UDYOGI INTERNATIONAL PRIVATE LIMITED,KOLKATA vs. A.C.I.T., CIRCLE-1(1), KOLKATA

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ITA 2114/KOL/2024Status: DisposedITAT Kolkata19 December 2024AY 2014-15Bench: Shri Rajesh Kumar (Accountant Member), Shri Pradip Kumar Choubey (Judicial Member)5 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the loss was clearly stated in the audited financial statement, indicating no concealment of income. Merely disallowing a claimed loss, especially when debatable issues are raised, does not amount to concealment for levying penalty.

What were the facts?

The assessee company claimed a loss of Rs. 24,86,221/- from derivative transactions in its audited accounts. The AO disallowed this loss, deeming the transaction not genuine, and initiated penalty proceedings under Section 271(1)(c). The CIT(A) upheld the penalty.

What were the issues?

Whether the disallowance of a claimed loss, which was disclosed in the audited financials, constitutes concealment of income for the purpose of levying penalty under Section 271(1)(c).

Which sections of the Income-tax Act were involved?

Section 147,Section 144,Section 144B,Section 271(1)(c)

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Cases cited in this judgment(2)Show list

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Income Tax Appellate Tribunal, “B” BENCH: KOLKATA

Before: Shri Rajesh Kumar&Shri Pradip Kumar Choubey]

ORDER / आदेश Per Pradip Kumar Choubey, JM:

This is the appeal preferred by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)-NFAC, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 29.08.2024 for the AY 2014-15.

2.

Brief facts of the case of the assessee are that the assessee is a company, return of income for AY 2014-15 was scrutinized and assessment order was passed u/s 147 Assessment Year: 2014-15 Udyogi Internaitonal pvt. Ltd. read with Section 144 read with Section 144B of the Act. A penalty proceeding has also been initiated u/s 271(1)(C) of the Act and penalty of Rs. 8,45,315/- have been levied against the assessee.

3.

The said order has been challenged by the assessee before the Ld. CIT(A) wherein the appeal of the assessee has been dismissed.

Being aggrieved and dissatisfied the present appeal has been filed by the assessee.

4.

The ld. Counsel for the assessee challenges the impugned order thereby submitting that the Ld. CIT(A) has erred in sustaining the penalty though there was no concealment of income from the side of the assessee. The Ld. Counsel submits that the AO imposed penalty only on this account the assessee did not prefer any appeal against the assessment order and paid the taxes. The ld. Counsel submits that the penalty proceedings and assessment proceeding are different and on this ground that the assessee did not prefer appeal against the assessment order imposition of penalty is bad in law. The Ld. Counsel vehemently submits that there was no concealment but mere disallowance of loss claimed by the assessee. He has cited following decisions: i) India Cine Agencies vs. DCIT [2005] 275 ITR 430 (Mad) ii) CIT vs. Auric Investment and Securities Ltd. [2009] 310 ITR 121 (Del) iii) CIT vs. SSP Ltd. [2010] 189 Taxman 282 (P & H) iv) Mahavir Irrigation Pvt. Ltd. vs. CITY [2009] 314 ITR (Trib)(Del)

Further relied on the decision of Co-ordinate Bench of Mumbai in the case of CIT vs. Reliance Petro Products Pvt. Ltd.

5.

Contrary to that the ld. DR supports the impugned order.

Assessment Year: 2014-15 Udyogi Internaitonal pvt. Ltd.

6.

Upon hearing the submission of the ld. Counsel for the respective parties, we have perused the record and find that the assessee is a company. During the assessment year, the assessee entered into derivative transaction on recognized stock exchange i.e. Bombay Stock Exchange through registered stock broker resulting in a loss of Rs. 24,86,221/- which were duly debited in the audited statement of accounts. The Ld. AO in course of assessment proceedings believed that the transaction was not genuine and disallowed the genuine loss and, in the process, raised demand of Rs. 28,87,060/-. It is a fact that the assessee did not prefer any appeal against the said raised demand. The penalty proceedings have been initiated on the ground that wrong declaration of the list in the audited financials does amount to concealment of income as such loss. It has been held that in the penalty proceeding that the loss is also income and if claimed wrongly, it is of the nature of concealed income. It is evident from the record that the loss is duly stated in the audited financial statement hence in our view, there is no concealment but it is a mere disallowance of loss claimed by the assessee.

We have gone through the cited judicial pronouncement and find that in a case of India Cine agencies V. DCIT it has been held that the assessee had as balance sheet showed the discount to be given to customers on their further purchases, there was no concealment of income and no penalty was leviable. In another decision reported in (2009) 310 ITR 121 Del. it has been held that -Where loss is disallowed on the ground of it being speculative loss it would not amount to concealment and hence penalty u/s 271(1)(C) cannot be levied. Further in a case CIT V.SSP Ltd. (2010) 189 Taxman282(P&H) it has been held thus- Mere erroneous claim for deduction in the absence of any concealment or giving of inaccurate particulars is no ground for levying penalty u/s 271(1)(c ) . Where the assessee had offered valid explanation and had raised debatable issues for claiming the expenditure, disallowance of the claim alone would not justify imposition of penalty.

7.

It is well settled that the purpose of imposing penalty u/s 271(1)(c ) are different from those applied for making or confirming the addition. Then the assessee has made a particular claim in the return of income and also furnished all the material facts Assessment Year: 2014-15 Udyogi Internaitonal pvt. Ltd. relevant thereto disallowance of such claim cannot lead to the conclusion that there was the concealment of particulars of its income. The Hon’ble ITAT, Delhi in the case of Mahavir Irrigation Pvt. Ltd. vs. CIT (supra) has held thus:

What is to be seen is whether the claim made by the assessee was bonafide and whether all the material facts relevant thereto have been furnished. Once it is so established, the assessee cannot be held liable for payment of penalty for concealment. Assessment proceedings and penalty proceedings are separate and distinct and therefore findings in the assessment proceedings could not be regarded as conclusive for the purpose of penalty proceedings and could not be taken as conclusive for the purpose of holding the assessee liable for concealment and imposed penalty u/s 271(1)(c ) (Mahavir Irrigation Pvt. Ltd. vs. CITY [2009] 314 ITR (Trib)(Del).

8.

Going over the cited decision as well as the facts of the case, we find substance in the argument of the ld. Counsel of the assessee and accordingly imposition of penalty is hereby directed to be deleted. The order of the AO confirmed by the Ld. CIT(A) is hereby set aside. In the result, the appeal of the assessee is allowed. Order is pronounced in the open court on 19th December, 2024

Sd/- Sd/- (Rajesh Kumar/राजेश कुमार) (Pradip Kumar Choubey /�द�प कुमार चौबे) Accountant Member/लेखा सद�य Judicial Member/�या�यक सद�य Dated: 19th December, 2024 SM, Sr. PS Copy of the order forwarded to: 1. Appellant- Udyogi International pvt. Ltd., 294, B. B. Ganguly Street, Bowbazar S.O (Kolkata)-700012 2. Respondent – ACIT, Circle-1(1), Kolkata 3. Ld. CIT(A)-NFAC, Delhi 4. Ld. Pr. CIT- , Kolkata 5. DR, Kolkata Benches, Kolkata (sent through e-mail)

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