Appeal details
Counselvise Citation
[2021] 108 COUNSELVISE.COM (IT) 2165 (ITAT-HYDERABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
3 year(s) 6 month(s) 22 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
29-06-2021
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
DB-B
Next Hearing Date
10-05-2021
Assessment Year
2013-2014
Appeal Filed On
07-12-2017
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD (THROUGH VIRTUAL CONFERENCE) BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER IT A NO. 2040 /H/20 17 ASSESSMENT YEAR: 2 0 13 - 14 LOKESH MACHINES LTD. , HYDERABAD. PAN A AACL 4244 L VS. JT . COMMISSIONER OF INCOME - TAX, CIRCLE 1 6(1), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI A.V. RAGHURAM REVENUE BY: SHRI ROHIT MUJUMDAR DATE OF HEARING: 1 0 /0 5 /2021 DATE OF PRONOUNCEMENT: 29 /0 6 /2021 O R D E R PER L.P. SAHU, A.M. : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST CIT(A) 4 , HYDERABADS ORDER DATED 1 4 / 0 9 /20 17 FOR AY 20 13 - 14 INVOLVING PROCEEDINGS U/S 271 (1 ) (C) OF THE INCOME TAX ACT, 1961 ; IN SHORT THE ACT , ON THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ORDER OF THE LEARNED CIT(A) IS ERRONEOUS, ILLEGAL AND UNSUSTAINABLE IN LAW. I TA NO. 2040 /HYD /20 17 LOKESH MACHINES LTD., HYD. : - 2 - : 2. THE LEARNED CIT(A) ERRED IN SUSTAINING PENALTY ON THE ISSUE OF DISALLOWANCE OF FOREX LOSS OF RS . 4 2,60,676, WHICH ISSUE IS HIGHLY DEBATABLE AND AT ANY RATE WAS A LEGAL CLAIM MADE BY THE APPELLANT IN RESPECT OF WHICH TWO VIEWS ARE POSSIBLE. 3. THE LEARNED CIT(A) ERRED IN SUSTAINING PENALTY ON THE ALLEGED DISALLOWANCE OF RS 4,00,000/ - MADE UNDER SECTION 14A OF THE ACT. THE CIT(A) FAILED TO APPRECIATE THAT THE VERY DISALLOWANCE IS UNSUSTAINABLE AS THERE IS NO SATISFACTION RECORDED BY THE AO IN THE ASST. ORDER THAT THE APPELLANT HAS INCURRED EXPENDITURE IN RESPECT OF EXEMPTED INCOME. FOR THESE AND ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF HEARING IT IS PRAYED THAT THE APPEAL MAY BE ALLOWE D. 1.1 THE ASSESSEE FILED A PETITION FOR ADMI SSION OF ADDITIONAL GROUND, WHICH IS AS UNDER: ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE PENALTY OF RS.13,82,382 LEVIED BY THE ASSESSING OFFICER AND UPHELD BY CIT(A) IS UNSUSTAINABLE ON THE FACTS OF THE PRESENT CASE AND ALSO IN LAW FOR NON - APPLICATI ON OF MIND ON PART OF ASSESSING OFFICER AS THE VERY BASIS I.E., PENALTY SHOW CAUSE NOTICE DOES NOT SPECIFY WHETHER THE NOTICE WAS FOR (CONCEALMENT OF INCOME' OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME . 2. AS THE SAID ADDITIONAL GROUND IS A LE GAL GROUND, WHEREIN, THE FACTS ARE ON RECORD AND FACTS DO NOT REQUIRE FRESH INVESTIGATION, FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO., LIMITED VS. CIT 229 ITR 383 (SC), WE ADMIT THE SAID ADDITIONAL GROUND OF A SSESSEE. I TA NO. 2040 /HYD /20 17 LOKESH MACHINES LTD., HYD. : - 3 - : 3. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY, ENGAGED IN THE MANUFACTURING OF SPECIAL PURPOSE MACHINES (SPMS LIKE MILLING, DRILLING LATHE, ETC.) AND GENERAL PURPOSE MACHINES (GPMS) AND ALSO MANUFACTURING OF MACHINERY FOR CAPTIV E CONSUMPTION, FILED RETURN OF INCOME FOR THE A.Y. 2013 - 14 ADMITTING TOTAL INCOME OF RS. 1,46,95,540/ - AND BOOK PROFIT U/S 115JB AT RS. 1,51,27,764/ - . THE ASSESSMENT IN THIS CASE WAS COMPLETED ON 30 - 11 - 2015 DETERMINING THE TOTAL INCOME AT RS. 1,86,10,598/ - BY MAKING DISALLOWANCE OF FOREX LOSS OF RS. 42.60,676/ - AND DISALLOWANCE U/S 14A OF RS. 4,00,000/ - . 3 .1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT THE APPELLANT COMPANY HAD DEBITED A SUM OF RS. 39.70 LAKHS TOWARDS EXCHANGE VARIANCE. ON VERIFICATION OF DETAILS FURNISHED BY THE APPELLANT COMPANY, IT WAS NOTICED BY THE ASSESSING OFFICER THAT THERE IS A FOREX LOSS OF RS. 42,60,676/ - ON ACCOUNT OF PURCHASE OF MACHINERY FROM YAMAZAKI MAZAK SINGAPORE PTE. THE APPELLANT COM PANY IN ITS BOOKS RECORDED THE ENTRY AS CAPITAL. HOWEVER, AFTER ACCOUNTING FOR CERTAIN FOREX INCOME, THE NET LOSS OF RS. 39.70 LAKHS HAD BEEN CLAIMED AS DEDUCTION THE PROFIT AND LOSS ACCOUNT. THUS THERE WAS VIOLATION OF SECTION 43A, THEREFORE, THE ASSESSIN G OFFICER ISSUED NOTICE U/ S 274 RWS 271 (1)(C) FOR FURNISHING INACCURATE PARTICULARS OF INCOME. IN R ESPONSE, THE ASSESSEE I TA NO. 2040 /HYD /20 17 LOKESH MACHINES LTD., HYD. : - 4 - : APPEARED AND FILED THE SUBMISSIONS. AFTER GOING THROUGH THE INFORMATION, THE ASSESSING OFFICER COMPLETED THE PENALTY PROCEEDINGS BY INITIATING MINIMUM PENALTY OF RS. 13,82,382/ - . 4 . WHEN THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A), THE CIT(A) CONFIRMED THE PENALTY LEVIED BY THE AO. 5 . STILL AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 6 . BEFORE US, THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER INI TIATED THE PENALTY PROCEEDINGS BY ISSUE OF A NOTICE U/S 274 R.W.S. 271 (1)(C) ON 30 / 11 /201 5 . HE SUBMITTED THAT WHILE ISSUING THE SAID NOTICE, THE ASSESSING OFFICER DID NOT MENTION WHETHER THE NOTICE IS ISSUED FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF I NACCURATE PARTICULARS OF INCOME. THEREFORE, THE NOTICE IS NOT VALIDLY ISSUED. CONSEQUENTLY, THE ORDER PASSED U/S 271 (1)(C) IS NOT VALID. 7 . THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND RELIED ON THE ORDERS OF REVENUE AUTHORITIES 8 . CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL FACTS ON RECORD. THE ISSUE IN DISPUTE IS SQUARELY COVERED BY THE DECISION OF THE HONBLE SUPREME COURT IN THE I TA NO. 2040 /HYD /20 17 LOKESH MACHINES LTD., HYD. : - 5 - : CASE OF CIT VS. SSAS EMERALD MEADOWS, [2016] 73 TAXMANN.COM 248 (SC) WHEREIN THE APEX C OURT UPHELD THE DECISION OF THE HONBLE HIGH COURT, IN WHICH, THE HONBLE HIGH COURT CONFIRMED THE ORDER OF THE TRIBUNAL AND DISMISSED THE APPEAL OF THE REVENUE, WHO CAME IN APPEAL AGAINST THE ORDER OF THE TRIBUNAL. THE TRIBUNAL RELYING ON A DECISION OF K ARNATAKA HIGH COURT IN CASE OF CIT VS. MANJUNATHA COTTON & GINNING FACTORY, [2013] 359 ITR 565/210 ALLOWED THE APPEAL OF THE ASSESSEE HOLDING THAT NOTICE ISSUED BY ASSESSING OFFICER U/S 274 READ WITH SECTION 271(1)(C) WAS BAD IN LAW, AS IT DID NOT SPECIFY UNDER WHICH LIMB OF SECTION 271(1)(C) PENALTY PROCEEDINGS HAD BEEN INITIATED, I.E. WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. SIMILAR ISSUE HAS ALSO BEEN DECIDED BY THE HONBLE HIGH COURT OF BOMBAY A T GOA IN THE CASE OF MR. MOHD. FARHAN A. SHAIKH VS. DCIT IN TAX APPEAL NOS. 51 & 57 OF 2012, DATED 11/03/2012, IN WHICH, MANY JUDGMENTS HAVE BEEN CONSIDERED BY THE THREE MEMBER BENCH. 8.1 IN THE CASE UNDER CONSIDERATION, ON PERUSAL OF THE SHOW CAUSE NOT ICES ISSUED BY THE ASSESSING OFFICER U/S 274 R.W.S. 271 (1)(C) OF THE IT ACT, 1961, DATED 30 / 11 /201 5 , WHICH IS PLACED ON RECORD OF PAPER BOOK, IT IS SEEN THAT THE ASSESSING OFFICER DID NOT MENTION WHETHER THE NOTICE IS ISSUED FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THEREFORE, AS PER THE RATIO I TA NO. 2040 /HYD /20 17 LOKESH MACHINES LTD., HYD. : - 6 - : LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF SSAS EMERALD MEADOWS, THE NOTICE ISSUED BY THE ASSESSING OFFICER IS NOT VALID AND CONSEQUENTLY, THE ORDER PASSED U/S 271 (1)(C) IS ALSO NOT VALID. HENCE, WE SET ASIDE THE ORDER OF THE CIT(A) AND QUASH THE ORDER PASSED BY THE ASSESSING OFFICER U/S 271 (1)(C) OF THE ACT. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. 9 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 29 TH JUNE , 2021 . SD/ - SD/ - ( S.S. GODARA ) (L . P . SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDE RABAD, DATED : 29 TH JUNE , 20 2 1 . K V C OPY TO : 1 M/S LOKESH MACHINES LTD., C/O S/SHRI AV RAGHURAM & P. VINOD, ADVOCATES, 610 BABUKHAN ESTATE, BASHEERBAGH, HYDERABAD 500 001 2 J C IT (OSD) , CIRCLE 1 6(1), IT TOWERS, AC GUARDS, HYDERABAD. 3 C I T(A) 4 , HYDERABAD. 4 PR. CIT - 4 , HYDERABAD 5 ITAT, DR, HYDERABAD. 6 GUARD FILE. I TA NO. 2040 /HYD /20 17 LOKESH MACHINES LTD., HYD. : - 7 - : S.NO. DETAILS DATE 1 DRAFT DICTATED ON 2 DRAFT PLACED BEFORE AUTHOR 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 5 APPROVED DRAFT COMES TO THE SR. PS/PS 6 KEPT FOR PRONOUNCEMENT 7 FILE SENT TO BENCH CLERK 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER
