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THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD

ITA No. 2947/Ahd/2015 Assessment Year: 2004-05
M/s. Anuj Securities (Appellant) vs. ITO (Respondent)
Date of Order: 18-02-2016

ORDER

This appeal, at the instance of the assessee, is directed against the order of the CIT (A), Ahmedabad-5, dated 28.09.2015. The relevant assessment year is 2004-05.

2. The solitary ground raised in this appeal is whether the CIT(A) is justified in confirming the levy of penalty imposed by the Assessing Officer u/s 271(1)(c) of the Act.

3. Briefly stated the facts of the case are as follows:-

The assessee is a partnership firm. It derives income from subbroking in shares. The return of income for the relevant assessment year was filed on 21.10.2004 declaring total income at Rs.20,390/-. The assessment was finalized u/s 153A r.w.s. 143(3) of the Act vide order dated 27.12.2007, assessing the total income at Rs.34,790/-. Subsequently, reassessment notice was issued u/s 148 of the Act and assessment u/s 143(3) r.w.s. 147 was completed vide order dated 30.12.2011, wherein disallowance was made in respect of bad debt and service tax expenses amounting to Rs.2,25,567/- and Rs.68,890/- respectively.

4. Aggrieved by the addition made in the quantum assessment, the assessee preferred an appeal before the First Appellate Authority. The CIT(A) deleted the addition with regard to the bad debt and confirmed the disallowance of service tax expenditure of Rs.68,890/-.

5. Subsequent to the CIT(A)’s order in the quantum assessment, the penalty was imposed u/s 271(1)(c) of the Act for the addition sustained of service tax expenses by the CIT(A). On further appeal as against the penalty order, the CIT(A) dismissed the appeal of the assessee and confirmed the penalty imposed amounting to Rs.30,070/-. The assessee, being aggrieved, is in appeal before the Tribunal.

6. The ld. Counsel for the assessee, relying on the order of the Pune ‘A’ Bench of the Tribunal in the case of Envair Electrodyne Ltd. vs. DCIT, contended that the particulars with regard to service tax expenses claimed were disclosed in the Profit & Loss Account for the relevant assessment year and there is no concealment on the part of the assessee warranting the imposition of penalty u/s 271(1)(c) of the Act.

7. The ld. Departmental Representative present was duly heard.

8. I have heard the rival submissions and perused the material on record. Admittedly, in this case service tax expenses of Rs.68,890/- has been claimed as deduction and debited to the Profit & Loss Account. The Pune Bench of the Tribunal in the case of Envair Electrodyne Ltd vs. DCIT in ITA No.595/PN/2008 had held that when disclosure has been made in the return of income or its annexures, it cannot be stated that there is concealment of income or furnishing of inaccurate particulars of income. The relevant finding of the Tribunal reads as under:-

“6. We have heard the parties and perused the documents and decisions available before us. Assessee's appeal filed belatedly before the CIT(A) was not condoned. It is also a fact that the additions made on account of disallowance of sales tax and service tax etc. u/s 43B and valuation of inventories are uncontested by the assessee before the Tribunal. During the assessment proceedings, assessee did not filed any cogent explanation before the AO in respect of these additions excepting that the 'inadvertence' is the explanation.During the penalty proceedings, the assessee did not any explanation in response to the show cause notice dated 18.5.2007 of the AO excepting that the penalty proceedings must be kept in abeyance till the above said belated appeal before the CIT(A) is disposed of. It is borne on records (page 2 of the penalty order dated 31.5.2007) that the AO mentioned that the 'no submission whatsoever on merits has been made in respect of the following additions...'. It is also mentioned in page 3 of the said penalty order that 'as regard penalty proceedings, the assessee did not furnish any submission for the reasons best known to them only'. Thus, the AO proceeded to levy penalty in the absence any explanation from the assessee. During the first appellate proceedings relating to the penalty, assessee defense relates to the disclosure of particulars in the return. Before us, Ld counsel essentially relied on the submissions made before the revenue authorities. Thus, we have to decide the issues based on the assessee's defense arguments relating to the disclosure of information in the return of income and if the particulars disclosed in the return advocates for non concealment of income. In our opinion, where there is disclosure of relevant information in the return, the concealment of income cannot be attributed to the assessee. Considering the above, we have examined the assessee's case where relevant information is furnished in the return or its annexure but failed to add back to the income returned and whether the penalty is attracted in such case. In our considered opinion, when the particulars are available in the returns and its enclosures say Audit Report filed u/s 44AB of the Act and failure to make additions on account of 43B of the Act and the inclusion of excise duty, freight etc do not attract penalty u/s 271(1)(c) of the Act in view of Pune Bench decision in the case of Kanbay Software P Ltd (supra). Accordingly, the grounds raised in the appeal are allowed.”

9. In the instant case, since the relevant information is furnished alongwith the return filed and based on that return the disallowance is made, it cannot be stated that there is a concealment of income warranting imposition of penalty u/s 271(1)(c) of the Act. Accordingly, the penalty is cancelled.

10. In the result, the appeal filed by the assessee is allowed.

Order pronounced in the Court on 18th February, 2016 at Ahmedabad.

(GEORGE GEORGE K.)
JUDICIAL MEMBER

Penalty 271(1)(c)-When disclosure made in return of income (ITR) or annexures, there is no concealment or furnishing of inaccurate particulars of income | 20-02-2016 |