Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI
Before: SHRI A.MOHAN ALANKAMONY & SHRI DUVVURU RL REDDY
आदेश / O R D E R
Per A. Mohan Alankamony, AM:-
This appeal is filed by the assessee aggrieved by the order of the learned Commissioner of Income Tax (Appeals)-15, Chennai dated 21.03.2016 in passed U/s.250(6) r.w.s.
271(1)(c) of the Act.
The assessee has raised several grounds in its appeal, however the crux of the issue is that the Ld.CIT(A) has erred in confirming the penalty of Rs.3,36,622/- levied by the Assessing Officer U/s.271(1)(c) of the Act.
The brief facts of the case are that the assessee is a private limited company engaged in the business of manufacturing and selling of biscuits, filed its return of income for the assessment year 2005-06 on 31.10.2005 and subsequently filed revised return on 22.02.2006.
The case was taken up for scrutiny under CASS and finally order U/s. 143(3) was passed on 14.12.2007 wherein the Ld.AO made addition of Rs.9,19,921/-, since the assessee has not taken into account of the same which is reflected in the TDS certificate issued by M/s. Britannia Industries Limited, Bangalore in the name of the assessee as payment to contractors. Thereafter penalty proceedings were initiated. In the penalty proceedings, it was explained by the assessee that the amount of Rs.9,19,921.89 received by the assessee from M/s. Britannia Industries Limited, Bangalore was nothing but reimbursement of the amount paid to the employee of the assessee company who was assigned to work for M/s. Britannia Industries Limited Bangalore. Hence, the assessee had not enjoyed any income out of the transaction because the entire amount of Rs.9,19,921.89 received by the assessee was paid to the employee of the assessee as salary. However, the Ld.AO rejecting the contention of the assessee and levied penalty invoking Section 271(1)(c) of the Act by stating as under:- “During the course of penalty proceedings as authorized representative appeared and filed a letter dated 17/06/2008. In it, it was contended that if the department wishes to tax Rs.9,19,921.90 as income, then the corresponding expenditure should also be allowed.
Allowing or not allowing the corresponding expenditure is not the issue on hand. Now as far as this penalty proceedings are concerned, in fact by contending that if the departments wishes to tax the income .... assessee impliedly has admitted that the income is omitted to be included in the return of income.
As I am convinced that the assessee has furnished inaccurate particulars of the contract receipts to the extent Of Rs.9,19,921.89 and hence by invoking Sec 271(1)(c) I levy the lessor of following penalty.
100% of tax sought to be added 3,21,973 + SC + Cess 300% -do- 9,65,918+ SC + Cess
In view of the cooperation extended by the assessee in filing details called for by the department during the course of assessment proceedings the minimum penalty viz.l00% of the tax sought to be evaded Rs.3,36,622/- is levied.”
On appeal, the Ld.CIT(A) confirmed the order of the Ld.AO by agreeing with his view and observing as under:- “No claim of expenditure can be entertained during the penalty proceedings. The appellant was in the knowledge of the TDS certificate issued by the associate concern and chose to claim its credit but neither offered income nor any explanation. The action of AO in levying penalty u/s 271(1)(c) of the IT Act is confirmed. These grounds of appeal are dismissed.”
Before us the Ld.AR reiterated the submission made before the Revenue authorities on the earlier occasions and the Ld.DR could not convincingly controvert to the submission of the Ld.AR on merits.
At the outset, we find merit in the submission of the Ld.AR. It is not disputed that the amount of Rs.9,19,921/- received by the assessee from M/s. Britannia Industries Limited, Bangalore is nothing but reimbursement of salary paid to the assessee’s employee who had rendered service to M/s. Britannia Industries Limited, Bangalore. By matching the receipt of Rs.9,19,921/- with the payment of salary of the same amount to the employee of the assessee there is no income accruing to the assessee company. Therefore prima facie on merits, we find that the Revenue does not have a case. We also fail to understand as to why the assessee company has not carried the matter on appeal before the appellate authorities. However in this situation, we do not find it appropriate for invoking the penal provisions of Section 271(1)(c) of the Act in the case of the assessee because the assessee has neither furnished incorrect particulars of its income or concealed its income. Therefore we hereby direct the Ld.AO to delete the penalty of Rs.3,36,622/- levied by him.
In the result, the appeal of the assessee is allowed.
Order pronounced in the court on the 07th April, 2017.