GODAVARI KHORE SAHAKARI DUDH UTPADAK SANGH LTD,AHMEDNAGAR vs. ASSISTANT COMMISSIONER OF INCOME-TAX, AHMEDNAGAR CIRCLE, AHMEDNAGAR

This is an appeal filed by the assessee directed against the order of ld. Commissioner of Income Tax (Appeals)- 2, Pune (‘CIT(A)’ for short) dated 12.07.2017 confirming the levy of penalty u/s 271(1)(c) of the Income Tax, Act, 1961 (‘the Act’ for short) for the assessment year 2013-14.

Briefly, the facts of the case are that the appellant is cooperative society engaged in the business of milk processing. The appellant society filed the return of income for the assessment year 2013-14 through electronically mode on 22.09.2013 disclosing Rs.Nil income after setting off of the brought forward losses. Against the said return of income, the assessment was completed by the Assistant Commissioner of Income Tax, Ahmednagar Circle, Ahmednagar (‘the Assessing Officer’ for short) u/s 143(3) of the Act vide order dated 01.03.2016 at a total income of Rs.Nil after setting off of brought forward losses of Rs.5,31,49,786/-. While doing so, the Assessing Officer made disallowance of depreciation of Rs.10,55,526/-, disallowance of belated payment of employees contribution to PPF of Rs.33,43,522/-, additions on account of profit from business of sale of fertilizers and seeds and interest received from MSEB etc. Simultaneously, the Assessing Officer issued a show-cause notice for levy of penalty u/s 271(1)(c) of the Act for concealment or inaccurate of particulars of income. In response to the said show-cause notice, it is the additions made by the Assessing Officer during the course of assessment proceedings are based on the information filed by the assessee and there is no deliberate attempt to file any inaccurate particulars of income. It is only on account of mistakes occurred by inadvertence and, therefore, levy of penalty is not justified. However, rejecting the explanation of the assessee, the Assessing Officer proceeded with the levy of penalty for furnishing of inaccurate particulars and levied penalty of Rs.4,43,000/- vide order dated 12.09.2016. 3. Even an appeal before the ld. CIT(A), the ld. CIT(A) confirmed the levy of penalty. 4. Being aggrieved, the appellant is before us in the present appeal. 5. Before us, it is contended that no penalty can be levied in respect of additions made on estimate basis and the additions are made on mistakes occurred on account of inadvertence. He further submitted that there is no Assessing Officer. Thus, it was prayed that the penalty levied be deleted.

On the other hand, ld. Sr. DR placed reliance on the orders of the lower authorities.

We heard the rival submissions and perused the material on record. The only issue in the present appeal relates to whether or not the levy of penalty u/s 271(1)(c) of the Act is justified? On mere reading of the assessment order, it would suggest that the additions in respect of which penalty u/s 271(1)(c) of the Act was levied is based on the information filed by the appellant society. There is no finding in the impugned penalty order by the Assessing Officer as to which part of the information filed by the appellant society is found to be inaccurate or false. In the absence of this finding, the levy of penalty cannot be sustained. Reliance in this regard can be placed on the following decisions of the Hon’ble High Courts :- (i) CIT vs. Aero Traders Pvt. Ltd., 322 ITR 316 (Del); (ii) CIT vs. Parkash Industries Ltd., 322 ITR 622 (P&H); (iii) CIT vs. Vijay Kumar Jain, 325 ITR 378 (Chhattisgarh); and, (iv) CIT vs. S S P Ltd, 328 ITR 643 (P&H).

In the light of the above legal position, we are of the considered view that the impugned order of penalty cannot be sustained in the eyes of law. Accordingly, the orders of the lower authorities are set-aside and we direct the Assessing Officer to delete the penalty of Rs.4,43,000/- levied u/s 271(1)(c) of the Act.