SH. MAM RAJ,SIRMOUR vs. ITO, NAHAN

PDF · subscribers
ITA 315/CHANDI/2018Status: DisposedITAT Chandigarh10 July 2018AY 2006-073 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the issue of freight subsidy being revenue or capital receipt was debatable and the assessee had not even received the subsidy. Therefore, penalty under Section 271(1)(c) was not attracted.

What were the facts?

The Assessing Officer disallowed freight subsidy and initiated penalty proceedings under Section 271(1)(c) of the Income Tax Act. The assessee argued that the subsidy was not received and its nature (revenue vs. capital) was debatable.

What were the issues?

Whether penalty under Section 271(1)(c) is leviable when the nature of a receipt is debatable and the receipt itself has not yet been realized.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

Income Tax Appellate Tribunal, DIVISION BENCH ‘B’, CHANDIGARH

Before: SHRI SANJAY GARG & SHRI B.R.R. KUMAR

For Appellant: Shri Abhishek Jhamba
For Respondent: Shri Tarun Kushwaha, JCIT
Hearing: 05.06.2018Pronounced: 10.07.2018

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH ‘B’, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI B.R.R. KUMAR, ACCOUNTANT MEMBER ITA No.315/Chd/2018 (Assessment Year : 2006-07) Sh.Mam Raj C/o Vs. The Income Tax Officer, M/s Neel Kanth Services Station, Nahan, Badrinagar, Paonta Sahib, Himachal Pradesh. Distt. Sirmour (H.P.) PAN: ADXPR4044D (Appellant) (Respondent)

Appellant by : S/Shri Abhishek Jhamba, Abhimanyu Jhamba & Mohit Jhamba Respondent by : Shri Tarun Kushwaha, JCIT Date of hearing : 05.06.2018 Date of Pronouncement : 10.07.2018

ORDER Per Sanjay Garg, Judicial Member :

This appeal has been preferred by the assessee

agitating the penalty levied by the Assessing Officer u/s

271(1)(c) of the Income Tax Act, 1961 (in short ‘the Act’),

and confirmed by Ld. Commissioner of Income Tax

(Appeals), Shimla (hereinafter referred to as (‘Ld.CIT

(Appeals’) vide order dated 31.1.2018 passed u/s 250(6) of

the Act, in Appeal No.IT/98/2016-17/Sml, relating to

assessment year 2006-07.

2.

Brief facts relating to the issue, are that during the

assessment proceedings the Assessing Officer noticed that

under the head “Freight outward (net)” a sum of

Rs.20,97,908/- was debited in the Profit & Loss Account.

He, therefore, asked the assessee to file details of freight

2 ITA No.315/Chd/2018 AY: 2006-07

subsidy received/receivable from government. The assessee

submitted that he had not received freight subsidy during

the financial year relevant to assessment year under

consideration and as such the amount of freight subsidy

was not accounted for. The Assessing Officer, however,

observed that the assessee was maintaining his account on

mercantile basis and that the amount of freight subsidy

received by it should have been reflected in the Balance

Sheet and Profit & Loss Account. He, therefore, worked out

the total freight subsidy @ 60% of the total freight

expenditure at Rs.20,97,908/- and disallowed and added

back the same to the income of the assessee. He also

initiated penalty proceedings u/s 271(1)(c) of the Act for

furnishing inaccurate particulars of income and thereby

levied the impugned penalty.

3.

In appeal the Ld.CIT(Appeals) confirmed the impugned

penalty.

4.

The assessee thus has come up in appeal before us. At

the outset, the Ld. counsel for assessee has submitted that

the impugned penalty had been levied on account of non-

setting off the amount receivable as freight subsidy as

against the expenditure claimed. He has further submitted

that whether the freight subsidy is a revenue receipt or

capital receipt, is a debatable issue. Hence, the penalty

u/s 271(1)(c) of the Act was not attracted. He further

submitted that the freight subsidy is given as an incentive

by the Government of the State to units established in the

3 ITA No.315/Chd/2018 AY: 2006-07

economically backward and remote area of the State for the

development of the area and for generation of employment.

He, in this respect, has relied upon the decision of the

Hon'ble Supreme Court in the case of CIT vs. Chaphalkar

Brothers Pune & Others (2017) 88 Taxmann.com 278 (SC).

He, therefore, has submitted that it cannot be said that the

assessee had furnished inaccurate particulars of income

and that when the issue is debatable then no penalty u/s

271(1)(c) is attracted.

5.

We have considered the rival submissions. We find that

this is not a fit case for levy of penalty u/s 271(1)(c) of the

Act. The above issue relating to receipt of freight subsidy

whether it was capital or revenue receipt in the case of the

assessee, is/was a debatable issue. Even the assessee had not

received freight subsidy till date. In view of this, we do not

think that the penalty proceedings u/s 271(1)(c) of the Act are

attracted in this case. We, therefore, delete the penalty levied

by the lower authorities.

6.

In the result the appeal of the assessee stands allowed.

Order pronounced in the open court on 15.06.2018

Sd/- Sd/- (B.R.R. KUMAR) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated : 10th July, 2018 *Rati* Copy to: 1. The Appellant 2. The Respondent 3. The CIT(A) 4. The CIT 5. The DR Assistant Registrar, ITAT, Chandigarh

More judgments on Section 271(1)(c)

All 25,141 judgments and leading authorities on Section 271(1)(c) →

Recent GST High Court judgments

Search GST case law →