DCIT 9(2), MUMBAI vs. MEERA COTTON SYNTHETICS MILLS P.LTD, MUMBAI

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ITA 7007/MUM/2013Status: DisposedITAT Mumbai06 November 2015AY 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 Tribunal held that penalty proceedings are distinct from quantum proceedings and should be considered independently. Since the assessee suo-moto corrected the computation and offered the amount for taxation, there was no concealment or furnishing of inaccurate particulars.

What were the facts?

The assessee company declared income and later discovered an oversight in its profit and loss account regarding a loss on sale of machinery. The assessee filed a revised computation offering this loss for taxation. The Assessing Officer added this amount to the total income and initiated penalty proceedings.

What were the issues?

Whether penalty under Section 271(1)(c) is leviable when the assessee voluntarily discloses an omission and offers it for taxation before assessment is finalized.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 142(1),Section 143(3)

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, MUMBAI BENCHES “B”, MUMBAI

Before: Shri Joginder Singh, & Shri Rajesh Kumar

For Respondent: Shri Vijay Kumar Soni-DR
Hearing: 06/11/2015

Per Joginder Singh (Judicial Member) The Revenue is aggrieved by the impugned order dated 18/09/2013 of the ld. First Appellate Authority, Mumbai,

1.

2 M/s Meeta Cotton & Synthetics Mills Pvt. Ltd. deleting the penalty imposed u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter the Act) on account of disallowance of loss on sale of assets.

2.

The crux of argument advanced by Shri Vijay Kumar Soni, ld. DR, is identical to the ground raised by submitting that the disallowance was confirmed by the ld. Commissioner of Income Tax (Appeals) and the assessee revised his return only after issuance of notices u/s 142(1) and 143(2) of the Act. On the other hand, none was present for the assessee in spite of issuance of registered notice, therefore, we have no option but to proceed ex- parte, qua the assessee and tend to dispose off the appeal on the basis of material available on record.

2.1. We have duly considered the submissions of the ld. DR and perused the material available on record. The facts, in brief, are that the assessee is a private limited company engaged in production of texturised yarn knitted fabrics and woven fabrics declared income of Rs,17,52,807/-, filed on 25/11/2006. During the course of assessment proceedings u/s 143(3) of the Act, the assessee relies that a loss of Rs.9,46,662/- was incurred on sale of machinery which was debited profit & loss account vide schedule No.E, however, while preparing normal computation of total income, the said amount remained to be added to the profit of the company by oversight. This mistake was brought to the notice of the 3 M/s Meeta Cotton & Synthetics Mills Pvt. Ltd.

Assessing Officer by the assessee and requested to permit the assessee to file revised return. The assessee suo-moto filed the revised computation and offered the same for taxation. The Assessing Officer duly considered the explanation of the assessee and added the same to the total income of the assessee. At the same time, the ld. Assessing Officer initiated penalty proceedings u/s 271(1)(c) of the Act. Now, question arises, whether the penalty was rightly levied. The obvious reply is “NO” because quantum and penalty proceedings are all together different and both should be considered independently uninfluenced by the finding in the quantum addition. Even otherwise, the assessee is fortified by the decision from Hon’ble Apex Court in CIT vs Reliance Petro Products Pvt. Ltd. (2010) 320 ITR 158 (SC). It is noted that during assessment proceedings itself, the assessee filed corrected computation of income by filing revised return, thus, neither there is concealment of income or furnishing of inaccurate particulars of such income. It is simple case of disallowance, therefore, the assessee further find support from the ratio laid down in price Water House Cooper Pvt. Ltd. vs CIT (2012) 348 ITR 306 (SC) and CIT vs Icon Controls Pvt. ltd. (2007) 207 CTR (Del.) 592. In view of this fact and the decision mentioned hereinabove, we find no infirmity in the conclusion drawn by the ld. Commissioner of Income Tax (Appeals).

Finally, the appeal of the Revenue is dismissed.

4 M/s Meeta Cotton & Synthetics Mills Pvt. Ltd.

This Order was pronounced in the open court in the presence of ld. DR at the conclusion of the hearing on 29/10/2015.

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