The ITO, Ward-2(1), Guntur V. Sri Vasireddy Vidya Sagar, Guntur

ITA 387/VIZ/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 2553 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 28-10-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 21-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D S SUNDAR SINGH
• Assessee Lawyers: C KAMESWARA RAO
• Keywords: Business expenditure

Judgement Text

ITA NO387/VIZAG/2010 SRI VASIREDDY VIDYA SAGAR, GU NTUR PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO.387/VIZAG/2010 ASSESSMENT YEAR: 2005-06 INCOME TAX OFFICER, WARD-2(1), GUNTUR. VS. SRI VASIREDDY VIDYA SAGAR, GUNTUR. (APPELLANT) (RESPONDENT) PAN NO.AGZPS 2420 F APPELLANT BY: SHRI DS SUNDAR SINGH, SR DR RESPONDENT BY: SHRI C KAMESWARA RAO, CA ORDER PER SHRI B. R. BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 23.3.2010 PASSED BY LD. CIT(A), GUNTUR AND IT RELAT ES TO THE ASSESSMENT YEAR 2005-06. 2. THE PENALTY LEVIED UNDER SECTION 271(1)(C) O F THE ACT ON THE DISALLOWANCE MADE IN RESPECT OF THE AMOUNT PAID AS PENALTY TO M/S BSNL WAS DELETED BY LEARNED CIT(A). HENCE THE REVENUE I S IN APPEAL BEFORE US ASSAILING THE DECISION OF LEARNED CIT(A). 3. THE FACTS RELATING TO THE SAID ISSUE ARE STA TED IN BRIEF. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PROVIDING MEDICAL TRANSC RIPTION SERVICES TO HIS OVERSEAS CLIENTS. THE ASSESSEE HAD PAID PENAL AMOU NTS TO THE TUNE OF RS.12,49,463/- TO M/S BHARAT SANCHAR NIGAM LTD TOWA RDS ILLEGAL OPERATION OF ILD CALLS. THE ASSESSING OFFICER DISALLOWED THE SAME AS HE DID NOT TREAT ITA NO387/VIZAG/2010 SRI VASIREDDY VIDYA SAGAR, GU NTUR PAGE 2 OF 3 THE SAID PAYMENT AS A BUSINESS EXPENDITURE OF THE A SSESSEE. THE ASSESSING OFFICER ALSO LEVIED PENALTY UNDER SECTION 271(1)(C) ON THE ABOVE SAID ADDITION. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LEARNED CIT(A), WHO DELETED THE PENALTY ON THE IMPUGNED ADDITION BY HOLDING THAT THERE IS NO DELIBERATE DEFAULT ON THE PART OF THE ASSESSEE T O ADD BACK THIS AMOUNT, THOUGH THE SAME WAS DULY REPORTED IN THE TAX AUDIT REPORT. HENCE THE REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED THE RECORD. THE UNDISPUTED FACT REMAINS THAT THE ASSESSEE HAS REPOR TED THE FACT OF PAYMENT OF PENALTY TO M/S BSNL THROUGH THE TAX AUDIT REPORT . THE LEARNED CIT(A) HAS NOTICED THAT THE ASSESSEE HAS CLAIMED EXEMPTION UNDER SECTION 10A OF THE ACT AND THE SAME WAS DENIED DUE TO A TECHNICAL DEFAULT. ACCORDINGLY THE LEARNED CIT(A) OPINED THAT THE ASSESSEE WAS HAV ING A REASON FOR NOT ADDING THE IMPUGNED AMOUNT TO ITS TOTAL INCOME SINC E IT WILL NOT MAKE ANY DIFFERENCE IF THE CLAIM OF THE ASSESSEE TO EXEMPT I TS INCOME UNDER SECTION 10A IS ALLOWED. IT IS A WELL SETTLED PROPOSITION TH AT THE FACTS RELATING TO THE ISSUES, WHICH GIVE RISE TO A PENALTY, HAVE TO BE CO NSIDERED AFRESH IN PENALTY PROCEEDINGS AND THE ASSESSMENT PROCEEDINGS CANNOT B E TAKEN TO BE CONCLUSIVE, THOUGH ASSISTANCE CAN BE TAKEN FROM IT. IN THE INSTANT CASE, THE ASSESSEE HAS DISCLOSED THE FACT OF PAYMENT OF P ENALTY AMOUNT TO M/S BSNL IN THE TAX AUDIT REPORT ENCLOSED WITH THE RETU RN OF INCOME. THUS THERE IS NO CONCEALMENT OF PARTICULARS OF INCOME. SINCE THE ASSESSEE HAS DULY ACCOUNTED FOR THE SAID PAYMENT AND THERE IS NO FIND ING THAT THE PARTICULARS GIVEN ARE INACCURATE. IN THIS VIEW OF THE MATTER, WE ARE OF THE VIEW THAT MERE DISALLOWANCE OF CERTAIN EXPENDITURE DULY DISCL OSED BY THE ASSESSEE WOULD NOT GIVE RISE TO PENALTY AS PER THE PROVISION S OF SEC. 271(1)(C) OF THE ITA NO387/VIZAG/2010 SRI VASIREDDY VIDYA SAGAR, GU NTUR PAGE 3 OF 3 ACT. ACCORDINGLY WE DO NOT FIND ANY INFIRMITY IN T HE ORDER OF LEARNED CIT(A) IN DELETING THE IMPUGNED PENALTY LEVIED UNDER SECTI ON 271(1)(C) OF THE ACT. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMI SSED. PRONOUNCED IN THE OPEN COURT ON 30 TH DECEMBER, 2010. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM, DATE: 30-12-2010. COPY TO 1 INCOME TAX OFFICER, WARD-2(1), RAJKAMAL COMPLEX, LAKSHMIPURAM, MAIN RAOD, GUNTUR. 2 SRI VASIREDDY VIDYA SAGAR, PROP: SOCIAL COMPUTER SERVICE, 4/7, BRODIPET, GUNTUR. 3 4. THE CIT GUNTUR. THE CIT(A), GUNTUR. 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM