DCIT CENTRAL CIRCLE 5(2), MUMBAI vs. IPCA LABORATORIES LIMITED, MUMBAI
Before: SHRI NARENDER KUMAR CHOUDHRY & SHRI PRABHASH SHANKARAssessment Year: 2009-10 & Assessment Year: 2012-13
Per : Narender Kumar Choudhry, Judicial Member:
These appeals have been preferred by the Revenue
Department against the order even dated 30.10.2024, impugned herein, passed by the Ld. Commissioner of Income Tax (Appeals)
(in short Ld. Commissioner) u/s 250 of the Income Tax Act, 1961
(in short ‘the Act’) for the A.Y. 2009-10 & 2012-13. ITA No.25/M/2025 & ors.
M/s. IPCA Laboratories Limited
2
2. As both the appeals are based on the almost identical facts and issues and the penalties, therefore for the sake of brevity the same were heard together and are being disposed of by this composite order by taking into consideration the facts and circumstances and issues involved in ITA No.25/M/2025 as a lead case and result of the same would be mutatis mutandis applicable to both the appeals under consideration.
Coming to ITA No.25/M/2025, the Assessing Officer (AO) vide assessment order dated 30.12.2016 u/s 153A r.w.s. 143(3) of the Act has made the certain disallowances as mentioned below in para no. 5 of this order, which have been affirmed by the Ld. Commissioner, vide order dated 31.03.2021. 4. Therefore the disallowances affirmed, were subjected to levy of penalties by the AO vide penalty order dated 16.03.2022
Subsequently the Hon’ble Tribunal vide composite order in ITA no.880/M/2021 & ors. decided on 08.04.2024, partly deleted/affirmed the disallowances to the extent as detailed below:
Sr.
No.
Nature of Addition /
Disallowance
Amount confirmed by CIT(A) in quantum proceedings on which penalty levied
Amount confirmed by ITAT in quantum proceedings
Remarks
1. Disallowance on deduction of profit on sale of empty containers claimed u/s 80IC
10,27,691
0
Deleted by ITAT (Para 4.1-
4.5 of ITAT order pg. no. 7 &
8)- Penalty deleted by CIT(A) since quantum deleted.
2. Disallowance on account of additional depreciation
2,84,75,543
0
Assessee claimed additional deprecation in AY 2008-09
(put to use for less than 180
in AY 2008-09) and part of the additional depreciation claimed in AY 2009-10. AO disallowed stating no ITA No.25/M/2025 & ors.
M/s. IPCA Laboratories Limited
3
concept to carry forward additional depreciation.
Confirmed by CIT(A). ITAT deleted (Para 4.1-4.5 of ITAT order pg. no. 7 & 8) - Penalty deleted by CIT(A) since quantum deleted.
3. Disallowance on account of adjustment by TP Officer
2,09,60,016
0
Addition deleted by ITAT
(Para 4.1-4.5 of ITAT order pg. no. 7 & 8) - Penalty deleted by CIT(A) since quantum deleted.
4. Disallowance of Rs. 24,92,650/- on account of bogus purchases
26,988
12,272
Purchases alleged to be bogus based of sales tax department information.
CIT(A) held that material was duly consumed and therefore, estimated the disallowance to 12.5%.
Tribunal further restricted estimation to 8%. (Para 9.10
of ITAT order pg. no. 47 & 48
) - Penalty deleted by CIT(A) since income assessed under MAT as well as on merits holding estimated addition
5. Disallowance on account of over invoicing
16,83,900
0
Tribunal deleted the entire addition holding no over invoicing done by assessee.
(Para 8.6 to 8.12 of ITAT order Pg. no. 35) - Penalty deleted by CIT(A) since quantum deleted.
Disallowance of loss pertaining to exempt unit (Adjustment made in Book profits u/s 11 5JB) 5,97,86,283 0 Loss incurred on account of various trial expenses in respect of unit situated in SEZ area at Pritampur, was added back to the book profit u/s 115JB. ITAT deleted the adjustment (Para 5.4 of ITAT order Pg. No. 12) - Penalty deleted by CIT(A) since quantum deleted.
The Ld. Commissioner, by taking into consideration the decision/order dated 08.04.2024 (supra) of the Hon’ble Tribunal in partly deleting/affirming the additions, vide impugned order dated 30.10.2024, deleted the penalties imposed by the AO.
The Revenue Department in respect of the disallowances as mentioned in column nos. 1, 2, 3, 5 & 6 as depicted above, though raised the grounds of appeal challenging the decision of the Ld.
ITA No.25/M/2025 & ors.
M/s. IPCA Laboratories Limited
4
Commissioner in deleting the penalties referred to above mainly on the reason that an approval for filing appeal before the Hon’ble
Bombay High Court, against the decision of the Hon’ble Tribunal on the quantum issues involved therein, have been approved.
Admittedly there is no stay against the order dated
08.04.2024 by the Tribunal referred to above and as on today, as additions mentioned in clause 1, 2, 3, 5 & 6 which were the foundation for imposing the penalties, are not in existence. We further observe that the Ld. Commissioner before deleting the penalties imposed, not only considered the peculiar facts and circumstances of the case in totality, but also considered the decision/findings of the Tribunal in deleting the additions and therefore considering the fact that quantum additions have been deleted, he deleted the penalties imposed. Thus, in our considered view, the decision of the Ld. Commissioner in deleting the penalties imposed on the aforesaid disallowances cannot be faulted with and therefore the decision of the Ld. Commissioner needs no interference.
Coming to the disallowance as mentioned at sl. No.4, which pertains to bogus purchases, we observe that the AO has made the disallowance of Rs.24,92,650/- on account of bogus purchases, which was restricted to the extent of Rs. 26,988/- being profit element @ 12.5%, embedded in the said purchases, by the Ld. Commissioner. The AO therefore on the said addition of Rs. Levied the penalty.
1 Thereafter, the Hon’ble Tribunal vide order dated 08.04.2024 referred to above, further reduced the said addition 26,988 {@ 12.5%} of the bogus purchases, to the extent of 17212/- being 8% in lieu of 26,988/- {@12.5%}, as affirmed by the Ld. Commissioner.
ITA No.25/M/2025 & ors.
M/s. IPCA Laboratories Limited
2 Admittedly, the penalty levied by AO pertains to addition on account of disallowance of bogus purchases, which has been sustained to the extent @ 8 % only by the Tribunal and even otherwise the same is based on the estimation and therefore, the same is un-sustainable and thus we are in concurrence with the Ld. Commissioner and inclined not the interference in the decision of Ld. Commissioner in deleting the penalty imposed on the addition made on account of disallowance on account of bogus purchases as well. Thus, the appeal i.e. ITA no.25/M/2025 filed by the Revenue Department, which is under consideration, stand dismissed.
In view of our judgment in ITA no.25/M/2025, both the appeals under consideration are dismissed on the same footing.
Order pronounced in the open court on 25.03.2025. (PRABHASH SHANKAR)
JUDICIAL MEMBER
* Kishore, Sr. P.S.
Copy to: The Appellant
The Respondent
The CIT, Concerned, Mumbai
The DR Concerned Bench
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By Order
Dy/Asstt.