M/S ANUPAM TEXFEB PVT. LTD.,INDORE vs. ASSISTANT COMMISSIONER OF INCOME TAX, KHANDWA, KHANDWA

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ITA 535/IND/2017Status: DisposedITAT Indore23 October 2018AY 2010-114 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since Section 115BBE was not in existence at the time and the issue was debatable with divergent judicial views, the penalty should not be sustained.

What were the facts?

During a survey, the assessee surrendered unexplained share application money and claimed expenses as deductions against this declared income. The Assessing Officer disallowed these expenses and imposed a penalty.

What were the issues?

Whether penalty under Section 271(1)(c) is leviable when expenses are claimed against surrendered income, especially when the issue is debatable and Section 115BBE was not yet introduced.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 68

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

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Income Tax Appellate Tribunal, INDORE BENCH, INDORE

Before: SHRI KUL BHARAT & SHRI MANISH BORAD

For Respondent: Shri P.K. Mitra, Sr. DR
Hearing: 09.10.2018Pronounced: 23.10.2018

1 Penalty-Anupam Texfeb/JDM Builders and Deverlpers ITA Nos.535 & 536 of 2017

IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE

BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER And SHRI MANISH BORAD, ACCOUNTANT MEMBER

ITA No. 535/Ind/2017 A.Y. 2010-11

M/s. Anupam Texfab Pvt. Ltd., Burhanpur PAN – AAICA 7806 P :: Appellant

Vs

ACIT-Khandwa :: Respondent

ITA No. 536/Ind/2017 A.Y. 2010-11

M/s. JDM Builders & Developers Pvt. Ltd., Burhanpur PAN – AAMCS 9359 P :: Appellant

Vs

ACIT-Khandwa :: Respondent

Assessees by Shri Pankaj Shah, CA Department by Shri P.K. Mitra, Sr. DR Date of hearing 09.10.2018 Date of pronouncement 23.10.2018

O R D E R Per Shri Kul Bharat, JM

2 Penalty-Anupam Texfeb/JDM Builders and Deverlpers ITA Nos.535 & 536 of 2017

Both these above appeals are filed by the above assessees

against the orders of ld. CIT(A)-II, Indore dated 27.4.2017 challenging

the confirmation of penalty at Rs.60,000/- & Rs.80,000/-, respectively,

imposed by the Assessing Officer u/s 271(1)(c) of the I.T. Act.

ITA No.535/Ind/2017 in case of Anupam Texfab P. Ltd.

2.

Facts, in brief, are that the assessee is a private limited co. and

has income from interest during the year under consideration. During

survey action, the assessee surrendered Rs.40 lacs on account of

unexplained share application money and the same was considered as

other income in the P & L account and on this declared income, certain

expenses of Rs.1,55,324/- were claimed as deductions which were set

off from the income declared. However, the Assessing Officer disallowed

the same and imposed the penalty at Rs.60,000/- on account of

furnishing inaccurate particulars of income and ld. CIT(A) also confirmed

the penalty on the ground that the set off was not intention of the

Legislature.

3.

Before us, learned Counsel for the assessee submitted that the

year under consideration is prior to insertion to section 115BBE in the

I.T. Act and based on certain judicial pronouncements, the said

allowance of expenses from declared income was permissible. He relied

on the following judicial pronouncements in favour of his plea:

3 Penalty-Anupam Texfeb/JDM Builders and Deverlpers ITA Nos.535 & 536 of 2017

i. DCIT vs. Radhey Developers India Ltd.; 329 ITR 1 (Guj)

ii. Satish Kumar Goyal; ITA No.143/Against/2014.

Thus, he submitted that no penalty can be sustained when the claim is

supported by judicial pronouncements and also when debatable

claim/divergent views exist between different judicial authorities on an

issue.

4.

On the other hand, ld. Sr. DR supported the orders of the Revenue

Authorities.

5.

We have heard both the parties and perused the orders of lower

authorities. We find that in the impugned order, the ld. CIT(A) has

himself noted that section 115BBE was not in existence at that point of

time. In the case of Satish Kumar Goyal (supra), the ITAT, Agra Bench

has allowed business loss set off against deemed income u/s 68 holding

amended Section 115BBE as prospective. However, divergent views of

various judicial authorities exist on this issue. Thus, the issue has

become debatable and therefore, in principle, the ld. CIT(A) should have

deleted the penalty. Accordingly, we direct the Assessing Officer to

delete the penalty.

6.

In result, the appeal of the assessee is allowed.

4 Penalty-Anupam Texfeb/JDM Builders and Deverlpers ITA Nos.535 & 536 of 2017

ITA No.536/Ind/2017 in case of JDM Builders & Developers P. Ltd.

7.

Both the parties submitted that the facts and circumstances are

identical to that of Anupam Texfab P. Ltd. and the decision taken in the

case of Anupam Texfab P. Ltd. will prevail in the case of present

assessee too. Thus, following the above order in the case of Anupam

Texfab P. Ltd., we direct the Assessing Officer to delete the penalty of

Rs.80,000/- in the present appeal too. Accordingly, this appeal of the

assessee is also allowed.

8.

Finally, both the appeals filed by the respective assessees are

allowed.

Order was pronounced in the open court on 23.10.2018.

Sd/- Sd/- ( MANISH BORAD) (KUL BHARAT) ACCOUNTANT MEMBER JUDICIAL MEMBER

Dated : 23.10.2018 !vyas! Copy to: Appellant/Respondent/CIT(A)/Pr.CIT/DR, Indore

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