ACIT, CENTRAL CIRCLE-2(1), KOLKATA, KOLKATA vs. M/S AMRIT HATCHERIES PVT. LTD., KOLKATA

Per Rajpal Yadav, Vice-President (KZ):- The Revenue is in appeal before the Tribunal against the order of ld. Commissioner of Income Tax (Appeals)-20, Kolkata dated 27.09.2016 passed for the assessment year 2013-14. The grievance of the Revenue is that the ld. CIT(Appeals) has erred in deleting the penalty imposed upon the assessee under section 271AAB of the Income Tax Act. This appeal was listed along with the quantum appal of the assessee, i.e. ITA No. 2304/KOL/2016. Both the appeals were heard together and the Tribunal has decided both the appeals together. The Tribunal has dismissed the

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quantum appeal of the Revenue but allowed the present appeal. The discussions made by the Tribunal on this appeal in its order dated 23.02.2018 read as under:-

“4. Let us take up ITA No. 2305/Kol/2016 with regard to cancellation of penalty levied u/s 271AAB of the Act.

i) That Ld. CIT(A) erred in facts and circumstances of the case in deleting the penalty imposed on the assessee of Rs. 27,33,800/- u/s 271AAB(1)(a) of the I.T. Act, 1961 on account of disclosure made u/s 132(4) at the time of search on undisclosed stock. ii) That Ld. CIT(A) failed to appreciate the provision of section 271AAB, as the penalty was imposed @10% of Rs. 2,73,38,000/- which is disclosed at the time of search. iii) That the Ld. CIT(A) erred in facts and circumstances of the case in deleting the penalty imposed on the assessee of Rs. 32,70,560/- u/s 271AAB(1)(c) of the I.T. Act, 1961 on account of disallowance of deduction u/s 80IB, as the assessee did not manufacturing any articles or things. iv) That the Department craves the right to add, modify or abrogate the grounds of appeal during the course of hearing of the case.

5.1. The brief facts of this issue is that the search and seizure operation was conducted in the "Amrit Group" u/s 132 of the Act on 30th / 31st August 2012. The assessee is one of the companies in the said group. The search was conducted at the office premises and residential premises of the promoters of the assessee. Survey operations u/s 133A of the Act were also conducted at the factories. The assessee was having huge stock of poultry feeds spread across various locations and hence thought it fit to carry out stock audit for the same. The Stock Auditor submitted his report on 20.8.2012 pursuant to his physical verification . Neither in the course of search nor in the survey proceedings, any of the authorized officers conducted physical stock verification. No physical inventory of raw materials or finished goods was taken nor the stock records verified by the search parties at any of the manufacturing units of Amrit Group as is evident from the panchanamas drawn up at the end of search operations at various premises. Since the search operations were continuing for more than 36 hours, Prohibitory Orders u/s 132(3) were placed at various locations/rooms with a view to resume the search operations at a later date. The prohibitory orders inter alia included the same chambers at the Head office of the 'Amrit Group' at 'Infinity Benchmark' Block EP & GP, Sector-V, 6th Floor, Saltlake, Kolkata-700091. The search proceedings resumed on 29.10.2012; when the Prohibitory Order u/s 132(3) was revoked. In the course of resumed search conducted at the Head Office of the assessee on 29.10.2012 a report of M/s Damle Dhandhania & Co. (Chartered Accountants) was found, which contained their findings to the management of the appellant in respect of physical verification of the stock carried out at the factories of the assessee as well as sister concerns/group companies. The Stock taking exercise was conducted by the firm of Chartered Accountant in the ordinary course of appellant's book keeping. In their report the Chartered Accountant reported that few items of raw materials were physically found to be in excess of the quantities as per

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the stock records. Accordingly, the CA had advised the company to adjust the stock records by making appropriate adjustment entries only in the stock records. Since the inventory actually found on physical verification was more than the inventory as per stock records; the additional inventory was incorporated in the stock records as well as in the financial books at 'NIL' cost. The assessee submitted the copies of the entries passed in the stock records on 31.8.2012 before the income tax department.

5.2. When confronted with the above mentioned Audit Report, Shri Harish Bagla, Director of the assessee gave a detailed explanation in his declaration u/s 132(4) dated 29.10.2012 wherein he stated as follows.

" .. we had engaged services of M/ s Damle Dhandhania & Co., Chartered Accountants to conduct physical inspection of inventory at all manufacturing locations. After the physical inspection was conducted by M/s Damle Dhandhania & Co. in mid August. they' had forwarded their report dated 20.08.2012 for taking further action. In this report, the Auditor had observed that on taking physical inspection of the inventories they had found excess stock of approximately Rs.2192 lacs, compared with stock records. Report of M/s Damle Dhandhania & Co. was found & seized from my office which is identified as Pages 42 to 44 in ID: AF/3. I submit that excess stock found in the course of physical inspection will be offered as income o[the Group Companies in the current year and the appropriate tax on such income will be paid in due course."

From the above facts, it shall therefore be observed that physical stock taking exercise was voluntarily carried out by the assessee through a firm of Chartered Accountant in the regular course of its business. The report contained findings with regard to excess/shortage of stock found on physical inspection at the various factories vis-a-vis the stock records. The said report was issued by the Chartered Accountants on 20.08.2012, and was received by the appellant on 23.08.2012. Admittedly appropriate entries in the stock records were passed on 31st August 2012 incorporating the findings of the Chartered Accountants and bringing the stock on material at pat with physical quantities found on physical inspection. Understandably the valuation of inventory was to be carried out & incorporated in. the financial books only at the time of closing of the accounts as on 31st March 2013. Accordingly the excess physical stock found by the Chartered Accountants at the appellant's factory premises was incorporated in the stock records in August 2012 at "NIL". The excess stock incorporated in stock records at zero cost was considered by the appellant when the inventory valuation was carried out at the time of preparation of annual financial statements for the year ended 31.03.2013. In the assessment order for AY 2013-14 passed u/s 143(3) the AO did not find any infirmity either with the quantity or inventory or with its valuation. In fact in the assessment order u/s 143(3) the AO admitted that excess stock reported in the Auditors' report was properly accounted in the appellant's books and accordingly the AO had accepted the assessee's declaration before the Authorized Officer.

In any business organization, the stock records are maintained separate and distinct from the financial books. The stock records are maintained at the plant level whereas financial records are maintained at the administrative offices. At periodic intervals stock records are reconciled with financial books. In the appellant's line of business raw materials are handled in bulk. When items of raw material are issued for

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production out of the stock, it is not always feasible to undertake the exact physical weighment of the individual item due to bulkiness of the material. In the circumstances entries in stock records are made by visual inspection which involves same degree and on approximation. However at periodic intervals the physical stock taking exercise is conducted so as to determine the exact quantities of stock of material physically available at the plant level. The discrepancies noted on physical stock taking are accounted in the stock records by aligning the "balances" as per books with physical quantities actually found. The procedure of reconciling physical stock with stocks records is carried out routinely in all large business organizations and. the appellant's case was not an exception.

More particularly, during the FY 2012-13, the "Amrit Group" to which the appellant belongs had decided to implement SAP Accounting software. SAP Accounting software is an advanced version where the financial records and stock records are aligned with each other on real time basis and these are updated simultaneously.

In particular the need for real time supervision and control of manufacturing operations at different plant locations was found necessary in view of the rapid growth which Amrit Group was witnessing since FY 2010-11. From perusal of the audited accounts of Amrit Group of Companies for the year ended 31st March 2013, your goodself will note that the sales turnover achieved by the main three operating companies viz., Amrit Feeds Limited, Amrit Hatcheries Limited and Amricon Agrovet Pvt Ltd for the Financial Year 2012-13 was Rs.1169.13 crores, Rs.704.47 crores & RS.240.48 crores respectively. The total turnover of these three operating companies for the FY 2012-13 amounted to Rs.2114.08 crores. The turnover of these three companies for the immediate preceding year was however only RS.1511.66 crores; meaning thereby in the FY 2012-13 the Amrit Group had achieved substantial quantum increase in its turnover. Moreover the production activities were carried on by the Group at more than 10 locations and therefore it was absolutely essential that the Head Office of the Group at Kolkata exercised tighter control over the inventories since the consumption of material constituted more than 85% of the cost of sales and therefore managing material consumption was the major challenge for achieving better productivity as well as profitability for the Group. In that view of the matter the management of the company had deemed it necessary to implement more sophisticated SAP software at all plant levels aligning the production records with financial books. In pursuance of the management decision taken for implementing SAP Software the task of stock taking was assigned to MI s Damle Dhandhania & Co., Chartered Accountants who in their stock report reported variation between the balances as per stock records and physical quantities of various materials found at different manufacturing locations. As per the stock audit report the auditors reported excess stocks valued at Rs.17.61 crores for Amrit Feeds Limited, Rs.1.58 crores for Amrit Hatcheries Limited and Rs.2.73 crores for Amricon Agrovet Pvt Ltd. Although the quantum of variation in absolute numeric terms may aggregate to Rs.21. 92 crores and the same may look very substantial but when one takes into account the fact that the Group turnover of the three operating companies for the FY 2012-13 exceed Rs.2100 crores, then your goodself will appreciate that in comparative terms such variation was only 1% of the group turnover and not very significant.

The management of Amrit Group had decided upon implementation of SAP Software which would have enabled the management sitting at Head Office greater control over the production and inventory management in real time. In SAP Software the

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entries in the stock records automatically update the financial accounts and vice versa. Before the SAP Software was implemented management of the appellant considered it necessary that the physical quantities of the materials available at the plant levels tallied exactly with the inventory records so that no discrepancies remained at the time of commencement of SAP. With this objective in mind the appellant had suo moto appointed M/s Damle &Dhandhania & Co.; Chartered Accountants to undertake physical verification of the stocks at company's different plants. The appointment of the said Chartered Accountant and the physical stock taking exercise was concluded much prior to the date of search. The said firm of Chartered Accountant had submitted its report prior to the date of search in which they had reported variations between the quantities of raw material items as per stock records and as found on physical inspection. The excesses and shortages of stocks noted on physical inspection were reported by the said Auditor. The Auditor had also recommended steps to be taken for correcting the stock records. On receipt of the stock audit report the management of the appellant had issued necessary instructions to the factory managers to reconcile the stock records and incorporate the correct quantitative details in the stock records in compliance with the fmdings of the stock auditor as contained in the stock audit report. On 31st August 2012, appropriate entries were also passed in the stock records and the excess quantities physically found by the stock auditor were suitably increased in the stock records at 'NIL' cost.

In course of resumed search operation on 29.10.2012 report of M/s. Damle Dhandhania & Co., Chartered Accountant dated 20.08.012 in respect of physical verification of stock undertaken at different places was found and seized [ID Mark AF /3, Pages 42 to 441 by the Investigation authorities. With reference to the said audit report Shri Harish Bagla was asked to furnish his explanations. In response in his sworn statement u/s 132(4), Shri Harish Bagla, Director of the appellant had clarified that with reference to the findings of the stock taking report, appropriate entries in the stock registers were being incorporated and effect thereof would be given in the financial accounts. For the FY 2012-13 Shri Harish Bagla in his statement admitted that the findings of the report prepared by the Chartered Accountant would result in increase in the profit for the FY 2012-13 and that the same was being incorporated in the books of the appellant company. However nowhere in his statement the Director of the appellant had admitted that the excess quantity of stock reported in the audit report represented appellant's "undisclosed" or "unexplained" stock. Shri Bagla had only clarified that with reference to stock adjustment accounted in the appellant's books amounting to Rs.2, 73,38,800 / -; income of Amrit Group will stand increased and the same would form part of the disclosure of Rs.35 crs mentioned in his initial statement u/s 132(4) of the Act dated 31.08.2012. It is submitted that the stock records had been updated and appropriate entries in stock records had been passed at the respective factories much before 29.10.2012 when the Authorized Officer had found the stock audit report and with reference to which Director's statement was recorded. Further in compliance with the declaration ix] s 132(4), the difference in stock which had already been incorporated in the stock records. The sum of Rs.2,73,38,000/- being value of the excess stock found in physical verification therefore formed part of the regular books of the appellant and was offered to tax by the appellant in the return of income filed u/s 139(1). The above facts and the assessee's explanation were examined and verified by the AO in the course of assessment. In the course of proceedings u/s 143(3), the AO specifically show caused the appellant to explain as to whether the above stock of Rs.2,73,38,000/- was incorporated in the books of account. In response

ITA No. 2305/KOL/2016 Assessment Year : 2013-2014 Amrit Hatcheries (P) Limited

the appellant filed its explanation dated 09.03.2015 in which it was stated that the difference in quantity as reported by the stock auditor had been duly incorporated in the stock records on 31st August 2012 itself and formed part of the regular books of account. Copies of the journal entries were also furnished before the AO. After the stock records were reconciled with the report of the stock auditor; there remained no discrepancy between the two. Accordingly when the inventory was valued by the company as at 31.03.2013; the value of the excess quantity reported in audit report was included. Being satisfied with the submissions of the appellant, the AO accepted the stock records and the valuation of closing stock and no adverse inference-was drawn in this regard.

5.3. The assessee pleaded that in view of the aforesaid facts, the following facts emerge in the assessee's case:-

No stock taking exercise was ever conducted by the Department nor was any excess stock was detected by the Department either at the time of search or at any other point of time.

Stock report of Damle Dhandhania & Co. was obtained by the assessee in the regular course of business. The said stock audit report containing findings with regard to difference in stock found on the physical inspection vis-à-vis the stock records was obtained prior to conducting of search u/s 132. The stock report was found in the course of search operations on October, 2012 by which time stock records had already been updated.

Appropriate Reconciliation Entries pursuant to the stock audit report were passed in the regular stock Records incorporating the difference in stock on 31st August, 2012 at NIL cost.

In the statement u/s 132(4), nowhere did the Director of the Appellant admitted that the difference in physical stock represented 'undisclosed stock'. Instead it was categorically mentioned that the difference in stock was found on physical inspection vis-à-vis stock records by Stock Auditor; and the findings reported by them shall be incorporated in the regular financial books of the assessee for assessment year 2012- 13. No 'undisclosed income' or 'undisclosed stock' was ever found by the Department nor was any such allegation leveled by the Department against the assessee either in the course of search operations or assessment proceedings.

In the explanation dated 09.03.2015 filed in proceedings u/s 143(3) the assessee reiterated that the differences repeated by the stock auditor had been incorporated in the stock records on 31st August, 2012. At no time did the assessee state that such excess physical stock represented 'undisclosed stock'. The explanation of the assessee was accepted by the Assessing Officer.

5.4. The assessee further pleaded that what the Authorized Officer found in the assessee's office premises in the course of resumed search was the report of the Chartered Accountant concerning physical inspection of the Inventory. No discrepancy in the physical quantities of raw materials was however found by the Department in the course of search. It is therefore the submission of the assessee that no 'undisclosed income' was found or unearthed in the course of search and therefore no penalty u/s 271AAB was leviable in respect of income which was included in the total income on account of inventory adjustment carried out in the books of the 6

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assessee for financial year 2012-13. The ld. AO however without properly appreciating the facts and explanations offered by the assessee mechanically levied penalty @ 10% amounting Rs. 27,33,800/- u/s 271AAB(1)(a) of the Act.

It is submitted that the penalty proceedings are quasi criminal in nature and the same are distinct and separate from assessment proceedings. Before levying penalty for concealment of income, it is necessary for the authority to prove that sum of Rs. 2,73,38,000/- in fact constituted assessee's 'undisclosed income' and further such income was unearthed or detected as a result of the search u/s 132 conducted against the assessee. In the present case admittedly no such incriminating material was unearthed by the Investigation Wing in the course of search nor was any excess physical stock was found by the IT authorities. The difference in stock had been duly incorporated in the regular stock records prior to the date on which the stock audit report was found and declaration u/s 132(4) was recorded from the Director. The assessee thus submits that the income of Rs. 2,73,38,000/- which it incorporated in its books for the financial year 2012-13 did not in any manner represent 'undisclosed income' of the assessee as contemplated by sec 271AAB of the Act. In the present case the sum of Rs. 2,73,38,000/- was incorporated by the assessee in the regular books of accounts. The assessee had already decided to incorporate the difference in stock found on the physical inspection prior to the date on which stock audit report was seized by the Authorized Officer u/s 132 on 29.10.2012. In the statement u/s 132(4) dated 29.10.2012, the assessee had merely admitted that the income with reference to excess quantities reported in the stock audit report would be included in taxable income for the assessment year 2013-14 and the same was to be part of income declared in the statement recorded u/s 132(4) on 31.08.2012 cannot be construed to be 'undisclosed income' of the company for the purposes of levy of penalty u/s 271AAB of the Act. The assessee pleaded that the sum of Rs 2,73,38,000/- assessed as assessee's income for the relevant year did not represent any 'unexplained money, bullion, jewellery, valuable article or any other asest', for the simple reason that no such asset had been identified by the ld AO and no undisclosed asset came to light as a result of the search conducted by the investigation authorities. Accordingly, the sum of Rs 2,73,38,000/- does not come within the first limb of the definition of 'undisclosed income' as mentioned in section 271AAB of the Act. Similarly the assessee pleaded that its case does not fall under any of the limb of definition of 'undisclosed income' defined in section 271AAB of the Act.

5.5. The ld CITA duly appreciated the contentions of the assessee and deleted the levy of penalty u/s 271AAB of the Act . Aggrieved, the revenue is in appeal before us.

"(c) undisclosed income means - (i) Any income of the specified previous year represented, either wholly or partly, by any money, bullion, jewellery or other valuable article or thing or any entry in the books of accounts or other documents or transactions found in the course of a search under section 132, which has-

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(A) Not been recorded on or before the date of search in the books of account or other documents maintained in the normal course relating to such previous year; or (B) Otherwise not been disclosed to the [Principal Chief Commissioner or] Chief Commissioner or [ Principal Commissioner or] Commissioner before the date of search; or ii) any income of the specified previous year represented , either wholly or partly, by any entry in respect of an expense recorded in the books of accounts or other documents maintained in the normal course relating to the specified previous year which is found to be false and would not have been found to be so had the search not been conducted."

6.1. We find that the director of assessee company in his statement u/s 132(4) of the Act had explained that the stock verification was carried out by the independent chartered accountant since the company was in the process of implementing an integrated ERP- SAP system of accounting. Since in the records, it was deemed necessary by the management that physical inventory should tally with stock records at the time when ERP system was being implemented. On taking physical inventory of raw materials and finished goods, the auditor had reported in his report discrepancies which he had found between the physical quantities of materials and their corresponding stock records. These discrepancies were presented to the management in tabular form in the report submitted to the management of the company. Accordingly, the director with reference to the said report had stated that as per the stock audit report the physical stock found was in excess of stock as per stock records and the value of excess stock in the case of the assessee was Rs 2,73,38,000/-. It is crucial at this juncture to note that the excess stock found in the stock audit report represents investment made by the assessee out of the books of the assessee which would take the colour of undisclosed income. Without making purchases, how could there be excess physical stock. Hence the element of undisclosed income enters the scenario at this juncture towards unexplained investment made towards purchases. This would be irrespective of the fact that the assessee would have entered the excess quantity in the stock register by increasing the quantity alone with Nil value attached to it. The moment the excess stock is found physically when compared to the quantity reflected in the stock register, the undisclosed income theory sets into motion. This would not undergo any change even though the Director of the assessee company u/s 132(4) of the Act had stated that the excess stock found on physical verification was incorporated in the stock records of the assessee at Nil cost and thereby the value of excess would be accounted as income at the time when the stock valuation shall be incorporated in the final accounts as on 31.3.2013.

6.2. What is to be seen is whether there was any undisclosed stock that were found in the sum of Rs 2.73 crores at the time of search. Admittedly, the stock audit containing the excess stock were found at the time of search by the search team on 29.10.2012. The statement of the Director of the assessee company u/s 132(4) of the Act only goes to prove that the assessee had entered the excess stock found in the stock register on 31.8.2012 at Nil Cost. No corresponding entry was made in the financial records which is very crucial for determination of income i.e undisclosed income. The Director of the assessee company Shri Harish Bagla, in effect, actually admitted that the said discrepancies in stock (i.e excess stock found in stock audit report) would be treated as part and parcel of the assessee's regular income for the Asst Year 2013-14 and taxes thereon would be paid in regular course. But the same would still partake the character of undisclosed income for the purpose of section 271AAB of the Act alone. 8

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6.3. The ld AR argued that if the version of the ld AO is to be accepted, then any person who has been subjected to search u/s 132 of the Act in a year and who had not properly updated the accounts probably due to the absence of his accountant for few days just prior to the search, can it be said that the unupdated transactions in the regular books of accounts or other documents would be construed as 'undisclosed income' for the purpose of section 271AAB of the Act. In our considered opinion, the remedy is available to the assessee in such a situation, to clearly mention in the statement recorded u/s 132(4) of the Act by explaining the fact of absence of the accountant and also adduce evidences by showing the relevant purchases, sales, proof of movement of goods and expenses bills that are not recorded in the books of accounts, wherein from the relevant papers, it is possible to arrive at the true profits / losses of the assessee on that date for the unrecorded period. What is required to be seen is that the assessee had maintained the relevant papers which would enable him to record the same in the regular books of accounts which might be recorded with some timing difference.

6.4. It appears that there is no escape from the rigor of Sec.271AAB(1) of the Act, if income of the specified previous year emanates from the material found in the course search and such income or transaction has not been records in the books of accounts maintained by the Assessee. Situations contemplated in paragraph 6.3 of this order would be determinative in such cases as to ascertain whether the Assessee would have attempted not to disclose income. The legislature has given sanctity to entries made in the Books of accounts maintained in the ordinary course of business on the premise that it is maintained contemporaneously. If there is excess stock physically found than what is recorded in the books of accounts, then Sec.69 of the Act (Unexplained investments not recorded in the books), comes into play. Therefore such income does not have any source as the source is unexplained. It is also undisclosed because it is not recorded in the books of accounts of the Assessee.

6.5. Hence we have no hesitation in holding that the excess stock in the sum of Rs 2,73,38,000/- does fall under the definition of 'undisclosed income' and consequently penalty u/s 271AAB of the Act is leviable for the same. Accordingly, the grounds raised by the revenue in this regard are allowed.

7.1. We have heard the rival submissions. This issue has now become academic. Since we have already held that the assessee is indeed entitled for deduction u/s 80IB of the Act and accordingly deleted the disallowance in quantum appeal, the penalty u/s 271AAB of the Act is only a fallout of the said issue. Since quantum disallowance is deleted , the penalty thereon u/s 271AAB of the Act does not survive. In any case, we find in the facts of the case, that there was absolutely no seizure of any material or documents at the time of search to reach to a different conclusion that assessee is not entitled for deduction u/s 80IB of the Act. Hence the same does not fall within the definition of the expression 'undisclosed income' and therefore would be outside the ambit of penalty u/s 271AAB of the Act. The assessee has been claiming deduction u/s 80IB of the Act consistently from earlier years. Since the revenue had denied deduction thereon in earlier years, it was denied for the year under appeal also . This has nothing to do with the search proceedings so as to fall within the ambit of undisclosed income and consequential levy of penalty u/s 271AAB of the Act.

ITA No. 2305/KOL/2016 Assessment Year : 2013-2014 Amrit Hatcheries (P) Limited

Accordingly, we hold that the ld CITA had rightly deleted the levy of penalty u/s 271AAB of the Act in respect of denial of deduction u/s 80IB of the Act. Accordingly, the grounds raised by the revenue in this regard are dismissed.

Dear Sir, Re: M/s. Amrit Hatcheries Pvt. Ltd I.T.A. No.2305/Kol/2016 Sub: Petition under Rule 27 of the ITAT Rules

The Revenue has filed the captioned appeal for the A. Y. 2013-14 against the appellate order passed by the CIT (A)-20 cancelling the AO’s order levying penalty u/s 271AAB of the Act. In the Grounds of Appeal preferred before him the assessee-respondent had objected to the penalty levied on the ground that the assessee was not guilty of any offence specified in Sec. 271AAB of the Act and therefore the levy of penalty was legally untenable.

For your kind perusal and record, we enclose herewith copy of the Show Cause Notice (SCN) issued by the AO dated 30th March 2015 from which it will be noted that it was issued u/s 274 read with Sec. 271 of the Income Tax Act. Though said SCN the AO informed the assessee that it appeared to him that it had concealed the particulars of its income or furnished inaccurate particulars of income for A.Y. 2013-14 and for such alleged defaults the assessee was directed to show cause why an order imposing penalty should not be levied u/s 271AAB of the Act.

Your goodself will appreciate that penalty u/s 271AAB of the Act can be imposed by the AO if he finds that the assessee is guilty of having undisclosed income. From the language used in Sec. 271AAB it is evident that the penalty contemplated in Sec. 271AAB has no rationale connection with the alleged default of concealing particulars of the income or furnishing inaccurate particulars of income. In the circumstances, it will be appreciated that the alleged default for which penalty was initiated and a show cause notice was issued was for the defaults not contemplated in Sec. 271AAB of the Act. In the circumstances therefore the CIT (A) ought to have cancelled the penalty on the preliminary ground that there was fundamental infirmity in initiation of the penalty proceedings u/s 271AAB

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of the Act. The CIT (A) however did not appreciate these aspects, but allowed relief on other grounds.

In the circumstances, therefore in terms of Rule 27 of the ITAT Rules we wish to defend the CIT (A)’s order on the ground which was not decided in assessee’s favour.

Thanking you, Your/faithfully,

(D S Damle) Authorized Representative”

ITA No. 2305/KOL/2016 Assessment Year : 2013-2014 Amrit Hatcheries (P) Limited

ITA No. 2305/KOL/2016 Assessment Year : 2013-2014 Amrit Hatcheries (P) Limited

Rules, the assessee cannot persuade the Tribunal to dismiss the appeal of the Revenue. In other words, the plea taken in this application is not of such a substance, which can persuade the Tribunal to uphold the impugned order. All these aspects have been considered by the Tribunal in its order dated 23.02.2018 extracted supra. We do not find any merit in the application of the assessee filed under Rule 27. It is dismissed. Consequently the appeal of the Revenue is allowed. Penalty imposed upon the assessee is confirmed.

(2) Amrit Hatcheries (P) Limited, 158, Lenin Sarani, 2 nd Floor, Kolkata-700013 (3) Commissioner of Income Tax(Appeals)-20, Kolkata, (4) The Departmental Representative (5) Guard File TRUE COPY By order

Assistant Registrar, Income Tax Appellate Tribunal, Kolkata Benches, Kolkata Laha/Sr. P.S.