DCIT, CIR-7(2), KOLKATA, Kolkata V. M/s Ural India Ltd., Kolkata

ITA 718/KOL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0760 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 6 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 22-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DAVID Z CHAWNGTHU
• Keywords: Procedural lapse
• Section: 2

Judgement Text

1 ITA NOS.762 & 718/KOL/2015 URAL INDIA LTD. AYS- 2010-11 , C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA () BEFORE . , /AND . . , ) [BEFORE SHRI J. SUDHAKAR REDDY, AM & SHRI A. T. VA RKEY, JM] I.T.A. NO. 762/KOL/2015 ASSESSMENT YEAR: 2010-11 URAL INDIA LTD. (PAN:AAACU6182G) VS. DEPUTY COMMISS IONER OF INCOME-TAX, CIRCLE-7, KOLKATA. APPELLANT RESPONDENT & I.T.A. NO. 718/KOL/2015 ASSESSMENT YEAR: 2010-11 DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-7(2), KOLKATA. VS. URAL INDIA LTD. APPELLANT RESPONDENT DATE OF HEARING 07.12.2017 DATE OF PRONOUNCEMENT 21.12.2017 FOR THE ASSESSEE SHRI SOMNATH GHOSH, ADVOCATE FOR THE REVENUE SHRI DAVID Z. CHAWNGTHU, ADDL. CIT, SR. DR ORDER PER SHRI A.T.VARKEY, JM THESE CROSS APPEALS FILED BY THE ASSESSEE AND THE R EVENUE AGAINST THE ORDER OF LD. CIT(A)-3, KOLKATA DATED 31.03.2015 FOR AY. 2010-11 AGAINST THE PENALTY IMPOSED U/S. 271(1)(C) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 2. BRIEFLY STATED FACTS AS OBSERVED BY THE AO ARE THAT IN THE ASSESSMENT ORDER THE AO MADE THREE DISALLOWANCES I.E. COMMISSION OF RS. 57 LACS IN RESPECT OF SALE OF 57 VEHICLES, SALES PROMOTION EXPENDITURE OF RS.6,54,177/- WHICH WAS STATED TO BE INCURRED FOR PURCHASES OF GOLD COINS GIVEN TO THE PURCHASER OF THE VEHICLE S, RS. 97,940/- AND RS.43,000/- DEBITED UNDER THE HEAD SALES PROMOTION EXPENSES WERE ALSO D ISALLOWED DUE TO NON-FURNISHING OF THE RELEVANT DETAILS AND THE DISALLOWANCE TO RS.13,58,5 57/- INCURRED ON FOREIGN TRAVEL BY THE DIRECTORS. DUE TO LACK OF RELEVANT DETAILS AND EVI DENCE AND IN THE ABSENCE OF PROPER EXPLANATION, THE AO DISALLOWED THE EXPENSES AND INI TIATED THE PENALTY PROCEEDINGS U/S. 2 ITA NOS.762 & 718/KOL/2015 URAL INDIA LTD. AYS- 2010-11 271(1)(C) OF THE ACT AND IMPOSED PENALTY OF RS.48,5 3,570/- BEING 200% OF THE TAX SOUGHT TO BE EVADED. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEF ORE THE LD. CIT(A), WHO RESTRICTED THE PENALTY AT 100% OF THE TAX SOUGHT TO BE EVADED AND GAVE PARTIAL RELIEF TO THE ASSESSEE. AGGRIEVED, BOTH THE ASSESSEE AS WELL AS THE REVENUE IS IN APPEAL BEFORE US. 3. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO THE NOTICE U/S. 274 OF THE ACT R.W.S. 271 OF THE ACT DATED 08.03.2013 SERV ED ON THE ASSESSEE WHEREIN WE NOTE THAT THE AO HAS NOT STRUCK DOWN THE LIMB OF CHARGE/DEFAU LT I.E. CONCEALED THE PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF IN COME FOR WHICH THE PENALTY WAS INITIATED AGAINST THE ASSESSEE WHICH ACCORDING TO THE LD. AR, MAKE THE NOTICE DEFECTIVE AND, THEREFORE, THE NOTICE WAS INVALID AND PENALTY LEVIE D IS NOT SUSTAINABLE IN THE EYES OF LAW AND RELIED ON THE DECISION OF HONBLE KARNATAKA HIGH CO URT IN THE CASE OF CIT VS MANJUNATHA COTTON AND GINNING FACTORY REPORTED IN (2013) 359 I TR 565 (KAR.) AND POINTED OUT THAT AGAINST THE SAID ORDER OF HONBLE HIGH COURT THE RE VENUE PREFERRED SLP BEFORE THE HONBLE SUPREME COURT WHICH WAS DISMISSED. ON THE OTHER HAN D, LD. CIT, DR VEHEMENTLY OPPOSED THE SAID PLEA OF THE ASSESSEE AND CONTENDED THAT IT IS CLEARLY DISCERNIBLE THAT A TICK MARK HAS BEEN PUT ON ONE OF THE FAULTS SPECIFIED THEREIN SO, IF THE ASSESSEE HAD ANY GRIEVANCE HE SHOULD HAVE TAKEN UP THE MATTER WITH THE AO DURING PENALTY PROCEEDINGS AND GET IT CLARIFIED. THEREFORE, ACCORDING TO THE LD. DR, THERE IS NO QUE STION OF INVALIDITY OF THE NOTICE. HE, THEREFORE, RELIED ON THE FOLLOWING DECISIONS: I) DR. SYAMAL BARAN MONDAL VS. CIT (2011) 244 CTR 6 31 (CAL), II) JAYSONS INFRASTRUCTURE INDIA PRIVATE LTD. VS. I TO TS 5873 ITAT 2017 (BANGALORE), III) TRISHUL ENTERPRISES VS. DCIT ITA NOS. 384 * 38 5/MUM/2014 FOR AYS. 2006-07 & 2007-08 DT. 10.02.2017, IV) M/S. MAHARAJ GARAGE & CO. VS. CIT JUDGMENT DATE D 22.08.2017, V) EARTHMOVING EQUIPMENT SERVICE CORPORATION VS. DC IT (2017) 84 TAXMANN.COM 51 AND VI) DECISION OF ITAT, JAIPUR IN ITA NO. 820/JP/2016 IN AIREN METALS PVT. LTD. DT. 29.09.2017. AND LD DR HAS FILED HIS WRITTEN SUBMISSION STATING THAT THE PENALTY CANNOT BE STRUCK DOWN FOR MERELY A PROCEDURAL LAPSE, LIKE IN THIS CASE. 3 ITA NOS.762 & 718/KOL/2015 URAL INDIA LTD. AYS- 2010-11 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT SINCE THE NOTICE HAS BEEN ISSUED FOR BOTH THE LIMBS OF THE FAULTS HAVING CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME AND ONLY A TICK MARK HAS BEEN PUT WHICH IS APPLICAB LE FOR BOTH THE FAULTS/LIMBS, IT DOES NOT CLEARLY CALL UPON THE ASSESSEE AS TO WHICH FAULT FO R WHICH HE IS BEING PROCEEDED AGAINST FOR IMPOSITION OF PENALTY. WE NOTE THAT IN A SIMILAR C ASE, THE HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF CIT VS MANJUNATHA COTTON AND GINNING FACTORY REPOR TED IN (2013) 359 ITR 565 (KAR) HAS CANCELLED THE PENALTY TAKING NOTE OF THE FACT THAT THE PENALTY NOTICE DID NOT SPELL OUT CLEARLY AS TO WHETHER THE ASSESSEE HAS CO NCEALED THE PARTICULARS OF INCOME OR HAS FURNISHED INACCURATE PARTICULARS OF INCOME. WE ALSO FIND THAT HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. SSAS EMERALD MEADOWS, REPOR TED IN (2016) 73 TAXMANN.COM 241 (KAR) ENDORSED THE SAME VIEW IN MANJUNATHA COTTON A ND GINNING FACTORY (SUPRA) AND HELD AS UNDER: 3. THE TRIBUNAL HAS ALLOWED THE APPEAL FILED BY T HE ASSESSEE HOLDING THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER SECTION 274 READ WITH S ECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT), TO BE BAD IN LAW AS IT DID NOT SPECIFY WHICH LIMB OF SECTION 271(1)(C) OF THE ACT, THE PENALTY PROCEEDINGS HAD B EEN INITIATED I.E., WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE TRIBUNAL, WHILE ALLOWING THE APPEAL OF THE ASSESSEE , HAS RELIED ON THE DECISION OF THE DIVISION BENCH OF THIS COURT RENDERED IN THE CASE O F CIT VS. MANJUNATHA COTTON & GINNING FACTORY (2013) 359 ITR 565/218 TAXMAN 423/35 TAXMAN N.COM 250(KAR). 4. IN OUR VIEW, SINCE THE MATTER IS COVERED BY JUD GMENT OF THE DIVISION BENCH OF THIS COURT, WE ARE OF THE OPINION, NO SUBSTANTIAL QUESTION OF L AW ARISES IN THIS APPEAL FOR DETERMINATION BY THIS COURT. THE APPEAL IS ACCORDINGLY DISMISSED . WE ALSO FIND THAT THE AFORESAID ORDER OF THE HONBL E HIGH COURT WAS CHALLENGED BY THE DEPARTMENT BEFORE THE HONBLE SUPREME COURT BY PREF ERRING AN SLP WHICH HAS BEEN DISMISSED WHICH FACT HAS BEEN REPORTED IN CIT VS. S SAS EMERALD MEADOWS (2016) 73 TAXMANN.COM 248 (SC). 5. WE NOTE THAT SINCE THE PENALTY NOTICE ISSUED TO THE ASSESSEE DATED 08.03.2013 DID NOT SPELL OUT AS TO WHICH DEFAULT THE ASSESSEE HAS COMM ITTED FOR WHICH PENALTY U/S. 271(1)(C) OF THE ACT HAS BEEN INITIATED, THEREFORE, RESPECTFULLY FOLLOWING THE HONBLE KARNATAKA HIGH COURTS ORDER IN MANJUNATHA COTTON & GINNING FACTOR Y (SUPRA) AND SSAS EMERALD MEADOWS (SUPRA), WE SET ASIDE THE ORDER OF LD. CIT( A) AND DELETE THE PENALTY IMPOSED BY THE AO AND RESTRICTED BY THE LD. CIT(A) TO 100% OF THE TAX SOUGHT TO BE EVADED U/S. 4 ITA NOS.762 & 718/KOL/2015 URAL INDIA LTD. AYS- 2010-11 271(1)(C) OF THE ACT. THEREFORE, THE APPEAL OF THE ASSESSEE IS ALLOWED AND THAT OF THE REVENUE IS DISMISSED. 5. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED AND THAT OF THE REVENUE IS DISMISSED. . ORDER IS PRONOUNCED IN THE OPEN COURT ON 21ST DECE MBER. 2017. SD/- SD/- (J. SUDHAKAR REDDY) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 21ST DECEMBER, 2017 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPELLANT URAL INDIA LTD., C/O, S. N. GHOSH & ASSOCIATES, ADVOCATES, SEVEN BROTHERS LODGE, P.O. BUROSHIBTALA, P.S. CHIN SURAH, DIST. HOOGHLY, PIN 712 105. 2 RESPONDENT . DCIT, CIRCLE-7, KOLKATA. 3. THE CIT(A) KOLKATA. 4. 5. CIT KOLKATA DR, GUWAHATI BENCH, GUWAHATI / TRUE COPY, BY ORDER, SR. PVT. SECRETARY