M/s R & S Laboratories, Una V. ACIT, Palampur

ITA 21/CHANDI/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6521 (ITAT-CHANDIGARH)
• Duration Of Justice: 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 03-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: ADITYA KUMAR; SSH ASHWANI KUMAR
• Keywords: Bonafide mistake

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER & DR. B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NO. 21/CHD/2017 ASSESSMENT YEAR: 2007-08 M/S R & S LABORATORIES, VS. THE ACIT, 14-15, INDUSTRIAL AREA, PALAMPUR (H.P.) TAHLIWAL, UNA (H.P.) PAN NO. AAIFR6768C (APPELLANT) (RESPONDENT) APPELLANT BY : S/SH. ASHWANI KUMAR & ADITYA KUMAR RESPONDENT BY : SH. MANJIT SINGH DATE OF HEARING : 19.09.2017 DATE OF PRONOUNCEMENT : 11.12.2017 ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 27.09.2016 OF THE COMMISSIONER OF INCOM E TAX (APPEALS)-1, [HEREINAFTER REFERRED TO AS CIT(A)] AMRITSAR CAMP A T PALAMPUR AGITATING THE LEVY OF PENALTY IMPOSED U/S 271(1)(C) OF THE IN COME-TAX ACT, 1961 (IN SHORT 'THE ACT'). 2. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE A SSESSEE HAD DEBITED RS. 18 LAKHS TO THE PROFIT & LOSS ACCOUNT ON ACCOUNT OF GUARANTEE FEE PAID TO THE PARTNERS. WHEN ASKED TO EXPLAIN IN THIS RESPECT , THE ASSESSEE PRODUCED COPY OF THE PARTNERSHIP DEED ACCORDING TO WHICH THE PARTNERS HAD BEEN 2 AUTHORISED TO CHARGE SUCH FEE IN ADDITION TO THE PR OFITS ON THEIR SHARES AND INTEREST ON CAPITAL. THE ASSESSING OFFICER, HOWEVER , OBSERVED THAT SUCH PAYMENT WAS NOT ALLOWABLE AS PER THE PROVISIONS OF THE INCOME TAX ACT. HE, THEREFORE, DISALLOWED THE AFOREMENTIONED GUARAN TEE FEE AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. PENALTY PROCEED INGS WERE ALSO INITIATED WHEREIN THE PENALTY OF RS. 6,05,880/- WAS IMPOSED U /S 271(1)(C) OF THE ACT. 3. BEFORE US, THE LD. AR OF THE ASSESSEE HAS EXPLAI NED THAT THE FEE WAS CLAIMED AS EXPENDITURE UNDER THE BONAFIDE MISTAKE. HOWEVER, THERE WAS NO ATTEMPT ON THE PART OF THE ASSESSEE TO CONCEAL INCO ME OR FURNISH INACCURATE PARTICULARS OF INCOME. ALL THE FACTS WERE FULLY AND TRULY DISCLOSED. WHEN THE ASSESSEE REALIZED ITS BONAFIDE ERROR, IT IMMED IATELY VOLUNTARILY OFFERED THE SAID DISALLOWANCE FOR TAXATION. THE LD. AR, THE REFORE, HAS SUBMITTED THAT IT IS NOT A FIT CASE FOR LEVY OF PENALTY U/S 2 71(1)(C) OF THE ACT. HE IN THIS RESPECT HAS RELIED UPON THE DECISION OF THE HO N'BLE SUPREME COURT IN THE CASE OF PRINCE WATERHOUSE COOPERS PVT LTD VS. CIT 348 ITR 306 (SC) AND ANOTHER IN THE CASE OF CIT VS. RELIANCE P ETROPRODUCTS PVT. LTD. 322 ITR 158 (SC). 4. THE LD. DR, ON THE OTHER HAND, HAS RELIED ON THE FINDINGS OF THE LOWER AUTHORITIES. 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, CAREFU LLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND ALSO DELIBERATE D ON THE JUDICIAL PRONOUNCEMENTS CITED AT BAR. WE FIND FORCE IN THE S UBMISSIONS OF THE LD. AR. THE LD. AR HAS DULY EXPLAINED THAT THE CLAIM RE LATING TO WHICH DISALLOWANCE HAS BEEN MADE BY THE ASSESSING OFFICER WAS NOT MADE FOR THE PURPOSE OF CONCEALMENT OF INCOME OR FOR AVOIDANCE O F TAX BUT DUE TO 3 BONAFIDE ERROR AS NARRATED ABOVE. THE ASSESSEE DULY ACCEPTED ITS MISTAKE AT THE FIRST INSTANCE AND REQUESTED THE ASSESSING OFFI CER TO MAKE ADDITION IN RELATION TO THE ABOVE STATED CLAIM. AFTER CONSIDERI NG THE OVERALL CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT PENALTY U/S 271(1)(C) OF THE ACT IS NOT WARRANTED IN THIS CASE AND THE SAME IS ACCORDINGLY ORDERED TO BE DELETED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS HER EBY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11.12.2017 SD/- SD/- (DR. B.R.R. KUMAR) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 11.12.2017 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR