M/s Core Metal Krafts Ltd., Chandigarh V. ACIT, C-5(1), Chandigarh

ITA 347/CHANDI/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4063 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 25-08-2021
• Assessment Year: 2013-2014
• Appeal Filed On: 16-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Wrong claim; Agreed addition; Tax effect; Bonafide mistake; TDS; Set aside; FORM 26AS
• Section: 271(1)(c); 43B; 208; 43

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH A, CHANDIGARH , ! ' # $ %! , BEFORE: SHRI SANJAY GARG, JUDICIAL MEMBER AND SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER ./ ITA NO.347/CHD/2018 / ASSESSMENT YEAR : 2013-14 M/S CORE METAL KRAFTS LTD., SCO 36, SECTOR 26, CHANDIGARH. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 5(1), CHANDIGARH. ./PAN NO: AAFFC0194A /APPELLANT /RESPONDENT /ASSESSEE BY : SHRI SUDHIR SEHGAL, ADV. ! / REVENUE BY : SMT.MEENAKSHI VOHRA, ADDL. CIT ' # $ /DATE OF HEARING : 25.08.2021 %&'( $ /DATE OF PRONOUNCEMENT : 04.10.2021 (HEARING THROUGH WEBEX) /ORDER PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER : THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF IN COME TAX (APPEALS)-2, CHANDIGARH [(IN SHORT THE LD. CIT (A)] DATED 10.01.2018 RELATING TO ASSESSMENT YEAR 2013-14, PAS SED U/S 250(6) OF THE OF THE INCOME TAX ACT, 1961 (HEREINAF TER ITA NO.347/CHD/2018 A.Y. 2 013-14 PAGE 2 OF 9 REFERRED TO AS ACT), CONFIRMING THE LEVY OF PENAL TY U/S 271(1)(C) OF THE ACT. EARLIER THE APPEAL OF THE ASSESSEE WAS DISMISSED F OR NON PROSECUTION BY THE TRIBUNAL VIDE ORDER DATED 11.06.2018 AND THE SAME WAS RECALLED THEREAFTER VID E ORDER DATED 03.01.2020 PASSED IN MA NO.190/CHD/2018. HENC E, THE PRESENT APPEAL BEFORE US. 2. THE GROUNDS RAISED BY THE ASSESSEE READ AS UNDER : 1. THE LD. ASSESSING OFFICER'S AND WORTHY CIT (A)' S ORDERS ARE CONTRARY TO LAW AND FACTS OF THE CASE. 2. THE LD. ASSESSING OFFICER'S AND WORTHY CIT (A)'S HE LD. AO GROSSLY ERRED IN IMPOSING PENALTY U/S 271(L)(C) OF THE IT ACT, 1961 ON THE ADDITION OF RS.4,79,9867- B Y INVOKING THE PROVISIONS OF SECTION 43B OF THE ACT. THE NON ADDING BACK OF BONUS OF RS 2,31,778/- WAS COMPLETELY A CLERICAL ERROR BY THE ACCOUNTANT OF TH E ASSESSEE AND NO PENALTY CAN BE MADE ON THE SAME AS HE SAME WAS CLEARLY REPORTED IN THE TAX AUDIT REPORT ( FORM 3 CD) OF ASSESSEE. THE SAME ISSUE WAS ALSO DISCUSSED IN THE CASE OF PRICE WATERHOUSE COPPERS VS. CST SC AND DECIDED IN FAVOUR OF ASSESSEE. FURTHER THE ADDITION OF EX-GRATIA OF RS 2,48,208/- FALLS UNDER PURVIEW OF EMPLOYEE BENEFIT EXPENSES AND CANNOT BE REGARDED AS AN ITEM FALLING UNDER SECTION 43B OF THE ACT. OL4. 3. THE LD AO AND WORTHY CIT (A) GROSSLY ERRED IN IMPOSING PENALTY U/S 271(L)(C) OF THE IT ACT, 1961 ON THE ADDITION OF RS 7,4777- ON ACCOUNT OF INTEREST O N TDS INCOME TAX AND PENALTY PAID. THE AMOUNT WAS COMPLETELY COMPENSATORY IN NATURE AND NOT PENAL. TH E SAME WAS OFFERED FOR TAXATION TO AVOID LITIGATION A ND BUY PEACE OF MIND SUBJECT TO NO PENALTY. 4. THE LD AO AND WORTHY CIT (A) GROSSLY ERRED IN IM POSING PENALTY U7S 271(1) (C) OF THE INCOME TAX ACT 1961 O N THE ADDITION OF RS 40,057/- ON ACCOUNT OF DIFFERENCE IN THE ITA NO.347/CHD/2018 A.Y. 2 013-14 PAGE 3 OF 9 RECONCILIATION OF INCOME AS PER BOOKS AND FORM 26AS . THE SAME WAS MISTAKENLY SKIPPED DUE AS INTEREST WAS ACCRUED AT THE END OF FINANCIAL YEAR. THE ASSESSEE HIMSELF OFFERED THE SAME FOR TAXATION TO AVOID LITIGATION SUBJECT TO NO PENALTY. 5. THE LD AO AND WORTHY CIT (A) GROSSLY ERRED IN IM POSING PENALTY U/S 271(1) (C) OF THE IT ACT, 1961 ON THE ADDITION OF RS. 10,431/- ON ACCOUNT OF DISALLOWANC E ESI PENALTY. THE DISALLOWANCE OF ESI PENALTY DOES N OT WARRANT INVOCATION OF ANY PENALTY AS IT DOES NOT AM OUNT TO INACCURATE PARTICULARS. THE AMOUNT WAS COMPENSATORY IN NATURE AND NOT FOR ANY INFRINGEMENT OF LAW. THE SAME WAS AGREED ADDITION SUBJECT TO NO PENALTY. 6. THE LD. AO AND WORTHY CIT (A) GROSSLY ERRED IN I MPOSING PENALTY U/S271(1) (C) OF THE INCOME TAX ACT, 1961 O N THE ADDITION OF RS. 21,852/- ON ACCOUNT OF INTEREST ON REFUND NOT DISCLOSED. THE SAME WAS DUE TO AN OVERSIGHT/BONAFIDE MISTAKE AND WAS OFFERED FOR TAXA TION IMMEDIATELY WITHOUT ANY DELAY. 7. THE APPELLANT CRAVES LEAVE TO ADD TO OR AMEND TH E AFORESAID GROUNDS BEFORE DISPOSAL OF THE APPEAL. 3. IT TRANSPIRES FROM THE GROUNDS RAISED ABOVE THAT THE ASSESSEE IS AGITATING LEVY OF PENALTY U/S 271(1)(C) OF THE ACT FOR CONCEALMENT/FURNISHING OF INACCURATE PARTICULAR S RELATING TO THE FOLLOWING: 1) BONUS AND EXGRATIA REMAINING UNPAID BY THE PRESCRIBED DATED AS PER SECTION 43B OF THE ACT =RS.4,79,986/ - (2,31,778+2,48,208) 2) INTEREST ON TDS, INCOME TAX PENALTY PAID = 7,477/- 3) DIFFERENCE IN RECONCILIATION INCOME AS PER BONUS AND FORM 26AS = 40,057/- 4) ESI PENALTY = 10,431/- 5) INTEREST ON REFUND NOT RETURNED AS INCOME = 21,852/- ITA NO.347/CHD/2018 A.Y. 2 013-14 PAGE 4 OF 9 4. THE ARGUMENTS OF THE LD.COUNSEL FOR THE ASSESSEE AGAINST THE LEVY OF PENALTY FOR THE AFORESAID WAS T HAT ALL PARTICULARS RELATING TO THE ABOVE HAD BEEN DULY DIS CLOSED AND IT WAS NOT A CASE OF FURNISHING OF INACCURATE P ARTICULARS OR CONCEALMENT OF INCOME. THAT THE DISALLOWANCE MAD E U/S 43B OF THE ACT HAD BEEN SUFFERED ON ACCOUNT OF INVO CATION OF SPECIFIC PROVISIONS OF THE ACT. THAT ADDITIONS RELA TING TO DIFFERENCE IN INTEREST INCOME REPORTED IN FORM 26AS AND THAT DISCLOSED BY THE ASSESSEE WAS A BONAFIDE MISTA KE ON THE PART OF THE ASSESSEE SINCE FORM 16A HAD NOT BE EN RECEIVED FROM THE DEPARTMENT. THAT INTEREST ON INCO ME TAX REFUND HAD NOT BEEN RETURNED DUE TO INADVERTENT ER ROR HAVING WRONGLY CALCULATED THE INTEREST. AND WHEN BE COMING AWARE OF THE SAME DURING ASSESSMENT PROCEEDINGS THE ASSESSEE HAD DULY SURRENDERED BOTH THE INCOMES BEF ORE THE AO. LD.COUNSEL FOR THE ASSESSEE CONTENDED THAT THE BONAFIDES OF THE ASSESSEE ARE FURTHER ESTABLISHED B Y THE FACT THAT IT HAD RETURNED HUGE LOSSES, BOTH CURRENT AND BROUGHT FORWARD, AND THESE MINOR ADDITIONS WOULD NOT HAVE R ESULTED IN ANY TAX EFFECT. A NUMBER OF CASE LAWS WERE RELIE D UPON IN SUPPORT OF HIS CONTENTION, MORE PARTICULARLY THE FO LLOWING: ITA NO.347/CHD/2018 A.Y. 2 013-14 PAGE 5 OF 9 I) CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. (2010) 322 ITR 158 FOR THE PROPOSITION THAT ALL PARTICULAR S HAVING BEEN DULY DISCLOSED A MERE DISCUSSION WOULD NOT ATTRACT LEVY OF PENALTY; II) CIT VS NATIONAL INSTITUTE OF TECHNICAL TEACHER TRAINING & RESEARCH (2014) 50 TAXMAN.COM 107 (P&H) FOR THE PROPOSITION THAT PARTICULARS OF INCOME HAVI NG BEEN FURNISHED, DISALLOWANCE HAVING BEEN MADE OF A SPECIFIC PROVISION OF THE ACT I.E. SECTION 43B OF T HE ACT DISALLOWING THE AMOUNT REMAINING UNPAID BY SPECIFIC DUE DATE WOULD NOT ATTRACT PENALTY; III) PR.CIT VS. TORQUE PHARMACEUTICAL PVT. LTD. (20 17) 81 TAXMAN.COM 283 (P&H); IV) CIT VS. BALKISHAN DHAWAN HUF (2013) 40 TAXMAN.COM 208 (P&H) FOR THE PROPOSITION THAT MEREL Y BECAUSE THE ASSESSEES CLAIM FOR EXPENDITURE WAS NO T ACCEPTED, PENALTY U/S 271(1)(C) OF THE ACT COULD NO T BE LEVIED; V) PRICE WATERHOUSE COOPERS PVT. LTD. VS. CIT (2012 ) 25 TAXMAN.COM (SC) FOR THE PROPOSITION THAT A BONAF IDE INADVERTENT ERROR ON THE PART OF THE ASSESSEE WOULD NOT ATTRACT LEVY OF PENALTY. A GIST OF SUBMISSIONS IN WRITING DATED 28.01.2020 W AS FILED BY THE LD.COUNSEL FOR THE ASSESSEE BEFORE US. 5. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE O RDER OF THE LD.CIT(A) CONTENDING THAT THE EXCUSE OF ERROR C ANNOT ITA NO.347/CHD/2018 A.Y. 2 013-14 PAGE 6 OF 9 COME TO THE RESCUE OF THE ASSESSEE AS IT WAS ITS RESPONSIBILITY TO ENSURE NO WRONG CLAIMS WERE MADE IN THE RETURN AND CONCEALMENT HAVING BEEN DETECTED BY THE AO, ANY SURRENDER THEREAFTER COULD NOT SAVE THE ASSESSEE FR OM THE LEVY OF PENALTY. 6. WE HAVE HEARD BOTH THE PARTIES. IN THE PRESENT C ASE PENALTY U/S 271(1)(C) OF THE ACT HAS BEEN LEVIED FO R FURNISHING OF INACCURATE PARTICULARS OF INCOME/CONC EALMENT OF PARTICULARS OF INCOME AND THE EXPLANATION TO SEC TION 271(1)(C) STATES THAT WHERE IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF INCOME THE ASSESSEE DOES NOT OFFER AN EXPLANATION OR OFFERS A FALSE EXPLANATION OR OFFERS AN EXPLANATION WHICH IS UNABLE TO SUBSTANTIATE AND PRO VE THAT IT IS BONAFIDE, THEN THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME AS A RESULT THEREOF SHAL L BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF PARTIC ULARS HAVE BEEN CONCEALED. 7. HAVING SAID SO, THIS SECTION HAS BEEN THE SUBJEC T TO INTERPRETATION BY HIGHER JUDICIAL FORUMS REPEATEDLY AND THE BASIC PROPOSITION LAID DOWN WITH REGARD TO THE SAM E, AS POINTED OUT BY THE LD.COUNSEL FOR THE ASSESSEE, IS THAT IF ALL PARTICULARS OF INCOME ARE DISCLOSED THE MERE DISALL OWANCE OF ITA NO.347/CHD/2018 A.Y. 2 013-14 PAGE 7 OF 9 CLAIM OR NON ACCEPTANCE OF CLAIM OF THE ASSESSEE WO ULD NOT ATTRACT LEVY OF PENALTY AS HELD BY THE HON'BLE APEX COURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LTD. (SUPRA ) AT. IN THE CASE OF PRICE WATERHOUSE COOPERS PVT. LTD. (SUP RA) THE HON'BLE APEX COURT HAS HELD A BONAFIDE MISTAKE ON T HE PART OF THE ASSESSEE TO NOT ATTRACT LEVY OF PENALTY WHE RE ALL PARTICULARS OF INCOME ARE DISCLOSED BUT THE ASSESSE E FAILS TO ACT ACCORDINGLY WHILE COMPUTING HIS RETURN OF INCOM E. 8. HAVING SAID SO, IN THE FACTS OF THE PRESENT CASE WE FIND THAT IT IS NOT THE CASE THAT THE PARTICULARS OF INC OME IN RELATION TO WHICH PENALTY HAS BEEN LEVIED WERE EI THER INACCURATE OR THEY WERE CONCEALED. THE EMPLOYERS CONTRIBUTION TO ESI/PF DISALLOWABLE U/S 43 B OF TH E ACT STOOD DISCLOSED IN THE TAX AUDIT REPORT, INTEREST O N TDS & INCOME TAX REFUND, AND ESI /INCOME TAX PENALTY ALL STOOD DULY DISCLOSED BY THE ASSESSEE. IT IS JUST THAT WHI LE CERTAIN DISALLOWANCES/ADDITIONS, I.E. ESI & PF AND INTEREST ON REFUND & TDS AND DIFFERENCE IN INTEREST RECEIPTS R EFLECTED IN FORM 26AS AND THAT RETURNED, WERE INADVERTENTLY MIS SED TO HAVE BEEN MADE BY THE ASSESSEE WHO SURRENDERED THE SAME WHEN IT WAS MADE AWARE DURING SCRUTINY ASSESSMENT, THE REST BEING MINOR PENALTY OF ESI OF RS. 10,431/- A ND ITA NO.347/CHD/2018 A.Y. 2 013-14 PAGE 8 OF 9 INTEREST ON LATE PAYMENT OF TDS, INCOME TAX AND SER VICE TAX PENALTY OF RS.7477/- WERE CONTESTED AS BEING COMPEN SATORY AND HENCE ALLOWABLE BUT WERE SUBSEQUENTLY OFFERED F OR TAXATION. WE HAVE NOTED THAT THE CURRENT LOSSES RE TURNED BY THE ASSESSEE ,AS PER COPY OF ITR ALONGWITH COMPUTAT ION OF INCOME FOR THE YEAR FILED BEFORE US, WAS RS.78,98,8 57/- AND THE BROUGHT FORWARD BUSINESS WERE RS.30,86,198/- AN D BROUGHT FORWARD DEPRECIATION OF RS.48,12,659/- MAKI NG THE TOTAL LOSSES AS APPROX. RS.1.50 CRORES. CONSIDERIN G THE HUGE LOSSES, THE ADDITIONS AND DISALLOWANCES INVITING TH E LEVY OF PENALTY AMOUNTING IN ALL TO RS.5,59,803/-, ARE TOO IMMATERIAL AND COUPLED TO IT IS THE FACT THAT A MAJ OR PORTION OF IT RELATING TO ESI/PF DISALLOWED U/S 43B OF THE ACT OF RS.4,79,986/- HAD STOOD DISCLOSED IN THE TAX AUDIT REPORT AS DISALLOWABLE BUT WAS INADVERTENTLY LEFT OUT WHI LE COMPUTING THE INCOME FOR THE YEAR. THE SAME IS CLEA RLY NOT LIABLE TO ANY PENALTY BEING SQUARELY COVERED BY THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF PRICE WATE RHOUSE COOPERS(SUPRA).THE REMAINING ADDITIONS/DISALLOWANCE S OF RS.79,817/- ARE PATHETICALLY IMMATERIAL AND CAN BE SAFELY SAID TO HAVE BEEN BONAFIDELY MISTAKENLY NOT DISALLOWED/ADDED BACK TO THE INCOME OF THE ASSESSEE AS CLAIMED BY IT. ITA NO.347/CHD/2018 A.Y. 2 013-14 PAGE 9 OF 9 9. IN THESE BACKGROUND WE HOLD THAT NO PENALTY U/S 271(1)(C) OF THE ACT WAS LEVIABLE ON ACCOUNT OF ADD ITIONS MADE AS LISTED ABOVE IN OUR ORDER AND THE ORDER OF THE LD.CIT(A), THEREFORE, UPHOLDING LEVY OF PENALTY IS SET ASIDE AND THE AO IS DIRECTED TO DELETE THE PENALTY SO LEV IED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED ON 4 TH OCTOBER, 2021. SD/- SD/- ' # $ %! (SANJAY GARG) (ANNAPURNA GUPTA) /JUDICIAL MEMBER &' /ACCOUNTANT MEMBER )' /DATED: 4 TH OCTOBER, 2021 * ! * &) *+,+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ' - / CIT 4. ' - ( )/ THE CIT(A) 5. +./ 0 , $0 , 123/4 / DR, ITAT, CHANDIGARH 6. /35# / GUARD FILE &) ' / BY ORDER, / ASSISTANT REGISTRAR