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Income Tax Appellate Tribunal, AHMEDABAD “D” BENCH, AHMEDABAD
Before: Ms. SUCHITRA KAMBLE & SHRI MAKARAND VASANT MAHADEOKAR
PER SUCHITRA KAMBLE, JUDICIAL MEMBER:
This appeal is filed by the Assessee against order dated 29.12.2021 passed by the CIT(A), National Faceless Appala Centre (NFAC), Delhi for the Assessment Year 2008-09.
The assessee has raised the following grounds of appeal :-
“1. The learned CIT (A) has erred in law as well as on facts in confirming the penalty of Rs.1,43,24,576/- levied by the AO u/s. 271(1)(c) of the Act without proper consideration and appreciation of the facts of the case and submission filed. In view of the facts of the case and elaborate submissions filed, the appellant's case does not fall within the scope of provisions of Section 271(1)(c) of the Act. Accordingly, the impugned penalty of Rs.1,43,24,576/- requires to be quashed/cancelled.
2. The appellant states that since complete details, submissions and explanation in respect of each of the items of additions/disallowances, for which penalty has been levied, having been submitted before the AO, no penalty was warranted u/s.271(1)(c) of the Act. Accordingly, the Assessment Year: 2008-09 Page 2 of 4 impugned penalty of Rs.1,43,24,576/- requires to be quashed/ cancelled.
3. The Ld. CIT(A) has erred in law and on fact while confirming the penalty levied by the AO, in a summary manner without dealing with the various contentions and supporting legal decisions relied upon by the appellant for non-levy of penalty u/s. 271(1)(c) of the Act.”
Return of income for the relevant Assessment Year was filed on 27.09.2008 declaring total loss of Rs.9,67,82,080/-. Assessment under Section 143(3) of the Income Tax Act, 1961 was completed on 25.01.2012 thereby assessing loss of Rs.4,88,61,980/- as against returned loss of Rs.9,67,82,080/-. The disallowance/ additions on account of the following were made by the Assessing Officer :-
Additions/ Amount of Whether Decision of Additions confirmed Disallowances Addition (Rs.) Penalty CIT(A) by ITAT u/s.271(1)(c) initiated Adjustment 3,34,28,873 Yes Confirmed Confirmed the made in the addition CIT(A) decision. International Transaction Disallowance 15,02,592 Yes Confirmed Confirmed the of GDR issue the addition CIT(A) decision Disallowance 3,15,333 Yes Issue not in Issue not in appeal of misc. appeal expenses Disallowance 1,26,73,306 Yes Confirmed Deleted the of Foreign (57,76,604 + the addition addition of Exchange 68,96,702 Rs.57,76,604 and Fluctuation confirmed the addition Rs.68,96,702/- 3.1 A show cause notice under Section 271(1)(c) of the Act was issued on 14.07.2017 for which the assessee replied. After taking cognisance of the reply, the Assessing Officer held that the Assessing Officer is satisfied that the assessee company had furnished inaccurate particulars of income with ulterior motive to the tune of Rs.4,21,43,500/- and imposed penalty at Rs.1,43,24,576/- under Section 271(1(c) of the Act.
Being aggrieved by the Penalty Order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.
The Ld. AR submitted that from the Assessment Order under Section 143(3) of the Act, the Assessing Officer initiated the penalty proceedings of loss on Forex Derivatives treating it as speculative loss of Rs.57,76,605/- and disallowance of Foreign Exchange Fluctuation loss of Rs.68,96,702/-. In respect of other additions/disallowances, no penalty proceedings were initiated. However, while passing the Penalty Order under Section 271(1)(c) of the Act, the Assessing Officer levied penalty in respect of the items of additions/disallowances made in the Assessment Order except the disallowance of loss on Forex Derivatives amounting to Rs.57,76,605/-. The Assessing Officer has not taken into consideration the directions of the Tribunal in i.e. in the quantum appeal in respect of adopting the LIBOR + 2% rate for ALP adjustments. The Ld. AR further submitted that the CIT(A) passed the order in a summary manner without dealing with the various contentions and supporting legal decisions relied upon for non-levy of the penalty under Section 271(1)(c) of the Act. The Ld. AR further submitted that merely making of a claim which is not sustainable in law by itself will not amount to furnishing inaccurate particulars of income of the assessee. The Ld. AR relied upon the decision of Hon’ble Apex Court in the case of CIT vs. Reliance Petroproducts Pvt. Ltd. (2010) 322 ITR 15 (SC).
The Ld. DR relied upon the Assessment Order and the order of the CIT(A) as well as the Penalty Order.
We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that in quantum appeal the Tribunal has confirmed the addition in respect of disallowance of loss on Forex Derivatives treating it as speculative loss and disallowance of Foreign Exchange Fluctuation loss which was claimed by the assessee as per the assessee’s understanding. The advice given to the assessee by the Consultant cannot be termed as furnishing of inaccurate particulars of income as envisaged under Section 271(1)(c) of the Act for penalty provisions. The decision of Hon’ble Apex Court in the case of Reliance Petroproducts Pvt. Ltd. (supra) is categorically applicable in the assessee’s case and, therefore, the penalty levied under Section 271(1)(c) of the Act is not justifiable on the part of the Assessing Officer. Thus, the penalty is deleted.
In the result appeal of the assessee is allowed.
Order pronounced in the open Court on this 28th August, 2024.