M/s. Homera Tanning Industries Pvt Ltd., Kanpur V. Dy. Commissioner of Income Tax, Kanpur

ITA 53/LKW/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1167 (ITAT-LUCKNOW)
• Duration Of Justice: 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 20-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Agreed addition

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B , LUCKNOW BEFORE SHRI. T.S. KAPOOR, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ITA NO. 53/LKW/2017 ASSESSMENT YEAR: 2005 - 06 M/S HOMERA TANNING INDUSTRIES PVT. LTD. 150, F EET ROAD, JAJMAU KANPUR V. DY. CIT RANGE 6 LUCKNOW T AN /PAN : AAACH3613H (APP ELL ANT) (RESPONDENT) APPELLANT BY: SHRI RAKESH GARG, ADVOCATE RESPONDENT BY: SHRI HIMANSHU PANDEY, D.R. DATE OF HEARING: 17 01 201 8 DATE OF PRONOUNCEMENT: 18 01 201 8 O R D E R PER P ARTHA SARATHI CHAUDHURY, J.M : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LD. CIT(A) - II, KANPUR DATED 18/11/2016 ON THE FOLLOWING GROUNDS OF APPEAL: - 01. BECAUSE THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN UPHOL DING THE LEVY OF PENALTY OF RS. 1,82,960 / - UNDER SECTION 271 (1)(C) OF THE I . T. ACT, 1961, WHICH PENALTY IS BAD IN LAW AND BE QUASHED. 02. BECAUSE THERE BEING NEITHER ANY CONCEALMENT OF INCOME NOR FURNISHING OF INACCURATE PARTICULARS, THE PROVISIONS OF SECTI ON 271(1)(C) OF THE ACT ARE NOT APPLICABLE, THE PENALTY OF RS. 1,82,960 / - IMPOSED IS BAD IN LAW AND BE DELETED. 03. BECAUSE THE CIT(A) HAS FAILED TO APPRECIATE, THAT THE QUANTUM ADDITION WAS MADE ON ADHOC AND ESTIMATE BASIS, WHICH ITA NO.53/LKW/2017 PAGE 2 OF 3 COULD RESULT TO CONCEAL MENT OF INCOME, THE PENALTY IMPOSED IS BAD IN LAW AND BE DELETED. 04. BECAUSE IN ANY CASE AND IN ALL CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE AO IMPOSING PENALTY OF RS. 1,82,960 / - UNDER SEC TION 271(1)(C) OF THE ACT, AND UPHELD BY THE CIT(A) IS BAD IN LAW, THE PENALTY IMPOSED BE QUASHED. 2 . THE SOLE GRIEVANCE OF THE ASSESSEE IS AGAINST THE IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT OF RS.1,82,960/ - . THE ASSESSEE HAS ALSO TAKEN A LEGAL GROUND THAT NOTICE OF PENALTY IS NOT SPECIFIC AS TO W HICH LIM B OF THE PROVISION, PENALTY IS IMPOSED. 3 . THE FACTS IN BRIEF ARE THAT THE VALUATION OF CLOSING STOCK OF THE ASSESSEE WAS NOT FULLY VERIFIABLE AND THE ASSESSEE - COMPANY COULD NOT FURNISH COMPLETE DETAILS OF CHEMICALS KEPT AS CLOSING STOCK AND AN AD - HOC ADDITION OF RS.5 LAKHS WAS MADE TO THE TOTAL INCOME OF THE ASSESSEE TOWARDS TRADING RESULTS TO COVER UP THE POSSIBLE LEAKAGES IN THE VALUATION OF THE CLOSING STOCK , FOR WHICH ASSESSEE HAS ALSO AGREED. 4 . THE LD. CIT(A) - I, KANPUR HAS DECIDED THE APPEAL FILE D BY THE ASSESSEE AGAINST THIS AGREED ADDITION AND CONFIRMED THE ADDITION ON THE GROUND THAT ADDITION ON ACCOUNT OF UNDER VALUATION OF CLOSING STOCK HAS BEEN MADE ON AGREED BASIS. THE ASSESSING OFFICER HAS ALSO INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. THE LD. CIT(A) ON CONSIDERATION OF THE FACTS OF THE CASE , SUBMISSIONS OF THE ASSESSEE AND THE ASSESSMENT ORDER, SUSTAINED THE PENALTY LEVIED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE ACT. 5 . AT THE TIME OF HEARING, THE LD. A.R. OF THE ASSESSEE VEHEMENTLY ARGUED ON THE LEGAL ISSUE THAT NOTICE OF PENALTY WAS NOT SPECIFIC AS TO WHICH LIM B PENALTY WAS IMPOSED AND THE ASSESSEE HAS ALSO FURNISHED A COPY OF THE PENALTY NOTICE ISSUED BY THE ASSESSING OFFICER. THE LD. A.R. ITA NO.53/LKW/2017 PAGE 3 OF 3 OF THE A SSESSEE FURTHER PLACED RELIANCE UPON THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF CIT VS. M/S SSAS EMERALD MEADOWS IN CC NO.11485/2016 (SC). 6 . THE LD. D.R., ON THE OTHER HAND, PLACED RELIANCE UPON THE ORDERS OF THE AUTHORITIES BELOW. 7 . WE HAVE PERUSE D THE CASE RECORD AND THE RELEVANT DETAILS FILED IN THE PAPER BOOK, ESPECIALLY PENALTY NOTICE UNDER SECTION 274 READ WITH 271(1)(C) OF THE ACT AND WE FIND THAT THE NOTICE ISSUED BY THE ASSESSING OFFICER IS NOT SPECIFIC AS TO WHICH LIMB PENALTY IS LEVIED WH ETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. WE TAKE GUIDANCE FROM THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF CIT VS. M/S SSAS EMERALD MEADOWS (SUPRA) AND VARIOUS OTHER JUDICIAL PRONOUNCEMEN TS AND WE ARE OF THE CONSIDERED VIEW THAT WHEN NOTICE IS NOT SPECIFIC, IT IS ARBITRARY, ILLEGAL AND BAD IN LAW AND LIABLE TO BE QUASHED. ACCORDINGLY, WE HOLD THIS NOTICE IS VOID AB - INITIO AND PENALTY LEVIED IS, THEREFORE, DELETED . 8 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 / 01 / 201 8 . SD/ - SD/ - [ T.S. KAPOOR ] [PARTHA SARATHI CHAUDHURY ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 18 TH JANUARY , 201 8 JJ: 1701 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . D R