RING PLUS AQUA LTD,MUMBAI vs. DCIIT 9(3), MUMBAI

आदेश / O R D E R

PER SHAILENDRA KUMAR YADAV, JM

1. The learned Commissioner of Income tax (Appeals) erred in law in upholding the action of the Deputy Commissioner of Income tax, Range 9(3), Mumbai (hereinafter referred a the "Assessing Officer") to levy penalty under section 271(I)(c) amounting to Rs.2,04,466/-.

2. The appellant submits that it has filed full, true, correct and complete particulars of its income and has neither concealed its income nor filed any inaccurate particulars of its income and the learned Commissioner of Income-tax (Appeals) erred in confirming the order passed by the Assessing Officer levying penalty under section 271(1)(c). (a) The learned Commissioner of Income-tax (Appeals) erred in confirming penalty amounting to Rs.2,04,466/- under section 271(1)(c) levied by the Assessing Officer on the grounds that the appellant has failed to explain the discrepancy or reconcile the credit balance in respect of certain creditors as per its books of accounts with the response received from the creditors pursuant to summons issued under section 133(6) of the Act with necessary evidence. (b) The appellant submits that full explanation was provided in respect of the aforesaid difference which was on account of rejection of goods and short quantity received and accordingly the learned Commissioner of Income tax (Appeals) erred in confirming the levy of penalty by the Assessing Officer, as there has no inaccurate particulars nor any concealment of income.

3. The appellant submits that the Assessing Officer be directed to delete the penalty levied under section 27 I(1)(c) amounting to Rs.2,04,466/-.”

2. The Assessing Officer levied penalty of `2,04,466/- under section 271(1)(c) of the Act. Assessee is a limited company doing business of export of automobile component like starter ring, gears, flexplate assembling, Pulleys and shaft water pump bearings. Assessing Officer found that assessee has shown loan credit in the name of Radice Ispat (India) Vizaj of `3,48,640/-, M/s. Seva Enterprises of `13,783/- and Beekay Special Steels of `2,39,126/- totaling `6,10,549/- hence assessee was asked to explain about the discrepancy of credit. According to the Assessing Officer, explanation of the assessee that these amounts were debited to suppliers for rejection of goods and short quantity, was not found satisfactory, hence amount of discrepancy was added to the total income of the assessee and penalty proceeding was initiated for concealment of income to the tune of `6,01,549/-. Consequently penalty of `2,04,466/- was levied under section 271(1)(c) of the Act, which was confirmed by the CIT(A) in the appellate proceedings.

3. Before us the learned counsel for the assessee submitted that the authorities below have ignored the facts put before them with regard to the issue of penalty as well as quantum addition. Without prejudice to the merits of the quantum addition, the learned counsel for the assessee submitted that it was not justified in linking the two. In this regard the learned counsel for the assessee drew our attention to the letter dated 20th December, 2011 addressed to the Addl. Commissioner of Income Tax wherein the statement of account with regard to Radical Ispat and M/s. Seva Enterprises have been mentioned. Further, our attention was drawn to the payments. In this background it was submitted that in this situation the CIT(A) was not justified in rejecting the contention of the assessee that the explanation was vague and general. Further we find that the stand of the assessee has been that all details were submitted before the authorities below, which were not duly considered.

4. In the facts and circumstances of the case without being prejudice to the merits of the quantum addition we find that assessee has given certain explanation with regard to the addition in question though the same have been rejected but it does not mean that penalty is automatic on the basis of additions. It was not justified on the part of the Assessing Officer to hold that assessee failed to explain the discrepancy or reconcile the credit balance in respect of certain creditors as per its books of account as far as penalty is concerned. In fact assessee has responded to the notice in this regard. Even if the same is not accepted it does not amount to no explanation. In this circumstances penalty is not justified. Hence the same is cancelled. 5. In the result, appeal filed b the assessee is allowed. प�रणामतः िनधा�रती क� अपील �वीकृत क� जाती है । Order pronounced in the open court on 27th October, 2015. आदेश क� घोषणा खुले �यायालय म� �दनांकः 27.10.2015को क� गई । Sd/- Sd/- (RAJESH KUMAR) (SHAILENDRA KUMAR YADAV) लेखा सद�य/ACCOUNTANT MEMBER �याियक सद�य/JUDICIAL MEMBER मुंबई Mumbai, �दनांक Dated 27th October, 2015

आदेश क� �ितिलिप अ�ेिषत/Copy of the Order forwarded to :