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Income Tax Appellate Tribunal, “B” BENCH, AHMEDABAD
Before: SHRI WASEEM AHMED&
PER Ms. MADHUMITA ROY - JM: The instant appeal preferred by the revenue is against the order dated 24.01.2017 passed by the Commissioner of Income Tax (Appeals) – 8, Ahmedabad under section 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred as to ‘the Act’) arising out of the order dated 24.09.2015 passed by the DCIT, Circle – 4(1)(2), Ahmedabad for the Assessment Year 2012-13.
The assessee has filed its return of income on 29.09.2012 declaring total loss of Rs. 21,76,48,367/-. The revised return of income was filed on 28.09.2013 declaring total loss of Rs. 22,20,12,614/-. Upon scrutiny u/s 143(3)
ITA No.796/Ahd/2017 DCIT vs. Vini Cosmetics Pvt. Ltd. Asst. Year. 2012-13 - 2 - of the Act, the assessment was finalized on 17.03.2015 assessing total loss at Rs.20,98,48,475/- disallowed on account of claim on loss to the tune of Rs. 1,21,63,139/-. Penalty proceeding was initiated for furnishing inaccurate particulars of income.
The brief facts leading to this case is this that Vini Sales and Distributions Pvt. Ltd. (VSDPL) was amalgamated with the assessee company in terms of the scheme of arrangement approved by the Hon’ble Gujarat High Court by and under its order dated 23.03.2012 w.e.f. 01.04.2010. The assessee initially claimed brought forward loss and unabsorbed depreciation of Rs. 1,21,63,139/- and Rs. 5,90,37,630/- pertains to the amalgamating company namely Vini Sales & Distribution Pvt. Ltd. for A.Y. 2010-11 and 2011-12 respectively. The Learned AO with the view that the assessee company was not liable to carry forward loss as per the provision of Section 72A(2) of the Act as amalgamation company was not in the business for a period of three years asked for explanation from the appellant. In reply whereof, the assessee accepted the loss of the said amalgamating company VSDPL relating to A.Y. 2010-11 of Rs. 1,21,63,139/- as not allowable. The assessee thereafter suo moto withdrew the claim of the said amount of Rs. 1,21,63,139/-. A revised return was also filed on 28.09.2013 copy whereof is on record before us. The Learned AO was of the opinion that only upon raising the query the assessee has withdrawn the wrong claim of set off loss. Had there been no such scrutiny of the case of assessee, the assessee would not have gone away from the excess benefit of carry forward of losses amounting to Rs. 1,21,63,139/- and consequent short levy of tax. The Leaned AO, therefore, came to a finding that inaccurate particulars of income was furnished by the assessee and thus penalty
ITA No.796/Ahd/2017 DCIT vs. Vini Cosmetics Pvt. Ltd. Asst. Year. 2012-13 - 3 - proceeding has been initiated and ultimately imposed penalty u/s 271(1)(c) of the Act upon being satisfied that the assessee has committed default of furnishing of inaccurate particulars of income. Consequently, penalty of Rs. 39,46,331/- was levied. In appeal, the penalty was deleted by the Learned CIT(A). Hence, the instant appeal filed by the Revenue before us.
At the time of hearing of the instant appeal the Learned Counsel appearing for the assessee submitted before us that while imposing penalty the Learned AO needs to establish beyond doubt that the assessee has concealed the particulars of income and inaccurate particulars of income were furnished deliberately. But in this particular case, there is only disallowance of brought forward loss not amounting to concealment by the assessee. In fact, all the material facts in the form of schedule relating to brought forward and carried forward losses and computation sheet in which all the facts are correctly mentioned was duly submitted before the Learned AO. Subsequently, such claim of brought forward and carried forward losses of amalgamating company VSDPL has been withdrawn by the assessee. Therefore, it is not a case of furnishing of inaccurate particulars neither of concealment of income by the assessee. Rather this is only an excess claim on brought forward and carried forward loss made by the assessee details whereof was filed with the return but without disturbing the returned loss. Penalty therefore, is not sustainable in the eye of law as argued by the Learned AR. He, thus, relied upon the order passed by the Learned CIT(A) deleting such penalty. On the other hand, Learned DR relied upon the order passed by the Learned AO.
ITA No.796/Ahd/2017 DCIT vs. Vini Cosmetics Pvt. Ltd. Asst. Year. 2012-13 - 4 - 5. We have heard the representative of the respective parties. We have also perused the relevant materials available on records. It appears from the records that the assessee by and under submission dated 17.02.2015 brought to the notice of withdrawing the claim of observed business loss and unobserved depreciation of VSDPL prior to the appointment date. The content of that submission is as follows: “In the course of hearing you have inquired about as to fulfillment of conditions for carried forward of unabsorbed business loss and unabsorbed depreciation of the amalgamating company i.e. Vini Sales and Distribution Pvt. Ltd. (VSDPL) in our case. In this connection, it may please be noted that conditions to fulfilled with respect to unabsorbed business loss and unabsorbed depreciation (prior to 1st April, 2010) are as per provision of sec. 72A of the Act. The fulfillments of conditions are stipulated as under Conditions to be fulfilled in case of VSDPL Remarks has been engaged in the business, in which the The company is incorporated accumulated loss occurred or depreciation on 07.11.2009 and hence the remains unabsorbed, for three or more years. condition is not fulfilled has held continuously as on the date of the The company is incorporated amalgamation at least three-fourths of the book on 07.11.2009. Hence, this is value affixed assets held by it two years prior to not applicable. the date of amalgamation
In view of the above the company has already withdrawn the claim of unabsorbed business loss and unabsorbed depreciation of VSDPL prior to the appointed dated vide our letter which was submitted to you on 06.02.2015.” The copy of revised return is also before us filed by the assessee. However, with the following observation the Learned AO levied the penalty: “Disallowance of ciairn of loss u/s. 72A. M/s. Vini Sales & Distribution Pvt. Ltd. (VSOPL) was amalgamated with the Assessee company as per the scheme of arrangement of amalgamation sanctioned the Hon'ble Gujarat High Court vide order dated 23.03.2012 w.e.f. 01.04.2010. While making the assessment, the A.O has noticed that the assessee company assessee has claimed brought forward loss
ITA No.796/Ahd/2017 DCIT vs. Vini Cosmetics Pvt. Ltd. Asst. Year. 2012-13 - 5 - and unabsorbed depreciation of Rs.1,21,63,139/- & Rs. 5,90,37,630/- pertaining to M/s. Vini Sales & Distribution Pvt. Ltd. for A.Y. 2010-11 & 2011-12 respectively. It was seen that the Assessee company was not liable to carry forward the loss as per the provision 72A(2) of the IT Act as the amalgamation company was not in the business for the period of at least three years. On the query being raised the Assessee accepted that the loss of VSDPL relating to AY 2010-11 of Rs.1,21,63,139/- is not allowable. The Assessee further submitted that it has suo moto withdrew the claim of Rs.1,21,63,139/- .Which was not correct as only after the raising the query the assessee had withdrawn the wrong claim of the set off loss. Had the case not been selected under scrutiny the Assessee would have been gone away with the excess benefit of carry forward of loss amounting to Rs.1,21,63,139/- and consequent short levy .of tax. Thus, these facts clearly established that the assessee has furnished inaccurate particulars of income as per the provisions of Act and the A.O has correctly initiated penalty proceedings u/s 271(1)( c) of the Act. 4. Further, the Hon'ble Supreme Court in the case of Union of India v/s. Dharmendra Textile Processors [212 CTR 432 (SC)] has held that 'the penalty u/s.27T(1)(c) is a civil liability and element of willful concealment is not essential ingredient for attracting civil liability as the case in the matter of prosecution u/s.276C of the Act. 5. In view of the above, I am satisfied that the assessee has committed default of furnishing of inaccurate particulars of income, which attracts penalty provisions of section 271(1)(c) of the Act. I am satisfied that the assessee has furnished inaccurate particulars of income to the extent of Rs 1,21,63,139/- Therefore, minimum penalty leviable @ 100% of tax sought to be evaded comes to Rs.39,46,331/- and maximum penalty @300% of tax sought to be evaded comes to Rs.1,18,38,993/- Therefore, looking to the facts of the case, I hereby direct the assessee to pay minimum penalty of Rs.39,46,331/- u/s.271(1)(c) of the Act.”
We have also carefully considered the order passed by the Learned AO. It appears that the assessee claimed Rs.1,21,63,139/- as brought forward loss for last year of the amalgamating company in its return of income for A.Y. 2010- 11. Realizing the mistake the assessee withdrew the said wrong claim of carry forward loss of A.Y. 2010-11 which is not disputed by the Learned AO. Since the returned loss of the appellant company has not changed as a loss of
ITA No.796/Ahd/2017 DCIT vs. Vini Cosmetics Pvt. Ltd. Asst. Year. 2012-13 - 6 - Rs.1,21,63,139/- in dispute is only brought forward and carried forward loss. This does not amount to tax evasion. It is only the part of schedule giving details of the brought forward and carry forward losses and not the part of the returned income loss. It is a bonafide mistake and subsequently withdrew by the assessee, question of imposing penalty u/s 271(1)(c) for furnishing of inaccurate particulars of income this cannot arise at all. The Learned CIT(A) while deleting the penalty relied upon the judgment passed by the Hon’ble Tribunal at Chandigarh Bench in ITA No.529/Chd/2014 for A.Y. 2007-08 in the matter of DCIT-vs-The Bilaspur Distt. Co-op Marketing and Consumer Federation Ltd. Mandi where it has been decided that when the assessee has disclosed all particulars rightly before the Learned AO during the assessment proceeding and nowhere it was found any concealment of any facts relating to such particulars of income or furnishing of inaccurate particulars, penalty cannot be imposed. The judgment cited by the Hon’ble Supreme Court in the matter of Price Water House Cooper Pvt. Ltd.-vs-CIT (2012) 348 ITR 306 (SC) was also relied upon.
It appears from the records that the assessee explained the situation to the best possible manner pleaded bonafide. Such explanation was not found false by the Learned AO. The materials relating to returned income was duly disclosed before the Learned AO. At that relevant point of time, there was no iota of evidence of concealment of any fact relating to particulars of income or furnishing of inaccurate particulars of income. Merely because the assessee had claimed the expenditure, which was not accepted or was not acceptable to the revenue, that by itself would not, attract the penalty u/s 271(1)(c) of the
ITA No.796/Ahd/2017 DCIT vs. Vini Cosmetics Pvt. Ltd. Asst. Year. 2012-13 - 7 - Act. In that view of the matter the penalty order was rightly deleted by the Learned CIT(A).
Taking into consideration the entire aspect of the matter we are of the view that the impugned order suffers for no illegality and hence the same is hereby upheld.
In the result, Revenue’s appeal is dismissed. This Order pronounced in Open Court on 15/03/2019
Sd/- Sd/- ( WASEEM AHMED ) ( Ms. MADHUMITA ROY ) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 15/03/2019 Priti Yadav, Sr.PS आदेश 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)-8, Ahmedabad. 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, स�या�पत ��त //True Copy// उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील�य अ�धकरण, अहमदाबाद / ITAT, Ahmedabad