M/s. Collabrant Incubators Private Limited, Bangalore V. The Income Tax Officer, Ward- 2(1)(2), Bangalore

ITA 587/BANG/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7011 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 24-08-2021
• Assessment Year: 2011-2012
• Appeal Filed On: 24-06-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRIYADARSHI MISHRA
• Assessee Lawyers: R PRATHIBHA
• Keywords: Bad and doubtful debts
• Section: 271(1)(c); 14A; 274

Judgement Text

ITA NO.587/BANG/2020 M/S. COLLABRANT INCUBATORS PVT. LTD., BANGALORE IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: BANGALORE BEFORE SHRI GEORGE GEORGE K., JUDICIAL MEMBER AND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER ITA NO.587/BANG/2020 ASSESSMENT YEAR : 2011- 12 M/S. COLLABRANT INCUBATORS PVT. LTD. OLD ADDRESS: NO.29, 1 ST FLOOR, 17 TH MAIN, 33 RD CROSS, 4 TH BLOCK, JAYANAGAR, BANGALORE-560 041 PRESENTLY AT: NO.729, 38 TH CROSS, 16 TH A MAIN, 4 TH T BLOCK, JAYANAGAR, BANGALORE 560 041. PAN NO : AACCC5116G VS. ITO WARD-2(1)(2) BANGALORE APPELLANT RESPONDENT APPELLANT BY : SMT. R. PRATHIBHA, A.R. RESPONDENT BY : SHRI PRIYADARSHI MISHRA, D.R. DATE OF HEARING : 24.08.2021 DATE OF PRONOUNCEMENT : 26.08.2021 O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER: THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 10.2.2020 PASSED BY LD. CIT(A)-2, BENGALURU CONFIRM ING THE PENALTY OF RS.5,62,571/- LEVIED BY THE A.O. U/S 271 (1)(C) OF THE INCOME-TAX ACT,1961 ['THE ACT' FOR SHORT]. 2. WE HEARD THE PARTIES AND PERUSED THE RECORD. T HE ASSESSEE IS IN THE BUSINESS OF MANAGEMENT CONSULTANCY AND ANCIL LARY SERVICES. THE ASSESSMENT FOR THE ASSESSMENT YEAR 2011-12 WAS COMPLETED BY THE A.O. BY MAKING FOLLOWING CONDITIONS: ITA NO.587/BANG/2020 M/S. COLLABRANT INCUBATORS PVT. LTD., BANGALORE PAGE 2 OF 4 (A) DISALLOWANCE U/S 14A OF THE ACT RS. 1,31,033/ - (B) DISALLOWANCE OF BAD DEBTS WRITTEN OFF RS.4,99,450/ - (C) DISALLOWANCE OF DIMINUTION IN THE VALUE OF INVESTMENTS RS.9,77,500/- (D) DISALLOWANCE OF SERVICE TAX RS.2,12,639/ - TOTAL RS.18,20,622/- 3. THEREAFTER, THE A.O. LEVIED PENALTY OF RS.5,62, 571/- U/S 271(1)(C) OF THE ACT HOLDING THAT THE ASSESSEE COMP ANY HAS FURNISHED INACCURATE PARTICULARS RESULTING IN CONCE ALMENT OF INCOME IN CLAIMING THE ABOVE SAID DEDUCTIONS. THE ASSESSE E FILED THE APPEAL CHALLENGING THE LEVY OF PENALTY BEFORE LD. C IT(A), BUT COULD NOT SUCCEED AND HENCE THE ASSESSEE HAS FILED THIS A PPEAL BEFORE US. 4. AT THE TIME OF HEARING, THE LD. A.R. INVITED OU R ATTENTION TO THE COPY OF PENALTY NOTICE ISSUED TO THE ASSESSEE, WHICH IS PLACED AT PAGE NO.6 OF THE PAPER BOOK. THE LD. A.R. SUBMITTE D THAT THE A.O. HAS NOT STRUCK OFF THE IRRELEVANT PORTION IN THE PE NALTY NOTICE. HENCE IT IS NOT CLEAR AS TO THE LIMB UNDER WHICH TH E PENALTY PROCEEDINGS WERE INITIATED. INVITING OUR ATTENTION TO THE ASSESSMENT ORDER, THE LD. A.R. SUBMITTED THAT THE A.O. HAS MER ELY STATED THAT PENALTY U/S 271(1)(C) OF THE ACT IS INITIATED BY IS SUE OF APPROPRIATE NOTICE READ WITH SECTION 274 OF THE ACT, I.E., THE AO HAS NOT REFERRED TO THE LIMB UNDER WHICH THE PENALTY PROCEEDINGS ARE PROPOSED TO BE INITIATED. ACCORDINGLY, THE LD. A.R. SUBMITTED THAT THE IMPUGNED PENALTY ORDER IS VITIATED, AS PER THE DECISION REND ERED BY HONBLE KARNATAKA HIGH COURT IN THE CASE OF MANJUNATHA COTT ON & GINNING FACTORY (359 ITR 565). THE LD. A.R. SUBMITTED THAT THE A.O. HAD LEVIED PENALTY U/S 271(1)(C) OF THE ACT FOR ASSESSM ENT YEAR 2012-13 AND 2013-14, ON IDENTICAL DISALLOWANCES MADE IN THO SE YEARS. THE COORDINATE BENCH, VIDE ITS ORDER DATED 13.3.2020 PA SSED IN ITA NO.1709 & 1710/BANG/2019, HAS DELETED THE PENALTY B Y FOLLOWING ITA NO.587/BANG/2020 M/S. COLLABRANT INCUBATORS PVT. LTD., BANGALORE PAGE 3 OF 4 THE DECISION RENDERED IN THE CASE OF MANJUNATHA COT TON & GINNING FACTORY (SUPRA). 5. WE HEARD LD. D.R., WHO SUPPORTED THE ORDER PASS ED BY LD. CIT(A). 6. UNDER THE PROVISIONS OF SEC.271(1)(C), PENALTY CAN BE LEVIED EITHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. HENCE, IT IS IMP ERATIVE FOR THE AO TO MENTION THE LIMB UNDER WHICH THE PENALTY PROCEED INGS ARE INITIATED IN RESPECT OF THE ADDITIONS MADE BY THE A O. ADMITTEDLY, THE A O DID NOT MENTION THE LIMB UNDER WHICH PENALT Y PROCEEDINGS ARE INITIATED U/S 271(1)(C) OF THE ACT IN THE ASSES SMENT ORDER. IN THE PENALTY NOTICE ALSO, WE NOTICED THAT THE A.O. D ID NOT STRUCK OFF THE INAPPLICABLE PORTION. HENCE, IT IS NOT CLEAR T O THE ASSESSEE AS TO THE LIMB UNDER WHICH THE AO HAS PROCEEDED TO INITIA TE PENALTY PROCEEDINGS. IN THE CASE OF MANJUNATHA COTTON & GI NNING FACTORY (SUPRA), THE HONBLE JURISDICTIONAL KARNATAKA HIGH COURT HAS HELD THAT, IF SHOW CAUSE NOTICE IS VAGUE, NO PENALTY CAN BE IMPOSED ON THE ASSESSEE ON THE BASIS OF SUCH NOTICE. WE ALSO NOTICE THAT IN AY 2012-13 & 2013-14 ALSO IDENTICAL FACTS WERE AVAILAB LE IN RESPECT OF PENALTY PROCEEDINGS INITIATED IN THOSE YEARS. ACCO RDINGLY, THE COORDINATE BENCH HAS DELETED PENALTY IN THOSE YEARS FOLLOWING THE DECISION RENDERED BY THE JURISDICTIONAL HONBLE KAR NATAKA HIGH COURT IN THE CASE OF MANJUNATHA COTTON & GINNING FA CTORY (SUPRA). 7. CONSISTENT WITH THE VIEW TAKE IN THE ABOVE SA ID ORDER OF THE COORDINATE BENCH AND ALSO FOLLOWING THE BINDING DEC ISION OF JURISDICTIONAL KARNATAKA HIGH COURT IN THE CASE OF MANJUNATHA COTTON & GINNING FACTORY, WE HOLD THAT THE IMPUGNED PENALTY ORDER IS NOT SUSTAINABLE. ACCORDINGLY, WE QUASH THE IMPU GNED ORDERS PASSED BY THE TAX AUTHORITIES. ITA NO.587/BANG/2020 M/S. COLLABRANT INCUBATORS PVT. LTD., BANGALORE PAGE 4 OF 4 8 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH AUG, 2021 SD/- (GEORGE GEORGE K.) JUDICIAL MEMBER SD/- (B.R. BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED 26 TH AUG, 2021. VG/SPS COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.