DCIT CIR 2(2), MUMBAI V. KSH INTERNATIONAL P. LTD, MUMBAI

ITA 4042/MUM/2009

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 6401 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 30-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K SRIVASTAVA
• Keywords: Difference of opinion; Agreed addition
• Section: 143(3)

Judgement Text

I.T.A NO.4042/ MUM/2009 ASSESSMENT YEAR: 2003-04 1 IN THE INCOME TAX APPELLATE TRIBUNAL, A BENCH, MUMBAI. BEFORE SHRI D.MANMOHAN, VICE PRESIDENT AND SHRI PRAMOD KUMAR(ACCOUNTANT MEMBER) I.T.A NO.4042/ MUM/2009 ASSESSMENT YEAR: 2003-04 DY.COMMISSIONER OF INCOME TAX, .. APPELLANT AAYAKAR BHAVAN, M.K. ROAD, MUMBAI. VS KSH INTERNATIONAL P. LTD. ,. RESPONDEN T 14/2, WESTERN INDIA HOUSE, SIR P.M.ROAD, FORT, MUMBAI. PA NO.AAACB 1897 K APPELLANT BY: R.K.SRIVASTAVA RESPONDENT BY : NONE O R D E R PER PRAMOD KUMAR: 1. THIS IS AN APPEAL FILED BY THE REVENUE AND IS DIR ECTED AGAINST THE ORDER DATED 24.4.2009 PASSED BY THE CIT(A)-II, MUMBAI DELETING THE PENALTY OF RS 2,38,988/- LEVIED UNDER SECTION 271(1)(C) OF THE ACT FOR THE ASSE SSMENT YEAR 2003-04. 2. BRIEFLY STATED THE MATERIAL FACTS ARE LIKE THIS. THE ASSESSEE COMPANY IS A MANUFACTURING COMPANY, PRODUCING INSULATED COPPER/AL UMINIUM CONDUCTORS. THE ASSESSEE HAD LOCAL AND EXPORT SALES OF THE GOODS MANUFACTU RED THE ASSESSING OFFICER FRAMED THE ASSESSMENT UNDER SECTION 143(3) ON 28.2.2006 DETERMINING THE TOTAL INCOME AT RS 82,20,310/-, INTER ALIA, MAKING AN ADDI TION OF RS. 6,09,492/- BEING THE I.T.A NO.4042/ MUM/2009 ASSESSMENT YEAR: 2003-04 2 UNUTILIZED MODVAT CREDIT. THE LEARNED CIT (A) CONF IRMED THE STAND TAKEN BY THE ASSESSEE IN QUANTUM APPEAL. THE MATTER, HOWEVER, DID NOT REST THERE. THE ASSESSING OFFICER ALSO REQUIRED THE ASSESSEE TO SHOW CAUSE AS T O WHY PENALTY UNDER SECTION 271(1)(C) SHOULD NOT BE LEVIED OWING TO THE F ACT THAT LEARNED CIT (A) HAS CONFIRMED THE ACTION OF THE AO. THE EXPLANATION O FFERED BY THE ASSESSEE WAS NOT ACCEPTABLE TO THE AO AND CONSEQUENTLY, HE LEVIED THE PENALTY OF RS. 2,23,988/- BEING THE 100% OF THE TAX SOUGHT TO BE EVADED ON THE INCOM E OF RS. 6,09,492/-. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BE FORE THE CIT (A). THE CIT (A) DELETED THE PENALTY ON THE GROUND OF DIFFERENCE OF OPINION AND OBSERVING, INTER ALIA, AS FOLLOWS: THE APPELLANT SUBMITS THAT IT CONSTANTLY FOLLOWS TH E METHOD OF VALUING STOCK NO INCLUSIVE OF MODVAT CREDIT BALANCE OUTSTAN DING. FURTHER THE PARTICULARS OF THE SAME ARE DISCLOSED IN THE TAX AU DIT REPORT ALONGWITH THE RETURN OF INCOME AND HENCE IT WAS STATED BY THE AR OF THE APPELLANT THAT THE APPELLANT HAS NOT FURNISHED ANY INACCURATE PARTICULARS OF INCOME. IT WAS FURTHER SUBMITTED THAT IN MANY JUDI CIAL DECISIONS THE AGREED ADDITION MADE DURING THE COURSE OF ASSESSMEN T IS NOT REGARDED AS CONCLUSIVE TO COVER THE ASSESSEE WITHIN THE PROV ISIONS OF SEC.271(1)(C) OF THE ACT. THUS THE A.R. OF THE APPELLANT CLARIFI ED THAT IT IS AN OPINION DIFFERENCE. THE APPELLANT ALSO DISCLOSED ALL THE F ACTS MATERIAL TO THE COMPUTATION OF TOTAL INCOME. THE A.O. HAS NOT FOUN D ANY CONCEALMENT FROM OUTSIDE. HE HAS RELIED ON THE TAX AUDIT REPORT . AS SUCH THE A.R. ARGUED THAT PENALTY CANNOT BE LEVIED IN VIEW OF OPI NION DIFFERENCE ONLY. IN SUCH VIEW OF THE MATTER, I ORDER FOR THE CANCELL ATION OF THE PENALTY. THE ASSESSING OFFICER IS AGGRIEVED OF THE RELIEF SO GIVEN BY THE CIT (A) AND IS IN APPEAL BEFORE US. 3. NONE APPEARED FROM THE SIDE OF THE ASSESSEE BUT LOOKI NG TO THE FACT AND THE BASIS ON WHICH THE PENALTY HAS BEEN LEVIED, WE PROCEED TO DECIDE THE MATTER EX PARTE QUA THE ASSESSEE. WE HAVE HEARD THE LEARNED DEPA RTMENTAL REPRESENTATIVE, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FA CTUAL MATRIX OF THE CASE AS ALSO THE APPLICABLE LEGAL POSITION. 4. WE HAVE NOTED THAT THE IMPUGNED PENALTY WAS IMPOSE D BY THE AO FOR FURNISHING OF INACCURATE PARTICULARS BUT THEN THERE IS NO FINDING WHATSOEVER THAT I.T.A NO.4042/ MUM/2009 ASSESSMENT YEAR: 2003-04 3 ANY PARTICULARS GIVEN BY THE ASSESSEE WERE INACCURATE. ON THE CONTRARY, THERE IS A CATEGORICAL FINDING BY THE CIT (A) THAT THE CLAIM W AS MADE IN A TRANSPARENT MANNER AND WITHOUT CONCEALING ANY PARTICULARS OF INCOME. IN THE FACE OF THIS UN- CONTROVERTED FINDING OF THE CIT (A) AND IN THE LIGH T OF THE HONBLE SUPREME COURTS JUDGEMENT IN THE CASE OF RELIANCE PETRO PRODUCTS LTD ., 320 ITR 148(SC), WE ARE OF THE VIEW THAT THE PENALTY WAS WRONGLY IMPOSED AND THE CIT (A) WAS QUITE JUSTIFIED IN DELETING THE SAME. WE HAVE ALSO NOTED THAT THE ONLY REASON FOR AOS ISSUING SHOW CAUSE NOTICE WAS AS TO WHY THE PENALTY U/S.271(1)(C) SH OULD NOT BE IMPOSED. THE VERY APPROACH ADOPTED BY THE AO IS CLEARLY CONTRARY TO THE SCHEME OF THE ACT AND PROCEEDS ON THE INCORRECT ASSUMPTION AND OTHER ADDITI ON TO THE INCOME IS TO BE VITIATED WITH PENALTY PROCEEDINGS U/S.271(1)(C) . TH E CIT (A) WAS THEREFORE, JUSTIFIED IN DELETING THE PENALTY IN QUESTION. WE SEE NO INFIRMITY IN THE FINDINGS OF THE CIT (A) OR THE CONCLUSIONS ARRIVED AT BY HIM AND , CONSEQUENTLY, WE APPROVE THE SAME. 5. IN THE RESULT, THE APPEAL STANDS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 23 RD NOVEMBER, 2010 SD/- (D.MANMOHAN) (VICE PRESIDENT) SD/- (PRAMOD KUMAR) (ACCOUNTANT MEMBER) MUMBAI, DATED 23 RD NOVEMBER , 2010 PARIDA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)-II, MUMBAI 4. COMMISSIONER OF INCOME TAX, II , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH A, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI I.T.A NO.4042/ MUM/2009 ASSESSMENT YEAR: 2003-04 4 I.T.A NO.4042/ MUM/2009 ASSESSMENT YEAR: 2003-04 5