M/s. Rathi Industries Limited, New Delhi V. DCIT, New Delhi

ITA 6325/DEL/2014

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0080 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2010-2011
• Appeal Filed On: 19-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RINKO SINGH
• Assessee Lawyers: ASHISH GOEL S; SSH VED JAI N
• Keywords: Depreciation; Initiation of penalty proceedings; TDS
• Section: 271(1)(c); 80G; 250

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL, DELHI BENCH F, NEW DELHI BEFORE : SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 6325/DEL/2014 ASSESSMENT YEAR: 2010-11 RATHI INDUSTRIES LIMITED, A - 24/6, MOHAN CO-OPERATIVE INDUSTRIAL ESTATE, NEW DELHI PAN-AAACR0462Q (APPELLANT) VS. DCIT, CIRCLE 15(1), NEW DELHI (RESPONDENT) APPELLANT BY S/SH. VED JAIN & ASHISH GOEL, ADVOCATES RESPONDENT BY SMT. RINKO SINGH, ADDL. CIT/DR ORDER PER L.P. SAHU, A.M.: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(A)- XVIII, NEW DELHI FOR THE ASSESSMENT YEAR 2010-11, C HALLENGING THE PENALTY IMPOSED AND SUSTAINED U/S. 271(1)(C) OF THE INCOME- TAX ACT, 1961. 2. THE BRIEF FACTS OF THE CASE ARE THAT BASED ON TH E FOLLOWING ADDITIONS MADE IN REGULAR ASSESSMENT OF ASSESSEE, THE ASSESSI NG OFFICER IMPOSED A PENALTY OF RS.17,76,910/- U/S. 271(1)(C) OF THE ACT AGAINST THE ASSESSEE : DISALLOWANCE ON SALES PROMOTION EXPENSES : RS.10,7 4,750/- DISALLOWANCE OF DUTIES AND TAXES : RS.6,26,752/- DISALLOWANCE OF DEPRECIATION ON ADDITION TO DATE OF HEARING 09.05.2019 DATE OF PRONOUNCEMENT 24.05.2019 ITA NO. 6325/DEL/2014 2 PLANT AND MACHINERY : RS.8,47,495/- DISALLOWANCE ON ACCOUNT OF NON-DEDUCTION OF TDS : RS.4,54,101/- DISALLOWANCE OF DONATION : RS.22,14,653/- THE PENALTY SO IMPOSED AGAINST THE ASSESSEE WAS AFF IRMED BY THE LD. CIT(A) IN APPEAL FILED BY THE ASSESSEE. AGGRIEVED BY THE IMPU GNED ORDER, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. THE LD. AR OF THE ASSESSEE CONTENDED THAT ALL TH E MATERIAL FACTS PERTAINING TO ABOVE ADDITIONS WERE UNFOLDED BEFORE THE ASSESSING OFFICER IN RESPONSE TO VARIOUS QUERIES MADE BY THE ASSESSING O FFICER AND ALL THE DETAILS/EVIDENCES WERE FILED. HOWEVER, THE ASSESSIN G OFFICER DID NOT CONSIDER THEM IN RIGHT PERSPECTIVE, LEADING TO ADHOC ADDITIO NS. IT IS STATED THAT SIMPLY BECAUSE THE ABOVE ADDITIONS WERE NOT CHALLENGED BY ASSESSEE, THE ASSESSEE CANNOT BE SADDLED WITH PENALTY U/S. 271(1)(C) UNLES S THE ASSESSING OFFICER MAKES OUT A GOOD CASE FOR CONCEALMENT OF PARTICULAR S OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE LD. AUTHOR IZED REPRESENTATIVE ALSO PUT FORTH LEGAL ASPECT OF THE CASE THAT THE PENALTY PROCEEDINGS ARE VITIATED, AS THE NOTICE FOR PENALTY DOES NOT STATE THE SPECIFIC CHARGE AS TO WHETHER THE PENALTY IS PROPOSED FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING INACCURATE PARTICULARS OF INCOME. IN SUPPORT, THE L D. AUTHORIZED REPRESENTATIVE HAS PLACED RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN CIT VS. SSAS EMERALD MEADOWS (2016) 73 TAXMANN. COM 248 (SC), DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNATHA COTTON & GINNING FACTORY (2013) 35 TAXMANN.COM 250 (KARNATAK A) AND SEVERAL OTHER ITA NO. 6325/DEL/2014 3 DECISIONS OF ITAT DELHI BENCHES. THE LD. AR HAS ALS O FILED A WRITTEN SYNOPSIS, WHICH IS PLACED ON RECORD. 4. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDE RS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE LD. AUTHORITIES BELOW WERE QUITE JUSTIFIED TO IMPOSE PENALTY U/S. 271(1)(C) OF THE ACT, AS THE AS SESSEE COULD NOT BE ABLE TO SUBSTANTIATE THE CLAIMS MADE BEFORE THE ASSESSING O FFICER. THEREFORE, THE PENALTY HAS RIGHTLY BEEN IMPOSED FOR FURNISHING INA CCURATE PARTICULARS OF INCOME. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE GON E THROUGH THE MATERIAL ON RECORD AS WELL AS VARIOUS DECISIONS. ON GOING THROUGH THE ASSESSMENT ORDER, WE NOTE THAT IT IS A CASE OF DISA LLOWANCES MADE BY THE ASSESSING OFFICER AFTER REJECTING REPLY OF ASSESSEE AND VARIOUS DETAILS/EVIDENCES FILED BEFORE THE ASSESSING OFFICE R. CERTAIN EXPENSES HAVE BEEN DISALLOWED ON ADHOC BASIS WHEREAS IN RESPECT O F SOME OTHER EXPENSES, THE ADDITIONS HAVE BEEN MADE ON ACCOUNT OF NECESSAR Y DETAILS NOT BEING AVAILABLE. THE ADDITION ON ACCOUNT OF DONATION HAS BEEN MADE FOR WANT OF 80G CERTIFICATE. THUS, WE DO NOT FIND IT A FIT CASE FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS THER EOF. IN VIEW OF THESE FACTS, IT CANNOT BE SAID THAT THERE WAS ANY CONCEALMENT ON TH E PART OF THE ASSESSEE. THE ASSESSEE HAVING DISCLOSED THE MATERIAL FACTS WH ICH HAVE NOT BEEN FOUND FALSE, NO PENALTY IS LEVIABLE. ITA NO. 6325/DEL/2014 4 6. IT IS FURTHER NOTED THAT THE NOTICE ISSUED FOR I MPOSITION OF PENALTY DOES NOT STATE SPECIFICALLY AS TO FOR WHICH CHARGE WHE THER CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME- THE IMPUGNED PENALTY WAS PROPOSED TO BE IMPOSED. THIS L APSE ON THE PART OF ASSESSING OFFICER, IN OUR CONSIDERED OPINION, GOES TO VITIATE THE INITIATION OF PENALTY PROCEEDINGS, AS THE NOTICE SHOULD SPECIFICA LLY STATE THE CHARGES, AS CONTEMPLATED U/S. 271(1)(C) OF THE IT ACT. WE, THE REFORE, ARE IN AGREEMENT WITH THE CONTENTION OF THE ASSESSEE THAT NON-SPECIF ICATION OF THE CHARGE VITIATES THE ENTIRE PENALTY PROCEEDINGS GOES TO VIT IATE THE PENALTY PROCEEDINGS. FOR THIS VIEW WE STAND FORTIFIED BY THE DECISION OF HONBLE APEX COURT IN CIT VS. SSAS EMERALD MEADOWS, CC NO. 11485/2016 DATED 05.08.2016, WHERE THE SLP FILED BY THE REVENUE AGAINST THE DELETION OF PE NALTY BY THE HONBLE HIGH COURT HAS BEEN DISMISSED. SIMILAR VIEW HAS BEEN TAK EN BY THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNA THA COTTON & GINNING FACTORY, 359 ITR 565 (KAR), WHICH HAS ALSO BEEN FOL LOWED IN VARIOUS OTHER DECISIONS OF ITAT. THUS, RESPECTFULLY RELYING ON T HE AFORESAID DECISIONS, WE FIND NO JUSTIFICATION TO SUSTAIN THE PENALTY IMPOSE D AGAINST THE ASSESSEE. ACCORDINGLY, THE PENALTY IMPOSED IS DELETED ON THIS LEGAL ASPECT OF THE CASE TOO. 7. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24.05.2019. SD/- SD/- (AMIT SHUKLA) (L.P. S AHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 24,05,2019 *AKS*