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Income Tax Appellate Tribunal, DELHI BENCH: ‘F’ NEW DELHI
Before: SHRI R. K. PANDA & MS SUCHITRA KAMBLE
1 ITA No. 6039/Del/2017
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: ‘F’ NEW DELHI BEFORE SHRI R. K. PANDA ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDICIAL MEMBER I.T.A. No. 6039/DEL/2017 (A.Y 2008-09) (THROUGH PHYSICAL HEARING) P. K. Cotton Mills Pvt. Ltd. Vs Pr. CIT C/o. RRA Tax India, D-28, Meerut, South Extension, Part-1, New Uttar Pradesh Delhi AADCP4270D (APPELLANT) (RESPONDENT)
Appellant by Dr. Rakesh Gupta, Adv Respondent by Sh. Mahesh Thakur, Sr. DR Date of Hearing 06.04.2021 Date of Pronouncement 20.04.2021
ORDER PER SUCHITRA KAMBLE, JM This appeal is filed by the assessee against order dated 25/07/2017 passed by CIT(A), Meerut for assessment year 2008-09.
The grounds of appeal are as under:-
“1. That having regard to the facts and circumstances of the case, Ld. Pr.CIT has erred in law and on fact in imposing penalty u/s 271(l)(c) of Rs.33,62,420/- i.e. @ 200% and that too without assuming jurisdiction as per law and the impugned penalty order being illegal and void ab-initio and without considering the submissions of assessee and without observing the principles of natural justice. 2. That in any case and in any view of the matter, action of Ld. Pr.CIT in imposing penalty of Rs.33,62,420/- u/s 271(l)(c) and that too @ 200%, is bad in law and against the facts and circumstances of the case.
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That having regard to the facts and circumstances of the case, Ld. Pr.CIT has erred in law and on facts in imposing penalty u/s 271(l)(c) of Rs.33,62,420/- and that too without recording mandatory “satisfaction” as per law. Additional grounds of appeal 1. “That having regard to the facts and circumstances of the case, Ld. Pr. CIT has erred in law and on facts in imposing penalty and passing the impugned penalty order more so when the charge on penalty notice dated 18.03.2013 was not specified as to whether penalty is being initiated for “concealment of income” or for “furnishing inaccurate particulars of income”. 2. That in any case and in any view of the matter, action of Ld. Pr. CIT in imposing penalty and passing the impugned penalty order more so when the penalty notice dated 18.03.2013 is invalid is illegal, bad in law, void ab initio and against the facts and circumstances of the case. 3. That having regard to the facts and circumstances of the case, the impugned penalty order u/s 271(1)(c) of the Income Tax Act, 1961 passed by Ld. Pr. CIT is barred by limitation.”
The assessee filed return of income at Loss of Rs. 1,75,55,380/-. Assessment was completed u/s 143 (3) of the Income Tax Act, 1961 on 26/11/2010 by the Assessing Officer at loss of Rs. 1,74,92,383/-, after making addition of Rs. 41,253/- and Rs. 21,744/- on account of different expenses. The CIT observed that assessment was done by the Assessing Officer without proper enquiry and thus consequently passed order u/s 263 dated 18/3/2013. The assessment order dated 26/11/2010 was partly amended on the issue of wrong claim of loss on sale of plant and machinery at Rs. 49,46,196/- and partly set aside for fresh order by the Assessing Officer on the issue of huge loss of Rs. 1,75,74,887/- on total turnover of Rs. 1,69,62,106/- as the same is collusive in nature relating to transaction of sale of machinery, claim of depreciation of Rs. 28,23,005/- along with loss of Rs. 49,46,196/- debited to profit and loss account on sale of plant and machinery, claim of financial charges, unsecured loan of Rs. 30 lac Sundry Creditors of Rs. 7,16,533/- and possession of TDS of freight of Rs. 6,93,425/-. Consequently, the assessment order u/s 263/143(3) was passed by the Assessing Officer on 28/3/2014 on total income of Rs. 95,10,830/-. Penalty
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notice u/s 271(1)(c) was also issued on 18/3/2013. In the meanwhile, the assessee went in appeal before the Tribunal against the order u/s 263 and the Tribunal vide order dated 18/11/2016 in ITA No. 2055/Del/2013 dismissed the appeal of the assessee. Thus, the addition of Rs. 49,46,196/- was also confirmed which was made by the CIT u/s 263. The show cause notice u/s 271(1)(c) was again issued on 17/2/2017 requiring it to show cause as to why an order imposing a penalty upon the assessee should not be passed, but the specific limb was not struck off by the Revenue Authorities. Vide order dated 25/7/2017, the Commissioner of Income Tax imposing penalty of Rs. 33,62,420/- equal to 200% thereby held that the assessee has concealed its income and furnish inaccurate particulars of income.
Being aggrieved by the penalty order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.
The Ld. AR submitted that the additional grounds are raised as a matter of abundant caution though all grounds are covered in main appeal memo. The penalty @ 200% u/s 271(l)(c) was imposed by Pr. CIT which is being contested on the ground that the initiation of penalty is bad in law for the reason that penalty notice is vague as it does not specify the charge of penalty that whether the same is being levied for “concealment of particulars of income or furnishing inaccurate particulars of income”. The Ld. AR relied upon the following judicial decisions: a) CIT vs. M/s SSA’s Emerald Meadows, SLP No. 232 72/2016, dated 05.08.2016 (SC) b) CIT vs. M/s SSA’s Emerald Meadows, ITA No. 380/2015, dated 23.11.2015 (Kar. HC) c) Pr. CIT vs. Sahara India Life Insurance Company Ltd, ITA 475/2019, 426-427/2019 and 429/2019, dated 02.08.2019 (Del HC) d) Pr. CIT vs. Smt. Baiseity Revathi, I.T.T.A No. 684/2016, dated 13/07/2017 (AP HC)
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e) Meherjee Cassinath Holdings Pvt. Ltd. vs. ACIT, ITA No. 2555/Mum/2012, dated 28.04.2017 (Mum Tri.) f) Bhushan Uttamrao Bachchav vs. ITO, ITA No. 989/Pun/2017, dated 09.07.2019 (Pune Tri.) g) Shri Phool Singh vs. ITO, ITA No. 744/Del/2016, dated 03.05.2018 (Del Tri.) The Ld. AR further submitted that even penalty order of Pr. CIT dated 25.07.2017 in para 13 sought to impose penalty for both the charges, which is bad in law as held in the following judicial decisions: New Sorathia Engineering Co. vs. CIT, (2006) 282 ITR 0642 (Guj) • CIT vs. Manjunatha Cotton and Ginning Factory, (2013) 359 ITR 0565 • (Kar) ITO vs. Lachman Das Bhatia, ITA No. 1029/Del/2012, dated 04.09.2017 • (Del) The Ld. AR further submitted that impugned penalty order passed is barred by limitation in view of the provision of section 275(1)(b) as the penalty order could be passed within 6 months from the end of the month in which revision order was passed as provided in section 275(1)(b) and as provided in CBDT circular no. 7 of 2003 dated 05.09.2003. The Ld. AR submitted that impugned penalty order has been passed on 25.07.2017 whereas the order of the Tribunal bearing ITA No. 2055/Del/2013 was passed on 18.11.2016 & served on DR on 06.12.2016 as per the reply received under RTI from the Tribunal and hence penalty could be imposed on or before 30.06.2017 as per section 275(l)(a) of the Act. The Ld. AR relied upon the decision of the Hon’ble High Court of Delhi in the case of CIT vs. Odeon Builders Pvt. Ltd., (2017) 393 ITR 0027(Del)(FB). The Tribunal in quantum has deleted the addition with reference to which impugned penalty was imposed vide order dated 17.12.2019 in assessee’s own case bearing ITA No. 2504/Del/2016 passed against the order u/s 263/143(3), deleting the addition of Rs. 49,46,196/- . Even on merits penalty is not imposable as income has been estimated at 5%. The Ld. AR
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relied upon the decision of Hon’ble Apex Court in case of CIT vs. Reliance Petroproducts (P) Ltd., (2010) 322 ITR 0158 (SC). Without prejudice to above, the Ld. AR submitted that there is no reason furnished for imposing penalty of 200%.
The Ld. DR relied upon the penalty order and submitted that the Commissioner of Income Tax has rightly imposed penalty as per the provisions of Section 271(1)(c). The Ld. DR further submitted that the penalty order with respect to addition of Rs. 49,46,196/- was made on account of wrong claim of loss on sale of plant and machinery to the total income of the assessee vide order u/s 263 dated 18.03.2013 issued by the CIT. The said addition was sustained by the Tribunal vide order dated 18.11.2016 in ITA No. 2055/Del/2013. Subsequently to the said order of the Tribunal, penalty order dated 25.07.2017 was passed by the CIT imposing penalty of Rs. 33,62,420/- under Section 271(1)(c). The Ld. DR submitted that the plea of the Ld. AR that specific limb while levying penalty u/s 271(1)(c) was not specified does not hold any substance, as from the perusal of the penalty notice dated 18.03.2013, it can be seen that the CIT has ticked the ground pertaining to concealment of income, thus, implying that the penalty levied was on account of concealment of income. It is not mandatory that one of the grounds should be struck off, even placing tick mark in front of the relevant ground serves the purpose. The Ld. DR relied upon the following decisions: a) Vijay Agarwal vs. DCIT (ITA No. 5434 & 5435/Del/2016 2019-TOIL- 1628-ITAT-Del) b) Sundaram Finance Ltd. vs. CIT (2018) 99 taxmann.com 152 (SC) c) Sundaram Finance Ltd. vs. CIT (2018) 93 taxmann.com 250 (Mad. HC) d) CIT vs. Smt. Kaushalya (1995) 216 ITR 660 (Bom) e) New Holland Tractors (India) P. Ltd. vs. CIT (2015) 275 CTR 291(Del) f) Trimurti Engineering Works vs. ITO (2012) 138 ITD 189 (Del)
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g) Hybrid Rice International Pvt. Ltd. vs. CIT (ITA No. 285/Del/2007) h) Earthmoving Equipment Service Corporation vs. DCIT (2017) 166 ITD 113 (Mum Tri.) i) DCIT vs. Shah Rukh Khan (2018) 93 taxmann.com 320 (Mum Tri.) j) Dhanraj Mills Pvt. Ltd. vs. ACIT ITA No. 3830 & 3833/Mum/2009.
The Ld. DR further submitted that the penalty order passed by the CIT is within the time frame laid down in Section 275 of the Income Tax Act, 1961 and was not barred by limitation. Since, the assessee had gone in appeal before the Tribunal against the order u/s 263 of the CIT, the penalty order was passed rightly by the CIT after the order of the Tribunal and the said order was passed before the end of six months as laid down in Section 275(1)(a). The Ld. DR further submitted that the contention of the Ld. AR that as per Section 275(1)(b), penalty order was to be passed by the CIT before the expiry of six months from the end of the month in which such order of revision under Section 263 is passed and thus, the same is barred by limitation, is not justified as there was appeal filed by the assessee against the order u/s 263 and the Circular No. 7 of 2003 dated 05.09.2003 relied upon by the Ld. AR does not have any bearing on the present case. The Ld. DR further submitted that the reliance by the ld. AR on the decision of the Hon’ble High Court in case of Odeon Builders Pvt. Ltd. (supra) is not relevant as the facts are different. Thus, the Ld. DR opposed the additional grounds as well as prayed that the present appeal be dismissed.
We have heard both the parties and perused the material available on record. It is pertinent to note that the actual limb of Section 271(1)(c) is not mentioned by the Assessing Officer and from the perusal of the penalty order it can be seen that the reasoning and satisfaction imposing penalty is not as per the provisions of penalty under Income Tax Statute. As per the Ld. AR on merit as well the penalty cannot be levied and when we have seen the order of
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the Tribunal confirming the addition made by the Commissioner of Income Tax, it appears that the same does not tantamount for imposing penalty as the assessee was under bonafide belief while not quantifying the said amount in the income of the assessee. In fact, the Tribunal in quantum has deleted the addition with reference to which impugned penalty was imposed vide order dated 17.12.2019 in assessee’s own case bearing ITA No. 2504/Del/2016 passed against the order u/s 263/143(3), deleting the addition of Rs. 49,46,196/-. The Tribunal held as under: “(D) The second issue before us, is regarding the aforesaid addition of Rs. 49,46,196/-. The Ld. Counsel for assessee contended that the aforesaid addition amounts to double addition of the same amount. He drew our attention to the fact that the entire loss claimed by the assessee has been disallowed by the AO and the profit of Rs. 8,48,105/- has been brought to tax on account of estimation of business profit. The aforesaid amount of Rs. 49,46,196/- was part of the business loss claimed by the assessee and once that loss is disallowed, and estimated net profit is assessed as income; the aforesaid amount of Rs. 49,46,196/- stands disallowed automatically. Therefore, the Ld. Counsel for the assessee submitted that there was no justification for once again making repeated addition on the aforesaid amount of Rs. 49,46,196/- in the Assessment Order. The Ld. DR agreed that the repeated addition made by the AO in respect of the aforesaid amount of Rs. 49,46,196/- amounts to double addition of the same amount and he left it to the discretion of the Bench to give appropriate direction to the AO for deleting the double addition. As both sides are in agreement that repeated addition of Rs. 49,46,196/- made by the AO amounts to double addition of the same amount; we accordingly direct the AO to delete the repeated addition, because double addition of the same amount is not sustainable in law.” Thus, the addition upon which the penalty is imposed no longer sustains and hence, the penalty also does not survive. Hence, the appeal of the assessee is allowed.
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In result, the appeal of the assessee is allowed. Order pronounced in the Open Court on this 20th Day of April, 2021
Sd/- Sd/- (R. K. PANDA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated : 20/04/2021
R. Naheed *