Income Tax Appellate Tribunal - Kolkata
Ranga Electric Trading Co., Kolkata vs Assessee
I . T. A . N o . : 1 2 1 0 / K o l . / 2 0 11
A s s e s s m e nt y e a r : 2 0 0 6- 0 7
Page 1 of 4
IN THE INCOME TAX APPELLATE TRIBUNAL,
KOLKATA 'A' BENCH, KOLKATA
Before Shri Pramod Kumar (Accountant Member),
and Shri Mahavir Singh (Judicial Member)
I.T.A. No .: 1210/ Kol . / 2011
Assessme nt year : 20 06-07
Ranga El ectri c Trading Co.,............................................Appella nt
Shop No . G308, 22, R abindra S arani,
Kolka ta-700 073
[PAN : AADFR 77 31 E]
-Vs.-
In come Tax Officer ......................... ...........Responden t
Ward-37(4), Kolk ata
Appearances by:
Shri K.K. Harsh, for the appellant
Shri Amitabha Roy, D.R., for the respondent
Date of co ncluding t he hea ri ng : May 0 2, 20 12
Date of prono unci ng the o rde r : June 29, 2012
O R D E R
Per Pramod Kumar:
1. The short issue that we are required to adjudicate in this case is whether or not the CIT(Appeals) was justified in confirming the penalty of Rs.33,659/- imposed on the assessee u/s. 271(1)(c) of the Income Tax Act. The assessment year involved is 2006-07 and the impugned CIT(Appeals)'s order was passed on 15.07.2011.
2. The quantum addition, in respect of which the impugned penalty was levied, was made as of u nexplained credit amounting to Rs.1,00,000/- said to have been received as advance from customer. The assessee's appeal to CIT (Appeals) was rejected and the matter was not I . T. A . N o . : 1 2 1 0 / K o l . / 2 0 11 A s s e s s m e nt y e a r : 2 0 0 6- 0 7 Page 2 of 4 perused further. It was in this backdrop that the impugned penalty was levied. The Assessing Officer noted that the assessee has not been able to prove the genuineness of creditor and that, in view of Hon'ble Supreme C ourt's judgment in the case of Union of India -vs.-
Dharmendra Textile Processor (166 Taxman 65) the penalty being a civil liability, it is a fit case for imposition of penalty. Aggrieved, assessee carried the matter in appeal before the CIT(Appeals) but without any success. Learned CIT(Ap peals) confirmed the penalty and observed as follows :-
"2.4. 1 h av e carefully c onsidered va ri ous judicial p ron oun cem ent s cited ab ov e and th e decisi on taken by my p redecessor CIT(A) in his order no. 559 /CIT( A)-XXIV/37(4)/08-09 d at ed 25.02 .2010. In the instant case, th e appell ant has f ailed to furni sh satisf actory expl anati on s reg arding the credit of Rs.1,00,000 /- which has b een sh own as adv anc e f rom Visw as & Visw as duri ng F.Y. 2005-0 6. In ab sence of satisf actory expl an ations, th e Assessing Officer h as t reated it as un expl ain ed cash credit u/s. 68 and ad ded it to th e t otal inc ome of the app ellant. No appeal has b een filed before th e ITAT ag ain st the CIT(A)'s order. Th e H on'ble Supreme Court in th e case of Union of India v s. Dh armend ra Textiles Proc essors [2008] 30 6 ITR 277 h as view ed as f oll ow s:
"Th e Explanati ons appen d ed to secti on 27 2(1)(c) of th e Income- tax Act enti rely indi cate th e el ement of strict liability on the assessee for conc ealment or for giving ina ccurat e p articul ars w hile filing th e retu rn . Th e judgment in Dilip N. Shroff' s case /200 7] 8 Scal e 304 (SC)(3) h as not c onsidered th e eff ect and rel ev anc e of section 276C of the In come-t ax Act. Th e obj ect behind the en actment of section 271(1)(c) read with the Explanati ons indicates that the said section h as b een en acted to provid e for a remedy fo r l oss of revenu e. The p en al ty under th at provi si on i s a civil liability. Wilful conc eal ment is not an essenti al ingredi ent f or attracting civil liabi lity as is th e case in the matter of prosecuti on und er section 276 C of the Incom e-tax Act."
I a m of th e view th at this deci si on of th e Hon'bl e Sup reme Court is squarely applicabl e in thi s c ase. Accordingly, I h eld th at the app ell ant has fu rnished inaccurate p articul ars of income in t erm s of I . T. A . N o . : 1 2 1 0 / K o l . / 2 0 11 A s s e s s m e nt y e a r : 2 0 0 6- 0 7 Page 3 of 4 section 271(1)(c). Th e pen alty of Rs.33,659/- imposed u/s 27l(1)(c) of the I.T. Act is confirmed. Th ese g round s are dismissed".
3. The assessee is not satisfied and is in further appeal before us.
4. We have heard the rival contentions, perused the material on record, and duly considered factual matrix of the case as also the applicable legal position.
5. We find that the assessee had received the advance from customer by cheque and the refund was also made by cheque as evident from the documents produced before us in the paper book. When learned Departmental Representative's attention was drawn to the same, he did not have much to say beyond placing reliance on the orders of the authorities below. We have also noted that even after Hon'ble Supreme Cou rt's decision in the case of Dharmendra Textile Processors (supra), there is no change in the position that when assessee has a reasonable explanation, even when he is not able to establish factual elements embedded therein to the hilt, the penalty u/s. 271(1)(c) cannot be imposed. We may refer to a coordinate Bench's decision in the case of Kanbery Software India Pvt. Ltd. -vs.- DCIT (31 SOT 153) in this regard which has, at length explained the limited impact of Hon'ble Supreme Court's decision in the case of Dharmendra Textile Processors (supra). Therefore, not only that the authorities below were in error on facts but also on the legal position. In our considered view, the assessee's explanation of having received the money as customer advance, whether or not acceptable in quantum proceedings, was a reasonable explanation so far penalty p roceedings I . T. A . N o . : 1 2 1 0 / K o l . / 2 0 11 A s s e s s m e nt y e a r : 2 0 0 6- 0 7 Page 4 of 4 were concerned. We are, therefore, of the considered view that it was not a fit case for imposition of penalty u/s. 271(1)(c) and we, therefore, direct the Assessing Officer to delete the impugned penalty. The assessee gets the relief accordingly.
6. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open Court today on 29 t h day of June, 2012.
Sd/- Sd/-
Mahavir Singh Pramod Kumar
(Judicial Member) (Accountant Member)
Kolkata, the29th day of June, 2012
Copies to : (1) Th e app ell ant
(2) Th e respon dent
(3) CIT
(4) CIT(A)
(5) Th e D ep artment al Rep resentativ e
(6) Guard File
By order etc
Assis tant Registrar
Income Tax Appe llate Tribunal
Kolkata benches, Kolkata
Laha/Sr. P.S.