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 Jagdish Narayan Sharma vs. ITO (ITAT Jaipur)

A.C.I.T. Range-1,Faridabad. Vs. M/s Nuware India Ltd., 206-Mathura Road,Faridabad.
September, 24th 2012

                   (DELHI BENCH `H' NEW DELHI)


                      I.T.A. No.1960/Del/2007
                     Assessment year : 1995-96

           A.C.I.T.                      M/s Nuware India Ltd.,
           Range-1,                      206-Mathura Road,
           Faridabad.        V.          Faridabad.

               (Appellant)                     (Respondent)

                 Appellant by :  Shri Surendra Pal, Sr. DR.
                 Respondent by : Dr. Rakesh Gupta,
                                 Shri Somil Agarwal &
                                 Shri Tarun Kumar, Advocate.



  This is an appeal filed by the revenue against the order of Ld CIT(A)
dated 8.2.2007. The grounds raised by the revenue are as under:-

  1. On the facts and in the circumstances of the case, the Ld CIT(A)
     erred in deleting the penalty imposed u/s 271(1)( c) of the Act at
     `.10,70,000/- when the Assessing Officer has rightly imposed the
     penalty after properly recording his satisfaction for initiation of
     penalty proceedings.
  2. Without prejudice to ground No.1 above, ld CIT(A) erred in
     deleting the penalty of `.10,70,000/- imposed u/s 271(1)( c) of
     the Act by applying the ratio of the judgment of Punjab &
     Haryana High Court in the case of Prithpal Singh & Co. which has
                                      2              ITA No1960/Del/2007

       no relevance in the present case in view of the amendment
       made to section 271(1)( c) w.e.f. 1.4.1976.
     3. That the appellant craves for the permission to add, delete or
       amend the grounds of appeal before or at the time of hearing of
       the appeal.

2.     The brief facts of the case are that the penalty u/s 271(1)( c) was
imposed vide order dated 14.3.2006 in respect of additions made by
the Assessing Officer on account of following vide order dated

1. Under Valuation of closing stock                      `.12,91,026/-
2. Sales Tax penalty.                                    `.     79,133/-
3. Conveyance expenses.                                  `      50,335/-
4. LTA                                                   `.     28,594/-
5. Long Term Capital Loss.                               `. 8,78,450/-

The penalty order u/s 271(1)( c) of the Act was agitated before ld
CIT(A) who deleted the penalty order passed by the Assessing Officer.
The matter was further taken to Hon'ble Tribunal who vide its order
dated 7.12.2007 deleted the above penalty. The revenue took the
matter to Hon'ble High Court and Hon'ble High Court vide its judgment
dated 31.7.2009 remanded the case back to the Tribunal and directed
the Tribunal to decide afresh. The Hon'ble High Court hd observed as
                                      3             ITA No1960/Del/2007

      "The   assessee   declared loss     but   during assessment,    the
      Assessing Officer did not accept the extent of loss claimed and
      addition was made to the income. Proceedings were also
      initiated for penalty. Finally, penalty was levied. On appeal,
      CIT(A) deleted the penalty while upholding the addition. The
      Tribunal dismissed the appeal of the revenue following the
      judgment of the Hon'ble Supreme Court in Virtual Soft Systems
      Ltd. v. CIT (2007) 289 ITR 83. It is stated that the judgment relied
      upon by     the Tribunal has been overruled by the Hon'ble
      Supreme Court in Commissioner of Income Tax v. Gold Coin
      Health Food Pvt. Ltd. (2008) 304 ITR 308. This is not disputed by
      learned counsel for the assessee.

      In view of the above, this appeal is allowed. The order of the
      Tribunal is set aside and the matter is remanded to the Tribunal
      for fresh decision in accordance with law."

Therefore, in view of the above direction of Hon'ble High Court, the
case was fixed for rehearing after adjournments on various dates was
finally heard on 23rd August, 2012.

3.    At the out set, the Ld AR produced copy of the Tribunal order
dated 22.2.2008 stating that four out of five additions upheld by ld
CIT(A) has already been deleted by the Hon'ble Tribunal in respect of
addition of Sales tax penalty which was not decided by Hon'ble
Tribunal he submitted that such sales tax penalty for non payment of
sales tax is also an allowable deduction on the basis of Hon'ble
Karnataka High Court judgment in the case Commissioner of Income-
tax v. Mandya National Paper Mills Ltd. 150 ITR 26 wherein it was held
that sale tax penalty for delay in payment of sale tax is an allowable
                                      4              ITA No1960/Del/2007

deduction. Therefore, in view of the above facts, the Ld AR argued that
since additions due to which penalty proceedings were finalized are
already deleted, the penalty for concealment u/s 271(1)( c) cannot be

4.      The Ld DR, on the other hand, has relied on the orders of the
Taxing Authorities.
5.      We have duly considered the rival submissions and gone through
the material available on record. We observe from the order dated
22.2.2008 of Hon'ble Tribunal that most of the additions made in the
case of assessee were already deleted as described below:
1. First disallowance of under valuation of stock.       Page 2 of order.
2. Third disallowance of conveyance allowance.           Page 4 of order.
3. Fourth disallowance of LTA                            Page 5 of order.
4. Fifth disallowance of capital loss.                   Page 7 of order.

Regarding second disallowance of sales tax penalty, it is now
established law that sales tax penalty for delay in payment of sales tax
is a part of sales tax and is an allowable deduction. Therefore, in the
absence of sustainance of any additions, the penalty is not leviable.

6.      In the result, the appeal filed by the revenue is dismissed.

7.      Order pronounced in the open court on 21st day of September,

     Sd/-                                                Sd/-
 (A.D. JAIN)                                     (T.S. KAPOOR)
JUDICIAL MEMBER                              ACCOUNTANT MEMBER

Dt. 21.9.12.
                                 5             ITA No1960/Del/2007

Copy forwarded to:-
   1. The appellant
   2. The respondent
   3. The CIT
   4. The CIT (A)-, New Delhi.
   5. The DR, ITAT, Loknayak Bhawan, Khan Market, New Delhi.
True copy.
                                                   By Order

                                                   (ITAT, New Delhi).

Date of hearing                        23.8.2012

Date of Dictation                      19.9.2012

Date of Typing                         20.9.2012

Date of order signed by                21.9.2012
both the Members &

Date of order uploaded on net          24.9.2012
& sent to the Bench concerned.
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