The Dy. Commissioner of Income Tax, Circle-1(1)(1), Ahmedabad V. M/s. Applitech Solutions Ltd., Ahmedabad

ITA 3452/AHD/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0689 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2000-2001
• Appeal Filed On: 21-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ALAY KSHATRIYA A RS
• Keywords: Tax effect
• Section: 271(1)(c)

Judgement Text

, D IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMEBR ./ I.T.A. NO. 3452/AHD/2016 WITH CROSS OBJECTION NO. 15/AHD/2017 ( ASSESSMENT YEAR : 2000-01) DCIT CIRCLE 1(1)(1), AHMEDABAD / VS. APPLITECH SOLUTIONS LTD. 503, PARITOSH BUILDING, USMANPURA, AHMEDABAD 380009 ./ ./ PAN/GIR NO. : AABCA8332P ( APPELLANT / RESPONDENT ) .. ( RESPONDENT / CROSS OBJECTOR ) / REVENUE BY : SHRI VINOD TANWANI, SR. D.R. / ASSESSEE BY : SHRI ANIL KSHATRIYA & SHRI ALAY KSHATRIYA, A.RS. DATE OF HEARING 26/03/2019 ! / DATE OF PRONOUNCEMENT 28/03/2019 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF IN COME TAX (APPEALS)-1, AHMEDABAD (CIT(A) IN SHORT), DATED 2 7.10.2016 IN THE MATTER OF IMPOSITION OF PENALTY UNDER S. 271(1)(C) OF THE INCOME TAX ACT, 1961 (THE ACT) ARISING FROM THE PENALTY ORDER DATED 30.03.2016 PASSED BY THE ASSESSING OFFICER (AO) CONCERNING ASS ESSMENT YEAR 2000-01. ITA NO. 3452/AHD/16 WITH CO NO. 15/AHD/2017 [DCIT VS. APPLITECH SOLUTIONS LTD.] A.Y. 2000-01 - 2 - 2. THE ASSESSEE HAS ALSO FILED CROSS OBJECTION IN T HE REVENUES APPEAL AS CAPTIONED ABOVE. ITA NO. 3452/AHD/2018 (REVENUES APPEAL) 3. THE GROUNDS OF APPEAL RAISED BY THE REVENUE REA DS AS UNDER:- THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DELETING THE PENALTY AMOUNT OF RS.1,84,22,780 LEVIED U/S.271(1)(C) OF THE I.T. ACT . 4. WHEN THE MATTER WAS CALLED FOR HEARING, THE LEAR NED AR FOR THE ASSESSEE IN REVENUES APPEAL REFERRED TO THE PENALT Y ORDER DATED 30.03.2016 FOR THE AY 2000-01 IN QUESTION AND SUBMI TTED THAT AO HAS TABULATED VARIOUS ADDITIONS AND DISALLOWANCES AT PA GE NO.1 OF ITS ORDER. HOWEVER, ALL THE ADDITIONS AND DISALLOWANCE S STOOD DELETED BY THE ORDER OF THE TRIBUNAL IN QUANTUM PROCEEDINGS IN ITA NO. 1600 & 1452/AHD/2014 & ORS. DATED 19.04.2016 EXCEPT DISALL OWANCE OF FOREIGN TRAVEL EXPENSES AMOUNTING TO RS.16,56,920/- . THE LEARNED AR MADE TWO FOLD SUBMISSIONS TO DEFEND THE ORDER OF TH E CIT(A) AND ITS CROSS OBJECTION NAMELY: (I) THE RELEVANT BASIC DETA ILS TOWARDS FOREIGN TRAVEL EXPENSES NAMELY BILLS, VOUCHERS, PLACE OF VI SIT ETC. HAS BEEN PROVIDED TO THE LOWER AUTHORITIES AS RECORDED BY TH E CIT(A) AT PAGE NO.25 OF ITS ORDER IN CHALLENGE. THEREFORE, WHERE ALL THE MATERIAL FACTS HAVE BEEN PLACED ON RECORD WHICH FACTS IN THEMSELVE S HAVE NOT BEEN FOUND TO BE UNTRUE, THE IMPOSITION OF PENALTY UNDER S. 271(1)(C) OF THE ACT IS NOT JUSTIFIED MERELY ON THE GROUND THAT THE PURPOSE OF TRAVEL COULD NOT BE DEMONSTRATED TO THE SATISFACTION OF TH E AO. THE LEARNED AR SUBMITTED THAT OUT OF THE SUBSTANTIAL ADDITIONS, ALL THE ADDITIONS HAVE BEEN DELETED AND A SMALL AMOUNT TOWARDS FOREIG N TRAVEL HAS BEEN RETAINED BY THE TRIBUNAL WHICH HAS NOT BEEN CHALLEN GED DUE TO SMALLNESS INVOLVED. THE LEARNED AR SUBMITTED THAT MERELY BECAUSE SOME DISALLOWANCE HAS BEEN CARRIED OUT THAT DOES NO T IPSO FACTO GIVE ITA NO. 3452/AHD/16 WITH CO NO. 15/AHD/2017 [DCIT VS. APPLITECH SOLUTIONS LTD.] A.Y. 2000-01 - 3 - INFERENCE OF ANY CONCEALMENT OR FURNISHING OF INACC URATE PARTICULARS PER SE. THE LEARNED AR THUS SUBMITTED THAT NO INTERFERENCE WITH THE ORDER OF THE CIT(A) IS CALLED FOR ON THIS GROUND AL ONE. (II) THE PENALTY AMOUNT THOUGH SPECIFIED BY THE REVENUE AT RS.1,84,2 2,780/- LEVIED UNDER S.271(1)(C) OF THE ACT, ALL ADDITIONS AND DIS ALLOWANCES GIVING RISE TO THE AFORESAID PENALTY QUANTUM STOOD DELETED BY THE ITAT EXCEPT THE PENALTY OF FOREIGN TRAVEL EXPENSES OF RS .16,56,920/-. IN THE CIRCUMSTANCES, WHEN THE PENALTY IS CORRECTLY QUANTI FIED ON THE PURPORTED CONCEALMENT / INACCURATE PARTICULARS OF I NCOME WITH REFERENCE TO FOREIGN TRAVEL EXPENSES, THE AMOUNT OF PENALTY WOULD BE LESS THAN THE THRESHOLD LIMIT OF RS.20 LAKHS AND TH EREFORE, THE APPEAL OF THE REVENUE IS LIABLE TO BE STRUCK DOWN AS NOT M AINTAINABLE OWING TO LOW TAX EFFECT IN TERMS OF CBDT CIRCULAR NO.3 OF 2018 DATED 11/07/2018. 5. THE LEARNED DR, ON THE OTHER HAND, RELIED UPON T HE ORDER OF THE AO AND SUBMITTED THAT THE BUSINESS PURPOSE OF FOREI GN TRAVEL EXPENSES HAS NOT BEEN ESTABLISHED AND THEREFORE, PENALTY WAS JUSTIFIED IN VIEW OF EXPLANATION 1 TO SECTION 271(1)(C) OF THE ACT. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. THE CORRECTNESS OF IMPOSITION OF PENALTY UNDER S. 271(1 )(C) OF THE ACT ON DISALLOWANCE OF FOREIGN TRAVEL EXPENSES IS IN QUEST ION. AS POINTED OUT ON BEHALF OF THE ASSESSEE, IT IS MANIFEST THAT THE PENALTY UNDER S. 271(1)(C) OF THE ACT CANNOT BE IMPOSED BOTH ON MERI TS AS WELL AS ON ACCOUNT OF NON-MAINTAINABILITY OF THE REVENUES APP EAL. THE RELEVANT PRIMARY DETAILS OF FOREIGN TRAVEL EXPENSES TO SUPPO RT THE FOREIGN TRAVEL EXPENSES ARE AVAILABLE ON RECORD. IN THE CIRCUMSTAN CES, NOTWITHSTANDING, THE DISALLOWANCE CONFIRMED BY THE TRIBUNAL IN THE QUANTUM PROCEEDINGS, THE PENALTY OF STRICT NATURE I S NOT SUSTAINABLE IN VIEW OF LONG LINE OF JUDICIAL PRECEDENTS INCLUDING THE DECISION OF THE ITA NO. 3452/AHD/16 WITH CO NO. 15/AHD/2017 [DCIT VS. APPLITECH SOLUTIONS LTD.] A.Y. 2000-01 - 4 - HONBLE SUPREME COURT IN RELIANCE PETROPRODUCTS 322 ITR 158 (SC). SECONDLY, THE APPEAL OF THE REVENUE ITSELF IS NOT M AINTAINABLE OWING TO LOW TAX EFFECT IN TERMS OF CBDT CIRCULAR NO.3 OF 2018 DATED 11/07/2018. THEREFORE, THE APPEAL OF THE REVENUE IS DISMISSED ON BOTH COUNTS. 7. THE CROSS OBJECTION RAISED BY THE ASSESSEE IS AL SO DISMISSED AS INFRUCTUOUS OWING TO AFORESAID REASONS. 8. IN THE COMBINED RESULT, BOTH THE APPEAL OF THE R EVENUE AND CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. SD/- SD/- (MAHAVIR PRASAD) (PRADIP KUMA R KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 28/03/2019 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- $. / REVENUE 2. / ASSESSEE 3. () * / CONCERNED CIT 4. *- / CIT (A) -. ./0 122()3 ()!3 45 / DR, ITAT, AHMEDABAD 6. 078 9 / GUARD FILE. BY ORDER / 3 /4 ()!3 45 THIS ORDER PRONOUNCED IN OPEN COURT ON 28/03/2019