UDYOGI INTERNATIONAL PRIVATE LIMITED,KOLKATA V. .A.C.I.T., CIRCLE-1(1), KOLKATA

ITA 2114/KOL/2024

AI Insights

Udyogi International Pvt. Ltd. appealed against the penalty imposed for alleged concealment of income, which was sustained by the CIT(A). The penalty was based on the disallowance of a loss claimed by the assessee from derivative transactions, which the AO deemed non-genuine. The Tribunal examined whether the mere disallowance of a loss, which was transparently recorded in the financial statements, amounted to concealment of income. The Tribunal referenced several precedents to conclude that disallowance of a claim, without any concealment or inaccurate particulars, does not justify a penalty under Section 271(1)(c).

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 469679 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2024
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Other Referred Cases: India Cine Agencies vs. DCIT [2005] 275 ITR 430 (Mad), CIT vs. Auric Investment and Securities Ltd. [2009] 310 ITR 121 (Del), CIT vs. SSP Ltd. [2010] 189 Taxman 282 (P & H), Mahavir Irrigation Pvt. Ltd. vs. CITY [2009] 314 ITR (Trib)(Del), CIT vs. Reliance Petro Products Pvt. Ltd.
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Set aside; Speculation loss
• Section: 147; 144; 271(1)(c)

Judgement Text

"आयकर अपीलȣय अͬधकरण, कोलकाता पीठ “बी’’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH: KOLKATA Įी राजेश क ुमार, लेखा सटèय एवं Įी Ĥदȣप क ुमार चौबे, ÛयाǓयक सदèय क े सम¢ [Before Shri Rajesh Kumar, Accountant Member &Shri Pradip Kumar Choubey, Judicial Member] I.T.A. No. 2114/Kol/2024 Assessment Year: 2014-15 Udyogi International Pvt. Ltd. (PAN: AABCK 9574 B) Vs. ACIT, Circle-1(1), Kolkata Appellant / ) अपीलाथȸ ( Respondent / Ĥ×यथȸ Date of Hearing / सुनवाई कȧ Ǔतͬथ 09.12.2024 Date of Pronouncement/ आदेश उɮघोषणा कȧ Ǔतͬथ 19.12.2024 For the assessee / Ǔनधा[ǐरती कȧ ओर से Shri Siddharth Agarwal, Advocate For the revenue / राजèव कȧ ओर से Shri Arup Chatterjee, Sr. DR ORDER / आदेश Per Pradip Kumar Choubey, JM: This is the appeal preferred by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)-NFAC, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 29.08.2024 for the AY 2014-15. 2. Brief facts of the case of the assessee are that the assessee is a company, return of income for AY 2014-15 was scrutinized and assessment order was passed u/s 147 2 I.T.A. No. 2114/Kol/2024 Assessment Year: 2014-15 Udyogi Internaitonal pvt. Ltd. read with Section 144 read with Section 144B of the Act. A penalty proceeding has also been initiated u/s 271(1)(C) of the Act and penalty of Rs. 8,45,315/- have been levied against the assessee. 3. The said order has been challenged by the assessee before the Ld. CIT(A) wherein the appeal of the assessee has been dismissed. Being aggrieved and dissatisfied the present appeal has been filed by the assessee. 4. The ld. Counsel for the assessee challenges the impugned order thereby submitting that the Ld. CIT(A) has erred in sustaining the penalty though there was no concealment of income from the side of the assessee. The Ld. Counsel submits that the AO imposed penalty only on this account the assessee did not prefer any appeal against the assessment order and paid the taxes. The ld. Counsel submits that the penalty proceedings and assessment proceeding are different and on this ground that the assessee did not prefer appeal against the assessment order imposition of penalty is bad in law. The Ld. Counsel vehemently submits that there was no concealment but mere disallowance of loss claimed by the assessee. He has cited following decisions: i) India Cine Agencies vs. DCIT [2005] 275 ITR 430 (Mad) ii) CIT vs. Auric Investment and Securities Ltd. [2009] 310 ITR 121 (Del) iii) CIT vs. SSP Ltd. [2010] 189 Taxman 282 (P & H) iv) Mahavir Irrigation Pvt. Ltd. vs. CITY [2009] 314 ITR (Trib)(Del) Further relied on the decision of Co-ordinate Bench of Mumbai in the case of CIT vs. Reliance Petro Products Pvt. Ltd. 5. Contrary to that the ld. DR supports the impugned order. 3 I.T.A. No. 2114/Kol/2024 Assessment Year: 2014-15 Udyogi Internaitonal pvt. Ltd. 6. Upon hearing the submission of the ld. Counsel for the respective parties, we have perused the record and find that the assessee is a company. During the assessment year, the assessee entered into derivative transaction on recognized stock exchange i.e. Bombay Stock Exchange through registered stock broker resulting in a loss of Rs. 24,86,221/- which were duly debited in the audited statement of accounts. The Ld. AO in course of assessment proceedings believed that the transaction was not genuine and disallowed the genuine loss and, in the process, raised demand of Rs. 28,87,060/-. It is a fact that the assessee did not prefer any appeal against the said raised demand. The penalty proceedings have been initiated on the ground that wrong declaration of the list in the audited financials does amount to concealment of income as such loss. It has been held that in the penalty proceeding that the loss is also income and if claimed wrongly, it is of the nature of concealed income. It is evident from the record that the loss is duly stated in the audited financial statement hence in our view, there is no concealment but it is a mere disallowance of loss claimed by the assessee. We have gone through the cited judicial pronouncement and find that in a case of India Cine agencies V. DCIT it has been held that the assessee had as balance sheet showed the discount to be given to customers on their further purchases, there was no concealment of income and no penalty was leviable. In another decision reported in (2009) 310 ITR 121 Del. it has been held that -Where loss is disallowed on the ground of it being speculative loss it would not amount to concealment and hence penalty u/s 271(1)(C) cannot be levied. Further in a case CIT V.SSP Ltd. (2010) 189 Taxman282(P&H) it has been held thus- Mere erroneous claim for deduction in the absence of any concealment or giving of inaccurate particulars is no ground for levying penalty u/s 271(1)(c ) . Where the assessee had offered valid explanation and had raised debatable issues for claiming the expenditure, disallowance of the claim alone would not justify imposition of penalty. 7. It is well settled that the purpose of imposing penalty u/s 271(1)(c ) are different from those applied for making or confirming the addition. Then the assessee has made a particular claim in the return of income and also furnished all the material facts 4 I.T.A. No. 2114/Kol/2024 Assessment Year: 2014-15 Udyogi Internaitonal pvt. Ltd. relevant thereto disallowance of such claim cannot lead to the conclusion that there was the concealment of particulars of its income. The Hon’ble ITAT, Delhi in the case of Mahavir Irrigation Pvt. Ltd. vs. CIT (supra) has held thus: “What is to be seen is whether the claim made by the assessee was bonafide and whether all the material facts relevant thereto have been furnished. Once it is so established, the assessee cannot be held liable for payment of penalty for concealment. Assessment proceedings and penalty proceedings are separate and distinct and therefore findings in the assessment proceedings could not be regarded as conclusive for the purpose of penalty proceedings and could not be taken as conclusive for the purpose of holding the assessee liable for concealment and imposed penalty u/s 271(1)(c ) (Mahavir Irrigation Pvt. Ltd. vs. CITY [2009] 314 ITR (Trib)(Del).” 8. Going over the cited decision as well as the facts of the case, we find substance in the argument of the ld. Counsel of the assessee and accordingly imposition of penalty is hereby directed to be deleted. The order of the AO confirmed by the Ld. CIT(A) is hereby set aside. In the result, the appeal of the assessee is allowed. Order is pronounced in the open court on 19th December, 2024 Sd/- Sd/- (Rajesh Kumar/राजेश क ुमार) (Pradip Kumar Choubey /Ĥदȣप क ुमार चौबे) Accountant Member/लेखा सदèय Judicial Member/ÛयाǓयक सदèय Dated: 19th December, 2024 SM, Sr. PS 5 I.T.A. No. 2114/Kol/2024 Assessment Year: 2014-15 Udyogi Internaitonal pvt. Ltd. Copy of the order forwarded to: 1. Appellant- Udyogi International pvt. Ltd., 294, B. B. Ganguly Street, Bowbazar S.O (Kolkata)-700012 2. Respondent – ACIT, Circle-1(1), Kolkata 3. Ld. CIT(A)-NFAC, Delhi 4. Ld. Pr. CIT- , Kolkata 5. DR, Kolkata Benches, Kolkata (sent through e-mail) True Copy By Order Assistant Registrar ITAT, Kolkata Benches, Kolkata "