ACIT Range I, V. Nuware India Ltd,

ITA 1960/DEL/2007

• Counselvise Citation: 196020114 RSA 2007
• Duration Of Justice: 5 year(s) 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 18-04-2012
• Assessment Year: 1995-1996
• Appeal Filed On: 19-04-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: TARUN KUMAR A
• Keywords: Initiation of penalty proceedings

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH H NEW DELHI) BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.1960/DEL/2007 ASSESSMENT YEAR : 1995-96 A.C.I.T. M/S NUWARE INDIA LTD., RANGE-1, 206-MATHURA ROAD, FARIDABAD. V. FARIDABAD. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SURENDRA PAL, SR. DR. RESPONDENT BY : DR. RAKESH GUPTA, SHRI SOMIL AGARWAL & SHRI TARUN KUMAR, ADVOCA TE. ORDER PER TS KAPOOR, AM: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE OR DER OF LD CIT(A) DATED 8.2.2007. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) ERRED IN DELETING THE PENALTY IMPOSED U/S 271(1)( C) OF THE ACT AT ` .10,70,000/- WHEN THE ASSESSING OFFICER HAS RIGHTLY IMPO SED THE PENALTY AFTER PROPERLY RECORDING HIS SATISFACTION FOR INITIATION OF PENALTY PROCEEDINGS. 2. WITHOUT PREJUDICE TO GROUND NO.1 ABOVE, LD CIT(A) E RRED IN DELETING THE PENALTY OF ` .10,70,000/- IMPOSED U/S 271(1)( C) OF THE ACT BY APPLYING THE RATIO OF THE JUDGMENT OF PU NJAB & HARYANA HIGH COURT IN THE CASE OF PRITHPAL SINGH & C O. WHICH HAS ITA NO1960/DEL/2007 2 NO RELEVANCE IN THE PRESENT CASE IN VIEW OF THE AMEND MENT MADE TO SECTION 271(1)( C) W.E.F. 1.4.1976. 3. THAT THE APPELLANT CRAVES FOR THE PERMISSION TO ADD, D ELETE OR AMEND THE GROUNDS OF APPEAL BEFORE OR AT THE TIME O F HEARING OF THE APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE PENALTY U /S 271(1)( C) WAS IMPOSED VIDE ORDER DATED 14.3.2006 IN RESPECT OF ADDI TIONS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF FOLLOWING VIDE ORDE R DATED 27..3.1998:- 1. UNDER VALUATION OF CLOSING STOCK ` .12,91,026/- 2. SALES TAX PENALTY. ` . 79,133/- 3. CONVEYANCE EXPENSES. ` 50,335/- 4. LTA ` . 28,594/- 5. LONG TERM CAPITAL LOSS. ` . 8,78,450/- ---------------------------- ` .23,27,538/- ---------------------------- THE PENALTY ORDER U/S 271(1)( C) OF THE ACT WAS AGITA TED BEFORE LD CIT(A) WHO DELETED THE PENALTY ORDER PASSED BY THE ASSE SSING OFFICER. THE MATTER WAS FURTHER TAKEN TO HON'BLE TRIBUNAL WHO VIDE ITS ORDER DATED 7.12.2007 DELETED THE ABOVE PENALTY. THE REVE NUE TOOK THE MATTER TO HON'BLE HIGH COURT AND HON'BLE HIGH COURT VIDE ITS JUDGMENT DATED 31.7.2009 REMANDED THE CASE BACK TO THE TRIBUN AL AND DIRECTED THE TRIBUNAL TO DECIDE AFRESH. THE HON'BLE HIGH COUR T HD OBSERVED AS UNDER:- ITA NO1960/DEL/2007 3 THE ASSESSEE DECLARED LOSS BUT DURING ASSESSMENT, THE ASSESSING OFFICER DID NOT ACCEPT THE EXTENT OF LOSS CLAIM ED AND ADDITION WAS MADE TO THE INCOME. PROCEEDINGS WERE A LSO INITIATED FOR PENALTY. FINALLY, PENALTY WAS LEVIED. ON APPEAL, CIT(A) DELETED THE PENALTY WHILE UPHOLDING THE ADDI TION. THE TRIBUNAL DISMISSED THE APPEAL OF THE REVENUE FOLLOWING THE JUDGMENT OF THE HON'BLE SUPREME COURT IN VIRTUAL SO FT SYSTEMS LTD. V. CIT (2007) 289 ITR 83. IT IS STATED THAT THE JUDGMENT RELIED UPON BY THE TRIBUNAL HAS BEEN OVERRULED BY THE HON' BLE SUPREME COURT IN COMMISSIONER OF INCOME TAX V. GOLD C OIN HEALTH FOOD PVT. LTD. (2008) 304 ITR 308. THIS IS NO T DISPUTED BY LEARNED COUNSEL FOR THE ASSESSEE. IN VIEW OF THE ABOVE, THIS APPEAL IS ALLOWED. THE ORD ER OF THE TRIBUNAL IS SET ASIDE AND THE MATTER IS REMANDED TO TH E TRIBUNAL FOR FRESH DECISION IN ACCORDANCE WITH LAW. THEREFORE, IN VIEW OF THE ABOVE DIRECTION OF HON'B LE HIGH COURT, THE CASE WAS FIXED FOR REHEARING AFTER ADJOURNMENTS ON VAR IOUS DATES WAS FINALLY HEARD ON 23 RD AUGUST, 2012. 3. AT THE OUT SET, THE LD AR PRODUCED COPY OF THE TR IBUNAL ORDER DATED 22.2.2008 STATING THAT FOUR OUT OF FIVE ADDITI ONS UPHELD BY LD CIT(A) HAS ALREADY BEEN DELETED BY THE HON'BLE TRIBU NAL IN RESPECT OF ADDITION OF SALES TAX PENALTY WHICH WAS NOT DECIDED B Y HON'BLE TRIBUNAL HE SUBMITTED THAT SUCH SALES TAX PENALTY FOR N ON PAYMENT OF SALES TAX IS ALSO AN ALLOWABLE DEDUCTION ON THE BASIS OF HON'BLE KARNATAKA HIGH COURT JUDGMENT IN THE CASE COMMISSIONER OF INCOME- TAX V. MANDYA NATIONAL PAPER MILLS LTD. 150 ITR 26 W HEREIN IT WAS HELD THAT SALE TAX PENALTY FOR DELAY IN PAYMENT OF SALE T AX IS AN ALLOWABLE ITA NO1960/DEL/2007 4 DEDUCTION. THEREFORE, IN VIEW OF THE ABOVE FACTS, TH E LD AR ARGUED THAT SINCE ADDITIONS DUE TO WHICH PENALTY PROCEEDINGS WERE FINALIZED ARE ALREADY DELETED, THE PENALTY FOR CONCEALMENT U/S 271 (1)( C) CANNOT BE IMPOSED. 4. THE LD DR, ON THE OTHER HAND, HAS RELIED ON THE O RDERS OF THE TAXING AUTHORITIES. 5. WE HAVE DULY CONSIDERED THE RIVAL SUBMISSIONS AND GON E THROUGH THE MATERIAL AVAILABLE ON RECORD. WE OBSERVE FROM TH E ORDER DATED 22.2.2008 OF HON'BLE TRIBUNAL THAT MOST OF THE ADDI TIONS MADE IN THE CASE OF ASSESSEE WERE ALREADY DELETED AS DESCRIBED BELOW: 1. FIRST DISALLOWANCE OF UNDER VALUATION OF STOCK. PA GE 2 OF ORDER. 2. THIRD DISALLOWANCE OF CONVEYANCE ALLOWANCE. PAGE 4 OF ORDER. 3. FOURTH DISALLOWANCE OF LTA PAGE 5 OF ORDER. 4. FIFTH DISALLOWANCE OF CAPITAL LOSS. PAGE 7 OF OR DER. REGARDING SECOND DISALLOWANCE OF SALES TAX PENALTY, IT IS NOW ESTABLISHED LAW THAT SALES TAX PENALTY FOR DELAY IN PAY MENT OF SALES TAX IS A PART OF SALES TAX AND IS AN ALLOWABLE DEDUCTION. T HEREFORE, IN THE ABSENCE OF SUSTAINANCE OF ANY ADDITIONS, THE PENALTY I S NOT LEVIABLE. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 7. ORDER PRONOUNCED IN THE OPEN COURT ON 21ST DAY OF SEPTEMBER, 2012. SD/- SD/- (A.D. JAIN) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 21.9.12. HMS ITA NO1960/DEL/2007 5 COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). DATE OF HEARING 23.8.2012 DATE OF DICTATION 19.9.2012 DATE OF TYPING 20.9.2012 DATE OF ORDER SIGNED BY 21.9.2012 BOTH THE MEMBERS & PRONOUNCEMENT. DATE OF ORDER UPLOADED ON NET 24.9.2012 & SENT TO THE BENCH CONCERNED.