION OF ALL DETAILS, AND THE ASSESSEE IS AT LIBERTY TO FILE ANY OTHER EVIDENCE IN SUPPORT OF ITS CLAIM. THE ASSESSING OFF ICER SHALL DECIDE THESE ISSUES BY GIVING PROPER OPPORTUNITIES TO THE ASSESS EE. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON JUNE 29 TH , 2016. SD/- SD/- (WASEEM AHMED) (S.S. VISWANETHRA RAVI) ACCOUNTANT MEMBER JUDICIAL MEM BER KOLKATA, THE 29 TH DAY OF JUNE, 2016 COPIES TO : (1) HOOGHLY DOCK & PORT ENGINEERS LIMITED, 1, R.N. MUKHERJEE ROAD, 2 ND FLOOR, MARTIN BURN HOUSE, KOLKATA-700 001 (2) DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1, KOLKATA, AAYAKAR BHAWAN, 7 TH FLOOR, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 (3) COMMISSIONER OF INCOME-TAX (APPEALS)-6, KOLKAT A, (4) COMMISSIONER OF INCOME TAX, KOLKATA, (5) THE DEPARTMENTAL REPRESENTATIVE, (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.