Teleservices Ltd., Kolkata V. ACIT, Cir.12(2), Kolkata

ITA 517/KOL/2020

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 0250 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2016-2017
• Appeal Filed On: 05-10-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 271(1)(c); 143(3); 20

Judgement Text

ITA NO. 517/KOL/2020 A.Y. 20 16-2017 UNITED TELESERVICES LIMITED 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B BENCH, KOLKATA [VIRTUAL COURT HEARING] BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT & SHRI A.T. VARKEY, JUDICIAL MEMBER I.T.A. NO. 517/KOL/2020 ASSESSMENT YEAR: 2016-2017 UNITED TELESERVICES LIMITED,....................... ...................................APPELLANT C/O. SUBASH AGARWAL & ASSOCIATES, ADVOCATES, SIDDHA GIBSON, 1, GIBSON LANE, SUITE-213, 2 ND FLOOR, KOLKATA-700069 [PAN:ACRPA2275J] -VS.- ASSISTANT COMMISSIONER OF INCOME TAX,.............. ..........................RESPONDENT CIRCLE-12(2), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700069 APPEARANCES BY: SHRI SUBASH AGARWAL, ADVOCATE, APPEARED ON BEHALF O F THE ASSESSEE SHRI DEVI SARON SINGH, CIT , APPEARED ON BEHALF OF THE REVENUE DATE OF CONCLUDING THE HEARING : JULY 15, 2021 DATE OF PRONOUNCING THE ORDER : JULY 20, 2021 O R D E R PER SHRI P.M. JAGTAP, VICE-PRESIDENT :- THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-4, KOLKATA DATED 31.08.2020, WHEREBY HE IMPOSED A PENALTY OF RS.6,10,78,620/- UN DER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY, W HICH FILED ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION O N 31.10.2016 DECLARING TOTAL INCOME OF RS.2,50,56,290/-. IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) VIDE AN ORDER DATED 19.12.2018 , THE TOTAL INCOME OF THE ASSESSEE WAS DETERMINED BY THE ASSESSING OFFICE R AT RS.2,70,03,840/- AFTER MAKING CERTAIN ADDITIONS/DISALLOWANCES. ITA NO. 517/KOL/2020 A.Y. 20 16-2017 UNITED TELESERVICES LIMITED 2 3. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R UNDER SECTION 143(3) OF THE ACT, AN APPEAL WAS PREFERRED BY THE A SSESSEE BEFORE THE LD. CIT(APPEALS). DURING THE COURSE OF APPELLATE PROCEE DINGS BEFORE THE LD. CIT(APPEALS), IT WAS NOTED BY THE LD. CIT(APPEALS) THAT THE ASSESSEE- COMPANY HAD INFLATED ITS CLAIM FOR PURCHASES MADE D URING THE YEAR UNDER CONSIDERATION AND THIS ASPECT WAS NOT TAKEN INTO CO NSIDERATION BY THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT U NDER SECTION 143(3). HE, THEREFORE, ISSUED AN ENHANCEMENT NOTICE TO THE ASSESSEE-COMPANY. IN REPLY TO THE SAID NOTICE, A SUBMISSION WAS MADE ON BEHALF OF THE ASSESSEE OFFERING ITS EXPLANATION IN THE MATTER AND SINCE TH E SAME WAS NOT FOUND TO BE SATISFACTORY BY HIM, THE LD. CIT(APPEALS) PROCEE DED TO ENHANCE THE INCOME OF THE ASSESSEE BY RS.20,35,95,402/- ON ACCO UNT OF THE ALLEGED INFLATED PURCHASES VIDE HIS APPELLATE ORDER DATED 1 1.02.2020. HE ALSO INITIATED THE PENALTY PROCEEDINGS UNDER SECTION 271 (1)(C) IN RESPECT OF THE INCOME OF THE ASSESSEE-COMPANY AS ENHANCED BY H IM ON ACCOUNT OF INFLATED PURCHASES AND SINCE THE EXPLANATION OFFERE D BY THE ASSESSEE IN RESPONSE TO THE SHOW-CAUSE NOTICE ISSUED BY HIM DUR ING THE COURSE OF PENALTY PROCEEDINGS WAS NOT FOUND ACCEPTABLE, THE L D. CIT(APPEALS) PROCEEDED TO IMPOSE PENALTY OF RS.6,10,78,620/- UND ER SECTION 271(1)(C) BEING 100% OF THE TAX SOUGHT TO BE EVADED BY THE AS SESSEE-COMPANY ON THE INCOME OF RS.20,35,95,402/- REPRESENTING THE AL LEGED INFLATED PURCHASES. AGGRIEVED BY THE ORDER OF THE LD. CIT(AP PEALS) IMPOSING PENALTY UNDER SECTION 271(1)(C), THE ASSESSEE-COMPA NY HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE, THE ENTIRE ADDITION MADE BY THE LD. C IT(APPEALS) BY WAY OF ENHANCEMENT OF INCOME ON ACCOUNT OF ALLEGED INFLATE D PURCHASES WAS CHALLENGED BY THE ASSESSEE IN THE QUANTUM APPEAL FI LED BEFORE THE TRIBUNAL AND THE TRIBUNAL VIDE ITS ORDER DATED 17.0 2.2021 PASSED IN ITA ITA NO. 517/KOL/2020 A.Y. 20 16-2017 UNITED TELESERVICES LIMITED 3 NO. 248/KOL/2020 HAS SET ASIDE THE ORDER OF THE LD. CIT(APPEALS) DATED 11.02.2020 AND RESTORED THE ISSUE RELATING TO THE A LLEGED INFLATED PURCHASES OF RS.20,35,95,402/- TO THE FILE OF THE A SSESSING OFFICER WITH A DIRECTION TO DECIDE THE SAME AFRESH ON MERIT AFTER VERIFYING THE RELEVANT DETAILS AND DOCUMENTS PRODUCED/TO BE PRODUCED BY TH E ASSESSEE- COMPANY. AS RIGHTLY CONTENDED BY THE LD. COUNSEL FO R THE ASSESSEE AND AGREED EVEN BY THE LD. D.R., THE VERY FOUNDATION OF THE IMPUGNED PENALTY IMPOSED BY THE LD. CIT(APPEALS) UNDER SECTION 271(1 )(C) OF THE ACT THUS NO MORE SURVIVES AND THE PENALTY SO IMPOSED BY HIM IS LIABLE TO BE CANCELLED HAVING NO LEGS TO STAND. WE MAY CLARIFY T HAT THE ASSESSING OFFICER WILL BE FREE TO REINITIATE THE PENALTY PROC EEDING DEPENDING ON THE OUTCOME OF SET ASIDE PROCEEDINGS IN ACCORDANCE WITH LAW. WE ACCORDINGLY CANCEL THE PENALTY IMPOSED BY THE LD. CIT(APPEALS) UNDER SECTION 271(1)(C) AND ALLOW THIS APPEAL OF THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON JULY 20, 2021 . SD/- SD/- (A.T. VARKEY) (P.M. JAGTAP) JUDICIAL MEMBER VICE-PRESIDENT KOLKATA, THE 20 TH DAY OF JULY, 2021 COPIES TO : (1) UNITED TELESERVICES LIMITED C/O. SUBASH AGARWAL & ASSOCIATES, ADVOCATES, SIDDHA GIBSON, 1, GIBSON LANE, SUITE-213, 2 ND FLOOR, KOLKATA-700069 (2) ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-12(2), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700069 (3) COMMISSIONER OF INCOME TAX (APPEALS)-4, KOLKA TA, (4) COMMISSIONER OF INCOME TAX , (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY/DDO, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.