M/S ACCME (URVASHI PUMPS) ENGINEERS PVT. LTD., Jaipur V. ASSISTANT COMMISSIONER OF INCOME TAX, Jaipur

ITA 212/JPR/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7820 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 12-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RUNI PAUL
• Keywords: FORM 26AS
• Section: 271(1)(c); 143(3); 274; 246

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,B JAIPUR JH LAANHI XKSLKBZ] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI VIKRAM SING H YADAV, AM VK;DJ VIHY LA- @ ITA NO. 212/JP/2018 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2009-10 M/S. ACCME (URVASHI PUMPS) ENGINEERS (P) LTD. A-407, ROAD NO 14, VKI AREA, JAIPUR CUKE VS. THE ACIT CIRCLE 4,JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: BABCA 5655 R VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI ROHAN SOGANI, CA JKTLO DH VKSJ LS @ REVENUE BY: SMT. RUNI PAUL, JCIT DR LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 21/01/2020 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 23 /01/2020 VKNS'K@ ORDER PER SANDEEP GOSAIN, J.M. THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) -2, JAIPUR DATED 15.11.2017 FOR THE ASSE SSMENT YEAR 2009-10 WHEREIN THE ASSESSEE HAS RAISED THE FOLLOWING GRO UND OF APPEAL. 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE AO IN IMPOSING PENALTY U/S 271(1)( C) OF THE I.T. ACT, 1961 AMOUNTING TO RS. 3 8,516/-. THE ACTION OF THE LD. CIT(A) IS ILLEGAL, UNJUSTIFIED, ARBITRARY AND A GAINST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTED BY QUASHING THE SAID P ENALTY U/S 271(1)( C). 2.1 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE F ILED ITS RETURN OF INCOME AND SUBSEQUENTLY ASSESSMENT U/S 143(3) OF TH E I.T. ACT, 1961 WAS ITA NO. 212/JP/2018 M/S. ACCME (URVASSHI PUMPS) ENGINEERS PVT.LTD.VS ACI T CIRCLE 4, JAIPUR 2 COMPLETED AND ADDITION WAS MADE BY THE AO ON ACCOUN T OF INTEREST ON FDR OF RS. 1,13,318/-.THE SAID ORDER OF THE AO WAS SUSTAINED UPTILL ITAT. THEREFORE, THE PENALTY PROCEEDINGS WERE ALSO INITIATED AND CONSEQUENTLY PENALTY OF RS. 38,516/- WAS IMPOSED BY THE AO U/S 271(1) OF THE ACT ON ACCOUNT OF CONCEALMENT OF INCOME. 2.2 AGGRIEVED BY THE ORDER OF THE AO FOR IMPOSITION OF PENALTY, THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A) WHI CH WAS DISMISSED BY THE LD. CIT(A) FOR WHICH THE ASSESSEE IS IN APPEAL BEFORE US. 2.3 THE LD.AR APPEARING ON BEHALF OF THE ASSESSEE R EITERATED THE SAME ARGUMENTS AS WERE RAISED BY HIM BEFORE THE LD. CIT( A) AND THE SAME ARE CONTAINED IN PARA 2.2 OF THE LD. CIT(A)S ORDER WHI CH IS REPRODUCED AS UNDER:- 2.2 THE RELEVANT EXTRACT OF THE SUBMISSION OF THE A PPELLANT IS AS UNDER: 'THE ASSESSEE COMPANY MAINTAINS ITS ACCOUNTS ON ACC RUAL BASIS. IT REQUIRES ESTIMATING THE ACCRUED INCOME BY WAY OF INTEREST ON UNMATURED FIXED DEPOSIT. THIS ESTIMATION CAN BE AT VARIANCE WITH THE WORKING OF THE HANK. SUCH VARIANCE OVER THE TOTAL PERIOD C)F MATURITY OF FIXED DEPOSIT WILL GET NEUTRALIZED. II IS UNDISPUTED THAT THE TOTAL INTEREST INCOME ON MATURITY ACCOUNTED FOR BY THE COMPANY WILL HE IN TOTAL AGREEMENT WITH THE TOTAL I NTEREST GIVEN BY THE BANK. IN VIEW OF THIS WHEN THE DIFFERENCE IS TAXED IN SUB SEQUENT YEARS, THE SAME MAY NOT BE TAXED IN THE YEAR UNDER APPEAL AS THAT WOULD LEAD TO DOUBLE TAXATION. IT IS SUBMITTED THAT ASSESSEE COMPANY HAS NOWHERE T RIED TO CONCEAL ITS INCOME WHICH IS A SINE QUA NON FOR LEVY OF PENALTY UNDER S ECTION 271(I)(C). LAW FOR MAKING ADDITION IN QUANTUM PROCEEDINGS IS DIFFERENT . FROM THE LAW FOR IMPOSING PENALTY. IN RECOGNITION OF THIS FUNDAMENTAL DIFFERE NCE, BOTH PROVISIONS OF SECTION 271(1)(C) OF THE ACT GIVE DISCRETIONARY POW ERS TO THE AUTHORITY. LEVYING ITA NO. 212/JP/2018 M/S. ACCME (URVASSHI PUMPS) ENGINEERS PVT.LTD.VS ACI T CIRCLE 4, JAIPUR 3 PENALTY, TO LEVY OR 1701 TO LEVY PENALTY IN THE CAS E OF CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCO ME. 3.6 HON'BLE SUPREME COURT IN THE CASE HINDUSTAN STE EL LTD. V. STATE OF ORISSA [1972J 83 ITR 26 (SC) LAID DOWN A RATIO THAT PENALT Y SHOULD NOT BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. THE ASSESSING OFFICER HAS TO EXERCISE HIS DISCRETION JUDICIOUSLY. AN ORDER IMPOSING PENALTY F OR FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF A QUASI-CRIMI NAL PROCEEDING, AND PENALTY WILL NOT ORDINARILY BE IMPOSED UNLESS THE PARTY OBL IGED EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMA CIOUS OR DISHONEST. OR ACTED IN CONSCIOUS DISREGARD OF ITS OBLIGATION. 3.7. IT IS SUBMITTED THAT MERELY BECAUSE THE METHOD OF CALCULATING THE INTEREST INCOME AS ADOPTED BY THE ASSESSEE COMPANY DOES NOT MATCH WITH THAT ADOPTED BY THE LD AO AND ON THIS ACCOUNT ADDITIONS ARE MADE, THEN NO PENALTY CAN HE LEVIED. 3.8. HON'BLE SUPREME COURT THE CASE OF RELIANCE PET RO PRODUCTS (P.) LTD [20.10] 322 ITR 158 (SC) HELD THAT '........, 'WE DO NOT AGREE, AS THE ASSESSED HAD FURNISHED ALL THE DETAILS OF ITS EXPENDITURE AS WELL AS INCOME IN ITS RETURN, WHICH DETAILS, IN THEMSELVES., WERE NOT FOUND TO HE INACCURATE NOR COULD HE VIEWED AS THE CONCEALMENT 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 CLAI MED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT, IN OUR OPINION, ATTRACT THE PENAL TY UNDER SECTION 27.1(1)(C). IF WE ACCEPT THE CONTENTION OF THE REVENUE THEN IN CASE OF EVERY RETURN WHERE THE CLAIM MADE IS NOT ACCEPTED BY ASSESSING OFFICER FAR ANY REASON, THE ASSESSEE WILL INVITE PENALTY UNDER SECTION .271(1)4 ). THAT IS CLEARLY NOT THE INTENDMENT OF THE LEGISLATURE....' IN VIEW O THE ABOVE, PENALTY LEVIED BY THE ID AO, D ESERVES YES TO BE DELETED IN TO-TO. 2.4 ON THE OTHER HAND, THE LD. DR RELIED ON THE ORD ER OF THE AO WHICH IS REPRODUCED BY THE LD. CIT(A) IN PARA 2.1 OF HIS ORDER AS UNDER:- 2.1 THE RELEVANT EXTRACT OF PENALTY ORDER IS AS UNDER: 'THE ASSESSEE FILED ITS RETURN OF INCOME ON 28.09.2 009 DECLARING TOTAL INCOME OF RS. I,33,47,510/- .ASSESSMENT U/S 143(3) OF THE IT ACT WAS COMPLETED ON 28,12.20.11 AT TOTAL INCOME OF RS. 1,5 3.08.400A-. W'HILE COMPLETING THE ASSESSMENT U/S 143(3) FOLLOWING ADDI TION WAS MADE BY THE A.0. ITA NO. 212/JP/2018 M/S. ACCME (URVASSHI PUMPS) ENGINEERS PVT.LTD.VS ACI T CIRCLE 4, JAIPUR 4 INTEREST ON EDR: RS, 1,13,318/- .DURING THE ASSESSM ENT PROCEEDINGS, ON PERUSAL THE 26AS STATEMENT OF THE A SSESSEE IT WAS FOUND THAT THE ASSESSEE HAD RECEIVED INTEREST FROM STATE BANK OF INDIA AMOUNTING OF RS. 6,57,670/- WHEREAS THE ASSESSEE, IN ITS RETU RN OF INCOME HAD DECLARED INTEREST OF RS. 5,44,352/- THUS THE ASSE SSEE HAD DECLARED LESS AMOUNT OF RS. 1,13,318/- ON INTEREST OF RS. 5,44,35 2/- . THUS THE ASSESSEE WAS ASKED THE DIFFERENCE AND THE ASSESSEE HAD STATE D ONLY THAT IT IS DUE TO METHODOLOGY OF THE INTEREST CREDIT BY THE BANK. THE REPLY OF THE ASSESSEE WAS NOT ACCEPTABLE AND THUS IT WAS HELD THAT THE AS SESSEE HAD DECLARED THE LESS AMOUNT OF RS. 1,13,318/- ON INTEREST OF THE FD R FROM STATE BANK OF INDIA AND ADDED TO TOTAL INCOME OF THE ASSESSEE. SINCE THE ASSESSEE HAD CONCEALED ITS INCOME AND FUR NISHED INACCURATE PARTICULARS OF SUCH INCOME, PENALTY PROCEEDINGS US 271(1)(C)(1)(0 WAS INITIATED DURING ASSESSMENT PROCEEDING AND NOTICE U /S 274 R. W.S. 271(1)(C) OF THE I.T. ACT WAS ISSUED ON 28.12.2011. AGGRIEVED WITH THE ORDER OF THE A.0., THE ASSESSEE PREFERRED APPEAL BEFORE THE ID. (IT(A), THE ID. CIT(A)-2, JAIPUR VIDE HIS O RDER IN APPEAL NO. 483/.1.1-12 DATED 19.06.2014 HAS UPHELD THE ADDITIO N OF RS. 1,13,318/- MADE BY THE A.0 AND DISMISSED ASSESSEE'S APPEAL. TI RE, INDINGS OF THE LD. C2171A)-2, JAIPUR WERE AS UNDER... SINCE PENALTY PROCEEDINGS U/S 271(1)(C) WAS INITIAT ED THEREFORE BEFORE IMPOSING PENALTY REASONABLE OPPORTUNITY OF BEING HE ARD WAS GIVEN TO THE ASSESSEE VIDE THIS OFFICE LETTER DATED 03.03.2016. IN RESPONSE TO IT , A.R. OF THE ASSESSEE FILED WRITTEN SUBMISSION ON 10.03.2016 STATING HEREIN THAT I HAVE CONSIDERED THE REPLY OF THE ASSESSEE. THE FA CT GIVEN BY THE ASSESSEE ARE IMMATERIAL THE SECTION MENTIONED BY THE ASSESSE E RELATES TO LIMITATION OF IMPOSING PENALTY. SECTION 275(A) OF THE INCOME-T AX ACT, 1961 SAYS THAT............. PROVIDED THAT IN THE CASE WHERE THE RELEVANT ASSESS MENT OR OTHER ORDER IS THE SUBJECT-MATTER OF AN APPEAL TO THE COMMISSIONER (AP PEALS) UNDER SECTION 246 OR SECTION 246A, AND THE COMMISSIONER (APPEALS) PAS SES THE ORDER ON OR AFTER THE 1S T DAY OF JUNE, 2003 DISPOSING OF SUCH APPEAL , CM OR DER IMPOSING PENALTY SHALL HE PASSED BEFORE THE EXPIRY OF THE FI NANCIAL YEAR IN WHICH THE PROCEEDINGS, IN THE COURSE OF WHICH ACTION FOR IMPO SITION OF PENALTY HAS BEEN INITIATED, ARE COMPLETED, OR WITHIN ONE YEAR ,FROM :THE END OF THE FINANCIAL YEAR IN WHICH THE ORDER OF THE COMMISSIONER (APPEALS) IS RECEIVED BY THE PRINCIPAL CHIEF COMMISSIONER OR CHIEF COMMISSIONER OR PRINCIP AL COMMISSIONER OR COMMISSIONER. WHICHEVER IS LETTER: THE ASSESSEE FAILED TO SUBMIT ITS REPLY ON MERIT, THAT THEY HAVE NOT CONCEALED THEIR INCOME. SINCE THE ASSESSEE HAS NOT SUBMITTED ANY REPLY ON ITA NO. 212/JP/2018 M/S. ACCME (URVASSHI PUMPS) ENGINEERS PVT.LTD.VS ACI T CIRCLE 4, JAIPUR 5 MERIT OF THE CASE THEREFORE, I DECIDE THE ISSUE OF PENALTY ON THE BASIS OF MERIT OF THE DOCUMENTS AVAILABLE ON RECORD. IT MAY HE MENTIONED THAT AS PER 26AS THE ASSESSEE HAS RECEIVED INTEREST ON HANK RDR AMOUNTING TO RS. 6,57,670/- WHEREAS THE ASSESSEE HAS ONLY SHOWN AN A MOUNT OF RS. 5,44;352/-, THEREFORE INTEREST AMOUNTING TO RS. 1,13,318/- HAS BEEN LESS SHOWN. IT MAY HE MENTIONED THAT THE ASSESSEE WAS MAINTAINING ITS BOO K OF ACCOUNTS ON MERCANTILE BASIS, HENCE THE INCOME WHICH HAS BEEN A CCRUED DURING THE YEAR WAS THE REAL INCOME OF ASSESSEE IT IS IMMATERIAL T HAT THE ASSESSEE WOULD HAVE DISCLOSED SUCH INCOME IN OTHER YEAR. UNDER INC OME-TAX ACT REAL INCOME OF EACH YEAR IS BROUGHT TO TAX IN THAT YEAR ONLY IN WHICH IT HAS BEEN EARNED OR HAS BEEN ACCRUED. IT IS NOT THE ASSESSEE TO DECI DE THAT IN WHICH YEAR HE WANTS TO DISCLOSE SUCH INCOME. THE ASSESSEE HAS CON CEALED ITS INCOME TO THE TUNE OF RS,1,13,318/- ALTHOUGH IT WAS APPEARING IN ,FORM 26AS AND ALSO IN THE INTEREST CERTIFICATE ISSUED BY THE BANK. THE AS SESSEE IS, THEREFORE HELD TO HAVE COMMITTED THE DEFAULT OF CONCEALING ITS INCOME BY WAY OF DELIBERATELY FINISHING INACCURATE PARTICULARS OF ITS INCOME AND THUS CONCEALING ITS INCOME. THIS ACT OF ASSESSEE ATTRACTS PROVISIONS OF SECTION 271(1)(C) OF THE INCOME-TAX ACT.' 2.5 AFTER HEARING BOTH THE LD. COUNSELS OF THE ASSE SSEE AND PERUSING THE MATERIALS AVAILABLE ON RECORD, WE FOUND THAT THE AS SESSEE WAS MAINTAINING ITS ACCOUNT ON ACCRUAL BASIS WHICH REQUIRES ESTIMAT ING THE ACCRUED INCOME BY WAY OF INTEREST ON UNMATURED FIXED DEPOSIT. AS P ER THE ASSESSEE, THIS ESTIMATION CAN BE AT VARIANCE WITH THE WORKING OF THE BANK AND SUCH VARIANCE OVER THE TOTAL PERIOD OF MATURITY OF FIXED DEPOSIT WILL ULTIMATELY GET NEUTRALIZED. THE ASSESSEE HAD BEEN ADOPTING THI S METHOD OF CALCULATION IN PREVIOUS YEARS ALSO AND EVEN THE AUD ITOR OF THE ASSESSEE HAD NEVER OBJECTED. WE ARE OF THE VIEW THAT AS PER FACT S OF THE PRESENT CASE SINCE THE ASSESSEE WAS MAINTAINING MULTIPLE ACCOUNT S AND WAS ESTIMATING THE ACCRUAL INCOME BY WAY OF INTEREST ON UNMATURED FIXED DEPOSIT AND ITA NO. 212/JP/2018 M/S. ACCME (URVASSHI PUMPS) ENGINEERS PVT.LTD.VS ACI T CIRCLE 4, JAIPUR 6 THIS ESTIMATION CAN BE AT VARIANCE WITH THE WORKING OF THE BANK AND EVEN OTHERWISE SUCH VARIANCE OVER THE TOTAL PERIOD OF MATURITY OF FIXED DEPOSIT WILL ULTIMATELY GET NEUTRALIZED. THEREFORE, MERELY BECAUSE OF METHOD OF CALCULATING THE INTEREST INCOME AS ADOPTE D BY THE ASSESSEE COMPANY DOES NOT MATCH WITH THAT ADOPTED BY THE AO THEN NO PENALTY CAN BE LEVIED. WE ARE CONSCIOUS OF THE FACT THAT LAW FO R MAKING ADDITION IN QUANTUM PROCEEDINGS IS DIFFERENT FROM THE LAW FOR I MPOSING PENALTY. IN RECOGNITION OF THIS FUNDAMENTAL DIFFERENCE, BOTH PR OCEEDINGS HAVE BEEN KEPT SEPARATE AND INDEPENDENT. PROVISIONS OF SECTIO N 271(1)( C) OF THE ACT GIVE DISCRETIONARY POWERS TO THE AUTHORITY LEVYING PENALTY TO LEVY OR NOT LEVY PENALTY IN THE CASE OF CONCEALMENT OF INCOME O R FURNISHING INACCURATE PARTICULARS OF INCOME. HON'BLE SUPREME C OURT IN THE CASE OF HINDUSTAN STEEL LTD. VS STATE OF ORISSA (1972) 83 I TR 26 (SC) LAID DOWN A RATIO THAT PENALTY SHOULD NOT BE IMPOSED MERELY B ECAUSE IT IS LAWFUL TO DO SO. THE ASSESSING OFFICER HAS TO EXERCISE HIS DI SCRETION JUDICIOUSLY. AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF QUASI-CRIMINAL PROCEEDINGS AND PENALT Y WILL NOT ORDINARILY BE IMPOSED UNLESS THE PARTY OBLIGED EITHER ACTED DELIB ERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHON EST OR ACTED IN CONSCIOUS DISREGARD OF ITS OBLIGATION. THEREFORE, K EEPING IN VIEW OUR ITA NO. 212/JP/2018 M/S. ACCME (URVASSHI PUMPS) ENGINEERS PVT.LTD.VS ACI T CIRCLE 4, JAIPUR 7 ABOVE DISCUSSIONS, WE ARE OF THE VIEW THAT MERELY B ECAUSE OF METHOD OF CALCULATING THE INTEREST INCOME AS ADOPTED BY TH E ASSESSEE COMPANY DOES NOT MATCH WITH THAT ADOPTED BY THE AO THEN IN THAT EVENTUALITY NO PENALTY CAN BE LEVIED. OUR THIS VIEW IS FORTIFIED B Y THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS RELIANCE PETROP RODUCTS (P) LTD. 322 ITR 158. HENCE, THE PENALTY SUSTAINED BY THE LD. CI T(A) IS DELETED. THE SOLITARY GROUND OF THE ASSESSEE IS ALLOWED. 3.0 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED WITH NO ORDER AS TO COST. ORDER PRONOUNCED IN THE OPEN COURT ON 23 /01/20 20. SD/- SD/- FOE FLAG ;KNO LANHI XKSLKBZ (VIKRAM SINGH YADAV) (SANDEEP GOSAIN) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 23/01/2020. *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S. ACCME (URVASHI PUMPS) ENGINEERS PVT LTD., JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- ACIT, CIRCLE 4, AIPUR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 4. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR . 5. XKMZ QKBZY@ GUARD FILE {ITA NO. 212/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSTT. REGISTRAR