Business Communication (Guj.) Pvt.Ltd., Ahmedabad V. The Income tax Officer,Ward-1(2), Ahmedabad

ITA 2886/AHD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57246 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 21-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SOHAN U MASHRUWALA
• Section: 14A

Judgement Text

-1- IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'B' BEFORE SHRI D K TYAGI JUDICIAL MEMBER AND SHRI T R MEENA ACCOUNTANT MEMBER ITA NO.2886/AHD/2011 (ASSESSMENT YEAR:-2005-06) BUSINESS COMMUNICATION (GUJ) PVT. LTD., ADITYA BUILDING, NR. URVASHI FLATS, MITHAKHALI SIX ROADS, AHMEDABAD V/S THE INCOME-TAX OFFICER, WARD-1(2), AHMEDABAD PAN: AABFL 2613 D [APPELLANT] [RESPONDENT] ASSESSEE BY :- SHRI SOHAN U MASHRUWALA, AR REVENUE BY:- SHRI SAMIR TEKRIWAL, SR. DR DATE OF HEARING:- 05-03-2012 DATE OF PRONOUNCEMENT:- 05-03-2012 O R D E R PER D K TYAGI (JM) :- THIS IS AN ASSESSEES APPEAL AGAINST AN ORDER DATED 08-09-2011 PASSED BY THE LEARNED CIT(A) -6, AHMEDABAD FOR ASSESSMENT YEAR 2005-06, WHEREBY THE LEARNED CIT(A) HAS CONFIRMED LEVY OF PENALTY IMPOSED BY THE AO U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961. 2 THE FACTS OF THE CASE ARE THAT THE RETURN OF INCO ME FOR THE YEAR UNDER CONSIDERATION WAS FILED ON 29-10-2005 DE CLARING TOTAL INCOME OF RS. NIL AND CLAIMED CARRY FORWARD OF CURR ENT YEARS BUSINESS LOSS OF RS.7,687/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FINALIZED U/S 143 (3) OF THE ACT 2 ON 25-10-2007 WHEREIN FOLLOWING ADDITIONS / DISALLO WANCES OF RS.6,46,195/- WERE MADE AND THE TOTAL ASSESSED INCO ME WAS COMPUTED AT RS.6,31,279/- AFTER ALLOWING SET OFF OF BROUGHT FORWARD BUSINESS LOSS OF AY 2004-05 OF RS.7,229/-. PENALTY PROCEEDINGS U/S 271(1)(C) WERE ALSO INITIATED IN RE SPECT OF ADDITIONS / DISALLOWANCES MADE IN THE ASSESSMENT OR DER, FOR CONCEALMENT OF INCOME, BY ISSUING NOTICE U/S 274 RE AD WITH SECTION 271(1)(C) OF THE ACT. (I) MUNICIPAL TAX EXPENSES RS. 31,677 (II) ON ACCOUNT OF REPAIRING CHARGES RS.5,95,000 (III) DISALLOWANCE U/S 14A OF THE IT ACT RS. 19, 518 3 THE ASSESSEE COMPANY FILED APPEAL BEFORE THE LEAR NED CIT(A) AGAINST THE ABOVE ADDITIONS MADE IN THE ASSE SSMENT ORDER BY THE AO. THE LEARNED CIT(A) DISMISSED THE APPEAL FILED BY THE ASSESSEE VIDE ORDER DATED 24-11-2008 AND CONFIRMED ALL THE ABOVE ADDITIONS MADE BY THE AO. AS THE ASSESSEE DID NOT FILE REPLY TO THE PENALTY NOTICE, ANOTHER PENALTY NOTICE WAS ISSUED UPON THE ASSESSEE COMPANY ON 27-11-2009. THE ASSESS EE COMPANY FILED ITS REPLY ON 22-12-2009 IN WHICH IT W AS SUBMITTED THAT THE ASSESSEE COMPANY HAS FILED APPEAL BEFORE T HE ITAT AND THE APPEAL IS PENDING AND REQUESTED TO KEEP THE PEN ALTY PROCEEDINGS IN ABEYANCE TILL THE ITAT DECISION. 4 THEREAFTER, THE AO NOTED THAT AS PER THE PROVISIO NS OF SECTION 275(1A) INSERTED BY FINANCE ACT, 2006 W.E.F . 3-7-2006, THE PENALTY PROCEEDINGS HAVE TO BE FINALIZED WITHIN ONE YEAR FROM THE END OF FINANCIAL YEAR IN WHICH ORDER OF THE LEA RNED CIT(A) IS 3 RECEIVED BY CCIT / CIT. THE AO HAS FURTHER NOTED TH AT ALTHOUGH, ORDER OF ITAT ON THE ASSESSEES APPEAL HAS NOT BEEN RECEIVED TILL DATE HOWEVER IN VIEW OF THE TIME LIMITATION PRESCRI BED FOR IMPOSITION OF PENALTY U/S 271(1)(C), THE PENALTY HA S TO BE FINALIZED IN THE CASE OF ASSESSEE BEFORE 31-3-2010 AS ORDER OF THE CIT(A) IS RECEIVED BY CIT OFFICE ON 24-12-2008. THE AO ACCORDINGLY PROCEEDED TO FINALIZE THE PENALTY PROCE EDINGS AND IMPOSED A PENALTY OF RS.2,17,725/- WITH THE FOLLOWI NG OBSERVATIONS:- 3.1 PENALTY REGARDING MUNICIPAL TAX EXPENSES & DIS ALLOWANCE U/S 14A OF I.T. ACT. NO PENALTY IS LEVIED ON THESE ISSUES AFTER CONSIDER ING THE REPLY OF THE ASSESSEE AND NATURE OF ADDITIONS. 3.2.1 PENALTY ON ACCOUNT OF REPAIRING CHARGES - RS. 5,95,000/ - BRIEF DISCUSSION OF FACTS . RELEVANT PORTION ON THE ISSUE IS REPRODUCED FROM TH E ASSESSMENT ORDER HEREUNDER:- 'FROM THE P &L ACCOUNT FOR THE RELEVANT YEAR FILED -WITH RETURN OF INCOME- AND DETAILS FILED DURING ASSESSMENT PROCEED INGS IT IS SEEN THAT ASSESSEE SHOWN INCOME OF RS.4,25,000/- BEING REPAIR ING CHARGES RECEIVED FROM SILICON COMPUTECH PVT. LTD., (HEREINA FTER REFERRED TO AS SCPL) ASSOCIATES CONCERN OF THE ASSESSEE TDS CERTIF ICATE ATTACHED WITH THE RETURN OF INCOME ISSUED BY SCPL SHOWS PAYM ENT OF RS.10,20,000/- ON ACCOUNT OF REPAIRING. ON THE SAID PAYMENT TDS OF RS.20,960/-HAS BEEN DEDUCTED AT APPROPRIATE NOTE AN D HAS BEEN PAID INTO GOVT. ACCOUNT ON 11.5.2004. THUS THE ASSESSEE HAS SHOWN LESS INCOME BY RS.5,95,000/- RECEIVED FROM SCPL. THEREFO RE VIDE LETTER DATED 28.9.2007 ASSESSEE WAS ASKED 'INCOME OF REPAI RING RECEIVED FROM SILICON COMPUTECH PVT. LTD. IS SHOWN AT RS.4,2 5,000/- IN P & L ACCOUNT. HOWEVER TDS CERTIFICATE SUBMITTED WITH RET URN OF INCOME SHOWS TDS DEDUCED AT RS.20,910/- ON CORRESPONDING I NCOME OFRS.10,20,000/-. PLEASE EXPLAIN.' 4 SUBMISSION MADE BY THE ASSESSEE VIDE LETTER DATED 1 0.10.2007 IS AS UNDER - 'REGARDING TDS FROM SILICON COMPUTECH PVT. LTD. WE HAVE TO STATE THAT BY MISTAKE AMOUNT CREDITED IS SHOWN AS RS.10,2 0,000/- INSTEAD OF RS.4,25,000/-. FURTHER WE ARE ENCLOSING HEREWITH LE TTER DATED 24.8.2007FROM SILICON COMPUTECH PVT. LTD. STATING T HAT THERE IS GENUINE MISTAKE OF MENTIONING AMOUNT OF RS.10,20,00 0/- INSTEAD OF RS.4,25,000/-. FURTHER THAT COMPANY HAS ALSO SHOWN RS.4,25,000/- IN THEIR BOOK AND COPY OF BALANCE SHEET IS ALREADY FIL ED WITH YOU AT THE TIME OF HEARING. HENCE WE REQUEST YOU TO TREAT RS.4 ,25,000/- AS CORRECT AND NOT RS.10,20,000/- AND IF YOU REQUIRE TO CHANGE THE TDS CERTIFICATE THEN WE CAN DO SO IF YOU GIVE US THE OR IGINAL CERTIFICATE.' SUBMISSION OF THE ASSESSEE HAS BEEN CONSIDERED. TH E SAME IS HOWEVER NOT ACCEPTABLE ON FACTS AND IN LAW. TDS IS DONE AT THE TIME OF PAYMENT OR CREDITING THE AMOUNT OF PAYMENT. IN BOTH THE CAS ES INCOME ARISES TO THE PERSON IN WHOSE CASE TDS IS DEDUCTED. IN THE PR ESENT CASE TDS HAS BEEN DEDUCTED AND HAS ALSO BEEN PAID INTO GOVER NMENT ACCOUNT. THUS INCOME ON ACCOUNT OF REPAIRING OF RS.10,20,000 /- HAS ARISEN TO THE COMPANY WHICH HAS NOT BEEN SHOWN CORRECTLY. SIN CE ASSESSEE HAS SHOWN INCOME OF RS.4,25,000/- IN ITS P& L ACCOUNT B ALANCE OF RS.5,95,000/- IS ADDED TO THE TOTAL INCOME. PENALTY PROCEEDINGS U/S 271(1)(C) ARE INITIATED FOR CONCEALMENT.' 3.2.2 IN RESPONSE TO THE PENALTY NOTICE, THE ASSESS EE COMPANY VIDE LETTER DTD.22.12.2009 SUBMITTED AS UNDER:- 'THAT OUR CLIENT HAD SUBMITTED THAT BY MISTAKE IT H AD RECEIVED A TDS CERTIFICATE MENTIONING CONTRACT INCOME OF RS.10,20, 000/- INSTEAD OF RS.4,25,000/-. THAT SUBSEQUENTLY A REVERSE ENTRY HA D BEEN PASSED FOR RS.5,95,000/-FOR CANCELING THE CONTRACT. THIS FACT HAS ALSO BEEN CONFIRMED BY THE COMPANY WHO HAD ISSUED THE TDS CER TIFICATE. THE CONFIRMATION OF BOTH THE COMPANIES HAD ALSO BEEN FI LED. BUT THE ITO HAD MADE ADDITION OF RS.5,95,000/- AS INCOME. THE I TO HAS SIMPLY MENTIONED TO INITIATE PENALTY PROCEEDINGS FOR CONCE ALMENT AND HE HAS NOT GIVEN ANY SPECIFIC REASON FOR LEVY OF THE PENAL TY AND IT IS TOO GENERAL IN NATURE. THUS WE OBJECT TO LEVY THE PENAL TY U/S 271(1)(C) OF THE I.T. ACT FOR THE REASONS THAT ALL THE FACTS WER E PRODUCED BEFORE THE ITO AND NO MATERIAL DEFECT HAS BEEN FOUND BY THE IT O. FURTHER, HE HAS NOT GIVEN ANY SPECIFIC REASON FOR CONCEALMENT OF IN COME.' 5 3.2.3 THE REPLY OF THE ASSESSEE COMPANY IS NOT ACCE PTABLE ON THE FOLLOWING GROUNDS:- (I) THE ASSESSEE COMPANY HAS FAILED TO SUBMIT COGEN T REASON FOR THE MISTAKE IN MENTIONING AMOUNT OF RS.10,20,000/- INSTEAD OF RS.4,25,000/- IN THE TDS CERTIFICATE ISSUED BY THE SILICON COMPUTECH PVT. LTD. BY SUBMITTING DOCUMENTARY EVIDE NCE, IN ITS LETTER DTD.22.12.2009. (II) THE ASSESSEE COMPANY HAS CLAIMED TDS CREDIT OF RS.20,910/- IN THE RETURN OF INCOME ON CONTRACT RECEIPT OF RS.10,2 0,000/- RECEIVED FROM SILICON COMPUTECH PVT. LTD. IF ASSESS EE COMPANY HAS RECEIVED CONTRACT RECEIPT OF RS.4,25,000/- THEN IT SHOULD HAVE CLAIMED TDS ON CONTRACT RECEIPT OF RS.4,25,000 /- ONLY. HOWEVER, THE ASSESSEE COMPANY HAS FAILED TO SUBMIT ANY REASON FOR HIGHER CREDIT OF TDS IN RESPONSE TO PENALTY NOT ICE. (III) SILICON COMPUTECH PVT. LTD. IS ALSO A SISTER CONCERN OF THE ASSESSEE COMPANY. 4 IN VIEW OF THE ABOVE, IT IS CLEAR THAT THE ASSESS EE COMPANY HAS FURNISHED INACCURATE PARTICULARS OF INCOME AND THER EBY CONCEALED IT'S TRUE INCOME TO THE EXTENT OF RS.5,95,000/- WHICH AT TRACTS PENALTY U/S 271(L)(C) OF THE I.T. ACT. THE TAX SOUGHT TO BE EVA DED ON CONCEALED INCOME WORKS OUT TO RS.2,17,725/-. ACCORDINGLY, I A M SATISFIED THAT THE CASE IS FIT FOR LEVY OF PENALTY U/S 271(1)(C) O F THE ACT OF RS.2,17,725/- @100%, THE MINIMUM PENALTY LEVIABLE A S AGAINST MAXIMUM PENALTY OF RS.6,53,175/- @ 300% OF THE TAX SOUGHT TO BE EVADED-ON ACCOUNT OF FURNISHING OF INACCURATE PARTI CULARS OF INCOME AND THEREBY CONCEALING ITS TRUE INCOME. I, THEREFOR E, LEVY A PENALTY OF RS.2,17,725/- @100% U/S 271(1)(C) OF THE ACT AFTER CONSIDERING THE NATURE OF CONCEALMENT OF INCOME. 5 THIS ACTION OF THE AO WAS CONFIRMED BY THE LEARNE D CIT(A). FURTHER AGGRIEVED, THE ASSESSEE IS NOW IN A PPEAL BEFORE US. THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED T HAT PENALTY IS NOT REQUIRED TO BE LEVIED SINCE THE ADDITIONS ON TH E BASIS OF WHICH PENALTY WAS LEVIED, HAVE BEEN DELETED BY THE TRIBUNAL. THE 6 LEARNED DR DID NOT OBJECT TO THIS SUBMISSION OF THE LEARNED COUNSEL OF THE ASSESSEE. 6 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RE CORDS AND FIND THAT THE ADDITIONS ON THE BASIS OF WHICH THE I MPUGNED PENALTY HAS BEEN LEVIED, HAVE BEEN DELETED BY THE T RIBUNAL IN QUANTUM APPEAL VIDE THEIR ORDER DATED 02-12-2011 IN ITA NO.404/AHD/2009. FURTHER, IT IS WELL SETTLED LAW BY VARIOUS DECISIONS OF THE ITAT WHEREIN IT HAS BEEN HELD THAT WHEN ADDITION IS DELETED IN QUANTUM PROCEEDINGS, NO PENA LTY CAN BE LEVIED. IN VIEW OF THIS, WE CANCEL THE PENALTY. 7 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE I S ALLOWED. ORDER PRONOUNCED IN THE COURT TODAY ON 05-03-2012 SD/- SD/- (T R MEENA) ACCOUNTANT MEMBER (D K TYAGI) JUDICIAL MEMBER DATE : 05-03-2012 COPY OF THE ORDER FORWARDED TO: 1. BUSINESS COMMUNICATION (GUJ) PVT. LTD., ADITYA BUILDING, NR. URVASHI FLATS, MITHAKHALI SIX ROADS, AHMEDABAD C/O M/S M C MASHRUWALA & CO., CAS, 301-303, AKIK, OPP. LIONS HALL, MITHAKHALI, AHMEDABAD-380 006 2. THE INCOME-TAX OFFICER, WARD-1(2), AHMEDABAD 3. CIT CONCERNED 7 4. CIT(A)-6, AHMEDABAD 5. DR, ITAT, AHMEDABAD BENCH-B, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD