ASST CIT CIR 3, THANE vs. SAGAR SAI ENTERAPRISES, DOMBIVALI

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ITA 4485/MUM/2014Status: DisposedITAT Mumbai16 February 2017AY 2009-105 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s decision to delete the penalty, finding that the discrepancies were bona fide mistakes and not deliberate attempts to conceal income. The Tribunal noted that the quantum appeal of the Revenue had already been dismissed.

What were the facts?

The Assessing Officer disallowed partner remuneration and certain purchase entries. The assessee appealed, and the CIT(A) deleted the penalty imposed under Section 271(1)(C). The Revenue appealed this deletion to the ITAT.

What were the issues?

Whether penalty under Section 271(1)(C) is leviable when discrepancies in accounts are found to be bona fide mistakes and not intentional concealment of income.

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, MUMBAI BENCHES “E”, MUMBAI

Before: Shri Joginder Singh, & Shri N.K. Pradhan

For Respondent: Shri Vishwas Mundhe-DR
Hearing: 16/02/2017

आदेश / O R D E R

Per Joginder Singh (Judicial Member) The Revenue is aggrieved by the impugned order dated 04/03/2014 of the Ld. First Appellate Authority, Mumbai, deleting the penalty imposed u/s 271(1)(C) of the Income Tax Act, 1961 (hereinafter the Act).

2.

During hearing, the ld. DR, Shri Vishwas Mundhe, at the outset, pointed out that the quantum appeal of the Revenue was dismissed by the Tribunal (ITA No.3057/Mum/2014) order dated 09/05/2016, being low tax effect involved. On the other hand, none was present for the assessee. We find that this appeal was filed by the Department on 27/06/2014 and on 12/07/2016, the Department was directed to effect service upon the assessee. On 15/02/2017, no proof of service was produced. This appeal was adjourned to 16/02/2017. The assessee neither presented itself nor moved any adjournment petition, therefore, we have no option but to proceed ex-parte, qua the assessee and tend to dispose off this appeal on the basis of material available on record.

1.

2.1. We have considered the submissions of the ld. DR and perused the material available on record. The facts, in brief, are that the assessee is a partnership firm came into existence on 06/04/2006, consisting of three partners namely Shri Vasant Amruta Kanchar, Nanda Vasant Kanchar and Narayat Amruta Kanchar. The assessee firm was carrying on the business as electrical contractor. The assessee filed e-return declaring income of Rs.33,56,604/- on a turnover of Rs.7,22,64,327/- on 30/09/2009. The taxable net profit was arrived at after debiting the remuneration to the partners to the tune of Rs.23,25,236/-. The assessee attended the proceedings from time to time, wherein, the ld. Assessing Officer disallowed the remuneration paid to the partners after having recourse to CBDT Circular No.739 dated 25/03/1996 by observing that in the partnership deed, the remuneration payable to working partners has not been quantified.

2.2. On appeal before the Ld. Commissioner of Income Tax (Appeal), the factual matrix was considered and the penalty was deleted. The Revenue is aggrieved and is in appeal before this Tribunal.

2.3. We find that while coming to a particular conclusion, the Ld. Commissioner of Income Tax (Appeal) noted that so far as the disallowance of remuneration to the partners is concerned, it was allowed in favour of the assessee vide order in appeal No.244/11-12 dated 08/01/2014. The relevant observation has been observed in para -7 of the impugned order. So far as, the difference in account of four parties from whom the assessee had shown purchases at higher amount, as compare to admitted by those parties, the First Appellate Authority found that the assessee has accounted for a proforma invoice amounting to Rs.1,38,121/- in its books of accounts, which were inadvertently treated as purchase bills. In the case of Arihant Trading Co., one bill of Rs.50,139/- was inadvertently recorded twice. In the case of Rahul Cables pvt. Ltd., the difference of Rs.2,04,628/- was on account of goods returned by the assessee to the supplier, which was not entered in the ledger account of the party. The bill of Havels India Ltd. was placed on record by the assessee, as per which, Havels India ltd. had made certain sales to Rahul Cables Pvt. Ltd. from whom, the assessee made purchases amounting to Rs.9,54,821/-. M/s Rahul Cables Pvt. Ltd. had advanced a copy of original bill received from Havels India Ltd to the assessee and the assessee inadvertently recorded this purchase second time in the name of Havels India Pvt. Ltd. These inadvertent mistakes were even pointed out during assessment proceedings. These mistakes were held to be bona-fide and not deliberate with a intention to conceal particulars of income or to furnish inaccurate particulars, we find no infirmity in the conclusion of the Ld. Commissioner of Income Tax (Appeal), because, if on technicalities, the stand of the Ld. Commissioner of Income Tax (Appeal) is reversed, it will amount to unjust enrichment of the Revenue and certainly violate Article-265 of Constitution of India, which says that only legitimate taxes has to be levied and collected. The stand of the Ld. Commissioner of Income Tax (Appeal) is affirmed, more specifically when, the factual finding recorded in the impugned order was neither controverted by the Revenue nor new facts were brought to our notice. Thus, the appeal of the Revenue is dismissed.

Finally, the appeal of the Revenue is dismissed.

This Order was pronounced in the open court in the presence of ld. DR at the conclusion of the hearing on 16/02/2017.

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