Income Tax Appellate Tribunal - Ahmedabad
Raj Fab Pvt. Ltd.,, Ahmedabad vs Department Of Income Tax on 16 February, 2007
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD BENCH "D"
[BEFORE SHRI MAH AVIR SINGH,JM AND SHRI A N P AHUJ A, AM)
ITA No.1489/Ahd/2007
(Assessment Year:-1991-92)
The Income-tax Officer, V/s Raj Fab Private Ltd.,
W ard-5(3), Ahmedabad Shanti Chamber, Opp.
Dinesh Hall, Navrangpuram,
Ahmedabad
[PAN:AAACR9212N]
[Appellant] [Respondent]
Revenue by :- Smt. Neeta Shah, DR
Assessee by:- Shri K I Thakkar,AR
O R D E R
A N Pahuja: This appeal by the Revenue is directed against an order dated 16-02-2007 of the ld. CIT(Appeals)-XI, Ahmedabad [the "CIT(A)"] for Assessment Year (AY) 1991-92, cancelling the penalty of Rs.7,37,243/- levied by the Assessing Officer u/s 271(1)(c) of the Income-tax Act, 1961 [hereinafter referred to as the "Act"] on the ground of concealment of income and furnishing inaccurate particulars thereof.
2 Facts, in brief, as per relevant orders are that the assessment in this case was finalised u/s 143(3) of the Act on 28-03-1994, determining total income of Rs.6,93,730/-, after setting off of unabsorbed depreciation for the AY 1989-90, in pursuance to return declaring income of Rs.5,87,112/- filed on 30.12.1991.Inter alia, following additions/disallowances were made:
1. Service maintenance charges Rs. 7,200/-
2 Out of motor-car expenses Rs. 4,000/-
3. Out of staff welfare expenses Rs. 3,000/-
4 Addition on the ground of
gross profit estimation Rs.12,68,162/-
-----------------
Rs.12,82,162/-
ITA No.1489/Ahd/2007 2
Consequently, penalty proceedings u/s. 271(1)(c) of the Act were
also initiated for furnishing inaccurate particulars of income. On appeal, the learned CIT(A) upheld these additions/disallowances vide his order dated 09-07-1998 and thus, dismissed the appeal of the assessee-company. On further appeal the ITAT, Ahmedabad.
Bench-C vide their order dated 03-06-2005 in ITA No.1936/Ahd/1998 for the AY 1991-92 dismissed the appeal of the assessee-company. Thereafter, in response to a showcause notice before levy of penalty u/s 271(1)(c) of the Act, none appeared before the AO nor any reply was filed. In these circumstances, the Assessing Officer[AO in short] imposed minimum penalty of Rs.7,37,243/- @ 100% of the amount of tax sought to be evaded on the aforesaid amount of Rs. 12,82,162/-.by reason of concealment of income and furnishing of inaccurate particulars thereof.
3. On appeal, the ld. CIT(A) cancelled the penalty on the ground that the assessee itself filed necessary details / particulars on the basis of which disallowances and estimated additions had been made by the AO and there was no intention on the part of the assessee to withhold any information regarding expenses and gross profit rate, relying,inter alia, on the decision in the case of Hindustan Steel Ltd. vs. State of Orissa 83 ITR 26 (SC) and certain observations of the Hon'ble High Court of Punjab & Haryana in a decision, holding that disallowance of expenses per se does not mean that the assessee had furnished incorrect particulars of its income .
4 The Revenue is now in appeal before us against the aforesaid findings of the ld. CIT(A). The learned DR supported the order of the AO while the learned AR on behalf of the assessee contended that the aforesaid order dated 03-06-2005 of the ITAT in ITA No.1936/Ahd/ 1998 for the AY 1991-92 in the case of the assessee, had been subsequently recalled and the Tribunal vide their another order dated 28-11-2008 deleted the trading addition of 2 ITA No.1489/Ahd/2007 3 Rs.12,68,162/- and the remaining disallowances were not pressed by the assessee. In these circumstances, the ld. AR supported the impugned order of the ld. CIT(A) .
5 W e have heard both the parties and gone through the facts of the case as also the decision dated 28.11.2008 of the Tribunal in quantum appeal. W e find that the Tribunal in their aforesaid order dated 3.6.2005 had dismissed the appeal of the assessee for non- prosecution. Subsequently , the said order was recalled vide order dated 17.10.2008 in MA no.47/Ahd./2007. Thereafter, vide their order dated 28.11.2008 in ITA No. 1936/Ahd/1998 , the Tribunal deleted the trading addition of Rs.12,68,162/- and remaining disallowances were not pressed on behalf of the assessee. In these circumstances, penalty levied by the AO on the said amount of Rs.12,68,162/- does not survive. Where an order of assessment or reassessment on the basis of which penalty has been levied on the assessee, has itself been set aside , the penalty cannot stand by itself . Hon'ble Delhi High Court in the case of CIT Vs. R.Dalmia,(1992)107 Taxation 107, held that no penalty survives after deletion of additions, forming the basis for the levy of penalty. Since the very basis upon which the penalty has been imposed does not exist, we have no alternative but to uphold the decision of the ld. CIT(A) on that score alone . As regards penalty in relation to disallowance of the following expenditure:-
i) Service maintenance charges Rs. 7,200/- ii) Out of motor-car expenses Rs. 4,000/- iii). Out of staff welfare expenses Rs. 3,000/-
upheld by the ITAT,it is well settled that mere disallowance of expenses does not imply furnishing inaccurate particulars of such income. When a disallowance is made merely on an estimate basis, the penalty cannot automatically be imposed . It is well settled that assessment proceedings and penalty proceedings are separate and distinct and as held by Hon'ble Supreme Court in the case of Ananthraman Veerasinghaiah & Co. Vs. CIT - 123 ITR 457; the finding in the assessment proceedings cannot be regarded as conclusive for the purposes of 3 ITA No.1489/Ahd/2007 4 the penalty proceedings. It is, therefore, necessary to reappreciate and reconsider the matter so as to find out as to whether the addition made in the quantum proceedings actually represents the concealment on the part of the assessee as envisaged in sec. 271(1 )(c) of the Act and whether it is a fit case to impose the penalty by invoking the said provisions. It is also well settled that the criterion and yardsticks for the purpose of imposing penalty u/s 271(1)(c) of the Act are different than those applied for making or confirming the additions. When the assessee has made a particular claim in the return of income and has also furnished all the material facts relevant thereto, the disallowance of such claim cannot automatically lead to the conclusion that there was concealment of particulars of his income by the assessee or furnishing of inaccurate particulars thereof . What is to be seen is whether the said claim made by the assessee was bona-fide and whether all the material facts relevant thereto have been furnished and once it is so established, the assessee cannot be held liable for concealment penalty u/s 271(l)(c) of the Act. A mere rejection of the claim of the assessee by relying on different interpretations does not amount to concealment of the particulars of income or furnishing inaccurate particulars of income by the assessee. Hon'ble Punjab & Haryana High Court in the case of CIT vs. Ajaib Singh & Co. (2001) 170 CTR (P&H) 489 : (2002) 253 ITR 630 (P&H) have observed that merely because certain expenses claimed by the assessee are disallowed by an authority, it cannot mean that particulars furnished by the assessee were wrong. It was held that mere disallowance of expenses per se cannot mean that assessee has furnished inaccurate particulars of its income. In the case under consideration, as pointed out by the ld. CIT(A), the assessee had given all the particulars of income and had disclosed all facts to the AO. In such circumstances, Hon'ble Delhi High Court held in the case of Commissioner Of Income-Tax.vs Bacardi Martini India Limited.,288 ITR 585(Del) that no penalty was leviable. Recently, Hon'ble Apex Court in CIT Vs. Reliance Petro Products, arising out of SLP (C) No.27161 of 2008, vide their order dated 17.3.2010 held that merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself would not, attract the penalty u/s 271(1)(c) of the Act. In view of the foregoing, we have no 4 ITA No.1489/Ahd/2007 5 hesitation in upholding the findings of the ld. CIT(A). Thus, ground no. 1 in the appeal is dismissed.
6. Ground nos. 2 & 3 in the appeal being general in nature, do not require any separate adjudication and are, therefore, dismissed.
7. In the result, appeal is dismissed.
Order pronounced in the open court today on 31-03-2010 Sd/- Sd/-
(MAH AVIR SINGH) (A N P AHUJ A) JUDICI AL MEMBER ACCOUNTANT MEMBER Date : 31-03-2010 Copy of the order forwarded to :
1. Raj Fab Private Ltd., Shanti Chamber, Opp. Dinesh Hall, Navrangpuram, Ahmedabad
2. The ITO, W ard-5(3), Ahmedabad
3. CIT concerned
4. CIT(A)-XI, Ahmedabad
5. The DR, ITAT,'D' Bench Ahmedabad
6. Guard File BY ORDER Deputy Registrar Assistant Registrar ITAT, AHMEDABAD 5