M/s Santa Claus Apparels, Ludhiana V. ITO, Ludhiana

ITA 712/CHANDI/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68600 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 25-11-2013
• Assessment Year: 2003-2004
• Appeal Filed On: 14-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J S NAGAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A CHANDIGARH BEFORE SHRI T.R.SOOD ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.712/CHD/2013 ASSESSMENT YEAR : 2003-04 M/S SANTA CLAUS APPARELS, VS THE INCOME TAX OFFIC ER, B-1/1214, WARD VII (2), KAILASH CHOWK, LUDHIANA. CIVIL LINES, LUDHIANA. PAN : AAIFS-7452E (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : SHRI J.S.NAGAR DATE OF HEARING : 25.11.2013 DATE OF PRONOUNCEMENT : 23.12.2013 O R D E R PER SUSHMA CHOWLA, JM THE APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(APPEALS)-II, LUDHIANA DATED 12.04.2013 RELATING TO ASSESSMENT YEARS 2003-04 AGAINST THE PENALTY ORDER UNDER SECTION 271 (1)(C) OF THE INCOME-TAX ACT, 1961 ( 'THE ACT' FOR SHORT). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. CIT(APPEALS) HAS ERRED IN CONFIRMING PENALTY UNDER SECTION 271(1)(C) OF I.T.ACT, 1961 ON ADDITION OF RS. 45,00 0/- AS COMMISSION PAID TO PARTNER WHICH IS NOT ALLOWABLE U NDER SECTION 40(B) OF THE ACT VIDE PARA 3.3(III) OF THE ORDER DATED 12.4.2013. 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(APPEALS) HAS ERRED IN CONFIRMING THAT THE APPEL LANT HAS DELIBERATELY CONCEALED THE PARTICULARS OF INCOME AN D FURNISHED INACCURATE PARTICULARS OF ITS INCOME. 3. THAT THE IMPUGNED ORDER OF PENALTY PASSED BY THE CIT(APPEALS) IS BAD IN LAW AND FACTS OF THE CASE. 2 3. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS A GAINST THE LEVY OF PENALTY OF RS. 45,000/- UNDER SECTION 271(1)(C) OF THE ACT. 4. THE BRIEF FACTS RELATING TO THE ISSUE OF LEVY OF PENALTY UNDER SECTION 271(1)(C) ARE THAT WHILE COMPLETING THE ASSESSMENT, THE ASSESSING OFFICER HAD MADE THE FOLLOWING ADDITIONS: 1. TRADING ADDITION OF RS. 50,000/- FOR NON PRODUC TION OF OPENING & CLOSING STOCK. 2. ADDITION OF RS. 45,000/- AS COMMISSION PAID TO PART NER WHICH IS NOT A ALLOWABLE UNDER SECTION 40(B). 3. ADDITION OF RS. 1 LAC WHICH WAS PAID AS PENALTY FO R NON PRODUCTION OF H-FORM TO THE SALE TAX DEPARTMENT. 5. THE ASSESSING OFFICER LEVIED PENALTY FOR CONCEAL MENT IN RESPECT OF ALL THE THREE ITEMS AGAINST WHICH ADDITION WAS MADE IN THE HANDS OF THE ASSESSEE AND HENCE, PENALTY UNDER SECTION 271(1)(C) OF THE A CT WAS LEVIED AT RS. 73,192/-. THE CIT(APPEALS) RESTRICTED THE PENALTY IN RESPECT OF ADDITION OF RS. 45,000/- I.E. COMMISSION PAID TO PARTNERS WHICH WAS HELD TO BE NOT DEDUCTIBLE UNDER SECTION 40(B) OF THE ACT. IN RESP ECT OF TRADING ADDITION OF RS. 50,000/-, SINCE THE SAME WAS DELETED BY THE TRI BUNAL, THE PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT WAS ALSO CANCELLED. THE OTHER ADDITION OF RS.1,00,000/- ON ACCOUNT OF NON-PRODUCT ION OF H-FORM TO THE SALES TAX DEPARTMENT, THE ISSUE WAS SET ASIDE TO TH E FILE OF ASSESSING OFFICER AND CONSEQUENTLY, THE PENALTY RELATABLE TO THE SAID ADDITION WAS DELETED. HOWEVER, IN RESPECT OF THE ADDITION OF RS . 45,000/-, IT WAS NOTED BY THE CIT(APPEALS) THAT THE ASSESSEE HAD TRIED TO CLA IM AN EXPENDITURE WHICH WAS NOT PERMISSIBLE UNDER SECTION 40(B) OF THE ACT. IT WAS THUS, HELD THAT THE CLAIM WAS NOT ONLY INCORRECT BUT ALSO NOT BONAFIDE AND IN VIEW THEREOF, THE ASSESSEE WAS HELD TO HAVE FURNISHED INACCURATE PART ICULARS OF INCOME AND THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON THE S AME WAS RESTRICTED. 3 6. DESPITE SERVICE OF NOTICE, NONE APPEARED ON BEHA LF OF THE ASSESSEE AND BECAUSE OF THE SMALLNESS OF THE ISSUE, WE PROCEED T O DECIDE THE PRESENT APPEAL AFTER HEARING THE LD. DR FOR THE REVENUE. 7. ON CAREFUL CONSIDERATION OF THE RECORD, WE FIND THAT PENALTY UNDER SECTION 271(1)(C) OF THE ACT HAD BEEN IMPOSED IN TH E CASE OF THE ASSESSEE BECAUSE OF VARIOUS ADDITIONS MADE IN THE HANDS OF T HE ASSESSEE. HOWEVER, THE ONLY ADDITION SUSTAINED BY THE TRIBUNAL IN THE HANDS OF THE ASSESSEE WAS THE ADDITION MADE ON ACCOUNT OF COMMISSION BEING DI SALLOWABLE UNDER SECTION 40(B) OF THE ACT. THE SAID DISALLOWANCE WO RKED OUT BY THE ASSESSING OFFICER IS OF AN EXPENDITURE CLAIMED BY THE ASSESSE E. VARIOUS COURTS HAVE LAID DOWN THE PRINCIPLE THAT THE DISALLOWANCE OF AN EXPENDITURE DOES NOT ESTABLISH THE CASE OF THE REVENUE THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME AND DOES NOT ATTRACT LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT. IN THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND NO MERIT IN THE LEVY OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON THE AFORESAID ADDITION MADE BY THE ASSESSING OFFICER BY DISALLOWING THE COMMISSION PAID TO THE PARTNERS AS NOT ALLOWABL E UNDER SECTION 40(B) OF THE ACT. ACCORDINGLY, WE DIRECT THE ASSESSING OFFI CER TO DELETE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT. THE GRO UNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, ALLOWED. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 23 RD DAY OF DECEMBER, 2013. SD/- SD/- ( T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDI CIAL MEMBER DATED: .23 RD DECEMBER,2013 POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR ITAT,C HD.