Ukay Metal Industries Pvt.Ltd, Nashik V. Assistant Commissioner of Income-tax,

ITA 2554/PUN/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2209 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 24-06-2019
• Assessment Year: 2012-2013
• Appeal Filed On: 09-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VISHWAS MUNDHE
• Keywords: Set aside
• Section: 271(1)(c); 143(3); 27

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI ANIL CHATURVEDI, AM AND SHRI PARTHA SARATHI CHAUDHURY, JM . / ITA NO.2554/PUN/2016 / ASSESSMENT YEAR : 2012-13 UKAY METAL INDUSTRIES PVT. LTD., PLOT NO.F-139, AMBAD, MIDC, BEHIND KIRLOSKAR CUMMINS, AMBAD, NASHIK 422 010. PAN : AAACU1575F. . / APPELLANT V/S THE ASST. COMMISSIONER OF INCOME - TAX, CIRCLE 1, NASHIK. . / RESPONDENT ASSESSEE BY : SHRI PRAMOD SHINGTE. REVENUE BY : SHRI VISHWAS MUNDHE. / ORDER PER ANIL CHATURVEDI, AM : 1. THIS APPEAL FILED BY THE ASSESSEE IS EMANATING OUT OF THE O RDER OF COMMISSIONER OF INCOME TAX (A) 1, NASHIK DATED 20.09.20 16 FOR THE ASSESSMENT YEAR 2012-13. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN THE MANUFACTURING OF FRONT GRILL, INSTRUMENT PANEL, SPAIR, WHEEL CO VER, SEAT FOAM ETC. ASSESSEE FILED ITS RETURN OF INCOME ON 30 .09.2012 FOR / DATE OF HEARING : 24.06.2019 / DATE OF PRONOUNCEMENT: 26.06.2019 2 A.Y. 2012-13 DECLARING TOTAL INCOME AT RS.2,63,47,430/-. T HE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDER DT.23.02.2015 AND THE TOTAL INCOME WAS ASSESSED AT RS.2,82,85,502/- INTER-ALIA BY MAKING VARIOUS DISALLOWANCES INCLUDING DISALLOWANCE OF RS.17,79,699/- WHICH WAS NOT CAPITALIZED TO PLANT AND MACHINERY BY THE ASSESSEE. ON SUCH DISALLOWANCE OF RS.17,79,699/- AO VIDE ORDER DT.27.08.2015 PASSED U/S 271(1)(C) OF THE ACT LEVIED PENALTY OF RS.5,77,430/-. AGGRIEVED WITH THE PENALTY ORDER OF AO, ASSESSEE CARRIED THE MATTE R BEFORE LD.CIT(A), WHO VIDE ORDER DT.20.09.2016 (IN APPEAL NO.NSK/CIT (A)- 1/445/2015-16) DISMISSED THE APPEAL OF ASSESSEE. AGGRIEV ED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING EFFECTIVE GROUND : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LOWER AUTHORITIES HAVE ERRED IN LEVYING THE PENALTY OF RS .5,77,480/- U/S 271 (1)(C) OF THE ACT BY DISREGARDING APPELLANT'S CONTE NTION THAT THE CLAIM MADE UNDER REPAIRS AND MAINTENANCE OF MACHINERY WAS CAPITALIZED BY LEARNED ASSESSING OFFICER IS MERELY CHANGE IN ACCOU NTING TREATMENT AND SIMILARLY BY IGNORING THE RATIO LAID DOWN BY HON'BL E SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCT 322 ITR 158(SC), THE APPELLANT PRAYS FOR DELETION OF PENALTY. 3. BEFORE US, LD.A.R. SUBMITTED THAT THE SOLE ISSUE RAISED BY THE ASSESSEE IS WITH RESPECT TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. 4. BEFORE US, LD.A.R. SUBMITTED THAT WHILE FRAMING THE ASSESS MENT U/S 143(3) OF THE ACT, AO HAD MADE ADDITION OF RS.17,79,699/- ON ACCOUNT OF EXPENSES WHICH ARE NOT CAPITALIZED BY THE ASS ESSEE TO THE PLANT AND MACHINERY. HE SUBMITTED THAT IN THE ASSESSMEN T ORDER NO SATISFACTION HAS BEEN RECORDED BY THE AO AS TO WHETHER THE PENALTY HAS BEEN LEVIED ON ACCOUNT OF FURNISHING OF INACCURATE PART ICULARS OF INCOME OR IT WAS A CASE OF CONCEALMENT OF INCOME. HE SUBM ITTED THAT 3 IN THE PENALTY ORDER PASSED U/S 271(1)(C) OF THE ACT DATE D 27.08.2015 AO LEVIED PENALTY OF RS.5,77,430/- FOR FURNISHING OF INACCUR ATE PARTICULARS OF INCOME AS WELL AS FOR CONCEALMENT OF INCOME I.E., FOR BOTH THE LIMBS. HE THEREFORE RELYING ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SAMSON PERINCHE RY REPORTED IN (2017) 392 ITR 4 (BOM) SUBMITTED THAT WHEN PASSING ASSESSMENT ORDER NO SATISFACTION FOR LEVY OF PENALTY WAS R ECORDED BUT IN THE PENALTY ORDER WHEN PENALTY WAS LEVIED FOR CONCEALM ENT OF INCOME AS WELL AS FOR FURNISHING OF INACCURATE PARTICULARS OF IN COME, THEN IN THE ABSENCE OF PROPER SHOW CAUSE NOTICE TO ASS ESSEE AND IN THE ABSENCE OF RECORDING OF PROPER SATISFACTION, PENALTY U /S 271(1)(C) CANNOT BE LEVIED. HE THEREFORE SUBMITTED THAT PENALTY LEV IED BY AO BE DELETED. LD.D.R. ON THE OTHER HAND, SUPPORTED THE ORDER OF LOWER AUTHORITIES. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPEC T TO LEVY OF PENALTY U/S 271(1)(C) OF THE ACT. IN THE PRESENT CASE, PE NALTY OF RS.5,77,430/- HAS BEEN LEVIED ON ADDITION OF RS.17,79,799 /- ON ACCOUNT OF EXPENSES WHICH WERE NOT CAPITALIZED BY THE AS SESSEE TO THE PLANT AND MACHINERY. THE PERUSAL OF ASSESSMENT ORDER R EVEALS THAT NO SATISFACTION HAS BEEN RECORDED BY THE AO AS TO WHET HER THE PENALTY HAS BEEN LEVIED ON ACCOUNT OF FURNISHING OF INACCURATE PART ICULARS OF INCOME OR IT WAS A CASE OF CONCEALMENT OF INCOME. THEREAFT ER, IN THE PENALTY ORDER PASSED U/S 271(1)(C) OF THE ACT, AO HAD LEVI ED PENALTY FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME AS WELL A S FOR CONCEALMENT OF INCOME I.E., FOR BOTH THE LIMBS. IT IS A S ETTLED LAW THAT WHILE LEVYING PENALTY FOR CONCEALMENT, THE AO HAS TO RECORD 4 SATISFACTION AND THEREAFTER COME TO A FINDING IN RESPECT O F ONE OF THE LIMBS, WHICH IS SPECIFIED UNDER SECTION 271(1)(C) OF THE ACT. THE FIRST STEP IS TO RECORD SATISFACTION WHILE COMPLETING THE ASSESSM ENT AS TO WHETHER THE ASSESSEE HAD CONCEALED ITS INCOME OR FURNISH ED INACCURATE PARTICULARS OF INCOME. THEREAFTER, NOTICE U/S 27 4 READ WITH SECTION 271(1)(C) OF THE ACT IS TO BE ISSUED TO THE AS SESSEE. THE ASSESSING OFFICER THEREAFTER HAS TO LEVY PENALTY UNDER SEC TION 271(1)(C) OF THE ACT FOR NON-SATISFACTION OF EITHER OF THE LIMBS. WHILE COMPLETING THE ASSESSMENT, THE ASSESSING OFFICER HAS TO CO ME TO A FINDING AS TO WHETHER THE ASSESSEE HAS CONCEALED ITS INCO ME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THE HONBLE BO MBAY HIGH COURT IN CIT VS. SHRI SAMSON PERINCHERY REPORTED IN (2017) 392 ITR 4 (BOM) HELD THAT WHERE INITIATION OF PENALTY IS ONE LIMB AND THE LEVY OF PENALTY IS ON OTHER LIMB, THEN IN THE ABSENCE OF PR OPER SHOW CAUSE NOTICE TO THE ASSESSEE, THERE IS NO MERIT IN LEVY OF PENALTY. 6. IN THE PRESENT CASE, AS NOTED HEREINABOVE, IT IS SEEN THAT THE AO HAS NOT RECORDED ANY SATISFACTION IN THE ASSESSMENT ORD ER BUT HAD LEVIED PENALTY FOR FURNISHING OF INACCURATE PARTICULARS OF INC OME AS WELL AS FOR CONCEALMENT OF INCOME I.E., FOR BOTH THE LIMBS. CONSIDERING THE AFORESAID FACTS IN THE LIGHT OF THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF SAMSON PERINCHERY (SUPR A), WE ARE OF THE VIEW THAT IN THE PRESENT CASE THE BASIC CONDITION FOR LEVY OF PENALTY HAS NOT BEEN FULFILLED AND THAT THE PENALTY ORDER SUFFERS FROM NON-EXERCISING OF JURISDICTION POWER OF AO AND THEREFORE PE NALTY ORDER CANNOT BE UPHELD. WE ACCORDINGLY SET ASIDE THE PENALTY ORDER PASSED BY AO. THUS, THE GROUND OF ASSESSEE IS ALLOWED. 5 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED ON 26 TH DAY OF JUNE, 2019. SD/- SD/- ( PARTHA SARATHI CHAUDHURY ) ( ANIL CHATURVEDI ) ! / JUDICIAL MEMBER '! / ACCOUNTANT MEMBER PUNE; DATED : 26 TH JUNE, 2019. YAMINI #$%&'('% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A)-1, NASHIK. PR.CIT-1, NASHIK. '#$ %%&',) &', / DR, ITAT, A PUNE; $,-./ GUARD FILE. / BY ORDER // TRUE COPY // /01%2&3 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE.