DY CIT, CC-7(1), MUMBAI, MUMBAI vs. M/S. MANEESH PHARMACEUTICALS LTD., MUMBAI

The revenue is aggrieved by deletion of penalty u/s 271(1)(c) by Ld. Commissioner of Income-Tax (Appeals)-49, Mumbai {CIT(A)} vide order dated 31/01/2020. The penalty was levied by Ld. AO vide order dated 25/10/2019.

The Ld. AR, at the outset, submitted that the quantum appeal has already been decided in assessee’s favor by the Tribunal vide & ors., common order dated 17/06/2021. A copy of the same has been placed on record. The Ld. AR submitted that since the quantum has been deleted, the penalty would not survive. The Ld. DR could not controvert the aforesaid position. In the said background, our adjudication to the appeal would be as given in succeeding paragraphs. 3. The facts leading to penalty are that an assessment was framed against the assessee for the year u/s 143(3) on 31/03/2016. While framing the assessment, the assessee was saddled with certain additions / disallowances. Upon further appeal, learned first appellate authority granted partial relief to the assessee vide order dated 28/03/2019. After considering the same, the penalty u/s 271(1)(c) was levied by Ld. AO vide order dated 25/10/2019. 4. The disallowances / additions against which the impugned penalty was levied was (i) Investments written-off to the extent addition was confirmed by Ld. CIT(A); (ii) Advances written-off as confirmed by Ld. CIT(A); (iii) Transfer Pricing Adjustment with respect to interest on loans given to Associated Enterprises as confirmed by Ld. CIT(A); (iv) Disclosure made by assessee during search to cover up discrepancies and on account of bogus purchases which was offered to tax in the return of income. 5.1 The assessee contested the impugned penalty with success before Ld. CIT(A) vide impugned order dated 31/10/2020. The Ld. CIT(A) deleted penalty against item Nos. (i) to (ii) by observing that all such claims were made in the return of income which were not accepted by the authorities. The details filed by the assessee was not found to be factually incorrect. The issues were debatable. Therefore, in terms of decision of Hon’ble Supreme Court in CIT V/s Reliance Petroproducts Pvt. Ltd. (322 ITR 158), it could not be said that there was furnishing of inaccurate particulars of income or concealment of income on the part of the assessee. 5.2 Regarding penalty on Transfer Pricing Adjustments, it could not be said that the assessee had not determined the Arm’s Length Price of international transactions in accordance with the scheme of Section 92C in good faith and with due diligence. Accordingly, the conditions precedent for invoking Explanation-7 to Sec.271(1)(c) did not exist on the facts of the case. Therefore, the penalty on this item was also deleted. 5.3 The penalty against disclosure of Rs.39.47 Lacs as offered by assessee in return of income was deleted since no penalty was initiated by Ld. AO for the same in the assessment order. Therefore, the penalty could not be levied in terms of decision of Hon’ble Delhi High Court in Ms. Madhushree Gupta V/s UOI (2009; 317 ITR 107). 5.4 Regarding balance disclosure as made in the return of income, it was observed by Ld. CIT(A) that search took place on 29/08/2011. The penalty could not be levied under main provision as the assessee had included the income in the return of income filed u/s 139(1) and the same was assessed as well. There was no variation between the returned income and the assessed income, qua this addition. For levying penalty in case of income disclosed during search operation after 01/06/2007, the deeming provisions of Explanation 5A could be invoked which Ld. AO had not invoked. Even otherwise considering the same, there were a saving clause since the income was shown in the return of income filed on due date. Thus, the penalty could not be levied.

Regarding penalty on disclosure of Rs.39.47 Lacs, it is undisputed fact that no penalty was initiated by Ld. AO for the same in the assessment order which was sine-qua-non for levy of penalty. With respect to remaining disclosure, it could very well be noted that search took place on 29/08/2011. The financial year 2011-12 had not even completed on that date and hence, there would be no question of filing return of income by that date. The assessee made certain disclosure for AY 2012-13 which was included in the return of income filed u/s 139(1). The same has duly been accepted by Ld. AO without any variations. Thus, it was clear that there was no furnishing of inaccurate particulars of income or concealment of income in the return of income filed by the assessee. The Ld. CIT(A) has also examined the applicability of Explanation-5A and rightly concluded that the same was not applicable since the assessee had included the admitted income in the return of income filed on due date u/s 139(1). Thus, the penalty could not be levied and same has rightly been deleted by Ld. CIT(A). Hence, on the fact & circumstances of the case, the impugned order would not require any interreference on our part, in any manner.

Resultantly, the appeal stands dismissed. Order pronounced on 12th July, 2021 Sd/- Sd/- (Mahavir Singh) (Manoj Kumar Aggarwal) उपा�� / Vice President लेखा सद� / Accountant Member मुंबई Mumbai; िदनांक Dated : 12/07/2021 Sr.PS, Jaisy Varghese आदेशकी�ितिलिपअ�ेिषत/Copy of the Order forwarded to : अपीलाथ�/ The Appellant 1. ��थ�/ The Respondent 2. आयकरआयु�(अपील) / The CIT(A) 3. आयकरआयु�/ CIT– concerned 4. िवभागीय�ितिनिध, आयकरअपीलीयअिधकरण, मुंबई/ DR, ITAT, Mumbai 5. गाड�फाईल / Guard File 6. आदेशानुसार/ BY ORDER,