DCIT 1(3)(2), MUMBAI vs. SUMITOMO CHEMICAL INDIA P.LTD, MUMBAI

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ITA 294/MUM/2015Status: DisposedITAT Mumbai27 July 2016AY 2006-074 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 CIT(A) deleted the penalty for most items, relying on a previous Tribunal decision that set aside or deleted the quantum additions. For the remaining item, the CIT(A) held that a fully disclosed wrong claim does not constitute concealment of income.

What were the facts?

The Assessing Officer (AO) imposed a penalty under section 271(1)(c) on the assessee for furnishing inaccurate particulars of income. The penalty was levied on several disallowances including excess depreciation, disallowances under sections 35D and 40(a)(ia), and expenses for share capital increase.

What were the issues?

Whether penalty under section 271(1)(c) can be imposed when the underlying additions have been deleted or set aside, and whether a fully disclosed wrong claim amounts to concealment of income.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 35D,Section 40(a)(ia)

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, “A” BENCH, MUMBAI

Before: HON’BLE S/SHRI JOGINDER SINGH (JM), & RAJESH KUMAR,(AM)

Hearing: 20.7.2016

O R D E R

Per RAJESH KUMAR, Accountant Member:

1.

This is an appeal filed by the revenue and is directed against the order of the Ld. CIT(A)-7, Mumbai dated 22.10.2014 pertaining to A.Y. 2006-07.

2.

The issue raised by the revenue in the sole ground of appeal

is against the deletion of penalty by ld. CIT(A) as imposed by the AO under section 271(1)(c ) of the Income Tax Act, 1961.

3. The facts in brief are that the assesse filed its return of income on 29.11.2006 declaring total income of Rs.1,68,87,722/-. The assessment was completed under section 143(3) of the Act vide order dated 31.12.2009 determining total at Rs.4,53,090/- after making various disallowances including the disallowance of an amount of Rs.14,27,727/- under section 35 of the Act, Rs.23,74,987/- under section 40a(ia), excess claim of depreciation of Rs.1,13,57,742/-, capital expenditure of Rs.2,10,000/- aggregating to Rs.1,53,70,456/-. The AO, ultimately, imposed penalty vide order dated 28.3.2013 u/s 271 (1)( c ) of the Act of Rs.51,73,696/- being 100% of the tax sought to be evaded by holding that the assessee has furnished inaccurate particulars of income and concealed the particulars of income qua the said items of expenses. Aggrieved by the order of the AO, the assessee carried the matter before the First Appellate Authority, who deleted the penalty in respect of three items viz Excess claim of depreciation of Rs.1,13,57,742/-, disallowance u/s 40(a)(ia) amounting to Rs.23,74,987/- and disallowance u/s 35D of Rs.14,27,727/- on the basis of decision of Mumbai Bench of the Tribunal in assessee’s own case in quantum appeal in (AY-2006-07) dated 28.3.2014, whereby the Tribunal the set aside the quantum addition in respect of disallowance u/s 35D Rs. .14,27,727/- and disallowance u/s 40(a)(ia) Rs.23,74,987/- to the file of AO and the addition as made in respect of claim of deprecation of Rs.1,13,57,742/- was deleted. As regard fourth addition on which the penalty was imposed i.e. expenses incurred on increase in share capital of Rs.2,10,000/-, the ld. CIT(A) deleted the penalty by placing reliance on the decision of CIT V/s Reliance Petroproduct Pvt Ltd reported in 322 ITR 158 (SC) by holding that the wrong claim made by the assesse which was fully disclosed in the return of income and could not be construed as furnishing as inaccurate particulars of income or concealment of income and therefore the penalty could not be imposed, on the said disallowance.

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