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Income Tax Appellate Tribunal, KOLKATA ‘A’ BENCH, KOLKATA
Before: Shri Waseem Ahmed & Shri S.S. Viswanethra Ravi
Per Shri S.S. Viswanethra Ravi :- This appeal by the assessee against the order dated 13.11.2015 passed by the ld. Commissioner of Income Tax (Appeals)-6, Kolkata, where the ld. CIT(Appeals) confirmed the penalty imposed by the Assessing Officer for the assessment year relevant to 2008-09.
The brief facts of the case are that M/s. Hooghly Dock & Port Engineers Limited, Kolkata, a Public Sector Undertaking, have been working under the administrative control of the Ministry of Shipping, Government of India (GOI). The Company has been passing through severe financial constraints with a negative net worth of Rs.558.61 crore and Accumulated Loss to the tune of Rs.587.19 crore as on 31.03,2010 ./2016 Assessment year: 2008-2009 Page 2 of 5 (Audited). The Organisation is a sick Industrial company engaged in ship building activities. The company is perennially a loss making organization with negative net worth since 1985 - 86. The Govt. has been considering the revival of the company through Rehabilitation -Cum - Restructuring package. The proposal of Revival of HDBEL has got the recommendation of BRPSE (Board for Reconstruction of Public Sector Enterprise) vide the meeting dated.22.06.2007. Since then the package has been under further review of CCEA (Cabinet Committee on Economic Affairs) for a final decision.
Almost the last two decade the company has been getting Non-Plan assistance from GOI for payment of salary and wages and Statutory dues, The said assistance is not regular in nature for which deferment of salary and wages has become an intermittent outcome. In fact, the employees of the company have been surviving on the dole from the Govt. From the tax computation sheet, it is moreover clear that tax liability of the company is even nil by way of having negative income even after disallowance of the items selected by the Assessing Officer.
The Assessing Officer initiated penalty proceedings against assessee for not submitting proper explanation in the assessment proceedings. The case of the Assessing Officer was that the assessee made levies of unjustified claims i.e. claim for VAT/Service Tax, Provision for Fringe Benefit Tax, prior period expenses and penalty charges, whereby the Assessing Officer found that an extent of Rs.1,27,22,180/- was escaped assessment and the case thereon of Rs.43,24,269/- was imposed as penalty on the ground that the said amount was sought to be evaded.
In first appeal, the assessee contended before the ld. CIT(Appeals) as under:- “The assessee is a Public Sector Undertaking engaged in Ship Building, Repairing, and General Engineering. The return for the Assessment Year 2008-09 was filed declaring a loss of Rs.49,60,78,820/-. The assessment was completed on 03rd ./2016 Assessment year: 2008-2009 Page 3 of 5
December 2010 and the loss was assessed at Rs.47,09,97,612/- on account of certain additions made by the Ld. Assessing Officer. The Ld. Assessing Officer also issued notice u/ s 271(1)(c) of the Income Tax Act, 1961. The Ld. Assessing Officer passed the order u/s 271(1)(c) on 29th June 2011 levying a penalty of Rs 43,24,269 being 100% of the tax sought to be evaded on the income of Rs.1,27,22, 180 escaping assessment. The appellant is a perennially loss making undertaking with accumulated losses of Rs.47,905 lacs as at the end of the relevant previous year. The appellant did not prefer an appeal against the said additions since the additions made by the Ld. Assessing Officer did not result in any tax outgo, but only reduced the loss from Rs. 4,960 lacs to Rs.4,709 lacs. The appellant did not also foresee any profits in the near future to take advantage of the assessed loss.
2. It is submitted that penalty u/ s 271(1)(c) of the Income Tax Act, 1961 can be imposed only for the following two specific offences; a) concealment of particulars of income; or b) furnishing of inaccurate particulars of income.
In the impugned order passed U/s. 271(l)(c) of the Income Tax Act, 1961, the Ld. Assessing Officer has levied penalty for reasons that the appellant has failed to offer any explanation during assessment proceedings for the disallowances made in the assessment order dated 3rd December, 2010 passed u/ s 143(3) of the Income Tax Act, 1961 and hence it is proved that the appellant has "deliberately" furnished inaccurate particulars of income. Therefore as per the Ld. Assessing Officer's order, the appellant's case is not of "concealment", but of furnishing of inaccurate particulars. It is submitted that the assessee has made complete disclosure in the return of income which is duly supported by the tax audit report and the audited accounts and filed the relevant details during the course of assessment proceedings. This is evident from the details given hereunder with respect to the observations of the ld. Assessing Officer on the disallowances made by him in the assessment order passed u/s 143(3) of the Income Tax Act, 1961”.
The ld. CIT(Appeals) after considering the submissions of assessee confirmed the order of the Assessing Officer in imposing the penalty by observing that the assessee failed to discharge the onus as contemplated ./2016 Assessment year: 2008-2009 Page 4 of 5 by the Explanation 1 to section 271(1)(c) of the Act, the relevant portion is reproduced herein below:- “Thus the possibility that an assessee’s case may not be picked up for scrutiny may motivate some assessees not to disclose true and full income in their returns. Considering the above observations of the Hon’ble Court and the failure of the appellant to discharge the onus put on it by explanation 1 to section 271(1)(c) to establish that the explanation given by it in relation to the additions is bona fide, it has to be held that the Assessing Officer rightly imposed penalty of Rs.43,24,269/- on the appellant. Hence, the penalty of Rs.43,24,269/- imposed on the appellant u/s 271(1)(c) is confirmed”.
Before us, the ld. A.R. reiterates the submissions made before the ld. CIT(Appeals). Further agreed that the assessee made complete disclosure by giving all details including Tax Audit Report and audited accounts before the Assessing Officer during the assessment proceedings. Further contended that the Assessing Officer initiated the penalty proceedings for not offering the proper explanation against the claims made by the assessee but for not under the conditions contemplated in 271(1)(c) of Act and proceeded to remand the case to the file of Assessing Officer for examination and verification of all details. The ld. D.R. relied on the orders of both the lower authorities.
Heard rival submissions and perused the relevant record. We find that the Assessing Officer initiated penalty proceedings for not offering proper explanations can be seen from the page no. 2 of penalty order. The assessee contended before the ld. CIT(Appeals) that all the details were produced before the Assessing Officer including Tax Audit Report and audited accounts. We find that the proceedings impugned before us not initiated involving the conditions contemplated therein in Section 271(1)(c), in such circumstances that the imposition of penalty is not valid under law, but, however, in the circumstances of the case, taking into consideration of submission of the ld. A.R., we are of the view that the case on hand shall go back to Assessing Officer for verification and ./2016 Assessment year: 2008-2009 Page 5 of 5 examination of all details, and the assessee is at liberty to file any other evidence in support of its claim. The Assessing Officer shall decide these issues by giving proper opportunities to the assessee.