Income Tax Appellate Tribunal - Rajkot
Hariom Projects Pvt. Ltd.,, ... vs Dy. Commr. Income Tax, Circle-1, ... on 8 February, 2017
आयकर अपील य अ
धकरण, राजकोट यायपीठ, राजकोट ।
IN THE INCOME TAX APPELLATE TRIBUNAL
RAJKOT BENCH, RAJKOT
[ Conducted through E-Court at Ahmedabad ]
BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER And
SHRI MAHAVIR PRASAD, JUDICIAL MEMBER
आयकर अपील सं./I.T.A. No.667/RJT/2014
( नधा रण वष / Assessment Year : 2006-07)
Hariom Projects Pvt.Ltd. बनाम/ The Dy.CIT
17/2, Galaxy Commerical Vs. Circle-1
Centre Rajkot
Jawahar Road, Rajkot
थायी ले खा सं . /जीआइआर सं . / PAN/GIR No. AABCH 4446 B
(अपीलाथ /Appellant) .. ( यथ / Respondent)
अपीलाथ ओर से / Appellant by : Shri D.M. Rindani, AR
यथ क! ओर से/Respondent by : Shri Arvind Sontakke,
Sr.DR
ु वाई क! तार ख /
सन Date of Hearing 02/02/2017
घोषणा क! तार ख /Date of Pronounce ment 08/02/2017
आदे श / O R D E R
PER PRADIP KUMAR KEDIA, AM :
The captioned appeal filed by Assessee is directed against the order of the Commissioner of Income Tax(Appeals)-I, Rajkot ['CIT(A)' in short] dated 13/10/2014 against imposition of penalty of Rs.3,14,440/- under s.271(1)(c) relevant to Assessment Year (AY) 2006-07.
ITA No.667/RJT/2014Hariom Projects P.Ltd. Vs. DCIT Asst.Year - 2006-07 -2-
2. The solitary ground of appeal of the assessee reads as under:
The learned Commissioner of Income Tax Appeals)-I, Rajkot has erred in dismissing the appeal and thereby confirming the imposition of penalty of Rs.3,14,440/- levied u/s.271(1)(c) by the Deputy Commissioner of Income Tax, Circle-1, Rajkot is unwarranted, unjustified and bad in law.
3. Briefly stated, the assessee-company is engaged in carrying on activities of military civil construction work. The return of income relevant to AY 2006-07 was filed declaring a total income of Rs.22,07,370/-. The books of accounts of the assessee were duly audited. Return of income filed accompanied statutory Audit Report under companies Act, 1956 and also Tax Audit Report under s.44AB of the Income Tax Act, 1961 (hereinafter referred to as "the Act"). The return was subjected to scrutiny assessment. The Assessing Officer (AO) while assessing the total income inter alia made additions/disallowances on account of (i) inadmissible expenses under s.40A(3) of Rs.8,61,789/- and
(ii) on account of inadmissible expenses under section 40(a)(iii) r.w.Rule 6DD of the Income Tax Rules, 1962 for a sum of Rs.91,055/-. The assessment was followed by penalty order dated 12/03/2013. The assessee objected to the imposition of penalty on the aforesaid additions/disallowances before the CIT(A). The CIT(A) however, did not find merit in various pleas raised by the assessee. Accordingly, penalty was sustained by the CIT(A).
ITA No.667/RJT/2014Hariom Projects P.Ltd. Vs. DCIT Asst.Year - 2006-07 -3-
4. Aggrieved by the order of the CIT(A), the assessee preferred appeal before the Tribunal.
5. The Ld.AR for the assessee Mr.D.M. Rindani, at the outset, submitted that the appeal has been filed against two types of disallowances. First disallowance of Rs.8,61,789/- is on account of provision of income tax etc. which is not an admissible business expenditure. The second disallowance of Rs.91,055/- represents disallowance towards expenditure incurred in cash in excess of the prescribed limits. It was submitted that both the disallowances have been disclosed in column No.12(f) of the tax Audit Report. The Auditor has also put a note to the effect at relevant column in his Audit Report. The Ld.AR adverted our attention to the income tax filed by the assessee and submitted that the aforesaid disallowances have been duly carried out in the return of income and taxable income of Rs.22,07,370/- was determined which amount is the starting point for determination of the assessed income. However, in the assessment proceedings and in the first appellate proceedings the assessee somehow could not explain to the AO or to the CIT(A) that the disallowances have already been carried out. Thus, proceeding on the misconception of the facts, the AO made addition towards impugned disallowances which were already carried out ITA No.667/RJT/2014 Hariom Projects P.Ltd. Vs. DCIT Asst.Year - 2006-07 -4- while filing the return of income. The Ld.AR accordingly submitted that the assessee, in fact, has suffered taxation on the disallowance twice. However, these facts could not be brought to the notice of the Revenue and therefore remedial action could not be taken at the lower level. In these facts, on the face of full disclosure of disallowances in the tax Audit Report and coupled therewith, actual disallowance in the computation of income, there is no warrant to impose penalty under s.271(1)(c) of the Act.
6. The Ld.DR Mr.Arvind Sontakke, on the other hand, relied upon the order of the CIT(A).
7. On careful consideration of the facts placed on record, we find that it is undisputable fact that the disallowances made in the assessment order giving rise to the penalty were properly disclosed the tax Audit Report. The tax Audit Report was duly placed before the AO. Thus, the AO was made privy to the relevant facts in this regard without any suppression of facts. Secondly, as claimed by the assessee, the disallowances were actually carried out in the return of income and therefore quantum addition itself is at odds with the true income. We take note of the arguments of the assessee that the addition itself is not justified since the disallowances were already carried out while filing the return which remained unexplained in the course of assessment proceedings as well as in penalty proceedings. On these facts, it is ITA No.667/RJT/2014 Hariom Projects P.Ltd. Vs. DCIT Asst.Year - 2006-07 -5- crystal clear that circumstances stipulated for imposition of penalty under s.271(1)(c) of the Act are clearly absent. In the absence of any concealment of income, the imposition of penalty under s.271(1)(c) is not sustainable in law. Accordingly, we are inclined to set aside and cancel the order of the CIT(A) and quash the penalty so imposed.
8. In the result, appeal of the Assessee is allowed.
Order pronounced in the Court on 08/02/2017 at Ahmedabad.
Sd/- Sd/-
( MAHAVIR PRASAD) ( PRADIP KUMAR KEDIA )
JUDICIAL MEMBER ACCOUNTANT MEMBER
Ahmedabad ; Dated 08/02/2017
ट .सी.नायर, व.,न.स./T.C. NAIR, Sr. PS
आदे श क त ल प अ े षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent.
3. संबं
धत आयकर आयु.त / Concerned CIT
4. आयकर आयु.त(अपील) / The CIT(A)-I, Rajkot
5. 2वभागीय ,त,न
ध, आयकर अपील य अ
धकरण,राजोकट/DR,ITAT, Rajkot
6. गाड@ फाईल / Guard file.
आदे शानुसार/ BY ORDER,
स या2पत ,त //True Copy//
उप/सहायक पंजीकार (Dy./Asstt.Registrar)
आयकर अपील%य अ&धकरण, राजोकट / ITAT, Rajkot