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2024 Supreme(Online)(ITAT) 3399
INCOME TAX APPELLATE TRIBUNAL (AHMEDABAD BENCH)
Shri Siddhartha Nautiyal, J, Shri Makarand V. Mahadeokar, ACJ
N K PROTEINS PVT. LIMITED AHMEDABAD – Appellant
Versus
THE DY. COMMISSIONER OF INCOME TAX CIRCLE- 3(1)(1) AHMEDABAD – Respondent
ITA No. 463/Ahd/2022
For the Appellants/Petitioners: Shri Vartik Choksi, A.R.
For the Respondents: Shri Ketan Gajjar, CIT-D.R.
The court emphasized that penalties cannot stand when the basis for them, such as previous assessments, are invalidated, establishing that legitimate business losses not debited directly shouldn't lead to disallowance.
Headnote:(A) Income Tax Act, 1961 - Section 271(1)(c) - Appeal against penalty imposed for furnishing inaccurate particulars of income where underlying additions were deleted - The penalty has no legs to stand on when the basis for it is invalidated by the Tribunal. (Paras 3, 6)
(B) Penalty - Assessment proceedings - The principles of immediate penalties based on substantive merits of cases must be applied and should not subsist when core issues resolved in favor of the appellant. (Paras 4, 10)
(C) Business Loss - Disallowance of transaction charges - Established that transaction charges incurred were wholly and exclusively for the purpose of business expenditures and should not be debited indirectly in a profit and loss account. (Paras 10-14)
| Table of Content |
|---|
| 1. appeal against penalty on the basis of invalid assessments. (Para 1 , 2 , 3) |
| 2. counsel argues for the deletion of penalties based on deleted additions. (Para 4 , 5) |
| 3. transaction charges must be recognized as legitimate business expenses. (Para 6) |
आदेश/ORDER
PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:-
This is an appeal filed by the assessee against the order of the ld. Commissioner of Income Tax, CIT(A)-11, Ahmedabad, in proceeding u/s. 250 vide order dated 27/09/2022 passed for the assessment year 2011-12.
2. The assessee has taken the following grounds of appeal:-
“1. On the facts and in the circumstances of the case, the learned CIT(A) erred in confirming the legality of the Assessing Officer's order passed u/s. 271(1)(c) of the Act imposing penalty for furnishing inaccurate particulars of income.
1.1 While passing the penalty order, the learned CIT(A) has disregarded the fact that the issues on which penalty have been imposed are sub-judice before Honorable ITAT and in view of judicial precedents of Madras High Court in case of Rayala Corporation [161 Taxman 127(Madras)J and Ahmedabad ITAT in case of GE India Industries Pvt. Ltd. (33 Taxman.com 15), passing an order in present case is illegal and void-ab-initio.
2. On the facts and in the circumstance of the case, the learned CIT(A) erred in confirming penalty levied by the Assessing Officer u/s. 271(1)(c) of the Act with regards to loss on account of trading in cotton wash oil amounting to Rs. 14,42,91,136/-.
3. On the facts and in the circumstance of the case, the learned CIT(A) erred in confirming penalty levied by the Assessing Officer u/s. 271(1)(c) of the Act with regards to disallowance of transaction charges amounting to Rs. 1,30,29,338/-.
4. The appellant craves leave to add, alter, amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal.”
3. At the outset, before us, the counsel for the assessee submitted that the issue pertains to levy of penalty under section 271(1)(c) of the Act, with regards to two additions made by the assessing officer during the course of assessment proceedings. The first addition is with regards to loss on account (cid:1)
of trading in cotton wash oil amounting to 14,42,91,136/- and the second addition is on account of disallowance of transaction charges amounting to (cid:1) 1,30,29,338/-. However, the counsel for the assessee submitted before us that in the quantum appeal relating to both of the above additions, the ITA T vide order dated 16-11-2022 in ITA Nos. 328, 329/Ahd/2017 & 1211, 1213/Ahd/2018 has deleted both the additions referred to above, and therefore, since both the quantum additions itself have been deleted by ITA T in assessee’s own case for the same assessment year i.e. AY 2011-12, penalty imposed on the assessee u/s 271(1)(c) of the Act has no legs to stand on and is liable to be deleted.
4. It would be useful to reproduce the relevant extracts of the ruling for ready reference. We observe that ITAT in assessee’s own case for assessment year 2011-12 vide order dated 16-11-2022 has deleted the additions, therefore, it is pertinent to reproduce the relevant extracts of the ruling for ready reference:
“2. First we take up ITA No.328/Ahd/2017 for AY 2011-12 in the case of N.K. Proteins Pvt. Ltd. and the grounds of appeal raised therein are as under:
1. On the facts and in the circumstances of the case, the CIT(A) has erred in not accepting Appellant’s plea that the order passed by the Ld.CIT(A) is bad in law and void ab initio.
2. On the facts and in the circumstances of the case, the Ld.CIT(A) ought to have accepted that assessment order was barred by limitation.
3. On the facts and in the circumstances of the case, the learned CIT(A) is not correct in observing that the Assessing Officer had right reasons to believe that special audit was required in the given case.
4. On the facts and in the circumstances of the case, the Ld.CIT(A) has erred by confirming
