M/s Rotomac Exports (P) Ltd., Kanpur V. Dy. Commissioner of Income Tax-VI, Kanpur

ITA 806/LKW/2013

• Counselvise Citation: 80623714 RSA 2013
• Duration Of Justice: 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 12-11-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 26-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: Y P SRIVASTA VA
• Section: 143(3); 115JB; 263

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.806/LKW/2013 ASSESSMENT YEAR:2004 - 05 DY.C.I.T. - VI, KANPUR. VS M/S ROTOMAC EXPORTS (P) LTD., 201, CITY CENTRE, 63/2, THE MALL, KANPUR. PAN:AABCR9260K (RESPONDENT) (APPELLANT) SHRI S. K. JAIN, FCA APPELLANT BY SHRI Y. P. SRIVASTAVA, D. R. RESPONDENT BY 12/11/2014 DATE OF HEARING 18 /12/2014 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST THE ORDER PASSED BY LEARNED CIT(A) - I, KANPUR DATED 30/09/2013 FOR THE ASSESSMENT YEAR 2004 - 2005. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: (I) THAT THE ORDER OF LD. C.I.T.(A) - I, KANPUR CONFIRMING THE PENALTY LEVIED UNDER SECTION 271(L)(C) OF THE INCOME TAX ACT, 1961, IS INSUPPORTABLE IN LAW AND ON FACTS AND IS LIABLE TO BE QUASHED. (II) THAT THE LD. C.I.T.(A) - 1, KANPUR FAILED TO CONSIDER AND APPRECIATE THAT THE ASSESSMENT COMPLETED UNDER SECTION 143(3) VIDE ORDER DATED 14.12.2006, GIVING RISE TO THE IMPUGNED PENALTY (UNDER APPEAL) CEASED TO EXIST ON PASSING OF THE REVISION ORDER DATED 05.09.2008 BY THE LD. C.I.T. - II, KANPUR U/S 263 OF THE INCOME TAX ACT, 1961. 2 ( III) THAT THE LD. A.O. HAD INITIATED SEPARATE AND INDEPENDENT PROCEEDINGS U/S 271(L)(C) OF THE INCOME TAX ACT 1961, CONSEQUENT UPON PASSING OF THE REASSESSMENT ORDER U/S 143(3)/263 OF THE ACT, AND THEREAFTER DROPPING OF THE PENALTY VIDE ORDER DATED 30.03.2 009, HENCE THE IMPUGNED PENALTY ORDER (UNDER APPEAL) DID NOT SURVIVE AND/OR COULD NOT HAVE BEEN SUSTAINED BY THE LD. C.I.T.(A) - I, KANPUR. (IV) THAT THE C.I.T,(A) - 1, KANPUR HAS UPHELD THE IMPUGNED PENALTY ORDER MERELY ON CONJECTURES, PRESUMPTIONS & HYPOTHE SIS AND ALSO WITHOUT CONSIDERING FULL FACTS AND THE RELEVANT PROVISIONS OF THE INCOME TAX ACT, 1961 PARTICULARLY THE ACCOUNTING TREATMENT THEREFORE ALSO, THE ORDER UNDER APPEAL IS LIABLE TO BE QUASHED. (V) THAT THE LD. C.I.T.(A) - I, KANPUR HAS ERRED IN LAW AND ON FACTS IN SUSTAINING THE PENALTY IMPOSED BY THE LD. A.O. U/S 271(1)(C) OF THE INCOME TAX ACT, 1961, BECAUSE NEITHER THERE IS ANY CONCEALMENT OF PARTICULARS OF INCOME NOR THERE WAS FILING OF INACCURATE PARTICULARS OF INCOME TO JUSTIFY LEVY OF PENALTY . (VI) THAT THE LD. C.I.T.(A) - I, KANPUR ALSO FAILED TO UNDERSTAND THAT THE TREATMENT OF INTEREST INCOME BOTH UNDER MERCANTILE SYSTEM OF ACCOUNTING (ACCRUAL BASIS) AND UNDER CASH SYSTEM, OF ACCOUNTING WAS REVENUE NEUTRAL AND BOTH THE METHODS OF ACCOUNTING ARE PERMISSIBLE UNDER LAW, HENCE, NO PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 COULD HAVE BEEN LEVIED/SUSTAINED. 3. IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT FOR ASSESSMENT YEAR 2006 - 07, RETURN WAS FILED ON 29/11/2006 AND TH IS INCOME WAS INCLUDED IN THAT YEAR. HE ALSO SUBMITTED THAT THE ASSESSMENT ORDER WAS PASSED ON 14/12/2006 AND CASH SYSTEM OF ACCOUNTING ADOPTED BY THE ASSESSEE, WAS ACCEPTED BY THE ASSESSING OFFICER. HE SUBMITTED THAT UNDER THESE FACTS, PENALTY IS NOT JU STIFIED. 3 4. LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT IN THE PRESENT CASE, THE ORIGINAL RETURN OF INCOME WAS FILED BY THE ASSESSEE U/S 139, BY DECLARING LOSS OF R S.6,70,57,935/ - . AGAINST THIS RETURN, ORIGINALLY THE ASSESSMENT WAS COMPLETED BY THE ASSESSING OFFICER U/S 143(3) OF THE ACT AS PER ASSESSMENT ORDER DATED 14/12/2006 AT NET LOSS OF RS.6,45,87,835/ - . THE ASSESSING OFFICER MADE ADDITION OF RS.14,23,786/ - O N ACCOUNT OF INTEREST ON LOAN GIVEN TO ROTOMAC PENS PVT. LTD. RS. 17,90,926/ - BUT ACCOUNTED FOR BY THE ASSESSEE IN THE PRESENT YEAR TO THE EXTENT OF RS.3,67,140/ - ONLY AS AGAINST TOTAL INTEREST INCOME OF RS.17,19,926/ - . THE ASSESSING OFFICER ALSO MADE AD HOC DISALLOWANCE OF RS.25, 45 5/ - OUT OF COMMISSION AND BROKERAGE. LATER ON, CIT - II, KANPUR ISSUED A NOTICE U/S 263 ON 12/10/2007 PROPOSING THAT THE ASSESSMENT ORDER PASSED ON 14/12/2006 IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE AND THE ORDER U/S 263 WAS PASSED BY HIM ON 09/04/2008. THE ASSESSING OFFICER PASSED ORDER U/S 143(3)/263 ON 05/09/2008 AS PER WHICH HE ASSESSED THE LOSS AT RS.6,70,83,122/ - (COMPARED TO ORIGINAL ASSESSED LOSS OF RS.6,45,87,835/ - ) UNDER NORMAL PROVISIONS OF TH E ACT AND AT RS.17 2 , 08 , 6 55/ - U/S 115JB OF THE ACT. SINCE THE MAT WAS HIGHER AND THEREFORE, MAT WAS CHARGED ON THE BOOK PROFIT AS PER THE DIRECTION OF CIT - II, KANPUR. HENCE, IT IS SEEN THAT ULTIMATELY THE LOSS OF THE PRESENT YEAR UNDER NORMAL PROVISIONS O F THE ACT WAS ASSESSED AT RS.670.83 LAC AS AGAINST LOSS DECLARED BY THE ASSESSEE AT RS.670.57 LAC AND THUS, IT IS SEEN THAT THE LOSS ASSESSED AS PER THE ASSESSMENT ORDER U/S 143(3) READ WITH SECTION 263 ON 05/09/2008 IS HIGHER THAN THE LOSS DECLARED BY THE ASSESSEE IN THE ORIGINAL RETURN OF INCOME. ALTHOUGH THE BOOK PROFIT ASSESSED U/S 115JB WAS AT LOWER FIGURE BEING A LOSS OF RS.1 7 2.0 8 LAC BUT NO PENALTY IS PRESCRIBED FOR SUCH ADDITION IN BOOK PROFIT U/S 271(1)(C) OF THE ACT. UNDER THESE FACTS, IN OUR CO NSIDERED OPINION, NO CONCEALMENT HAS BEEN ESTABLISHED BY THE DEPARTMENT 4 AND THEREFORE, PENALTY U/S 271(1)(C) IS NOT JUSTIFIED UNDER THESE FACTS. WE, THEREFORE, DELETE THE PENALTY. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 18 /12/2014. *C.L.SINGH COPY OF THE ORDE R FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR