Eastern Devcon Ltd., Kolkata V. I.T.O.,Ward-11(2), Kolkata

ITA 289/KOL/2020

AI Insights

The case involves Eastern Devcon Limited, which appealed against the penalty confirmed by the Commissioner of Income Tax (Appeals)-4, Kolkata. The penalty was imposed following a scrutiny assessment where the Assessing Officer disallowed a loss claimed by the assessee and estimated the profit based on the stock value of flats, which was contested. The Tribunal had earlier directed the Assessing Officer to accept the book results and allow the loss, which led to the deletion of the additions to the declared income. Consequently, the basis for the penalty was removed, leading to the Tribunal's decision to delete the penalty.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 129066 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 14-03-2023
• Assessment Year: 2016-2017
• Appeal Filed On: 05-03-2020
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 271(1)(c); 143(2)

Judgement Text

ITA No. 289/KOL/2020 Assessment Year: 2016-2017 Eastern Devcon Limited 1 IN THE INCOME TAX APPELLATE TRIBUNAL, ‘B’ BENCH, KOLKATA Before Shri Rajpal Yadav, Vice-President (KZ) & Shri Girish Agrawal, Accountant Member I.T.A. No. 289/KOL/2020 Assessment Year: 2016-2017 Eastern Devcon Limited,..........................Appellant 548, S.N. Banerjee Road, Mistry Ghat Monirampore, Barrackpore, Kolkata-700120 [PAN: AADCE4093K] -Vs.- Income Tax Officer,................................Respondent Ward-11(2), Kolkata Aayakar Bhawan, P-7, Chowringhee Square, Kolkata-700069 Appearances by: Shri Raj Kumar Agarwal, C.A., appeared on behalf of the assessee Shri P.P. Barman, Addl. CIT, appeared on behalf of the Revenue Date of concluding the hearing : March 15, 2023 Date of pronouncing the order : March 31, 2023 O R D E R Per Rajpal Yadav, Vice-President (KZ):- The present appeal is directed at the instance of assessee against the order of ld. Commissioner of Income Tax (Appeals)-4, Kolkata dated 16.12.2019 passed for A.Y. 2016-17. ITA No. 289/KOL/2020 Assessment Year: 2016-2017 Eastern Devcon Limited 2 2. The solitary grievance of the assessee is that the ld. CIT(Appeals) has erred in confirming the penalty of Rs.17,40,189/-. 3. Brief facts of the case are that the assessee filed its return of income declaring a loss of Rs.51,87,901/-. The case of the assessee was selected for scrutiny assessment and a notice under section 143(2) was issued and served upon the assessee. The ld. Assessing Officer has observed that in A.Y. 2011-12, the assessee-company had taken the opening stock value of the flats ready for sale at Rs.1,07,31,700/-. Thereafter the assessee has accounted various expenditures. The assessee has sold the flats at the value declared in the stock. The ld. Assessing Officer was of the view that the assessee has committed an error in taking the stock value of the flats, because the assessee has sold the flats on the same value as is declared in the stock. He accordingly rejected the book result, estimated the profit, and disallowed the loss claimed by the assessee. He determined the taxable income at Rs.4,43,780/-. 4. Against disallowance of losses and determination of profit on an estimate basis, the assessee went in appeal. The dispute ultimately travelled upto the Tribunal in ITA No. 157/KOL/2022. The Tribunal vide its order dated 28.03.2023 rejected the arguments of the Department and observed that rejection of books of account is incorrect. The Tribunal directed the ld. ITA No. 289/KOL/2020 Assessment Year: 2016-2017 Eastern Devcon Limited 3 Assessing Officer to accept the book result and determine the income. In other words, Tribunal has deleted the estimation of income and directed the ld. Assessing Officer to allow the loss suffered by the assessee. 5. With the assistance of ld. Representative, we have gone through the record carefully. Sub-clause (iii) of section 271(1)(c) provides a method of computation of penalty. According to this sub-clause, a penalty is to be computed either equivalent to the taxes on the additions made to the declared income or three times of taxes on such addition. In the present case, the very addition in the declared income has been deleted by the Tribunal therefore, there is no foundation to compute the penalty upon the assessee. In view of the deletion of the additions in the quantum appeal, no penalty is imposable upon the assessee. Accordingly the present appeal is allowed and the penalty imposed upon the assessee is deleted. 6. In the appeal, the appeal of the assessee is allowed. Order pronounced in the open Court on 31 st March, 2023. Sd/- Sd/- (Girish Agrawal) (Rajpal Yadav) Accountant Member Vice-President (KZ) Kolkata, the 31 st day of March, 2023 ITA No. 289/KOL/2020 Assessment Year: 2016-2017 Eastern Devcon Limited 4 Copies to :(1) Eastern Devcon Limited, 548, S.N. Banerjee Road, Mistry Ghat Monirampore, Barrackpore, Kolkata-700120 (2) Income Tax Officer, Ward-11(2), Kolkata Aayakar Bhawan, P-7, Chowringhee Square, Kolkata-700069 (3) Commissioner of Income Tax (Appeals)-4, Kolkata; (4) Commissioner of Income Tax- , Kolkata; (5) The Departmental Representative (6) Guard File TRUE COPY By order Assistant Registrar, Income Tax Appellate Tribunal, Kolkata Benches, Kolkata Laha/Sr. P.S.