Sandhya Dyes Chemicals Pvt. Ltd., Sarigam V. Deputy Commissioner of Income Tax, Vapi Circle, Vapi

ITA 687/SRT/2018

• Counselvise Citation: [2019] 129 COUNSELVISE.COM (IT) 9943 (ITAT-SURAT)
• Duration Of Justice: 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 18-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P S CHOUDHARY
• Assessee Lawyers: A GOPALAKRISHNAN
• Keywords: Deemed dividend
• Section: 271(1)(c); 143(3); 2(22)(e)

Judgement Text

SANDHYA DYES & CHEMICAL PVT. LTD VS. DY. COMMISSIONER OF INCOME TAX, VAPI /ITA NO.687/SRT/2018/A.Y. 2011-12 PAGE 1 OF 3 , , IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT , . . , BEFORE SMT.DIVA SINGH, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER . . ./ I.T.A. NO.687/SRT/2018 / ASSESSMENT YEAR : 2011-12 SANDHYA DYES & CHEMICAL PVT. LTD (ERSTWHILE SANDHYA DYES & CHEMICALS) 1073-B, SARIGAM-396195 [PAN: AAXCS 1763 N] VS. DEPUTY COMMISSIONER OF INCOME TAX, VAPI CIRCLE, VAPI APPELLANT /RESPONDENT /ASSESSEE BY SHRI A. GOPALAKRISH NAN CA /REVENUE BY SHRI P.S.CHOUDHARY SR.DR / DATE OF HEARING: 09 .01.2019 /PRONOUNCEMENT ON 10 .01.2019 /O R D E R PER O.P.MEENA, AM: 1. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE DY. COMMISSIONER OF INCOME TAX (APPEALS), VALSAD, ORDER DATED 20.08.2018, FOR THE ASSESSMENT YEAR 2011-12. 2. THE GROUND RAISED BY THE ASSESSEE READ AS UNDER : 1. THE ORDER IMPOSING PENALTY U/S. 271(1)(C) OF THE ACT IS CONTRARY TO THE FACTS OF THE CASE AND PREJUDICIAL TO THE LAW. THE APPELLANT HAS NEITHER CONCEALED ITS INCOME NOR SUBMITTED ANY INACCURATE PARTICULARS OF INCOME AND THE ACTION OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS CONTRARY TO THE FACTS OF THE CASE AND LAW AND DESERVES TO BE DELETED. 2. ON APPRECIATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE LD. ASSESSING OFFICER IMPOSING PENALTY U/S.271(1)(C) ON SANDHYA DYES & CHEMICAL PVT. LTD VS. DY. COMMISSIONER OF INCOME TAX, VAPI /ITA NO.687/SRT/2018/A.Y. 2011-12 PAGE 2 OF 3 THE ADDITION MADE ON ACCOUNT OF SUNDRY CREDITORS TO THE TUNE OF RS.82,523/-. 3. ON APPRECIATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE LD. ASSESSING OFFICER IN IMPOSING PENALTY U/S. 271(1)(C) FOR BOTH CONCEALMENT AS WELL AS FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE ACTION OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS CONTRARY TO THE FACTS OF THE CASE AND LAW AND DESERVES TO BE DELETED. 4. ON APPRECIATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS GRIEVOUSLY ERRED IN ENHANCING THE PENALTY IMPOSED BY THE LD. ASSESSING OFFICER BY CONSIDERING THE ADDITION MADE ON ACCOUNT OF DEEMED DIVIDEND U/S. 2(22)(E) OF THE ACT TO THE TUNE OF RS.17,50,000/- AS FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE ACTION OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS CONTRARY TO THE FACTS OF THE CASE AND LAW AND DESERVES TO BE DELETED. 5. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, MODIFY OR ALTER THE ABOVE GROUNDS OF APPEAL AT ANY STAGE OF APPELLATE PROCEEDINGS. 6. THE APPELLANT HUMBLY PRAYS THAT THE APPEAL BE ALLOWED IN TOTO. 3. THE LD. COUNSEL FOR THE ASSESSEE, AT THE VERY OUTSET, CONTENDED THAT THE PENALTY HAS EMANATED FROM AN ASSESSMENT ORDER PASSED UNDER 143(3) OF THE ACT DATED 18.03.2014. THE PENALTY WAS LEVIED IN RESPECT OF ADDITION OF SUNDRY CREDITOR OF RS. 82,523 AND ADDITION OF RS. 17,50,000 ON ACCOUNT OF DEEMED DIVIDEND U/S. 2(22)(E) OF THE ACT. THESE ADDITIONS HAVE BEEN DELETED BY THE TRIBUNAL IN ORDER DTD. 04.10.2018 VIDE PARA 8 AND 14 IN I.T.A.NO. 3225/AHD/2015/SRT. THE APPEAL OF THE ASSESSEE HAS BEEN ALLOWED BY THE TRIBUNAL ON THIS ISSUE VIDE ORDER DATED 04.10.2018. THE LEARNED COUNSEL FOR THE ASSESSEE HAS PLACED ON RECORD COPY OF THE TRIBUNAL'S ORDER. THE TRIBUNAL HAS DELETED THE ADDITION SO MADE BASIS OF PENALTY. THEREFORE, NO PENALTY LEVIABLE AS ADDITION MADE BY THE AO STANDS DELETED. 4. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GONE THROUGH THE RECORD CAREFULLY. WE FIND THAT SUB-CLAUSE (III) OF SECTION 271(1)(C) PROVIDES MECHANISM FOR QUANTIFICATION OF PENALTY. IT CONTEMPLATES THAT IN THE CASES REFERRED TO IN CLAUSE (C) OF SECTION 271(1), IN ADDITION TO TAX, IF ANY, PAYABLE BY AN ASSESSEE, A SUM WHICH SHALL NOT BE LESS THAN, BUT WHICH SHALL NOT EXCEED THREE TIMES OF THE AMOUNT OF TAX SOUGHT TO BE EVADED BY REASON OF THE CONCEALMENT OF PARTICULARS OF HIS INCOME OR SANDHYA DYES & CHEMICAL PVT. LTD VS. DY. COMMISSIONER OF INCOME TAX, VAPI /ITA NO.687/SRT/2018/A.Y. 2011-12 PAGE 3 OF 3 THE FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME CAN BE DIRECTED TO BE PAID BY AN ASSESSEE. IN OTHER WORDS, PENALTY WOULD BE COMPUTED ON THE ADDITIONS MADE TO THE INCOME OF AN ASSESSEE EITHER EQUIVALENT TO THE TAX SOUGHT TO BE EVADED ON THOSE ADDITIONS OR UP TO THREE TIMES OF THE TAX SOUGHT TO BE EVADED. SINCE THE QUANTUM ADDITION HAS BEEN DELETED BY THE TRIBUNAL, THERE IS NO BASIS TO SAY THAT THE ASSESSEE HAS EVADED THE TAXES. RESULTANTLY, THERE IS NO ADDITION TO THE INCOME OF THE ASSESSEE ON WHICH PENALTY COULD BE COMPUTED. THUS, THE ISSUE ON WHICH PENALTY IS LEVIED IS NO LONGER SURVIVED; THEREFORE, PENALTY LEVIED IS NOT MAINTAINABLE AS OF NOW. ACCORDINGLY, WE DELETE THE PENALTY SO LEVIED. CONSIDERING THIS ASPECT, WE ALLOW THE APPEAL OF THE ASSESSEE AND QUASH THE PENALTY ORDER. CONSEQUENTLY, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. 6. THE ORDER PRONOUNCED IN THE OPEN COURT ON 10.01.2019 SD/- SD/- ( /DIVA SINGH) ( . . /O.P.MEENA) ( /JUDICIAL MEMBER) ( /ACCOUNTANT MEMBER) / SURAT, DATED : 10 JANUARY, 2019/ SUBHANKAR SAMANTA, PS COPY OF ORDER SENT TO- ASSESSEE/AO/PR. CIT/ CIT (A)/ ITAT (DR)/GUARD FILE OF ITAT. BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR, SURAT