M/S STEEL AUTHORITY OF INDIA EMPLOYEES CO OPERATIVE CREDIT SOCIETY LIMITED ,KOLKATA vs. PCIT, KOLKATA

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH KOLKATA Before Shri Sanjay Garg, Judicial Member and Shri Girish Agrawal, Accountant Member I.T.A. No.207/Kol/2022 Assessment Year: 2017-18 M/s Steel Authority of India Co-Operative Credit Society Limited.......….Appellant Ispat Cooperative House, 12, Charu Chandra Place Ispat Co-operative House, Charu Market, Kolkata-700 033. [PAN: AADAS9699B] vs. PCIT-9, Kolkata..……...…..…....................……........……............…...…..Respondent Appearances by: Shri S. K. Tulsiyan, Advocate & Puja Somani, CA, appeared on behalf of the appellant. Shri Amol Kamat, CIT-DR, appeared on behalf of the Respondent. Date of concluding the hearing : July 20, 2022 Date of pronouncing the order : July 28, 2022 ORDER Per Sanjay Garg, Judicial Member: The present appeal has been preferred by the assessee against the order dated 29.03.2022 passed by the Principal Commissioner of Income Tax, Asansol [hereinafter referred to as ‘PCIT’] exercising his revision jurisdiction u/s 263 of the Income Tax Act (hereinafter referred to as the ‘Act’).

“2. In the assessment order, an amount of Rs.6,00,380/- was added u/s 69A of the IT Act towards unexplained money with regard to deposit of cash in bank account during the demonetization period. Tax on this amount assessed to tax u/s 69Aof the Act was computed as per the provisions of Sec.115BBE of the Act. However, the penalty proceedings in this case have been initiated u/s 270A instead of Sec.271AAC(1) of the Act. Section 271AAC(2) specifically bars levying of penalty u/s 270A in respect of income assessed under section 68,section 69, section 69A, section 69B,section 69C or section

I.T.A. No.207/Kol/2022 Assessment Year: 2017-18 M/s Steel Authority of India Co-Operative Credit Society Limited 69D. In view of these specific provisions of law, initiation of penalty proceedings u/s 270A in this case is erroneous in so far as it is prejudicial to the interests of the revenue. 3. In the light of the above, it is clear that the A.O has, while passing the order u/s 143(3) of the Act, failed to make the order in accordance with the provision of IT Act as envisaged in clause (c) of Explanation 2 to section 263 of the I.T. Act, 1961 in respect of the above issue. As such, the assessment order u/s 143(3) of the I.T. Act, 1961 dated 30/12/2019 is erroneous and prejudicial to the interests of Revenue.” 3. A perusal of the above reproduced opening part of the order u/s 263 would reveal that the ld. PCIT noted that since the amount of Rs.6,00,380/- was added by the Assessing Officer u/s 69A of the Act being unexplained cash deposits in the bank account of the assessee and the income/tax was computed as per the provisions of section 115BBE of the Act, therefore, the penalty proceedings should have been initiated u/s 271AAC(1) of the Act by the Assessing Officer instead of 270A of the Act.

“(1) The Assessing Officer may, notwithstanding anything contained in this Act other than the provisions of section 271AAB, direct that, in a case where the income determined includes any income referred to in section 68, section 69, section 69A.” 5. The ld. Counsel has, therefore, contended that the word used in the section is ‘may’ and not ‘shall’. He, therefore, has submitted that it is not mandatory for the Assessing Officer to initiate penalty proceedings u/s 271AAC in each case and it is at the discretion of the Assessing Officer to initiate penalty if he deems fit in the facts and circumstances of that case. The ld. Counsel has further invited our attention to the relevant part of assessment order, wherein, the ld. Assessing Officer has noted as under:

“However, considering the fact that the assessee is engaged in the business of financial services, where dealing in cash is done in normal course of business, and that the assessee had cash balances with him in the previous assessment years, 80% of the total cash deposited i.e. Rs.24,01,520/- is treated as cash held in normal course of business. The balance amount of Rs.6,00,380/- is treated as unexplained money u/s 69A of the Act and thus added to the total income of the assessee.” 6. The ld. Counsel for the assessee has submitted that in this case, out of total cash balances, the Assessing Officer has made addition only of 20% of such cash balances, considering the fact that the assessee was engaged in the business of financial services

I.T.A. No.207/Kol/2022 Assessment Year: 2017-18 M/s Steel Authority of India Co-Operative Credit Society Limited where dealing in cash is done in normal course of business and that the assessee had cash balances with him in previous assessment years also. Since the Assessing Officer has made the impugned addition on ad hoc basis of the 20% of the total cash balances, the Assessing Officer, in his wisdom and in view of the facts and circumstances of the case, did not find it a fit case to initiate the levy of penalty u/s 271AAC of the Act in this respect. The Assessing Officer however has initiated penalty u/s 270A of the Act in respect of an another addition made in respect of disallowance of deduction paid to the employees as profit or dividend. The said penalty initiated by the Assessing Officer u/s 270A has no relevance in respect of impugned addition made by the Assessing Officer in respect of cash balances. In view of this, the ld. PCIT wrongly exercised his revision jurisdiction u/s 263 of the Act which is not sustainable in the eyes of law. The order passed by the PCIT u/s 263 of the Act is hereby quashed.

Kolkata, the 28th July, 2022. Sd/- Sd/- [Girish Agrawal] [Sanjay Garg] Accountant Member Judicial Member

Dated: 28.07.2022. RS Copy of the order forwarded to: 1. M/s Steel Authority of India Co-Operative Credit Society Limited 2. PCIT-9, Kolkata 3. CIT(A)- 4. CIT- , 5. CIT(DR),

//True copy// By order Assistant Registrar, Kolkata Benches