Kalinga Cables and Conduits Co., New Delhi V. ACIT, Circle-41(1), New Delhi

ITA 26/DEL/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6742 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 02-01-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: EKTA VISHNOI
• Keywords: Business expenditure
• Section: 271(1)(c); 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 26/DEL/2019 ASSESSMENT YEAR: 2014-15 M/S KALINGA CABLES & CONDUIT CO., H-81B, ROAD NO. 41, WEST PUNJABI BAGH, NEW DELHI. PAN NO. AAGFK7011H VS ACIT CIRCLE 41(1) NEW DELHI. APPELLANT RESPONDENT ASSESSEE BY NONE REVENUE BY MS. EKTA VISHNOI, SR. DR ORDER THIS APPEAL FILED BY THE ASSESSEE AGAINST THE IMPUG NED ORDER DATED 15.12.2016 PASSED BY THE LD. CIT(APPEALS)-14, NEW DELHI IN RELATION TO ASSESSMENT YEAR 2014-15 ON THE FOLLOWIN G GROUNDS: 1. THAT THE HONBLE CIT(A) HAS ERRED IN CONFIRMING T HE PENALTY U/S 271(1)(B) OF RS. 62,197/- IMPOSED BY TH E LD. ITO. 2. THAT THE LD. CIT(A) HAS PASSED THE ORDER IN HASTE A ND WITHOUT PROVIDING FAIR AND REASONABLE OPPORTUNITY T O THE APPELLANT. HENCE, THE ORDER IS BAD IN LAW AND ILLE GAL. 3. THAT THE LD. CIT(A) HAD WRONGLY, ILLEGALLY AND WITH OUT JUSTIFICATION NOT CONSIDERED THE REPLIES FILED BEFO RE HIM QUANTUM ADDITION WAS VOLUNTARILY OFFERED BY APPELLA NT 2 ITA NO . 26/DEL/2019 DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) ON THE GROUND THAT NO PENALTY U/S 271(1)(C) BE INITIATED. 4. THAT THE LD. CIT(A) HAS GROSSLY ERRED IN STATING IN THE ORDER THAT THE ASSESSEE IN HIS WRITTEN NOTE FILED HAS NO T MADE ANY SUBMISSION TO ESTABLISH THE NATURE OF CLAIM, BU T FROM A PERUSAL OF THE ASSESSMENT ORDER AND ASSESSEES SUBMISSION, IT IS APPELLANT THAT THE AMOUNT IS IN T HE NATURE OF PENALTY FOR VIOLATION OF EXCISE LAWS. SUCH EXPE NDITURE CAN NEVER BE SAID TO HAVE BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE BUSINESS PURPOSE OF THE ASSESSE E. THIS FACT WAS ALSO NOT DISCLOSED IN THE RETURN OF INCOME AND WAS DETECTED DURING ASSESSMENT PROCEEDINGS. THEREF ORE, IT WAS ALSO CASE OF NON DISCLOSURE OF MATERIAL FACT S WHICH ATTRACTS EXPLANATION 1 TO SECTION 271(1)(C) OF THE I.T. ACT AS WELL. 5. THAT THE LD. CIT(A) HAS NOT CONSIDERED THE VARIOUS GROUNDS RAISED BY THE APPELLANT BEFORE HIM AND MORE SO THAT THE SATISFACTION HAS NOT BEEN RECORDED IN A PROPER MANN ER BY THE LD. ACIT AND NO SHOW CAUSE NOTICE GIVEN BELOW ADDITION. 6. THAT THE APPELLANT CRAVES LEAVE TO ALTER, AMEND, DE LETE OR ADD ALL OR ANY GROUND BEFORE OR AT THE TIME OF HEAR ING. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE AO IN H IS ASSESSMENT ORDER MADE AN ADDITION OF RS. 2,01,284/- BEING PENA LTY EXPENSES ON ACCOUNT OF EXCISE DUTY. THE AO DETECTED THAT AS SESSEE HAS MADE PAYMENT OF PENALTY EXPENSES ON ACCOUNT OF EXCI SE DUTY DURING THE ASSESSMENT PROCEEDINGS AND ASSESSEE DID NOT FILE ANY APPEAL AGAINST THE SAME. DURING THE COURSE OF ASSE SSMENT PROCEEDING AS WELL AS BEFORE THE PENALTY PROCEEDING S, ASSESSEE SUBMITTED THAT THE CLAIM WAS MADE INADVERTENTLY AND THERE WAS NO MENS-REA INVOLVED. THE ASSESSEE ARGUMENT WAS THAT THE AMOUNT WAS OFFERED IN TAX VOLUNTARILY AND THE APPEA L WAS NOT FILED TO BUY THE PEACE OF MIND ALSO DO NOT HELP OF THE CA SE OF ASSESSEE 3 ITA NO . 26/DEL/2019 AND PENALTY PROCEEDINGS WERE TO BE DECIDED ON THE B ASIS OF FACTS OF THE CASE WITH RESPECT TO THE NATURE OF ADDITION AND NATURE OF CLAIM. DURING THE COURSE OF PENALTY PROCEEDINGS AN D ASSESSMENT PROCEEDINGS ASSESSEE HAS RELIED UPON VARIOUS DECISI ONS INCLUDING THE DECISION OF RELIANCE PETROPRODUCT PVT. LTD. OF THE HONBLE APEX COURT REPORTED IN 322 ITR 158. THE AO WAS OF THE V IEW THAT DECISION WAS WITH RESPECT TO DISALLOWANCE U/S 14A O F THE ACT AND WAS RELATING TO THE CLAIM NO EXPENDITURE AGAINST EX EMPT INCOME. THERE WAS NO NON-DISCLOSURE OF ANY MATERIAL FACT IN THAT CASE. THE AO ALSO HELD THAT IN THE CASE OF DHARAMENDRA TEXTIL E PROCESSORS REPORTED IN 306 ITR 277 THE HONBLE SUPREME COURT H ELD THAT MENS-REA IS NOT AN ESSENTIAL INGREDIENT FOR IMPOSITION OF PE NALTY, AS IT IS A CIVIL LIABILITY. BEFORE THE LD. FIRST A PPELLATE AUTHORITY THE ASSESSEE IN ITS WRITTEN NOTE FILED, HAS NOT MADE AN Y SUBMISSION TO ESTABLISH THE NATURE OF CLAIM, BUT FROM THE PERUSAL OF ASSESSMENT ORDER AND ASSESSEES SUBMISSION, IT WAS APPARENT TH AT THE AMOUNT WAS IN THE NATURE OF PENALTY FOR VIOLATION OF EXCIS E LAWS. SUCH EXPENDITURE CAN NEVER BE SAID TO HAVE BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE BUSINESS PURPOSE OF THE ASSESSE E. THE REVENUE AUTHORITY ALSO HELD THAT THIS FACT WAS ALSO NOT DIS CLOSED IN THE RETURN OF INCOME AND WAS DETECTED DURING THE ASSESS MENT PROCEEDINGS. THEREFORE, IT WAS ALSO THE CASE OF NO N-DISCLOSURE OF MATERIAL FACTS WHICH ATTRACTS EXPLANATION 1 TO SECT ION 271(1)(C) OF THE ACT. THE LD. FIRST APPELLATE AUTHORITY HAS DIS MISSED THE APPEAL OF THE ASSESSEE. 4 ITA NO . 26/DEL/2019 3. IN THIS APPELLATE PROCEEDING BEFORE THE UNDERSIG NED RPAD TO THE ASSESSEE WAS ALSO ISSUED FOR 17.09.2019 EARLIER FOR 23.05.2019 IN SPITE OF RPAD ISSUED TO THE ASSESSEE FOR 23.05.2 019 AND FOR 17.09.2019, NEITHER THE ASSESSEE, NOR ITS AUTHORIZE D REPRESENTATIVE APPEARED, NOR FILED ANY APPLICATION FOR ADJOURNMENT, THEREFORE, KEEPING IN VIEW THE FACTS A ND CIRCUMSTANCES OF THE PRESENT CASE AND THE PREVIOUS RECORD OF THE ASSESSEE, I AM OF THE VIEW THAT NO USEFUL PURPOSE WOULD BE SERVED TO ISSUE NOTICE AGAIN AND AGAIN TO THE ASSESSEE. T HEREFORE, IN THE INTEREST OF JUSTICE, I AM DECIDING THE ISSUE IN DIS PUTE EX-PARTE ASSESSEE AND AFTER HEARING LD. DR. 4. AT THE TIME OF HEARING, LD. DR RELIED UPON THE O RDERS PASSED BY THE REVENUE AUTHORITIES AND STATED THAT THE AO H AS MADE THE ADDITION OF RS. 2,01,284/- BEING PENALTY EXPENSES O N ACCOUNT OF EXCISE DUTY WHICH WAS NOT DISCLOSED BY THE ASSESSEE IN ITS RETURN OF INCOME AND WAS DETECTED BY THE AO DURING THE COU RSE OF ASSESSMENT PROCEEDINGS AND ASSESSEE PAID THE TAXES THEREON ASSESSEE ACCEPTED ITS PART AND PAID THE TAX. THERE FORE, LD. DR REQUESTED THAT THE PENALTY IN DISPUTE HAS RIGHTLY B EEN LEVIED BY THE AO AND CONFIRMED BY THE LD. FIRST APPELLATE AUT HORITY. THEREFORE, THE APPEAL FILED BY THE ASSESSEE MAY BE DISMISSED. 5. AFTER HEARING LD. DR AND PERUSING THE ORDERS PAS SED BY THE REVENUE AUTHORITY, I AM OF THE VIEW THAT THE ASSESS EE IS A PARTNERSHIP FIRM ENGAGED IN MANUFACTURING OF ELECTR ICAL INSULATED CABLES AND CONDUITS PIPES, DERIVING ITS INCOME FROM BUSINESS AND 5 ITA NO . 26/DEL/2019 PROFESSION. ASSESSEE FILED ITS RETURN OF INCOME OF RS. 24,07,648/- ON 14.11.2014 ALONG WITH NECESSARY DETAILS AND PART ICULARS. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY UNDE R CASS. AFTER ISSUING A PRESCRIBED NOTICE TO THE ASSESSEE, THE AS SESSING OFFICER COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT ON 1 5.12.2016 AND MADE THE ADDITION IN DISPUTE I.E. PENALTY EXPEN SES OF RS. 2,01,281/- WHICH WAS DEBITED IN THE PROFIT & LOSS A CCOUNT ON ACCOUNT OF PENALTY ON ADDITIONAL EXCISE DUTY. ASSE SSEE FIRM WAS PAID PENALTY OF RS. 2,01,284/- ON ADDITIONAL EXCISE DUTY WHICH IS DISPUTABLE ASSESSEE VOLUNTARY OFFERED THE SAME FOR TAXATION DURING ASSESSMENT PROCEEDINGS TO BUY THE PEACE OF MIND FRO M THE DEPARTMENT AND TO AVOID FRIVOLOUS LITIGATION AND RE QUESTED THAT NO PENALTY SHOULD BE IMPOSED ON SUO MOTTO SURRENDER OF PENALTY AMOUNT AS HELD IN NUMBER OF CASES BY HONBLE COURT AND ITAT. THE AO CONSIDERED THE REPLY FILED BY THE ASSESSEE A ND DID NOT AGREE WITH THE SAME AND HELD THAT ASSESSEE HAD FURN ISHED INACCURATE PARTICULARS OF INCOME WHICH LEAD TO THE CONCEALMENT OF INCOME AND LEVIED THE PENALTY OF RS. 62,197/- VIDE ORDER DATED 29.06.2017 PASSED U/S 271(1)(C) READ WITH SECTION 2 74 OF THE ACT. I HAVE GONE THROUGH THE PENALTY ORDER PASSED BY THE AO DATED 29.06.2017, WHERE THE AO HAS LEVIED THE PENALTY IN DISPUTE AFTER DISCUSSING THE ASSESSMENT ORDER AND AFTER ISSUING A PRESCRIBED NOTICE UNDER THE LAW AND CONSIDERING THE REPLY FILE D BY THE ASSESSEE, ASSESSEE FILED APPEAL BEFORE THE LD. FIRS T APPELLATE AUTHORITY AGAINST THE ORDER DATED 29.06.2017 AND TH E LD. FIRST APPELLATE AUTHORITY HAS ALSO CONFIRMED THE PENALTY IN DISPUTE AND 6 ITA NO . 26/DEL/2019 DISMISSED THE APPEAL FILED BY THE ASSESSEE. BEFORE THE UNDERSIGNED ASSESSEE DID NOT APPEAR AS DISCUSSED AB OVE IN SPITE OF TWO TIMES RPAD TO THE ASSESSEE. 6. I HAVE HEARD THE LD. DR PERUSED THE RELEVANT REC ORD AVAILABLE WITH ME ESPECIALLY ORDER PASSED BY THE REVENUE AUTH ORITY. I AM OF THE CONSIDERED VIEW THAT DURING THE COURSE OF ASSES SMENT PROCEEDINGS THE AO ASKED THE ASSESSEE ABOUT THE EXP ENSES ON ACCOUNT OF EXCISE DUTY OF RS. 2,01,285/- MADE BEING PENALTY WHICH WAS DETECTED BY THE AO DURING THE COURSE OF ASSESSM ENT PROCEEDINGS AND ASSESSEE HAS ACCEPTED AND PAID THE TAX THEREON AND DID NOT FILE ANY APPEAL BEFORE THE LD. FIRST AP PELLATE AUTHORITY AGAINST THE ADDITION IN DISPUTE ON WHICH THE PENALT Y HAS BEEN IMPOSED. I AM OF THE VIEW THAT ASSESSEE HAS CONCEA LED ITS INCOME AND HAS NOT DISCLOSED IN THE RETURN OF INCOME AND N OT PAID THE TAX THEREON. BUT ONLY ON ASKING BY THE AO ABOUT THE EX PENSES ON ACCOUNT OF EXCISE DUTY AMOUNTING TO RS. 2,01,284/-, THE ASSESSEE ACCEPTED HIS FAULT THEREON AND DID NOT FILE APPEAL AGAINST THIS ADDITION ALSO. EVEN OTHERWISE THE AMOUNT IN THE NA TURE OF PENALTY FOR VIOLATION OF EXCISE LAW WHICH THE ASSESSEE HAS PAID IS NOT A BUSINESS EXPENSES. THESE FACTS ALSO NOT DISCLOSED IN THE RETURN OF INCOME AND WERE DETECTED DURING THE ASSESSMENT PROC EEDINGS. THEREFORE, IN MY VIEW THAT IT WAS ALSO A CASE OF NO N DISCLOSURE OF MATERIAL FACTS WHICH ATTRACTS EXPLANATION 1 TO SECT ION 271(1)(C) OF THE ACT. KEEPING IN VIEW OF THE FACTS AND CIRCUMST ANCES OF THE CASE, AS DISCUSSED ABOVE, I AM OF THE VIEW THAT NO INTERFERENCE IS CALLED FOR IN THE WELL REASONED ORDER PASSED BY THE LD. FIRST 7 ITA NO . 26/DEL/2019 APPELLATE AUTHORITY, HENCE, I UPHOLD THE SAME AND R EJECT THE GROUNDS RAISED BY THE LD. CIT(A). 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (H.S. SIDHU) JUDICIAL MEMBER DATED: 30/10/2019 *KAVITA ARORA COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI 8 ITA NO . 26/DEL/2019