Income Tax Appellate Tribunal - Mumbai
Bunge India Pvt. Ltd., Mumbai vs Dcit 8(1), Mumbai on 13 September, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL " B" BENCH, MUMBAI
BEFORE SRI MAHAVIR SINGH, JM AND SRI MANOJ KUMAR AGGARWAL, AM
ITA No. 7069/Mum/2014
(A.Y:2007-08)
Bunge India Private Limited The Dy. Commissioner of
601 C & 601 D, 6th Floor Income Tax 8(1)
The Capital, C-70, G Block, Aayakar Bhavan, Mumbai
Vs.
Bandra Kurla Complex,
Bandra East, Mumbai-400051
PAN No.AAACG7034K
Appellant .. Respondent
Assessee by .. Shri V. Sankar Aiyar, AR
Revenue by .. Shri Suman Kumar, DR
Date of hearing .. 07-09-2017
Date of pronouncement .. 13-09-2017
ORDER
PER MAHAVIR SINGH, JM:
This appeal by the assessee is arising out of the order of CIT(A)-15 Mumbai, in appeal No. CIT(A)-15/Arr. 251/2014-15, dated 05-08-2014. The Assessment was framed by DCIT, Mumbai for the A.Y. 2007-08 vide order dated 30-12-2010 under section 144(C) read with section 143(3) of the Income Tax Act, 1961(hereinafter 'the Act'). The penalty under dispute is levied by the DCIT circle-8(1), Mumbai u/s 271(1)(c) of the Act vide his order dated 28-03-2013.
2. At the outset, the learned Counsel for the assessee stated that he has filed additional ground which is for assumption of jurisdiction by the AO for levy of penalty without elaborating any specific charge. For this he raised following ground: -
2 ITA No. 7069/Mum/2014Bunge India Private Limited ( A . Y : 2 0 0 7 - 0 8 ) "On the facts and in the circumstances of the case, it is submitted that the notice under section 274 of the Act is defective bad in law and hence the penalty proceedings based on the aforesaid notice be cancelled."
3. Briefly stated facts are that the AO initiated penalty proceedings under section 271(1)(c) of the Act on the following items: -
"i. Addition under section 92CA(4) of IT Act as discussed in Para 1, as per arm's length price determined by the Transfer Pricing Officer-Mumbai vide order dated 30-10-2009 (Para 4) 29,73,43,853/-.
ii. Addition on account of disallowance of non- compete payment claimed as revenue expenditure (Para6) 2,46,34,254/-
iii. Donation (Para 7) 85,000/-
iv. Addition on account of disallowance of marketing
research expenses (para9) 45,20,493
v. Provision for obsolete stock (Para 9) 1,51,54,287
vi Provision for Employees Stock Option Plan
30,51,840
vii. Excess claim of depreciation (Para 11) 12.26,771
Viii. Provision for unrealized loss on commodity hedging (Para 12). 49,09,494"
The AO initiated the penalty proceedings on the above mentioned heads of income u/s 271(1)(c) of the Act by a common and identically worded phrase used under each of the head, which reads as under: -
3 ITA No. 7069/Mum/2014Bunge India Private Limited ( A . Y : 2 0 0 7 - 0 8 )
"4.3 The penalty proceedings u/s 271(1)(c) of the IT Act are being initiated separately for furnishing of inaccurate particulars and concealment of income."
4. Subsequently, while levying penalty, the AO levied the penalty for furnishing of inaccurate particulars of income on the above mentioned heads and also for the default under explanation (1) to section 271(1)(c) of the Act. For this, he observed in para 5 of his penalty order as under: -
"5. In view of the above position, it is hereby held that the assessee has furnished inaccurate particulars of income and has committed a clear default within the meaning of section 271(1)(c) of the Income Tax Act, 1961 read with Explanation (1) to section 271(1)(c) of the Act, thereby suppressing its real income by Rs. 3,21,98,953/-. Hence, this is a fit case for levy of penalty u/s 271(1)(c) of the Income Tax Act, 1961."
5. In view of the above facts, the learned Counsel for the assessee argued that the AO while levying penalty u/s 271(1)(c) of the Act or while initiating penalty on all the above mentioned heads, is not sure about charge under which the penalty has been initiated or levied by the AO. In such circumstances, the learned Counsel for the assessee argued that the penalty u/s 271(1)(c) of the Act stood vitiated.
6. On the other hand, the learned Sr. DR only relied on the orders of the lower authorities.
7. We have heard the rival contentions and gone through the facts and circumstances of the case. We find from the facts of the case that the penalty order passed by the AO under section 271(1)(c) of the Act is on the charge of inaccurate particulars of income in relation to many heads of income whereas initiation in the order of assessment is for 4 ITA No. 7069/Mum/2014 Bunge India Private Limited ( A . Y : 2 0 0 7 - 0 8 ) concealment of particulars of income or for furnishing of inaccurate particulars of income. The penalty cannot be levied under section 271(1)(c) of the Act on the charge which is different than the charge initiated i.e. initiated for furnishing of inaccurate particulars of income whereas levied under explanation 1 to section 271(1)(c) of the Act. Accordingly, we find that this issue is covered by Hon'ble Bombay High Court in the case of CIT vs. Samson Perinchery (Bom) in ITA No. 1154 of 2014 and dated 05-01-2017.
8. As regards to the specific charge, we find that the AO while levying penalty under section 271(1)(c) of the Act in his discussion clearly stated that the expression used in section 271(1)(c) of the Act "furnishing of inaccurate particulars of income" and "concealing the particulars of income" are two distinct term. This issue is dealt by Hon'ble Bombay High Court in the case of Samson Perinchery (supra) wherein Hon'ble Supreme Court relying on the decision of the Karnataka High Court in the case of CIT vs. Manjunath Cotton & Ginning Factory [2013] 359 ITR 565 (Karnataka) observed as under: -
"The impugned order of the Tribunal deleted the penalty imposed upon the Respondent Assessee. This by holding that the initiation of penalty under Section 271(1)(c) of the Act by Assessing Officer was for furnishing inaccurate particulars of income while the order imposing penalty is for concealment of income. The impugned order holds that the concealment of income and furnishing inaccurate particulars of income carry different connotations. Therefore, the Assessing Officer should be clear as to which of the two limbs under which penalty is imposable, has been contravened or indicate that both have been contravened while initiating penalty proceedings. It cannot be that the initiation would be 5 ITA No. 7069/Mum/2014 Bunge India Private Limited ( A . Y : 2 0 0 7 - 0 8 ) only on one limb i.e. for furnishing inaccurate particulars of income while imposition of penalty on the other limb i.e. concealment of income. Further, the Tribunal also noted that notice issued under Section 274 of the Act is in a standard proforma, without having striked out irrelevant clauses therein. This indicates non application of mind on the part of the Assessing Officer while issuing the penalty notice."
Hence, on the issue of specific charge penalty levied by the AO cannot be sustained. Accordingly, we reverse the orders of the lower authorities i.e. of the AO and CIT(A) levying and confirming the penalty. We allow the appeal of the assessee.
9. In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 13-09-2017.
Sd/- Sd/-
(MANOJ KUMAR AGGARWAL) (MAHAVIR SINGH)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai, Dated: 13-09-2017
Sudip Sarkar /Sr.PS
6
ITA No. 7069/Mum/2014
Bunge India Private Limited ( A . Y : 2 0 0 7 - 0 8 ) Copy of the Order forwarded to:
1. The Appellant
2. The Respondent.
3. The CIT (A), Mumbai.
4. CIT
5. DR, ITAT, Mumbai
6. Guard file. //True Copy// BY ORDER, Assistant Registrar ITAT, MUMBAI