Acit 9(3), Mumbai vs Assessee
- CitationITA No.1557/M/2011
Ratio decidendi
The rule this decision rests on
Penalty under section 271(1)(c) cannot be sustained with reference to an addition that has itself been deleted in quantum proceedings, since with the underlying addition gone the penalty has no foundation. Where the claim disallowed by the Assessing Officer was not shown to rest on inaccurate or false particulars, but was held impermissible in law, the mere making of such a claim does not amount to furnishing inaccurate particulars or concealing income, and the conditions of section 271(1)(c) are not satisfied. Where an amount shown as payable in the books remains a liability of the assessee notwithstanding that the creditor has written it off in its own books, and the assessee has made full disclosure, the case is not one in which penalty under section 271(1)(c) is warranted. Where the supplier's non-confirmation of a transaction does not call the genuineness of the purchases into doubt, and the assessee has furnished correct particulars of total purchases including the disputed amount, no penalty is imposable on that addition.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
आयकर अपील सं./ITA No.1557/M/2011 ( िनधा रण वष / Assessment Year; 2004-05)
M/s. Simrone ACIT -9(3) Pharmaceutical Industries Aayakar Bhavan Ltd. बनाम/Vs. 10, Sai Sundaram, Saibaba Complex, Goregaon (E) Mumbai - 400 020 Mumbai - 400 063 PAN: AAACS0775P (अपीलाथ /Appellant) (ू!यथ /Respondent)
आयकर अपील सं./ITA No.1355/M/2011 ( िनधा रण वष / Assessment Year; 2004-05)
ACIT -9(3) M/s. Simrone Aayakar Bhavan Pharmaceutical Industries Ltd. बनाम/Vs. 10, Sai Sundaram, Saibaba Mumbai - 400 020 Complex, Goregaon (E) Mumbai - 400 063 PAN: AAACS0775P (अपीलाथ /Appellant) (ू!यथ /Respondent)
Assessee by : Shri D.C. Saboo & Shyam Saboo (AR) Revenue by : Shri Jeetendra Kumar, (DR)
सुनवाई क" तार$ख/ Date of Hearing : 09.02.2015 घोषणा क" तार$ख /Date of Pronouncement : 18 .02.2015
आदे श / O R D E R
PER R.C.SHARMA, A.M. :
These cross appeals filed by the Assessee & Revenue are directed against the order of Learned CIT(A) dated 01.12.2010 for the assessment year 2004-05, in the matter imposed of penalty u/s.271(1)(C) of the I.T. Act.
ITA No.1557&1355/M/2011 2
2. Rival contentions have been heard and perused material on record. The penalty of Rs. 49,20,688/- was levied on amount sought to be evaded aggregating to Rs.1,37,16,279/- which comprised Rs.1,32,63,213/- added on disallowance of advances written off, Rs.3,37,312/- added on account of cession of liability, Rs.1,07,633/- added on account of delayed payment of contribution to PF and Rs.8.121/- added towards unaccounted purchases. By the impugned order Ld. CIT(A) deleted penalty with reference to the addition of Rs.1,32,63,213/- made by denying deduction of advances written off and Rs.1,07,633/-, addition on account of delayed payment of contribution to PF. However, Ld. CIT(A) upheld the penalty with regard to addition of Rs.3,37,312/- and Rs.8,121/-. Detailed finding has been given by ld. CIT(A) at para 6.2 & 6.3 justifying the reasons for deleting the penalty. Both assessee and revenue are in appeal before us, against the order of CIT(A).
3. At the outset, Ld. AR placed on record on the order of the tribunal in quantum appeal dated 31st May 2011, wherein all additions were deleted except for addition made on account of written off advances of Rs.12,33,725/-.
4. We have heard the rival contentions and gone through the order of the Tribunal dated 31st May 2011 and found that all additions made by the AO were deleted by Tribunal after giving detailed findings from page 5 to 10 of the order. However, the Tribunal have upheld the additions of Rs.12,33,725/- on account of bad debts written off. As all the additions except the addition on account of debts written off amounting to Rs.12,33,725/- had already been deleted, the penalty order passed with reference to these additions have no legs to stand. Accordingly we do not find any merit in the action of AO and confirm the deletion of penalty with respect to all these for levying the penalty on the additions which had been deleted by Tribunal in quantum appeal. It is ITA No.1557&1355/M/2011 3
also pertinent to mention that CIT(A) has also given due reasoning for deletion of penalty with regard to the addition of Rs.1,32,63,213/- on account of advances written off and Rs.1,07,633/- on account of delayed payment of contribution to PF. The CIT(A) has observed as under:
" In the instant case, it is seen that the appellant had not concealed any income as regard additions made of Rs.1,32,63,213/- on delaying deduction of advances written off and Rs.1,07,633/- on account of delayed payment of contributions to PF. It is not the case of the AO that the appellant claimed deduction of these two sums based on particulars which were found to be inaccurate or false. In both the cases, the appellant had made claims which were held not sustainable in law. The particulars of claim were not found to be inaccurate, incorrect or false and only the claims were said to be not permissible under the law. As held in the case of Reliance Petro (supra) a mere making of the claim which is not sustainable in law will not amount to furnishing inaccurate particulars of income. The conditions prescribed in section 271(1)© do not exist in relation to additions of the aforesaid two sums."
5. In view of the discussion made in para 4, we do not find any reason to interfere with order of CIT(A) for deleting the penalty. Now coming to the addition of Rs.3,37,312/- and Rs.8,121/- with respect to which CIT(A) has upheld the penalty. We found that the amount was shown in the books of account as payable, merely because the other party has written off the amount, in their books of account will not absolve the assessee from its liability to make payment. The assessee has given full disclosure. Therefore, it was not a fit case for imposition of penalty.
6. With regard to purchase of Rs.8,121/-, merely because the supplier has not confirmed the transaction, no penalty is imposable. The assessee had furnished correct particular of total purchase including purchase of Rs.8,121/-. Genuineness of entire purchase was not in doubt. Even the Tribunal in quantum order has deleted the penalty. Accordingly, we do not find any justification for confirming penalty for these additions.
ITA No.1557&1355/M/2011 4
7. In the result appeal of the assessee is allowed and appeal of the revenue is dismissed.
Order pronounced in the open court on 18 .02.2015.
आदे श क" घोषणा खुले यायालय म+ ,दनांकः 18.02.2015 को क" गई ।
Sd/- Sd/- (Sanjay Garg) (R.C. Sharma) JUDICIAL MEMBER ACCOUNTANT MEMBER
मुंबई/Mumbai; ,दनांक/Dated 18.02.2015
* Patel
आदे श क" ूितिल1प अमे1षत/Copy षत of the Order forwarded to : 1. अपीलाथ / The Appellant 2. ू!यथ / The Respondent. 3. आयकर आयु3(अपील) / The CIT(A)- 4. आयकर आयु3 / CIT
5. 1वभागीय ूितिनिध, आयकर अपीलीय अिधकरण, मुंबई / The DR Concerned Bench,
6. गाड फाईल / Guard file.
आदे शानुसार/ BY ORDER,
स!या1पत ूित //True Copy//
उप/सहायक पंजीकार (Dy./Asstt.
उप/ Registrar) आयकर अपीलीय अिधकरण, अिधकरण, मुंबई / ITAT, Mumbai
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