M/s. Ankur Fine Products, Ahmedabad V. The Dy.CIT.,Circle-12, Ahmedabad

ITA 3182/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6431 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2004-2005
• Appeal Filed On: 27-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Section: 14A

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE S/SHRI M. K. SHRAWAT, JM AND D.C.AGRAWAL, AM M/S ANKUR FINE PRODUCTS, SHANKAR CHEMICAL WORKS COMPOUND, RAKHIAL, AHMEDABAD.. VS. DY. CIT, CIRCLE-12, AHMEDABAD. (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SMT. URVASHI SHODHAN, AR RESPONDENT BY:- SHRI B. L. YADAV, SR.DR O R D E R PER D.C. AGRAWAL, ACCOUNTANT MEMBER . THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST LE VY OF PENALTY OF RS.1,91,571/- U/S 271(1)(C) OF THE ACT. 2. THE FACTS OF THE CASE ARE THAT ASSESSEE IS CARRY ING ON BUSINESS OF TRADING OF HEALTH RELATED PRODUCTS. THE AO PROPOSED FOLLOWING ADDITIONS IN THE ASSESSMENT ORDER :- DISALLOWANCE OUT OF THE PAYMENT OF PROFESSIONAL CHA RGES AS PER PARA 3.3. RS.90,000/- DISALLOWANCE U/S 14A AS DISCUSSED ABOVE AS PER PARA 4.5 RS.4,16,447/- ON ACCOUNT OF INFLATED LIABILITIES AS PER PARA 7 RS .49,435/- DISALLOWANCES OUT OF CONVEYANCE & TELEPHONE & OFFIC E EXPENSES AS DISCUSSED ABOVE AS PER PARA 8 RS.10,000/- ITA NO.3182/AHD/2009 ASST. YEAR 2004-05 ITA NO.3182/AHD/2009 ASST. YEAR 2004-05 2 THE MATTER TRAVELLED TO THE TRIBUNAL WHICH VIDE ITS ORDER IN ITA NO.2628/AHD/2006 ASST. YEAR 2004-05 PRONOUNCED ON 2 7/8/2010 DECIDED THIS ISSUE AS UNDER :- (1) IN RESPECT OF DISALLOWANCE OUT OF PAYMENT OF PR OFESSIONAL CHARGES THE TRIBUNAL ALLOWED THE CLAIM HOLDING THAT EXPENDI TURE INCURRED WAS GENUINE, COPIES OF ALL THE BILLS WERE PRODUCED, PAYMENTS WERE MADE AFTER MAKING TDS AS REQUIRED U/S 194J, ASSESSE E WAS DEALING IN MORE THAN 18000 ITEMS AND, THEREFORE, CLAIM OF P ROFESSIONAL CHARGES FOR GATEWAY WEB SYSTEMS FOR PUTTING IN PL ACE AND MAINTAINING SOFTWARE FOR MANAGING AND CONTROLLING T HE ENTIRE TRADING SYSTEM. (2) THE ISSUE REGARDING DISALLOWANCE U/S 14A WAS RE STORED TO THE AO FOR DECIDING AFRESH IN VIEW OF THE DECISION OF HON. BOMBAY HIGH COURT IN THE CASE OF GODREJ BOYCE MFG. CO. LTD. (2 010_ 328 ITR 81 (BOM). (3) IN RESPECT OF THE THIRD ISSUE THE LD. CIT(A) HA S RESTRICTED THE DISALLOWANCE TO RS.27,549/- AS AGAINST RS.49,435/-. THE TRIBUNAL DELETED THE ENTIRE ADDITION EXCEPT OF RS.2,960/- WH ICH WAS IN RELATION TO M/S PRIYA ENTERPRISES. HOWEVER, THIS IS SUE WAS ALSO REFERRED BACK TO THE AO FOR EXAMINATION OF CORRECTN ESS OF THE RECTIFICATION I.E. REVERSAL OF THE ENTRY WITH THE D IRECTION IF SUCH REVERSAL/RECTIFICATION IS FOUND CORRECT THEN IT CAN NOT BE TAXED AGAIN. (4) IN RESPECT OF FOURTH ADDITION OF RS.10,000/- LD . CIT(A) HAS RESTRICTED THE DISALLOWANCE TO RS.7,000/- WHICH WAS CONFIRMED BY THE TRIBUNAL. 3. IN THE PENALTY PROCEEDINGS THE AO HAD CONSIDERED THE LEVY OF PENALTY IN RESPECT OF FIRST THREE ADDITIONS AS PER PARA 3 OF HIS ORDER. ON APPEAL THE LD. CIT(A) HAS CONFIRMED THE LEVY OF PEN ALTY. ITA NO.3182/AHD/2009 ASST. YEAR 2004-05 3 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW, AS ALL THE THREE AD DITIONS DO NOT SURVIVE FINALLY, AFTER THE ORDER OF THE TRIBUNAL AS REFERRE D TO ABOVE, THERE WILL NOT BE ANY QUESTION OF LEVY OF PENALTY U/S 271(1)(C). T HE ITO WILL BE FREE TO CONSIDER THE LEVY OF PENALTY IN THE FRESH ASSESSMEN T ORDER IF FACTS RELATING TO SUCH INITIATION ARE BROUGHT ON RECORD BY HIM. TH E PROPOSITION THAT NO PENALTY UNDER SECTION 271(1)(C) CAN BE LEVIED IF QU ANTUM IN RESPECT OF WHICH LEVY OF PENALTY IS PROPOSED, IS DELETED, HAS BEEN HELD BY SEVERAL AUTHORITIES SUCH AS ADDL. CIT VS. BADRI PRASAD KASH I PRASAD (1993) 200 ITR 206 (ALL), PRABHAT OIL TRADERS VS. ITO (1996) 2 18 ITR (AT) 39 ITAT (AHD), CITY DRY FISH CO. VS. CIT (1999) 238 IT R 63 (A.P.), CIT VS. MD. BUX SAUKAT ALI (2004) 265 ITR 326 (RAJ) AND CIT VS. SHISHPAL (2002) 255 ITR 187 (RAJ). 5. IN VIEW OF THE ABOVE, WE SET ASIDE THE ORDER OF LD. CIT(A), CANCEL THE PENALTY AND ALLOW THE APPEAL FILED BY THE ASSES SEE. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER WAS PRONOUNCED IN OPEN COURT ON 17.06.2011. SD/- SD/- (M. K. SHRAWAT) (D.C. AGRAWAL) JUDICIAL MEMBER ACCOUNTANT MEMB ER AHMEDABAD, DATED : 17.06.2011. ITA NO.3182/AHD/2009 ASST. YEAR 2004-05 4 MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD 1.DATE OF DICTATION 2/6/2011 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 8/6/2011 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..