Income Tax Appellate Tribunal - Chandigarh
M/S 10-D Retails, Chandigarh vs Ito, W-1(3), Chandigarh on 6 August, 2019
आयकर अपील य अ धकरण,च डीगढ़ यायपीठ, च डीगढ़ I N T H E I NC OM E T A X A P PEL L A TE T RI B U N AL C H A NDI G A RH B EN CH , ' SM C' , C H A N DI G A RH ी संजय गग , या यक सद य B E F OR E S H R I S A N J A Y G A R G, J U D I C I A L M E M B E R आयकर अपील सं./ ITA No. 1 2 7 7 / C H D / 2 0 1 8 नधा रण वष / Assessment Year : 2011-12 M/s 10D Retails, Vs. The ITO, House No.514, Sector 8-B, बनाम Ward 1(3), Chandigarh Chandigarh थायी लेखा सं./PAN NO: AAAFZ7556L अपीलाथ /Appellant यथ /Respondent नधा रती क ओर से/Assessee by : Shri M.S.Vohra, Advocate राज व क ओर से/ Revenue by : Sh. Manjit Singh, CIT DR सन ु वाई क तार%ख/Date of Hearing : 25.07.2019 उदघोषणा क तार%ख/Date of Pronouncement : .2019 आदे श/Order The present appeal has been preferred by the assessee against the order dated 06.07.2018 of the Commissioner of Income Tax (Appeals)- 4, Ludhiana [hereinafter referred to as 'CIT(A)'].
2. The assessee in this appeal has agitated the levy of penalty u/s 271 (1)(c) of the Income Tax Act, 1961 (in short 'the Act') imposed by the Assessing Officer and further confirmed by the Ld. CIT(A).
3. The brief facts relating to the issue are that in the quantum proceedings, the addition of Rs. 3 lacs was made by the Assessing Officer into the income of the assessee on account of unexplained ITA No. 1277-Chd-2018- M/s IOB Retails, Chandigarh 2 deposits. The penalty proceedings u/s 271 (1)(c) were initiated separately for concealment of income and furnishing of inaccurate particulars of income and thereby a penalty of Rs. 92,700/- was imposed by the Assessing Officer @ 100% of the tax amount sought to be evaded.
4. In appeal, the Ld. CIT(A) deleted the penalty in respect of the addition made by the Assessing Officer of an amount of Rs. 70,000/-, however, in respect of the remaining addition of Rs. 2,30,000/- the Ld. CIT(A) confirmed the penalty @ 100% of tax amount sought to be evaded on this addition.
5. Being aggrieved by the above order of the Ld. CIT(A), the assessee has come in appeal before us. The sole contention raised by the Ld. Counsel for the assessee has been that in this case the assessee had declared loss of Rs. 4,02,723/- in the return of income. Consequent to the addition made of Rs. 3 lacs made by the Assessing Officer, the resultant effect was reduction of this amount out of the total loss claimed. However, the total income of the assessee still remained in negative i.e. net loss of Rs. 1,02,723/-. The Ld. counsel placing reliance on the decision of the Hon'ble jurisdictional of Punjab & Haryana High Court in the case of 'CIT vs Pritipal Singh' dated 3.11.1988 reported in (1990) 183 ITR 69 (P&H), has submitted that as per the law laid down by the Hon'ble High Court, loss cannot be termed as 'income'. That the penalty provisions of section 271 (1)(c) of the ITA No. 1277-Chd-2018- M/s IOB Retails, Chandigarh 3 Act are attracted only in the case of an assessee having positive income and not in the case of loss, as the question of concealment of income to avoid the payment of tax would arise only in the former case. The Ld. Counsel, therefore, has submitted that the issue is squarely covered by the aforesaid decision of the Hon'ble jurisdictional High Court and since in the case in hand even after the addition made by the Assessing Officer, there was a net loss, hence, the penal provisions of section 271 (1)(c) of the Act would not be attracted in this case.
6. The Ld. DR, on the other hand, has relied upon the findings of the lower authorities and also placed reliance on Explanation 4 to section 271 of the Act, as were applicable for the assessment year under consideration, and has submitted that even where the net effect is reduction of loss, the penalty can be imposed on the amount so reduced from the net loss declared by the assessee.
7. I have considered the rival submission and have also gone through the record. Explanation 4(a) to section 271 as amended by Finance Act, 2002 w.e.f 1.4.2003 reads as under:-
"Explanation 4 - For the purpose of clause (iii) of this sub section, the expression "the amount of tax sought to be evaded" -
(a) in any case where the amount of income in respect of which particulars have been concealed or inaccurate particulars have been furnished has the effect of reducing the loss declared in the return or converting that loss into income, means the tax that would have been chargeable on the income in respect of which particulars have been concealed ITA No. 1277-Chd-2018-
M/s IOB Retails, Chandigarh 4 or inaccurate particulars have been furnished had such income been the total income."
8. The decision relied upon by the counsel for the assessee in the case of 'CIT vs Pritipal Singh' (supra) is dated 3.11.1988 in respect of the issue involved for the assessment year 1970-71. However, a lot of water has flowed under the bridge since then. As per the aforesaid statutory provisions as given in Explanation 4 to section 271, in the case where the amount of income in respect of which the particulars have been concealed or inaccurate particulars of income furnished has the effect of reducing the loss declared in the return of income, the provisions of section 271C of the Act would apply on the amount so reduced from the loss declared.
In view of this, we do not find any merit in the appeal of the assessee, and the same is accordingly dismissed.
Order pronounced in the Open Court on 06.08.2019 Sd/-
(संजय गग / SANJAY GARG)
या यक सद य/ Judicial Member
Dated : 06.08.2019
"आर.के."
आदे श क त,ल-प अ.े-षत/ Copy of the order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. आयकर आयु/त/ CIT
4. आयकर आयु/त (अपील)/ The CIT(A)
5. -वभागीय त न2ध, आयकर अपील%य आ2धकरण, च4डीगढ़/ DR, ITAT, CHANDIGARH
6. गाड फाईल/ Guard File ITA No. 1277-Chd-2018-
M/s IOB Retails, Chandigarh 5 आदे शानस ु ार/ By order, सहायक पंजीकार/ Assistant Registrar