Income Tax Appellate Tribunal - Jaipur
Dcit, Jaipur vs Zuberi Engineering Company, Jaipur on 11 November, 2016
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IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR
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BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YADAV, AM
vk;dj vihy la-@ITA No. 840/JP/2016
fu/kZkj.k o"kZ@Assessment Year : 2010-11.
The Dy. Commissioner of Income Tax,
Circle-2,
Jaipur.
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Vs.
M/s. Zuberi Engineering Co.,
2835, Jogiyon Ka Tibba,
Phuta Khura, Jaipur.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN No. AAAFZ 2102 K
vihykFkhZ@Appellant
izR;FkhZ@Respondent
jktLo dh vksj ls@ Revenue by : Shri Prithvi Raj Meena (Addl.CIT)
fu/kZkfjrh dh vksj ls@ Assessee by : Shri Anil Kumar Sharma (C.A)
lquokbZ dh rkjh[k@ Date of Hearing : 09.11.2016.
?kks"k.kk dh rkjh[k@ Date of Pronouncement : 11/11/2016.
vkns'k@ ORDER
PER SHRI KUL BHARAT, JM.
This appeal by the revenue is filed against the order of ld. CIT (A)-I, Jaipur dated 25.07.2016 pertaining to assessment year 2010-11. The revenue has raised the following grounds of appeal :-
" 1. Whether on the facts and in the circumstances of the case and in law the ld. CIT (A) has erred in deleting the entire penalty of Rs. 22,22,966/- levied by the AO by ignoring the fact that the addition to the tune of Rs. 65,40,060/- has been sustained by himself vide order dated 31.10.2013 in ITA No. 229/2012-13.
2. Whether on the facts and circumstances of the case and in law the ld. CIT (A) has erred in ignoring the fact that the Hon'ble ITAT order dated 08.07.2016 in ITA No. 979/JP/2013 is sub judice before Hon'ble High Court."
2. Briefly stated the facts are that while framing the assessment under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act), the AO by invoking the provisions of section 145(3) of the Act determined the business income at Rs. 3,76,01,102/- @ 8% on total contractual receipts of Rs. 47,00,13,786/- and treated the interest income from FDR at Rs. 92,62,914/- as Income from Other sources. Being aggrieved by this order, the assessee preferred an appeal before ld. CIT (A), who vide his order dated 31.10.2013, after considering the submissions and the decision of his predecessor for the preceding year, partly allowed the appeal. Subsequently, the AO initiated penalty proceedings under section 271(1)(c) of the Act and levied penalty of Rs. 22,22,966/-. Aggrieved by this order, the assessee preferred appeal before ld. CIT (A), who vide his order dated 25.07.2016 by following the order of the Tribunal in the assessee's own case in quantum matter, allowed the appeal of the assessee by cancelling the penalty.
3. Now the revenue is in appeal before us.
4. The ld. D/R supported the order of the AO and submitted that the revenue has filed appeal before the Hon'ble Jurisdictional High Court against the order of the Tribunal in quantum matter, supra.
4.1. On the contrary, ld. Counsel for the assessee has supported the order of the ld. CIT (A) deleting the penalty and submitted that since in quantum the addition has been deleted by the Tribunal, now the penalty do not survive.
4.2. We have heard rival contentions and perused the material available on record. The ld. CIT (A) has deleted the penalty by observing in para 3.1.2 of his order as under :-
"3.1.2. (i) The brief facts of the case are that the appellant filed its return of income for the relevant previous year on 09.02.2012 declaring total income at Rs. 2,50,48,510/- against Net Profit of Rs. 2,49,82,620/-. The AO estimated the net profit from contract business at Rs. 3,76,01,102/- by applying the NP rate of 8% on total contract receipts and made separate addition of Rs. 92,62,914/- towards interest income. Thus the AO determined the total income of the appellant at Rs. 4,68,64,016/- against Rs. 2,50,48,510/- declared by the appellant. The addition made by the AO was restricted to Rs. 65,40,060/- by the ld. CIT (A) and subsequently, vide order dated 23.03.2015, the AO levied a penalty of Rs. 22,22,966/- u/s 271(1)(c) of the Act on the amount of Rs. 65,40,060/- as sustained by the ld. CIT (A).
(ii) During the appellate proceedings, it was submitted by the appellant that vide order dated 08.07.2016, in ITA No. 979/JP/2013 for the AY 2010-11, the Hon'ble ITAT Jaipur has accepted the net profit declared by the appellant to be the total income and deleted the addition sustained by ld. CIT (A) and thus the relevant addition of Rs. 65,40,060/- do not survive and the penalty levied in respect of the same vide impugned order dated 23.03.2015 is liable to be deleted.
(iii) I have duly considered the submission of the appellant, the penalty order and the material placed on record. It would be appropriate to reproduce the extracts of the above referred order of Hon'ble ITAT as under :-
" 7.4. Respectfully following the decision of the Coordinate Bench, we are of the considered view that the business income of the assessee from the contract work of erection and fabrication has to be calculated by first applying 8% of the gross contract receipts of Rs. 47,00,13,786/- which comes to Rs. 3,76,01,102.88 and from this amount, the assessee should be allowed deduction of depreciation at Rs. 76,11,318.77, remuneration to the partners at Rs. 4,80,000/- and interest of Rs. 1,60,89,158.44. The resultant figure of business income will come to Rs. 1,34,20,625.67. The total income of the assessee to be calculated by adding interest on FDR of Rs. 92,62,914/- to the figure of business income of Rs. 1,34,20,625.67. Accordingly, the total income by way of this calculation will figure out at Rs. 2,26,83,539.67. We observe that the assessee has disclosed a net profit including bank interest at Rs. 2,49,82,620.84, which is more than the income calculated above at Rs. 2,26,83,539.67. We are, therefore, of the view that the net profit shown by the assessee at Rs. 2,49,82,620.84 to be accepted as total income of the assessee for assessment year 2010-11. Accordingly, the addition sustained by the ld. CIT (A) is deleted and appeal of the assessee is allowed."
(iv) As vide above referred order of the Hon'ble ITAT, Jaipur, the addition of Rs. 65,40,060/- sustained by the ld. CIT (A), has been deleted and thus there remains no basis for imposition of penalty u/s 271(1)(c) of the Act. It may be mentioned that in the case of K.C. Builders vs. ACIT (2004) 135 Taxman 461 (SC), it has been held by the Hon'ble Apex Court that :
" Where the additions made in the assessment order, on the basis of which penalty for concealment was levied, are deleted, there remains no basis at all for levying the penalty for concealment and, therefore, in such a case no such penalty can survive and the same is liable to be cancelled as in the instant case. Ordinarily, the penalty cannot stand if the assessment itself is set aside. Where an order of assessment or reassessment on the basis of which penalty has been levied on the assessee has itself been finally set aside or cancelled by the Tribunal or otherwise, the penalty cannot stand by itself and the same is liable to be cancelled as in the instant case ordered by the Tribunal and later cancellation of penalty by the authorities."
(v) In view of the above discussion, the penalty of Rs. 22,22,966/- imposed by the AO u/s 271(1)(c) of the Act cannot be upheld, as the addition on the basis of which the penalty has been imposed was deleted by the Hon'ble ITAT. Hence penalty of Rs. 22.22,966/- imposed by the AO u/s 271(1)(c) of the Act is hereby cancelled."
In view of the above facts and circumstances, we do not find any reason to interfere in the order of ld. CIT (A), who by following the order of Tribunal in the case of the assessee, cancelled the penalty, the same is hereby upheld.
5. In the result, appeal of the revenue is dismissed.
Order pronounced in the open court on 11/11/2016.
Sd/- Sd/-
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(VIKRAM SINGH YADAV) ( KUL BHARAT )
ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member
Jaipur
Dated:- 11/10/2016.
Das/
vkns'k dh izfrfyfi vxzsf"kr@Copy of the order forwarded to:
1. The Appellant- The DCIT, Circle-2, Jaipur.
2. The Respondent- M/s. Zuberi Engineering Co., Jaipur.
3. The CIT(A).
4. The CIT,
5. The DR, ITAT, Jaipur
6. Guard File (ITA No. 840/JP/2016)
vkns'kkuqlkj@ By order,
lgk;d iathdkj@ Assistant. Registrar
5
ITA No. 840/JP/2016.
M/s. Zuberi Engineering Co.