A P S ASSOCIATES PRIVATE LIMITED, JALANDHAR V. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE - 3, JALANDHAR

ITA 470/ASR/2019

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 1748 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 10 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-05-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2002-2003
• Appeal Filed On: 07-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: GUNJEET SINGH
• Section: 271(1)(c); 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER I.T.A. No. 470/Asr/2019 Assessment Year: 2002-03 A P S Associates Pvt. Ltd. 470-Lajpat Nagar, Jalandhar [PAN: AABCA 1318F] (Appellant) Vs. Asstt. Commissioner of Income Tax, Circle-3, Jalandhar (Respendent) Appellant by Sh. Gunjeet Singh, Adv. Respondent by Sh. S. M. Surendranath Sr. D. R. Date of Hearing 27.04.2022 Date of Pronouncement 20.05.2022 ORDER Per: Anikesh Banerjee, JM: 1. Aforesaid appeal by assessee was filed by assessee against the order of learned Commissioner of Income Tax (Appeals)-2, Jalandhar [brevity CIT(A)] bearing order no-2/10021/18-19/CIT(A)-2/Jal dated 24/04/2019, passed U/s 250(6) of the Income Tax Act, 1961 (in brevity the Act) in the matter of penalty levied by learned Assessing Officer (brevity AO) u/s 271(1)(c) of the Act, vide order dated 22.03.2018. The assessment for the assessment year 2002-03 was framed by Ld. Assessing Officer [brevity AO] U/s 143(3) of the Act on 28.01.2005. 2. The grounds raised by the assessee are read as under: - 1. That on facts and circumstances of the case the Ld. CIT(A) has erred in upholding the order of Ld. AO levying penalty of Rs. 1,73,390/- u/s 271(1)(c) on account of disallowance of interest. 2. That the ld. AO has failed to strike off the relevant default in the show cause notice and therefore penalty imposed cannot be sustained. Reliance is placed upon Malti Gupta v. ITO in ITA No. 757/Asr/2017 dated 17.01.2019 3. That on facts and circumstances of the case, the Ld. CIT(A) has failed to appreciate that the Ld. AO has exceeded his jurisdiction by levying penalty of Rs.1,73,390/- u/s 271(1)(c). 4. That under the facts and circumstances of the case no penalty u/s 271(1)(c) can be levied in the present case. 5. That the authority below have failed to take the submissions of the assessee into consideration. 6. That order is against law and facts of the case. 7. That no penalty is liable to be imposed in this case. 8. That proper opportunity should have been allowed. 9. Any other ground pressed at the time of hearing.” 3. As evident the assessee is aggrieved by confirmation of certain penalty u/s 271(1)(c). In the grounds of appeal, the assessee has assailed the penalty on legal grounds as well as on merits. But during hearing the legal grounds are not pressed. 4. The brief fact of the case is that the penalty proceeding was initiated under section 271(1)(c) of the Act. The penalty was generated from the assessment under section 143(3) of the Act. The penalty was levied on following additions under the head of disallowance of ESI and EPF, estimated disallowance at the rate of one 7.5% of outstanding debtors, ad-hoc disallowance of car expenses and telephone expenses. Total tax was levied amount of Rs.1,73,309/-. Hundred percent tax sought to be evaded amount of Rs. 1,73,390/-. Accordingly the penalty was levied under section 271(1)(c) of the Act amount to Rs.1,73,390/- 5. The learned counsel of the assessee filed written submission which is kept in record. The learned counsel of the assessee had claimed interest expenses of Rs 24,19,899/-. Penalty proceedings was initiated only in respect of estimated disallowance @ 17.5% of outstanding debtors, M/s Arora Enterprise Rs.46,01,778/-which is amount of Rs. 8,05,311/-. The assessee challenged the order of the learned AO before the learned CIT (A)/Jalandhar, vide order dated 29.11.2006 & the authority dismissed the appeal of the assessee. The matter was further raised before the Hon’able ITAT, Amritsar Bench by the assessee, The order was passed on dated 08.02 .2008 and the matter was setting aside to the learned CIT (A), Jalandhar. During, the remand proceeding, Shri Charanjit Singh proprietor of M/s Arora Enterprise confirmed that the scrap was purchased and the payment was made in the Bank account of the assessee. So, the debtor was settled. 6. We heard the rival submission and considered the documents available on record. The addition was made related to the disallowance of expenses like ESI & EPF, estimated disallowance on debtors, ad-hoc disallowance of car expenses, ad-hoc disallowance of telephone expenses. The addition was made by disallowance of expenses of assessee. On basis of disallowance, the penalty was levied U/s 271(1)(c) of the Act. We respectfully relied on the judgment of honourable Supreme Court in the case of Commissioner of Income-tax, Ahmedabad v. Reliance Petroproducts (P.) Ltd. [2010] 189 TAXMAN 322 (SC) with following observation- Section 271(1)(c) of the Income-tax Act, 1961, penalty, whether merely because assessee had claimed expenditure, which claim was not accepted or was not acceptable to revenue, that by itself would not attract penalty under section 271(1)(c). Similar is the ratio of decision of Hon’ble High Court of Madras in M.N.Rangachari V/s second ITO (23 TTJ 530) as well as in CIT Vs D.Harindran (97 Taxmann.com 297). In this case the factual matrix is different but the nature was explained thoroughly. Finally, respectfully following the binding judicial precedents as cited aforesaid, we are of the considered opinion that the demand amount of Rs 173,309/- related penalty under section 271(1)(c) of the Act is liable to be deleted. 7. In the result the appeal of the assessee is allowed. Order pronounced in the open court on 20 .05.2022 Sd/- Sd/- (Dr. M. L. Meena) (Anikesh Banerjee) Accountant Member Judicial Member *GP/Sr. PS* Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The CIT(A), (4) The CIT concerned (5) The Sr. DR, I.T.A.T (6) The Guard File True Copy By Order