M/s.Informatics (India) Limited, Bangalore V. Deputy Commissioner of Income Tax, Bangalore

ITA 2187/BANG/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 4781 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 13-12-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR P V PRADEEP KUMAR
• Assessee Lawyers: EDMOND DSOUZA
• Keywords: Question of law
• Section: 40A(3); 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, B ENGALURU BEFORE S HRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER I TA NO. 1878 / BANG/2 0 1 7 (ASSESSMENT YEAR: 1996 - 97 ) M/S.SANU FAMILY TRUST, D.NO.49 - 776 - 15, SANU PALACE, K ODIALBAIL, MANGALORE. PAN: AAAAS 9293 A VS. APPELLANT ASST. COMMISSIONER OF INCOME - TAX, CIRCLE 1(1), MANGALORE. RESPONDENT APPELLANT BY : SHRI EDMOND D SOUZA, CA RESPONDENT BY : DR. P.V.PRADEEP KUMAR, ADDL.CIT(DR) DATE OF HE ARING : 05/03/2018 DATE OF PRONOUNCEMENT : 31 /05/2018 O R D E R PER I NTURI RAMA RAO, AM : THIS IS AN APPEAL FILED BY ASSESSEE DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A), MANGALORE, DATED 24/ 0 7 / 2017 CONFIRMING LEVY OF PENALTY U/S 271(1)(C) OF THE IT ACT 1961. 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL: 1) THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) IS OPPOSED TO LAW AND FACTS, AR BITRARY AND NOT IN ACCORDANCE WITH LAW. 2) THE LEARNED COMMISSIONER OF INCOME - TA X (APPEALS), GROSSLY ERRED IN CONFIRMING THE ORDER OF THE ASSESSING AUTHORITY, HOLDING THAT THE APPELLANT HAS CONCEALED THE PARTICULARS OF ITS INCOME OR FURNISHING INACCURATE PARTICULARS OF ITS INCOME RELYING ON THE DECISION OF THE APEX COURT IN (2007) 212 CTR 434, WHICH IS NOT APPLICABLE IN THE CASE OF THE APPELLANT. ITA NO . 1878 /BANG/20 17 PAGE 2 OF 5 3) IN ANY CASE, ON THE FACTS OF THE CASE, THERE IS NO CONCEALMENT OF INCOME AND/O:R 110 INACCURATE PARTICULARS HAVE BEEN FURNISHED IN AS MUCH AS THE APPELLANT HAS NOT CLAIMED ANY EXPENDITURE TO DISALLOW UNDER SECTION 40 A (3). 4) IN ANY CASE. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN UPHOLDING THE ORDER OF THE ASSESSING OFFICER WITHOUT CONSIDERING THAT MERE DISALLOWANCE OF EXPENSES WILL NOT PER SE AMOUNT TO FURNISHING INACCURATE PA RTICULARS OF INCOME IRRESPECTIVE OF THE FACT, WHETHER THE APPELLANT HAS CLAIMED THE EXPENDITURE OR NOT. 5) IN ANY CASE, THE COMMISSIONER OF INCOME - LAX (APPEALS) ERRED IN CONFIRMING THE CIDER OF THE ASSESSING OFFICER MERELY ON THE GROUND THAT CERTAIN EXPENSE HAS BEEN DISALLOWED AS MERE DISALLOWANCE OF AN EXPENSE PER SE CANNOT MEAN THAT THE APPELLANT HAS FURNISHED INACCURATE PARTICULARS OF INCOME. 6) THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) FAILED TO NOTE IN CONFIRMING THE ORDER OF THE ASSESSING AUTHORI TY THAT NO EXPENDITURE HAS BEEN CLAIMED IN ITS OF INCOME, ARID THEREFORE THERE IS NO CONCEALMENT OF INCOME AND/OR NO INACCURATE PARTICULARS OF INCOME HAVE BEEN FURNISHED WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT. 7) THE LEARNED COMMISSIONER OF INCOM E - TAX (APPEALS) ARID THE ASSESSING AUTHORITY INCOME - TAX FAILED TO NOTE THAT THE DISALLOWANCE MADE UNDER SECTION 40 A (3) HAS BEEN DELETED BY THE COMMISSIONER OF INCOME - TAX (APPEALS) AS WELL AS THE INCOME - TAX APPELLATE TRIBUNAL BUT UPHELD BY THE HIGH COUR T WHICH SHOWS THAT THERE ARE MORE THAN ONE VIEW REGARDING THE DISALLOWANCE UNDER SECTION 40A(3) OF THE INCOME - TAX ACT, 1961 AND THEREFORE IT CANNOT BE SAID THAT THERE HAS BEEN CONCEALMENT OF INCOME AND/OR FURNISHED INACCURATE PARTICULARS OF ITS INCOME. 8) T HE LEARNED COMMISSIONER OF INCOME -- TAX (APPEALS) AND THE ASSESSING AUTHORITY, OUGHT TO HAVE NOTED THAT NO PENALTY CAN BE LEVIED WITH RESPECT TO THE ADDITIONS UPHELD BY THE HONOURABLE HIGH COURT AFTER ADMITTING THE SAME AS THE SUBSTANTIAL QUESTION OF LAW. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ALL OR ANY OF THE GROUNDS OF APPEAL B EFORE OR AT THE TIME OF HEARING OF THIS APPEAL. 3. BRIEFLY FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN AOP. THE RETURN OF INCOME FOR ASSESSMENT YEAR 1996 - 97 WAS FILED ON 19/04/1997 DECLARING NET LOSS OF RS.78 , 40 6 / - . SUBSEQUENTLY THERE WERE SURVEY OPERATIONS IN THE PREMISES OF THE ASSESSEE AND THE AO HAS ISSUED NOTICE PR ITA NO . 1878 /BANG/20 17 PAGE 3 OF 5 U/S 148 TO FILE THE RETURN OF INCOME. AGAINST THE SAME THE ASSESSEE HAD FILED LETTER STATING THAT RETURN OF INCOME FILED ON 29/11/2001 BE TREATED AS RETURN IN RESPONSE TO NOTICE U/S 148. AGAINST THE SAID RETURN OF INCOME, THE ASSESSMENT WAS COMPLETED BY THE AO BY MAKING ADDITION OF RS. 1,50,067 / - U/S 40A(3) AND ADDITION OF RS. 28,52,585/ - AS UNE XPLAINED CASH CREDITS U/S 68. THE ADDITION U/S 68 CAME TO BE DELETED IN THE APPELLATE PROCEEDINGS. IN RESPECT OF ADDITION U/S 40A(3), THE SUBMISSIONS MADE ON BEHALF OF ASSESSEE THAT 40A(3) HAS NO APPLICATION IN RESPECT OF WORK IN PROGRESS OF CONSTRUCTION OF COMPLEX CAME TO BE REJECTED BY THE AO . 2. ON APPEAL BEFORE THE LD.CIT(A), THE CONTENTION OF THE ASSESSEE WAS ACCEPTED AND THE SAME WAS CONFIRMED BY THE TRIBUNAL . AGGRIEVED BY THIS DECISION OF THE TRIBUNAL , THE REVENUE HAD PREFERRED AN APPEAL BE FORE THE HONORABLE HIGH COURT. THE HON BLE HIGH COURT, TAKING A CONTRARY VIEW, HELD THE ISSUE IN FAVOUR OF THE REVENUE. PURSUANT TO THE DIRECTION OF THE HON BLE HIGH COURT THE ASSESSMENT WAS MADE MAKING ADDITION OF RS.1 , 50 , 067/ - AND THE PENALTY PROVISIONS U/S 271(1)(C) WERE ALSO INITIATED. IN RESPECT OF SHOW CAUSE NOTICE IT WAS SUBMITTED THAT THE ASSESSEE NEITHER CONCEALED PARTICULARS OF INCOME NOR FURNISHED INACCURATE PARTICULARS OF INCOME AND IT IS ONLY A BONA FIDE BELIEF THAT THE PROVISIONS OF SECT ION 40A(3) ARE NOT APPLICABLE, WAS NOT REJECTED. THE AO LEVIED PENALTY OF RS. 34 ,028/ - U/S 271(1)(C) VIDE ORDER DATED 07/08/2012. 3. ON APPEAL BEFORE THE LD.CIT(A) THE SAME WAS CONFIRMED. ITA NO . 1878 /BANG/20 17 PAGE 4 OF 5 4 . BEING AGGRIEVED, THE ASSESSEE IS BEFORE US IN THE PRESEN T APPEAL. LEARNED AR OF THE ASSESSEE VEHEMENTLY CONTENDED THAT THE ASSESSEE IS NOT GUILTY OF CONCEALING PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. THEREFORE QUESTION OF LEVY OF PENALTY U/S 271(1)(C) DOES NOT ARISE. ON THE OTHER HAND, THE LEARNED DR PLACED RELIANCE ON THE ORDERS OF THE LOWER AUTHORITIES. 5 . WE HEARD RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. THE ONLY ISSUE IN THE PRESENT GROUNDS OF APPEAL IS WHETHER THE PENALTY OF RS 34 , 028 / - U/ S 271 (1)(C) IS LEVIABLE IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. PENALTY WAS LEVIED BY THE AO ON THE ADDITION OF RS. 1 , 15 , 000 / - MADE U/S 40A(3) PURSUANT TO THE DIRECTIONS OF THE HONORABLE HIGH COURT. THE FACT THAT THE ASSESSEE WAS GIVEN RELIEF IN THE APPELLA TE PROCEEDINGS BEFORE THE LD.CIT(A) AND THE ITAT GOES TO PROVE THAT THE ISSUE IS DEBATABLE AND IS NOT FREE FROM DOUBT AND THE ADDITION WAS MADE ONLY ON A QUESTION OF LAW AND THE AO HAS NOT POINTED OUT AS TO HOW THE ASSESSEE CONCEALED PARTICULARS OF INCOME OR INACCURATE PARTICULARS WERE FILED BY THE ASSESSEE LEADING TO THE ADDITION. THEREFORE, IN OUR CONSIDERED OPINION, IT IS NOT A FIT CASE FOR LEVY OF PENALTY U/S 271 (1)(C). ACCORDINGLY, WE DIRECT THE AO TO DELETE THE PE NALTY. 6 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST MAY, 2018 SD/ - SD/ - (SUNIL KUMAR YADAV) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE : BENGALURU. D A T E D : 31/05/2018 SRINIVAS ULU, SPS ITA NO . 1878 /BANG/20 17 PAGE 5 OF 5 COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A) 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER SENIO R PRIVATE SECRETARY INCOME - TAX APPELLATE TRIBUNAL BANGALORE