R.K. Township Constructions Private Limited, Hyderabad V. Income Tax Officer, Ward-3(2), Hyderabad

ITA 942/Hyd/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4701 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Assessment Year: 2013-2014
• Appeal Filed On: 11-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S PRAVEENA
• Keywords: Set aside
• Section: 271(1)(c); 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A , HYDERABAD BEFORE S MT . P. MADHAVI DEVI , JUDICIAL MEMBER AND SHRI S . RIFAUR RAHMAN , ACCOUNTANT MEMBER ITA NO. 942 /HYD/201 8 ASSESSMENT YEAR: 20 13 - 14 R.K. TOWNSHIP CONSTRUCTIONS PVT. L TD., HYDERABAD. PAN AA CCR 6127Q VS. INCOME - TAX OFFICER, WARD 3(2), HYDERABAD. ( APPELLANT ) (RESPONDENT) ASSESSEE BY : SHRI K.C. DEVDAS REVENUE BY : S MT. S. PRAVEENA DATE OF HEARING : 03 / 1 0/2018 DATE OF PRONOUNCEMENT : 26 / 1 0 / 201 8 O R D E R PER S . RIFAUR RAHMAN , A .M. : T H IS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT (A) 3 , DATED 2 6 / 0 2 /201 8 HYDERABAD FOR AY 20 13 - 14 , WHEREBY CONFIRMED THE PENALTY LEVIED BY THE AO U/S 271(1)(C) OF THE INCOME - TAX ACT, 1961 (IN SHORT THE ACT). 2. BRIEF FACTS OF THE CASE ARE, ASSESSEE COMPANY I S ENGAGED IN THE BUSINESS OF REAL ESTATE AND CONSTRUCTIONS. IT HAD FILED I TS RETURN OF INCOME FOR THE A.Y. 2013 - 14 ON 07.10.2013 DECLARING A TOTAL INCOME OF RS. N IL AND INCOME U/S 115JB AT RS. 11 ,44,750/ - . THE CASE WAS SELECTED FOR SCRUTINY ASSESSMENT AND STATUTORY NOTICES WERE ISSUED TO THE ASSESSEE CALLING FOR REQUISITE INFORMA TION. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT THE EXPENDITURE VOUCHERS I N SUPPORT OF EXPENSES W E RE SE LF MADE, NOT VERIFIABLE AND THAT SOME WERE MADE I N CASH. A DETAILED QUESTIONNAIRE WAS I SSUED TO THE ASSESSEE TO FURNISH THE DETAILS OF THE SAID 2 ITA NO. 942 /HYD/1 8 M/S R.K. TOWNSHIP CONSTRUCTIONS PVT. LTD. TRANSACTIONS. FURTHER, THE STATUTORY DEFECTS AND SHORTCOMINGS HA D BEEN PUT BEFORE THE AUTHORISED REPRESENTATIVE FOR EXPLANATION. IN THE ABSENCE OF PROPER JUSTIFICATION FOR SUCH CLAIM, THE AUTHORISED REPRESENTATIVE HAS FINALLY ACCEPTED F OR A ROUND SOME DISALLOWANCE OF RS.50,00,000/ - AND ACCORDINGLY THE ASSESSMENT WAS COMPLETED. 2.1 THEREAFTER, THE AO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) AND NOTICE WAS ISSUED ON 19/03/2016, AGAINST WHICH, THE ASSESSEE SUBMITTED THAT THE AO DISALLO WED CERTAIN EXPENSES ON ESTIMATION BASIS WITHOUT ESTABLISHING THE CONCEALMENT. 2.2 THE AO HELD THAT THE ASSESSEE HAD EXHAUSTED ALL OPPORTUNITIES AND FAILURE ON THE PART OF THE ASSESSE , RESULTED IN THE DISALLOWANCE OF RS. 50 LAKHS AS THE ASSESSEE HAD FIL ED THE BILLS AND VOUCHERS WHICH ARE NON - VERIFIABLE AND NON - GENUINE. THE AO FURTHER HELD THAT SINCE THE DEPARTMENT PROBED INTO THE ISSUES, THIS HAS COME TO LIGHT. HE, THEREFORE, CAME TO THE CONCLUSION THAT THE ASSESSEE HAD CONCEALED THE PARTICULARS OF INCOME A ND, THUS, SQUARELY GETS COVERED BY THE PROVISIONS OF SECTION 271(1)(C) OF THE AC.T ACCORDINGLY, HE LEVIED A MINIMUM PENALTY OF RS. 15,45,000/ - BEING 100% OF THE TAX SOUGHT TO BE EVADED. 2.3 WHEN THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A), THE CIT(A) UPHELD THE PENALTY LEVIED BY THE AO. MOREOVER, THE ASSESSEE FILED A PETITION FOR ADMISSION OF ADDITIONAL GROUND BEFORE THE CIT(A), WHICH IS AS UNDER: IN THE ABSENCE OF SPECIFIC CHARGE RAI SED BY THE AO IN THE NOTICE U/S 274 RWS 271(1)(C), THE LEVY OF PENALTY U/S 271(1)(C) IS NOT VALID. 2.4 HOWEVER, THE CIT(A) DISMISSED THE SAID ADDITIONAL GROUND ALSO. 3. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US RAISING THE FO LLOWING GROUNDS OF APPEAL: 3 ITA NO. 942 /HYD/1 8 M/S R.K. TOWNSHIP CONSTRUCTIONS PVT. LTD. 1. THE ORDER OF THE HON'BLE CIT (A) IS ERRONEOUS IN LAW AS WELL AS FACTS OF THE CASE. 2. THE HON'BLE CIT(A) OUGHT TO HAVE OBSERVED THAT THE ASSESSING OFFICER ERRED IN LEVYING PENALTY IN RESPECT OF ESTIMATED ADDITION WITH REGAR D TO UNVERIFIABLE EXPENDITURE AND THEREFORE THE SAME WAS LIABLE TO BE DELETED. 3. THE HON'BLE CIT(A) OUGHT TO HAVE OBSERVED THAT THE ASSESSING OFFICER DID NOT ESTABLISH CONCEALMENT OF INCOME OR FURNISHING OF PARTICULARS OF INCOME EITHER IN THE ASSESSMENT ORDER OR IN THE PENALTY ORDER AND THEREFORE, THERE WAS NO CASE FOR LEVY OF PENALTY UJS.271(1)(C) OF THE IT ACT . 4. THE HON'BLE CIT(A) RELIED UPON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF MAK DATA PRIVATE LIMITED VS CIT (358 ITR 593) WHIC H WAS CLEARLY DISTINGUISHABLE FROM THE FACTS OF THE CASE OF THE ASSESSEE AND THEREFORE THE PENALTY UPHELD RELYING ON IMPROPER DECISION MAY HAVE TO BE DELETED. 5. THE HON'BLE CIT(A) OUGHT TO HAVE OBSERVED THAT THE DECISIONS RELIED UPON BY THE APPELLANT IN THE ADDITIONAL GROUND HAVE DIRECT APPLICATION TO THE FACTS AND CIRCUMSTANCES OF THE CASE UNDER CONSIDERATION AND THEREFORE OUGHT TO HAVE ALLOWED THE APPEAL FILED BY THE APPELLANT. 6. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE HON'BLE CIT(A) OUGHT T O HAVE OBSERVED THAT THE PENALTY OF RS.15,45, 000/ - LEVIED WAS UN - SUSTAINABLE AND THEREFORE, THE SAME WAS LIABLE TO BE DELETED. 7. ANY OTHER GROUND WILL BE RAISED AT THE TIME OF HEARING. 4. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS OBSERVED THAT ASSESSEE AGREED TO DISALLOWANCE OF RS. 50 LAKHS ON ESTIMATION BASIS FOR THE SHORT COMINGS IN THE SELF - MADE VOUCHERS. NOWHERE IN THE ASSESSMENT ORDER, THE AO HAS BROUGHT ON RECORD THAT THESE EXPEN DITURES ARE NOT GENUINE OR THAT THESE WERE NOT INCURRED. MERELY BECAUSE, ASSESSEE AGREED FOR DISALLOWANCE AND THERE ARE SELF - MADE VOUCHERS, IT CANNOT BE TERMED AS CONCEALMENT OF INCOME OR INACCURATE PARTICULARS OF INCOME IN THE CASE OF ASSESSEE AND THIS IS NOT A FIT CASE TO ATTRACT PENALTY PROVISIONS U/S 271(1)(C). ACCORDINGLY, WE SET ASIDE THE ORDER OF CIT(A) AND DIRECT THE AO TO DELETE THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. 4 ITA NO. 942 /HYD/1 8 M/S R.K. TOWNSHIP CONSTRUCTIONS PVT. LTD. 5. MOREOVER, THE ASSESSEE HAS RAISED AN ADDITIONAL GROUND, WHICH IS LEGAL IN NATURE, WAS DISMISSED BY THE CIT(A). 5.1 THE LD. AR OF THE ASSESSEE SUBMIT TED THAT THE ASSESSING OFFICER INITIATED THE PENALTY PROCEEDINGS BY ISSUE OF A NOTICE U / S 274 R.W.S . 271 (1)(C) ON 19 . 12 .20 13 . HE SUBMITTED THAT W HILE ISSUING THE SAID NOTICE, TH E ASSESSING OFFICER DID NOT MENTION WHETHER THE NOTICE IS ISSUED FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF IN ACCURATE PARTICULARS OF INCOME. THEREFORE, THE NOTICE IS NOT VALIDLY ISSUED. CONSEQUENTLY, THE ORDER PASSED U / S 271(1)(C) ALSO IS NOT VALID. 5.2 THE ISSUE IN DISPUTE IS SQUARELY COVERED BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. SSAS EMERALD MEADOWS, [2016] 73 TAXMANN.COM 248 (SC) WHEREIN THE APEX COURT UPHELD THE DECISION OF THE HONBLE HIGH COURT, IN WHICH, THE HONB LE HIGH COURT CONFIRMED THE ORDER OF THE TRIBUNAL AND DISMISSED THE APPEAL OF THE REVENUE, WHO CAME IN APPEAL AGAINST THE ORDER OF THE TRIBUNAL. THE TRIBUNAL RELYING ON A DECISION OF KARNATAKA HIGH COURT IN CASE OF CIT VS. MANJUNATHA COTTON & GINNING FACT ORY, [2013] 359 ITR 565/210 ALLOWED THE APPEAL OF THE ASSESSEE HOLDING THAT NOTICE ISSUED BY ASSESSING OFFICER U/S 274 READ WITH SECTION 271(1)(C) WAS BAD IN LAW, AS IT DID NOT SPECIFY UNDER WHICH LIMB OF SECTION 271(1)(C) PENALTY PROCEEDINGS HAD BEEN INIT IATED, I.E. WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. 5.3 IN THE CASE UNDER CONSIDERATION, ON PERUSAL OF THE SHOW CAUSE NOTICES ISSUED BY THE ASSESSING OFFICER U/S 274 R.W.S. 271 OF THE IT ACT, 196 1, DATED 19/03/2016, WHICH IS PLACED ON RECORD, IT IS SEEN THAT THE ASSESSING OFFICER DID NOT MENTION WHETHER THE NOTICE IS ISSUED FOR CONCEALMENT OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THEREFORE, AS PER THE RATIO LAID DOWN BY TH E HONBLE SUPREME COURT IN THE CASE OF SSAS EMERALD MEADOWS(SUPRA), THE NOTICE ISSUED BY THE ASSESSING OFFICER IS NOT VALID AND CONSEQUENTLY, THE ORDER PASSED U/S 271(1)(C) IS ALSO NOT VALID. HENCE, THE PENALTY ORDER DOES NOT WITH STAND LEGALLY ALSO. 5 ITA NO. 942 /HYD/1 8 M/S R.K. TOWNSHIP CONSTRUCTIONS PVT. LTD. 6 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 26 TH OCTOBE R , 2018 . SD/ - SD/ - ( P. MADHAVI DEVI ) (S . RIFAUR RAHMAN ) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED: 26 TH OCTOBER , 2018 KV C OPY TO: - 1) M/S R.K. TOWNSHIP CONSTRUCTIONS PVT. LTD., C/O B. NARSING RAO & CO., CAS., PLOT NO. 554, ROAD NO. 92, JUBILEE HILLS, HYD. 96 2) ITO , WARD 3(2), HYDERABAD. 3) CIT (A) 3 , HYDERABAD. 4) PR. CIT - 3 , HYD. 5 ) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD. 6 ) GUARD FILE