M/s Baynee Industries, Kolkata V. ACIT, CIR-44, KOLKATA, Kolkata

ITA 59/KOL/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1841 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 01-05-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 13-01-2016
• Court: TRIBUNAL
• Department Lawyers: MD GHYAS UDDIN JCIT LD
• Keywords: Wrong claim
• Section: 69

Judgement Text

1 ITA NO.59/KOL/2016 M/S. BAYNEE INDUSTRIES IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA BEFORE: SHRI P.M.JAGTAP, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIA L MEMBER I.T.A NO. 59/KOL/2016 ASSESSMENT YEAR: 2007-08 M/S. BAYNEE INDUSTRIES VS. ASSISTANT COMMISSI ONER OF PAN: AADFB1024E INCOME-TAX, CIRCLE-44, KOLKATA [ APPELLANT] [ RESPONDENT ] FOR THE APPELLANT : S/SHRI ANIL KOCHAR, ADVOCATE ARYAN KOCHAR, ACA, LD.ARS FOR THE RESPONDENT : SHRI MD. GHYAS UDDIN, JCIT, LD.DR DATE OF HEARING : 01-05-2017 DATE OF PRONOUNCEMENT : 05 -05-2017 ORDER SHRI S.S.VISWANETHRA RAVI, JM: THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER DAT ED 30-11-2015 OF CIT(A),13, KOLKATA FOR THE ASSESSMENT YEAR 2007-08, WHEREIN HE CONFIRMED THE PENALTY OF RS.14,71,134/- IMPOSED BY THE AO U/S. 271(1)( C) OF THE ACT BY AN ORDER DT.17-03-2014. 2. THE BRIEF FACTS OF THE ISSUE ARE THAT THE ASSESS EE IS A FIRM AND ENGAGED IN THE BUSINESS OF MANUFACTURING OF AUTOMOB ILE PARTS. THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING A TOT AL INCOME OF RS.10,34,804/-. AGAINST WHICH UNDER SCRUTINY THE AO DETERMINED THE TOTAL INCOME AT RS.3,49,61,820/-. 3. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE CIT-A. THE CIT-A CONFIRMED SOME OF THE ADDITIONS AND SOME OF T HE ADDITIONS WERE PARTLY ALLOWED. THEREAFTER, THE AO INITIATED PENALT Y PROCEEDINGS BY ISSUING NOTICE ON 31-12-09 U/S. 274 R.W.S 271 OF THE ACT. THEREBY, HE IMPOSED A PENALTY OF RS.14,71,134/- U/SEC 271(1) ( C) OF T HE ACT. 2 ITA NO.59/KOL/2016 M/S. BAYNEE INDUSTRIES 4. BEFORE THE CIT-A THE ASSESSEE CONTENDED THAT THE AO DID NOT GIVE SUFFICIENT OPPORTUNITY TO ASSESSEE TO SUBSTANTIATE ITS CONTENTIONS. THE ASSESSEE ALSO CONTENDED THAT THE AO IMPOSED THE IMP UGNED PENALTY ONLY ON THE BASIS OF INCOME AS DETERMINED AFTER GIVING EFFECT TO THE 1 ST APPELLATE ORDER AND URGED TO DROP THE PENALTY PROC EEDING. THE CIT-A AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE CONFI RMED THE IMPUGNED PENALTY ON THE BASIS OF ADDITION MADE BY THE AO BY STATING AS UNDER:- IN THIS REGARD IT IS TO SUBMIT THAT THE INITIATIO N OF THE PENALTY HAS ALREADY BEEN MENTIONED IN THE PENALTY ORDER WHICH HAS BEEN DULY CONFIRMED BY THE CIT(A) AND THE HON'BLE ITAT. BEFORE PASSING THE PENALTY ORDER THE ASSESSING OFFICER HAS CLEARLY REFERRED IN THE 1 ST PARA OF BODY OF ORDER ABOUT THE GRAND AND ISSUES O N WHICH HE HAS IMPOSED PENALTY. THE ASSESSEE HAS OVER LOOKED THE FIRST PAR A OF THE ASSESSING OFFICER'S ORDER WHERE HE HAS CLEARLY MENTIONED AND MADE REFERENCE O F ORDER OF THE HON'BLE CIT(A) AND THE HON'BLE ITAT, KOLKATA. IT IS TO FURTHER POINT O UT THAT THE AO CORRECTLY MENTIONED ABOUT THE-INITIATION OF PENALTY BY THE EARLIER AO A T THE TIME OF ASSESSMENT ORDER BECAUSE HE CANNOT PROCEED FOR LEVYING PENALTY, IF IT IS NOT INITIATED DURING THE ASSESSMENT ORDER. MOREOVER AS STATED ABOVE ONCE IT IS HELD BY THE HON 'BLE SUPREME COURT THAT PENALTY IS CIVIL LIABILITY IT HARDLY LEAVES ANY SCOPE OF DESCR IPTION TO THE AO ONCE THE ORDER U/S 68, U/S. 69 AND ON BOGUS CLAIM OF EXPENSES ON WHICH DIS ALLOWANCE IS MADE. THE TDS DISALLOWED U/S. 40(A)(IA) IS NOT MERELY A DISALLOWA NCE BUT IT IS PROVED BOGUS ALSO. THE AO HAS CHOSEN TO DISALLOW IT U/S 40(A)(IA) HENCE IT IS ALSO A CONCEALMENT. (VIII) CONSIDERING THE ABOVE FACTS OF THE CASE I FIND NO INFIRMITY WITH THE ORDER OF THE AO AND THE SAME IS CONFIRMED AND THE APPEAL OF THE ASS ESSEE IS DISMISSED. 5. THE LD AR APART FROM REITERATING THE FACTS ALS O BROUGHT TO THE NOTICE OF THE BENCH THAT THE PENALTY NOTICE ISSUED U/S 274 READ WITH SECTION 271(1)(C ) OF THE ACT HAD NOT STRUCK OFF THE RELEVA NT PORTION BY SPECIFICALLY MENTIONING THE CHARGE OF OFFENCE COMMITTED BY THE A SSESSEE VIZ., WHETHER IT HAD CONCEALED THE PARTICULARS OF INCOME OR IT HA D FURNISHED INACCURATE PARTICULARS OF INCOME. THE LD. AR ARGUED THAT THE S HOW CAUSE NOTICE ISSUED FOR PENALTY PROCEEDINGS WAS DEFECTIVE AND IN SUPPOR T OF THIS, HE PLACED RELIANCE ON THE DECISION OF THE HONBLE KARNATAKA H IGH COURT IN THE CASE OF CIT VS SSAS EMERALD MEADOWS IN ITA NO. 380 OF 2015 DATED 23.11.2015 WHICH WAS LATER APPROVED BY THE HONBLE SUPREME COU RT BY DISMISSAL OF SPECIAL LEAVE PETITION (SLP) FILED BY THE REVENUE I N CC NO. 11485/2016 DATED 5.8.2016. IN RESPONSE TO THIS, THE LD DR VEH EMENTLY RELIED ON THE ORDER OF THE LD AO. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THAT THE PENALTY NOTICE DT. 31-12-09 U/S 274 R.W.S 271(1)(C ) OF THE ACT DOES NOT SPECIFY THE 3 ITA NO.59/KOL/2016 M/S. BAYNEE INDUSTRIES CHARGE OF OFFENCE COMMITTED BY THE ASSESSEE VIZ WHE THER IT HAD CONCEALED THE PARTICULARS OF INCOME OR IT HAD FURNISHED INACC URATE PARTICULARS OF INCOME. HENCE THE SAID NOTICE IS TO BE HELD AS DEF ECTIVE. NOW THE SHORT QUESTION THAT ARISES FOR CONSIDERATION IS AS TO WHE THER THE PENALTY COULD BE VALIDLY LEVIED BASED ON THE DEFECTIVE SHOW CAUSE NO TICE. THIS ISSUE HAS BEEN ADDRESSED BY THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS SSAS EMERALD MEADOWS IN ITA NO. 380 OF 2015 DATED 23.11.2015 WHICH IN TURN PLACED RELIANCE ON ANOTHER JUDGMENT OF THE SAME COURT IN THE CASE OF CIT VS MANJUNATHA COTTON AND GINNING FACTORY REPORT ED IN 359 ITR 565 (KAR). IN THE SAID DECISION, THEIR LORDSHIPS OF HONBLE K ARNATAKA HIGH COURT HELD THAT :- 3. THE TRIBUNAL HAS ALLOWED THE APPEAL FILED BY THE ASSESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 READ WITH S ECTION 271(1)(C ) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) TO BE BAD IN LAW AS IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1)(C ) OF THE ACT, THE PENALTY PROCEEDINGS HAD BEEN INITIATED I.E , WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE TRIBUNAL, WHILE ALLOWING THE APPEAL OF THE ASSE SSEE, HAS RELIED ON THE DECISION OF THE DIVISION BENCH OF THIS COURT RENDERED IN THE CASE O F COMMISSIONER OF INCOME TAX VS MANJUNATHA COTTON AND GINNING FACTORY REPORTED IN ( 2013) 359 ITR 565. 4. IN OUR VIEW, SINCE THE MATTER IS COVERED BY JUDG EMENT OF THE DIVISION BENCH OF THIS COURT, WE ARE OF THE OPINION, NO SUBSTANTIAL QUESTI ON OF LAW ARISES IN THIS APPEAL FOR DETERMINATION BY THIS COURT. THE APPEAL IS ACCORDI NGLY DISMISSED. 7. WE FIND THAT THE REVENUE HAD PREFERRED A SLP BEF ORE THE HONBLE SUPREME COURT AGAINST THIS JUDGMENT WHICH WAS DISMI SSED IN CC NO. 11485/2016 DATED 5.8.2016 BY OBSERVING AS UNDER:- UPON HEARING THE COUNSEL, THE COURT MADE THE FOLLOW ING ORDER DELAY CONDONED. WE DO NOT FIND ANY MERIT IN THIS PETITION. THE SPE CIAL LEAVE PETITION IS , ACCORDINGLY DISMISSED. PENDING APPLICATION, IF ANY, STANDS DISPOSED OF. 8. RESPECTFULLY FOLLOWING THE AFORESAID JUDICIAL P RECEDENTS, WE CANCEL THE PENALTY LEVIED OF RS.14,71,134/- U/SEC. 271(1) ( C) OF THE ACT AND CONFIRMED BY THE CIT-A. ACCORDINGLY THE GROUNDS RA ISED BY THE ASSESSEE ARE ALLOWED. 4 ITA NO.59/KOL/2016 M/S. BAYNEE INDUSTRIES 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. . ORDER PRONOUNCED IN THE OPEN COURT ON 05-05-2017 SD/- SD/- P.M.JAGTAP S.S. VISWANETHRA RAVI ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 05-05-2017 PP(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT M/S. BAYNEE INDUSTRIES C/O S.L KOCHAR, ADVOCATE, 86 CANNING STREET, KOLKATA-1. 2 RESPONDENT THE ACIT, CIRCLE-44,KOLKATA 3 GOVT PLACE (WEST), KOLKATA-1. 3 . THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .