Sheetal Wireless Technologies P Ltd, Pune V. Deputy Commissioner of Income-Tax, Cir- 06, Pune

ITA 591/PUN/2021

AI Insights

The case involves Sheetal Wireless Technologies Pvt. Ltd., which appealed against the penalty imposed by the Deputy Commissioner of Income Tax, Circle-6, Pune, under section 271(1)(c) for the assessment year 2015-16. The penalty was confirmed by the National Faceless Appeal Centre, Delhi. The main contention was the alleged furnishing of inaccurate particulars of income. The Tribunal examined the validity of the show cause notice and the application of Explanation-1 of section 271(1)(c), referencing judgments from the Supreme Court and the Bombay High Court. The Tribunal concluded that the notice was defective as it did not specify the exact nature of the charge, leading to the quashing of the penalty.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 136240 (ITAT-PUNE)
• Duration Of Justice: 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 30-11-2022
• Assessment Year: misc
• Appeal Filed On: 28-01-2022
• Other Referred Cases: Dilip N Shroff Vs JCIT, CIT Vs Samson Pericherry, Mohd. Farhan A. Shaikh Vs DCIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 271(1)(c); 250; 274

Judgement Text

॥ आयकर अपीलीय न्यायाधिकरण, पुणे “ए” न्यायपीठ, पुणे में ॥ ITAT-Pune Page 1 of 4 IN THE INCOME TAX APPELLATE TRIBUNAL, PUNE“A” BENCH, PUNE BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI G. D. PADMAHSHALI,ACCOUNTANT MEMBER आयकर अपऩल सं. / ITA No.591/PUN/2021 ननधधारण वषा / Assessment Year : 2015-16 Sheetal Wireless Technologies Pvt. Ltd., Flat No.17, 2 nd floor, Sheshadri Society, Rambaug Colony, Paud Road, Pune – 411 038 PAN : AAHCS4069D . . . . . . . अपऩलधथी / Appellant बनधम / V/s. DCIT, Circle-6, Pune . . . . . . . प्रत्यथी / Respondent द्वारा / Appearances Assessee by : Shri Kishor B Phadke Revenue by : Shri Ramnath P Murkunde सपनवधई की तधरऩख / Date of conclusive Hearing : 01/12/2022 घोषणध की तधरऩख / Date of Pronouncement : 01/12/2022 आदेश / ORDER PER G.D. PADMAHSHALI, AM; The present appeal of the assessee for the assessment year [for short “AY”] 2015-16 is assailed against the first appellate order of National Faceless Appeal Centre, Delhi [for short “CIT(A) /NFAC”] dt. 08/09/2021 passed u/s 250 of the Income-tax Act,1961 [for short “the Act”] which emanated out of penalty order [for short “PO”] of Dy. Commissioner of Income, Circle-6, Pune u/s 271(1)(c) of the Act dt.28/06/2018 [for short “AO”] u/s.143(3) of the Act dt. 08.12.2017. Sheetal Wireless Technologies Pvt.Ltd. ITA No.591/PUN/2021 AY: 2015-16 ITAT-Pune Page 2 of 4 2. In advancing the matter for adjudication, it is essential to reproduce grounds challenged by the appellant as under; “1. The learned CIT(A), NFAC, erred in law and on facts in confirming the penalty of Rs. 16,47,166/- levied u/s 271(l)(c) of the IT Act, 1961. 2. The learned CIT(A), NFAC, erred in law and on facts in confirming the levy of penalty for alleged furnishing inaccurate particulars of income. The learned CIT(A) ought to have appreciated that the appellant had not furnished any inaccurate particulars of income. 3. The learned CIT(A), NFAC, erred in law and on facts in confirming the penalty levied by the AO for alleged furnishing inaccurate particulars of income, by relying on Explanation-1 of section 271(1)(c) of the IT Act, 1961. The learned CIT(A) ought to have appreciated that Explanation- 1 is not applicable in case of "furnishing inaccurate particulars of income" and that the penalty is levied in a mechanical manner. 4. The learned CIT(A), NFAC, erred in law and on facts in confirming the penalty levied for addition on account of disallowance of provision for warranty. The learned CIT(A) failed to appreciate that the said provisions were written back in future years and offered to tax. 5. The learned CIT(A), NFAC, erred in law and on facts in confirming the penalty levied for addition on account of valuation of closing stock. The learned CIT(A) ought to have appreciated that the addition was uncalled for in first place and further, closing stock is carried forward to next year as opening stock, and hence, there is no tax arbitrage.” Sheetal Wireless Technologies Pvt.Ltd. ITA No.591/PUN/2021 AY: 2015-16 ITAT-Pune Page 3 of 4 3. The sole issue under adjudication relates to survival of penalty levied u/s 271(1)(c) on the premise of erratic and undetermined allegation sought to be adjudicated by the present appeal. 4. After hearing to rival contentions of both the parties; and subject to the provisions of rule 18 of the Income Tax Appellate Tribunal Rules, 1963 [for short “ITAT, Rules”], perused the copy of SCN issued u/s 274 r.w.s. 271(1)(c),case laws relied upon by the appellant as well the respondent and duly considered the facts of the case in the light of settled legal position forewarned to either parties. 5. In the light of judgement rendered by Hon'ble Supreme Court in “Dilip N Shroff Vs JCIT” reported at 291 ITR 519 (SC), and of Hon'ble Jurisdictional High Court of Bombay, in plethora of cases inter-alia “CIT Vs Samson Pericherry” reportedin 392 ITR 4, and recently in “Mohd. Farhan A. Shaikh Vs DCIT” reported at 434 ITR 1, we are on the considered view that, since the provision of section 271(1)(c) is calamitous, albeit commercial, consequences, and mandatory, hence brooks no trifling or dilution therewith, as a result in the instant case the SCN dt. 08/12/2017 was issued u/s 274 r.w.s. 271(1)(c) of the Act without specifying any limb or charge, is invalid and untenable in the eyes of law, consequently we set aside the first appellate order and quashed the order of penalty passed u/s 271(1)(c) of the Act, being bad in law. Sheetal Wireless Technologies Pvt.Ltd. ITA No.591/PUN/2021 AY: 2015-16 ITAT-Pune Page 4 of 4 6. Resultantly, the appeal of the appellant assessee is allowed in terms of aforestated observation. In terms of rule 34 of ITAT Rules, 1963 the order ispronounced in the open court on this Tuesday 01 st day of December, 2022. -S/d- -S/d- -S/d- -S/d- S.S. GODARA G. D. PADMAHSHALI JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / PUNE ; दिन ांक / Dated : 01 st day of December, 2022. Ashwini आदेश की प्रधिधलधप अग्रेधिि / Copy of the Order forwarded to : 1. अपऩलधथी / The Appellant. 2.प्रत्यथी / The Respondent. 3. The NFAC, Delhi (India) 4. The Pr.CIT(CPC) Bangaluru (Ka-India) 5. नवभधगऩय प्रनतनननध, आयकर अपऩलऩय न्यधयधनधकरण, पपणे “ए” बेंच, पपणे / DR, ITAT, Pune “A” Bench, Pune. 6. गधर्ाफ़धइल / Guard File. आदेशधनपसधर / BY Order, वररष्ठ ननजऩ सनचव / Sr. Private Secretary आयकर अपऩलऩय न्यधयधनधकरण, पपणे / ITAT, Pune.