NKCM Spinners Private Ltd, Erode V. ACIT, Circle-1, Erode

ITA 540/CHNY/2021

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 1815 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-07-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 28-11-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice; TDS; Set aside

Judgement Text

आयकर अपील सं./ITA No.540/Chny/2021 िनधा रण वष /Assessment Year: 2013-14 M/s.NKCM Spinners Pvt. Ltd., 43, Alagiri Singh Street, Erode. v. The Asst. Commissioner- of Income Tax, Circle-I, Erode. [PAN: AACCN 7095 D] (अपीलाथ /Appellant) ( यथ /Respondent) अपीलाथ क ओर से/ Appellant by : Mr.S.Sridhar, Adv., Erode यथ क ओर से /Respondent by : Mr.Guru Bashyam, CIT-DR सुनवाई क तारीख/Date of Hearing : 26.07.2022 घोषणा क तारीख /Date of Pronouncement : 29.07.2022 आदेश / O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, dated 18.11.2021 and pertains to assessment year 2013-14. 2. The assessee has raised the following grounds of appeal: 1) The order of the learned CIT(A) is bad and erroneous in law and against the principles of natural justice. 2) The learned CIT(A) erred in not considering the fact that the Assessing officer, hurriedly, passed the order levying penalty, despite availability of time as per proviso to Sec.275(1)(a) of the Act, besides interpreting the section 275 to suit his convenience. [para- 4,page-4 of the impugned order] 3) The learned CIT(A) erred in not considering all the submissions with regard to penalty on estimated addition, despite repeating the written submissions TWICE in the impugned order, making it allegedly a speaking order, though factually wrong. आयकर अपीलीय अिधकरण, ‘बी’ यायपीठ, चे ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH: CHENNAI ी महावीर िसंह, माननीय उपा , एवं ी जी. मंजूनाथा, , माननीय लेखा सद के सम BEFORE SHRI MAHAVIR SINGH, HON’BLE VICE PRESIDENT AND SHRI G. MANJUNATHA, HON’BLE ACCOUNTANT MEMBER ITA No.540/Chny/2021 :: 2 :: 4) The learned CIT(A) erred in not considering the fact that the order levying penalty require stands to be cancelled, for the very restriction of disallowance of commission by the CIT(A) was only on ·estimate basis and not on furnishing of inaccurate particulars, which, again was omitted to be considered by the First Appellate Authority, for reasons known to him only. And for other grounds of appeal that may be adduced at the time of hearing, the appellant prays that the appeal be considered and justice be rendered. 3. The brief facts of the case are that the assessee is engaged in the business of spinning and windmill, filed its return of income for the AY 2013- 14 on 30.11.2013 declaring total income at Rs.2,16,21,050/-. The assessment has been completed u/s.143(3) of the Act, on 28.03.2016 and determined total income at Rs.3,26,75,310/- by making additions towards disallowance of commission expenses of Rs.99,84,636/- out of total commission expenses claimed by the assessee at Rs.1,18,32,182/- on the ground that the assessee could not substantiate commission payment to various persons except filing TDS particulars, confirmation letters from the parties. The assessee carried the matter in appeal before the First Appellate Authority and the Ld.CIT(A) for the reasons stated in his appellate order made adhoc disallowance @ 15% of the total commission expenses claimed by the assessee amounting to Rs.17,74,922/- out of total disallowance worked bout by the AO at Rs.99,84,636/-. Thereafter, the AO initiated penalty proceedings u/s.271(1)(c) of the Act, and after considering the relevant submissions of the assessee, levied penalty of Rs.5,75,874/- which is 100% of the tax sought to be evaded on disallowance of commission expenses. ITA No.540/Chny/2021 :: 3 :: 4. Being aggrieved by the penalty order, the assessee preferred an appeal before the Ld.CIT(A). Before the Ld.CIT(A), the assessee challenged the penalty order passed by the AO on the issue of limitation as per the provisions of Sec.275(1) of the Act. The assessee had also challenged penalty levied on adhoc disallowance of commission expenses on the ground that the AO failed to make out a case of concealment of particulars of income and furnished inaccurate particulars of income. The Ld.CIT(A) rejected the legal ground taken by the assessee challenging penalty order passed by the AO on limitation issue by holding that the penalty order passed by the AO is within the time allowed under the Act. However, not adjudicated the grounds raised by the assessee, as challenged penalty levied u/s.271(1)(c) of the Act, on estimated disallowance of commission expenses. Aggrieved by the order of the Ld.CIT(A), the assessee is in appeal before us. 5. The Ld.AR for the assessee submitted that the Ld.CIT(A) is erred in not adjudicating the specific ground taken by the assessee challenging levy of penalty on estimated on disallowance of commission expenses, even though, the assessee has taken a specific ground before the Ld.CIT(A). 6. The Ld.DR, on the other hand, supporting the order of the Ld.CIT(A), submitted that the assessee has challenged penalty order passed by the AO on limitation as well as on merits, but the Ld.CIT(A) has decided the issue on limitation but not on merits. Therefore, the issue may be set aside to the file of the Ld.CIT(A). ITA No.540/Chny/2021 :: 4 :: 7. We have heard both the parties, perused the materials available on record including grounds of appeal raised by the assessee before us and grounds of appeal taken by the assessee before the Ld.CIT(A). We find that although, the assessee has taken specific grounds of appeal on merits of the issue in levying penalty u/s.271(1)(c) of the Act, on adhoc disallowance of commission expenses, but the Ld.CIT(A) had failed to adjudicate the issue on merits. Therefore, we are of the considered view that the issue needs to be go back to the file of the Ld.CIT(A) to decide the issue of levy of penalty u/s.271(1)(c) of the Act, on merits with reference to the specific grounds raised by the assessee. Hence, we set aside the appeal to the file of the Ld.CIT(A) and direct the Ld.CIT(A) to decide the issue of penalty levied u/s.271(1)(c) of the Act, on merits. 8. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced on the 29 th day of July, 2022, in Chennai. Sd/- ( महावीर िसंह) (MAHAVIR SINGH) उपा /VICE PRESIDENT Sd/- (जी. मंजूनाथा) (G. MANJUNATHA) लेखा सद य/ACCOUNTANT MEMBER चे ई/Chennai, दनांक/Dated: 29 th July, 2022. TLN आदेश क ितिलिप अ ेिषत/Copy to: 1. अपीलाथ /Appellant 4. आयकर आयु"/CIT 2. यथ /Respondent 5. िवभागीय ितिनिध/DR 3. आयकर आयु" (अपील)/CIT(A) 6. गाड फाईल/GF