THE ACIT, CIRCLE-1(2), BARODA vs. M/S. EFFLUENT CHANNEL PROJECT LTD., BARODA

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ITA 2997/AHD/2014Status: DisposedITAT Ahmedabad15 July 2022AY 2008-093 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that since the quantum appeals regarding the taxability of the capital contribution were decided in favour of the assessee by the Tribunal, the penalty under Section 271(1)(c) did not sustain. Therefore, the CIT(A) rightly deleted the penalty in part for AY 2008-09 and the penalty for AY 2010-11 was also dismissed.

What were the facts?

The Revenue appealed against the deletion of penalty under Section 271(1)(c) by the CIT(A) for AY 2008-09 and 2010-11. The penalty was related to additions made on account of members' capital contribution, which was treated as revenue receipt by the Assessing Officer.

What were the issues?

Whether penalty under Section 271(1)(c) can be sustained when the underlying addition on which penalty was levied has been deleted in quantum appeal. Whether capital contribution from members should be treated as revenue receipt.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AHMEDABAD “A” BENCH, AHMEDABAD

Before: SHRI P.M. JAGTAP & Ms. SUCHITRA KAMBLE

For Appellant: Shri Vijay Kumar Jaiswal, CIT DR &, Smt. M.M. Garg, Sr. D.R
For Respondent: Shri M.J. Shah, A.R
Hearing: 29.06.2022Pronounced: 15.07.2022

PER SUCHITRA KAMBLE, JUDICIAL MEMBER :

1.

These two appeals are filed by the Revenue against two different orders, dated 19.08.2014 & 04.07.2016, passed by the CIT(A)-I, Baroda for the Assessment Years 2008-09 & 2010-11.

2.

The grounds of appeal are as under:

“1. On the facts and in the circumstances of the case and in law, the Ld. CIT(Appeals) erred ain deleting the penalty u/s.271(1)(c) of the Act levied on the addition/disallowance of Rs.82,52,000/- on account of members’ capital contribution, by holding that issue is debatable without appreciating that the said claim made by the assessee was not bonafide.”

– Assessment Year 2010-11 2532/Ahd/2016 A.Ys. 2008-09 & 2010-11 Page 2 of 3 “1. The order levying penalty under section 271(1)(c) of the Income Tax Act, 1961 passed by the learned Assessing Officer is bad in law and on facts.

2. The learned Assessing Officer has erred in law and on facts in levying a penalty of Rs.1,35,03,479/- under section 271(1)(c) of the Act for the alleged concealment and/or furnishing of inaccurate particulars of income in respect of considering a Capital Contribution of Rs.4,39,72,266/- received as revenue receipt. Thus, Appellate Company craves for the deletion.”

3.

The facts of the case in A.Y. 2008-09 are that the assessee filed return of income on 27.09.2008 declaring total income of Rs.2,60,660/-. The assessment order under Section 143(3) of the Income Tax Act, 1961 was passed on 19.10.2010 determining total income of Rs.1,05,57,662/-. The assessment was finalised on the issue of disallowance of the claim of deferred revenue expenditure in respect of capital contribution received from members. The penalty proceedings under Section 271(1)(c) of the Act was initiated by the Assessing Officer thereby imposing penalty of Rs.43,20,156/- for furnishing inaccurate particulars of income and concealment of the income in respect of the additions made by the Assessing Officer towards capital contribution received from the members.

4.

Being aggrieved by the penalty order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.

5.

The Ld. AR submitted that the quantum appeal of the assessee being for A.Y. 2008-09 was decided by the Tribunal on 24.07.2015 thereby allowing the issue towards determining of taxability of receipts received in the said year. The Ld. AR further submitted that the CIT(A) has rightly deleted the penalty on the addition of Rs.23,95,082/- in respect of 4/5th of capital contribution of Rs.1,03,15,000/-. The Ld. AR submitted that the penalty does not sustain since the quantum appeal has already been decided by the Tribunal.

6.

The Ld. DR relied upon the Assessment Order and the Penalty Order.

7.

We have heard both the parties and perused the relevant material available on record. Since the quantum appeal has already been decided by the Tribunal, the 2532/Ahd/2016 A.Ys. 2008-09 & 2010-11 Page 3 of 3 CIT(A) has rightly deleted the penalty on addition of Rs.82,52,000/- being 4/5th of the capital contribution and confirmed the penalty on addition of Rs.20,63,000/-. There is no need to interfere with the findings of the CIT(A). Hence, the appeal of the Revenue for A.Y. 2008-09 is dismissed.

8.

In respect of for A.Y. 2010-11, the penalty was imposed in respect of capital contribution which is similar to A.Y. 2008-09 and the quantum was decided by the Tribunal in ITA No.1518/Ahd/2014 vide order dated 27.06.2017. Therefore, the penalty does not sustain. Hence, appeal filed by the Revenue for A.Y. 2010-11 is also dismissed.

9.

In the result, both the appeals filed by the Revenue are dismissed.

Order pronounced in the open Court on this 15th day of July, 2022.

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