Asstt. Commissioner of Income Tax-6, Kanpur V. M/s Ram Charan Steel, Kanpur

ITA 753/LKW/2013

• Counselvise Citation: 75323714 RSA 2013
• Duration Of Justice: 1 year(s) 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 05-08-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 22-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.753/LKW/2013 ASSESSMENT YEAR 2004-05 M/S RAM CHARAN STEEL LTD., 99A, INDUSTRIAL COOPERATIVE ESTATE, DADA NAGAR, KANPUR-208022 VS ACIT-6, 15/295-A, VAIBHAV BUILDING CIVIL LINES, KANPUR 208001 PAN AAACR 6627 D (RESPONDENT) (APPELLANT) SHRI AMIT NIGAM, DR APPELLANT BY SHRI ASHISH JAISWAL, ADVOCATE RESPONDENT BY 05/08/2015 DATE OF HEARING 10/09/2015 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORDE R OF LD. CIT (A)-I, KANPUR DATED 06.08.2013 FOR THE AY 2004-05. 2. THE GROUNDS RAISED BY THE REVENUES ARE AS UNDER : 1. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE PENALTY OF RS. 40,25,000/-WITHOUT APPRECIATING THE FACTS TH AT ASSESSEE UNDISPUTEDLY ADMITTED ITSELF THE ADDITIONS/DISALLOW ANCES MADE IN ITS CASE AND DID NOT FILE ANY APPEAL AGAINST THE DI SALLOWANCE MADE BY THE AO . 2. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELE TING THE PENALTY OF RS. 40,25,000/-WITHOUT APPRECIATING THE PROVISIO NS OF PENALTY U/S 27L(L)(C) AS THE WORD INACCURATE PARTICULAR MUS T BE DEFINED ONLY BY ADDING THE WORD 'INCOME'. 2 3. THE ORDER OF THE CIT (A), KANPUR BEING ERRONEOUS , UNJUST AND BAD IN LAW BE VACATED AND THE ORDER OF THE AO BE RE STORED. 4. THAT THE APPELLANT CRAVES LEAVE TO MODIFY ANY OF THE GROUNDS OF APPEAL OR TAKE ADDITIONAL GROUND DURING THE PENDENC Y OF THIS APPEAL. 3. LD. DR OF THE REVENUE SUPPORTED THE PENALTY ORD ER WHEREAS THE LD. AR OF THE ASSESSEE SUPPORTED THE ORDER OF THE LD. CIT (A). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIN D THAT THE PENALTY IN THE PRESENT CASE WAS IMPOSED IN RESPECT OF TWO ADDITION S. FIRST ADDITION IS OF RS.1,10,19,975/- ON ACCOUNT OF SALARY AND WAGES AND SECOND ADDITION IS OF RS.1,61,156/- ON ACCOUNT OF DISALLOWANCE OF VARIOUS EXPENSES SUCH AS PRINTING & STATIONARY, TRAVELLING AND CONVEYANCE, AUDIT FEES, MISCELLANEOUS EXPENSES WRITTEN OFF AND LEGAL EXPENSES. THESE DISALLOWANCES WERE MADE B Y THE AO BY STATING THAT NO BUSINESS ACTIVITY WAS CARRIED OUT BY THE ASSESSEE I N PRESENT YEAR AND THERE WAS ONE MORE REASON GIVEN BY THE AO FOR DISALLOWING THE CLA IM OF THE ASSESSEE OF RS.1,10,19,975/- ON ACCOUNT OF SALARY AND WAGES THA T THESE EXPENSES PERTAIN TO EARLIER YEARS. WE FIRST DECIDE THE ISSUE REGARDING PENALTY ON THE SECOND ADDITION OF RS.1,61,156/-. WE FIND THAT THIS ADDITION IS ON ACC OUNT OF CLAIM OF THE ASSESSEE FOR EXPENSES OF RS.1,275/- ON ACCOUNT OF PRINTING & STA TIONARY, RS.4,975/- ON ACCOUNT OF TRAVELLING & CONVEYANCE, RS.5,400/- ON ACCOUNT OF A UDIT FEES, RS.79,406/- ON ACCOUNT OF MISCELLANEOUS EXPENSES AND RS.65,500/- O N ACCOUNT OF LEGAL EXPENSES TOTAL RS.1,61,156. IN OUR CONSIDERED OPINION, THESE EXPENSES ARE TO BE INCURRED AND TO BE ALLOWED EVEN WHEN THE BUSINESS ACTIVITIES ARE NOT CARRIED OUT BECAUSE AUDIT FEE IS REQUIRED FOR MAINTAINING THE COMPANY. MISCEL LANEOUS EXPENSES WRITTEN OFF ARE REGARDING WRITE OFF OF PRIMARY EXPENSES INCURRED AT THE TIME OF THE FORMATION OF THE COMPANY WHICH IS ALLOWABLE IN 10 EQUAL INSTALLMENTS . LEGAL EXPENSES ARE TO BE INCURRED FOR VARIOUS PURPOSES EVEN IF THE MANUFACTU RING ACTIVITY HAS STOPPED AND IN THE PRESENT CASE, THERE WAS DISPUTE GOING ON IN LAB OUR COURT IN RESPECT OF PAYMENT OF SALARY AND WAGES AND THE REMAINING TWO EXPENSES ARE SMALL ADMINISTRATIVE 3 EXPENSES AND THEREFORE, IN RESPECT OF THIS ADDITION , WE FEEL EVEN IF DISALLOWANCE IS ALL RIGHT, PENALTY IS NOT JUSTIFIED FOR SUCH DISALLOWAN CE. 5. REGARDING THE FIRST ADDITION OF RS.1,10,19,975/- , WE FIND THAT IT IS OBSERVED BY THE LD. CIT(A) IN PARA 4.2.2. OF HIS ORDER THAT THE LABOUR UNION HAD FILED CLAIM/CASE AGAINST THE COMPANY FOR NON-PAYMENT OF SALARY AND WAGES FOR EARLIER YEARS AND THE ASSESSEE HAS PRODUCED DETAILS OF LABOUR UNION PETIT ION WHICH WAS FILED BEFORE THE AO FOR VERIFICATION AND/OR TO ESTABLISH THAT THERE WAS DISPUTE GOING ON IN LABOUR COURT FOR CLAIM OF SALARY AND WAGES. IT WAS ALSO EX PLAINED BY THE ASSESSEE BEFORE LD. CIT(A) THAT THE ASSESSEE HAS MADE PROVISION FOR PAYMENT OF THESE EXPENSES ON ACCOUNT OF SALARY AND WAGES IN VIEW OF THIS COURT C ASE BY LABOUR UNION IN LABOUR COURT. IN VIEW OF THIS FACTUAL POSITION, WE ARE OF THE CONSIDERED OPINION THAT ALTHOUGH IT MAY BE A FIT CASE FOR DISALLOWING EXPEN SES BUT IT DOES NOT SATISFY THE NECESSARY INGREDIENTS FOR LEVY OF PENALTY U/S 271(1 )(C) OF THE ACT BECAUSE UNDER THESE FACTS, IT IS NOT ESTABLISHED THAT THERE WAS A NY CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE REFORE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF THE CIT(A). 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/- SD/- (SUNIL KUMAR YADAV) (A.K. GAROD IA ) JUDICIAL MEMBER ACCOUNTANT MEMBE R DATED: 10/09/2015 AKS COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGI STRAR