Messung Systems Private Limited, Pune V. Addl. Commissioner of Income Tax, Pune

ITA 333/PUN/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 8583 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 09-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRI
• Section: 271(1)(c); 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI PARTHA SARATHI CHAUDHURY, JM . / ITA NO. 333/PUN/2017 / ASSESSMENT YEAR : 2008-09 MESSUNG SYSTEMS PRIVATE LIMITED. LUNKAD SKYVISTA, SR. NO.230/A/3/2, VIMAN NAGAR, PUNE-411 014 PAN : AABCM1832E ....... / APPELLANT / V/S. THE ADDL. COMMISSIONER OF INCOME TAX, RANGE-8, PUNE. / RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK & SHRI P.D. KUDVA REVENUE BY : SHRI PANKAJ GARG / DATE OF HEARING : 01.01.2019 / DATE OF PRONOUNCEMENT : 02.01.2019 / ORDER PER PARTHA SARATHI CHAUDHURY, JM : THIS APPEAL PREFERRED BY ASSESSEE EMANATES FROM THE OR DER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-6, PUNE DATED 04.10.20 16 FOR ASSESSMENT YEAR 2008-09 AS PER FOLLOWING GROUNDS ON RECORD: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW : 2 ITA NO. 333/PUN/2017 A.Y.2008-09 1. THE HON'BLE CIT(A) ERRED IN CONFIRMING LEVY OF PEN ALTY U/S.271(1)(C) IN RESPECT OF LEAVE ENCASHMENT EXPENSES OF RS.16,82 ,776/- ADDED U/S.43B IN THE ASSESSMENT ORDER ON GROUNDS OF CONCE ALMENT OF INCOME AND FURNISHING INACCURATE PARTICULARS. THE A O AND CIT(A) FAILED TO APPRECIATE THAT THE LEAVE ENCASHMENT EXPE NSES WERE REPORTED IN FORM 3CD AND THE FAILURE TO ADD BACK TH E SAME IN COMPUTATION OF INCOME WAS A BONA-FIDE MISTAKE. THE APPELLANT PLEADS THAT THE LEVY OF PENALTY U/S.271(1)(C) IS NO T JUSTIFIED. 2. THE APPELLANT PLEADS THAT HIS APPEAL BE ALLOWED AND CRAVES LEAVE TO ADD TO, ALTER, AMEND, MODIFY OR WITHDRAW ANY OR ALL GROUNDS OF APPEAL. 2. THE MAIN GRIEVANCE OF THE ASSESSEE IS AGAINST THE IMPO SITION AND CONFIRMATION OF PENALTY OF RS.5,71,975/- LEVIED UNDER SECTION 271(1)(C) OF THE ACT. 3. THE BRIEF FACTS IN THIS CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PROGRAMMABLE LOGIC CONTROLLERS (PLC) AND PARTS THEREOF. THE ASSESSEE FILED RETURN OF INCOME FOR ASSESSMENT YEAR 2008- 09 ON 30.09.2008 DECLARING TOTAL INCOME AT RS.31,94,46,810/-. THE ASSESSEE RE VISED HIS RETURN OF INCOME ON 31.03.2010 DECLARING TOTAL INCOME AT RS.31,64,46,8 10/-. THE ASSESSING OFFICER COMPLETED ASSESSMENT U/S.143(3)(II) OF THE INC OME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) ON 27.12.2010 ASSESSING THE INCOME AT RS.32,04,82,990/- MAKING CERTAIN DISALLOWANCE OUT OF THE CLAIMS FOR EXPENSES. THE ASSESSING OFFICER ALSO MADE ADDITION OF RS.1 6,82,776/- BEING THE DISALLOWANCE OF LEAVE ENCASHMENT U/S.43B OF THE A CT. THE ASSESSEE CONTESTED SOME OF THE ADDITIONS IN APPEAL AND GOT RELIEF. TH E ASSESSEE DID NOT CONTEST THE DISALLOWANCE OF LEAVE ENCASHMENT MADE U/S.43B OF THE ACT. THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S.271(1)(C) OF T HE ACT BUT LEVIED PENALTY ONLY ON THE DISALLOWANCE OF LEAVE ENCASHMENT . THE ASSESSING OFFICER LEVIED PENALTY OF RS.5,71,975/- U/S. 271(1)(C) OF THE ACT FO R CONCEALMENT OF INCOME AS WELL AS FURNISHING OF INACCURATE PARTICULARS OF 3 ITA NO. 333/PUN/2017 A.Y.2008-09 INCOME. IN THE FIRST APPELLATE PROCEEDINGS, THE CIT(A) CONFIR MED THE PENALTY IMPOSED OF RS.5,71,975/-U/S. 271(1)(C) OF THE ACT. 4. BEING FURTHER AGGRIEVED, ASSESSEE PREFERRED THIS APPEA L BEFORE US. THE LD.AR FOR THE ASSESSEE AT THE TIME OF HEARING BASED HIS A RGUMENT REFERRING TO GROUNDS SUBMITTED THAT THIS IS A CASE WHERE THE ASSESS ING OFFICER FAILED TO RECORD VALID SATISFACTION IN THE ASSESSMENT ORDER DURING W HICH THE PENALTY PROCEEDINGS WERE INITIATED. HIGHLIGHTING THE LEGAL REQUIREMENT OF MAKING A SPECIFIC REFERENCE TO THE SPECIFIC LIMB OF CLAUSE (C) OF SECTION 271(1) OF THE ACT AND RELYING ON VARIOUS BINDING JUDGMENTS IN THE CASE CIT VS. SHRI SAMSON PERINCHERY (2017) 392 ITR 4 (BOM.) AS WELL AS THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY 359 ITR 565 LD. COUNSEL DEMONSTRATED TH AT THE PENALTY LEVIED BY THE ASSESSING OFFICER IS UNSUSTAINABLE IN LAW. IN TH IS REGARD, HE BROUGHT OUR ATTENTION TO THE ASSESSMENT ORDER AS WELL AS THE PENALTY ORDER HIGHLIGHTING THE ABOVE LEGAL DEFICIENCIES. 5. PER CONTRA, LD. DR FOR THE REVENUE RELIED ON THE ORDER S OF ASSESSING OFFICER/CIT(A). 6. WE HEARD BOTH THE PARTIES ON THIS SPECIFIC LEGAL ISSUE, I.E . RECORDING OF PROPER SATISFACTION BY THE ASSESSING OFFICER. WE PERUSED THE ORDER OF THE ASSESSING OFFICER AND FIND THE SATISFACTION RECORDED BY THE ASSESSING OFFICER FOR INITIATING THE PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT IS RELEVANT FOR EXTRACTION. THEREFORE, THE SAME IS REPRODUCED AS UNDER : 3.3. PROVISION FOR LEAVE ENCASHMENT DISALLOWABLE UN DER SECTION 43B . 4 ITA NO. 333/PUN/2017 A.Y.2008-09 IT IS SEEN FROM THE TAX AUDIT REPORT THAT THE ASSE SSEE HAS MADE A PROVISION FOR LEAVE ENCASHMENT OF RS.16,82,776/-, WHICH IS DI SCLOSED IN FORM 3CD OF THE REPORT AS DISALLOWABLE UNDER SECTION 43B OF THE ACT . HOWEVER, IN ITS COMPUTATION, THE ASSESSEE HAS FAILED TO ADD BACK TH E SAME. THEREFORE, AN AMOUNT OF RS.16,82,776/- IS DISALLOWED AND ADDED BA CK TO TOTAL INCOME OF THE ASSESSEE U/S.43B OF THE ACT AND FOR FURNISHING INACCURATE PARTICULARS OF INCOME , PENALTY PROCEEDINGS U/S.271(1)(C) OF THE I.T.ACT ARE INITIATED SEPARATELY. 7. WE ALSO PERUSED THE PENALTY ORDER DATED 28.03.2014 AN D FIND THE SATISFACTION RECORDED BY THE AO FOR LEVYING THE PENALTY U/ S.271(1)(C) OF THE ACT IS RELEVANT FOR EXTRACTION. THE SAID SATISFACTION READS AS UNDER: 8.. HENCE, I BELIEVE THAT THIS IS A FIT CASE OF CONCEALMENT OF INCOME AS WELL AS FURNISHING OF INACCURATE PARTICU LARS OF INCOME AND I , HEREBY, IMPOSE PENALTY U/S.271(1)(C) OF THE I.T. ACT, 1961 FROM THE ABOVE, IT IS EVIDENT THAT SO FAR AS ASSESSMENT ORDER IS CONCERNED, THE ASSESSING OFFICER HAS MENTIONED THAT PENALT Y PROCEEDINGS HAVE BEEN INITIATED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. HOWEVER, AT THE TIME OF LEVYING PENALTY IN THE ASSESSMENT, ASSESSING OFFICER MENTIONED BOTH LIMBS OF CLAUSE (C) OF SECTION 271(1) OF THE ACT I.E. CONCEALMENT OF INCOME AS WELL AS FURNISHING OF INACCURATE PARTICULARS OF INCOME. THIS MANNER OF RECORDING OF SATISFACTION SUGGESTS THE EXISTENCE OF AMBIGUITY WITH REFERENCE TO APPLICABILITY OF SPECIFIC LIMB. THEREFORE, W E ARE OF THE OPINION THAT CONSIDERING THE ABOVE REFERRED BINDING JU DGMENTS SUCH PENALTY ORDER IS UNSUSTAINABLE IN LAW LEGALLY. THE ASSESSING OFFICER IS UNDER OBLIGATION TO SPECIFY THE CORRECT LIMB AT THE TIME OF INITIATIO N AS WELL AS AT THE TIME OF LEVY OF PENALTY. IN VIEW OF THE ABOVE DELIBERATION ON THIS ISSUE, WE ARE OF THE OPINION THAT THE PENALTY ORDER IS LIABLE TO BE QUASH ED ON THIS LEGAL ISSUE. THUS, THE ORDER OF CIT(A) IS SET-ASIDE AND DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY. ACCORDINGLY, THE GROUNDS O F APPEAL RAISED BY THE ASSESSEE ARE ALLOWED. 5 ITA NO. 333/PUN/2017 A.Y.2008-09 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 02ND DAY OF JANUARY, 2019. SD/- SD/- D. KARUNAKARA RAO PARTHA S ARATHI CHAUDHURY ACCOUNTANT MEMBER JUDICIAL MEMBER / PUNE; / DATED : 02 ND JANUARY, 2019. SB !'#$%$' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT (APPEALS)-6, PUNE. 4. THE PR. CIT-5, PUNE. 5. '#$ %%&' , ( &' , )*+ , / DR, ITAT, B BENCH, PUNE. 6. $,- ./ / GUARD FILE. //TRUE COPY // (0 / BY ORDER, %1 &+ / PRIVATE SECRETARY ( &' , / ITAT, PUNE. 6 ITA NO. 333/PUN/2017 A.Y.2008-09 DATE 1 DRAFT DICTATED ON 01.01 .201 9 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 0 2 .01 .201 9 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER