The DCIT, Central Circle-2(2), Ahmedabad V. M/s. Dishman Biotech Ltd., Ahmedabad

ITA 60/AHD/2022

AI Insights

The case involves an appeal by the Department against the decision of the CIT(A) which had deleted a penalty imposed on Dishman Biotech Ltd. under section 271(1)(c) of the Income Tax Act. The penalty was originally imposed following additions made during the assessment proceedings for the year 2010-11. These additions were later contested and deleted in quantum proceedings by the ITAT, which led to the CIT(A)'s decision to delete the penalty. The Department's appeal to the ITAT challenged the CIT(A)'s decision, arguing that the penalty should stand despite the deletion of the quantum additions, as the matter was pending before the High Court.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 131554 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 16-04-2023
• Assessment Year: 2010-2011
• Appeal Filed On: 24-02-2022
• Other Referred Cases: CIT v. Ajanta Pharma Ltd., CIT v. Atul Ltd., Smt. Jayashree Jayakar Mohanka
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Tax effect; Set aside
• Section: 271(1)(c); 143(3); 10B

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “D” BENCH Before: Shri Waseem Ahmed, Accountant Member And Shri Siddhartha Nautiyal, Judicial Member Th e DCIT, Central Circle-2(2), Ah medabad (Appellant) Vs Dish man Biotech Ltd. 2 n d Floor, Bhadra Raj Chamber s, Swasti k Cross Road, Nav rangpu ra, Ah med abad-3800 09 PAN: AACCS0 988C (Resp ondent) Asses see b y : Shri Biren Shah, A. R. Revenue by : Shri Pravin Verma, Sr. D. R. Date of hearing : 17-04 -2023 Date of pronouncement : 21-04 -2023 आदेश /ORDER PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:- This is an appeal filed by the Revenue against the order of the ld. Commissioner of Income Tax (Appeals)-12, Ahmedabad, in proceeding u/s. 271(1)(c) vide order dated 08/12/2021 passed for the assessment year 2010- 11. 2. The Department has taken the following grounds of appeal:- ITA No. 60 /Ahd/2022 Assessment Year 2010-11 I.T.A No. 60/Ahd/2022 A.Y. 2010-11 Page No. DCIT vs. M/s. Dishman Biotech Ltd. 2 “1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the penalty u/s. 271(l)(c) of the Act amounting to Rs. 91,25,938/-, although the revenue's appeal against quantum deletion is pending before the Hon'ble High Court. 2. The appellant prays that the order of the Ld. CIT(A) on the above ground be set aside and the penalty levied by the AO may kindly be restored. Total tax effect 91,25,938/-.” 3. The short controversy for consideration before us is whether penalty imposed u/s. 271(1)(c) of the Act can be imposed in case the appellate authority has deleted the additions made by the ld. Assessing Officer in quantum proceedings. 4. The brief facts of the case are that the assessee company filed its return of income for assessment year 2010-11 declaring total income of Rs. Nil. The assessment u/s. 143(3) r.w.s. 144(c) of the Act was completed on 14-03-2014 assessing total income at Rs. 4,88,81,070/- by making following additions:- 1 Addition on account of deficit/excess consumption of raw material Rs. 2,20,10,405/- 2 Addition on account of late payment of PF/ESIC Rs. 60,335/- 3 Previous years loss 11,02,365/- 4 Addition on account of prior period income 4,29,490/- 5 Adjustment made in international transaction u/s. 92 2,33,75,788/- 6 Disallowance u/s. 10B Rs. 19,02,690/- 5. The assessee preferred appeal against the aforesaid additions before the ld. CIT(A), who partly allowed the appeal of the assessee. Thereafter, I.T.A No. 60/Ahd/2022 A.Y. 2010-11 Page No. DCIT vs. M/s. Dishman Biotech Ltd. 3 the ld. Assessing Officer imposed penalty on the assessee u/s. 271(1)(c) of the Act amounting to Rs. 91,25,938/- with the following observations:- “5. In view of the above, I am satisfied that the assessee has furnished inaccurate particulars of income and thereby concealed its income. The assessee has furnished inaccurate particulars of income to the extent of Rs.2,68,48,890/-. Therefore, minimum penalty leviable @ 100% of tax sought to be evaded comes to Rs. 91,25,938/- and maximum penalty @ 300% of tax sought to be evaded comes to Rs.2,73,77,814/-. Therefore, looking to the facts of the case, I hereby levy minimum penalty of Rs.91,25,938/- u/s.271(l)(c) of the Act.” 6. The assessee preferred appeal before the ITAT Ahmedabad against the quantum additions and the ITAT vide ITA No. 1947/Ahd/2015 (appeal by assessee) and ITA No. 1909/Ahd/2015 (appeal by Revenue) dated 01-01- 2019 decided the appeal in favour of the assessee and each ground of appeal on the issues on which penalty was imposed was either sent by the ITAT to the Assessing Officer for de-novo consideration or ITAT deleted the additions and thus allowed the appeal in favour of the assessee. In assessee’s appeal against the 271(1)(c) penalty order before ld. CIT(A), he allowed the appeal of the assessee on the ground since ITAT Ahmedabad vide its order dated 01-01-2019 has allowed the complete relief to the assessee in quantum proceedings, the penalty imposed by the ld. Assessing Officer u/s. 271(1)(c) cannot be sustained. Accordingly, the ld. CIT(A) allowed the appeal of the assessee with the following observations:- “5.2 Since the quantum appeal has been decided in favour of the appellant by the ITAT and no additions made by AO and confirmed by the CIT(A) survive, the penalty u/s 271(1)(c) has become infructuous. Hence the AO is directed to delete the penalty of Rs 91,25,938/- imposed u/s 271(1)(c) of the Act vide his order dated 29/03/201. Accordingly, grounds of appeal 3 to 16 are allowed.” 7. The assessee in appeal before us against the aforesaid order passed by ld. CIT(A) allowing the appeal of the assessee. The contention of the I.T.A No. 60/Ahd/2022 A.Y. 2010-11 Page No. DCIT vs. M/s. Dishman Biotech Ltd. 4 Department before us is that since the Department has filed appeal against the ITAT order before the High Court in which the ITAT had allowed the appeal of the assessee in quantum proceedings, the ld. CIT(A) has erred in law and in fact in deleting the penalty imposed u/s. 271(1)(c) of the Act. In response, the counsel for the assessee submitted that since the ITAT in assessee’s own case had deleted the quantum additions, penalty u/s. 271(1)(c) cannot survive. 8. We have heard the rival contention and perused the material on record. We observe that ld. CIT(A) has allowed the appeal of the assessee against the order of penalty u/s. 271(1)(c) of the Act on the ground that since the entire quantum additions have been deleted by ITAT in assessee’s own case, the penalty imposed u/s. 271(1)(c) of the Act does not survive. In our considered view, it is a well settled law, once the quantum additions have itself been deleted by the appellate authority, there is no scope of imposing penalty for concealment of income or furnishing of inaccurate particulars of income u/s. 271(1)(c) of the Act. In the case of CIT v. Ajanta Pharma Ltd. 105 taxmann.com 161 (SC), the Supreme Court held that where High Court upheld Tribunal's order deleting penalty imposed on assessee under section 271(1)(c) on ground that impugned additions had been deleted on merits, SLP filed against said decision was to be dismissed. In the case of CIT v. Atul Ltd. 44 taxmann.com 320 (Gujarat), the Gujarat High Court held that where in course of appellate proceedings, Revenue Authorities admitted that quantum addition on account of transfer pricing difference which was basis for imposition of penalty had already been deleted, impugned penalty order based on said addition also deserved to be set aside. I.T.A No. 60/Ahd/2022 A.Y. 2010-11 Page No. DCIT vs. M/s. Dishman Biotech Ltd. 5 In the case of Smt. Jayashree Jayakar Mohanka 146 taxmann.com 321 (Calcutta), the Calcutta High Court held that where additions made in assessment order on basis of which penalty for concealment is levied, are deleted, there remains no basis at all for levying penalty for concealment. Accordingly, we are of the considered view that the ld. CIT(A) has not erred in law and in facts in deleting penalty imposed u/s. 271(1)(c) of the Act in the instant set of facts. Accordingly, the appeal of the Department is dismissed. 9. In the result, the appeal of the Department is dismissed. Order pronounced in the open court on 21-04-2023 Sd/- Sd/- (WASEEM AHMED) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad : Dated 21/04/2023 आदेश क त ल प अ े षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/ आदेश से, उप/सहायक पंजीकार आयकर अपील य अ धकरण, अहमदाबाद