ACIT, Circle, Bhilwara V. M/s. Suraj Fabrics Industries Ltd. , Kolkata

ITA 475/JODH/2017

AI Insights

The case involves an appeal by the Assistant Commissioner of Income-tax, Bhilwara against M/s Suraj Fabrics Industries Ltd., concerning penalties imposed under section 271(1)(c) of the Income Tax Act for the assessment year 2010-11. The penalties were initially levied due to additions made under section 68 (unexplained cash credit) and section 40A(3) (disallowance of certain expenses). However, both the additions were later deleted by the ITAT and CIT(A), leading to the cancellation of the penalties. The Department's appeal contested the deletion of these penalties, but the Tribunal found no infirmity in the CIT(A)'s decision, citing precedents and the lack of substantive evidence to uphold the penalties.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 122776 (ITAT-JODHPUR)
• Duration Of Justice: 5 year(s) 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 10-08-2023
• Assessment Year: 2010-2011
• Appeal Filed On: 30-11-2017
• Other Referred Cases: M/s Laxmi Engineers, Jodhpur vs. Department of Income-tax, ACIT, 14(1), Mumbai vs. M/s Sunland Metal Recycling
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value
• Section: 68; 271(1)(c); 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER AND DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER ITA No.475/JODH/2017 Assessment Year: 2010-11 Assistant Commissioner of Income-tax, Circle, Bhilwara Vs M/s Suraj Fabrics Industries Ltd., 224A, Elegant Tower, A.J.C. Bose Road, Kolkata, West Bengal PAN: AABCS8988B Appellant / Revenue Respondent / Assessee Revenue by Smt. Alka Rajvanshi Jain, CIT-DR Assessee by None Date of hearing 11.08.2023 Date of pronouncement 11.08.2023 ORDER PER DR. DIPAK P. RIPOTE, AM: This is an appeal filed by the Department against the order of ld. Commissioner of Income Tax (Appeals), Ajmer dated 06.09.2017 deleting the penalty under section 271(1)(c) of the Act for A.Y. 2010-11. The assessee has raised following grounds of appeal as under:- “1. Cancelling the penalty levied for addition of unexplained cash credit on a/c of share capital of 10,00,00,000/- without appreciating the facts that the quantum addition made by the AO was confirmed by the Ld.CIT(A) as the identity and ITA No.475/JODH/2017 M/s Suraj Fabrics Industries Ltd. 2 creditworthiness of investing companies and genuineness of the transactions were not proved; 2. cancelling the penalty levied for addition made u/s.40A(3) of 5,16,066/- without appreciating the fact that the quantum addition made by the AO was confirmed by the Ld.CIT(A) as well as ITAT; 3. The appellant craves to add, amend, alter, delete or modify the above ground of appeal before or at the time of hearing." 2. We have heard Ld. DR and perused the record. 3. It is observed that Ld. CIT(A) has deleted penalty under section 271(1)(c) because ITAT in assessee’s own case has deleted the addition of Rs. 10 Crore made by the AO under section 68 of the Act. The relevant paragraph of the Ld. CIT(A’s) order is as under:- “(i) The appellant has submitted that the addition of Rs. 10 crore has been deleted by the ITAT Jodhpur Bench vide its order dated 19.05.2017 (ITA No. 436/Jodh/2014, A.Y. 2010-11). The appellant has filed the copy of ITATS order dated 19.05.2017. It is seen that ITAT while deciding the appeal of the appellant at Para 16 of the order has held as under: "in the circumstances and facts of the case, no addition can be made by the AO and the addition so made as directed herein above is directed to be deleted and order of the Id. CIT(A) is reversed". As the ITAT has deleted the addition of Rs. 10 crore made by the AO, therefore there remains no justification for confirming the penalty levied in respect of the addition of Rs. 10 crore. ITA No.475/JODH/2017 M/s Suraj Fabrics Industries Ltd. 3 Accordingly, the penalty levied in respect of the addition of Rs. 10 crore is hereby cancelled. (ii) As far as the penalty levied in respect of the disallowance of Rs. 5,16,066/- made u/s 40A(3) is concerned, the appellant, relying on the decision of ITAT Jodhpur in the case of M/s Laxmi Engineers, Jodhpur vs. Department of Income-tax (ITA No. 460/Jodh/2015, A.Y. 2010-11) has contended that no penalty u/s 271(1)(c) can be levied on the disallowance made u/s 40A(3). I have gone through the order of the ITAT Jodhpur relied upon by the appellant carefully. The ITAT relying on the decision of Supreme Court in Reliance Petroproducts Ltd. [322 ITR 158 (SC)) has deleted the penalty levied w/s 271(1)(c) in respect of the disallowance made u/s 40A(3). Therefore, following the decision of Jurisdictional ITAT, the penalty levied in respect of the disallowance of Rs. 5,16,066/- made u/s 40A(3) is hereby cancelled. (iii) Regarding the addition of Rs. 28,950/- made under the head "long term capital gain", the appellant, relying on the decision of ITAT "E" Bench Mumbai in the case of ACIT, 14(1), Mumbai vs. M/s Sunland Metal Recycling (ITA No. 6454/Mum/2011, A.Y. 2008-09) has contended that no penalty u/s 271(1)(c) can be levied in respect of the addition made by invoking the Provisions of Section 50C. I have gone through the order of the Mumbai ITAT relied upon by the appellant carefully. The ITAT at para 6 of its order has held as under: "6. As it is clear that the assessee has disclosed all relevant details as well as documents in support of its computation of Short term Capital Gain by taking into consideration the actual sale consideration received by the assessee. The fact of actual sale consideration received by the assessee has not been disputed by the Assessing Officer but the addition was made simply by applying the deeming provisions of ITA No.475/JODH/2017 M/s Suraj Fabrics Industries Ltd. 4 section 50C. Therefore, in view of the various decisions as relied upon by the Ld. Authorized http://www.itatonline.org M/s Sunland Metal Recycling 51Page Representative as well as by the CIT(A), we do not find any error in the impugned order of CIT(A) in deleting the penalty levied us 271(1)(c). 7. In the result appeal of the revenue is dismissed." In view of the decision of the ITAT Mumbai relied upon by the appellant, the penalty levied, in respect of the addition of Rs. 28,950/- by the AO is hereby cancelled.” 4. Thus the Ld. CIT(A) has deleted the penalty levied under section 271(1)(c) with respect to concealment of Rs. 10 Crore on the ground that quantum addition of Rs. 10 Crore has been deleted by the ITAT. In this facts and circumstances of the case, we do not find any infirmity in the order of the Ld. CIT(A). 5. The Ld. CIT(A) has deleted penalty with respect to addition of Rs. 5,16,066/- made under section 40A(3) following jurisdictional High Court. Since facts are identical, we do not find any infirmity in the order of the Ld. CIT(A). Accordingly, the appeal of the Department is dismissed. 6. In the result, the appeal of the Department is dismissed. Order pronounced on 11 th August, 2023. Sd/- Sd/- (PAVAN KUMAR GADALE) (DR. DIPAK P. RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 11/08/2023 Sh. ITA No.475/JODH/2017 M/s Suraj Fabrics Industries Ltd. 5 Copy to: 1. The Appellant 2. The Respondent 3. The CIT 4. The CIT(A) Asstt. Registrar 5. The DR 6. Guard File Jodhpur Bench